plth_ex42






Exhibit 4.2





 



PLANET 13 HOLDINGS INC.

 



- and -

 



ODYSSEY TRUST COMPANY

 



WARRANT INDENTURE

 



Providing for the Issue of



up to 3,110,750 Common Share Purchase Warrants

 

 

 

 

 

 



September 10, 2020


 

 














 






 

 



TABLE OF CONTENTS

 


	


ARTICLE 1 INTERPRETATION

	


6


	


1.1

	


Definitions

	


6


	


1.2

	


Words Importing the Singular

	


10


	


1.3

	


Interpretation not Affected by Headings

	


10


	


1.4

	


Day not a Business Day

	


11


	


1.5

	


Time of the Essence

	


11


	


1.6

	


Governing Law

	


11


	


1.7

	


Meaning of "outstanding" for Certain Purposes

	


11


	


1.8

	


Currency

	


11


	


1.9

	


Termination

	


11


	


ARTICLE 2 ISSUE OF WARRANTS

	


11


	


2.1

	


Issue of Warrants

	


11


	


2.2

	


Form and Terms of Warrants

	


12


	


2.3

	


Signing of Warrant Certificates

	


12


	


2.4

	


Authentication by the Warrant Agent

	


13


	


2.5

	


Warrantholder not a Shareholder, etc.

	


13


	


2.6

	


Issue in Substitution for Lost Warrant Certificates

	


14


	


2.7

	


Warrants to Rank Pari Passu

	


14


	


2.8

	


Registration and Transfer of Warrants

	


14


	


2.9

	


Registers Open for Inspection

	


16


	


2.10

	


Exchange of Warrants

	


16


	


2.11

	


Ownership of Warrants

	


16


	


2.12

	


Uncertificated Warrants

	


16


	


2.13

	


Adjustment of Exchange Basis

	


18


	


2.14

	


Rules Regarding Calculation of Adjustment of Exchange
Basis

	


22


	


2.15

	


Postponement of Subscription

	


24


	


2.16

	


Notice of Adjustment

	


24


	


2.17

	


No Action after Notice

	


24


	


2.18

	


Purchase of Warrants for Cancellation

	


25


	


2.19

	


Protection of Warrant Agent

	


25


	


2.20

	


U.S. Legend on Warrant Certificates and Warrant Share
certificates

	


25


	


ARTICLE 3 EXERCISE OF WARRANTS

	


27


	


3.1

	


Method of Exercise of Warrants

	


27


	


3.2

	


No Fractional Shares

	


29


	


3.3

	


Effect of Exercise of Warrants

	


29


	


3.4

	


Cancellation of Warrants

	


30


	


3.5

	


Subscription for less than Entitlement

	


30






 



 







 





 


	
 

	
 

	
 


	


3.6

	


Expiration of Warrant

	


30


	


3.7

	


Prohibition on Exercise by U.S. Persons; Exception

	


30


	


ARTICLE 4 COVENANTS FOR WARRANTHOLDERS' BENEFIT

	


31


	


4.1

	


General Covenants of the Company

	


31


	


4.2

	


Warrant Agent's Remuneration and Expenses

	


33


	


4.3

	


Performance of Covenants by Warrant Agent

	


33


	


4.4

	


Enforceability of Warrants

	


33


	


ARTICLE 5 ENFORCEMENT

	


33


	


5.1

	


Suits by Warrantholders

	


33


	


5.2

	


Limitation of Liability

	


34


	


5.3

	


Waiver of Default

	


34


	


ARTICLE 6 MEETINGS OF WARRANTHOLDERS

	


34


	


6.1

	


Right to Convene Meetings

	


34


	


6.2

	


Notice

	


35


	


6.3

	


Chairman

	


35


	


6.4

	


Quorum

	


35


	


6.5

	


Power to Adjourn

	


36


	


6.6

	


Show of Hands

	


36


	


6.7

	


Poll and Voting

	


36


	


6.8

	


Regulations

	


36


	


6.9

	


Company, Warrant Agent and Counsel may be Represented

	


36


	


6.10

	


Powers Exercisable by Extraordinary Resolution

	


37


	


6.11

	


Meaning of "Extraordinary Resolution"

	


38


	


6.12

	


Powers Cumulative

	


38


	


6.13

	


Minutes

	


38


	


6.14

	


Instruments in Writing

	


39


	


6.15

	


Binding Effect of Resolutions

	


39


	


6.16

	


Holdings by the Company or Subsidiaries of the Company
Disregarded

	


39


	


6.17

	


Common Shares or Warrants Owned by the Company or its Subsidiaries
– Certificate to
be Provided

	


39


	


ARTICLE 7 SUPPLEMENTAL INDENTURES AND SUCCESSOR
COMPANIES

	


40


	


7.1

	


Provision for Supplemental Indentures for Certain
Purposes

	


40


	


7.2

	


Successor Companies

	


41


	


ARTICLE 8 CONCERNING THE WARRANT AGENT

	


41


	


8.1

	


Indenture Legislation

	


41


	


8.2

	


Rights and Duties of Warrant Agent

	


41


	


8.3

	


Evidence, Experts and Advisers

	


42


	


8.4

	


Securities, Documents and Monies Held by Warrant Agent

	


44


	


8.5

	


Actions by Warrant Agent to Protect Interests

	


44


	


8.6

	


Warrant Agent not Required to Give Security

	


44


	
 

	
 

	
 






 



 







 





 


	


8.7

	


Protection of Warrant Agent

	


44


	


8.8

	


Replacement of Warrant Agent

	


46


	


8.9

	


Conflict of Interest

	


47


	


8.10

	


Acceptance of Duties and Obligations

	


47


	


8.11

	


Warrant Agent not to be Appointed Receiver

	


47


	


8.12

	


Authorization to Carry on Business

	


47


	


ARTICLE 9 GENERAL

	


48


	


9.1

	


Notice to the Company and the Warrant Agent

	


48


	


9.2

	


Notice to the Warrantholders

	


49


	


9.3

	


Privacy

	


49


	


9.4

	


Third Party Interests

	


50


	


9.5

	


Securities Exchange Commission Certification

	


50


	


9.6

	


Discretion of Directors

	


50


	


9.7

	


Satisfaction and Discharge of Indenture

	


51


	


9.8

	


Provisions of Indenture and Warrants for the Sole Benefit of
Parties and Warrantholders

	
 


	


9.9

	


Indenture to Prevail

	


51


	


9.10

	


Assignment

	


51


	


9.11

	


Severability

	


51


	


9.12

	


Force Majeure

	


51


	


9.13

	


Rights of Rescission and Withdrawal for Holders

	


52


	


9.14

	


Counterparts and Formal Date

	


52






 



Schedule “A” Form of Warrant Certificate

 



Schedule “B” Form of Declaration for Removal of
Legend


 




 








 






THIS WARRANT INDENTURE
dated as of September 10,
2020


 


BETWEEN:

 



PLANET 13 HOLDINGS INC.,


a
company existing under the laws of British Columbia

 


(the "Company")

 

 



AND

 

 



ODYSSEY TRUST COMPANY,


a
trust company incorporated under the laws of Alberta and authorized
to carry on business in the provinces of Alberta and British
Columbia

 


(the "Warrant
Agent")

 



RECITALS

 



WHEREAS:

 




A.

In connection with the public offering by the
Company of up to 6,221,500 Units (as defined below) pursuant to a
short form prospectus dated September 2, 2020 (the
"Offering"), the Company proposes to issue and sell to the
public up to 3,110,750 Warrants (as defined below), of which
2,705,000 Warrants will be issuable as a part of the base Offering
and up to 405,750 Warrants will be issuable upon the due exercise
of the Over-Allotment Option (as defined
below);





 




B.

Each
Warrant entitles the holder thereof to purchase, subject to
adjustment in certain events, one Warrant Share (as defined below)
at a price of $5.00 at any time prior to 5:00 p.m. (Toronto time)
on September 10, 2022;





 




C.

For
such purpose the Company deems it necessary to create and issue
Warrants and Warrant Certificates (as defined below) to be
constituted and issued in the manner hereinafter set
forth;





 




D.

The
Company is duly authorized to create and issue the Warrants to be
issued as herein provided;





 




E.

All
things necessary have been done and performed to make the Warrants,
when Authenticated (as defined below) or certified by the Warrant
Agent and issued as provided in this Indenture, legal, valid and
binding upon the Company with the benefits of and subject to the
terms of this Indenture;





 




F.

The
foregoing recitals are made as statements of fact by the Company
and not by the Warrant Agent; and





 




G.

The
Warrant Agent has agreed to enter into this Indenture and to hold
all rights, interests and benefits contained herein for and on
behalf of those persons who become holders of Warrants issued
pursuant to this Indenture from time to time;






 



 

5







 






 


NOW THEREFORE THIS INDENTURE
WITNESSES that for good and
valuable consideration mutually given and received, the receipt and
sufficiency of which are hereby acknowledged, it is hereby agreed
and declared as follows:

 



ARTICLE 1 INTERPRETATION

 



1.1            


Definitions





 


In
this Indenture, unless there is something in the subject matter or
context inconsistent therewith:

 


"Applicable
Legislation" means the
provisions of the statutes of Canada and its provinces and the
regulations under those statutes relating to warrant indentures
and/or the rights, duties or obligations of issuers and warrant
agents under warrant indentures as are from time to time in force
and applicable to this Indenture;

 


"Authenticated"
means (a) with respect to the issuance of a Warrant Certificate,
one which has been duly signed by the Company and authenticated by
manual signature of an authorized officer of the Warrant Agent, and
(b) with respect to the issuance of an Uncertificated Warrant, one
in respect of which the Warrant Agent has completed all Internal
Procedures such that the particulars of such Uncertificated Warrant
as required by Section 2.4 are entered in the register of
Warrantholders, "Authenticate", "Authenticating"
and "Authentication"
have the appropriate correlative meanings;

 


"Beneficial
Owner" means a person that has
a beneficial interest in a Warrant;

 


"Book-Entry Only
System" means the book-based
securities system administered by CDS in accordance with its
operating rules and procedures in force from time to
time;

 


"Business Day" means a day that is not a Saturday, Sunday, or a
day on which banks are closed or which is a civic or statutory
holiday in the City of Toronto, Ontario or Calgary,
Alberta;


"Capital
Reorganization" has the meaning
ascribed to that term in Section 2.13(4); "CDS" means CDS Clearing and Depository Services Inc.
and its successors in interest;

 


"CDSX" means the CDS settlement and clearing system for
equity and debt securities in Canada;

 


"Closing Date" means September 10, 2020 or such other date as
agreed to by the Company and the Underwriters;

 


"Common Share
Reorganization" has the meaning
ascribed to that term in Section 2.13(1); "Common
Shares" means the common shares
in the capital of the Company;

 


"Company" means Planet 13 Holdings Inc., a corporation
existing under the laws of British Columbia, and its lawful
successors from time to time;

 


"Company's
Auditors" means the chartered
(professional) accountant or firm of chartered


 


(professional)
accountants duly appointed as auditor or auditors of the Company
from time to time, including prior auditors of the Company, as
applicable;

 



 

6







 






 


"Confirmation" has the meaning ascribed that term in Section
3.1(4);

 


"counsel" means a barrister and solicitor or lawyer or a
firm of barristers and solicitors or lawyers, in both cases
acceptable to the Warrant Agent;

 


"CSE" means the Canadian Securities
Exchange;

 


"Current Market
Price" means, at any date, the
volume weighted average price per share at which the Common Shares
have traded:

 




(a)

on
the CSE;





 




(b)

if
the Common Shares are not listed on the CSE, on any stock exchange
upon which the Common Shares are listed, as may be selected for
this purpose by the board of directors of the Company, acting
reasonably; or





 




(c)

if
the Common Shares are not listed on any stock exchange, on any
over-the-counter market on which the Common Shares are trading, as
may be selected for this purpose by the board of directors of the
Company, acting reasonably;





 


during
the 20 consecutive trading days (on each of which at least 500
Common Share are traded in board lots) ending the second trading
day before such date; provided that the volume weighted average
price shall be determined by dividing the aggregate sale price of
all Common Shares sold in board lots on the exchange or market, as
the case may be, during the 20 consecutive trading days by the
number of Common Shares so sold on said exchange or market or, if
not traded on any recognized exchange or market, as determined by
the directors of the Company, acting reasonably;

 


"director" means a member of the board of directors of the
Company for the time being, and unless otherwise specified herein,
reference to "action by the board of
directors" means action by the
board of directors of the Company as a board or, whenever duly
empowered, action by a committee of the board;

 


"Dividend Paid in the Ordinary
Course" means dividends paid in
any financial year of the Company, whether in (i) cash, (ii) shares
of the Company, (iii) warrants or similar rights to purchase any
shares of the Company or property or other assets of the Company
provided that the value of such dividends per outstanding Common
Share does not in such financial year exceed in aggregate 5% of the
Exercise Price;

 


"Exchange
Basis" means, at any time, the
number of Warrant Shares or other classes of shares or securities
or property which a Warrantholder is entitled to receive upon the
exercise of the rights attached to the Warrants pursuant to the
terms of this Indenture, as the number may be adjusted pursuant to
Article 2 hereof, such number being equal to one Warrant Share per
Warrant as of the date hereof;

 


"Exercise
Date" with respect to any
Warrant means the date on which such Warrant is duly surrendered
for exercise in accordance with the provisions of Article 3
hereof;


 




 

7








 






 


"Exercise
Notice" has the meaning
ascribed that term in Section 3.1(4);

 


"Exercise
Price" means $5.00 for each
Warrant Share, subject to adjustment in accordance with the
provisions of Article 2 hereof;

 


“Expiry Date” means September 10,
2022;

 


"extraordinary
resolution" has the meaning
ascribed to that term in sections 6.12 and
6.15;

 


"Internal
Procedures" means in respect of
the making of any one or more entries to, changes in or deletions
of any one or more entries in the register at any time (including
without limitation, original issuance or registration of transfer
of ownership) the minimum number of the Warrant Agent's internal
procedures customary at such time for the entry, change or deletion
made to be complete under the operating procedures followed at the
time by the Warrant Agent;

 


"Offering" has the meaning ascribed thereto in Recital A of
this Indenture;

 


“Original U.S.
Purchaser” means a
Qualified Institutional Buyer who purchased Warrants as part of the
Offering;

 


"Over-Allotment
Option" means the option
granted by the Company to the Underwriters, which may be exercised
in the Underwriters' sole discretion and without obligation, to
purchase up to an additional 811,500 Units, including up to 811,500
Unit Shares and up to 405,750 Warrants, for the purpose of covering
over-allotments made in connection with the Offering and for market
stabilization purposes, and which is exercisable for any
combination of additional Units, additional Unit Shares and/or
additional Warrants, from and including thirty (30) days following
the Closing Date;

 


"Participant" means a person recognized by CDS as a
participant in the Book-Entry Only System;

 


"person" means an individual, a corporation, a limited
liability company, a partnership, a syndicate, a trustee or any
unincorporated organization and words importing persons are
intended to have a similarly extended meaning;

 


“Price” means the Exercise
Price;

 


“Qualified Institutional
Buyer” means a
“qualified institutional buyer” as such term is defined
in Rule 144A under the U.S. Securities Act;

 


"QIB Letter" means the Qualified Institutional Buyer Letter
signed by the Original U.S. Purchaser;

 


"Regulation S" means Regulation S as promulgated under the U.S.
Securities Act;


 


"Rights
Offering" has the meaning
ascribed to that term in Section 2.13(2);


 


"Rights Offering
Price" has the meaning ascribed
to that term in Section 2.14(8);

 


"Securities
Laws" means, collectively, the
applicable securities laws and regulations of each of the provinces
of Canada, except Quebec, the United States and each of the states
of the United States, together with all respective regulations made
and forms prescribed thereunder published
rules, policy statements, notices, orders and rulings of the
securities commissions or similar regulatory authorities thereto,
as applicable, including the rules and policies of the
CSE;

 



 

8







 





 



"shareholder" means an owner of record of one or more Common
Shares or shares of any other class or series of the
Company;

 


"Special
Distribution" has the meaning
ascribed to that term in Section 2.13(3);

 


"Subsidiary" means a corporation, a majority of the
outstanding voting shares of which are owned, directly or
indirectly, by the Company or by one or more subsidiaries of the
Company and, as used in this definition, "voting shares" means
shares of a class or classes ordinarily entitled to vote for the
election of the majority of the directors of a corporation
irrespective of whether or not shares of any other class or classes
shall have or might have the right to vote for directors by reason
of the happening of any contingency;

 


"successor
company" has the meaning
ascribed to that term in Section 7.2;

 


"this
Indenture",
"herein",
"hereby" and similar expressions mean or refer to this
Common Share purchase warrant indenture and any indenture, deed or
instrument supplemental or ancillary hereto; and the expressions
"Article", "section", or "paragraph" followed by a number or letter mean and refer to
the specified Article, section, or paragraph of this
Indenture;

 


"Time of
Expiry" means 5:00 p.m.
(Toronto time) on the Expiry Date;

 


"trading day" means a day on which the CSE (or such other
exchange on which the Common Shares are listed) is open for
trading, and if the Common Shares are not listed on a stock
exchange, a day on which an over-the-counter market where such
shares are traded is open for business;

 


"transaction
instruction" means a written
order signed by the holder or CDS, entitled to request that one or
more actions be taken, or such other form as may be reasonably
acceptable to the Warrant Agent, requesting one or more such
actions to be taken in respect of an Uncertificated
Warrant;

 


"Transfer
Agent" means the transfer agent
or agents for the time being for the Common
Shares;

 


"U.S. Person" means a U.S. person as that term is defined
under Regulation S;

 


"U.S. Securities
Act" means the United States
Securities Act of 1933, as amended;

 


"Uncertificated
Warrant" means any Warrant
which is issued under the Book-Entry Only System or any Warrant
which is not a certificated Warrant;

 


"Underwriters" means collectively Beacon Securities Limited and
Canaccord Genuity Corp.;

 


"Unit Share" means a Common Share comprising part of each
Unit;

 


"United
States" means the United States
as that term is defined in Regulation S;


 




 

9








 






 


"Units" means the units of the Company, each Unit being
comprised of one Unit Share and one-half
Warrant;

 


"Warrant
Agent" means Odyssey Trust
Company, a trust company incorporated under the laws of Alberta and
authorized to carry on business in the provinces of Alberta and
British Columbia or any lawful successor thereto including through
the operation of Section 8.8;

 


"Warrant
Certificates" means the
certificates representing Warrants substantially in the form
attached as Schedule "A" hereto or such other form as may be
approved by the Company and the Warrant Agent;

 


"Warrant
Shares" means the Common Shares
or, as a result of any adjustment to the subscription rights
pursuant to Article 2 hereof, other securities or property issuable
upon the exercise of the Warrants;

 


"Warrantholders"
or "holders" means the persons whose names are entered for
the time being in the register maintained pursuant to Section
2.8;

 


"Warrantholders'
Request" means an instrument,
signed in one or more counterparts by Warrantholders representing,
in the aggregate, at least 20% of the aggregate number of Warrants
then outstanding, which requests the Warrant Agent to take some
action or proceeding specified therein;

 


"Warrants" means the Common Share purchase warrants of the
Company issued and Authenticated hereunder as Uncertificated
Warrants or to be issued and countersigned in the form of Warrant
Certificates, in either case, entitling the holders thereof to
purchase Warrant Shares on the basis of one Warrant Share for each
Warrant upon payment of the Exercise Price prior to the Time of
Expiry; provided that in each case the number and/or class of
securities or property receivable on the exercise of the Warrants
may be subject to increase or decrease or change in accordance with
the terms and provisions hereof; and

 


"written direction of the
Company", "written request of the
Company", "written consent of the
Company", "Officer's
Certificate" and
"certificate
of the Company" and any other
document required to be signed by the Company, means, respectively,
a written direction, request, consent, certificate or other
document signed in the name of the Company by any officer or
director and may consist of one or more instruments so
executed.

