Document:

Exhibit 10.24

EXHIBIT 10.24

IVANHOE ENERGY INC.

- and -

MACQUARIE CAPITAL MARKETS CANADA LTD.

- and -

CIBC MELLON TRUST COMPANY

 

Share Purchase Warrant Indenture

Dated as of February 25, 2010

Providing for the Issue of Common Share Purchase Warrants

of Ivanhoe Energy Inc.

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1 INTERPRETATION
	 	 	5	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	 5	 
	1.2 Headings
	 	 	 9	 
	1.3 Gender
	 	 	 9	 
	1.4 Business Day
	 	 	 9	 
	1.5
Meaning of
“Outstanding”
	 	 	 9	 
	1.6 Time
	 	 	 10	 
	1.7 Applicable Law
	 	 	 10	 
	 
	 	 	 	 
	ARTICLE 2 ISSUE AND PURCHASE OF OPTION WARRANTS
	 	 	10	 
	 
	 	 	 	 
	2.1 Creation and Issue of Option Warrants
	 	 	 10	 
	2.2 Book Entry System
	 	 	 10	 
	2.3 Global Warrant Certificates
	 	 	 11	 
	2.4 Form and Terms of Option Warrants
	 	 	12	 
	2.5 Registration and Transfer of Option Warrants
	 	 	13	 
	2.6 List of Warrantholders
	 	 	13	 
	2.7 Transfer and Ownership of Option Warrants
	 	 	13	 
	2.8 Legends
	 	 	14	 
	2.9 Warrantholders Not Shareholders
	 	 	16	 
	2.10 Signing of Option Warrants
	 	 	16	 
	2.11 Countersigning
	 	 	17	 
	2.12 Loss, Mutilation, Destruction or Theft of Option Warrants
	 	 	17	 
	2.13 Issue of Option Warrants
	 	 	18	 
	2.14 Fractions
	 	 	18	 
	2.15 Option Warrants to Rank Pari Passu
	 	 	18	 
	2.16 Exchange of Option Warrants
	 	 	18	 
	2.17 Recognition of Registered Holder
	 	 	19	 
	2.18 Cancellation of Surrendered Option Warrants
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 3 COVENANTS OF THE COMPANY
	 	 	19	 
	 
	 	 	 	 
	3.1 Covenants of the Company
	 	 	19	 
	3.2 Suits by Warrantholder
	 	 	21	 
	3.3 Warrant Agent May Institute Proceedings
	 	 	21	 
	 
	 	 	 	 
	ARTICLE 4 ADJUSTMENT OF SUBSCRIPTION RIGHTS
	 	 	21	 
	 
	 	 	 	 
	4.1 Adjustment of Subscription Rights
	 	 	21	 
	4.2 Proceedings Prior to any Action Requiring Adjustment
	 	 	26	 
	4.3 Certificate of Adjustment
	 	 	26	 
	4.4 Adjustment Rules
	 	 	27	 
	4.5 Notice of Special Matters
	 	 	27	 
	4.6 No Action after Notice
	 	 	27	 
	4.7 Protection of Warrant Agent
	 	 	28	 
	 
	 	 	 	 
	ARTICLE 5 EXERCISE AND CANCELLATION OF OPTION WARRANTS
	 	 	28	 
	 
	 	 	 	 
	5.1 Exercise of Option Warrants
	 	 	28	 
	5.2 Effect of Exercise of Option Warrants
	 	 	31	 
	5.3 Postponement of Delivery of Certificates
	 	 	32	 
	5.4 Option Warrants Void after Expiry Time
	 	 	32	 
	5.5 Fractions
	 	 	32	 
	5.6 Partial Exercise of Option Warrants
	 	 	32	 
	5.7 Accounting and Recording
	 	 	33	 
	5.8 Option Warrant Exercise Proceeds
	 	 	33	 
	 
	 	 	 	 

 

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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 6 MEETINGS OF OPTION WARRANTHOLDERS
	 	 	33	 
	 
	 	 	 	 
	6.1 Convening of Meeting
	 	 	33	 
	6.2 Notice
	 	 	33	 
	6.3 Chairman
	 	 	33	 
	6.4 Quorum
	 	 	34	 
	6.5 Show of Hands
	 	 	34	 
	6.6 Poll
	 	 	34	 
	6.7 Regulations
	 	 	35	 
	6.8 Minutes
	 	 	35	 
	6.9 Powers Exercisable by Extraordinary Resolution
	 	 	35	 
	6.10 Meaning of “Extraordinary Resolution”
	 	 	36	 
	6.11 Powers Cumulative
	 	 	37	 
	6.12 Company, Warrantholders and Warrant Agent May be Represented
	 	 	37	 
	6.13 Instruments in Writing
	 	 	37	 
	6.14 Binding Effect of Resolutions
	 	 	37	 
	6.15 Holdings by the Company or Subsidiaries of the Company Disregarded
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 7 SUPPLEMENTAL AGREEMENTS, MERGER, SUCCESSORS
	 	 	38	 
	 
	 	 	 	 
	7.1 Provision for Supplemental Agreements for Certain Purposes
	 	 	38	 
	7.2 Company May Consolidate, etc. on Certain Terms
	 	 	39	 
	7.3 Successor Body Corporate Substituted
	 	 	39	 
	 
	 	 	 	 
	ARTICLE 8 CONCERNING THE WARRANT AGENT
	 	 	39	 
	 
	 	 	 	 
	8.1 No Conflict of Interest
	 	 	39	 
	8.2 Replacement of Warrant Agent
	 	 	40	 
	8.3 Duty of Warrant Agent
	 	 	40	 
	8.4 Experts, Advisors and Agents
	 	 	40	 
	8.5 Warrant Agent Not Required to Give Security
	 	 	41	 
	8.6 Warrant Agent Not Ordinarily Bound
	 	 	41	 
	8.7 Warrant Agent may Rely on Certificates
	 	 	42	 
	8.8 Warrant Agent’s Liability
	 	 	42	 
	8.9 Indemnification
	 	 	43	 
	8.10 No Representation as to Validity
	 	 	43	 
	8.11 Acceptance of Duties
	 	 	43	 
	8.12 Contracting with Company
	 	 	43	 
	8.13 Warrant Agent’s Authority to Carry on Business
	 	 	43	 
	8.14 Monetary Distributions
	 	 	44	 
	8.15 Trust Indenture Legislation
	 	 	44	 
	8.16 Limitations on Warrant Agent
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 9 NOTICE AND CERTIFICATES
	 	 	45	 
	 
	 	 	 	 
	9.1 Notice to Company or Agent
	 	 	45	 
	9.2 Notice to Warrantholders
	 	 	45	 
	9.3 Notice to Warrant Agent
	 	 	46	 
	9.4 Mail Service Interruption
	 	 	46	 
	9.5 General Provisions as to Certificates
	 	 	47	 
	 
	 	 	 	 
	ARTICLE 10 GENERAL PROVISIONS
	 	 	48	 
	 
	 	 	 	 
	10.1 Power of Board of Directors
	 	 	48	 
	10.2 Formal Date and Execution Date
	 	 	48	 
	10.3 Further Assurances
	 	 	48	 
	10.4 Unenforceable Terms
	 	 	48	 
	10.5 Entire Agreement
	 	 	48	 
	10.6 Amendments
	 	 	48	 
	10.7 Counterparts
	 	 	49	 
	10.8 No Waiver
	 	 	49	 
	10.9 Enurement
	 	 	49	 
	10.10 Conflicts
	 	 	49	 
	10.11 Assignment
	 	 	49	 

 

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THIS WARRANT INDENTURE made as of the 25th day of February, 2010.

BETWEEN:

IVANHOE ENERGY INC., a corporation incorporated under the laws
of the Yukon Territory

(the “Company”)

AND:

MACQUARIE CAPITAL MARKETS CANADA LTD., a company incorporated
under the laws of Ontario

(the “Agent”)

AND:

CIBC MELLON TRUST COMPANY, a trust company existing under the
laws of Canada and having an office in the City of Vancouver

(the “Warrant Agent”)

WHEREAS:

	(A)	 	terms used in these recitals which are not otherwise defined have the meanings assigned to
them in Article 1;

	 
	(B)	 	pursuant to the terms of the Agency Agreement and the Option Special Warrants, the Company
proposes to create and issue the Option Warrants to be constituted and issued in the manner
set forth herein;

	 
	(C)	 	the Company is authorized to create and issue the Option Warrants;

	 
	(D)	 	each one (1) Option Warrant will entitle the holder to acquire upon exercise thereof one (1)
Common Share, subject to adjustment and on the terms and conditions as set forth herein;

	 
	(E)	 	the Company represents to the Warrant Agent that all necessary resolutions of the directors
of the Company have been duly enacted, passed or confirmed and all other proceedings taken and
conditions complied with to authorize the execution and delivery of this Indenture and the
execution and issue of the Option Warrants and to make the same legal and valid and binding on
the Company in accordance with the laws relating to the Company;

	 
	(F)	 	the foregoing recitals are made as representations and statements of fact by the Company and
not by the Warrant Agent and the Warrant Agent shall not be liable for or by reason
of any statements of fact or recitals in this Indenture and all such statements are and
shall be deemed to be made by the Company;

 

- 4 -

 

	(G)	 	the Warrant Agent has agreed to act as Warrant Agent for the Warrantholders on the terms and
conditions herein set forth; and

	 
	(H)	 	all things necessary have been done and performed to make the Option Warrants, when certified
by the Warrant Agent and issued as in this Indenture provided, legal, valid and binding upon
the Company with the benefits of and subject to the terms of this Indenture.

NOW THEREFORE, in consideration of the premises and in further consideration of the mutual
covenants herein set forth, the parties hereto agree as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

In this Indenture unless there is something in the subject matter or context inconsistent
therewith, the following words have the respective meanings indicated below:

	 	(a)	 	“Agency Agreement” means the agency agreement dated as of January 12, 2010
between the Company and the Agent;

	 
	 	(b)	 	“Applicable Legislation” has the meaning set forth in Section 8.15 hereof;

	 
	 	(c)	 	“Applicable Securities Laws” means, collectively, the applicable securities
laws of the Qualifying Provinces, the securities laws of the United States and the
states thereof, the regulations, rules, rulings and orders made thereunder, the
applicable policy statements issued by the securities regulatory authorities in the
Qualifying Provinces, the United States Securities and Exchange Commission and the
securities legislation and policies of each other relevant jurisdiction;

	 
	 	(d)	 	“Beneficial Owners” means any person who holds a beneficial interest in a
Global Warrant Certificate as shown on the books of the Depository or a Participant;

	 
	 	(e)	 	“Book Entry Only System” means the book-based securities transfer system
administered by a Depository in accordance with its operating procedures;

	 
	 	(f)	 	“Business Day” means any day except Saturday, Sunday or a statutory or banking
holiday in Vancouver, British Columbia;

	 
	 	(g)	 	“Certificate of the Company” means a certificate signed by any one of the
President, Vice-President, Secretary or Chief Financial Officer of the Company in
accordance with Section 9.5;

	 
	 	(h)	 	“Common Shares” means, collectively, the fully paid and non-assessable common
 shares in the capital of the Company as presently constituted and, except
where the context hereof otherwise requires, includes common shares issued or to be
issued in accordance with the exercise of Option Warrants hereunder;

 

 - 5 - 

 

	 	(i)	 	“Company’s auditors” means the firm of accountants appointed by the
shareholders of the Company as the auditors of the Company from time to time;

	 
	 	(j)	 	“counsel” means a barrister and solicitor or a firm of barristers and
solicitors retained by the Warrant Agent or retained by the Company and acceptable to
the Warrant Agent;

	 
	 	(k)	 	“Current Market Price” of a Common Share at any date means the price per share
equal to the volume weighted average price at which the Common Shares have traded on
the TSX for any 20 consecutive Trading Days immediately preceding such date or, if the
Common Shares are not listed on the TSX, on any other stock exchange or securities
market on which the Common Shares are then listed as may be selected by the directors,
or, if the Common Shares are not listed on any stock exchange, then on the
over-the-counter market, with the weighted average price per Common Share being
determined by dividing the aggregate sale price of all Common Shares sold on such stock
exchange or market, as the case may be, during such 20 consecutive Trading Day period
by the aggregate number of Common Shares so sold or, if not traded on any recognized
market or exchange, as determined by the directors, acting reasonably;

	 
	 	(l)	 	“Depository” means CDS Clearing and Depository Services Inc. (“CDS”), or its
successor, or any other depository offering a book based securities registration and
transfer system similar to that administered by CDS which the Company, with the consent
of the Trustee, acting reasonably, may designate;

	 
	 	(m)	 	“director” means a director of the Company for the time being and reference
without more to action by the directors means action by the directors of the Company as
a board or, whenever duly empowered, action by a committee of the board;

	 
	 	(n)	 	“Document” shall have the meaning ascribed to such term in Section 9.5 hereof;

	 
	 	(o)	 	“Exercise Date” has the meaning set forth in Section 5.2 hereof;

	 
	 	(p)	 	“Exercise Consideration” means the sum of Cdn.$3.16, being the amount payable
in connection with the exercise of one (1) Warrant in order to purchase one (1) Common
Share, subject to adjustment under Article 4;

	 
	 	(q)	 	“Expiry Date” means January 26, 2011, representing the first anniversary of the
closing date of the issue of the Initial Special Warrants;

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

	 
	 	(s)	 	“Extraordinary Resolution” has the meaning set forth in Section 6.10 and 6.13
hereof;

 

 - 6 - 

 

	 	(t)	 	“Final Prospectus” means the (final) short form prospectus of the Company which
qualifies, among other things, the distribution of the Option Warrants in the
Qualifying Jurisdictions and includes any amendments or supplements thereto;

	 
	 	(u)	 	“Final Receipt” means the final decision document in respect of the Final
Prospectus issued in accordance with Multilateral Instrument 11-102 — Passport System
and National Policy 11-202 — Process for Prospectus Reviews in Multiple Jurisdictions
by the Ontario Securities Commission and the Company’s principal regulator on its own
behalf and on behalf of the regulators in the Qualifying Jurisdictions (other than the
Ontario Securities Commission);

	 
	 	(v)	 	“Global Warrant Certificate” means an Option Warrant Certificate that is issued
to and registered in the name of the Depository or its nominee;

	 
	 	(w)	 	“Indenture”, “hereto”, “hereunder”, “hereof”, “hereby” and similar expressions
mean or refer to this Indenture and not to any particular Article, Section, Subsection,
paragraph, clause, subdivision or portion hereof and include any agreement, deed or
instrument supplemental or ancillary hereto and the expressions “Article”, “Section”,
“Subsection” and “paragraph” followed by a number mean and refer to the specified
Articles, Sections, Subsections or paragraphs of this Indenture;

	 
	 	(x)	 	“Initial Special Warrants” means special warrants of the Company issued
pursuant to the Initial Special Warrant Indenture, each special warrant entitling the
holder thereof to one Common Share and one-quarter (0.25) of one Initial Warrant upon
conversion or deemed conversion thereof;

	 
	 	(y)	 	“Initial Special Warrant Indenture” means the Special Warrant Indenture among
the Company, the Agent and the Warrant Agent dated January 26, 2010;

	 
	 	(z)	 	“Initial Warrant Indenture” means the Common Share purchase Warrant Indenture
among the Company, the Agent and the Warrant Agent dated January 26, 2010;

	 
	 	(aa)	 	“Initial Warrants” means, collectively, the Common Share purchase warrants of
the Company issued and certified under the Initial Warrant Indenture;

	 
	 	(bb)	 	“Issue Date” means in respect of any Option Warrants issued hereunder, their
date of issue as shown on the corresponding Option Warrant Certificate;

	 
	 	(cc)	 	“Option” has the meaning ascribed thereto in the Agency Agreement;

	 
	 	(dd)	 	“Option Special Warrant Indenture” means the Special Warrant Indenture among
the Company, the Agent and the Warrant Agent dated February 25, 2010;

	 
	 	(ee)	 	“Option Special Warrants” means special warrants of the Company issued pursuant
to the Option Special Warrant Indenture, each special warrant entitling
the holder thereof to one Common Share and one-quarter (0.25) of one Option Warrant
upon conversion or deemed conversion thereof;

 

 - 7 - 

 

	 	(ff)	 	“Option Warrant Certificate” means a certificate substantially in the form
attached hereto as Schedule “A” evidencing one or more Option Warrants;

	 
	 	(gg)	 	“Option Warrants” means, collectively, the Common Share purchase warrants of
the Company issued and certified hereunder entitling holders thereof to receive, upon
the exercise of one (1) such Common Share purchase warrant, one (1) Common Share
subject to adjustment in accordance with Article 4 hereof;

	 
	 	(hh)	 	“Participant” means a person recognized by the Depository as a participant in
the Book-Entry Only System administered by the Depository;

	 
	 	(ii)	 	“person” means any entity whatsoever including, without limitation, an
individual, a corporation, a partnership, a trust, an unincorporated organization, a
syndicate and words importing persons have a similar meaning;

	 
	 	(jj)	 	“Qualifying Provinces” has the meaning set out in the Option Special Warrant
Indenture;

	 
	 	(kk)	 	“Regulation S” means Regulation S under the U.S. Securities Act;

	 
	 	(ll)	 	“Share Rate” has the meaning ascribed to such term in Section 4.1(b) hereto;

	 
	 	(mm)	 	“subsidiary of the Company” means a corporation of which voting securities
carrying a majority of votes attached to all outstanding voting securities are owned,
directly or indirectly, by the Company or by one or more subsidiaries of the Company,
or by the Company and one or more subsidiaries of the Company, and, as used in this
definition, voting securities means securities, other than debt securities, carrying a
voting right to elect directors either under all circumstances or under some
circumstances that may have occurred and are continuing;

	 
	 	(nn)	 	“Trading Day”, with respect to any stock exchange or over-the-counter market,
means a day on which shares may be traded through the facilities of such stock exchange
or in such over-the-counter market and otherwise means a day on which shares may be
traded through the facilities of the principal stock exchange on which the Common
Shares are then listed (or, if the Common Shares are not then listed on any stock
exchange, then in the over-the-counter market).

