Filed by sedaredgar.com - Fox Petroleum, Inc. - Exhibit 10.5






WARRANT 

THE SECURITIES REPRESENTED BY THIS WARRANT HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE
SECURITIES LAWS. THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT BE
OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE OF AN EFFECTIVE
REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR APPLICABLE STATE SECURITIES LAWS, OR AN OPINION OF COUNSEL IN A FORM
REASONABLY SATISFACTORY TO THE ISSUER THAT REGISTRATION IS NOT REQUIRED UNDER
SAID ACT OR APPLICABLE STATE SECURITIES LAWS OR UNLESS SOLD PURSUANT TO RULE 144
UNDER SAID ACT. NOTWITHSTANDING THE FOREGOING, THIS WARRANT MAY BE PLEDGED IN
CONNECTION WITH A BONA FIDE MARGIN ACCOUNT. 

FOX PETROLEUM, INC. 

Replacement Warrant To Purchase Common Stock 

	Warrant No.: FPI - 1 	Number of Shares: 2,000,000



Date of Issuance: October 31, 2008 

Fox Petroleum, Inc. a Nevada corporation (the
“Company”), hereby certifies that, for Ten United States Dollars ($10.00)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Trafalgar Capital Specialized Investment Fund,
Luxembourg, (“Trafalgar”), the registered holder hereof or its permitted
assigns, is entitled, subject to the terms set forth below, to purchase from the
Company upon surrender of this Warrant, at any time or times on or after the
date hereof, but not after 11:59 P.M. Eastern Time on the Expiration Date (as
defined herein) Two Million (2,000,000) fully paid and nonassessable shares of
Common Stock (as defined herein) of the Company (the “Warrant Shares”) at
the exercise price per share provided in Section 1(b) below or as subsequently
adjusted; provided, however, that in no event shall the holder be entitled to
exercise this Warrant for a number of Warrant Shares in excess of that number of
Warrant Shares which, upon giving effect to such exercise, would cause the
aggregate number of shares of Common Stock beneficially owned by the holder and
its affiliates to exceed 4.99% of the outstanding shares of the Common Stock
following such exercise, except within sixty (60) days of the Expiration Date.
For purposes of the foregoing proviso, the aggregate number of shares of Common
Stock beneficially owned by the holder and its affiliates shall include the
number of shares of Common Stock issuable upon exercise of this Warrant with
respect to which the determination of such proviso is being made, but shall
exclude shares of Common Stock which would be issuable upon (i) exercise of the
remaining, unexercised Warrants beneficially owned by the holder and its
affiliates and (ii) exercise or conversion of the unexercised or unconverted
portion of any other securities of the Company beneficially owned by the holder
and its affiliates (including, without limitation, any convertible notes or
preferred stock) subject to a limitation on conversion or exercise 




analogous to the limitation contained herein. Except as set
forth in the preceding sentence, for purposes of this paragraph, beneficial
ownership shall be calculated in accordance with Section 13(d) of the Securities
Exchange Act of 1934, as amended. For purposes of this Warrant, in determining
the number of outstanding shares of Common Stock a holder may rely on the number
of outstanding shares of Common Stock as reflected in (1) the Company’s most
recent Form 10-Q or Form 10-K, as the case may be, (2) a more recent public
announcement by the Company or (3) any other notice by the Company or its
transfer agent setting forth the number of shares of Common Stock outstanding.
Upon the written request of any holder, the Company shall promptly, but in no
event later than one (1) Business Day following the receipt of such notice,
confirm in writing to any such holder the number of shares of Common Stock then
outstanding. In any case, the number of outstanding shares of Common Stock shall
be determined after giving effect to the exercise of Warrants (as defined below)
by such holder and its affiliates since the date as of which such number of
outstanding shares of Common Stock was reported. 

                    Section
1. 

                              (a)     
This Warrant is issued as a replacement of the common stock purchase warrants
(each, a “Warrant” and together, the “Warrants”) originally issued
pursuant to a Securities Purchase Agreement dated June 24, 2008 by and between
the Company and Trafalgar (the “Purchase Agreement”) and is issued
pursuant to the terms of an amendment to such Purchase Agreement executed by the
Company and Trafalgar as of October 31, 2008. 

                              (b)     
Definitions. The following words and terms as used in this Warrant shall
have the following meanings: 

                                        (i)     
“Approved Stock Plan” means any employee benefit plan which has been
approved by the Board of Directors of the Company prior to the Issuance Date of
this Warrant, pursuant to which the Company’s securities may be issued to any
employee, consultant, officer or director for services provided to the Company.


                                        (ii)     
“Business Day” means any day other than Saturday, Sunday or other day on
which commercial banks in the City of New York are authorized or required by law
to remain closed. 

                                        (iii)     
“Closing Bid Price” means the closing bid price of Common Stock as quoted
on the Principal Market (as reported by Bloomberg Financial Markets
(“Bloomberg”) through its “Volume at Price” function).

                                        (iv)     
“Common Stock” means (i) the Company’s common stock, par value $0.001 per
share, and (ii) any capital stock into which such Common Stock shall have been
changed or any capital stock resulting from a reclassification of such Common
Stock. 

