Document:

Premium DividendTM and Dividend Reinvestment
Plan

     

    Overview

     

    This
Premium DividendTM and Dividend Reinvestment Plan (the "Plan")
provides Eligible Shareholders of Perpetual Energy Inc. ("Perpetual")
with the opportunity to reinvest their Dividends in new Shares, which new Shares
will, at the Participant's election, either be (i) purchased at a 5% discount to
the Average Market Price on the applicable payment date and credited to the
Participant's account under the Dividend Reinvestment Component of the Plan, or
(ii) purchased at a 5% discount to the Average Market Price and exchanged under
the Premium DividendTM Component
of the Plan for a cash payment equal to 102% of the reinvested
Dividends.  Each component of the Plan, which is explained in greater
detail below, is subject to eligibility restrictions, prorating as provided
herein, and other limitations on the availability of new Shares in certain
events.

     

    Eligible
Shareholders are not required to participate in the Plan.  An Eligible
Shareholder who has not elected to participate in the Plan will continue to
receive its regular Dividends in the normal manner.

     

    In order
to elect to participate in either the Dividend Reinvestment Component or the
Premium DividendTM Component,
an Eligible Shareholder must enroll in the Plan directly or through the broker,
investment dealer, financial institution or other nominee who holds Shares on
the Eligible Shareholder's behalf.  See "Enrollment"
below.

     

    Transition
from Previous Plan of Paramount Energy Trust

     

    This Plan
amends, restates and supersedes the Premium DistributionTM and
Distribution Reinvestment Plan of Paramount Energy Trust ("PET")
dated September 18, 2009 (the "PET
Plan").

     

    If you
were an eligible registered holder of trust units of PET and a participant in
either the distribution reinvestment component or the Premium DistributionTM
component of the PET Plan prior to June 30, 2010, and as a result
of  the conversion of PET to a corporation on June 30, 2010 you became
an Eligible Shareholder who is a registered holder of Shares and you continue to
hold such Shares at the relevant time, then you will be deemed to be a
participant in the Dividend Reinvestment Component or the Premium DividendTM
Component of the Plan, as the case may be, without any further action on your
part.

     

    If you
were an eligible beneficial holder of trust units of PET (i.e., a holder of trust units
whose trust units were not registered in their own name, but were instead held
through a broker, investment dealer, financial institution or other nominee) and
a participant in either the distribution reinvestment component or the Premium
DistributionTM component of the PET Plan through the nominee holder through which
you held your trust units prior to June 30, 2010, and as a result
of  the conversion of PET to a corporation on June 30, 2010 you became
an eligible beneficial holder of Shares and you continue to hold such Shares at
the relevant time, you should contact such nominee holder to confirm your
continued participation in the Dividend Reinvestment Component or the Premium
DividendTM Component of the Plan, as the case may be.

     

    
      

    

    TM   denotes
trademark of Canaccord Genuity Corp.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
    

      

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    Definitions

     

    In this
Plan:

     

    "Average Market
Price", in respect of a particular Dividend payment date, refers to the
arithmetic average (calculated by the Plan Broker to four decimal places) of the
daily volume weighted average trading prices of Shares on the TSX for the
trading days on which at least one board lot of Shares is traded on the TSX
during the corresponding Pricing Period, subject to such adjustments as
Perpetual may, in its sole discretion, determine to be appropriate to account
for (i) a change in the aggregate number of Shares outstanding into a greater or
lesser number of Shares, (ii) a reclassification of the Shares, or (iii) a
merger, reorganization or other transaction affecting the Shares.

     

    "Business
Day" refers to any day other than a Saturday, Sunday or statutory holiday
in the Province of Ontario.

     

    "CDS"
refers to CDS Clearing and Depository Services Inc., which acts as a nominee for
certain Canadian brokers, investment dealers, financial institutions and other
nominees, or its nominee, as applicable.

     

    "CDS
Participants" refers to brokers, investment dealers, financial
institutions or other nominees in their capacity as participants in the CDS
depository service, who hold Shares registered in the name of CDS on behalf of
eligible beneficial owners of Shares and who are acting on behalf of such
beneficial owners in respect of the Plan.

     

    "Depository"
means CDS and, with respect to the Dividend Reinvestment Component only,
DTC.

     

    "Depository
Participant" means a CDS Participant and, with respect to the Dividend
Reinvestment Component only, a DTC Participant.

     

    "Dividend"
refers to a cash dividend declared payable by Perpetual on the outstanding
Shares.

     

    "Dividend
Reinvestment Component" refers to that component of the Plan, as more
particularly described herein under the heading "Plan Components – Dividend
Reinvestment", pursuant to which Shares are purchased on the reinvestment of
Dividends under the Plan but are not exchanged for the Premium
DividendTM.

     

    "DTC" means
The Depository Trust Company, which acts as nominee for certain United States
brokers, investment dealers, financial institutions and other nominees, or its
nominee, as applicable.

     

    "DTC
Participants" refers to brokers, investment dealers, financial
institutions or other nominees in their capacity as participants in the DTC
depository service who hold Shares registered in the name of DTC on behalf of
eligible beneficial owners of Shares who are acting on behalf of such beneficial
owners in respect of the Plan.

     

    "Eligible
Shareholders" refers to Shareholders who are permitted to participate in
the Plan as described herein under the heading "Eligibility
Requirements".

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
    

       

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    "Enrollment
Form" refers to the Reinvestment Enrollment – Participant Declaration
Form established by Perpetual and the Plan Agent from time to time for the
purpose of enrolling eligible registered holders of Shares (other than a
Depository) in the Plan.

     

    "Participants"
refers to registered holders of Shares who, on the applicable record date for a
Dividend, are Eligible Shareholders and are duly enrolled in the Plan; provided,
however, that Depositories and brokers, investment dealers, financial
institutions or other nominees, as the case may be, shall be Participants only
to the extent that such Depositories or such nominees, respectively, have
enrolled in the Plan on behalf of Shareholders who are Eligible
Shareholders.

     

    "Plan Agent"
refers to Computershare Trust Company of Canada, or such other party as is
appointed by Perpetual from time to time to act as "Plan Agent" under the
Plan.