	 
	 	(oo)	 	“TSX” means the Toronto Stock Exchange;

	 
	 	(pp)	 	“United States” means the “United States” as that term is defined in Rule 902
of Regulation S;

	 
	 	(qq)	 	“U.S. Person” means a “U.S. person” as that term is defined in Rule 902 of
Regulation S;

 

 - 8 - 

 

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

	 
	 	(ss)	 	“Warrantholder” or “holder” means the registered holder of an Option Warrant
hereunder;

	 
	 	(tt)	 	“Warrantholders’ Request” means an instrument, signed in one or more
counterparts by Warrantholders and/or holders of Initial Warrants who hold in the
aggregate not less than 10% of the total number of Initial Warrants and Option Warrants
then outstanding, requesting the Warrant Agent to take some action or proceeding
specified therein; and

	 
	 	(uu)	 	“written direction of the Company”, “written order of the Company” and any
other document required to be signed by the Company, mean, respectively, a written
direction, order or request, consent or other document signed in the name of the
Company by any of the President, Vice-President, Secretary or Chief Financial Officer
of the Company, and may consist of one or more instruments so executed.

1.2 Headings

The division of this Indenture into Articles, Sections, Subsections, paragraphs or other
subdivisions, 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 or the Option Warrants.

1.3 Gender

In this Indenture wherever the context permits or requires words importing number shall
include the singular and the plural and words importing gender shall include all genders.

1.4 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 on or before the requisite time
on the next succeeding day that is a Business Day.

1.5 Meaning of “Outstanding”

Every Option Warrant represented by an Option Warrant Certificate countersigned and delivered
by the Warrant Agent hereunder shall be deemed to be outstanding until it shall be cancelled or
delivered to the Warrant Agent for cancellation or until the Expiry Time; provided that where a new
Option Warrant Certificate has been issued pursuant to Section 2.12 hereof to replace one which has
been mutilated, lost, stolen or destroyed, the Option Warrants represented by any such new Option
Warrant Certificate shall be counted for the purpose of determining the aggregate number of Option
Warrants outstanding.

 

 - 9 - 

 

1.6 Time

Time shall be of the essence hereof and of the Option Warrants issued hereunder.

1.7 Applicable Law

This Indenture and the Option Warrants shall be governed by and construed in accordance with
the laws of the Province of British Columbia. The parties hereto submit to the exclusive
jurisdiction of the courts in the Province of British Columbia. The parties agree that any
litigation between the parties which arises pursuant to or in connection with this Indenture or any
of its provisions, shall be referred to the courts in the Province of British Columbia and shall
not be referred to the courts in any other jurisdiction.

ARTICLE 2

ISSUE AND PURCHASE OF OPTION WARRANTS

2.1 Creation and Issue of Option Warrants

A total of up to 2,083,333 Option Warrants are hereby created and authorized to be issued and
shall be executed by the Company and certified by, or on behalf of, the Warrant Agent upon the
written order of the Company and delivered by the Warrant Agent to the Company in accordance with
the written direction of the Company. Subject to the provisions hereof, the Option Warrants to be
issued under this Indenture shall be limited in the aggregate to 2,083,333 Option Warrants and one
(1) such Option Warrant shall entitle a holder, upon exercise thereof, to acquire one (1) Common
Share (except in certain circumstances noted below) and/or such other kind and amount of securities
or property determined pursuant to the provisions of Article 4, as the case may be.

2.2 Book Entry System

	 	(a)	 	Unless the Book-Entry Only System is terminated or required to do so by
applicable law, Warrant Certificates will only be issued in the form of a Global
Warrant Certificate, which will be registered in the name of and deposited with the
Depository or its nominee.

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

 

 - 10 - 

 

2.3 Global Warrant Certificates

	 	(a)	 	The Company shall issue the Option Warrants pursuant to one or more Global
Warrant Certificates registered in the name of the Depository or its nominee and the
Company shall execute and the Warrant Agent shall certify and deliver one or more
Global Warrant Certificates that shall represent the aggregate number of outstanding
Option Warrants.

	 
	 	(b)	 	Transfers of beneficial ownership in any Option Warrant represented by a Global
Warrant Certificate will be effected only (i) with respect to the interest of a
Participant, through records maintained by the Depository or its nominee for such
Global Warrant Certificate, and (ii) with respect to the interest of any person other
than a Participant, through records maintained by Participants. Beneficial Owners who
are not Participants but who desire to sell or otherwise transfer ownership of or any
other interest in Option Warrants represented by such Global Warrant Certificate may do
so only through a Participant.

	 
	 	(c)	 	The rights of Beneficial Owners shall be limited to those established by
applicable law and agreements between the Depository and the Participants and between
such Participants and Beneficial Owners and must be exercised through a Participant in
accordance with the rules and procedures of the Depository.

	 
	 	(d)	 	Subject to subsection 2.3(e) and 2.3(f), neither the Company nor the Warrant
Agent shall be under any obligation to deliver to any Participant or Beneficial Owner,
nor shall any Participant or Beneficial Owner have any right to require the delivery
of, a certificate or other instrument evidencing any interest in Option Warrants except
where physical certificates evidencing ownership in the Option Warrants.

	 
	 	(e)	 	If any Option Warrant is represented by a Global Warrant Certificate and any of
the following events occurs:

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

	 
	 	(ii)	 	the Company has determined, in is sole discretion, to terminate
the Book-Entry Only System in respect of such Global Warrant Certificate and
has communicated such determination to the Warrant Agent in writing;

 

 - 11 - 

 

	 	(iii)	 	the Company or the Depository is required by applicable law to
take the action contemplated in this subsection 2.3(e); or

	 
	 	(iv)	 	the Book-Entry Only System administered by the Depository
ceases to exist;

then one or more definitive fully registered Option Warrant Certificates shall be
executed by the Company and certified and delivered by the Warrant Agent to the
Depository in exchange for the Global Warrant Certificate(s) held by the Depository.

	 	(f)	 	Fully registered Option Warrant Certificates issued and exchanged pursuant to
subsection 2.3(e) shall be registered in such names and in such denominations as the
Depository shall instruct the Warrant Agent, provided that the aggregate number of
Option Warrants represented by such Option Warrant Certificates shall be equal to the
aggregate number of Option Warrants represented by the Global Warrant Certificate(s) so
exchanged. Upon exchange of a Global Warrant Certificate for one or more Option Warrant
Certificates in definitive form, such Global Warrant Certificate shall be cancelled by
the Warrant Agent.

	 
	 	(g)	 	Notwithstanding anything herein or in the terms of the Option Warrant
Certificates to the contrary, neither the Company nor the Warrant Agent nor any agent
thereof shall have any responsibility or liability for (i) the records maintained by
the Depository relating to any ownership interests or any other interest in the Option
Warrants or the depository system maintained by the Depository, or payments made on
account of any ownership interest or any other interest of any person in any Option
Warrant represented by any Global Warrant Certificate (other than the applicable
Depository or its nominee), (ii) maintaining, supervising or reviewing any records of
the Depository or any Participant relating to any such interest, or (iii) any advice or
representation made or given by the Depository or those contained herein that relate to
the rules and regulations of the Depository or any action to be taken by the Depository
on its own direction or at the direction of any Participant.

	 
	 	(h)	 	The provisions of Sections 2.6 and 2.7 with respect to the transfer of Option
Warrants are subject to the provisions of this section 2.3 while the Option Warrants
are represented by Global Warrant Certificate(s).

2.4 Form and Terms of Option Warrants

The Option Warrants shall be issued pursuant to one or more Global Warrant Certificates,
including all replacements issued in accordance with this Indenture, substantially in the form set
out in Schedule “A” hereto with, subject to the provisions of this Indenture, such additions,
variations and/or omissions as may from time to time be agreed upon between the Company and
the Warrant Agent, shall be dated as of the Issue Date, and shall be numbered or lettered in
such manner and shall have such legends as the Company, with the approval of the Warrant Agent, may
prescribe. All Option Warrants shall, save as to denominations, be of like tenor and effect. No
change in the form of the Option Warrant Certificate shall be required by reason of any adjustment
made pursuant to Article 4 hereof. Option Warrant Certificates may be engraved, lithographed or
printed or such combination thereof as the Company with the approval of the Warrant Agent may
determine.

 

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2.5 Registration and Transfer of Option Warrants

The Company hereby appoints the Warrant Agent as the registrar and transfer agent of the
Option Warrants and the Warrant Agent shall maintain a register of the holders of the Option
Warrants at its principal stock transfer office in the City of Vancouver, which shall be open for
inspection by any agent or representative of the Company or a Warrantholder, in which shall be
entered the name and addresses of the Warrantholders and the number of Option Warrants held by them
and all other information required by law, and in which will be recorded all transfers of the
Option Warrants and the date and other particulars of each transfer.

2.6 List of Warrantholders

The Warrant Agent shall, from time to time when requested to do so by the Company in writing,
furnish the Company with a list of the names and addresses of the Warrantholders entered in the
register kept by the Warrant Agent and showing the number of Option Warrants held by each such
holder.

2.7 Transfer and Ownership of Option Warrants

Unless the Company has instructed the Warrant Agent in writing to waive any or all of the
following requirements, Option Warrants may be transferred upon receipt by the Warrant Agent of a
duly completed and executed transfer instrument in the form attached to the Option Warrant
Certificate, executed by the registered holder or his executors, administrators or other legal
representatives or his or their attorney duly appointed by an instrument in writing in form and
execution satisfactory to the Warrant Agent, together with evidence to its reasonable satisfaction
that the transferee of such Option Warrants is:

	 	(a)	 	the executor, administrator, heir or legal representative of the heirs of the
estate of a deceased Warrantholder;

	 
	 	(b)	 	a guardian, committee, Warrant Agent, curator or tutor representing a
Warrantholder who is an infant, an incompetent person or a missing person;

	 
	 	(c)	 	a liquidator of, or a Warrant Agent in bankruptcy for, a Warrantholder; or

	 
	 	(d)	 	a transferee of a Warrantholder who provides the Warrant Agent with evidence
satisfactory to the Warrant Agent and the Company, acting reasonably, including but not
limited to a properly completed and executed declaration attached as Exhibit “A” to the
transfer form attached to the Warrant Certificate, that such transferee is/was either:
(i) not in the United States at the time the buy order for
the Option Warrants was executed, not acquiring the Option Warrants for the account
or benefit of a U.S. Person or a person in the United States and was not offered the
Option Warrants in the United States, or (ii) a person that has purchased or
acquired Option Warrants in a transaction that was exempt from registration under
the U.S. Securities Act and has provided the Company with satisfactory evidence of
the availability of such exemption which shall include an opinion of counsel
reasonably acceptable to the Company that such transaction was exempt from
registration under any applicable securities laws of any state of the United States
and that the securities laws of any other applicable jurisdiction(s) have been
complied with in relation to the transfer of the Option Warrants involved,

 

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together with the Option Warrant Certificate in question (by delivery or mail as set forth in
Section 9.3 hereof), and subject to such reasonable requirements relating to the payment of costs
of the transfer by the holder as the Warrant Agent may prescribe and compliance with all applicable
securities legislation and requirements of regulatory authorities. A transferee of Option Warrants
who complies with the requirements of this Section 2.7 will be entitled to become noted upon the
register of holders as a Warrantholder. After receiving the surrendered Option Warrant Certificate
and upon the person surrendering the Option Warrant Certificate meeting the requirements as
hereinbefore set forth, the Warrant Agent shall as soon as practicable give written notice thereof
to the Company together with confirmation as to the identity of the person entitled to become the
holder to the Company. Forthwith after receiving written notice from the Warrant Agent as
aforesaid, the Company shall, in accordance with the provisions of this Section 2.7 hereof, cause a
new Option Warrant Certificate to be issued and sent to the new holder and the Warrant Agent shall
alter its register of holders accordingly.

Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be
entitled to the rights and privileges attaching to the Option Warrants free from all equities and
rights of set-off or counterclaim between the Company and the transferor or any previous holder of
Option Warrants and the issuance of Common Shares by the Company upon the exercise of Option
Warrants by any Warrantholder in accordance with the terms and conditions herein contained shall
discharge all responsibilities of the Company and the Warrant Agent with respect to such Option
Warrants.

2.8
Legends

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

 

 - 14 - 

 

	 	(b)	 	For greater certainty, if any Option Special Warrants are converted to Common
Shares and Option Warrants prior to the receipt of the Final Receipt, the certificates
representing such Option Warrants and the Common Shares issuable upon the exercise of
such Option Warrants will bear the following legend:

	 
	 	 	 	“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE [INSERT DATE THAT IS FOUR MONTHS PLUS ONE DAY FOLLOWING
THE DATE OF ISSUANCE OF THE SPECIAL WARRANTS].”

	 
	 	(c)	 	Certificates representing Option Warrants and Common Shares issuable on the
exercise of such Option Warrants originally issued to a U.S. Person, a person in the
United States, or a person purchasing for the account or benefit of a U.S. Person or a
person in the United States, as well as all certificates issued in exchange for or in
substitution of such certificates, will bear the following additional legend:

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

 

 - 15 - 

 

In reaching a decision to affix to an Option Warrant the legend set forth above, the
Warrant Agent shall be entitled to act and rely upon the direction of the Company to
issue the Option Warrant with or without the legend. In reaching a decision to
remove the legend set forth above from an Option Warrant transferred in accordance
with the provisions of this Section 2.8, the Warrant Agent and the Company shall be
entitled to act and rely upon the evidence provided by the transferee of the Option
Warrant.

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

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

2.9 Warrantholders Not Shareholders

A Warrantholder shall not, as such, be deemed to be or regarded as a shareholder of the
Company nor shall such Warrantholder be entitled to any right or interest, including any right to
vote at, receive notice of or attend any meeting of shareholders or any other proceeding of the
Company or any right to receive any dividend or other distribution, except as is expressly provided
in this Indenture and in the Option Warrant Certificate.

2.10 Signing of Option Warrants

The Option Warrant Certificates shall be signed either manually or by facsimile signature by
any officer or director of the Company and may, but need not be, under the corporate seal of the
Company. A facsimile signature upon any Option Warrant Certificate shall for all purposes hereof
be deemed to be the signature of the person whose signature it purports to be and to have been
signed at the time such facsimile signature is reproduced. If a person whose signature, either
manually or in facsimile, appears on an Option Warrant Certificate is not a director or officer of
the Company at the date of this Indenture or at the date of the countersigning and
delivery of such Option Warrant Certificate, such fact shall not affect in any way the
validity of the Option Warrants evidenced thereby or the entitlement of the holder thereof to the
benefits of this Indenture.

 

 - 16 - 

 

2.11 Countersigning

No Option Warrant Certificate shall be issued, or if issued, shall be valid for any purpose or
exercisable or entitle the holder to the benefits hereof or thereof until the Option Warrant
Certificate has been countersigned by or on behalf of the Warrant Agent. The Warrant Agent will
countersign the Option Warrant Certificates upon the written direction of the Company. The
countersignature by or on behalf of the Warrant Agent on any Option Warrant Certificate shall not
be construed as a representation or warranty by the Warrant Agent as to the validity of this
Indenture or of the Option Warrants or as to the performance by the Company of its obligations
under this Indenture, and the Warrant Agent shall in no way be liable or answerable for the use
made of the Option Warrants or any of them or of the consideration therefor except as specified
herein. The countersignature of the Warrant Agent shall, however, be a representation and warranty
of the Warrant Agent that the Option Warrant Certificate has been duly countersigned by or on
behalf of the Warrant Agent pursuant to the provisions of this Indenture and shall be conclusive
evidence as against the Company that the Option Warrant Certificate so countersigned has been duly
issued hereunder and the holder is entitled to the benefits hereof.

2.12 Loss, Mutilation, Destruction or Theft of Option Warrants

In case any of the Option Warrant Certificates issued and countersigned hereunder shall become
mutilated or be lost, destroyed or stolen, the Company shall, upon the holder complying with this
Section 2.12 and subject to applicable law, issue and thereupon the Warrant Agent shall countersign
and deliver, a new Option Warrant Certificate of like date and tenor in exchange for and in place
of the one mutilated, lost, destroyed or stolen and upon surrender and cancellation of such
mutilated Option Warrant Certificate or in lieu of and in substitution for such lost, destroyed or
stolen Option Warrant Certificate, and the substituted Option Warrant Certificate shall be in a
form approved by the Warrant Agent and shall entitle the holder thereof to the benefits hereof and
rank equally in accordance with its terms with all other Option Warrants issued hereunder.

The applicant for the issuance of a new Option Warrant Certificate pursuant to this Section
2.12 shall bear the reasonable costs (including applicable taxes) of the issuance thereof and in
case of loss, destruction or theft shall, as a condition precedent to the issue thereof, furnish to
the Company and to the Warrant Agent such evidence of ownership and of the loss, destruction or
theft of the Option Warrant Certificate so lost, destroyed or stolen as shall be satisfactory to
the Company and to the Warrant Agent, in their discretion, and such applicant may also be required
to furnish an indemnity and a surety bond in amount and form satisfactory to the Company and the
Warrant Agent in their discretion, and shall pay the reasonable charges of the Company and the
Warrant Agent in connection therewith.

 

 - 17 - 

 

2.13 Issue of Option Warrants

Option Warrant Certificates shall be signed by the Company as aforesaid and delivered to the
Warrant Agent from time to time. The Warrant Agent shall countersign any Option Warrant
Certificate delivered by the Company to the Warrant Agent as aforesaid and shall forthwith
deliver or cause to be delivered to the person or persons in whose name or names the Option Warrant
Certificate is to be issued (as specified in any written order from time to time given by the
Company to the Warrant Agent and signed by a director or officer of the Company) or mail to such
person or persons at their respective addresses specified in the written order from the Company the
Option Warrant Certificate for the appropriate number of Option Warrants.

