Document:

FORM OF

 

WARRANT

 

To Purchase Common Stock of

 

American Eagle Energy Corporation

 

Dated _______ __, 20__

 

 

  

    	 

    	 

    

 

TABLE OF CONTENTS

 

	 	 	 	Page
	 	 	 	 
	1.	DEFINITIONS	1
	 	 	 
	2.	EXERCISE OF WARRANT	3
	 	2.1	Manner of Exercise	3
	 	2.2	Payment of Taxes	4
	 	2.3	Fractional Shares	4
	 	 	 	 
	3.	TRANSFER, DIVISION AND COMBINATION	4
	 	3.1	Transfer	4
	 	3.2	Division and Combination	5
	 	3.3	Expenses	5
	 	3.4	Maintenance of Books	5
	 	 	 	 
	4.	ADJUSTMENTS	5
	 	4.1	Stock Dividends, Subdivisions and Combinations	5
	 	4.2	Other Provisions Applicable to Adjustments under this Section	6
	 	4.3	Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets	7
	 	4.4	Certain Limitations	7
	 	 	 	 
	5.	NOTICES TO WARRANT HOLDERS	7
	 	5.1	Notice of Adjustments	7
	 	5.2	Notice of Corporate Action	8
	 	5.3	Notice to Shareholders	9
	 	 	 	 
	6.	NO IMPAIRMENT	9
	 	 	 
	7.	RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY	9
	 	 	 
	8.	TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS	10
	 	 	 
	9.	RESTRICTIONS ON TRANSFERABILITY	10
	 	9.1	Restrictive Legend	10
	 	9.2	Termination of Restrictions	10
	 	 	 	 
	10.	SUPPLYING INFORMATION	11
	 	 	 
	11.	LOSS OR MUTILATION	11
	 	 	 
	12.	OFFICE OF THE COMPANY	11

 

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	13.	FINANCIAL AND BUSINESS INFORMATION	11
	 	13.1	Filings	11
	 	13.2	Access	11
	 	 	 	 
	14.	LIMITATION OF LIABILITY	11
	 	 	 
	15.	MISCELLANEOUS	12
	 	15.1	Nonwaiver and Expenses	12
	 	15.2	Notice Generally	12
	 	15.3	Indemnification	12
	 	15.4	Successors and Assigns	13
	 	15.5	Amendment	13
	 	15.6	Severability	13
	 	15.7	Headings	13
	 	15.8	Governing Law	13

 

	EXHIBITS
	 
	Exhibit A - Subscription Form
	Exhibit B - Assignment Form

 

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THE OFFER AND SALE OF
THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER
THIS WARRANT NOR ANY OF THE SECURITIES REPRESENTED HEREBY MAY BE TRANSFERRED IN VIOLATION OF SUCH ACT, THE RULES AND REGULATIONS
THEREUNDER OR THE PROVISIONS OF THIS WARRANT.

 

Warrant No. __

 

Original Issue Date: ______

 

FORM OF
WARRANT

 

To Purchase
Common Stock of

 

AMERICAN
EAGLE ENERGY CORPORATION

 

THIS IS TO CERTIFY
THAT ________________________, or its registered assigns, is entitled, at any time prior to the Expiration Date (as hereinafter
defined), to purchase from American Eagle Energy Corporation, a Nevada corporation
(the “Company”), _____________ shares of Common Stock (as hereinafter defined and subject to adjustment
as provided herein), in whole or in part, including fractional parts, at a purchase price of $0.001 per share, all on
the terms and conditions and pursuant to the provisions hereinafter set forth. This Warrant has been issued pursuant to the terms
of the Credit Agreement, dated as of August __, 2013 (the “Credit Agreement”), among the Company, the
lenders party thereto, and Morgan Stanley Capital Group Inc., as administrative agent for such lenders.

 

		1.	DEFINITIONS

 

As used in this Warrant,
the following terms have the respective meanings set forth below:

 

“Business
Day” means any day that is not a Saturday or Sunday or a day on which banks are required or permitted to be closed
in the State of New York.

 

“Commission”
means the Securities and Exchange Commission or any other federal agency then administering the Securities Act and other federal
securities laws.

 

“Common
Stock” means (except where the context otherwise indicates) the common stock, $0.001 par value, of the Company as
constituted on the Closing Date (as defined in the Credit Agreement), and any capital stock into which such common stock may thereafter
be changed, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to
the holders of shares of Common Stock upon any reclassification thereof which is also not preferred as to dividends or assets on
liquidation over any other class of stock of the Company and which is not subject to redemption and (ii) shares of common equity
of any successor or acquiring entity (as defined in Section 4.3) received by or distributed to the holders of Common Stock of the
Company in the circumstances contemplated by Section 4.3.

