A.

The Corporation has agreed to issue 4,250,000 Units (as defined below), each Unit consisting of one Common Share (as defined below) and 0.4 of one Warrant (as defined below) at no additional cost;

B.

the Corporation has agreed to grant the Underwriters (as defined below) an Over-Allotment Option (as defined below) to purchase up to an additional 637,500 Common Shares at a price of U.S.$2.95 and up to 255,000 Warrants at a price of U.S.$0.05 per 0.4 of one Warrant;

C.

one whole Warrant shall, subject to adjustment, entitle the holder thereof to purchase from the Corporation one Common Share at the Exercise Price (as defined below) at any time prior to the Time of Expiry (as defined below) on the Expiry Date (as defined below), upon the terms and conditions herein set forth;

D.

all acts and deeds necessary have been done and performed to make the Warrants, when certified, issued and delivered as provided in this Indenture, legal, valid and binding upon the Corporation with the benefits and subject to the terms of this Indenture; and

E.

the Trustee has agreed to enter into this Indenture and to hold all rights, interests and benefits contained herein for and on behalf of those persons who from time to time become holders of Warrants issued pursuant to this Indenture.

1.1

Definitions

(a)

“Applicable Legislation” means the provisions of the Business Corporations Act (Alberta) as from time to time amended, and any other 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;

(b)

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

(c)

“CDS” means CDS Clearing and Depository Services Inc.;

(d)

“Clearing Agency” means CDS or DTC, its nominees or any successors thereto, or any other organization registered as a “clearing agency” pursuant to the securities legislation of any jurisdiction of Canada, as in effect from time to time, and any additional qualified clearing agency that carries on business within or outside Canada for Warrantholders resident in the relevant jurisdiction, or any of the foregoing, as the context may require, all as may be designated by the Corporation from time to time;

(e)

“Closing Date” means November 23, 2009 or at such later date as the Corporation and the Underwriters may agree;

(f)

“Common Shares” means, subject to Section 4.1, 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 volume weighted average trading price per share for such shares for the last ten Trading Days ending three trading days prior to such date on the Toronto Stock Exchange or, if on such date the Common Shares are not listed on the Toronto Stock Exchange, on such stock exchange upon which such shares are listed and as selected by the directors, or, if such shares are not listed on any stock exchange, then on such over-the-counter market or otherwise as may be determined by the directors, acting reasonably;

(j)

“Determination Date” has the meaning set forth in Section 3.9(d);

(k)

“director” means a director of the Corporation for the time being and, unless otherwise specified herein, reference without more 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;

(l)

“DTC” means The Depositary Trust Company;

(m)

“Effective Date” means the Closing Date;

(n)

“Exercise Date” means, with respect to any Warrant, the date on which the Warrant

(o)

“Exercise Price” means U.S.$3.50 per share;

(p)

“Expiry Date” means November 23, 2014, or if on any date (the “Accelerated Exercise Date”) prior to November 23, 2014 the 10-day volume-weighted average trading price of the Common Shares on the Toronto Stock Exchange exceeds the Canadian dollar equivalent (based on the Bank of Canada noon spot rate on the final day of the 10-day period) of U.S.$6.50 per Common Share, then, at the Corporation’s sole discretion and upon the Corporation sending the holder written notice of such Accelerated Exercise Date and issuing a news release announcing such Accelerated Exercise Date, the day that is 30 days following the later of: (i) the date on which such written notice is sent to the holder; and (ii) the date on which such announcement is made by news release;

(q)

“Extraordinary Resolution” has the meaning set forth in Section 7.11;

(r)

“Final Exercise Notice” has the meaning set forth in Section 3.9(b);

(s)

“Officer’s Certificate” has the meaning set forth in Section 3.9(a);

(t)

“Over-Allotment Option” means the option granted to the Underwriters in connection with the offering to purchase up to an additional 637,500 Common Shares at a price of U.S.$2.95 and up to 255,000 Warrants at a price of U.S.$0.05 per 0.4 of one Warrant exercisable in whole or in part at any time from the date of the closing of the Unit offering until and including 30 days thereafter;

(u)

“Participant” means a broker, dealer, bank or other financial institution or other person who maintains an account for clearing and holding securities, including Warrants, with a Clearing Agency or its nominee and on whose behalf a Clearing Agency or its nominee holds Warrants;

(v)

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

(w)

“SEC” means the United States Securities and Exchange Commission;

(x)

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

(y)

“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;

(z)

“Time of Expiry” means 4:30 p.m. (Calgary time) on the Expiry Date;

(aa)

“Total Share Number” has the meaning set forth in Section 3.9(c);