 



1.2            


Words Importing the Singular





 


Unless
elsewhere otherwise expressly provided, or unless the context
otherwise requires, words importing the singular include the plural
and vice versa and words importing the masculine gender include the
feminine and neuter genders.

 



1.3            


Interpretation not Affected by Headings





 


The
division of this Indenture into Articles, sections, and paragraphs,
the provision of a table of contents and the insertion of headings
are for convenience of reference only and shall not affect the
construction or interpretation of this Indenture.


 




 

10








 






 



1.4            


Day not a Business Day





 


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

 



1.5            


Time of the Essence





 


Time
shall be of the essence in all respects of this Indenture and the
Warrants issued hereunder.

 



1.6            


Governing Law





 


This
Indenture and the Warrants issued hereunder shall be construed and
enforced in accordance with the laws of the Province of Ontario and
the federal laws of Canada applicable therein and shall be treated
in all respects as Ontario contracts.

 



1.7            


Meaning of "outstanding" for Certain Purposes





 


Every
Warrant Authenticated or certified by the Warrant Agent hereunder
shall be deemed to be outstanding until it shall be cancelled or
delivered to the Warrant Agent for cancellation, exercised pursuant
to Section 3.1 or until the Time of Expiry; provided that where a
new Warrant Certificate has been issued pursuant to Section 2.6 to
replace one which is lost, mutilated, stolen or destroyed, the
Warrants represented by only one of such Warrant Certificates shall
be counted for the purpose of determining the aggregate number of
Warrants outstanding.

 



1.8            


Currency





 


Unless
otherwise stated, all dollar amounts referred to in this Indenture
are in Canadian dollars.

 



1.9            


Termination





 


This
Indenture shall continue in full force and effect until the earlier
of: (a) the Time of Expiry; and (b) provided that no Warrants
remain issuable pursuant to the terms of this Indenture, the date
that no Warrants are outstanding hereunder; provided that this
Indenture shall continue in effect thereafter, if applicable, until
the Company and the Warrant Agent have fulfilled all of their
respective obligations under this Indenture.

 



ARTICLE 2 ISSUE OF WARRANTS

 



2.1            


Issue of Warrants





 


Subject
to adjustment in accordance with the provisions hereof, the Company
creates and authorizes the issuance of up to 3,110,750 Warrants
entitling the registered holders thereof to acquire an aggregate of
up to 3,110,750 Warrant Shares, all of which are hereby created and
authorized to be issued hereunder at the Exercise Price upon the
terms and conditions as set forth herein. Uncertificated Warrants
shall be Authenticated by the Warrant Agent and deposited in CDS
and Warrant Certificates evidencing the Warrants shall be executed
by the Company, certified by or on behalf of the Warrant Agent and
delivered by the Warrant
Agent in accordance with a written direction of the Company, all in
accordance with sections 2.3 and 2.4. Subject to adjustment in
accordance with the provisions of this Indenture, each of the
Warrants issued hereunder shall entitle the holder thereof to
receive from the Company, at the Exercise Price, the number of
Warrant Shares equal to the Exchange Basis in effect on the
Exercise Date.

 



 

11







 






 



2.2            


Form and Terms of Warrants





 

(1) The
Warrants may be issued in either certificated or uncertificated
form. The Warrant Certificates shall be substantially in the form
attached as Schedule "A" hereto, subject to the provisions of this
Indenture, with such additions, variations and changes as may be
required or permitted by the terms of this Indenture, and to give
effect to any Warrants not being issued as Uncertificated Warrants,
and which may from time to time be agreed upon by the Warrant Agent
and the Company, and shall have such legends, distinguishing
letters and numbers as the Company may, with the approval of the
Warrant Agent, prescribe. Except as hereinafter provided in this
Article 2, all Warrants shall, save as to denominations, be of like
tenor and effect. The Warrant Certificates may be engraved,
printed, lithographed, photocopied or be partially in one form or
another, as the Company may determine. No change in the form of the
Warrant Certificate shall be required by reason of any adjustment
made pursuant to this Article 2 in the number and/or class of
securities or type of securities or property that may be acquired
pursuant to the Warrants. All Warrants issued to CDS may be in
either a certificated or uncertificated form, such uncertificated
form being evidenced by a book position on the register of
Warrantholders to be maintained by the Warrant Agent in accordance
with Section 2.8.

 

(2) Each
Warrant authorized to be issued hereunder shall entitle the
registered holder thereof to acquire (subject to sections 2.13,
2.14 and 2.15) upon due exercise and upon the transaction
instruction or due execution of the exercise form endorsed on the
Warrant Certificate, as applicable, or other instrument of exercise
in such form as the Warrant Agent and/or the Company may from time
to time prescribe and upon payment of the Exercise Price, one
Warrant Share or such other kind and amount of shares or securities
or property, calculated pursuant to the provisions of sections 2.13
and 2.14, as the case may be, at any time after the date of
issuance of such Warrants and prior to the Time of Expiry, in
accordance with the provisions of this Indenture.

 

(3) Fractional
Warrants shall not be issued or otherwise provided for. If any
fraction of a Warrant would otherwise be issuable and result in a
fraction of a Warrant Share being issuable, any such fractional
Warrant so issued shall be rounded down to the nearest whole
Warrant without compensation therefor.

 



2.3            


Signing of Warrant Certificates





 


Warrant
Certificates shall be signed by any one of the directors or
officers of the Company and may, but need not be under the
corporate seal of the Company or a reproduction thereof. The
signature of any such director or officer may be mechanically
reproduced in facsimile or other electronic format and Warrant
Certificates bearing such facsimile or other electronic format
signatures shall be binding upon the Company as if they had been
manually signed by such director or officer. Notwithstanding that
the person whose manual or electronic signature appears on any
Warrant Certificate as a director or officer may no longer hold
office at the date of issue of the Warrant Certificate or at the
date of certification or delivery thereof, any Warrant Certificate
Authenticated or signed as aforesaid shall, subject to Section 2.4,
be valid
and binding upon the Company and the registered holder thereof will
be entitled to the benefits of this Indenture.

 




 

12








 






 



2.4            


Authentication by the Warrant Agent





 

(1) No
Warrant shall be issued or, if issued, shall be valid for any
purpose or entitle the registered holder to the benefit hereof or
thereof until it has been Authenticated by or on behalf of the
Warrant Agent, as applicable, and such Authentication by the
Warrant Agent shall be conclusive evidence as against the Company
that the Warrant so Authenticated has been duly issued hereunder
and the holder is entitled to the benefits hereof.

 

(2) The
Warrant Agent shall Authenticate Uncertificated Warrants (whether
upon original issuance, exchange, registration of transfer, partial
payment, or otherwise) by completing its Internal Procedures and
the Company shall, and hereby acknowledges that it shall, thereupon
be deemed to have duly and validly issued such Uncertificated
Warrants under this Indenture. Such Authentication shall be
conclusive evidence that such Uncertificated Warrant has been duly
issued hereunder and that the holder or holders are entitled to the
benefits of this Indenture. The register shall be final and
conclusive evidence as to all matters relating to Uncertificated
Warrants with respect to which this Indenture requires the Warrant
Agent to maintain records or accounts. In case of differences
between the register at any time and any other time, the register
at the later time shall be controlling, absent manifest error and
such Uncertificated Warrants are binding on the
Company.

 

(3) Any
Warrant Certificate validly issued in accordance with the terms of
this Indenture in effect at the time of issue shall, subject to the
terms of this Indenture and applicable law, validly entitle the
holder to acquire Warrant Shares, notwithstanding that the form of
such Warrant Certificate may not be in the form currently required
by this Indenture.

 

(4) No
Warrant Certificate shall be considered issued or shall be
obligatory or shall entitle the holder thereof to the benefits of
this Indenture, until it has been Authenticated by or on behalf of
the Warrant Agent substantially in the form of the Warrant
Certificate set out in Schedule "A" hereto. Such Authentication on
any such Warrant Certificate shall be conclusive evidence that such
Warrant Certificate is duly Authenticated and is valid and a
binding obligation of the Company and that the holder is entitled
to the benefits of this Indenture.

 

(5) The
Authentication or certification of the Warrant Agent on the
Warrants issued hereunder, including by way of entry on the
register, shall not be construed as a representation or warranty by
the Warrant Agent as to the validity of this Indenture or the
Warrants (except the due Authentication and certification thereof)
or as to the performance by the Company of its obligations under
this Indenture and the Warrant Agent shall in no respect be liable
or answerable for the use made of the Warrants or any of them or of
the consideration therefor except as otherwise specified
herein.

 



2.5            


Warrantholder not a Shareholder, etc.





 


Nothing
in this Indenture or the holding of a Warrant shall be construed as
conferring upon a Warrantholder any right or interest whatsoever as
a shareholder, including but not limited to the right to vote at,
to receive notice of, or to attend meetings of shareholders or any
other proceedings of the Company, nor entitle the holder to any
right or interest in respect thereof except as herein and in the
Warrants expressly provided.


 




 

13








 






 



2.6            


Issue in Substitution for Lost Warrant Certificates





 

(1) If
any Warrant Certificates issued and certified under this Indenture
shall become mutilated or be lost, destroyed or stolen, the
Company, subject to applicable law, and Section 2.6(2), shall issue
and thereupon the Warrant Agent shall certify and deliver a new
Warrant Certificate of like denomination, date and tenor as the one
mutilated, lost, destroyed or stolen in exchange for, in place of
and upon cancellation of such mutilated Warrant Certificate, or in
lieu of and in substitution for such lost, destroyed or stolen
Warrant Certificate, and the substituted Warrant Certificate shall
be substantially in the form set out in Schedule "A" hereto and
Warrants evidenced by it will entitle the holder thereof to the
benefits hereof and shall rank equally in accordance with its terms
with all other Warrant Certificates issued or to be issued
hereunder.

 

(2) The
applicant for the issue of a new Warrant Certificate pursuant to
this Section shall bear the reasonable cost of the issue thereof
and in the case of mutilation shall, as a condition precedent to
the issue thereof, deliver to the Warrant Agent the mutilated
Warrant Certificate, and in the case of loss, destruction or theft
shall, as a condition precedent to the issue thereof, furnish to
the Company and to the Warrant Agent such evidence of ownership and
of the loss, destruction or theft of the Warrant Certificate so
lost, destroyed or stolen as shall be satisfactory to the Company
and to the Warrant Agent in their sole discretion, acting
reasonably, and such applicant may be required to furnish an
indemnity and surety bond in amount and form satisfactory to the
Company and the Warrant Agent in their sole discretion, acting
reasonably, and shall pay the reasonable charges of the Company and
the Warrant Agent in connection therewith.

 



2.7            


Warrants to Rank Pari Passu





 


All Warrants shall rank pari passu with all other Warrants, whatever may be the
actual date of issue of the Warrants.

 



2.8            


Registration and Transfer of Warrants





 


(1)           The
Warrant Agent will create and keep at the principal stock transfer
offices of the Warrant Agent in the City of Calgary,
Alberta:

 




(a)

a
register of holders in which shall be entered in alphabetical order
the names and addresses of the holders of Warrants and particulars
of the Warrants held by them and the Warrant Agent shall be
entitled to rely on such register in connection with the exchange,
transfer, exercise or deemed exercise of any Warrant(s) pursuant to
the terms of this Indenture or the terms thereof; and





 




(b)

a
register of transfers in which all transfers of Warrants and the
date and other particulars of each such transfer shall be
entered.





 


(2)           No
transfer of any Warrant will be valid unless entered on the
register of transfers referred to in Section 2.8(1), upon surrender
to the Warrant Agent of the Warrant Certificate evidencing such
Warrant, and a duly completed and executed transfer form endorsed
on the Warrant Certificate or in the case of Uncertificated
Warrants a duly executed transaction instruction from the holder
(or such other instructions, in form satisfactory to
the Warrant
Agent) executed by the registered holder or his executors,
administrators or other legal representatives or his attorney duly
appointed by an instrument in writing in form and execution
satisfactory to the Warrant Agent, if applicable, and, upon
compliance with such requirements and such other reasonable
requirements as the Warrant Agent may prescribe and all applicable
securities requirements of regulatory authorities, such transfer
will be recorded on the register of transfers by the Warrant Agent.
Upon compliance with such requirements, the Warrant Agent shall
issue to the transferee a Warrant Certificate, or in the case of an
Uncertificated Warrant, the Warrant Agent shall Authenticate and
deliver a Warrant Certificate upon request that part of the
Uncertificated Warrant be certificated. Transfers within the
systems of CDS are not the responsibility of the Warrant Agent and
will not be noted on the register maintained by the Warrant
Agent.


 




 

14








 






 

(3) The
transferee of any Warrant will, after surrender to the Warrant
Agent of the Warrant as required by Section 2.8(2) and upon
compliance with all other conditions in respect thereof required by
this Indenture or by law, be entitled to be entered on the register
of holders referred to in Section 2.8(1) as the owner of such
Warrant free from all equities or rights of setoff or counterclaim
between the Company and the transferor or any previous holder of
such Warrant, except in respect of equities of which the Company is
required to take notice by statute or by order of a court of
competent jurisdiction.

 

(4) The
Company will be entitled, and may direct the Warrant Agent, to
refuse to recognize any transfer, or enter the name of any
transferee, of any Warrant on the registers referred to in Section
2.8(1), if such transfer would constitute a violation of the
Securities Laws of any applicable jurisdiction or the rules,
regulations or policies of any regulatory authority having
jurisdiction. The Warrant Agent is entitled to assume compliance
with all applicable Securities Laws unless otherwise notified in
writing by the Company. No duty shall rest with the Warrant Agent
to determine compliance of the transferee or transferor of any
Warrant with applicable Securities Laws.

 

(5) Any
Warrant issued to a transferee upon transfers contemplated by this
section 2.8 shall bear the appropriate legend as set forth in
Section 2.20(2), if applicable.

 

(6) If
a Warrant tendered for transfer bears the legend set forth in
Section 2.20(2), the Warrant Agent shall not register such transfer
unless the transferor has provided the Warrant Agent with the
Warrant and complies with the requirements of the said Section
2.20(2).

 

(7) Warrants,
in certificated form, bearing the legend set forth in Section
2.20(2) shall not be offered, sold, pledged or otherwise
transferred, directly or indirectly, except (A) to the Company; (B)
outside the United States in compliance with Rule 904 of Regulation
S, if available, and in compliance with applicable local laws and
regulations; (C) pursuant to an exemption from registration under
the U.S. Securities Act provided by (i) Rule 144 or (ii) Rule 144A
thereunder, if available, and in compliance with applicable U.S.
state securities laws; (D) in compliance with another exemption
from registration under the U.S. Securities Act and applicable
state securities laws; or (E) under an effective registration
statement under the U.S. Securities Act, provided that in the case
of transfers pursuant to (C)(i) or (D) above, a legal opinion or
other evidence, reasonably satisfactory to the Company, must first
be provided to the Company and the Warrant Agent to the effect that
such transfer is exempt from registration under the U.S. Securities
Act and applicable state securities laws.

 

(8) The
Warrant Agent shall give notice to the Company of the transfer made
by a



 

15







 






 


Warrantholder
pursuant to Section 2.8(7) and the Company shall provide written
authorization to proceed with the transfer before such transfer is
made effective by the issuance of the Warrant.

 



2.9            


Registers Open for Inspection





 


The
registers referred to in Section 2.8(1) shall be open at all
reasonable times during business hours on a Business Day for
inspection by the Company or any Warrantholder. The Warrant Agent
shall, from time to time when requested to do so in writing by the
Company, furnish the Company with a list of the names and addresses
of holders of Warrants entered in the register of holders kept by
the Warrant Agent and showing the number of Warrants held by each
such holder.

 


2.10 Exchange of
Warrants

 

(1) Warrants
may, upon compliance with the reasonable requirements of the
Warrant Agent, be exchanged for Warrants in any other authorized
denomination representing in the aggregate an equal number of
Warrants as the number of Warrants represented by the Warrants
being exchanged. The Company shall sign and the Warrant Agent shall
Authenticate or certify, in accordance with sections 2.3 and 2.4,
all Warrants necessary to carry out the exchanges contemplated
herein.

 

(2) Warrants
may be exchanged only at the principal stock transfer offices of
the Warrant Agent in the City of Calgary, Alberta or at any other
place that is designated by the Company with the approval of the
Warrant Agent. Any Warrants tendered for exchange shall be
surrendered to the Warrant Agent and cancelled.

 

(3) Except
as otherwise herein provided, the Warrant Agent may charge
Warrantholders requesting an exchange a reasonable sum for each
Warrant Certificate issued; and payment of such charges and
reimbursement of the Warrant Agent or the Company for any and all
taxes or governmental or other charges required to be paid shall be
made by the party requesting such exchange as a condition precedent
to such exchange.

 


2.11 Ownership of
Warrants

 


The
Company and the Warrant Agent and their respective agents may deem
and treat the registered holder of any Warrant as the absolute
owner of the Warrant represented thereby for all purposes and the
Company and the Warrant Agent and their respective agents shall not
be affected by any notice or knowledge to the contrary except as
required by statute or order of a court of competent jurisdiction.
The holder of any Warrant shall be entitled to the rights evidenced
by that Warrant free from all equities or rights of set-off or
counterclaim between the Company and the original or any
intermediate holder thereof, except in respect of equities of which
the Company is required to take notice by statute or by order of a
court of competent jurisdiction and all persons may act accordingly
and the receipt by any holder of the Warrant Shares or monies
obtainable pursuant to the exercise of the Warrant shall be a good
discharge to the Company and the Warrant Agent for the same and
neither the Company nor the Warrant Agent shall be bound to inquire
into the title of any holder.

 



2.12             


Uncertificated Warrants





 



(1)            

Registration
and re-registration of beneficial interests in and transfers
of






 



 

16







 





 


Warrants
held by CDS shall be made only through the Book-Entry Only System
and no Warrant Certificates shall be issued in respect of such
Warrants except where physical certificates evidencing ownership in
such securities are required or as set out herein or as may be
requested by CDS, as determined by the Company, from time to time.
Except as provided in this Section 2.12, owners of beneficial
interests in any Uncertificated Warrants shall not be entitled to
have Warrants registered in their names and shall not receive or be
entitled to receive Warrants in definitive form or to have their
names appear in the register referred to in Section 2.8 herein.
Notwithstanding any terms set out herein, Warrants subject to the
restrictions and any legend set forth in Section 2.20 herein and
held in the name of CDS may only be held in the form of
Uncertificated Warrants with the prior consent of the Company and
CDS.

 


(2)          
If any Warrant is issued in uncertificated form and any of the
following events

 


occurs:

 




(a)

CDS
or the Company has notified the Warrant Agent that (A) CDS is
unwilling or unable to continue as depository or (B) CDS ceases to
be a clearing agency in good standing under applicable laws and, in
either case, the Company is unable to locate a qualified successor
depository within ninety (90) days of delivery of such
notice;





 




(b)

the
Company has determined, in its sole discretion, acting reasonably,
to terminate the Book-Entry Only System in respect of such
Uncertificated Warrants and has communicated such determination to
the Warrant Agent in writing;





 




(c)

the
Company or CDS is required by applicable law to take the action
contemplated in this section;





 




(d)

there
is an exercise of Warrants pursuant to 3.1(4) and the Warrantholder
is unable to make the representations in 3.1(4) (a), (b), (c) and
(d) thereto; or





 




(e)

the
Book-Entry Only System administered by CDS ceases to
exist,





 


then
one or more definitive fully registered Warrant Certificates shall
be executed by the Company and certified and delivered by the
Warrant Agent to CDS in exchange for the Uncertificated Warrants
held by CDS. The Company shall provide an Officer's Certificate
giving notice to the Warrant Agent of the occurrence of any event
outlined in this Section 2.12(2).

