Document:

Agreement, dated May 24, 2007 - Gary Stougaard

 Exhibit 10.5 
 AGREEMENT 
 This agreement (this “Agreement”) is entered into as of May 24, 2007 (the
“Effective Date”), by and between Sunstone Hotel Investors, Inc. (the “Company”) and Gary A. Stougaard (the “Executive”) on the terms and conditions set forth below. 
 1. Consideration; Potential Payment; Consulting Services 
 (a) In consideration of the payment described in Section 1(b) and the Executive’s continued compliance with his obligations under the Related Agreements (defined below) until October 1, 2008, and other good and valuable
consideration, the sufficiency of which the parties hereby acknowledge, the parties make the agreements set forth below. The Executive acknowledges and agrees that (i) this Agreement extends the term of his obligations not to compete with and
not to solicit employees of the Company and its affiliates under that certain Non-Competition Agreement, dated as of October 26, 2004, between the Company and the Executive (the “Non-Competition Agreement”) until October 1, 2008,
(ii) the following consideration is in addition to anything of value to which he is or may become entitled to receive under any other plan, program policy or agreement of, or with, the Company and (iii) the agreements and obligations
provided for herein are in addition to any other agreements and obligations the Executive may have with, or to, the Company (including without limitation that certain Non-Disclosure Agreement, dated as of October 26, 2004, between the Company
and the Executive (the “Non-Disclosure Agreement”; and collectively with this Agreement and the Non-Competition Agreement, the “Related Agreements”), which agreements shall continue in full force and effect in accordance with
their terms, other than as extended and supplemented hereby. 
 (b) In the event that on or prior to October 1, 2008, the Executive has
not breached any of the obligations set forth in the Related Agreements (as extended by this Agreement), and subject to the provisions of Sections 1(c) and (d) below, the Executive shall be entitled to receive a single lump sum cash payment in
the amount of $515,000, less applicable withholdings and deductions, as soon as practicable (but not later than ninety (90) days) after October 1, 2008. 
 (c) Notwithstanding anything herein to the contrary, receipt by the Executive of any payment under Section 1(b) of this Agreement is contingent upon the Executive executing the release of claims set forth in
Exhibit 1 hereto on or after October 1, 2008, and failing to revoke such release during the applicable revocation period. 
 (d) The
Executive hereby agrees he will be available for the period from the Effective Date through October 1, 2008, to provide consulting services to the Company as reasonably requested by the Company, provided that such consulting services shall only
relate to matters on which the Executive worked while he was employed with the Company and shall not exceed ten (10) hours per month or be required to be performed at times which interfere with future employment or other activities of the
Executive and, provided, further, that the Executive shall not be required to travel for purposes of providing such consulting services. Such consulting services will be provided by the Executive for no additional consideration. 
 (e) The Company and the Executive agree that notwithstanding the obligations in the Non-Competition Agreement, the Executive may acquire and/or manage,
directly or indirectly, 

 
hotel properties that were not identified as potential acquisition targets for the Company during the Executive’s employment with the Company. The
foregoing, however, shall in no way change the Executive’s other obligations under the Related Agreements, including, but not limited to, refraining from disclosing and using the Company’s confidential information, non-disparagement of the
Company and non-solicitation of employees. 
 (f) In no event shall the Executive be obligated to seek other employment or take any other
action by way of mitigation of the amounts payable to the Executive under any of the provisions of this Agreement, and such amounts shall not be reduced whether or not the Executive obtains other employment, except to the extent the Company is
permitted to reduce post-termination group health insurance coverage being provided to the Executive and his eligible family members in accordance with the provisions of Section 4(a)(ii) of the employment agreement, dated October 26, 2004,
between the Company and the Executive. 
 2. Restrictions 
 The Executive hereby agrees that until October 1, 2008, the Executive or any Affiliate (as such term is defined in Rule 12b-2 under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), and regardless of whether such person is an Affiliate on the date hereof) will not, and will not cause any of his Affiliates, directly or indirectly, to (a) acquire or offer to acquire or agree to acquire from any person, directly
or indirectly, by purchase or merger, through the acquisition of control of another person, by joining a partnership, limited partnership or other “group” (within the meaning of Section 13(d)(3) of the Exchange Act) or otherwise,
beneficial ownership of any equity securities of the Company, or direct or indirect rights (including convertible securities) or options to acquire such beneficial ownership (or otherwise act in concert with respect to any such securities, rights or
options with any person that so acquires, offers to acquire or agrees to acquire); provided, however, that no such acquisition, offer to acquire or agreement to acquire shall be deemed to occur solely due to (i) a stock split, reverse stock
split, reclassification, reorganization or other transaction by the Company affecting any class of the outstanding capital stock of the Company generally, (ii) a stock dividend or other pro rata distribution by the Company to holders of its
outstanding capital stock or (iii) an issuance of shares by the Company upon the exercise of options; or (b) make, or in any way participate in, directly or indirectly, any “solicitation” of “proxies” to vote (as such
terms are used in the Regulation 14A promulgated under the Exchange Act), become a “participant” in any “election contest” (as such terms are defined in Rule 14a-11 promulgated under the Exchange Act) or initiate, propose or
otherwise solicit stockholders of the Company for the approval of any stockholder proposals, in each case with respect to the Company; or (c) form, join, in any way participate in, or encourage the formation of, a group (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to any voting securities of the Company; or (d) deposit any securities of the Company into a voting trust, or subject any securities of the Company to any agreement or arrangement with
respect to the voting of such securities, or other agreement or arrangement having similar effect; or (e) alone or in concert with others, seek, or encourage or support any effort, to influence or control the management, board of directors,
business, policies, affairs or actions of the Company, including through the acquisition of securities of the Company; or (f) request the Company (or any directors, officers, employees or agents of the Company), directly or indirectly, to
amend, waive or modify any provision of this Agreement; or (g) make any public disclosure, or take any action which could require the Company to make any public disclosure, with respect to any of the matters set forth in this Agreement.