(bb)

“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

(cc)

“Trustee” means Computershare Trust Company of Canada or its successors from time to time in the trust hereby created;

(dd)

“Underwriters” means Oppenheimer & Co. Inc. and Canaccord Capital Corporation;

(ee)

“Units” means the units offered by the Corporation pursuant to a prospectus supplement dated November 18, 2009 to a short form base shelf prospectus dated June 16, 2008, each such unit consisting of one Common Share and one Warrant;

(ff)

“U.S. Person” means a “U.S. person” as defined in Rule 902 (k) of Regulation S under the U.S. Securities Act;

(gg)

“U.S. Registration Statement” means a registration statement under the U.S. Securities Act, including any amendments or supplements thereto, registering the Common Shares issuable upon the exercise of the Warrants;

(hh)

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

(ii)

“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;

(jj)

“Warrant” means the Common Share purchase warrants of the Corporation to be issued pursuant to and in accordance with this Indenture entitling holders thereof to acquire one Common Share at the Exercise Price until the Time of Expiry for each whole common share purchase warrant held, subject to the terms and conditions herein;

(kk)

“Warrant Agency” means the principal office of the Trustee in the City of Calgary, Alberta or such other place as may be designated in accordance with Section 3.3;

(ll)

“Warrant Certificate” means a certificate, substantially in the form set forth in Schedule “A”, issued on or after the Effective Date to evidence Warrants;

(mm)

“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;

(nn)

“Warrantholders”, or “holders” means the persons who are registered owners of Warrants;

(oo)

“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

(pp)

“written request of the Corporation” and “certificate of the Corporation” mean, respectively, a written request and certificate signed in the name of the Corporation by its Chairman, President or Chief Financial Officer and may consist of one or more instruments so executed.

1.2

Gender and Number

1.3

Interpretation not Affected by Headings, etc.

1.4

Day not a Business Day

1.5

Time of the Essence

1.6

Currency

1.7

Applicable Law

2.1

Issue of Warrants

2.2

Terms of Warrants

(a)

Each whole Warrant shall entitle the holder thereof, upon the exercise thereof prior to the Time of Expiry, to acquire one (1) Common Share on payment of the Exercise Price.

(b)

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

(c)

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

2.3

Warrantholder not a Shareholder

2.4

Warrants to Rank Pari Passu

2.5

Form of Warrants

2.6

Signing of Warrant Certificates

2.7

Certification by the Trustee

(a)

No Warrant Certificate shall be issued or, if issued, shall be valid for any purpose or entitle the holder to the benefit of this Indenture hereof until it has been certified by manual signature by or on behalf of the Trustee by its authorized signing officers located in the City of Calgary, Alberta 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) 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.

2.8

Issue in Substitution for Warrant Certificates Lost, etc.

(a)

If any Warrant Certificate becomes mutilated or is lost, destroyed or stolen, the Corporation, subject to applicable law and to subsection 2.8(b), 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 pursuant to the provisions of this Warrant Indenture and 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 issue 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 and surety bond 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.

2.9

Exchange of Warrant Certificates

(a)

Any one or more Warrant Certificates representing any number of Warrants may, upon compliance with the reasonable requirements of the Trustee, 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 tendered for exchange.

(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.

(c)

Warrant Certificates issued pursuant to this Section 2.9 shall be in same form and shall bear the same legends as those Warrant Certificates they are exchanged for.

2.10

Transfer and Ownership of Warrants

(a)

The Trustee will cause to be kept (i) by and at the Warrant Agency, a register (or registers) of holders in which shall be entered in alphabetical order the names and addresses of the holders of Warrants and particulars of the Warrants held by them, respectively, and (ii) by and at the Warrant Agency, a register of transfers in which all transfers of Warrants and the date and other particulars of each transfer shall be entered.

(b)

The Warrants may only be transferred on the register referred to in subsection (a) by the holder or its legal representatives or its attorney duly appointed by an instrument in writing in form and execution satisfactory to the Trustee only upon surrendering to the Trustee the Warrant Certificate or Warrant Certificates representing the Warrants to be transferred, together with the duly completed Transfer Form (in the form annexed to the Warrant Certificate), and upon compliance with and, upon reasonable request of the Corporation or Transfer Agent, satisfactory evidence of:

(i)

the conditions set forth in this Indenture;

(ii)

such reasonable requirements as the Trustee may prescribe; and

(iii)

all applicable securities legislation and requirements of regulatory authorities,

(c)

The Corporation and the Trustee may deem and treat the registered owner of any Warrant as the beneficial owner thereof for all purposes and neither the Corporation nor the Trustee shall be affected by any notice or knowledge to the contrary except as required by statute or court of competent jurisdiction.