 


Fully
registered Warrant Certificates issued and exchanged pursuant to
this section shall be registered in such names and in such
denominations as CDS shall instruct the Warrant Agent, provided
that the aggregate number of Warrants represented by such Warrant
Certificates shall be equal to the aggregate number of
Uncertificated Warrants so exchanged. Upon exchange of
Uncertificated Warrants for one or more Warrant Certificates in
definitive form, such Uncertificated Warrants shall be cancelled by
the Warrant Agent.

 


(3)         
Subject to the provisions of this Section 2.12, any exchange of
Warrants for Warrants which are not Uncertificated Warrants may be
made in whole or in part in accordance with the provisions of
Section 2.10, mutatis
mutandis. All such Warrants
issued in exchange for Uncertificated Warrants or any portion
thereof shall be registered in such names as
CDS

 




 

17








 






 


for
such Uncertificated Warrants shall direct and shall be entitled to
the same benefits and subject to the same terms and conditions
(except insofar as they relate specifically to Uncertificated
Warrants) as the Uncertificated Warrants or portion thereof
surrendered upon such exchange.

 


(4)           Every
Warrant Authenticated upon registration of transfer of
Uncertificated Warrants, or in exchange for or in lieu of
Uncertificated Warrants or any portion thereof, whether pursuant to
this Section 2.12, or otherwise, shall be Authenticated in the form
of, and shall be, an Uncertificated Warrant, unless such Warrant is
registered in the name of a person other than CDS for such
Uncertificated Warrant or a nominee thereof.

 


(5)           Notwithstanding
anything to the contrary in this Indenture, subject to Applicable
Legislation, the Warrants to be issued to CDS or a nominee thereof
will be issued as an Uncertificated Warrant, unless otherwise
requested in writing by CDS or the Company.

 


(6)           The
rights of Beneficial Owners of Warrants who hold securities
entitlements in respect of the Warrants through the Book-Entry Only
System shall be limited to those established by applicable law and
agreements between CDS and the Participants and between such
Participants and the Beneficial Owners of Warrants who hold
securities entitlements in respect of the Warrants through the
Book-Entry Only System, and such rights must be exercised through a
Participant in accordance with the rules and procedures of
CDS.

 


(7)           Notwithstanding
anything herein to the contrary, neither the Company nor the
Warrant Agent nor any agent thereof shall have any responsibility
or liability for:

 




(a)

the
electronic records maintained by CDS relating to any ownership
interests or any other interests in the Warrants or the depository
system maintained by CDS, or payments made on account of any
ownership interest or any other interest of any person in any
Warrant represented by an electronic position in the Book-Entry
Only System (other than CDS or its nominee);





 




(b)

maintaining,
supervising or reviewing any records of CDS or any Participant
relating to any such interest; or





 




(c)

any
advice or representation made or given by CDS or those contained
herein that relate to the rules and regulations of CDS or any
action to be taken by CDS on its own direction or at the direction
of any Participant.





 


(8)           The
Company may terminate the application of this Section 2.12 in its
sole discretion, acting reasonably, in which case all Warrants
shall be evidenced by Warrant Certificates registered in the
name(s) of a person other than CDS.

 



2.13                     


Adjustment of Exchange Basis





 


Subject
to Section 2.14, the Exchange Basis shall be subject to adjustment
from time to time in the events and in the manner provided as
follows:

 


(1)           If
and whenever, at any time after the date hereof and prior to the
Time of Expiry, the Company shall:


 




 

18








 






 




(a)

issue
Common Shares or securities exchangeable for or convertible into
Common Shares to all or substantially all the holders of the Common
Shares as a stock dividend or other distribution (other than a
distribution of Common Shares upon the exercise of Warrants);
or





 




(b)

subdivide,
redivide or change its then outstanding Common Shares into a
greater number of Common Shares; or





 




(c)

reduce,
combine or consolidate its then outstanding Common Shares into a
lesser number of Common Shares,





 


(any of such events in these paragraphs (a), (b)
or (c) being called a "Common Share
Reorganization"), then the
Exchange Basis in effect on the effective date of such subdivision
or consolidation, or on the record date of such stock dividend or
other distribution, as the case may be, shall be adjusted by
multiplying the Exchange Basis in effect immediately prior to such
effective or record date by a fraction:

 




(a)

the
numerator of which shall be the total number of Common Shares
outstanding on such date immediately after giving effect to such
Common Share Reorganization (including, in the case where
securities exchangeable for or convertible into Common Shares are
distributed, the number of Common Shares that would have been
outstanding had such securities been exchanged for or converted
into Common Shares on such record date, assuming in any case where
such securities are not then convertible or exchangeable but
subsequently become so, that they were convertible or exchangeable
on the record date on the basis upon which they first become
convertible or exchangeable), and





 




(b)

the
denominator of which shall be the total number of Common Shares
outstanding on such date before giving effect to such Common Share
Reorganization.





 


The
resulting product, adjusted to the nearest 1/100th, shall
thereafter be the Exchange Basis until further adjusted as provided
in this Article 2. To the extent that any adjustment in the
Exchange Basis occurs pursuant to this Section 2.13(1) as a result
of the fixing by the Company of a record date for the distribution
of securities exchangeable for or convertible into Common Shares
and the Common Share Reorganization does not occur or any
conversion or exchange rights are not fully exercised, the Exchange
Basis shall be readjusted immediately after the expiry of any
relevant exchange or conversion right or the termination of the
Common Share Reorganization, as the case may be, to the Exchange
Basis that would then be in effect, based upon the number of Common
Shares actually issued and remaining issuable pursuant to the
Common Share Reorganization after such expiry and shall be further
readjusted in such manner upon the expiry of any further such
right.

 


(2)           If
and whenever, at any time after the date hereof and prior to the
Time of Expiry, the Company shall fix a record date for the
distribution to all or substantially all of the holders of its
outstanding Common Shares of rights, options or warrants entitling
them, for a period expiring not more than forty-five (45) days
after such record date, to subscribe for or purchase Common Shares,
or securities exchangeable for or convertible into Common Shares,
at a price per share to the holder (or at an exchange or conversion
price per share) of less than 95% of the Current Market Price on such record date (any
of such events being called a "Rights
Offering"), then the Exchange
Basis shall be adjusted effective immediately after such record
date for the Rights Offering by multiplying the Exchange Basis in
effect immediately prior to such record date by a
fraction:


 




 

19








 











(a)

the
numerator of which shall be the number of Common Shares which would
be outstanding after giving effect to the Rights Offering (assuming
the exercise of all of the rights, options or warrants under the
Rights Offering and assuming the exchange for or conversion into
Common Shares of all exchangeable or convertible securities issued
upon exercise of such rights, options or warrants, if any),
and





 




(b)

the
denominator of which shall be the aggregate of:





 




(i)

the
total number of Common Shares outstanding as of the record date for
the Rights Offering, and





 




(ii)

a
number of Common Shares determined by dividing





 




(A)

the
amount equal to the aggregate consideration payable on the exercise
of all of the rights, options and warrants under the Rights
Offering plus the aggregate consideration, if any, payable on the
exchange or conversion of the exchangeable or convertible
securities issued upon exercise of such rights, options or warrants
(assuming the exercise of all rights, options and warrants under
the Rights Offering and assuming the exchange or conversion of all
exchangeable or convertible securities issued upon exercise of such
rights, options and warrants);





 


by

 




(B)

the
Current Market Price as of the record date for the Rights
Offering.





 


The resulting product, adjusted to the nearest
1/100th,
shall thereafter be the Exchange Basis until further adjusted as
provided in this Article 2. Any Common Shares owned by or held for
the account of the Company or any of its Subsidiaries or a
partnership in which the Company is directly or indirectly a party
to will be deemed not to be outstanding for the purpose of any
computation. If, at the date of expiry of the rights, options or
warrants subject to the Rights Offering, less than all the rights,
options or warrants have been exercised, then the Exchange Basis
shall be readjusted immediately after the date of expiry to the
Exchange Basis that would have been in effect on the date of expiry
if only the rights, options or warrants issued had been those
exercised. If at the date of expiry of the rights of exchange or
conversion of any securities issued pursuant to the Rights Offering
less than all of such securities have been exchanged or converted
into Common Shares, then the Exchange Basis shall be readjusted
immediately after the date of expiry to the Exchange Basis that
would have been in effect on the date of expiry if only the
exchangeable or convertible securities issued had been those
securities actually exchanged for or converted into Common
Shares.


 



 

20







 





 


(3)           If
and whenever, at any time after the date hereof and prior to the
Time of Expiry, the Company shall fix a record date for the
issuance or distribution to all or substantially all the holders of
its outstanding Common Shares of:

 




(a)

shares
of the Company of any class other than Common Shares;
or





 




(b)

rights,
options or warrants to acquire Common Shares or securities
exchangeable for or convertible into Common Shares; or





 




(c)

evidences
of indebtedness; or





 




(d)

cash,
securities or any property or other assets,





 


and if such issuance or distribution does not
constitute a Common Share Reorganization or a Rights Offering (any
of such non-excluded events being herein called a
"Special
Distribution"), the Exchange
Basis shall be adjusted effective immediately after such record
date for the Special Distribution by multiplying the Exchange Basis
in effect immediately prior to such record date by a
fraction:

 




(a)

the
numerator of which shall be the number of Common Shares outstanding
on such record date multiplied by the Current Market Price on such
record date, and





 




(b)

the
denominator of which shall be:





 




(A)

the
number of Common Shares outstanding on such record date multiplied
by the Current Market Price on such record date, less





 




(B)

the
fair market value, as determined by action by the board of
directors acting reasonably and in good faith (whose determination,
absent manifest error, shall be conclusive), to the holders of the
Common Shares of the shares, rights, options, warrants, evidences
of indebtedness or securities, property or other assets issued or
distributed in the Special Distribution provided that no such
adjustment shall be made if the result of such adjustment would be
to decrease the Exchange Basis in effect immediately before such
record date.





 


The resulting product, adjusted to the nearest
1/100th,
shall thereafter be the Exchange Basis until further adjusted as
provided in this Article 2. Any Common Shares owned by or held for
the account of the Company or any of its Subsidiaries or a
partnership of which the Company is directly or indirectly a party,
will be deemed not to be outstanding for the purpose of any such
computation.

 


(4)           If
and whenever, at any time after the date hereof and prior to the
Time of Expiry, there shall be a reclassification of the Common
Shares at any time outstanding or change or exchange of the Common
Shares into or for other shares or into or for other securities or
property (other than a Common Share Reorganization), or a
consolidation, amalgamation, arrangement or merger of the Company
with or into any other corporation or other entity (other than a
consolidation, amalgamation, arrangement or merger which does not
result in any reclassification of the outstanding Common Shares or
a change or exchange of the Common Shares into or for other shares, securities or
property), or a transfer (other than to a Subsidiary) of the
undertaking or assets of the Company as an entirety or
substantially as an entirety to another corporation or other entity
(any of such events being herein called a "Capital
Reorganization"), any
Warrantholder who thereafter shall exercise his right to receive
Warrant Shares pursuant to Warrant(s) shall be entitled to receive,
and shall accept in lieu of the number of Warrant Shares to which
such holder was theretofore entitled upon such exercise, the
aggregate number of shares, other securities or other property
resulting from the Capital Reorganization which such holder would
have been entitled to receive as a result of such Capital
Reorganization if, on the effective date or record date thereof, as
the case may be, the Warrantholder had been the registered holder
of the number of Warrant Shares to which such holder was
theretofore entitled upon exercise. If appropriate, adjustments
shall be made as a result of any such Capital Reorganization in the
application of the provisions in this Indenture with respect to the
rights and interests thereafter of Warrantholders to the end that
the provisions in this Indenture shall thereafter correspondingly
be made applicable as nearly as may reasonably be possible in
relation to any shares, other securities or other property
thereafter deliverable upon the exercise of any Warrant. Any such
adjustment shall be made by and set forth in an indenture
supplemental hereto approved by the directors of the Company and by
the Warrant Agent and entered into pursuant to the provisions of
this Indenture and shall for all purposes be conclusively deemed to
be an appropriate adjustment.


 




 

21








 





 


(5) 
Any
adjustment to the Exchange Basis as set forth herein shall also
include a corresponding adjustment to the Price which shall be
calculated by multiplying the Price by a fraction: (a) the
numerator of which shall be the Exchange Basis prior to the
adjustment, and (b) the denominator of which shall be the Exchange
Basis after the adjustment.

 



2.14                     


Rules Regarding Calculation of Adjustment of Exchange
Basis





 



For the purposes of Section 2.13:

 

(1) The
adjustments provided for in Section 2.13 shall be cumulative and
such adjustments shall be made successively whenever an event
referred to in Section 2.13 shall occur, subject to the following
subsections of this Section 2.14.

 

(2) No
adjustment in the: (a) Exchange Basis shall be required unless such
adjustment would result in a change of at least 0.01 of a Warrant
Share based on the prevailing Exchange Basis; or (b) the Price
shall be required unless such adjustment would result in a change
of at least 1% of the Price, provided that any adjustments which,
except for the provisions of this subsection, would otherwise have
been required to be made, shall be carried forward and taken into
account in any subsequent adjustment.

 

(3) No
adjustment in the Exchange Basis or the Price shall be made in
respect of any event described in Section 2.13, other than the
events referred to in paragraphs (b) and

 


(c) of subsection (1) thereof, if Warrantholders
are entitled to participate in such event on the same terms,
mutatis
mutandis, as if Warrantholders
had exercised their Warrants prior to or on the effective date or
record date of such event, any such participation being subject to
regulatory approval.

 

(4) No
adjustment in the Exchange Basis or the Price shall be made
pursuant to Section 2.13 in respect of (i) the issue from time to
time of Warrant Shares purchasable on exercise of the Warrants and
any such issue shall be deemed not to be a Common Share
Reorganization; (ii) a Dividend Paid in the Ordinary Course; or
(iii) a distribution of Common Shares
pursuant to the exercise of stock options granted under stock
option plans of the Company.

 



 

22







 





 

(5) If
a dispute shall at any time arise with respect to adjustments
provided for in Section 2.13, such dispute shall, absent manifest
error, be conclusively determined by the Company's Auditors, or if
they are unable or unwilling to act, by such other firm of
independent chartered accountants as may be selected by the
directors and any further determination, absent manifest error,
shall be binding upon the Company, the Warrant Agent and the
Warrantholders.

 

(6) If
the Company shall set a record date to determine the holders of the
Common Shares for the purpose of entitling them to receive any
dividend or distribution or any subscription or purchase rights and
shall, thereafter and before the distribution to such shareholders
of any such dividend, distribution, or subscription or purchase
rights, legally abandon its plan to pay or deliver such dividend,
distribution, or subscription or purchase rights, then no
adjustment in the Exchange Basis shall be required by reason of the
setting of such record date.

 

(7) In
the absence of a resolution of the directors fixing a record date
for a Rights Offering or Special Distribution, the Company shall be
deemed to have fixed as the record date therefor the date on which
the Rights Offering or Special Distribution is
effected.

 

(8) If
the purchase price provided for in any Rights Offering (the
"Rights
Offering Price") is decreased,
the Exchange Basis shall forthwith be changed so as to increase the
Exchange Basis to such Exchange Basis as would have been obtained
had the adjustment to the Exchange Basis made pursuant to Section
2.13(2) upon the issuance of such Rights Offering been made upon
the basis of the Rights Offering Price as so decreased, provided
that the provisions of this subsection shall not apply to any
decrease in the Rights Offering Price resulting from provisions in
any such Rights Offering designed to prevent dilution if the event
giving rise to such decrease in the Rights Offering Price itself
requires an adjustment to the Exchange Basis pursuant to the
provisions of Section 2.13.

 

(9) As
a condition precedent to the taking of any action that would
require any adjustment in any of the subscription rights pursuant
to any of the Warrants, including the Exchange Basis, the Company
shall take any corporate action which may, in the opinion of
counsel, be necessary in order that the Company have unissued and
reserved in its authorized capital and may validly and legally
issue as fully paid and non-assessable all the shares or other
securities that all the holders of such Warrants are entitled to
receive on the exercise of all the subscription rights attaching
thereto in accordance with the provisions thereof.

 

(10) In
case the Company, after the date hereof, shall take any action
affecting any Common Shares, other than action described in Section
2.13, which in the opinion of the directors acting reasonably and
in good faith would materially affect the rights of Warrantholders,
the Exchange Basis shall be adjusted in such manner, if any, and at
such time, as the directors, in their sole discretion acting
reasonably and in good faith, may determine to be equitable in the
circumstances. Failure of the taking of any action by the directors
so as to provide for an adjustment in the Exchange Basis prior to
the effective date of any action by the Company affecting the
Common Shares shall be conclusive evidence that the directors have
determined that it is equitable to make no adjustment in the
circumstances.

 

(11) The
Warrant Agent shall be entitled to act and rely on any
adjustment calculations
by the Company or the Company's Auditors.

 



 

23







 





 



2.15                      


Postponement of Subscription





 


In
any case where the application of Section 2.13 results in an
increase in the number of Common Shares that are issuable upon
exercise of the Warrants taking effect immediately after the record
date for a specific event, if any Warrant is exercised after that
record date and prior to completion of such specific event, the
Company may postpone the issuance to the Warrantholder of the
Warrant Shares to which he is entitled by reason of such
adjustment, but such Warrant Shares shall be so issued and
delivered to that holder upon completion of that event, with the
number of such Warrant Shares calculated on the basis of the number
of Warrant Shares on the date that the Warrant was exercised,
adjusted for completion of that event and the Company shall deliver
to the person or persons in whose name or names the Warrant Shares
are to be issued an appropriate instrument evidencing the right of
such person or persons to receive such Warrant Shares and the right
to receive any dividends or other distributions which, but for the
provisions of this Section 2.15, such person or persons would have
been entitled to receive in respect of such Warrant Shares from and
after the date that the Warrant was exercised in respect
thereof.

 



2.16                      


Notice of Adjustment





 


(1)           At
least fourteen (14) days prior to the effective date or record
date, as the case may be, of any event which requires or might
require adjustment pursuant to Section 2.13, the Company
shall:

 




(a)

file
with the Warrant Agent a certificate of the Company specifying the
particulars of such event (including the record date or the
effective date for such event) and, if determinable, the required
adjustment and the computation of such adjustment and setting forth
in reasonable detail the method of calculation and the facts upon
which such calculation is based; and





 




(b)

give
notice to the Warrantholders of the particulars of such event
(including the record date or the effective date for such event)
and, if determinable, the required adjustment.





 


(2)           In
case any adjustment for which a notice in Section 2.16(1) has been
given is not then determinable, the Company shall promptly after
such adjustment is determinable:

 




(a)

file
with the Warrant Agent a computation of such adjustment;
and





 




(b)

give
notice to the Warrantholders of the adjustment.





 


(3)           The
Warrant Agent may and shall be protected in so doing, absent
manifest error, act and rely upon certificates of the Company and
other documents filed by the Company pursuant to this Section 2.16
for all purposes of the adjustment.

 



2.17                      


No Action after Notice





 


The
Company covenants with the Warrant Agent that it will not close its
books nor take any other corporate action which might deprive a
Warrantholder of the opportunity of exercising the
rights of acquisition pursuant thereto during the period of ten
(10) days after the giving of the notice set forth in paragraph (b)
of Sections 2.16(1) and (2).


 



 

24







 





 



2.18                     


Purchase of Warrants for Cancellation





 


The
Company may, at any time and from time to time, purchase Warrants
by invitation to tender, by private contract, on any stock exchange
(if then listed) or otherwise (which shall include a purchase
through an investment dealer or firm holding membership on a
Canadian stock exchange) on such terms as the Company may
determine. All Warrants purchased pursuant to the provisions of
this Section 2.18 shall be forthwith delivered to and cancelled by
the Warrant Agent and shall not be reissued. If required by the
Company, the Warrant Agent shall furnish the Company with a
certificate as to such destruction.


