Document:

EXHIBIT 10.5.6

 

Sixth Amendment to the

Amended and Restated Revolving Credit
Agreement

 

SIXTH AMENDMENT TO THE

AMENDED AND RESTATED REVOLVING CREDIT AGREEMENT

 

This
Sixth Amendment to the Amended and Restated Revolving Credit Agreement (this “Amendment”)
is made effective as of September 30, 2008 and is entered into between
Union Carbide Corporation, as Borrower (“Borrower”), The Dow Chemical Company,
as Lender (“Lender”) and Union Carbide Subsidiary C, Inc. and Union
Carbide Chemicals & Plastics Technology LLC as the Subsidiary
Guarantors (the “Subsidiary Guarantors”) (together, the “Parties”).

 

BACKGROUND

 

The
parties have entered into the Amended and Restated Revolving Credit Agreement
dated as of May 28, 2004, as amended by the First Amendment to the Amended
and Restated Revolving Credit Agreement dated October 29, 2004, the Second
Amendment to the Amended and Restated Revolving Credit Agreement dated December 30,
2004, the Third Amendment to the Amended and Restated Revolving Credit
Agreement dated September 30, 2005, the Fourth Amendment to the Amended
and Restated Revolving Credit Agreement dated September 30, 2006, and the
Fifth Amendment to the Amended and Restated Revolving Credit Agreement dated September 30,2007
(the “Credit Agreement”).

 

The
Parties desire to amend the Credit Agreement according to the terms in this
Amendment. Any capitalized terms used in this Amendment, but not otherwise
defined in this Amendment, are as defined in the Credit Agreement.

 

THE AGREEMENT

 

	
  1.

  	
   

  	
  Amendment
  to Section 1.1.
  The Parties agree to amend Section 1.1 of the Credit Agreement by
  Replacing the definition of “Scheduled Termination Date” with the following
  definition:

  
	
   

  	
   

  	
   

  
	
  “Scheduled Termination Date” means December 30, 2009.

  
	
   

  	
   

  	
   

  
	
  2.

  	
   

  	
  No
  Other Amendment or Waiver. Except as expressly amended by this Amendment, the Credit Agreement
  and all other Loan Documents remain in full force and effect in accordance
  with their terms, and the Parties ratify and confirm the Credit Agreement and
  all other Loan Documents in all respects.

  
	
   

  	
   

  	
   

  
	
  3.

  	
   

  	
  Execution
  in Counterparts.
  This amendment may be executed in any number of counterparts and and by
  different parties in separate counterparts, each of which when so executed
  will be deemed to be an original and all of which taken together will
  constitute one and the same agreement. Signature pages may be detached
  from multiple separate counterparts and attached to a single counterpart so
  that all signature pages are attached to the same document.

  
	
   

  	
   

  	
   

  
	
  4.

  	
   

  	
  Governing
  Law. This Amendment
  and the rights and obligation of the Parties to this Amendment will be
  governed by, and construed and interpreted in accordance with, the law of the
  State of New York.

  
	
   

  	
   

  	
   

  
	
  5.

  	
   

  	
  Subsidiary
  Guarantors. The
  Guarantors to this Agreement will only be bound by their guarantees if they
  remain a wholly owned subsidiary of the Borrower.

  

 

[Signature pages follow.]

 

23

 

The Parties agree that this
Amendment is effective as of September 30, 2008, and they have caused
their authorized representatives to execute this Amendment below.

 

	
  LENDER:

  	
   

  	
  SUBSIDIARY
  GUARANTORS:

  
	
   

  	
   

  	
   

  
	
  THE
  DOW CHEMICAL COMPANY

  	
   

  	
  UNION
  CARBIDE SUBSIDIARY C, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /s/
  FERNANDO RUIZ

  	
   

  	
  By:

  	
    /s/
  MICHAEL L. GLENN

  
	
  Name:

  	
  Fernando
  Ruiz

  	
   

  	
  Name:

  	
   Michael L. Glenn

  
	
  Title:

  	
  Corporate
  Vice President and

  	
   

  	
  Title:

  	
   Secretary

  
	
   

  	
  Treasurer

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  BORROWER:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  UNION
  CARBIDE CHEMICALS &

  
	
  UNION
  CARBIDE CORPORATION

  	
   

  	
  PLASTICS
  TECHNOLOGY LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
     /s/ EUDIO GIL

  	
   

  	
  By:

  	
    /s/ ALEXANDER J. MAKAI

  
	
  Name:

  	
  Eudio
  Gil

  	
   

  	
  Name:

  	
   Alexander J. Makai

  
	
  Title:

  	
  Chief
  Financial Officer, Vice

  	
   

  	
  Title:

  	
   President

  
	
   

  	
  President,
  and Treasurer

  	
   

  	
   

  	
   

  
									

 

24Exhibit 4.1

 

Dated as of October 2, 2008

 

BETWEEN

 

CHALLENGER ENERGY CORP.

 

- and –

 

OLYMPIA TRUST COMPANY

 

	
   

  
	
  WARRANT INDENTURE

  
	
   

  
	
  Providing for the Creation and Issue of

  
	
   

  
	
  Common Share Purchase Warrants

  
	
   

  

 

McCarthy Tétrault LLP

Borden Ladner Gervais LLP

 

 

TABLE
OF CONTENTS

 

	
  ARTICLE 1 INTERPRETATION

  	
  1

  
	
  1.1

  	
  Definitions

  	
  1

  
	
  1.2

  	
  Gender and Number

  	
  4

  
	
  1.3

  	
  Interpretation not Affected by Headings, etc.

  	
  4

  
	
  1.4

  	
  Day not a Business Day

  	
  4

  
	
  1.5

  	
  Time of the Essence

  	
  4

  
	
  1.6

  	
  Currency

  	
  5

  
	
  1.7

  	
  Applicable Law

  	
  5

  
	
  ARTICLE 2 ISSUE OF WARRANTS

  	
  5

  
	
  2.1

  	
  Creation and Issue of Warrants

  	
  5

  
	
  2.2

  	
  Terms of Warrants

  	
  5

  
	
  2.3

  	
  Warrantholder not a Shareholder

  	
  5

  
	
  2.4

  	
  Warrants to Rank Pari Passu

  	
  6

  
	
  2.5

  	
  Form of Warrants

  	
  6

  
	
  2.6

  	
  Signing of Warrant Certificates

  	
  7

  
	
  2.7

  	
  Certification by the Trustee

  	
  7

  
	
  2.8

  	
  Issue in Substitution for Warrant Certificates Lost,
  etc.

  	
  8

  
	
  2.9

  	
  Exchange of Warrant Certificates

  	
  8

  
	
  2.10

  	
  Transfer and Ownership of Warrants

  	
  8

  
	
  2.11

  	
  Charges for Exchange or Transfer

  	
  9

  
	
  2.12

  	
  Cancellation of Surrendered Warrants

  	
  10

  
	
  2.13

  	
  Registration of Warrants

  	
  10

  
	
  2.14

  	
  Assumption by Transferee and Release of
  Transferor

  	
  10

  
	
  ARTICLE 3 EXERCISE OF WARRANTS

  	
  10

  
	
  3.1

  	
  Method of Exercise of Warrants

  	
  10

  
	
  3.2

  	
  Effect of Exercise of Warrants

  	
  12

  
	
  3.3

  	
  Partial Exercise of Warrants; Fractions

  	
  12

  
	
  3.4

  	
  Expiration of Warrants

  	
  13

  
	
  3.5

  	
  Accounting and Recording

  	
  13

  
	
  3.6

  	
  Securities Restrictions

  	
  13

  
	
  3.7

  	
  U.S. Common Share Legends

  	
  14

  
	
  ARTICLE 4 ADJUSTMENT OF NUMBER OF
  COMMON SHARES AND EXERCISE PRICE

  	
  15

  
	
  4.1

  	
  Adjustment of Number of Common Shares and Exercise
  Price

  	
  15

  
	
  4.2

  	
  Entitlement to Shares on Exercise of Warrant

  	
  19

  
	
  4.3

  	
  No Adjustment for Certain Transactions

  	
  19

  
	
  4.4

  	
  Determination by Corporation’s Auditors

  	
  19

  
	
  4.5

  	
  Proceedings Prior to any Action Requiring Adjustment

  	
  19

  
	
  4.6

  	
  Certificate of Adjustment

  	
  19

  
	
  4.7

  	
  Notice of Special Matters

  	
  20

  
	
  4.8

  	
  No Action after Notice

  	
  20

  
	
  4.9

  	
  Other Action

  	
  20

  
	
  4.10

  	
  Protection of Trustee

  	
  20

  
	
  ARTICLE 5 RIGHTS OF THE CORPORATION
  AND COVENANTS

  	
  21

  
	
  5.1

  	
  Optional Purchases by the Corporation

  	
  21

  

 

 

	
  5.2

  	
  General Covenants

  	
  21

  
	
  5.3

  	
  Trustee’s Remuneration and Expenses

  	
  22

  
	
  5.4

  	
  Securities Qualification Requirements

  	
  22

  
	
  5.5

  	
  Performance of Covenants by Trustee

  	
  22

  
	
  ARTICLE 6 ENFORCEMENT

  	
  22

  
	
  6.1

  	
  Suits by Warrantholders

  	
  22

  
	
  6.2

  	
  Immunity of Shareholders, etc.

  	
  22

  
	
  6.3

  	
  Limitation of Liability

  	
  23

  
	
  6.4

  	
  Waiver of Default

  	
  23

  
	
  ARTICLE 7 MEETINGS OF
  WARRANTHOLDERS

  	
  23

  
	
  7.1

  	
  Right to Convene Meetings

  	
  23

  
	
  7.2

  	
  Notice

  	
  23

  
	
  7.3

  	
  Chairman

  	
  24

  
	
  7.4

  	
  Quorum

  	
  24

  
	
  7.5

  	
  Power to Adjourn

  	
  24

  
	
  7.6

  	
  Show of Hands

  	
  24

  
	
  7.7

  	
  Poll and Voting

  	
  24

  
	
  7.8

  	
  Regulations

  	
  25

  
	
  7.9

  	
  Corporation and Trustee May be Represented

  	
  26

  
	
  7.10

  	
  Powers Exercisable by Extraordinary Resolution

  	
  26

  
	
  7.11

  	
  Meaning of Extraordinary Resolution

  	
  27

  
	
  7.12

  	
  Powers Cumulative

  	
  27

  
	
  7.13

  	
  Minutes

  	
  27

  
	
  7.14

  	
  Instruments in Writing

  	
  28

  
	
  7.15

  	
  Binding Effect of Resolutions

  	
  28

  
	
  7.16

  	
  Holdings by Corporation Disregarded

  	
  28

  
	
  ARTICLE 8 SUPPLEMENTAL INDENTURES

  	
  28

  
	
  8.1

  	
  Provision for Supplemental Indentures for Certain
  Purposes

  	
  28

  
	
  8.2

  	
  Successor Corporations

  	
  29

  
	
  ARTICLE 9 CONCERNING THE TRUSTEE

  	
  29

  
	
  9.1

  	
  Trust Indenture Legislation

  	
  29

  
	
  9.2

  	
  Rights and Duties of Trustee

  	
  30

  
	
  9.3

  	
  Evidence, Experts and Advisers

  	
  30

  
	
  9.4

  	
  Documents, Monies, etc. Held by Trustee

  	
  31

  
	
  9.5

  	
  Actions by Trustee to Protect Interest

  	
  31

  
	
  9.6

  	
  Trustee Not Required to Give Security

  	
  31

  
	
  9.7

  	
  Protection of Trustee

  	
  32

  
	
  9.8

  	
  Replacement of Trustee; Successor by Merger

  	
  32

  
	
  9.9

  	
  Conflict of Interest

  	
  33

  
	
  9.10

  	
  Acceptance of Trust

  	
  33

  
	
  9.11

  	
  Trustee Not to be Appointed Receiver

  	
  33

  
	
  9.12

  	
  Trustee Not Required to Give Notice of Default

  	
  33

  
	
  ARTICLE 10 GENERAL

  	
  34

  
	
  10.1

  	
  Notice to the Corporation and the Trustee

  	
  34

  
	
  10.2

  	
  Notice to Warrantholders

  	
  35

  
	
  10.3

  	
  Ownership of Warrants

  	
  35

  

 

ii

 

	
  10.4

  	
  Evidence of Ownership

  	
  35

  
	
  10.5

  	
  Counterparts

  	
  36

  
	
  10.6

  	
  Satisfaction and Discharge of Indenture

  	
  36

  
	
  10.7

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

  	
  36

  
	
  10.8

  	
  Common Shares or Warrants Owned by the Corporation
  or its Subsidiaries - Certificate to be Provided

  	
  36

  

 

iii

 

THIS WARRANT INDENTURE is made as of October 2, 2008

 

BETWEEN:

 

CHALLENGER
ENERGY CORP., a corporation incorporated
under the laws of Canada having an office in the City of Calgary, in the
Province of Alberta (hereinafter referred to as the “Corporation”)

 

AND

 