(d)

Subject to the provisions of this Indenture and Applicable Legislation, the Warrantholders shall be entitled to the rights and privileges attaching to the Warrants free from all equities or rights of set off or counterclaims between the Corporation and the original and any intermediate holder of the Warrants. The issue of Common Shares by the Corporation upon the exercise or deemed 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.

2.11

Charges for Exchange or Transfer

2.12

Global Warrant Certificates

(a)

Warrants may, upon original issuance, be issued in the form of one or more global Warrant Certificates, representing the Warrants to be delivered to the Clearing Agency by or on behalf of the Corporation in respect of such Warrants. The Warrants shall initially be registered on the Warrant register in the name of the Clearing Agency or its nominee and no Warrantholder will receive definitive Warrant Certificates representing such Warrantholder’s interest in the Warrants, except as provided in Subsection 2.12(c) or upon due request by such Warrantholder. Unless and until definitive Warrants have been issued to the applicable Warrantholders pursuant to Subsection 2.12(c):

(i)

the provisions of this Section 2.12 shall be in full force and effect;

(ii)

the Corporation and the Trustee may deal with the Clearing Agency or its nominee for all purposes (including the making of payments and the delivery of any notice, report or other communication) as the registered holder of the Warrants and as the authorized representative of the respective Warrantholders;

(iii)

to the extent that the provisions of this Section 2.12 conflict with any other provisions of this Indenture, the provisions of this Section 2.12 shall prevail;

(iv)

the rights of the respective Warrantholders shall be exercised only through the Clearing Agency (directly or by proxy in favour of the respective Participants) and shall be limited to those established herein and by law;

(v)

all transfers and exchanges of Warrants evidenced by a global certificate must be made through the Clearing Agency and any person transferring a Warrant in such manner shall be deemed to have transferred to the transferee all of such person’s rights and obligations in respect thereof; all transferees of Warrants shall be deemed to have received and accepted such transfer and be deemed to have agreed to be bound by the provisions of this Indenture;

(vi)

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

(vii)

for purposes of any provision of this Indenture requiring or permitting actions with the consent of, or at the direction of, holders of Warrants evidencing a specified percentage of the aggregate unpaid principal amount of Warrants then outstanding, the Trustee is entitled to act and rely upon the instructions of the Clearing Agency that it has received instructions, directly or indirectly through its respective Participants, to such effect from such Warrantholders owning or representing, respectively, the requisite percentage of Warrants.

(b)

Each of the parties hereto acknowledges and agrees that such Warrantholders, through their respective Participants, are collectively entitled, under the terms hereof, to all of the rights accorded to registered holders of Warrants and are bound by all of the obligations of such Warrantholders.

(c)

If Warrants have been issued in the manner described by Section 2.12(a) and (i) the Corporation advises the Trustee that any Clearing Agency is no longer willing or able to discharge properly its responsibilities as the Clearing Agency with respect to such Warrants and the Clearing Agency is unable to locate a qualified successor; (ii) the Corporation, at its option, advises the Trustee that it elects to terminate the use of the global certificate procedure described in Section 2.12(a) with respect to the Warrants; then the Trustee shall notify the relevant holders of the Warrants, through the Clearing Agency, of the occurrence of any such event and of the availability of definitive Warrants

(d)

If definitive Warrants have been issued and thereafter the Trustee advises the Corporation of the availability of the global certificate procedure described in Section 2.12(a) in regard to such Warrants, the Trustee and the Corporation may agree to allow for the re-registration of such definitive Warrants under such procedure and the Trustee shall forthwith deliver notice thereof to each registered holder of such Warrants. Upon surrender by any such Warrantholder of its definitive Warrant accompanied by instructions for re-registration of the Warrant under such procedure, such Warrant shall thereafter be re-registered under such procedure and be subject to Subsections 2.12(a), (b) and (c), mutatis mutandis. The Corporation shall pay all expenses incurred by the Trustee and the reasonable fees of the Trustee associated with any termination of the use of such procedure and of any such re-registration of the definitive Warrants under such procedure.

(e)

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

2.13

Cancellation of Surrendered Warrants

2.14

Assumption by Transferee and Release of Transferor

3.1

Exercise of Warrants by the Holder

(a)

Subject to the terms hereof, including the provisions of Section 3.1(b) and Section 3.1(d), each holder of Warrants may exercise the right conferred on such holder to purchase one Common Share for each whole Warrant held by surrendering to the Trustee at the Warrant Agency, after the Effective Date and prior to the Time of Expiry:

(i)

the Warrant Certificate with a duly completed and executed Exercise Form in the form substantially set out in Schedule “A”; and

(ii)

a certified cheque, bank draft or money order in lawful money of Canada payable to or to the order of the Trustee, at par in the city where such Warrant Certificate is surrendered in an amount equal to the Exercise Price multiplied by the number of Common Shares subscribed for.