     

    "Plan
Broker" refers to Canaccord Genuity Corp., or such other qualified
investment dealer as is designated from time to time to act as "Plan Broker"
under the Plan.

     

    "Premium
DividendTM"
refers to a cash amount equal to 102% of a Dividend or, as the context may
require, 102% of the aggregate Dividends payable by Perpetual on a particular
Dividend payment date to Participants enrolled in the Premium DividendTM
Component, subject to proration in certain events as described
herein.

     

    "Premium
DividendTM
Component" refers to that component of the Plan, as more particularly
described herein under the heading "Plan Components – Premium DividendTM",
pursuant to which Shares are purchased on the reinvestment of Dividends under
the Plan and exchanged for the Premium DividendTM.

     

    "Pricing
Period", in respect of a particular Dividend, refers to the period
beginning on the later of the 21st Business Day preceding the Dividend payment
date and the second Business Day following
the record date applicable to that Dividend payment date, and ending on the
second Business Day preceding the Dividend payment date.

     

    "Shareholders"
refers to holders of Shares.

     

    "Shares"
refers to common shares in the capital of Perpetual.

     

    "TSX"
refers to the Toronto Stock Exchange.

     

    Plan
Components

     

    Dividend
Reinvestment

     

    Under the
Dividend Reinvestment Component, the Plan Agent will, on each Dividend payment
date, on behalf of Participants enrolled in the Dividend Reinvestment Component,
apply the aggregate Dividends payable on the Shares of such Participants towards
the purchase from treasury of Perpetual of such number of new Shares (calculated
to six decimal places) as is equal to the aggregate amount of such Dividends
divided by 95% of the corresponding Average Market Price.

     

    The new
Shares so purchased will be held under the Plan by the Plan Agent for the
account of the applicable Participants or, in the case of Eligible Shareholders
that are enrolled in the Plan indirectly through a Depository, credited through
such Depository to the accounts of appropriate Depository Participants on behalf
of such Eligible Shareholders.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

         

    
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    Any
subsequent Dividends paid in respect of Shares purchased under the Dividend
Reinvestment Component will be subject to reinvestment under the Plan (i) in the
case of Shares held under the Plan for the account of a Participant other than a
Depository, pursuant to the current election of the Participant as between the
Dividend Reinvestment Component and the Premium DividendTM Component, or (ii) in
the case of Shares enrolled in the Plan indirectly through a Depository,
pursuant to instructions provided to the Plan Agent by such Depository in the
manner described below under the heading "Enrollment".

     

    Premium
DividendTM

     

    Under the
Premium DividendTM Component, the Plan Agent will, on each Dividend payment date,
on behalf of Participants enrolled in the Premium DividendTM Component, apply the
aggregate Dividends payable on the Shares of such Participants towards the
purchase from treasury of Perpetual of such number of new Shares (calculated to
six decimal places) as is equal to the aggregate amount of such Dividends
divided by 95% of the corresponding Average Market
Price.  Additionally, a number of Shares approximately equal to that
number of new Shares to be purchased under the Premium DividendTM Component will
in turn be pre-sold, through the Plan Broker, in one or more transactions on the
TSX.

     

    The new
Shares purchased on the reinvestment of Dividends under the Premium DividendTM
Component will not be held under the Plan by the Plan Agent or credited through
CDS to the accounts of appropriate CDS Participants on behalf of Eligible
Shareholders that are enrolled in the Premium DividendTM Component, but will
instead be credited through CDS or otherwise delivered to the Plan Broker in
exchange for the Premium DividendTM in an amount equal to 102% of the reinvested
amount.  The Plan Agent will in turn remit payment of the Premium
DividendTM to Participants in the Premium DividendTM Component in the same manner
that regular Dividends are paid by Perpetual.

     

    At
the time Shares are delivered to the Plan Broker, each Shareholder for whom
Dividends are reinvested under the Premium DividendTM Component shall be deemed
to represent and warrant to Perpetual, the Plan Agent and the Plan Broker that:
(i) it holds good and marketable title to such Shares, free and clear of all
liens, restrictions, charges, encumbrances, claims and rights of others; (ii)
such Shares are not subject to resale restrictions; and (iii) it is an Eligible
Shareholder.

     

    Perpetual
and the Plan Agent have a commitment from the Plan Broker to pay the Premium
DividendTM to the Plan Agent against delivery of the corresponding Shares on the
applicable Dividend payment date.  Although Perpetual and the Plan
Agent will, if necessary, make claims on this commitment, neither Perpetual nor
the Plan Agent has any liability to Participants enrolled in the Premium
DividendTM Component (or to any Shareholder for which the Participant may be
acting) for any failure of the Plan Broker to fulfil its obligation to pay the
Premium DividendTM when required.  If the Plan Broker does not deliver
sufficient funds to pay the Premium DividendTM on all Shares of Participants
enrolled in the Premium DividendTM Component, Perpetual will deliver the full
amount of the regular Dividend to the Plan Agent and such Participants will be
entitled to receive the regular Dividend for each such Share in respect of which
the Premium DividendTM is not paid by the Plan Broker.  For greater
certainty, a Participant who receives the regular Dividend in these
circumstances will not be entitled to receive the corresponding Premium
DividendTM .

     

    Eligibility
Requirements

     

    Shareholders
who are resident in Canada may participate in either the Dividend Reinvestment
Component or the Premium DividendTM Component.  Unless otherwise
announced by Perpetual, Shareholders who are not resident in Canada cannot
participate in the Premium DividendTM Component.

     

    A
Shareholder who is a "U.S. person" as that term is defined in Regulation S under
the United States Securities
Act of 1933, as amended (including without limitation any natural person
resident in the United States, any partnership or corporation organized or
incorporated under the laws of the United States, any estate of which any
executor or administrator is a U.S. person and any trust of which any trustee is
a U.S. person) may participate in the Dividend Reinvestment Component, but
cannot participate in the Premium DividendTM Component.  For greater
certainty, neither DTC nor beneficial owners of Shares who hold their Shares
through DTC are eligible to participate in the Premium DividendTM
Component.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
    

    
         

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    Shareholders
who are resident in any other jurisdiction outside of Canada may participate in
the Dividend Reinvestment Component only if their participation is permitted by
the laws of the jurisdiction in which they reside and provided that Perpetual is
satisfied, in its sole discretion, that such laws do not subject the Plan or
Perpetual to additional legal or regulatory requirements.  Any such
Shareholder wishing to participate in the Dividend Reinvestment Component should
consult legal counsel where they reside to determine their eligibility to
participate in either component of the Plan.  The amount of any
Dividends to be reinvested under the Plan on behalf of Shareholders who are not
residents of Canada will be reduced by the amount of any applicable non-resident
withholding tax.

