WARRANT INDENTURE Providing for the Issue of Warrants BETWEEN RED MILE ENTERTAINMENT, INC. - and - OLYMPIA TRUST COMPANY Dated as of July 18, 2007 TABLE OF CONTENTS

(a)  

"Adjustment Period" means the period from the date of this Indenture up to and including the Expiry Time;

(b)  

"Agent" means J.F. Mackie & Company Ltd.;

(c)  

"Applicable Legislation" means the provisions of the Business Corporations Act, R.S.A. 2000, c. B-9, as from time to time amended, and any statute of Canada or a province thereof, and the regulations under any such named or other statute, relating to trust indentures or to the rights, duties and obligations of trustees and of corporations under trust indentures, to the extent that such provisions are at the time in force and applicable to this Indenture;

(d)  

"Business Day" means a day which is not Saturday or Sunday or a legal holiday in the City of Calgary, Alberta;

(e)  

"Canadian Selling Jurisdictions" means the Provinces of Alberta, British Columbia, Saskatchewan, Ontario and Nova Scotia;

(f)  

"Common Shares" means, subject to Article 4, fully paid and non-assessable common shares of the Corporation as presently constituted;

(g)  

"Corporation's Auditors" means a firm of chartered accountants duly appointed as auditors of the Corporation;

(h)  

"Counsel" means a barrister or solicitor or a firm of barristers and solicitors retained by the Trustee or retained by the Corporation and acceptable to the Trustee;

(i)  

"Current Market Price" of the Common Shares at any date means the simple average of the closing trading price per share for such shares for the 20 consecutive Trading Days immediately preceding such date on the OTC Bulletin Board, or if on such date the Common Shares are not listed on the OTC Bulletin Board, on such stock exchange upon which such shares are listed (provided that if on any day in such 20 Trading Day period no closing price per share is reported by such exchange, the average of the reported closing bid and ask price on such exchange shall be deemed to be the closing price per share for such day), or, if such shares are not listed on any stock exchange, then on such over-the-counter market as may be selected for such purpose by the directors;

(j)  

"director" means a director of the Corporation for the time being and, unless otherwise specified herein, reference to action "by the directors" means action by the directors of the Corporation as a board or, whenever duly empowered, action by any committee of such board;

(k)  

"Dividends Paid in the Ordinary Course" means cash dividends declared payable on the Common Shares in any fiscal year of the Corporation to the extent that such cash dividends do not exceed, in the aggregate, greater than:

(i)  

fifty (50%) percent of the retained earnings of the Corporation as at the end of its immediately preceding fiscal year; and

(ii)  

one hundred (100%) percent of the aggregate consolidated net income of the Corporation, determined before computation of extraordinary items, for its immediately preceding fiscal year;

(l)  

"Exercise Date" means, with respect to any Warrant, the date on which the Warrant Certificate representing such Warrant is surrendered for exercise in accordance with Section 3.3;

(m)  

"Expiry Date" means the date upon which the Corporation completes a Liquidity Transaction, or, if no such Liquidity Transaction is completed within eight months of the Issue Date, means the date which is 18 months following the Issue Date;

(n)  

"Expiry Time" means 4:00 p.m. (MST) on the Expiry Date;

(o)  

"extraordinary resolution" has the meaning set forth in Section 7.11;

(p)  

"Issue Date" means the date upon which the Warrants are issued;

(q)  

"Liquidity Transaction" means any of:

 

1.

the Common Shares being listed on the TSX Venture Exchange, the Toronto Stock Exchange, or any other exchange (a "Recognized Exchange") acceptable to the Agent and the Corporation becoming a "reporting issuer" (as defined in applicable securities legislation) in at least one of the Canadian Selling Jurisdictions;

 

2.

all of the issued and outstanding Common Shares having been sold, transferred or exchanged pursuant to an amalgamation, plan of arrangement or other business combination, for cash or securities ("Free Trading Securities") that are listed on a Recognized Exchange and that are not subject to any restricted period or hold period under applicable securities laws in Canada (other than in respect of resales by control persons);

 

3.

the sale by the Corporation of all or substantially all of its assets for cash or Free Trading Securities and the subsequent distribution of all of such consideration to all of the Corporation's shareholders (including the investors who subscribed for Units), on a pro-rata basis;

 

4.

the acceptance of a takeover bid or an issuer bid, made to all holders of Common Shares for proceeds consisting of cash or Free Trading Securities, by holders of Common Shares: (A) who hold not less than 66²/₃% of the outstanding Common Shares; and (B) who hold not less than 66²/₃% of the outstanding Warrants; or

 

5.

any combination of the events or circumstances described in Subsections 1, 2, 3 or 4 above.