(b)

Notwithstanding any provision to the contrary contained in this Indenture, no person in the United States, U.S. Person or person holding a Warrant for the account of or benefit of a person in the United States or U.S. Person shall exercise any Warrant pursuant to this Section 3.1 at any time when no U.S. Registration Statement is effective, provided that at any such time, any person in the United States, U.S. Person or person holding a Warrant for the account or benefit of a person in the United States or U.S. Person shall be entitled to the rights and benefits set forth in Section 3.9 hereof. If no U.S. Registration Statement is effective at any time when a Warrant is exercised, as a condition to the exercise of any Warrant the Corporation may require that the holder of such Warrant provide such evidence as the Corporation shall reasonably request that such person is not exercising in the United States, a U.S. Person or person holding such Warrant for the account or benefit of a person in the United States or U.S. Person and certification from the holder of such Warrant that all offer and sales of the Common Shares acquired pursuant to exercise of the Warrants will be conducted in compliance with Regulation S under the U.S Securities Act, registration under the U.S. Securities Act or pursuant to an applicable exemption from such registration requirements.

(c)

Any Exercise Form referred to in subsection 3.1(a) and any Notice of Intent to Exercise Form referred to in Section 3.9 shall be signed by the Warrantholder and shall specify:

(i)

the number of Common Shares which the holder wishes to acquire (being not more than the number of Common Shares which the holder is entitled to acquire pursuant to the Warrant Certificate(s) surrendered);

(ii)

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

(iii)

the address or addresses of such person or persons; and

(iv)

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

(d)

If Warrants have been issued in the manner described in Section 2.12, a beneficial owner of Warrants who desires to exercise Warrants should ensure that the Participant is provided with the required exercise form sufficiently in advance of the relevant notice date so as to permit the Participant to deliver notice to the Clearing Agency and to the Trustee at the Warrant Agency, after the Effective Date and prior to the Expiry. Any expense associated with the preparation and delivery of such exercise form will be for the account of the beneficial owner exercising the Warrants. The Corporation and the Trustee shall not be liable to the Warrantholder or any other person for any delay in the Trustee receiving such exercise form.

3.2

Transfer Fees and Taxes

3.3

Warrant Agency

3.4

Effect of Exercise of Warrants

(a)

Upon the exercise of Warrants pursuant to Section 3.1 or upon the Determination Date (as defined below) pursuant to Section 3.9, as the case may be, and subject to Section 3.5, the Common Shares to be issued 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

(b)

Upon the exercise of Warrants pursuant to Section 3.1 and subject to Section 3.5, the Corporation or its nominee shall, upon receipt by the Trustee of the Warrant Certificate, the payment of the Exercise Price and the Exercise Form duly completed, as soon as practicable and in any event within five (5) Business Days after the Exercise Date, cause to be mailed to the person or persons in whose name or names the 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 issued upon exercise of the Warrants evidenced by the Warrant Certificate.

3.5

Partial Exercise of Warrants; Fractions

(a)

The holder of any Warrants may exercise his right to acquire Common Shares in part and may thereby acquire a number of Common Shares less than the aggregate number which such holder is entitled to acquire pursuant to the surrendered Warrant Certificate(s). In the event of any exercise of a number of Warrants less than the number which the holder is entitled to exercise, the holder of the Warrants upon such exercise shall, in addition, be entitled to receive, without charge therefor, a new Warrant Certificate(s) in respect of the balance of the Warrants represented by the surrendered Warrant Certificate(s) and which were not then exercised.

(b)

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 or Warrants which evidence a fractional Common Share. In lieu of a fractional Common Share, the Corporation shall pay to the holder who would otherwise be entitled to receive a fractional Common Share upon an exercise of Warrants, within five (5) Business Days after the Exercise Date, an amount in lawful money of Canada equal to the Current Market Price of the Common Shares on the Exercise Date multiplied by an amount equal to the fractional interest such holder would otherwise be entitled to receive upon such exercise, provided that the Corporation shall make only one such payment for each beneficial holder exercising such Warrants.

3.6

Expiration of Warrants

3.7

Accounting and Recording

(a)

The Trustee shall promptly account to the Corporation with respect to Warrants exercised. Any securities or other instruments (including any property), from time to

(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 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.