     

    Perpetual
and the Plan Agent also reserve the right to deny participation in the Plan to,
or cancel the participation of, any person or agent of any person who appears to
be, or who Perpetual or the Plan Agent has reason to believe is, subject to the
laws of any jurisdiction which do not permit participation in the Plan in the
manner sought by such person or which will subject the Plan or Perpetual to
requirements of the jurisdiction not otherwise applicable to the Plan or
Perpetual, or whose participation in the Plan is suspected to be part of a
scheme to avoid applicable legal requirements or otherwise engage in unlawful
behaviour.

     

    Perpetual
further reserves the right to determine, from time to time, a minimum number of
Shares that a Shareholder must hold in order to be eligible for, or continue to
be enrolled in, the Plan, subject to any applicable legal or regulatory
requirements.

     

    Enrollment

     

    Direct
Enrollment

     

    An
Eligible Shareholder whose Shares are registered in its own name may directly
enroll in either the Dividend Reinvestment Component or the Premium DividendTM
Component by delivering to the Plan Agent a duly completed Enrollment
Form.  A copy of the Enrollment Form is available from the Plan
Agent's website at www.computershare.com
or by calling the Plan Agent at 1-800-564-6253, or from Perpetual's website at
www.perpetualenergyinc.com.

     

    A
Participant who delivers an Enrollment Form will be deemed to thereby direct
Perpetual to credit the Plan Agent with all Dividends payable in respect of all
Shares registered in the name of the Participant or held under the Plan by the
Plan Agent for the Participant's account as of the Dividend record date, and the
Plan Agent to reinvest such Dividends in new Shares in accordance with the
Dividend Reinvestment Component or the Premium DividendTM Component, as
applicable, and otherwise upon and subject to the terms and conditions described
herein.  See "Deemed Representations, Directions and Authorizations"
below.

     

    Indirect
Enrollment

     

    An
Eligible Shareholder whose Shares are not registered in its
own name cannot enroll in the Plan directly but may instead do so indirectly
through the broker, investment dealer, financial institution or other nominee
who holds their Shares by providing appropriate enrollment instructions to such
nominee.  Where such nominee holds Shares in its own name (and not
through a Depository) on behalf of an Eligible Shareholder, the nominee may
enroll in the Plan on behalf of the Eligible Shareholder by delivering to the
Plan Agent a duly completed Enrollment Form.  Where the Shares are
held indirectly through a Depository, enrollment instructions must be
communicated to such Depository by the applicable Depository Participant in
accordance with the procedures of such Depository's system, and such Depository
will in turn provide instructions to the Plan Agent regarding the extent of its
participation, on behalf of Eligible Shareholders, in the Dividend Reinvestment
Component and, where the Depository is CDS, the Premium DividendTM
Component.  The Depository's instructions will advise the Plan Agent
of (i) the aggregate number of Shares held through such Depository in respect of
which Dividends are to be reinvested under the Dividend Reinvestment Component,
and (ii) where the Depository is CDS, the aggregate number of Shares held
through CDS in respect of which Dividends are to be reinvested under the Premium
DividendTM Component.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
    

    
         

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    Continued
Participation

     

    Once a
Participant (other than a Depository) has enrolled in either the Premium
DividendTM Component or the Dividend Reinvestment Component by delivering to the
Plan Agent a duly completed Enrollment Form, participation in the manner elected
by the Participant continues automatically with respect to all Shares registered
in the name of the Participant or held under the Plan by the Plan Agent for the
Participant's account until the Plan or the Participant's participation therein
is terminated or until the Participant changes its election.

     

    Eligible
Shareholders who participate in the Plan indirectly through a Depository or
otherwise through their broker, investment dealer, financial institution or
other nominee should consult such nominee to confirm the nominee's policies
concerning continued participation following initial enrollment.

     

    See
"Termination of Participation" and "Change of Election" below.

     

    Enrollment
Deadlines

     

    In order
for a particular Dividend payable on Shares of an Eligible Shareholder to be
reinvested on the Dividend payment date, the Plan Agent must receive (i) a duly
completed Enrollment Form that covers such Shares not later than 5:00 p.m.
(Toronto time) on the third (3rd) business day preceding the record date for the
Dividend, or (ii) in the case of Shares enrolled indirectly through a
Depository, appropriate instructions from such Depository regarding the extent
of its participation not later than such time preceding the record date for that
Dividend as may be agreed from time to time between such Depository and the Plan
Agent in accordance with custom and practice relating to such Depository's
system.  The Depository must in turn receive appropriate instructions
from the nominee holders that are Depository Participants not later than such
deadline preceding the record date as may be established by such Depository from
time to time.  Enrollment Forms or instructions from a Depository, as
applicable, received by the Plan Agent after the stipulated pre-record date
deadline will not be effective in respect of the corresponding Dividend unless
otherwise determined by Perpetual and the Plan Agent in their sole
discretion.

     

    Broker
Requirements

     

    A
Depository Participant or other broker, investment dealer, financial institution
or other nominee may require certain information or documentation from an
Eligible Shareholder before it will act upon enrollment instructions relating to
the Plan.  Eligible
Shareholders who wish to participate in the Plan should contact the broker,
investment dealer, financial institution or other nominee who holds their Shares
to provide instructions regarding their decision to enroll and their election as
between the Dividend Reinvestment Component and the Premium DividendTM Component,
to confirm any information or documentation required to give effect to their
instructions, to confirm the nominee's policies concerning continued
participation following initial enrollment, and to inquire about any applicable
deadlines that the nominee may impose or be subject to under the policies of
that nominee or a Depository's system.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
    

    
         

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    Administration

     

    Computershare
Trust Company of Canada has been appointed to act as Plan Agent, as agent for
and on behalf of Participants.  If Computershare Trust Company of
Canada ceases to act as Plan Agent for any reason, another qualified party will
be designated by Perpetual to act as Plan Agent and Participants will be
notified of the change.