 

    	 

    	 

    

 

“Current
Market Price” means, in respect of any share of Common Stock on any date herein specified, the average of the
daily market prices for 30 consecutive Business Days commencing 45 days before such date. The daily market price for each such
Business Day shall be (i) the last sale price on such day on the principal stock exchange on which such Common Stock is then listed
or admitted to trading, (ii) if no sale takes place on such day on any such exchange, the average of the last reported closing
bid and asked prices on such day as officially quoted on any such exchange, (iii) if the Common Stock is not then listed or admitted
to trading on any stock exchange, the average of the last reported closing bid and asked prices on such day in the over the counter
market, or (iv) if there is no trading market in the Common Stock, as furnished by any member of the FINRA selected mutually by
Holder and the Company or, if they cannot agree upon such selection, as selected by two such members of the FINRA, one of which
shall be selected by Holder and one of which shall be selected by the Company.

 

“Current
Warrant Price” means, in respect of a share of Common Stock at any date herein specified, the price at which a share
of Common Stock may be purchased pursuant to this Warrant on such date.

 

“Exchange
Act” means the Securities Exchange Act of 1934, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect from time to time.

 

“Exercise
Period” means the period during which this Warrant is exercisable pursuant to Section 2.1.

 

“Expiration
Date” means the fifth anniversary of the original issue date of this Warrant.

 

“FINRA”
means the Financial Industry Regulatory Authority.

 

“Governmental
Authority” means any nation or government, any state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, taxing, regulatory or administrative functions of or pertaining to government, any province,
commonwealth, territory, possession, county, parish, town, township, village or municipality, whether now existing or hereafter
constituted or existing.

 

“Holder”
and “Holders” means the Person or Persons, as applicable, in whose name the Warrant set forth herein
is registered on the books of the Company maintained for such purpose.

 

“Other
Property” has the meaning set forth in Section 4.3.

 

“Person”
an individual, partnership, corporation, limited liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of whatever nature.

 

“Restricted
Securities” means: (a) any Warrant bearing the applicable legend or legends referred to in Section 9.1 and (b) any
shares of Common Stock which have been issued upon the exercise of Warrants and which are evidenced by a certificate or certificates
bearing the applicable legend or legends referred to in such section.

 

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“Securities
Act” means the Securities Act of 1933, as amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the time.

 

“Warrants”
means this Warrant and all warrants issued upon transfer, division or combination of, or in substitution for, any thereof. All
Warrants shall at all times be identical as to terms and conditions and date, except as to the number of shares of Common Stock
for which they may be exercised.

 

“Warrant
Price” means an amount equal to (i) the number of shares of Common Stock being purchased upon exercise of this Warrant
pursuant to Section 2.1, multiplied by (ii) the Current Warrant Price.

 

“Warrant
Stock” means the shares of Common Stock purchased by the holders of the Warrants upon the exercise thereof.

 

		2.	EXERCISE OF WARRANT

 

2.1           Manner
of Exercise. From and after the date of issuance of this Warrant and until 5:00 p.m., New York time, on the Expiration Date,
Holder may exercise this Warrant, on any Business Day, for all or any part of the number of shares of Common Stock purchasable
hereunder.

 

In order to exercise
this Warrant, in whole or in part, Holder shall deliver to the Company at its principal office at 2549 W. Main Street, Suite 202,
Littleton, Colorado or at the office or agency designated by the Company pursuant to Section 12, (i) a written notice of Holder’s
election to exercise this Warrant, which notice shall specify the number of shares of Common Stock to be purchased, (ii) payment
of the Warrant Price and (iii) this Warrant. Such notice shall be substantially in the form of the subscription form appearing
at the end of this Warrant as Exhibit A, duly executed by Holder or its agent or attorney. Upon receipt of all of the deliveries
specified in clauses (i) through (iii) above, the Company shall, as promptly as practicable, and in any event within five Business
Days thereafter, execute or cause to be executed and deliver or cause to be delivered to Holder a certificate or certificates representing
the aggregate number of full shares of Common Stock issuable upon such exercise, together with cash in lieu of any fraction of
a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such
denomination or denominations as Holder shall reasonably request in the notice and shall be registered in the name of Holder or,
subject to Section 9, such other name as shall be designated in the notice. This Warrant shall be deemed to have been exercised
and such certificate or certificates shall be deemed to have been issued, and Holder or any other Person so designated to be named
therein shall be deemed to have become a holder of record of such shares for all purposes, as of the date the notice, together
with the cash or check or checks and this Warrant, is received by the Company as described above and all taxes required to be paid
by Holder, if any, pursuant to Section 2.2 prior to the issuance of such shares have been paid. If this Warrant shall have
been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Stock,
deliver to Holder a new Warrant evidencing the rights of Holder to purchase the unpurchased shares of Common Stock called for by
this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or, at the request of Holder, appropriate
notation may be made on this Warrant and the same returned to Holder.