 



2.19 


Protection of Warrant Agent










 



The Warrant Agent shall not:

 




(a)

at
any time be under any duty or responsibility to any registered
holder of Warrants to determine whether any facts exist that may
require any adjustment contemplated by this Article 2, nor to
verify the nature and extent of any such adjustment when made or
the method employed in making the same;





 




(b)

be
accountable with respect to the validity or value or the kind or
amount of any Warrant Shares or of any other securities or property
that may at any time be issued or delivered upon the exercise of
the Warrants;





 




(c)

be
responsible for any failure of the Company to make any cash
payment, to issue, transfer or deliver Warrant Shares or
certificates upon the surrender of any Warrants for the purpose of
the exercise of such rights or to comply with any of the covenants
contained in Section 2.13; or





 




(d)

incur
any liability or responsibility whatsoever or be in any way
responsible for the consequence of any breach on the part of the
Company of any of the representations, warranties or covenants of
the Company or any acts or deeds of the agents or servants of the
Company.





 



2.20                     


U.S. Legend on Warrant Certificates and Warrant Share
certificates





 

(1) The
Warrant Agent understands and acknowledges that the Warrants and
the Warrant Shares issuable upon exercise of the Warrants have not
been, and will not be, registered under the U.S. Securities Act or
the securities laws of any state of the United States.

 

(2) Each
Warrant, in certificated form, originally issued in the United
States or, to or for the account or benefit of, a U.S. Person, and
all Warrant Shares issued upon exercise of such Warrants, and all
certificates issued in exchange or in substitution thereof or upon
transfer thereof, shall bear the following legend:

 



"THE SECURITIES REPRESENTED HEREBY [for Warrants,
add: AND
THE


 




 

25








 






 


SECURITIES ISSUABLE ON EXERCISE HEREOF] HAVE NOT
BEEN AND WILL NOT BE REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR UNDER ANY
STATE SECURITIES LAWS, AND THE SECURITIES REPRESENTED HEREBY
[for
Warrants, add: AND THE
SECURITIES ISSUABLE ON EXERCISE HEREOF] MAY BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, DIRECTLY OR INDIRECTLY, ONLY (A) TO THE
COMPANY, (B) OUTSIDE THE UNITED STATES IN ACCORDANCE WITH
REGULATION S UNDER THE U.S. SECURITIES ACT AND IN COMPLIANCE WITH
APPLICABLE LOCAL LAWS AND REGULATIONS, (C) PURSUANT TO AN EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY (i)
RULE 144 OR (ii) RULE144A THEREUNDER, IF AVAILABLE, AND IN
COMPLIANCE WITH APPLICABLE U.S. STATE SECURITIES LAWS, (D) IN
COMPLIANCE WITH ANOTHER EXEMPTION FROM REGISTRATION UNDER THE U.S.
SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (E) UNDER
AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT,
PROVIDED THAT IN THE CASE OF TRANSFERS PURSUANT TO (C)(i) OR (D)
ABOVE, A LEGAL OPINION OR OTHER EVIDENCE, REASONABLY SATISFACTORY
TO THE COMPANY, MUST FIRST BE PROVIDED TO THE COMPANY AND THE
COMPANY'S TRANSFER AGENT TO THE EFFECT THAT SUCH TRANSFER IS EXEMPT
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE "GOOD DELIVERY" IN SETTLEMENT OF TRANSACTIONS ON STOCK
EXCHANGES IN CANADA.”

 


[for Warrants,
include: "THIS WARRANT MAY NOT
BE EXERCISED IN THE UNITED STATES OR BY OR ON BEHALF OF, OR FOR THE
ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED STATES OR A U.S.
PERSON UNLESS THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON
EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. "UNITED
STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE
U.S. SECURITIES ACT."]

 


provided that, if the Warrants or Warrant Shares issuable
upon exercise of the Warrants are being sold in accordance with
Rule 904 of Regulation S, the legend may be removed by providing to
the Warrant Agent or the Transfer Agent, as the case may be, (i) a
declaration in the form attached hereto as Schedule "B" (or as the
Company may prescribe from time to time in order to address changes
in applicable laws) and (ii) if required by the Transfer Agent, an
opinion of counsel, of recognized standing reasonably satisfactory
to the Company, or other evidence reasonably satisfactory to the
Company, that the proposed transfer may be effected without
registration under the U.S. Securities Act.

 


provided
further, that if the Warrants
or Warrant Shares are being sold pursuant to Rule 144 under the
U.S. Securities Act, if available, the legend may be removed by
delivering to the Company and the Warrant Agent or the Transfer
Agent, as the case may be, an opinion of counsel of recognized
standing in form and substance reasonably satisfactory to the
Company, to the effect that the legend is no longer required under
applicable requirements of the U.S. Securities
Act.


 




 

26








 






 


(3)           If
a Warrant or Warrant Share issued with respect to an exercise of
Warrants is tendered for transfer and bears the legend set forth in
Section 2.20(2) herein and the holder thereof has not obtained the
prior written consent of the Company, the Warrant Agent or the
Transfer Agent, as the case may be, shall not register such
transfer unless the holder complies with the requirements of the
said Section 2.20(2) hereof.

 



ARTICLE 3 EXERCISE OF WARRANTS

 



3.1            


Method of Exercise of Warrants





 

(1) The
registered holder of any Warrant may exercise the rights thereby
conferred on him to acquire all or any part of the Warrant Shares
to which such Warrant entitles the holder, by surrendering the
Warrant Certificate representing such Warrants to the Warrant Agent
at any time prior to the Time of Expiry at its principal stock
transfer offices in the City of Calgary, Alberta (or at such
additional place or places as may be decided by the Company from
time to time with the approval of the Warrant Agent), with a duly
completed and executed exercise form of the registered holder or
his executors, administrators or other legal representative or his
attorney duly appointed by an instrument in writing in the form and
manner satisfactory to the Warrant Agent, substantially in the form
endorsed on the Warrant Certificate specifying the number of
Warrant Shares subscribed for together with a certified cheque,
bank draft or money order in lawful money of Canada, payable to or
to the order of the Company in an amount equal to the Exercise
Price multiplied by the number of Warrant Shares subscribed for. A
Warrant Certificate with the duly completed and executed exercise
form and payment of the Exercise Price shall be deemed to be
surrendered only upon personal delivery thereof to or, if sent by
mail or other means of transmission, upon actual receipt thereof by
the Warrant Agent.

 

(2) Any
exercise form referred to in Section 3.1(1) shall be signed by the
Warrantholder, or his executors, or administrators or other legal
representative or his attorney duly appointed by an instrument in
writing in the form and manner satisfactory to the Warrant Agent,
but such exercise form need not be executed by CDS. Such exercise
form shall specify the person(s) in whose name such Warrant Shares
are to be issued, the address(es) of such person(s) and the number
of Warrant Shares to be issued to each person, if more than one is
so specified. If any of the Warrant Shares subscribed for are to be
issued to person(s) other than the Warrantholder, the Warrantholder
shall also complete the transfer form, substantially in the form
endorsed on the Warrant Certificate. The signatures set out in the
exercise form referred to in Section 3.1(1) and the signatures set
out in the transfer form shall be guaranteed by a Canadian Schedule
1 chartered bank or a medallion signature guarantee from a member
of a recognized Signature Medallion Guarantee Program and the
Warrantholder shall pay to the Company or the Warrant Agent all
applicable transfer or similar taxes and the Company shall not be
required to issue or deliver certificates evidencing Warrant Shares
unless or until such Warrantholder shall have paid to the Company
or the Warrant Agent on behalf of the Company the amount of such
tax or shall have established to the satisfaction of the Company
that such tax has been paid or that no tax is due.

 

(3) If,
at the time of exercise of the Warrants, in accordance with the
provisions of Section 3.1(1), there are any trading restrictions on
the Warrant Shares pursuant to applicable Securities Laws or stock
exchange requirements, the Company shall, on the advice of
counsel, endorse
any certificates representing the Warrant Shares to such effect.
The Warrant Agent is entitled to assume compliance with all
applicable Securities Laws unless otherwise notified in writing by
the Company.


 




 

27








 






 

(4) A
Beneficial Owner who desires to exercise his, her or its
Uncertificated Warrants, must do so by causing a Participant to
deliver to CDS (at its office in the City of Toronto, Ontario), on
behalf of the Beneficial Owner at any time prior to the Time of
Expiry, a written notice of the Beneficial Owner's intention to
exercise Warrants (the "Exercise
Notice"); provided, that a
Beneficial Owner holding Uncertificated Warrants that is in the
United States or that is a U.S. Person will first request the
withdrawal of the Uncertificated Warrant(s) from the Book-Entry
Only System and request certificated Warrant(s) in exchange for
such Uncertificated Warrant(s). Forthwith upon receipt by CDS of
such notice, as well as payment for the Exercise Price, CDS shall
deliver to the Warrant Agent confirmation of its intention to
exercise Warrants (the "Confirmation") in a manner acceptable to the Warrant Agent,
including by electronic means through the Book-Entry Only System,
including CDSX. An electronic exercise of the Warrants initiated by
the Beneficial Owner through a Book-Entry Only System, including
CDSX, shall constitute a representation to both the Company and the
Warrant Agent that the Beneficial Owner at the time of exercise of
such Warrants (a) is not in the United States; (b) did not acquire
the Warrants in the United States or on behalf of, or for the
account or benefit of, a U.S. Person or a person in the United
States; (c) is not a U.S. Person and is not exercising such
Warrants on behalf of a U.S. Person or a person in the United
States; and (d) did not execute or deliver the notice of the
owner's intention to exercise such Warrants in the United States.
If the Participant is not able to make or deliver the foregoing
representation by initiating the electronic exercise of the
Warrants, then such Warrants shall be withdrawn from the Book-Entry
Only System, including CDSX, by the Participant and an individually
registered Warrant Certificate shall be issued by the Warrant Agent
to such Beneficial Owner or Participant and the exercise procedures
set forth in Section 3.1(1) shall be followed. Payment representing
the aggregate Exercise Price must be provided to the appropriate
office of the Participant in a manner acceptable to it. A notice in
form acceptable to the Participant and payment from such Beneficial
Owner should be provided through the Book-Entry Only System
sufficiently in advance so as to permit the Participant to deliver
notice and payment to CDS and for CDS in turn to deliver notice and
payment to the Warrant Agent prior to Time of Expiry. CDS will
initiate the exercise by way of the Confirmation and forward the
aggregate Exercise Price electronically to the Warrant Agent and
the Warrant Agent will execute the exercise by issuing to CDS
through the Book- Entry Only System the Warrant Shares to which the
exercising Beneficial Owner is entitled pursuant to the exercise.
Any expense associated with the preparation and delivery of
Exercise Notices will be for the account of the Beneficial Owner
exercising the Warrants.

 

(5) By
causing a Participant to deliver notice to CDS, a Warrantholder
shall be deemed to have irrevocably surrendered his, her or its
Warrants so exercised and appointed such Participant to act as his,
her or its exclusive settlement agent with respect to the exercise
and the receipt of Warrant Shares in connection with the
obligations arising from such exercise.

 

(6) Any
notice which CDS determines to be incomplete, not in proper form or
not duly executed shall for all purposes be void and of no effect
and the exercise to which it relates shall be considered for all
purposes not to have been exercised thereby. A failure by a
Participant to exercise or to give effect to the settlement thereof
in accordance with the Beneficial Owner's instructions will not
give rise to any obligations or liability on the part of the
Company or Warrant Agent to the Participant or the Beneficial
Owner.


 

(7) Any
exercise referred to in this Section 3.1 shall require that the
entire Exercise Price for the Warrant Shares subscribed for must be
paid at the time of subscription and such Exercise Price and
original Exercise Notice or exercise form executed by the
Registered Warrantholder or the Confirmation from CDS must be
received by the Warrant Agent prior to the Time of
Expiry.

 



 

28







 





 

(8) Warrants
may only be exercised pursuant to this Section 3.1 by or on behalf
of a Warrantholder, as applicable, who makes the certifications set
forth on the exercise form substantially in the form endorsed on
the Warrant Certificate.

 

(9) If
the exercise form set forth in the Warrant Certificate shall have
been amended, the Company shall cause the amended exercise form to
be forwarded to all registered Warrantholders.

 

(10) Exercise
forms, Exercise Notices and Confirmations must be delivered to the
Warrant Agent at any time during the Warrant Agent's actual
business hours on any Business Day prior to the Time of Expiry. Any
exercise form, Exercise Notice or Confirmation received by the
Warrant Agent after business hours on any Business Day other than
the Time of Expiry will be deemed to have been received by the
Warrant Agent on the next following Business Day.

 

(11) Any
Warrant with respect to which a Confirmation is not received by the
Warrant Agent before the Time of Expiry shall be deemed to have
expired and become void and all rights with respect to such
Warrants shall terminate and be cancelled.

 



3.2            


No Fractional Shares





 


Under
no circumstances shall the Company be obliged to issue any
fractional Warrant Shares or any cash or other consideration in
lieu thereof upon the exercise of one or more Warrants. To the
extent that the holder of one or more Warrants would otherwise have
been entitled to receive on the exercise or partial exercise
thereof a fraction of a Warrant Share, that holder may exercise
that right in respect of the fraction only in combination with
another Warrant or Warrants that in the aggregate entitle the
holder to purchase a whole number of Warrant Shares.

 



3.3            


Effect of Exercise of Warrants





 

(1) Upon
compliance by the Warrantholder with the provisions of Section 3.1,
the Warrant Shares subscribed for shall be deemed to have been
issued and the person to whom such Warrant Shares are to be issued
shall be deemed to have become the holder of record of such Warrant
Shares on the Exercise Date unless the transfer registers of the
Company for the Common Shares shall be closed on such date, in
which case the Warrant Shares subscribed for shall be deemed to
have been issued and such person shall be deemed to have become the
holder of record of such Warrant Shares on the date on which such
transfer registers are reopened.

 

(2) The
Warrant Agent shall as soon as practicable account to the Company
with respect to Warrants exercised, and shall as soon as
practicable forward to the Company (or into an account or accounts
of the Company with the bank or trust company designated by the
Company for that purpose), all monies received by the Warrant Agent
on the subscription of Warrant Shares through the exercise of
Warrants. All such monies and any securities or other
instruments,
from time to time received by the Warrant Agent, shall be received
in trust for the Warrantholders and the Company as their interests
may appear and shall be segregated and kept apart by the Warrant
Agent.

 




 

29








 






 


(3)           Within
five Business Days following the due exercise of a Warrant pursuant
to Section 3.1, the Company shall cause the Transfer Agent to issue
and the Warrant Agent to deliver, within such five Business Day
period, to CDS through the Book-Entry Only System the Warrant
Shares to which the exercising Warrantholder is entitled pursuant
to the exercise or mail to the person in whose name the Warrant
Shares so subscribed for are to be issued, as specified in the
exercise form completed on the Warrant Certificate, at the address
specified in such exercise form, a certificate or certificates for
the Warrant Shares to which the Warrantholder is entitled or, if so
specified in writing by the holder, cause to be delivered to such
person or persons at the office of the Warrant Agent where the
Warrant Certificate was surrendered, a certificate or certificates
for the appropriate number of Warrant Shares subscribed for, or any
other appropriate evidence of the issuance of Warrant Shares to
such person or persons in respect of Warrant Shares issued under
the Book-Entry Only System and, if applicable, shall cause the
Warrant Agent to mail a Warrant Certificate representing any
Warrants not then exercised.

 



3.4            


Cancellation of Warrants





 


All
Warrants surrendered to the Warrant Agent pursuant to sections 2.6,
2.8(2), 2.10 or 3.1 shall be cancelled by the Warrant Agent and the
Warrant Agent shall record the cancellation of such Warrants on the
register of holders maintained by the Warrant Agent pursuant to
Section 2.8(1). The Warrant Agent shall, if required by the
Company, furnish the Company with a certificate identifying the
Warrants so cancelled. All Warrants that have been duly cancelled
shall be without further force or effect whatsoever.

 



3.5            


Subscription for less than Entitlement





 


The
holder of any Warrant may subscribe for and purchase a whole number
of Warrant Shares that is less than the number that the holder is
entitled to purchase pursuant to a surrendered Warrant. In such
event, the holder thereof shall be entitled to receive a new
Warrant Certificate in respect of the balance of Warrants that were
not then exercised, such new Warrant Certificate to contain the
same legend as provided for in Section 2.20(2), if
applicable.

 



3.6            


Expiration of Warrant





 


After
the Time of Expiry, all rights under any Warrant in respect of
which the right of subscription and purchase herein and therein
provided for shall not theretofore have been exercised shall wholly
cease and terminate and such Warrant shall be void and of no
effect.

 



3.7            


Prohibition on Exercise by U.S. Persons; Exception





 


(1)           Warrants
may not be exercised within the United States or by or on behalf
of, or for the account or benefit of, any U.S. Person or any person
in the United States unless an exemption is available from the
registration requirements of the U.S. Securities Act and applicable
state securities laws. The Warrant Agent shall be entitled to rely
upon the registered address of the Warrantholder as set forth in
the Warrantholders register for the purchase of Units in
determining whether the address is in the United States or the
Warrantholder is a U.S. Person.



 




 

30








 






 



(2)            

Any
holder which exercises any Warrants shall provide to the Company
either:





 




(a)

a
written certification that such holder (a) at the time of exercise
of the Warrants is not in the United States; (b) is not a U.S.
Person and is not exercising the Warrants on behalf of a U.S.
Person or person in the United States; (c) did not execute or
deliver the exercise form for the Warrants in the United States;
and (d) has in all other aspects complied with the terms of an
"offshore transaction" as defined under Regulation S (which written
certification shall be deemed delivered by checking Box 1 in the
Exercise Form attached to the Warrant, as provided for in Schedule
“A” hereof); or





 




(b)

a
written certification that the holder (i) purchased the Warrants as
part of the Units in the Offering; (ii) is exercising the Warrants
solely for its own account or for the benefit of a U.S. Person or a
person in the United States for whose account such holder acquired
the Warrants as a part of the Units in the Offering and for whose
account such holders exercises sole investment discretion; (iii)
was and is, and any beneficial purchaser for whose account such
holder acquired the Warrant and is exercising the Warrants was and
is, a Qualified Institutional Buyer both on the date the Units were
purchased in the Offering and on the Exercise Date; and (iv) the
representations and warranties made by the holder or any beneficial
purchaser, as the case may be, to the Company in such
holder’s QIB Letter remain true and correct on the Exercise
Date (which written certification shall be deemed delivered by
checking Box 2 in the Exercise Form attached to the Warrant, as
provided for in Schedule “A” hereof); or





 




(c)

a
written opinion of counsel of recognized standing in form and
substance satisfactory to the Company or evidence satisfactory to
the Company to the effect that an exemption from the registration
requirements of the U.S. Securities Act and applicable state
securities laws is available for the issuance of the Warrant Shares
issuable on exercise of the Warrants.





 


(3)           No
Warrant Shares will be registered or delivered to an address in the
United States unless the holder of Warrants complies with the
requirements of paragraph (b) or (c) of Section
3.7(2).

 



ARTICLE 4 COVENANTS FOR WARRANTHOLDERS' BENEFIT

 



4.1            


General Covenants of the Company





 


The
Company represents, warrants and covenants with the Warrant Agent
for the benefit of the Warrant Agent and the Warrantholders
that:

 


(1)           The
Company will at all times, so long as any Warrants remain
outstanding or issuable hereunder, maintain its existence, unless
otherwise inconsistent with the fiduciary


 




 

31








 






 


duties
of the board of directors of the Company, and will keep or cause to
be kept proper books of account in accordance with applicable law
until the Time of Expiry.

 

(2) The
Company is duly authorized to create and issue the Warrants to be
issued hereunder and the Warrants, when Authenticated, will be
legal, valid, binding and enforceable obligations of the
Company.

 

(3) The
Company will reserve and keep available a sufficient number of
Warrant Shares for the purpose of enabling the Company to satisfy
its obligations to issue Common Shares upon the exercise of the
Warrants, and all Warrants Shares shall, when issued as provided
herein, be valid and enforceable against the Company.