2.14 Fractions

The Company will not, whether pursuant to an adjustment in accordance with Article 4 hereof or
under any other circumstance, be obligated after the aggregation of the number of Common Shares and
Option Warrants to be issued to each holder of Option Special Warrants to issue any fraction of an
Option Warrant on the conversion of Option Special Warrants. If a holder of an Option Special
Warrant would otherwise be entitled to a fractional Option Warrant pursuant to the conversion of
the Option Special Warrants, the number of Option Warrants to be issued will be rounded down to the
next whole number, if the holder is entitled to receive less than 0.5 of an Option Warrant and
rounded up to the next whole number, if the holder is entitled to receive 0.5 or more of an Option
Warrant, and the holder of such Option Special Warrants will not be entitled to any cash
compensation in respect of such fraction.

2.15 Option Warrants to Rank Pari Passu

All Option Warrants shall rank pari passu, whatever may be the actual date of issue of the
Option Warrant Certificates by which they are represented. All Option Warrants will also rank pari
passu with the Initial Warrants.

2.16 Exchange of Option Warrants

Except as otherwise herein provided:

	 	(a)	 	Option Warrant Certificates may, upon compliance with the reasonable
requirements of the Warrant Agent, be exchanged for Option Warrant Certificates in any
other authorized denomination representing in the aggregate the same number of Option
Warrants. The Company shall sign, and the Warrant Agent shall countersign, in
accordance with Sections 2.10 and 2.11, all Option Warrant Certificates necessary to
carry out the exchanges contemplated herein;

	 
	 	(b)	 	Option Warrant Certificates may be exchanged only at the principal office of
the Warrant Agent in the city of Vancouver. Any Option Warrant Certificates tendered
for exchange shall be surrendered to the Warrant Agent and cancelled; and

	 
	 	(c)	 	the Warrant Agent may charge registered holders requesting an exchange a
reasonable sum for each Option Warrant Certificate exchanged and payment of such
charges and reimbursement of the Warrant Agent or the Company for any and all taxes or
governmental or other charges required to be paid shall be made by the party requesting
such exchange as a condition precedent to such exchange.

 

 - 18 - 

 

2.17 Recognition of Registered Holder

The Company and the Warrant Agent may deem and treat the registered holder of any Option
Warrant Certificate as the absolute beneficial owner of the Option Warrants represented thereby for
all purposes under this Indenture, and the Company and the Warrant Agent shall not be affected by
any notice or knowledge to the contrary except where the Company or the Warrant Agent 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 the Option Warrants registered in his name free from all
equities or rights of set-off or counterclaim between the Company and the original or any
intermediate holder thereof and all persons may act accordingly and the receipt by any such
Warrantholder of the Common Shares issuable upon the exercise thereof shall be a good discharge to
the Company and the Warrant Agent for the same and neither the Company nor the Warrant Agent shall
be bound to inquire into the title of any such holder except where the Company or the Warrant Agent
is required to take notice by statute or by order of a court of competent jurisdiction.

2.18 Cancellation of Surrendered Option Warrants

All Option Warrant Certificates surrendered to the Warrant Agent pursuant to Section 2.7,
Section 2.12, Section 2.16 (where a new certificate is issued) or Section 5.1 will be cancelled and
destroyed by the Warrant Agent in accordance with applicable legislation and its ordinary business
practices and, if required by the Company, the Warrant Agent will deliver to the Company a
destruction certificate identifying each Option Warrant Certificate so destroyed.

ARTICLE 3

COVENANTS OF THE COMPANY

3.1 Covenants of the Company

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

	 	(a)	 	To Issue Option Warrants and Reserve Common Shares: The Company is
duly authorized to create and issue the Option Warrants and the Option Warrant
Certificates, when issued and countersigned as herein provided, will be valid and
enforceable against the Company and, subject to the provisions of this Indenture, the
Company will cause a sufficient number of Common Shares from time to time issuable upon
the exercise of Option Warrants under this Indenture together with the certificates
representing such Common Shares to be duly issued and delivered in accordance with
instructions on the Option Warrant Certificates and the terms hereof. At all times
prior to the Expiry Time, while any of the Option Warrants are outstanding, the Company
shall reserve and allot and conditionally issue out of its authorized capital a number
of Common Shares sufficient to enable the Company to meet its obligation to issue
Common Shares in respect of the exercise of all Option Warrants outstanding hereunder
from time to time. All Common Shares acquired upon the exercise of the Option Warrants
shall be fully paid and non-assessable.

 

 - 19 - 

 

	 	(b)	 	To Pay Warrant Agent’s Remuneration: The Company will pay to the
Warrant Agent from time to time reasonable remuneration for its services hereunder and
will repay to the Warrant Agent on demand the amount of all expenditures, disbursements
and advances whatsoever which the Warrant Agent reasonably incurs in and about the
administration or execution of the trusts hereby created (including the compensation
and disbursements of its counsel and other advisors and assistants not regularly in its
employ), both before any default hereunder and thereafter until all duties of the
Warrant Agent hereunder have been finally and fully performed.

	 
	 	(c)	 	To Execute Further Assurances: The Company will do, execute,
acknowledge and deliver or cause to be done, executed, acknowledged and delivered, all
other acts, deeds and assurances in law as the Warrant Agent may reasonably require for
effecting the intentions and provisions of this Indenture.

	 
	 	(d)	 	To Carry on Business: Subject to the express provisions hereof, the
Company will at all times maintain its corporate existence, carry on and conduct (and
cause to be carried on and conducted) its business in the same manner as heretofore
carried on and conducted, provided, however, that the Company or any subsidiary of the
Company may dispose of any business, premises, property or operation if in the
reasonable opinion of the directors or officers of the Company or any subsidiary of the
Company, as the case may be, it would be advisable and in the best interests of the
Company or any subsidiary of the Company to do so; and subject to the express
provisions hereof, it will do or cause to be done all things necessary to preserve and
keep in full force and effect its corporate existence, provided, however, that (subject
to compliance with the provisions of Article 4 hereof) nothing herein contained shall
prevent the amalgamation, consolidation or merger of the Company or any subsidiary of
the Company or the abandonment of any rights and franchises of the Company or any
subsidiary of the Company if, in the reasonable opinion of the directors or officers of
the Company, or the directors or officers of any subsidiary of the Company, as the case
may be, it would be advisable and in the best interests of the Company or of such
subsidiary of the Company to do so. The Company will keep or cause to be kept proper
books of account in accordance with generally accepted accounting practices and will
file with the Warrant Agent copies of all annual statements of the Company furnished to
its shareholders after the date hereof, forthwith following delivery to its
shareholders.

	 
	 	(e)	 	Performance of Covenants By Warrant Agent: If the Company shall fail
to perform any of its covenants contained in this Indenture, the Warrant Agent may
notify the Warrantholders of such failure on the part of the Company or may itself
perform any of the said covenants capable of being performed by it, but, subject to
Section 8.3 hereof, the Warrant Agent shall be under no obligation to do so or to
notify any Warrantholder. All sums reasonably expended or advanced by the Warrant
Agent in performance of its rights provided for in this Subsection 3.1(e) shall be
repayable as provided in Subsection 3.1(b). No such performance,
expenditure or advance by the Warrant Agent shall be deemed to relieve the Company
of any default hereunder or its continuing obligations hereunder.

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

 

 - 20 - 

 

3.2 Suits by Warrantholder

Subject to the provisions of this Indenture, all or any of the rights conferred upon a
Warrantholder by the terms of the Warrant held by him or by this Indenture may be enforced by such
Warrantholder by appropriate legal proceedings, but subject to the rights which are hereby
conferred upon the Warrant Agent to proceed in its own name to enforce each and all of the
provisions herein contained for the benefit of the Warrantholders from time to time.

3.3 Warrant Agent May Institute Proceedings

The Warrant Agent shall also have the power at any time and from time to time to institute and
to maintain such suits and proceedings as it may be advised shall be necessary or advisable to
preserve and protect its interest and the interests of the Warrantholders.

ARTICLE 4

ADJUSTMENT OF SUBSCRIPTION RIGHTS

4.1 Adjustment of Subscription Rights

The subscription rights attaching to the Option Warrants with respect to the Common Shares
issuable upon the exercise of the Option Warrants and the Exercise Consideration shall be subject
to adjustment from time to time as follows:

	 	(a)	 	if and whenever at any time from the date hereof (and for greater certainty
such date being prior to the issuance of the Option Warrants) and prior to the Expiry
Time, the Company shall:

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

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

	 
	 	(iii)	 	issue Common Shares or securities convertible into or
exchangeable for Common Shares to all or substantially all of the holders of
Common Shares by way of stock dividend or other distribution;

 

 - 21 - 

 

then, in each such event, the number of Common Shares obtainable upon the exercise
of each Option Warrant and the Exercise Consideration therefor will be adjusted, at
no cost to the holder, on the record date for such event or, if no record date is
fixed, the effective date of such event, by multiplying the number of
Common Shares theretofore obtainable on the exercise thereof, and correspondingly
dividing the Exercise Consideration, by the fraction of which:

	 	(A)	 	the numerator shall be the total number of
Common Shares outstanding immediately after such date, or, in the case
of the issuance of securities convertible into or exchangeable for
Common Shares, the total number of Common Shares outstanding
immediately after such date plus the number of Common Shares issuable
upon conversion or exchange of such securities, and

	 
	 	(B)	 	the denominator shall be the total number of
Common Shares outstanding immediately prior to such date,

and such adjustment shall be made successively whenever any event referred to in
this Subsection 4.1(a) shall occur (and all adjustments in this Subsection are
cumulative);

	 	(b)	 	if and whenever at any time from the date hereof (and for greater certainty
such date being prior to the issuance of the Option Warrants) and prior to the Expiry
Time, the Company shall fix a record date for the issue of rights, options or warrants
to all or substantially all of the holders of Common Shares entitling the holders
thereof, within a period expiring not more than 45 days after the record date for such
issue, to subscribe for or purchase Common Shares (or securities convertible into or
exchangeable for Common Shares) at a price per Common Share (or having a conversion or
exchange price per Common Share) less than 95% of the Current Market Price on the
earlier of such record date and the date on which the Company announces its intention
to make such issue, then, in each such case, the Exercise Consideration will be
adjusted immediately after such record date so that it will equal the price determined
by multiplying the Exercise Consideration in effect on such record date by a fraction,
of which the denominator shall be the total number of Common Shares outstanding on such
record date plus the number arrived at when (A) either the product of (1) the number of
Common Shares so offered for subscription and (2) the price at which those Common
Shares are offered, or the product of (3) the conversion price thereof and (4) the
maximum number of Common Shares for or into which the convertible or exchangeable
securities so offered pursuant to the rights offering may be converted or exchanged, as
the case may be, is divided by (B) the Current Market Price on the record day, and of
which the numerator shall be the total number of Common Shares outstanding on such
record date plus the total number of additional Common Shares so offered for
subscription or purchase (or into or for which the convertible or exchangeable
securities so offered are convertible or exchangeable). Any Common Shares owned by or
held for the account of the Company or any subsidiary of the Company will be deemed not
to be outstanding for the purpose of any such computation. Such adjustment will be made
successively whenever such a record date is fixed, provided that if two or more such
record dates or record dates referred to in Section 4.1(c) hereof are fixed within a
period of 20 Trading Days, such adjustment will be made successively as
if each of such record dates occurred on the earliest of such record dates. To the
extent that any such rights, options or warrants are not exercised prior to the
expiration thereof, the number of Common Shares obtainable on the exercise of each
Option Warrant (“Share Rate”) will then be readjusted to the Share Rate which would
then be in effect based upon the number of Common Shares (or securities convertible
into or exchangeable for Common Shares) actually issued upon the exercise of such
rights, options or warrants, as the case may be;

 

 - 22 - 

 

	 	(c)	 	if and whenever at any time from the date hereof (and for greater certainty
such date being prior to the issuance of the Option Warrants) and prior to the Expiry
Time, the Company shall fix a record date for the making of a distribution to all or
substantially all of the holders of Common Shares of:

	 	(i)	 	shares of any other class other than Common Shares whether of
the Company or any other corporation;

	 
	 	(ii)	 	rights, options or warrants to acquire Common Shares or
securities exchangeable for or convertible into Common Shares or property or
other assets of the Company (other than rights, options or warrants exercisable
by the holders thereof within a period expiring not more than 45 days after the
record date for such issue or distribution to acquire Common Shares or
securities exchangeable for or convertible into Common Shares at a price per
share, or at an exchange or conversion price per share in the case of
securities exchangeable for or convertible into Common Shares, of at least 95%
of the Current Market Price of the Common Shares on such record date);

	 
	 	(iii)	 	evidences of indebtedness; or

	 
	 	(iv)	 	cash, securities or other property or assets (other than cash
dividends paid in the ordinary course);

then, in each such case, (A) the Exercise Consideration will be adjusted immediately
after such record date so that it will equal the rate determined by multiplying the
Exercise Consideration 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 the Current Market Price on the earlier of such record date and the
date on which the Company announces its intention to make such distribution, less
the aggregate fair market value (as determined by the directors at the time such
distribution is authorized) of such securities or rights, options or warrants or
evidences of indebtedness or cash or other property or assets so distributed, 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 (B) the Share Rate will be
adjusted immediately after such record date so that it will equal the rate
determined by multiplying the Share Rate in effect on such record date by a
fraction, of which the denominator shall be the total number of Common Shares
outstanding on

 

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such record date multiplied by the Current Market Price on the
earlier of such record date and the date on which the Company announces its intention to make such distribution, less the aggregate
fair market value (as determined by the directors at the time such distribution is
authorized) of such securities or rights, options or warrants or evidences of
indebtedness or cash or other property or assets so distributed, and of which the
numerator shall be the total number of Common Shares outstanding on such record date
multiplied by such Current Market Price. Such adjustment will be made successively
whenever such a record date is fixed, provided that if two or more such record dates
or record dates referred to in Subsection 4.1(b) are fixed within a period of 20
Trading Days on the principal stock exchange on which the Common Shares are listed,
such adjustment will be made successively as if each of such record dates occurred
on the earliest of such record dates. To the extent that such distribution is not
so made or to the extent that any such rights, options or warrants so distributed
are not exercised prior to the expiration thereof, the Exercise Consideration and
the Share Rate will then be readjusted to the Exercise Consideration and the Share
Rate which would then be in effect if such record date had not been fixed or to the
Exercise Consideration and the Share Rate which would then be in effect based upon
such securities or rights, options or warrants or evidences of indebtedness or cash
or other property or assets actually distributed or based upon the number or amount
of securities or the property or assets actually issued or distributed upon the
exercise of such rights, options or warrants, as the case may be;

	 	(d)	 	if and whenever at any time from the date hereof (and for greater certainty
such date being prior to the issuance of the Option Warrants) and prior to the Expiry
Time, there is a reclassification of the Common Shares or a capital reorganization of
the Company other than as described in Subsections 4.1(a), (b) or (c) or a
consolidation, amalgamation, arrangement or merger of the Company or other form of
business combination of the Company with or into any other body corporate, trust,
partnership or other entity, any sale, conveyance, lease, exchange or transfer of the
undertaking or assets of the Company as an entirety or substantially as an entirety to
another corporation or entity, any Warrantholder who has not exercised his right of
subscription prior to the effective date of such reclassification, capital
reorganization, consolidation, amalgamation, merger, sale or conveyance, upon the
exercise of such right thereafter, shall be entitled to receive and shall accept the
kind and number of shares, securities or property that such Warrantholder would have
been entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, 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 receivable upon the exercise of Option Warrants
then held, subject to adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained in this Section 4.1; provided that no
such action shall be carried into effect unless all necessary steps shall have been
taken so that the holders of the Option Warrants shall thereafter be entitled to
receive such kind and number of securities and property. The Company, its successor,
or purchasing body corporate, partnership, trust or other entity, as the case may be,
shall, as a condition precedent to any such reclassification, capital 

 

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reorganization,
consolidation, amalgamation, merger, sale or conveyance, take all necessary steps
hereunder to enter into an agreement which shall provide, to the extent possible,
that the provisions set forth in this Indenture shall thereafter correspondingly be
made applicable, as nearly as may reasonably be, to the securities and property to
which a Warrantholder is entitled on the exercise of his Option Warrants thereafter.
Any agreement entered into between the Company and the Warrant Agent pursuant to
the provisions of this Subsection 4.1(d) shall be a supplemental agreement entered
into pursuant to the provisions of Article 7 hereof. Any agreement entered into
between the Company, any successor to the Company or any purchasing body corporate,
partnership, trust or other entity and the Warrant Agent 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 requires an adjustment to become
effective immediately after a record date for an event referred to herein, the Company
may defer, until the occurrence of such event, issuing any Warrantholder exercising or
deemed to be exercising his subscription rights after such record date the additional
Common Shares or other securities or property issuable upon such exercise by reason of
the adjustment required by such event; provided, however, that the Company shall
deliver to such holder an appropriate instrument evidencing such holder’s right to
receive such additional Common Shares or other securities or property, as the case may
be, upon the occurrence of the event requiring such adjustment and the right to receive
any distributions made on such additional Common Shares or other securities or
property, as the case may be, declared in favour of holders of record of such Common
Shares or other securities or property, as the case may be, on and after the 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,
other securities or property, as the case may be, upon the exercise of the Option
Warrants held by such holder;

	 
	 	(f)	 	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 or property which, as a result of such adjustment and all prior adjustments
pursuant to this Section 4.1, a Warrantholder is entitled to receive upon the exercise
of such holder’s Option Warrants, and the number of Common Shares indicated to be
issuable upon any exercise of an Option Warrant shall be interpreted to include the
number of Common Shares or other securities or property a Warrantholder is entitled to
receive, as a result of such adjustment and all prior adjustments pursuant to this
Section 4.1, upon the exercise of the Warrant;

	 
	 	(g)	 	all shares of any class or classes or other securities or property which a
Warrantholder is at the time in question entitled to receive on the exercise of his
Warrant, whether or not as a result of adjustments made pursuant to this Section
4.1 shall, for the purposes of the interpretation of this Indenture, be deemed to be
Common Shares which such Warrantholder is entitled to subscribe for pursuant to the
exercise of such Option Warrant;

 

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	 	(h)	 	anything in this Section 4.1 to the contrary notwithstanding, no adjustment
shall be made in the subscription rights attaching to the Option Warrants if the issue
of Common Shares is being made pursuant to any stock option or stock purchase plan in
force from time to time for directors, officers or employees of the Company or any
other currently existing obligation of the Company; and

	 
	 	(i)	 	in the event of any question arising with respect to the adjustments provided
for in this Section 4.1 such question shall be conclusively determined, subject to the
consent of any stock exchange upon which the Common Shares are then listed, by a firm
of chartered accountants appointed by the Company and acceptable to the Warrant Agent
(which may be the Company’s auditors). Such accountants shall have access to all
necessary records of the Company, and such determination shall be binding upon the
Company, the Warrant Agent, all Warrantholders and all other persons interested
therein. In the event that any such determination is made, the Company shall deliver a
certificate to the Warrant Agent describing such determination;

provided that no adjustment will be required if the holder of an Option Warrant is otherwise
entitled to participate in the event which triggers the adjustment pursuant to this Section 4.1 on
the same basis as such Warrantholder would have been entitled had he exercised or been deemed to
have exercised his Option Warrants and subscribed for Common Shares immediately prior to such
event. Any such adjustment shall be subject to the prior consent of the TSX.