 

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Payment of the Warrant
Price may be made at the option of Holder, as specified by Holder at the time of exercise, by (i) certified or official bank check,
(ii) surrender of shares of Warrant Stock having an aggregate Current Market Price equal to the Warrant Price, (iii) surrender
of Warrants representing the right to purchase that number of shares of Common Stock that have an aggregate Current Market Price
equal to the sum of the Warrant Price plus the Current Warrant Price multiplied by the number of shares of Common Stock represented
by the Warrants so surrendered or (iv) any combination of the foregoing. Any shares of Warrant Stock or Warrants so surrendered
shall be duly endorsed, or accompanied by appropriate instruments of transfer duly executed, by Holder, and if the certificate
for such Warrant Stock or such Warrants evidences more shares of Warrant Stock or the right to purchase a greater number of shares
of Common Stock, the Company shall issue and deliver to Holder a new certificate for such additional shares of Warrant Stock or
a new Warrant to purchase such additional shares of Common Stock.

 

2.2           Payment
of Taxes. All shares of Common Stock issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly
issued and, upon payment of the Warrant Price, fully paid and nonassessable and without any preemptive rights. The Company shall
pay all expenses in connection with, and all taxes and other governmental charges that may be imposed with respect to, the issue
or delivery thereof. The Company shall not be required, however, to pay any tax or other charge imposed in connection with any
transfer involved in the issue of any certificate for shares of Common Stock issuable upon exercise of this Warrant in any name
other than that of Holder, and in such case the Company shall not be required to issue or deliver any stock certificate until
such tax or other charge has been paid or it has been established to the satisfaction of the Company that no such tax or other
charge is due.

 

2.3           Fractional
Shares. The Company shall not be required to issue a fractional share of Common Stock upon exercise of any Warrant. As to
any fraction of a share which Holder of one or more Warrants, the rights under which are exercised in the same transaction, would
otherwise be entitled to purchase upon such exercise, the Company shall pay a cash adjustment in respect of such final fraction
in an amount equal to the same fraction of the Current Market Price per share of Common Stock on the date of exercise.

 

		3.	TRANSFER, DIVISION AND COMBINATION

 

3.1           Transfer.
Subject to compliance with Section 9, transfer of this Warrant and all rights hereunder, in whole or in part, shall be registered
on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company
referred to in Section 2.1 or the office or agency designated by the Company pursuant to Section 12, together with a
written assignment of this Warrant substantially in the form of Exhibit B hereto duly executed by Holder, funds sufficient to
pay any transfer taxes payable upon the making of such transfer. Upon such compliance, surrender, delivery, and, if required,
such payment, the Company shall promptly execute and deliver a new Warrant or Warrants each dated the same dates as the surrendered
Warrant in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall
issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall be cancelled.
A Warrant, if properly assigned, may be exercised by a new Holder for the purchase of shares of Common Stock without having a
new Warrant issued.

 

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3.2           Division
and Combination. Subject to Section 9, this Warrant may be divided or combined with other Warrants upon presentation
hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations
in which new Warrants are to be issued, signed by Holder or its agent or attorney. Subject to compliance with Section 3.1,
as to any transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant
or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice.

 

3.3           Expenses.
The Company shall prepare, issue and deliver at its own expense the new Warrant or Warrants under this Section 3.

 

3.4           Maintenance
of Books. The Company agrees to maintain, at its aforesaid office or agency, books for the registration and the registration
of transfer of the Warrants.

 

		4.	ADJUSTMENTS

 

The number of shares
of Common Stock for which this Warrant is exercisable, and the price at which such shares may be purchased upon exercise of this
Warrant, shall be subject to adjustment from time to time as set forth in this Section 4. The Company shall give Holder notice
of any event described below which requires an adjustment pursuant to this Section 4 in accordance with Sections 5.1 and 5.2.