(r)  

"person" means an individual, body corporate, partnership, trust, trustee, executor, administrator, legal representative or any unincorporated organization;

(s)  

"Privacy Laws" has the meaning given in Section 10.10;

(t)  

"Regulation S" means Regulation S under the U.S. Securities Act;

(u)  

"Shareholder" means a holder of record of one or more Common Shares;

(v)  

"Subsidiary of the Corporation" or "Subsidiary" means any corporation of which more than fifty (50%) percent of the outstanding Voting Shares are owned, directly or indirectly, by or for the Corporation, provided that the ownership of such shares confers the right to elect at least a majority of the board of directors of such corporation and includes any corporation in like relation to a Subsidiary;

(w)  

"successor corporation" has the meaning set forth in Section 8.2;

(x)  

"this Warrant Indenture", "this Indenture", "herein", "hereby", "hereof" and similar expressions mean and refer to this Indenture and any indenture, deed or instrument supplemental hereto; and the expressions "Article", "Section", "Subsection" and "paragraph" followed by a number, letter or both mean and refer to the specified article, section, Subsection or paragraph of this Indenture;

(y)  

"Trading Day" means, with respect to a stock exchange, a day on which such exchange is open for the transaction of business and with respect to the over-the-counter market means a day on which the TSX Venture Exchange is open for the transaction of business;

(z)  

"Transfer Agent" means Corporate Stock Transfer, Inc. or such other company as may from time to time be appointed as transfer agent of the Common Shares;

(aa)  

"Trustee" means Olympia Trust Company or its successors from time to time in the trust hereby created;

(bb)  

"United States" means the United States of America, its territories and possessions, any state of the United States, and the District of Columbia;

(cc)  

"Units" means the units, each consisting of one Common Share and 0.2 of one Warrant, issued by the Corporation to subscribers pursuant to an agency agreement dated effective June 22, 2007 between the Corporation and the Agent;

(dd)  

"U.S. Securities Act" means the United States Securities Act of 1933, as amended;

(ee)  

"Vesting Date" has the meaning ascribed thereto in Section 3.1 hereof;

(ff)  

"Voting Shares" means shares of the capital stock of any class of any corporation carrying voting rights under all circumstances, provided that, for the purposes of such definition, shares which only carry the right to vote conditionally on the happening of an event shall not be considered Voting Shares, whether or not such event shall have occurred, nor shall any shares be deemed to cease to be Voting Shares solely by reason of a right to vote accruing to shares of another class or classes by reason of the happening of any such event;

(gg)  

"Warrant Agency" means the principal office of the Trustee in Calgary, Alberta or such other place(s) as may be designated in accordance with Subsection 3.3(c);

(hh)  

"Warrant Certificate" means a certificate, substantially in the form set forth in Schedule "A" hereto, issued on or after the Issue Date to evidence Warrants;

(ii)  

"Warrantholders", or "holders" without reference to Common Shares, means the persons who are registered owners of Warrants;

(jj)  

"Warrantholders' Request" means an instrument signed in one or more counterparts by Warrantholders entitled to acquire in the aggregate not less than 25% of the aggregate number of Common Shares which could be acquired pursuant to all Warrants then unexercised and outstanding, requesting the Trustee to take some action or proceeding specified therein;

(kk)  

"Warrants" means the warrants created by and authorized by and issuable under this Indenture; and

(ll)  

"written order of the Corporation", "written request of the Corporation", "written consent of the Corporation" and "certificate of the Corporation" mean, respectively, a written order, request, consent and certificate signed in the name of the Corporation by its Chairman, Chief Executive Officer, President, Chief Financial Officer, Vice-President or Corporate Secretary, and may consist of one or more instruments so executed.

(a)  

Subject to adjustment in accordance with Article 4 and vesting in accordance with Section 3.1, each whole Warrant shall entitle the holder thereof to acquire, upon exercise at any time after the Issue Date and prior to the Expiry Time, one (1) Common Share and the Corporation acknowledges and agrees that payment of the exercise price for such Warrant has been previously received as part of, and in connection with, the Warrantholder's subscription for Units.

(b)  

No fractional Warrants shall be issued or otherwise provided for hereunder.

(c)  

Each Warrant shall entitle the holder thereof to such other rights and privileges as are set forth in this Indenture.

(d)  

The number of Common Shares which may be purchased pursuant to the Warrants shall be adjusted in the events and in the manner specified in Article 4.

(a)  

No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the holder to the benefit hereof until it has been certified by manual signature by or on behalf of the Trustee by its authorized signing officers substantially in the form of the certificate set out in Schedule "A" hereto, and such certification by the Trustee upon any Warrant Certificate shall be conclusive evidence as against the Corporation that the Warrant Certificate so certified has been duly issued hereunder and that the holder is entitled to the benefits hereof.

(b)  

The certification of the Trustee on Warrant Certificates issued hereunder shall not be construed as a representation or warranty by the Trustee as to the validity of this Indenture or the Warrant Certificates (except the due certification thereof) or as to the performance by the Corporation of its obligations under this Indenture and the Trustee shall in no respect be liable or answerable for the use made of the Warrant Certificates or any of them or of the consideration therefor except as otherwise specified herein.

(a)  

If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law, shall issue and thereupon the Trustee shall certify and deliver, a new Warrant Certificate of like tenor as the one mutilated, lost, destroyed or stolen in exchange for and in place of and upon 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 Trustee and the Warrants evidenced thereby shall be entitled to the benefits hereof and shall rank equally in accordance with its terms with all other Warrants issued or to be issued hereunder.

(b)  

The applicant for the issue of a new Warrant Certificate pursuant to this Section 2.8 shall bear the cost of the issue thereof and in case of loss, destruction or theft shall, as a condition precedent to the issuance thereof, furnish to the Corporation and to the Trustee 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 Corporation and to the Trustee, in their sole discretion, and such applicant may also be required to furnish an indemnity or security in amount and form satisfactory to the Corporation and the Trustee, in their sole discretion, and shall pay the reasonable charges of the Corporation and the Trustee in connection therewith.

