Document:

Exhibit 10.22

EXHIBIT 10.22

IVANHOE ENERGY INC.

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MACQUARIE CAPITAL MARKETS CANADA LTD.

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CIBC MELLON TRUST COMPANY

 

Share Purchase Warrant Indenture

Dated as of January 26, 2010

Providing for the Issue of Common Share Purchase Warrants

of Ivanhoe Energy Inc.

 

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 1 INTERPRETATION
	 	 	5	 
	 
	 	 	 	 
	1.1 Definitions
	 	 	 5	 
	1.2 Headings
	 	 	 9	 
	1.3 Gender
	 	 	 9	 
	1.4 Business Day
	 	 	 9	 
	1.5 Meaning of “Outstanding“
	 	 	 9	 
	1.6 Time
	 	 	 9	 
	1.7 Applicable Law
	 	 	 9	 
	 
	 	 	 	 
	ARTICLE 2 ISSUE AND PURCHASE OF WARRANTS
	 	 	10	 
	 
	 	 	 	 
	2.1 Creation and Issue of Warrants
	 	 	 10	 
	2.2 Book Entry System
	 	 	 10	 
	2.3 Global Warrant Certificates
	 	 	 11	 
	2.4 Form and Terms of Warrants
	 	 	 12	 
	2.5 Registration and Transfer of Warrants
	 	 	13	 
	2.6 List of Warrantholders
	 	 	13	 
	2.7 Transfer and Ownership of Warrants
	 	 	13	 
	2.8 Legends
	 	 	14	 
	2.9 Warrantholders Not Shareholders
	 	 	16	 
	2.10 Signing of Warrants
	 	 	16	 
	2.11 Countersigning
	 	 	16	 
	2.12 Loss, Mutilation, Destruction or Theft of Warrants
	 	 	17	 
	2.13 Issue of Warrants
	 	 	17	 
	2.14 Fractions
	 	 	17	 
	2.15 Warrants to Rank Pari Passu
	 	 	18	 
	2.16 Exchange of Warrants
	 	 	18	 
	2.17 Recognition of Registered Holder
	 	 	18	 
	2.18 Cancellation of Surrendered Warrants
	 	 	19	 
	 
	 	 	 	 
	ARTICLE 3 COVENANTS OF THE COMPANY
	 	 	19	 
	 
	 	 	 	 
	3.1 Covenants of the Company
	 	 	19	 
	3.2 Suits by Warrantholder
	 	 	20	 
	3.3 Warrant Agent May Institute Proceedings
	 	 	20	 
	 
	 	 	 	 
	ARTICLE 4 ADJUSTMENT OF SUBSCRIPTION RIGHTS
	 	 	21	 
	 
	 	 	 	 
	4.1 Adjustment of Subscription Rights
	 	 	21	 
	4.2 Proceedings Prior to any Action Requiring Adjustment
	 	 	26	 
	4.3 Certificate of Adjustment
	 	 	26	 
	4.4 Adjustment Rules
	 	 	26	 
	4.5 Notice of Special Matters
	 	 	27	 
	4.6 No Action after Notice
	 	 	27	 
	4.7 Protection of Warrant Agent
	 	 	27	 
	 
	 	 	 	 
	ARTICLE 5 EXERCISE AND CANCELLATION OF WARRANTS
	 	 	28	 
	 
	 	 	 	 
	5.1 Exercise of Warrants
	 	 	28	 
	5.2 Effect of Exercise of Warrants
	 	 	30	 
	5.3 Postponement of Delivery of Certificates
	 	 	31	 
	5.4 Warrants Void after Expiry Time
	 	 	31	 
	5.5 Fractions
	 	 	31	 
	5.6 Partial Exercise of Warrants
	 	 	32	 
	5.7 Accounting and Recording
	 	 	32	 
	5.8 Warrant Exercise Proceeds
	 	 	32	 

 

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	 	 	Page	 
	 
	 	 	 	 
	ARTICLE 6 MEETINGS OF WARRANTHOLDERS
	 	 	32	 
	 
	 	 	 	 
	6.1 Convening of Meeting
	 	 	32	 
	6.2 Notice
	 	 	33	 
	6.3 Chairman
	 	 	33	 
	6.4 Quorum
	 	 	33	 
	6.5 Show of Hands
	 	 	33	 
	6.6 Poll
	 	 	34	 
	6.7 Regulations
	 	 	34	 
	6.8 Minutes
	 	 	34	 
	6.9 Powers Exercisable by Extraordinary Resolution
	 	 	35	 
	6.10 Meaning of “Extraordinary Resolution”
	 	 	36	 
	6.11 Powers Cumulative
	 	 	36	 
	6.12 Company, Warrantholders and Warrant Agent May be Represented
	 	 	36	 
	6.13 Instruments in Writing
	 	 	36	 
	6.14 Binding Effect of Resolutions
	 	 	37	 
	6.15 Holdings by the Company or Subsidiaries of the Company Disregarded
	 	 	37	 
	 
	 	 	 	 
	ARTICLE 7 SUPPLEMENTAL AGREEMENTS, MERGER, SUCCESSORS
	 	 	37	 
	 
	 	 	 	 
	7.1 Provision for Supplemental Agreements for Certain Purposes
	 	 	37	 
	7.2 Company May Consolidate, etc. on Certain Terms
	 	 	38	 
	7.3 Successor Body Corporate Substituted
	 	 	38	 
	 
	 	 	 	 
	ARTICLE 8 CONCERNING THE WARRANT AGENT
	 	 	39	 
	 
	 	 	 	 
	8.1 No Conflict of Interest
	 	 	39	 
	8.2 Replacement of Warrant Agent
	 	 	39	 
	8.3 Duty of Warrant Agent
	 	 	40	 
	8.4 Experts, Advisors and Agents
	 	 	40	 
	8.5 Warrant Agent Not Required to Give Security
	 	 	40	 
	8.6 Warrant Agent Not Ordinarily Bound
	 	 	40	 
	8.7 Warrant Agent may Rely on Certificates
	 	 	41	 
	8.8 Warrant Agent’s Liability
	 	 	42	 
	8.9 Indemnification
	 	 	42	 
	8.10 No Representation as to Validity
	 	 	42	 
	8.11 Acceptance of Duties
	 	 	43	 
	8.12 Contracting with Company
	 	 	43	 
	8.13 Warrant Agent’s Authority to Carry on Business
	 	 	43	 
	8.14 Monetary Distributions
	 	 	43	 
	8.15 Trust Indenture Legislation
	 	 	43	 
	8.16 Limitations on Warrant Agent
	 	 	44	 
	 
	 	 	 	 
	ARTICLE 9 NOTICE AND CERTIFICATES
	 	 	44	 
	 
	 	 	 	 
	9.1 Notice to Company or Agent
	 	 	44	 
	9.2 Notice to Warrantholders
	 	 	45	 
	9.3 Notice to Warrant Agent
	 	 	45	 
	9.4 Mail Service Interruption
	 	 	46	 
	9.5 General Provisions as to Certificates
	 	 	46	 
	 
	 	 	 	 
	ARTICLE 10 GENERAL PROVISIONS
	 	 	47	 
	 
	 	 	 	 
	10.1 Power of Board of Directors
	 	 	47	 
	10.2 Formal Date and Execution Date
	 	 	47	 
	10.3 Further Assurances
	 	 	47	 
	10.4 Unenforceable Terms
	 	 	47	 
	10.5 Entire Agreement
	 	 	48	 
	10.6 Amendments
	 	 	48	 
	10.7 Counterparts
	 	 	48	 
	10.8 No Waiver
	 	 	48	 
	10.9 Enurement
	 	 	48	 
	10.10 Conflicts
	 	 	48	 
	10.11 Assignment
	 	 	48	 

 

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THIS WARRANT INDENTURE made as of the 26th day of January, 2010.

BETWEEN:

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

(the “Company”)

AND:

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

(the “Agent”)

AND:

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

(the “Warrant Agent”)

WHEREAS:

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

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

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

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

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

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

 

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

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

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

ARTICLE 1

INTERPRETATION

1.1 Definitions

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

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

	 	(b)	 	“Agent’s Option Warrants” means any Common Share purchase warrants underlying
the Option Special Warrants issued pursuant to the exercise of the Option, such
warrants to have substantially the same terms and conditions as the Warrants;

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

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

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

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

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

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

 

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

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

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

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

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

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

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

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

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

	 	(r)	 	“Expiry Date” means January 25, 2011, representing the first anniversary of the
closing date of the issue of the Special Warrants;

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

 

- 6 -

 

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

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

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

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

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

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

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

	 	(aa)	 	“Option Special Warrants” has the meaning ascribed thereto in the Special
Warrant Indenture;

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

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

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

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

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

 

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

	 	(hh)	 	“Special Warrant Indenture” means the Special Warrant Indenture among the
Company, the Agent and the Warrant Agent dated January 25, 2010;

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

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

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

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

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

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

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

	 
	 	(pp)	 	“Warrantholder” or “holder” means the registered holder of a Warrant hereunder;

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

 

- 8 -

 

	 	(rr)	 	“Warrants” means, collectively, the Common Share purchase warrants of the
Company issued and certified hereunder entitling holders thereof to receive, upon
the exercise of one (1) such Common Share purchase warrant, one (1) Common Share
and/or such kind and amount of securities or property determined pursuant to Article
4 hereof; and

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

1.2 Headings

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

1.3 Gender

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

1.4 Business Day

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

1.5 Meaning of “Outstanding”

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

1.6 Time

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

1.7 Applicable Law

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

 

- 9 -

 

ARTICLE 2

ISSUE AND PURCHASE OF WARRANTS

2.1 Creation and Issue of Warrants

A total of up to 10,416,667 Warrants are hereby created and authorized to be issued and shall
be executed by the Company and certified by, or on behalf of, the Warrant Agent upon the written
order of the Company and delivered by the Warrant Agent to the Company in accordance with the
written direction of the Company. Subject to the provisions hereof, the Warrants to be issued
under this Indenture shall be limited in the aggregate to 10,416,667 Warrants and one (1) such
Warrant shall entitle a holder, upon exercise thereof, to acquire one (1) Common Share (except in
certain circumstances noted below) and/or such other kind and amount of securities or property
determined pursuant to the provisions of Article 4, as the case may be.

2.2 Book Entry System

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

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

 

- 10 -

 

2.3 Global Warrant Certificates

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

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

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

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

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

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

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

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

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

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

 

- 11 -

 

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

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

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

2.4 Form and Terms of Warrants

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

 

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2.5 Registration and Transfer of Warrants

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

2.6 List of Warrantholders

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

2.7 Transfer and Ownership of Warrants

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

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

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

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

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

 

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

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

2.8 Legends

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

 

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

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT
TRADE THE SECURITY BEFORE MAY 26, 2010.”

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

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

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

 

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

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

2.9 Warrantholders Not Shareholders

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

2.10 Signing of Warrants

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

2.11 Countersigning

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

 

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2.12 Loss, Mutilation, Destruction or Theft of Warrants

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

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

2.13 Issue of Warrants

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

2.14 Fractions

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

 

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2.15 Warrants to Rank Pari Passu

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

2.16 Exchange of Warrants

Except as otherwise herein provided:

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

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

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

2.17 Recognition of Registered Holder

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

 

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2.18 Cancellation of Surrendered Warrants

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

ARTICLE 3

COVENANTS OF THE COMPANY

3.1 Covenants of the Company

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

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

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

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

 

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

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

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

3.2 Suits by Warrantholder

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

3.3 Warrant Agent May Institute Proceedings

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

 

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ARTICLE 4

ADJUSTMENT OF SUBSCRIPTION RIGHTS

4.1 Adjustment of Subscription Rights

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

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

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

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

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

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

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

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

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

 

- 21 -

 

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

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

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

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

 

- 22 -

 

	 	(iii)	 	evidences of indebtedness; or

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

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

 

- 23 -

 

	 	(d)	 	if and whenever at any time from the date hereof (and for greater certainty
such date being prior to the issuance of the Warrants) and prior to the Expiry Time,
there is a reclassification of the Common Shares or a capital reorganization of the
Company other than as described in Subsections 4.1(a), (b) or (c) or a consolidation,
amalgamation, arrangement or merger of the Company or other form of business
combination of the Company with or into any other body corporate, trust, partnership or
other entity, any sale, conveyance, lease, exchange or transfer of the undertaking or
assets of the Company as an entirety or substantially as an entirety to another
corporation or entity, any Warrantholder who has not exercised his right of
subscription prior to the effective date of such reclassification, capital
reorganization, consolidation, amalgamation, merger, sale or conveyance, upon the
exercise of such right thereafter, shall be entitled to receive and shall accept the
kind and number of shares, securities or property that such Warrantholder would have
been entitled to receive on such reclassification, capital reorganization,
consolidation, amalgamation, merger, sale or conveyance, if, on the record date or the
effective date thereof, as the case may be, the Warrantholder had been the registered
holder of the number of Common Shares receivable upon the exercise of Warrants then
held, subject to adjustment thereafter in accordance with provisions the same, as
nearly as may be possible, as those contained in this Section 4.1; provided that no
such action shall be carried into effect unless all necessary steps shall have been
taken so that the holders of the Warrants shall thereafter be entitled to receive such
kind and number of securities and property. The Company, its successor, or purchasing
body corporate, partnership, trust or other entity, as the case may be, shall, as a
condition precedent to any such reclassification, capital reorganization,
consolidation, amalgamation, merger, sale or conveyance, take all necessary steps
hereunder to enter into an agreement which shall provide, to the extent possible, that
the provisions set forth in this Indenture shall thereafter correspondingly be made
applicable, as nearly as may reasonably be, to the securities and property to which a
Warrantholder is entitled on the exercise of his Warrants thereafter. Any agreement
entered into between the Company and the Warrant Agent pursuant to the provisions of
this Subsection 4.1(d) shall be a supplemental agreement entered into pursuant to the
provisions of Article 7 hereof. Any agreement entered into between the Company, any
successor to the Company or any purchasing body corporate, partnership, trust or other
entity and the Warrant Agent shall provide for adjustments which shall be as nearly
equivalent as may be practicable to the adjustments provided in this Section 4.1 and
which shall apply to successive reclassifications, capital reorganizations,
amalgamations, consolidations, mergers, sales or conveyances;

	 	(e)	 	in any case in which this Section 4.1 requires an adjustment to become
effective immediately after a record date for an event referred to herein, the Company
may defer, until the occurrence of such event, issuing any Warrantholder exercising or
deemed to be exercising his subscription rights after such record
date the additional Common Shares or other securities or property issuable upon such exercise
by reason of the adjustment required by such event; provided, however, that the
Company shall deliver to such holder an appropriate instrument evidencing such
holder’s right to receive such additional Common Shares or other securities or
property, as the case may be, upon the occurrence of the event requiring such
adjustment and the right to receive any distributions made on such additional Common
Shares or other securities or property, as the case may be, declared in favour of
holders of record of such Common Shares or other securities or property, as the case
may be, on and after the date of exercise or such later date as such holder would
but for the provisions of this Subsection 4.1(e), have become the holder of record
of such additional Common Shares, other securities or property, as the case may be,
upon the exercise of the Warrants held by such holder;

 

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	 	(f)	 	after any adjustment pursuant to this Section 4.1, the term “Common Shares”
where used in this Indenture shall be interpreted to mean securities of any class or
classes or property which, as a result of such adjustment and all prior adjustments
pursuant to this Section 4.1, a Warrantholder is entitled to receive upon the exercise
of such holder’s Warrants, and the number of Common Shares indicated to be issuable
upon any exercise of a Warrant shall be interpreted to include the number of Common
Shares or other securities or property a Warrantholder is entitled to receive, as a
result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon
the exercise of the Warrant;

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

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

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

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

 

- 25 -

 

4.2 Proceedings Prior to any Action Requiring Adjustment

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

4.3 Certificate of Adjustment

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

4.4 Adjustment Rules

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

 

- 26 -

 

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

4.5 Notice of Special Matters

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

4.6 No Action after Notice

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

4.7 Protection of Warrant Agent

The Warrant Agent:

	 	(a)	 	shall not at any time be under any duty or responsibility to any Warrantholder
to determine whether any facts exist which may require any adjustment contemplated by
Section 4.1 hereof, or with respect to the nature or extent of any such adjustment when
made, or with respect to the method employed in making the same;

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

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

 

- 27 -

 

	 	(d)	 	shall not incur any liability or responsibility whatever or be in any way
responsible for the consequence of any breach on the part of the Company of any of the
representations, warranties or covenants herein contained or of any acts of the agents
or servants of the Company.

ARTICLE 5

EXERCISE AND CANCELLATION OF WARRANTS

5.1 Exercise of Warrants

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

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

	 
	 	(ii)	 	either:

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

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

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

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

 

- 28 -

 

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

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

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

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

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

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

 

- 29 -

 

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

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

5.2 Effect of Exercise of Warrants

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

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

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

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

 

- 30 -

 

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

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

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

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

5.3 Postponement of Delivery of Certificates

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

5.4 Warrants Void after Expiry Time

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

5.5 Fractions

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

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

 

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5.6 Partial Exercise of Warrants

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

5.7 Accounting and Recording

The Warrant Agent shall:

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

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

5.8 Warrant Exercise Proceeds

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

ARTICLE 6

MEETINGS OF WARRANTHOLDERS

6.1 Convening of Meeting

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

 

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6.2 Notice

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

6.3 Chairman

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

6.4 Quorum

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

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

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

6.5 Show of Hands

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

 

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6.6 Poll

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

6.7 Regulations

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

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

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

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

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

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

6.8 Minutes

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

 

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6.9 Powers Exercisable by Extraordinary Resolution

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

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

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

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

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

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

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

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

 

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

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

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

6.10 Meaning of “Extraordinary Resolution”

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

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

6.11 Powers Cumulative

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

6.12 Company, Warrantholders and Warrant Agent May be Represented

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

6.13 Instruments in Writing

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

 

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6.14 Binding Effect of Resolutions

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

6.15 Holdings by the Company or Subsidiaries of the Company Disregarded

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

ARTICLE 7

SUPPLEMENTAL AGREEMENTS, MERGER, SUCCESSORS

7.1 Provision for Supplemental Agreements for Certain Purposes

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

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

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

	 	(c)	 	making such provisions not inconsistent with this Indenture as may be necessary
or desirable with respect to matters or questions arising hereunder or for the purpose
of obtaining a listing or quotation of the Common Shares issuable upon
the exercise of the Warrants on any stock exchange, or for the purpose of complying
with applicable laws, provided that such provisions are not, in the opinion of the
Warrant Agent, relying on the advice of counsel, prejudicial to the interests of the
Warrantholders;

 

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

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

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

7.2 Company May Consolidate, etc. on Certain Terms

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

7.3 Successor Body Corporate Substituted

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

 

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ARTICLE 8

CONCERNING THE WARRANT AGENT

8.1 No Conflict of Interest

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

8.2 Replacement of Warrant Agent

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

 

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8.3 Duty of Warrant Agent

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

8.4 Experts, Advisors and Agents

The Warrant Agent may:

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

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

8.5 Warrant Agent Not Required to Give Security

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

8.6 Warrant Agent Not Ordinarily Bound

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

 

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

8.7 Warrant Agent may Rely on Certificates

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

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

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

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

 

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

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

8.8 Warrant Agent’s Liability

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

8.9 Indemnification

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

8.10 No Representation as to Validity

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

 

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8.11 Acceptance of Duties

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

8.12 Contracting with Company

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

8.13 Warrant Agent’s Authority to Carry on Business

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

8.14
Monetary Distributions

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

8.15
Trust Indenture Legislation

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

 

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8.16
Limitations on Warrant Agent

The parties agree that:

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

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

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

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

ARTICLE 9

NOTICE AND CERTIFICATES

9.1 Notice to Company or Agent

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

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

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

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

 

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9.2 Notice to Warrantholders

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

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

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

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

9.3 Notice to Warrant Agent

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

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

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

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

 

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

9.4 Mail Service Interruption

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

9.5 General Provisions as to Certificates

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

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

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

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

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

 

- 46 -

 

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

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

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

ARTICLE 10

GENERAL PROVISIONS

10.1 Power of Board of Directors

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

10.2 Formal Date and Execution Date

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

10.3 Further Assurances

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

10.4 Unenforceable Terms

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

 

- 47 -

 

10.5 Entire Agreement

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

10.6 Amendments

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

10.7 Counterparts

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

10.8 No Waiver

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

10.9 Enurement

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

10.10 Conflicts

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

10.11 Assignment

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

 

- 48 -

 

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

 

- 49 -

 

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

	 	 	 	 	 
	 	IVANHOE ENERGY INC.

 	 
	 	Per:  	(signed) Beverly A. Bartlett
 	 
	 	 	Beverly A. Bartlett 	 
	 	 	Vice President & Corporate Secretary 	 
	 
	 	MACQUARIE CAPITAL MARKETS CANADA LTD.