 

(4) The
Company will cause the Warrant Shares from time to time subscribed
for pursuant to the Warrants issued by the Company hereunder, in
the manner herein provided, to be duly issued in accordance with
the Warrants and the terms hereof.

 

(5) All
Warrant Shares that shall be issued by the Company upon exercise of
the rights provided for herein shall be issued as fully paid and
non-assessable Common Shares of the Company.

 

(6) The
Company will use commercially reasonable efforts to ensure that the
Warrants, and the Common Shares outstanding on the date hereof and
issuable from time to time on the exercise of the Warrants,
continue to be or are listed and posted for trading on the CSE (or
such other Canadian stock exchange acceptable to the Company),
provided that this Section 4.1(6) shall not be construed as
limiting or restricting the Company from completing a
consolidation, amalgamation, arrangement, takeover bid, merger or
other form of business combination that would result in the
Warrants and/or the Common Shares ceasing to be listed and posted
for trading on such exchanges, so long as the holders of Common
Shares have approved the transaction in accordance with the
requirements of applicable corporate and securities laws and the
policies of such exchanges or the holders of Common Shares receive
securities of an entity which is listed on a stock exchange in
North America or cash.

 

(7) Except
to the extent that the Company participates in a takeover bid,
consolidation, merger, arrangement, amalgamation, or other form of
business combination transaction, the Company will use its
commercially reasonable efforts to maintain its status as a
"reporting issuer" (or the equivalent thereof) in each of the
provinces of Canada and other Canadian jurisdictions in which it is
currently or becomes a reporting issuer, make all requisite filings
under applicable Securities Laws including those necessary to
remain a reporting issuer not in default of the requirements of the
applicable Securities Laws of such province or jurisdiction, until
the Time of Expiry.

 

(8) The
Company will perform and carry out all of the acts or things to be
done by it as provided in this Indenture.

 

(9) The
Company will not take any action or omit to take any action which
would have the effect of preventing the Warrantholders from
receiving any of the Warrant Shares issuable upon the exercise of
the Warrants.

 

(10) The
Company will promptly advise the Warrant Agent and the
Warrantholders in writing of any breach or default under the terms
of this Indenture no later than five (5) Business Days following
the occurrence of such breach or default.


 



 

32







 





 


(11)           If,
in the opinion of counsel, any instrument is required to be filed
with, or any permission, order or ruling is required to be obtained
from any securities regulatory authority, or any other step is
required under any federal or provincial law of Canada before the
Warrant Shares may be issued and delivered to a Warrantholder, the
Company covenants that it will use its best efforts to file such
instrument, obtain such permission, order or ruling or take all
such other actions, at its expense, as is required or appropriate
in the circumstances.

 



4.2            


Warrant Agent's Remuneration and Expenses





 


The
Company covenants that it will pay to the Warrant Agent from time
to time reasonable remuneration for its services hereunder and will
pay or reimburse the Warrant Agent upon its request for all
reasonable expenses and disbursements and advances incurred or made
by the Warrant Agent in the administration or execution of the
trusts hereby created (including the reasonable compensation and
the disbursements of its counsel and all other advisers, experts,
accountants and assistants not regularly in its employ) both before
any default hereunder and thereafter until all duties of the
Warrant Agent hereunder shall be finally and fully performed. Any
amount owing hereunder and remaining unpaid after thirty (30) days
from the invoice date will bear interest at the then current rate
charged by the Warrant Agent against unpaid invoices and shall be
payable upon demand. This section shall survive the resignation or
removal of the Warrant Agent and/or the termination of this
Indenture.

 



4.3            


Performance of Covenants by Warrant Agent





 


Subject
to Section 8.7, if the Company shall fail to perform any of its
covenants contained in this Indenture and the Company has not
rectified such failure within twenty-five (25) Business Days after
either giving notice of such default pursuant to Section 4.1(10) or
receiving written notice from the Warrant Agent of such failure,
the Warrant Agent may notify the Warrantholders of such failure on
the part of the Company or may itself perform any of the said
covenants capable of being performed by it, but shall be under no
obligation to perform said covenants. All reasonable sums expended
or disbursed by the Warrant Agent in so doing shall be repayable as
provided in Section 4.2. No such performance, expenditure or
advance by the Warrant Agent shall be deemed to relieve the Company
of any default hereunder or of its continuing obligations under the
covenants herein contained.

 



4.4            


Enforceability of Warrants





 


The
Company covenants and agrees that it is duly authorized to create
and issue the Warrants to be issued hereunder and that the
Warrants, when issued and Authenticated as herein provided, will be
valid and enforceable against the Company in accordance with the
provisions hereof and that, subject to the provisions of this
Indenture, the Company will cause the Warrant Shares from time to
time acquired upon exercise of Warrants issued under this Indenture
to be duly issued and delivered in accordance with the terms of
this Indenture.

 



ARTICLE 5 ENFORCEMENT

 



5.1            


Suits by Warrantholders





 


Subject
to Section 6.10, all or any of the rights conferred upon a
Warrantholder by the terms of the Warrants held by him and/or this
Indenture may be enforced by such

 




 

33








 






 


Warrantholder
by appropriate legal proceedings but without prejudice to the right
that is hereby conferred upon the Warrant Agent to proceed in its
own name to enforce each and all of the provisions herein contained
for the benefit of the holders of the Warrants from time to time
outstanding. The Warrant Agent shall also have the power at any
time and from time to time to institute and to maintain such suits
and proceedings as it may reasonably be advised shall be necessary
or advisable to preserve and protect its interests and the
interests of the Warrantholders.

 



5.2            


Limitation of Liability





 


The
obligations hereunder (including without limitation under Section
8.7(5)) are not personally binding upon, nor shall resort hereunder
be had to, the private property of any of the past, present or
future directors or shareholders of the Company or any of the past,
present or future officers, employees or agents of the Company, but
only the property of the Company (or any successor person) shall be
bound in respect hereof.

 



5.3            


Waiver of Default





 


Upon
the happening of any default hereunder:

 




(a)

the
Warrantholders of not less than 50% plus 1 of the Warrants then
outstanding shall have power (in addition to the powers exercisable
by Extraordinary Resolution) by requisition in writing to instruct
the Warrant Agent to waive any default hereunder and the Warrant
Agent shall thereupon waive the default upon such terms and
conditions as shall be prescribed in such requisition;
or





 




(b)

the
Warrant Agent shall have power to waive any default hereunder upon
such terms and conditions as the Warrant Agent may deem advisable,
on the advice of counsel, if, in the Warrant Agent's opinion, based
on the advice of counsel, the same shall have been cured or
adequate provision made therefor,





 


provided
that no delay or omission of the Warrant Agent or of the
Warrantholders to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed
to be a waiver of any such default or acquiescence therein and
provided further that no act or omission either of the Warrant
Agent or of the Warrantholders in the premises shall extend to or
be taken in any manner whatsoever to affect any subsequent default
hereunder of the rights resulting therefrom.

 



ARTICLE 6 MEETINGS OF WARRANTHOLDERS

 



6.1            


Right to Convene Meetings





 


The
Warrant Agent may at any time and from time to time, and shall on
receipt of a written request of the Company or of a Warrantholders'
Request, convene a meeting of the Warrantholders provided that the
Warrant Agent has been provided with sufficient funds and is
indemnified to its reasonable satisfaction by the Company or by the
Warrantholders signing such Warrantholders' Request against the
costs, charges, expenses and liabilities that may be incurred in
connection with the calling and holding of such meeting. If within
fifteen (15) Business
Days after the receipt of a written request of the Company or a
Warrantholders' Request, funding and indemnity given as aforesaid
the Warrant Agent fails to give the requisite notice specified in
Section 6.2 to convene a meeting, the Company or such
Warrantholders, as the case may be, may convene such meeting. Every
such meeting shall be held in the City of Toronto, Ontario or at
such other place as may be approved or determined by the Warrant
Agent.

 



 

34







 





 



6.2            


Notice





 


At
least fourteen (14) days prior notice of any meeting of
Warrantholders shall be given to the Warrantholders at the expense
of the Company in the manner provided for in Section 9.2 and a copy
of such notice shall be delivered to the Warrant Agent unless the
meeting has been called by it, and to the Company unless the
meeting has been called by it. Such notice shall state the date,
time and place of the meeting, the general nature of the business
to be transacted and shall contain such information as is
reasonably necessary to enable the Warrantholders to make a
reasoned decision on the matter, but it shall not be necessary for
any such notice to set out the terms of any resolution to be
proposed or any of the provisions of this Article 6. The notice
convening any such meeting may be signed by an appropriate officer
of the Warrant Agent or of the Company or the person designated by
such Warrantholders, as the case may be.

 



6.3            


Chairman





 


The
Warrant Agent may nominate in writing an individual (who need not
be a Warrantholder) to be chairman of the meeting and if no
individual is so nominated, or if the individual so nominated is
not present within fifteen (15) minutes after the time fixed for
the holding of the meeting, the Warrantholders present in person or
by proxy shall appoint an individual present to be chairman of the
meeting. The chairman of the meeting need not be a
Warrantholder.

 



6.4            


Quorum





 


Subject
to the provisions of Section 6.11, at any meeting of the
Warrantholders a quorum shall consist of two Warrantholders present
in person or represented by proxy and representing at least 20% of
the aggregate number of Warrants then outstanding. If a quorum of
the Warrantholders shall not be present within one-half hour from
the time fixed for holding any meeting, the meeting, if summoned by
the Warrantholders or on a Warrantholders' Request, shall be
dissolved; but in any other case the meeting shall be adjourned to
the same day in the next week (unless such day is not a Business
Day in which case it shall be adjourned to the next following
Business Day) at the same time and place to the extent possible
and, subject to the provisions of Section 6.11, no notice of the
adjournment need be given. Any business may be brought before or
dealt with at an adjourned meeting that might have been dealt with
at the original meeting in accordance with the notice calling the
same. At the adjourned meeting the Warrantholders present in person
or represented by proxy shall form a quorum and may transact the
business for which the meeting was originally convened,
notwithstanding that they may not represent at least 20% of the
aggregate number of Warrants then unexercised and outstanding. No
business shall be transacted at any meeting, except an adjourned
meeting as described above, unless a quorum is present at the
commencement of business.


 




 

35








 






 



6.5            


Power to Adjourn





 


The
chairman of any meeting at which a quorum of the Warrantholders is
present may, with the consent of the meeting, adjourn any such
meeting, and no notice of such adjournment need be given except
such notice, if any, as the meeting may prescribe.

 



6.6            


Show of Hands





 


Every
question submitted to a meeting shall be decided in the first place
by a majority of the votes given on a show of hands except that
votes on an extraordinary resolution shall be given in the manner
hereinafter provided. At any such meeting, unless a poll is duly
demanded as herein provided, a declaration by the chairman that a
resolution has been carried or carried unanimously or by a
particular majority or lost or not carried by a particular majority
shall be conclusive evidence of the fact.

 



6.7            


Poll and Voting





 


On
every extraordinary resolution, and when demanded by the chairman
or by one or more of the Warrantholders acting in person or by
proxy on any other question submitted to a meeting and after a vote
by show of hands, a poll shall be taken in such manner as the
chairman shall direct. Questions other than those required to be
determined by extraordinary resolution shall be decided by a
majority of the votes cast on the poll. On a show of hands, every
person who is present and entitled to vote, whether as a
Warrantholder or as proxy for one or more absent Warrantholders, or
both, shall have one vote. On a poll, each Warrantholder present in
person or represented by a proxy duly appointed by instrument in
writing shall be entitled to one vote in respect of each whole
Warrant then held by her. A proxy need not be a Warrantholder. The
chairman of any meeting shall be entitled, both on a show of hands
and on a poll, to vote in respect of the Warrants, if any, held or
represented by her.

 



6.8            


Regulations





 


Subject
to the provisions of this Indenture, the Warrant Agent or the
Company with the approval of the Warrant Agent may from time to
time make and from time to time vary such regulations as it shall
consider necessary or appropriate generally for the calling of
meetings of Warrantholders and the conduct of business thereat
including setting a record date for Warrantholders entitled to
receive notice of or to vote at such meeting.

 


Any
regulations so made shall be binding and effective and the votes
given in accordance therewith shall be valid and shall be counted.
Save as such regulations may provide, the only persons who shall be
recognized at any meeting as a Warrantholder, or be entitled to
vote or be present at the meeting in respect thereof (subject to
Section 6.9), shall be Warrantholders or persons holding proxies of
Warrantholders.

 



6.9            


Company, Warrant Agent and Counsel may be Represented





 


The
Company and the Warrant Agent, by their respective directors,
officers and employees and the counsel for each of the Company, the
Warrantholders and the Warrant Agent may attend any meeting of the
Warrantholders and speak thereat but shall not be entitled to vote
unless in their capacities as Warrantholders or proxies
therefor.


 




 

36








 






 


6.10       
Powers
Exercisable by Extraordinary Resolution

 


In
addition to all other powers conferred upon them by any other
provisions of this Indenture or by law, the Warrantholders at a
meeting shall have the power, exercisable from time to time by
extraordinary resolution:

 




(a)

to
agree with the Company to any modification, alteration, compromise
or arrangement of the rights of Warrantholders and/or the Warrant
Agent in its capacity as Warrant Agent hereunder (subject to the
Warrant Agent's approval) or on behalf of the Warrantholders
against the Company, whether such rights arise under this Indenture
or the Warrants or otherwise;





 




(b)

to
amend, modify or repeal any extraordinary resolution previously
passed or sanctioned by the Warrantholders;





 




(c)

to
direct or authorize the Warrant Agent (subject to the Warrant Agent
receiving funding and indemnity) to enforce any of the covenants on
the part of the Company contained in this Indenture or the Warrants
or to enforce any of the rights of the Warrantholders in any manner
specified in such extraordinary resolution or to refrain from
enforcing any such covenant or right;





 




(d)

to
waive, authorize and direct the Warrant Agent to waive any default
on the part of the Company in complying with any provisions of this
Indenture or the Warrants either unconditionally or upon any
conditions specified in such extraordinary resolution;





 




(e)

to
restrain any Warrantholder from taking or instituting any suit,
action or proceeding against the Company for the enforcement of any
of the covenants on the part of the Company contained in this
Indenture or the Warrants or to enforce any of the rights of the
Warrantholders;





 




(f)

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





 




(g)

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





 




(h)

with
the consent of the Company, such consent not to be unreasonably
withheld, to remove the Warrant Agent or its successor in office
and to appoint a new warrant agent or warrant agents to take the
place of the Warrant Agent so removed.






 




 

37








 






 


6.11            
              
Meaning of
"Extraordinary Resolution"

 

(1) The
expression "extraordinary
resolution" when used in this
Indenture means, subject as hereinafter in this Section 6.11 and in
Section 6.14 provided, a resolution proposed at a meeting of
Warrantholders duly convened for that purpose and held in
accordance with the provisions of this Article 6 at which there are
present in person or by proxy at least two Warrantholders
representing at least 20% of the aggregate number of all the then
outstanding Warrants and passed by the affirmative votes of
Warrantholders representing not less than 662/3%
of the aggregate number of all the then outstanding Warrants
represented at the meeting and voted on the poll upon such
resolution.

 

(2) If,
at any meeting called for the purpose of passing an extraordinary
resolution, Warrantholders representing at least 20% of the
aggregate number of all the then outstanding Warrants are not
present in person or by proxy within one-half hour after the time
appointed for the meeting, then the meeting, if convened by
Warrantholders or on a Warrantholders' Request, shall be dissolved;
but in any other case it shall stand adjourned to such day, being
not less than ten (10) Business Days later, and to such place and
time as may be appointed by the chairman. Not less than three (3)
Business Days prior notice shall be given of the time and place of
such adjourned meeting in the manner provided in sections 9.1 and
9.2. Such notice shall state that at the adjourned meeting the
Warrantholders present in person or represented by proxy shall form
a quorum but it shall not be necessary to set forth the purposes
for which the meeting was originally called or any other
particulars. At the adjourned meeting the Warrantholders present in
person or represented by proxy shall form a quorum and may transact
the business for which the meeting was originally convened and a
resolution proposed at such adjourned meeting and passed by the
requisite vote as provided in Section 6.11(1) shall be an
extraordinary resolution within the meaning of this Indenture
notwithstanding that Warrantholders representing at least 20% of
all the then outstanding Warrants are not present in person or
represented by proxy at such adjourned meeting.

 

(3) Votes
on an extraordinary resolution shall always be given on a poll and
no demand for a poll on an extraordinary resolution shall be
necessary.

 


6.12 Powers
Cumulative

 


It
is hereby declared and agreed that any one or more of the powers or
any combination of the powers in this Indenture stated to be
exercisable by the Warrantholders by extraordinary resolution or
otherwise may be exercised from time to time and the exercise of
any one or more of such powers or any combination of powers from
time to time shall not be deemed to exhaust the right of the
Warrantholders to exercise such powers or combination of powers
then or thereafter from time to time.

 


6.13            
         Minutes

 


Minutes
of all resolutions and proceedings at every meeting of
Warrantholders as aforesaid shall be made and duly entered in books
to be provided for that purpose by the Warrant Agent at the expense
of the Company and any minutes as aforesaid, if signed by the
chairman of the meeting at which resolutions were passed or
proceedings had, or by the chairman of the next succeeding meeting
of the Warrantholders, shall be prima facie evidence of the matters
therein stated and, until the contrary is proved, every meeting, in
respect of the proceedings of which minutes shall have been made,
shall be deemed to have been duly convened and held, and all
resolutions passed thereat or proceedings taken, to have
been duly
passed and taken.


 




 

38








 





 



6.14                     


Instruments in Writing





 


All actions that may be taken and all powers that
may be exercised by the Warrantholders at a meeting held as
provided in this Article 6 may also be taken and exercised by
Warrantholders representing a majority, or in the case of an
extraordinary resolution at least 662/3%,
of the aggregate number of all the then outstanding Warrants by an
instrument in writing signed in one or more counterparts by such
Warrantholders in person or by attorney duly appointed in writing,
and the expression "extraordinary resolution" when used in this
Indenture shall include an instrument so
signed.

 



6.15                     


Binding Effect of Resolutions





 


Every
resolution and every extraordinary resolution passed in accordance
with the provisions of this Article 6 at a meeting of
Warrantholders shall be binding upon all the Warrantholders,
whether present at or absent from such meeting, and every
instrument in writing signed by Warrantholders in accordance with
Section 6.14 shall be binding upon all the Warrantholders, whether
signatories thereto or not, and each and every Warrantholder and
the Warrant Agent (subject to the provisions for indemnity herein
contained) shall be bound to give effect accordingly to every such
resolution and instrument in writing. In the case of an instrument
in writing, the Warrant Agent shall give notice in the manner
contemplated in sections 9.1 and 9.2 of the effect of the
instrument in writing to all Warrantholders and the Company as soon
as is reasonably practicable.

 



6.16                     


Holdings by the Company or Subsidiaries of the Company
Disregarded





 


In
determining whether Warrantholders are present at a meeting of
Warrantholders for the purpose of determining a quorum or have
concurred in any consent, waiver, extraordinary resolution,
Warrantholders' Request or other action under this Indenture,
Warrants owned legally or beneficially by the Company or its
Subsidiaries or in partnership of which the Company is directly or
indirectly a party to shall be disregarded.

 



6.17 


Common Shares or Warrants Owned by the Company or its Subsidiaries
– Certificate to be Provided





 


For
the purpose of disregarding any Warrants owned legally or
beneficially by the Company in Section 6.16, the Company shall
provide to the Warrant Agent, upon written request, a certificate
of the Company setting forth as at the date of such
certificate:

 




(a)

the
names (other than the name of the Company) of the Warrantholders
which, to the knowledge of the Company, hold Warrants that are
owned by or held for the account of the Company; and





 




(b)

the
number of Warrants owned legally or beneficially by the Company,
and the Warrant Agent, in making the computations in Section 6.16,
shall be entitled to rely on such certificate without any
additional evidence.