  

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 3. Non-disparagement 
 As of the Effective Date and thereafter, the Executive agrees for himself and all others acting on his behalf, that he shall not, in any manner, directly or indirectly, make or publish, or assist, support, instigate
or participate in the making or publication of any statement (orally or in writing) or take, assist, support, instigate or participate in any action or attempted action that would libel, slander, disparage, denigrate, ridicule or criticize the
Company, any of its affiliates or any of their past or present employees, officers or directors or that would otherwise harm the reputation, goodwill or commercial interest of the Company or any of its affiliates. 
 4. Miscellaneous 
 (a) For purposes of this Agreement,
(i) a “person” shall mean any individual, firm, partnership, association, corporation or other entity or group of such persons; (ii) a person shall have “beneficial ownership” of any securities as to which such person
may be deemed the beneficial owner pursuant to Rule 13d-3 under the Exchange Act and shall include, without limitation, any securities such person has the right to become the beneficial owner of (whether or not such right is immediately
exercisable) pursuant to any agreement, arrangement or understanding or upon the exercise of any exchange right, conversion right, option, warrant or other right; and (iii) a “share” in the Company shall mean a share of capital stock.

 (b) The Executive acknowledges and agrees that irreparable damage to the Company would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were otherwise breached and that such damage would not be compensable in money damages. It is accordingly agreed that the Company shall be entitled to, and the Executive agrees
not to take action, directly or indirectly, in opposition to the Company’s seeking, specific enforcement of, and injunctive relief to prevent any violation of, the terms hereof, in addition to any other remedy or relief available at law or in
equity. 
 (c) This Agreement shall be construed in accordance with and governed by the laws of the State of California (without regard to
the principles of conflict of laws thereof). 
 (d) This Agreement may be amended, modified or supplemented only by written agreement of the
parties hereto. 
 (e) Any failure of any party to comply with any obligation, covenant, agreement or condition herein may be waived by the
party entitled to the benefit of such obligation, covenant, agreement or condition only by a written instrument signed by such party, but such waiver or failure to insist upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or other failure. Whenever this Agreement requires or permits consent by or on behalf of any party hereto, such consent shall be effective only if given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth in this Section. 
  

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 (f) This Agreement and all of the provisions hereof shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. 
 (g) This Agreement may be executed in two or more counterparts, each
of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 
 (h) If any provision of this
Agreement shall be deemed or declared to be unenforceable, invalid or void, the same shall not impair any of the other provisions of this Agreement. 
 (i) To the extent that the Executive is determined to be a “specified employee” within the meaning of Section 409A(a)(2)(B) of the Internal Revenue Code of 1986, as amended, and the payment of any
amount under this Agreement is subject to a six-month delay in payment, the parties hereto agree that any such payment shall be so delayed. 
  

 -4- 

 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and
year first above written. 
  

			
	SUNSTONE HOTEL INVESTORS, INC.
		
	By:	 	  

	Name:	 	
	Title:	 	
	
	EXECUTIVE
	
	By: Gary A Stougaard

  

 -5- 

 EXHIBIT 1 
 GENERAL RELEASE 
 For a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, except as otherwise expressly provided herein, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Sunstone Hotel Investors, Inc., a Maryland corporation, Sunstone Hotel
Partnership, LLC, a Delaware limited liability company and each of their partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting
by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands,
damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or
any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon,
or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on
Releasee’s right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In
Employment Act, the Americans With Disabilities Act, and the California Fair Employment and Housing Act. 
 THE UNDERSIGNED ACKNOWLEDGES THAT
HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.” 
 THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE
THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. 
 IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT
PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS: 
 (A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS
RELEASE; 
  

 -6- 

 (B) HE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND 
 (C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT
REVOCATION PERIOD. 
 The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any
Claim which he may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by
Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to
recovery by the Releasees against the undersigned under this indemnity. 
 The undersigned agrees that if he hereafter commences any suit
arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in
addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim. 
 The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the
Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned. 
 Notwithstanding any provision contained herein, this Release does not release any rights which the undersigned has (A) to receive payments and benefits (i) under the Agreement entered into as of May 24, 2007, between Sunstone
Hotel Investors, Inc. and the undersigned or (ii) which are described in Exhibit A hereto or (B) under the Indemnification Agreement entered into as of October 26, 2004, between Sunstone Hotel Investors, Inc. and the undersigned.

 IN WITNESS WHEREOF, the undersigned has executed this Release this      day of
                    , 2008. 
  

	
	  

	Gary A. Stougaard

  

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 Exhibit A 
 Payments under Section 4(a) of Employment Agreement 
 (Gary Stougaard) 
  

	I.	Two Lump Sum Cash Payments: 

  

							
	1. Accrued Obligations: (a) earned but unpaid Base Salary, (b) Accrued Vacation and (c) Accrued Bonus as described under Section 4(a)(i) of the Employment
Agreement. Base salary and vacation pay that is accrued but unpaid as of the date of termination of the Executive’s employment will be paid in accordance with California law.
			