OLYMPIA
TRUST COMPANY, a trust company incorporated
under the laws of Alberta and having an office in the City of Calgary,
(hereinafter referred to as the “Trustee”)

 

WHEREAS:

 

A.            The Corporation proposes to create and issue Warrants to be
constituted and issued as herein set forth;

 

B.            One whole Warrant shall, subject to adjustment, entitle the holder
thereof to purchase one Common Share upon payment of the Exercise Price upon
the terms and conditions herein set forth;

 

C.            The Corporation is duly authorized to create and issue the Warrants
as herein provided;

 

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

 

E.             The Trustee 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 from time to time become the holders of Warrants issued pursuant to
this Indenture;

 

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

 

ARTICLE 1

INTERPRETATION

 

1.1                          Definitions

 

In this Indenture, including the recitals and schedules hereto, and in
all indentures supplemental hereto:

 

a.             “Adjustment
Period” means the period from and including the
Effective Date up to and including the Expiry Time;

 

 

b.             “Agents” means collectively, Blackmont Capital Inc., Thomas Weisel Partners
Canada Inc. and Wolverton Securities Ltd.;

 

c.             “Applicable
Legislation” means such provisions of any statute
of Canada or a province thereof, and regulations under any such statute,
relating to trust indentures or to the rights, duties and obligations of
trustees and of corporations under trust indentures, to the extent that such
provisions are at the time in force and applicable to this Indenture;

 

d.             “Business Day” means a day which is not Saturday or Sunday or a statutory holiday
in the City of Calgary in the Province of Alberta;

 

e.             “Common Shares” means, subject to Article 4, fully paid and non-assessable
common shares of the Corporation as presently constituted;

 

f.              “Corporation” means Challenger Energy Corp., a corporation amalgamated under the
laws of Canada and its lawful successors from time to time;

 

g.             “Corporation’s
Auditors” means Meyers Norris & Penny LLP,
or such other firm of chartered accountants duly appointed as auditors of the
Corporation for the time being;

 

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

 

i.              “Current Market
Price” of the Common Shares at any date means the
weighted average of the trading price per share for such shares for the 20
consecutive Trading Days immediately preceding such date on the TSXV or the
principal stock exchange on which the Common Shares are listed and as selected
by the directors, or, if such shares are not listed on any stock exchange, then
on such over-the-counter market as may be selected for such purpose by the
directors;

 

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

 

k.             “Effective Date” means the date of this Indenture;

 

l.              “Exercise Date” means, with respect to any Warrant exercised, the day on which the
Warrant Certificate evidencing such Warrant is surrendered to the Trustee for
exercise together with full payment of the Exercise Price in accordance with Section 3.1;

 

m.            “Exercise Price” at any time means, the price at which a Common Share may be
purchased by the exercise of one Warrant which is currently $3.50, subject to
adjustment in accordance with the provisions of Article 4, in which case
it shall mean the adjusted price in effect at such time and, for greater
certainty, the Exercise Price of any Warrants acquired by the Agents after the
date of an adjustment referred to in Article 4 shall be adjusted as if
such Warrants had been issued prior to such date;

 

n.             “Expiry Date” means October 2, 2009;

 

2

 

o.             “Expiry Time” means 5:00 p.m. (Calgary time) on the Expiry Date;

 

p.             “extraordinary
resolution” has the meaning set forth in Section 7.11;

 

q.             “Issue Date” means October 2, 2008, or such other date as agreed by the
parties;

 

r.              “person” means an individual, body corporate, partnership, trust, trustee,
executor, administrator, legal representative or any unincorporated
organization;

 

s.             “Shareholder” means a holder of record of one or more Common Shares;

 

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

 

u.             “successor
corporation” has the meaning set forth in Section 8.2;

 

v.             “this Warrant
Indenture”, “this Indenture”,
“herein”, “hereby”,
“hereof” and similar expressions mean
and refer to this Indenture and any indenture, deed or instrument supplemental
hereto; and the expressions “Article”, “Section”, “subsection”
and “paragraph” followed by a number,
letter or both mean and refer to the specified article, section, subsection or
paragraph of this Indenture;

 

w.            “Trading Day” means, with respect to a stock exchange, a day on which such
exchange is open for the transaction of business and with respect to the
over-the-counter market means a day on which the TSXV is open for the
transaction of business;

 

x.             “Transfer Agent” means the transfer agent for the time being of the Common Shares;

 

y.             “Trustee” means Olympia Trust Company or its successors from time to time in
the trust hereby created;

 

z.             “TSXV” means the TSX Venture Exchange;

 

aa.           “United States”
means United States of America;

 

bb.          “U.S. Person” means “U.S. person” as defined in Regulation S under the U.S.
Securities Act;

 

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

 

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

 

3

 

ee.           “Warrant Agency” means the principal office of the Trustee in the City of Calgary or
such other place(s) as may be designated in accordance with subsection
3.1(d);

 

ff.            “Warrant
Certificate” means a certificate, substantially in
the form set forth in Schedule “A” hereto, issued on or after the Issue
Date to evidence Warrants;

 

gg.          “Warrant Exercise
Form” means an exercise form, substantially in the
form set forth in Schedule “A” hereto, delivered by a Warrantholder to the
Warrant Agency at any time after the Issue Date and prior to the Expiry Time;

 

hh.          “Warrantholders”, or “holders” without reference to
Common Shares, means the persons who are registered owners of Warrants;

 

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

 

jj.             “Warrants” means the warrants created by and authorized by and issuable under
this Indenture; and

 

kk.           “written order
of the Corporation”, “written
request of the Corporation”, “written consent of the
Corporation” and “certificate of the
Corporation” mean, respectively, a written order, request, consent
and certificate signed in the name of the Corporation by its Chairman, Chief
Executive Officer, Chief Operating Officer, Chief Financial Officer, President
or any Vice-President, or a person acting in any such capacity for the
Corporation and may consist of one or more instruments so executed.

 

1.2                          Gender
and Number

 

Unless herein otherwise expressly provided or unless the context
otherwise requires, words importing the singular include the plural and vice
versa and words importing gender include all genders.

 

1.3                          Interpretation
not Affected by Headings, etc.

 

The division of this Indenture into Articles and Sections, 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.

 

1.4                          Day
not a Business Day

 

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

 

4

 

1.6                          Currency

 

Except as otherwise expressly provided, all dollar amounts herein are
expressed in Canadian dollars.

 

1.7                          Applicable
Law

 

This Indenture and the Warrant Certificates and all documents relating
thereto, which by common accord have been and will be drafted in English, shall
be construed in accordance with the laws of the Province of Alberta and the
federal laws applicable therein and shall be treated in all respects as Alberta
contracts.

 

ARTICLE 2

ISSUE OF WARRANTS

 

2.1                          Creation
and Issue of Warrants

 

Up to 5,000,000 Warrants, entitling the holders thereof to purchase up
to an aggregate of 5,000,000 Common Shares (plus such additional indeterminate
number of Common Shares as may be issued pursuant to any adjustment referred to
in Article 4)  are hereby
authorized to be issued in accordance with the terms and conditions
hereof.  The Warrant Certificates shall
be certified and delivered by the Trustee to such persons as the Corporation
may direct by written order of the Corporation.

 

2.2                          Terms
of Warrants

 

a.             Each whole Warrant shall
entitle the holder thereof, upon due exercise hereunder, together with the
payment of the Exercise Price, to acquire one (1) Common Share, subject to adjustment in accordance
with Article 4, at any time after the Issue Date until the Expiry Time.

 

b.             No fractional Warrants
shall be issued or otherwise provided for hereunder and any fractional
entitlements shall be rounded down to the nearest whole number.

 

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

 

d.             The number of Common
Shares which may be purchased pursuant to the Warrants and the exercise price
therefor shall be adjusted in the events and in the manner specified in Article 4.

 

2.3                          Warrantholder
not a Shareholder

 

Except as may be specifically provided herein, nothing in this Indenture
or in the holding of a Warrant or Warrant Certificate or otherwise, shall, in
itself, confer or be construed as conferring upon a Warrantholder any right or
interest whatsoever as a Shareholder or as any other shareholder of the
Corporation, including, but not limited to, the right to vote at, to receive
notice of, or to attend, meetings of shareholders or any other proceedings of
the Corporation, or the right to receive dividends and other distributions.

 

5

 

2.4                          Warrants
to Rank Pari Passu

 

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

 

2.5                          Form of
Warrants

 

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

 

b.             The Trustee acknowledges
that the Warrants and the Common Shares issuable upon the exercise of the
Warrants have not been and will not be registered under the U.S. Securities Act
or the securities laws of applicable states of the United States.  Each Warrant Certificate originally issued to
a U.S. Person or a person in the United States (and, except as provided in
subsection 2.10(c), each Warrant Certificate issued in exchange therefor or in
substitution on transfer thereof) shall be overprinted with the following
legend:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES.  THE HOLDER
HEREOF, BY PURCHASING THE SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY: (A) TO
THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN AN OFFSHORE TRANSACTION
IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT AND IN
COMPLIANCE WITH APPLICABLE LOCAL OR STATE LAWS AND REGULATIONS, (C) INSIDE
THE UNITED STATES PURSUANT TO THE EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND ANY
APPLICABLE STATE SECURITIES LAWS OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS, AFTER PROVIDING AN OPINION OF COUNSEL OF
RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION TO THAT
EFFECT.  DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS OF STOCK EXCHANGES IN
CANADA.  IF THE SECURITIES REPRESENTED
HEREBY ARE SOLD AT THE TIME THE CORPORATION IS A “FOREIGN PRIVATE ISSUER”
WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, A NEW CERTIFICATE,
BEARING NO LEGEND MAY BE OBTAINED FROM THE CORPORATION’S TRANSFER AGENT
AND REGISTRAR UPON DELIVERY OF THIS CERTIFICATE AND A DULY EXECUTED

 

6

 

DECLARATION,
IN A FORM SATISFACTORY TO THE CORPORATION’S TRANSFER AGENT AND CHALLENGER,
TO THE EFFECT THAT THE SALE IS BEING MADE IN COMPLIANCE WITH RULE 904 OF
REGULATION S UNDER THE SECURITIES ACT.

 

THE WARRANTS
REPRESENTED HEREBY MAY NOT BE EXERCISED UNLESS THE HOLDER OF THE WARRANTS
SIGNS AND DELIVERS TO THE CORPORATION A LETTER CERTIFYING THAT EITHER (I) THE
HOLDER OF THE WARRANTS IS NOT WITHIN THE UNITED STATES AND IS NOT A U.S.
PERSON; (II) THAT THE HOLDER OF THE WARRANTS IS AN ACCREDITED INVESTOR; OR
(III) THAT THE HOLDER OF THE WARRANTS IS ACQUIRING THE COMMON SHARES
ISSUABLE UPON THE EXERCISE OF THE WARRANTS IN A TRANSACTION THAT, IN THE
OPINION OF COUNSEL OF RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE
CORPORATION, DOES NOT REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY
APPLICABLE UNITED STATES FEDERAL OR STATE SECURITIES LAWS.

 

2.6                          Signing
of Warrant Certificates

 

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

 

2.7                          Certification
by the Trustee

 

a.             No Warrant Certificate
shall be issued or, if issued, shall be valid for any purpose or entitle the
holder to the benefit hereof until it has been certified by manual signature by
or on behalf of the Trustee by its authorized signing officers substantially in
the form of the Warrant Certificate, and such certification by the Trustee upon
any Warrant Certificate shall be conclusive evidence as against the Corporation
that the Warrant Certificate so certified has been duly issued hereunder and
that the holder is entitled to the benefits hereof.

 

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

 

7

 

2.8                          Issue
in Substitution for Warrant Certificates Lost, etc.

 

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

 

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

 

2.9                          Exchange
of Warrant Certificates

 

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

 

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

 

2.10                        Transfer
and Ownership of Warrants

 

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

 

(i)            the conditions herein;

 

(ii)           such reasonable requirements as the Trustee may
prescribe; and

 

(iii)          all applicable securities legislation and requirements
of regulatory authorities;

 

and such transfer shall be duly noted in such register
by the Trustee.  Upon compliance with
such requirements, the Trustee shall issue to the transferee a Warrant Certificate
representing the Warrants transferred. 
If a Warrantholder transfers a number of Warrants less than the 

 

8

 

total number of Warrants evidenced by a surrendered
Warrant Certificate, the transferor shall be entitled to receive a new Warrant
Certificate evidencing the balance of the Warrants which have not been
transferred.

 

b.             The Trustee acknowledges
that the Warrants may not be offered, sold or transferred in the United States
unless the Warrants and the Common Shares issuable upon exercise thereof have
been registered under the U.S. Securities Act and the securities laws of all
applicable states of the United States or an exemption from registration is
available.