(a)  

Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Trustee (including compliance with applicable securities legislation), be exchanged for one or more other Warrant Certificates representing the same aggregate number of Warrants as represented by the Warrant Certificate or Warrant Certificates so exchanged, provided that such other Warrant Certificates are registered in the name of the beneficial owner (or his nominee) of the Warrant Certificates so exchanged.

(b)  

Warrant Certificates may be exchanged only at the Warrant Agency or at any other place that is designated by the Corporation with the approval of the Trustee.  Any Warrant Certificate tendered for exchange shall be cancelled by the Trustee and, after the expiry of any period of retention prescribed by law, destroyed by the Trustee.

(a)  

The Warrants may only be transferred in connection with a transfer of those Common Shares which, together with such Warrants to be transferred, constitute a Unit or Units and further, may only be transferred on the register kept by the Trustee at the Warrant Agency, by the holder or its legal representative or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee, only upon surrendering to the Trustee at the Warrant Agency the Warrant Certificates representing the Warrants to be transferred and upon compliance with:

(i)  

the conditions herein;

(ii)  

such reasonable requirements as the Trustee may prescribe; and

(iii)  

all applicable securities legislation and requirements of regulatory authorities;

(b)  

The Trustee acknowledges that the Warrants and the Common Shares issuable upon exercise thereof have not been registered under the U.S. Securities Act, or the securities laws of any state of the United States, and may not be transferred in the United States or to a U.S. Person unless the Warrants and the Common Shares issuable upon exercise thereof have been registered under the U.S. Securities Act and the securities laws of all applicable states of the United States or an exemption from such registration requirements is available.

(c)  

Subject to the provisions of this Indenture and applicable law, the Warrantholder shall be entitled to the rights and privileges attaching to the Warrants and the issue of Common Shares by the Corporation upon the exercise of Warrants in accordance with the terms and conditions herein contained shall discharge all responsibilities of the Corporation and the Trustee with respect to such Warrants and neither the Corporation nor the Trustee shall be bound to inquire into the title of any such holder.

(a)  

written certification that it was not offered and did not acquire the Warrants in the United States, such Warrant is not being exercised within the United States or on behalf of, or for the account or benefit of, a person in the United States; or

(b)  

written certification that (i) it was the original purchaser in the Corporation’s private placement of the Units pursuant to which the Warrant was issued, (ii) it acquired the Units for its own account for investment purposes only and (iii) except for the fact that the Warrants are being exercised by the undersigned in the United States, if applicable, the representations and warranties made to the Corporation in connection with the acquisition of the Units remain true and correct on the date of such exercise; or

(c)  

a written opinion of counsel or other evidence satisfactory to the Corporation to the effect that the issuance of the Common Shares upon exercise of the Warrants has been registered under the U.S. Securities Act and applicable state securities laws or is exempt from registration thereunder.

(a)  

The holder of any Warrant may exercise the right conferred on such holder to acquire Common Shares by surrendering, after the Vesting Date and prior to the Expiry Time, to the Warrant Agency the Warrant Certificate representing such Warrant, with a duly completed and executed exercise form.

(b)  

Any exercise form referred to in Subsection 3.3(a) shall be signed by the Warrantholder and shall specify:

(i)  

the person or persons in whose name or names such Common Shares are to be issued;

(ii)  

the address or addresses of such persons; and

(iii)  

the number of Common Shares to be issued to each such person if more than one is so specified.

(c)  

In connection with the exchange of Warrant Certificates and exercise of Warrants and compliance with such other terms and conditions hereof as may be required, the Corporation has appointed the principal office of the Trustee in Calgary, Alberta as the agency at which Warrant Certificates may be surrendered for exchange or at which Warrants may be exercised and the Trustee has accepted such appointment.  The Corporation may from time to time designate alternate or additional places as the Warrant Agency and shall give notice to the Trustee of any change of the Warrant Agency.

(a)  

Upon the exercise of Warrants pursuant to Section 3.3 and subject to Section 3.5, the Common Shares to be issued pursuant to the Warrants exercised shall be deemed to have been issued and the person or persons to whom such Common Shares are to be issued shall be deemed to have become the holder or holders of record of such Common Shares on the Exercise Date unless the transfer registers of the Transfer Agent shall be closed on such date, in which case the Common Shares subscribed for shall be deemed to have been issued and such person or persons deemed to have become the holder or holders of record of such Common Shares, on the date on which such transfer registers are reopened.

(b)  

Within five (5) Business Days after the Exercise Date with respect to a Warrant, the Corporation shall cause to be delivered or mailed to the person or persons in whose name or names a Warrant is registered or, if so specified in writing by the holder, cause to be delivered to such person or persons at the Warrant Agency where the Warrant Certificate was surrendered, a certificate or certificates for the appropriate number of Common Shares subscribed for.

(a)  

Notwithstanding anything herein contained including any adjustment provided for in Article 4, the Corporation shall not be required, upon the exercise of any Warrants, to issue fractions of Common Shares or to distribute certificates which evidence fractional Common Shares, provided that all such fractional interests the holder would otherwise be entitled to if not for the foregoing shall be aggregated and, if as a result of such aggregation the holder would be entitled to one or more whole Common Shares, the Corporation shall cause such shares to be issued to the holder.