 	 
	 	Per:  	(signed) David Vetters
 	 
	 	 	 	 
	 	Per:  	(signed) Josh Woitas
 	 
	 
	 	CIBC MELLON TRUST COMPANY

 	 
	 	Per:  	(signed) Tricia Murphy
 	 
	 	 	Tricia Murphy 	 
	 	 	Manager, Client Relations 	 
	 	 	 
	 	Per:  	(signed) Margot Sulymka
 	 
	 	 	Associate Manager 	 
	 	 	Corporate Trust 	 

 

- 50 -

 

	 	 	 	 	 

SCHEDULE “A”

IVANHOE ENERGY INC. WARRANT CERTIFICATE

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

EXERCISABLE ONLY BEFORE 5:00 P.M. (VANCOUVER TIME) ON OR BEFORE JANUARY 25, 2011 (THE “EXPIRY
DATE”), AFTER WHICH TIME THIS WARRANT WILL BE NULL AND VOID.

THE FOLLOWING LEGEND FOR U.S. PURCHASERS ONLY

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

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

“UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE
SECURITY BEFORE MAY 26, 2010.”

 

 

 

WARRANTS

IVANHOE ENERGY INC.

(Incorporated under the laws of the Yukon Territory)

	 	 	 	 	 
	 

	 	WARRANT CERTIFICATE NO.                     
	 	                     Warrants

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

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

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

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

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

 

- 2 -

 

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

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

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

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

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

 

- 3 -

 

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

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

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

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

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

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

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

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

 

- 4 -

 

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

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

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

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

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

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

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

 

- 5 -

 

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

	 	 	 	 	 
	 	IVANHOE ENERGY INC.

  	 
	 	Per:  	 	 
	 	 	Authorized Signatory 	 

	 	 	 	 	 
	 	
 	Countersigned by:

CIBC MELLON TRUST COMPANY
 	 
	 	Per:  	 	 
	 	 	Authorized Signatory 	 
	 	 	 	 

 

- 6 -

 

	 	 	 	 	 

EXERCISE INSTRUCTIONS TO WARRANTHOLDER

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

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

 

- 7 -

 

EXERCISE FORM

	To:	 	 Ivanhoe Energy Inc.

c/o CIBC Mellon Trust Company

Suite 1600, The Oceanic Plaza

1066 West Hastings Street

Vancouver, British Columbia

V6E 3X1

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

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

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

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 
	 
	 	 	 	 
	 

	 	 
	 	 

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

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

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

 

 

 

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

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

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

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

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

DATED at
 _____ 
this
 _____ 
day of
 _____,
 _____.

	 	 	 
	 

	 	 
	Signature Guaranty*

	 	Signature of Subscriber**
	 
	 	 
	 

	 	 
	 

	 	Name of Subscriber
	 
	 	 
	 

	 	 
	 

	 	Address (include Postal Code)
	 
	 	 
	 

	 	 
	 

	 	SIN/TIN Number (if any)

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

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

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

 

- 2 -

 

TRANSFER OF WARRANTS

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

	 	 	 	 	 
	 	 	 
	 

	 	Name
	 
	 	 	 	 
	 	 	 
	 

	 	Address
	 
	 	 	 	 
	 	 	 

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

DATED this
 _____ 
day of
 _____,
 _____ 

	 	 	 
	 

	 	 
	Signature Guaranteed

	 	(Signature of Warrant Holder)
	 
	 	 
	 

	 	 
	 

	 	Print full Name
	 
	 	 
	 

	 	 
	 

	 	Print full address and SIN/TIN (if any)
	 
	 	 
	 

	 	 

Instructions

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

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

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

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

 

 

 

EXHIBIT “A”

DECLARATION OF TRANSFEREE OF WARRANTS OF IVANHOE ENERGY INC.

	 	 	 
	TO:

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

	 	Ivanhoe Energy Inc. (the “Company”)

The undersigned transferee (“Transferee”) of common share purchase warrants of Ivanhoe Energy
Inc. (“Warrants”) whose name appears as such on the form of transfer of such Warrants that
accompanies this declaration, hereby declares and certifies, for himself and on behalf of each
beneficial transferee of all or any part of such Warrants, that he and they are aware that the
Warrants and the common shares (“Common Shares”) of the Company underlying the Warrants (together
the “Subject Securities”) have not been and will not be registered under the United States
Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws of any states
of the United States, and that the transfer contemplated hereby is being made in reliance on an
exemption from such registration requirements.

The Transferee represents and warrants that:

[check one only]

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

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

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

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

 

 

 

DATED at
 _____ 
this
 _____ 
day of
 _____,
 _____.

	 	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Name of Transferee
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	 	 	Signature of Authorized Representative
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Name of Person Signing
	 
	 	 	 	 
	 

	 	 	 	 
	 

	 	 	 	Title

 

- 2 -Exhibit 10.23

EXHIBIT 10.23

IVANHOE ENERGY INC.

- and -

MACQUARIE CAPITAL MARKETS CANADA LTD.

- and -

CIBC MELLON TRUST COMPANY

SPECIAL WARRANT INDENTURE

Providing for the Issue of

Special Warrants

Dated as of February 25, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	Article 1 INTERPRETATION
	 	 	2	 
	1.1 Definitions
	 	 	2	 
	1.2 Words Importing the Singular
	 	 	8	 
	1.3 Interpretation Not Affected by Headings, Etc.
	 	 	8	 
	1.4 Day Not a Business Day
	 	 	8	 
	1.5 Time of the Essence
	 	 	8	 
	1.6 Currency
	 	 	8	 
	1.7 Applicable Law
	 	 	8	 
	1.8 Severability
	 	 	8	 
	1.9 Conflicts
	 	 	8	 
	 
	Article 2 THE SPECIAL WARRANTS
	 	 	9	 
	2.1 Creation and Issue of Special Warrants
	 	 	9	 
	2.2 Terms of Special Warrants
	 	 	9	 
	2.3 Form of Special Warrant Certificates
	 	 	10	 
	2.4 Signing of Special Warrant Certificates
	 	 	12	 
	2.5 Certification by Trustee
	 	 	12	 
	2.6 Special Warrants to Rank Pari Passu
	 	 	12	 
	2.7 Issue in Substitution for Lost Certificates, Etc.
	 	 	13	 
	2.8 Cancellation of Surrendered Special Warrants
	 	 	13	 
	2.9 Global Special Warrant Certificate and Book-Entry Only System
	 	 	14	 
	2.10 Special Warrantholder not a Shareholder
	 	 	15	 
	 
	Article 3 REGISTRATION, TRANSFER AND OWNERSHIP OF SPECIAL WARRANTS AND EXCHANGE OF SPECIAL WARRANT
CERTIFICATES
	 	 	15	 
	3.1 Registration and Transfer of Fully Registered Special Warrant Certificates
	 	 	15	 
	3.2 Registration and Transfer of Global Special Warrant Certificates
	 	 	15	 
	3.3 Certain Transfers by Persons in the United States
	 	 	17	 
	3.4 Other Registration and Transfer Matters
	 	 	18	 
	3.5 Exchange of Special Warrant Certificates
	 	 	19	 
	3.6 No Charges for Transfer or Exchange
	 	 	19	 
	3.7 Ownership of Special Warrants
	 	 	19	 
	 
	Article 4 CONVERSION OF SPECIAL WARRANTS
	 	 	20	 
	4.1 Conversion by Holder
	 	 	20	 
	4.2 Conversion by Trustee
	 	 	21	 
	4.3 Effect of Conversion
	 	 	21	 
	4.4 No Fractional Common Shares or Warrants
	 	 	22	 
	4.5 Recording
	 	 	23	 
	4.6 Securities Restrictions
	 	 	23	 
	4.7 Adjustments
	 	 	25	 
	 
	Article 5 COVENANTS
	 	 	31	 
	5.1 General Covenants
	 	 	31	 
	5.2 Remuneration and Expenses of Trustee
	 	 	33	 
	5.3 Securities Qualification Requirements
	 	 	33	 
	5.4 Performance of Covenants by Trustee
	 	 	34	 

 

1

 

	 	 	 	 	 
	Article 6 ESCROWED FUNDS
	 	 	34	 
	6.1 Initial Escrowed Funds and Distribution Amounts
	 	 	34	 
	6.2 Qualified Investments
	 	 	35	 
	6.3 Release of Escrowed Funds Upon Conversion of Special Warrants Prior to Receipt of
Release and Payment Certificate
	 	 	36	 
	6.4 Release of Escrowed Funds Upon Receipt of Release and Payment Certificate
	 	 	36	 
	6.5 Release of Escrowed Funds on Termination
	 	 	37	 
	6.6 Direction
	 	 	37	 
	6.7 Early Termination of any Investment of the Escrowed Funds
	 	 	37	 
	6.8 Method of Disbursement and Delivery
	 	 	37	 
	6.9 Acknowledgements
	 	 	38	 
	6.10 Miscellaneous
	 	 	38	 
	6.11 Tax Reporting
	 	 	40	 
	 
	Article 7 ENFORCEMENT
	 	 	40	 
	7.1 Suits by Special Warrantholder
	 	 	40	 
	7.2 Limitation of Liability
	 	 	41	 
	 
	Article 8 MEETINGS OF SPECIAL WARRANTHOLDERS
	 	 	41	 
	8.1 Right to Convene Meetings
	 	 	41	 
	8.2 Notice
	 	 	41	 
	8.3 Chairman
	 	 	41	 
	8.4 Quorum
	 	 	42	 
	8.5 Power to Adjourn
	 	 	42	 
	8.6 Show of Hands
	 	 	42	 
	8.7 Poll
	 	 	42	 
	8.8 Voting
	 	 	43	 
	8.9 Regulations
	 	 	43	 
	8.10 The Company and Trustee may be Represented
	 	 	44	 
	8.11 Powers Exercisable by Extraordinary Resolution
	 	 	44	 
	8.12 Meaning of “Extraordinary Resolution”
	 	 	45	 
	8.13 Powers Cumulative
	 	 	46	 
	8.14 Minutes
	 	 	46	 
	8.15 Instruments in Writing
	 	 	46	 
	8.16 Binding Effect of Resolutions
	 	 	46	 
	8.17 Holdings by the Company and Subsidiaries Disregarded
	 	 	47	 
	 
	Article 9 SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS
	 	 	47	 
	9.1 Provision for Supplemental Indentures for Certain Purposes
	 	 	47	 
	9.2 Successor Entities
	 	 	48	 

 

2

 

	 	 	 	 	 
	Article 10 CONCERNING TRUSTEE
	 	 	48	 
	10.1 Trust Indenture Legislation
	 	 	48	 
	10.2 Rights and Duties of Trustee
	 	 	49	 
	10.3 Evidence, Experts and Advisers
	 	 	50	 
	10.4 Documents, Money, Etc. held by Trustee
	 	 	51	 
	10.5 Action by Trustee to Protect Interests
	 	 	51	 
	10.6 Trustee not Required to Give Security
	 	 	51	 
	10.7 Protection of Trustee
	 	 	51	 
	10.8 Replacement of Trustee
	 	 	53	 
	10.9 Conflict of Interest
	 	 	54	 
	10.10 Acceptance of Duties and Obligations
	 	 	54	 
	 
	Article 11 GENERAL
	 	 	54	 
	11.1 Notice to the Company and the Trustee
	 	 	54	 
	11.2 Notice to Special Warrantholders
	 	 	56	 
	11.3 Satisfaction and Discharge of Indenture
	 	 	56	 
	11.4 Sole Benefit of Parties and Special Warrantholders
	 	 	56	 
	11.5 Discretion of Directors
	 	 	57	 
	11.6 Counterparts and Formal Date
	 	 	57	 
	11.7 Assignment
	 	 	57	 

 

3

 

SPECIAL WARRANT INDENTURE

THIS INDENTURE dated as of the 25th day of February, 2010

BETWEEN:

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

(the “Company”)

AND:

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

(the “Agent”)

AND:

CIBC MELLON TRUST COMPANY, a trust company existing under the laws of Canada

(the “Trustee”)

WHEREAS:

	A.	 	The Company proposes to create and issue Special Warrants (as hereinafter defined) to be
constituted and issued as herein provided;

	B.	 	The Company is authorized to create and issue the Special Warrants as herein provided and to
complete the transactions contemplated herein;

	C.	 	All things necessary have been done and performed to make the Special Warrant Certificates
(as hereinafter defined), when certified by the Trustee and issued and delivered as herein
provided, legal, valid and binding obligations of the Company with the benefits of and subject
to the terms of this Indenture;

	 
	D.	 	The foregoing recitals are made as representations by the Company and not by the Trustee; and

	E.	 	The Trustee has agreed to enter into this Indenture (as hereinafter defined) and to hold all
rights, interests and benefits contained herein for and on behalf of those persons who from
time to time become holders of Special Warrants issued pursuant to this Indenture.

 

 

 

NOW THEREFORE THIS INDENTURE WITNESSES that for good and valuable consideration mutually given, the
receipt and sufficiency of which are hereby acknowledged, by each of the Company and the Trustee,
the Company hereby appoints the Trustee as agent for the
Special Warrantholders (as hereinafter defined), to hold all rights, interests and benefits
contained herein for and on behalf of those persons who from time to time become holders of Special
Warrants issued pursuant to this Indenture, and the Company and the Trustee hereby covenant, agree
and declare as follows:

ARTICLE 1

INTERPRETATION

1.1 Definitions

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

“Adjustment Period” means the period commencing on the date hereof and ending at the
Time of Expiry.

“Agency Agreement” means the agency agreement dated as of January 12, 2010 between
the Company and the Agent.

“Agent” means Macquarie Capital Markets Canada Ltd.

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

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

“Beneficial Holder” means any person who holds a beneficial interest in a Global
Special Warrant Certificate as shown on the books of the Depository or a
Participant.

“Book-Entry Only System” means the book-based securities transfer system
administered by a Depository in accordance with its operating procedures in force
from time to time.

“Business Day” means any day that is not a Saturday, Sunday or statutory holiday in
Vancouver, British Columbia, or a day when the principal office of the Trustee in
such city is not generally open to the public for the transaction of business.

“Common Shares” means the fully paid and non-assessable common shares of the Company
as constituted on the date hereof, provided that, in the event of any
adjustment pursuant to Section 4.7 hereof, Common Shares will thereafter mean or
include, as the case may be, the shares, other securities or property resulting from
such adjustment.

 

2

 

“Company” means Ivanhoe Energy Inc. and includes any successor corporation to or of
the Company.

“Company’s auditors” means the firm of accountants appointed by the shareholders of
the Company as the auditors of the Company from time to time.

“Conversion Date” means with respect to:

	 	(i)	 	any Special Warrant exchanged by the holder thereof pursuant to
Section 4.1(a) hereof, the day on which the Special Warrant Certificate
representing such Special Warrant is surrendered to the Trustee in accordance
with the provisions of Section 4.1 hereof; and

	 	(ii)	 	any Special Warrant exchanged by the Trustee in accordance with
Section 4.2(a) hereof, the day on which the Trustee is required to exchange
such Special Warrant pursuant to Section 4.2(a) hereof.

“counsel” means a barrister or solicitor or an attorney-at-law or a firm of
barristers and solicitors or attorneys-at-law, who may be counsel for the Company,
acceptable to the Trustee, acting reasonably.

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

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

“director” means a director of the Company for the time being, and reference without
more to an action by the directors means an action by the directors of the Company
as a board or, to the extent empowered, by a committee of the board, in each case by
resolution duly passed.

 

3

 

“Earnings” means any income (including interest or gains) net of any related
expenses derived from investing the Initial Escrowed Funds.

“Effective Date” means the date of this Indenture.

“Escrow Agent” means the role of the Trustee to, inter alia, hold and disburse the
Escrowed Funds on behalf of the Company and the Special Warrantholders pursuant to
the terms and conditions of this Indenture.

“Escrowed Funds” at any time means the aggregate of the Initial Escrowed Funds and
any Earnings derived from time to time from holding the Initial Escrowed Funds less
any amounts released to the Company and the Agent from time to time pursuant to
Section 6.3.

“Expiry Date” means the earliest of:

	 	(i)	 	the date which is the first Business Day following the
Qualification Date; and

	 
	 	(ii)	 	the Release Deadline.

“Extraordinary Resolution” has the meaning attributed thereto in Sections 8.12 and
8.15 hereof.

“Final Prospectus” means the (final) short form prospectus of the Company which
qualifies the distribution of the Underlying Securities in the Qualifying
Jurisdictions and includes any amendments or supplements thereto.

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

“Fully Registered Special Warrant Certificate” means a Special Warrant Certificate
other than a Global Special Warrant Certificate.

“Global Special Warrant Certificate” means a Special Warrant Certificate that is
issued to and registered in the name of the Depository or its nominee.

“Initial Escrowed Funds” means an amount equal to the aggregate Issue Price received
from the issue of the Special Warrants.

“Issue Price” means $3.00 per Special Warrant.

“National Policy 11-202” means National Policy 11-202 — Process for Prospectus
Reviews in Multiple Jurisdictions.

 

4

 

“Participant” means a person recognized by the Depository as a participant in the
Book-Entry Only System administered by the Depository.

“Passport System” means the passport review system established under Multilateral
Instrument 11-102 Passport System.

“Person” includes an individual, corporation, partnership, trustee, unincorporated
organization or any other entity whatsoever, and words importing persons have a
similar extended meaning.

“Qualification Date” means the date on which the British Columbia Securities
Commission as the principal regulator under National Policy 11-202 and the Passport
System has issued the Final Receipt.

“Qualified Investments” means short term interest bearing or discount debt
obligations issued or guaranteed by the Government of Canada, by a Province of
Canada or, provided that such obligation is rated at least R-1 (high) by DBRS Inc.
or an equivalent rating service, by a Canadian chartered bank (which may include a
Canadian chartered bank which is an Affiliate (as defined in Section 6.2(b)) of the
Trustee).

“Qualifying Jurisdictions” means the provinces of Canada where purchasers of Special
Warrants are located and any other jurisdiction in Canada in which the Company is
required to file the Final Prospectus pursuant to the Agency Agreement, or
otherwise.

“Regulation D” means Regulation D under the U.S. Securities Act.

“Regulation S” means Regulation S under the U.S. Securities Act.

“Release and Payment Certificate” means a certificate executed by the Company in the
form attached as Schedule C hereto and addressed to the Trustee and the Agent and
acknowledged by the Agent confirming that the Release Condition has been satisfied
and directing the Trustee to release the Escrowed Funds in satisfaction of the
commission payable to the Agent pursuant to the Agency Agreement, and the remainder
to the Company.

“Release Condition” means the filing and clearance of the Final Prospectus, as
evidenced by the Final Receipt.

“Release Deadline” means 5:00 p.m. (Toronto time) on the date which is 30 days from
the date of this Indenture.

“SEC” means the Securities and Exchange Commission in the United States.

“Securities Commissions” means, collectively, the securities regulatory authorities
of the Qualifying Jurisdictions.

 

5

 

“Share Rate” means the Common Shares issuable pursuant to the conversion of the
Special Warrants in accordance with Section 2.2 hereof, subject to adjustment in
accordance with Section 4.7 hereto.

“Special Warrant Certificate” means a certificate representing one or more Special
Warrants substantially in the form of the certificate attached hereto as Schedule A.

“Special Warrantholder” or “holders” means the persons for the time being entered in
a register of holders described in Section 3.1 hereof as holders of Special
Warrants.

“Special Warrantholders’ Request” means an instrument, signed in one or more
counterparts by Special Warrantholders who hold in the aggregate not less than 10%
of the total number of Special Warrants then outstanding, requesting the Trustee to
take some action or proceeding specified therein.

“Special Warrants” means the special warrants created and issued pursuant to
Sections 2.1(a) and 2.1(b) hereof and authorized for issue hereunder and represented
by Special Warrant Certificates issued and certified in accordance with the
provisions hereof and that have not at the particular time expired, or been
converted into Underlying Securities.

“Subsidiary of the Company” means any corporation or other corporate entity of which
Voting Shares carrying more than 50% of the votes attached to all outstanding Voting
Shares of such corporation are owned, directly or indirectly, other than by way of
security only, by one or more of the Company and any Subsidiary of the Company,
regardless of whether the Company or such Subsidiary of the Company is not
contractually or otherwise prohibited or restricted from exercising sufficient of
the voting rights attached to such Voting Shares to elect at least a majority of the
directors of such corporation.

“Termination Payment Time” means 5:00 p.m. (Toronto time) on the second Business Day
after the Release Deadline if the Release Condition has not been satisfied at or
prior to the Release Deadline.