                                        (v)     
“Excluded Securities” means, provided such security is issued at a price
which is greater than or equal to the arithmetic average of the Closing Bid
Prices of the Common Stock for the ten (10) consecutive trading days immediately
preceding the date of issuance, any of the following: (a) shares of Common Stock
and options, warrants or other rights to purchase Common Stock issued to
employees, officers or directors of, or consultants or 

2 




advisors to the Corporation or any subsidiary pursuant to
restricted stock purchase agreements, stock option plans or similar arrangements
outstanding as of the Issuance Date of this Warrant (as adjusted for any stock
dividend, stock split, combination of shares, reorganization, recapitalization,
reclassification or other similar event. (a “Recapitalization”)) or (b) shares
of Common Stock issued upon the exercise or conversion of options or convertible
securities outstanding as of the Issuance Date of this Warrant;

                                        (vi)     
“Expiration Date” means the date that is five (5) years from the Issuance
Date of this Warrant or, if such date falls on a Saturday, Sunday or other day
on which banks are required or authorized to be closed in the City of New York
or the State of New York or on which trading does not take place on the
Principal Exchange or automated quotation system on which the Common Stock is
traded (a “Holiday”), the next date that is not a Holiday. 

                                        (vii)     
“Issuance Date” means the date hereof. 

                                        (viii)     
“Options” means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.

                                        (ix)     
“Other Securities” means (i) those options and warrants of the Company
issued prior to, and outstanding on, the Issuance Date of this Warrant, (ii) the
shares of Common Stock issuable on exercise of such options and warrants,
provided such options and warrants are not amended after the Issuance Date of
this Warrant and (iii) the shares of Common Stock issuable upon exercise of this
Warrant.

                                        (x)     
“Person” means an individual, a limited liability company, a partnership,
a joint venture, a corporation, a trust, an unincorporated organization and a
government or any department or agency thereof. 

                                        (xi)     
“Principal Market” means the New York Stock Exchange, the American Stock
Exchange, the Nasdaq Global Market, the Nasdaq Capital Market, whichever is at
the time the principal trading exchange or market for such security, or the
over-the-counter market on the electronic bulletin board for such security as
reported by Bloomberg or, if no bid or sale information is reported for such
security by Bloomberg, then the average of the bid prices of each of the market
makers for such security as reported in the “pink sheets” by the National
Quotation Bureau, Inc. 

                                        (xii)      “Securities
Act” means the Securities Act of 1933, as amended.

                                        (xiii)     
“Warrant” means this Warrant and all Warrants issued in exchange,
transfer or replacement thereof.

                                        (xiv)     
“Warrant Exercise Price” shall be one tenth of one cent ($0.001) per
share or as subsequently adjusted as provided in Section 8 hereof.

                                        (xv)     
“Warrant Shares” means the shares of Common Stock issuable at any time
upon exercise of this Warrant.

3 




                              (c)      Other
Definitional Provisions.

                                        (i)      Except
as otherwise specified herein, all references herein (A) to the Company shall be
deemed to include the Company’s successors and (B) to any applicable law defined
or referred to herein shall be deemed references to such applicable law as the
same may have been or may be amended or supplemented from time to time.

                                        (ii)      When
used in this Warrant, the words “herein”, “hereof”, and
“hereunder” and words of similar import, shall refer to this
Warrant as a whole and not to any provision of this Warrant, and the words
“Section”, “Schedule”, and “Exhibit” shall refer to
Sections of, and Schedules and Exhibits to, this Warrant unless otherwise
specified.

                                        (iii)      Whenever
the context so requires, the neuter gender includes the masculine or feminine,
and the singular number includes the plural, and vice versa.

                    Section
2.      Exercise of Warrant. Subject to the
terms and conditions hereof, this Warrant may be exercised by the holder hereof
then registered on the books of the Company, pro rata as hereinafter provided,
at any time on any Business Day on or after the opening of business on such
Business Day, commencing with the first day after the date hereof, and prior to
11:59 P.M. Eastern Time on the Expiration Date, by (i) delivery of a written
notice, in the form of the subscription notice attached as Exhibit A
hereto (the “Exercise Notice”), of such holder’s election to exercise
this Warrant, which notice shall specify the number of Warrant Shares to be
purchased, (ii) payment to the Company of an amount equal to the Warrant
Exercise Price(s) applicable to the Warrant Shares being purchased, multiplied
by the number of Warrant Shares (at the applicable Warrant Exercise Price) as to
which this Warrant is being exercised (plus any applicable issue or transfer
taxes) (the “Aggregate Exercise Price”): (a) in cash or wire transfer of
immediately available funds, (b) by delivery of a written notice of Net
Exercise, as set forth in the following paragraph and (iii) the surrender of
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) to a common carrier for overnight
delivery to the Company as soon as practicable following such date. In the event
of any exercise of the rights represented by this Warrant in compliance with
this Section 2(a), the Company shall on the fifth (5th) Business Day following
the date of receipt of the Exercise Notice, the Aggregate Exercise Price and
this Warrant (or an indemnification undertaking with respect to this Warrant in
the case of its loss, theft or destruction) and the receipt of the
representations of the holder specified in Section 6 hereof, if requested by the
Company (the “Exercise Delivery Documents”), and if the Common Stock is
DTC eligible credit such aggregate number of shares of Common Stock to which the
holder shall be entitled to the holder’s or its designee’s balance account with
The Depository Trust Company; provided, however, if the holder who submitted the
Exercise Notice requested physical delivery of any or all of the Warrant Shares,
or, if the Common Stock is not DTC eligible then the Company shall, on or before
the fifth (5th) Business Day following receipt of the Exercise
Delivery Documents, issue and surrender to a common carrier for overnight
delivery to the address specified in the Exercise Notice, a certificate,
registered in the name of the holder, for the number of shares of Common Stock
to which the holder shall be entitled pursuant to such request. Upon delivery of
the Exercise Notice and Aggregate Exercise Price referred to in clause (ii)
above the holder of this Warrant shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect to which
this Warrant has been 