(b)  

In the event of the exercise of Warrants prior to the expiry of the applicable "restricted period" under applicable securities laws the Trustee shall cause the Transfer Agent to legend the certificates representing the Common Shares issued on such exercise with the following legend:

(a)  

The Trustee shall promptly account to the Corporation with respect to Warrants exercised.  Any securities or other instruments, from time to time received by the Trustee shall be received in trust for, and shall be segregated and kept apart by the Trustee, the Warrantholders and the Corporation as their interests may appear.

(b)  

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

(c)  

The Trustee will maintain a register of numbers of all Warrant Certificates outstanding and the number of Warrants represented by each such Warrant Certificate.

(a)  

if and whenever at any time during the Adjustment Period, the Corporation shall:

(i)  

subdivide or redivide the outstanding Common Shares into a greater number of Common Shares;

(ii)  

reduce, combine or consolidate its outstanding Common Shares into a smaller number of Common Shares; or

(iii)  

issue Common Shares to the holders of all or substantially all of the outstanding Common Shares by way of a stock dividend (other than the issue of Common Shares to such holders as a Dividend Paid in the Ordinary Course);

(b)  

if and whenever at any time during the Adjustment Period, there is a reclassification of the Common Shares or a capital reorganization of the Corporation other than as described in Subsection 4.1(a) or a consolidation, amalgamation, arrangement, merger, reorganization of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale or conveyance of the property and assets of the Corporation as an entirety or substantially as an entirety to any other body corporate, trust, partnership or other entity, any Warrantholder who has not exercised its right of acquisition prior to the effective date of such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, reorganization, sale or conveyance, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Common Shares then sought to be acquired by it, the number of shares or other securities or property of the Corporation or of the body corporate, trust, partnership or other entity resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the case may be, that such Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, arrangement or 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 sought to be acquired by it and to which it was entitled to acquire upon the exercise of the Warrants.  The Corporation, its successor, or such purchasing body corporate, partnership, trust or other entity, as the case may be, shall, prior to or contemporaneously with any such reclassification, capital reorganization, consolidation, amalgamation, arrangement, merger, reorganization, sale or conveyance, enter into an indenture which shall provide, to the extent possible, for the application of the provisions set forth in this Indenture with respect to the rights and interests thereafter of the Warrantholders to the end that the provisions set forth in this Indenture shall thereafter correspondingly be made applicable, as nearly as may reasonably be, with respect to any shares, other securities or property to which a Warrantholder is entitled on the exercise of its acquisition rights thereafter.  Any indenture entered into between the Corporation and the Trustee pursuant to the provisions of this Subsection 4.1(b) shall be a supplemental indenture entered into pursuant to the provisions of Article 8 hereof.  Any indenture entered into between the Corporation, any successor to the Corporation or such purchasing body corporate, partnership, trust or other entity and the Trustee 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, reorganization, sales or conveyances; and

(c)  

in any case in which this Section 4.1 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the Corporation may defer, until the occurrence of such event, issuing to the holder of any Warrant exercised after such event the additional Common Shares or other securities or property issuable upon such exercise by reason of the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such holder, as soon as reasonably practicable an appropriate instrument evidencing such holder's right to receive such additional Common Shares or other securities or property 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 declared in favour of holders of record of Common Shares or other securities or property on and after the relevant date of exercise or such later date as such holder would, but for the provisions of this Subsection 4.1(c), have become the holder of record of such additional Common Shares or other securities or property pursuant to this Section 4.1;

(d)  

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 which, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, the Warrantholder is entitled to receive upon the exercise of his Warrant, and the number of Common Shares indicated by any exercise made pursuant to a Warrant shall be interpreted to mean the number of Common Shares or other property or securities a Warrantholder is entitled to receive, as a result of such adjustment and all prior adjustments pursuant to this Section 4.1, upon the full exercise of a Warrant.

(a)  

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, 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)  

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

(c)  

be responsible for any failure of the Corporation to issue, transfer or deliver Common Shares or certificates for the same upon the surrender of any Warrants for the purpose of the exercise of such rights or to comply with any of the covenants contained in this Article 4; and

(d)  

incur any liability or be in any way responsible for the consequences of any breach on the part of the Corporation of any of the representations, warranties or covenants herein contained or of any acts of the directors, officers, employees, agents or servants of the Corporation.

(a)  

it will reserve and keep available a sufficient number of Common Shares for the purpose of enabling it to satisfy its obligations to issue Common Shares upon the exercise of the Warrants;

(b)  

it will cause the Common Shares and the certificates representing the Common Shares from time to time acquired pursuant to the exercise of the Warrants to be duly issued and delivered in accordance with the Warrant Certificates and the terms hereof;

(c)  

all Common Shares which shall be issued upon exercise of the right to acquire provided for herein and in the Warrant Certificates, upon compliance with all of the applicable terms and conditions hereof and thereof, shall be fully paid and non-assessable;

(d)  

it will use reasonable commercial efforts to maintain its corporate existence or, if applicable, the corporate existence of any successor corporation (as defined in Section 8.2) and carry on its business in the ordinary course, provided that the foregoing shall not prevent or be construed to prevent or impair the Corporation from completing any merger, arrangement, reorganization, amalgamation, recapitalization, business combination or other similar transaction;

(e)  

it will use reasonable commercial efforts to make all requisite filings under applicable Canadian securities legislation and stock exchange rules including those necessary to report the exercise of the right to acquire Common Shares pursuant to Warrants, provided that the foregoing shall not prevent or be construed to prevent or impair the Corporation from completing any merger, arrangement, reorganization, amalgamation, recapitalization, business combination or other similar transaction; and

(f)  

generally, it will well and truly perform and carry out all of the acts or things to be done by it as provided in this Indenture.