 




 

39








 






 



ARTICLE 7 SUPPLEMENTAL INDENTURES AND SUCCESSOR
COMPANIES

 



7.1            


Provision for Supplemental Indentures for Certain
Purposes





 


From
time to time the Company (if properly authorized by its directors)
and the Warrant Agent may, subject to the provisions hereof, and
they shall, when so directed in accordance with the provisions
hereof, execute and deliver by their proper officers, indentures or
instruments supplemental hereto, which thereafter shall form part
hereof, for any one or more or all of the following
purposes:

 




(a)

providing
for the issuance of additional Warrants hereunder including
Warrants in excess of the number set out in Section 2.1 and any
consequential amendments hereto as may be required by the Warrant
Agent, relying on the advice of counsel;





 




(b)

setting
forth adjustments in the application of Article 2;





 




(c)

adding
to the provisions hereof such additional covenants and enforcement
provisions as, in the opinion of counsel are necessary or
advisable, provided that the same are not in the opinion of the
Warrant Agent, relying on the advice of counsel, prejudicial to the
interests of the Warrantholders as a group;





 




(d)

giving
effect to any extraordinary resolution passed as provided in
Article 6;





 




(e)

making
such provisions not inconsistent with this Indenture as may be
necessary or desirable with respect to matters or questions arising
hereunder provided that such provisions are not, in the opinion of
the Warrant Agent, relying on the advice of counsel, prejudicial to
the interests of the Warrantholders as a group;





 




(f)

adding
to or amending the provisions hereof in respect of the transfer of
Warrants, making provision for the exchange of Warrants and making
any modification in the form of the Warrant Certificate that does
not affect the substance thereof;





 




(g)

amending
any of the provisions of this Indenture or relieving the Company
from any of the obligations, conditions or restrictions herein
contained, provided that no such amendment or relief shall be or
become operative or effective if, in the opinion of the Warrant
Agent, relying on the advice of counsel, such amendment or relief
impairs any of the rights of the Warrantholders as a group or of
the Warrant Agent, and provided further that the Warrant Agent may
in its sole discretion decline to enter into any supplemental
indenture that in its opinion may not afford adequate protection to
the Warrant Agent when the same shall become operative;
and





 




(h)

for
any other purpose not inconsistent with the terms of this
Indenture, including the correction or rectification of any
ambiguities, defective or






 


inconsistent
provisions, errors or omissions herein, provided that, in the
opinion of the Warrant Agent, relying on the advice of counsel, the
rights of the Warrant Agent and the Warrantholders as a group are
in no way prejudiced thereby.

 



 

40







 





 



7.2            


Successor Companies





 


In the case of the amalgamation, consolidation,
arrangement, merger or transfer of the undertaking or assets of the
Company as an entirety or substantially as an entirety to or with
another person (a "successor
company"), the successor
company resulting from the amalgamation, consolidation,
arrangement, merger or transfer (if not the Company) shall be bound
by the provisions hereof and all obligations for the due and
punctual performance and observance of each and every covenant and
obligation contained in this Indenture to be performed by the
Company and the successor company shall by supplemental indenture
satisfactory in form to the Warrant Agent and executed and
delivered to the Warrant Agent, expressly assume those
obligations.

 



ARTICLE 8 CONCERNING THE WARRANT AGENT

 



8.1            


Indenture Legislation





 

(1) If
and to the extent that any provision of this Indenture limits,
qualifies or conflicts with a mandatory requirement of Applicable
Legislation, such mandatory requirement shall prevail.

 

(2) The
Company and the Warrant Agent agree that each will at all times in
relation to this Indenture and any action to be taken hereunder
observe and comply with and be entitled to the benefit of
Applicable Legislation.

 



8.2            


Rights and Duties of Warrant Agent





 

(1) The
Warrant Agent accepts the duties and responsibilities under this
Indenture, solely as custodian, bailee and agent. No trust is
intended to be, or is or will be, created hereby and the Warrant
Agent shall owe no duties hereunder as a trustee.

 

(2) In
the exercise of the rights and duties prescribed or conferred by
the terms of this Indenture, the Warrant Agent shall act honestly
and in good faith with a view to the best interests of the
Warrantholders and shall exercise the degree of care, diligence and
skill that a reasonably prudent warrant agent would exercise in
comparable circumstances. No provision of this Indenture shall be
construed to relieve the Warrant Agent from, or require any other
person to indemnify the Warrant Agent against liability for its own
gross negligence, wilful misconduct, bad faith or
fraud.

 

(3) The
Warrant Agent shall not be bound to do or take any act, action or
proceeding for the enforcement of any of the obligations of the
Company under this Indenture unless and until it shall have
received a Warrantholders' Request specifying the act, action or
proceeding that the Warrant Agent is requested to take. The
obligation of the Warrant Agent to commence or continue any act,
action or proceeding for the purpose of enforcing any rights of the
Warrant Agent or the Warrantholders hereunder shall be conditional
upon the Warrantholders furnishing, when required by notice in
writing by the Warrant Agent, sufficient

 




 

41








 






 


funds
to commence or continue such act, action or proceeding and an
indemnity reasonably satisfactory to the Warrant Agent and its
counsel to protect and hold harmless the Warrant Agent, its
officers, directors, employees, agents, successors and assigns
against the costs, charges and expenses and liabilities to be
incurred thereby and any loss and damage it may suffer by reason
thereof. None of the provisions contained in this Indenture shall
require the Warrant Agent to expend or risk its own funds or
otherwise incur financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers unless
indemnified and funded as aforesaid.

 

(4) The
Warrant Agent may, before commencing any act, action or proceeding,
or at any time during the continuance thereof require the
Warrantholders at whose instance it is acting to deposit with the
Warrant Agent the Warrants held by them, for which Warrants the
Warrant Agent shall issue receipts.

 

(5) Every
provision of this Indenture that, by its terms, relieves the
Warrant Agent of liability or entitles it to rely upon any evidence
submitted to it is subject to the provisions of Applicable
Legislation.

 

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

 

(7) In
this Indenture, whenever confirmations or instructions are required
to be given to the Warrant Agent, in order to be valid, such
confirmations and instructions shall be in writing.

 



8.3            


Evidence, Experts and Advisers





 

(1) In
addition to the reports, certificates, opinions and other evidence
required by this Indenture, the Company shall furnish to the
Warrant Agent such additional evidence of compliance with any
provision hereof and in such form as may be prescribed by
Applicable Legislation or as the Warrant Agent may reasonably
require by written notice to the Company.

 

(2) In
the exercise of its rights and duties hereunder, the Warrant Agent
may, if it is acting in good faith, act and rely absolutely as to
the truth of the statements and the accuracy of the opinions
expressed therein, upon statutory declarations, opinions, reports,
written requests, consents, or orders of the Company, certificates
of the Company or other evidence furnished to the Warrant Agent
pursuant to any provision hereof or of Applicable Legislation or
pursuant to a request of the Warrant Agent, provided that such
evidence complies with Applicable Legislation and that the Warrant
Agent complies with Applicable Legislation and that the Warrant
Agent examines the same and determines that such evidence complies
with the applicable requirements of this Indenture. The Warrant
Agent shall be under no responsibility in respect of the validity
of this Indenture or the execution and delivery hereof
by

 




 

42








 






 


or
on behalf of the Company or in respect of the validity or the
execution of any Warrant Certificate by the Company and issued
hereunder, nor shall it be responsible for any breach by the
Company of any covenant or condition contained in this Indenture or
in any such Warrant Certificate; nor shall it by any act hereunder
be deemed to make any representation or warranty as to the
authorization or reservation of any securities to be issued upon
the right to acquire provided for in this Indenture and/or in any
Warrant or as to whether any securities will when issued be duly
authorized or be validly issued and fully paid and
non-assessable.

 

(3) Whenever
provided for in this Indenture or Applicable Legislation requires
that the Company deposit with the Warrant Agent resolutions,
certificates, reports, opinions, requests, orders or other
documents, it is intended that the truth, accuracy and good faith
on the effective date thereof and the facts and opinions stated in
all such documents so deposited shall, in each and every such case,
be conditions precedent to the right of the Company to have the
Warrant Agent take the action to be based thereon.

 

(4) Proof
of the execution of an instrument in writing, including a
Warrantholders' Request, by any Warrantholder may be made by a
certificate of a notary public or other person with similar powers
that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such
execution or in any other manner which the Warrant Agent may
consider adequate and in respect of a corporate Warrantholder,
shall include a certificate of incumbency of such Warrantholder
together with a certified resolution authorizing the person who
signs such instrument to sign such instrument.

 

(5) The
Warrant Agent may act and rely and shall be protected in acting and
relying upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, letter, or other
paper document believed by it to be genuine and to have been
signed, sent or presented by or on behalf of the proper party or
parties. The Warrant Agent has sole discretion and shall be
protected in acting and relying upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent,
order, letter or other paper document received in facsimile or
e-mail form.

 

(6) The
Warrant Agent may employ or retain such counsel, accountants,
engineers, appraisers or other experts or advisers as it may
reasonably require for the purpose of determining and discharging
its duties hereunder and shall pay reasonable remuneration for all
services so performed by any of them, without taxation of costs of
any counsel and shall not be responsible for any misconduct or
negligence on the part of any of them who has been selected with
due care by the Warrant Agent. Any reasonable remuneration paid by
the Warrant Agent shall be paid by the Company in accordance with
Section 4.2.

 

(7) The
Warrant Agent may act and rely and shall be protected in acting and
relying in good faith on the opinion or advice of or information
obtained from any counsel, accountant, appraiser, engineer or other
expert or advisor, whether retained or employed by the Company or
the Warrant Agent, in relation to any matter arising in fulfilling
its duties and obligations hereof.

 

(8) The
Warrant Agent may, as a condition precedent to any action to be
taken by it under this Indenture, require such opinions, statutory
declarations, reports, certificates or other evidence as it, acting
reasonably, considers necessary or advisable in the
circumstances.

 

(9) The
Warrant Agent is not required to expend or place its own funds at
risk in executing its duties and obligations.


 




 

43








 






 



8.4            


Securities, Documents and Monies Held by Warrant Agent





 

(90)                       
Any securities, documents of title,
monies or other instruments that may at any time be held by the
Warrant Agent subject to the duties and obligations hereof, for the
benefit of the Company, may be placed in the deposit vaults of the
Warrant Agent or of any Schedule 1 Canadian chartered bank under
the Bank
Act (Canada) or deposited for
safekeeping with any such bank or the Warrant Agent. Any monies
held pending the application or withdrawal thereof under any
provisions of this Indenture, shall be held, invested and
reinvested in "Permitted Investments" as directed in writing by the
Company. "Permitted Investments" shall be treasury bills guaranteed
by the Government of Canada having a term to maturity not to exceed
ninety (90) days, or term deposits or bankers' acceptances of a
Canadian chartered bank having a term to maturity not to exceed
ninety (90) days, or such other investments that is in accordance
with the Warrant Agent's standard type of investments. Unless
otherwise specifically provided herein, all interest or other
income received by the Warrant Agent in respect of such deposits
and investments shall belong to the Company and shall be paid to
the Company upon discharge of this Indenture.

 

(2) Any
written direction for the investment or release of funds received
shall be received by the Warrant Agent by 9:00 a.m. (Calgary time)
on the Business Day on which such investment or release is to be
made, failing which such direction will be handled on a
commercially reasonable efforts basis and may result in funds being
invested or released on the next Business Day.

 

(3) The
Warrant Agent shall have no responsibility or liability for any
diminution of any funds resulting from any investment made in
accordance with this Indenture, including any losses on any
investment liquidated prior to maturity in order to make a payment
required hereunder.

 

(4) In
the event that the Warrant Agent does not receive a direction or
only a partial direction, the Warrant Agent may hold cash balances
constituting part or all of such monies and may, but need not,
invest same in its deposit department, the deposit department of
one of its affiliates, or the deposit department of a Canadian
chartered bank; but the Warrant Agent, its affiliates or a Canadian
chartered bank shall not be liable to account for any profit to any
parties to this Indenture or to any other person or
entity.

 



8.5            


Actions by Warrant Agent to Protect Interests





 


The
Warrant Agent shall have the power to institute and to maintain
such actions and proceedings as it may consider necessary or
expedient to preserve, protect or enforce its interests and the
interests of the Warrantholders pursuant to the provisions of this
Indenture.

 



8.6            


Warrant Agent not Required to Give Security





 


The
Warrant Agent shall not be required to give any bond or security in
respect of the execution of the duties and obligations of this
Indenture or otherwise.

 



8.7            


Protection of Warrant Agent





 


By
way of supplement to the provisions of any law for the time being
relating to warrant agents, it is expressly declared and agreed as
follows:


 




 

44








 






 

(1) The
Warrant Agent shall not be liable for or by reason of any
representations, statements of fact or recitals in this Indenture
or in the Warrants (except the representation contained in Section
8.9 or in the Authentication of the Warrant Agent on the Warrants)
or be required to verify the same and all such statements of fact
or recitals are and shall be deemed to be made by the
Company.

 

(2) Nothing
herein contained shall impose any obligation on the Warrant Agent
to see to or to require evidence of the registration or filing (or
renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto.

 

(3) The
Warrant Agent shall not be bound to give notice to any person or
persons of the execution hereof.

 

(4) The
Warrant Agent shall not incur any liability or responsibility
whatsoever or be in any way responsible for the consequence of any
breach on the part of the Company of any of the covenants or
warranties herein contained or of any acts of any directors,
officers, employees, agents or servants of the
Company.

 

(5) Without
limiting any protection or indemnity of the Warrant Agent under any
other provision hereof, or otherwise at law, the Company hereby
agrees to indemnify and hold harmless the Warrant Agent and its
affiliates, directors, officers, agents and employees, successors
and assigns (the "Indemnified
Parties") from and against any
and all liabilities whatsoever, losses, damages, penalties, claims,
demands, proceedings, charges, actions, suits, costs, expenses and
disbursements, including reasonable legal or advisor fees and
disbursements on a solicitor and client basis, of whatever kind and
nature which may at any time be imposed on, incurred by or asserted
against the Indemnified Parties, or any of them, whether at law or
in equity, in any way caused by or arising from the performance of
its duties hereunder, directly or indirectly, in respect of any
act, deed, matter or thing whatsoever made, done, acquiesced in or
omitted in or about or in relation to the execution of the
Indemnified Parties' duties, or any other services that Warrant
Agent may provide in connection with or in any way relating to this
Indenture. The Company agrees that its liability hereunder shall be
absolute and unconditional regardless of the correctness of any
representations of any third parties and regardless of any
liability of third parties to the Indemnified Parties, and shall
accrue and become enforceable without prior demand or any other
precedent action or proceeding; provided that the Company shall not
be required to indemnify the Indemnified Parties in the event of
the gross negligence, fraud or wilful misconduct of the Warrant
Agent, and this provision shall survive the resignation or removal
of the Warrant Agent or the termination or discharge of this
Indenture.

 

(6) Notwithstanding
the foregoing or any other provision of this Indenture, any
liability of the Warrant Agent shall be limited, in the aggregate,
to the amount of annual retainer fees paid by the Company to the
Warrant Agent under this Indenture in the twelve (12) months
immediately prior to the Warrant Agent receiving the first notice
of the claim; provided that this limitation shall not apply in
respect of any gross negligence, fraud or wilful misconduct of the
Warrant Agent. Notwithstanding any other provision of this
Indenture, and whether such losses or damages are foreseeable or
unforeseeable, the Warrant Agent shall not be liable under any
circumstances whatsoever for any (a) breach by any other party of
securities law or other rule of any securities regulatory
authority, (b) lost profits or (c) special, indirect, incidental,
consequential, exemplary, aggravated or punitive losses or
damages.


 




 

45








 






 

(7) If
any of the funds provided to the Warrant Agent hereunder are
received by it in the form of an uncertified cheque or bank draft,
the Warrant Agent shall delay the release of such funds and the
related Warrant Shares until such uncertified cheque has cleared
the financial institution upon which the same is
drawn.

 

(8) The
forwarding of a cheque or the sending of funds by wire transfer by
the Warrant Agent will satisfy and discharge the liability of any
amounts due to the extent of the sum represented thereby unless
such cheque is not honoured on presentation, provided that in the
event of the non-receipt of such cheque by the payee, or the loss
or destruction thereof, the Warrant Agent, upon being furnished
with reasonable evidence of such non-receipt, loss or destruction
and indemnity reasonably satisfactory to it, will issue to such
payee a replacement cheque for the amount of such
cheque.

 

(9) The
Warrant Agent shall retain the right not to act and shall not be
liable for refusing to act if, due to a lack of information or for
any other reason whatsoever, the Warrant Agent, in its sole
judgement, determines that such act might cause it to be in
non-compliance with any applicable anti-money laundering,
anti-terrorist or economic sanctions legislation, regulation or
guideline. Further, should the Warrant Agent, in its sole
judgement, determine at any time that its acting under this
Indenture has resulted in its being in non-compliance with any
applicable anti-money laundering, anti-terrorist or economic
sanctions legislation, regulation or guideline, then it shall have
the right to resign on ten (10) days' written notice to the Company
provided: (i) that the Warrant Agent's written notice shall
describe the circumstances of such non-compliance; and (ii) that if
such circumstances are rectified to the Warrant Agent's
satisfaction within such ten (10) day period, then such resignation
shall not be effective.

 



8.8            


Replacement of Warrant Agent





 


(1)           The
Warrant Agent may resign its appointment and be discharged from all
further duties and liabilities hereunder by giving to the Company
not less than sixty (60) days prior notice in writing or such
shorter prior notice as the Company may accept as sufficient. The
Warrantholders by extraordinary resolution shall have the power at
any time to remove the existing Warrant Agent and to appoint a new
warrant agent. In the event of the Warrant Agent resigning or being
removed as aforesaid or being dissolved, becoming bankrupt, going
into liquidation or otherwise becoming incapable of acting
hereunder, the Company shall forthwith appoint a new warrant agent
unless a new warrant agent has already been appointed by the
Warrantholders; failing such appointment by the Company, the
retiring Warrant Agent or any Warrantholder may apply to a justice
of the Ontario Superior Court of Justice (the "Court") at the Company's expense, on such notice as
such justice may direct, for the appointment of a new warrant
agent; but any new warrant agent so appointed by the Company or by
the Court shall be subject to removal as aforesaid by the
Warrantholders. Any new warrant agent appointed under any provision
of this Section 8.8 shall be a corporation authorized to carry on
the business of a transfer agent or a trust company in one or more
provinces of Canada and, if required by Applicable Legislation of
any province, in such province. On any such appointment the new
warrant agent shall be vested with the same powers, rights, duties
and responsibilities as if it had been originally named herein as
Warrant Agent without any further assurance, conveyance, act or
deed; but there shall be immediately executed, at the expense of
the Company, all such conveyances or other instruments as may, in
the opinion of counsel, be necessary or advisable for the purpose
of assuring the same to the new warrant agent, provided that any
resignation or removal of the Warrant Agent and appointment of a
successor warrant agent shall not become effective until the
successor warrant
agent shall have executed an appropriate instrument accepting such
appointment and, at the request of the Company, the predecessor
Warrant Agent, upon payment of its outstanding remuneration and
expenses, shall execute and deliver to the successor warrant agent
an appropriate instrument transferring to such successor warrant
agent all rights and powers of the Warrant Agent hereunder and all
securities, documents of title and other instruments and all monies
and properties held by the Warrant Agent hereunder.

 




 

46








 






 

(2) Upon
the appointment of a successor warrant agent, the Company shall
promptly notify the Warrantholders thereof in the manner provided
for in Section 9.2.