 

c.             In addition, the Trustee
agrees not to register any transfer of Warrants bearing the legend set forth in
subsection 2.5(b) unless, in addition to the other requirements set forth
herein:

 

(i)            the Warrantholder has executed and delivered to the
Trustee a declaration in the form set out in Exhibit “A” to Schedule “A”
hereto (or as the Corporation may otherwise prescribe) to the effect that the
transfer is being made pursuant to Rule 904 of Regulation S under the U.S.
Securities Act, and in such case the Warrant Certificate issued to the transferee
shall not include the legend set forth in subsection 2.5(c) unless the
Corporation has, prior to the issuance thereof, informed the Trustee that it
has ceased to be a “foreign issuer” as defined in Rule 902 under the U.S.
Securities Act; or

 

(ii)           the Warrantholder has delivered to the Trustee and the
Corporation an opinion of counsel to the effect that the transfer is in
compliance with the requirements of the U.S. Securities Act and all applicable
state securities laws, and the Corporation has confirmed in writing to the
Trustee that such opinion is satisfactory to the Corporation, and in such case
the Warrant Certificate issued to the transferee shall include the legend set
forth in subsection 2.5(b) unless such opinion states that the legend is no
longer required; or

 

(iii)          the Corporation has confirmed in writing to the
Trustee that it has received other evidence satisfactory to it that the
transfer is in compliance with the requirements of the U.S. Securities Act and
all applicable state securities laws, and has instructed the Trustee regarding
the inclusion or omission of the legend set forth in subsection 2.5(b) on
the Warrant Certificate issued to the transferee.

 

d.             Subject to the provisions
of this Indenture and applicable law, the Warrantholder shall be entitled to
the rights and privileges attaching to the Warrants and the issue of Common
Shares by the Corporation upon the exercise of Warrants in accordance with the
terms and conditions herein contained, shall discharge all responsibilities of
the Corporation and the Trustee with respect to such Warrants and neither the
Corporation nor the Trustee shall be bound to inquire into the title of any
such holder.

 

2.11                        Charges
for Exchange or Transfer

 

Except as otherwise provided for herein, the Trustee may charge to the
holder requesting a transfer or exchange a reasonable sum for each new Warrant
Certificate issued in exchange for one or more Warrant Certificates.

 

9

 

2.12                        Cancellation
of Surrendered Warrants

 

All Warrant Certificates surrendered pursuant to sections 2.8, 2.9,
2.10, 3.1, 3.3, 3.4 or 5.1 shall be returned to the Trustee for cancellation
and, after the expiry of any period of retention prescribed by law, destroyed
by the Trustee.  Upon request by the
Corporation, the Trustee shall furnish to the Corporation a destruction
certificate identifying the Warrant Certificates so destroyed, the number of
Warrants evidenced thereby, the number of Common Shares, if any, issued
pursuant to such Warrants and the details of any Warrant Certificates issued in
substitution or exchange for such Warrant Certificates destroyed.

 

2.13                        Registration
of Warrants

 

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

 

2.14                        Assumption by Transferee and Release of Transferor

 

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

 

ARTICLE 3

EXERCISE OF WARRANTS

 

3.1                          Method
of Exercise of Warrants

 

a.             The holder of any Warrant
may exercise the right conferred on such holder to acquire Common Shares by
surrendering, after the Issue Date and prior to the Expiry Time, to the Warrant
Agency, the Warrant Certificate representing such Warrant, with a duly
completed and executed Warrant Exercise Form, together with a certified cheque
or bank draft or money order in lawful money of Canada payable to the
Corporation or to the order of the Trustee at par in the city where the Warrant
Agency is located in an amount equal to the Exercise Price multiplied by the
number of Common Shares subscribed for.

 

A Warrant Certificate with the duly completed and
executed Warrant Exercise Form referred to in this subsection
3.1(a) shall be deemed to be surrendered only upon personal delivery
thereof or, if sent by mail or other means of transmission, upon actual receipt
thereof at, in each case, the Warrant Agency, provided that such Warrant
Certificate is accompanied by the 

 

10

 

requisite certified cheque, bank draft or money order
in the amount of the aggregate Exercise Price for the Warrants represented
thereby that are being exercised.

 

b.             Any Warrant Exercise
Form referred to in subsection 3.1(a) shall be signed by the
Warrantholder and shall specify:

 

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

 

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

 

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

 

(iv)          if an individual, the social insurance number of such
person or persons; and

 

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

 

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

 

c.             Warrants may not be
exercised in the United States or by or on behalf of a U.S. Person unless the
offer of Common Shares pursuant to the Warrants is registered under the U.S.
Securities Act and applicable state securities laws or an exemption is
available.  No exercise of any Warrant
shall be effective, and no certificate representing Common Shares shall be
issued pursuant to the exercise of Warrants, unless, in addition to the
foregoing, the Warrantholder represents, warrants and certifies to the
Corporation and to the Trustee that:

 

(i)        it is not in the United States or a U.S. Person and is not exercising
the Warrants on behalf of a U.S. Person or a person in the United States, and
did not execute or deliver the Warrant Exercise Form in the United States;
or

 

(ii)       it (i) originally purchased the Warrants on its own behalf or on
behalf of a beneficial purchaser (a “Beneficial Purchaser”), directly from the
Corporation pursuant to the Corporation’s offering of units comprised of Common
Shares and Warrants at a time when the holder was and any Beneficial Purchaser
was an accredited investor, as defined in Rule 501(a) under the U.S.
Securities Act (“Accredited Investor”); (ii) is exercising the Warrants
solely for its own account or for the account of the Beneficial Purchaser, if
any, and not on behalf of any other person; and (iii) is, and the
Beneficial Purchaser, if any, is, an Accredited Investor on the date of
completing the Warrant Exercise Form.

 

(iii)      an exemption from registration under the U.S. Securities Act and any
applicable state securities law is available, and attached to the Warrant
Exercise Form is an opinion of 

 

11

 

counsel
to such effect, it being understood that any opinion of counsel tendered in
connection with the exercise of the Warrants must be in form and substance
satisfactory to the Corporation.

 

The
certificate representing any Common Shares issuable upon exercise of the
Warrants where the Warrantholder does not provide the representations set forth
in subsection 3.1(c)(i) shall bear the legend set forth in
Section 3.7 of this Indenture.  No
certificate for Common Shares issuable upon exercise of a Warrant shall be
registered or delivered to an address in the United States unless the Warrantholder
shall have complied with subsections 3.1(c)(ii) or (iii) and, in the
case of subsection 3.1(c)(iii), the Corporation has confirmed in writing to the
Trustee that the opinion of counsel is satisfactory to the Corporation.

 

d.             In connection with the
exchange of Warrant Certificates and exercise of Warrants and compliance with
such other terms and conditions hereof as may be required, the Corporation has
appointed the principal office of the Trustee in Calgary as the Warrant Agency
at which Warrant Certificates may be surrendered for exchange, transfer or
repurchase or at which Warrants may be exercised and the Trustee has accepted
such appointment.  The Corporation may
from time to time designate alternate or additional places as a Warrant Agency
upon notice to and consent of the Trustee of any change of any Warrant Agency.

 

3.2                          Effect
of Exercise of Warrants

 

a.             Upon the exercise of
Warrants pursuant to Section 3.1 and subject to Section 3.3, the
Common Shares to be issued pursuant to the Warrants exercised shall be deemed
to have been issued and the person or persons to whom such Common Shares are to
be issued shall be deemed to have become the holder or holders of record of
such Common Shares on the Exercise Date unless the transfer registers of the
Corporation shall be closed on such date, in which case the Common Shares
subscribed for shall be deemed to have been issued and such person or persons
deemed to have become the holder or holders of record of such Common Shares, on
the date on which such transfer registers are reopened.

 

b.             Within five
(5) Business Days after the Exercise Date with respect to a Warrant, the
Corporation shall cause the Trustee to mail to the person or persons in whose
name or names such Warrant is registered or, if so specified in writing by the
holder, cause to be delivered to such person or persons at the Warrant Agency
where the Warrant Certificate was surrendered, a certificate or certificates
for the appropriate number of Common Shares subscribed for and, to the extent
less than all of the Warrants represented by any Warrant Certificate are
exercised, a Warrant Certificate representing the unexercised balance of
Warrants.

 

3.3                          Partial
Exercise of Warrants; Fractions

 

a.             The holder of any
Warrants may exercise his right to acquire a number of Common Shares less than
the aggregate number which the holder is entitled to acquire pursuant to the
surrendered Warrant Certificate(s), provided that, in no event shall fractional
Common Shares be issued with regard to Warrants exercised.  In the event of any exercise of a number of
Warrants less than the number which the holder is entitled to exercise, the
holder of the Warrants upon such exercise shall, in addition, be entitled to
receive, without charge therefor, 

 

12

 

a new
Warrant Certificate(s) in respect of the balance of the Warrants
represented by the surrendered Warrant Certificate(s) and which were not
then exercised.

 

b.             Notwithstanding anything
herein contained including any adjustment provided for in Article 4, the
Corporation shall not be required, upon the exercise of any Warrants, to issue
fractions of Common Shares or to distribute certificates which evidence
fractional Common Shares.  Any fractional
entitlements will be rounded down to the nearest whole number.

 

3.4                          Expiration
of Warrants

 

Immediately after the Expiry Time, all rights under any Warrant in
respect of which the right of acquisition provided for herein shall not have
been exercised shall cease and terminate and each Warrant shall be void and of
no further force or effect except to the extent that the Warrantholder has not
received in full all monies to which it is entitled pursuant to Article 4
or Article 5 hereof or has not received certificates representing the
Common Shares issued upon exercise of Warrants held by it, in which instances
the Warrantholders’ rights hereunder shall continue until it has received that
to which it is entitled hereunder.

 

3.5                          Accounting
and Recording

 

a.             The Trustee shall
promptly account to the Corporation with respect to Warrants exercised.  Any securities or other instruments, from
time to time received by the Trustee shall be received in trust for, and shall
be segregated and kept apart by the Trustee, the Warrantholders and the Corporation
as their interests may appear.

 

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

 

3.6                          Securities
Restrictions

 

Notwithstanding anything herein contained, Common Shares will only be
issued pursuant to any Warrant in compliance with the securities laws of any
applicable jurisdiction.  The
certificates representing the Common Shares issued will bear such legend as
may, in the opinion of Counsel to the Corporation be necessary in order to
avoid a violation of any securities laws of any province or territory in Canada
or of the United States or any state thereof to comply with the requirements of
any stock exchange or over-the-counter market on which the Common Shares are
listed or quoted, as the case may be, provided that if, at any time, in the
opinion of Counsel to the Corporation, such legends are no longer necessary in
order to avoid a violation of any such laws, or the holder of any such legended
certificate, at the holder’s expense, provides the Corporation with evidence
satisfactory in form and substance to the Corporation (which may include an
opinion of counsel satisfactory to the Corporation) to the effect that such
holder is entitled to sell or otherwise transfer such Common Shares in a
transaction in which such legends are not required, such legended certificate
may thereafter be surrendered to the Trustee in exchange for a certificate
which does not bear such legend.

 

13

 

3.7                          U.S.
Common Share Legends

 

The Warrants and the Common 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.

 

Until such time as it is no longer required under applicable
requirements of the U.S. Securities Act or applicable state securities laws,
all certificates representing Common Shares issued upon the exercise of
Warrants in the manner described in subsections 3.1(c)(ii) or (iii), and
all certificates issued in exchange therefor or in substitution thereof, shall
bear the following legend:

 

THE SECURITIES
REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”), OR THE SECURITIES LAWS OF ANY
STATE OF THE UNITED STATES.  THE HOLDER
HEREOF, BY PURCHASING THE SECURITIES, AGREES FOR THE BENEFIT OF THE CORPORATION
THAT SUCH SECURITIES MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY:
(A) TO THE CORPORATION, (B) OUTSIDE THE UNITED STATES IN AN OFFSHORE
TRANSACTION IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE SECURITIES
ACT AND IN COMPLIANCE WITH APPLICABLE LOCAL OR STATE LAWS AND REGULATIONS,
(C) INSIDE THE UNITED STATES PURSUANT TO THE EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF AVAILABLE, AND ANY
APPLICABLE STATE SECURITIES LAWS OR (D) IN A TRANSACTION THAT DOES NOT
REQUIRE REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE UNITED STATES
FEDERAL OR STATE SECURITIES LAWS, AFTER PROVIDING AN OPINION OF COUNSEL OF
RECOGNIZED STANDING REASONABLY SATISFACTORY TO THE CORPORATION TO THAT
EFFECT.  DELIVERY OF THIS CERTIFICATE
MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS OF STOCK
EXCHANGES IN CANADA.  IF THE SECURITIES
REPRESENTED HEREBY ARE SOLD AT THE TIME THE CORPORATION IS A “FOREIGN PRIVATE
ISSUER” WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, A NEW
CERTIFICATE, BEARING NO LEGEND MAY BE OBTAINED FROM THE CORPORATION’S
TRANSFER AGENT AND REGISTRAR UPON DELIVERY OF THIS CERTIFICATE AND A DULY
EXECUTED DECLARATION, IN A FORM SATISFACTORY TO THE CORPORATION’S TRANSFER
AGENT AND CHALLENGER, TO THE EFFECT THAT THE SALE IS BEING MADE IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE SECURITIES ACT.