4 




exercised. In the case of a dispute as to the determination of
the Warrant Exercise Price, the Closing Sale Price or the arithmetic calculation
of the Warrant Shares, the Company shall promptly issue to the holder the number
of Warrant Shares that is not disputed and shall submit the disputed
determinations or arithmetic calculations to the holder via facsimile within one
(1) Business Day of receipt of the holder’s Exercise Notice. If the holder and
the Company are unable to agree upon the determination of the Warrant Exercise
Price or arithmetic calculation of the Warrant Shares within one (1) day of such
disputed determination or arithmetic calculation being submitted to the holder,
then the Company shall immediately submit via facsimile (i) the disputed
determination of the Warrant Exercise Price or the Closing Bid Price to an
independent, reputable investment banking firm or (ii) the disputed arithmetic
calculation of the Warrant Shares to its independent, outside accountant. The
Company shall cause the investment banking firm or the accountant, as the case
may be, to perform the determinations or calculations and notify the Company and
the holder of the results no later than forty-eight (48) hours from the time it
receives the disputed determinations or calculations. Such investment banking
firm’s or accountant’s determination or calculation, as the case may be, shall
be deemed conclusive absent manifest error. 

          If
the Company is in Default under any of the Transaction Documents, then the
Holder may notify the Company in an Exercise Notice of its election to utilize
cashless exercise, in which event the Company shall issue to the Holder the
number of Warrant Shares determined as follows: 

	X= 	Y(A-B)  
	  	     A 



	Where X = 	
      the number of shares of Common Stock to be issued to the
      holder 

	  	
       

	Y = 	
      the number of shares of Common Stock purchasable under
      this Warrant or, if only a portion of this Warrant is being exercised, the
      portion of this Warrant being exercised (at the date of such calculation)
      

	  	
       

	A = 	
      the Fair Market Value of one share of the Company’s
      Common Stock (at the date of such calculation) 

	  	
       

	B = 	
      the Exercise Price per share (as adjusted to the date of
      such calculation). 



                              (a)     
Unless the rights represented by this Warrant shall have expired or shall have
been fully exercised, the Company shall, as soon as practicable and in no event
later than five (5) Business Days after any exercise and at its own expense,
issue a new Warrant identical in all respects to this Warrant exercised except
it shall represent rights to purchase the number of Warrant Shares purchasable
immediately prior to such exercise under this Warrant exercised, less the number
of Warrant Shares with respect to which such Warrant is exercised. 

                              (b)     
No fractional Warrant Shares are to be issued upon any pro rata exercise of this
Warrant, but rather the number of Warrant Shares issued upon such exercise of
this Warrant shall be rounded up or down to the nearest whole number. 

5 




                              (c)     
If the Company or its Transfer Agent shall fail for any reason or for no reason
to issue to the holder within ten (10) days of receipt of the Exercise Delivery
Documents , a certificate for the number of Warrant Shares to which the holder
is entitled or to credit the holder’s balance account with The Depository Trust
Company for such number of Warrant Shares to which the holder is entitled upon
the holder’s exercise of this Warrant, the Company shall, in addition to any
other remedies under this Warrant or otherwise available to such holder, pay as
additional damages in cash to such holder on each day the issuance of such
certificate for Warrant Shares is not timely effected an amount equal to 0.025%
of the product of (A) the sum of the number of Warrant Shares not issued to the
holder on a timely basis and to which the holder is entitled, and (B) the
Closing Bid Price of the Common Stock for the trading day immediately preceding
the last possible date which the Company could have issued such Common Stock to
the holder without violating this Section 2. 

                              (d)     
If within ten (10) days after the Company’s receipt of the Exercise Delivery
Documents, the Company fails to deliver a new Warrant to the holder for the
number of Warrant Shares to which such holder is entitled pursuant to Section 2
hereof, then, in addition to any other available remedies under this Warrant, or
otherwise available to such holder, the Company shall pay as additional damages
in cash to such holder on each day after such tenth (10th) day that
such delivery of such new Warrant is not timely effected in an amount equal to
0.25% of the product of (A) the number of Warrant Shares represented by the
portion of this Warrant which is not being exercised and (B) the Closing Bid
Price of the Common Stock for the trading day immediately preceding the last
possible date which the Company could have issued such Warrant to the holder
without violating this Section 2. 

                    Section
3.      Covenants as to Common Stock. The
Company hereby covenants and agrees as follows: 

                              (a)     
This Warrant is, and any Warrants issued in substitution for or replacement of
this Warrant will upon issuance be, duly authorized and validly issued. 

                              (b)     
All Warrant Shares which may be issued upon the exercise of the rights
represented by this Warrant will, upon issuance, be validly issued, fully paid
and nonassessable and free from all taxes, liens and charges with respect to the
issue thereof. 