     

    All funds
credited to the Plan Agent under the Plan on account of the reinvestment of
Dividends will be applied to the purchase of new Shares directly from Perpetual
on behalf of Participants.  In no event will interest be paid to
Participants on any funds held for reinvestment under the Plan.

     

    In
carrying out its obligations under the Plan on behalf of Participants, the Plan
Agent shall only be required to act in accordance with the instructions duly
received within the appropriate time periods.

     

    Proration
in Certain Events

     

    Perpetual
reserves the right to determine, promptly following each Dividend record date,
the amount of new equity, if any, to be made available under the Plan on the
Dividend payment date to which such record date relates.  No
assurances can be made that new Shares will be made available under the Plan on
a regular basis, or at all.

     

    If, in
respect of any Dividend payment date, fulfilling the elections of all
Participants under the Plan would result in the issuance of more than the
maximum amount of new equity determined to be available under the Plan, then
elections for the purchase of new Shares on that Dividend payment date will be
accepted (i) first, from Participants electing to reinvest Dividends under the
Dividend Reinvestment Component, and (ii) second, to the extent that new equity
remains available under the Plan, from Participants electing to receive the
Premium DividendTM under the Premium DividendTM Component.  If Perpetual
is not able to accept all elections for a particular component of the Plan, then
purchases of new Shares under that component on the applicable Dividend payment
date will be prorated among all Participants in that component according to the
number of Shares enrolled therein.

     

    If
trading of Shares on the TSX, or the trading thereof by the Plan Broker, is for
any reason prohibited for an entire day, or if the Premium DividendTM Component
is terminated or suspended for any reason, in any such case during a Pricing
Period, then purchases of new Shares under that component on the applicable
Dividend payment date will be prorated among all Participants in that component
according to the number of Shares enrolled therein.

     

    If on any
Dividend payment date Perpetual determines not to issue any equity through the
Plan, or the availability of new Shares is prorated in accordance with the terms
of the Plan, or for any other reason a Dividend cannot be reinvested under the
Plan, in whole or in part, then Participants will be entitled to receive from
Perpetual the full amount of the regular Dividend on each Share for which the
Dividend is payable but cannot be reinvested under the Plan in accordance with
the applicable election.

     

    Price
of New Shares

     

    The
subscription price of new Shares purchased on a Dividend payment date under the
Dividend Reinvestment Component will be 95% of the Average Market Price for that
Dividend payment date.  Full reinvestment is possible as fractions of
Shares (to six decimal places) may be credited to Participants' accounts
maintained under the Plan.

     

    The
subscription price of new Shares purchased on a Dividend payment date under the
Premium DividendTM Component will be 95% of the Average Market Price for that
Dividend payment date.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

         

    
      
      

      
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    Costs

     

    No
commissions, service charges or brokerage fees are payable by Participants in
connection with the purchase of new Shares from treasury under either the
Dividend Reinvestment Component or the Premium DividendTM
Component.  All administrative costs of the Plan, including the fees
and expenses of the Plan Agent, will be paid by Perpetual.

     

    Eligible
Shareholders whose Shares are not registered in their own name but wish to
participate in the Plan should consult the broker, investment dealer, financial
institution or other nominee who holds their Shares to confirm whether the
nominee charges any fees to enroll in the Plan on their behalf.

     

    Reports
to Participants

     

    The Plan
Agent will maintain an account for each Participant respect to purchases of
Shares made under the Plan for that Participant's account and will issue an
unaudited statement regarding purchases made under the Dividend Reinvestment
Component on a monthly basis.  These statements are a Participant's
continuing record of purchases of Shares made for such Participant's account
under the Plan and should be retained for income tax purposes.  No
statements will be provided to Participants in respect of purchases made under
the Premium DividendTM Component.

     

    Eligible
Shareholders who participate in the Plan indirectly through their broker,
investment dealer, financial institution or other nominee should consult such
nominee to confirm what statements or reports, if any, will be provided by the
nominee, whether for tax reporting purposes or otherwise.

     

    Whether
or not it receives detailed statements or reports concerning transactions made
on its behalf under the Plan, each Shareholder is responsible for calculating
and monitoring its own adjusted cost base in Shares for Canadian federal income
tax purposes, as certain averaging and other rules may apply and such
calculations may depend on the cost of other Shares held by the Shareholder and
other factors.

     

    Certificates
for Shares

     

    Shares
purchased under the Dividend Reinvestment Component and held under the Plan by
the Plan Agent for the account of Participants other than a Depository will be
registered in the name of the Plan Agent or its nominee or in accounts
designated by it for the account of Participants other than such
Depository.  Certificates for such Shares will only be issued to the
Participant if the Plan or the Participant's participation therein is terminated
or if the Participant withdraws Shares from its account.

     

    A
Participant may, without terminating participation in the Plan, withdraw from
its account under the Plan, and have a Share certificate issued and registered
in the Participant's name for, any number of whole Shares held for its account
under the Plan by delivering to the Plan Agent a duly completed withdrawal
portion of the voucher located on the reverse of the statement of account issued
by the Plan Agent.  A withdrawal request form may also be obtained
from the Plan Agent at the address below.  The withdrawal of Shares
and certificate issuance will be completed within the Plan Agent's ordinary
service standards.  Any remaining Shares (including any residual
fraction of a Share) will continue to be held by the Plan Agent for the
Participant's account under the Plan.

     

    Shares
held under the Plan by the Plan Agent for the account of a Participant may not
be sold, pledged or otherwise disposed of by the Participant while so
held.

     

    For
Eligible Shareholders enrolled in the Dividend Reinvestment Component indirectly
through a Depository, any new Shares issued will not be held under the Plan but
instead credited through such Depository's system to the accounts of appropriate
Depository Participants on behalf of such Eligible Shareholders.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

        

    
      
      

      
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    Termination
of Participation

     

    An
Eligible Shareholder who is enrolled in the Plan directly as a Participant and
wishes to terminate their participation in the Plan may do so voluntarily by
delivering to the Plan Agent a duly completed termination portion of the voucher
located on the reverse of the statement of account issued by the Plan
Agent.  A termination request form may also be obtained from the Plan
Agent at the address below.  In addition, participation will be
terminated automatically following receipt by the Plan Agent of written notice
of an individual Participant's death.