 

14

 

ARTICLE 4

ADJUSTMENT OF NUMBER OF COMMON SHARES AND
EXERCISE PRICE

 

4.1                          Adjustment
of Number of Common Shares and Exercise Price

 

The acquisition rights as they relate to Common Shares, in effect at
any date attaching to the Warrants, and the Exercise Price in respect thereof,
shall be subject to adjustment from time to time as follows:

 

a.             if and whenever at any
time during the Adjustment Period, the Corporation shall:

 

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

 

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

 

(iii)          issue Common Shares or securities exchangeable for or
convertible into Common Shares to the holders of all or substantially all of
the outstanding Common Shares by way of a stock dividend (other than the issue
of Common Shares to such holders as a dividend paid in the ordinary course as
defined in subsection (c));

 

the Exercise Price in effect on the effective date of
such subdivision, redivision, change, reduction, combination, consolidation or
on the record date of such stock dividend, as the case may be, shall be
adjusted effective immediately after the effective date or record date, as the
case may be, on which the holders of Common Shares are determined for the
purpose of the Common Share Reorganization by multiplying the Exercise Price in
effect immediately prior to such effective date or record date by a fraction,
the numerator of which shall be the number of Common Shares outstanding on such
effective date or record date before giving effect to such Common Share
Reorganization and the denominator of which shall be the number of Common
Shares outstanding immediately after giving effect to such Common Share
Reorganization, including in the case of a distribution of securities
exchangeable for or convertible into Common Shares, the number of Common Shares
that would have been outstanding if such securities had been exchanged for or
converted into Common Shares.  Such
adjustment shall be made successively whenever any event referred to in this
subsection 4.1(a) shall occur.  Upon
any adjustment of the Exercise Price pursuant to subsection 4.1(a), the number
of Common Shares subject to the right of purchase under each Warrant shall be
contemporaneously adjusted by multiplying the number of Common Shares
theretofore obtainable on the exercise thereof by a fraction of which the
numerator shall be the respective Exercise Price in effect immediately prior to
such adjustment and the denominator shall be the respective Exercise Price
resulting from such adjustment;

 

b.             if and whenever at any
time during the Adjustment Period, the Corporation shall fix a record date for
the issuance of rights, options or warrants to all or substantially all the
holders of its outstanding Common Shares 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 convertible or exchangeable into Common
Shares) at a price per share (or having a conversion or exchange price per
share) less than ninety-five (95%) percent of the Current Market Price on such
record date, the Exercise Price shall be 

 

15

 

adjusted
immediately after such record date so that it shall equal the amount determined
by multiplying the Exercise Price in effect on such record date by a fraction,
of which the numerator shall be the total number of Common Shares outstanding
on such record date plus a number of Common Shares equal to the number arrived
at by dividing the aggregate price of the total number of additional Common
Shares offered for subscription or purchase (or the aggregate conversion or
exchange price of the convertible or exchangeable securities so offered) by
such Current Market Price, and of which the denominator shall be the total
number of Common Shares outstanding on such record date plus the total number
of additional Common Shares offered for subscription or purchase or into which
the convertible or exchangeable securities so offered are convertible or
exchangeable; any Common Shares owned by or held for the account of the
Corporation or any Subsidiary shall be deemed not to be outstanding for the
purpose of any such computation; such adjustment shall be made successively
whenever such a record date is fixed; to the extent that any such rights or
warrants are not exercised prior to the expiration thereof, the Exercise Price
shall be readjusted to the Exercise Price which would then be in effect if such
record date had not been fixed or to the Exercise Price which would then be in
effect based upon the number of Common Shares (or securities convertible or
exchangeable into Common Shares) actually issued upon the exercise of such
rights or warrants, as the case may be. 
Upon any adjustment of the Exercise Price pursuant to this subsection
4.1(b), the number of Common Shares subject to the right of purchase under each
Warrant shall be contemporaneously adjusted by multiplying the number of Common
Shares theretofore obtainable on the exercise thereof by a fraction of which
the numerator shall be the respective Exercise Price in effect immediately
prior to such adjustment and the denominator shall be the respective Exercise
Price resulting from such adjustment;

 

c.             if and whenever at any
time during the Adjustment Period the Corporation shall fix a record date for
the making of a distribution to all or substantially all the holders of its
outstanding Common Shares of (i) shares of any class, whether of the Corporation
or any other corporation (other than Common Shares and other than shares
distributed to holders of Common Shares pursuant to their exercise of options
to receive dividends in the form of such shares in lieu of dividends paid in
the ordinary course on the Common Shares), (ii) rights, options or
warrants to subscribe for or purchase Common Shares (or other securities
convertible into or exchangeable for Common Shares) for a period expiring not
more than forty-five (45) days after such record date at a price per share (or
having a conversion or exercise price per share) not less than ninety-five
(95%) percent of the Current Market Price on such record date),
(iii) evidences of its indebtedness or (iv) any property or other
assets (excluding dividends paid in the ordinary course) then, in each such
case, the Exercise Price shall be adjusted immediately after such record date
so that it shall equal the price determined by multiplying the Exercise Price
in effect on such record date by a fraction, of which the numerator shall be
the total number of Common Shares outstanding on such record date multiplied by
such Current Market Price less the aggregate fair market value (as determined
by the directors, acting reasonably, which determination shall be conclusive)
of such shares or rights, options or warrants or evidences of indebtedness or
assets actually distributed, as the case may be, and of which the denominator
shall be the total number of Common Shares outstanding on such record date
multiplied by such Current Market Price; and Common Shares owned by or held for

 

16

 

the
account of the Corporation or any Subsidiary shall be deemed not to be
outstanding for the purpose of any such computation; such adjustment shall be
made successively whenever such a record date is fixed; to the extent that such
distribution is not so made, the Exercise Price shall be readjusted to the
Exercise Price which would then be in effect if such record date had not been
fixed or to the Exercise Price which would then be in effect based upon such
shares or rights, options or warrants or evidences of indebtedness or assets
actually distributed, as the case may be; in this Section 4.1 the term
“dividends paid in the ordinary course” shall include the value of any
securities or other property or assets distributed in lieu of cash dividends
paid in the ordinary course at the option of shareholders.  Upon any adjustment of the Exercise Price
pursuant to this subsection 4.1(c), the number of Common Shares subject to the
right of purchase under each Warrant shall be contemporaneously adjusted by
multiplying the number of Common Shares theretofore obtainable on the exercise
thereof by a fraction of which the numerator shall be the respective Exercise
Price in effect immediately prior to such adjustment and the denominator shall
be the respective Exercise Price resulting from such adjustment;

 

d.             if and whenever at any
time during the Adjustment Period, there is a reclassification of the Common
Shares or a capital reorganization of the Corporation other than as described
in subsection 4.1(a) or a consolidation, amalgamation, arrangement or
merger of the Corporation with or into any other body corporate, trust,
partnership or other entity, or a sale or conveyance of the property and assets
of the Corporation as an entirety or substantially as an entirety to any other
body corporate, trust, partnership or other entity, any Warrantholder who has
not exercised its right of acquisition prior to the effective date of such
reclassification, capital reorganization, consolidation, amalgamation,
arrangement or merger, sale or conveyance, upon the exercise of such right
thereafter, shall be entitled to receive and shall accept, in lieu of the
number of Common Shares then sought to be acquired by it, the number of shares
or other securities or property of the Corporation or of the body corporate,
trust, partnership or other entity resulting from such merger, amalgamation or
consolidation, or to which such sale or conveyance may be made, as the case may
be, that such Warrantholder would have been entitled to receive on such
reclassification, capital reorganization, consolidation, amalgamation,
arrangement or merger, sale or conveyance, if, on the record date or the
effective date thereof, as the case may be, the Warrantholder had been the
registered holder of the number of Common Shares sought to be acquired by it
and to which it was entitled to acquire upon the exercise of the Warrants.  If determined appropriate by the Trustee to
give effect to or to evidence the provisions of this subsection 4.1(d), the
Corporation, its successor, or such purchasing body corporate, partnership,
trust or other entity, as the case may be, shall, prior to or contemporaneously
with any such reclassification, capital reorganization, consolidation,
amalgamation, arrangement, merger, sale or conveyance, enter into an indenture
which shall provide, to the extent possible, for the application of the
provisions set forth in this Indenture with respect to the rights and interests
thereafter of the Warrantholders to the end that the provisions set forth in
this Indenture shall thereafter correspondingly be made applicable, as nearly
as may reasonably be, with respect to any shares, other securities or property
to which a Warrantholder is entitled on the exercise of its acquisition rights
thereafter.  Any indenture entered into
between the Corporation and the Trustee pursuant to the provisions of this subsection
4.1(d) shall be a supplemental indenture entered into pursuant to the
provisions of Article 8 hereof.  Any
indenture 

 

17

 

entered
into between the Corporation; any successor to the Corporation or such
purchasing body corporate, partnership, trust or other entity and the Trustee
shall provide for adjustments which shall be as nearly equivalent as may be
practicable to the adjustments provided in this Section 4.1 and which
shall apply to successive reclassifications, capital reorganizations,
amalgamations, consolidations, mergers, sales or conveyances;

 

e.             in any case in which this
Section 4.1 shall require that an adjustment shall become effective
immediately after a record date for an event referred to herein, the
Corporation may defer, until the occurrence of such event, issuing to the
holder of any Warrant exercised after such event the additional Common Shares
issuable upon such conversion by reason of the adjustment required by such
event before giving effect to such adjustment; provided, however, that the
Corporation shall deliver to such holder an appropriate instrument evidencing
such holder’s right to receive such additional Common Shares upon the
occurrence of the event requiring such adjustment and the right to receive any
distributions made on such additional Common Shares declared in favour of
holders of record of Common Shares on and after the relevant date of exercise
or such later date as such holder would, but for the provisions of this
subsection 4.1(e), have become the holder of record of such additional Common
Shares pursuant to subsection 4.1(d);

 

f.              in any case in which
subsections 4.1(b) or 4.1(c) require that an adjustment be made to
the Exercise Price, no such adjustment shall be made if the holders of the
outstanding Warrants receive the rights, options or warrants referred to in
subsection 4.1(b) or the shares, rights, options, warrants, evidences of
indebtedness, property or assets referred to in subsection 4.1(c), as the case
may be, in such kind and number as they would have received if they had been
holders of Common Shares on the applicable record date or effective date, as
the case may be, by virtue of their outstanding Warrants having then been
exercised into Common Shares at the Exercise Price in effect on the applicable
record date or effective date, as the case may be.  Any such issuance of share, rights, options,
or warrants will be subject to regulatory approval;

 

g.             the adjustments provided
for in this Section 4.1 are cumulative, and shall, in the case of adjustments
to the Exercise Price be computed to the nearest whole cent and shall apply to
successive subdivisions, redivisions, reductions, combinations, consolidations,
distributions, issues or other events resulting in any adjustment under the
provisions of this Section 4.1, provided that, notwithstanding any other
provision of this Section, no adjustment of the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least one (1%) percent in the Exercise Price then in effect; provided, however,
that any adjustments which by reason of this subsection 4.1(g) are not
required to be made shall be carried forward and taken into account in any
subsequent adjustment; and

 

h.             after any adjustment
pursuant to this Section 4.1, the term “Common Shares” where used in this
Indenture shall be interpreted to mean securities of any class or classes
which, as a result of such adjustment and all prior adjustments pursuant to
this Section 4.1, the Warrantholder is entitled to receive upon the
exercise of his Warrant, and the number of 

 

18

 

Common
Shares indicated by any exercise made pursuant to a Warrant shall be
interpreted to mean the number of Common Shares or other property or securities
a Warrantholder is entitled to receive, as a result of such adjustment and all
prior adjustments pursuant to this Section 4.1, upon the full exercise of
a Warrant.

 

4.2                          Entitlement
to Shares on Exercise of Warrant

 

All shares of any class or other securities which a Warrantholder is at
the time in question entitled to receive on the exercise of its Warrant,
whether or not as a result of adjustments made pursuant to this Article 4,
shall, for the purposes of the interpretation of this Indenture, be deemed to
be shares which such Warrantholder is entitled to acquire pursuant to such
Warrant.

 

4.3                          No
Adjustment for Certain Transactions

 

Notwithstanding anything in this Article 4, no adjustment shall be
made in the acquisition rights attached to the Warrants if the issue of Common
Shares is being made pursuant to or in connection with:

 

a.             any stock option or stock
purchase plan in force from time to time for directors, officers, employees,
consultants or other service providers of the Corporation; or

 

b.             the satisfaction of
existing instruments issued at or prior to the date hereof.

 

4.4                          Determination
by Corporation’s Auditors

 

In the event of any question arising with respect to the adjustments
provided for in this Article 4 such question shall be conclusively
determined by the Corporation’s Auditors who shall have access to all necessary
records of the Corporation, and such determination shall be binding upon the
Corporation, the Trustee, all Warrantholders and all other persons interested
therein.