                              (c)      If
at any time after the date hereof the Company shall file a registration
statement, the Company shall include the Warrant Shares issuable to the holder,
pursuant to the terms of this Warrant subject to compliance with Rule 415 as
promulgated under the Securities Act or any Rule 415 comments or restrictions
placed by the Securities and Exchange Commission on the registration statement
for the Warrant Shares, and shall maintain, so long as any other shares of
Common Stock shall be so listed, such listing of all Warrant Shares from time to
time issuable upon the exercise of this Warrant; and the Company shall so list
on each national securities exchange or automated quotation system, as the case
may be, and shall maintain such listing of, any other shares of capital stock of
the Company issuable upon the exercise of this Warrant if and so long as any
shares of the same class shall be listed on such national securities exchange or
automated quotation system. 

6 




                              (d)      The
Company will not, by amendment of its Articles of Incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution, issue or
sale of securities, or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms to be observed or performed by it
hereunder, but will at all times in good faith assist in the carrying out of all
the provisions of this Warrant and in the taking of all such action as may
reasonably be requested by the holder of this Warrant in order to protect the
exercise privilege of the holder of this Warrant against dilution or other
impairment, consistent with the tenor and purpose of this Warrant. The Company
will not increase the par value of any shares of Common Stock receivable upon
the exercise of this Warrant above the Warrant Exercise Price then in effect,
and (ii) will take all such actions as may be necessary or appropriate in order
that the Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant. 

                              (e)      This
Warrant will be binding upon any entity succeeding to the Company by merger,
consolidation or acquisition of all or substantially all of the Company’s
assets. 

                     Section
4.      Taxes. The Company shall pay any and all
taxes, except any applicable withholding, which may be payable with respect to
the issuance and delivery of Warrant Shares upon exercise of this Warrant. 

                     Section
5.      Warrant Holder Not Deemed a Stockholder.
Except as otherwise specifically provided herein, no holder, as such, of this
Warrant shall be entitled to vote or receive dividends or be deemed the holder
of shares of capital stock of the Company for any purpose, nor shall anything
contained in this Warrant be construed to confer upon the holder hereof, as
such, any of the rights of a stockholder of the Company or any right to vote,
give or withhold consent to any corporate action (whether any reorganization,
issue of stock, reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or subscription
rights, or otherwise, prior to the issuance to the holder of this Warrant of the
Warrant Shares which he or she is then entitled to receive upon the due exercise
of this Warrant. In addition, nothing contained in this Warrant shall be
construed as imposing any liabilities on such holder to purchase any securities
(upon exercise of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by creditors of the
Company. Notwithstanding this Section 5, the Company will provide the holder of
this Warrant with copies of the same notices and other information given to the
stockholders of the Company generally, contemporaneously with the giving thereof
to the stockholders. 

                    Section
6.      Representations of Holder. The
holder of this Warrant, by the acceptance hereof, represents that it is
acquiring this Warrant and the Warrant Shares for its own account for investment
only and not with a view towards, or for resale in connection with, the public
sale or distribution of this Warrant or the Warrant Shares, except pursuant to
sales registered or exempted under the Securities Act; provided, however, that
by making the representations herein, the holder does not agree to hold this
Warrant or any of the Warrant Shares for any minimum or other specific term and
reserves the right to dispose of this Warrant and the Warrant Shares at any time
in accordance with or pursuant to a registration statement or an exemption under
the Securities Act. The holder of this Warrant further represents, by 

7 




acceptance hereof, that, as of this date, such holder is an
“accredited investor” as such term is defined in Rule 501(a)(1) of Regulation D
promulgated by the Securities and Exchange Commission under the Securities Act
(an “Accredited Investor”). Upon exercise of this Warrant the holder
shall, if requested by the Company, confirm in writing, in a form satisfactory
to the Company, that the Warrant Shares so purchased are being acquired solely
for the holder’s own account and not as a nominee for any other party, for
investment, and not with a view toward distribution or resale and that such
holder is an Accredited Investor. If such holder cannot make such
representations because they would be factually incorrect, it shall be a
condition to such holder’s exercise of this Warrant that the Company receive
such other representations as the Company considers reasonably necessary to
assure the Company that the issuance of its securities upon exercise of this
Warrant shall not violate any United States or state securities laws. 

                    Section
7.      Ownership and Transfer. 

                              (a)      The
Company shall maintain at its principal executive offices (or such other office
or agency of the Company as it may designate by notice to the holder hereof), a
register for this Warrant, in which the Company shall record the name and
address of the person in whose name this Warrant has been issued, as well as the
name and address of each transferee. The Company may treat the person in whose
name any Warrant is registered on the register as the owner and holder thereof
for all purposes, notwithstanding any notice to the contrary, but in all events
recognizing any transfers made in accordance with the terms of this Warrant.