3.8

Securities Restrictions

3.9

Cashless Exercise by U.S. Persons

(a)

If the U.S. Registration Statement ceases to be effective, prior to the Time of Expiry and for so long as the U.S. Registration Statement is not effective, any holder of any Warrant that is a person in the United States, U.S. Person or person holding a Warrant for the account or benefit of a person in the United States or U.S. Person may provide the Corporation with a notice of intent to exercise such Warrant by surrendering the certificate representing such Warrant at any time during such period to the Trustee at the Warrant Agency, with a duly completed and executed Exercise Form, in substantially the form attached hereto upon which the holder shall indicate that he or she is exercising his or her right to exercise the Warrants on a cashless basis. Upon receipt of the Exercise Form, the Trustee at the Warrant Agency shall inform the Corporation of the Warrantholder’s intent to exercise on a cashless basis. Within three business days of notice from the Trustee at the Warrant Agency of the provision of a Exercise Form on a cashless basis, the Corporation shall authorize such cashless exercise or request further evidence that the holder of the Warrants is in the United States, a U.S. Person or is holding for the account or benefit of a person in the United States or U.S. Person, as provided below. As a condition of such cashless exercise, the Corporation may require that the holder of such Warrant provide such evidence that it is a U.S. Person as the Corporation shall reasonably request, provided that if the Corporation, acting reasonably, is not satisfied in such circumstance that such Warrantholder is a U.S. Person or person

(b)

Forthwith following the election of the Corporation to permit the exercise by a Warrantholder of the cashless exercise, the Trustee shall deliver to the Corporation a notice setting out the particulars of the Warrants to be exercised and the name and address of the Warrantholder and the number of Common Shares to be issued (“Final Exercise Notice”).

(c)

Within three Business Days of receipt of the Final Exercise Notice referred to in (b), the Corporation shall cause a certificate to be mailed to such Warrantholder at the address specified in such Final Exercise Notice, or, if so specified in such Final Exercise Notice, to be made available for pick-up by such Warrantholder at the Warrant Agency representing the number of Common Shares calculated using the following formula:

X = Y(A-B)
A

Where

X =

the number of Common Shares to be issued to the Warrantholder

Y =

the number of shares of Common Shares purchasable under this Warrant or, if only a portion of this Warrant is being exercised, the portion of this Warrant being cancelled (at the date of such calculation)

A =

the Current Market Price of one Common Share (at the date of such calculation)

B =

Exercise Price (as adjusted to the date of such calculation)

(d)

“Determination Date” means, with respect to any Warrants subject to the provisions of Section 5.1(h) hereof, the date the Warrant Certificate together with a duly completed and executed Notice of Intent to Exercise Form is surrendered to the Trustee. A Warrant Certificate with the duly completed and executed Notice of Intent to Exercise Form shall be deemed to be surrendered upon personal delivery thereof, or if sent by mail or other means of transmission, upon actual receipt thereof by the Trustee at the Warrant Agency.

4.1

Adjustment of Number of Common Shares

(a)

if and whenever at any time from the date hereof and prior to the Exercise Date, the

(i)

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

(ii)

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

(iii)

issue Common Shares or securities exchangeable for or convertible into Common Shares to all or substantially all the holders of the then outstanding Common Shares by way of stock dividend or otherwise (other than the issue of Common Shares to holders of Common Shares pursuant to their exercise of options or the exercise of previously granted warrants, including the Warrants issued hereunder, or as dividends in the form of Common Shares in lieu of dividends paid in the ordinary course on the Common Shares);

(b)

if and whenever at any time from the date hereof and prior to the Exercise Date, 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 or merger of the Corporation with or into any other body corporate, trust, partnership or other entity, or a sale, lease, exchange or transfer 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, a Warrantholder shall be entitled to receive and shall accept, in lieu of the number of Common Shares originally 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, arrangement or consolidation, or to which such sale, lease, exchange or transfer may be made, as the case may be, that such Warrantholder would have been entitled to receive on such reclassification, capital reorganization, consolidation, amalgamation, merger, sale, lease, exchange or transfer, 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 originally sought to be acquired by it and to which it was entitled to acquire upon the exercise of the Warrants. If determined appropriate by the Trustee to give effect to or to evidence the provisions of this subsection 4.1(b), 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, reorganization, consolidation, amalgamation, arrangement,

(c)

if and whenever at any time after the date hereof and prior to the Expiry Time:

(i)

the Corporation shall fix a record date for the issuance of rights, options or warrants to all or substantially all of the holders of Common Shares entitling them to subscribe for or purchase Common Shares (or securities convertible into or exchangeable for Common Shares) at a price per share (or having a conversion price per share or exchange price per share) less than 80% of the Current Market Price on such record date, and