     

    If a duly
completed termination request (or notice of an individual Participant's death)
is not received by the Plan Agent before 5:00 p.m. (Toronto time) on the third
(3rd) Business Day preceding a Dividend record date, then the Participant's
account will not be closed, and participation in the Plan by such Participant
will not be terminated, until after the Dividend payment date to which that
record date relates.

     

    An
Eligible Shareholder who is enrolled in the Plan indirectly through a Depository
or otherwise through its broker, investment dealer, financial institution or
other nominee and wishes to terminate its participation in the Plan must contact
the nominee who holds its Shares and provide appropriate instructions to do
so.  The nominee should be consulted to confirm what information or
documentation may be required to give effect to the termination instructions,
and to inquire about any applicable deadlines that the nominee may impose or be
subject to under the policies of that nominee or a Depository's
system.

     

    In the
event of termination of participation, a Participant (other than a Depository)
or a deceased Participant's estate or legal representative, as applicable, will
be issued a certificate for the number of whole Shares held under the Plan by
the Plan Agent in the Participant's account and payment for any residual
fraction of a Share so held based on the last price per Share at which Dividends
were reinvested under the Plan.

     

    Change
of Election

     

    An
Eligible Shareholder who is enrolled in the Plan directly as a Participant and
wishes to change its election as between the Dividend Reinvestment Component and
the Premium DividendTM Component may do so by delivering to the Plan Agent a new,
duly completed Enrollment Form reflecting the new election.

     

    If a new
Enrollment Form is not received by the Plan Agent before 5:00 p.m. (Toronto
time) on the third (3rd) Business Day preceding a Dividend record date, then the
previous election will apply to the Dividend to which that record date relates
and the new election will only become effective for purposes of subsequent
Dividends.

     

    An
Eligible Shareholder who is enrolled in the Plan indirectly through a Depository
or otherwise through its broker, investment dealer, financial institution or
other nominee and wishes to change its election as between the Dividend
Reinvestment Component and the Premium DividendTM Component must contact such
nominee who holds its Shares and provide appropriate instructions to do
so.  The nominee should be consulted to confirm what information or
documentation may be required to give effect to the change of election
instructions, and to inquire about any applicable deadlines that the nominee may
impose or be subject to under the policies of that nominee or a Depository's
system.

     

    Subdivisions

     

    If Shares
are distributed pursuant to a subdivision of Shares, the additional Shares
received by the Plan Agent in respect of Shares held under the Plan by the Plan
Agent for the account of Participants will be credited proportionately to the
accounts of such Participants.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

        

    
      
      

      
        - 10 -

           

      

    

    Shareholder
Voting

     

    Whole
Shares held under the Plan by the Plan Agent for a Participant's account on the
record date for a vote of Shareholders will be voted in accordance with the
instructions of the Participant given on a form to be furnished to the
Participant for this purpose.  Shares for which instructions are not
received will not be voted.  No voting rights will attach to any
fraction of a Share held for a Participant's account under the
Plan.

     

    Deemed
Representations, Directions and Authorizations

     

    Dividend
Reinvestment Component

     

    By
enrolling in the Dividend Reinvestment Component, whether directly as a
Participant or indirectly through a Depository or otherwise through a broker,
investment dealer, financial institution or other nominee, a Shareholder shall
be deemed to have:  (i) represented and warranted to Perpetual and the
Plan Agent that it is an Eligible Shareholder with respect to participation in
the Dividend Reinvestment Component; (ii) appointed the Plan Agent to receive
from Perpetual, and directed Perpetual to credit the Plan Agent with, all
Dividends payable in respect of all Shares registered in the name of the
Shareholder or held under the Plan for its account or, in the case of a
Shareholder enrolled indirectly through a Depository or otherwise through a
broker, investment dealer, financial institution or other nominee, that are
enrolled (through a Depository or otherwise) on its behalf in the Dividend
Reinvestment Component; and (iii) authorized and directed the Plan Agent to
reinvest such Dividends in new Shares, all in accordance with the provisions of
the Dividend Reinvestment Component as set forth herein (which provisions
include, without limitation, the purchase of new Shares at a 5% discount to the
Average Market Price and the holding of such new Shares under the Plan or the
crediting of such new Shares to a Depository) and otherwise upon and subject to
the terms and conditions described herein.

     

    Premium
DividendTM Component

     

    By
enrolling in the Premium DividendTM Component, whether directly as a Participant
or indirectly through CDS or otherwise through a broker, investment dealer,
financial institution or other nominee, a Shareholder shall be deemed to
have:  (i) represented and warranted to Perpetual, the Plan Agent and
the Plan Broker that it is an Eligible Shareholder with respect to participation
in the Premium DividendTM Component; (ii) appointed the Plan Agent to receive
from Perpetual, and directed Perpetual to credit the Plan Agent with, all
Dividends payable in respect of all Shares registered in the name of the
Shareholder or held under the Plan for its account or, in the case of a
Shareholder enrolled indirectly through CDS or otherwise through a broker,
investment dealer, financial institution or other nominee, that are enrolled
(through CDS or otherwise) on its behalf in the Premium DividendTM Component; and
(iii) authorized and directed the Plan Agent to reinvest such Dividends in new
Shares, all in accordance with the provisions of the Premium DividendTM Component
as set forth herein (which provisions include, without limitation, the purchase
of new Shares at the 5% discount to the Average Market Price, the pre-sale of
Shares through the Plan Broker and the delivery of new Shares to the Plan Broker
in exchange for payment of the Premium DividendTM) and otherwise upon and subject
to the terms and conditions described herein.