4.2 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 subscription rights attaching to the Option Warrants, including the number of Common Shares
which are to be received upon the exercise thereof, the Company shall take any corporate action
which may, in the opinion of counsel, be necessary in order for the Company to allot and reserve
for issuance and to validly and legally issue as fully paid and non-assessable, such number of
Common Shares and validly and legally deliver all other securities or property which the holders of
such Option Warrants are entitled to receive on the exercise thereof in accordance with the
provisions hereof.

4.3 Certificate of Adjustment

The Company shall from time to time immediately after the occurrence of any event which
requires an adjustment or readjustment as provided in Section 4.1 hereof, deliver a certificate of
the Company to the Warrant Agent specifying the nature of the event requiring the same and the
amount of the adjustment necessitated thereby and setting forth in reasonable detail the method of
calculation and the facts upon which such calculation is based, which certificate and the amount of
the adjustment specified therein shall be verified by the Company’s auditors, upon whose
verification the Warrant Agent shall be entitled to act and rely. When so verified, the Company
shall, except in respect of any subdivision or consolidation of the Common Shares,
forthwith give written notice to the Warrantholders specifying the event requiring such
adjustment or readjustment and the results thereof; provided that if the Company has already given
the required notices under Section 4.5 hereof covering all the relevant facts in respect of such
event and if the Warrant Agent consents in writing, no further notice need be given under this
Section 4.3.

 

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4.4 Adjustment Rules

The adjustments provided for in this Article 4 are cumulative and shall apply (without
duplication) to successive actions requiring an adjustment under the provisions of Section 4.1;
provided that, notwithstanding any other provision of this Article 4, no adjustment shall be made
in the number of Common Shares which may be subscribed for on the exercise of an Option Warrant
unless it would result in a change of at least one-hundredth of a Common Share and no adjustment
shall be made to the Exercise Consideration unless it would result in a 1% increase or decrease in
the Exercise Consideration (provided, however, that any adjustments which by reason of this Section
4.4 are not required to be made shall be carried forward and taken into account in any subsequent
adjustment).

In the event that the Company after the date of this Indenture shall take any action affecting
the Common Shares other than an action described in this Article 4, the directors of the Company
may, but shall not be required to, make any other adjustments to the number of Common Shares which
may be acquired upon exercise of the Option Warrants, to the extent, if any, such directors deem
appropriate, provided that no such adjustment shall, in the opinion of the directors, relying on
the advice of counsel, be prejudicial to the interests of the Warrantholders and that no such
adjustment shall be made unless prior approval of any stock exchange on which the Common Shares are
then listed for trading, if required, has been obtained.

4.5 Notice of Special Matters

The Company covenants with the Warrant Agent that so long as any Option Warrant remains
outstanding it will give at least 14 days prior written notice in the manner provided for in
Article 9 to the Warrant Agent and to each Warrantholder of any event which requires an adjustment
to the subscription rights attaching to any of the Option Warrants pursuant to this Article 4.
The Company covenants and agrees that such notice shall contain the particulars of such event in
reasonable detail and, if determinable, the required adjustment in the manner provided for in this
Article 4. The Company further covenants and agrees that it shall promptly as soon as the
adjustment calculations are reasonably determinable, file a Certificate of the Company with the
Warrant Agent showing how such adjustment shall be computed and direct the Warrant Agent to send a
copy of such certificate to the Warrantholders.

4.6 No Action after Notice

The Company covenants with the Warrant Agent that it will not close its transfer books or take
any other corporate action which might deprive the holder of an Option Warrant of the opportunity
of exercising his right of subscription pursuant thereto during the period of thirty (30) days
after the giving of the notice set forth in Sections 4.3 and 4.5 hereof.

 

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4.7 Protection of Warrant Agent

The Warrant Agent:

	 	(a)	 	shall not 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 hereof, 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)	 	shall not be accountable with respect to the validity or value (or the kind or
amount) of any Common Share or of any other securities or property which may at any
time be issued or delivered upon the exercise of the subscription rights attaching to
any Option Warrant;

	 
	 	(c)	 	shall not be responsible for any failure of the Company to make any cash
payment or to issue, transfer or deliver Common Shares (or certificates representing
same) upon the surrender or deemed surrender of any Option Warrants upon the exercise
of the subscription rights attaching to any Option Warrants or to comply with any of
the covenants contained in this Article 4; and

	 
	 	(d)	 	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 Company of any of the
representations, warranties or covenants herein contained or of any acts of the agents
or servants of the Company.

ARTICLE 5

EXERCISE AND CANCELLATION OF OPTION WARRANTS

5.1 Exercise of Option Warrants

	 	(a)	 	Upon and subject to the provisions of this Article 5, any holder of an Option
Warrant may exercise the right thereby conferred on him to subscribe for Common Shares
by delivering or causing to be delivered to the Warrant Agent after the Issue Date and
until the Expiry Time at its principal office in the City of Vancouver, or any other
place designated by the Company with the approval of the Warrant Agent, during normal
business hours on a Business Day,

	 	(i)	 	the Option Warrant Certificate evidencing the Option Warrants,
with the Exercise Form attached to the Option Warrant Certificate duly
completed and executed by the holder or his executors or administrators or
other legal representatives or his or their attorney duly appointed by an
instrument in writing in form and manner satisfactory to the Warrant Agent; and

	 
	 	(ii)	 	either:

	 	A.	 	a certified cheque, bank draft or money order
in lawful money of Canada payable to or to the order of the Warrant
Agent, in trust for
the Company, at par in such city or other place, in an amount equal
to the Exercise Consideration multiplied by the number of Option
Warrants being exercised; or

	 
	 	B.	 	a written notice by the Company that the
Company has received payment in full of an amount equal to the Exercise
Consideration multiplied by the number of Option Warrants being
exercised.

 

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Delivery of (i) and (ii) above will be deemed to have been made only on personal
delivery of (i) and (ii) above or, if sent by mail or other means of transmission,
on actual receipt thereof by, the Warrant Agent at its office in the City of
Vancouver.

	 	(b)	 	Unless the Company has instructed the Warrant Agent in writing to waive any or
all of the following requirements, the Option Warrants may not be exercised by or for
the account or benefit of a U.S. Person or a person in the United States unless the
holder certifies in writing to the Company and the Warrant Agent that the holder: (i)
purchased the Option Special Warrants directly from the Company pursuant to a written
subscription agreement for the purchase of Option Special Warrants, (ii) is exercising
the Option Warrants solely for its own account and not on behalf of any other Person;
and (iii) was an “Accredited Investor”, as that term is defined in Regulation D under
the Securities Act, both on the date the Option Warrants were issued by the Company and
on the date of exercise of the Option Warrants; or (iii) a registered transferee of
such Option Warrants who has complied with Subsection 2.7(d) hereof, provided that the
Company may, in its sole discretion, accept, in substitution of the foregoing, evidence
satisfactory to the Company, acting reasonably, to the effect that the Common Shares
have been registered under the U.S. Securities Act and applicable state securities laws
or that the Common Shares may be issued upon exercise of the Option Warrants without
registration under the U.S. Securities Act and any applicable state securities laws.

	 
	 	 	 	In determining whether any person is a U.S. Person under the terms of this
Indenture, the Warrant Agent and the Company shall be entitled to act and rely upon
the address of the Warrantholder recorded on the register.

	 
	 	(c)	 	The Exercise Form attached to the Option Warrant Certificate shall be signed as
set out above and shall specify:

	 	(i)	 	the number of Option Warrants which the Warrantholder wishes to
exercise; and

	 
	 	(ii)	 	the number of Common Shares owned or controlled (beneficially
and legally) by the Warrantholder on the date of exercise; and

	 
	 	(iii)	 	the person or persons in whose name or names the Common Shares
issuable upon the exercise of such Option Warrants are to be registered, the
address or addresses and the social insurance number or numbers of such person
or persons and the number of Common Shares to be issued to each such person if
more than one is so specified, provided that the
Warrantholder shall only be entitled to direct his entitlement to the Common
Shares in a manner permitted by applicable securities legislation, and
provided further that no certificates for Common Shares shall be registered
at or delivered to an address in the United States unless the person in
whose name the certificates are to be registered has complied with the
requirements of subsection 2.7(d) hereof.

 

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If any of the Common Shares issuable upon the exercise of Option Warrants are to be
issued to a person or persons other than the Warrantholder in accordance with the
provisions of Section 2.7 hereof, the signature set out in the Exercise Form shall
be guaranteed by a Schedule 1 chartered bank or medallion guaranteed by a member of
a recognized medallion guarantee program and the Warrantholder shall pay to the
Warrant Agent all requisite stamp or security transfer taxes or other governmental
charges exigible in connection with the issue of such Common Shares to such other
person or persons or shall establish to the satisfaction of the Warrant Agent that
such taxes and charges have been paid and the Company will not be required to issue
or deliver any certificate evidencing any Common Shares issuable upon the exercise
of Option Warrants unless or until such amount has been paid or the Warrantholder
has established to the satisfaction of the Company that such taxes and charges have
been paid or that no such taxes or charges are owing.

	 	(d)	 	If at the time of the exercise of the Option Warrants there remain trading
restrictions on the Common Shares issuable upon such exercise pursuant to Applicable
Securities Laws, the Company may, on the advice of counsel, endorse the certificates
representing such Common Shares with legends accordingly until such time as the Company
determines that such endorsement is no longer necessary to avoid a violation of such
securities laws by the Company and so advises the Warrant Agent in writing or unless
and until the holder of any such endorsed certificate, at the holder’s expense,
provides the Company with evidence satisfactory in form and substance to the Company
(which may include an opinion of counsel satisfactory to the Company) to the effect
that such holder is entitled to sell or otherwise transfer such Common Shares in a
transaction in which such endorsement is not required, whereupon such endorsed
certificate may thereafter be surrendered to the Company in exchange for a certificate
which does not bear such endorsement.

	 
	 	(e)	 	In the event of non-receipt of any certificates representing Common Shares
issuable upon an exercise of Option Warrants by the person to whom such certificates
are so sent as aforesaid, or the loss or destruction thereof, the Company shall issue
and the Warrant Agent shall countersign and deliver to such person a replacement
certificate of like date and tenor in place of the one lost or destroyed upon being
furnished with such evidence of ownership and non-receipt, loss or destruction and with
such indemnity and surety bond or security as the Company may reasonably require. The
Warrantholder shall bear the cost of the issue of such replacement certificates.

 

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5.2 Effect of Exercise of Option Warrants

Upon a valid exercise of Option Warrants as provided in Section 5.1 hereof, the Common Shares
issuable upon the exercise of the Option Warrants shall be deemed to have been issued, and such
person or persons as are specified pursuant to Section 5.1 hereof shall be deemed to have become
the holder or holders of record of such Common Shares on the date of such valid exercise (herein
called the “Exercise Date”) unless the stock transfer books of the Company shall be closed by law
on the date of such valid exercise, in which case such securities shall be deemed to have been
issued, such person or persons shall be deemed to have become the holder or holders of record of
such Common Shares and the Exercise Date shall be deemed to be on the date on which such stock
transfer books are next re-opened.

Upon a valid exercise of Option Warrants as aforesaid, the Warrant Agent shall forthwith give
written notice thereof to the Company.

In the case of an Option Warrant which is exercised by a holder in accordance with the
provisions of Section 5.1, within five (5) Business Days after the Exercise Date of such Option
Warrant, the Company shall, in the case of Option Warrants issued pursuant to Option Warrant
Certificates other than Global Warrant Certificate(s):

	 	(a)	 	cause to be mailed to the person in whose name the Common Shares so subscribed
for are to be issued, at the address specified in the Exercise Form attached to the
Option Warrant Certificate representing the Option Warrant exercised;

	 
	 	(b)	 	if so specified therein, cause to be delivered to such person at the office of
the Warrant Agent where such Option Warrant was surrendered; or

	 
	 	(c)	 	if no specification as contemplated by (a) or (b) is provided, cause to be
mailed to the person in whose name the Common Shares are to be issued at the address of
such person last appearing on the register maintained by the Warrant Agent pursuant
hereto or as such person may otherwise notify the Warrant Agent in writing on or prior
to the Exercise Date,

certificates representing the Common Shares to which the Warrantholder is entitled upon exercise of
the Option Warrants so exercised, provided that no certificate shall be registered or mailed to an
address in the United States unless the subscriber shall have satisfied the requirements of Section
5.1.

In the case of the exercise of Option Warrants issued pursuant to Global Warrant
Certificate(s), the Company shall cause the Depository to enter and issue, as the case may be, to
the person or persons in whose name or names such Common Shares have been issued, a Book-Entry Only
System customer confirmation.

 

 - 31 - 

 

5.3 Postponement of Delivery of Certificates

The Company shall not be required to deliver certificates representing Common Shares during
any period when the stock transfer books of the Company are closed by law and in the
event of an exercise of an Option Warrant during such period, the delivery of certificates
evidencing such Common Shares may be postponed for a period not exceeding five (5) Business Days
after the date of the re-opening of the stock transfer books.

5.4 Option Warrants Void after Expiry Time

Upon the earlier of (i) the exercise of the Option Warrants and (ii) the Expiry Time, the
Option Warrants shall be void and of no value or effect.

5.5 Fractions

To the extent that the holder of an Option Warrant is entitled to receive on the exercise
thereof a fraction of a Common Share, such right may only be exercised in respect of such fraction
which, in combination with another Option Warrant or other Option Warrants, in the aggregate,
entitle the holder to receive a whole number of Common Shares.

If a holder is not able to, or elects not to, combine Option Warrants so as to be entitled to
acquire a whole number of Common Shares, the Company shall make an appropriate cash adjustment to
such holder in respect only of the entitlement to a fractional Common Share. In respect of any
holder, the Company shall only be required to make such a cash adjustment once and for one (1)
fractional Common Share and no more. The amount of the cash adjustment shall be equal to the
fraction of a Common Share to which the holder would be entitled multiplied by the Current Market
Price. The Company will not, under any circumstances, be obligated to issue a cheque to a
Warrantholder of less than Cdn.$10.00. The price to be paid shall be provided by the Company in
writing to the Warrant Agent on request.

5.6 Partial Exercise of Option Warrants

The holder of any Option Warrants may acquire a number of Common Shares less than the number
which the holder is entitled to acquire pursuant to the surrendered Option Warrant Certificate(s).
In the event of any exercise of a number of Option Warrants less than the number which the holder
is entitled to exercise, the holder of the Option Warrants upon such exercise shall be entitled to
receive, without charge therefor, a new Option Warrant Certificate(s) in respect of the balance of
the Option Warrants represented by the surrendered Option Warrant Certificate(s) which were not
then exercised, and with respect to Global Warrant Certificate(s), the Depository shall make
notations on the Global Warrant Certificate of the Option Warrants so exercised.

 

 - 32 - 

 

5.7 Accounting and Recording

The Warrant Agent shall:

	 	(a)	 	promptly account to the Company with respect to Option Warrants exercised and
forward to the Company or to an account or accounts of the Company at a bank or trust
company designated by the Company for that purpose) all cash or instruments of payment
received on the exercise of Option Warrants; and

	 
	 	(b)	 	record the particulars of Option Warrants exercised, which particulars shall
include the names and addresses of the persons who become holders of Common Shares on
such exercise and the Exercise Date in respect thereof. The Warrant Agent shall
provide such particulars in writing to the Company within five (5) Business Days of any
request by the Company therefor.

5.8 Option Warrant Exercise Proceeds

All cash, instruments of payment and any securities or other instruments, from time to time
received by the Warrant Agent upon an exercise of Option Warrants shall be received in trust for,
and shall be segregated and be kept apart by the Warrant Agent in trust for, the Company.

ARTICLE 6

MEETINGS OF OPTION WARRANTHOLDERS

6.1 Convening of Meeting

A meeting of Warrantholders (which meeting will include the holders of Initial Warrants and
for purposes of this Article 6, Warrantholders includes holders of Initial Warrants and Option
Warrants includes Initial Warrants) may be convened at any time by the Warrant Agent or the Company
or by the holders of Option Warrants pursuant to a Warrantholders’ Request, who shall serve the
Warrant Agent with a requisition signed by such holders and the Warrant Agent, upon being funded
and indemnified, shall then be bound to convene a meeting of Warrantholders. In the event that the
Warrant Agent fails to convene the meeting after being duly required to do so, the holders of the
then outstanding Option Warrants representing no less than ten percent (10%) of the aggregate
number of Option Warrants then outstanding may themselves convene a meeting, the notice of which
shall be signed by any person as such Warrantholders may specify, provided that every such meeting
shall be held at the City of Vancouver or such other place as the Warrant Agent may approve and the
Warrant Agent and the Company shall receive notice of such meeting as provided in Section 6.2
hereof.