(ii)

the Corporation does not fix a record date for the same date as the record date provided for in (c)(i) for the issuance to Warrantholders of equivalent rights, options or warrants as provided to holders of Common Shares in the event described in (c)(i) and on equivalent terms thereto,

A + (B / C)

A + D

Where:

A

=

Total number of Common Shares outstanding on the record date

B

=

Aggregate gross price of the total number of additional Common

C

=

Current Market Price on the record date

D

=

Total number of additional Common Shares offered for

(iii)

any Common Shares owned by or held for the account of the Corporation or any subsidiary (as defined in theBusiness Corporations Act (Alberta)) of the Corporation shall be deemed not to be outstanding for the purpose of any such computation;

(iv)

such adjustment shall be made successively whenever such a record date is fixed;

(v)

to the extent that any such rights, options or warrants are not so issued or any such rights, options or warrants are not exercised prior to the expiration thereof, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon the number and aggregate price of Common Shares (or securities convertible into Common Shares) actually issued upon the exercise of such rights, options or warrants, as the case may be; and

(vi)

upon any adjustment of the Exercise Price pursuant to this subsection 4.1(c), the number of Common Shares subject to the right of purchase under each Warrant shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the respective Exercise Price in effect immediately prior to such adjustment and the denominator shall be the respective Exercise Price resulting from such adjustment;

(d)

if and whenever at any time after the date hereof and prior to the Expiry Time:

(i)

the Corporation shall fix a record date for the making of a distribution to all or substantially all the holders of its outstanding Common Shares of:

(A)

shares of any class, whether of the Corporation or any other corporation (other than Common Shares);

(B)

evidence of its indebtedness; or

(C)

assets or property of the Corporation; and

(ii)

the Corporation does not fix a record date for the same date as the record date provided for in (d)(i) for the issuance to Warrantholders of equivalent shares, evidence of indebtedness, assets or property as provided to holders of Common Shares in the event described in (d)(i) and on equivalent terms thereto,

A x B

A

=

Total number of Common Shares outstanding on such record

B

=

Current Market Price on such record date

C

=

Aggregate fair market value of such shares, evidence of

(iii)

any Common Shares owned by or held for the account of the Corporation or any subsidiary of the Corporation shall be deemed not to be outstanding for the purpose of any such computation;

(iv)

such adjustment shall be made successively whenever such a record date is fixed;

(v)

to the extent that such distribution is not so made, the Exercise Price shall then be readjusted to the Exercise Price which would then be in effect if such record date had not been fixed or to the Exercise Price which would then be in effect based upon such shares, evidences of indebtedness or assets actually distributed, as the case may be; and

(vi)

upon any adjustment of the Exercise Price pursuant to clauses 4.1(d)(i)(A) and 4.1(d)(i)(B), the number of Common Shares subject to the right of purchase under each Warrant shall be contemporaneously adjusted by multiplying the number of Common Shares theretofore obtainable on the exercise thereof by a fraction of which the numerator shall be the respective Exercise Price in effect immediately prior to such adjustment and the denominator shall be the respective Exercise Price resulting from such adjustment;

(e)

the adjustments provided for in this Article 4 in the number of Common Shares and classes of securities which are to be received on the exercise of Warrants are cumulative. 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 its 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; and

(f)

subject only to this Article 4, no Warrantholder shall be entitled to receive at any time cash or property of any kind in lieu of those Common Shares issuable on the exercise of the Warrants held by such Warrantholder.

4.2

Entitlement to Shares on Exercise of Warrant

4.3

Determination by Corporation’s Auditors

4.4

Proceedings Prior to any Action Requiring Adjustment

4.5

Certificate of Adjustment

4.6

Notice of Special Matters

4.7

No Action after Notice

4.8

Protection of Trustee

(a)

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

(b)

shall not be accountable with respect to the validity or value (or the kind or amount) of any Common 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)

shall not 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; and

(d)

shall not incur any liability or responsibility whatsoever 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.