 

4.1           Stock
Dividends, Subdivisions and Combinations. If at any time the Company shall:

 

(a)          take
a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend payable in, or other distribution
of, shares of Common Stock,

 

(b)          subdivide
its outstanding shares of Common Stock into a larger number of shares of Common Stock, or

 

(c)          combine
its outstanding shares of Common Stock into a smaller number of shares of Common Stock,

 

then (i) the number of shares of Common
Stock for which this Warrant is exercisable immediately after the occurrence of any such event shall be adjusted to equal the number
of shares of Common Stock which a record holder of the same number of shares of Common Stock for which this Warrant is exercisable
immediately prior to the occurrence of such event would own or be entitled to receive after the happening of such event, and (ii)
the Current Warrant Price shall be adjusted to equal (A) the Current Warrant Price multiplied by the number of shares of Common
Stock for which this Warrant is exercisable immediately prior to the adjustment divided by (B) the number of shares of Common Stock
for which this Warrant is exercisable immediately after such adjustment.

 

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4.2           Other
Provisions Applicable to Adjustments under this Section. The following provisions shall be applicable to the making of adjustments
of the number of shares of Common Stock for which this Warrant is exercisable and the Current Warrant Price provided for in this
Section 4:

 

(a)          When
Adjustments to Be Made. The adjustments required by this Section 4 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment of the number of shares of Common Stock for which this Warrant
is exercisable that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares
of the Common Stock, as provided for in Section 4.1) up to, but not beyond the date of exercise if such adjustment either
by itself or with other adjustments not previously made adds or subtracts less than 1% of the shares of Common Stock for which
this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than
such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together
with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the
date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business
on the date of its occurrence.

 

(b)          Fractional
Interests. In computing adjustments under this Section 4, fractional interests in Common Stock shall be taken into account
to the nearest 1/100th of a share.

 

(c)          When
Adjustment Not Required. If the Company shall take a record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution or subscription or purchase rights and shall, thereafter and before the distribution
to stockholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights,
then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made
in respect thereof shall be rescinded and annulled. Furthermore, no adjustment pursuant to this Section 4 shall be required for
issuances of: (i) Common Stock upon the exercise of options granted to officers, directors or employees of the Company pursuant
to any employee share scheme approved by the Board of Directors of the Company; or (ii) securities issued in connection with acquisitions
by the Company of other companies, businesses or assets in transactions approved by the Board of Directors of the Company.

 

(d)          Escrow
of Warrant Stock. If after any property becomes distributable pursuant to this Section 4 by reason of the taking of any
record of the holders of Common Stock, but prior to the occurrence of the event for which such record is taken, and Holder exercises
this Warrant, any shares of Common Stock issuable upon exercise by reason of such adjustment shall be deemed the last shares of
Common Stock for which this Warrant is exercised (notwithstanding any other provision to the contrary herein) and such shares or
other property shall be held in escrow for Holder by the Company to be issued to Holder upon and to the extent that the event actually
takes place, upon payment of the Current Warrant Price. Notwithstanding any other provision to the contrary herein, if the event
for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be cancelled by the Company and
escrowed property returned.

 

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4.3           Reorganization,
Reclassification, Merger, Consolidation or Disposition of Assets. In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another entity (where the Company is not the surviving entity or where there
is a change in or distribution with respect to the Common Stock of the Company), or sell, transfer or otherwise dispose of all
or substantially all its property, assets or business to another entity and, pursuant to the terms of such reorganization, reclassification,
merger, consolidation or disposition of assets, shares of common equity of the successor or acquiring entity, or any cash, shares
of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights)
in addition to or in lieu of common equity of the successor or acquiring entity (“Other Property”),
are to be received by or distributed to the holders of Common Stock of the Company, then Holder shall have the right thereafter
to receive, upon exercise of this Warrant, the number of shares of common equity of the successor or acquiring entity or of the
Company, if it is the surviving entity, and Other Property receivable upon or as a result of such reorganization, reclassification,
merger, consolidation or disposition of assets by a holder of the number of shares of Common Stock for which this Warrant is exercisable
immediately prior to such event. In case of any such reorganization, reclassification, merger, consolidation or disposition of
assets, the Company shall use commercially reasonable efforts to cause the successor or acquiring entity (if other than the Company)
to expressly assume the due and punctual observance and performance of each and every covenant and condition of this Warrant to
be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may
be deemed appropriate (as determined by resolution of the Board of Directors of the Company) in order to provide for adjustments
of shares of the Common Stock for which this Warrant is exercisable which shall be as nearly equivalent as practicable to the
adjustments provided for in this Section 4. For purposes of this Section 4.3 “common equity of the successor or acquiring
entity” shall include equity of such entity of any class which is not preferred as to dividends or assets on liquidation
over any other class of equity of such entity and which is not subject to redemption and shall also include any evidences of indebtedness,
shares of stock or other securities which are convertible into or exchangeable for any such equity, either immediately or upon
the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase
any such equity. The foregoing provisions of this Section 4.3 shall similarly apply to successive reorganizations, reclassifications,
mergers, consolidations or disposition of assets.