6.2 Notice

At least twenty-one (21) days prior notice of a meeting of Warrantholders shall be given to
all Warrantholders, the Warrant Agent and the Company in accordance with Article 9 hereof, and the
notice shall state the time, the place, and in general terms, the nature of the business to be
transacted but it shall not be necessary to specify the text of the resolutions to be considered.
It shall not be necessary to specify the nature of business to be transacted at an adjourned
meeting.

6.3 Chairman

The chairman of the meeting of Warrantholders shall be designated in writing by the Warrant
Agent and need not be a Warrantholder. If no person is so designated or if the person so
designated is not present within fifteen (15) minutes after the time fixed for the holding of a
meeting, the Warrantholders and proxyholders for Warrantholders present at the meeting shall choose
one of their members to be the chairman.

 

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6.4 Quorum

	 	(a)	 	Quorum: Subject to the provisions of Section 6.10 hereof, at any
meeting of Warrantholders a quorum will consist of two or more Warrantholders, present
in person or represented by proxy at the commencement of the meeting, who hold in the
aggregate not less than 25% of the total number of Option Warrants then outstanding.

	 
	 	(b)	 	No Quorum: If a quorum of Warrantholders is not present within 30
minutes after the time appointed for holding a meeting, the meeting, if convened by
Warrantholders or on a Warrantholders’ Request, will be dissolved, but, subject to
Section 6.10 hereof, in any other case will stand adjourned to the same day in the next
week (unless such day is not a Business Day, in which case it will be adjourned to the
next following Business Day) at the same time and place and no notice of the
adjournment need be given.

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

6.5 Show of Hands

Subject to Section 6.6 hereof, every question submitted to a meeting, except one requiring an
Extraordinary Resolution, shall be decided in the first instance by a majority of hands on a show
of hands, the outcome of which will be declared by the chairman. Each Warrantholder present, in
person or by proxy, shall have one (1) vote.

6.6 Poll

A poll shall be taken when requested by a Warrantholder acting in person or by proxy and, when
demanded on the election of a chairman or on the question of adjournment, shall be taken forthwith.
On an Extraordinary Resolution or if demanded on any other question, a poll shall be taken in such
manner and either at once or after an adjournment as the chairman may direct. The result of a poll
shall be the decision of the meeting at which the poll was demanded. On a poll vote, each
Warrantholder acting in person or by proxy shall have one (1) vote for each Option Warrant which he
holds or represents. Votes may be given in person or by proxy and the proxyholder need not be a
Warrantholder. The chairman of any meeting shall be entitled to vote in respect of any Option
Warrants and proxies held by him.

 

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6.7 Regulations

The Warrant Agent, or the Company with the approval of the Warrant Agent and the Agent, may
from time to time make and from time to time vary such regulations not contrary to the provisions
of this Indenture as it shall think fit providing for and governing:

	 	(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 a meeting;

	 
	 	(b)	 	voting by proxy, the form of instrument appointing proxyholders, the manner in
which proxies are to be executed and the production of the authority of any persons
signing on behalf of a Warrantholder;

	 
	 	(c)	 	the lodging of and means of forwarding the instruments appointing proxyholders
and the time before the holding of a meeting or adjourned meeting by which the
instruments appointing proxyholders are to be deposited; and

	 
	 	(d)	 	any other matter relating to the conduct of meetings of Warrantholders.

Any regulations so made shall be binding and effective on the Warrantholders and votes given in
accordance therewith shall be valid and counted. The Warrant Agent may permit Warrantholders to
provide proof of ownership of the Option Warrants in such manner as the Warrant Agent may approve.
Save as aforesaid, the only persons who shall be recognized at any meeting as Warrantholders or
entitled to vote or, except as provided in Section 6.12 hereof, be present at the meeting in
respect thereof shall be persons who are registered holders of Option Warrants or are duly
appointed proxyholders for registered holders of Option Warrants.

6.8 Minutes

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

6.9 Powers Exercisable by Extraordinary Resolution

Subject to the prior approval of the TSX, the Warrantholders shall have the power from time to
time by Extraordinary Resolution:

	 	(a)	 	to agree to or sanction any modification, abrogation, alteration or compromise
of the rights of the Warrantholders or (subject to the prior consent of the Warrant
Agent therefor) the Warrant Agent in its capacity as Warrant Agent hereunder or on
behalf of Warrantholders against the Company which shall be agreed to by the Company
whether such rights arise under this Indenture or under the Option Warrants or
otherwise;

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

 

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	 	(c)	 	with the consent of the Company, not to be unreasonably withheld, to remove the
Warrant Agent or its successor in office and to appoint a new Warrant Agent or Warrant
Agents to take the place of the Warrant Agent so removed;

	 
	 	(d)	 	to require, direct or authorize the Warrant Agent to enforce any of the
covenants on the part of the Company contained in this Indenture or the Option Warrants
or to enforce any of the rights of the Warrantholders in any manner specified in such
Extraordinary Resolution or to refrain from enforcing any such covenant or right, in
each case upon the Warrant Agent being furnished with an indemnity and such funding as
the Warrant Agent may, in the reasonable exercise of its discretion determine it
requires to so act;

	 
	 	(e)	 	to restrain any Warrantholder from instituting or continuing any suit or
proceedings against the Company for the enforcement of the covenants on the part of the
Company contained in this Indenture or the Option Warrants or of any of the rights
conferred upon the Warrantholders by the Option Warrants and this Indenture;

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

	 
	 	(g)	 	to waive and direct the Warrant Agent to waive any default on the part of the
Company in complying with any of the provisions of this Indenture or the Option
Warrants either unconditionally or upon any conditions specified in such Extraordinary
Resolution;

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

	 
	 	(i)	 	to amend, alter or repeal any Extraordinary Resolution previously passed or
sanctioned by the Warrantholders.

An Extraordinary Resolution of the Warrantholders is binding upon all the Warrantholders
whether or not present at the meeting at which the Extraordinary Resolution was passed or whether
or not assented to in writing and each Warrantholder, the Warrant Agent and the Company shall be
bound to give effect to the Extraordinary Resolution to the extent that the Extraordinary
Resolution applies to such party.

6.10 Meaning of “Extraordinary Resolution”

The expression “Extraordinary Resolution” when used in this Indenture means, subject to
Section 6.13, a resolution proposed to be passed as an extraordinary resolution at a meeting of
Warrantholders duly convened for the purpose and held in accordance with the provisions of this
Article 6 and passed by not less than sixty-six and two-thirds percent (662/3%) of the
votes cast upon such resolution.

 

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Subject to Section 6.13 hereof, votes on an Extraordinary Resolution shall always be given on
a poll.

6.11 Powers Cumulative

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

6.12 Company, Warrantholders and Warrant Agent May be Represented

The Company and the Warrant Agent, by their respective employees, officers and directors, and
the legal and financial advisors and the Company’s auditors and the Warrant Agent may attend any
meeting of the Warrantholders, but they shall have no vote thereat. In addition, any Warrantholder
is entitled to have his legal or financial advisers present at any such meeting, but such advisors
shall have no vote thereat.

6.13 Instruments in Writing

All actions that may be taken and all powers that may be exercised by the Warrantholders at a
meeting as hereinbefore in this Article provided may also be taken and exercised by holders of not
less than sixty-six and two-thirds percent (662/3%) of the aggregate number of Option
Warrants then outstanding by an instrument in writing signed in one or more counterparts by such
holders and the expression “Extraordinary Resolution” when used in this Indenture shall include an
instrument so signed.

6.14 Binding Effect of Resolutions

Every resolution and every Extraordinary Resolution passed in accordance with the provisions
of this Article 6 at a meeting of Warrantholders shall be binding upon all the Warrantholders,
whether present at or absent from such meeting and every instrument in writing signed by
Warrantholders in accordance with Section 6.13 shall be binding upon all the Warrantholders,
whether signatories thereto or not and each, and every Warrantholder and the Warrant Agent (subject
to the provisions for indemnity herein contained) shall be bound to give effect accordingly to
every such resolution and Extraordinary Resolution. In the case of an Extraordinary Resolution in
writing, the Warrant Agent shall give notice in writing to all Warrantholders and the Company in
the manner contemplated in Article 9 of the effect of the Extraordinary Resolution as soon as it
is reasonably practicable.

6.15 Holdings by the Company or Subsidiaries of the Company Disregarded

In determining whether Warrantholders holding the required number of Option Warrants are
present at a meeting of Warrantholders for the purpose of determining a quorum or have concurred to
any consent, waiver, resolution, Extraordinary Resolution or other action under this Indenture,
Option Warrants owned legally or beneficially by the Company or any subsidiary of
the Company shall be disregarded. The Company shall provide to the Warrant Agent, upon
written request, a Certificate of the Company stating the registration and denomination of any
Option Warrants owned legally or beneficially by the Company or any subsidiary of the Company.

 

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ARTICLE 7

SUPPLEMENTAL AGREEMENTS, MERGER, SUCCESSORS

7.1 Provision for Supplemental Agreements for Certain Purposes

From time to time the Company (when authorized by a resolution of its directors), the Agent
and the Warrant Agent may, subject to the prior approval of the TSX, if necessary, and the
provisions of this Indenture, and they shall, when so required by any provision of this Indenture,
execute and deliver by their proper officers, deeds, agreements or instruments supplemental hereto,
which thereafter shall form part hereof, for any one or more of the following purposes:

	 	(a)	 	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 Warrant Agent, relying on the
advice of counsel, prejudicial to the interests of the Warrantholders;

	 
	 	(b)	 	giving effect to any Extraordinary Resolution passed as provided in Article 6
hereof;

	 
	 	(c)	 	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 Common Shares issuable upon the exercise of
the Option Warrants on any stock exchange, or for the purpose of complying with
applicable laws, provided that such provisions are not, in the opinion of the Warrant
Agent, relying on the advice of counsel, prejudicial to the interests of the
Warrantholders;

	 
	 	(d)	 	making any modification in the form of the Option Warrant Certificate which
does not affect the substance of the Option Warrants;

	 
	 	(e)	 	evidencing any succession, or successive successions, of other bodies
corporate, or other persons to the Company and the assumption by any successor of the
covenants of the Company contained herein and in the Option Warrant Certificates as
provided hereafter in this Article 7; and

	 
	 	(f)	 	for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguities, defective provisions,
errors or omissions herein, provided that, in the opinion of the Warrant Agent, relying
on the advice of counsel, the rights of the Warrant Agent and of the Warrantholders are
in no way prejudiced thereby and provided that the Warrant Agent may in its
uncontrolled discretion decline to enter into any such supplemental indenture which in
its opinion may not afford adequate protection to the Warrant Agent when the same shall
become operative.

 

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7.2 Company May Consolidate, etc. on Certain Terms

Subject to Subsection 4.1(d), nothing in this Indenture shall prevent any consolidation,
reorganization, arrangement, amalgamation or merger of the Company with or into any other body
corporate, or bodies corporate, or person, or a conveyance or transfer of all or substantially all
the properties and assets of the Company as an entirety to any body corporate or person lawfully
entitled to acquire and operate the same, provided, however, that the body corporate or person
formed by such consolidation or amalgamation or arrangement or into which such merger shall have
been made or the person which acquires by conveyance or transfer all or substantially all the
properties and assets of the Company as an entirety shall execute and deliver to the Warrant Agent
and the Agent prior to or contemporaneously with such consolidation, reorganization, amalgamation,
arrangement, merger, conveyance or transfer, and as a condition precedent thereto an agreement
supplemental hereto wherein the due and punctual performance and observance of all the covenants
and conditions of this Indenture to be performed or observed by the Company shall be assumed by
such body corporate or person on terms and conditions not adverse to the Warrantholders. The
Warrant Agent shall be entitled to receive and shall be fully protected in relying upon an opinion
of counsel and such other advisors as they deem necessary that any such consolidation,
reorganization, amalgamation, arrangement, merger, conveyance or transfer and any supplemental
agreement executed in connection therewith, complies with the provisions of this Section 7.2.

7.3 Successor Body Corporate Substituted

In case the Company, pursuant to Section 7.2 hereof, shall be consolidated, amalgamated,
reorganized, arranged or merged with or into any other body corporate, bodies corporate or person
or shall convey or transfer all or substantially all of the properties and assets of the Company as
an entirety to another body corporate or person, the successor body corporate or person formed by
such consolidation, reorganization, arrangement or amalgamation or into which the Company shall
have been merged or which shall have received a conveyance or transfer as aforesaid shall succeed
to and be substituted for the Company hereunder with the same effect as nearly as may be possible
as if it had been named herein as a party in substitution for the Company. Such changes may be
made in the Option Warrants as may be appropriate in view of such consolidation, reorganization,
amalgamation, merger, conveyance or transfer and as may be necessary to ensure that the
Warrantholders are not adversely affected by such consolidation, organization, amalgamation,
merger, conveyance or transfer.

ARTICLE 8

CONCERNING THE WARRANT AGENT

8.1 No Conflict of Interest

The Warrant Agent represents to the Company that, to the best of its knowledge, at the date of
the execution and delivery of this Indenture, there exists no material conflict of interest in the
role of the Warrant Agent as a fiduciary 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 ninety (90)
days after ascertaining that it has such material conflict of interest, either eliminate the same
or assign its trust hereunder to a successor warrant agent approved by the Company.
Notwithstanding the foregoing provisions of this Section 8.1, if any such material conflict of
interest exists hereunder or shall exist, the validity and enforceability of this Indenture
and the Option Warrant Certificates shall not be affected in any manner whatsoever by reason
thereof.

 

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8.2 Replacement of Warrant Agent

The Warrant Agent may resign its duties and be discharged from all further duties and
liabilities hereunder after giving sixty (60) days notice in writing to the Company and the Agent,
provided that such shorter notice may be given as the Company shall accept as sufficient. In the
event of the office of Warrant Agent becoming vacant by resignation or incapacity to act or
otherwise, the Company shall appoint in writing a new Warrant Agent unless a new Warrant Agent has
already been appointed by the Warrantholders pursuant to an Extraordinary Resolution. If the
Company makes default for a period of ten (10) Business Days in making such appointment, then any
Warrantholder or the retiring or former Warrant Agent (at the Company’s expense) may apply to a
judge of the Supreme Court of the Province of British Columbia for the appointment of a new Warrant
Agent after such notification to the holders of the then outstanding Option Warrants and the
Company as such judge may order. Upon appointment, the successor Warrant Agent shall be vested
with the same powers, rights, duties and responsibilities as if it had been originally named as
Warrant Agent without any further assurance, conveyance, act or deed, but if for any reason it
becomes necessary or expedient to execute any further deed or assurance the same shall be done at
the expense of the Company and may and shall be legally and validly executed by the former Warrant
Agent. Any company resulting from a merger, consolidation or amalgamation to which the Warrant
Agent for the time being is a party shall be the successor Warrant Agent under this Indenture
without any further act. Any new Warrant Agent appointed under this Section 8.2 shall be a
corporation authorized to carry on the business of a trust company in the Qualifying Provinces.
Upon the appointment of a new Warrant Agent, the Company or the Agent shall promptly notify the
Warrantholders thereof in the manner provided in Section 9.2.

8.3 Duty of Warrant Agent

In the exercise of its rights, duties and obligations prescribed or conferred by the terms of
this Indenture, the Warrant Agent shall exercise that degree of care, diligence and skill that a
reasonably prudent Warrant Agent would exercise in comparable circumstances.

8.4 Experts, Advisors and Agents

The Warrant Agent may:

	 	(a)	 	in relation to this Indenture, rely and act on, and shall be protected in
relying and acting in good faith, on the opinion or advice of or information obtained
from any counsel, auditor, valuer, engineer, surveyor or other expert, whether obtained
by the Warrant Agent, the Company, the Agent or otherwise; and/or

	 
	 	(b)	 	employ or retain such agents and other assistants as it may reasonably require
for the proper determination and discharge of its duties hereunder and may pay
reasonable remuneration without taxation of costs of counsel for all services performed
for it in the determination and discharge of the duties hereunder and shall receive
reimbursement from the Company for all disbursements, costs and
expenses reasonably made or incurred by it in the determination and discharge of its
duties hereunder and in the management of the trusts hereof. Any counsel employed
or consulted by the Warrant Agent may, but need not be, counsel for the Company or
the Agent.

 

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8.5 Warrant Agent Not Required to Give Security

The Warrant Agent shall not be required to give security for its conduct or administration of
the trusts hereof and shall not be responsible for the acts, omissions, defaults, errors or
failures of any agents whom it may reasonably employ in the exercise of the powers conferred upon
it hereby, nor for any loss occasioned by its own acts, omissions or defaults unless such acts,
omissions or defaults constitute bad faith, wilful misconduct, wilful or negligent breach of trust
or fraud.

8.6 Warrant Agent Not Ordinarily Bound

Subject to Sections 6.1 and 6.9 hereof, the Warrant Agent shall not be bound to do or to take
any action for the enforcement of any of the obligations of the Company under this Indenture unless
and until it is required to do so by an instrument in writing signed by the holders representing
not less than ten percent (10%) of the aggregate number of Option Warrants then outstanding. The
Warrant Agent may, before taking the action, require the Warrantholders at whose instance the
action is required to deposit with the Warrant Agent the Option Warrants held by them for which the
Warrant Agent shall issue receipts. The obligation of the Warrant Agent to commence or continue
any act, action or proceeding shall be conditional upon such Warrantholders furnishing, when
required in writing so to do by the Warrant Agent, funds sufficient for commencing or continuing
the act, action or proceeding and an indemnity reasonably satisfactory to the Warrant Agent to
protect and hold harmless the Warrant Agent against any loss, damage or liability by reason
thereof. None of the provisions contained in this Indenture shall require the Warrant Agent to
risk or expend its own funds or otherwise incur financial liability in the performance of any of
its duties or in the exercise of any of its rights or powers unless funded and indemnified as
aforesaid.