“this Special Warrant Indenture”, “this Indenture”, “hereto”, “hereunder”, “hereof”,
“herein”, “hereby” and similar expressions mean or refer to this Special Warrant
Indenture and any indenture, deed or instrument supplemental or ancillary hereto,
and the expressions “article”, “section”, “subsection”, “paragraph”, “subparagraph”,
“clause” and “subclause” followed by a number mean the specified article, section,
subsection, paragraph, subparagraph, clause or subclause of this Indenture.

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

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

 

6

 

“Trustee” means CIBC Mellon Trust Company, including its successors and assigns.

“TSX” means the Toronto Stock Exchange.

“Underlying Securities” means the Common Shares and Warrants issuable pursuant to
the Special Warrants at or before the Time of Expiry.

“United States” means the United States, as that term is defined in Rule 902(1) of
Regulation S.

“U.S. Accredited Investor” means an “Accredited Investor” as defined in Rule 501(a)
of Regulation D.

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

“U.S. Purchaser” means (i) a person in the United States, or (ii) a U.S. Person or
person purchasing on behalf, or for the benefit or account, of any U.S. Person or
person in the United States.

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

“Voting Shares” of any corporation means shares of one or more classes or series of
a class of shares of such corporation carrying voting rights under all circumstances
(and not by reason of the happening of a contingency) sufficient if exercised to
elect all of the directors of such corporation, irrespective of whether or not
 shares of any other class or classes will have or may have the right to vote for
directors by reason of the happening of any contingency.

“Warrant Indenture” means the warrant indenture among the Company, the Agent and the
Trustee to be dated as of the date hereof which will govern the Warrants.

“Warrants” means the Common Share purchase warrants of the Company, with each whole
Warrant entitling the holder thereof, subject to the terms and conditions of the
Warrant Indenture, to purchase one (1) Share at a price of $3.16 at any time on or
before the first anniversary of the Effective Date.

“Written Order of the Company”, “Written Request of the Company”, “Written Consent
of the Company”, “Written Direction of the Company” and “Certificate of the Company”
mean a written order, request, consent, direction
and certificate, respectively, signed in the name of the Company by any director or
officer of the Company or by any other individual to whom such signing authority is
delegated by the directors from time to time, and may consist of one or more
instruments so executed respectively.

 

7

 

1.2 Words Importing the Singular

Words importing the singular include the plural and vice versa and words importing a
particular gender or neuter include both genders and neuter.

1.3 Interpretation Not Affected by Headings, Etc.

The division of this Indenture into articles, sections, subsections, paragraphs,
subparagraphs, clauses and subclauses, the provision of a table of contents and the insertion of
headings are for convenience of reference only and will not affect the construction or
interpretation of this Indenture.

1.4 Day Not a Business Day

If the day on or before which any action which would otherwise be required to be taken
hereunder is not a Business Day in the place where the action is required to be taken, that action
will be required to be taken on or before the requisite time on the next succeeding day that is a
Business Day.

1.5 Time of the Essence

Time will be of the essence in all respects in this Indenture and the Special Warrant
Certificates.

1.6 Currency

All dollar amounts herein and in the Special Warrant Certificates are expressed in Canadian
dollars.

1.7 Applicable Law

This Indenture and the Special Warrant Certificates will be construed and enforced in
accordance with the laws prevailing in the Province of British Columbia and the federal laws of
Canada applicable therein and will be treated in all respects as British Columbia contracts.

1.8 Severability

If any provision of this Indenture shall be held by any court of competent jurisdiction to be
invalid or unenforceable, in whole or in part, such invalidity or unenforceability shall not affect
the validity or enforceability of the remaining provisions, or part thereof, of this Indenture and
such remaining provisions, or part thereof, shall remain enforceable and binding.

1.9 Conflicts

In the event of any conflict or inconsistency between the provisions of this Indenture and the
Special Warrant Certificates, the provisions of this Indenture will govern.

 

8

 

ARTICLE 2

THE SPECIAL WARRANTS

2.1 Creation and Issue of Special Warrants

	 	(a)	 	Creation of Special Warrants: 8,333,333 Special Warrants entitling the
holders thereof to be issued, subject to adjustment in accordance with the provisions
of this Indenture, an aggregate of (i) 8,333,333 Common Shares and (ii) 2,083,333
Warrants, together with such additional indeterminate number of Underlying Securities
as may be required to be issued pursuant to any adjustment required to be made by the
provisions of Section 4.7 hereof on the terms and subject to the conditions herein
provided, are hereby created and authorized for issue at a price of $3.00 for each
Special Warrant.

	 	(b)	 	Certification of Special Warrants: Upon the issue of the Special
Warrants and upon receipt of the issue price therefor, one or more Global Special
Warrant Certificates will be executed by the Company and delivered to the Trustee,
certified by the Trustee upon the Written Order of the Company and delivered by the
Trustee to the Company or to the order of the Company pursuant to a Written Direction
of the Company, without any further act of or formality on the part of the Company and
without the Trustee receiving any consideration therefor.

2.2 Terms of Special Warrants

	 	(a)	 	Conversion Terms: Subject to Section 4.7 hereof, each Special Warrant
issued hereunder will entitle the holder thereof, upon the conversion thereof in
accordance with the provisions of Article 4 hereof, and without payment of any
additional consideration, to be issued, one (1) Common Share and one quarter of one
(0.25) of one Warrant.

	 	(b)	 	Adjustment: The number of Underlying Securities issued upon the
conversion of the Special Warrants in accordance with the provisions hereof will be
adjusted in accordance with Section 4.7 hereof.

 

9

 

2.3 Form of Special Warrant Certificates

	 	(a)	 	Form: The Special Warrants (including the certificate of the Trustee
endorsed thereon) shall be issued pursuant to one or more Global Special Warrant
Certificates substantially in the form of the certificate attached hereto as
Schedule A, will be dated as of the date of issuance, will bear such distinguishing
letters and numbers as the Company, with the approval of the Trustee and the
Depository, may prescribe and such legends as permitted under this Indenture and
will be issuable in any whole number denomination.

	 	(b)	 	Production: The Global Special Warrant Certificates may be engraved,
lithographed or printed (the expression “printed” including for purposes hereof both
original typewritten material as well as mimeographed, mechanically, photographically,
photostatically or electronically reproduced, typewritten or other written material),
or partly in one form and partly in another, as the Company may determine.

	 	(c)	 	Legends: Certificates representing Special Warrants, as well as all
certificates issued in exchange for or in substitution of such certificates
representing Special Warrants, will, if directed by the Company, bear the following
legend:

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

	 	(d)	 	Additional United States Legend: Certificates representing Special
Warrants originally issued to a U.S. Person, a person in the United States, or a person
purchasing for the account or benefit of a U.S. Person or a person in the United
States, as well as all certificates issued in exchange for or in substitution of such
certificates representing Special Warrants, will bear the following additional legend:

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

 

10

 

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

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

	 	(f)	 	Registration of the Special Warrants and the Underlying Securities:
The Trustee understands and acknowledges that the Special Warrants and the Underlying
Securities have not been and will not be registered under the U.S. Securities Act or
applicable state securities laws and the Special Warrants must not be converted in the
United States unless the Special Warrants and the Underlying Securities have been
registered under the U.S. Securities Act and any applicable state securities laws or
unless an exemption from such registration is available.

	 	(g)	 	Rights: Each Special Warrant will entitle the holder thereof to such
other rights and privileges which are set forth in this Indenture.

 

11

 

2.4 Signing of Special Warrant Certificates

	 	(a)	 	Signing Officers: The Special Warrant Certificates will be signed by
any one officer of the Company or any one director or by any other individual to whom
such signing authority is delegated by the directors from time to time.

	 	(b)	 	Signatures: The signature of any officer of the Company or director or
any individual referred to in Section 2.4(a) hereof may be a manual signature,
engraved, lithographed or printed in facsimile and Special Warrant Certificates bearing
such facsimile signature will, subject to Section 2.5 hereof, be binding on the Company
as if they had been manually signed by such officer of the Company or director or
individual.

	 	(c)	 	No Longer Officer: Notwithstanding that any individual whose manual or
facsimile signature appears on a Special Warrant Certificate as one of the officers of
the Company or directors referred to in Section 2.4(a) hereof no longer holds the same
or any other office with, or is no longer a director of, the Company at the date of
issue of any Special Warrant Certificate or at the date of certification or delivery
thereof, such Special Warrant Certificate will, subject to Section 2.5 hereof, be valid
and binding on the Company.

2.5 Certification by Trustee

	 	(a)	 	Certification: No Special Warrant Certificate will be issued or, if
issued, will be valid for any purpose or entitle the holder to the benefits hereof or
thereof until it has been certified by manual signature by or on behalf of the Trustee
substantially in the form of the certificate attached hereto as Schedule A or in such
other form as may be approved by the Trustee. The certification by the Trustee on a
Special Warrant Certificate will be conclusive evidence as against the Company that
such Special Warrant Certificate has been issued hereunder and that the holder thereof
is entitled to the benefits hereof.

	 	(b)	 	Certification No Representation: The certification by the Trustee on
any Special Warrant Certificate issued hereunder will not be construed as a
representation or warranty by the Trustee as to the validity of this Indenture or such
Special Warrant Certificate (except the due certification thereof) or as to the
performance by the Company of the obligations thereof under this Indenture, and the
Trustee will in no respect be liable or answerable for the use made of any Special
Warrant Certificate or of the consideration therefor, except as otherwise specified
herein.

2.6 Special Warrants to Rank Pari Passu

All Special Warrants will rank pari passu, whatever may be the actual dates of issue of the
Special Warrant Certificates by which they are represented.

 

12

 

2.7 Issue in Substitution for Lost Certificates, Etc.

	 	(a)	 	Substitution: If any Special Warrant Certificate becomes mutilated or
is lost, destroyed or stolen, the Company, subject to applicable law and to
Section 2.7(b) hereof, will issue, and thereupon the Trustee will certify and deliver,
a new Special Warrant Certificate of like denomination and tenor and bearing the
applicable legends as the one mutilated, lost, destroyed or stolen in exchange for and
in place of and on surrender and cancellation of such mutilated certificate or in lieu
of and in substitution for such lost, destroyed or stolen certificate and the Special
Warrants evidenced thereby will be entitled to the benefits hereof and will rank
equally in accordance with its terms with all other Special Warrants issued or to be
issued hereunder.

	 	(b)	 	Cost of Substitution: The applicant for the issue of a new Special
Warrant Certificate pursuant to this Section 2.7 will bear the reasonable cost of the
issue thereof and, in the case of loss, destruction or theft, will as a condition
precedent to the issue thereof:

	 	(i)	 	furnish to the Company and to the Trustee such evidence
of ownership and of the loss, destruction or theft of the Special Warrant
Certificate to be replaced as is satisfactory to the Company and to the
Trustee in their discretion, acting reasonably;

	 	(ii)	 	if so requested, furnish an indemnity and surety bond in
amount and form satisfactory to the Company and to the Trustee in their
discretion, acting reasonably; and

	 	(iii)	 	if so requested, pay the reasonable charges of the
Company and the Trustee in connection therewith.

2.8 Cancellation of Surrendered Special Warrants

All Special Warrant Certificates surrendered to the Trustee in accordance with the provisions
of this Indenture will be cancelled by the Trustee and, if requested in writing by the Company, the
Trustee will furnish the Company with a cancellation certificate identifying each Special Warrant
Certificate so cancelled, the number of Special Warrants represented thereby and the number of
Underlying Securities, if any, issued pursuant to such Special Warrants.

 

13

 

2.9 Global Special Warrant Certificate and Book-Entry Only System

	 	(a)	 	Global Special Warrant Certificate: Unless the Book-Entry Only System
is terminated or required to do so by applicable law:

	 	(i)	 	Special Warrant Certificates will only be issued in the
form of one or more Global Special Warrant Certificates, which will be
registered in the name of and deposited with the Depository or its nominee;
and

	 	(ii)	 	Beneficial Holders shall not be entitled to have Special
Warrants registered in their names, shall not receive or be entitled to
receive Special Warrant Certificates in definitive form and shall not be
considered owners or holders thereof under this Indenture or any
supplemental indenture except in circumstances where the Depository resigns
or is removed from its responsibility and the Trustee is unable or does not
wish to locate a qualified successor. Beneficial interests in a Global
Special Warrant Certificate will be represented only through the Book-Entry
Only System. Transfers of Special Warrants between Participants shall occur
in accordance with the Depository’s rules and procedures and pursuant to an
exemption under Applicable Securities Laws. The Company and the Trustee
shall not have any responsibility or liability for any aspects of the
records relating to or payments made by the Depository, or its nominee, on
account of the beneficial interests in the Special Warrants. Nothing herein
shall prevent the owners of beneficial interests in the Special Warrants
from voting such Special Warrants using duly executed proxies.

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

	 	(c)	 	Resignation or Removal of the Depository: If the Depository resigns or
is removed from its responsibility as depository and the Trustee is unable or does not
wish to locate a qualified successor, the Depository shall surrender the Global Special
Warrant Certificates to the Trustee with instructions for registration of Special
Warrants in the name and in the amount specified by the Depository and the Company
shall issue and the Trustee shall certify and deliver the aggregate number of Special
Warrants then outstanding in the form of Fully Registered Special Warrant Certificates
representing such Special Warrants.

 

14

 

2.10 Special Warrantholder not a Shareholder

Except as provided in Sections 4.7 and 5.1(m), nothing in this Indenture or in the holding of
a Special Warrant represented by a Special Warrant Certificate, or otherwise, will, in itself, be
construed as conferring on any Special Warrantholder any right or interest whatsoever as a
shareholder of the Company, including but not limited to any right to vote at, to receive notice
of, or to attend, any meeting of shareholders.

ARTICLE 3

REGISTRATION, TRANSFER AND OWNERSHIP OF SPECIAL WARRANTS AND

EXCHANGE OF SPECIAL WARRANT CERTIFICATES

3.1 Registration and Transfer of Fully Registered Special Warrant Certificates

	 	(a)	 	Register: With respect to Special Warrants issued pursuant to Fully
Registered Special Warrant Certificates, the Company will cause to be kept by the
Trustee at its principal office in Vancouver, British Columbia:

	 	(i)	 	a register of holders in which will be entered the names
and addresses of the holders of Special Warrants and particulars of the
Special Warrants held by them; and

	 	(ii)	 	a register of transfers in which all transfers of Special
Warrants and the date and other particulars of each transfer will be
entered.

	 	(b)	 	Transfer: Subject to Section 3.3, no transfer of any Fully Registered
Special Warrant Certificates will be valid unless entered on the register of transfers
referred to in Section 3.1(a) hereof, or on any branch register maintained pursuant to
Section 3.4(e) hereof, upon surrender to the Trustee of the Special Warrant Certificate
representing such Special Warrant, with a properly completed transfer form in
substantially the form attached to the Special Warrant Certificate executed by the
registered holder or the executors, administrators or other legal representatives
thereof or the attorney thereof duly appointed by an instrument in writing in form and
executed in a manner satisfactory to the Trustee, acting reasonably, and, upon
compliance with such requirements and such other reasonable requirements as the Trustee
may prescribe, such transfer will be duly noted on one of such registers by the
Trustee.

3.2 Registration and Transfer of Global Special Warrant Certificates

	 	(a)	 	Register: With respect to Special Warrants issuable in whole or in
part as one or more Global Special Warrant Certificates, the Company shall cause to be
kept by and at the principal offices of the Trustee in Vancouver, British Columbia a
register in which shall be entered the name and address of the holder of each such
Global Special Warrant Certificate (being the Depository, or its nominee, for such
Global Special Warrant Certificate) as holder thereof and particulars of the Global
Special Warrant Certificate held by it, and of all transfers thereof. If any Special
Warrants are at any time not represented by a Global Special Warrant Certificate,
the provisions of Section 3.1 shall govern with respect to registrations and
transfers of such Special Warrants.

 

15

 

	 	(b)	 	Transfer: Notwithstanding any other provision of this Indenture, a
Global Special Warrant Certificate may not be transferred by the registered holder
thereof and accordingly, no definitive certificates shall be issued to Beneficial
Holders except in the following circumstances or as otherwise specified in a resolution
of the directors of the Company or supplemental indenture relating to the Special
Warrants:

	 	(i)	 	Global Special Warrant Certificates may be transferred by
a Depository to a nominee of such Depository or by a nominee of a Depository
to such Depository or to another nominee of such Depository or by a
Depository or its nominee to a successor Depository or its nominee;

	 	(ii)	 	Global Special Warrant Certificates may be transferred at
any time after the Depository for such Global Special Warrant Certificates
(a) has notified the Trustee, or the Company has notified the Trustee, that
it is unwilling or unable to continue as Depository for such Global Warrant
Certificates, or (b) ceases to be eligible to be a Depository, provided that
at the time of such transfer the Company has not appointed a successor
Depository for such Global Special Warrant Certificates;

	 	(iii)	 	Global Special Warrant Certificates may be transferred
at any time after the Company has determined, in its sole discretion, to
terminate the Book-Entry Only System in respect of such Global Special
Warrant Certificates and has communicated such determination to the Trustee
in writing;

	 	(iv)	 	Global Special Warrant Certificates may be transferred if
required by applicable law; or

	 	(v)	 	Global Special Warrant Certificates may be transferred if
the Book-Entry Only System ceases to exist.

	 	(c)	 	Certain Matters in respect of the Book-Entry Only System: With respect
to the Global Special Warrant Certificates, unless and until definitive certificates
have been issued to Beneficial Holders pursuant to subsection 3.2(b):

	 	(i)	 	the Company and the Trustee may deal with the Depository
for all purposes as the sole holder of such Special Warrants and the
authorized representative of the Beneficial Holders;

	 	(ii)	 	the rights of the Beneficial Holders shall be exercised
only through the Depository and shall be limited to those established by law
and agreements between such Beneficial Holders and the Depository or the
Participants;

	 	(iii)	 	the Depository will make book entry transfers among the
Participants;

 

16

 

	 	(iv)	 	whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Special Warrantholders
evidencing a specified percentage of the outstanding Special Warrants, the
Depository shall be deemed to be counted in that percentage only to the
extent that it has received instructions to such effect from the Beneficial
Holders or the Participant, and has delivered such instructions to the
Trustee; and

	 	(v)	 	upon surrender by the Depository of the certificate(s)
representing the Global Special Warrant Certificates and receipt of new
registration instructions from the Depository, the Trustee shall deliver
Fully Registered Warrant Certificates for such Special Warrants to the
holders thereof in accordance with the new registration instructions and
thereafter, the registration and transfer of such Special Warrants will be
governed by Section 3.1 and the remaining Sections of this Article 3.

3.3 Certain Transfers by Persons in the United States

	 	(a)	 	If the Special Warrant Certificate surrendered pursuant to Section 3.1(b) or
Section 3.2(b) hereof bears the legend set forth in Section 2.3(d) hereof and:

	 	(i)	 	the holder thereof is selling Special Warrants
represented thereby outside the United States in compliance with the
requirements of Rule 904 of Regulation S and in compliance with applicable
Canadian laws and regulations, and provided that the Company is a “foreign
issuer” within the meaning of Regulation S at the time of sale, the Trustee
will not register such transfer unless the holder thereof delivers to the
Trustee a declaration in the form set forth as Schedule B hereof, together
with such additional information as the Trustee may reasonably request, in
which case the Special Warrant Certificate representing the Special Warrants
transferred to the transferee will only bear the legend set forth in
Section 2.3(c) hereof; or

	 	(ii)	 	the holder thereof is selling Special Warrants
represented thereby in compliance with the requirements of Rule 144 under
the U.S. Securities Act, the legend set forth in Section 2.3(d) hereof may
be removed by delivery to the Trustee and the Company of an opinion of
counsel, of recognized standing reasonably satisfactory to the Company, that
such legend is no longer required under applicable requirements of the U.S.
Securities Act or state securities laws.

 

17

 

3.4 Other Registration and Transfer Matters

	 	(a)	 	Register of Transfers: The transferee of any Special Warrant will,
after surrender to the Trustee of the Special Warrant Certificate representing such
Special Warrant as required by Section 3.1(b) hereof and upon compliance with all other
conditions in respect thereof required by this Indenture or by law, be entitled to be
entered on the register of holders referred to in Section 3.1(a) hereof, or on any
branch register of holders maintained pursuant to Section 3.4(e) hereof, as the
owner of such Special Warrant free from all equities or rights of set-off or
counterclaim between the Company and the transferor or any previous holder of such
Special Warrant, except in respect of equities of which the Company is required to
take notice by statute or by order of a court of competent jurisdiction.

	 	(b)	 	Refusal of Registration: The Company will be entitled, and may direct
the Trustee, to refuse to recognize any transfer, or enter the name of any transferee,
of any Special Warrant on the registers referred to in Section 3.1(a) hereof or on any
branch register maintained pursuant to Section 3.4(e) hereof if such transfer would
constitute a violation of the securities laws of any jurisdiction or the instruments,
rules, regulations or policies of any regulatory authority (including the TSX or any
other stock exchange or securities market upon which the Common Shares are listed and
posted for trading or which an application has been made to list the Common Shares)
having jurisdiction.