	 2. Severance Amount
  
 Severance Amount= 1x (Base Salary + Bonus Severance Amount)
 Bonus Severance
Amount = Lesser of:
 - Target Annual Bonus of 2007, or
 - Previous year actual bonus
	  			 		
			
	 Target Annual Bonus:
	  			 		
	 Estimated 2007 Earnings**
	  	376,247.18	 	 		
	 Target Bonus Accrual Rate =
	  	75	%	 		
		  	 	 	 		
	 Target Annual Bonus =
	  	282,185.39	 	 		
		  	 	 	 		
	 **Projected earnings based on 26 pay periods and March 2007 pay increase.
	  			 		
	 Prior Year Bonus Paid
	  	339,230.78	 	 		
		  	 	 	 		
	 Lesser of the 2 =
	  	282,185.39	 	 		
	 Base Salary =
	  	378,473.89	 	 		
		  	 	 	 		
		  	660,659.28	 	 		
		  	 	 	 		
	 Multiple =
	  	1.00	 	 		
		  	 	 	 		
	 Severance Amount =
	  	660,659.28	 	 	$	660,659.28
		  	 	 	 	 	 
	 Total Severance Amount Lump Sum Payment
	  			 	$	660,659.28
		  			 	 	 

  

	II.	18 Months of Group Health Coverage: In accordance with Section 4(a)(ii) of the Employment Agreement. 

  

	III.	One Year’s Vesting: 

  

											
	 Grants
	  	Grant Date	  	Grant
Number	  	Unvested
Remaining
Shares	  	 Next
 Vesting
 Date
 Within One
Year
	  	Number of
Shares
Vesting
Within One
Year
	 2004 Grant
	  	10/26/2004	  	92,105	  	55,264	  	10/26/2007	  	18,421
	 2006 Grant
	  	2/9/2006	  	31,203	  	20,802	  	2/9/2008	  	10,401
	 2007 Grant
	  	2/7/2007	  	19,680	  	19,680	  	2/7/2008	  	6,560
		  		  		  		  		  	 
	 Total Shares Vesting Within One Year
	  		  		  		  		  	35,382
		  		  		  		  		  	 

  

	IV.	Other Benefits: In accordance with Section 4(a)(iv) of the Employment Agreement. 

 Initial Here:              

 EXHIBIT B  
 GENERAL RELEASE  
 For a valuable consideration, the receipt and adequacy of which are hereby
acknowledged, except as otherwise expressly provided herein, the undersigned does hereby release and forever discharge the “Releasees” hereunder, consisting of Sunstone Hotel Investors, Inc., a Maryland corporation, Sunstone Operating
Partnership, LLC, a Delaware limited liability company and each of their partners, subsidiaries, associates, affiliates, successors, heirs, assigns, agents, directors, officers, employees, representatives, lawyers, insurers, and all persons acting
by, through, under or in concert with them, or any of them, of and from any and all manner of action or actions, cause or causes of action, in law or in equity, suits, debts, liens, contracts, agreements, promises, liability, claims, demands,
damages, losses, costs, attorneys’ fees or expenses, of any nature whatsoever, known or unknown, fixed or contingent (hereinafter called “Claims”), which the undersigned now has or may hereafter have against the Releasees, or
any of them, by reason of any matter, cause, or thing whatsoever from the beginning of time to the date hereof. The Claims released herein include, without limiting the generality of the foregoing, any Claims in any way arising out of, based upon,
or related to the employment or termination of employment of the undersigned by the Releasees, or any of them; any alleged breach of any express or implied contract of employment; any alleged torts or other alleged legal restrictions on
Releasee’s right to terminate the employment of the undersigned; and any alleged violation of any federal, state or local statute or ordinance including, without limitation, Title VII of the Civil Rights Act of 1964, the Age Discrimination In
Employment Act, the Americans With Disabilities Act, and the California Fair Employment and Housing Act. 
 THE UNDERSIGNED ACKNOWLEDGES THAT
HE HAS BEEN ADVISED BY LEGAL COUNSEL AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS: 
 “A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER
SETTLEMENT WITH THE DEBTOR.” 
 THE UNDERSIGNED, BEING AWARE OF SAID CODE SECTION, HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE
THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT. 
 IN ACCORDANCE WITH THE OLDER WORKERS BENEFIT
PROTECTION ACT OF 1990, THE UNDERSIGNED IS HEREBY ADVISED AS FOLLOWS: 
 (A) HE HAS THE RIGHT TO CONSULT WITH AN ATTORNEY BEFORE SIGNING THIS
RELEASE; 

 (B) HE HAS TWENTY-ONE (21) DAYS TO CONSIDER THIS RELEASE BEFORE SIGNING IT; AND 
 (C) HE HAS SEVEN (7) DAYS AFTER SIGNING THIS RELEASE TO REVOKE THIS RELEASE, AND THIS RELEASE WILL BECOME EFFECTIVE UPON THE EXPIRATION OF THAT
REVOCATION PERIOD. 
 The undersigned represents and warrants that there has been no assignment or other transfer of any interest in any
Claim which he may have against Releasees, or any of them, and the undersigned agrees to indemnify and hold Releasees, and each of them, harmless from any liability, Claims, demands, damages, costs, expenses and attorneys’ fees incurred by
Releasees, or any of them, as the result of any such assignment or transfer or any rights or Claims under any such assignment or transfer. It is the intention of the parties that this indemnity does not require payment as a condition precedent to
recovery by the Releasees against the undersigned under this indemnity. 
 The undersigned agrees that if he hereafter commences any suit
arising out of, based upon, or relating to any of the Claims released hereunder or in any manner asserts against Releasees, or any of them, any of the Claims released hereunder, then the undersigned agrees to pay to Releasees, and each of them, in
addition to any other damages caused to Releasees thereby, all attorneys’ fees incurred by Releasees in defending or otherwise responding to said suit or Claim. 
 The undersigned further understands and agrees that neither the payment of any sum of money nor the execution of this Release shall constitute or be construed as an admission of any liability whatsoever by the
Releasees, or any of them, who have consistently taken the position that they have no liability whatsoever to the undersigned. 
 Notwithstanding any provision contained herein, this Release does not release any rights which the undersigned has (A) to receive payments and benefits (i) under the Agreement entered into as of May 24, 2007, between Sunstone
Hotel Investors, Inc. and the undersigned or (ii) which are described in Exhibit A hereto or (B) under the Indemnification Agreement entered into as of October 26, 2004, between Sunstone Hotel Investors, Inc. and the undersigned.

 IN WITNESS WHEREOF, the undersigned has executed this Release this      day of
                    , 2007. 
  