                    Section
8.      Adjustment of Warrant Exercise Price and
Number of Shares. The Warrant Exercise Price and the number of shares of
Common Stock issuable upon exercise of this Warrant shall be adjusted from time
to time as follows: 

                              (a)      Adjustment
of Warrant Exercise Price and Number of Shares upon Issuance of Common
Stock. If and whenever on or after the Issuance Date of this Warrant, the
Company issues or sells, or is deemed to have issued or sold, any shares of
Common Stock (other than (i) Excluded Securities and (ii) shares of Common Stock
which are issued or deemed to have been issued by the Company in connection with
an Approved Stock Plan or upon exercise or conversion of the Other Securities)
for a consideration per share less than a price (the “Applicable Price”)
equal to the Warrant Exercise Price in effect immediately prior to such issuance
or sale, then immediately after such issue or sale the Warrant Exercise Price
then in effect shall be reduced to an amount equal to eighty-five percent (85%)
of such consideration per share. Upon each such adjustment of the Warrant
Exercise Price hereunder, the number of Warrant Shares issuable upon exercise of
this Warrant shall be adjusted to the number of shares determined by multiplying
the Warrant Exercise Price in effect immediately prior to such adjustment by the
number of Warrant Shares issuable upon exercise of this Warrant immediately
prior to such adjustment and dividing the product thereof by the Warrant
Exercise Price resulting from such adjustment. 

                              (b)     
Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Section 8(a) above, the
following shall be applicable: 

8 




                                        (i)     
Issuance of Options. If after the date hereof, the Company in any manner
grants any Options (other than Excluded Issuances) and the lowest price per
share for which one share of Common Stock is issuable upon the exercise of any
such Option or upon conversion or exchange of any convertible securities
issuable upon exercise of any such Option is less than the Applicable Price,
then such share of Common Stock shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such
Option for such price per share. For purposes of this Section 8(b)(i), the
lowest price per share for which one share of Common Stock is issuable upon
exercise of such Options or upon conversion or exchange of such Convertible
Securities shall be equal to the sum of the lowest amounts of consideration (if
any) received or receivable by the Company with respect to any one share of
Common Stock upon the granting or sale of the Option, upon exercise of the
Option or upon conversion or exchange of any convertible security issuable upon
exercise of such Option. No further adjustment of the Warrant Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
convertible securities upon the exercise of such Options or upon the actual
issuance of such Common Stock upon conversion or exchange of such convertible
securities. 

                                        (ii)      Issuance
of Convertible Securities. If the Company in any manner issues or sells any
convertible securities (other than Excluded Issuances) and the lowest price per
share for which one share of Common Stock is issuable upon the conversion or
exchange thereof is less than the Applicable Price, then such share of Common
Stock shall be deemed to be outstanding and to have been issued and sold by the
Company at the time of the issuance or sale of such convertible securities for
such price per share. For the purposes of this Section 8(b)(ii), the lowest
price per share for which one share of Common Stock is issuable upon such
conversion or exchange shall be equal to the sum of the lowest amounts of
consideration (if any) received or receivable by the Company with respect to one
share of Common Stock upon the issuance or sale of the convertible security and
upon conversion or exchange of such convertible security. No further adjustment
of the Warrant Exercise Price shall be made upon the actual issuance of such
Common Stock upon conversion or exchange of such convertible securities, and if
any such issue or sale of such convertible securities is made upon exercise of
any Options for which adjustment of the Warrant Exercise Price had been or are
to be made pursuant to other provisions of this Section 8(b), no further
adjustment of the Warrant Exercise Price shall be made by reason of such issue
or sale.

                                        (iii)     
Change in Option Price or Rate of Conversion. If the purchase price
provided for in any Options, the additional consideration, if any, payable upon
the issue, conversion or exchange of any convertible securities, or the rate at
which any convertible securities are convertible into or exchangeable for Common
Stock changes at any time, the Warrant Exercise Price in effect at the time of
such change shall be adjusted to the Warrant Exercise Price which would have
been in effect at such time had such Options or convertible securities provided
for such changed purchase price, additional consideration or changed conversion
rate, as the case may be, at the time initially granted, issued or sold and the
number of Warrant Shares issuable upon exercise of this Warrant shall be
correspondingly readjusted. For purposes of this Section 8(b)(iii), if the terms
of any Option or convertible security that was outstanding as of the Issuance
Date of this Warrant are changed in the manner described in the immediately
preceding sentence, then such Option or convertible security and the Common
Stock deemed issuable upon exercise, conversion or exchange thereof shall be
deemed to have 

9 




been issued as of the date of such change. No adjustment
pursuant to this Section 8(b) shall be made if such adjustment would result in
an increase of the Warrant Exercise Price then in effect. 

                              (c)     
Effect on Warrant Exercise Price of Certain Events. For purposes of
determining the adjusted Warrant Exercise Price under Sections 8(a) and 8(b),
the following shall be applicable: 

                                        (i)      Calculation
of Consideration Received. If any Common Stock, Options or convertible
securities are issued or sold or deemed to have been issued or sold for cash,
the consideration received therefore will be deemed to be the net amount
received by the Company therefore. If any Common Stock, Options or convertible
securities are issued or sold for a consideration other than cash, the amount of
such consideration received by the Company will be the fair value of such
consideration, except where such consideration consists of marketable
securities, in which case the amount of consideration received by the Company
will be the market price of such securities on the date of receipt of such
securities. If any Common Stock, Options or convertible securities are issued to
the owners of the non-surviving entity in connection with any merger in which
the Company is the surviving entity, the amount of consideration therefore will
be deemed to be the fair value of such portion of the net assets and business of
the non-surviving entity as is attributable to such Common Stock, Options or
convertible securities, as the case may be. The fair value of any consideration
other than cash or securities will be determined jointly by the Company and the
holders of Warrants representing at least two-thirds (b) of the Warrant Shares
issuable upon exercise of the Warrants then outstanding. If such parties are
unable to reach agreement within ten (10) days after the occurrence of an event
requiring valuation (the “Valuation Event”), the fair value of such
consideration will be determined within five (5) Business Days after the tenth
(10th) day following the Valuation Event by an independent, reputable
appraiser jointly selected by the Company and the holders of Warrants
representing at least two-thirds (b) of the Warrant Shares issuable upon
exercise of the Warrants then outstanding. The determination of such appraiser
shall be final and binding upon all parties and the fees and expenses of such
appraiser shall be borne jointly by the Company and the holders of Warrants.