 

4.4           Certain
Limitations. Notwithstanding anything herein to the contrary, the Company agrees not to enter into any transaction which,
by reason of any adjustment hereunder, would cause the Current Warrant Price to be less than the par value per share of Common
Stock.

 

		5.	NOTICES TO WARRANT HOLDERS

 

5.1           Notice
of Adjustments. Whenever the number of shares of Common Stock for which this Warrant is exercisable, or whenever the price
at which a share of such Common Stock may be purchased upon exercise of this Warrant, shall be adjusted pursuant to Section 4,
the Company shall forthwith prepare a certificate to be executed by the chief financial officer of the Company setting forth,
in reasonable detail, the event requiring the adjustment and the method by which such adjustment was calculated, specifying the
number of shares of Common Stock for which this Warrant is exercisable and (if such adjustment was made pursuant to Section 4.3)
describing the number and kind of any other shares of stock or Other Property for which this Warrant is exercisable, and any change
in the purchase price or prices thereof, after giving effect to such adjustment or change. The Company shall promptly cause a
signed copy of such certificate to be delivered to Holder in accordance with Section 15.2. The Company shall keep at its
office or agency designated pursuant to Section 12 copies of all such certificates and cause the same to be available for
inspection at said office during normal business hours by Holder or any prospective purchaser of this Warrant designated by Holder.

 

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5.2           Notice
of Corporate Action. If at any time

 

(a)          the
Company shall take a record of the holders of its Common Stock for the purpose of entitling them to receive a dividend or other
distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or
any other securities or property, or to receive any other right, or

 

(b)          there
shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company
or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the
property, assets or business of the Company to, another corporation, or

 

(c)          there
shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company;

 

then, in any one or more of such cases,
the Company shall give to Holder written notice no later than the same date as such information is made available to the stockholders
of the Company (i) of the date on which a record date shall be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up, the date when the same is expected to take place. Such notice in accordance
with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall be entitled to any such dividend, distribution or right,
and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation,
sale, transfer, disposition, dissolution, liquidation or winding up is expected to take place and the time, if any such time is
to be fixed, as of which the holders of Common Stock shall be entitled to exchange their shares of Common Stock for securities
or other property deliverable upon such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and shall be given to Holder at least five (5) business days prior to the setting of any such record
date. Each such written notice shall be sufficiently given if addressed to Holder at the last address of Holder appearing on the
books of the Company and delivered in accordance with Section 15.2.

 

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5.3           Notice
to Shareholders. The Holder shall be entitled to the same rights to receive notice of corporate action as any holder of Common
Stock.

 

		6.	NO IMPAIRMENT

 

The Company shall not
by any action including, without limitation, amending its articles of incorporation or through any reorganization, transfer of
assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the
observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of Holder against
impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior
to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly
and legally issue fully paid and nonassessable shares of Common Stock upon the exercise of this Warrant, and (c) use its commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction
thereof as may be necessary to enable the Company to perform its obligations under this Warrant.

 

Upon the reasonable
request of Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form reasonably
satisfactory to Holder, the continuing validity of this Warrant and the obligations of the Company hereunder.

 

		7.	RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR APPROVAL OF ANY GOVERNMENTAL
AUTHORITY

 

From and after the
Closing Date, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of
its authorized but unissued shares of Common Stock as will be sufficient to permit the exercise in full of all outstanding Warrants.
All shares of Common Stock which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance
with the terms of such Warrant, shall be duly and validly issued and fully paid and nonassessable, and not subject to preemptive
rights.

 

Before taking any action
which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the shares of Common Stock
issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and non-assessable shares of such Common Stock at such adjusted Current Warrant Price.

 

Before taking any action
which would result in an adjustment in the number of shares of Common Stock for which this Warrant is exercisable or in the Current
Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.

 

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If any shares of Common
Stock required to be reserved for issuance upon exercise of Warrants require registration or qualification with any Governmental
Authority under any federal or state law (otherwise than pursuant to the Securities Act) before such shares may be so issued, the
Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered.

 

		8.	TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS

 

In the case of all
dividends or other distributions by the Company to the holders of its Common Stock with respect to which any provision of Section 4
refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record
as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding
up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise
or transfer of any Warrant.