	
	  

	Gary A. StougaardForm of Special Warrant Certificate

 Exhibit 4.1 
 UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (i) AUGUST 2, 2007 AND (ii) THE DATE THE ISSUER BECAME A
REPORTING ISSUER IN ANY PROVINCE OR TERRITORY. 
 THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF
1933, AS AMENDED (THE “1933 ACT”) OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH LAWS
COVERING SUCH SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND
SUCH LAWS. THE SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE 1933 ACT. 
 SPECIAL WARRANT CERTIFICATE 
 STERLING MINING COMPANY 
 (Incorporated under the laws of the State of Idaho) 
  

			
	 SPECIAL WARRANT
 CERTIFICATE NO.            
	 	            SPECIAL WARRANTS

 THIS IS TO CERTIFY THAT 
 [Name of holder] 
 [Address of holder] 
 (the “Special Warrantholder”) is the registered holder of the number of special warrants (the “Special Warrants”) stated above and is
entitled to receive for each Special Warrant evidenced by this certificate, in the manner and subject to the restrictions and adjustments set forth herein, one unit (a “Unit”) of Sterling Mining Company (the
“Corporation”) for no further payment. Each Unit shall consist, subject to adjustments, of one share of common stock of the Corporation (a “Common Share”), par value U.S.$0.05 per share and one half of one share
purchase warrant (each whole warrant, a “Warrant”). Each Warrant is exercisable for one Common Share until August 2, 2009, at an exercise price of U.S.$4.10 per Common Share. The Warrants shall be governed by certificates
substantially in the form and terms attached hereto. All capitalized terms used by not otherwise defined herein shall have the meaning ascribed to such terms in the subscription agreement between the Special Warrantholder and the Corporation dated
the date hereof. 

 The Special Warrants evidences by this certificate will be automatically exercised (the “Automatic
Exercise”) into Units, without any action, including additional payment, on the part of the Special Warrantholder, on the third business day after a (i) Final Receipt (as defined herein) has been issued and (ii) the Corporation
and the Agents confirm in writing that the conditions of Automatic Exercise have been fulfilled and all other regulatory or other approvals have been received. The Corporation shall upon such automatic exercise, register certificates representing
the Common Shares and Warrants issued upon the Automatic Exercise in the name and at the address appearing on the Special Warrant register maintained by the Corporation. 
 The right to acquire Units may only be exercised by the Special Warrantholder at any time from and after the
90th day after the date hereof and prior to the Automatic Exercise by: 
  

	 	(a)	duly completing and executing the exercise form (the “Exercise Form”) attached hereto as Appendix “A”; and 

  

	 	(b)	surrendering this warrant certificate (the “Special Warrant Certificate”), with the Exercise Form to the Corporation at its principal address at 2201 Government
Way, Suite E, Coeur d’Alene, Idaho, U.S.A., 83814. 

 The Special Warrants represented by this Special Warrant Certificate shall be deemed
to be surrendered only upon personal delivery hereof or, if sent by mail or other means of transmission, upon actual receipt thereof by the Corporation at the office referred to above, unless the Corporation accepts another form of delivery.

 Upon the exercise of Special Warrants, the person or persons in whose name or names the Units issuable upon subscription of the Units are to be issued
shall be deemed for all purposes to be the Special Warrantholder or Special Warrantholders of record of such Units and upon surrender of these Special Warrants, the Corporation covenants that it will cause a certificate or certificates representing
such Units to be delivered or mailed to the person or persons at the address or addresses specified in by such person or persons within three business days. 
 The registered Special Warrantholder of these Special Warrants may acquire any lesser number of Units than the number of Units which may be purchased for the Special Warrants represented by this Special Warrant Certificate. In such event,
the Special Warrantholder shall be entitled to receive a new Special Warrant Certificate for the balance of the Units which may be purchased. No fractional Common Shares or Warrants will be issued and no cash consideration will be paid in lieu of
fractional Common Shares or Warrants. 
 In the event of certain alterations to the Common Shares, including any subdivision, consolidation or
reclassification, and in the event of certain forms of reorganization of the Corporation, including any amalgamation, merger or arrangement, the Special Warrantholders of Special Warrants shall, upon subscription of the Special Warrants following
the occurrence of any of those events, be entitled to receive the same number and kind of securities that they would have been entitled to receive had they subscribed for their Special Warrants immediately prior to the occurrence of those events
more fully described below. 
 All certificates issued in exchange for or in substitution of, the Special Warrant Certificates, unless such exchange or
substitution shall occur subsequent to the date that is (A) the date on which a Final Receipt (the term “Final Receipt” means a receipt for a final 

  

 Page 2 

 
prospectus qualifying the Common Shares and Warrants, issued by the securities regulatory authorities of the jurisdictions of Canada where subscribers of
special warrants issued by the Corporation on August 2, 2007 reside) or (B) four months and a day after the later of (i) August 2, 2007, and (ii) the date the Corporation became a reporting issuer in any province or
territory of Canada (the “Freetrade Date”), shall bear the following legend: 
 “UNLESS PERMITTED UNDER SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (i) AUGUST 2, 2007, AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR
TERRITORY.” 
 In the event that the Special Warrants are exercised by the Special Warrantholder prior to the Freetrade Date, the certificates
evidencing the Common Shares and Warrants shall bear the following legend: 
 “UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE
HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (i) AUGUST 2, 2007, AND (ii) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”

 The certificates representing the Common Shares and Warrants, if issued prior to the Registration Statement (as such term is defined in the subscription
agreement between the Corporation and the investor pursuant to which the Special Warrants have been issued) becoming effective, and all certificates issued in substitution or exchange thereof, will bear a legend substantially in the following form:

 “THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
“1933 ACT”) OR APPLICABLE STATE SECURITIES LAWS. THESE SECURITIES MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT AND SUCH LAWS COVERING SUCH
SECURITIES, OR THE COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY STATING THAT SUCH OFFER, SALE, PLEDGE OR OTHER TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE SECURITIES ACT AND SUCH LAWS. THE
SECURITIES REPRESENTED BY THE CERTIFICATE CANNOT BE THE SUBJECT OF HEDGING TRANSACTIONS UNLESS SUCH TRANSACTIONS ARE CONDUCTED IN COMPLIANCE WITH THE 1933 ACT.” 
 In addition, Warrants shall bear another legend substantially in the following form: 
 “THIS WARRANT
[AND IF THE REGISTRATION STATEMENT HAS NOT BECOME EFFECTIVE AT THE TIME OF ISSUANCE OF THE WARRANTS, ADD THE FOLLOWING: AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS
AMENDED (THE “1933 ACT”), OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. THIS WARRANT MAY NOT BE EXERCISED BY OR ON BEHALF OF A U.S. PERSON OR PERSON IN THE UNITED STATES UNLESS THIS WARRANT AND SECURITIES ISSUABLE UPON EXERCISE
OF THIS 

  

 Page 3 

 
WARRANT HAVE BEEN REGISTERED UNDER THE 1933 ACT AND THE APPLICABLE SECURITIES LEGISLATION OF ANY SUCH STATE OR AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT.” 
 provided
that, if at any time, in the opinion of counsel to the Corporation, such legends are no longer necessary or advisable under any such securities laws, or the holder of any such legended certificate, at the holder’s expense, provides the
Corporation with evidence satisfactory in form and substance to the Corporation (which may include an opinion of counsel satisfactory to the Corporation) to the effect that such legends are not required, such legended certificate may thereafter be
surrendered to the Corporation in exchange for a certificate which does not bear such legend. 
  

	1.1	Adjustment of Number of Common Shares 

  

	(a)	Adjustment: The rights of the holder of any Special Warrant, including the number of Common Shares issuable upon the exchange or deemed exchange of such Special
Warrant, shall be adjusted from time to time in the events and in the manner provided in, and in accordance with the provisions of, this section 1.1. The Share Rate (as defined hereinafter) in effect on any date shall be subject to adjustment from
time to time as follows: 

  

	 	(i)	If at any time from the date hereof to the date of Automatic Exercise (the “Adjustment Period”) the Corporation shall: 

  

	 	A.	fix a record date for the issue of, or issue, common shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend;

  

	 	B.	fix a record date for the distribution to, or make a distribution to, the holders of all or substantially all of the outstanding Common Shares payable in common shares or securities
exchangeable for or convertible into common shares (other than a distribution which constitutes a Rights Offering (as defined hereinafter) or a Special Distribution (as defined hereinafter)); 

  

	 	C.	subdivide the outstanding common shares into a greater number of common shares; or 

  

	 	D.	consolidate the outstanding common shares into a smaller number of common shares; 

 (any of the events in subclauses A, B, C and D above being herein called a “Common Share Reorganization”), the Share Rate shall be adjusted on the earlier of the record date on which holders of Common
Shares are determined for the purposes of the Common Share Reorganization and the effective date of the Common Share Reorganization to the number determined by multiplying the Share Rate in effect immediately prior to such record date or effective
date, as the case may be, by a fraction: 
  

	 	A.	the numerator of which shall be the number of common shares which will be outstanding immediately after giving effect to such Common Share Reorganization (including in the case of a
distribution of securities exercisable or exchangeable for or convertible into Common Shares the number of Common Shares which would be outstanding had such securities been exercised or exchanged for or converted into Common Shares on such date);
and 

  

 Page 4 

	 	B.	the denominator of which shall be the number of common shares outstanding on such record date or effective date, as the case may be, before giving effect to such Common Share
Reorganization. 

 To the extent that any adjustment in the Share Rate occurs pursuant to this paragraph 1.1(a)(i) as a result
of the fixing by the Corporation of a record date for the issue or distribution of securities exercisable or exchangeable for or convertible into Common Shares, the Share Rate shall be readjusted immediately after the expiry of any relevant
exercise, exchange or conversion right to the Share Rate which would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of
any further such right. 
  

	 	(ii)	If at any time during the Adjustment Period the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding
Common Shares of rights, options or warrants pursuant to which the holders thereof are entitled, during a period expiring not more than forty-five days after the record date for such issue (such period being the “Rights Period”), to
subscribe for or purchase common shares or securities exercisable or exchangeable for or convertible into Common Shares at a price per share to the holder thereof (or in the case of securities exercisable or exchangeable for or convertible into
common shares, at an exercise, exchange or conversion price per share) which is less than 95% of the Current Market Price (as defined hereinafter) of the Common Shares as of such record date (any of such events being called a “Rights
Offering”), the Share Rate shall be adjusted effective immediately after the record date for such Rights Offering to the number determined by multiplying the Share Rate in effect on such record date by a fraction: 

 

	 	A.	the numerator of which shall be the sum of the number of Common Shares outstanding on such record date and the number of Common Shares offered pursuant to the Rights Offering
(including in the case of the issue or distribution of securities exercisable or exchangeable for or convertible into Common Shares the number of Common Shares for or into which such securities may be exercised, exchanged or converted); and

  

	 	B.	the denominator of which shall be the aggregate of 

  

	 	I.	the number of Common Shares outstanding on the record date for the Rights Offering, and 

  

 Page 5 

	 	II.	the quotient determined by dividing 

  

	 	(1)	either (a) the product of the number of Common Shares offered during the Rights Period pursuant to the Rights Offering and the price at which such Common Shares are offered,
or, (b) the product of the exercise, exchange or conversion price of the securities so offered and the number of Common Shares for or into which the securities offered pursuant to the Rights Offering may be exercised, exchanged or converted, as
the case may be, by 

  

	 	(2)	the Current Market Price of the Common Shares as of the record date for the Rights Offering. 