5.1

General Covenants

(a)

it will allot and 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)

upon payment of the Exercise Price, all Common Shares which shall be issued upon exercise of the rights to acquire provided for herein and in the Warrant Certificates shall be fully paid and non-assessable;

(d)

it will use its reasonable commercial efforts maintain its corporate existence; carry on and conduct its business in a proper, efficient and business-like manner; in accordance with good business practice, keep or cause to be kept proper books of account in accordance with Canadian generally accepted accounting practice;

(e)

it will use its reasonable commercial efforts to ensure that all Common Shares outstanding or issuable from time to time (including without limitation the Common Shares issuable on the exercise of the Warrants) continue to be or are listed and posted for trading on the Toronto Stock Exchange, provided that the foregoing shall not restrict or prevent the Corporation from completing a plan of arrangement, take-over bid or other business combination which could or may result in delisting of the Common Shares;

(f)

it will use its reasonable commercial efforts to maintain its status as a reporting issuer in

(g)

it will use its reasonable commercial efforts to make all requisite filings to be made by it under applicable Canadian securities legislation and stock exchange rules including without limitation to report the exercise of the rights to acquire Common Shares pursuant to Warrants or otherwise,

(h)

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;

(i)

if at any time no U.S. Registration Statement is effective, it will give notice to the Trustee forthwith and will give notice, in accordance with the provisions set out in Article 10, to each Warrantholder having an address in the United States shown on the register of holders of Warrants kept by the Trustee pursuant to this Indenture of such fact as soon as reasonably practicable, but in any event such notice must be sent within two Business Days, after learning that no U.S. Registration Statement is effective. Such notice must be sent by fax if possible to any securities depositary that is a registered holder; provided that until the date that is two Business Days after the date the notice is provided to the holders of Warrants, the Determination Date for any Warrant will be any date specified by the holder during the period starting as of when no U.S. Registration Statement is effective and ending as of the provision of the form;

(j)

it will use its reasonable commercial efforts to file and bring effective a U.S. Registration Statement and use its reasonable commercial efforts to maintain the effectiveness of such U.S. Registration Statement, or other U.S. Registration Statement, continuously until the Expiry Date and will provide the Trustee notice of any change in the effectiveness of any U.S. Registration Statement;

(k)

in the event that it shall begin, or cease, to file as a “Foreign Issuer” with the U.S. Securities and Exchange Commission, it shall promptly deliver to the Trustee an Officers’ Certificate (in a form provided by the Trustee certifying such “reporting issuer” status and other information as the Trustee may require at such given time.

5.2

Trustee’s Remuneration and Expenses

5.3

Performance of Covenants by Trustee

5.4

Optional Purchases by the Corporation

6.1

Suits by Warrantholders

6.2

Immunity of Shareholders, etc.

6.3

Limitation of Liability

6.4

Waiver of Default

(a)

the holders of not less than 51% of the Warrants then outstanding shall have the power (in addition to the powers exercisable by Extraordinary Resolution) by requisition in

(b)

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 opinion, the same shall have been cured or adequate provision made therefor;

7.1

Right to Convene Meetings

7.2

Notice

7.3

Chairman

7.4

Quorum

7.5

Power to Adjourn

7.6

Show of Hands

7.7

Poll and Voting

7.8

Regulations

(a)

the setting of the record date for a meeting of Warrantholders 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.

7.9

Corporation and Trustee May be Represented

7.10

Powers Exercisable by Extraordinary Resolution

(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 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 to enforce any of the covenants on the part of the

(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; and

(h)

with the consent of the Corporation (which consent shall not be unreasonably withheld), 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.

7.11

Meaning of Extraordinary Resolution

(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 25% 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 66 2/3% 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 25% 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 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 15 or more than 60 days later, and to such place and time as may be appointed by the chairman. Not less than ten 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

(c)

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.

7.12

Powers Cumulative

7.13

Minutes

7.14

Instruments in Writing

7.15

Binding Effect of Resolutions

7.16

Holdings by Corporation Disregarded

8.1

Provision for Supplemental Indentures for Certain Purposes

(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 as a group;

(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)

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

8.2

Successor Corporations

9.1

Trust Indenture Legislation

(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.

9.2

Rights and Duties of Trustee

(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 and/or custodian 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.

(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

9.3

Evidence, Experts and Advisers

(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.

9.4

Documents, Monies, etc. Held by Trustee

(a)

deposited in the name of the Trustee in any Canadian chartered bank listed in Schedule I of the Bank Act (Canada) at the rate of interest (if any) then current on similar deposits;

(b)

deposited in the deposit department of the Trustee; or

(c)

invested in securities issued or guaranteed by the Government of Canada or a province thereof, any Canadian chartered bank listed in Schedule I of the Bank Act (Canada) or the Trustee, provided that the securities shall not have a maturity date of more than 60 days from the date of investment. Unless the Corporation shall be in default hereunder or unless otherwise specifically provided herein, all interest or other income received by the Trustee in respect of such deposits and investments shall belong to the Corporation.