(a)  

the Trustee will provide a notice as provided in Section 10.2 to the Warrantholders setting out, in reasonable detail, the particulars of such default;

(b)  

the holders of not less than 51% of the Warrants then outstanding shall have power (in addition to the powers exercisable by extraordinary resolution) by requisition in writing to instruct the Trustee to waive any default hereunder and the Trustee shall thereupon waive the default upon such terms and conditions as shall be prescribed in such requisition; or

(c)  

the Trustee shall have power to waive any default hereunder upon such terms and conditions as the Trustee may deem advisable, if, in the Trustee's reasonable opinion, the same shall have been cured or adequate provision made therefor;

(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 the meeting;

(b)  

the issue of voting certificates by any bank, trust company or other depositary satisfactory to the Trustee stating that the 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 shall 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 bearers of the Warrant Certificates specified therein;

(c)  

the deposit of voting certificates and instruments appointing proxies at such place and time as the Trustee, the Corporation or the Warrantholders convening the meeting, as the case may be, may in the notice convening the meeting direct;

(d)  

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 enabling particulars of such instruments appointing proxies to be mailed or telecopied before the meeting to the Corporation or to the Trustee at the place where the same is to be held and for the voting of proxies so deposited as though the instruments themselves were produced at the meeting;

(e)  

the form of the instrument of proxy; and

(f)  

generally for the calling of meetings of Warrantholders and the conduct of business thereat.

(a)  

to agree to any modification, abrogation, alteration, compromise or arrangement of the rights of Warrantholders or the Trustee in its capacity as trustee hereunder (subject to the Trustee's prior consent, acting reasonably) or on behalf of the Warrantholders against the Corporation whether such rights arise under this Indenture or the Warrant Certificates or otherwise;

(b)  

to amend, alter or repeal any extraordinary resolution previously passed or sanctioned by the Warrantholders;

(c)  

to direct or to authorize the Trustee, subject to Subsection 9.2(b) hereof, to enforce any of the covenants on the part of the Corporation contained in this Indenture or the Warrant Certificates 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;

(d)  

to waive, and to direct the Trustee to waive, any default on the part of the Corporation in complying with any provisions of this Indenture or the Warrant Certificates either unconditionally or upon any conditions specified in such extraordinary resolution;

(e)  

to restrain any Warrantholder from taking or instituting any suit, action or proceeding against the Corporation for the enforcement of any of the covenants on the part of the Corporation in this Indenture or the Warrant Certificates or to enforce any of the rights of the Warrantholders;

(f)  

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

(g)  

to assent to any change in or omission from the provisions contained in the Warrant Certificates and this Indenture or any ancillary or supplemental instrument which may be agreed to by the Corporation, and to authorize the Trustee to concur in and execute any ancillary or supplemental indenture embodying the change or omission;

(h)  

with the consent of the Corporation, such consent not to be unreasonably withheld or delayed, to remove the Trustee or its successor in office and to appoint a new trustee or trustees to take the place of the Trustee so removed; and

(i)  

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 Corporation.

(a)  

The expression "extraordinary resolution" when used in this Indenture means, subject as hereinafter provided in this Section 7.11 and in Section 7.14, a resolution proposed at a meeting of Warrantholders duly convened for that purpose and held in accordance with the provisions of this Article 7 at which there are present in person or by proxy Warrantholders entitled to acquire at least 20% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants and passed by the affirmative votes of Warrantholders entitled to acquire not less than 66²/₃% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants represented at the meeting and voted on the poll upon such resolution.

(b)  

If, at the meeting at which an extraordinary resolution is to be considered, Warrantholders entitled to acquire at least 20% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy within thirty (30) minutes after the time appointed for the meeting, then the meeting, if convened by Warrantholders or on a Warrantholders' Request, shall be dissolved; but in any other case it shall stand adjourned to such day, being not less than fifteen (15) or more than sixty (60) days later, and to such place and time as may be appointed by the chairman.  Not less than ten (10) days' prior notice shall be given of the time and place of such adjourned meeting in the manner provided for in Section 10.2.  Such notice shall state that at the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum but it shall not be necessary to set forth the purposes for which the meeting was originally called or any other particulars.  At the adjourned meeting the Warrantholders present in person or by proxy shall form a quorum and may transact the business for which the meeting was originally convened and a resolution proposed at such adjourned meeting and passed by the requisite vote as provided in Subsection 7.11(a) shall be an extraordinary resolution within the meaning of this Indenture notwithstanding that Warrantholders entitled to acquire at least 20% of the aggregate number of Common Shares which may be acquired pursuant to all the then outstanding Warrants are not present in person or by proxy at such adjourned meeting.