 If by the terms of the rights, options, or warrants referred to in this paragraph 1.1(i), there is more than one purchase, exercise, exchange or
conversion price per common share, the aggregate price of the total number of additional common shares offered for subscription or purchase, or the aggregate exercise, exchange or conversion price of the exercisable, exchangeable or convertible
securities so offered, shall be calculated for purposes of the adjustment on the basis of the lowest purchase, exercise, exchange or conversion price per Common Share, as the case may be. Any Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding for the purpose of any such calculation. To the extent that any adjustment in the Share Rate occurs pursuant to this paragraph 1.1(a)(ii) as a result of the fixing by the Corporation of a record date
for the issue or distribution of rights, options or warrants referred to in this paragraph 1.1(a)(ii), the Share Rate shall be readjusted immediately after the expiry of any relevant exercise, exchange or conversion right to the Share Rate which
would then be in effect based upon the number of Common Shares actually issued and remaining issuable after such expiry and shall be further readjusted in such manner upon the expiry of any further such right. 
  

	 	(iii)	If at any time during the Adjustment Period the Corporation shall fix a record date for the issue or distribution to the holders of all or substantially all of the outstanding
Common Shares of: 

  

	 	A.	shares of the Corporation of any class other than Common Shares; 

  

	 	B.	rights, options or warrants to acquire Common Shares or securities exercisable, exchangeable for or convertible into Common Shares (other than rights, options or warrants pursuant
to which holders of Common Shares are entitled, during a period expiring not more than forty-five days after the record date for such issue, to subscribe for or purchase Common Shares or securities exercisable or exchangeable for or convertible into
Common Shares at a price per share (or in the case of securities exercisable or exchangeable for or convertible into Common Shares at an exercise, exchange or conversion price per share) which is at least 95% of the Current Market Price of the
Common Shares as of such record date); 

  

 Page 6 

	 	C.	evidences of indebtedness of the Corporation; or 

  

	 	D.	any property or assets of the Corporation; 

 and if such
issue or distribution does not constitute a Common Share Reorganization or a Rights Offering (any of such non-excluded events being herein called a “Special Distribution”), the Share Rate shall be adjusted effective immediately
after the record date for the Special Distribution to the number determined by multiplying the Share Rate in effect on the record date for the Special Distribution by a fraction: 
  

	 	I.	the numerator of which shall be the product obtained by multiplying the number of Common Shares outstanding on such record date by the Current Market Price of the Common Shares as
of such record date; and 

  

	 	II.	the denominator of which shall be the difference between 

  

	 	(1)	the product of the number of Common Shares outstanding on such record date and the Current Market Price of the Common Shares of as such record date, and 

  

	 	(2)	the fair value, as determined by the directors of the Corporation, to the holders of Common Shares of the shares, rights, options, warrants, evidences of indebtedness or property or
assets to be issued or distributed in the Special Distribution. 

 Any Common Shares owned by or held for the account of the
Corporation shall be deemed not to be outstanding for the purpose of such calculation. To the extent that any adjustment in the Share Rate occurs pursuant to this paragraph 1.1(a)(iii) as a result of the fixing by the Corporation of a record date
for the issue or distribution of rights, options or warrants to acquire Common Shares or securities exercisable or exchangeable for or convertible into Common Shares referred to in this paragraph 1.1(b)(iii), the Share Rate shall be readjusted
immediately after the expiry of any relevant exercise, exchange or conversion right to the amount which would then be in effect based upon the number of Common Shares issued and remaining issuable after such expiry and shall be further readjusted in
such manner upon the expiry of any further such right. 
  

	 	(iv)	If at any time during the Adjustment Period there shall occur: 

  

	 	A.	a reclassification or redesignation of the Common Shares, any change of the Common Shares into other shares or securities or any other capital reorganization involving the Common
Shares other than a Common Share Reorganization; 

  

	 	B.	a consolidation, amalgamation or merger of the Corporation with or into another body corporate which results in a reclassification or redesignation of the Common Shares or a change
of the Common Shares into other shares or securities; or 

  

 Page 7 

	 	C.	the transfer of the undertaking or assets of the Corporation as an entirety or substantially as an entirety to another corporation or entity; 

 (any of such events being called a “Capital Reorganization”), after the effective date of the Capital Reorganization the Holder shall be
entitled to receive, and shall accept, upon exchange of the Special Warrants, in lieu of the number of Common Shares to which the Holder was theretofor entitled upon the exchange of the Special Warrants, the kind and aggregate number of shares and
other securities or property resulting from the Capital Reorganization which the Holder would have been entitled to receive as a result of the Capital Reorganization if, on the effective date thereof, the Holder had been the registered holder of the
number of Common Shares which the Holder was theretofore entitled to purchase or receive upon the exchange of the Special Warrants. If necessary, as a result of any such Capital Reorganization, appropriate adjustments shall be made in the
application of the provisions of this Special Warrant Certificate with respect to the rights and interests thereafter of the Holder to the end that the provisions hereof shall thereafter correspondingly be made applicable as nearly as may reasonably
be possible in relation to any shares or other securities or property thereafter deliverable upon the exchange of the Special Warrants. 
  

	 	(b)	Deferral of Adjustment: In any case in which this section 1.1 shall require that an adjustment shall become effective immediately after a record date for, or an
effective date of, an event referred to in this section 1.1, the Corporation may defer, until the occurrence and consummation of such event, issuing to the Special Warrantholder exchanged after such record date or effective date and before the
occurrence and consummation of such event the additional Common Shares or other shares or securities or property issuable upon such exchange by reason of the adjustment required by such event, provided, however, that, subject to subsection 1.1(c)
hereof, the Corporation shall deliver to the Special Warrantholder an appropriate instrument evidencing the right of the Special Warrantholder to receive such additional Common Shares or other shares or 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 shares or securities or property declared in favour of the holders of record of Common Shares or of such
other shares or securities or property on or after the date on which the Special Warrants are exchanged or deemed to be exchanged for Common Shares or such later date as the Special Warrantholder would, but for the provisions of this subsection,
have become the holder of record of such additional Common Shares or of such other shares or securities or property pursuant to subsection 1.1(a) hereof. 