The Warrant Agent shall not be bound to give any notice or do or take any act, action or
proceeding by virtue of the powers conferred on it hereby unless and until it shall have been
required so to do under the terms hereof; nor shall the Warrant Agent be required to take notice of
any default hereunder, unless and until notified in writing of such default, which notice shall
distinctly specify the default desired to be brought to the attention of the Warrant Agent and in
the absence of any such notice the Warrant Agent 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 the Warrant Agent to determine whether or not the
Warrant Agent shall take action with respect to any default.

 

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8.7 Warrant Agent may Rely on Certificates

Whenever in the administration of the trusts of this Indenture, the Warrant Agent shall deem
it necessary or desirable that any matter be proved or established by the Company prior to taking
or suffering any action to be taken hereunder, such matter (unless other evidence in
respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate or instrument signed by any of the Chairman, President,
Vice-President, Secretary or the Treasurer of the Company and delivered to the Warrant Agent, and
such certificate or instrument shall be full authority to the Warrant Agent for any action taken or
suffered by it under the provisions of this Indenture in reliance thereon, provided in its
reasonable discretion the Warrant Agent may in lieu thereof accept other evidence of such fact or
matter or may require such further or additional evidence as to it may seem reasonable.

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

In the exercise of its rights and duties, the Warrant Agent may, if it is acting in good
faith, act and rely as to the truth of the statements and the accuracy of the opinions expressed
therein, upon statutory declarations, opinions, reports, certificates or other evidence furnished
to the Warrant Agent pursuant to a request of the Warrant Agent, provided that such evidence
complies with Applicable Legislation and that the Warrant Agent examines the same and determines
that such evidence complies with the applicable requirements of this Indenture.

Whenever Applicable Legislation requires that evidence be in the form of a statutory
declaration, the Warrant Agent may accept such statutory declaration in lieu of a certificate of
the Company required by any provision hereof. Any such statutory declaration may be made by any
one or more of the Chairman or Chief Financial Officer of the Company or by any other officer(s) or
director(s) of the Company to whom such authority is delegated by the directors from time to time.

The Warrant Agent may act and rely and shall be protected in acting and relying upon any
resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order,
letter, telegram, cablegram or other paper document believed by it to be genuine and to have been
signed, sent or presented by or on behalf of the proper party or parties.

Proof of execution of any document or instrument in writing by a holder may be made by the
certificate of a notary public, or other officer with similar powers, that the person signing such
instrument acknowledged to him the execution thereof, or by an affidavit of a witness to such
execution, or in any other manner the Warrant Agent considers adequate.

8.8 Warrant Agent’s Liability

The Warrant Agent shall not be liable or accountable for any loss or damage whatsoever to any
person caused by its performance or failure to perform its responsibilities under this Indenture
save only to the extent that such loss or damage is attributable to the negligence, wilful
misconduct or fraud of the Warrant Agent. The Warrant Agent shall not be responsible for any
misconduct on the part of any counsel, banker, receiver, agent or other person appointed with due
care by it hereunder, or be bound to supervise the proceedings of any such appointee.

 

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8.9 Indemnification

Without limiting any protection or indemnity of the Warrant Agent, its directors, officers and
employees under any other provision hereof, or otherwise at law, the Company hereby agrees to
indemnify and hold harmless the Warrant Agent, its directors, officers and employees from and
against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs,
expenses and disbursements, including legal or advisor fees and disbursements, of whatever kind and
nature which may at any time be imposed on, incurred by or asserted against them in connection with
the performance of their duties and obligations hereunder, other than such liabilities, losses,
damages, penalties, claims, actions, suits, costs, expenses and disbursements arising by reason of
the negligence, wilful misconduct, bad faith or fraud of the Warrant Agent, its directors, officers
or employees. This provision shall survive the resignation or removal of the Warrant Agent, or the
termination of this Indenture.

8.10 No Representation as to Validity

The Warrant Agent shall be under no responsibility in respect of the validity or the execution
and delivery by the Company of this Indenture or in respect of the validity or the execution by the
Company of any Option Warrant Certificate issued hereunder; nor shall it be responsible for any
breach by the Company of any covenant or condition contained in this Indenture or in any Option
Warrant Certificate; nor shall it by any act hereunder be deemed to make any representation or
warranty as to the authorization or reservation of any Common Shares to be issued upon the exercise
of Option Warrants provided for in this Indenture and/or in any Option Warrant Certificate or as to
whether any Common Shares will, when issued, be duly authorized or be validly issued and fully paid
and non-assessable, it being hereby agreed and declared that as to all the matters and things
referred to in this Section 8.10, the duty and responsibility shall rest upon the Company and not
upon the Warrant Agent and the failure of the Company to discharge any such duty and responsibility
shall not in any way render the Warrant Agent liable or place upon it any duty or responsibility
for breach of which it would be liable.

8.11 Acceptance of Duties

The Warrant Agent hereby accepts the duties set out in this Indenture and agrees to perform
the same upon the terms and conditions herein set forth or referred to unless and until discharged
therefrom by resignation or in some other lawful manner.

8.12 Contracting with Company

The Warrant Agent may contract with the Company and buy, lend upon and deal in shares in the
capital of the Company and in the Option Warrants constituted hereunder without being accountable
for profits arising therefrom.

8.13 Warrant Agent’s Authority to Carry on Business

The Warrant Agent represents to the Company that as at the date hereof it is authorized to
carry on the business of a trust company in the Qualifying Provinces. If, notwithstanding the
provisions of this Section 8.13, it ceases to be authorized to carry on such business in such
provinces, the validity and enforceability of this Indenture and the Option Warrants issued
hereunder shall not be affected in any manner whatsoever by reason only of such event,
provided that the Warrant Agent shall, within thirty (30) days after ceasing to be authorized to
carry on such business in such provinces, either become so authorized or resign in the manner and
with the effect specified in Section 8.2 hereof.

 

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8.14
Monetary Distributions

The Warrant Agent will have no obligation to make any monetary distributions to the
Warrantholders under this Indenture except to the extent that certified funds have been deposited
with the Warrant Agent.

8.15
Trust Indenture Legislation

In this Section 8.15, the term “Applicable Legislation” means the provisions, if any, of any
statute relating to trust indentures and the applicable rules and regulations thereunder or to the
rights, duties and obligations of Warrant Agents and of corporations under trust indentures, to the
extent that such provisions are at the time in force and applicable to this Indenture. If and to
the extent that such provisions of this Indenture limits, qualifies or conflicts with a mandatory
requirement of Applicable Legislation, such mandatory requirement shall prevail. The Company and
the Warrant Agent agree that each will at all times in relation to this indenture and any action to
be taken hereunder, observe and comply with and be entitled to the benefits of Applicable
Legislation.

8.16
Limitations on Warrant Agent

The parties agree that:

	 	(a)	 	nothing in this Agreement will impose on the Warrant Agent any obligation to
see to, or to require evidence of, the registration or filing (or renewal thereof) of
this indenture or any instrument ancillary or supplemental hereto;

	 
	 	(b)	 	the Warrant Agent shall not be bound to give notice to any person of the
execution hereof;

	 
	 	(c)	 	the Warrant Agent shall not incur any liability or responsibility whatever or
be in any way responsible for the consequences of any breach by the Company of any
obligation herein contained or of any act of any director, officer, employee or agent
of the Company; and

	 
	 	(d)	 	the Warrant Agent and any person related to the Warrant Agent will not be
appointed a receiver or receiver and manager or liquidator of all or any part of the
assets or undertaking of the Company.

 

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ARTICLE 9

NOTICE AND CERTIFICATES

9.1 Notice to Company or Agent

Unless and until the Company or the Agent notifies the Warrant Agent of a change of address,
any notice or communication required or permitted to be given to the Company or the Agent under the
provisions of this Indenture shall be valid and effective if delivered (i) in respect of the
Company, to the Company at Suite 654, 999 Canada Place, Vancouver, British Columbia V6C 3E1
Attention: Vice-President and Corporate Secretary, or sent by telecopier (and a copy by regular
mail) or other means of prepaid transmitted or recorded communication to such address or, subject
to the provisions of Section 9.4 hereof, if mailed by prepaid registered mail addressed to the
Company at Suite 654, 999 Canada Place, Vancouver, British Columbia V6C 3E1 Attention:
Vice-President and Corporate Secretary, telecopier number (604) 682-2060, and (ii) in respect of
the Agent, to the Agent at Suite 2020, 335 8th Avenue S.W., Calgary, Alberta, T2P 1C9 Attention:
Thomas Ebbern, telecopier number (403) 269-7870, or sent by telecopier (and a copy by regular mail)
or other means of prepaid transmitted or recorded communication to such address or, subject to the
provisions of Section 9.4 hereof, if mailed by prepaid registered mail addressed to the Agent at
2020, 335 8th Avenue S.W., Calgary, Alberta T2P 1C9 Attention: Thomas Ebbern, telecopier number
(403) 269-7870. Any notice to the Company or the Agent as aforesaid shall be deemed to have been
effectively given on the earlier of:

	 	(a)	 	the date of delivery, if delivered during normal business hours of the Company
or the Agent, as applicable, (and, if not, on the next following Business Day);

	 
	 	(b)	 	the Business Day immediately following the day of sending, if sent by
telecopier (with receipt confirmed), or

	 
	 	(c)	 	on the fifth (5th) Business Day after effectual posting in Canada.

9.2 Notice to Warrantholders

Unless and until a Warrantholder notifies the Company and the Agent of a change of address,
any notice or communication required or permitted to be given to a Warrantholder under the
provisions of this Indenture shall be valid and effective if delivered to such holders at their
post office addresses appearing on the register to be kept by the Warrant Agent or sent by
telecopier (and a copy by regular mail) or other means of prepaid transmitted or recorded
communication to such address, or subject to the provisions of Section 9.4 hereof, if mailed by
prepaid registered mail addressed to such holders at their post office addresses appearing on the
register to be kept by the Warrant Agent. Accidental error or omission in giving notice or
accidental failure to mail notice to any holder will not invalidate any action or proceeding
founded thereon. All notice may be given to whichever one of the Warrantholders (if more than one)
is named first in the appropriate register hereinbefore mentioned, and any notice so given shall be
sufficient notice to all Warrantholders of and any other persons (if any) interested in such Option
Warrants. Any notice to a Warrantholder as aforesaid shall be deemed to have been effectively
given on the earlier of:

	 	(a)	 	the date of delivery, if delivered during normal business hours (and, if not,
on the next following Business Day);

	 
	 	(b)	 	the Business Day immediately following the day of sending, if sent by telex,
telegram, cable or telecopier (with receipt confirmed); or

	 
	 	(c)	 	on the fifth (5th) Business Day after effectual posting in Canada.

 

 - 45 - 

 

9.3 Notice to Warrant Agent

Unless and until the Warrant Agent is changed in accordance with the provisions of this
Indenture or the Warrant Agent notifies the Company and the Agent of a change of address, any
notice or communication required or permitted to be given to the Warrant Agent under the provisions
of this Indenture shall be valid and effective if delivered to the Warrant Agent at CIBC Mellon
Trust Company (Attention: Manager, Corporate Trust Department) at 1066 West Hastings Street, Suite
1600, Vancouver, British Columbia, V6E 3X1 or sent by telecopier (and a copy by regular mail) or
other means of prepaid transmitted or recorded communication to either of such addresses, or
subject to the provisions of Section 9.4 hereof, if mailed by prepaid registered mail addressed to
the Warrant Agent (Attention: Manager, Corporate Trust Department) in Vancouver at telecopier
number: (604) 688-4301. Any notice to the Warrant Agent as aforesaid shall be deemed to have been
effectively given on the earlier of:

	 	(a)	 	the date of delivery, if delivered during normal business hours of the Warrant
Agent (and, if not, on the next following Business Day);

	 
	 	(b)	 	the Business Day immediately following the day of sending, if sent by telex,
telegram, cable or telecopier (with receipt confirmed); or

	 
	 	(c)	 	on the fifth (5th) Business Day after effectual posting in Canada.

Surrender of an Option Warrant Certificate and evidence relating thereto pursuant to Section 2.4
hereof shall be valid and effective if delivered or mailed by prepaid registered mail to the
Principal Office of the Warrant Agent, (Attention: Manager, Corporate Trust Department) at 1066
West Hastings Street, Suite 1600, Vancouver, British Columbia, V6E 3X1 and shall be deemed to have
been effectively surrendered on the date of delivery, if delivered during normal business hours of
the Warrant Agent (and, if not, on the next following Business Day) or, if mailed, on the fifth
(5th) Business Day after effectual posting in Canada.

9.4 Mail Service Interruption

If by reason of strike, lockout or other work stoppage, actual or threatened, of postal
employees, any notice to be given to the Warrant Agent, the Company or the Agent would be
unreasonably delayed in reaching its destination, such notice shall be valid and effective only if
delivered to an officer of the party to which it is addressed or if sent to such party, at the
appropriate address in accordance with Sections 9.1 or 9.3 hereof, as the case may be, by
telecopier or other means of prepaid transmitted or recorded communication, or, in the case of
Warrantholders, if published once (i) in the national edition of The Globe & Mail; and (ii) in such
other place or places and manner, if any, as the Warrant Agent may require. Any notice
given to Warrantholders by publication shall be deemed to have been given on the last day on
which publication shall have been effected in all of the cities in which publication is required.

 

 - 46 - 

 

9.5 General Provisions as to Certificates

Each Certificate of the Company and opinion of counsel (“Document”) required under or referred
to in this Indenture or furnished in connection with any application, written order or written
request made to the Warrant Agent or a Warrantholder pursuant to any provisions of this Indenture
shall specify the section under which such Document, application, written order or written request
is being made and shall include:

	 	(a)	 	a statement that the person signing such Document has read and understands the
conditions precedent with respect to compliance with which such evidence is being
given;

	 
	 	(b)	 	a description of the nature and scope of the examination or investigation upon
which the Document is based; and

	 
	 	(c)	 	a statement that the person providing the Document has made such examination or
investigation as he believes is necessary to enable him to make the statements or give
the opinions contained or expressed therein.

Any application, written demand, statement, request, notice, designation, direction,
nomination or other instrument to be made by the Company under any of the provisions of this
Indenture shall, unless otherwise provided, be deemed sufficiently made and executed if executed by
any one of the President, any Vice-President, the Secretary or the Chief Financial Officer of the
Company and need not be under the corporate seal of the Company. The Warrant Agent shall accept a
certificate signed by the Secretary of the Company as sufficient evidence of the passage of any
resolution by the directors.

Any Document may be based, insofar as it relates to factual matters, upon information with
respect to the Company which is in the possession of the Company or upon the certificate or opinion
of or representations by an officer or officers of the Company, unless such counsel knows that the
certificate or opinion or representations with respect to the matters upon which the certificate or
opinion may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have
known that the same were erroneous.

Counsel, in giving any opinion under this Indenture, may rely in whole or in part upon the
opinion of other counsel, provided that counsel shall consider such other counsel as one upon whom
he may properly rely.

Any certificate of any expert, insofar as it relates to matters outside of such expert’s
competence or responsibility, may be based upon a certificate or opinion of or upon representations
by counsel or some other qualified expert, unless such first-mentioned expert knows that the
certificate or opinion or representations with respect to the matters upon which his certificate
may be based as aforesaid are erroneous or, in the exercise of reasonable care, should have known
that the same were erroneous.

 

 - 47 - 

 

ARTICLE 10

GENERAL PROVISIONS

10.1 Power of Board of Directors

In this Indenture, wherever the Company is required or empowered to exercise any acts, all
such acts may be exercised by the directors of the Company or by those officers of the Company
authorized to exercise such acts.

10.2 Formal Date and Execution Date

For the purpose of convenience this Indenture may be referred to as bearing as its formal date
the date first above written in this Indenture, which shall be the date on which this Indenture
shall become effective between the parties hereto, irrespective of the actual date of execution
hereof.

10.3 Further Assurances

The parties hereto and each of them do hereby covenant and agree to do such things and execute
such further documents, agreements and assurances as may be necessary or advisable from time to
time in order to carry out the terms and conditions of this Indenture in accordance with their true
intent.

10.4 Unenforceable Terms

If any term, covenant or condition of this Indenture, or the application thereof to any party
or circumstance shall be invalid or unenforceable to any extent, the remainder of this Indenture or
the application of such term, covenant or condition to a party or circumstance other than those to
which it is held invalid or unenforceable shall not be affected thereby and each remaining term,
covenant or condition of this Indenture shall be valid and shall be enforceable to the fullest
extent permitted by law.

10.5 Entire Agreement

This Indenture constitutes the entire agreement between the parties hereto relating to the
subject matter hereof and supersedes all prior and contemporaneous agreements, understandings,
negotiations and discussions, whether oral or written, of the parties and there are no general or
specific warranties, representations or other agreements by or among the parties in connection with
the entering into of this Indenture or the subject matter hereof except as specifically set forth
herein.

10.6 Amendments

Subject to Section 7.1 and other applicable provisions, this Indenture may be altered or
amended in any of its provisions when any such changes are reduced to writing and signed by the
parties hereto but not otherwise.

 

 - 48 - 

 

10.7 Counterparts

This Indenture may be executed in one or more counterparts, each of which so executed shall be
deemed to be an original and such counterparts together shall constitute one and the same
instrument.

10.8 No Waiver

Subject to the express provisions hereof, no consent or waiver, express or implied, by either
party to or of any breach or default by another party in the performance of such party’s
obligations hereunder shall be deemed or construed to be a consent or waiver to or of any other
breach or default in the performance of obligations hereunder by such party hereunder. Failure on
the part of any party to complain of any act or failure to act of another party or to declare such
other party in default, irrespective of how long such failure continues, shall not constitute a
waiver by such party of its rights hereunder.