 

4.5                          Proceedings
Prior to any Action Requiring Adjustment

 

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

 

4.6                          Certificate
of Adjustment

 

The Corporation shall from time to time immediately after the
occurrence of any event which requires an adjustment or readjustment as
provided in Article 4, deliver a certificate of the Corporation to the
Trustee specifying the nature of the event requiring the same and the amount of
the adjustment or readjustment necessitated thereby and setting forth in
reasonable detail the method of calculation and the facts upon which such
calculation is based, which certificate shall be supported by a certificate of
the Corporation’s Auditors verifying such calculation.

 

19

 

4.7                          Notice
of Special Matters

 

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

 

4.8                          No
Action after Notice

 

The Corporation covenants with the Trustee that it will not close its
transfer books or take any other corporate action which might deprive the
holder of a Warrant of the opportunity to exercise its right of acquisition
pursuant thereto during the period of fourteen (14) days after the giving of
the certificate or notices set forth in Sections 4.6 and 4.7.

 

4.9                          Other
Action

 

In case the Corporation, after the date hereof, shall take any action
affecting the Common Shares other than action described in subsection 4.1,
which in the reasonable opinion of the directors of the Corporation would
materially affect the rights of Warrantholders, the number of Common Shares
which may be acquired upon exercise of the Warrants shall be adjusted in such
manner and at such time, by action of the directors, acting reasonably, in
their sole discretion as they may determine to be equitable in the
circumstances, provided that no such adjustment will be made unless prior
approval of any stock exchange on which the Common Shares are listed for
trading has been obtained.

 

4.10                        Protection
of Trustee

 

Except as provided in Section 9.2, the Trustee shall not:

 

a.             at any time be under any
duty or responsibility to any Warrantholder to determine whether any facts
exist which may require any adjustment contemplated by Section 4.1, or
with respect to the nature or extent of any such adjustment when made, or with
respect to the method employed in making the same;

 

b.             be accountable with
respect to the validity or value (or the kind or amount) of any Common Shares
or of any shares or other securities or property which may at any time be
issued or delivered upon the exercise of the rights attaching to any Warrant;

 

c.             be responsible for any
failure of the Corporation to issue, transfer or deliver Common Shares or
certificates for the same 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
this Article; and

 

d.             incur any liability or
responsibility whatsoever or be in any way responsible for the consequences of
any breach on the part of the Corporation of any of the representations,
warranties or covenants herein contained or of any acts of the directors,
officers, employees, agents or servants of the Corporation.

 

20

 

ARTICLE 5

RIGHTS OF THE CORPORATION AND COVENANTS

 

5.1                          Optional
Purchases by the Corporation

 

Subject to compliance with applicable securities legislation and
approval of applicable regulatory authorities, the Corporation may from time to
time purchase in the open market, by tender or by private contract or otherwise
any of the Warrants.  Any such purchase
shall be made at the lowest price or prices at which, in the opinion of the
directors, such Warrants are then obtainable, plus reasonable costs of
purchase, and may be made in such manner, from such persons and on such other
terms as the Corporation, in its sole discretion, may determine.  Any Warrant Certificates representing the
Warrants purchased pursuant to this Section 5.1 shall forthwith be
delivered to and cancelled by the Trustee. 
No Warrants shall be issued in replacement thereof.

 

5.2                          General
Covenants

 

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

 

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

 

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

 

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

 

d.             it will use all
reasonable efforts to maintain its corporate existence and carry on its
business in the ordinary course;

 

e.             if any of its Common
Shares are listed on a stock exchange, it will use all reasonable efforts to
ensure that the Common Shares issuable on the exercise of the Warrants are
listed and posted for trading on such stock exchange;

 

f.              it will make all
requisite filings under applicable Canadian securities legislation and stock
exchange rules, including (on a reasonable efforts basis) those necessary to
remain a reporting issuer not in default in each of the provinces of Canada
(other than Québec) and those necessary to report the exercise of the right to
acquire Common Shares pursuant to Warrants;

 

g.             it will provide to
Warrantholders copies of all financial statements and other documentation required
to be provided by applicable laws to registered holders of Common Shares as if
such Warrantholders were registered shareholders of the Corporation; and

 

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

 

21

 

5.3                          Trustee’s
Remuneration and Expenses

 

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

 

5.4                          Securities
Qualification Requirements

 

If, in the opinion of Counsel, any instrument is required to be filed
with, or any permission is required to be obtained from, any governmental
authority in Canada or any other step is required under any federal, provincial
or territorial law of Canada before any Common Shares which a Warrantholder is
entitled to acquire pursuant to the exercise of any Warrant may properly and
legally be issued upon due exercise thereof and thereafter traded, without
further formality or restriction, the Corporation covenants that it will take
such required action.

 

5.5                          Performance
of Covenants by Trustee

 

If the Corporation shall fail to perform any of its covenants contained
in this Indenture, the Trustee may notify the Warrantholders of such failure on
the part of the Corporation or may itself perform any of the covenants capable
of being performed by it but, subject to Section 9.2, shall be under no
obligation to perform said covenants or to notify the Warrantholders of such
performance by it.  All sums expended or
advanced by the Trustee in so doing shall be repayable as provided in
Section 5.3.  No such performance,
expenditure or advance by the Trustee shall relieve the Corporation of any
default hereunder or of its continuing obligations under the covenants herein
contained.

 

ARTICLE 6

ENFORCEMENT

 

6.1                          Suits
by Warrantholders

 

All or any of the rights conferred upon any Warrantholder by any of the
terms of the Warrant Certificates or of this Indenture, or of both, may be
enforced by the Warrantholder by appropriate proceedings but without prejudice
to the right which is hereby conferred upon the Trustee to proceed in its own
name to enforce each and all of the provisions herein contained for the benefit
of the Warrantholders.

 

6.2                          Immunity
of Shareholders, etc.

 

The Trustee and, by the acceptance of the Warrant Certificates and as
part of the consideration for the issue of the Warrants, the Warrantholders
hereby waive and release any right, cause of action or remedy now or hereafter
existing in any jurisdiction against any incorporator or 

 

22

 

any past, present or future shareholder, director,
officer, employee or agent of the Corporation or any successor corporation on
any covenant, agreement, representation or warranty by the Corporation herein
or contained in the Warrant Certificates.

 

6.3                          Limitation
of Liability

 

The obligations hereunder 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 Corporation or any successor
corporation or any of the past, present or future officers, employees or agents
of the Corporation or any successor corporation, but only the property of the
Corporation or any successor corporation shall be bound in respect hereof.

 

6.4                          Waiver
of Default

 

Upon the happening of any default hereunder the Trustee shall have
power to waive any default hereunder upon such terms and conditions as the
Trustee may deem advisable, if, in the Trustee’s reasonable opinion, the same
shall have been cured or adequate provision made therefor provided that no
delay or omission of the Trustee 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 of the Trustee 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 7

MEETINGS OF WARRANTHOLDERS

 

7.1                          Right
to Convene Meetings

 

The Trustee may at any time and from time to time, and shall on receipt
of a written request of the Corporation or of a Warrantholders’ Request and
upon being indemnified to its reasonable satisfaction by the Corporation or by
the Warrantholders signing such Warrantholders’ Request against the costs which
may be incurred in connection with the calling and holding of such meeting,
convene a meeting of the Warrantholders. 
In the event of the Trustee failing to so convene a meeting within seven
(7) days after receipt of such written request of the Corporation or such
Warrantholders’ Request and indemnity given as aforesaid, the Corporation or
such Warrantholders, as the case may be, may convene such meeting.  Every such meeting shall be held in the City
of Calgary or at such other place as may be approved or determined by the
Trustee.

 

7.2                          Notice

 

At least twenty-one (21) days’ prior written notice of any meeting of
Warrantholders shall be given to the Warrantholders in the manner provided for
in Section 10.2 and a copy of such notice shall be sent by mail to the
Trustee (unless the meeting has been called by the Trustee) and to the
Corporation (unless the meeting has been called by the Corporation).  Such notice shall state the time when and the
place where the meeting is to be held, shall state briefly the general nature
of the business to be transacted thereat 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 7.

 

23

 

7.3                          Chairman

 

An individual (who need not be a Warrantholder) designated in writing
by the Trustee shall be chairman of the meeting and if no individual is so
designated, or if the individual so designated is not present within fifteen
(15) minutes from the time fixed for the holding of the meeting, the
Warrantholders present in person or by proxy shall choose some individual
present to be chairman.

 

7.4                          Quorum

 

Subject to the provisions of Section 7.11, at any meeting of the
Warrantholders a quorum shall consist of Warrantholders present in person or by
proxy and entitled to purchase at least 25% of the aggregate number of Common
Shares which could be acquired pursuant to all the then outstanding Warrants,
provided that at least two persons entitled to vote thereat are personally
present.  If a quorum of the
Warrantholders shall not be present within thirty (30) minutes from the time
fixed for holding any meeting, the meeting, if summoned by 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 and no notice of the adjournment need
be given.  Any business may be brought
before or dealt with at an adjourned meeting which might have been dealt with at
the original meeting in accordance with the notice calling the same.  No business shall be transacted at any
meeting unless a quorum be present at the commencement of business; provided
that at the adjourned meeting the Warrantholders present in person or by proxy
shall form a quorum and may transact the business for which the meeting was
originally convened, notwithstanding that they may not be entitled to acquire
at least 25% of the aggregate number of Common Shares which may be acquired
pursuant to all then outstanding Warrants.

 

7.5                          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.

 

7.6                          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.

 

7.7                          Poll
and Voting

 

On every extraordinary resolution, and on any other question submitted
to a meeting and after a vote by show of hands when demanded by the chairman or
by one or more of the Warrantholders acting in person or by proxy and entitled
to acquire in the aggregate at least 5% of the aggregate number of Common
Shares which could be acquired pursuant to all the Warrants then 

 

24

 

outstanding, 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
Common Share which it is entitled to acquire pursuant to the Warrant or
Warrants then held or represented by it. 
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 him.

 

7.8                          Regulations

 

The Trustee, or the Corporation with the approval of the Trustee, may
from time to time make and from time to time vary such regulations as it shall
think fit for:

 

a.             the setting of the record
date for a meeting for the purpose of determining Warrantholders entitled to
receive notice of and to vote at the meeting;

 

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

 

c.             the deposit of voting
certificates and instruments appointing proxies at such place and time as the
Trustee, the Corporation or the Warrantholders convening the meeting, as the case
may be, may in the notice convening the meeting direct;

 

d.             the deposit of voting
certificates and instruments appointing proxies at some approved place or
places other than the place at which the meeting is to be held and enabling
particulars of such instruments appointing proxies to be mailed or telecopied
before the meeting to the Corporation or to the Trustee at the place where the
same is to be held and for the voting of proxies so deposited as though the
instruments themselves were produced at the meeting;

 

e.             the form of the
instrument of proxy; and

 

f.              generally for the
calling of meetings of Warrantholders and the conduct of business thereat.

 

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 7.9), shall be Warrantholders or their counsel, or proxies of
Warrantholders.

 

25

 

7.9                          Corporation
and Trustee May be Represented

 

The Corporation and the Trustee, by their respective directors and
officers, and the Counsel for the Corporation and for the Trustee may attend
any meeting of the Warrantholders, but shall not be entitled to vote thereat,
whether in respect of any Warrants held by them or otherwise.

 

7.10                        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,
subject to the provisions of Section 7.11, have the power, exercisable
from time to time by extraordinary resolution:

 

a.             to agree to any
modification, abrogation, alteration, compromise or arrangement of the rights
of Warrantholders or the Trustee in its capacity as trustee hereunder (subject
to the Trustee’s prior consent) or on behalf of the Warrantholders against the
Corporation whether such rights arise under this Indenture or the Warrant
Certificates or otherwise;

 

b.             to amend, alter or repeal
any extraordinary resolution previously passed or sanctioned by the
Warrantholders;

 

c.             to direct or to authorize
the Trustee, subject to subsection 9.2(b) hereof, to enforce any of the
covenants on the part of the Corporation contained in this Indenture or the
Warrant Certificates 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, and to direct
the Trustee to waive, any default on the part of the Corporation in complying
with any provisions of this Indenture or the Warrant Certificates 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 Corporation for the enforcement of any of the covenants on the part of the
Corporation in this Indenture or the Warrant Certificates 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 to discontinue or otherwise to deal with the same upon payment of the costs,
charges and expenses reasonably and properly incurred by such Warrantholder in
connection therewith;

 

g.             to consent to any change
in or omission from the provisions contained in the Warrant Certificates and
this Indenture or any ancillary or supplemental instrument which may be agreed
to by the Corporation, and to authorize the Trustee to concur in and execute
any ancillary or supplemental indenture embodying the change or omission;

 

h.             with the consent of the
Corporation, such consent not to be unreasonably withheld, to remove the
Trustee or its successor in office and to appoint a new trustee or trustees to
take the place of the Trustee so removed; and

 

i.              to consent to any
compromise or arrangement with any creditor or creditors or any class or
classes of creditors, whether secured or otherwise, and with holders of any
shares or other securities of the Corporation.