	 	(c)	 	No Notice of Trusts: Subject to applicable law, neither the Company
nor the Trustee will be bound to take notice of or see to the execution of any trust,
whether express, implied or constructive, in respect of any Special Warrant, and may
transfer any Special Warrant on the direction of the person registered as the holder
thereof, whether named as trustee or otherwise, as though that person were the
beneficial owner thereof.

	 	(d)	 	Inspection: The registers referred to in Section 3.1(a) hereof, and
any branch register maintained pursuant to Section 3.4(e) hereof, will be open for
inspection by the Company, the Agent and any Special Warrantholder during the normal
business hours of the Trustee. The Trustee will from time to time when requested to do
so in writing by the Company or any Special Warrantholder (upon payment of the
reasonable charges of the Trustee) furnish the Company or such Special Warrantholder
with a list of the names and addresses of holders of Special Warrants entered on such
registers and showing the number of Special Warrants held by each such holder.

	 	(e)	 	Location of Registers: The Company may at any time and from time to
time change the place at which the registers referred to in Section 3.1(a) hereof are
kept, cause branch registers of holders or transfers to be kept, in each case subject
to the approval of the Trustee, at other places and close such branch registers or
change the place at which such branch registers are kept. Notice of all such changes or
closures will be given by the Company to the Trustee, the Agent and to the holders of
Special Warrants in accordance with Section 11.2 hereof.

 

18

 

3.5 Exchange of Special Warrant Certificates

	 	(a)	 	Exchange: One or more Special Warrant Certificates (other than Global
Special Warrant Certificates) may at any time prior to the Time of Expiry, on
compliance with the reasonable requirements of the Trustee, be exchanged for one or
more Special Warrant Certificates of different denominations representing in the
aggregate the same number of Special Warrants as the Special Warrant Certificate or
Special Warrant Certificates being exchanged.

	 	(b)	 	Place of Exchange: Special Warrant Certificates may be exchanged only
at the principal offices of the Trustee in Vancouver, British Columbia or Toronto,
Ontario or at any other place designated by the Company with the approval of the
Trustee.

	 	(c)	 	Cancellation: Any Special Warrant Certificate tendered for exchange
pursuant to this Section 3.5 will be surrendered to the Trustee and cancelled.

	 	(d)	 	Execution: The Company will sign all Special Warrant Certificates in
accordance with Section 2.4 hereof necessary to carry out exchanges pursuant to this
Section 3.5 and such Special Warrant Certificates will be certified by the Trustee.

	 	(e)	 	Special Warrant Certificates: Special Warrant Certificates exchanged
for Special Warrant Certificates that bear any of the legends set forth in Section 2.3
hereof will bear the same legends.

3.6 No Charges for Transfer or Exchange

No charge will be levied on a presenter of a Special Warrant Certificate pursuant to this
Indenture for the transfer of any Special Warrant or the exchange of any Special Warrant
Certificate. All costs of such transfer or exchange will be borne by the Company.

3.7 Ownership of Special Warrants

	 	(a)	 	Owner: Except with respect to Global Special Warrant Certificates, the
Company and the Trustee may deem and treat the person in whose name any Special Warrant
is registered as the absolute owner of such Special Warrant for all purposes, and such
person will for all purposes of this Indenture be and be deemed to be the absolute
owner thereof, and the Company and the Trustee will not be affected by any notice or
knowledge to the contrary, except as may otherwise be set forth herein or as required
by statute or by order of a court of competent jurisdiction.

	 	(b)	 	Rights of Registered Holder: The registered holder of any Special
Warrant will be entitled to the rights represented thereby free from all equities and
rights of set-off or counterclaim between the Company and the original or any
intermediate holder thereof and all persons may act accordingly, and the issue and
delivery to any such registered holder of the Underlying Securities issuable pursuant
thereto will be a good discharge to the Company and the Trustee therefor, and neither
the Company nor the Trustee will be bound to inquire into the title of any such
registered holder.

 

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ARTICLE 4

CONVERSION OF SPECIAL WARRANTS

4.1 Conversion by Holder

	 	(a)	 	Conversion: Subject to the limitation set forth in Section 4.1(b)
hereof and Section 4.7 hereof, the holder of any Special Warrant may at any time prior
to the Time of Expiry exercise the right thereby conferred to be issued Underlying
Securities by surrendering to the Trustee at the principal office of the Trustee in
Vancouver, British Columbia or Toronto, Ontario, or to any other person or at any other
place designated by the Company with the approval of the Trustee, during normal
business hours on a Business Day at such place, the Special Warrant Certificate
representing such Special Warrant, with a completed and executed notice of conversion
substantially in the form attached to such Special Warrant Certificate.

	 	(b)	 	Surrender: Any Special Warrant Certificate with a completed and
executed notice of conversion referred to in Section 4.1(a) hereof will be deemed to
have been surrendered to the Trustee only on personal delivery thereof to, or, if sent
by mail or other means of transmission, on actual receipt thereof by, the Trustee or
one of the other persons at the office or one of the other places specified in
Section 4.1(a) hereof.

	 	(c)	 	Notice of Conversion: Any notice of conversion referred to in
Section 4.1(a) hereof must be signed by the Special Warrantholder, or the executors,
administrators or other legal representatives thereof or the attorney thereof duly
appointed by an instrument in writing in form and executed in a manner satisfactory to
the Trustee, acting reasonably, and, if any Underlying Securities thereby issuable are
to be issued to a person or persons other than the Special Warrantholder, must specify
the name or names and the address or addresses of each such person or persons and the
number of Underlying Securities to be issued to each such person if more than one is so
specified (and, in this case, the signature appearing on the notice of conversion must
be Signature Guaranteed by a Schedule I Canadian chartered bank or a member of a
Medallion Guarantee program, with the stamp affixed thereon bearing the actual words
“Signature Guarantee” or “Signature Medallion Guaranteed” and otherwise be in
accordance with industry standards).

	 	(d)	 	Conversion of Less than All: The holder of any Special Warrants may
exercise his right to acquire a number of Underlying Securities less than the aggregate
number which the holder is entitled to acquire pursuant to the surrendered Special
Warrant Certificate(s). In the event of any conversion of a number of Special Warrants
less than the number which the holder is entitled to convert, the holder of the Special
Warrants upon such conversion will, in addition, be entitled to receive, without charge
therefor, a new Special Warrant Certificate(s) in respect of the balance of the Special
Warrants represented by the surrendered Special Warrant Certificate(s) and which were
not then converted, and with respect to a
Global Special Warrant Certificate, the Depository shall make notations on the
Global Special Warrant Certificate of the Special Warrants so converted.

 

20

 

4.2 Conversion by Trustee

	 	(a)	 	Conversion by Trustee: If any Special Warrant has not been converted
pursuant to Section 4.1 hereof prior to the Qualification Date, such Special Warrant
will be converted by the Trustee for and on behalf of the holder thereof and, without
any action on the part of the holder thereof (including the surrender of any Special
Warrant Certificate), and the Special Warrants will be deemed to have been converted
into Underlying Securities on the first Business Day following the Qualification Date.

	 	(b)	 	Rights on Conversion by Trustee: The holder of any Special Warrant
converted pursuant to Section 4.2(a) hereof will have no further rights as a Special
Warrantholder except to receive the certificates representing the Underlying Securities
issued upon the conversion thereof to such holder in accordance with Sections 4.3 and
4.4 hereof.

	 	(c)	 	Direction of Trustee: By taking delivery of a Special Warrant
Certificate, the holder of the Special Warrants represented thereby is deemed to have
irrevocably authorized and directed the Trustee to convert such Special Warrants
pursuant to, and in accordance with, Section 4.2(a) hereof.

4.3 Effect of Conversion

	 	(a)	 	Effect of Conversion: Upon the conversion of any Special Warrants in
accordance with Section 4.1 or Section 4.2 hereof, the Underlying Securities thereby
issuable will be deemed to have been issued, and the person or persons to whom such
Underlying Securities are to be issued will be deemed to have become the holder or
holders of record thereof, on the Conversion Date, unless the transfer registers
maintained by or on behalf of the Company for the Common Shares are closed on that
date, in which case such Underlying Securities will be deemed to have been issued, and
such person or persons will be deemed to have become the holder or holders of record
thereof, on the date on which such transfer registers are reopened, but such Underlying
Securities will be issued on the basis of the number of Underlying Securities to which
such person or persons were entitled on the Conversion Date. The certificates
representing the Underlying Securities which are issued to a holder of Special Warrants
upon the conversion of Special Warrants by the Trustee pursuant to Section 4.2(a)
hereof will be issued in the name of such holder.

 

21

 

	 	(b)	 	Certificates and Customer Confirmations: Within three Business Days
after the Conversion Date:

	 	(i)	 	the Trustee will mail to the person or persons in whose
name or names the Underlying Securities thereby issued have been issued, at
the respective addresses thereof, or, if so specified, deliver to such
person or persons at
the place where a Special Warrant Certificate representing Special Warrants
was surrendered, certificates representing the Underlying Securities so
issued; and

	 	(ii)	 	in the case of the conversion of Special Warrants under a
Global Special Warrant Certificate, the Company shall cause the Depository
to be entered and issued, as the case may be, to the person or person in
whose name or names such Underlying Securities have been issued, a
Book-Entry Only System customer confirmation.

	 	(c)	 	Issue to Other than Holder: If any Underlying Securities issuable
pursuant to any Special Warrants are to be issued to a person or persons other than the
Special Warrantholder, the Special Warrantholder must pay to the Company an amount
equal to all exigible transfer taxes or other government charges, and neither the
Company nor the Trustee will be required to issue or deliver any certificates
representing any such Underlying Securities unless or until such amount has been so
paid or the Special Warrantholder has established to the satisfaction of the Company in
its discretion, acting reasonably, that such taxes and charges have been paid or that
no such taxes or charges are owing.

4.4 No Fractional Common Shares or Warrants

	 	(a)	 	The Company will not, whether pursuant to an adjustment in accordance with
Section 4.7 hereof or under any other circumstance, be obligated after the aggregation
of the number of Common Shares and Warrants to be issued to each holder of Special
Warrants to issue any fraction of a Common Share or Warrant on the conversion of
Special Warrants. If a holder of a Special Warrant would otherwise be entitled to a
fractional Common Share or Warrant pursuant to the conversion of the Special Warrants,
the number of Common Shares and Warrants to be issued will be rounded down to the next
whole number, if the holder is entitled to receive less than 0.5 of a Common Share or
Warrant and rounded up to the next whole number, if the holder is entitled to receive
0.5 or more of a Common Share or Warrant, and the holder of such Special Warrants will
not be entitled to any cash compensation in respect of such fraction.

	 	(b)	 	For the purpose of Section 4.4(a), in the case of a holder of Special Warrants
exercising Special Warrants represented by more than one Special Warrant Certificate,
the fractional interest of such holder will be the fractional interest of a Common
Share or Warrant such Special Warrantholder would otherwise be entitled to receive if
the Special Warrants being exercised were represented by one Special Warrant
Certificate.

 

22

 

4.5 Recording

The Trustee will record the particulars of each Special Warrant converted, which particulars
will include the name and address of each person to whom Underlying Securities are thereby issued,
the number of Underlying Securities so issued and the Conversion Date in
respect thereof. Within three Business Days after each Conversion Date, the Trustee will
provide such particulars in writing to the Company.

4.6 Securities Restrictions

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

	 	(b)	 	Canadian Legends: Certificates representing Underlying Securities
issued upon the conversion of Special Warrants on or prior to the date that is four
months and a day following the date of issuance of the Special Warrants, and without
the British Columbia Securities Commission, as the principal regulator under National
Policy 11-202 and the Passport System, having issued a receipt for the Final
Prospectus, will bear the legend provided in subsection 4.6(d) and the following
legend:

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

And the Common Shares forming part of the Underlying Securities shall also bear the
following legend:

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE LISTED ON THE
TORONTO STOCK EXCHANGE BUT CANNOT BE TRADED THROUGH THE FACILITIES
OF THE EXCHANGE SINCE THEY ARE NOT FREELY TRANSFERABLE AND
CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT
“GOOD DELIVERY” IN
SETTLEMENT OF TRANSACTIONS ON THE TORONTO STOCK EXCHANGE”

 

23

 

	 	(c)	 	U.S. Legends: If the Special Warrant Certificate representing the
Special Warrants converted in accordance with this Article 4 bears the legend set forth
in Section 2.3(d) hereof, then any certificate representing Underlying Securities
issued upon the conversion thereof, will bear the following legend:

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

provided that, if such Common Shares or Warrants are being sold outside the United
States in compliance with the requirements of Rule 904 of Regulation S and in
compliance with Canadian local laws and regulations, and provided that the Company
is a “foreign issuer” within the meaning of Regulation S at the time of sale, any
such legend may be removed by providing a declaration to the registrar and transfer
agent for the Common Shares and Warrants in the form set forth in Schedule B hereof,
together with such additional information as the registrar and transfer agent may
request (and the Company hereby covenants and agrees to use reasonable commercial
efforts to cause the registrar and transfer agent for the Underlying Securities to
deliver certificates representing Underlying Securities bearing no such legend
within three Business Days of the date of delivery of such a declaration), and
provided, further, that, if any such Common
Shares or Warrants are being sold in the United States pursuant to Rule 144 under
the U.S. Securities Act, the legend may be removed by delivery to the Company of an
opinion of counsel, of recognized standing reasonably satisfactory to the Company,
that such legend is no longer required under applicable requirements of the U.S.
Securities Act or state securities laws.

 

24

 

	 	(d)	 	Book-Entry Only System Legend: Certificates representing Underlying
Securities issued upon the conversion of Special Warrants where such Special Warrants
were previously held pursuant to a Global Special Warrant Certificate, as well as all
certificates issued in exchange for or in substitution of such certificates
representing Underlying Securities, will, if directed by the Company, bear the
following legend:

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

4.7 Adjustments

	 	(a)	 	Adjustment: The rights of the holder of any Special Warrant, including
the number of Underlying Securities issuable upon the conversion or deemed conversion
of such Special Warrant, will be adjusted from time to time in the events and in the
manner provided in, and in accordance with the provisions of, this section.

 

25

 

	 	(b)	 	Triggering Events: The Share Rate in effect at any date will be subject
to adjustment from time to time as follows:

	 	(i)	 	Share Reorganization: If, and whenever at any
time during the Adjustment Period, the Company will (A) subdivide, redivide
or change the outstanding Common Shares into a greater number of shares, (B)
reduce, consolidate or combine the outstanding Common Shares into a lesser number of
 shares, or (C) issue Common Shares (or securities convertible or
exchangeable into Common Shares) to all or substantially all of the holders
of Common Shares by way of a stock dividend or other distribution, then, in
each such event, the Share Rate will, on the record date for such event or,
if no record date is fixed, the effective date of such event, be adjusted so
that it will equal the rate determined by multiplying the Share Rate in
effect immediately prior to such date by a fraction, of which the
denominator will be the total number of Common Shares outstanding on such
date before giving effect to such event, and of which the numerator will be
the total number of Common Shares outstanding on such date after giving
effect to such event (including Common Shares into which such convertible or
exchangeable securities by way of stock dividend may be issued). Such
adjustment will be made successively whenever any such event will occur. Any
such issue of Common Shares by way of a stock dividend or other distribution
will be deemed to have been made on the record date for such stock dividend
or other distribution for the purpose of calculating the number of
outstanding Common Shares under Sections 4.7(b)(i) and (ii) hereof.

	 	(ii)	 	Rights Offering: If, and whenever at any time
during the Adjustment Period, the Company will fix a record date for the
issue of rights, options or warrants to all or substantially all of the
holders of Common Shares entitling the holders thereof, within a period
expiring not more than 45 days after the record date for such issue, to
subscribe for or purchase Common Shares (or securities convertible into or
exchangeable for Common Shares) at a price per share (or having a conversion
or exchange price per share) less than 95% of the Current Market Price on
the earlier of such record date and the date on which the Company announces
its intention to make such issue, then, in each such case, the Share Rate
will be adjusted immediately after such record date so that it will equal
the rate determined by multiplying the Share Rate in effect on such record
date by a fraction, of which the denominator will be the total number of
Common Shares outstanding on such record date plus the number arrived at
when (A) either the product of (1) the number of Common Shares offered for
subscription and (2) the price at which those Common Shares are offered, or
the product of (3) the conversion price thereof and (4) the maximum number
of Common Shares for or into which the convertible or exchangeable
securities so offered pursuant to the rights offering may be converted or
exchanged, as the case may be, is divided by (B) the Current Market Price on
the record date, and of which the numerator will be the total number of
Common Shares outstanding on such record date plus the total number of
additional Common Shares so offered for subscription or purchase (or into or
for which the convertible or exchangeable securities so offered are
convertible or exchangeable). Any Common Shares owned by or held for the
account of the Company or any Subsidiary of the Company will be deemed not

 

26

 

 to be outstanding for the purpose of any
such computation. Such adjustment will be made successively whenever such a
record date is fixed, provided that if two or more such record dates or
record dates referred to in Section 4.7(b)(iii) hereof are fixed within a
period of 25 Trading Days, such adjustment will be made successively as if
each of such record dates occurred on the earliest of such record dates. To
the extent that any such rights, options or warrants are not exercised prior
to the expiration thereof, the Share Rate will then be readjusted to the
Share Rate which would then be in effect based upon the number of Common
Shares (or securities convertible into or exchangeable for Common Shares)
actually issued upon the exercise of such rights, options or warrants, as
the case may be.

	 	(iii)	 	Distribution: If, and whenever at any time
during the Adjustment Period, the Company will fix a record date for the
making of a distribution to all or substantially all of the holders of
Common Shares of (A) shares of any class other than Common Shares whether of
the Company or any other corporation, (B) rights, options or warrants to
acquire Common Shares or securities exchangeable for or convertible into
Common Shares or property or other assets of the Company (other than rights,
options or warrants exercisable by the holders thereof within a period
expiring not more than 45 days after the record date for such issue or
distribution to acquire Common Shares or securities exchangeable for or
convertible into Common Shares at a price per share, or at an exchange or
conversion price per share in the case of securities exchangeable for or
convertible into Common Shares, of at least 95% of the Current Market Price
of the Common Shares on such record date), (C) evidences of indebtedness, or
(D) cash, securities or other property or assets (other than cash dividends
paid in the ordinary course), then, in each such case, the Share Rate will
be adjusted immediately after such record date so that it will equal the
rate determined by multiplying the Share Rate in effect on such record date
by a fraction, of which the denominator will be the total number of Common
Shares outstanding on such record date multiplied by the Current Market
Price on the earlier of such record date and the date on which the Company
announces its intention to make such distribution, less the aggregate fair
market value (as determined by the directors, acting reasonably, at the time
such distribution is authorized) of such shares or rights, options or
warrants or evidences of indebtedness or cash, securities or other property
or assets so distributed, and of which the numerator will be the total
number of Common Shares outstanding on such record date multiplied by such
Current Market Price. Any Common Shares owned by or held for the account of
the Company or any Subsidiary of the Company will be deemed not to be
outstanding for the purpose of any such computation. Such adjustment will be
made successively whenever such a record date is fixed, provided that if two
or more such record dates or record dates referred to in Section 4.7(b)(ii)
hereof are fixed within a period of 25 Trading Days, such adjustment will be

 

27

 

made successively as if each of such record dates occurred on the earliest
of such record dates. To the extent that any such rights, options or warrants so distributed are
not exercised prior to the expiration thereof, the Share Rate will then be
readjusted to the Share Rate which would then be in effect based upon such
rights, options or warrants or evidences of indebtedness or cash, securities
or other property or assets actually distributed or based upon the number or
amount of securities or the property or assets actually issued or
distributed upon the exercise of such rights, options or warrants, as the
case may be.