                                        (ii)     
Integrated Transactions. In case any Option is issued in connection with
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been issued
for a consideration of $.01. 

                                        (iii)     
Treasury Shares. The number of shares of Common Stock outstanding at any
given time does not include shares owned or held by or for the account of the
Company, and the disposition of any shares so owned or held will be considered
an issue or sale of Common Stock. 

                                        (iv)     
Record Date. If the Company takes a record of the holders of Common Stock
for the purpose of entitling them (1) to receive a dividend or other
distribution payable in Common Stock, Options or in convertible securities or
(2) to subscribe for or purchase Common Stock, Options or convertible
securities, then such record date will be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or 

10 




sold upon the declaration of such dividend or the making of
such other distribution or the date of the granting of such right of
subscription or purchase, as the case may be. 

                              (d)     
Adjustment of Warrant Exercise Price upon Subdivision or Combination
of Common Stock. If the Company at any time after the date of issuance of
this Warrant subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, any Warrant Exercise Price in effect immediately prior
to such subdivision will be proportionately reduced and the number of shares of
Common Stock obtainable upon exercise of this Warrant will be proportionately
increased. If the Company at any time after the date of issuance of this Warrant
combines (by combination, reverse stock split or otherwise) one or more classes
of its outstanding shares of Common Stock into a smaller number of shares, any
Warrant Exercise Price in effect immediately prior to such combination will be
proportionately increased and the number of Warrant Shares issuable upon
exercise of this Warrant will be proportionately decreased. Any adjustment under
this Section 8(d) shall become effective at the close of business on the date
the subdivision or combination becomes effective. 

                              (e)     
Distribution of Assets. If the Company shall declare or make any
dividend, or other distribution, of its assets (or rights to acquire its assets)
to holders of Common Stock, by way of return of capital or otherwise (including,
without limitation, any distribution of cash, stock or other securities,
property or options by way of a dividend, spin off, reclassification, corporate
rearrangement or other similar transaction) (a “Distribution”), at any
time after the issuance of this Warrant, then, in each such case: 

                                        (i)     
any Warrant Exercise Price in effect immediately prior to the close of business
on the record date fixed for the determination of holders of Common Stock
entitled to receive the Distribution shall be reduced, effective as of
the close of business on such record date, to a price determined by multiplying
such Warrant Exercise Price by a fraction of which (A) the numerator shall be
the Closing Sale Price of the Common Stock on the trading day immediately
preceding such record date minus the value of the Distribution (as determined in
good faith by the Company’s Board of Directors) applicable to one share of
Common Stock, and (B) the denominator shall be the Closing Sale Price of the
Common Stock on the trading day immediately preceding such record date; and 

                                        (ii)     
either (A) the number of Warrant Shares obtainable upon exercise of this Warrant
shall be increased to a number of shares equal to the number of shares of Common
Stock obtainable immediately prior to the close of business on the record date
fixed for the determination of holders of Common Stock entitled to receive the
Distribution multiplied by the reciprocal of the fraction set forth in the
immediately preceding clause (i), or (B) in the event that the Distribution is
of common stock of a company whose common stock is traded on a national
securities exchange or a national automated quotation system, then the holder of
this Warrant shall receive an additional warrant to purchase Common Stock, the
terms of which shall be identical to those of this Warrant, except that such
warrant shall be exercisable into the amount of the assets that would have been
payable to the holder of this Warrant pursuant to the Distribution had the
holder exercised this Warrant immediately prior to such record date and with an
exercise price equal to the amount by which the exercise price of this Warrant
was 

11 




decreased with respect to the Distribution pursuant to the
terms of the immediately preceding clause (i). 

                              (f)      Certain
Events. If any event occurs of the type contemplated by the provisions of
this Section 8 but not expressly provided for by such provisions (including,
without limitation, the granting of stock appreciation rights, phantom stock
rights or other rights with equity features), then the Company’s Board of
Directors will make an appropriate adjustment in the Warrant Exercise Price and
the number of shares of Common Stock obtainable upon exercise of this Warrant so
as to protect the rights of the holders of the Warrants; provided, except as set
forth in section 8(d),that no such adjustment pursuant to this Section 8(f) will
increase the Warrant Exercise Price or decrease the number of shares of Common
Stock obtainable as otherwise determined pursuant to this Section 8. 

                              (g)      Notices.


                                        (i)      Immediately
upon any adjustment of the Warrant Exercise Price, the Company will give written
notice thereof to the holder of this Warrant, setting forth in reasonable
detail, and certifying, the calculation of such adjustment. 