 

		9.	RESTRICTIONS ON TRANSFERABILITY

 

The Warrants and the
Warrant Stock shall not be transferred, hypothecated or assigned before satisfaction of the conditions specified in this Section 9,
which conditions are intended to ensure compliance with the provisions of the Securities Act with respect to the transfer of any
Warrant or any Warrant Stock. Holder, by acceptance of this Warrant, agrees to be bound by the provisions of this Section 9.

 

9.1           Restrictive
Legend

 

Except as otherwise permitted by this Article
9, each Warrant (including each Warrant issued upon the transfer of any Warrant) shall be stamped or otherwise imprinted with a
legend in substantially the following form:

 

“This
Warrant and any shares acquired upon the exercise of this Warrant have not been registered under the Securities Act of 1933, as
amended, and may not be transferred, sold or otherwise disposed of in the absence of such registration or an exemption therefrom
under such Act.”

 

Except as otherwise permitted by this Article
9, each certificate for Warrant Stock issued upon the exercise of any Warrant, and each certificate issued upon the transfer of
any such Warrant Stock shall be stamped or otherwise imprinted with a legend in substantially the following form:

 

“The
shares represented by this certificate have not been registered under the Securities Act of 1933 and may not be transferred in
the absence of such registration or an exemption therefrom under such Act.”

 

9.2           Termination
of Restrictions. The restrictions imposed by this Article 9 upon the transferability of Restricted Securities shall cease
and terminate as to any particular Restricted Securities when such securities shall have been sold pursuant to an effective registration
statement under the Securities Act or otherwise become freely transferable by the holder thereof. Whenever such restrictions shall
cease and terminate as to any Restricted Securities, the holder thereof shall be entitled to receive from the Company, without
expense (other than applicable transfer taxes, if any), new certificates representing the securities not bearing the applicable
legends required by Section 9.1

 

    	10

    	 

    

 

		10.	SUPPLYING INFORMATION

 

The Company shall cooperate
with Holder and each holder of Restricted Securities in supplying such information as may be reasonably necessary for such holder
to complete and file any information reporting forms presently or hereafter required by the Commission as a condition to the availability
of an exemption from the Securities Act for the sale of any Restricted Securities.

 

		11.	LOSS OR MUTILATION

 

Upon receipt by the
Company from Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation
of this Warrant and indemnity reasonably satisfactory to it (it being understood that the written agreement of the original Holder
shall be sufficient indemnity) and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver
in lieu hereof a new Warrant of like tenor to Holder; provided, however, that in the case of mutilation, no indemnity shall be
required if this Warrant in identifiable form is surrendered to the Company for cancellation.

 

		12.	OFFICE OF THE COMPANY

 

As long as any of the
Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the
Company) where the Warrants may be presented for exercise, registration of transfer, division or combination as provided in this
Warrant.

 

		13.	FINANCIAL AND BUSINESS INFORMATION

 

13.1         Filings.
The Company will file on or before the required date all regular or periodic reports (pursuant to the Exchange Act) with the Commission
and will deliver to Holder promptly upon their becoming available one copy of each report, notice or proxy statement sent by the
Company to its stockholders generally, and notice of each regular or periodic report (pursuant to the Exchange Act) and any registration
statement, prospectus or written communication (other than transmittal, comment, and response letters and requests for confidential
treatment) (pursuant to the Securities Act), filed by the Company with (i) the Commission or (ii) any securities exchange on which
shares of Common Stock are listed.

 

13.2         Access.
At any reasonable time and at reasonable intervals, the Company shall permit any holder of Warrants and any authorized agent or
representative thereof to (a) visit the properties of the Company and any of its subsidiaries and (b) discuss the affairs, finances
and accounts of the Company and any of its subsidiaries with any of their respective officers or directors, in each case subject
to such holder and any such agent or representative thereof entering into a non-disclosure agreement in form and substance reasonably
satisfactory to the Company.

 

    	11

    	 

    

 

		14.	LIMITATION OF LIABILITY

 

No provision hereof,
in the absence of affirmative action by Holder to purchase shares of Common Stock, and no enumeration herein of the rights or privileges
of Holder hereof, shall give rise to any liability of Holder for the purchase price of any Common Stock or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors of the Company.

 

		15.	MISCELLANEOUS

 

15.1         Nonwaiver
and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate
as a waiver of such right or otherwise prejudice Holder’s rights, powers or remedies. If the Company or the Holder fails
to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Warrant, the Company
or Holder, as the case may be, shall pay to Holder or the Company, as applicable, such amounts as shall be sufficient to cover
any costs and expenses including, but not limited to, reasonable attorneys’ fees, including those of appellate proceedings,
incurred by Holder or the Company, as applicable, in collecting any amounts due pursuant hereto or in otherwise enforcing any
of its rights, powers or remedies hereunder.