	 	(c)	 	Reclassifications: If and whenever at any time during the Adjustment
Period, there is (A) any reclassification of the outstanding Common Shares, any change
of the Common Shares into other shares or any other reorganization of the Company
(other than as described in Section 4.7(b) hereof), (B) any consolidation,
amalgamation, arrangement, merger or other form of business combination of the Company
with or into any other corporation, trust, partnership or other entity resulting in any
reclassification of the outstanding Common Shares, any change of the Common Shares into
other shares or any other reorganization of the Company, or (C) any sale, conveyance,
lease, exchange or transfer of the undertaking or assets of the Company as an entirety
or substantially as an entirety to another corporation or entity, then, in each such
event, each holder of any Special Warrant which is thereafter exchanged will be
entitled to receive, and will accept, in lieu of the number of Underlying Securities to
which such holder was theretofore entitled upon such exchange, the kind and number or
amount of shares or other securities or property which such holder would have been
entitled to receive as a result of such event if, on the effective date of such event
in (A), (B) or (C), such holder had been the registered holder of the number of
Underlying Securities to which such holder was theretofore entitled upon such
conversion or exchange. If necessary as a result of any such event, appropriate
adjustments will be made in the application of the provisions set forth in this
Section 4.7(c) with respect to the rights and interests thereafter of the holders of
Special Warrants to the end that the provisions set forth in this Section 4.7(c) will
thereafter correspondingly be made applicable, as nearly as may reasonably be, in the
relation to any shares or other securities or property thereafter deliverable upon the
exercise of any Special Warrant. Any such adjustments will be set forth in an indenture
supplemental hereto with the successor to the Company or such corporation or other
entity, as applicable, contemporaneously with such reclassification, consolidation,
amalgamation, arrangement, merger, other form of business combination or other event
and which supplemental indenture will be approved by the directors, acting reasonably,
and will for all purposes be conclusively deemed to be an appropriate adjustment and
such supplemental indenture will provide for adjustments which will be as nearly
equivalent as may be practicable to the adjustments provided in this Section 4.7 and
which will apply to successive reclassifications, reorganizations, amalgamations,
mergers, other forms of business combination or other events.

 

28

 

	 	(d)	 	Deferral of Adjustment: In any case in which this Section 4.7 will
require that an adjustment will become effective immediately after a record date for or
an effective date of an event referred to herein, the Company may defer, until the
occurrence and consummation of such event, issuing to the holder of any Special
Warrant exchanged after such record date or effective date and before the occurrence
and consummation of such event the additional Common Shares or other securities or
property issuable upon such exchange by reason of the adjustment required by such
event, provided, however, that the Company will deliver to such holder an
appropriate instrument evidencing such holder’s right to receive such additional
Common Shares or other securities or property upon the occurrence and consummation
of such event and the right to receive any dividend or other distribution in respect
of such additional Common Shares or other securities or property declared in favour
of the holders of record of Common Shares or of such other securities or property on
or after the Conversion Date or such later date as such holder would, but for the
provisions of this subsection, have become the holder of record of such additional
Common Shares or of such other securities or property pursuant to Section 4.3(a)
hereof.

	 	(e)	 	Adjustments Cumulative: The adjustments provided for in this
Section 4.7 (in both the number of Common Shares and of securities to be received on an
exercise of the Special Warrants) are cumulative, will, in the case of any adjustment
to the Share Rate, be computed to the nearest one one-hundredth of a Common Share and
will apply (without duplication) to successive subdivisions, consolidations,
distributions, issues or other events resulting in any adjustment under the provisions
of this Section 4.7, provided that, notwithstanding any other provision of this
section, no adjustment of the Share Rate will be required (i) unless such adjustment
would require an increase or decrease of at least 1% in the Share Rate then in effect
(provided, however, that any adjustment which by reason of this Section 4.7(e) is not
required to be made will be carried forward and taken into account in any subsequent
adjustment), (ii) if, in respect of any event described in this Section 4.7 (other than
the events referred to in clauses (A) and (B) of Section 4.7(b)(i) hereof and in
Section 4.7(c) hereof), the holders of Special Warrants are entitled to participate in
such event, or are entitled to participate within 45 days in a comparable event, on the
same terms, with the necessary changes, as if the Special Warrants had been exercised
prior to or on the effective date of or record date for such event, (iii) in respect of
any Common Shares issuable or issued pursuant to any stock option or any stock option
or stock purchase plan in force from time to time for directors, officers or employees
of the Company or of Subsidiaries of the Company, or (iv) in respect of any Underlying
Securities issuable or issued pursuant to the conversion of Special Warrants. After
any adjustment pursuant to this Section 4.7, the term “Common Shares” where used in
this Indenture will be interpreted to mean securities of any class or classes which, as
a result of such adjustment and all prior adjustments pursuant to this Section, the
Special Warrantholder is entitled to receive upon the exercise of its Special Warrant,
and the number of Underlying Securities indicated by any exercise made pursuant to a
Special Warrant will be interpreted to mean the number of Common Shares or other
property or securities a Special Warrantholder is entitled to receive, as a result of
such adjustment and all prior adjustments pursuant to this Section 4.7, upon the full exercise of a Special
Warrant;

 

29

 

	 	(f)	 	Resolution of Questions: If any question arises with respect to the
adjustments provided in this Section 4.7, such question will be conclusively determined
by the Company’s auditors or, if they are unable or unwilling to act, by such firm of
chartered accountants as is appointed by the Company and is acceptable to the Trustee.
Such accountants will have access to all necessary records of the Company and such
determination will be binding upon the Company, the Trustee and the Special
Warrantholders.

	 	(g)	 	Other Actions: If, and whenever at any time during the Adjustment
Period, the Company will take any action affecting or relating to the Common Shares,
other than any action described in this Section 4.7, which in the opinion of the
directors would prejudicially affect the rights of holders of Special Warrants, the
Share Rate will, subject to receipt of any applicable regulatory approvals, be adjusted
by the directors in such manner, if any, and at such time, as the directors may
reasonably determine to be equitable in the circumstances to such holders.

	 	(h)	 	Additional Actions: As a condition precedent to the taking of any
action which would require an adjustment in any of the rights under the Special
Warrants, the Company will take any action which may, in the opinion of counsel to the
Company, be necessary in order that the Company, or any successor to the Company or
successor to the undertaking or assets of the Company, will have unissued and reserved
in its authorized capital and will be obligated to and may validly and legally issue
all the Common Shares or other securities or property which the holders of Special
Warrants would be entitled to receive thereafter on the exercise thereof in accordance
with the provisions hereof.

	 	(i)	 	Notice to Trustee: The Company covenants with the Trustee that at
least ten Business Days before the earlier of the effective date of or record date for
any event referred to in this Section 4.7 that requires or might require an adjustment
in any of the rights under the Special Warrants, the Company will:

	 	(i)	 	file with the Trustee a Certificate of the Company
specifying the particulars of such event and, to the extent determinable,
any adjustment required and the computation of such adjustment; and

	 	(ii)	 	give notice to the Special Warrantholders of the
particulars of such event and, to the extent determinable, any adjustment
required, in accordance with Section 11.2(a) hereof.

Such notice will set forth such particulars as have been determined at the date
such notice is given. If any adjustment for which such notice is given is not then
determinable, promptly after such adjustment is determinable the Company will:

	 	(iii)	 	file with the Trustee a Certificate of the Company
showing the computation of such adjustment; and

	 	(iv)	 	give notice to the Special Warrantholders of such
adjustment in accordance with Section 11.2(a) hereof.

 

30

 

Where a notice pursuant to this Section 4.7(i) has been given, the Trustee will be
entitled to act and rely on any adjustment calculation of the Company or of the
Company’s auditors.

	 	(j)	 	Duty of Trustee: Subject to Section 10.2(a) hereof, the Trustee will
not:

	 	(i)	 	at any time be under any duty or responsibility to any
Special Warrantholder to determine whether any facts exist which may require
any adjustment in the Share Rate, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method employed in
making such adjustment;

	 	(ii)	 	be accountable with respect to the validity or value (or
the kind or amount) of any Common Shares, Warrants or of any shares or other
securities or property which may at any time be issued or delivered upon the
exercise of any Special Warrant; or

	 	(iii)	 	be responsible for any failure of the Company to make
any cash payment or to issue, transfer or deliver Underlying Securities,
share certificates or warrant certificates upon the surrender of any Special
Warrants for the purpose of exercise, or to comply with any of the covenants
contained in this Section 4.7.

ARTICLE 5

COVENANTS

5.1 General Covenants

The Company represents, warrants and covenants with the Trustee that so long as any Special
Warrants remain outstanding:

	 	(a)	 	Authorization and Issue of Special Warrants: The Company is duly
authorized to create and issue the Special Warrants and, when issued and countersigned
as herein provided, they will be valid and enforceable against the Company in
accordance with the terms herein.

	 	(b)	 	Maintenance: The Company will use its commercially reasonable efforts
to at all times maintain its corporate existence and keep or cause to be kept proper
books of account in accordance with generally accepted accounting principles in the
United States or Canada or in accordance with international financial reporting
standards.

	 	(c)	 	Reservation of Common Shares: The Company will reserve and
conditionally allot and keep available sufficient unissued Common Shares to enable it
to satisfy
its obligations on the conversion of the Special Warrants including the issuance of
Common Shares underlying the Warrants.

 

31

 

	 	(d)	 	Issue of Underlying Securities: The Company will cause the Underlying
Securities from time to time issued pursuant to the conversion of the Special Warrants,
and the certificates representing such Underlying Securities, to be issued and
delivered in accordance with the provisions of this Indenture and the terms hereof and
all Common Shares and Warrants that are issued on the conversion of the Special
Warrants will be fully paid and non-assessable shares and warrants respectively.

	 	(e)	 	Open Registers: The Company will cause the Trustee to keep open the
registers of holders and registers of transfers referred to in Section 3.1 hereof as
required by such Section and will not take any action or omit to take any action which
would have the effect of preventing the Special Warrantholders from converting any of
the Special Warrants or receiving any of the Underlying Securities issuable upon such
conversion.

	 	(f)	 	Filings: The Company will make all requisite filings, including filings
with appropriate securities commissions and stock exchanges, in connection with the
conversion of the Special Warrants and the issue of the Underlying Securities in
connection therewith.

	 	(g)	 	Notice of Receipt: Upon the issuance of a receipt therefor, the Company
will send or cause to be sent to each Special Warrantholder a commercial copy of the
Final Prospectus and written notice specifying the date that the Special Warrants
expire and such notice will be sent within one Business Day after the British Columbia
Securities Commission, as the principal regulator under National Policy 11-202 and the
Passport System, issues the Final Receipt.

	 	(h)	 	General Performance: The Company, using reasonable commercial efforts,
will well and truly perform and carry out all acts and things to be done by it as
provided in this Indenture or in order to consummate the transactions contemplated
hereby and it will do, execute, acknowledge and deliver or cause to be done, executed,
acknowledged and delivered, all other acts, deeds and assurances in law as the Trustee
may reasonably require for the better accomplishing and effecting of the intentions and
provisions of this Indenture, including without limitation, to execute and deliver the
Warrant Indenture as of the date hereof.

	 	(i)	 	Reporting Issuer Status: The Company will use its commercially
reasonable efforts to maintain its status as a reporting issuer in each of the
Qualifying Jurisdictions and not be in default in any material respect of the
applicable requirements of the applicable securities laws of each of the Qualifying
Jurisdictions.

 

32

 

	 	(j)	 	Listing or Quotation of Common Shares: The Company will use
commercially reasonable efforts to maintain the listing of its Common Shares on TSX and
the quotation of its Common Shares on the NASDAQ Stock Market for a period of 18 months
from the date hereof.

	 	(k)	 	Final Prospectus: The Company will use commercially reasonable efforts
to file and cause the Ontario Securities Commission, and the British Columbia
Securities Commission, as the principal regulator under National Policy 11-202 and the
Passport System, to issue the Final Receipt as soon as reasonably practicable.

	 	(l)	 	Disclosure Documentation: The Company will provide to Special
Warrantholders copies of all documentation required to be provided by applicable law to
registered holders of Common Shares, as if such Special Warrantholders were registered
shareholders of the Company.

	 	(m)	 	Notice of Distribution: It will give written notice to the Trustee and
each Special Warrantholder specifying the particulars of each payment or distribution
made in accordance with Section 4.7, within three Business Days of such payment or
distribution.

Any notices or deliveries required to be provided to holders of Special Warrants hereunder will be
sent by prepaid mail or delivery to each holder of Special Warrants at the address of such holder
appearing on the register of Special Warrants maintained hereunder.

5.2 Remuneration and Expenses of Trustee

The Company will pay to the Trustee from time to time reasonable remuneration for the services
of the Trustee hereunder and will, on the request of the Trustee, pay to or reimburse the Trustee
for all reasonable expenses, disbursements and advances made or incurred by the Trustee in the
administration or execution of the duties and obligations hereof (including reasonable compensation
and disbursements of its counsel and other advisers and assistants not regularly in the employment
thereof), both before any default hereunder and thereafter until all duties of the Trustee
hereunder have been finally and fully performed, except any such expense, disbursement or advance
that arises out of or results from gross negligence, fraud, wilful misconduct or bad faith of the
Trustee.

5.3 Securities Qualification Requirements

	 	(a)	 	Compliance with Laws: If, in the opinion of counsel, any instrument
(not including a prospectus, except as contemplated by Section 5.1(j) hereof) is
required to be filed with, or any permission, order or ruling is required to be
obtained from, any securities regulatory authority or any stock exchange or any other
actions are required under any applicable law of the Qualifying Jurisdictions or any
stock exchange rules before any securities or property, including Underlying Securities
which a Special Warrantholder is entitled to receive pursuant to the conversion or
deemed conversion of a Special Warrant may properly and legally be issued and delivered
upon the conversion or deemed conversion of a Special Warrant, the Company covenants
that it will use
reasonable efforts to file such instrument, obtain such permission, order or ruling
or take all such other actions at its expense, as is required or appropriate in the
circumstances.

 

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	 	(b)	 	Notice of Issue: The Company will give written notice of, and will make
all necessary filings in respect of, the issue of the Underlying Securities pursuant to
the conversion or deemed conversion of Special Warrants, in such detail as may be
required, to any stock exchange upon which the Common Shares may be listed or to the
securities regulatory authority in any of the Qualifying Jurisdictions if there is
therein any applicable law, ruling or order requiring the giving of any such notice or
the making of any such filings in order that the subsequent disposition of the
Underlying Securities so issued will not be subject to the prospectus requirements of
such applicable law, ruling or order (subject to any hold periods applicable to
Underlying Securities issued pursuant to the conversion of Special Warrants prior to
the Qualification Date).

	 	(c)	 	No U.S. Registration: The Company has no obligation to register or
qualify the Special Warrants or the Underlying Securities under the U.S. Securities Act
or the securities laws of any state of the United States.

5.4 Performance of Covenants by Trustee

If the Company fails to perform any of the obligations thereof under this Indenture, the
Trustee may notify the Special Warrantholders of such failure or may itself perform any of such
obligations capable of being performed by the Trustee, but will not be bound to do so or to notify
the Special Warrantholders that it is so doing. All amounts expended or advanced by the Trustee in
so doing will be repayable as provided in Section 5.2 hereof. No such performance, expenditure or
advance by the Trustee will relieve the Company of any default or of its continuing obligations
hereunder.

ARTICLE 6

ESCROWED FUNDS

6.1 Initial Escrowed Funds and Distribution Amounts

The Company will deposit or cause to be deposited the Initial Escrowed Funds with the Trustee
forthwith upon receipt thereof and the Trustee will accept and hold the Escrowed Funds in escrow
for and on behalf of the persons who have an interest therein pursuant hereto, will disburse and
deal with the Escrowed Funds in the manner contemplated by this Article 6 and at all times will
keep the Escrowed Funds in a segregated account, all on the terms and subject to the conditions
hereof. The Company acknowledges and agrees that it is a condition of the payment by the holders of
Special Warrants of the Issue Price therefor that the Escrowed Funds are held in escrow by the
Trustee in accordance with the provisions of this Article 6. The Trustee will retain the Escrowed
Funds for the benefit of the holders of Special Warrants and, upon the delivery of the Release and
Payment Certificate to the Trustee and satisfaction of the Release Condition, retroactively for the
benefit of the Company, in accordance with the provisions of this Article 6.

 

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6.2 Qualified Investments

	 	(a)	 	Investment Directions: The Trustee will invest the Escrowed Funds in
Qualified Investments in its name in accordance with such directions as it may receive
from the Company from time to time. Any such direction will be in writing and will
specify the Qualified Investments to be made including, if applicable, the name of the
issuer. Any such direction will be provided to the Trustee no later than 9:00 a.m.
(Toronto time) on the day on which the investment is to be made. Any such direction
received by the Trustee after 9:00 a.m. (Toronto time) or received on a non-Business
Day, will be deemed to have been given prior to 9:00 a.m. (Toronto time) the next
Business Day. Any direction from the Company for the release of the Escrowed Funds must
be received prior to 11:00 a.m. (Toronto time) on the day on which the release of
Escrowed Funds is to be made. Any such direction for the release of Escrowed Funds
received after 11:00 a.m. (Toronto time) or on a non-Business Day, will be handled on a
commercially reasonable efforts basis and may result in Escrowed Funds being released
on the next Business Day.

	 	(b)	 	Absence of Directions: In the event that the Trustee does not receive a
direction or only a partial direction to invest the Escrowed Funds in Qualified
Investments, the Trustee may hold cash balances constituting part or all of the
Escrowed Funds and may, but need not, invest same in its deposit department, the
deposit department of one of its Affiliates, or the deposit department of a Canadian
chartered bank; but the Trustee, its Affiliates or a Canadian chartered bank will not
be liable to account for any profit to any parties to this Indenture or to any other
person or entity other than at a rate, if any, established from time to time by the
Trustee, its Affiliates or a Canadian chartered bank. For the purpose of this Section,
“Affiliate” means affiliated companies within the meaning of the Business Corporations
Act (British Columbia) (“BCBCA”); and includes Canadian Imperial Bank of Commerce, CIBC
Mellon Global Securities Services Company and Mellon Bank, N.A. and each of their
affiliates within the meaning of the BCBCA.

	 	(c)	 	Accounts: The Trustee will maintain accurate books, records and
accounts of the transactions effected or controlled by the Trustee hereunder and the
receipt, investment, re-investment and disbursement of the property hereunder and will
provide to the Company records and statements thereof periodically upon written
request.

 

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6.3 Release of Escrowed Funds Upon Conversion of Special Warrants Prior to Receipt of Release and
Payment Certificate

If, at any time prior to the receipt by the Trustee of the Release and Payment Certificate, a
holder of Special Warrants elects to convert such Special Warrants into Underlying Securities
pursuant to Section 4.1 hereof, the Trustee will:

	 	(a)	 	notify the Company and the Agent in writing of the conversion of such Special
Warrants;

	 	(b)	 	subject to receiving a Certificate of the Company as to the amount of the
commission payable to the Agent in respect of the Special Warrants so converted, notify
the Company and the Agent in writing of the total amount of Escrowed Funds that will
remain in escrow after deducting an amount of the Escrowed Funds equal to, but not
exceeding, the aggregate Issue Price of the Special Warrants so converted, plus a pro
rata portion of any Earnings;

	 	(c)	 	provided that the total amount of Escrowed Funds that will remain in escrow
after such deduction will be not less than an amount equal to (i) the product obtained
by multiplying the number of unconverted Special Warrants by the Issue Price, plus (ii)
a pro rata portion of any Earnings, immediately liquidate any Qualified Investment of
the Escrowed Funds to the extent necessary to release to the Company and the Agent an
amount of the Escrowed Funds equal to, but not exceeding, the aggregate Issue Price of
the Special Warrants so converted, plus a pro rata portion of any Earnings; and

	 	(d)	 	release and deliver (i) to the Written Direction of the Company an amount of
the Escrowed Funds equal to, but not exceeding, the aggregate Issue Price of the
Special Warrants so converted, plus a pro rata portion of any Earnings, less an amount
equal to the commission payable to the Agent in respect of the converted Special
Warrants, and (ii) to, or to the written direction of the Agent, an amount of the
Escrowed Funds equal to the commission payable to the Agent in respect of the converted
Special Warrants.

6.4 Release of Escrowed Funds Upon Receipt of Release and Payment Certificate

	 	(a)	 	Delivery of Certificate: Upon satisfaction of the Release Condition on
or before the Release Deadline, the Company will forthwith cause the Release and
Payment Certificate in the form attached as Schedule C hereto, executed by the Company
and acknowledged by the Agent to be delivered to the Trustee by facsimile or courier to
the address of the Trustee set out in Section 11.1. The Trustee will be entitled to act
and rely upon, and will be protected in acting and relying upon the Release and Payment
Certificate received from the Company.

	 	(b)	 	Liquidation of Qualified Investments: Upon receipt of the Release and
Payment Certificate, the Trustee will immediately liquidate any Qualified Investment of
the Escrowed Funds, as soon as reasonably practicable given standard business
investment standards.

	 	(c)	 	Release of Escrowed Funds: The Escrowed Funds will, as soon as
reasonably practicable following receipt by the Trustee of the Release and Payment
Certificate and the liquidation of any Qualified Investment of the Escrowed Funds, be
released and delivered by the Trustee as directed in the Release and Payment
Certificate.