9.5

Actions by Trustee to Protect Interest

9.6

Trustee Not Required to Give Security

9.7

Protection of Trustee

(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; and

(d)

the Corporation indemnifies and saves harmless the Trustee and its officers from and against any and all liabilities, losses, costs, claims, actions, or demands whatsoever which may be brought against the Trustee or which it may suffer or incur as a result of or arising out of the performance of its duties and obligations under this Indenture, save only in the event of the negligent failure to act, or the wilful misconduct or bad faith of the Trustee. It is understood and agreed that this indemnification shall survive the termination or discharge of this Indenture or the resignation of the Trustee.

9.8

Replacement of Trustee; Successor by Merger

(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

(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 hereof.

(c)

Any corporation into or with 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 a successor trustee under subsection 9.8(a).

9.9

Conflict of Interest

(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 Certificate 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.

9.10

Acceptance of Trust

9.11

Trustee Not to be Appointed Receiver

9.12

Anti-Money Laundering and Anti-Terrorist Legislation

9.13

Accounts Opened for Corporation

10.1

Notice to the Corporation and the Trustee

(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 or if sent by registered letter, postage prepaid or if telecopied:

Attention:

President

Telecopier:

(403) 283-0858

Attention:

Andrew Grasby

Telecopier:

(403) 260-3501

Attention:

Manager, Corporate Trust Department

Telecopier:

(403) 267-6598

(b)

For greater clarity, the sending of any notice to Warrantholders as contemplated in the definition of “Expiry Date” shall be conclusively deemed to have been sent by the Corporation on the date the notice is deposited in first class mail to the registered address of the Warrantholder as reflected on the Warrant Register maintained under the Indenture.

(c)

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.

(d)

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 or sent by telecopier at the appropriate address or number provided in subsection 10.1(a).

10.2

Notice to Warrantholders

(a)

Unless otherwise provided herein, any notice to the Warrantholders under the provisions of this Indenture shall be valid and effective if delivered or if sent by telecopier or letter or circular through the 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, five Business Days following actual posting of the notice, or if telecopied, the next Business Day after transmission provided that transmission has been completely and accurately transmitted.

(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 or sent by telecopier at the appropriate address or number referred to in subsection 10.2(a).

10.3

Counterparts

10.4

Satisfaction and Discharge of Indenture

(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 Time of Expiry,

10.5

Provisions of Indenture and Warrants for the Sole Benefit of Parties, Agent and Warrantholders

10.6

Warrants Owned by the Corporation or its Subsidiaries - Certificate to be Provided

(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;

10.7

Evidence of Ownership

(a)

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)

such other documentation as is satisfactory to the Trustee.

10.8

Privacy Laws

ONCOLYTICS BIOTECH INC.

Per:

Doug Ball

Chief Financial Officer

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:

Name:
Title:

Per:

Name:
Title:

CUSIP: ●

ISIN: ●

CERTIFICATE NO. ___________

_________ WARRANTS entitling the holder to acquire, subject to adjustment, one (1) Common Share for each whole Warrant represented hereby.

ONCOLYTICS BIOTECH INC.

Per:

Name

Title

COMPUTERSHARE TRUST COMPANY OF CANADA

Per:

Name

Title

(full name of Transferee)

(full address of Transferee)

Signature Guaranteed

(Signature of Special Warrantholder)

TO:

Oncolytics Biotech Inc. and

Name:

Address in full:

Social Insurance Number/Business Number:

Number of Common Shares:

1.

The registered holder may receive its Common Shares by completing this form and surrendering this form and the Warrant Certificate representing the Warrants to Computershare Trust Company of Canada at its principal office at 600, 530- 8th Avenue S.W., Calgary, Alberta, T2P 3S8. The Corporation will use its reasonable best efforts to cause certificates for Common Shares to be delivered to the Warrant Agency or to be mailed to the registered holder within five Business Days after receipt of the Warrant Certificates and this form duly completed.

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 Warrant Certificate, the signature of such holder 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 Trustee and the Corporation.

4.

Notice to Warrantholders: If this Exercise Form is being used by U.S. Persons, persons in the United States, or persons exercising for the account or benefit of U.S. Persons or persons in the United States at a time when there is no effective registration statement (“Registration Statement”) under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), registering the common shares issuable upon exercise of the Warrants to which this Exercise Form relates. Warrantholders who submit this Exercise Form may be required by the Corporation or the Warrant Agency to provide evidence that such Warrantholder is a U.S. Person or in the United States.

By providing this Exercise Form during any periods during which there is not an effective Registration Statement, the Warrantholder will be permitted to undertake a cashless exercise of the Warrants pursuant to the conditions of the Indenture. Please review Section 3.9 of the Indenture for further information regarding the cashless exercise provision.