 

26

 

7.11                        Meaning
of Extraordinary Resolution

 

a.             The expression “extraordinary
resolution” when used in this Indenture means, subject as hereinafter provided
in this Section 7.11 and in Section 7.14, a resolution proposed at a
meeting of Warrantholders duly convened for that purpose and held in accordance
with the provisions of this Article 7 at which there are present in person
or by proxy Warrantholders entitled to acquire at least 25% of the aggregate
number of Common Shares which may be acquired pursuant to all the then
outstanding Warrants and passed by the affirmative votes of Warrantholders
entitled to acquire not less than 66-2/3% of the aggregate number of Common
Shares which may be acquired pursuant to all the then outstanding Warrants
represented at the meeting and voted on the poll upon such resolution.

 

b.             If, at the meeting at
which an extraordinary resolution is to be considered, Warrantholders entitled
to acquire at least 25% of the aggregate number of Common Shares which may be
acquired pursuant to all the then outstanding Warrants are not present in person
or by proxy within thirty (30) minutes 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 fifteen (15) or more than
sixty (60) days later, and to such place and time as may be appointed by the
chairman.  Not less than ten
(10) days’ prior notice shall be given of the time and place of such adjourned
meeting in the manner provided for in Section 10.2.  Such notice shall state that at the adjourned
meeting the Warrantholders present in person or 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 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 subsection 7.11(a) shall be an
extraordinary resolution within the meaning of this Indenture notwithstanding
that Warrantholders entitled to acquire at least 25% of the aggregate number of
Common Shares which may be acquired pursuant to all the then outstanding
Warrants are not present in person or by proxy at such adjourned meeting.

 

c.             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.

 

7.12                        Powers
Cumulative

 

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
power or powers or combination of powers then or thereafter from time to time.

 

7.13                        Minutes

 

Minutes of all resolutions and proceedings at every meeting of
Warrantholders shall be made and duly entered in books to be provided from time
to time for that purpose by the Trustee at the expense of the Corporation, and
any such minutes as aforesaid, if signed by the chairman or the secretary of
the meeting at which such resolutions were passed or proceedings had shall be
prima facie evidence of the matters therein stated and, until the contrary is
proved, every such meeting in 

 

27

 

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 shall be deemed to have been
duly passed and taken.

 

7.14                        Instruments
in Writing

 

All actions which may be taken and all powers that may be exercised by
the Warrantholders at a meeting held as provided in this Article 7 may
also be taken and exercised by Warrantholders entitled to acquire at least
66-2/3% of the aggregate number of Common Shares which may be acquired pursuant
to 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.

 

7.15                        Binding
Effect of Resolutions

 

Every resolution and every extraordinary resolution passed in
accordance with the provisions of this Article 7 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 7.14 shall be binding upon all the Warrantholders,
whether signatories thereto or not, and each and every Warrantholder and the
Trustee (subject to the provisions for indemnity herein contained) shall be
bound to give effect accordingly to every such resolution and instrument in
writing.

 

7.16                        Holdings
by Corporation Disregarded

 

In determining whether Warrantholders holding Warrant Certificates
evidencing the entitlement to acquire the required number of Common Shares 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 Corporation or any Subsidiary of the Corporation
shall be disregarded in accordance with the provisions of Section 10.8.

 

ARTICLE 8

SUPPLEMENTAL INDENTURES

 

8.1                          Provision
for Supplemental Indentures for Certain Purposes

 

From time to time the Corporation (when authorized by action of the
directors) and the Trustee 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.             setting forth any
adjustments resulting from the application of the provisions of Article 4;

 

b.             adding to the provisions
hereof such additional covenants and enforcement provisions as, in the opinion
of Counsel, are necessary or advisable in the premises, provided that the same
are not in the opinion of the Trustee prejudicial to the interests of the
Warrantholders;

 

28

 

c.             giving effect to any
extraordinary resolution passed as provided in Article 7;

 

d.             making such provisions
not inconsistent with this Indenture as may be necessary or desirable with
respect to matters or questions arising hereunder or for the purpose of
obtaining a listing or quotation of the Warrants on any stock exchange,
provided that such provisions are not, in the opinion of the Trustee,
prejudicial to the interests of the Warrantholders;

 

e.             adding to or altering the
provisions hereof in respect of the transfer of Warrants, making provision for
the exchange of Warrant Certificates, and making any modification in the form
of the Warrant Certificates which does not affect the substance thereof;

 

f.              with the prior approval
of the TSXV, modifying any of the provisions of this Indenture, including
relieving the Corporation from any of the obligations, conditions or
restrictions herein contained, provided that such modification or relief shall
be or become operative or effective only if, in the opinion of the Trustee,
such modification or relief in no way prejudices any of the rights of the
Warrantholders or of the Trustee, and provided further that the Trustee may in
its sole discretion decline to enter into any such supplemental indenture which
in its opinion may not afford adequate protection to the Trustee when the same
shall become operative; and

 

g.             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,
mistakes or omissions herein, provided that in the opinion of the Trustee the
rights of the Trustee and of the Warrantholders are in no way prejudiced
thereby.

 

8.2                          Successor
Corporations

 

In the case of the consolidation, amalgamation, arrangement, merger or
transfer of the undertaking or assets of the Corporation as an entirety or
substantially as an entirety to another Corporation (“successor corporation”),
the successor corporation resulting from such consolidation, amalgamation,
arrangement, merger or transfer (if not the Corporation) shall expressly
assume, by supplemental indenture satisfactory in form to the Trustee and
executed and delivered to the Trustee, the due and punctual performance and
observance of each and every covenant and condition of this Indenture to be
performed and observed by the Corporation.

 

ARTICLE 9

CONCERNING THE TRUSTEE

 

9.1                          Trust
Indenture Legislation

 

a.             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.

 

b.             The Corporation and the
Trustee 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 benefits of Applicable Legislation.

 

29

 

9.2                          Rights
and Duties of Trustee

 

a.             In the exercise of the
rights and duties prescribed or conferred by the terms of this Indenture, the
Trustee shall exercise that degree of care, diligence and skill that a
reasonably prudent trustee would exercise in comparable circumstances.  No provision of this Indenture shall be
construed to relieve the Trustee from liability for its own negligent action,
its own negligent failure to act, or its own wilful misconduct or bad faith or
any breach by it of its obligations or duties under the Indenture.

 

b.             The obligation of the
Trustee to commence or continue any act, action or proceeding for the purpose
of enforcing any rights of the Trustee or the Warrantholders hereunder shall be
conditional upon the Warrantholders furnishing, when required by notice by the
Trustee, sufficient funds to commence or to continue such act, action or
proceeding and an indemnity reasonably satisfactory to the Trustee to protect
and to hold harmless the Trustee 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 Trustee to expend or to risk its
own funds or otherwise to incur financial liability in the performance of any
of its duties or in the exercise of any of its rights or powers unless
indemnified as aforesaid.

 

c.             The Trustee may, before
commencing or at any time during the continuance of any such act, action or proceeding,
require the Warrantholders, at whose instance it is acting to deposit with the
Trustee the Warrants held by them, for which Warrants the Trustee shall issue
receipts.

 

d.             Every provision of this
Indenture that by its terms relieves the Trustee of liability or entitles it to
rely upon any evidence submitted to it is subject to the provisions of
Applicable Legislation, of this Section 9.2 and of Section 9.3.

 

9.3                          Evidence,
Experts and Advisers

 

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

 

b.             In the exercise of its
rights and duties hereunder, the Trustee may, if it is acting in good faith,
rely as to the truth of the statements and the accuracy of the opinions
expressed in statutory declarations, opinions, reports, written requests,
consents, or orders of the Corporation, certificates of the Corporation or
other evidence furnished to the Trustee pursuant to a request of the Trustee,
provided that such evidence complies with Applicable Legislation and that the
Trustee complies with Applicable Legislation and that the Trustee examines the
same and determines that such evidence complies with the applicable
requirements of this Indenture.

 

c.             Whenever it is provided
in this Indenture or under Applicable Legislation that the Corporation shall
deposit with the Trustee resolutions, certificates, reports, opinions,
requests, orders or other documents, it is intended that the trust, accuracy
and good faith on the effective date thereof and the facts and opinions stated
in all such documents so deposited 

 

30

 

shall,
in each and every such case, be conditions precedent to the right of the
Corporation to have the Trustee take the action to be based thereon.

 

d.             Proof of the execution of
an instrument in writing, including a Warrantholders’ Request, by any
Warrantholder may be made by the certificate of a notary public, or other
officer with similar powers, that the person signing such instrument
acknowledged to it the execution thereof, or by an affidavit of a witness to
such execution or in any other manner which the Trustee may consider adequate.

 

e.             The Trustee may employ or
retain such Counsel, accountants, appraisers or other experts or advisers as it
may reasonably require for the purpose of discharging its duties hereunder and
may 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 such experts or advisers who have
been appointed with due care by the Trustee.

 

9.4                          Documents,
Monies, etc. Held by Trustee

 

Any securities, documents of title or other instruments that may at any
time be held by the Trustee subject to the trusts hereof may be placed in the
deposit vaults of the Trustee or of any Canadian chartered bank listed in
Schedule I to the Bank Act (Canada) or of any trust
company registered to do business in Canada or deposited for safekeeping with
any such bank or trust company.  Unless
herein otherwise expressly provided, any monies so held pending the application
or withdrawal thereof under any provisions of this Indenture upon the direction
of the Corporation shall be or, with the consent of the Corporation may be:
(i) deposited in the name of the Trustee in any Canadian chartered bank
listed in Schedule I to the Bank Act
(Canada) or any trust company registered to do business in Canada at the rate
of interest (if any) then current on similar deposits; (ii) deposited in
the deposit department of the Trustee; or (iii) invested in treasury bills
or short term interest bearing or discounted obligations issued or guaranteed
by the Government of Canada or a province thereof, of any Canadian chartered
bank listed in Schedule I of the Bank Act
(Canada) or of the Trustee, provided that the securities shall not have a
maturity date of more than sixty (60) days from the date of such
investment.  Unless the Corporation shall
be in default hereunder or unless otherwise specifically provided herein, all
interest or other income received by the Trustee in respect of such deposits
and investments shall belong to the Corporation.

 

9.5                          Actions
by Trustee to Protect Interest

 

The Trustee shall have 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.

 

9.6                          Trustee
Not Required to Give Security

 

The Trustee shall not be required to give any bond or security in
respect of the execution of the trusts and powers of this Indenture or
otherwise in respect of the premises.

 

31

 

9.7                                                                               Protection
of Trustee

 

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

 

a.                                       the Trustee shall not be liable for or by reason of any statements
of fact or recitals in this Indenture or in the Warrant Certificates (except
the representation contained in Section 9.9 or in the certificate of the
Trustee on the Warrant Certificates) or be required to verify the same, but all
such statements or recitals are and shall be deemed to be made by the
Corporation;

 

b.                                      nothing herein contained shall impose any obligation on the Trustee
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;

 

c.                                       the Trustee shall not be bound to give notice to any person or
persons of the execution hereof;

 

d.                                      the Trustee shall not incur any liability or responsibility whatever
or be in any way responsible for the consequence of any breach on the part of
the Corporation of any of the covenants herein contained or of any acts of any
directors, officers, employees, agents or servants of the Corporation; and

 

e.                                       the Corporation hereby indemnifies and agrees to hold harmless the
Trustee from and against any and all liabilities, losses, damages, penalties,
claims, actions, suits, costs, expenses and disbursements, including legal fees
and disbursements of whatever kind and nature which may at any time be imposed
on, incurred by or asserted against the Trustee, whether groundless or
otherwise, arising from or out of any act, omission or error of the Trustee
made in good faith in the conduct of its duties hereunder, provided that the
Trustee has met the standard of care, diligence and skill provided for in subsection
9.2(a) and, provided further that, the Corporation shall not be required
to indemnify the Trustee in the event of gross negligence, wilful misconduct,
bad faith or breach of the obligations of the Trustee as provided in subsection
9.2(a), and this provision shall survive the resignation or removal of the
Trustee or the termination or discharge of this Agreement.

 

9.8                                                                               Replacement
of Trustee; Successor by Merger

 

a.                                       The Trustee may resign its trust and be discharged from all further
duties and liabilities hereunder, subject to this Section 9.8, by giving
to the Corporation not less than 90 days’ prior notice in writing or such
shorter prior notice as the Corporation may accept as sufficient.  The Warrantholders by extraordinary
resolution shall have power at any time to remove the existing Trustee and to
appoint a new Trustee.  In the event of
the Trustee resigning or being removed as aforesaid or being dissolved,
becoming bankrupt, going into liquidation or otherwise becoming incapable of
acting hereunder, the Corporation shall forthwith appoint a new trustee unless
a new trustee has already been appointed by the Warrantholders; failing such
appointment by the Corporation, the retiring Trustee or any Warrantholder may
apply to a justice of the Court of Queen’s Bench of the Province of Alberta on
such notice as such justice may direct, for the appointment of a new trustee;
but any new trustee so appointed by the Corporation or by the Court shall be
subject to removal as aforesaid by the Warrantholders.  Any new trustee appointed under any provision
of this

 

32

 

Section 9.8
shall be a corporation authorized to carry on the business of a trust company
in each of the provinces of Canada.  On
any such appointment the new trustee shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named herein
as Trustee hereunder.