(c)  

Subject to Section 7.14, votes on an extraordinary resolution shall always be given on a poll and no demand for a poll on an extraordinary resolution shall be necessary.

(a)  

setting forth any adjustments resulting from the application of the provisions of Article 4;

(b)  

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 Trustee prejudicial to the interests of the Warrantholders;

(c)  

giving effect to any extraordinary resolution passed as provided in Article 7;

(d)  

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 Warrants on any stock exchange, provided that such provisions are not, in the opinion of the Trustee, prejudicial to the interests of the Warrantholders;

(e)  

adding to or altering the provisions hereof in respect of the transfer of Warrants, making provision for the exchange of Warrant Certificates, and making any modification in the form of the Warrant Certificates which does not affect the substance thereof;

(f)  

with the prior approval of the OTC Bulletin Board or such other stock exchange upon which the Common Shares of the Corporation are listed and posted for trading, if required, modifying any of the provisions of this Indenture, including relieving the Corporation from any of the obligations, conditions or restrictions herein contained, provided that such modification or relief shall be or become operative or effective only if, in the opinion of the Trustee, such modification or relief in no way prejudices any of the rights of the Warrantholders or of the Trustee, and provided further that the Trustee may in its sole discretion decline to enter into any such supplemental indenture which in its opinion may not afford adequate protection to the Trustee when the same shall become operative; and

(g)  

for any other purpose not inconsistent with the terms of this Indenture, including the correction or rectification of any ambiguities, defective or inconsistent provisions, errors, mistakes or omissions herein, provided that in the opinion of the Trustee the rights of the Trustee and of the Warrantholders are in no way prejudiced thereby.

(a)  

If and to the extent that any provision of this Indenture limits, qualifies or conflicts with a mandatory requirement of Applicable Legislation, such mandatory requirement shall prevail.

(b)  

The Corporation and the Trustee 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.

(a)  

In the exercise of the rights and duties prescribed or conferred by the terms of this Indenture, the Trustee shall exercise that degree of care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances.  No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own wilful misconduct or bad faith or any breach by it of its obligations or duties under this Indenture.

(b)  

The obligation of the Trustee to commence or continue any act, action or proceeding for the purpose of enforcing any rights of the Trustee or the Warrantholders hereunder shall be conditional upon the Warrantholders furnishing, when required by notice by the Trustee, sufficient funds to commence or to continue such act, action or proceeding and an indemnity reasonably satisfactory to the Trustee to protect and to hold harmless the Trustee against the costs, charges and expenses and liabilities to be incurred thereby and any loss and damage it may suffer by reason thereof.  None of the provisions contained in this Indenture shall require the Trustee to expend or to risk its own funds or otherwise to incur financial liability in the performance of any of its duties or in the exercise of any of its rights or powers unless indemnified as aforesaid.

(c)  

The Trustee may, before commencing or at any time during the continuance of any such act, action or proceeding, require the Warrantholders, at whose instance it is acting to deposit with the Trustee the Warrants held by them, for which Warrants the Trustee shall issue receipts.

(d)  

Every provision of this Indenture that by its terms relieves the Trustee of liability or entitles it to rely upon any evidence submitted to it is subject to the provisions of Applicable Legislation, of this Section 9.2 and of Section 9.3.

(a)  

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

(b)  

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

(c)  

Whenever it is provided in this Indenture or under Applicable Legislation that the Corporation shall deposit with the Trustee resolutions, certificates, reports, opinions, requests, orders or other documents, it is intended that the trust, accuracy and good faith on the effective date thereof and the facts and opinions stated in all such documents so deposited shall, in each and every such case, be conditions precedent to the right of the Corporation to have the Trustee take the action to be based thereon.

(d)  

Proof of the execution of an instrument in writing, including a Warrantholders' Request, by any 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 it the execution thereof, or by an affidavit of a witness to such execution or in any other manner which the Trustee may consider adequate.

(e)  

The Trustee may employ or retain such Counsel, accountants, appraisers or other experts or advisers as it may reasonably require for the purpose of discharging its duties hereunder and may pay reasonable remuneration for all services so performed by any of them, without taxation of costs of any Counsel, and shall not be responsible for any misconduct or negligence on the part of any such experts or advisers who have been appointed with due care by the Trustee.

(f)  

The Trustee may act and rely and shall be protected in acting and relying in good faith on the opinion or advice of or information obtained from any Counsel, accountant, appraiser, engineer or other expert or adviser, whether retained or employed by the Corporation or by the Trustee, in relation to any matter arising in the administration of the trusts hereof.