                                        (ii)      The
Company will give written notice to the holder of this Warrant at least ten (10)
days prior to the date on which the Company closes its books or takes a record
(A) with respect to any dividend or distribution upon the Common Stock, (B) with
respect to any pro rata subscription offer to holders of Common Stock or (C) for
determining rights to vote with respect to any Organic Change (as defined
below), dissolution or liquidation, provided that such information shall be made
known to the public prior to or in conjunction with such notice being provided
to such holder. 

                                        (iii)      The
Company will also give written notice to the holder of this Warrant at least ten
(10) days prior to the date on which any Organic Change, dissolution or
liquidation will take place, provided that such information shall have been made
known to the public. 

                    Section
9.      Purchase Rights; Reorganization,
Reclassification, Consolidation, Merger or Sale. 

                                        (a)     
In addition to any adjustments pursuant to Section 8 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities or rights to
purchase stock, warrants, securities or other property pro rata to the record
holders of any class of Common Stock (the “Purchase Rights”), then the
holder of this Warrant will be entitled to acquire, upon the terms applicable to
such Purchase Rights, the aggregate Purchase Rights which such holder could have
acquired if such holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant immediately before the date on which a
record is taken for the grant, issuance or sale of such Purchase Rights, or, if
no such record is taken, the date as of which the record holders of Common Stock
are to be determined for the grant, issue or sale of such Purchase Rights. 

                                        (b)      Any
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company’s assets to another Person 

12 




or other transaction in each case which is effected in such a
way that holders of Common Stock are entitled to receive (either directly or
upon subsequent liquidation) stock, securities or assets with respect to or in
exchange for Common Stock is referred to herein as an “Organic Change.”
Prior to the consummation of any Organic Change following which the Company is
not a surviving entity, the Company will secure from the Person purchasing such
assets or the successor resulting from such Organic Change (in each case, the
“Acquiring Entity”) a written agreement (in form and substance
satisfactory to the holders of Warrants representing at least two-thirds of the
Warrant Shares issuable upon exercise of the Warrants then outstanding) to
deliver to each holder of Warrants in exchange for such Warrants, a security of
the Acquiring Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant and satisfactory to the holders of the
Warrants (including an adjusted warrant exercise price equal to the value for
the Common Stock reflected by the terms of such consolidation, merger or sale,
and exercisable for a corresponding number of shares of Common Stock acquirable
and receivable upon exercise of the Warrants without regard to any limitations
on exercise, if the value so reflected is less than any Applicable Warrant
Exercise Price immediately prior to such consolidation, merger or sale). Prior
to the consummation of any other Organic Change, the Company shall make
appropriate provision (in form and substance satisfactory to the holders of
Warrants representing a majority of the Warrant Shares issuable upon
exercise of the Warrants then outstanding) to insure that each of the holders of
the Warrants will thereafter have the right to acquire and receive in lieu of or
in addition to (as the case may be) the Warrant Shares immediately theretofore
issuable and receivable upon the exercise of such holder’s Warrants (without
regard to any limitations on exercise), such shares of stock, securities or
assets that would have been issued or payable in such Organic Change with
respect to or in exchange for the number of Warrant Shares which would have been
issuable and receivable upon the exercise of such holder’s Warrant as of the
date of such Organic Change (without taking into account any limitations or
restrictions on the exercisability of this Warrant). 

                    Section
10.      Lost, Stolen, Mutilated or Destroyed
Warrant. If this Warrant is lost, stolen, mutilated or destroyed, the
Company shall promptly, on receipt of an indemnification undertaking (or, in the
case of a mutilated Warrant, the Warrant), issue a new Warrant of like
denomination and tenor as this Warrant so lost, stolen, mutilated or destroyed.


                    Section
11.      Notice. Any notices, consents, waivers
or other communications required or permitted to be given under the terms of
this Warrant must be in writing and will be deemed to have been delivered: (i)
upon receipt, when delivered personally; (ii) upon receipt, when sent by
facsimile (provided confirmation of receipt is received by the sending party
transmission is mechanically or electronically generated and kept on file by the
sending party); or (iii) one Business Day after deposit with a nationally
recognized overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses and facsimile numbers for such
communications shall be: 

13 





	If to Trafalgar: 	Trafalgar Capital Specialized
      Investment Fund 
	  	8-10 Rue Mathias Hardt 
	  	BP 3023 
	  	L-1030 Luxembourg 
	  	Attention:        Andrew
      Garai, Chairman of the Board of 
	  	                          
      Trafalgar Capital Sarl, General Partner 
	  	Facsimile:         
      011-44-207-405-0161 and 
	  	                           
      001-786-323-1651 
	  	 
	  	 
	With Copy to: 	James G. Dodrill II, P.A. 
	  	5800 Hamilton Way 
	  	Boca Raton, FL 33496 
	  	Attention:         James
      Dodrill, Esq. 
	  	Telephone:        (561)
      862-0529 
	  	Facsimile:         
       (561) 892-7787 
	  	 
	If to the Company, to: 	Fox Petroleum, Inc. 
	  	64 Knightsbridge 
	  	London, SW1X7JF 
	  	Attention: Mr. Richard Joseph
      Moore, CEO and Director 
	  	Telephone: 011-44-207-590-9630
  
	  	Facsimile: 011-44-207-590-9601
  
	  	 
	With a copy to: 	As above 
	  	 
	  	 
	  	Attention: Alex Craven - Director
    
	  	Telephone: as above 
	  	Facsimile: as above



If to a holder of this Warrant, to it at the address and
facsimile number set forth on Exhibit C hereto, with copies to such
holder’s representatives as set forth on Exhibit C, or at such other
address and facsimile as shall be delivered to the Company upon the issuance or
transfer of this Warrant. Each party shall provide five days’ prior written
notice to the other party of any change in address or facsimile number. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
facsimile, waiver or other communication, or (B) provided by a nationally
recognized overnight delivery service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively. 