  

	 	(c)	 Adjustments Cumulative: The adjustments provided for in this section 1.1 are cumulative, shall, in the case of any adjustment to the Share Rate, be
computed to the nearest one one-hundredth of a Common Share and shall apply (without duplication) to successive subdivisions, consolidations, distributions, issues or other events resulting in any adjustment under the provisions of this section 1.1,
provided that, notwithstanding any other provision of this section 1.1, no adjustment of the Share Rate will be required (i) unless such adjustment would require an increase or decrease of at least one per cent in the Share Rate then in effect
(provided, however, that any adjustment which by reason of this 

  

 Page 8 

	 	 
subsection 1.1(c) 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 1.1 the holders of Special Warrants are entitled to participate in such event on the same terms, with the necessary changes, as if the Special Warrants had been exchanged 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 share incentive plan in force from time to time for directors, officers or employees of the Corporation or of subsidiaries of the Corporation or
(iv) in respect of any Common Shares issuable or issued upon the exchange of the Special Warrants. Notwithstanding any other provision of this section 1.1, no adjustment of the Share Rate shall be made which would result in a decrease in the
number of Common Shares issuable upon the exchange of the Special Warrants, except in respect of a consolidation of the outstanding Common Shares or an event referred to in paragraph 1.1(a)(iv) hereof. 

  

	 	(d)	Resolution of Questions: If any question arises with respect to the adjustments provided in this section 1.1, such question shall be conclusively determined by the
auditors of the Corporation or, if they are unable or unwilling to act, by such firm of chartered accountants as is appointed by the Corporation and is acceptable to the Holder. Such accountants shall have access to all necessary records of the
Corporation and such determination shall be binding upon the Corporation and the Holder. 

  

	 	(e)	Other Actions: If and whenever at any time during the Adjustment Period, the Corporation shall take any action affecting or relating to the Common Shares other than
any action described in this section 1.1, which in the opinion of the directors of the Corporation would prejudicially affect the rights of the Special Warrantholder, the Share Rate will be adjusted by the directors of the Corporation in such
manner, if any, and at such time, as the directors of the Corporation may reasonably determine to be equitable in the circumstances to such holder. Failure of the taking of action by the directors so as to provide for an adjustment prior to the
record date or effective date of any action by the Corporation affecting the Share Rate shall be deemed to be conclusive evidence that the directors of the Corporation have determined that it is equitable to make no adjustment in the circumstances.

  

	 	(f)	Additional Actions: As a condition precedent to the taking of any action which would require an adjustment in any of the rights of the Special Warrantholder under the
Special Warrants, including the Share Rate, the Corporation will take any action which may, in the opinion of counsel to the Corporation, be necessary in order that the Corporation, or any successor to the Corporation or successor to the undertaking
and assets of the Corporation, will be obligated to and may validly and legally issue all of the Common Shares or other securities or property which the Holder would be entitled to receive thereafter on the exchange thereof in accordance with the
provisions hereof. 

  

	 	(g)	Notice: At least ten days before the earlier of the record date of or effective date for any event referred to in this section 1.1 that requires or might require an
adjustment in any of the rights of the Special Warrantholder under the Special Warrants including, the Share Rate, the Corporation will give notice to the Holder at the address set out in the Special Warrant register maintained by the Corporation of
the particulars of such event and, to the extent determinable, any adjustment required, in accordance with the provisions of this Special Warrant Certificate. Such notice need only 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 Corporation will give notice to the Special Warrantholder of such adjustment. 

  

 Page 9 

	 	(h)	Definitions: In this section 1.1, unless there is something in the subject matter or context inconsistent therewith: 

  

	 	(i)	“Current Market Price” of a Common Share at any date means the price per share equal to the weighted average price at which the Common Shares have traded a
recognized stock exchange for any 20 consecutive Trading Days selected by the directors of the Corporation commencing not more than 30 Trading Days before such date and ending no less than five Trading Days prior to such date, or, if the Common
Shares are not then 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 the said exchange or market, as
the case may be, during the said 20 consecutive Trading Days by the aggregate number of Common Shares so sold or, if the Common Shares are not then traded on any recognized market or exchange, as determined by the directors of the Corporation,
acting reasonably; 

  

	 	(ii)	“Share Rate” means the number of Common Shares which are issuable upon the exchange of each Special Warrant in accordance herewith, subject to adjustment as
provided herein, and which on the date hereof is one Common Share; and 

  

	 	(iii)	“Trading Day” with respect to a stock exchange means a day on which such stock exchange is open for business and with respect to the over-the-counter market means a
day on which the over-the-counter market is open for business. 

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

 The Special Warrants evidenced by this Special Warrant Certificate may not be transferred except with the written consent of the Corporation. 

Compliance with securities legislation applicable to the Special Warrantholders is the responsibility of the Special Warrantholder or its transferee. 
 This Special Warrant Certificate shall be governed by and interpreted in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable
therein. 
 Neither the Special Warrants represented by this Special Warrant Certificate nor the Common Shares or Warrants issuable upon exercise of such
Special Warrants have been registered under the United States Securities Act of 1933, as amended, (the “Act”) and, therefore, neither may be offered, sold or otherwise transferred within the United States or to, or for the account
or benefit of United States Persons. Terms used in this paragraph have the meanings given them by Regulation S under the Act. 
 This Special Warrant
Certificate shall not be valid for any purpose whatsoever unless and until it has been certified by or on behalf of the Corporation. 
  

 Page 10 

 Adjustments to Warrants shall be made in accordance with the terms of the attached Warrant Certificate, whether or not
such Warrants have been issued. 
  