 

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6.5 Release of Escrowed Funds on Termination

If the Release Condition has not been satisfied at or prior to the Release Deadline, on the
Release Deadline, the Trustee will forthwith (and, in any event, no later than the Termination
Payment Time) return to each Special Warrantholder an amount equal to the Issue Price of each
Special Warrant held by such Special Warrantholder plus its pro rata share of any Earnings. For
greater certainty, a Special Warrantholder who has previously converted all or a portion of such
holder’s Special Warrants pursuant to Section 4.1(a) shall not be entitled to receive any Earnings
in respect of such Special Warrants so converted. In the event that the Escrowed Funds are not
sufficient to fund the return to each Special Warrantholder of an amount equal to the Issue Price
of each Special Warrant held by such Special Warrantholder plus its pro rata share of any Earnings
on the Release Deadline, the Company will fund any such shortfall at the time of payment of the
Escrowed Funds to the Special Warrantholders. Payment made in accordance with this Article 6 will
be made in accordance with Section 6.8 hereof and the Trustee will mail such payment to such
Special Warrantholders at their address last appearing on the register of the Special Warrants
maintained by the Trustee. All Special Warrant Certificates representing Special Warrants in
respect of which the aggregate Issue Price plus a pro rata share of any Earnings have been paid to
the holder thereof will be deemed to have been cancelled as and from the Termination Payment Time
and the Trustee will record the deemed cancellation of such Special Warrant Certificates on the
register of the Special Warrants. Upon the Written Request of the Company, the Trustee will furnish
the Company with a certificate identifying the Special Warrant Certificates deemed to have been
cancelled. All Special Warrants represented by Special Warrant Certificates which have been deemed
to have been cancelled pursuant to this Section 6.5 will be without further force and effect
whatsoever.

6.6 Direction

In order to permit the Trustee to carry out its obligations under this Article 6, the Company
hereby specifically authorizes and directs the Trustee to make any stipulated payment or to take
any stipulated action in accordance with the provisions of this Indenture.

6.7 Early Termination of any Investment of the Escrowed Funds

In making any payment pursuant to this Indenture, the Trustee has the authority to liquidate
any investments in order to make payments contemplated under this Article 6 and will not be liable
for any loss sustained in the escrow account for early termination of any investment of the
Escrowed Funds necessary to enable the Trustee to make such payment.

6.8 Method of Disbursement and Delivery

	 	(a)	 	Method of Disbursement: All disbursements of money made in accordance
with the provisions of this Article 6 will be made by cheque drawn upon a Canadian
Schedule I chartered bank or by official cheque or wire transfer drawn upon the account
of the Trustee made payable to or to the order of the persons entitled to disbursement
and in the correct amount, and if not so directed, by wire transfer as may be directed
in writing by the Special Warrantholders, the Company or the Agent (less all amounts
required to be withheld by the Company by law,
including without limitation, under the Income Tax Act (Canada), as directed by the
Company).

 

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	 	(b)	 	Discharge of Trustee Upon Delivery: If the Trustee delivers any such
wire transfer or cheque as required under subsection 6.8(a), the Trustee will have no
further obligation or liability for the amount represented thereby, unless any such
wire transfer or cheque is not paid on due presentation; provided that in the event of
the non-receipt of such wire transfer or cheque by the payee, or the loss or
destruction of such cheque, the Trustee, upon being furnished with reasonable evidence
of such non-receipt, loss or destruction and funding and indemnity reasonably
satisfactory to it, will initiate a new wire transfer or issue to such payee a
replacement cheque for the amount of such wire transfer or cheque.

6.9 Acknowledgements

	 	(a)	 	Receipt of Initial Escrow Funds: The Trustee will acknowledge receipt
from the Company of the Initial Escrowed Funds by providing a written receipt and the
Trustee hereby confirms that such funds will, upon receipt, be deposited in a
segregated account in the name of the Company designated as “CIBC Mellon Trust Company
in trust for Ivanhoe Energy Inc. — Special Warrants” or as otherwise directed by the
Company and, pending the satisfaction of the Release Condition, will be used in
accordance with Section 6.2 and Section 10.4 hereof.

	 
	 	(b)	 	Company Direction to Trustee: The Company hereby:

	 	(i)	 	acknowledges that the amount to be received by the
Trustee pursuant to subsection 6.9(a) will represent the aggregate Issue
Price received by the Company for the Special Warrants; and

	 	(ii)	 	irrevocably directs the Trustee to retain such amounts in
accordance with the terms of this Indenture pending payment of such amounts
in accordance with the terms of this Indenture.

6.10 Miscellaneous

	 	(a)	 	Scope of Trustee’s Obligations and Duties: The Trustee will disburse
Escrowed Funds according to this Indenture only to the extent that Escrowed Funds have
been deposited with it. The Trustee will be protected in acting and relying upon any
written notice, request, waiver, consent, certificates, receipts, statutory declaration
or other paper or document furnished to it, not only as to its due execution and the
validity and effectiveness of its provisions but also as to the truth and acceptability
of any information therein contained which it in good faith believes to be genuine and
what it purports to be. The Trustee will have no duties except those which are
expressly set forth herein, and it will not be bound by any notice of a claim or demand
with respect to, or any waiver, modification, amendment, termination or rescission of
this Indenture, unless received by it in writing, and signed by the parties hereto and
if its duties herein are 

 

38

 

affected, unless it will have given its prior written consent
thereto. The duties and obligations of the Trustee will be determined solely by the provisions hereof and,
accordingly, the Trustee will not be responsible except for the performance of such
duties and obligations as it has undertaken herein. The Trustee will retain the
right not to act and will not be held liable for refusing to act unless it has
received clear and reasonable instructions which comply with the terms of this
Indenture. Such documentation must not require the exercise of any discretion or
independent judgment. The Trustee is acting hereunder as Escrow Agent at the request
of the Company and the Special Warrantholders and will not be responsible as Escrow
Agent except for its duties of receiving, holding and disbursing the Escrowed Funds
pursuant to the terms and conditions of this Indenture. Any certificate of a party
referred to herein, unless otherwise specified, will, in the case of the Company,
refer to a certificate signed in the name of the Company by any officer or director
of the Company, and, in the case of any other party, refer to a certificate of an
authorized officer of such party. The Trustee will not be liable for any error in
judgment or for any act done or step taken or omitted by it in good faith or for any
mistake, in fact or law, or for anything which it may do or refrain from doing in
connection therewith, except arising out of its own gross negligence or wilful
misconduct. In the event of any disagreement arising regarding the terms of this
Indenture, the Trustee will be entitled, at its option, to refuse to comply with any
or all demands whatsoever until the dispute is settled, either by agreement amongst
the various parties or by a court of competent jurisdiction. None of the provisions
of this Indenture will require the Trustee to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers. The Trustee will not be responsible for
any losses which may occur as a result of the investment of the Escrowed Funds where
the Escrowed Funds have been invested in accordance with the terms of this
Indenture.

	 	(b)	 	Special Warrantholders’ Rights Against Escrowed Funds: In addition to
the other rights granted to holders of Special Warrants in this Indenture, until the
release of the Escrowed Funds pursuant to the terms of this Indenture, each holder of
Special Warrants has a pro rata claim against the Escrowed Funds, which claim will
subsist until such time as the Underlying Securities issuable upon the deemed
conversion of the Special Warrants are issued or such amount is paid to such holder in
full. In the event that, prior to the release of the Escrowed Funds in accordance with
the terms of this Indenture, the Company: (i) makes a general assignment for the
benefit of creditors or any proceeding is instituted by the Company seeking relief on
behalf thereof as a debtor, or to adjudicate the Company a bankrupt or insolvent, or
seeking liquidation, winding-up, reorganization, arrangement, adjustment or composition
of the Company or the debts of the Company under any law relating to bankruptcy,
insolvency, reorganization or relief of debtors, or seeking appointment of a receiver,
receiver and manager, trustee, custodian or similar official for the Company or any
substantial part of the property and assets of the Company or the Company takes any
corporate action to authorize any of the actions set forth above; or (ii) is declared
bankrupt, or a receiver, receiver and manager, trustee, custodian or 

 

39

 

similar official
is appointed for the Company or any substantial part of its property and assets of the Company or an encumbrancer legally takes possession of
any substantial part of the property or assets of the Company or a distress or
execution or any similar process is levied or enforced against such property and
assets and remains unsatisfied for such period as would permit such property or such
part thereof to be sold thereunder, the right of each holder of Special Warrants to
be issued Common Shares or Warrants upon the deemed conversion of the Special
Warrants of such holder will terminate and such holder will be entitled to assert a
claim against the Escrowed Funds and Earnings in an amount equal to its pro rata
share of the Escrowed Funds and Earnings less any withholding tax or charges
required to be withheld in respect thereof.

	 	(c)	 	Unclaimed Amounts: In the event that the Trustee holds any amount of
interest or other distributable amount which is unclaimed or which cannot be paid for
any reason other than the negligence or wilful misconduct of the Trustee, the Trustee
will be under no obligation to invest or reinvest the same but will only be obligated
to hold the same on behalf of the person or persons entitled thereto in a current or
other non-interest bearing account pending payment to the person or persons entitled
thereto. The Trustee will, as and when required by law, and may at any time prior to
such required time, pay all or part of such interest or other distributable amount so
held to the Public Trustee of British Columbia (or other appropriate official or
agency), whose receipt will be good discharge and release of the Trustee for such
amounts.

	 	(d)	 	Reliance: The Trustee will be entitled to act and rely absolutely on
the Release and Payment Certificate and will be entitled to release the Escrowed Funds
upon the receipt of the Release and Payment Certificate as provided for in this
Indenture.

6.11 Tax Reporting

The Trustee will prepare, file and, to the extent required, mail to the Company and Special
Warrantholders any tax filings, forms or elections required in connection with amounts distributed
by the Trustee to the Company or the Special Warrantholders in accordance with this Indenture as
directed from time to time by the Company pursuant to a Written Direction of the Company.

ARTICLE 7

ENFORCEMENT

7.1 Suits by Special Warrantholder

All or any of the rights conferred on the holder of any Special Warrant by the terms of the
Special Warrant Certificate representing such Special Warrant or of this Indenture may be enforced
by such holder by appropriate legal proceedings but without prejudice to the right which is hereby
conferred on the Trustee to proceed in the name thereof or on behalf of the holders of Special
Warrants to enforce each and every provision herein contained for the benefit of the Special
Warrantholders.

 

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7.2 Limitation of Liability

The obligations hereunder are not personally binding on, nor will resort hereunder be had to
the private property of, any past, present or future director, shareholder, officer, employee or
agent of the Company, but only the property of the Company or any successor entity will be bound in
respect hereof.

ARTICLE 8

MEETINGS OF SPECIAL WARRANTHOLDERS

8.1 Right to Convene Meetings

	 	(a)	 	Convening of Meeting: The Trustee may at any time and from time to time
convene a meeting of Special Warrantholders, and will do so on receipt of a Written
Request of the Company or a Special Warrantholders’ Request and on being funded and
indemnified to its reasonable satisfaction by the Company or by one or more of the
Special Warrantholders signing such Special Warrantholders’ Request against the costs
which it may incur in connection with calling and holding such meeting.

	 	(b)	 	Failure to Convene: If the Trustee fails, within ten days after receipt
of such Written Request of the Company or Special Warrantholders’ Request, funding and
indemnification, to give notice convening a meeting, the Company or any of such Special
Warrantholders, as the case may be, may convene such meeting.

	 	(c)	 	Place of Meeting: Every such meeting will be held in Vancouver, British
Columbia, or such other place as is approved or determined by the Trustee and the
Company.

8.2 Notice

	 	(a)	 	Notice: At least 21 days’ notice of any meeting must be given to the
Special Warrantholders in the manner provided for in Section 11.2, to the Trustee
(unless the meeting has been called by it) and to the Company (unless the meeting has
been called by it).

	 	(b)	 	Contents: The notice of the meeting must state the time when and the
place where the meeting is to be held and must state briefly the general nature of the
business to be transacted thereat, and will contain such information as is reasonably
necessary to enable the Special Warrantholders to make a reasoned decision on the
matter, but it will not be necessary for the notice to set out the terms of any
resolution to be proposed or any of the provisions of this article.

8.3 Chairman

An individual (who need not be a Special Warrantholder) designated in writing by the Trustee,
or by the Company in the case of a meeting called by the Company, will be chairman of the meeting
or, if no individual is so designated or the individual so designated is
not present within 15 minutes after the time fixed for the holding of the meeting, the Special
Warrantholders present in person or by proxy may choose an individual present to be chairman.

 

41

 

8.4 Quorum

	 	(a)	 	Quorum: Subject to the provisions of Section 8.12 hereof, at any
meeting of Special Warrantholders a quorum will consist of two or more Special
Warrantholders, present in person or represented by proxy at the commencement of the
meeting, who hold in the aggregate not less than 25% of the total number of Special
Warrants then outstanding.

	 	(b)	 	No Quorum: If a quorum of Special Warrantholders is not present within
30 minutes after the time appointed for holding a meeting, the meeting, if convened by
Special Warrantholders or on a Special Warrantholders’ Request, will be dissolved, but,
subject to Section 8.12 hereof, in any other case will stand adjourned to the same day
in the next week (unless such day is not a Business Day, in which case it will be
adjourned to the next following Business Day) at the same time and place and no notice
of the adjournment need be given.

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

8.5 Power to Adjourn

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

8.6 Show of Hands

Every question submitted to a meeting, other than an Extraordinary Resolution, will be decided
in the first place by a majority of the votes given on a show of hands and, unless a poll is duly
demanded as herein provided, a declaration by the chairman that a resolution has been carried or
carried unanimously or by a particular majority or lost or not carried by a particular majority
will be conclusive evidence of the fact.

8.7 Poll

	 	(a)	 	Extraordinary Resolution: On every Extraordinary Resolution, and on
every other question submitted to a meeting on which a poll is directed by the chairman
or requested by one or more Special Warrantholders acting in person or by proxy and
holding in the aggregate not less than 5% of the total number of Special Warrants then
outstanding, a poll will be taken in such manner as the chairman directs.

	 	(b)	 	Other: Questions other than those required to be determined by
Extraordinary Resolution will be decided by a majority of the votes cast on the poll.

 

42

 

8.8 Voting

On a show of hands each person present and entitled to vote, whether as a Special
Warrantholder or as proxy for one or more absent Special Warrantholder, or both, will have one
vote, and on a poll each Special Warrantholder present in person or represented by a proxy duly
appointed by instrument in writing will be entitled to one vote in respect of each Special Warrant
held by such holder. A proxy need not be a Special Warrantholder.

8.9 Regulations

	 	(a)	 	Ability to Make: The Trustee, or the Company with the approval of the
Trustee, may from time to time make or vary such regulations as it thinks fit:

	 	(i)	 	for the form of instrument appointing a proxy, the manner
in which it must be executed and verification of the authority of a person
who executes it on behalf of a Special Warrantholder;

	 	(ii)	 	governing the places at which and the times by which
voting certificates or instruments appointing proxies must be deposited;

	 	(iii)	 	generally for the calling of meetings of Special
Warrantholders and the conduct of business thereof;

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

	 	(v)	 	for the deposit of voting certificates and instruments
appointing proxies at some approved place or places other than the place at
which the meeting is to be held and authorizing particulars of such
instruments appointing proxies to be sent by mail, facsimile or other means
of prepaid, transmitted, recorded communication before the meeting to the
Company or to the Trustee at the place where the meeting is to be held and
for voting pursuant to instruments appointing proxies so deposited as though
the instruments themselves were produced at the meeting.

 

43

 

Any regulations so made will be binding and effective and the votes given in
accordance therewith will be valid and will be counted.

	 	(b)	 	Recognition: Except as such regulations provide, the only persons who
will be recognized at a meeting as the holders of any Special Warrants, or as entitled
to vote or, subject to Section 8.10 hereof, to be present at the meeting in respect
thereof, will be the registered holders of such Special Warrants or their duly
appointed proxies and their counsel.

8.10 The Company and Trustee may be Represented

The Company and the Trustee by their respective employees, officers or directors, and the
counsel of the Company and the Trustee, may attend any meeting of Special Warrantholders, but will
not be entitled to vote thereat, whether in respect of any Special Warrants held by them or
otherwise.

8.11 Powers Exercisable by Extraordinary Resolution

In addition to all other powers conferred on them by the other provisions of this Indenture or
by law, the Special Warrantholders at a meeting will, subject to Section 8.12 have the power,
exercisable from time to time by Extraordinary Resolution:

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

	 
	 	(b)	 	to amend, alter or repeal any Extraordinary Resolution previously passed;

	 	(c)	 	subject to arrangements as to financing and indemnity satisfactory to the
Trustee, to direct or authorize the Trustee to enforce any obligation of the Company
under this Indenture or to enforce any right of the Special Warrantholders in any
manner specified in the Extraordinary Resolution;

	 	(d)	 	to direct or authorize the Trustee to refrain from enforcing any obligation or
right referred to in Section 8.11(c) hereof;

	 	(e)	 	to waive and direct the Trustee to waive any default by the Company in
complying with any provision of this Indenture, either unconditionally or on any
condition specified in the Extraordinary Resolution;

	 	(f)	 	to appoint a committee with power and authority to exercise, and to direct the
Trustee to exercise, on behalf of the Special Warrantholders, such of the powers of the
Special Warrantholders as are exercisable by Extraordinary Resolution;

	 	(g)	 	to restrain any Special Warrantholder from taking or instituting any suit,
action or proceeding against the Company for the enforcement of any obligation of the
Company under this Indenture or to enforce any rights of the Special Warrantholders;

 

44

 

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

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

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

	 	(k)	 	from time to time and at any time to remove the Trustee and appoint a
successor, agent or trustee.

8.12 Meaning of “Extraordinary Resolution”

	 	(a)	 	Meaning: The expression “Extraordinary Resolution” when used in this
Indenture means, subject to the provisions of this Section 8.12 and of Sections 8.15
and 8.16 hereof, a motion proposed at a meeting of Special Warrantholders duly convened
for that purpose and held in accordance with the provisions of this Article 8 at which
there are present in person or by proxy Special Warrantholders holding in the aggregate
at least 25% of the total number of Special Warrants then outstanding and passed by the
affirmative votes of Special Warrantholders who hold in the aggregate not less than 66
2/3% of the total number of Special Warrants represented at the meeting and voted on
the motion.

	 	(b)	 	Quorum: If, at a meeting called for the purpose of considering an
Extraordinary Resolution, the quorum required by Section 8.12(a) hereof is not present
within 30 minutes after the time appointed for the meeting, the meeting, if convened by
Special Warrantholders or on a Special Warrantholders’ Request, will be dissolved, but
in any other case will stand adjourned to such day, being not less than ten Business
Days or more than 30 Business Days later, and to such place and time, as is appointed
by the chairman.

	 	(c)	 	Notice: Not less than seven Business Days’ notice must be given to the
Special Warrantholders of the time and place of such adjourned meeting.

	 	(d)	 	Form of Notice: The notice must state that at the adjourned meeting the
Special Warrantholders present in person or by proxy will form a quorum but it will not
be necessary to set forth the purposes for which the meeting was originally called or
any other particulars.

 

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	 	(e)	 	Quorum at Adjourned Meeting: At the adjourned meeting the Special
Warrantholders present in person or by proxy will form a quorum and may
transact any business for which the meeting was originally convened, and a motion
proposed at such adjourned meeting and passed by the requisite vote as provided in
Section 8.12(a) hereof will be an Extraordinary Resolution within the meaning of
this Indenture notwithstanding that Special Warrantholders holding in the aggregate
25% of the total number of Special Warrants outstanding may not be present in person
or by proxy.

	 	(f)	 	Poll: Votes on an Extraordinary Resolution must always be given on a
poll and no demand for a poll on an Extraordinary Resolution will be necessary.

8.13 Powers Cumulative

Any one or more of the powers, and any combination of the powers, in this Indenture stated to
be exercisable by the Special Warrantholders by Extraordinary Resolution or otherwise, may be
exercised from time to time, and the exercise of any one or more of such powers or any combination
of such powers from time to time will not prevent the Special Warrantholders from exercising such
power or powers or combination of powers thereafter from time to time.

8.14 Minutes

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

8.15 Instruments in Writing

Any action that may be taken and any power that may be exercised by Special Warrantholders at
a meeting held as provided in this Article 8 may also be taken and exercised by Special
Warrantholders who hold in the aggregate not less than 50% of the total number of Special Warrants
at the time outstanding or in the case of an Extraordinary Resolution, Special Warrantholders who
hold in the aggregate not less than 66 2/3% of the total number of Special Warrants at the time
outstanding, by their signing, each in person or by attorney duly appointed in writing, an
instrument in writing in one or more counterparts, and the expression “Extraordinary Resolution”
when used in this Indenture includes a resolution embodied in an instrument so signed.

8.16 Binding Effect of Resolutions

Every resolution and every Extraordinary Resolution passed in accordance with the provisions
of this Article 8 at a meeting of Special Warrantholders will be binding on all Special
Warrantholders, whether present at or absent from the meeting and whether voting for or against the
resolution or abstaining, and every instrument in writing signed by Special
Warrantholders in accordance with Section 8.15 hereof will be binding on all Special
Warrantholders, whether signatories thereto or not, and every Special Warrantholder and the Trustee
(subject to the provisions for its indemnity herein contained) will be bound to give effect
accordingly to every such resolution and instrument in writing.