     

    Responsibilities
of Perpetual and the Plan Agent

     

    None of
Perpetual, the Plan Agent or the Plan Broker will be liable to any Shareholder,
a Depository, any Depository Participant or any other nominee acting on behalf
of a Shareholder in respect of the Plan for any act or for any omission to act
in connection with the operation of the Plan including, without limitation, any
claims or liability with respect to or arising out of:

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
      

      
            

        - 11 -

           

      

    

    
      	
              (a)

            	
              any
      failure by a Depository, a Depository Participant or any other nominee to
      enroll or not enroll in the Plan any Shareholder (or, as applicable, any
      Shares held on the Shareholder's behalf) in accordance with the
      Shareholder's instructions or to not otherwise act upon a Shareholder's
      instructions;

            

    

     

    
      	
              (b)

            	
              the
      continued enrollment in the Plan of any Shareholder (or, as applicable,
      any Shares held on the Shareholder's behalf) until receipt of all
      necessary documentation as provided herein required to terminate
      participation in the Plan

            

    

     

    
      	
              (c)

            	
              the
      prices and times at which Shares are purchased under the Plan for the
      account of, or on behalf of, any
Shareholder;

            

    

     

    
      	
              (d)

            	
              any
      decision by Perpetual to issue or not issue new equity through the Plan on
      any given Dividend payment date, or the amount of equity issued (if
      any);

            

    

     

    
      	
              (e)

            	
              any
      decision to amend or terminate the Plan in accordance with the terms
      hereof;

            

    

     

    
      	
              (f)

            	
              any
      default by the Plan Broker in delivering the Premium DividendTM to the Plan
      Agent on any Dividend payment date;

            

    

     

    
      	
              (g)

            	
              a
      prorating, for any reason, of the amount of equity available under the
      Plan in the circumstances described herein or
  otherwise;

            

    

     

    
      	
              (h)

            	
              any
      determination made by Perpetual or the Plan Agent regarding a
      Shareholder's eligibility to participate in the Plan or any component
      thereof, including the cancellation of a Shareholder's participation for
      failure to satisfy eligibility requirements;
or

            

    

     

    
      	
              (i)

            	
              any
      income taxes or other liabilities payable by a Shareholder in connection
      with their participation in the
Plan.

            

    

     

    None
of Perpetual, the Plan Agent or the Plan Broker can assure a Participant (or any
beneficial owner of Shares for which the Participant may be acting) a profit or
protect a Participant (or such beneficial owner, as applicable) against loss on
Shares purchased under the Plan.

     

    The Plan
Agent retains the right not to act and shall not be liable for refusing to act
if, due to a lack of information or for any other reason whatsoever, the Plan
Agent, in its sole judgment, determines that such act might cause it to be in
non-compliance with any applicable anti-money laundering or anti-terrorist law,
regulation or policy or any other law, regulation or policy to which the Plan
Agent is now or hereafter becomes subject.

     

    Canadian
Federal Income Tax Considerations

     

    The
following is a summary of principal Canadian federal income tax considerations
generally applicable to Shareholders who participate in the Plan. This summary
is of a general nature only, is not exhaustive of all possible tax
considerations and is not intended to be legal or tax advice to any particular
Shareholder.

     

    This
summary is provided by and on behalf of Perpetual and not the Plan Agent or the
Plan Broker.  The summary is for general information only and is not
intended to be legal or tax advice to any particular
Shareholder.  Shareholders are urged to consult their own tax advisors
as to their particular circumstances and tax position.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
      

      
           

        - 12 -

           

      

    

    This
summary is based on the provisions of the Income Tax Act (Canada) (the
"Tax
Act") and the regulations thereunder (the "Regulations"),
all specific proposals to amend the Tax Act and the Regulations publicly
announced by or on behalf of the Minister of Finance (Canada), and the
administrative and assessing practices of the Canada Revenue Agency (the "CRA"), all
as of June 30, 2010.  This summary does not otherwise take into
account or anticipate any changes in law or the administrative or assessing
practices of the CRA, nor does it take into account any provincial or
territorial laws of Canada or the tax laws of any other country, including,
without limitation, any changes which may occur after June 30,
2010.

     

    This
summary assumes that all Shares held by a Participant, including Shares
purchased pursuant to the Dividend Reinvestment Component or Premium DividendTM
Component, are held by the Participant as capital property for the purposes of
the Tax Act.  The Shares will generally constitute capital property to
a Participant provided the Participant does not hold or use such Shares in the
course of carrying on business in which the Participant buys or sell securities,
and the Participant did not acquire such Shares in one or more transactions
considered to be an adventure in the nature of trade.  Certain
Participant who might not otherwise be considered to hold their Shares as
capital property may, in certain circumstances, be entitled to have their Shares
and any other "Canadian security" (as defined in the Tax Act), treated as
capital property by making the irrevocable election permitted by subsection
39(4) of the Tax Act.  A Participant contemplating making such an
election should first consult its own tax advisors.

     

    This
summary is not applicable to:  (i) a Participant that is a "financial
institution" (as defined in the Tax Act) for the purposes of the
"mark-to-market" rules; (ii) a Participant an interest in which would be a "tax
shelter investment" (as defined in the Tax Act); (iii) a Participant that is a
"specified financial institution" or a "restricted financial institution" (each
as defined in the Tax Act); or (iv) a Participant that has made a "functional
currency" election under the Tax Act to determine its Canadian tax results in a
currency other than Canadian currency.

     

    Canadian
Participants

     

    This
portion of the summary is applicable to Participants who, at all relevant times
and for the purposes of the Tax Act, are or are deemed to be residents of Canada
(each, a "Canadian
Participant").

     

    The
reinvestment of Dividends, or the receipt of Premium DividendsTM, under the terms
of the Plan does not relieve a Canadian Participant from any liability for
income taxes that may otherwise be payable on such amounts.  In this
regard, a Canadian Participant who participates in the Dividend Reinvestment
Component or Premium DividendTM Component will be treated, for tax purposes, as
having received, on each Dividend payment date, a taxable dividend equal to the
amount of the Dividend payable on such date, which Dividend will be subject to
the same tax treatment accorded to taxable dividends received by the Canadian
Participant from a taxable Canadian corporation.  For example, if the
Canadian Participant is an individual, Dividends will be subject to the gross-up
and dividend tax credit rules contained in the Tax Act. If the Canadian
Participant is a "private corporation" or a "subject corporation" (both as
defined in the Tax Act), a refundable tax will apply to the amount of the
Dividend.  The fact that the Dividends are reinvested pursuant to the
Dividend Reinvestment Component or Premium DividendTM Component will not affect
the status of any Dividend as an "eligible dividend" for the purposes of the Tax
Act.