                    Section
12.      Date. The date of this Warrant is
set forth on page 1 hereof. This Warrant, in all events, shall be wholly void
and of no effect after the close of business on the Expiration Date, except that
notwithstanding any other provisions hereof, the provisions of Section 8(b)
shall continue in full force and effect after such date as to any Warrant Shares
or other securities issued upon the exercise of this Warrant. 

14 




                    Section
13.      Amendment and Waiver. Except as
otherwise provided herein, the provisions of the Warrants may be amended and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, only if the Company has obtained the written
consent of the holders of Warrants representing at least two-thirds of the
Warrant Shares issuable upon exercise of the Warrants then outstanding; provided
that, except for Section 8(d), no such action may increase the Warrant Exercise
Price or decrease the number of shares or class of stock obtainable upon
exercise of any Warrant without the written consent of the holder of such
Warrant. 

                    Section
14.      Descriptive Headings; Governing Law.
The descriptive headings of the several sections and paragraphs of this Warrant
are inserted for convenience only and do not constitute a part of this Warrant.
The corporate laws of the State of Florida shall govern all issues concerning
the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity, enforcement and interpretation of this
Agreement shall be governed by the internal laws of the State of Florida without
giving effect to any choice of law or conflict of law provision or rule (whether
of the State of Florida or any other jurisdictions) that would cause the
application of the laws of any jurisdictions other than the State of Florida
Each party hereby irrevocably submits to the exclusive jurisdiction of the state
courts sitting in Broward County, Florida and the United States District Court
for the Southern District of Florida for the adjudication of any dispute
hereunder or in connection herewith or therewith, or with any transaction
contemplated hereby or discussed herein, and hereby irrevocably waives, and
agrees not to assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such suit, action
or proceeding is brought in an inconvenient forum or that the venue of such
suit, action or proceeding is improper. Each party hereby irrevocably waives
personal service of process and consents to process being served in any such
suit, action or proceeding by mailing a copy thereof to such party at the
address for such notices to it under this Agreement and agrees that such service
shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve
process in any manner permitted by law.

                    Section
15.      Waiver of Jury Trial. AS A
MATERIAL INDUCEMENT FOR EACH PARTY HERETO TO ENTER INTO THIS WARRANT, THE
PARTIES HERETO HEREBY WAIVE ANY RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING
RELATED IN ANY WAY TO THIS WARRANT AND/OR ANY AND ALL OF THE OTHER DOCUMENTS
ASSOCIATED WITH THIS TRANSACTION. 

          IN
WITNESS WHEREOF, the Company has caused this Warrant to be signed as of the
date first set forth above. 

FOX PETROLEUM, INC. 

By:     
 /s/ Richard Joseph
Moore                                    

Name: Mr. Richard Joseph Moore 
Title:   CEO and Director


15 




EXHIBIT A TO WARRANT 

EXERCISE NOTICE 

TO BE EXECUTED
BY THE REGISTERED HOLDER TO EXERCISE
THIS WARRANT 

          The
undersigned holder hereby exercises the right to purchase ______________ of the
shares of Common Stock (“Warrant Shares”) of Fox Petroleum, Inc. a
___________ corporation (the “Company”), evidenced by the attached
Warrant (the “Warrant”). Capitalized terms used herein and not otherwise
defined shall have the respective meanings set forth in the Warrant. 

          1.     
Form of Warrant Exercise Price. The Holder intends that payment of the
Warrant Exercise Price shall be made as a “Cash Exercise” with respect to
______________ Warrant Shares. 

          2.     
Payment of Warrant Exercise Price. The holder shall pay the sum of
$______________ to the Company in accordance with the terms of the Warrant.

          3.     
Delivery of Warrant Shares. The Company shall deliver to the holder                                 Warrant Shares in accordance with the terms of the Warrant.

Date: _______________ __, ______


Name of Registered Holder 

By: ___________________________________
Name:
_________________________________
Title:
__________________________________

A-1 




EXHIBIT B TO WARRANT 

FORM OF WARRANT POWER 

          FOR
VALUE RECEIVED, the undersigned does hereby assign and transfer to
________________, Federal Identification No. __________, a warrant to purchase
____________ shares of the capital stock of Fox Petroleum, Inc. a
________ corporation, represented by warrant certificate no. _____ , standing in
the name of the undersigned on the books of said corporation. The undersigned
does hereby irrevocably constitute and appoint ______________, attorney to
transfer the warrants of said corporation, with full power of substitution in
the premises. 

	Dated: 
      _______________________________________	________________________________________________
	 	  
	 	By:
      _____________________________________________
	 	Name:
      ___________________________________________
	 	Title:
      ____________________________________________


B-1