 

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8.17 Holdings by the Company and Subsidiaries Disregarded

In determining whether Special Warrantholders holding the required total number of Special
Warrants are present in person or by proxy for the purpose of constituting a quorum, or have voted
or consented to a resolution, Extraordinary Resolution, consent, waiver, Special Warrantholders’
Request or other action under this Indenture, a Special Warrant held by the Company or by a
Subsidiary of the Company will be deemed to be not outstanding. The Company will provide the
Trustee with a certificate of the Company providing details of any Special Warrants held by the
Company or by a Subsidiary of the Company upon the written request of the Trustee.

ARTICLE 9

SUPPLEMENTAL INDENTURES AND SUCCESSOR CORPORATIONS

9.1 Provision for Supplemental Indentures for Certain Purposes

From time to time the Company (when authorized by the directors and subject to any applicable
regulatory approvals) and the Trustee may, subject to the provisions hereof, and will when so
directed hereby, execute and deliver by their proper officers indentures or instruments
supplemental hereto, which thereafter will form part hereof, for any or all of the following
purposes:

	 	(a)	 	increasing the number of Special Warrants authorized for issue hereunder and
the corresponding number of Underlying Securities to which Special Warrantholders are
entitled;

	 	(b)	 	setting forth any adjustments resulting from the application of the provisions
of Section 4.7 hereof;

	 	(c)	 	adding hereto such additional covenants and enforcement provisions as in the
opinion of counsel are necessary or advisable, and are not in the opinion of the
Trustee, relying on the advice of counsel, prejudicial to the interests of the Special
Warrantholders or any of them;

	 	(d)	 	giving effect to any Extraordinary Resolution passed as provided in Article 8
hereof;

	 	(e)	 	making such provisions not inconsistent with this Indenture as are (i)
necessary or desirable with respect to matters or questions arising hereunder or for
the purpose of obtaining a listing or quotation of the Common Shares on a stock
exchange or over-the-counter market, and (ii) not, in the opinion of counsel,
prejudicial to the interests of the Special Warrantholders;

 

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	 	(f)	 	adding to, deleting or altering the provisions hereof in respect of the
transfer of Special Warrants or the conversion of Special Warrant Certificates, and
making any modification in the form of the Special Warrant Certificates that does not
affect the substance thereof;

	 	(g)	 	modifying any provision of this Indenture (including, without limitation,
making any modification which increases the number or amount of Common Shares issuable
pursuant to the Special Warrants) or relieving the Company from any obligation,
condition or restriction herein contained, except that no such modification or relief
will be or become operative or effective if, in the opinion of counsel, it would impair
any right of the Special Warrantholders or of the Trustee, and the Trustee may in its
uncontrolled discretion decline to enter into any such supplemental indenture which, in
its opinion, will not afford adequate protection to the Trustee when it becomes
operative; and

	 	(h)	 	for any other purpose not inconsistent with the terms of this Indenture,
including the correction or rectification of any ambiguity, defective or inconsistent
provision, error or omission herein, if in the opinion of counsel, the rights of the
Trustee and of the Special Warrantholders are not prejudiced thereby.

9.2 Successor Entities

In the case of the consolidation, amalgamation, arrangement, merger, other form of business
combination or transfer of the undertaking or assets of the Company as an entirety, or
substantially as an entirety, to another corporation or other entity, the successor corporation or
other entity resulting from such consolidation, amalgamation, arrangement, merger, other form of
business combination or transfer (if not the Company) will be bound by the provisions hereof and
for the due and punctual performance and observance of each and every covenant and obligation
contained in this Indenture to be performed by the Company and will execute and deliver to the
Trustee a supplemental indenture and such other instruments as are satisfactory in form to the
Trustee and in the opinion of counsel are necessary or advisable to evidence the express assumption
by the successor corporation of such obligations.

ARTICLE 10

CONCERNING TRUSTEE

10.1 Trust Indenture Legislation

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with
a mandatory requirement of Applicable Legislation, the mandatory requirement will prevail. The
Company, the Agent and the Trustee each will at all times in relation to this Indenture and any
action to be taken hereunder observe and comply with and be entitled to the benefits of Applicable
Legislation.

 

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10.2 Rights and Duties of Trustee

	 	(a)	 	Duty of Trustee: In the exercise of the rights and duties prescribed or
conferred by the terms of this Indenture, the Trustee will act honestly and in good
faith and will
exercise that degree of care, diligence and skill that a reasonably prudent special
warrant agent would exercise in comparable circumstances. The Trustee will not be
bound to give any notice or do or take any act, action or proceeding by virtue of
the powers conferred on it hereby unless and until it will have been required so to
do under the terms hereof; nor will the Trustee be required to take notice of any
default hereunder, unless and until notified in writing of such default, which
notice will distinctly specify the default desired to be brought to the attention of
the Trustee and, in the absence of any such notice, the Trustee may for all purposes
of this Indenture conclusively assume that no default has been made in the
observance or performance of any of the representations, warranties, covenants,
agreements or conditions contained therein. Any such notice will in no way limit any
discretion herein given to the Trustee to determine whether or not the Trustee will
take action with respect to any default.

	 	(b)	 	No Relief From Liability: No provision of this Indenture will be
construed to relieve the Trustee from liability for its own negligent act, negligent
failure to act, wilful misconduct or bad faith.

	 	(c)	 	Actions: The obligation of the Trustee to commence or continue any act,
action or proceeding in connection herewith, including without limitation, for the
purpose of enforcing any right of the Trustee or the Special Warrantholders hereunder
is on the condition that the Trustee will have received a Special Warrantholders’
Request specifying the act, action or proceeding which the Trustee is requested to take
and, when required by notice to the Special Warrantholders by the Trustee, the Trustee
is furnished by one or more Special Warrantholders with sufficient funds to commence or
continue such act, action or proceeding and an indemnity reasonably satisfactory to the
Trustee to protect and hold it harmless against the costs, charges, expenses and
liabilities to be incurred thereby and any loss and damage it may suffer by reason
thereof.

	 	(d)	 	Funding: No provision of this Indenture will require the Trustee to
expend or risk its own funds or otherwise incur financial liability in the performance
of any of its duties or in the exercise of any of its rights or powers unless it is so
indemnified.

	 	(e)	 	Deposit of Special Warrants: The Trustee may, before commencing or at
any time during the continuance of any such act, action or proceeding, require the
Special Warrantholder at whose instance it is acting to deposit with the Trustee the
Special Warrant Certificates held by them, for which certificates the Trustee will
issue receipts.

	 	(f)	 	Restriction: Every provision of this Indenture that relieves the
Trustee of liability or entitles it to rely on any evidence submitted to it is subject
to the provisions of (i) Applicable Legislation, (ii) this Section 10.2(f) and (iii)
Section 10.3 hereof.

 

49

 

10.3 Evidence, Experts and Advisers

	 	(a)	 	Evidence: In addition to the reports, certificates, opinions and other
evidence required by this Indenture, the Company will furnish to the Trustee such
additional evidence of compliance with any provision hereof, and in such form, as is
prescribed by Applicable Legislation or as the Trustee reasonably requires by written
notice to the Company.

	 	(b)	 	Reliance by Trustee: In the exercise of any right or duty hereunder the
Trustee, if it is acting in good faith, may act and rely, as to the truth of any
statement or the accuracy of any opinion expressed therein, on any statutory
declaration, opinion, report, certificate or other evidence furnished to the Trustee
pursuant to the provisions hereof or of Applicable Legislation or pursuant to a request
of the Trustee, if such evidence complies with Applicable Legislation and the Trustee
examines such evidence and determines that it complies with the applicable requirements
of this Indenture.

	 	(c)	 	Statutory Declaration: Whenever Applicable Legislation requires that
evidence referred to in Section 10.3(a) hereof be in the form of a statutory
declaration, the Trustee may accept such statutory declaration in lieu of a Certificate
of the Company required by any provision hereof. Any such statutory declaration may be
made by any one or more of the Chairman, President, Chief Financial Officer or
Secretary of the Company or by any other officer(s) or director(s) of the Company to
whom such authority is delegated by the directors from time to time. In addition, the
Trustee may act and rely and will be protected in acting and relying upon any
resolution, certificate, direction, instruction, statement, instrument, opinion,
report, notice, request, consent, order, letter, telegram, cablegram or other paper or
document believed by it to be genuine and to have been signed, sent or presented by or
on behalf of the proper party or parties.

	 	(d)	 	Proof of Execution: Proof of the execution of any document or
instrument in writing, including a Special Warrantholders’ Request, by a Special
Warrantholder may be made by the certificate of a notary public, or other officer with
similar powers, that the person signing such instrument acknowledged to him the
execution thereof, or by an affidavit of a witness to such execution, or in any other
manner that the Trustee considers adequate.

	 	(e)	 	Experts: The Trustee may employ or retain such counsel, accountants,
appraisers, or other experts or advisers as it reasonably requires for the purpose of
determining and discharging its rights and duties hereunder and may pay the reasonable
remuneration and disbursements for all services so performed by any of them, without
taxation of costs of any counsel, and will not be responsible for any misconduct or
negligence on the part of any of them who has been selected with due care by the
Trustee. The Trustee may act and rely and will be protected in acting or not acting and
relying in good faith on the opinion or advice of or information obtained from any
counsel, accountant or other expert or advisor,
whether retained or employed by the Company or by the Trustee, in relation to any
matter arising in the administration of the duties and obligations hereof.

 

50

 

10.4 Documents, Money, Etc. held by Trustee

Any security, document of title or other instrument that may at any time be held by the
Trustee subject to the provisions of this Indenture hereof may be placed in the deposit vaults of
the Trustee or of any Canadian chartered bank or deposited for safekeeping with any such bank.

The Trustee shall maintain accurate books, records and accounts of the transactions effected
or controlled by the Trustee hereunder and the receipt, investment, reinvestment and disbursement
of the property hereunder and shall provide to the Company records and statements thereof
periodically upon request.

10.5 Action by Trustee to Protect Interests

The Trustee will have power to institute and to maintain such actions and proceedings as it
considers necessary or expedient to protect or enforce its interests and the interests of the
Special Warrantholders.

10.6 Trustee not Required to Give Security

The Trustee will not be required to give any bond or security in respect of the execution of
the duties and obligations and powers of this Indenture.

10.7 Protection of Trustee

	 	(a)	 	Protection: By way of supplement to the provisions of any applicable
law for the time being relating to Agent, it is expressly declared and agreed that:

	 	(i)	 	the Trustee will not be liable for or by reason of, or
required to substantiate, any statement of fact, representation or recital
in this Indenture or in the Special Warrant Certificates (except the
representation contained in Section 10.9 hereof or in the certificate of the
Trustee on the Special Warrant Certificates or other representation of the
Trustee made herein or therein), but all such statements or recitals are and
will be deemed to be made by the Company;

	 	(ii)	 	nothing herein contained will impose on the Trustee any
obligation to see to, or to require evidence of, the registration or filing
(or renewal thereof) of this Indenture or any instrument ancillary or
supplemental hereto;

	 	(iii)	 	the Trustee will not be bound to give notice to any
person of the execution hereof;

	 	(iv)	 	the Trustee will not incur any liability or
responsibility whatsoever or be in any way responsible for the consequence
of any breach by the Company
of any obligation or warranty herein contained or of any act of any
director, officer, employee or agent of the Company;

 

51

 

	 	(v)	 	the Trustee, in its personal or any other capacity, may
buy, lend upon and deal in securities of the Company and in the Special
Warrants and generally may contract and enter into financial transactions
with the Company or any related corporation without being liable to account
for any profit made thereby;

	 	(vi)	 	the Trustee will incur no liability with respect to the
delivery or non-delivery of any certificate or certificates whether
delivered by hand, mail or any other means provided that they are sent in
accordance with the provisions hereof;

	 	(vii)	 	if the Trustee delivers any cheque as required
hereunder, the Trustee will have no further obligation or liability for the
amount represented thereby, unless any such cheque is not honoured on
presentation, provided that in the event of the non-receipt of such cheque
by the payee, or the loss or destruction thereof, the Trustee, upon being
furnished with reasonable evidence of such non-receipt, loss or destruction
and, if required by the Trustee, an indemnity reasonably satisfactory to it,
will issue to such payee a replacement cheque for the amount of such cheque;
and

	 	(viii)	 	the Trustee will disburse funds in accordance with the provisions hereof
only to the extent that funds have been deposited with it.

	 	(b)	 	Indemnity: In addition to and without limiting any protection of the
Trustee hereunder or otherwise by law, the Company agrees to indemnify the Trustee,
employees, directors and officers (each an “Indemnified Person”), and save each
Indemnified Person harmless from all liabilities, suits, damages, costs, expenses and
actions which may be brought against or suffered by it arising out of or connected with
the performance by the Trustee of its duties hereunder, except to the extent that such
liabilities, suits, damages, costs and actions are attributable to the gross
negligence, fraud, wilful misconduct or bad faith of the Trustee or an Indemnified
Person. Notwithstanding any other provision hereof, this indemnity will survive any
removal or resignation of the Trustee, discharge of this Indenture and termination of
any duties and obligations hereunder.

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

 

52

 

10.8 Replacement of Trustee

	 	(a)	 	Resignation: The Trustee may resign and be discharged from all further
duties and liabilities hereunder, except as provided in this Section 10.8, by giving to
the Company and the Special Warrantholders not less than 60 Business Days notice in
writing or, if a new Trustee has been appointed, such shorter notice as the Company
accepts as sufficient, provided that such resignation and discharge will be subject to
the appointment of a successor thereto in accordance with the provisions hereof.

	 	(b)	 	Removal: The Special Warrantholders by Extraordinary Resolution may at
any time remove the Trustee and appoint a new Trustee.

	 	(c)	 	Appointment of New Trustee: If the Trustee so resigns or is so removed
or is dissolved, becomes bankrupt, goes into liquidation or otherwise becomes incapable
of acting hereunder, the Company will forthwith appoint a new Trustee, unless a new
Trustee has already been appointed by the Special Warrantholders.

	 	(d)	 	Failure to Appoint: Failing such appointment by the Company, the
retiring Trustee or any Special Warrantholder may apply, at the expense of the Company,
to the British Columbia Supreme Court, on such notice as the Court directs, for the
appointment of a new Trustee.

	 	(e)	 	New Trustee: Any new Trustee appointed under this Section must be a
corporation authorized to carry on the business of a transfer agent or trust company in
the Provinces of Ontario and British Columbia and, if required by the Applicable
Legislation of any other province, in such other province. On any such appointment, the
new Trustee will be vested with the same powers, rights, duties and responsibilities as
if it had been originally named herein as Trustee without any further assurance,
conveyance, act or deed, but there will be immediately executed, at the expense of the
Company, all such conveyances or other instruments as, in the opinion of counsel, are
necessary or advisable for the purpose of assuring the transfer of such powers, rights,
duties and responsibilities to the new Trustee. The predecessor Trustee will transfer,
deliver and pay over to the successor new Trustee, who will be entitled to receive, all
monies, securities, records or other property held by the predecessor Trustee pursuant
to the terms hereof and the predecessor Trustee will thereupon be discharged as Trustee
hereunder. Any new Trustee so appointed by the Company or by the Court will be subject
to removal as aforesaid by the Special Warrantholders and by the Company.

	 	(f)	 	Notice of New Trustee: On the appointment of a new Trustee, the Company
will promptly give notice thereof to the Special Warrantholders in accordance with
Section 11.2(a) hereof.

 

53

 

	 	(g)	 	Successor Trustee: A corporation into or with which the Trustee is
merged or consolidated or amalgamated, or a corporation succeeding to the business of
the Trustee, will be the successor to the Trustee hereunder without any further act on
its part or on the part of any party hereto if such corporation would be eligible for
appointment as a new Trustee under Section 10.8(e) hereof.

	 	(h)	 	Certificates: A Special Warrant Certificate certified but not delivered
by a predecessor Trustee may be delivered by the new or successor Trustee in the name
of the predecessor Trustee or successor Trustee.

10.9 Conflict of Interest

The Trustee represents to the Company that, at the time of the execution and delivery hereof,
no material conflict of interest exists between its role as Trustee hereunder and its role in any
other capacity and if a material conflict of interest arises hereafter it will, within 90 days
after ascertaining that it has such material conflict of interest, either eliminate the conflict of
interest or resign its duties and obligations hereunder.

10.10 Acceptance of Duties and Obligations

The Trustee hereby accepts the duties and obligations in this Indenture declared and provided
for and agrees to perform them on the terms and conditions herein set forth. The Trustee accepts
the duties and responsibilities under this Indenture solely as custodian, bailee and agent. No
trust is intended to be or will be created hereby and the Trustee will owe no duties hereunder as a
trustee. Neither the Trustee nor any person related to the Trustee will be appointed a receiver or
receiver and manager or liquidator of all or any part of the assets or undertaking of the Company.
The Trustee will not be required to give any bond or security in respect of the execution of the
trusts and powers on this Indenture or otherwise in respect of the premises.

ARTICLE 11

GENERAL

11.1 Notice to the Company and the Trustee

	 	(a)	 	Company: Unless herein otherwise expressly provided, a notice to be
given hereunder to the Company or the Trustee will be validly given if delivered or if
sent by registered letter, postage prepaid, or if sent by facsimile transmission (if
receipt of such transmission is confirmed):

	 	(i)	 	if to the Company:

	 
	 	 	 	Ivanhoe Energy Inc.

654-999 Canada Place

Vancouver, British Columbia V6C 3E1

	 
	 	 	 	Attention: Corporate Secretary

Facsimile: (604) 682-2060

 

54

 

	 	(ii)	 	if to the Agent:

Macquarie Capital Markets Canada Ltd.

2020, 335 8th Avenue S.W.

Calgary, Alberta T2P 1C9

Attention: Thomas Ebbern

Facsimile: (403) 269-7870

	 
	 	(iii)	 	if to the Trustee:

	 
	 	 	 	CIBC Mellon Trust Company

1600 — 1066 West Hastings Street

Vancouver, British Columbia V6E 3X1

	 
	 	 	 	Attention: Corporate Trust Department

Facsimile: (604) 688-4301

and any such notice delivered or sent in accordance with the foregoing will be
deemed to have been received on the date of delivery or facsimile transmission or,
if mailed, on the second Business Day following the day of the mailing of the
notice. The original of any document sent by facsimile transmission to the Trustee
will be subsequently mailed to the Trustee.

	 	(b)	 	Change of Address: The Company, the Agent or the Trustee, as the case
may be, may from time to time notify the other in the manner provided in
Section 11.1(a) hereof of a change of address which, from the effective date of such
notice and until changed by like notice, will be the address of the Company, the Agent
or the Trustee, as the case may be, for all purposes of this Indenture.

	 	(c)	 	Postal Interruption: If, by reason of a strike, lockout or other work
stoppage, actual or threatened, involving Canadian postal employees, a notice to be
given to the Trustee or to the Company hereunder could reasonably be considered
unlikely to reach or likely to be delayed in reaching its destination, the notice will
be valid and effective only if it is delivered to an officer of the party to which it
is addressed. Any notice delivered in accordance with the foregoing will be deemed to
have been received on the date of delivery to such officer.

 

55

 

11.2 Notice to Special Warrantholders

	 	(a)	 	Notice: Unless herein otherwise expressly provided, a notice to be
given hereunder to Special Warrantholders will be deemed to be validly given if the
notice is sent by ordinary surface or air mail, postage prepaid, addressed to the
Special Warrantholders or delivered (or so mailed to certain Special Warrantholders and
so delivered to the other Special Warrantholders) at their respective addresses
appearing on any of the registers of holders described in Section 3.1 hereof, provided,
however, that if, by reason of a strike, lockout or other work stoppage, actual or
threatened, involving Canadian postal employees,
the notice could reasonably be considered unlikely to reach or likely to be delayed
in reaching its destination, the notice will be valid and effective if it is printed
once in the national edition of the Globe & Mail. All notices may be given to
whichever of the holders of a Special Warrant (if more than one) is named first in
the appropriate register hereinbefore provided, and any notice so given shall be
sufficient notice to all holders of such Special Warrant and any other persons (if
any) interested in such Special Warrant.

	 	(b)	 	Date of Notice: A notice so given by mail or so delivered will be
deemed to have been given on the fifth Business Day after it has been mailed or on the
day on which it has been delivered, as the case may be, and a notice so given by
publication will be deemed to have been given on the day on which it has been published
as required. In determining under any provision hereof the date when notice of a
meeting or other event must be given, the date of giving notice will be included and
the date of the meeting or other event will be excluded. Accidental error or omission
in giving notice or accidental failure to mail notice to any Special Warrantholder will
not invalidate any action or proceeding founded thereon.