(a)  

the Trustee shall not be liable for or by reason of any statements of fact or recitals in this Indenture or in the Warrant Certificates (except the representation contained in Section 9.9 or in the certificate of the Trustee on the Warrant Certificates) or be required to verify the same, but all such statements or recitals are and shall be deemed to be made by the Corporation;

(b)  

nothing herein contained shall impose any obligation on the Trustee 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;

(c)  

the Trustee shall not be bound to give notice to any person or persons of the execution hereof;

(d)  

the Trustee 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 Corporation of any of its covenants herein contained or of any acts of any directors, officers, employees, agents or servants of the Corporation; and

(e)  

the Corporation hereby indemnifies and agrees to hold harmless the Trustee from and against any and all liabilities, losses, damages, penalties, claims, actions, suits, costs, expenses and disbursements, including reasonable legal fees and disbursements of whatever kind and nature which may at any time be imposed on or incurred by or asserted against the Trustee, whether groundless or otherwise, arising from or out of any act, omission or error of the Trustee made in good faith in the conduct of its duties hereunder, provided that the Trustee has met the standard of care, diligence and skill provided for in Subsection 9.2(a) and, provided further, that the Corporation shall not be required to indemnify the Trustee in the event of the negligence or wilful misconduct of the Trustee, as provided in Subsection 9.2(a), and this provision shall survive the resignation or removal of the Trustee or the termination or discharge of this Agreement.

(a)  

The Trustee may resign its trust and be discharged from all further duties and liabilities hereunder, subject to this Section 9.8, by giving to the Corporation not less than 90 days' prior notice in writing or such shorter prior notice as the Corporation may accept as sufficient.  The Warrantholders by extraordinary resolution shall have power at any time to remove the existing Trustee and to appoint a new Trustee.  In the event of the Trustee resigning or being removed as aforesaid or being dissolved, becoming bankrupt, going into liquidation or otherwise becoming incapable of acting hereunder, the Corporation shall forthwith appoint a new trustee unless a new trustee has already been appointed by the Warrantholders; failing such appointment by the Corporation, the retiring Trustee or any Warrantholder may apply to a justice of the Court of Queen's Bench of the Province of Alberta on such notice as such justice may direct, for the appointment of a new trustee; but any new trustee so appointed by the Corporation or by the Court shall be subject to removal as aforesaid by the Warrantholders.  Any new trustee appointed under any provision of this Section 9.8 shall be a corporation authorized to carry on the business of a trust company in the Province of Alberta and, if required by the Applicable Legislation for any other provinces, in such other provinces.  On any such appointment the new trustee shall be vested with the same powers, rights, duties and responsibilities as if it had been originally named herein as Trustee hereunder.

(b)  

Upon the appointment of a successor trustee, the Corporation shall promptly notify the Warrantholders thereof in the manner provided for in Section 10.2.

(c)  

Any Warrant Certificates certified but not delivered by a predecessor trustee may be certified by the successor trustee in the name of the predecessor or successor trustee.

(d)  

Any corporation in to which the Trustee may be merged or consolidated or amalgamated, or any corporation resulting therefrom to which the Trustee shall be a party, or any corporation succeeding to the trust business of the Trustee shall be the successor to the Trustee hereunder without any further act on its part or any of the parties hereto, provided that such corporation would be eligible for appointment as successor trustee under Subsection 9.8(a).

(a)  

The Trustee represents to the Corporation that at the time of execution and delivery hereof no material conflict of interest exists between its role as a trustee 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 90 days after ascertaining that it has such material conflict of interest, either eliminate the same or assign its trust hereunder to a successor trustee approved by the Corporation and meeting the requirements set forth in Subsection 9.8(a).  Notwithstanding the foregoing provisions of this Subsection 9.9(a), if any such material conflict of interest exists or hereafter shall exist, the validity and enforceability of this Indenture and the Warrant Certificates shall not be affected in any manner whatsoever by reason thereof.

(b)  

Subject to Subsection 9.9(a), the Trustee, in its personal or any other capacity, may buy, lend upon and deal in securities of the Corporation and generally may contract and enter into financial transactions with the Corporation or any Subsidiary of the Corporation without being liable to account for any profit made thereby.

(a)  

Unless herein otherwise expressly provided, any notice to be given hereunder to the Corporation or the Trustee shall be deemed to be validly given if delivered, sent by registered letter, postage prepaid or telecopied:

(b)  

The Corporation or the Trustee, as the case may be, may from time to time notify the other in the manner provided in Subsection 10.1(a) of a change of address which, from the effective date of such notice and until changed by like notice, shall be the address of the Corporation or the Trustee, as the case may be, for all purposes of this Indenture.

(c)  

If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Trustee or to the Corporation hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered to the named officer of the party to which it is addressed or, if it is delivered to such party at the appropriate address provided in Subsection 10.1(a), by telecopy or other means of prepaid, transmitted and recorded communication.

(a)  

Unless otherwise provided herein, notice to the Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or sent by telecopy or by ordinary post addressed to such holders at their post office addresses appearing on the register hereinbefore mentioned and shall be deemed to have been effectively given on the date of delivery or, if mailed, on the fifth Business Day following the date of the postmark on such notice or, if telecopied, on the next Business Day following the date of transmission, provided that its contents are transmitted and received completely and accurately.

(b)  

If, by reason of a strike, lockout or other work stoppage, actual or threatened, involving postal employees, any notice to be given to the Warrantholders hereunder could reasonably be considered unlikely to reach its destination, such notice shall be valid and effective only if it is delivered personally to such Warrantholders or if delivered to the address for such Warrantholders contained in the register of Warrants maintained by the Trustee, by telecopy or other means of prepaid transmitted and recorded communication.