	1.2	Entitlement to Shares on Exercise of Special Warrant 

 All
shares of any class, other securities or property which a Special Warrantholder is at the time in question entitled to receive on the exercise of its Special Warrant, whether or not as a result of adjustments made pursuant to this section, shall,
for the purposes of the interpretation of this Special Warrant Certificate, be deemed to be shares or securities which such Special Warrantholder is entitled to acquire pursuant to such Special Warrant. 
 The Corporation may deem and treat the registered owner of any Special Warrant Certificate as the absolute owner of the Special Warrant represented thereby for all
purposes, and the Corporation shall not be affected by any notice or knowledge to the contrary except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. A Special Warrantholder shall be
entitled to the rights evidenced by its Special Warrant Certificate free from all equities or rights of set off or counterclaim between the Corporation and the original or any intermediate Special Warrantholder thereof and all Persons may act
accordingly and the receipt of any such Special Warrantholder of the Units which may be acquired pursuant thereto shall be a good discharge to the Corporation for the same and the Corporation shall not be bound to inquire into the title of any such
Special Warrantholder except where the Corporation is required to take notice by statute or by order of a court of competent jurisdiction. 
 Immediately
after the Automatic Exercise, all rights under any Special Warrant to acquire Units, in respect of which the right of acquisition herein and therein provided shall not have been exercised, shall cease and terminate and such Special Warrant shall be
void and of no further force or effect, except to the extent that the Special Warrantholder has not received certificates representing Common Shares held by it, in which case the Special Warrantholders’ rights shall continue until it has
received that to which it is entitled hereunder. 
  

	1.3	Liquidity Incentive 

 The Company will file and obtain a receipt for
the Prospectus in Canada within 90 days of Closing. The Company will no later than 14 days after the Closing Date, file a Registration Statement and use its best efforts to have such Registration Statement declared effective by the SEC within 90
days of Closing to register the resale of the Common Shares and the Registrable Securities. 
 If the Company does not both (i) file and obtain a
receipt for the Prospectus in Canada and (ii) the resale Registration Statement in the United States is not, for any reason in the reasonable control of the Company, declared effective by the SEC within 90 days of Closing, the Company shall
thereafter pay the Holder 5% of the Subscription Amount and an additional 15% of the Subscription Amount if such conditions are not met within 120 days of Closing, payable in U.S. dollars forthwith upon the expiry of such periods. 
 Time shall be of the essence hereof. 
  

 Page 11 

 IN WITNESS WHEREOF the Corporation has caused this Special Warrant Certificate to be signed by its duly authorized
officer as of the              day of August, 2007. 
  

			
	STERLING MINING COMPANY
		
	By:	 	  

		 	 James Meek
 Chief Financial
Officer

 APPENDIX “A” 
 EXERCISE FORM 
 TO: STERLING MINING COMPANY 
 1. The undersigned registered Special Warrantholder of the within warrants (the “Warrants”) hereby irrevocably subscribes for the number of Units of Sterling
Mining Company (the “Corporation”) as indicated, for no further payment, upon the terms applicable to these Special Warrants. 
  

			
	 NUMBER OF UNITS SUBSCRIBED FOR:
	 	  

		
	Further Special Warrant Certificate required for balance of Special Warrants evidenced hereby:	 	  

 2. The Common Shares and Warrants (or other securities or property) are to be registered as follows: 

 

					
	Name:	 	  
	 	
	Address in Full:	 	  
	 	
	Telephone:	 	  
	 	
	SIN:	 	  
	 	

 3. The Common Shares and Warrants (or other security or property) are to be delivered as follows (check one):

  

													
	A.	  	To the registered address above	  	 	  	B.	  	To the following address below:	  	 	  	
		  		  		  		  	  
	  		  	
		  		  		  		  	  
	  		  	
		  		  		  		  	  
	  		  	

 4. The undersigned represents, warrants and certifies as follows (one (only) of the following must be checked):

  

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

			
	  ̈
	  	B	  	The undersigned holder (i) purchased the Special Warrants directly from the Corporation pursuant to a written subscription agreement for the purchase of Special Warrants, (ii) is exercising
the Special Warrant 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
acquired from the Corporation and on the date of exercise of the Special Warrant.
			
	  ̈
	  	C.	  	The undersigned holder has delivered to the Corporation an opinion of counsel (which will not be sufficient unless it is from counsel of recognized standing and in form and substance
satisfactory to the Corporation) to the effect that an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available.

 Certificates will not be registered or delivered to an address in the United States unless Box “C” above is
checked. If Box “C” above is checked, holders are encouraged to consult with the Corporation in advance to determine that the legal opinion tendered in connection with the exercise will be satisfactory in form and substance to the
Corporation. 
 DATED this      day of
                , 200  . 
  

			
	  
	 	  

	Signature Guaranteed	 	 Signature
 (Signature of Special Warrantholder must
correspond with the name that appears on the face of the Special Warrant Certificate)
  

		 	 (Name in Full - Please print)

		 	 (Address)

		 	  

		 	  

		 	 (Telephone Number)

 Notes: 
 1.
Instructions for exercising Special Warrants are on the face page of the Special Warrant Certificate. 
 2. If the Exercise Form indicates that Common Shares
or Warrants are to be issued to a person or persons other than the registered Special Warrantholder of the Special Warrant Certificate, the signature of such Special Warrantholder on the Exercise Form must be guaranteed by an authorized
officer of a chartered bank, trust company or an eligible guarantor institution with membership in an approved signature guarantee medallion program. 
 3.
If the Exercise Form is signed by a trustee, executor, administrator, curator, guardian, attorney, officer of a corporation or any person acting in a judiciary or representative capacity, the certificate must be accompanied by evidence of authority
to sign satisfactory to the Corporation. 
  

 Page 2 

 FORM OF WARRANT

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