 

15.2         Notice
Generally.  Any notice, demand, request, consent, approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant shall be sufficiently given or made if in writing and either delivered in person with
receipt acknowledged or sent by registered mail, return receipt requested, postage prepaid, addressed as follows:

 

(a)          If
to Holder or any holder of Warrant Stock, at its last known address appearing on the books of the Company maintained for such purpose.

 

(b)          If
to the Company at

 

American Eagle Energy Corporation

____________________

____________________

Attention:

 

or at such other address as may be substituted
by notice given as herein provided. The giving of any notice required hereunder may be waived in writing by the party entitled
to receive such notice. Every notice, demand, request, consent, approval, declaration, delivery or other communication hereunder
shall be deemed to have been duly given or served on the date on which personally delivered, with receipt acknowledged, or three
Business Days after the same shall have been deposited in the United States mail as provided in this Section 15.2. Failure
or delay in delivering copies of any notice, demand, request, approval, declaration, delivery or other communication to the person
designated above to receive a copy shall in no way adversely affect the effectiveness of such notice, demand, request, approval,
declaration, delivery or other communication.

 

    	12

    	 

    

 

15.3         Indemnification.
The Company agrees to indemnify and hold harmless Holder from and against any liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, attorneys’ fees, expenses and disbursements of any kind which may be imposed upon,
incurred by or asserted against Holder in any manner relating to or arising out of Holder’s ownership or exercise of this
Warrant or the issuance to Holder of any shares of Warrant Stock issued in consequence thereof.

 

15.4         Successors
and Assigns. Subject to compliance with the provisions of Sections 3.1 and 9, this Warrant and the rights evidenced hereby
shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of Holder. The
provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable
by any such Holder.

 

15.5         Amendment.
This Warrant may be modified or amended or the provisions of this Warrant waived with the written consent of the Company and Holder.

 

15.6         Severability.
Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions
of this Warrant.

 

15.7         Headings.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of
this Warrant.

 

15.8         Governing
Law. This Warrant shall be governed by, and be construed and interpreted in accordance with, the law of the State of Nevada.

 

[Signature Page Follows]

 

    	13

    	 

    

 

IN WITNESS WHEREOF,
the Company has caused this Warrant to be duly executed by its Secretary or Assistant Secretary as of the date first above written.

 

	 	AMERICAN EAGLE ENERGY CORPORATION
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:
	 	 
	 	MORGAN STANLEY CAPITAL GROUP INC.
	 	 
	 	By:	 
	 	 	Name:
	 	 	Title:

 

Signature Page to Warrant

 

    	 

    	 

    

 

EXHIBIT
A

 

SUBSCRIPTION
FORM

 

[To be
executed only upon exercise of Warrant]

 

The undersigned registered owner of this
Warrant irrevocably exercises this Warrant for the purchase of ______ shares of Common Stock of American Eagle Energy Corporation,
and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant and requests that
certificates for the shares of Common Stock hereby purchased (and any securities or other property issuable upon such exercise)
be issued in the name of and delivered to _____________ whose address is _________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in this Warrant, that a new Warrant of like tenor and
date for the balance of the shares of Common Stock issuable hereunder be delivered to the undersigned.

 

	 	 
	 	(Name of Registered Owner)
	 	 
	 	 
	 	(Signature of Registered Owner)
	 	 
	 	 
	 	(Street Address)
	 	 
	 	 
	 	(City)   (State) (Zip Code)

 

		NOTICE:	The signature on this subscription must correspond with the name as written upon the face of the Warrant in every particular,
without alteration or enlargement or any change whatsoever.

 

    	A-1

    	 

    

 

EXHIBIT
B

 

ASSIGNMENT
FORM

 

FOR VALUE RECEIVED the undersigned registered
owner of this Warrant hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under
this Warrant, with respect to the number of shares of Common Stock set forth below:

 

	Name and Address of Assignee	 	No. of Shares of 

Common Stock
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	 	 	 

 

and does hereby irrevocably constitute and appoint _______________________
attorney in fact to register such transfer on the books of ______________________, maintained for the purpose, with full power
of substitution in the premises.

 

	Dated:	Print Name:	 
	 	 	 
	 	Signature:	 
	 	 	 
	 	Witness:	 

 

		NOTICE:	The signature on this assignment must correspond with the name as written upon the face of the Warrant in every particular,
without alteration or enlargement or any change whatsoever.