10.9 Enurement

This Indenture shall benefit and bind the parties to it and their respective successors and
assigns.

10.10 Conflicts

In the event of any conflict or inconsistency through the provision of this Indenture and the
Certificate, the provisions of this Indenture will govern.

10.11 Assignment

This Indenture may not be assigned by either party hereto without the consent in writing of
the other party.

[The remainder of this page has been intentionally left blank]

 

 - 49 - 

 

IN WITNESS WHEREOF the parties hereto have executed this Indenture as of the date first above
written.

	 	 	 	 	 	 	 
	 	 	IVANHOE ENERGY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Beverly A. Bartlett
 

Beverly A. Bartlett
	 	 
	 

	 	 	 	Vice President & Corporate Secretary	 	 
	 
	 	 	 	 	 	 
	 	 	MACQUARIE CAPITAL MARKETS CANADA LTD.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Tom Ebbern
 

Tom Ebbern
	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Josh Woitas
 

Josh Woitas, Senior Manager
	 	 
	 
	 	 	 	 	 	 
	 	 	CIBC MELLON TRUST COMPANY	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Van Bot
 

Authorized Signatory
	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:
	 	/s/ Tricia Murphy
 

Tricia Murphy
	 	 

 

 - 50 - 

 

SCHEDULE “A”

IVANHOE ENERGY INC. OPTION WARRANT CERTIFICATE

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

EXERCISABLE ONLY BEFORE 5:00 P.M. (VANCOUVER TIME) ON OR BEFORE JANUARY 26, 2011 (THE “EXPIRY
DATE”), AFTER WHICH TIME THIS WARRANT WILL BE NULL AND VOID.

THE FOLLOWING LEGEND FOR U.S. PURCHASERS ONLY

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

THE FOLLOWING LEGENDS ONLY IF THE OPTION SPECIAL WARRANTS WERE CONVERTED PRIOR TO RECEIPT OF FINAL
RECEIPT

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
SECURITY BEFORE [INSERT DATE THAT IS
FOUR MONTHS PLUS ONE DAY FOLLOWING THE DATE OF ISSUANCE OF THE OPTION SPECIAL WARRANTS].”

 

 

 

WARRANTS

IVANHOE ENERGY INC.

(Incorporated under the laws of the Yukon Territory)

	 	 	 	 	 
	 

	 	WARRANT CERTIFICATE NO.                     
	 	                    Warrants

THIS IS TO CERTIFY that, for value received,                                         , the registered holder hereof (the “holder”) is
entitled, for every one (1) Warrant held, to purchase at any time before the Expiry Time, being
5:00 p.m. (Vancouver time) on the Expiry Date one (1) fully paid and non-assessable common share
(“Common Share”) in the capital of Ivanhoe Energy Inc. (the “Company”) as constituted on the date
hereof, or such other securities as are stipulated by the provisions for adjustment contained in
the Option Warrant Indenture hereinafter described, by delivery to CIBC Mellon Trust Company (the
“Warrant Agent”) at its principal office in the City of Vancouver or City of Toronto of this Option
Warrant Certificate, with the Exercise Form attached hereto duly completed and executed, and a bank
draft, certified cheque, money order or wire transfer in lawful money of Canada, payable to or to
the order of the Warrant Agent, in trust for the Company, at par in the city where this Option
Warrant Certificate is so delivered, in an amount equal to the product of the Exercise
Consideration multiplied by the number of Common Shares being purchased upon exercise of the Option
Warrants.

For the purposes of this Option Warrant Certificate, “Exercise Consideration” means, in
respect of every one (1) Option Warrant exercised, the sum of Cdn.$3.16, subject to adjustment
pursuant to Article 4 of the Option Warrant Indenture.

The Option Warrants represented by this certificate are issued under and pursuant to an Option
Warrant Indenture (the “Indenture”) made as of February 25, 2010 among the Company, the Agent and
the Warrant Agent (which expression shall include any successor warrant agent appointed under the
Indenture), to which Indenture (and any amendments thereto and instruments supplemental thereto)
reference is hereby made for a full description of the rights of the holders of the Option Warrants
and the terms and conditions upon which such Option Warrants are or are to be, issued and held, all
to the same effect as if the provisions of the Indenture and all amendments thereto and instruments
supplemental thereto were herein set forth and to all of which provisions the holder of these
Option Warrants by acceptance hereof assents. All capitalized terms not otherwise defined herein
shall have the meanings ascribed thereto in the Indenture.

In the event of any conflict or inconsistency between the provisions of the Indenture (and any
amendments thereto and instruments supplemental thereto) and the provisions of this Option Warrant
Certificate, except those that are necessary by context, the provisions of the Indenture (and any
amendments thereto and instruments supplemental thereto) shall prevail. The terms and provisions
of the Indenture (and any amendments thereto and instruments supplemental thereto) are incorporated
herein by reference.

This Option Warrant Certificate shall be validly surrendered only upon delivery thereof or by
mailing the same, with payment as provided above, to the Warrant Agent at its principal office in
the City of Vancouver (at the address hereinafter indicated). The Exercise Form attached hereto
shall be deemed not to be duly completed if not fully completed in the manner
indicated or if the name and mailing address of the holder do not appear legibly on such
Exercise Form or such Exercise Form is not signed by the holder.

 

 - 2 - 

 

Not later than the fifth (5th) Business Day after the surrender to the Warrant
Agent of this Option Warrant Certificate for the purposes of exercising Option Warrants represented
hereby with the attached Exercise Form duly completed and payment as provided above, (i) the
Warrant Agent will cause to be mailed to the holder, or to such person as the holder may otherwise
specify in the Exercise Form or by written notice given to the Warrant Agent prior to such mailing,
at the address of the holder or, if so specified, of such person, or, if specified in the Exercise
Form or by written notice given to the Warrant Agent prior to such mailing, cause to be delivered
to such holder or person at the place where this Option Warrant Certificate was surrendered
certificates representing the number of Common Shares issuable upon the exercise of such Option
Warrants registered in the name of the holder or, if so specified, such person, or (ii) in the case
of the exercise of Option Warrants issued pursuant to Global Warrant Certificate(s), the Company
shall cause the Depository to enter and issue, as the case may be, to the person or persons in
whose name or names such Common Shares have been issued, a Book-Entry Only System customer
confirmation. In the event of non-receipt of any such certificate referred to in (i) above by the
person to whom it is so sent as aforesaid, or the loss or destruction thereof, the Company shall
issue and the Warrant Agent shall countersign and deliver to such person a replacement certificate
of like date and tenor in place of the one lost or destroyed upon being furnished with such
evidence of ownership and of such non-receipt, loss or destruction and with such indemnity and
surety bond or security as the Warrant Agent may reasonably require. The holder shall bear the
cost of the issue of such replacement certificate. If less than all the Option Warrants evidenced
by this Option Warrant Certificate are exercised, the holder will be entitled to receive without
charge a new Option Warrant Certificate representing the balance of such Option Warrants.

Upon a valid exercise of Option Warrants as provided herein, the person or persons in whose
name or names the Common Shares are issuable, 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 Company
covenants that it will (subject to and in accordance with the provisions of the Indenture) cause
certificates representing such Common Shares to be delivered or mailed to such person or persons at
the address or addresses specified in such Exercise Form.

To the extent that the Option Warrants represented by this Option Warrant Certificate confer
the right to subscribe for a fraction of a Common Share, such right may be exercised in respect of
such fraction only in combination with an additional Warrant or Option Warrants which in the
aggregate entitle the holder to acquire a whole number of Common Shares. No fractional Common
Shares will be issued. If a holder is not able to, or elects not to, combine Option Warrants so as
to be entitled to acquire a whole number of Common Shares, the Company shall make an appropriate
cash adjustment. In respect of any holder, the Company shall only be required to make such a cash
adjustment once and for one (1) fractional Common Share and no more. The amount of the cash
adjustment shall be equal to the fraction of a Common Share to which the holder would be entitled
multiplied by the Current Market Price. The Company will not, under any circumstances, be obligated
to issue a cheque to a Warrantholder of less than Cdn.$10.00.

 

 - 3 - 

 

The Indenture provides for adjustments to the subscription rights attaching to the Option
Warrants represented by this Option Warrant Certificate in certain events and also provides for
the giving of notice by the Company prior to taking certain actions necessitating such
adjustments.

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

The Option Warrants evidenced by this Option Warrant Certificate are transferable only in
accordance with the terms and conditions set forth in Section 2.7 of the Indenture which makes
reference to the fact that a person who furnishes evidence (unless the Company has instructed the
Warrant Agent in writing to waive such requirement) to the reasonable satisfaction of the Warrant
Agent that he is:

	 	(a)	 	the executor, administrator, heir or legal representative of the heirs of the
estate of a Warrantholder,

	 
	 	(b)	 	a guardian, committee, trustee, curator or tutor representing a Warrantholder
who is an infant, an incompetent person or a missing person,

	 
	 	(c)	 	a liquidator of, or a trustee in bankruptcy for, a Warrantholder, or

	 
	 	(d)	 	a transferee of a Warrantholder who provides the Warrant Agent with evidence
satisfactory to the Warrant Agent and the Company, acting reasonably, including but not
limited to a properly completed and executed declaration attached as Exhibit “A” to the
transfer form attached to this Option Warrant Certificate, that such transferee is/was
either: (i) not in the United States at the time the buy order for the Option Warrants
was executed, not acquiring the Option Warrants for the account or benefit of a U.S.
Person or a person in the United States and was not offered the Option Warrants in the
United States, or (ii) a person that has purchased or acquired Option Warrants in a
transaction that was exempt from registration under the U.S. Securities Act and has
provided the Company with satisfactory evidence of the availability of such exemption
(which shall include an opinion of counsel reasonably acceptable to the Company) and
was exempt from registration under any applicable securities laws of any state of the
United States and that the securities laws of any other applicable jurisdiction(s) have
been complied with in relation to the transfer of the Option Warrants involved.

Option Warrants may only be transferred on compliance with the conditions of the Indenture on
the register to be kept by and at the principal office of the Warrant Agent in the City of
Vancouver upon surrender of this Option Warrant Certificate to the Warrant Agent accompanied by a
written instrument of transfer in form and execution satisfactory to the Warrant Agent or other
registrar and upon compliance with such reasonable requirements relating to the payment of costs of
the transfer by the holder as the Warrant Agent may prescribe and all applicable securities
legislation and requirements of regulatory authorities.

If any of the Common Shares issuable upon the exercise of Option Warrants are to be issued to
a person or persons other than the holder (as aforesaid), the holder shall pay to the Warrant Agent
all requisite stamp transfer taxes or other governmental charges exigible in
connection with the issue of such Common Shares to such other person or persons or shall
establish to the satisfaction of the Warrant Agent that such taxes and charges have been paid.

 

 - 4 - 

 

On presentation at the principal office of the Warrant Agent in Vancouver, subject to the
provisions of the Indenture and on compliance with the reasonable requirements of the Warrant
Agent, one or more Option Warrant Certificates may be exchanged for one or more Option Warrant
Certificates of different denomination evidencing in total the same number of Option Warrants as
the certificate or certificates being exchanged.

The Indenture contains provisions making resolutions passed at properly held meetings of
Warrantholders and instruments in writing signed by Warrantholders holding a specified majority of
the outstanding Option Warrants binding on all such holders.

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

Time shall be of the essence hereof. The Option Warrants and the Indenture (and any
amendments thereto and instruments supplemental thereto) shall be governed by, performed, construed
and enforced in accordance with the laws of the Province of British Columbia and the laws of Canada
applicable therein and shall be treated in all respects as British Columbia contracts.

Unless the Company has instructed the Warrant Agent in writing to waive any or all of the
following requirements, the Option Warrants may not be exercised by or for the account or benefit
of a U.S. Person or a person in the United States unless the holder certifies in writing to the
Company and the Warrant Agent that the holder: (i) purchased the Option Special Warrants directly
from the Company pursuant to a written subscription agreement for the purchase of Option Special
Warrants; (ii) is exercising the Option Warrants solely for its own account and not on behalf of
any other Person; and (iii) was an “Accredited Investor”, as that term is defined in Regulation D
under the Securities Act, both on the date the Option Warrants were issued by the Company and on
the date of exercise of the Option Warrants; or (iii) a registered transferee of such Option
Warrants who has complied with Subsection 2.7(d) hereof, provided that the Company may, in its sole
discretion, accept, in substitution of the foregoing, evidence satisfactory to the Company, acting
reasonably, to the effect that the Common Shares have been registered under the U.S. Securities Act
and applicable state securities laws or that the Common Shares may be issued upon exercise of the
Option Warrants without registration under the U.S. Securities Act and any applicable state
securities laws.

This Warrant may not be exercised in the United States or by or for the account or benefit of
a U.S. Person or person in the United States other than by: (i) an original Warrantholder, or (ii)
by a registered transferee of Option Warrants that acquired the Option Warrants in a transaction
registered or exempt from registration under the U.S. Securities Act and applicable state
securities laws and in compliance with the Indenture.

If, as and when deemed necessary by the Company pursuant to Applicable Securities Laws, the
Company and the Warrant Agent may attach such legends to each certificate representing Common
Shares issuable upon the exercise of Option Warrants as are required in order to comply with such
securities laws.

 

 - 5 - 

 

After the exercise of any of the Option Warrants represented by this Option Warrant
Certificate, the holder will no longer have any rights under either the Indenture or this Option
Warrant Certificate with respect to such Option Warrants, other than the right to receive
certificates representing the Common Shares issuable upon the exercise or deemed exercise of the
Option Warrants represented by this Option Warrant Certificate, and such Option Warrants shall be
void and of no further value or effect.

IN WITNESS WHEREOF the Company has caused this Option Warrant Certificate to be signed by its
duly authorized officer as of                     , 2010.

	 	 	 	 	 	 	 
	 	 	IVANHOE ENERGY INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	Per:	 	 	 	 
	 

	 	 	 	 

Authorized Signatory
	 	 

Countersigned by:

CIBC MELLON TRUST COMPANY

	 	 	 	 	 
	Per:
	 	 	 	 
	 

	 	 

Authorized Signatory
	 	 

 

 - 6 - 

 

EXERCISE INSTRUCTIONS TO OPTION WARRANTHOLDER

The Warrantholder may exercise his right to subscribe for Common Shares of IVANHOE ENERGY INC.
(the “Company”) by completing the Exercise Form and surrendering this Option Warrant Certificate
and the duly completed Exercise Form, with payment of the applicable Exercise Consideration, to
CIBC Mellon Trust Company by delivering or mailing it to CIBC Mellon Trust Company at its principal
stock transfer office in the City of Vancouver at Suite 1600, The Oceanic Plaza, 1066 West Hastings
Street, Vancouver, British Columbia, V6E 3X1.

For your own protection, it is suggested that all documentation be forwarded to the Warrant
Agent by registered mail.

 

 - 7 - 

 

EXERCISE FORM

	 	 	 
	To:

	 	Ivanhoe Energy Inc.
	 

	 	c/o CIBC Mellon Trust Company
	 

	 	Suite 1600, The Oceanic Plaza
	 

	 	1066 West Hastings Street
	 

	 	Vancouver, British Columbia
	 

	 	V6E 3X1

The undersigned holder of the within Option Warrant Certificate, pursuant to the Option
Warrant Indenture mentioned therein hereby exercises                      of the Option Warrants (the
“Exercised Option Warrants”) evidenced thereby and hereby subscribes for a number of Common Shares
of Ivanhoe Energy Inc. equal to such number of Common Shares or number or amount of other
securities or property, or combination thereof, to which such exercise entitles him under the
provisions of the Option Warrant Indenture at an aggregate price equal to the product of the
Exercise Consideration and the number of Exercised Option Warrants, and on the terms specified in
such Option Warrant Certificate and the Option Warrant Indenture, and in payment therefor, delivers
herewith a bank draft, certified cheque or money order payable to CIBC Mellon Trust Company, in
trust for Ivanhoe Energy Inc.

The undersigned hereby irrevocably directs that such Common Shares be issued and delivered as
follows:

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

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

No certificates will be registered or delivered to an address in the United States unless Box
B below is checked.

Aggregate Common Shares owned or controlled (beneficial and legal) on the date of exercise                                         .

(Please print full name in which share certificates are to be issued. If any Common Shares
are to be issued to a person or persons other than the Warrantholder, the Warrantholder must pay to
the Warrant Agent all exigible transfer taxes or other government charges.)

 

 

 

The undersigned certifies that each of the representations and warranties made by the
undersigned to the Company in connection with the undersigned’s acquisition of the Exercised Option
Warrants remains true and correct on the date hereof.

The undersigned represents that it (A) has had access to such current public information
concerning Ivanhoe Energy Inc. as it considered necessary in connection with its investment
decision and (B) understands that the securities issuable upon exercise hereof have not and will
not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities
Act”).

The undersigned represents and warrants that it: [check one only]

	o	A.	 	is not in the United States or a U.S. Person as defined in Rule 902 of
Regulation S under the U.S. Securities Act and is not exercising the Exercised Option
Warrants for the account or benefit of a U.S. Person or a person in the United States.

	 
	o	B.	 	is a registered holder that acquired the Exercised Option Warrants in a
transaction that was exempt from registration under the U.S. Securities Act and
applicable state securities laws and in compliance with Subsections 2.7(d) of the
Option Warrant Indenture.

DATED at                                          this
 _____ 
day of                                         ,                     .

	 	 	 
	 
	 	 
	 
	 	 
	 

	 	 
	Signature Guaranty*

	 	Signature of Subscriber**
	 
	 	 
	 

	 	 
	 

	 	Name of Subscriber
	 
	 	 
	 

	 	 
	 

	 	Address (include Postal Code)
	 
	 	 
	 

	 	 
	 

	 	SIN/TIN Number (if any)

	*	If the Common Shares are to be issued to a person other than the registered holder, then the
signature of the Subscriber must be guaranteed by a bank or medallion guaranteed by a member
of a recognized medallion guarantee program.     