     

    A
Canadian Participant's reinvestment of Dividends pursuant to the Dividend
Reinvestment Component or Premium DividendTM Component, in such number of
newly-issued Shares as is equal to the aggregate amount of the Dividend payable
on each Dividend payment date divided by 95% of the corresponding Average Market
Price, should not result in the Canadian Participant realizing a taxable benefit
under the Tax Act.

     

    Where
Shares purchased pursuant to the Dividend Reinvestment Component or Premium
DividendTM Component are held as capital property to a Canadian Participant for
the purposes of the Tax Act, the Canadian Participant will generally realize a
capital gain (or loss) on the sale of the Shares, whether sold pursuant to the
Premium DividendTM Component or otherwise outside the Plan, equal to the amount
by which the proceeds of disposition is greater (or less) than the Canadian
Participant's adjusted cost base of such Shares plus any reasonable costs
incurred by the Canadian Participant in connection with the sale.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
      

      
           

        - 13 -

           

      

    

    For the
purposes of determining the amount of any capital gain (or loss) which may
result from the disposition of Shares, the adjusted cost base of the Shares
owned by a Canadian Participant at a particular time will be the average cost of
all Shares owned by the Canadian Participant at that time, whether purchased
through the Dividend Reinvestment Component or the Premium DividendTM Component
or otherwise purchased outside the Plan. Generally, a Canadian Participant's
cost of a Share purchased pursuant to the Dividend Reinvestment Component or
Premium DividendTM Component will be equal to 95% of the Average Market Price of
the Share for that Dividend payment date.

     

    Generally,
one-half of any capital gain realized by a Canadian Participant on a disposition
of Shares purchased pursuant to the Dividend Reinvestment Component or Premium
DividendTM Component must be included in the Canadian Participant's income for
the year as a taxable capital gain. Subject to certain specific rules in the Tax
Act, one-half of any capital loss realized by a Canadian Participant on a
disposition of Shares in a taxation year will be an allowable capital loss which
must be deducted from any taxable capital gains realized by the Canadian
Participant in the year of disposition.  Allowable capital losses for
a taxation year in excess of taxable capital gains for that year generally may
be carried back and deducted in any of the three preceding taxation years or
carried forward and deducted in any subsequent taxation year against net taxable
capital gains realized in such years to the extent and under the circumstances
discussed in the Tax Act.

     

    A
Canadian Participant that is throughout the relevant taxation year a "Canadian
controlled private corporation" (as defined in the Tax Act) may be liable to pay
an additional refundable tax of 6 2/3% on its "aggregate investment income" (as
defined in the Tax Act) for the year which will include an amount in respect of
taxable capital gains.  If the Canadian Participant is a corporation,
the amount of any capital loss arising from a disposition or deemed disposition
of such Shares may be reduced by the amount of dividends received or deemed to
have been received by it on such shares to the extent and under circumstances
prescribed by the Tax Act. Similar rules may apply where a corporation is a
member of a partnership or a beneficiary of a trust that owns
Shares.  Canadian
Participants to whom these rules may be relevant should consult their own tax
advisors.

    

    When a
Canadian Participant's participation in the Plan is terminated by the Canadian
Participant or Perpetual or when the Plan is terminated by Perpetual, the
Canadian Participant will receive a cash payment based on the last price per
Share at which Dividends were reinvested under the Plan.  A deemed
dividend may arise if the cash payment for a fractional Share exceeds the
paid-up capital in respect of such fractional Share and a capital gain (or loss)
may also be realized in certain circumstances.  A deemed dividend is
treated in the manner described above in respect of dividends.

    

    For the
purpose of calculating the alternative minimum tax of a Canadian Participant who
is an individual, the actual amount of dividends received (exclusive of the
gross-up) and 80% of capital gains should generally be included in the "adjusted
taxable income" (as defined in the Tax Act) of that Canadian
Participant.

     

    Where
a Canadian Participant has not made the irrevocable election permitted under
subsection 39(4) of the Tax Act to treat their Shares and any other "Canadian
security" (as defined in the Tax Act) as capital property, the CRA may take the
position that any Shares purchased and sold by the Canadian Participant pursuant
to the Premium DividendTM Component are not capital property to the Canadian
Participant, such that the tax consequences of the Canadian Participant's sale
of Shares pursuant to the Premium DividendTM Component may differ from the
consequences described above.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
      

      
           

        - 14 -

           

      

    

    Non-Resident
Participants

     

    This
portion of the summary is applicable to Participants who, at all relevant times
and for the purposes of the Tax Act, are not and are not deemed to be residents
of Canada (each, a "Non-Resident
Participant").

     

    Any
Dividends paid or credited to the Plan Agent on a Dividend payment date in
respect a Non-Resident Participant's Shares will be subject to a non-resident
withholding tax for Canadian income tax purposes.  Under the Tax Act,
the rate of non-resident withholding tax on dividends is
25%.  However, this rate may be subject to reduction under the
provisions of any income tax treaty between Canada and the country in which the
Non-Resident Participant is resident. For example, under the provisions of the
Canada – United States Income
Tax Convention, 1980 (the "Treaty"),
where a Non-Resident Participant is a resident of the United States, is fully
entitled to the benefits of the Treaty, and does not maintain a "permanent
establishment" or "fixed base" (each within the meaning of the Treaty) in Canada
to which the Non-Resident Participant's Shares are attributable, the rate of
Canadian withholding tax will generally not exceed 15% of the
Dividend.

     

    Any
Dividends paid or credited to the Plan Agent on a Dividend payment date in
respect of a Non-Resident Participant's Shares will be reduced by an amount
equal to the Non-Resident Participant's Canadian withholding tax obligation
prior to reinvestment pursuant to the Dividend Reinvestment
Component.