11.3 Satisfaction and Discharge of Indenture

If all certificates representing Underlying Securities required to be issued in compliance
with the provisions hereof have been issued hereunder in accordance with such provisions, if all
payments required to be made in compliance with the provisions of this Indenture have been made in
accordance with such provisions and payment to the Trustee of the fees and other remuneration
payable to the Trustee have been made, this Indenture will cease to be of further effect and, on
demand of and at the cost and expense of the Company and on delivery to the Trustee of a
Certificate of the Company stating that all conditions precedent to the satisfaction and discharge
of this Indenture have been complied with and on payment to the Trustee of the fees and other
remuneration payable to the Trustee, the Trustee will execute proper instruments acknowledging the
satisfaction of and discharging this Indenture, provided that if the Trustee has not then performed
any of its obligations hereunder, any such satisfaction and discharge of the Company’s obligations
hereunder shall not affect or diminish the rights of any Special Warrantholder or the Company
against the Trustee.

11.4 Sole Benefit of Parties and Special Warrantholders

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

 

56

 

11.5 Discretion of Directors

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

11.6 Counterparts and Formal Date

This Indenture may be executed in several counterparts, each of which when so executed will be
deemed to be an original and such counterparts together will constitute one and the same instrument
and notwithstanding the date of their execution will be deemed to be dated as of this Indenture.

11.7 Assignment

This Indenture may not be assigned by either party hereto without the consent in writing of
the other party. This Indenture shall enure to and bind the parties and their lawful successors and
permitted assigns.

[Remainder of page intentionally blank]

 

57

 

IN WITNESS WHEREOF the parties hereto have executed this Special Warrant Indenture as of the day
and year first above written.

	 	 	 	 	 
	IVANHOE ENERGY INC.

 	 
	Per:  	(signed) Beverly A. Bartlett
 	 	 
	 	Name:  	Beverly A. Bartlett 	 	 
	 	Title:  	Vice President & Corporate Secretary 	 	 
	 
	MACQUARIE CAPITAL MARKETS CANADA LTD.

 	 	 
	Per:  	(signed) Thomas Ebbern
 	 	 
	 	Name:  	Tom Ebbern 	 	 
	 	Title:  	Managing Director 	 	 
	 	 	 
	Per:  	(signed) Josh Woitas
 	 	 
	 	Name:  	Josh Woitas 	 	 
	 	Title:  	Senior Manager 	 	 
	 
	CIBC MELLON TRUST COMPANY

 	 	 
	Per:  	(signed) Van Bot
 	 	 
	 	Name:  	Van Bot 	 	 
	 	Title:  	Authorized Signatory 	 	 
	 	 	 
	Per:  	(signed) Tricia Murphy
 	 	 
	 	Name:  	Tricia Murphy 	 	 
	 	Title:  	Manager, Client relations 	 	 

 

58

 

SCHEDULE A TO THE SPECIAL WARRANT INDENTURE DATED AS OF

FEBRUARY 25, 2010 AMONG IVANHOE ENERGY INC. MACQUARIE CAPITAL

MARKETS CANADA LTD. AND

CIBC MELLON TRUST COMPANY

SPECIAL WARRANT CERTIFICATE

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

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

THE FOLLOWING LEGEND FOR U.S. PURCHASERS ONLY

THE SPECIAL WARRANTS (AS DEFINED BELOW), THE COMMON SHARES (AS DEFINED BELOW) AND THE WARRANTS (AS
DEFINED BELOW) ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE “SECURITIES ACT”) OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES AND SUCH SPECIAL WARRANTS MAY NOT BE EXERCISED WITHIN THE UNITED STATES OR BY OR ON BEHALF
OF ANY PERSON IN THE UNITED STATES UNLESS REGISTERED UNDER THE SECURITIES ACT AND THE SECURITIES
LAWS OF ALL APPLICABLE STATES OF THE UNITED STATES OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS IS AVAILABLE. “UNITED STATES” IS AS DEFINED BY REGULATION S UNDER THE SECURITIES ACT.

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

 

 

 

			
	 	 	 
	Certificate Number:                                         
	 	Number of Special Warrants:                                        

SPECIAL WARRANTS

convertible into Common Shares and Warrants of

IVANHOE ENERGY INC.

THIS IS TO CERTIFY THAT, for value received,                                          (the “holder”) is the
registered holder of the number of special warrants (“Special Warrants”) of Ivanhoe Energy Inc.
(the “Company”) specified above and is thereby entitled, without payment of any additional
consideration, to be issued fully paid and non-assessable common shares of the Company (“Common
Shares”) and common share purchase warrants of the Company (“Warrants” and together with the Common
Shares, the “Underlying Securities”)) on the first Business Day following the Qualification Date
(as defined in the Special Warrant Indenture hereinafter referred to) on the basis of one (1)
Common Share and one quarter of one (0.25) Warrant for each one Special Warrant, subject to
adjustment in accordance with the provisions of the Special Warrant Indenture.

This Special Warrant Certificate represents Special Warrants issued under the provisions of a
special warrant indenture (which indenture, together with all instruments supplemental or ancillary
thereto, is herein referred to as the “Special Warrant Indenture”) dated as of February 25, 2010
among the Company, Macquarie Capital Markets Canada Ltd. and CIBC Mellon Trust Company (the
“Trustee”). Reference is hereby made to the Special Warrant Indenture for particulars of the rights
of the holders of the Special Warrants, the Company and the Trustee in respect thereof and of the
terms and conditions upon which the Special Warrants are issued and held, all to the same effect as
if the provisions of the Special Warrant Indenture were herein set forth in full, to all of which
the holder, by acceptance hereof, assents. In the event of a conflict between the provisions of
this Special Warrant Certificate and the Special Warrant Indenture, the terms of the Special
Warrant Indenture will govern. The Company will furnish to the holder, on request, a copy of the
Special Warrant Indenture. Terms used in this Special Warrant Certificate and not otherwise defined
herein have the meanings assigned to them in the Special Warrant Indenture.

An amount equal to the aggregate Issue Price paid for the Special Warrants has been deposited
in escrow with the Trustee, pending satisfaction of the Release Condition. Provided the Release
Condition is satisfied at or prior to the Release Deadline, the Escrowed Funds will be released as
directed by the Company in satisfaction of the commission payable to the Agent pursuant to the
Agency Agreement and the remainder to the Company. If the Release Condition is not satisfied at or
prior to the Release Deadline, the Trustee will return to each Special Warrantholder an amount
equal to the Issue Price paid by such holder and such holder’s pro rata entitlement to Earnings
less applicable withholding taxes, if any. If a Special Warrantholder elects to convert any Special
Warrants into Underlying Securities prior to the satisfaction of the Release Condition, the
aggregate Issue Price deposited in escrow in respect of the converted Special Warrants, together
with Earnings in respect thereof, will be released from escrow as directed by the Company for the
Company’s use in its absolute discretion and such
holder will no longer be entitled to the return of any Escrowed Funds if the Release Condition
is not satisfied by the Release Deadline.

 

2

 

The Special Warrants represented by this Special Warrant Certificate may be converted by the
holder at any time after the Effective Date and prior to the Time of Expiry; provided that if such
Special Warrants have not been converted as hereinafter provided prior to the Qualification Date,
such Special Warrants will be deemed to be converted into Underlying Securities by the Trustee for
and on behalf of the holder on the first Business Day following the Qualification Date without the
taking of any action by the holder, including the surrender of this Special Warrant Certificate,
which will thereupon be cancelled by the Trustee.

The holder of this Special Warrant and any transferee hereof are cautioned that in the event
that the Special Warrants are deemed to be converted, certificates representing the Underlying
Securities, will be mailed or delivered to the latest address of record of the registered holder or
to the direction of the registered holder, and the Company and the Trustee are not bound to take
notice of any transfers or assignments unless the transferee is a duly registered holder of the
Special Warrant prior to such mailing or delivery.

On and after the date of any conversion of the Special Warrants represented by this Special
Warrant Certificate, the holder will have no rights as a Special Warrantholder except to receive
certificates representing the Underlying Securities issued upon the conversion thereof to such
holder and as set forth in the Indenture.

The Company will not be obligated after the aggregation of the number of Underlying Securities
to be issued to a holder of Special Warrants to issue any fraction of an Underlying Securities on
the conversion of Special Warrants. If a holder of Special Warrants would otherwise be entitled to
a fractional Underlying Securities pursuant to the Special Warrants, the number of Underlying
Securities to be issued will be rounded down to the next whole number, if the holder is entitled to
receive less than 0.5 of an Underlying Securities and rounded up to the next whole number, if the
holder is entitled to receive 0.5 or more of an Underlying Securities, and the holder of such
Special Warrants will not be entitled to any cash compensation in respect of such fraction.

No Underlying Securities will be issued pursuant to any conversion of any Special Warrant if
the issue of such security would constitute a violation of the securities laws of the applicable
jurisdiction.

The Special Warrant Indenture provides for adjustments to the rights of the holders of Special
Warrants on the happening of certain stated events, including the subdivision or consolidation of
the outstanding Common Shares, certain distributions of Common Shares or of securities convertible
into or exchangeable for Common Shares or of other securities or assets of the Company, certain
offerings of rights, warrants or options and certain capital reorganizations.

 

3

 

The Special Warrant Indenture contains provisions making binding on all holders of Special
Warrants outstanding thereunder resolutions passed by holders of a specified majority
of all outstanding Special Warrants at meetings of such holders held in accordance with such
provisions and instruments in writing signed by holders of a specified majority of all outstanding
Special Warrants.

On presentation at the principal office of the Trustee in Vancouver, British Columbia, or
Toronto, Ontario, subject to the provisions of the Special Warrant Indenture and on compliance with
the reasonable requirements of the Trustee, one or more Special Warrant Certificates may be
exchanged at no cost to the holder for one or more Special Warrant Certificates of different
denominations representing in the aggregate the same number of Special Warrants as the Special
Warrant Certificate or Special Warrant Certificates being exchanged.

The Special Warrants represented by this Special Warrant Certificate may only be transferred,
upon compliance with the conditions prescribed in the Special Warrant Indenture, on the register of
transfers to be kept at the principal office of the Trustee in Vancouver, British Columbia, or
Toronto, Ontario by the holder or the executors, administrators or other legal representatives
thereof or the attorney thereof appointed by an instrument in writing in form and executed in a
manner satisfactory to the Trustee and, upon compliance with such requirements and such other
reasonable requirements as the Trustee may prescribe, such transfer will be duly recorded on such
register of transfers by the Trustee. Notwithstanding the foregoing, the Company will be entitled,
and may direct the Trustee, to refuse to record any transfer of any Special Warrant on such
register if such transfer would constitute a violation of the securities laws of any jurisdiction.

The holding of this Special Warrant Certificate will not constitute the holder a shareholder
of the Company or entitle such holder to any right or interest in respect thereof except as
otherwise provided in the Special Warrant Indenture.

This Special Warrant Certificate will not be valid for any purpose until it has been certified
by or on behalf of the Trustee for the time being under the Special Warrant Indenture. Time is of
the essence hereof.

The Special Warrant Certificate will be construed and enforced in accordance with the laws
prevailing in the Province of British Columbia and the federal laws of Canada applicable therein
and will be treated in all respects as a British Columbia contract.

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

 

4

 

IN WITNESS WHEREOF the Company has caused this Special Warrant Certificate to be signed by its
officers or other individuals duly authorized in that behalf as of February
 _____, 2010.

	 	 	 	 	 
	 	IVANHOE ENERGY INC.

 	 
	 	By:  	 	 

This Special Warrant Certificate is one of the Special Warrant Certificates referred to in the
Special Warrant Indenture.

	 	 	 	 	 
	 	CIBC MELLON TRUST COMPANY

 	 
	 	By:  	 	 

Countersigned by the Trustee as of this
 _____ 
day of February, 2010.

 

5

 

			
	TO:	 	IVANHOE ENERGY INC. (the “Company”)

NOTICE OF CONVERSION

The undersigned holder of the Special Warrants represented by this Special Warrant Certificate
hereby exercises the right thereof to be issued the Underlying Securities which are issuable
pursuant to the conversion of such Special Warrants on the terms specified in such Special Warrant
Certificate and in the Special Warrant Indenture.

The undersigned certifies that (check applicable box(es), if any)

	 	o	 	A	 	

The undersigned holder (i) at the time of exercise of the
Special Warrants is not in the United States; (ii) it is not
a U.S. person, and is not exercising the Special Warrants on
behalf of a U.S. person; and (iii) did not execute or deliver
this exercise form in the United States.

	 
	 	o	 	B	 	
The undersigned holder (i) purchased the Special Warrants
directly from the Company pursuant to a written subscription
agreement for the purchase of Special Warrants, (ii) is
exercising the Special Warrants solely for its own account
and not on behalf of any other Person; and (iii) was an
“Accredited Investor”, as that term is defined in Regulation
D under the U.S. Securities Act, both on the date the Special
Warrants were purchased from the Company and on the date of
exercise of the Special Warrants.

	 
	 	o	 	C	 	
The undersigned holder has delivered to the Company an
opinion of counsel (which will not be sufficient unless it is
from counsel of recognized standing and such opinion is in
form and substance satisfactory to the Company) to the effect
that an exemption from the registration requirements of the
U.S. Securities Act and applicable state securities laws is
available.

			
	Note:	 	Certificates representing Underlying Securities will not be registered or delivered to an
address in the United States unless Box B or C above is checked.

 

 

 

The undersigned hereby irrevocably directs that the said Underlying Securities be issued,
registered and delivered as follows:

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

(Please print full name in which certificates representing the Underlying Securities are to be
issued. If any Underlying Securities are to be issued to a person or persons other than the holder,
the holder must pay to the Trustee, all exigible transfer taxes or other government charges.

DATED this
 _____ 
day of                                         , 20_____.

	 	 	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 		 	 
	 

	 	 	)	 	 	Signature of Registered Holder 

	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	)	 	 	 	 	 
	 

	 	 	 	 	 	 
	Signature Guaranteed

	 	 	)	 	 	Name of Registered Holder	 	 
	 

	 	 	)	 	 	 	 	 

o Please check if the certificates representing the Underlying Securities are to be delivered at
the office where this Special Warrant Certificate is surrendered, failing which such certificates
will be mailed to the address set out above. Certificates will be delivered or mailed as soon as
practicable after the surrender of this Special Warrant Certificate to the Trustee.

Instructions:

	1.	 	The registered holder may exercise its right to receive Underlying Securities on exercise
hereof by completing this form and surrendering this form and the Special Warrant Certificate
representing the Special Warrants being exercised to the Trustee.

	2.	 	If the Notice of Conversion indicates that the Underlying Securities are to be issued to a
person or persons other than the registered holder of the Special Warrant Certificate, the
signature of such registered holder on the Notice of Conversion must be guaranteed by a
Schedule I Canadian chartered bank, or a member of a recognized Medallion Guarantee program.
The stamp affixed thereon by the guarantor must bear the actual words “Signature Guaranteed”
or “Medallion Guaranteed” and otherwise be in accordance with industry standards.

 

2

 

FORM OF TRANSFER

CIBC MELLON TRUST COMPANY

1600 — 1066 West Hastings Street

Vancouver, British Columbia V6E 3X1

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

                 
                                                                                                                                 
      (print name and address) the Special Warrants
represented by this Special Warrant Certificate and hereby appoints                                                             
as its attorney with full power of substitution to transfer the Special Warrants on the appropriate
register of the Trustee.

DATED this
 _____ 
day of                                         , 201_____.

	 	 	 	 	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	)	 	 	Signature of Transferor
	 

	 	 	)	 	 	 
	 

	 	 	)	 	 	 
	 

	 	 	 	 
	Signature Guaranteed

	 	 	)	 	 	Name of Transferor
	 

	 	 	)	 	 	 

CERTAIN REQUIREMENTS RELATING TO TRANSFERS

	1.	 	In the case of any transfer of Special Warrants to a Person resident in, or otherwise subject
to the securities laws of, any province or territory of Canada, either the transferee must be
an Accredited Investor within the meaning of such applicable securities laws in Canada or the
transfer must otherwise be exempt from the prospectus and registration requirements of
applicable securities laws in Canada.

	2.	 	The Special Warrant Indenture contains certain other requirements relating to the transfer of
Special Warrants, including, among other things, a requirement in certain cases that a written
opinion of U.S. counsel of recognized standing be delivered in connection with the transfer of
Special Warrants by a U.S. Person or a person in the United States or a person holding Special
Warrants for the account or benefit of a U.S. Person or a person in the United States, to a
person in the United States or for the account or benefit of a U.S. Person or a person in the
United States.

	3.	 	The signature of the transferor must correspond in every particular with the surname and the
first name(s) or initials shown on the face of this certificate and the endorsement must be
signature guaranteed, in either case, by a Schedule 1 Canadian chartered bank, a firm which is
a member of a recognized stock exchange in Canada, a national securities exchange in the
United States, or the National Association of Securities dealers or a member of a recognized
medallion program. The stamp affixed thereon by the guarantor must bear the actual words
“signature guarantee”, or “medallion guaranteed” and otherwise be in accordance with industry
standards.

 

 

SCHEDULE B TO THE SPECIAL WARRANT INDENTURE DATED AS OF

FEBRUARY 25, 2010 AMONG IVANHOE ENERGY INC., MACQUARIE CAPITAL

MARKETS CANADA LTD. AND

CIBC MELLON TRUST COMPANY

DECLARATION FOR REMOVAL OF LEGEND

			
	To:	 	IVANHOE ENERGY INC. (the “Company”) and its

Registrar/Transfer Agent for the subject securities.

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

	 	 	 	 	 	 	 	 	 
	By:

	 	 	 	 	 	Date:	 	 
	 

	 	 
	 	 	 	 	 	 
	 

	 	Signature	 	 	 	 	 	 

Name (please print)                                                                  
               

 

 

AFFIRMATION BY SELLER’S BROKER-DEALER (IF ANY)

We have read the foregoing representations of our customer,                                          (the
“Seller”), with regard to our sale, for such Seller’s account, of the securities of the Company
described therein, and on behalf of ourselves we certify and affirm that (A) we have no knowledge
that the transaction had been prearranged with a buyer in the United States, (B) the transaction
was executed on or through the facilities of the Toronto Stock Exchange and (C) neither we, nor any
person acting on our behalf, engaged in any directed selling efforts in connection with the offer
and sale of such securities. Terms used herein have the meanings given to them by Regulation S.

	 	 	 	 	 
	 	 	 
	Name of Firm	 	 
	 
	 	 	 	 
	By:
	 	 	 	 
	 

	 	Authorized Officer

	 	 
	 
	 	 	 	 
	Date:
	 	 	 	 
	 

	 	 

	 	 

 

2

 

SCHEDULE C TO THE SPECIAL WARRANT INDENTURE DATED AS OF

FEBRUARY 25, 2010 AMONG IVANHOE ENERGY INC., MACQUARIE CAPITAL

MARKETS CANADA LTD. AND

CIBC MELLON TRUST COMPANY

RELEASE AND PAYMENT CERTIFICATE

	 	 	 
	TO:

	 	CIBC Mellon Trust Company (the “Trustee”), as Trustee relating to
the issue of special warrants (“Special Warrants”) of Ivanhoe
Energy Inc. (the “Company”)
	 
	 	 
	AND TO:

	 	Macquarie Capital Markets Canada Ltd. (the “Agent”)

This Release and Payment Certificate is being provided pursuant to Section 6.3(a) of the
Special Warrant Indenture (the “Indenture”) dated February 25, 2010 among the Company, the Trustee
and the Agent. Capitalized terms not defined herein have the meaning ascribed to them in the
Indenture.

The undersigned,                                         , the                       
                   of the Company, hereby certifies
for and on behalf of the Company and not in a personal capacity that the Release Condition has been
met.

The Company hereby directs the Trustee to release the Escrowed Funds as follows:

	 	(1)	 	in satisfaction of the commission payable to the Agent pursuant
to the Agency Agreement:

	 	 	 
	Amount:

	 	$                    
	 
	 	 
	Wire Instructions:

	 	                                                            
	 

	 	                                                            
	 

	 	                                                            

	 	(2)	 	with respect to any Escrowed Funds not allocated to (1) above,
to the Company:

	 	 	 
	Amount:

	 	$                    
	 
	 	 
	Wire Instructions:

	 	                                                            
	 

	 	                                                            
	 

	 	                                                            

 

 

DATED at Vancouver, British Columbia, this
 _____ 
day of                     , 2010.

IVANHOE ENERGY INC.

	 	 	 	 	 
	Per:  	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 

ACKNOWLEDGED by

MACQUARIE CAPITAL MARKETS CANADA LTD.

	 	 	 	 	 
	Per:  	 	 	 	 
	 	Name:  	 	 	 
	 	Title:  	 	 	 

 

2

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