 

    	B-1Exhibit 10.1

SECOND AMENDMENT TO OPTION AGREEMENT

BETWEEN PASSPORT POTASH, INC. AND TWIN BUTTES RANCH, LLC

THIS SECOND AMENDMENT TO OPTION AGREEMENT (this "Second Amendment") is made effective this 20th day of August, 2013, by and between TWIN BUTTES RANCH, LLC an Arizona limited liability company ("Optionor"), and PASSPORT POTASH, INC., a British Columbia corporation ("Optionee").

RECITALS

1.   Optionor and Optionee entered into an Option Agreement, dated August 28, 2009 ("Option Agreement"), pursuant to which Optionor granted the option to purchase certain real property described therein to Optionee.

2.   Optionor and Optionee entered into an Amendment Agreement, dated December 4, 2009 (the "Amendment"), amending certain provisions of the Option Agreement.

3.   Optionor and Optionee desire to further amend the Option Agreement and enter into this Second Amendment Agreement.

NOW, THEREFORE, in consideration of the promises and covenants contained herein, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows.

1.   Amendment 1.  Paragraph 1 shall be amended as follows (to be inserted after Paragraph 1(iv)):
"(v)     A payment in the amount of TWO HUNDRED FIFTY THOUSAND DOLLARS (US$250,000) to be paid on the earlier of (i) within (30) days of closing its next round of financing which is a minimum of FIVE MILLION DOLLARS (U.S.)($5,000,000), or (ii) December 1, 2013.  Optionor and Optionee expressly agree that this obligation shall survive any early termination of the Option by Optionee or a termination resulting from an uncured breach by Optionee under the terms of the Option Agreement.  Although Optionor is granting the Optionee the ability to pay this Option Payment in arrears (since it is not made at the signing of the Second Amendment), it should be clear that it is not an elective payment, but an obligation of Optionee once the Second Amendment is signed; and

(vi)    A payment in the amount of TWO HUNDRED FIFTY THOUSAND AND NO/100  DOLLARS (U.S.)($250,000) on August 28, 2014; and

(vii)   A payment in the amount of TWO HUNDRED FIFTY THOUSAND AND NO/100  DOLLARS (U.S.)($250,000) on May 1, 2015."

2.   Amendment 2.  Paragraph 2 shall be amended as follows:
"2.      Expiration.  This Option shall expire at 5:00 p.m., Arizona time, on January 6, 2016, or such other time as is mutually acceptable and agreed to by Optionor and Optionee in writing, unless earlier terminated as a result of an uncured breach by Optionee under the terms of the Option Agreement."

3.   Amendment 3.  Paragraph 13 shall be amended as follows:
"13.    Notices.  All notices, requests, demands or other communication required or permitted under this Agreement must be in writing and shall be effective on the earlier of either (i) the date received by such party if delivered via hand delivery; or (ii) forty eight (48) hours after the date if sent via registered or certified mail, return receipt requested, postage and fees prepaid and addressed as follows:

	
If to Optionor
	
Michael R. Fitzgerald, Manager

Twin Buttes Ranch, LLC

25020 Hwy. 145

Dolores, CO 81323

	
with a copy to:
	
Olsen Smith, Ltd.

301 East Virginia Avenue, Suite 3300

Phoenix, Arizona 85004

Attn: James J. Rossie, Jr., Esq.

	
If to Optionee:
	
Joshua Bleak, President

Passport Potash, Inc.

608-1199 West Pender Street

Vancouver, British Columbia V6E 2R1

	
with a copy to:
	
McMillan LLP

1500 Royal Center P.O. Box 11117

1055 West Georgia Street

Vancouver, B.C. V6E 4N7

Attn: Ms. Linda Hogg"

4.   As a material inducement to Optionor to enter into this Second Amendment Agreement, Optionee agrees to reimburse Optionor, without offset, for such attorney fees as may be incurred by Optionor in connection with the preparation and negotiation of this Second Amendment Agreement., within fifteen (15) days following receipt of an invoice evidencing the incurrence of such fees.

5.   Except as provided in this Second Amendment Agreement, all other terms and conditions of the Option Agreement, Amendment, and Mining Lease, shall continue to have the same effect and force as though the parties had not entered into this Second Amendment.

[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]

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

	
OPTIONOR:
	 	
OPTIONEE:

	
TWIN BUTTES RANCH, LLC an Arizona limited liability company
	 	
PASSPORT POTASH, INC., a British Columbia corporation

	 	 	 
	 	 	 
	
By: /s/ Michael R. Fitzgerald____

     MICHAEL R. FITZGERALD, 

     Manager

	 	
By: /s/ John Eckersley____________

     JOHN ECKERSLEY,  

      Executive Vice President, Director

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