 

(3) Any
corporation into or with which the Warrant Agent may be merged or
consolidated or amalgamated, or any corporation succeeding to the
corporate trust business of the Warrant Agent, shall be the
successor to the Warrant Agent hereunder without any further act on
its part or of any of the parties hereto, provided that such
corporation would be eligible for appointment as a new warrant
agent under Section 8.8(1).

 

(4) Any
Warrants Authenticated or certified but not delivered by a
predecessor Warrant Agent may be Authenticated or certified by the
new or successor warrant agent in the name of the predecessor or
the new or successor warrant agent.

 



8.9            


Conflict of Interest





 

(1) The
Warrant Agent represents to the Company, to the best of its
knowledge, that at the time of execution and delivery hereof no
material conflict of interest exists which it is aware of in the
Warrant Agent's role hereunder and agrees that in the event of a
material conflict of interest arising which it becomes aware of
hereafter it will, within ninety (90) days after ascertaining that
it has such a material conflict of interest, either eliminate the
same or resign its appointment hereunder. If any such material
conflict of interest exists or hereafter shall exist, the validity
and enforceability of this Indenture and the Warrants shall not be
affected in any manner whatsoever by reason thereof.

 

(2) Subject
to Section 8.9(1), the Warrant Agent, in its personal or any other
capacity, may buy, lend upon and deal in securities of the Company
and generally may contract and enter into financial transactions
with the Company or any Subsidiary without being liable to account
for any profit made thereby.

 


8.10 Acceptance of Duties
and Obligations

 


The
Warrant Agent hereby accepts the duties and obligations in this
Indenture declared and provided for and agrees to perform the same
upon the terms and conditions herein set forth and agrees to hold
all rights, interests and benefits contained herein on behalf of
those persons who become holders of Warrants from time to time
issued under this Indenture.

 


8.11 Warrant Agent not to
be Appointed Receiver

 


The
Warrant Agent and any person related to the Warrant Agent shall not
be appointed a receiver or receiver and manager or liquidator of
all or any part of the assets or undertaking of the Company or any
Subsidiary or any partnership of which the Company is directly or
indirectly involved.

 


8.12 Authorization to Carry
on Business


 


The
Warrant Agent represents to the Company that it is registered to
carry on business under Applicable Legislation in the provinces of
Alberta and British Columbia.

 







 

47







 






 



ARTICLE 9 GENERAL

 



9.1            


Notice to the Company and the Warrant Agent





 


(1)           Unless
herein otherwise expressly provided, any notice to be given
hereunder to the Company or the Warrant Agent shall be deemed to be
validly given if delivered, if sent by registered letter, postage
prepaid or if transmitted by email to the following addresses or
facsimile numbers:

 

 




(a) If to the Company,
to:





Planet 13 Holdings
Inc.

2548 West Desert
Inn Road

Las Vegas,
Nevada



89109

 

Attention:                   
Leighton Koehler

E-mail:                       
[REDACTED]

 

with a copy
to:

 

Wildeboer Dellelce
LLP


396 Bay Street,
Suite 80

Toronto,
ON



M5H
2V1

 

Attention:                   
Charlie Malone

E-mail:                       
[REDACTED]

 

(b) If to the Warrant
Agent, to:

 


Odyssey
Trust Company


Suite
1230, 300 5th Avenue
SW


Calgary,
Alberta

T2P
3C4

 

Attention:                  
Dan Sander

Email:                       
[REDACTED]



 


and
any notice given in accordance with the foregoing shall be deemed
to have been received on the date of delivery if that date is a
Business Day (and if that date is not a Business Day, on the next
Business Day) or, if mailed, on the fifth Business Day following
the date of the postmark on such notice or, if transmitted by
email, on the Business Day following the transmission.

 


(2)           The
Company or the Warrant Agent, as the case may be, may from time to
time notify the other in the manner provided in Section 9.1(1) of a
change of address which, from the
effective date of such notice and until changed by like notice,
shall be the address of the Company or the Warrant Agent, as the
case may be, for all purposes of this Indenture.





 

48







 





 


(3)           If,
by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the Warrant Agent or to the Company hereunder could reasonably be
considered unlikely to reach its destination, the notice shall be
valid and effective only if it is delivered to an officer of the
party to which it is addressed or if it is delivered to that party
at the appropriate address provided in Section 9.1(1) by facsimile
or other means of prepaid, transmitted or recorded communication
and any notice delivered in accordance with the foregoing shall be
deemed to have been received on the date of delivery to the officer
or if delivered by facsimile or other means of prepaid,
transmitted, recorded communication on the third Business Day
following the date of the sending of the notice by the person
giving the notice.

 



9.2            


Notice to the Warrantholders





 


(1)           Any
notice to the Warrantholders under the provisions of this Indenture
shall be deemed to be validly given if the notice is sent by
prepaid mail or, if delivered by hand, to the holders at their
addresses appearing in the register of holders. Any notice so
delivered shall be deemed to have been received on the date of
delivery if that date is a Business Day or the Business Day
following the date of delivery if such date is not a Business Day
or on the third Business Day if delivered by mail. All notices may
be given to whichever one of the Warrantholders (if more than one)
is named first in the appropriate register hereinbefore mentioned,
and any notice so given shall be sufficient notice to all
Warrantholders and any other persons (if any) interested in such
Warrants. Accidental error or omission in giving notice or
accidental failure to mail notice to any Warrantholder will not
invalidate any action or proceeding founded
thereon.

 


(2)           If,
by reason of strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to
the Warrantholders could reasonably be considered unlikely to reach
its destination, the notice may be given in a news release
disseminated through a newswire service, filed on SEDAR and posted
on the Company's website; provided that in the case of a notice
convening a meeting of the holders of Warrants, the Warrant Agent
may require such additional publications of that notice, in
Toronto, Ontario or in other cities or both, as it may deem
necessary for the reasonable notification of the holders of
Warrants or to comply with any applicable requirement of law or any
stock exchange. Any notice so given shall be deemed to have been
given on the day on which it has been published in all of the
cities in which publication was required.

 



9.3            


Privacy





 


The
Company acknowledges that the Warrant Agent may, in the course of
providing services hereunder, collect or receive financial and
other personal information about such parties and/or their
representatives, as individuals, or about other individuals related
to the subject matter hereof, and use such information for the
following purposes:

 




(a)

to
provide the services required under this Indenture and other
services that may be requested from time to time;





 




(b)

to
help the Warrant Agent manage its servicing relationships with such
individuals;






 




 

49








 






 




(c)

to
meet the Warrant Agent's legal and regulatory requirements;
and





 




(d)

if
Social Insurance Numbers are collected by the Warrant Agent, to
perform tax reporting and to assist in verification of an
individual's identity for security purposes.





 


The
Company acknowledges and agrees that the Warrant Agent may receive,
collect, use and disclose personal information provided to it or
acquired by it in the course of its acting as agent hereunder for
the purposes described above and, generally, in the manner and on
the terms described in its privacy code, which the Warrant Agent
shall make available on its website or upon request, including
revisions thereto. Some of this personal information may be
transferred to servicers in the United States for data processing
and/or storage. Further, the Company agrees that it shall not
provide or cause to be provided to the Warrant Agent any personal
information relating to an individual who is not a party to this
Indenture unless the Company has assured itself that such
individual understands and has consented to the aforementioned uses
and disclosures.

 



9.4            


Third Party Interests





 


The
Company represents to the Warrant Agent that any account to be
opened by, or interest to held by the Warrant Agent in connection
with this Indenture, for or to the credit of such party, either (i)
is not intended to be used by or on behalf of any third party; or
(ii) is intended to be used by or on behalf of a third party, in
which case such party hereto agrees to complete and execute
forthwith a declaration in the Warrant Agent prescribed form as to
the particulars of such third party.

 



9.5            


Securities Exchange Commission Certification





 


The Company confirms that as at the date of this
Indenture it does not have a class of securities registered
pursuant to section 12 of the U.S. Securities and Exchange Act of
1934, as amended (the "Exchange Act") or have a reporting obligation pursuant to
section 15(d) of the Exchange Act.

 


The Company covenants that in the event that (i)
any class of its securities shall become registered pursuant to
section 12 of the Exchange Act or the Company shall incur a
reporting obligation pursuant to section 15(d) of the Exchange Act,
or (ii) any such registration or reporting obligation shall be
terminated by the Company in accordance with the Exchange Act, the
Company shall promptly deliver to the Warrant Agent an Officer's
Certificate (in a form provided by the Warrant Agent) notifying the
Warrant Agent of such registration or termination and such other
information as the Warrant Agent may reasonably require at the
time. The Company acknowledges that the Warrant Agent is relying
upon the foregoing representation and covenants in order to meet
certain United States Securities and Exchange Commission
("SEC") obligations with respect to those clients who
are filing with the SEC.

 



9.6            


Discretion of Directors





 


Any
matter provided herein to be determined by the directors in their
sole discretion and determination so made will be
conclusive.


 




 

50








 






 



9.7              


Satisfaction and Discharge of Indenture





 


Upon
the earlier of the Time of Expiry or the date by which there shall
have been delivered to the Warrant Agent for exercise or
destruction in accordance with the provisions hereof all Warrants
theretofore Authenticated or certified hereunder and by which no
Warrants shall remain issuable hereunder, this Indenture, except to
the extent that Warrant Shares and any certificates therefor have
not been issued and delivered hereunder or the Company has not
performed any of its obligations hereunder, shall cease to be of
further effect in respect of the Company, and the Warrant Agent, on
written demand of and at the cost and expense of the Company, and
upon delivery to the Warrant Agent of a certificate of the Company
stating that all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with and upon
payment to the Warrant Agent of the expenses, fees and other
remuneration payable to the Warrant Agent, shall execute proper
instruments acknowledging satisfaction of and discharging this
Indenture; provided that if the Warrant Agent has not then
performed any of its obligations hereunder any such satisfaction
and discharge of the Company's obligations hereunder shall not
affect or diminish the rights of any Warrantholder or the Company
against the Warrant Agent.

 



9.8              


Provisions of Indenture and Warrants for the Sole Benefit of
Parties and Warrantholders





 


Nothing
in this Indenture or the Warrant Certificates, expressed or
implied, shall give or be construed to give to any person other
than the parties hereto and the holders from time to time of the
Warrants any legal or equitable right, remedy or claim under this
Indenture, or under any covenant or provision therein contained,
all such covenants and provisions being for the sole benefit of the
parties hereto and the Warrantholders.

 



9.9              


Indenture to Prevail





 


To
the extent of any discrepancy or inconsistency between the terms
and conditions of this Indenture and the Warrant Certificate, the
terms of this Indenture will prevail.

 


9.10 Assignment

 


This
Indenture nor any benefits or burdens under this Indenture shall be
assignable by the Company or the Warrant Agent without the prior
written consent of the other party, such consent not to be
unreasonably withheld. Subject to the foregoing, this Indenture
shall enure to the benefit of and be binding upon the Company and
the Warrant Agent and their respective successors (including any
successor by reason of amalgamation) and permitted
assigns.

 



9.11              


Severability





 


If,
in any jurisdiction, any provision of this Indenture or its
application to any party or circumstance is restricted, prohibited
or unenforceable, such provision will, as to such jurisdiction, be
ineffective only to the extent of such restriction, prohibition or
unenforceability without invalidating the remaining provisions of
this Indenture and without affecting the validity or enforceability
of such provision in any other jurisdiction or without affecting
its application to other parties or circumstances.

 


9.12 Force
Majeure

 


No
party shall be liable to the other, or held in breach of this
Indenture, if prevented, hindered,
or delayed in the performance or observance of any provision
contained herein by reason of act of God, riots, terrorism, acts of
war, epidemics, governmental action or judicial order, earthquakes,
or any other similar causes (including, but not limited to,
mechanical, electronic or communication interruptions, disruptions
or failures). Performance times under this Indenture shall be
extended for a period of time equivalent to the time lost because
of any delay that is excusable under this section.


 




 

51








 






 


9.13 Rights of Rescission
and Withdrawal for Holders

 


Should
a holder of Warrants exercise any legal, statutory, contractual or
other right of withdrawal or rescission that may be available to
it, and the holder’s funds which were paid on exercise have
already been released to the Company by the Warrant Agent, the
Warrant Agent shall not be responsible for ensuring the exercise is
cancelled and a refund is paid back to the holder. In such cases,
the holder shall seek a refund directly from the Company and
subsequently, the Company, upon surrender to the Company or the
Warrant Agent of any underlying Warrant Shares or other securities
that may have been issued, or such other procedure as agreed to by
the parties hereto, shall instruct the Warrant Agent in writing to
cancel the exercise transaction and any such underlying Warrant
Shares or other securities on the register that may have already
been issued upon the Warrant exercise. In the event that any
payment is received from the Company by virtue of the holder being
a shareholder for such Warrants that were subsequently rescinded,
such payment must be returned to the Company by such holder. The
Warrant Agent shall not be under any duty or obligation to take any
steps to ensure or enforce the return of the funds pursuant to this
section, nor shall the Warrant Agent be in any other way
responsible in the event that any payment is not delivered or
received pursuant to this section. Notwithstanding the foregoing,
in the event that the Company provides the refund to the Warrant
Agent for distribution to the holder, the Warrant Agent shall
return such funds to the holder as soon as reasonably practicable,
and in so doing, the Warrant Agent shall incur no liability with
respect to the delivery or non-delivery of any such
funds.

 


9.14 Counterparts and
Formal Date

 


This
Indenture may be simultaneously executed in several counterparts,
each of which when so executed shall be deemed to be an original
and such counterparts together shall constitute one and the same
instrument and notwithstanding their date of execution shall be
deemed to bear the date set out at the top of the first page of
this Indenture.

 



(Signature page follows)


 




 

52








 






 

 


IN WITNESS WHEREOF
the parties hereto
have executed this Indenture under the hands of their proper
officers in that behalf.

 

 

 





	

 

	
PLANET 13 HOLDINGS
INC.


	

 


	

 

	

 

	

 

	

 


	



	
By:  

	
/s/ Dennis
Logan


	

 


	

 

	

 

	
Dennis
Logan 

	

 


	

 

	

 

	

Chief
Financial Officer 

	

 






 

 


	

 

	
ODYSSEY TRUST COMPANY


	

 


	

 

	

 

	

 

	

 


	



	
By:  

	
/s/ Dan
Sander

	

 


	
 

	
 

	
Dan
Sander 

	

 


	

 

	

 

	
VP, Corp Trust


 

 

	

 


	

 

	

By: 

	

/s/ Amy
Douglas 

	

 


	

 

	

 

	

Amy
Douglas 

	

 


	

 

	

 

	


Director, Corp
Trust




	

 






 

  


 




 








 






 



SCHEDULE “A”

 



[For Warrants issued in the United States or to, or for the account
or benefit of, U.S. Persons, also include the following
legends:]

 



THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE ON
EXERCISE HEREOF HAVE NOT BEEN AND WILL NOT BE REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "U.S.
SECURITIES ACT") OR UNDER ANY STATE SECURITIES LAWS, AND THE
SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE ON
EXERCISE HEREOF MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
DIRECTLY OR INDIRECTLY, ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN ACCORDANCE WITH REGULATION S UNDER THE U.S.
SECURITIES ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL LAWS AND
REGULATIONS, (C) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER
THE U.S. SECURITIES ACT PROVIDED BY (i) RULE 144 OR (ii) RULE144A
THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH APPLICABLE U.S.
STATE SECURITIES LAWS, (D) IN COMPLIANCE WITH ANOTHER EXEMPTION
FROM REGISTRATION UNDER THE U.S. SECURITIES ACT AND APPLICABLE
STATE SECURITIES LAWS, OR (E) UNDER AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE U.S. SECURITIES ACT, PROVIDED THAT IN THE CASE
OF TRANSFERS PURSUANT TO (C)(i) OR (D) ABOVE, A LEGAL OPINION OR
OTHER EVIDENCE, REASONABLY SATISFACTORY TO THE COMPANY, MUST FIRST
BE PROVIDED TO THE COMPANY AND THE COMPANY'S TRANSFER AGENT TO THE
EFFECT THAT SUCH TRANSFER IS EXEMPT FROM REGISTRATION UNDER THE
U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS. DELIVERY
OF THIS CERTIFICATE MAY NOT CONSTITUTE GOOD DELIVERY" IN SETTLEMENT
OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.

 



THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR ON
BEHALF OF, OR FOR THE ACCOUNT OR BENEFIT OF, A PERSON IN THE UNITED
STATES OR A U.S. PERSON UNLESS THIS WARRANT AND THE COMMON SHARES
ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE BEEN REGISTERED UNDER
THE UNITED STATES SECURITIES ACT AND APPLICABLE STATE SECURITIES
LAWS OR AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS
AVAILABLE. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY
REGULATION S UNDER THE U.S. SECURITIES ACT.

 



FORM OF WARRANT CERTIFICATE

 



WARRANTS TO PURCHASE COMMON SHARES



OF PLANET 13 HOLDINGS INC.

 



(a company existing under the laws of British
Columbia)

 


CUSIP
No. 72706K143 ISIN


No.
CA72706K1434

 



Warrant Certificate Number: ●



Representing ●
Warrants to






purchase
Common Shares (as defined below)




 








 





 

THIS CERTIFIES
that, for value received, the
registered holder hereof, ●
(the "holder") is entitled at any time at or before the Expiry
Time (as defined below) to acquire, subject to adjustment in
certain events, the number of Common Shares ("Common
Shares") of Planet 13 Holdings
Inc. (the "Company") specified above, as presently constituted, by
surrendering to Odyssey Trust Company (the "Warrant
Agent") at its principal office
in Calgary, Alberta, this Warrant Certificate with the duly
completed and executed Exercise Form endorsed on the back of this
Warrant Certificate, and accompanied by payment of $5.00 per Common
Share (the "Warrant Exercise
Price") by certified cheque,
bank draft or money order in lawful money of Canada payable to, or
to the order of, the Company at par at the above-mentioned office
of the Warrant Agent. The holder of this Warrant Certificate may
purchase less than the number of Common Shares which he is entitled
to purchase on the exercise of the Warrants represented by this
Warrant Certificate, in which event a new Warrant Certificate
representing the Warrants not then exercised will be issued to the
holder.



 


The Warrants evidenced under this Warrant
Certificate are exercisable on or before 5:00 p.m. (Toronto time)
(the "Expiry
Time") on September 10, 2022
(the "Expiry
Date"). After the Expiry Time,
Warrants evidenced hereby shall be deemed to be void and of no
further force or effect.

 


This Warrant Certificate represents Warrants of
the Company issued or issuable under the provisions of a warrant
indenture (which indenture together with all other instruments
supplemental or ancillary thereto is herein referred to as the
"Warrant
Indenture") dated as of
September 10, 2020, between the Company and the Warrant Agent, as
may be amended from time to time, which contains particulars of the
rights of the holders of the Warrants and the Company and of the
Warrant Agent in respect thereof and the terms and conditions upon
which the Warrants are issued and held, all to the same effect as
if the provisions of the Warrant Indenture were herein set forth,
to all of which the holder of this Warrant Certificate by
acceptance hereof assents. Unless otherwise defined herein, all
capitalized terms shall have the meanings ascribed to them in the
Warrant Indenture. A copy of the Warrant Indenture can be requested
by contacting the Warrant Agent. In the event of any conflict
between the provisions contained in this Warrant Certificate and
the provisions of the Warrant Indenture, the provisions of the
Warrant Indenture shall prevail.

 


Upon
acceptance hereof, the holder hereof hereby expressly waives the
right to receive any fractional Common Shares upon the exercise
hereof in full or in part and further waives the right to receive
any cash or other consideration in lieu thereof. The Warrants
represented by this Warrant Certificate shall be deemed to have
been surrendered, and payment by certified cheque, bank draft or
money order shall be deemed to have been made only upon personal
delivery thereof or, if sent by post or other means of
transmission, upon actual receipt thereof by the Warrant Agent at
its office in the City of Calgary, Alberta.