     

    A
Non-Resident Participant will not be subject to Canadian income tax under the
Tax Act on any capital gains realized on the disposition of Shares acquired
pursuant to the Dividend Reinvestment Component unless such Shares constitute
"taxable Canadian property" (as defined by the Tax Act) to the Non-Resident
Participant.  So long as the Shares are listed on a "designated stock
exchange" (as defined in the Tax Act and which currently includes the Toronto
Stock Exchange) at the time of sale, Shares acquired by a Non-Resident
Participant pursuant to the Dividend Reinvestment Component will not be taxable
Canadian property to the Non-Resident Participant unless:

     

    
      	
              (a)

            	
              at
      any time during the 60-month period immediately preceding the disposition,
      the Non-Resident Participant and/or persons with whom the Non-Resident
      Participant did not deal at arm's length, held 25% or more of the issued
      shares of any class of Perpetual's capital stock;
  or

            

    

     

    
      	
              (b)

            	
              the
      Shares are used by the Non-Resident Participant in carrying on business in
      Canada.

            

    

     

    Where
Shares represent taxable Canadian property to a Non-Resident Participant, any
capital gains realized on the sale or deemed disposition of the Shares will be
subject to taxation in Canada, except as otherwise provided in any tax treaty
between Canada and the country in which the Non-Resident Participant is
resident.

     

    Amendment
or Termination of the Plan

     

    Perpetual
reserves the right to amend or terminate the Plan at any time, provided that no
such action shall have retroactive effect prejudicial to
Participants.  Perpetual will publicly announce any material
amendments to or termination of the Plan.  Generally, no notice will
be given to Participants regarding any amendments to the Plan intended to cure,
correct or rectify any ambiguities, defective or inconsistent provisions,
errors, mistakes or omissions.  Amendments to the Plan will be subject
to the prior approval of the TSX.

     

    In the
event of termination of the Plan, Participants will be issued a certificate for
the number of whole Shares held under the Plan by the Plan Agent in the
Participant's account and payment for any remaining fraction of a Share so held
based on the last price per Share at which Dividends were reinvested under the
Plan.

     

    
      
         

      

      
        
        

        
          

        

      

      
         

      

    

    
      
      

      
           

        - 15 -

           

      

    

    Withholding
Taxes

     

    This Plan
is subject to any withholding obligations that Perpetual may have with respect
to taxes or other charges under applicable laws, and any amounts to be
reinvested hereunder shall be net of any amounts required to be so
withheld.

     

    Interpretation

     

    Any
issues of interpretation arising in connection with the Plan or its application
shall be conclusively determined by Perpetual.

     

    Governing
Law

     

    The Plan
shall be governed by, and administered and construed in accordance with, the
laws of the Province of Alberta and the federal laws of Canada applicable
therein.

     

    Notices
and Inquiries

     

    Any
notices, documents (including Share certificates) or payments required under the
Plan to be given or delivered to Participants by Perpetual or the Plan Agent
shall be validly given or delivered if mailed to Participants at their
respective addresses as recorded in the register of Shareholders maintained by
or on behalf of Perpetual or, in the case of a Depository, if given in
accordance with custom and practice relating to such Depository's
system.

     

    Inquiries
to the Plan Agent may be directed to:

     

    
      
        	
                Computershare
      Trust Company of Canada

              
	
                Attention:  Dividend
      Reinvestment Department

              
	
                100
      University Avenue, 9th Floor

              
	
                Toronto,
      Ontario  M5J 2Y1

              
	 
      	 
      
	
                Toll-Free
      Tel:

              	
                1-800-564-6253

              

      

    

     

    
      
        	
                Inquiries
      to Perpetual may be directed to:

              
	 
	
                Perpetual
      Energy Inc.

              
	
                Suite
      3200, 605 - 5th Avenue SW

              
	
                Calgary,
      Alberta  T2P 3H5

              
	 
      	 
      
	
                Attention:

              	
                Sue
      Showers

              
	
                Tel:

              	
                (403)
      269-4400

              
	
                Fax:

              	
                (403)
      269-4444

              

      

    

     

    Effective
Date

     

    The
effective date of the Plan is June 30, 2010.20-F

                                                                    EXHIBIT 4.12

                        [Unofficial English Translation]

(LOGO) B A N K  H A P O A L I M
THE BUSINESS DIVISION
THE MAIN MANAGEMENT
THE BUSINESS BRANCH
23 MENACHEM BEGIN STREET, TEL AVIV, 66183
DATE: JULY 11, 2010

For the attention of:
TEFRON LTD. (hereinafter: "the Company")

Dear Sir/ Madam,

              RE: YOUR COVENANT DOCUMENT TO US, DATED MARCH 2, 2010

Whereas In the framework of the Covenant document which you signed in our favor
        on March 2, 2010 (hereinafter: "THE COVENANT DOCUMENT"), you committed to
        us, INTER ALIA, that your EBITDA, based on your consolidated financial
        statements as of December 31, 2010 (hereinafter: "THE SAID STATEMENTS")
        will be positive (hereinafter: "THE SAID COVENANT"); and

Whereas You have informed us that you will not meet the Said Covenant in reports
        pursuant to your consolidated financial statements as of December 31, 2010,
        and you have asked us, notwithstanding the foregoing, not to exercise our
        rights pursuant to the said Covenant Document;

                      Therefore we wish to inform you that:

1.   We consent, on a one-time basis, not to take any measures against you
     following the breach of the Said Covenant, subject to the following: that
     your EBITDA, according to your consolidated financial statements as of
     December 31, 2010 shall not be less than U.S.$ - 2.1 million (negative two
     million and one hundred thousand U.S. dollars), and that no other cause
     shall be established for us to declare your debts to us to be immediately
     due and payable;

2.   Except as aforesaid, there shall be no change in the Covenant Document and
     in the Said Covenant.

3.   Our consent, as set forth above, is subject to your obtaining an identical
     consent from any entity to which non-compliance with any financial
     covenants based on the Said Statements confers a right to the immediate
     payment of your debts and obligations thereto, including from Israel
     Discount Bank Ltd. and from Bank Leumi LeIsrael Ltd.

Sincerely yours,
      /s/
-----------------
Bank Hapoalim Ltd.                              /s/ Amit Meridor, Eran Rotem
                                                ----------------------------
                                                Tefron Ltd.

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