(a)  

Upon receipt of a certificate of any bank, trust company or other depositary satisfactory to the Trustee stating that the Warrants specified therein have been deposited by a named person with such bank, trust company or other depositary and will remain so deposited until the expiry of the period specified therein, the Corporation and the Trustee may treat the person so named as the owner, and such certificate as sufficient evidence of the ownership by such person of such Warrant during such period, for the purpose of any requisition, direction, consent, instrument or other document to be made, signed or given by the holder of the Warrant so deposited.

(b)  

The Corporation and the Trustee may accept as sufficient evidence of the fact and date of the signing of any requisition, direction, consent, instrument or other document by any person (i) the signature of any officer of any bank, trust company, or other depositary satisfactory to the Trustee as witness of such execution, (ii) the certificate of any notary public or other officer authorized to take acknowledgments of deeds to be recorded at the place where such certificate is made that the person signing acknowledged to him the execution thereof, (iii) a statutory declaration of a witness of such execution, or (iv) any other documentation satisfactory to the Corporation and the Trustee.

(a)  

the date by which there shall have been delivered to the Trustee for exercise or destruction all Warrant Certificates theretofore certified hereunder; or

(b)  

the Expiry Time;

(a)  

the names (other than the name of the Corporation) of the registered holders of Warrants which, to the knowledge of the Corporation, are owned by or held for the account of the Corporation or any Subsidiary of the Corporation; and

(b)  

the number of Warrants owned legally or beneficially by the Corporation or any Subsidiary of the Corporation;

WARRANT

CERTIFICATE NO. ________

 

_____________ WARRANTS

entitling the holder to acquire, subject to adjustment, one Common Share for each whole Warrant represented hereby

(a)  

duly completing and executing the Exercise Form attached hereto; and

(b)  

surrendering this Warrant Certificate and the Exercise Form to Olympia Trust Company (the "Trustee") at the principal office of the Trustee in the city of Calgary, Alberta.

(i)  

written certification that it was not offered and did not acquire the Warrants in the United States, such Warrant is not being exercised within the United States or on behalf of, or for the account or benefit of, a person in the United States; or

(ii)  

written certification that (i) it was the original purchaser in the Corporation's private placement of the Units pursuant to which the Warrant was issued, (ii) it acquired the Units for its own account for investment purposes only, and (iii) except for the fact that the Warrants are being exercised by the undersigned in the United States, if applicable, the representations and warranties made to the Corporation in connection with the acquisition of the Units remains true and correct on the date of such exercise; or

(iii)  

a written opinion of counsel or other evidence satisfactory to the Corporation, acting reasonably, to the effect that the issuance of the Common Shares and Warrants have been registered under the U.S. Securities Act and applicable state securities laws or is exempt from registration thereunder.

 

¨

A

it is not in the United States as defined in Rule 902 of Regulation S under the United States Securities Act of 1933, as amended (the "1933 Act"), was not offered and did not acquire the Warrants in the United States, and is not exercising the Warrant for the account or benefit of a person in the United States.

 

¨

B

(i) it was the original purchaser in the Corporation’s private placement of the Units pursuant to which the Warrant was issued, (ii) it acquired the Units for its own account for investment purposes only, and (iii) except for the fact that the Warrants are being exercised by the undersigned in the United States, if applicable, the representations and warranties made to the Corporation in connection with the acquisition of the Units remain true and correct on the date of this Exercise Form.

 

¨

C

enclosed herewith is an opinion of counsel to the effect that an exemption from registration under the 1933 Act and applicable state securities laws is available in connection with the exercise of the Warrants.  The undersigned understands such opinion must be reasonably acceptable to the Corporation, and that the exercise of the Warrants in the United States or by or for the account or benefit of a person in the United States is limited by the terms of the Warrants and the Warrant Indenture.

1.  

The registered holder may exercise its right to receive Common Shares by completing this form and surrendering this form and the Warrant Certificate representing the Warrants being exercised to Olympia Trust Company at its principal office at Suite 2300, 125 - 9th Avenue SE, Calgary, Alberta, T2G 0P6.  Certificates for Common Shares will be delivered or mailed within five (5) business days after the exercise of the Warrants.

2.  

If the Exercise Form indicates that Common Shares are to be issued to a person or persons other than the registered holder of the Certificate, the signature of such holder on the Exercise Form must be guaranteed by an authorized officer of a Canadian chartered bank, Canadian trust company or member of an acceptable Medallion Guarantee Program.  The guarantor must affix a stamp bearing the actual words "Signature Guaranteed".  Please note signature guarantees are not accepted from Treasury Branches or Credit Unions unless they are members of the Stamp Medallion Program.  Please note that in the United States, signature guarantees must be done by members of the Medallion Signature Guarantee Program only.

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 fiduciary or representative capacity, the certificate must be accompanied by evidence of authority to sign satisfactory to the Trustee and the Corporation.

1.  

Signature of the Warrantholder must be the signature of the person appearing on the face of this Warrant Certificate.

2.  

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 Trustee and the Corporation.

3.  

The signature on the Transfer Form must be guaranteed by an authorized officer of a Canadian chartered bank, Canadian trust company, or member of an acceptable Medallion Guarantee Program.  The guarantor must affix a stamp bearing the actual words "Signature Guaranteed".  Please note signature guarantees are not accepted from Treasury Branches or Credit Unions unless they are members of the Stamp Medallion Program.  Please note that in the United States, signature guarantees must be done by members of the Medallion Signature Guarantee Program only.