 

b.                                      Upon the appointment of a successor trustee, the Corporation shall
promptly notify the Warrantholders thereof in the manner provided for in Section 10.2.

 

c.                                       Any corporation into or with which the Trustee may be merged or
consolidated or amalgamated, or any corporation resulting therefrom to which
the Trustee shall be a party, or any corporation succeeding to the trust
business of the Trustee shall be the successor to the Trustee hereunder without
any further act on its part or any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor trustee under subsection
9.8(a).

 

d.                                      Any Warrant Certificates certified but not delivered by a
predecessor trustee may be certified by the successor trustee in the name of
the predecessor or successor trustee.

 

9.9                                                                               Conflict
of Interest

 

a.                                       The Trustee represents to the Corporation that at the time of
execution and delivery hereof no material conflict of interest exists between
its role as a trustee hereunder and its role in any other capacity and agrees
that in the event of a material conflict of interest arising hereafter it will,
within 90 days after ascertaining that it has such material conflict of
interest, either eliminate the same or assign its trust hereunder to a
successor trustee approved by the Corporation and meeting the requirements set
forth in subsection 9.8(a). 
Notwithstanding the foregoing provisions of this subsection 9.9(a), if
any such material conflict of interest exists or hereafter shall exist, the
validity and enforceability of this Indenture and the Warrant Certificate shall
not be affected in any manner whatsoever by reason thereof.

 

b.                                      Subject to subsection 9.9(a), the Trustee, in its personal or any
other capacity, may buy, lend upon and deal in securities of the Corporation
and generally may contract and enter into financial transactions with the Corporation
or any Subsidiary of the Corporation without being liable to account for any
profit made thereby.

 

9.10                                                                        Acceptance
of Trust

 

The
Trustee hereby accepts the trusts in this Indenture declared and provided for
and agrees to perform the same upon the terms and conditions herein set forth.

 

9.11                                                                        Trustee
Not to be Appointed Receiver

 

The
Trustee and any person related to the Trustee shall not be appointed a
receiver, a receiver and manager or liquidator of all or any part of the assets
or undertaking of the Corporation.

 

9.12                                                                        Trustee
Not Required to Give Notice of Default

 

The Trustee
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 hereby unless and until it
shall have been required so to do under the terms hereof; nor shall the Trustee
be required to take notice of any default hereunder, unless and

 

33

 

until notified
in writing of such default, which notice shall distinctly specify the default
desired to be brought to the attention of the Trustee and in the absence of any
such notice the Trustee may for all purposes of this Indenture conclusively
assume that no default has been made in the observance or performance of any of
the representations, warranties, covenants, agreements or conditions contained
herein.  Any such notice shall in no way
limit any discretion herein given to the Trustee to determine whether or not
the Trustee shall take action with respect to any default.

 

ARTICLE 10

GENERAL

 

10.1                                                                        Notice
to the Corporation and the Trustee

 

a.                                       Unless herein otherwise expressly provided, any notice to be given
hereunder to the Corporation or the Trustee shall be deemed to be validly given
if delivered, sent by registered letter, postage prepaid or telecopied:

 

If to
the Corporation:

 

Challenger
Energy Corp. 

200, 744 – 4th Avenue S.W.

Calgary, Alberta

T2P 3N9

 

Attention:
Chief Executive Officer

Facsimile: (403) 503-8811

 

If to
the Trustee:

 

Olympia
Trust Company 

Suite 2300, 125-9 Avenue S.E.

Calgary, Alberta T2G 0P6

 

Attention:
Manager, Corporate Trust Department

Facsimile: (403) 265-1455

 

and any such
notice delivered in accordance with the foregoing shall be deemed to have been
received on the date of delivery or, if mailed, on the fifth Business Day
following the date of the postmark on such notice or, if telecopied, on the
next Business Day following the date of transmission, provided that its
contents are transmitted and received completely and accurately.

 

b.                                      The Corporation or the Trustee, as the case may be, may from time to
time notify the other in the manner provided in subsection 10.1(a) 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 Corporation or the Trustee,
as the case may be, for all purposes of this Indenture.

 

c.                                       If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the Trustee
or to the Corporation hereunder could reasonably be considered unlikely to
reach its destination, such notice shall be valid and effective only if it is
delivered to the named officer of the party to which it is addressed or, if

 

34

 

it is
delivered to such party at the appropriate address provided in subsection
10.1(a), by telecopy or other means of prepaid, transmitted and recorded
communication.

 

10.2                                                                        Notice
to Warrantholders

 

a.                                       Unless otherwise provided herein, notice to the Warrantholders under
the provisions of this Indenture shall be valid and effective if delivered or
sent by telecopy or by ordinary post addressed to such holders at their post
office addresses appearing on the register hereinbefore mentioned and shall be
deemed to have been effectively given on the date of delivery or, if mailed, on
the fifth Business Day following the date of the postmark on such notice or, if
telecopied, on the next Business Day following the date of transmission,
provided that its contents are transmitted and received completely and
accurately.

 

b.                                      If, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving postal employees, any notice to be given to the
Warrantholders hereunder could reasonably be considered unlikely to reach its
destination, such notice shall be valid and effective only if it is delivered
personally to such Warrantholders or if delivered to the address for such
Warrantholders contained in the register of Warrants maintained by the Trustee,
by telecopy or other means of prepaid transmitted and recorded communication.

 

10.3                                                                        Ownership
of Warrants

 

The
Corporation and the Trustee may deem and treat the registered owner of any
Warrants as the absolute owner thereof for all purposes, and the Corporation and
the Trustee shall not be affected by any notice or knowledge to the contrary
except where the Corporation or the Trustee is required to take notice by
statute or by order of a court of competent jurisdiction.  A Warrantholder shall be entitled to the rights
evidenced by its Warrant Certificate free from all equities or rights of set
off or counterclaim between the Corporation and the original or any
intermediate holder of the Warrants and all persons may act accordingly.  The receipt of any such Warrantholder for the
Common Shares which may be acquired pursuant thereto, or the receipt of the
amount payable to such Warrantholder upon the exercise of the repurchase right
referred to in subsection 5.1 shall be a good discharge to the Corporation and
the Trustee for the same and neither the Corporation nor the Trustee shall be
bound to inquire into the title of any such holder except where the Corporation
or the Trustee is required to take notice by statute or by order of a court of
competent jurisdiction.

 

10.4                                                                        Evidence
of Ownership

 

a.                                       Upon receipt of a certificate of any bank, trust company or other
depositary satisfactory to the Trustee stating that the Warrants specified
therein have been deposited by a named person with such bank, trust company or
other depositary and will remain so deposited until the expiry of the period
specified therein, the Corporation and the Trustee may treat the person so
named as the owner, and such certificate as sufficient evidence of the
ownership by such person of such Warrant during such period, for the purpose of
any requisition, direction, consent, instrument or other document to be made,
signed or given by the holder of the Warrant so deposited.

 

b.                                      The Corporation and the Trustee may accept as sufficient evidence of
the fact and date of the signing of any requisition, direction, consent,
instrument or other document by any person (i) the signature of any
officer of any bank, trust company, or other depositary satisfactory to the

 

35

 

Trustee as
witness of such execution, (ii) the certificate of any notary public or
other officer authorized to take acknowledgements of deeds to be recorded at
the place where such certificate is made that the person signing acknowledged
to him the execution thereof, (iii) a statutory declaration of a witness
of such execution, or (iv) any other documentation satisfactory to the
Corporation and the Trustee.

 

10.5                                                                        Counterparts

 

This
Indenture may be 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 they shall be deemed to be dated as of the date hereof.

 

10.6                                                                        Satisfaction
and Discharge of Indenture

 

Upon
the earlier of:

 

a.                                       the date by which there shall have been delivered to the Trustee for
exercise or destruction all Warrant Certificates contemplated to be certified
hereunder; or

 

b.                                      the Expiry Time;

 

and if all
certificates representing Common Shares required to be issued in compliance
with the provisions hereof have been issued and delivered hereunder or to the
Trustee in accordance with such provisions and if all payments required to be
made in accordance with such provisions have been made, this Indenture shall
cease to be of further effect and the Trustee, on demand of and at the cost and
expense of the Corporation and upon delivery to the Trustee of a certificate of
the Corporation stating that all conditions precedent to the satisfaction and
discharge of this Indenture have been complied with, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture.  Notwithstanding the foregoing, the
indemnities provided to the Trustee by the Corporation hereunder shall remain
in full force and effect and survive the termination of this Indenture.

 

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

 

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

 

10.8                                                                        Common
Shares or Warrants Owned by the Corporation or its Subsidiaries - Certificate
to be Provided

 

For the
purpose of disregarding any Warrants owned legally or beneficially by the
Corporation or any Subsidiary of the Corporation in Section 7.16, the
Corporation shall provide to the Trustee, from time to time, a certificate of
the Corporation setting forth as at the date of such certificate:

 

36

 

a.                                       the names (other than the name of the Corporation) of the registered
holders of Warrants which, to the knowledge of the Corporation, are owned by or
held for the account of the Corporation or any Subsidiary of the Corporation;
and

 

b.                                      the number of Warrants owned legally or beneficially by the
Corporation or any Subsidiary of the Corporation;

 

and the
Trustee, in making the computations in Section 7.16, shall be entitled to
rely on such certificate without any additional evidence.

 

[THIS
SPACE INTENTIONALLY LEFT BLANK]

 

37

 

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

 

 

	
   

  	
  CHALLENGER ENERGY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   (signed)
  “Manjeet Dhillon”

  
	
   

  	
  Per:

  	
   (signed)
  “Dan MacDonald”

  
	
   

  	
   

  
	
   

  	
  OLYMPIA TRUST COMPANY

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   (signed)
  “Susan Mak”

  
	
   

  	
  Per:

  	
   (signed)
  “Dan Young”

  

 

38

 

THIS
IS SCHEDULE “A” TO THE WARRANT INDENTURE MADE AS OF OCTOBER 2, 2008 BETWEEN
CHALLENGER ENERGY CORP. AND OLYMPIA TRUST COMPANY AS TRUSTEE.

 

THE
WARRANTS REPRESENTED BY THIS CERTIFICATE WILL BE VOID AND OF NO VALUE UNLESS
EXERCISED BY 5:00 P.M. (CALGARY TIME) ON OR BEFORE OCTOBER 2, 2009.

 

[Include
the legend set forth in subsection 2.5(b) of this Indenture, if required.]

 

	
   

  	
   

  	
  Cusip.
  No. 15758N135

  

 

WARRANT
CERTIFICATE

 

CHALLENGER
ENERGY CORP. 

(Incorporated under the laws of the Province of Alberta)

 

	
  WARRANT

  CERTIFICATE NO.

  	
   

  	
                WARRANTS, each

  entitling the holder to acquire,

  subject to adjustment, one

  Common Share at a price of $3.50

  per share for each whole Warrant

  represented hereby.

  

 

THIS IS TO
CERTIFY THAT [·]

 

(hereinafter
referred to as the “holder”) is entitled to acquire in the manner and subject
to the restrictions and adjustments set forth herein, at any time and from time
to time until 5:00 p.m. (Calgary time) (the “Expiry Time”) on October 2,
2009 (the “Expiry Date”), one fully paid and non-assessable common share (“Common
Share”) without nominal or par value of Challenger Energy Corp. (the “Corporation”),
as such shares were constituted on October 2, 2008 at an exercise price of
$3.50, subject to adjustment as described below (the “Exercise Price”) for each
Common Share represented hereby.

 

The
Warrants represented by this certificate are issued under and pursuant to a
Warrant Indenture (hereinafter referred to as the “Indenture”) made as of October 2,
2008 between the Corporation and Olympia Trust Company (the “Trustee”).  Reference is made to the Indenture and any
instruments supplemental thereto for a full description of the rights of the
holders of the Warrants and the terms and conditions upon which the Warrants
are, or are to be, issued and held, with the same effect as if the provisions
of the Indenture and all instruments supplemental thereto were herein set
forth.  By acceptance hereof, the holder
assents to all provisions of the Indenture. 
In the event of a conflict between the provisions of this Warrant
Certificate and the Indenture, the provisions of the Indenture shall
govern.  Capitalized terms used in the
Indenture have the meaning herein as therein, unless otherwise defined.

 

The
right to acquire Common Shares maybe exercised by the holder within the time
set forth above by:

 

a.                                       duly completing and executing the Warrant Exercise Form attached
hereto; and

 

 

b.                                      surrendering this Warrant Certificate to the Trustee together with a
certified cheque payable to or to the order of the Trustee at par at the
principal offices of the Trustee in the City of Calgary for the Exercise Price
for the Common Shares subscribed for.

 

These
Warrants shall be deemed to be surrendered only upon personal delivery hereof or,
if sent by mail or other means of transmission, upon actual receipt thereof by
the Trustee at either office referred to above.

 

Upon
surrender of these Warrants, the person or persons in whose name or names the
Common Shares issuable upon exercise of the Warrants are to be issued shall be
deemed for all purposes (except as provided in the Indenture) to be the holder
or holders of record of such Common Shares and the Corporation has covenanted
that it will (subject to the provisions of the Indenture) cause the Trustee to
mail or deliver a certificate or certificates representing such Common Shares
the person or persons at the address or addresses specified in the Warrant
Exercise Form within five (5) Business Days of the receipt of this
Warrant Certificate, the Exercise Price and the Warrant Exercise Form duly
completed.

 

The
registered holder of these Warrants may acquire any lesser number of Common
Shares than the number of Common Shares which may be acquired for the Warrants
represented by this Warrant Certificate. 
In such event, the holder shall be entitled to receive a new Warrant
Certificate for the balance of the Common Shares which may be acquired.  Any fractional entitlements will be rounded
down to the nearest whole number.

 

These
Warrants and the Common Shares issuable upon exercise of the Warrants have not
been and will not be registered under the United States Securities Act of 1933,
as amended (the “U.S. Securities Act”) or the securities laws of any state in
the United States.  These Warrants may
not be exercised in the United States or by or on behalf of a U.S. person
unless an exemption is available from the registration requirements of the U.S.
Securities Act and any applicable state securities laws, and the holder
furnishes to the Corporation an opinion of counsel satisfactory to the
Corporation to such effect; provided, however, that an accredited investor (as
defined in Rule 501(a) under the U.S. Securities Act) that purchased
these Warrants from the Corporation pursuant to Rule 506 under the U.S.
Securities Act on its own behalf or on behalf of another accredited investor,
or a qualified institutional buyer (as defined in Rule 144A under the U.S.
Securities Act) (in each case, such other accredited investor being the “Original
Beneficial Purchaser”), will not be required to deliver an opinion of counsel
in connection with its exercise of these Warrants on its own behalf or on
behalf of the Original Beneficial Purchaser at a time when it, and such
Original Beneficial Purchaser, if any, are accredited investors.  The terms “United States” and “U.S. person”
are as defined in Regulation S under the U.S. Securities Act.

 

In the
event of any alteration of the Common Shares, including any subdivision,
consolidation or reclassification, and in the event of any form of
reorganization of the Corporation, including any amalgamation, merger or
arrangement, an adjustment shall be made to the terms of the Warrants such that
the holders of Warrants shall, upon exercise of the Warrants following the
occurrence of any of those events, be entitled to receive the same number and
kind of securities that they would have been entitled to receive had they
exercised their Warrants immediately prior to the occurrence of those events,
provided that no fractional shares will be issued.  The Indenture also provides that the exercise
price per Common Share is subject to adjustment in certain events.

 

2

 

The registered holder of this Warrant Certificate may, at any time
prior to the Expiry Time, upon surrender hereof to the Trustee at its principal
office in the City of Calgary, exchange this Warrant Certificate for other
Warrant Certificates entitling the holder to acquire, in the aggregate, the
same number of Common Shares as may be acquired under this Warrant Certificate.

 

The holding of the Warrants evidenced by this Warrant Certificate shall
not constitute the holder hereof a shareholder of the Corporation or entitle
the holder to any right or interest in respect thereof except as expressly
provided in the Indenture and in this Warrant Certificate.

 

The Indenture provides that all holders of Warrants shall be bound by
any resolution passed at a meeting of the holders held in accordance with the
provisions of the Indenture and resolutions signed by the holders of Warrants
entitled to acquire a specified majority of the Common Shares which may be
acquired pursuant to all then outstanding Warrants.

 

The Warrants evidenced by this Warrant Certificate may be transferred
on the register kept at the offices of the Trustee by the registered holder
hereof or its legal representatives or its attorney duly appointed by an
instrument in writing in form and execution satisfactory to the Trustee, upon
compliance with the conditions prescribed in the Indenture and upon compliance
with such reasonable requirements as the Trustee may prescribe.

 

This Warrant Certificate shall not be valid for any purpose whatever
unless and until it has been certified by or on behalf of the Trustee.

 

Time shall be of the essence hereof.

 

IN WITNESS WHEREOF the Corporation has caused this Warrant Certificate
to be signed by its duly authorized officer as of October 2, 2008.

 

	
   

  	
  CHALLENGER ENERGY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Per:

  	
   

  

 

Certified
by:

OLYMPIA
TRUST COMPANY 

Trustee

 

 

	
  By:

  	
   

  	
   

  

 

3

 

TRANSFER OF
WARRANTS

 

	
  FOR VALUE
  RECEIVED, the undersigned hereby sells, assigns and transfers to                                             [name
  and address of Transferee],                                                  [number of Warrants] Warrants of Challenger Energy Corp. registered
  in the name of the undersigned on the records of Olympia Trust Company
  represented by the Warrant Certificate attached and irrevocably appoints
  Olympia Trust Company the attorney of the undersigned to transfer the said
  securities on the books or register with full power of substitution.

  

 

	
   

  	
  DATED the                       

  	
  day of                                     

  	
  , 200

  

 

	
   

  	
   

  	
   

  
	
    Signature Guaranteed

  	
   

  	
    (Signature of Warrantholder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Name of Warrantholder

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
    Address of Warrantholder

  

 

Instructions:

 

1.                                       Signature of the Warrantholder must be the signature of the person
appearing on the face of this Warrant Certificate.

 

2.                                       If the Transfer Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or any
person acting in a fiduciary or representative capacity, the certificate must
be accompanied by evidence of authority to sign satisfactory to the Trustee and
the Corporation.

 

3.                                       The signature on the Transfer Form must be guaranteed by a
Schedule A major chartered bank/trust company, or a member of an acceptable
Medallion Guarantee Program.  The
guarantor must affix a stamp bearing the actual words “Signature Guaranteed”.  Please note signature guarantees are not
accepted from Treasury Branches or Credit Unions unless they are members of the
Stamp Medallion Program.  Please note
that in the United States, signature guarantees must be done by members of the
Medallion Signature Guarantee Program only.

 

4.                                       If the Warrant Certificate includes a restrictive legend relating to
the United States Securities Act of 1933, as amended (the “U.S. Securities Act”),
this transfer form must be accompanied either (a) by a completed and
executed declaration for removal of legend in the form attached as Exhibit A
to the Warrant Certificate (or as otherwise prescribed by the Corporation), or (b) by
an opinion of counsel to the effect that the transfer is in compliance with the
requirements of the U.S. Securities Act and all applicable state securities
laws, or other evidence thereof (which opinion or other evidence must be in
form and substance satisfactory to the Corporation).  Warrantholders transferring Warrants pursuant
to paragraph 4(b) should contact Challenger Energy Corp. in advance to
determine whether any such opinion of counsel or other evidence of exemption
will be satisfactory.

 

 

EXERCISE FORM

 

	
  TO:

  	
   

  	
  Challenger
  Energy Corp. (The “Corporation”)

  
	
   

  	
   

  	
   

  
	
  AND
  TO:

  	
   

  	
  Olympia
  Trust Company (The “Trustee”)

  
	
   

  	
   

  	
   

  
	
  DELIVER
  TO:

  	
   

  	
  Suite 2300, 125-9 Avenue S.E.

  
	
   

  	
   

  	
  Calgary, Alberta

  
	
   

  	
   

  	
  T2G 0P6

  

 

The undersigned hereby exercises the right to acquire Common Shares of Challenger Energy Corp. as constituted on October 2,
2008 (or such number of other securities or property to which such Warrants
entitle the undersigned in lieu thereof or in addition thereto under the
provisions of the Indenture referred to in the accompanying Warrant
Certificate) in accordance with and subject to the provisions of such
Indenture.

 

	
  The
  Common Shares (or other securities or property) are to be issued as follows:

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  
	
   

  	
  (print
  clearly)

  	
   

  
	
   

  	
   

  	
   

  
	
  Address
  in full:

  	
   

  
	
   

  
	
  Social
  Insurance Number:

  	
   

  
	
   

  	
   

  
	
  Number
  of Common Shares:

  	
   

  
							

 

 

Note:
If further nominees intended, please attach (and initial) schedule giving these
particulars.

 

The
undersigned holder hereby represents, warrants and certifies as follows (check one and only one of the following boxes that is applicable):

 

A. o  The undersigned holder (i) at the time of
exercise of these Warrants is not in the United States; (ii) is not a
“U.S. person” as defined in Regulation S under the United States Securities Act
of 1933, as amended (the “U.S. Securities Act”) and is not exercising these
Warrants on behalf of a “U.S. person,” or a person in the United States, and
(iii) did not execute or deliver this Warrant Exercise Form in the
United States.

 

B. o  The undersigned (i) originally purchased
the Warrants on its own behalf or on behalf of a beneficial purchaser (a
“Beneficial Purchaser”), either (A) directly from the Corporation pursuant
to the Corporation’s offering of units comprised of Common Shares and Warrants
at a time when the holder was and any Beneficial Purchaser was an accredited
investor, as defined in Rule 501(a) under the U.S. Securities Act
(“Accredited Investor”), or (B) from the agents named in the Corporation’s
Canadian final prospectus dated November 24, 2004 or their U.S. affiliates
at a time when the holder was and any Beneficial Purchaser was a qualified
institutional buyer, as defined in Rule 144A under the U.S. Securities
Act; (ii) is exercising the Warrants solely for its own account or for the
account of the Beneficial Purchaser, if any, and not on behalf of any other
person; and (iii) is, and the Beneficial Purchaser, if any, is, an
Accredited Investor on the date hereof.

 

C. o  An exemption from registration under the U.S.
Securities Act and any applicable state securities law is available, and
attached hereto is an opinion of counsel to such effect, it being understood
that any opinion of counsel tendered in connection with the exercise of the
Warrants must be in form and substance satisfactory to the Corporation.

 

2

 

	
   

  	
  Dated this                                    

  	
  day of                                     

  	
  , 200

  

 

	
   

  	
   

  	
   

  
	
  Signature
  Guaranteed

  	
   

  	
  (Signature
  of Warrantholder)

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print
  full name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print
  full address

  

 

Instructions:

 

1.                                       The registered holder may exercise its right to receive Common
Shares by completing this form and surrendering this form and the Warrant
Certificate representing the Warrants being exercised together with the exercise
price to Olympia Trust Company at its principal offices at Suite 2300,
125-9 Avenue S.E., Calgary, Alberta T2G 0P6. 
Certificates for Common Shares will be delivered or mailed within five (5) business
days after the exercise of the Warrants.

 

2.                                       If the Warrant Exercise Form indicates that Common Shares are
to be issued to a person or persons other than the registered holder of the
Certificate the signature of such holder must be guaranteed by a Schedule A
major chartered bank/trust company, or a member of an acceptable Medallion
Guarantee Program.  The guarantor must
affix a stamp bearing the actual words “Signature Guaranteed”.  Please note signature guarantees are not
accepted from Treasury Branches or Credit Unions unless they are members of the
Stamp Medallion Program.  Please note
that in the United States, signature guarantees must be done by members of the
Medallion Signature Guarantee Program only.

 

3.                                       If the Warrant Exercise Form is signed by a trustee, executor,
administrator, curator, guardian, attorney, officer of a corporation or any
person acting in a fiduciary or representative capacity, the certificate must
be accompanied by evidence of authority to sign satisfactory to the Trustee and
the Corporation.

 

4.                                       Certificates representing Common Shares will not be registered or
delivered to an address in the United States unless Box B or Box C above is
checked.

 

5.                                       If Box B or Box C above is checked, the certificate representing the
Common Shares will bear a legend in the form set forth in the Indenture
restricting transfer without registration under the U.S. Securities Act and
applicable state securities laws unless an exemption from registration is
available.

 

3

 

EXHIBIT A

 

FORM OF DECLARATION FOR REMOVAL OF LEGEND

 

TO:                            Olympia Trust Company 

                                                as registrar and transfer agent for Common Shares and Warrants of
Challenger Energy Corp.

 

The undersigned (a) acknowledges that the sale of the securities
of Challenger Energy Corp.(the “Corporation”) to which this declaration relates
is being made in reliance on Rule 904 of Regulation S under the United
States Securities Act of 1933, as amended (the “1933 Act”) and (b) certifies
that (1) the undersigned is not an affiliate of the Corporation as that
term is defined in Rule 405 under the 1933 Act, (2) the offer of such
securities was not made to a person in the United States and either (A) at
the time the buy order was originated, the buyer was outside the United States,
or the seller and any person acting on its behalf reasonably believed that the
buyer was outside the United States, or (B) the transaction was executed
in, on or through the facilities of The Toronto Stock Exchange or the TSX
Venture Exchange or any other designated offshore securities market as defined
in Regulation S under the 1933 Act 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 1933
Act), (5) the seller does not intend to replace the securities sold in
reliance on Rule 904 of the 1933 Act with fungible unrestricted securities
and (6) the contemplated sale is not a transaction, or part of a series of
transactions which, although in technical compliance with Regulation S, is part
of a plan or scheme to evade the registration provisions of the 1933 Act.  Terms used herein have the meanings given to
them by Regulation S under the 1933 Act.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Name
  of Seller

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

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