	 
	**	This signature must correspond exactly with the name appearing on the registration panel.

	 
	o	 Check box if the share certificates are to be delivered at the office where this Warrant is
exercised, failing which they will be mailed.

 

 - 2 - 

 

TRANSFER OF OPTION WARRANTS

FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers to:

	 	 	 
	 

	 	 
	 

	 	Name
	 
	 	 
	 

	 	 
	 

	 	Address
	 
	 	 
	 

	 	 
	 
	 	 

                                        Option Warrants of Ivanhoe Energy Inc. registered in the name of the
undersigned on the records of Ivanhoe Energy Inc. maintained by CIBC Mellon Trust Company
represented by the Option Warrant Certificate attached and irrevocably appoints
                                         the attorney of the undersigned to transfer the said securities on the
books or register with full power of substitution.

DATED this
 _____ 
day of                                         ,                     

	 	 	 
	 
	 	 
	 
	 	 
	 

	 	 
	Signature Guaranteed

	 	(Signature of Warrant Holder)
	 
	 	 
	 

	 	 
	 

	 	Print full Name
	 
	 	 
	 

	 	 
	 

	 	Print full address and SIN/TIN (if any)
	 
	 	 
	 

	 	 
	 
	 	 

Instructions

	1.	 	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 Warrant Agent and the Company.

	 
	2.	 	The signature on the Transfer Form must be guaranteed by an authorized officer of a Schedule
1 chartered bank or medallion guaranteed by a member of a recognized medallion guarantee
program.

	 
	3.	 	Option Warrants will only be transferable in accordance with applicable securities laws and
stock exchange regulations. The transfer of Option Warrants to a transferee may, depending on
the residency of such transferee, result in the securities obtained upon the exercise of the
Option Warrants not being freely tradeable in the jurisdiction where the transferee is
resident.

	4.	 	Unless the Company has otherwise instructed the Warrant Agent in writing, no transfer of
Option Warrants will be valid unless this Transfer Form is accompanied by: (a) a duly
executed declaration by the transferee of Option Warrants in the form attached as Exhibit “A”
to this Transfer Form; and (b) such other evidence as the Warrant Agent may reasonably require
that the transfer of such Option Warrants is being made in accordance with all applicable
securities legislation.

 

 

 

EXHIBIT “A”

DECLARATION OF TRANSFEREE OF OPTION WARRANTS

OF IVANHOE ENERGY INC.

			
	TO:	 	CIBC Mellon Trust Company, Warrant Agent of the Option Warrants of
Ivanhoe Energy Inc.

			
	AND TO:	 	Ivanhoe Energy Inc. (the “Company”)

The undersigned transferee (“Transferee”) of common share purchase warrants of Ivanhoe Energy
Inc. (“Option Warrants”) whose name appears as such on the form of transfer of such Option Warrants
that accompanies this declaration, hereby declares and certifies, for himself and on behalf of each
beneficial transferee of all or any part of such Option Warrants, that he and they are aware that
the Option Warrants and the common shares (“Common Shares”) of the Company underlying the Option
Warrants (together the “Subject Securities”) 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 states of the United States, and that the transfer contemplated hereby is being made in
reliance on an exemption from such registration requirements.

The Transferee represents and warrants that:

[check one only]

	o	 	A.	 	(i)	 	 no offers to sell the Subject Securities were made by any person to the
Transferee or any beneficial transferee for whom he is acting while such persons were
in the United States;

	 
	 	 	 	 	(ii)	 	the Transferee and each beneficial transferee for whom he is
acting were outside the United States at the time of execution and delivery of
the instrument by which the Transferee and each beneficial transferee for whom
he is acting agreed to acquire the Subject Securities; and

	 
	 	 	 	 	(iii)	 	the Transferee and each beneficial transferee for whom he is
acting, is not, and is not acquiring the Subject Securities for the account or
benefit of, a U.S. Person as defined in Rule 904 of Regulation S under the U.S.
Securities Act.

	o	 	B.	 	The Transferee has acquired the Option Warrants in a transaction exempt from registration under
the U.S. Securities Act and applicable state securities laws and has provided herewith
evidence (which the Transferee acknowledges must be satisfactory to the Company) of such
exemption. The Transferee acknowledges that there is an Option Warrant Indenture which
contains restrictions with respect to the exercise and transfer of Option Warrants.

 

 

 

DATED at                      this                      day of                       
                  ,                     .

	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Name of Transferee
	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Signature of Authorized Representative
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Name of Person Signing
	 	 
	 
	 	 	 	 	 	 
	 

	 	 	 	 

Title
	 	 

 

 - 2 -exv10w1

Exhibit 10.1

FORRESTER RESEARCH, INC.

STOCK OPTION PLAN FOR DIRECTORS, as amended

1. DEFINED TERMS

     Exhibit A, which is incorporated by reference, defines the terms used in the Plan and sets
forth certain operational rules related to those terms.

2. PURPOSE

     The Plan has been established to advance the interests of the Company by providing for the
grant of Stock Options to Eligible Directors.

3. ADMINISTRATION

     The Administrator has discretionary authority, subject only to the express provisions of the
Plan, to interpret the Plan; determine eligibility for and grant Stock Options; determine, modify
or waive the terms and conditions of any Stock Option; prescribe forms, rules and procedures; and
otherwise do all things necessary to carry out the purposes of the Plan. Determinations of the
Administrator made under the Plan will be conclusive and will bind all parties.

4. LIMITS ON AWARDS UNDER THE PLAN

     (a) Number of Shares. A maximum of four hundred fifty thousand (450,000) shares of
Stock may be delivered under the Plan.  Shares of Stock, if any, withheld by the Company
in payment of the exercise price of a Stock Option shall not be treated as delivered for purposes
of the preceding sentence.

     (b) Type of Shares. Stock delivered by the Company under the Plan may be authorized
but unissued Stock or previously issued Stock acquired by the Company. No fractional shares of
Stock will be delivered under the Plan.

5. ELIGIBILITY AND PARTICIPATION

     Only Eligible Directors shall be eligible to be awarded Stock Options under, and thereby to
participate in, the Plan.

6. RULES APPLICABLE TO STOCK OPTIONS

     (a) Automatic Awards

          (1) Number of Stock Options; Time of Grant; Term. On the date of each annual meeting
of stockholders of the Company (beginning with the annual meeting of stockholders at which the Plan
is approved), each individual who is then an Eligible Director, including any Eligible Director
elected to the Board on such date but not including any individual who ceases to be a member of the
Board on such date, shall automatically be granted

 

 

an Annual Award. In addition, each individual who first becomes an Eligible Director between
annual meetings shall be granted an Interim Award on the date he or she first becomes an Eligible
Director. Subject to Section 7 and the terms of the award, (i) each Annual Award shall entitle the
Eligible Director to acquire 12,000 shares of Stock, and (ii) each Interim Award shall entitle the
Eligible Director to acquire 6,000 shares of Stock. Unless earlier exercised or terminated in
accordance with the Plan, each Automatic Award shall have a term of ten (10) years from the date of
grant.

          (2) Exercise Price. The per-share exercise price of each Automatic Award shall be the
per-share fair market value of the Stock on the date of grant, as determined by the Administrator.

          (3) Vesting. Unless earlier terminated and subject to Section 7 below, each Automatic
Award shall vest (become exercisable) as to one quarter (25%) of the shares subject thereto on (a)
in the case of an Interim Award, on the date of grant and on each of the next three anniversaries
of that date, and (b) in the case of an Annual Award, the first, second, third and fourth
anniversaries of the date of grant

     (b) Discretionary Awards

          (1) Grant. In addition to such Automatic Awards as may be granted pursuant to Section
6(a) above, the Administrator may grant Discretionary Awards to any Eligible Director at any time,
for such number of shares as the Administrator may determine in its discretion.

          (2) Exercise Price; Other Terms. Each Discretionary Award shall be exercisable at a
price per share determined by the Administrator in connection with the grant that is not less than
the per-share fair market value of the Stock on the date of grant, as determined by the
Administrator. Each Discretionary Award shall be subject to such vesting and other terms, not
inconsistent with the express provisions of the Plan, as the Administrator may determine in its
discretion.

     (c) All Awards

          (1) Transferability. A Stock Option may not be transferred other than by will or by
the laws of descent and distribution and during the Eligible Director’s lifetime may be exercised
only by the Eligible Director. Notwithstanding the foregoing, the Administrator in its discretion
may permit any Eligible Director to transfer any or all of his or her Stock Options in a
gratuitous transfer to a family member or a family trust, family partnership or similar entity.

          (2) Time and Manner of Exercise; Payment of Exercise Price. A Stock Option will not
be deemed to have been exercised until the Administrator receives a notice of exercise (in form
acceptable to the Administrator) signed by the appropriate person and accompanied by the exercise
price. If the Stock Option is exercised by any person other than the Participant, the
Administrator may require satisfactory evidence that the person exercising the Stock Option has
the right to do so. The exercise price must be paid (i) by cash or check acceptable to the
Administrator, or (ii) through the delivery of shares of Stock that have been

-2-

 

outstanding for at least six months (unless the Administrator approves a shorter period) and
that have a fair market value equal to the exercise price, or (iii) through a broker-assisted
exercise program acceptable to the Administrator, or (iv) by other means acceptable to the
Administrator, or (v) by any combination of the foregoing permissible forms of payment. The
delivery of shares in payment of the exercise price under clause (ii) above may be accomplished
either by actual delivery or by constructive delivery through attestation of ownership, subject to
such rules as the Administrator may prescribe.

          (3) Termination of Service. If an Eligible Director ceases for any reason other than
death to be a member of the Board, all Automatic Awards and, unless otherwise provided in the terms
of the Award, all Discretionary Awards then held by the Eligible Director that are not then vested
shall immediately terminate and all other Automatic Awards and Discretionary Awards then held by
the Eligible Director shall remain exercisable for a period of three (3) months or until the last
day of the applicable ten-year term, if earlier, and then (except to the extent previously
exercised) shall immediately terminate. In the event of an Eligible Director’s death, except as the
Administrator shall otherwise provide, all Automatic Awards and Discretionary Awards held by the
Eligible Director not then exercisable shall terminate. All Automatic Awards and Discretionary
Awards held by an Eligible Director or his or her permitted transferees, if any, immediately
prior to the Eligible Director’s death, to the extent exercisable, (i) will remain exercisable for
the lesser of the one-year period ending with the first anniversary of the Eligible Director’s
death or (ii) the period ending on the latest date on which such Automatic Award or Discretionary
Award could have been exercised without regard to this Section 6(c)(3), and will thereupon
terminate.

          (4) Dividend Equivalents, Etc. The Administrator may provide for the payment of
amounts in lieu of cash dividends or other cash distributions with respect to Stock subject to a
Stock Option, subject in each case to compliance with the requirements of Section 409A to the
extent applicable.

          (5) Rights Limited. Nothing in the Plan will be construed as giving any Eligible
Director the right to continued service with the Company or any rights as a stockholder except as
to shares of Stock actually issued under the Plan.

7. EFFECT OF CERTAIN TRANSACTIONS

     (a) Mergers, etc. Except as otherwise provided in a Stock Option, the following
provisions shall apply in the event of a Covered Transaction:

          (1) Assumption or Substitution. If the Covered Transaction is one in which there is
an acquiring or surviving entity, the Administrator may provide for the assumption of some or all
outstanding Stock Options or for the grant of new awards in substitution therefor by the acquiror
or survivor or an affiliate of the acquiror or survivor to any Eligible Director who will continue
to provide services to the acquiring or surviving entity.

-3-

 

          (2) Cash-Out of Awards. If the Covered Transaction is one in which holders of Stock
will receive upon consummation a payment (whether cash, non-cash or a combination of the
foregoing), the Administrator may provide for payment (a “cash-out”), with respect to some or all
Awards, equal in the case of each affected Stock Option to the excess, if any, of (A) the fair
market value of one share of Stock (as determined by the Administrator in its reasonable
discretion) times the number of shares of Stock subject to the Stock Option, over (B) the aggregate
exercise or purchase price, if any, under the Stock Option, in each case on such payment terms
(which need not be the same as the terms of payment to holders of Stock) and other terms, and
subject to such conditions, as the Administrator determines. 

          (3) Acceleration of Certain Awards. If the Covered Transaction (whether or not there
is an acquiring or surviving entity) is one in which there is no assumption, substitution or
cash-out under Section 7(a)(1) above), each Stock Option requiring exercise will become fully
exercisable, prior to the Covered Transaction, on a basis that gives the holder of the Stock Option
a reasonable opportunity, as determined by the Administrator, following exercise of the Stock
Option to participate as a stockholder in the Covered Transaction.

          (4) Termination of Awards Upon Consummation of Covered Transaction. Each Stock Option
(unless assumed pursuant to Section 7(a)(1) above), will terminate upon consummation of the Covered
Transaction.

          (5) Additional Limitations. Any share of Stock delivered pursuant to Section 7(a)(2)
or Section 7(a)(3) above with respect to a Stock Option may, in the discretion of the
Administrator, contain such restrictions, if any, as the Administrator deems appropriate to reflect
any performance or other vesting conditions to which the Stock Option was subject.

     (b) Change in and Distributions With Respect to Stock

          (1) Basic Adjustment Provisions. In the event of a stock dividend, stock split or
combination of shares (including a reverse stock split), recapitalization or other change in the
Company’s capital structure, the Administrator will make appropriate adjustments to the maximum
number of shares specified in Section 4(a) that may be delivered under the Plan and to the share
amounts described in Section 6(a)(1), and will also make appropriate adjustments to the number and
kind of shares of stock or securities subject to Stock Options then outstanding or subsequently
granted, any exercise prices relating to Stock Options and any other provision of Stock Options
affected by such change.

          (2) Continuing Application of Plan Terms. References in the Plan to shares of Stock
will be construed to include any stock or securities resulting from an adjustment pursuant to this
Section 7.

8. LEGAL CONDITIONS ON DELIVERY OF STOCK

     The Company will not be obligated to deliver any shares of Stock pursuant to the Plan or to
remove any restriction from shares of Stock previously delivered under the Plan until: (i) the
Company is satisfied that all legal matters in connection with the issuance and delivery of such
shares have been addressed and resolved; (ii) if the outstanding Stock is at the time of delivery

-4-

 

listed on any stock exchange or national market system, the shares to be delivered have been
listed or authorized to be listed on such exchange or system upon official notice of issuance; and
(iii) all conditions of the Award have been satisfied or waived. If the sale of Stock has not been
registered under the Securities Act of 1933, as amended, the Company may require, as a condition to
exercise of the Award, such representations or agreements as counsel for the Company may consider
appropriate to avoid violation of such Act. The Company may require that certificates evidencing
Stock issued under the Plan bear an appropriate legend reflecting any restriction on transfer
applicable to such Stock, and the Company may hold the certificates pending lapse of the applicable
restrictions.

9. AMENDMENT AND TERMINATION

     The Administrator may at any time or times amend the Plan or any outstanding Stock Option for
any purpose which may at the time be permitted by law, and may at any time terminate the Plan as to
any future grants of Stock Options; provided, that except as otherwise expressly provided in the
Plan the Administrator may not, without the Eligible Director’s consent, alter the terms of a Stock
Option so as to affect adversely the Eligible Director’s rights under the Stock Option, unless the
Administrator expressly reserved the right to do so at the time of the Stock Option grant. Any
amendments to the Plan shall be conditioned upon stockholder approval only to the extent, if any,
such approval is required by law (including the Code and applicable stock exchange or Nasdaq
requirements), as determined by the Administrator.

10. OTHER COMPENSATION ARRANGEMENTS

     The existence of the Plan or the grant of any Stock Option will not in any way affect the
Company’s right to grant an Eligible Director other compensation outside of the Plan.

-5-

 

EXHIBIT A

Definition of Terms

     The following terms, when used in the Plan, will have the meanings and be subject to the
provisions set forth below:

     “Administrator”: The Compensation Committee, except that the Compensation Committee may
delegate to such persons as it determines such ministerial tasks as it deems appropriate. In the
event of any delegation described in the preceding sentence, the term “Administrator” shall include
the person or persons so delegated to the extent of such delegation.

     “Annual Award”: An Automatic Award described in Section 6(a)(1)(i).

     “Automatic Award”: A Stock Option described in Section 6(a)(1).

     “Board”: The Board of Directors of the Company.

     “Code”: The U.S. Internal Revenue Code of 1986 as from time to time amended and in effect, or
any successor statute as from time to time in effect.

     “Compensation Committee”: The Compensation and Nominating Committee of the Board.

     “Company”: Forrester Research, Inc.

     “Covered Transaction”: Any of (i) a consolidation, merger, or similar transaction or series
of related transactions, including a sale or other disposition of stock, in which the Company is
not the surviving corporation or which results in the acquisition of all or substantially all of
the Company’s then outstanding common stock by a single person or entity or by a group of persons
and/or entities acting in concert, (ii) a sale or transfer of all or substantially all the
Company’s assets, or (iii) a dissolution or liquidation of the Company. Where a Covered
Transaction involves a tender offer that is reasonably expected to be followed by a merger
described in clause (i) (as determined by the Administrator), the Covered Transaction shall be
deemed to have occurred upon consummation of the tender offer.

     “Discretionary Award”: A Stock Option described in Section 6(b)(1).

     “Eligible Director": A member of the Board who is not a present or former employee of the
Company or of any subsidiary of the Company.

     “Interim Award”: An Automatic Award described in Section 6(a)(1)(ii).

     “Plan”: The Forrester Research, Inc. Stock Option Plan for Directors as from time to time
amended and in effect.

-6-

 

     “Stock”: Common Stock of the Company, par value $.01 per share.

     “Stock Option”: An option entitling the holder to acquire shares of Stock upon payment of the
exercise price.

-7-

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