 


Upon
due exercise of the Warrants represented by this Warrant
Certificate and payment of the Warrant Exercise Price, the Company
shall cause to be issued to the person(s) in whose name(s) the
Common Shares have been so subscribed for, the number of Common
Shares to be issued to such person(s) (provided that if the Common
Shares are to be issued to a person other than the registered
holder of this Warrant Certificate, the holder's signature on the
Exercise Form herein shall be guaranteed by a Schedule I Canadian
chartered bank or by a medallion signature guarantee from a member
of a recognized Signature Medallion Guarantee Program), and the
holder shall pay to the Company or the Warrant Agent all applicable
transfer or similar taxes and the Company shall not be required to
issue or deliver certificates evidencing the Common Shares unless
or until the holder shall have paid the Company or the Warrant
Agent the amount of such tax (or shall have satisfied the Company
that such tax has been paid or that no tax is due), and such
person(s) shall become a holder in respect of such Common Shares
with effect from the date
of such exercise, and upon due surrender of this Warrant
Certificate, the Transfer Agent shall issue a certificate(s)
representing such Common Shares to be issued within five Business
Days after the exercise of the Warrants (or portion thereof)
represented hereby.


 



 







 





 


Neither the Warrants represented by this Warrant
Certificate nor the Common Shares issuable upon exercise hereof
have been or will be registered under the United States Securities
Act of 1933, as amended (the “U.S. Securities
Act”), or any state
securities laws. The Warrants represented by this Warrant
Certificate may not be exercised within the United States or by, or
for the account or benefit of, a U.S. person or a person within the
United States unless registered under the U.S. Securities Act and
any applicable state securities laws or unless an exemption from
such registration is available. Certificates representing Common
Shares issued in the United States or to, or for the account or
benefit of, U.S. persons will bear a legend restricting the
transfer and exercise of such securities under applicable United
States federal and state securities laws. "United States" and "U.S.
person" are as defined in Regulation S under the U.S. Securities
Act.

 


The
holder acknowledges that the Warrants represented by this Warrant
Certificate and the Common Shares issuable upon exercise hereof may
be offered, sold or otherwise transferred only in compliance with
all applicable securities laws.

 


No
transfer of any Warrant will be valid unless entered on the
register of transfers, upon surrender to the Warrant Agent of the
Warrant Certificate evidencing such Warrant, duly endorsed by, or
accompanied by a transfer form or other written instrument of
transfer in form satisfactory to the Warrant Agent executed by the
registered holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an
instrument in writing in form and execution satisfactory to the
Warrant Agent. Subject to the provisions of the Warrant Indenture
and upon compliance with the reasonable requirements of the Warrant
Agent, Warrant Certificates may be exchanged for Warrants
Certificates entitling the holder thereof to acquire an equal
aggregate number of Common Shares subject to adjustment as provided
for in the Warrant Indenture. The Company and the Warrant Agent may
treat the registered holder of this Warrant Certificate for all
purposes as the absolute owner hereof. The holding of the Warrants
represented by this Warrant Certificate shall not constitute the
holder hereof a holder of Common Shares nor entitle him to any
right or interest in respect thereof except as herein and in the
Warrant Indenture expressly provided.

 


The
Warrant Indenture provides for adjustment in the number of Common
Shares to be delivered upon exercise of the right of purchase
hereby granted and to the Warrant Exercise Price in certain events
therein set forth.

 


The
Warrant Indenture contains provisions making binding upon all
holders of Warrants outstanding thereunder resolutions passed at
meetings of such holders held in accordance with such provisions
and instruments in writing signed by the holders entitled to
acquire upon the exercise of the Warrants a specified percentage of
the Common Shares.

 


The
Warrants and the Warrant Indenture shall be governed by and
performed, construed and enforced in accordance with the laws of
the Province of Ontario and the federal laws of Canada applicable
therein and shall be treated in all respects as Ontario contracts.
Time shall be of the essence hereof and of the Warrant
Indenture.

 


The
Company may from time to time at any time prior to the Expiry Time
purchase any of the Warrants by private agreement or
otherwise.


 




 








 






 


This
Warrant Certificate shall not be valid for any purpose until it has
been certified by or on behalf of the Warrant Agent for the time
being under the Warrant Indenture.

 


All
dollar amounts herein are expressed in the lawful money of
Canada.

 

 


 

 

 



(Signature page follows)


 




 








 






 

 

IN WITNESS WHEREOF the Company has
caused this Warrant Certificate to be signed by its duly
authorized officer as of this _________ day of ________,
20 

 

 





	

 

	
PLANET 13 HOLDINGS
INC.



	

 


	

 

	

 

	

 

	

 


	



	
By:  

	

	

 


	

 

	

 

	
Authorized Signing
Officer

 

Countersigned this
_______ day

 

of ______,
20


 

	

 


	

 

	

 

	




	

 







	

 

	


ODYSSEY
TRUST COMPANY



	

 


	

 

	

 

	

 

	

 


	



	
By:  

	

	

 


	

 

	

 

	
Authorized Signing
Officer

 

 

	

 




  



 

 




 




 








 






 

 



EXERCISE FORM

 



TO:        



Planet
13 Holdings Inc.






c/o
Odyssey Trust Company


Suite 1230, 300 5th
Avenue SW


Calgary,
Alberta


T2P
3C4

 



The undersigned holder of the within Warrants hereby irrevocably
exercises the right of such holder to be issued and hereby
subscribes for            
  Common Shares of Planet 13
Holdings Inc. (the "Company") at the Warrant Exercise Price referred to in
the attached Warrant Certificate on the terms and conditions set
forth in such certificate and the Warrant Indenture and encloses
herewith a certified cheque, bank draft or money order payable at
par in the City of Calgary, in the Province of Alberta to the order
of the Company in payment in full of the subscription price of the
Common Shares hereby subscribed for.

 



Unless otherwise defined herein, all capitalized terms shall have
the meanings ascribed to them in the warrant indenture between the
Company and Odyssey Trust Company dated September 10,
2020.

 



(Please check the ONE box applicable):

 



☐

1.The
undersigned certifies that it (i) is not in the United States and
is not a "U.S.






person", within the meaning of Regulation S under
the United States Securities Act of 1933, as amended (the
"U.S.
Securities Act"), (ii) is not
exercising this Warrant for the account or benefit of any U.S.
Person or person in the United States, (iii) did not execute or
deliver this Exercise Form within the United States and (iv) has in
all other aspects complied with the terms of Regulation S under the
U.S. Securities Act.

 



☐

2.The
undersigned certifies that it (i) purchased the Warrants as a part
of the Units






in
the Offering; (ii) is exercising the Warrants solely for its own
account or for the benefit of a U.S. Person or a person in the
United States for whose account such holder acquired the Warrants
as a part of the Units in the Offering and for whose account such
holders exercises sole investment discretion; (iii) was and is, and
any beneficial purchaser for whose account such holder acquired the
Warrant and is exercising the Warrants was and is, a Qualified
Institutional Buyer both on the date the Units were purchased in
the Offering and on the Exercise Date; and (iv) the representations
and warranties made by the holder or any beneficial purchaser, as
the case may be, to the Company in such holder’s QIB Letter
remain true and correct on the Exercise Date.

 



☐

3.The
undersigned is delivering a written opinion of United States legal
counsel or






evidence
satisfactory to the Company to the effect that the Warrant and the
Common Shares to be delivered upon exercise hereof have been
registered under the U.S. Securities Act or are exempt from the
registration requirements of the U.S. Securities Act and applicable
state securities laws.

 



It is understood that the Company may require evidence to verify
the foregoing representations.


 




 








 






 



The undersigned hereby directs that the said Common Shares be
issued as follows:

 


	


NAME(S) IN FULL

	


ADDRESS(ES)

	


NUMBER OF COMMON SHARES


	
 

	
 

	
 


	
 

	
 

	
 


	
 

	
 

	
 






 


Please
print full name in which certificates representing the Common
Shares are to be issued. If any Common Shares are to be issued to a
person or persons other than the registered holder, the registered
holder must pay to the Warrant Agent all eligible transfer taxes or
other government charges, if any, and the Transfer Form must be
duly executed.

 


Once
completed and executed, this Exercise Form must be mailed or
delivered to Odyssey Trust Company, c/o Corporate
Trust.

 



DATED this  


day
of                                

,               

.





 


)

 


)

 


 )  



Witness                                                                  

)
(Signature of Warrantholder, to be the same as





 


)
appears on the face of this Warrant Certificate)



)

 


)  

 


Name
of Registered Warrantholder

 



[        

]
Please check this box if the securities are to be delivered at the
office where these Warrants are surrendered, failing which the
securities will be mailed.





 



NOTES:

 




1.

Certificates
will not be registered or delivered to an address in the United
States unless Box 2 or Box 3 above is checked.





 




2.

If
Box 3 above is checked, holders are encouraged to contact the
Company in advance to determine that the legal opinion or evidence
tendered in connection with exercise will be satisfactory in form
and substance to the Company.






 




 








 






 

 



TRANSFER FORM

 



TO:        



Planet
13 Holdings Inc.






c/o
Odyssey Trust Company


Suite 1230, 300 5th
Avenue SW


Calgary,
Alberta


T2P
3C4

 


FOR VALUE
RECEIVED, the undersigned
transferor hereby sells, assigns and transfers
unto

 







(Transferee)


 


 







(Address)

 

 







(Social Insurance Number)

 



                                  
of the Warrants registered in the name of the undersigned
transferor represented by the Warrant Certificate.


 


In
the case of a Warrant Certificate that contains a U.S. restrictive
legend, the undersigned hereby represents, warrants and certifies
that (one (only) of the following must be checked):

 

 






☐

(A) the transfer is
being made only to the Company; or





 



☐

(B) the transfer is
being made outside the United States in accordance with Regulation
S under the United States Securities Act of 1933, as amended (the
“U.S. Securities
Act”), and in compliance with any applicable local
securities laws and regulations and the holder has provided
herewith the Declaration for Removal of Legend attached as Schedule
"B" to the Warrant Indenture; or





 



☐

(C) the transfer is
being made pursuant to the exemption from the registration
requirements of the U.S. Securities Act provided by (i) Rule 144 or
(ii) Rule 144A thereunder, and in either case in accordance with
applicable state securities laws; or





 



☐

(D) the transfer is
being made within the United States or to, or for the account or
benefit of, U.S. persons, in accordance with a transaction that
does not require registration under the U.S. Securities Act or any
applicable state securities laws and the undersigned has furnished
to the Company and the Warrant Agent an opinion of counsel of
recognized standing in form and substance reasonably satisfactory
to the Company to such effect.





 




In
the case of a transfer in accordance with (C)(i) or (D) above, the
Company and the Warrant Agent shall first have received an opinion
of counsel of recognized standing in form and substance reasonably
satisfactory to the Company, to such effect.


 



 







 






 


 



	

In
the case of a Warrant Certificate that does not contain a U.S.
restrictive legend, if the proposed transfer is to, or for the
account or benefit of a U.S. person or to a person in the United
States, the undersigned hereby represents, warrants and certifies
that the transfer of the Warrants is being completed pursuant to an
exemption from the registration requirements of the U.S. Securities
Act and any applicable state securities laws, in which case the
undersigned has furnished to the Company and the Warrant Agent an
opinion of counsel of recognized standing in form and substance
reasonably satisfactory to the Company to such effect.


"United
States" and "U.S. Person" are as defined by Regulation S under the
U.S. Securities Act.






 




DATED
this  


day
of                                   

,              

.





 


	


SPACE FOR GUARANTEES)

	
 

	
 

	
 


	


OF SIGNATURES (BELOW

	
 

	

)

	
 


	
 

	
 

	

)

	
 


	
 

	
 

	

)

	

Signature
of Transferor


	
 

	
 

	

)

	
 


	
 

	
 

	

)

	
 


	
 

	
 

	

)

	
 


	

Guarantor's
Signature/Stamp

	
 

	

)

	

Name of
Transferor







 


REASON
FOR TRANSFER – For US Residents only (where the individual(s)
or corporation receiving the securities is a US resident). Please
select only one (see instructions below).


 

 



☐ 
Gift                                              

☐
Estate 


☐
Private Sale


☐
Other (or no change






in
ownership)

  








Date
of Event (Date of gift, death or sale):


Value
per Warrant on the date of event:





 


	



	
 

	
 

	
 

	
 


	
 

	


CAD OR

	
 






 





  
USD

NOTES:

 




1.

The signature to
this transfer must correspond with the name as recorded on the
Warrants in every particular without alteration or enlargement or
any change whatever. The signature of the person executing this
transfer must be guaranteed by a Schedule I Canadian chartered
bank, or by a medallion signature guarantee from a member of a
recognized Signature Medallion Guarantee Program.





 




2.

Warrants shall only
be transferable in accordance with the warrant indenture between
Planet 13 Holdings Inc. and Odyssey Trust Company dated July 3,
2020 (the "Warrant
Indenture"),applicable laws and the rules and policies of
any applicable stock exchange. Without limiting the foregoing, if
the Warrant Certificate bears a legend restricting the transfer of
the Warrants except pursuant to an exemption from registration
under the U.S. Securities Act, and applicable state securities
laws, this Transfer Form must be accompanied by a properly
completed and executed declaration for removal of legend in the
form attached as Schedule "B" to the Warrant
Indenture.





 




 








 






 



CERTAIN REQUIREMENTS RELATING TO TRANSFERS – READ
CAREFULLY

 


The
signature(s) of the transferor(s) must correspond with the name(s)
as written upon the face of this certificate(s), in every
particular, without alteration or enlargement, or any change
whatsoever. All securityholders or a legally authorized
representative must sign this form. The signature(s) on this form
must be guaranteed in accordance with the transfer agent's then
current guidelines and requirements at the time of transfer.
Notarized or witnessed signatures are not acceptable as guaranteed
signatures. As at the time of closing, you may choose one of the
following methods (although subject to change in accordance with
industry practice and standards):

 




●

Canada and the USA:
A Medallion Signature Guarantee
obtained from a member of an acceptable Medallion Signature
Guarantee Program (STAMP, SEMP, NYSE, MSP). Many commercial banks,
savings banks, credit unions, and all broker dealers participate in
a Medallion Signature Guarantee Program. The Guarantor must affix a
stamp bearing the actual words "Medallion Guaranteed", with the
correct prefix covering the face value of the
certificate.





 




●

Canada: A Signature Guarantee obtained from an authorized
officer of the Royal Bank of Canada, Scotia Bank or TD Canada
Trust. The Guarantor must affix a stamp bearing the actual words
"Signature Guaranteed", sign and print their full name and alpha
numeric signing number. Signature Guarantees are not accepted from
Treasury Branches, Credit Unions or Caisse Populaires unless they
are members of a Medallion Signature Guarantee Program. For
corporate holders, corporate signing resolutions, including
certificate of incumbency, are also required to accompany the
transfer, unless there is a "Signature & Authority to Sign
Guarantee" Stamp affixed to the transfer (as opposed to a
"Signature Guaranteed" Stamp) obtained from an authorized officer
of the Royal Bank of Canada, Scotia Bank or TD Canada Trust or a
Medallion Signature Guarantee with the correct prefix covering the
face value of the certificate.





 




●

Outside North America:
For holders located outside North
America, present the certificates(s) and/or document(s) that
require a guarantee to a local financial institution that has a
corresponding Canadian or American affiliate which is a member of
an acceptable Medallion Signature Guarantee Program. The
corresponding affiliate will arrange for the signature to be
over-guaranteed.






 



OR


 


The
signature(s) of the transferor(s) must correspond with the name(s)
as written upon the face of this certificate(s), in every
particular, without alteration or enlargement, or any change
whatsoever. The signature(s) on this form must be guaranteed by an
authorized officer of Royal Bank of Canada, Scotia Bank or TD
Canada Trust whose sample signature(s) are on file with the
transfer agent, or by a member of an acceptable Medallion Signature
Guarantee Program (STAMP, SEMP, NYSE, MSP). Notarized or witnessed
signatures are not acceptable as guaranteed signatures. The
Guarantor must affix a stamp bearing the actual words: "SIGNATURE
GUARANTEED", "MEDALLION GUARANTEED" OR "SIGNATURE & AUTHORITY
TO SIGN GUARANTEE", all in accordance with the transfer agent's
then current

 



 







 





 


guidelines
and requirements at the time of transfer. For corporate holders,
corporate signing resolutions, including certificate of incumbency,
will also be required to accompany the transfer unless there is a
"SIGNATURE & AUTHORITY TO SIGN GUARANTEE" Stamp affixed to the
Form of Transfer obtained from an authorized officer of the Royal
Bank of Canada, Scotia Bank or TD Canada Trust or a "MEDALLION
GUARANTEED" Stamp affixed to the Form of Transfer, with the correct
prefix covering the face value of the certificate.

 



REASON FOR TRANSFER – FOR US RESIDENTS ONLY

 


Consistent
with US IRS regulations, Odyssey Trust Company is required to
request cost basis information from US securityholders. Please
indicate the reason for requesting the transfer as well as the date
of event relating to the reason. The event date is not the day in
which the transfer is finalized, but rather the date of the event
which led to the transfer request (i.e. date of gift, date of death
of the securityholder, or the date the private sale took
place).


 




 








 






 



SCHEDULE “B”

 



FORM OF DECLARATION FOR REMOVAL OF LEGEND

 



TO:  


Planet
13 Holdings Inc.






c/o
Odyssey Trust Company


Suite 1230, 300 5th
Avenue SW


Calgary,
Alberta


T2P
3C4

 


The undersigned (a) acknowledges that the sale of
the securities of Planet 13 Holdings Inc. (the "Company") to which this declaration relates is being made
in reliance on Rule 904 of Regulation S ("Regulation S") under the United States Securities Act of 1933,
as amended (the "U.S. Securities
Act") and (b) certifies that
(1) it is not an affiliate of the Company (as defined in Rule 405
under the U.S. Securities Act), (2) the offer of such securities
was not made to a person in the United States and either (A) at the
time the buy order was originated, the buyer was outside the United
States, or the seller and any person acting on its behalf
reasonably believe that the buyer was outside the United States, or
(B) the transaction was executed on or through the facilities of
the Canadian Securities Exchange and neither the seller nor any
person acting on its behalf knows that the transaction has been
prearranged with a buyer in the United States, (3) neither the
seller nor any affiliate of the seller nor any person acting on any
of their behalf has engaged or will engage in any directed selling
efforts in the United States in connection with the offer and sale
of such securities, (4) the sale is bona fide and not for the
purpose of "washing off" the resale restrictions imposed because
the securities are "restricted securities" (as such term is defined
in Rule 144(a)(3) under the U.S. Securities Act), (5) the seller
does not intend to replace the securities sold in reliance on Rule
904 of the U.S. Securities Act with fungible unrestricted
securities, and (6) the sale was not a transaction, or part of a
series of transactions which, although in technical compliance with
Regulation S, is part of a plan or scheme to evade the registration
provisions of the U.S. Securities Act. Terms used herein have the
meanings given to them by Regulation S.

 

 






Dated:                                                                        

By:                                                      







 


Name:

 


Title:

 



Affirmation By Seller's Broker-Dealer (required for sales in
accordance with Section (b)(2)(B)

 



above)

 


We have
read the foregoing representations of our customer, 
                                                  
(the "Seller") dated                                                   
, with regard to our sale, for such Seller's account, of the
securities of the Company described therein, and on behalf of
ourselves we certify and affirm that (A) we have no knowledge that
the transaction had been prearranged with a buyer in the United
States, (B) the transaction was executed on or through the
facilities of designated offshore securities market, (C) neither
we, nor any person acting on our behalf, engaged in any directed
selling efforts in connection with the offer and sale of such
securities, and (D) no selling concession, fee or other
remuneration is being paid to us in connection with this offer and
sale other than the usual and customary broker's commission that
would be received by a person executing such transaction as agent.
Terms used herein have the meanings given to them by Regulation
S.

 


Name of
Firm

 


By: 
          
    
                                  

 


Authorized
officer

 


Date: