Document:

exv4w1

 

AMENDED AND RESTATED

SHAREHOLDER RIGHTS PLAN AGREEMENT

(amending and restating the Rights Agreement dated as of April 24, 1996, as
amended by an Amending Agreement dated as of June 30, 1999)

Dated as of May 20, 2004

BETWEEN

GOLDEN STAR RESOURCES LTD.

and

CIBC MELLON TRUST COMPANY

as Rights Agent

FASKEN MARTINEAU DUMOULIN LLP

Toronto-Dominion Bank Tower

Box 20, Suite 4200

Toronto Dominion Centre

Toronto, Canada M5K 1N6

 

 

TABLE OF CONTENTS

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	ARTICLE 1	 	INTERPRETATION
	 	 	2	 
	 	1.1	 	 	Certain Definitions
	 	 	2	 
	 	1.2	 	 	Currency
	 	 	15	 
	 	1.3	 	 	Number and Gender
	 	 	15	 
	 	1.4	 	 	Descriptive Headings and References
	 	 	15	 
	 	1.5	 	 	Acting Jointly or in Concert
	 	 	15	 
	 	1.6	 	 	Holder
	 	 	15	 
	 	1.7	 	 	Calculation of Voting Shares Beneficially Owned
	 	 	16	 
	ARTICLE 2	 	THE RIGHTS
	 	 	16	 
	 	2.1	 	 	Legend on Voting Share Certificates
	 	 	16	 
	 	2.2	 	 	Initial Exercise Price; Exercise of Rights; Detachment of Rights
	 	 	17	 
	 	2.3	 	 	Adjustments to Exercise Price; Number of Rights
	 	 	20	 
	 	2.4	 	 	Date on Which Exercise is Effective
	 	 	26	 
	 	2.5	 	 	Execution, Authentication, Delivery and Dating of Rights Certificates
	 	 	26	 
	 	2.6	 	 	Registration, Registration of Transfer and Exchange
	 	 	27	 
	 	2.7	 	 	Mutilated, Destroyed, Lost and Stolen Rights Certificates
	 	 	28	 
	 	2.8	 	 	Persons Deemed Owners
	 	 	28	 
	 	2.9	 	 	Delivery and Cancellation of Certificates
	 	 	29	 
	 	2.10	 	 	Agreement of Rights Holders
	 	 	29	 
	ARTICLE 3	 	ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF A FLIP-IN EVENT
	 	 	30	 
	 	3.1	 	 	Flip-in Event
	 	 	30	 
	ARTICLE 4	 	THE RIGHTS AGENT
	 	 	31	 
	 	4.1	 	 	General
	 	 	31	 
	 	4.2	 	 	Merger, Amalgamation or Consolidation or Change of Name of Rights Agent
	 	 	32	 
	 	4.3	 	 	Duties of Rights Agent
	 	 	33	 
	 	4.4	 	 	Change of Rights Agent
	 	 	35	 
	ARTICLE 5	 	MISCELLANEOUS
	 	 	36	 
	 	5.1	 	 	Redemption and Termination of Rights
	 	 	36	 
	 	5.2	 	 	Waiver of Flip-In Events
	 	 	37	 
	 	5.3	 	 	Expiration
	 	 	37	 
	 	5.4	 	 	Issuance of New Rights Certificates
	 	 	38	 
	 	5.5	 	 	Supplements and Amendments
	 	 	38	 
	 	5.6	 	 	Fractional Rights and Fractional Shares
	 	 	40	 
	 	5.7	 	 	Rights of Action
	 	 	40	 
	 	5.8	 	 	Holder of Rights Not Deemed a Shareholder
	 	 	40	 
	 	5.9	 	 	Notice of Proposed Actions
	 	 	41	 
	 	5.10	 	 	Notices
	 	 	41	 

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TABLE OF CONTENTS

(continued)

	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 	5.11	 	 	Costs of Enforcement
	 	 	42	 
	 	5.12	 	 	Successors
	 	 	42	 
	 	5.13	 	 	Benefits of this Agreement
	 	 	42	 
	 	5.14	 	 	Governing Law
	 	 	43	 
	 	5.15	 	 	Language
	 	 	43	 
	 	5.16	 	 	Counterparts
	 	 	43	 
	 	5.17	 	 	Severability
	 	 	43	 
	 	5.18	 	 	Determinations and Actions by the Board of Directors
	 	 	43	 
	 	5.19	 	 	Effective Date and Expiration Time
	 	 	43	 
	 	5.20	 	 	Regulatory Approvals
	 	 	44	 
	 	5.21	 	 	Time of the Essence
	 	 	44	 
	 	5.22	 	 	Declaration as to Non-Canadian Holders
	 	 	44	 

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AMENDED AND RESTATED

SHAREHOLDER RIGHTS PLAN AGREEMENT

AMENDED AND RESTATED SHAREHOLDER RIGHTS PLAN AGREEMENT dated as of May 20, 2004
between GOLDEN STAR RESOURCES LTD., a corporation organized under the laws of
Canada (the “Corporation”), and CIBC MELLON TRUST COMPANY, a trust company
existing under the laws of Canada, as rights agent (the “Rights Agent”, which
term shall include any successor Rights Agent hereunder), amending and
restating the Rights Agreement dated as of April 24, 1996 between the
Corporation and The R-M Trust Company, as rights agent, as amended pursuant to
an Amending Agreement dated as of June 30, 1999 between the Corporation and
CIBC Mellon Trust Company (formerly The R-M Trust Company), as rights agent.

     WHEREAS the Corporation and The R-M Trust Company entered into a rights
agreement dated as of April 24, 1996 (the “1996 Rights Plan”) respecting a
shareholder rights plan that was effective until June 30, 1999;

     AND WHEREAS the 1996 Rights Plan was amended by an Amending Agreement
dated as of June 30, 1999 (the “Amending Agreement”) between the Corporation
and the Rights Agent (formerly The R-M Trust Company) that, among other things,
extended the 1996 Rights Plan until June 30, 2004, unless earlier terminated or
extended (the 1996 Rights Plan, as amended by the Amending Agreement, being the
"Original Rights Plan”)

     AND WHEREAS the Board of Directors (as hereinafter defined) has determined
that it is advisable and in the best interests of the Corporation to continue
the Original Rights Plan, by adopting an Amended and Restated Shareholder
Rights Plan Agreement as provided herein (the “Rights Plan”) to take effect on
the Effective Date (as hereinafter defined), subject to approval by the
Independent Shareholders (as hereinafter defined) at the annual and special
meeting of the shareholders of the Corporation scheduled to be held on May 20,
2004, to ensure, to the extent possible, that all shareholders of the
Corporation are treated fairly in connection with any Take-Over Bid (as
hereinafter defined) and, due to the uniqueness of the Corporation’s business,
to ensure that the Board of Directors are provided with sufficient time to
evaluate unsolicited Take-Over Bids and to explore and develop alternatives to
maximize shareholder value;

     AND WHEREAS in order to implement the Rights Plan, the Board of Directors
has:

	(a)	 	reconfirmed the distribution of one right (a “Right”) effective at the
Record Time (as hereinafter defined) in respect of each Common Share (as
hereinafter defined) outstanding at the Record Time; and
	 
	(b)	 	reconfirmed its authorization of the issuance of one Right in respect of
each Voting Share issued after the Record Time and prior to the earlier of
the Separation Time (as hereinafter defined) and the Expiration Time (as
hereinafter defined);

     AND WHEREAS each Right entitles the holder thereof, after the Separation
Time, to purchase securities of the Corporation pursuant to the terms and
subject to the conditions set forth herein;

 

 

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     AND WHEREAS the Rights Agent has agreed to act on behalf of the
Corporation in connection with the issuance, transfer, exchange and replacement
of Rights Certificates (as hereinafter defined), the exercise of Rights and
other matters referred to herein;

     NOW THEREFORE, in consideration of the premises and the respective
agreements set forth herein, the Corporation and the Rights Agent hereby agree
as follows:

ARTICLE 1

INTERPRETATION

	1.1	 	Certain Definitions

     For purposes of this Agreement, the following terms have the meanings
indicated:

"Acquiring Person” means any Person who is the Beneficial Owner of 20% or
more of the outstanding Voting Shares; provided, however, that the term
“Acquiring Person” shall not include:

	 	(i)	 	the Corporation or any Subsidiary of the Corporation;
	 
	 	(ii)	 	any Person who becomes the Beneficial Owner of 20% or more of
the outstanding Voting Shares as a result of one or any combination
of:

	 	(A)	 	a Voting Share Reduction,
	 
	 	(B)	 	a Permitted Bid Acquisition,
	 
	 	(C)	 	an Exempt Acquisition,
	 
	 	(D)	 	a Convertible Security Acquisition, or
	 
	 	(E)	 	a Pro Rata Acquisition.

	 	 	 	provided, however, that if a Person becomes the Beneficial Owner of
20% or more of the outstanding Voting Shares by reason of one or
any combination of a Voting Share Reduction, a Permitted Bid
Acquisition, an Exempt Acquisition, a Convertible Security
Acquisition or a Pro Rata Acquisition, and thereafter becomes the
Beneficial Owner of an additional 1% or more of the outstanding
Voting Shares (other than pursuant to a Voting Share Reduction, a
Permitted Bid Acquisition, an Exempt Acquisition, a Convertible
Security Acquisition or a Pro Rata Acquisition), then as of the
date and time that such Person becomes the Beneficial Owner of such
additional Voting Shares, such Person shall become an Acquiring
Person;
	 
	 	(iii)	 	an underwriter or member of a banking or selling group that
becomes the Beneficial Owner of 20% or more of the outstanding
Voting Shares as a result of an acquisition from the Corporation in
connection with a distribution of securities pursuant to a
prospectus or by way of a private placement; and

 

 

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	 	(iv)	 	a Grandfathered Person, provided, however, that if after the
Record Time such Person becomes the Beneficial Owner of an
additional 1% or more of the outstanding Voting Shares (other than
pursuant to a Voting Share Reduction, a Permitted Bid Acquisition,
an Exempt Acquisition, a Convertible Security Acquisition or a Pro
Rata Acquisition), then as of the date and time that such Person
becomes the Beneficial Owner of such additional Voting Shares, such
Person shall become an Acquiring Person.

"Affiliate”, when used to indicate a relationship with a specified
corporation, means a Person that directly, or indirectly through one or
more controlled intermediaries, controls, or is a corporation controlled
by, or is a corporation under common control with, such specified
corporation.

"Agreement” means this amended and restated shareholder rights plan
agreement between the Corporation and the Rights Agent, as amended,
supplemented or restated from time to time; “hereof”, “herein”, “hereto”
and similar expressions mean and refer to this Agreement as a whole and
not any particular part of this Agreement.

"Associate”, when used to indicate a relationship with a specified
Person, means (i) a spouse of such specified Person, (ii) any Person of
either sex with whom such specified Person is living in a conjugal
relationship outside marriage, or (iii) any relative of such specified
Person or of a Person mentioned in Clause (i) or (ii) of this definition
if that relative has the same residence as the specified Person.

"Beneficial Owner”: a Person shall be deemed the “Beneficial Owner” and
to have “Beneficial Ownership” of and to “Beneficially Own”, any
security:

	 	(i)	 	of which such Person or any of such Person’s Affiliates or
Associates is the owner at law or in equity;
	 
	 	(ii)	 	as to which such Person or any of such Person’s Affiliates or
Associates has the right to become the owner at law or in equity (A)
upon the purchase, exercise, conversion or exchange of any
Convertible Securities, or (B) pursuant to any agreement,
arrangement, pledge or understanding, whether or not in writing, in
each case if such right is then exercisable or exercisable within a
period of 60 days of the date of the determination of Beneficial
Ownership, and whether or not on condition or the happening of any
contingency (other than customary agreements with and between
underwriters and members of banking groups or selling groups with
respect to a distribution of securities pursuant to a prospectus or
by way of a private placement and other than pursuant to pledges of
securities in the ordinary course of business); and
	 
	 	(iii)	 	which is Beneficially Owned within the meaning of Clause (i)
or (ii) of this definition by any other Person with which, and in
respect of which security, such Person is acting jointly or in
concert;

provided, however, that a Person shall not be deemed the “Beneficial
Owner” of, or to have “Beneficial Ownership” of, or to “Beneficially
Own”, any security by reason of:

 

 

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	 	(1)	 	such security having been deposited or tendered pursuant to a
Take-Over Bid made by such Person, any of such Person’s Affiliates
or Associates or any other Person with which, and in respect of
which security, such Person is acting jointly or in concert, until
such deposited or tendered security has been accepted
unconditionally for payment or exchange or has been taken up and
paid for, whichever shall first occur;
	 
	 	(2)	 	the holder of such security having agreed pursuant to a
Permitted Lock-Up Agreement to deposit or tender such security
pursuant to a Take-Over Bid made by such Person, any of such
Person’s Affiliates or Associates or any other Person with which,
and in respect of which security, such Person is acting jointly or
in concert, until the earliest time at which any such deposited or
tendered security has been accepted unconditionally for payment or
exchange or has been taken up and paid for, whichever shall first
occur;
	 
	 	(3)	 	such Person, for greater certainty, holding such security in
the ordinary course of such Person’s business or activities as
follows:

	 	(A)	 	such Person (in this definition, a “Manager”)
manages investment funds for others (which others may include,
or be limited to, employee benefit plans and pension plans),
if such security is held by the Manager in the performance of
the Manager’s duties for the account of another Person (in
this definition, a “Client”, which term shall include any
non-discretionary account held on behalf of a Client by a
broker or dealer registered under applicable law);
	 
	 	(B)	 	such Person (in this definition, a “Trust
Company”) is licensed as a trust company under applicable law
and, as such, acts as trustee or administrator or in a similar
capacity for the estates of deceased or incompetent Persons
(each, in this definition, an “Estate Account”) or for other
accounts (each, in this definition, an “Other Account”), if
such security is held by the Trust Company for the Estate
Account or for such Other Accounts;
	 
	 	(C)	 	such Person (in this definition, a “Crown Agent”)
is a Crown agent or agency that manages public assets, if such
security is held by the Crown Agent for the purposes of its
activities as Crown Agent;
	 
	 	(D)	 	such Person (in this definition, a “Statutory
Body”) is established by statute for purposes that include the
management of investment funds for employee benefit plans,
pension plans and insurance plans (other than insurance plans
administered by insurance companies) of various public bodies,
if such security is held by the Statutory Body for the
purposes of its activities as Statutory Body; or
	 
	 	(E)	 	such Person (in this definition, an
“Administrator”) is the administrator or trustee of one or
more pension funds or plans (each, in this definition, a

 

 

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"Plan”) registered under the laws of Canada or any province
thereof or the corresponding laws of the jurisdiction by
which such Plan is governed, or is such a Plan, if such
security is held by the Administrator or Plan for the
purposes of its activities as Administrator or Plan;

	 	 	 	but only if the Manager, the Trust Company, the Crown Agent, the
Statutory Body, the Administrator or the Plan, as the case may be,
is not then making or has not publicly announced a current
intention to make a Take-Over Bid, alone or by acting jointly or in
concert with any other Person, other than pursuant to a
distribution by the Corporation or by means of ordinary market
transactions (including pre-arranged trades entered into in the
ordinary course of business of such Person) executed through the
facilities of a stock exchange, securities quotation system or an
organized over-the-counter market;
	 
	 	(4)	 	such Person, for greater certainty, being a Client of the
same Manager as another Person on whose account the Manager holds
such security;
	 
	 	(5)	 	such Person, for greater certainty, having an Estate Account
or an Other Account with the same Trust Company as another Person on
whose account the Trust Company holds such security;
	 
	 	(6)	 	such Person, for greater certainty, being a Plan with the
same Administrator as another Plan on whose account the
Administrator holds such security;
	 
	 	(7)	 	such Person, for greater certainty:

	 	(A)	 	being a Client of a Manager, if such security is
owned at law or in equity by the Manager;
	 
	 	(B)	 	being an Estate Account or an Other Account of a
Trust Company, if such security is owned at law or in equity
by the Trust Company; or
	 
	 	(C)	 	being a Plan, if such security is owned at law or
in equity by the Administrator of the Plan; or

	 	(8)	 	such Person being the registered holder of such security as a
result of carrying on the business of, or acting as nominee for, a
securities depository.

"Board of Directors” means the board of directors of the Corporation or
any duly constituted or empowered committee thereof.

"Business Day” means any day other than a Saturday, a Sunday or a day
that is treated as a holiday in Vancouver, British Columbia.

"Canada Business Corporations Act” means the Canada Business Corporations
Act, R.S.C. 1985, c.C-44, as amended, and the regulations made
thereunder, as now in effect or as the same may from time to time be
amended, re-enacted or replaced.

 

 

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"Canadian Dollar Equivalent” of any amount which is expressed in United
States dollars means on any date the Canadian dollar equivalent of such
amount determined by multiplying such amount by the U.S.-Canadian
Exchange Rate in effect on such date.

"Canadian-U.S. Exchange Rate” means on any date the inverse of the
U.S.-Canadian Exchange Rate.

"Close of Business” on any date means the time on such date (or, if such
date is not a Business Day, the time on the next succeeding Business Day)
at which the office of the transfer agent for the Common Shares in
Vancouver, British Columbia (or, after the Separation Time, the office of
the Rights Agent in Vancouver, British Columbia) is closed to the public.

"Common Shares” means the common shares in the capital of the
Corporation.

"Competing Permitted Bid” means a Take-Over Bid that:

	 	(i)	 	is made after a Permitted Bid or another Competing Permitted
Bid has been made and prior to the expiry, termination or withdrawal
of that Permitted Bid or Competing Permitted Bid (in this
definition, the “Prior Bid”);
	 
	 	(ii)	 	satisfies all the provisions of the definition of a Permitted
Bid other than the requirements set out in Clauses (ii)(A) and (D)
of the definition of Permitted Bid; and
	 
	 	(iii)	 	contains, and the take-up and payment for securities
deposited or tendered thereunder are subject to, irrevocable and
unqualified conditions that:

	 	(A)	 	no Voting Shares and/or Convertible Securities
shall be taken up or paid for pursuant to the Take-Over Bid
(x) prior to the Close of Business on a date that is not less
than the later of 35 days after the Offer Date of such
Take-Over Bid constituting the Competing Permitted Bid and 60
days after the Offer Date of the earliest Prior Bid then in
existence, and (y) then only if, at the Close of Business on
the date Voting Shares and/or Convertible Securities are first
taken up or paid for under such Take-Over Bid constituting the
Competing Permitted Bid, more than 50% of the outstanding
Voting Shares and/or Convertible Securities held by
Independent Shareholders have been deposited or tendered
pursuant to such Take-Over Bid and not withdrawn; and
	 
	 	(B)	 	in the event that the requirement set forth in
Subclause (iii)(A)(y) of this definition is satisfied, the
Offeror will make a public announcement of that fact and the
Take-Over Bid will remain open for deposits and tenders of
Voting Shares and/or Convertible Securities for not less than
10 Business Days from the date of such public announcement.

"controlled”: a body corporate is “controlled” by another Person or two
or more Persons acting jointly or in concert if:

 

 

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	 	(i)	 	securities entitled to vote in the election of directors
carrying more than 50% of the votes for the election of directors
are held, directly or indirectly, by or on behalf of the other
Person or two or more Persons acting jointly or in concert; and
	 
	 	(ii)	 	the votes carried by such securities are entitled, if
exercised, to elect a majority of the board of directors of such
body corporate;

and “controls”, “controlling” and “under common control with” shall be
interpreted accordingly.

"Convertible Securities” means at any time any securities issued by the
Corporation from time to time (other than the Rights) carrying any
purchase, exercise, conversion or exchange right pursuant to which the
holder thereof may acquire Voting Shares or other securities carrying any
purchase, exercise, conversion or exchange right pursuant to which the
holder thereof may acquire Voting Shares (in each case, whether such
right is then exercisable or exercisable within or after a specified
period and whether or not on condition or the happening of any
contingency).

"Convertible Security Acquisition” means the acquisition of Voting Shares
by a Person upon the purchase, exercise, conversion or exchange of
Convertible Securities acquired or received by such Person pursuant to a
Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata
Acquisition.

"Co-Rights Agent” has the meaning attributed thereto in Subsection
4.1(a).

"Effective Date” means the time at which the annual and special meeting
of the holders of Voting Shares scheduled to be held on May 20, 2004
terminates.

"Election to Exercise” shall have the meaning attributed thereto in
Subsection 2.2(d).

"Exempt Acquisition” means an acquisition by a Person of Voting Shares
and/or Convertible Securities (i) in respect of which the Board of
Directors has waived the application of Section 3.1 pursuant to the
provisions of Section 5.2, (ii) pursuant to a regular dividend
reinvestment or other plan of the Corporation made available by the
Corporation to the holders of Voting Shares and/or Convertible Securities
where such plan permits the holder to direct that the dividends paid in
respect of such Voting Shares and/or Convertible Securities be applied to
the purchase from the Corporation of further securities of the
Corporation, (iii) pursuant to a distribution of Voting Shares and/or
Convertible Securities made by the Corporation (A) to the public pursuant
to a prospectus; provided that such Person does not thereby become the
Beneficial Owner of a greater percentage of Voting Shares so offered than
the percentage of Voting Shares Beneficially Owned by such Person
immediately prior to such distribution, or (B) by way of a private
placement; provided that (x) all necessary stock exchange approvals to
such private placement have been obtained and such private placement
complies with the terms and conditions of such approvals, and (y) such
Person does not thereby become the Beneficial Owner of Voting Shares
equal in number to more than 25% of the Voting Shares outstanding
immediately prior to the private placement and, in making this
determination, the securities to be issued to such Person on the private
placement shall be

 

 

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deemed to be held by such Person but shall not be included in the
aggregate number of Voting Shares outstanding immediately prior to the
private placement, or (iv) pursuant to an amalgamation, merger,
arrangement or other statutory procedure requiring shareholder approval.

"Exercise Price” means, as of any date, the price at which a holder may
purchase the securities issuable upon exercise of one whole Right in
accordance with the terms hereof and, subject to adjustment thereof in
accordance with the terms hereof, the Exercise Price shall be:

	 	(i)	 	until the Separation Time, an amount equal to three times the
Market Price, from time to time, per Common Share; and
	 
	 	(ii)	 	from and after the Separation Time, an amount equal to three
times the Market Price, as at the Separation Time, per Common Share.

"Expansion Factor” has the meaning attributed thereto in Subsection
2.3(b)(x).

"Expiration Time” has the meaning attributed thereto in Subsection
5.19(a)(ii).

"Flip-in Event” means a transaction or event in which any Person becomes
an Acquiring Person.

"Grandfathered Person” means any Person who is the Beneficial Owner of
20% or more of the outstanding Voting Shares as determined at the Record
Time; provided, however, that a Person shall cease to be a Grandfathered
Person in the event that such Person ceases to Beneficially Own 20% or
more of the outstanding Voting Shares at any time after the Record Time.

“holder” shall have the meaning attributed thereto in Section 1.6.

"including” and “includes” shall be interpreted on an inclusive basis and
shall be deemed to be followed by the words “without limitation”.

"Independent Shareholders” means holders of outstanding Voting Shares,
excluding (i) any Acquiring Person, (ii) any Offeror, (iii) any Affiliate
or Associate of any Acquiring Person or Offeror, (iv) any Person acting
jointly or in concert with any Acquiring Person or Offeror, and (v) any
employee benefit plan, share purchase plan, deferred profit sharing plan
or trust for the benefit of employees of the Corporation or a
wholly-owned Subsidiary of the Corporation (unless the beneficiaries of
such plan or trust direct the manner in which such Voting Shares are to
be voted or direct whether the Voting Shares are to be deposited or
tendered to a Take-Over Bid, in which case such plan or trust shall be
considered to be an Independent Shareholder).

"Market Price” per security of any securities on any date means the
average of the daily closing prices per security of such securities
(determined as described below) on each of the 20 consecutive Trading
Days through to and including the Trading Day immediately preceding such
date; provided, however, that if an event of a type analogous to any of
the

 

 

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events described in Section 2.3 shall have caused the closing prices used
to determine the Market Price on any Trading Day not to be fully
comparable with the closing price on such date of determination (or, if
the date of determination is not a Trading Day, on the immediately
preceding Trading Day), each such closing price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 in order to make it fully comparable with
the closing price on such date of determination (or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day).

The closing price per security of any securities on any date shall be:

	 	(i)	 	the closing board lot sale price or, in case no such sale
takes place on such date, the average of the closing bid and asked
prices for each such security as reported by the principal stock
exchange or securities quotation system in Canada on which such
securities are listed or admitted to trading (based on the volume of
securities traded during the most recently completed financial
year);
	 
	 	(ii)	 	if for any reason none of the prices described in Clause (i)
above are available for such date or the securities are not listed
or admitted to trading on a stock exchange or securities quotation
system in Canada, the last board lot sale price or, if such price is
not available, the average of the closing bid and asked prices, for
each such security on such date as reported by such other securities
exchange or securities quotation system on which such securities are
listed or admitted to trading (and if such securities are listed or
admitted to trading on more than one other stock exchange or
securities quotation system such prices shall be determined based on
the stock exchange or securities quotation system on which such
securities are then listed or admitted to trading on which the
largest number of such securities were traded during the most
recently completed financial year);
	 
	 	(iii)	 	if for any reason none of the prices described in Clauses
(i) and (ii) above are available for such date or the securities are
not listed or admitted to trading on a stock exchange in Canada or
any other securities exchange or securities quotation system, the
last sale price, or if no sale takes place, the average of the high
bid and low asked prices for each such security on such date in the
over-the-counter market, as quoted by any reporting system then in
use (as determined by the Board of Directors); or
	 
	 	(iv)	 	if for such date none of the prices described in Clauses (i),
(ii) and (iii) above are available or the securities are not listed
or admitted to trading on a stock exchange in Canada or any other
securities exchange and are not quoted by any reporting system, the
average of the closing bid and asked prices for such date as
furnished by a professional market maker making a market in the
securities selected in good faith by the Board of Directors;

provided, however, that if on any such date none of such prices is
available, the closing price per security of such securities on such date
shall be the fair value per security of such securities on such date as
determined in good faith by an internationally recognized

 

 

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investment banking firm selected by the Board of Directors. The Market
Price shall be expressed in Canadian dollars and if initially determined
in respect of any day forming part of the 20 consecutive Trading Day
period in question in United States dollars, such amount shall be
translated into Canadian dollars on such date at the Canadian Dollar
Equivalent thereof.

"Offer Date” means the date of a Take-Over Bid.

"Offer to Acquire” shall include:

	 	(i)	 	an offer to purchase, or a solicitation of an offer to sell,
Voting Shares and/or Convertible Securities; and
	 
	 	(ii)	 	an acceptance of an offer to sell Voting Shares and/or
Convertible Securities, whether or not such offer to sell has been
solicited;

or any combination thereof, and the Person accepting an offer to sell
shall be deemed to be making an Offer to Acquire to the Person that made
the offer to sell.

"Offeror” means a Person who has made a public announcement of a current
intention to make or who is making a Take-Over Bid (including a Permitted
Bid or a Competing Permitted Bid), but excluding any Person referred to
in Clause (3) of the definition of Beneficial Owner in the circumstances
described therein.

"Offeror’s Securities” means the aggregate of the Voting Shares
Beneficially Owned on the date of an Offer to Acquire by an Offeror.

"Permitted Bid” means a Take-Over Bid that is made by means of a
take-over bid circular and that also complies with the following
additional provisions:

	 	(i)	 	the Take-Over Bid is made to all holders of Voting Shares of
record, other than the Offeror; and
	 
	 	(ii)	 	the Take-Over Bid contains, and the provisions for take-up
and payment for securities deposited or tendered thereunder are
subject to, irrevocable and unqualified conditions that:

	 	(A)	 	no Voting Shares and/or Convertible Securities
shall be taken up or paid for pursuant to the Take-Over Bid
(x) prior to the Close of Business on a date that is not less
than 60 days following the Offer Date, and (y) then only if,
at the Close of Business on the date Voting Shares and/or
Convertible Securities are first taken up or paid for under
such Take-Over Bid, more than 50% of the outstanding Voting
Shares and/or Convertible Securities held by Independent
Shareholders have been deposited or tendered pursuant to the
Take-Over Bid and not withdrawn;
	 
	 	(B)	 	Voting Shares and/or Convertible Securities may
be deposited or tendered pursuant to such Take-Over Bid,
unless such Take-Over Bid is withdrawn,

 

 

-11-

	 	 	 	at any time prior to the Close of Business on the date Voting
Shares and/or Convertible Securities are first taken up or
paid for under the Take-Over Bid;
	 
	 	(C)	 	any Voting Shares and or Convertible Securities
deposited or tendered pursuant to the Take-Over Bid may be
withdrawn until taken up and paid for; and
	 
	 	(D)	 	in the event that the requirement set forth in
Subclause (ii)(A)(y) of this definition is satisfied, the
Offeror will make a public announcement of that fact and the
Take-Over Bid will remain open for deposits and tenders of
Voting Shares and/or Convertible Securities for not less than
10 Business Days from the date of such public announcement.

"Permitted Bid Acquisition” means an acquisition by a Person of Voting
Shares and/or Convertible Securities pursuant to a Permitted Bid or a
Competing Permitted Bid.

"Permitted Lock-Up Agreement” means an agreement (the “Lock-Up
Agreement”) between a Person and one or more holders of Voting Shares
and/or Convertible Securities (each a “Locked-Up Person”) (the terms of
which are publicly disclosed and a copy of which is made available to the
public (including the Corporation) not later than the date the Lock-Up
Bid (as defined below) is publicly announced or, if the Lock-Up Bid has
been made prior to the date on which such Lock-Up Agreement is entered
into, not later than the date of such Lock-Up Agreement (or, if such date
is not a Business Day, on the Business Day next following such date)),
pursuant to which such Locked-Up Person agrees to deposit or tender
Voting Shares and/or Convertible Securities held by such holder to a
Take-Over Bid (the “Lock-Up Bid”) made or to be made by such Person, any
of such Person’s Affiliates or Associates or any other Person with which,
and in respect of which security, such Person is acting jointly or in
concert; provided that:

	 	(i)	 	the Lock-Up Agreement permits such Locked-Up Person to
terminate its obligation to deposit or tender to or not to withdraw
Voting Shares and/or Convertible Securities from the Lock-Up Bid in
order to deposit or tender such securities to another Take-Over Bid
or support another transaction where:

	 	(A)	 	the price or value per Voting Share or
Convertible Security offered under such other Take-Over Bid or
transaction exceeds the price or value per Voting Share or
Convertible Security offered under the Lock-Up Bid;
	 
	 	(B)	 	the price or value per Voting Share or
Convertible Security offered under such other Take-Over Bid or
transaction exceeds by as much as or more than a specified
amount (the “Specified Amount") the price or value per Voting
Share or Convertible Security offered under the Lock-Up Bid,
provided that such Specified Amount is not greater than 7% of
the price or value per Voting Share or Convertible Security
offered under the Lock-Up Bid; or

 

 

-12-

	 	(C)	 	the number of Voting Shares and/or Convertible
Securities to be purchased under such other Take-Over Bid or
transaction exceeds by as much as or more than a specified
number (the “Specified Number”) the number of Voting Shares
and/or Convertible Securities that the Offeror has offered to
purchase under the Lock-Up Bid at a price or value per Voting
Share or Convertible Security that is not less than the price
or value per Voting Share or Convertible Security offered
under the Lock-Up Bid, provided that the Specified Number is
not greater than 7% of the number of Voting Shares and/or
Convertible Securities offered under the Lock-Up Bid;

and for greater certainty, such Lock-Up Agreement may contain a
right of first refusal or require a period of delay to give the
Offeror under the Lock-Up Bid an opportunity to match the higher
price, value or number in such other Take-Over Bid or transaction,
or other similar limitation on a Locked-Up Person’s right to
withdraw Voting Shares from the Lock-Up Agreement, so long as the
limitation does not preclude the exercise by the Locked-Up Person
of the right to withdraw Voting Shares and/or Convertible
Securities in sufficient time to deposit or tender to the other
Take-Over Bid or support the other transaction; and

	 	(ii)	 	no “break-up” fees, “top-up” fees, penalties, expenses or
other amounts that exceed in the aggregate the greater of:

	 	(A)	 	the cash equivalent of 2.5% of the price or value
payable under the Lock-Up Bid to a Locked-Up Person; and
	 
	 	(B)	 	50% of the amount by which the price or value
payable under another Take-Over Bid or other transaction to a
Locked-Up Person exceeds the price or value of the
consideration that such Locked-Up Person would have received
under the Lock-Up Bid,

shall be payable by a Locked-Up Person pursuant to the Lock-Up
Agreement in the event that the Locked-Up Bid is not successfully
concluded or if any Locked-Up Person fails to deposit or tender
Voting Shares and/or Convertible Securities to the Lock-Up Bid or
withdraws Voting Shares and/or Convertible Securities previously
deposited or tendered thereto in order to deposit or tender to
another Take-Over Bid or support another transaction.

"Person” shall include any individual, firm, partnership, syndicate,
association, trust, trustee, executor, administrator, legal personal
representative, government, governmental body or authority, corporation
or other incorporated or unincorporated organization.

"Pro Rata Acquisition” means an acquisition by a Person of Voting Shares
and/or Convertible Securities (i) as a result of a stock dividend, a
stock split or other event pursuant to which such Person receives or
acquires Voting Shares and/or Convertible Securities on the same pro rata
basis as all other holders of Voting Shares and/or Convertible Securities
of the same class or series; or (ii) pursuant to the receipt or

 

 

-13-

exercise of rights (other than the Rights) to subscribe for or purchase
Voting Shares and/or Convertible Securities issued by the Corporation on
the same pro rata basis to all of the holders of Voting Shares and/or
Convertible Securities of the same class or series, provided that such
rights are acquired directly from the Corporation; and further provided,
in either case, that such Person does not thereby become the Beneficial
Owner of a greater percentage of Voting Shares than the percentage of
Voting Shares Beneficially Owned by such Person immediately prior to such
acquisition.

"Record Time” means 5:00 p.m. (Vancouver time) on May 20, 2004.

"Redemption Price” shall have the meaning attributed thereto in
Subsection 5.1(a).

"Regular Periodic Cash Dividend” shall have the meaning attributed
thereto in Subsection 2.3(d).

"Rights” means the herein described rights to purchase securities
pursuant to the terms and subject to the conditions set forth herein.

"Rights Certificate” means a certificate representing the Rights after
the Separation Time which shall be substantially in the form attached
hereto as Exhibit A or such other form as the Corporation and the Rights
Agent may agree.

"Rights Register” and “Rights Registrar” shall each have the meaning
attributed thereto in Subsection 2.6(a).

"Securities Act (British Columbia)” means the Securities Act, S.B.C.
1985, chapter 85, as amended, and the rules and regulations made
thereunder, as now in effect or as the same may from time to time be
amended, re-enacted or replaced.

"Separation Time” means the Close of Business on the tenth Trading Day
after the earliest of:

	 	(i)	 	the Stock Acquisition Date;
	 
	 	(ii)	 	the date of the commencement of, or first public announcement
of the current intention of any Person (other than the Corporation
or any Subsidiary of the Corporation) to commence, a Take-Over Bid
(other than a Permitted Bid or Competing Permitted Bid so long as
such Take-Over Bid continues to satisfy the requirements of a
Permitted Bid or a Competing Permitted Bid); and
	 
	 	(iii)	 	the date upon which a Permitted Bid or Competing Permitted
Bid ceases to be a Permitted Bid or a Competing Permitted Bid, as
applicable;

or such later date as may be determined by the Board of Directors in good
faith, provided, however, that if any Take-Over Bid referred to in Clause
(ii) above expires or is terminated or otherwise withdrawn prior to the
Separation Time, such Take-Over Bid shall be deemed, for the purposes of
this definition, never to have been made.

 

 

-14-

"Stock Acquisition Date” means the first date of public announcement
(which, for purposes of this definition, shall include a report filed
pursuant to the Securities Act (British Columbia), the 1934 Exchange Act
or any other applicable securities laws) by the Corporation or an
Acquiring Person of facts indicating that a Person has become an
Acquiring Person.

"Subsidiary”: a body corporate is a Subsidiary of another body corporate
if:

	 	(i)	 	it is controlled by (A) that other, or (B) that other and one
or more bodies corporate, each of which is controlled by that other,
or (C) two or more bodies corporate, each of which is controlled by
that other; or
	 
	 	(ii)	 	it is a Subsidiary of a body corporate that is that other’s
Subsidiary.

"Take-Over Bid” means an Offer to Acquire Voting Shares and/or
Convertible Securities where the Voting Shares and/or Convertible
Securities subject to the Offer to Acquire, together with the Offeror’s
Securities, constitute in the aggregate 20% or more of the outstanding
Voting Shares and/or Convertible Securities at the date of the Offer to
Acquire.

"Termination Time” means the time at which the right to exercise Rights
shall terminate pursuant to Section 5.1.

"Trading Day”, when used with respect to any securities, means a day on
which the principal stock exchange or securities quotation system in
Canada on which such securities are listed or admitted to trading is open
for the transaction of business or, if the securities are not listed or
admitted to trading on any stock exchange or securities quotation system
in Canada, a Business Day.

"TSX” means the Toronto Stock Exchange.

"U.S.-Canadian Exchange Rate” means on any date:

	 	(i)	 	if on such date the Bank of Canada sets an average noon spot
rate of exchange for the conversion of one United States dollar into
Canadian dollars, such rate; and
	 
	 	(ii)	 	in any other case, the rate on such date for the conversion
of one United States dollar into Canadian dollars which is
calculated in the manner which shall be determined by the Board of
Directors from time to time acting in good faith.

"U.S. Dollar Equivalent” of any amount which is expressed in Canadian
dollars means on any date the United States dollar equivalent of such
amount determined by reference to the Canadian-U.S. Exchange Rate in
effect on such date.

"Voting Share Reduction” means an acquisition or a redemption by the
Corporation of Voting Shares and/or Convertible Securities which, by
reducing the number of outstanding Voting Shares and/or Convertible
Securities, increases the percentage of Voting Shares Beneficially Owned
by any Person.

 

 

-15-

"Voting Shares” means collectively the Common Shares and any other shares
in the capital stock or voting interests issued by the Corporation, the
holders of which are entitled to vote generally in the election of
directors.

"1933 Securities Act” means the Securities Act of 1933 of the United
States, as amended, and the rules and regulations made thereunder, as now
in effect or as the same may from time to time be amended, re-enacted or
replaced.

"1934 Exchange Act” means the Securities Exchange Act of 1934 of the
United States, as amended, and the rules and regulations made thereunder,
as now in effect or as the same may from time to time be amended,
re-enacted or replaced.

	1.2	 	Currency

     All sums of money which are referred to in this Agreement are expressed in
lawful money of Canada, unless otherwise specified.

	1.3	 	Number and Gender

     Wherever the context so requires, terms used herein importing the singular
number only shall include the plural and vice versa and words importing any one
gender shall include all others.

	1.4	 	Descriptive Headings and References

     Descriptive headings and the Table of Contents appear herein for
convenience of reference only and shall not affect the meaning or construction
of any of the provisions hereof. All references to Articles, Sections,
Subsections, Clauses and Exhibits are to the articles, sections, subsections,
clauses and exhibits forming part of this Agreement unless otherwise indicated.
The words “hereto”, “herein”, “hereof”, “hereunder”, “this Agreement” and
similar expressions refer to this Agreement including the Exhibits, as the same
may be amended, supplemented or restated from time to time.

	1.5	 	Acting Jointly or in Concert

     For purposes of this Agreement, a Person is acting jointly or in concert
with every other Person who is a party to any agreement, commitment or
understanding, whether formal or informal and whether or not in writing, with
the first mentioned Person to acquire or Offer to Acquire Voting Shares and/or
Convertible Securities (other than customary agreements with and between
underwriters and/or members of banking groups and/or selling group members with
respect to a distribution of securities pursuant to a prospectus or by way of a
private placement and other than pursuant to pledges of securities in the
ordinary course of business).

	1.6	 	Holder

     As used in this Agreement, unless the context otherwise requires, the term
“holder” of any Rights means the registered holder of such Rights (or, prior to
the Separation Time, of the associated Common Shares).

 

 

-16-

	1.7	 	Calculation of Voting Shares Beneficially Owned

     For the purposes of this Agreement, the percentage of Voting Shares
Beneficially Owned by a Person shall be and be deemed to be the product
determined by the formula:

	 	 	 	 	 
	100

	 	x
	 	A
	

	 	 	 	
 
	

	 	 	 	B

     where

	 	 	 	 	 	 	 
	

	 	A
	 	=
	 	the number of votes for the
election of all directors generally attaching to
the Voting Shares Beneficially Owned by such
Person; and
	 
	 	 	 	 	 	 
	

	 	B
	 	=
	 	the number of votes for the
election of all directors generally attaching to
all outstanding Voting Shares.

     Where a Person is deemed to Beneficially Own unissued Voting Shares, such
Voting Shares shall be deemed to be outstanding for the purposes of both A and
B above, but no other unissued Voting Shares shall, for the purposes of such
calculation, be deemed to be outstanding.

ARTICLE 2

THE RIGHTS

	2.1	 	Legend on Voting Share Certificates

     Voting Share certificates issued after the Record Time and prior to the
Close of Business on the earlier of the Separation Time and the Expiration Time
shall evidence one Right for each Voting Share represented thereby and shall
have impressed on, printed on, written on or otherwise affixed to them prior to
the Effective Date the legend set forth in Section 2.1 of the 1996 Rights Plan
and which legend shall be deemed to be amended for all purposes to read the
same as the legend set forth below, and after the Effective Date the following
legend:

“Until the Separation Time (as such term is defined in the
Shareholder Rights Plan Agreement referred to below), this
certificate also evidences and entitles the holder hereof to
certain Rights as set forth in an Amended and Restated Shareholder
Rights Plan Agreement dated as of May 20, 2004, as amended,
supplemented or restated from time to time (the “Rights
Agreement”) between Golden Star Resources Ltd. (the “Corporation”)
and CIBC Mellon Trust Company, as Rights Agent, the terms of which
are hereby incorporated herein by reference and a copy of which is
on file and may be inspected during normal business hours at the
registered office of the Corporation. In certain circumstances,
as set forth in the Rights Agreement, such Rights may be amended,
may be redeemed, may expire, may become null and void or may be
evidenced by separate certificates and may no longer be evidenced
by this certificate. The Corporation will mail or arrange for the
mailing of a copy of the

 

 

-17-

Rights Agreement to the holder of this certificate without charge
as soon as practicable after the receipt of a written request
therefor.”

Certificates representing Voting Shares that are issued and outstanding at the
Record Time shall also evidence one Right for each Voting Share evidenced
thereby, notwithstanding the absence of the foregoing legend, until the earlier
of the Separation Time and the Expiration Time. Following the Separation Time,
Rights will be evidenced by Rights Certificates issued pursuant to Section 2.2
hereof.

	2.2	 	Initial Exercise Price; Exercise of Rights; Detachment of Rights

	 	(a)	 	Subject to adjustment as herein set forth, each Right will
entitle the holder thereof, from and after the Separation Time and
prior to the Expiration Time, to purchase one Common Share for the
Exercise Price (which Exercise Price and number of Common Shares are
subject to adjustment as set forth below) or its U.S. Dollar
Equivalent as at the Business Day immediately preceding the day on
which such Right is exercised. Notwithstanding any other provision
of this Agreement, any Rights held by the Corporation or any of its
Subsidiaries shall be null and void.
	 
	 	(b)	 	Until the Separation Time, (i) the Rights shall not be
exercisable and no Right may be exercised, and (ii) for
administrative purposes, each Right will be evidenced by the
certificate for the associated Voting Share registered in the name
of the holder thereof (which certificate shall be deemed to
represent a Rights Certificate) and will be transferable only
together with, and will be transferred by a transfer of, such
associated Voting Share.
	 
	 	(c)	 	From and after the Separation Time and prior to the
Expiration Time, the Rights may be exercised and the registration
and transfer of the Rights shall be separate from and independent of
Voting Shares. Promptly following the Separation Time, the
Corporation will prepare and the Rights Agent will mail to each
holder of record of Voting Shares as of the Separation Time (other
than an Acquiring Person, any other Person whose Rights are or
become null and void pursuant to the provisions of Subsection 3.1(b)
and, in respect of any Rights Beneficially Owned by such Acquiring
Person which are not held of record by such Acquiring Person, the
holder of record of such Rights), at such holder’s address as shown
by the records of the Corporation (the Corporation hereby agreeing
to furnish copies of such records to the Rights Agent for this
purpose):

	 	(i)	 	a Rights Certificate appropriately completed,
representing the number of Rights held by such holder at the
Separation Time and having such marks of identification or
designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate and as
are not inconsistent with the provisions of this Agreement, or
as may be required to comply with any law or with any rule or
regulation or judicial or administrative order made pursuant
thereto or with any rule or regulation of any self-regulatory
organization, stock exchange or securities

 

 

-18-

	 	 	 	quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage; and
	 
	 	(ii)	 	a disclosure statement prepared by the
Corporation describing the Rights;

provided, however, that a nominee shall be sent the materials
provided for in Clauses (i) and (ii) above only in respect of
Voting Shares held of record by it which are not Beneficially Owned
by an Acquiring Person. In order for the Corporation to determine
whether any Person is holding Voting Shares which are Beneficially
Owned by another Person, the Corporation may require such
first-mentioned Person to furnish such information and
documentation as the Corporation deems necessary or appropriate to
make such determination.

	 	(d)	 	Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration Time by
submitting to the Rights Agent at its principal office in Vancouver,
British Columbia or, with the approval of the Rights Agent, at any
other office of the Rights Agent in the cities designated from time
to time for that purpose by the Corporation:

	 	(i)	 	the Rights Certificate evidencing such Rights
with an election to exercise (an “Election to Exercise”)
substantially in the form attached to the Rights Certificate
appropriately completed and duly executed by the holder or his
executors or administrators or other personal representatives
or his legal attorney duly appointed by an instrument in
writing in form and executed in a manner satisfactory to the
Rights Agent; and
	 
	 	(ii)	 	payment by certified cheque, banker’s draft or
money order payable to the order of the Corporation, of a sum
equal to the Exercise Price multiplied by the number of Rights
being exercised and a sum sufficient to cover any transfer tax
or charge which may be payable in respect of the transfer or
delivery of Rights Certificates or the issuance or delivery of
certificates for Voting Shares in a name other than that of
the holder of the Rights being exercised.

	 	(e)	 	Upon receipt of a Rights Certificate, with a completed
Election to Exercise appropriately completed and duly executed which
does not indicate that such Right is null and void as provided by
Subsection 3.1(b), accompanied by payment as set forth in Clause
2.2(d)(ii), the Rights Agent (unless otherwise instructed in writing
by the Corporation) will thereupon promptly:

	 	(i)	 	requisition from the transfer agent of the Common
Shares certificates for the number of Common Shares to be
purchased (the Corporation hereby irrevocably agreeing to
authorize its transfer agent to comply with all such
requisitions);
	 
	 	(ii)	 	after receipt of such certificates referred to in
Clause 2.2(e)(i), deliver such certificates to or upon the
order of the registered holder of such Rights

 

 

-19-

	 	 	 	Certificate, registered in such name or names as may be
designated by such holder;
	 
	 	(iii)	 	when appropriate, requisition from the
Corporation the amount of cash to be paid in lieu of issuing
fractional Common Shares or fractional Rights;
	 
	 	(iv)	 	after receipt, deliver such cash referred to in
Clause 2.2(e)(iii) to or to the order of the registered holder
of the Rights Certificate; and
	 
	 	(v)	 	tender to the Corporation all payments received
upon exercise of the Rights.

	 	(f)	 	In case the holder of any Rights shall exercise less than all
the Rights evidenced by such holder’s Rights Certificate, a new
Rights Certificate evidencing the Rights remaining unexercised will
be issued by the Rights Agent to such holder or to such holder’s
duly authorized assigns.
	 
	 	(g)	 	The Corporation covenants and agrees that it will:

	 	(i)	 	take all such action as may be necessary and
within its power to ensure that all securities delivered upon
exercise of Rights shall, at the time of delivery of the
certificates for such securities (subject to payment of the
Exercise Price), be duly and validly authorized, executed,
issued and delivered as fully paid and non-assessable;
	 
	 	(ii)	 	take all such action as may be necessary and
within its power to comply with any applicable requirements of
the Canada Business Corporations Act, the Securities Act
(British Columbia), the securities acts or comparable
legislation of each of the other provinces of Canada, the 1933
Securities Act and the 1934 Exchange Act and any other
applicable law, rule or regulation, in connection with the
issuance and delivery of the Rights Certificates and the
issuance of any Common Shares upon exercise of Rights;
	 
	 	(iii)	 	use reasonable efforts to cause all Common
Shares issued upon exercise of Rights to be listed upon
issuance on the TSX and each other stock exchange and/or
securities quotation system on which the Common Shares are
then listed or admitted to trading at that time;
	 
	 	(iv)	 	cause to be reserved and kept available out of
its authorized and unissued Common Shares the number of Common
Shares that, as provided in this Agreement, will from time to
time be sufficient to permit the exercise in full of all
outstanding Rights; and
	 
	 	(v)	 	pay when due and payable any and all Canadian and
United States federal, provincial and state transfer taxes
(for greater certainty not including any income taxes or
capital gains of the holder or exercising holder or any
liability of the Corporation to withhold tax) and charges
which may be

 

 

-20-

	 	 	 	payable in respect of the original issuance or delivery of
the Rights Certificates or certificates for Common Shares,
provided that the Corporation shall not be required to pay
any transfer tax or charge which may be payable in respect of
the transfer or delivery of Rights Certificates or the
issuance or delivery of certificates for Common Shares in a
name other than that of the holder of the Rights being
transferred or exercised.

	2.3	 	Adjustments to Exercise Price; Number of Rights

	 	(a)	 	The Exercise Price, the number and kind of securities subject
to purchase upon exercise of each Right and the number of Rights
outstanding are subject to adjustment from time to time as provided
in this Section 2.3.
	 
	 	(b)	 	In the event the Corporation shall at any time after the
Record Time and prior to the Expiration Time:

	 	(i)	 	declare or pay a dividend on the Common Shares
payable in Common Shares or other capital stock of the
Corporation (or Convertible Securities) other than pursuant to
any optional stock dividend program, dividend reinvestment
plan or dividend payable in Common Shares in lieu of a regular
periodic cash dividend;
	 
	 	(ii)	 	subdivide or change the outstanding Common Shares
into a greater number of Common Shares;
	 
	 	(iii)	 	consolidate or change the outstanding Common
Shares into a smaller number of Common Shares; or
	 
	 	(iv)	 	issue any Common Shares or other capital stock of
the Corporation (or Convertible Securities) in respect of, in
lieu of, or in exchange for existing Common Shares;

the Exercise Price and the number of Rights outstanding or, if the
payment or effective date therefor shall occur after the Separation
Time, the securities purchasable upon exercise of Rights, shall be
adjusted in the manner set forth below.

If the Exercise Price and number of Rights outstanding are to be
adjusted:

	 	(x)	 	the Exercise Price in effect after such
adjustment shall be equal to the Exercise Price in effect
immediately prior to such adjustment divided by the number of
Common Shares (or other capital stock) (the “Expansion
Factor”) that a holder of one Common Share immediately prior
to such dividend, subdivision, change, consolidation or
issuance would hold thereafter as a result thereof (assuming
the exercise of all such purchase, exercise, conversion or
exchange rights, if any); and

 

 

-21-

	 	(y)	 	each Right held prior to such adjustment shall
become that number of Rights equal to the Expansion Factor and
the adjusted number of Rights will be deemed to be distributed
among the Common Shares with respect to which the original
Rights were associated (if they remain outstanding) and the
Common Shares issued or issuable in respect of such dividend,
subdivision, change, consolidation or issuance, so that each
such Common Share (or other capital stock) will have exactly
one Right associated with it.

For greater certainty, if the securities purchasable upon exercise
of Rights are to be adjusted, the securities purchasable upon
exercise of each Right after such adjustment will be the securities
that a holder of the securities purchasable upon exercise of one
Right immediately prior to such dividend, subdivision, change,
consolidation or issuance would hold thereafter as a result
thereof. To the extent that such rights of purchase, exercise,
conversion or exchange are not exercised prior to the expiration
thereof, the Exercise Price shall be readjusted to the Exercise
Price which would then be in effect based on the number of Common
Shares (or Convertible Securities) actually issued upon the
exercise of such rights.

If after the Record Time and prior to the Expiration Time the
Corporation shall issue any shares of capital stock other than
Common Shares in a transaction of a type described in Clause
2.3(b)(i) or (iv), shares of such capital stock shall be treated
herein as nearly equivalent to Common Shares as may be practicable
and appropriate under the circumstances and the Corporation and the
Rights Agent shall amend or supplement this Agreement in order to
effect such treatment.

If an event occurs which would require an adjustment under both
this Section 2.3 and Section 3.1, the adjustment provided for in
this Section 2.3 shall be in addition to, and shall be made prior
to, any adjustment required pursuant to Section 3.1. Adjustments
pursuant to Section 2.3 shall be made successively, whenever an
event referred to in Section 2.3 occurs.

If the Corporation shall at any time after the Record Time and
prior to the Separation Time issue any Common Shares otherwise than
in a transaction referred to in this Subsection 2.3(b), each such
Common Share so issued shall automatically have one new Right
associated with it, which Right shall be evidenced by the
certificate representing such associated Common Share.

	 	(c)	 	In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time fix a record date for
the issuance to all holders of Common Shares of rights, options or
warrants entitling them (for a period expiring within 45 days after
such record date) to subscribe for or purchase Common Shares (or
Convertible Securities pursuant to which the holder may acquire
Common Shares) at a price per Common Share (or, if a Convertible
Security having a purchase, exercise, conversion or exchange price,
including the price required to be paid to purchase such convertible
or exchangeable security or right, per share) less than 90% of the
Market Price per Common Share on such record date, the Exercise

 

 

-22-

	 	 	 	Price shall be adjusted in the manner set forth below. The
Exercise Price in effect after such record date shall equal the
Exercise Price in effect immediately prior to such record date
multiplied by a fraction, of which the numerator shall be the
number of Common Shares outstanding on such record date plus the
number of Common Shares that the aggregate offering price of the
total number of Common Shares so to be offered (and/or the
aggregate initial conversion, exchange or exercise price of the
convertible or exchangeable securities or rights so to be offered
(including the price required to be paid to purchase such
convertible or exchangeable securities or rights)) would purchase
at such Market Price per Common Share and of which the denominator
shall be the number of Common Shares outstanding on such record
date plus the number of additional Common Shares to be offered for
subscription or purchase (or into which the convertible or
exchangeable securities or rights so to be offered are initially
convertible, exchangeable or exercisable). In case such
subscription price may be paid by delivery of consideration part or
all of which shall be in a form other than cash, the value of such
consideration shall be as determined in good faith by the Board of
Directors whose determination shall be described in a statement
filed with the Rights Agent and shall be binding on the Rights
Agent and the holders of Rights. To the extent that such rights of
purchase, exercise, conversion or exchange are not exercised prior
to the expiration thereof, the Exercise Price shall be readjusted
to the Exercise Price which would then be in effect based on the
number of Common Shares (or securities convertible into or
exchangeable for Common Shares) actually issued upon the exercise
of such rights.
	 
	 	 	 	Such adjustment shall be made successively whenever such a record
date is fixed. For purposes of this Agreement, the granting of the
right to purchase Common Shares (whether from treasury shares or
otherwise) pursuant to any dividend or interest reinvestment plan
and/or any Common Share purchase plan providing for the
reinvestment of dividends or interest payable on securities of the
Corporation and/or the investment of periodic optional payments
and/or employee benefit or similar plans (so long as such right to
purchase is in no case evidenced by the delivery of rights or
warrants) shall not be deemed to constitute an issue of rights or
warrants by the Corporation; provided, however, that, in the case
of any dividend or interest reinvestment plan, the right to
purchase Common Shares is at a price per share of not less than 90%
of the current market price per share (determined as provided in
such plans) of the Common Shares.
	 
	 	(d)	 	In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time fix a record date for
the making of a distribution to all holders of Common Shares of
evidences of indebtedness or assets (other than a Regular Periodic
Cash Dividend (as defined below) or a dividend paid in Common
Shares) or rights, options or warrants (excluding those referred to
in Subsection 2.3(c)), the Exercise Price shall be adjusted. The
Exercise Price in effect after such record date will equal the
Exercise Price in effect immediately prior to such record date less
the fair market value (as determined in good faith by the Board of
Directors) of the portion of the assets, evidences of indebtedness,
rights or warrants so to be distributed applicable to the securities
purchasable

 

 

-23-

	 	 	 	upon exercise of one Right. Such adjustment shall be made
successively whenever such a record date is fixed.
	 
	 	 	 	For the purpose of this Subsection 2.3(d), “Regular Periodic Cash
Dividend” means cash dividends paid at regular intervals in any
fiscal year of the Corporation to the extent that such cash
dividends do not exceed, in the aggregate, the greatest of:

	 	(i)	 	200% of the aggregate amount of cash dividends
declared payable by the Corporation on its Common Shares in
its immediately preceding fiscal year;
	 
	 	(ii)	 	300% of the arithmetic mean of the aggregate
amounts of cash dividends declared payable by the Corporation
on its Common Shares in its three immediately preceding fiscal
years; and
	 
	 	(iii)	 	100% of the aggregate consolidated net income of
the Corporation, before extraordinary items, for its
immediately preceding fiscal year.

	 	(e)	 	Each adjustment made pursuant to this Section 2.3 shall be
made as of:

	 	(i)	 	the payment or effective date for the applicable
dividend, subdivision, change, consolidation or issuance, in
the case of an adjustment made pursuant to Subsection 2.3(b)
above; and
	 
	 	(ii)	 	the record date for the applicable dividend or
distribution, in the case of an adjustment made pursuant to
Subsection 2.3(c) or (d) above subject to readjustment to
reverse same if such distribution shall not be made.

	 	(f)	 	In the event the Corporation shall at any time after the
Record Time and prior to the Separation Time issue any shares of
capital stock (other than Common Shares), or rights, options or
warrants to subscribe for or purchase any such capital stock, or
securities convertible into or exchangeable for any such capital
stock in a transaction referred to in Clause 2.3(b)(i) or (iv), or
if the Corporation shall take any other action (other than the issue
of Common Shares) which might have a negative effect on the holders
of Rights, if the Board of Directors acting in good faith determines
that the adjustments contemplated by Subsections 2.3(b), (c) and (d)
above in connection with such transaction will not appropriately
protect the interests of the holders of Rights, the Board of
Directors may determine what other adjustments to the Exercise
Price, number of Rights and/or securities purchasable upon exercise
of Rights would be appropriate and, notwithstanding Subsections
2.3(b), (c) and (d) above, but subject to the prior consent of the
holders of Common Shares or Rights obtained as set forth in
Subsection 5.5(b) or (c) as applicable, such adjustments, rather
than the adjustments contemplated by Subsections 2.3(b), (c) and (d)
above, shall be made. The Corporation and the Rights Agent shall
amend or supplement this Agreement as appropriate to provide for
such adjustments.

 

 

-24-

	 	(g)	 	Notwithstanding anything herein to the contrary, no
adjustment of the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in
such Exercise Price; provided, however, that any adjustments which
by reason of this Subsection 2.3(g) are not required to be made
shall be carried forward and taken into account in any subsequent
adjustment. All adjustments made pursuant to this Section 2.3 shall
be made to the nearest cent or to the nearest ten-thousandth of a
Common Share, as the case may be.
	 
	 	(h)	 	If as a result of an adjustment made pursuant to Section 3.1,
the holder of any Right thereafter exercised shall become entitled
to receive any securities other than Common Shares, thereafter the
number of such other shares so receivable upon exercise of any Right
and the applicable Exercise Price thereof shall be subject to
adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the
Common Shares contained in the provisions of this Section 2.3 and
the provisions of this Agreement with respect to the Common Shares
shall apply on like terms to any such other securities.
	 
	 	(i)	 	All Rights originally issued by the Corporation subsequent to
any adjustment made to an Exercise Price hereunder shall evidence
the right to purchase, at the adjusted Exercise Price, the number of
Common Shares purchasable from time to time hereunder upon exercise
of the Rights, all subject to further adjustment as provided herein.
	 
	 	(j)	 	Unless the Corporation shall have exercised its election, as
provided in Subsection 2.3(k), upon each adjustment of the Exercise
Price as a result of the calculations made in Subsections 2.3(c) and
(d), each Right outstanding immediately prior to the making of such
adjustment shall thereafter evidence the right to purchase, at the
adjusted Exercise Price, that number of Common Shares obtained by:

	 	(i)	 	multiplying (A) the number of Common Shares
covered by a Right immediately prior to such adjustment, by
(B) the relevant Exercise Price in effect immediately prior to
such adjustment of the relevant Exercise Price; and
	 
	 	(ii)	 	dividing the product so obtained by the relevant
Exercise Price in effect immediately after such adjustment of
the relevant Exercise Price.

	 	(k)	 	The Corporation may elect on or after the date of any
adjustment of an Exercise Price to adjust the number of Rights, in
lieu of any adjustment in the number of Common Shares purchasable
upon the exercise of a Right. Each of the Rights outstanding after
the adjustment in the number of Rights shall be exercisable for the
number of Common Shares for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record
prior to such adjustment of the number of Rights shall become the
number of Rights (calculated to the nearest one ten-thousandth)
obtained by dividing the relevant Exercise Price in effect
immediately prior to adjustment of relevant Exercise Price by the
relevant

 

 

-25-

	 	 	 	Exercise Price in effect immediately after adjustment of the
relevant Exercise Price. The Corporation shall make a public
announcement of its election to adjust the number of Rights,
indicating the record date for the adjustment, and, if known at the
time, the amount of the adjustment to be made. This record date
may be the date on which the relevant Exercise Price is adjusted or
any day thereafter, but, if the Rights Certificates have been
issued, shall be at least 10 days later than the date of the public
announcement. If Rights Certificates have been issued, upon each
adjustment of the number of Rights pursuant to this Subsection
2.3(k), the Corporation shall, as promptly as practicable, cause to
be distributed to holders of record of Rights Certificates on such
record date, Rights Certificates evidencing, subject to Section
5.6, the additional Rights to which such holders shall be entitled
as a result of such adjustment, or, at the option of the
Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Rights Certificates
held by such holders prior to the date of adjustment, and upon
surrender thereof if required by the Corporation, new Rights
Certificates evidencing all the Rights to which such holders shall
be entitled after such adjustment. Rights Certificates so to be
distributed shall be issued, executed and countersigned in the
manner provided for herein and may bear, at the option of the
Corporation, the relevant adjusted Exercise Price and shall be
registered in the names of holders of record of Rights Certificates
on the record date specified in the public announcement.
	 
	 	(l)	 	Irrespective of any adjustment or change in the securities
purchasable upon exercise of the Rights, the Rights Certificates
theretofore and thereafter issued may continue to express the
securities so purchasable which were expressed in the initial Rights
Certificates issued hereunder.
	 
	 	(m)	 	In any case in which this Section 2.3 shall require that an
adjustment in the Exercise Price be made effective as of a record
date for a specified event, the Corporation may elect to defer until
the occurrence of such event the issuance to the holder of any Right
exercised after such record date of the number of Common Shares and
other securities of the Corporation, if any, issuable upon such
exercise over and above the number of Common Shares and other
securities of the Corporation, if any, issuable upon such exercise
on the basis of the relevant Exercise Price in effect prior to such
adjustment; provided, however, that the Corporation shall deliver to
such holder a due bill or other appropriate instrument evidencing
such holder’s right to receive such additional Common Shares
(fractional or otherwise) or other securities upon the occurrence of
the event requiring such adjustment.
	 
	 	(n)	 	Notwithstanding anything in this Section 2.3 to the contrary,
the Corporation shall be entitled to make such reductions in the
Exercise Price, in addition to those adjustments expressly required
by this Section 2.3, as and to the extent that in its good faith
judgment the Board of Directors shall determine to be advisable in
order that any (i) subdivision or consolidation of the Common
Shares, (ii) issuance (wholly or in part for cash) of Common Shares
at less than the applicable Market Price, (iii) issuance (wholly for
cash) of any Common Shares or securities

 

 

-26-

	 	 	 	that by their terms are exchangeable for or convertible into or
give a right to acquire Common Shares, (iv) stock dividends, or (v)
issuance of rights, options or warrants referred to in this Section
2.3, hereafter made by the Corporation to holders of its Common
Shares, subject to applicable taxation laws, shall not be taxable
to such shareholders.
	 
	 	(o)	 	After the Separation Time, the Corporation will not, except
as permitted by the provisions hereof, take (or permit any
Subsidiary of the Corporation to take) any action if at the time
such action is taken it is reasonably foreseeable that such action
will diminish substantially or otherwise eliminate the benefits
intended to be afforded by the Rights.
	 
	 	(p)	 	Whenever an adjustment to the Exercise Price or a change in
the securities purchasable upon the exercise of Rights is made
pursuant to this Section 2.3, the Corporation shall promptly:

	 	(i)	 	prepare a certificate setting forth such
adjustment and a brief statement of the facts accounting for
such adjustment;
	 
	 	(ii)	 	file with the Rights Agent and with each transfer
agent for the Common Shares, a copy of such certificate; and
	 
	 	(iii)	 	cause notice of the particulars of such
adjustment or change to be given to the holders of the Rights.

Failure to file such certificate or to cause such notice to be
given as aforesaid, or any defect therein, shall not affect the
validity of any such adjustment or change.

	2.4	 	Date on Which Exercise is Effective

     Each Person in whose name any certificate for Common Shares or other
securities, if applicable, is issued upon the exercise of Rights shall for all
purposes be deemed to have become the holder of record of the Common Shares or
other securities, if applicable, represented thereby, and such certificate
shall be dated the date upon which the Rights Certificate evidencing such
Rights was duly surrendered in accordance with Subsection 2.2(e) (together with
a duly completed Election to Exercise) and payment of the Exercise Price for
such Rights (and any applicable transfer taxes and other governmental charges
payable by the exercising holder hereunder) was made; provided, however, that
if the date of such surrender and payment is a date upon which the Common Share
transfer books of the Corporation are closed, such Person shall be deemed to
have become the record holder of such shares on, and such certificate shall be
dated, the next succeeding Business Day on which the Common Share transfer
books of the Corporation are open.

	2.5	 	Execution, Authentication, Delivery and Dating of Rights Certificates

	 	(a)	 	The Rights Certificates shall be executed on behalf of the
Corporation by its Chairman of the Board, President or any Vice
President and by the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary of the Corporation.

 

 

-27-

	 	 	 	The signature of any of these officers on the Rights Certificates
may be manual or facsimile. Rights Certificates bearing the manual
or facsimile signatures of individuals who were at any time the
proper officers of the Corporation shall bind the Corporation,
notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the countersignature and delivery of
such Rights Certificates.
	 
	 	(b)	 	Promptly after the Corporation learns of the Separation Time,
the Corporation will notify the Rights Agent in writing of such
Separation Time and will deliver Rights Certificates executed by the
Corporation to the Rights Agent for countersignature and a
disclosure statement as described in Subsection 2.2(c), and the
Rights Agent shall countersign (manually or by facsimile signature)
and mail such Rights Certificates and disclosure statement to the
holders of the Rights pursuant to Subsection 2.2(c). No Rights
Certificate shall be valid for any purpose until countersigned by
the Rights Agent as aforesaid.
	 
	 	(c)	 	Each Rights Certificate shall be dated the date of
countersignature thereof.

	2.6	 	Registration, Registration of Transfer and Exchange

	 	(a)	 	From and after the Separation Time, the Corporation will
cause to be kept a register (the “Rights Register”) in which,
subject to such reasonable regulations as it may prescribe, the
Corporation will provide for the registration and transfer of
Rights. The Rights Agent is hereby appointed “Rights Registrar” for
the purpose of maintaining the Rights Register for the Corporation
and registering Rights and transfers of Rights as herein provided.
In the event that the Rights Agent shall cease to be the Rights
Registrar, the Rights Agent will have the right to examine the
Rights Register at all reasonable times.
	 
	 	 	 	After the Separation Time and prior to the Expiration Time, upon
surrender for registration of transfer or exchange of any Rights
Certificate, and subject to the provisions of Subsection 2.6(c),
the Corporation will execute, and the Rights Agent will countersign
and deliver, in the name of the holder thereof or the designated
transferee or transferees, as required pursuant to the holder’s
instructions, one or more new Rights Certificates evidencing the
same aggregate number of Rights as did the Rights Certificates so
surrendered.
	 
	 	(b)	 	All Rights issued upon any registration of transfer or
exchange of Rights Certificates shall be the valid obligations of
the Corporation, and such Rights shall be entitled to the same
benefits under this Agreement as the Rights surrendered upon such
registration of transfer or exchange.
	 
	 	(c)	 	Every Rights Certificate surrendered for registration of
transfer or exchange shall be duly endorsed, or be accompanied by a
written instrument of transfer in form satisfactory to the
Corporation or the Rights Agent, as the case may be, duly executed,
by the holder thereof or such holder’s attorney duly authorized in
writing. As a condition to the issuance of any new Rights
Certificate under this

 

 

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	 	 	 	Section 2.6, the Corporation or the Rights Agent may require the
payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Rights Agent)
connected therewith.
	 
	 	(d)	 	The Corporation shall not be required to register the
transfer or exchange of any Rights after the Rights have been
terminated pursuant to the provisions of this Agreement.

	2.7	 	Mutilated, Destroyed, Lost and Stolen Rights Certificates

	 	(a)	 	If any mutilated Rights Certificate is surrendered to the
Rights Agent prior to the Expiration Time, the Corporation shall
execute and the Rights Agent shall countersign and deliver in
exchange therefor a new Rights Certificate evidencing the same
number of Rights as did the Rights Certificate so surrendered.
	 
	 	(b)	 	If there shall be delivered to the Corporation and the Rights
Agent prior to the Expiration Time (i) evidence to their
satisfaction of the destruction, loss or theft of any Rights
Certificate, and (ii) such security or indemnity as may be required
by them in their sole discretion to save each of them and any of
their agents harmless, then, in the absence of notice to the
Corporation or the Rights Agent that such Rights Certificate has
been acquired by a bona fide purchaser, the Corporation shall
execute and upon its request the Rights Agent shall countersign and
deliver, in lieu of any such destroyed, lost or stolen Rights
Certificate, a new Rights Certificate evidencing the same number of
Rights as did the Rights Certificate so destroyed, lost or stolen.
	 
	 	(c)	 	As a condition to the issuance of any new Rights Certificate
under this Section 2.7, the Corporation may require the payment of a
sum sufficient to cover any tax or other governmental charge that
may be imposed in relation thereto and any other expenses (including
the fees and expenses of the Rights Agent) connected therewith.
	 
	 	(d)	 	Every new Rights Certificate issued pursuant to this Section
2.7 in lieu of any destroyed, lost or stolen Rights Certificate
shall evidence a contractual obligation of the Corporation, whether
or not the destroyed, lost or stolen Rights Certificate shall be at
any time enforceable by anyone, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and
all other Rights duly issued hereunder.

	2.8	 	Persons Deemed Owners

     Prior to due presentment of a Rights Certificate (or, prior to the
Separation Time, the associated Voting Share certificate) for registration of
transfer, the Corporation, the Rights Agent and any agent of the Corporation or
the Rights Agent may deem and treat the Person in whose name such Rights
Certificate (or, prior to the Separation Time, such Voting Share certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
for all purposes whatsoever.

 

 

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	2.9	 	Delivery and Cancellation of Certificates

     All Rights Certificates surrendered upon exercise or for redemption,
registration of transfer or exchange shall, if surrendered to any Person other
than the Rights Agent, be delivered to the Rights Agent and, in any case, shall
be promptly cancelled by the Rights Agent. The Corporation may at any time
deliver to the Rights Agent for cancellation any Rights Certificates previously
countersigned and delivered hereunder which the Corporation may have acquired
in any manner whatsoever, and all Rights Certificates so delivered shall be
promptly cancelled by the Rights Agent. No Rights Certificate shall be
countersigned in lieu of or in exchange for any Rights Certificates cancelled
as provided in this Section 2.9, except as expressly permitted by this
Agreement. The Rights Agent shall, subject to applicable law, destroy all
cancelled Rights Certificates and deliver a certificate of destruction to the
Corporation on request.

	2.10	 	Agreement of Rights Holders

     Every holder of Rights, by accepting such Rights, consents and agrees with
the Corporation and the Rights Agent and with every other holder of Rights
that:

	 	(a)	 	such holder shall be bound by and subject to the provisions
of this Agreement in respect of all Rights held;
	 
	 	(b)	 	prior to the Separation Time, each Right will be transferable
only together with, and will be transferred by a transfer of, the
associated Voting Share certificate representing such Right;
	 
	 	(c)	 	after the Separation Time, the Rights will be transferable
only upon registration of the transfer on the Rights Register as
provided herein;
	 
	 	(d)	 	prior to due presentment of a Rights Certificate (or, prior
to the Separation Time, the associated Voting Share certificate) for
registration of transfer, the Corporation, the Rights Agent and any
agent of the Corporation or the Rights Agent may deem and treat the
Person in whose name the Rights Certificate (or, prior to the
Separation Time, the associated Voting Share certificate) is
registered as the absolute owner thereof and of the Rights evidenced
thereby (notwithstanding any notations of ownership or writing on
such Rights Certificate or the associated Voting Share certificate
made by anyone other than the Corporation or the Rights Agent) for
all purposes whatsoever, and neither the Corporation nor the Rights
Agent shall be affected by any notice to the contrary;
	 
	 	(e)	 	such holder of Rights is not entitled to receive any
fractional Rights or fractional Common Shares or other securities
upon the exercise of Rights;
	 
	 	(f)	 	without the approval of any holder of Rights or Voting Shares
and upon the sole authority of the Board of Directors acting in good
faith, this Agreement may be amended or supplemented from time to
time in accordance with the provisions of Section 5.5 and the third
last paragraph of Subsection 2.3(b); and

 

 

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	 	(g)	 	notwithstanding anything in this Agreement to the contrary,
neither the Corporation nor the Rights Agent shall have any
liability to any holder of a Right or to any other Person as a
result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or
other order, decree or ruling issued by a court of competent
jurisdiction or by a government, regulatory or administrative agency
or commission, or any statute, rule, regulation or executive order
promulgated or enacted by any governmental authority, prohibiting or
otherwise restraining performance of such obligation.

ARTICLE 3

ADJUSTMENTS TO THE RIGHTS IN THE EVENT

OF A FLIP-IN EVENT

	3.1	 	Flip-in Event

	 	(a)	 	Subject to Subsection 3.1(b) and Sections 5.1 and 5.2, in the
event that prior to the Expiration Time a Flip-in Event shall occur,
each Right shall constitute, effective from and after the Close of
Business on the tenth Trading Day following the Stock Acquisition
Date, the right to purchase from the Corporation, upon exercise
thereof in accordance with the terms hereof, that number of Common
Shares having an aggregate Market Price on the date of consummation
or occurrence of such Flip-in Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such right
to be appropriately adjusted in a manner analogous to the applicable
adjustment provided for in Section 2.3 in the event that after such
date of consummation or occurrence an event of a type analogous to
any of the events described in Section 2.3 shall have occurred with
respect to such Common Shares).
	 
	 	(b)	 	Notwithstanding anything in this Agreement to the contrary,
upon the occurrence of a Flip-in Event, any Rights that are or were
Beneficially Owned on or after the earlier of the Separation Time or
the Stock Acquisition Date by:

	 	(i)	 	an Acquiring Person (or an Affiliate or Associate
of an Acquiring Person, or any Person acting jointly or in
concert with an Acquiring Person); or
	 
	 	(ii)	 	a transferee or other successor-in-title,
directly or indirectly, from an Acquiring Person (or an
Affiliate or Associate of an Acquiring Person, or any Person
acting jointly or in concert with an Acquiring Person) in a
transfer of Rights, whether or not for consideration, that the
Board of Directors acting in good faith has determined is part
of a plan, understanding or scheme of an Acquiring Person (or
an Affiliate or Associate of an Acquiring Person, or any
Person acting jointly or in concert with an Acquiring Person)
that has the purpose or effect of avoiding the provisions of
Clause 3.1(b)(i);

 

 

-31-

	 	 	 	shall become null and void without any further action and any
holder of such Rights (including transferees or other
successors-in-title) shall thereafter have no
right to exercise or transfer such Rights under any provision of
this Agreement and shall have no other rights whatsoever with
respect to such Rights, whether under any provision of this
Agreement or otherwise. The holder of any Rights represented by a
Rights Certificate which is submitted to the Rights Agent upon
exercise or for registration of transfer or exchange which does not
contain the necessary certifications set forth in the Rights
Certificate establishing that such Rights are not null and void
under this Subsection 3.1(b) shall be deemed to be an Acquiring
Person for the purposes of this Section 3.1 and such Rights shall
become null and void.
	 
	 	(c)	 	Any Rights Certificate that represents Rights Beneficially
Owned by a Person described in either Clause 3.1(b)(i) or 3.1(b)(ii)
or transferred to any nominee of any such Person, and any Rights
Certificate issued upon transfer, exchange, replacement or
adjustment of any other Rights Certificate referred to in this
sentence, shall contain the following legend:

“The Rights represented by this Rights Certificate were
issued to a Person who was an Acquiring Person, or an
Affiliate or an Associate of an Acquiring Person, or a
Person acting jointly or in concert with any of them
(as such terms are defined in the Shareholder
Protection Rights Agreement). This Rights Certificate
and the Rights represented hereby shall become null and
void in the circumstances specified in Subsection
3.1(b) of the Shareholder Protection Rights Agreement.”

provided, however, that the Rights Agent shall not be under any
responsibility to ascertain the existence of facts that would
require the imposition of such legend but shall be required to
impose such legend only if instructed to do so in writing by the
Corporation or if a holder fails to certify upon transfer or
exchange in the space provided on the Rights Certificate that such
holder is not a Person described in such legend. The issuance of a
Rights Certificate without the legend referred to in this
Subsection 3.1(c) shall be of no effect on the provisions of
Subsection 3.1(b).

ARTICLE 4

THE RIGHTS AGENT

	4.1	 	General

	 	(a)	 	The Corporation hereby appoints the Rights Agent to act as
agent for the Corporation and the holders of Rights in accordance
with the terms and conditions hereof, and the Rights Agent hereby
accepts such appointment. The Corporation may from time to time
appoint one or more co-rights agents (each a “Co-Rights Agent”) as
it may deem necessary or desirable, subject to the approval of the
Rights Agent. In the event the Corporation appoints one or more
Co-Rights Agents, the respective duties of the Rights Agent and
Co-Rights Agents shall be as the Corporation may determine with the
approval of the Rights Agent and the

 

 

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	 	 	 	Co-Rights Agents. The Corporation agrees to pay to the Rights
Agent reasonable compensation for all services rendered by it
hereunder and, from time to time, on demand of the Rights Agent,
its reasonable expenses and counsel fees and other disbursements
reasonably incurred in the execution and administration of this
Agreement and the exercise and performance of its duties hereunder
(including the reasonable fees and other disbursements of any
expert retained by the Rights Agent with the approval of the
Corporation, such approval not to be unreasonably withheld). The
Corporation also agrees to indemnify the Rights Agent, its
officers, directors, employees and agents for, and to hold it
harmless against, any loss, liability, cost, claim, action, suit,
damage or expense, incurred without negligence, bad faith or wilful
misconduct on the part of the Rights Agent, for anything done,
suffered or omitted by the Rights Agent in connection with the
acceptance, execution and administration of this Agreement and the
exercise and performance of its duties hereunder, including the
legal costs and expenses of defending against any claim of
liability, which right to indemnification will survive the
termination of this Agreement and the resignation or removal of the
Rights Agent.
	 
	 	(b)	 	The Rights Agent shall be protected and shall incur no
liability for or in respect of any action taken, suffered or omitted
by it in connection with its administration of this Agreement in
reliance upon any certificate for Common Shares, Rights Certificate,
certificate for other securities of the Corporation, instrument of
assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement or other
paper or document believed by it to be genuine and to be signed,
executed and, where necessary, verified or acknowledged, by the
proper Person or Persons.
	 
	 	(c)	 	The Corporation shall inform the Rights Agent in a reasonably
timely manner of events which may materially affect the
administration of this Agreement by the Rights Agent and, at any
time upon request, shall provide to the Rights Agent an incumbency
certificate certifying the then current officers of the Corporation,
provided that failure to inform the Rights Agent of any such events
or any defect therein, shall not affect the validity of any action
taken hereunder in relation to such events.

	4.2	 	Merger, Amalgamation or Consolidation or Change of Name of Rights Agent

	 	(a)	 	Any corporation into which the Rights Agent or any successor
Rights Agent may be merged or amalgamated or with which it may be
consolidated, or any corporation resulting from any merger,
amalgamation or consolidation to which the Rights Agent or any
successor Rights Agent is a party, or any corporation succeeding to
the shareholder services business of the Rights Agent or any
successor Rights Agent, will be the successor to the Rights Agent
under this Agreement without the execution or filing of any paper or
any further act on the part of any of the parties hereto, provided
that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4. In case at the time such successor Rights Agent succeeds to the
agency created by

 

 

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	 	 	 	this Agreement any of the Rights Certificates
have been countersigned but not delivered, any such successor
Rights Agent may adopt the countersignature of the predecessor
Rights Agent and deliver such Rights Certificates so countersigned;
and in case at that time any of the Rights Certificates have not
been countersigned, any successor Rights Agent may countersign such
Rights Certificates either in the name of the predecessor Rights
Agent or in the name of the successor Rights Agent; and in all such
cases such Rights Certificates will have the full force provided in
the Rights Certificates and in this Agreement.
	 
	 	(b)	 	In case at any time the name of the Rights Agent is changed
and at such time any of the Rights Certificates shall have been
countersigned but not delivered, the Rights Agent may adopt the
countersignature under its prior name and deliver such Rights
Certificates so countersigned; and in case at that time any of the
Rights Certificates have not been countersigned, the Rights Agent
may countersign such Rights Certificates either in its prior name or
in its changed name; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in
this Agreement.

	4.3	 	Duties of Rights Agent

     The Rights Agent undertakes the duties and obligations imposed by this
Agreement upon the following terms and conditions, by all of which the
Corporation and the holders of Rights Certificates, by their acceptance
thereof, shall be bound:

	 	(a)	 	The Rights Agent may retain and consult with legal counsel
(who may be legal counsel for the Corporation), and the opinion of
such counsel will be full and complete authorization and protection
to the Rights Agent as to any action taken or omitted by it in good
faith and in accordance with such opinion and the Rights Agent may
also, with the approval of the Corporation (such approval not to be
unreasonably withheld), retain and consult with such other experts
or advisors as the Rights Agent shall consider necessary or
appropriate to properly carry out its duties and obligations imposed
under this Agreement (at the Corporation’s expense) and the Rights
Agent shall be entitled to act and rely in good faith on the advice
of such experts or advisors.
	 
	 	(b)	 	Whenever in the performance of its duties under this
Agreement, the Rights Agent deems it necessary or desirable that any
fact or matter be proved or established by the Corporation prior to
taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proved and established
by a certificate signed by an individual believed by the Rights
Agent to be the Chairman of the Board, the Vice Chairman of the
Board, the President or any Vice President and by the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the
Corporation and delivered to the Rights Agent; and such certificate
will be full authorization to the Rights Agent for any action taken,
omitted or suffered in good faith by it under the provisions of
this Agreement in reliance upon such certificate.

 

 

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	 	(c)	 	The Rights Agent will be liable hereunder only for its own
negligence, bad faith or wilful misconduct and that of its officers,
directors and employees.
	 
	 	(d)	 	The Rights Agent will not be liable for or by reason of any
of the statements of fact or recitals contained in this Agreement or
in the certificates for Common Shares or the Rights Certificates
(except its countersignature thereof) or be required to verify the
same, but all such statements and recitals are and will be deemed to
have been made by the Corporation only.
	 
	 	(e)	 	The Rights Agent will not be under any responsibility in
respect of the validity of this Agreement or the execution and
delivery hereof (except the due authorization, execution and
delivery hereof by the Rights Agent) or in respect of the validity
or execution of any Common Share certificate or Rights Certificate
(except its countersignature thereof); nor will it be responsible
for any breach by the Corporation of any covenant or condition
contained in this Agreement or in any Rights Certificate; nor will
it be responsible for any change in the exercisability of the Rights
(including the Rights becoming null and void pursuant to Subsection
3.1(b)) or any adjustment required under the provisions of Section
2.3 or responsible for the manner, method or amount of any such
adjustment or the ascertaining of the existence of facts that would
require any such adjustment (except with respect to the exercise of
Rights after receipt of the certificate contemplated by Subsection
2.3(p) describing any such adjustment); nor will it by any act
hereunder be deemed to make any representation or warranty as to the
authorization of any Common Shares to be issued pursuant to this
Agreement or any Rights or as to whether any Common Shares will,
when issued, be duly and validly authorized, executed, issued and
delivered and fully paid and non-assessable.
	 
	 	(f)	 	The Corporation will perform, execute, acknowledge and
deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and
assurances as may reasonably be required by the Rights Agent for the
carrying out or performing by the Rights Agent of the provisions of
this Agreement.
	 
	 	(g)	 	The Rights Agent is hereby authorized and directed to accept
written instructions with respect to the performance of its duties
hereunder from any individual believed by the Rights Agent to be
Chairman of the Board, the Vice Chairman of the Board, the
President, any Vice President or the Secretary or any Assistant
Secretary or the Treasurer or any Assistant Treasurer of the
Corporation, and to apply to such individuals for advice or
instructions in connection with its duties, and it shall not be
liable for any action taken, omitted or suffered by it in good faith
in accordance with instructions of any such individual; it is
understood that instructions to the Rights Agent shall, except where
circumstances make it impossible or the Rights Agent otherwise
agrees, be given in writing and, where
not in writing, such instructions shall be confirmed in writing as
soon as reasonably possible after the giving of such instructions.

 

 

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	 	(h)	 	The Rights Agent and any shareholder, director, officer or
employee of the Rights Agent may buy, sell or deal in Common Shares,
Rights or other securities of the Corporation or become pecuniarily
interested in any transaction in which the Corporation may be
interested, or contract with or lend money to the Corporation or
otherwise act as fully and freely as though it were not Rights Agent
under this Agreement. Nothing herein shall preclude the Rights
Agent from acting in any other capacity for the Corporation or for
any other legal entity.
	 
	 	(i)	 	The Rights Agent may execute and exercise any of the rights
or powers hereby vested in it or perform any duty hereunder either
itself or by or through its attorneys or agents, and the Rights
Agent will not be answerable or accountable for any act, omission,
default, neglect or misconduct of any such attorneys or agents or
for any loss to the Corporation resulting from any such act,
omission, default, neglect or misconduct, provided reasonable care
was exercised in the selection and continued employment thereof.

	4.4	 	Change of Rights Agent

     The Rights Agent may resign and be discharged from its duties under this
Agreement upon 30 days’ notice (or such lesser notice as is acceptable to the
Corporation) in writing mailed to the Corporation and to each transfer agent of
Voting Shares by registered or certified mail. The Corporation may remove the
Rights Agent upon 30 days’ notice in writing, given to the Rights Agent and to
the transfer agent of the Common Shares (by personal delivery or registered or
certified mail), and to the holders of the Rights in accordance with Section
5.10. If the Rights Agent should resign or be removed or otherwise become
incapable of acting, the Corporation will appoint a successor to the Rights
Agent. If the Corporation fails to make such appointment within a period of 30
days after such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent (at
the Corporation’s expense) or by the holder of any Rights (which holder shall,
with such notice if given after the Separation Time, submit such holder’s
Rights Certificate for inspection by the Corporation), then the resigning
Rights Agent or the holder of any Rights may apply to any court of competent
jurisdiction for the appointment of a new Rights Agent. Any successor Rights
Agent, whether appointed by the Corporation or by such a court, shall be a
corporation incorporated under the laws of Canada or a province thereof
authorized to carry on the business of a trust company in the Province of
British Columbia. After appointment, the successor Rights Agent will be vested
with the same powers, rights, duties and responsibilities as if it had been
originally named as Rights Agent without further act or deed; but the
predecessor Rights Agent, upon receipt of any and all outstanding amounts owing
to it pursuant to this Agreement, shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose. Not later than the effective date of any such appointment, the
Corporation will file notice thereof in writing with the predecessor Rights
Agent and the transfer agent of the Common Shares, and mail a notice thereof in
writing to the holders of the Rights. Failure to give any notice provided for
in this Section 4.4, however, or any defect therein, shall not affect the
legality or validity of the resignation or removal of the Rights Agent or the appointment of the
successor Rights Agent, as the case may be.

 

 

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ARTICLE 5

MISCELLANEOUS

	5.1	 	Redemption and Termination of Rights

	 	(a)	 	With the prior consent of the holders of Voting Shares or
Rights obtained in accordance with Subsection 5.5(b) or (c), as
applicable, the Board of Directors may, at any time prior to the
occurrence of a Flip-in Event as to which the application of Section
3.1 has not been waived pursuant to Section 5.2, elect to redeem all
but not less than all of the outstanding Rights at a redemption
price of $0.00001 per Right, appropriately adjusted in a manner
analogous to the applicable adjustment to the Exercise Price
provided for in Section 2.3 if an event analogous to any of the
events described in Section 2.3 shall have occurred (such redemption
price being herein referred to as the “Redemption Price”).
	 
	 	(b)	 	If a Person acquires, pursuant to a Permitted Bid, a
Competing Permitted Bid or an Exempt Acquisition occurring under
Subsection 5.2(a) or (b), outstanding Voting Shares, the Board of
Directors shall, notwithstanding the provisions of Subsection
5.1(a), immediately upon such acquisition and without further
formality, be deemed to have elected to redeem the Rights at the
Redemption Price.
	 
	 	(c)	 	Where a Take-Over Bid that is not a Permitted Bid or
Competing Permitted Bid expires, is terminated or is otherwise
withdrawn after the Separation Time has occurred and prior to the
occurrence of a Flip-in Event, the Board of Directors may elect to
redeem all of the outstanding Rights at the Redemption Price.
	 
	 	(d)	 	If the Board of Directors elects or is deemed to have elected
to redeem the Rights and, in circumstances where Subsection 5.1(a)
is applicable, the requisite consent is given by the holders of
Voting Shares or Rights, as applicable, (i) the right to exercise
the Rights will thereupon, without further action and without
notice, terminate and the only right thereafter of the holders of
Rights shall be to receive the Redemption Price, and (ii) subject to
Subsection 5.1(f), no further Rights shall thereafter be issued.
	 
	 	(e)	 	Within 10 Business Days of the Board of Directors electing or
having been deemed to have elected to redeem the Rights or, in
circumstances where Subsection 5.1(a) is applicable, within 10
Business Days after the requisite consent is given by the holders of
Voting Shares or Rights, as applicable, the Corporation shall give
notice of redemption to the holders of the outstanding Rights by
mailing such notice to each such holder at his last address as it
appears upon the Rights Register or, prior to the Separation Time,
on the register of Voting Shares maintained by the Corporation’s
transfer agent or transfer agents.
Each such notice of redemption shall state the method by which the
payment of the Redemption Price shall be made.

 

 

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	 	(f)	 	Upon the Rights being redeemed pursuant to Subsection 5.1(c),
all the provisions of this Agreement shall continue to apply as if
the Separation Time had not occurred and Rights Certificates
representing the number of Rights held by each holder of record of
Voting Shares as of the Separation Time had not been mailed to each
such holder and, for all purposes of this Agreement, the Separation
Time shall be deemed not to have occurred and Rights shall remain
attached to the outstanding Voting Shares, subject to and in
accordance with the provisions of this Agreement.

	5.2	 	Waiver of Flip-In Events

	 	(a)	 	With the prior consent of the holders of Voting Shares
obtained in accordance with Subsection 5.5(b), the Board of
Directors may, at any time prior to the occurrence of a Flip-in
Event that would occur by reason of an acquisition of Voting Shares
otherwise than in the circumstances described in Subsection 5.2(b)
or (c), waive the application of Section 3.1 to such Flip-in Event
by written notice delivered to the Rights Agent.
	 
	 	(b)	 	The Board of Directors may, at any time prior to the
occurrence of a Flip-in Event that would occur by reason of a
Take-Over Bid made by means of a take-over bid circular sent to all
holders of record of Voting Shares (which, for greater certainty,
shall not include the circumstances described in Subsection 5.2(c)),
waive the application of Section 3.1 to such Flip-in Event by
written notice delivered to the Rights Agent, provided, however,
that if the Board of Directors waives the application of Section 3.1
to such a Flip-in Event, the Board of Directors shall be deemed to
have waived the application of Section 3.1 to any other Flip-in
Event occurring by reason of any Take-Over Bid which is made by
means of a take-over bid circular sent to all holders of record of
Voting Shares prior to the expiry, termination or withdrawal of any
Take-Over Bid in respect of which a waiver is, or is deemed to have
been, granted under this Subsection 5.2(b).
	 
	 	(c)	 	The Board of Directors may waive the application of Section
3.1 to a Flip-in Event provided that the following conditions are
satisfied:

	 	(i)	 	the Board of Directors has determined that the
Acquiring Person became an Acquiring Person by inadvertence
and without any intention to become, or knowledge that it
would become, an Acquiring Person; and
	 
	 	(ii)	 	such Acquiring Person has reduced its Beneficial
Ownership of Voting Shares such that, at the time of the
waiver pursuant to this Subsection 5.2(c), it is no longer an
Acquiring Person.

	5.3	 	Expiration

     No Person shall have any rights pursuant to this Agreement in respect of
any Right after the Expiration Time, except the Rights Agent as specified in
Subsection 4.1(a).

 

 

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	5.4	 	Issuance of New Rights Certificates

     Notwithstanding any of the provisions of this Agreement or of the Rights
to the contrary, the Corporation may, at its option, issue new Rights
Certificates evidencing Rights in such form as may be approved by the Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the
provisions of this Agreement.

	5.5	 	Supplements and Amendments

	 	(a)	 	The Corporation may from time to time prior to or after the
Separation Time amend, supplement or restate this Agreement without
the approval of any holders of Rights or Voting Shares in order to
correct any clerical or typographical error or, subject to
Subsection 5.5(d), to maintain the validity and effectiveness of
this Agreement as a result of any change in applicable laws, rules
or regulatory requirements. The Corporation may, prior to the date
of the shareholders’ meeting referred to in Subsection 5.19(b),
amend, supplement or restate this Agreement without the approval of
any holders of Voting Shares or Rights in order to make any changes
which the Board of Directors acting in good faith may deem necessary
or desirable. Notwithstanding anything in this Section 5.5 to the
contrary, no such amendment, supplement or restatement shall be made
to the provisions of Article 4 except with the written concurrence
of the Rights Agent to such amendment, supplement or restatement.
	 
	 	(b)	 	Subject to Subsection 5.5(a), the Corporation may, with the
prior consent of the holders of Voting Shares obtained as set forth
below, at any time prior to the Separation Time, amend, supplement,
restate or rescind any of the provisions of this Agreement and the
Rights (whether or not such action would materially adversely affect
the interests of the holders of Rights generally). Such consent
shall be deemed to have been given if the action requiring such
approval is authorized by the affirmative vote of a majority of the
votes cast by Independent Shareholders present or represented at and
entitled to vote at a meeting of the holders of Voting Shares duly
called and held in compliance with applicable laws and the articles
and by-laws of the Corporation.
	 
	 	(c)	 	Subject to Subsection 5.5(a), the Corporation may, with the
prior consent of the holders of Rights obtained as set forth below,
at any time after the Separation Time, amend, supplement, restate or
rescind any of the provisions of this Agreement and the Rights
(whether or not such action would materially adversely affect the
interests of the holders of Rights generally). Such consent shall
be deemed to have been given if the action requiring such approval
is authorized by the affirmative vote of a majority of the votes
cast by the holders of Rights (other
than any holder of Rights whose Rights have become null and void
pursuant to the provisions hereof) present or represented at and
entitled to vote at a meeting of the holders of Rights. For the
purposes hereof, the procedures for the calling, holding and
conduct of a meeting of the holders of Rights shall be those, as
nearly as may be, which are provided in the Corporation’s by-laws
with respect to meetings of its shareholders and each Right shall
be entitled to one vote at any such meeting.

 

 

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	 	(d)	 	Any amendments, supplements or restatements made by the
Corporation to this Agreement pursuant to Subsection 5.5(a) which
are required to maintain the validity and effectiveness of this
Agreement as a result of any change in any applicable laws, rules or
regulatory requirements shall:

	 	(i)	 	if made before the Separation Time, be submitted
to the holders of Voting Shares at the next meeting of holders
of Voting Shares and the holders of Voting Shares may, by the
majority referred to in Subsection 5.5(b), confirm or reject
such amendment, supplement or restatement; and
	 
	 	(ii)	 	if made after the Separation Time, be submitted
to the holders of Rights at a meeting to be called and held in
accordance with the provisions of Subsection 5.5(c) and the
holders of Rights may, by a majority referred to in Subsection
5.5(c), confirm or reject such amendment, supplement or
restatement.

	 	 	 	Any such amendment, supplement or restatement shall, unless the
Board of Directors otherwise stipulates, be effective from the date
of the resolution of the Board of Directors adopting such
amendment, supplement or restatement, until it is confirmed or
rejected or until it ceases to be effective (as described in the
next sentence) and, where such amendment, supplement or restatement
is confirmed, it shall continue in effect in the form so confirmed.
If such amendment, supplement or restatement is rejected by the
holders of Voting Shares or the holders of Rights or is not
submitted to the holders of Voting Shares or holders of Rights as
required, then such amendment, supplement or restatement shall
cease to be effective from and after the termination of the meeting
at which it was rejected or to which it should have been but was
not submitted or if such a meeting of the holders of Rights is not
called within 90 days after the date of the resolution of the Board
of Directors adopting such amendment, supplement or restatement, at
the end of such period, and no subsequent resolution of the Board
of Directors to amend, supplement or restate this Agreement to
substantially the same effect shall be effective until confirmed by
the holders of Voting Shares or holders of Rights as the case may
be.

	 	(e)	 	The Corporation shall give notice in writing to the Rights
Agent of any amendment, supplement or restatement to this Agreement
pursuant to Section 5.5 within five Business Days of the date of any
such amendment, supplement or restatement, provided that failure to
give such notice, or any defect therein, shall not affect the
validity of any such amendment, supplement or restatement.

 

 

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	5.6	 	Fractional Rights and Fractional Shares

	 	(a)	 	The Corporation shall not be required to issue fractions of
Rights or to distribute Rights Certificates which evidence
fractional Rights. Subject to Section 5.3, after the Separation
Time there shall be paid to the registered holders of the Rights
Certificates with regard to which fractional Rights would otherwise
be issuable, an amount in cash equal to the same fraction of the
Market Price at the Separation Time of a whole Right in lieu of such
fractional Rights. The Rights Agent shall have no obligation to
make any payments in lieu of fractional Rights unless the
Corporation shall have provided the Rights Agent with the necessary
funds to pay in full all amounts payable in accordance with
Subsection 2.2(e).
	 
	 	(b)	 	The Corporation shall not be required to issue fractional
Common Shares upon exercise of the Rights or to distribute
certificates which evidence fractional Common Shares. In lieu of
issuing fractional Common Shares, the Corporation shall pay to the
registered holder of Rights Certificates at the time such Rights are
exercised as herein provided, an amount in cash equal to the same
fraction of the Market Price at the date of such exercise of one
Common Share. The Rights Agent shall have no obligation to make any
payments in lieu of fractional Voting Shares unless the Corporation
shall have provided the Rights Agent with the necessary funds to pay
in full all amounts payable in accordance with Subsection 2.2 (e).

	5.7	 	Rights of Action

     Subject to the terms of this Agreement, rights of action in respect of
this Agreement, other than rights of action vested solely in the Rights Agent,
are vested in the respective holders of the Rights; and any holder of any
Rights, without the consent of the Rights Agent or of the holder of any other
Rights, may, on such holder’s own behalf and for such holder’s own benefit and
the benefit of other holders of Rights, enforce, and may institute and maintain
any suit, action or proceeding against the Corporation to enforce, or otherwise
act in respect of, such holder’s right to exercise such holder’s Rights, or
Rights to which such holder is entitled, in the manner provided in such
holder’s Rights Certificate and in this Agreement. Without limiting the
foregoing or any remedies available to the holders of Rights, it is
specifically acknowledged that the holders of Rights would not have an adequate
remedy at law for any breach of this Agreement and will be entitled to specific
performance of the obligations under, and injunctive relief against actual or
threatened violations of, the obligations of any Person subject to this
Agreement.

	5.8	 	Holder of Rights Not Deemed a Shareholder

     No holder, as such, of any Rights shall be entitled to vote, receive
dividends or be deemed for any purpose the holder of Common Shares or any other
securities which may at any time be issuable on the exercise of such Rights,
nor shall anything contained herein or in any Rights Certificate be construed
to confer upon the holder of any Rights, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of meetings or other actions
affecting shareholders (except as provided in Section 5.9), or to receive
dividends or subscription rights or otherwise, until such Rights, or Rights to
which such holder is entitled, shall have been exercised in accordance with the
provisions hereof.

 

 

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	5.9	 	Notice of Proposed Actions

     If after the Separation Time and prior to the Expiration Time:

	 	(i)	 	there shall occur an adjustment in the rights
attaching to the Rights pursuant to Section 3.1 as a result of
the occurrence of a Flip-in Event; or
	 
	 	(ii)	 	the Corporation proposes to effect the
liquidation, dissolution or winding up of the Corporation or
the sale of all or substantially all of the Corporation’s
assets;

then, in each such case, the Corporation shall give to each holder of a Right,
in accordance with Section 5.10, a notice of such event or proposed action,
which shall specify the date on which such adjustment to the Rights occurred or
liquidation, dissolution or winding up is to take place, and such notice shall
be so given within 10 Business Days after the occurrence of an adjustment to
the Rights and not less than 20 Business Days prior to the date of taking such
proposed action by the Corporation.

	5.10	 	Notices

     Notices or demands to be given or made in connection with this Agreement
by the Rights Agent or by the holder of any Rights to or on the Corporation
shall be sufficiently given or made if delivered or sent by mail, postage
prepaid or by fax (with, in the case of fax, an original copy of the notice or
demand sent by first class mail, postage prepaid, to the Corporation following
the giving of the notice or demand by fax), addressed (until another address is
filed in writing with the Rights Agent) as follows:

	 	 	 	 	 
	 	 	Golden Star Resources Ltd.
	 	 	10901 West Toller Drive
	 	 	Suite 300
	 	 	Littleton, Colorado
	 	 	80127-6312
	 
	 	 	 	 
	

	 	Attention:
	 	Vice President and Chief Financial Officer
	

	 	Fax:
	 	(303) 830-9094

     Notices or demands to be given or made in connection with this Agreement
by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by mail, postage
prepaid, or by fax (with, in the case of fax, an original copy of the notice or
demand sent by first class mail, postage prepaid, to the Rights Agent following
the giving of the notice or demand by fax), addressed (until another address is
filed in writing with the Corporation) as follows:

	 	 	 	 	 
	 	 	CIBC Mellon Trust Company
	 	 	1600, 1066 West Hastings Street
	 	 	Vancouver, British Columbia V6E 3X1
	

	 	Attention:
	 	Assistant Vice President
	

	 	Fax:
	 	(604) 688-4301

 

 

-42-

     Notices or demands to be given or made in connection with this Agreement
by the Corporation or the Rights Agent to or on the holder of any Rights shall
be sufficiently given or made if delivered or sent by first class mail, postage
prepaid, or by fax (with, in the case of fax, an original copy of the notice or
demand sent by first class mail, postage prepaid, to such holder following the
giving of the notice or demand by fax), addressed to such holder at the address
of such holder as it appears upon the register of the Rights Agent or, prior to
the Separation Time, on the register of the Corporation for the Common Shares.

     Any notice given or made in accordance with this Section 5.10 shall be
deemed to have been given and to have been received on the day of delivery, if
so delivered, on the third Business Day (excluding each day during which there
exists any general interruption of postal service due to strike, lockout or
other cause) following the mailing thereof, if so mailed, and on the day of
faxing (provided such sending is during the normal business hours of the
addressee on a Business Day and if not, on the first Business Day thereafter).
Each of the Corporation and the Rights Agent may from time to time change its
address for notice by notice to the other given in the manner aforesaid.

     If mail service is or is threatened to be interrupted at a time when the
Corporation or the Rights Agent wishes to give a notice or demand hereunder to
or on the holders of the Rights, the Corporation or the Rights Agent may,
notwithstanding the foregoing provisions of this Section 5.10, give such notice
by means, of publication once in each of two successive weeks in the business
section of the Financial Post and, so long as the Corporation has a transfer
agent in the United States, in a daily publication in the United States
designated by the Corporation, or in such other publication or publications as
may be designated by the Corporation and notice so published shall be deemed to
have been given on the date on which the first publication of such notice in
any such publication has taken place.

	5.11	 	Costs of Enforcement

     The Corporation agrees that, if the Corporation fails to fulfil any of its
obligations pursuant to this Agreement, then the Corporation will reimburse the
holder of any Rights for the costs and expenses (including legal fees)
reasonably incurred by such holder in actions to enforce his rights pursuant to
any Rights or this Agreement.

	5.12	 	Successors

     All the covenants and provisions of this Agreement by or for the benefit
of the Corporation or the Rights Agent shall bind and inure to the benefit of
their respective successors and assigns hereunder.

	5.13	 	Benefits of this Agreement

     Nothing in this Agreement shall be construed to give to any Person other
than the Corporation, the Rights Agent and the holders of the Rights any legal
or equitable right, remedy or claim under this Agreement; this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the holders of the Rights.

 

 

-43-

	5.14	 	Governing Law

     This Agreement and each Right issued hereunder shall be deemed to be a
contract made under the laws of the Province of British Columbia and for all
purposes shall be governed by and construed in accordance with the laws of such
Province applicable to contracts to be made and performed entirely within such
Province.

	5.15	 	Language

     Les parties aux présentes ont exigé que la présente convention ainsi que
tous les documents et avis qui s’y rattachent et/ou qui en découleront soient
rédigés en langue anglaise. The parties hereto have required that this
Agreement and all documents and notices related thereto and/or resulting
therefrom be drawn up in the English language.

	5.16	 	Counterparts

     This Agreement may be executed in any number of counterparts and each of
such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.

	5.17	 	Severability

     If any term or provision hereof or the application thereof to any
circumstance shall, in any jurisdiction and to any extent, be invalid or
unenforceable, such term or provision shall be ineffective as to such
jurisdiction to the extent of such invalidity or unenforceability without
invalidating or rendering unenforceable the remaining terms and provisions
hereof or the application of such term or provision to circumstances other than
those as to which it is held invalid or unenforceable.

	5.18	 	Determinations and Actions by the Board of Directors

     All actions, calculations and determinations (including all omissions with
respect to the foregoing) which are done or made by the Board of Directors in
good faith pursuant to this Agreement, shall not subject the Board of Directors
to any liability to the holders of the Rights.

	5.19	 	Effective Date and Expiration Time

	 	(a)	 	Notwithstanding its amendment and restatement as at the date
hereof, and subject to Subsection 5.19(b), this Agreement:

	 	(i)	 	shall be effective and in full force and effect in
accordance with its terms from and after the Effective Date
and shall replace and supercede the Original Rights Plan, and
shall constitute the entire agreement between the parties
pertaining to the subject matter hereof as of the Effective
Date; and

 

 

-44-

	 	(ii)	 	shall expire and be of no further force or effect
from and after the Close of Business on the date (the
“Expiration Time”) that is the earlier of (i) the Termination
Time, and (ii) the date upon which the annual meeting of the
holders of Voting Shares terminates in 2007.

	 	(b)	 	Notwithstanding Subsection 5.19(a), if the Agreement is not
approved by a resolution passed by a majority of the votes cast by
Independent Shareholders who vote in respect of approval of this
Agreement at the annual and special meeting of the holders of Voting
Shares scheduled to be held on May 20, 2004, then the Original
Rights Plan and all outstanding Rights shall terminate and be null
and void and of no further force and effect from and after June 30,
2004 (unless the Original Rights Plan is earlier terminated in
accordance with its terms) and this Agreement shall not become
effective.

	5.20	 	Regulatory Approvals

     Any obligation of the Corporation or action or event contemplated by this
Agreement, or any amendment, supplement or restatement of this Agreement, shall
be subject to receipt of any requisite approval or consent from any
governmental or regulatory authority having jurisdiction including, while any
securities of the Corporation are listed and admitted to trading thereon, the
TSX.

	5.21	 	Time of the Essence

     Time shall be of the essence of this Agreement.

	5.22	 	Declaration as to Non-Canadian Holders

     If in the opinion of the Board of Directors (who may rely on the advice of
counsel) any action or event contemplated by this Agreement would require
compliance with the securities laws or comparable legislation of a jurisdiction
outside of Canada or the United States, the Board of Directors acting in good
faith may take such actions as it may deem appropriate to ensure such
compliance. In no event shall the Corporation or the Rights Agent be required
to issue or deliver Rights or securities issuable on the exercise of Rights to
Persons who are citizens, residents or nationals of any jurisdiction other than
Canada or the United States in which such issue or delivery would be unlawful
without registration or the relevant Persons or securities for such purposes,
or (until such notice is given as required by law) without advance notice to
any regulatory or self-regulatory body.

 

 

-45-

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

	 	 	 	 	 
	 	GOLDEN STAR RESOURCES LTD.

 	 
	 	By:  	/s/ Peter J. Bradford	 
	 	 	Name:  	Peter J. Bradford 	 
	 	 	Title:  	President 	 
	 
	 	 	 
	 	By:  	/s/ Allan J. Marter	 
	 	 	Name:  	Allan J. Marter 	 
	 	 	Title:  	Senior Vice President and Chief Financial Officer 	 
	 
	 	CIBC MELLON TRUST COMPANY

 	 
	 	By:  	/s/ Leslie MacFarlane	 
	 	 	Name:  	Leslie MacFarlane 	 
	 	 	Title:  	Manager, Client Relations 	 
	 
	 	 	 
	 	By:  	/s/ Van Bot	 
	 	 	Name:  	Van Bot 	 
	 	 	Title:  	Senior Manager, Client Relations 	 
	 

 

 

EXHIBIT A

(Form of Rights Certificate)

			
	Certificate No.                     
	 	                     Rights

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF THE CORPORATION, ON THE
TERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT. UNDER CERTAIN
CIRCUMSTANCES (SPECIFIED IN SUBSECTION 3.1(b) OF THE SHAREHOLDER RIGHTS PLAN
AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING PERSON OR ITS AFFILIATES
OR ASSOCIATES OR ANY PERSON ACTING JOINTLY OR IN CONCERT WITH ANY OF THEM (AS
SUCH TERMS ARE DEFINED IN THE SHAREHOLDER RIGHTS PLAN AGREEMENT) OR TRANSFEREES
OF ANY OF THE FOREGOING WILL BECOME NULL AND VOID WITHOUT FURTHER ACTION.

Rights Certificate

This certifies that                                         , or registered assigns, is the registered holder of the
number of Rights set forth above, each of which entitles the registered holder
thereof, subject to the terms, provisions and conditions of the Amended and
Restated Shareholder Rights Plan Agreement dated as of May 20, 2004 amending
and restating the Rights Agreement dated as of April 24, 1996, as amended on
June 30, 1999, and as further amended, supplemented or restated from time to
time (the “Rights Agreement”) between Golden Star Resources Ltd., a corporation
incorporated under the laws of Canada (the “Corporation”) and CIBC Mellon Trust
Company, a trust company incorporated under the laws of Canada, as Rights Agent
(the “Rights Agent”, which term shall include any successor Rights Agent under
the Rights Agreement), to purchase from the Corporation at any time after the
Separation Time and prior to the Expiration Time (as such terms are defined in
the Rights Agreement), one fully paid common share of the Corporation (a
“Common Share”) at the Exercise Price referred to below, upon presentation and
surrender of this Rights Certificate with the Form of Election to Exercise duly
executed and submitted to the Rights Agent at its principal office in
Vancouver, British Columbia or, with the approval of the Rights Agent, at any
other office of the Rights Agent in the cities designated from time to time by
the Corporation. Until adjustment thereof in certain events as provided in the
Rights Agreement, the Exercise Price shall be $<*> (Canadian) per Right.

In certain circumstances described in the Rights Agreement, each Right
evidenced hereby may entitle the registered holder thereof to purchase more or
less than one Common Share, all as provided in the Rights Agreement.

This Rights Certificate is subject to all of the terms, provisions and
conditions of the Rights Agreement which terms, provisions and conditions are
hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Rights Agent, the Corporation and the holders of the Rights. Copies of the
Rights Agreement are on file at the registered office of the Corporation and
are available upon written request.

 

 

-2-

This Rights Certificate, with or without other Rights Certificates, upon
surrender at any of the offices of the Rights Agent designated for such
purpose, may be exchanged for another Rights
Certificate or Rights Certificates of like tenor and date evidencing an
aggregate number of Rights equal to the aggregate number of Rights evidenced by
the Rights Certificate or Rights Certificates surrendered. If this Rights
Certificate shall be exercised in part, the registered holder shall be entitled
to receive, upon surrender hereof, another Rights Certificate or Rights
Certificates for the number of whole Rights not exercised.

Subject to the provisions of the Rights Agreement, the Rights evidenced by this
Certificate may be, and under certain circumstances are required to be,
redeemed by the Corporation at a redemption price of Cdn.$0.00001 per Right,
subject to adjustment in certain events.

No fractional Common Shares will be issued upon the exercise of any Right or
Rights evidenced hereby, but in lieu thereof, a cash payment will be made, as
provided in the Rights Agreement.

No holder of this Rights Certificate, as such, shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of Common Shares or
any other securities which may at any time be issuable upon the exercise
hereof, nor shall anything contained in the Rights Agreement or herein be
construed to confer upon the holder hereof, as such, any of the rights of a
shareholder of the Corporation or any right to vote for the election of
directors or upon any matter submitted to shareholders at any meeting thereof,
or to give or withhold consent to any corporate action, or to receive notice of
meeting or other actions affecting shareholders (except as provided in the
Rights Agreement), or to receive dividends or subscription rights, or
otherwise, until the Rights evidenced by this Rights Certificate shall have
been exercised as provided in the Rights Agreement.

This Rights Certificate shall not be valid or obligatory for any purpose until
it shall have been countersigned by the Rights Agent.

     WITNESS the facsimile signature of the proper officers of the Corporation
and its corporate seal.

     Date:                                         

	 	 	 	 	 
	 	GOLDEN STAR RESOURCES LTD.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

-3-

	 	 	 	 	 
	 	CIBC MELLON TRUST COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

 

 

(To be attached to each Rights Certificate)

FORM OF ELECTION TO EXERCISE

TO:

The undersigned hereby irrevocably elects to exercise                                         
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares issuable upon the exercise of such Rights and requests that
certificates for such shares be issued in the name of:

	 
	

	Name
	 
	

	Address
	 
	

	 
	

     Social Insurance, Social Security or other Taxpayer Identification Number                                         

	 	 	 	 	 	 
	 	 	 
	 	 	Per:  	
 	 
	Dated 	 	 	Signature 	 
	 	 	 	(Signature must correspond to name as written upon the
face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever) 	 
	 
	 	 	 	
 	 
	Signature Guaranteed 	 	 	 	 

Signature must be guaranteed by a Schedule 1 Canadian chartered bank, a major
Canadian trust company or by a medallion guarantee by a member firm of a
recognized Medallion Guarantee Program.

 

 

-2-

(To be completed if true)

The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned
by an Acquiring Person or an Affiliate or Associate thereof or by any Person
acting jointly or in concert with any of the foregoing (all as defined in the
Rights Agreement).

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Signature 	 
	 	 	 	 
	 

NOTICE

In the event the certification set forth above is not completed, the
Corporation will deem the Beneficial Owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person (as defined in the Rights
Agreement) and, accordingly, such Rights shall be null and void and not
transferable or exercisable.

 

 

(To be executed by the registered holder if such holder desires to transfer the Rights evidenced

by this Rights Certificate.)

FORM OF ASSIGNMENT

	 
	FOR VALUE RECEIVED                                          hereby sells, assigns and transfers unto                                         

	 

	

	 

	

	 

	

	 

	

(please print name and address of transferee)

the Rights evidenced by this Rights Certificate, together with all right, title
and interest therein, and does hereby irrevocably constitute and appoint
                                         attorney, to transfer the within Rights on the
books of the within-named Corporation, with full power of substitution.

	 	 	 	 	 	 
	 	 	 
	 	 	Per:  	
 	 
	Dated 	 	 	Signature 	 
	 	 	 	(Signature must correspond to name as written upon the
face of this Rights Certificate in every particular,
without alteration or enlargement or any change
whatsoever) 	 
	 
	 	 	 	
 	 
	Signature Guaranteed 	 	 	 	 

Signature must be guaranteed by a Schedule 1 Canadian chartered bank, a major
Canadian trust company or by a medallion guarantee by a member firm a
recognized Medallion Guarantee Program.

(To be completed if true)

The undersigned hereby represents, for the benefit of all holders of Rights and
Common Shares, that the Rights evidenced by this Rights Certificate are not,
and, to the knowledge of the undersigned, have never been, Beneficially Owned
by an Acquiring Person or an Affiliate or Associate thereof or by any Person
acting jointly or in concert with any of the foregoing (as defined in the
Rights Agreement).

	 	 	 	 	 
	 	 	 
	 	  	
 	 
	 	 	Signature 	 
	 	 	 	 
	 

 

 

-2-

NOTICE

In the event the certification set forth above is not completed, the
Corporation will deem the Beneficial Owner of the Rights evidenced by this
Rights Certificate to be an Acquiring Person (as defined in the Rights
Agreement) and, accordingly, such Rights shall be null and void and not
transferable or exercisable.QuickLinks
 -- Click here to rapidly navigate through this document

 
 

Exhibit 4.11    
    

        METABASIS THERAPEUTICS, INC.  

 AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT  

 DATED AS OF OCTOBER 28, 2003*  

	*
	 Reflects amendments agreed to by the parties effective immediately prior to the closing of the Company's firm commitment underwritten initial public offering of Common Stock.

 
 METABASIS THERAPEUTICS, INC.

AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT  

        THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of October 28, 2003 (the  "Effective
Date") by and among METABASIS THERAPEUTICS, INC., a Delaware corporation (the  "Company"), and the investors listed
on Exhibit A hereto, including, without limitation,  SICOR INC., a Delaware corporation ("SICOR"), and SANKYO
COMPANY, LTD., a Japanese corporation ("Sankyo"), each of which is herein
referred to as an "Investor." 

RECITALS  

        WHEREAS, certain Investors are holders of shares of the Company's Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or securities and/or debt convertible thereinto (the "Prior Parties")
and possess registration rights, information rights and other rights pursuant to that certain Amended and Restated Investor Rights Agreement dated as of October 18, 2001, by and among the
Company, SICOR, Sankyo and such other Prior Parties (the "Prior Agreement"); and 

        WHEREAS, the undersigned Prior Parties desire to amend and restate in its entirety the Prior Agreement and to accept the rights created
pursuant hereto in lieu of the rights granted to them under the Prior Agreement; and 

        WHEREAS, certain other Investors are parties to the Series E Preferred Stock Purchase Agreement dated as of the Effective Date
between the Company and such Investors (the "Purchase Agreement"), such Investors' obligations under which are conditioned upon, among other things, the
execution and delivery of this Agreement. 

        NOW, THEREFORE, in consideration of the mutual promises and covenants set forth herein, the parties to the Prior Agreement hereby agree
that the Prior Agreement shall be superseded and replaced in its entirety by this Agreement, and the parties hereto further agree as follows: 

        1.    INFORMATION RIGHTS.    

        1.1    Financial Information.    

        (a)   The Company shall deliver to each Investor who continues to hold shares of Series A Preferred Stock
("Series A Preferred Stock") of the Company (or the common stock of the Company ("Common Stock")
into which the shares of Series A Preferred Stock have been converted), shares of Series B Preferred Stock ("Series B Preferred
Stock") of the Company (or the Common Stock into which the shares of Series B Preferred Stock have been converted), shares of Series C Preferred Stock
("Series C Preferred Stock") of the Company (or the Common Stock into which shares of Series C Preferred Stock have been converted),
shares of Series D Preferred Stock ("Series D Preferred Stock") of the Company (or the Common Stock into which the shares of
Series D Preferred Stock have been converted) or shares of Series E Preferred Stock ("Series E Preferred Stock") of the Company (or
the Common Stock into which the shares of Series E Preferred Stock have been converted) (in each case as adjusted for any stock split, stock dividends, combinations, recapitalizations and the
like with respect to such shares), and as long as such Investor or a principal, partner or manager of such Investor, is not employed by or an officer or director of a competitor of the Company,
audited financial statements, prepared in accordance with United States generally accepted accounting principles ("GAAP"), consistently applied, and
setting forth in comparative form the figures for the previous year, all in reasonable detail, of the
Company, as soon as practicable after the end of each fiscal year of the Company and in any event within 90 days after the close of each fiscal year. 

        (b)   The Company shall deliver to each Investor who continues to hold shares of Series A, Series B,
Series C, Series D or Series E Preferred Stock (or the Common Stock into which shares 

1

 

of
Series A, Series B, Series C, Series D or Series E Preferred Stock have been converted) (as adjusted for any stock split, stock dividends, combinations,
recapitalizations and the like with respect to such shares), and as long as such Investor or a principal, partner or manager of such Investor, is not employed by or an officer or director of a
competitor of the Company, within 30 days after the end of each fiscal quarter of the Company, unaudited quarterly financial statements prepared in accordance with GAAP, consistently applied. 

        (c)   The Company will deliver to each Investor who continues to hold Series A or Series B Preferred Stock (or
the Common Stock into which shares of Series A or Series B Preferred Stock have been converted) (as adjusted for any stock split, stock dividends, combinations, recapitalizations and the
like with respect to such shares) within 30 days prior to the beginning of each fiscal year, a capitalization summary, annual budget and operating plans for such fiscal year (and as soon as
available, any subsequent revisions thereto), and within 30 days after the end of each month, monthly unaudited financial statements with comparisons against the Company's operating plan;  provided, however,
 that to the extent that the Company reasonably concludes that disclosure of the specific budget/operating plan line items,
corresponding dollar amounts and comparisons would provide the holders of Series A and Series B Preferred Stock (or the Common Stock into which shares of Series A or
Series B Preferred Stock have been converted) (as adjusted for any stock split, stock dividends, combinations, recapitalizations and the like with respect to such shares) with competitively
sensitive information regarding the Company's allocation of resources, the Company shall not be obligated to disclose such information to the holders of Series A or Series B Preferred
Stock on a line-item basis but shall disclose such information on an aggregate basis. 

        (d)   The Company shall deliver to each Investor who continues to hold at least 1,000,000 shares of Series C Preferred
Stock (or 1,000,000 shares of the Common Stock into which shares of Series C Preferred Stock have been converted or a combination of such Series C Preferred Stock and Common Stock), at
least 1,000,000 shares of Series D Preferred Stock (or 1,000,000 shares of the Common Stock into which shares of Series D Preferred Stock have been converted or a combination of such
Series D Preferred Stock and Common Stock) or at least 1,000,000 shares of Series E Preferred Stock (or 1,000,000 shares of the Common Stock into which shares of Series E
Preferred Stock have been converted or a combination of such Series E Preferred Stock and Common Stock) (in each case, as adjusted for any stock split, stock dividends, combinations,
recapitalizations and the like with respect to such shares), and as long as such Investor or a principal, partner or manager of such Investor, is not employed by or an officer or director of a
competitor of the Company within 30 days prior to the beginning of the Company's next fiscal year, a copy of the Company's annual operating plan for the next fiscal year, and within
30 days after the end of each month, monthly unaudited financial statements with comparisons against the Company's annual operating plan. 

        (e)   For purposes of this Section 1.1, a "competitor of the Company"
means any entity that engages in the business of human therapeutic drug development, research, distribution or related business (the "Business"),
provided that the Board of Directors of the Company may in their reasonable and good faith discretion exempt any individual entity from such definition through board action that defines the duration
and scope of such exemption, and provided further that no Investor that is a financial investor shall be deemed to be a competitor of the Company due to its having made an investment in, or due to the
service of one or more of its principals or employees on the board of directors of, a competitor of the Company. 

        1.2    Inspection Rights.    Each Investor shall have the right to
visit and inspect any of the properties of the Company or any of its subsidiaries, and to discuss the affairs, finances and accounts of the Company or any of its subsidiaries with its officers, and to
review such information as is reasonably requested all at such reasonable times and as often as may be reasonably 

2

 

requested;  provided, however, that the Company shall not be obligated under this Section 1.2 with respect to a competitor of the Company or with
respect to information which the Board of Directors determines in good faith is confidential and should not, therefore, be disclosed, unless the Investor first executes and delivers a confidentiality
agreement with the Company in form and substance reasonably satisfactory to the Board of Directors; provided further that, whenever requested, the Investor shall sign an agreement satisfactory to the
Company stating that the Investor shall hold all such information in confidence. 

        1.3    Confidentiality of Records.    Each Investor hereby represents,
warrants and covenants that it shall maintain in confidence, and shall not use or disclose without the prior written consent of the Company, any information identified in writing as confidential that
is furnished to it by the Company in connection with this Agreement. This obligation of confidentiality shall not apply, however, to any information (i) in the public domain through no
unauthorized act or failure to act by the Investor, (ii) lawfully disclosed to the Investor by a third party who possessed such information without any obligation of confidentiality,
(iii) known to the Investor at the time of disclosure by the Company, as evidenced by records of the Investor in existence at the time of the disclosure in question, (iv) which has been
independently developed by employees or other agents of, or independent contractors hired by, the Investor without access to the information described in the first sentence of this Section 1.3
or (v) that is required to be disclosed pursuant to applicable law or stock exchange regulations. Each Investor further covenants that it shall return to the Company all tangible materials in
the possession of such Investor, or affiliates of such Investor containing such information upon request by the Company. Each Investor agrees that it will restrict access to the confidential
information of the Company among its officers, directors, employees, financial and legal advisors and to those persons with a need to use such information and who are parties to agreements with such
Investor to maintain such information as confidential (or otherwise subject to obligations to maintain such information as confidential). 

        1.4    Termination of Covenants.    Except as required by law, the
rights set forth in Sections 1.1 and 1.2 shall terminate and be of no further force or effect upon the closing of a Qualified IPO, as defined below, of the Company's Common Stock pursuant to an
effective registration statement filed by the Company
under the Securities Act of 1933, as amended (the "Securities Act"), or on the date the Company otherwise becomes subject to the reporting requirements
under Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), whichever first occurs. Furthermore, for
purposes of the holders of Series A and Series B Preferred Stock, the rights set forth in Sections 1.2 and 1.3 shall also terminate upon the later to occur of
(i) January 10, 2005 or (ii) the date on which Sankyo, and its affiliates (taken as a whole) cease to own fifty (50%) of the outstanding Series A Preferred Stock and
Series B Preferred Stock (or shares of Common Stock received on conversion thereof), collectively, by virtue of the exercise of the Exchange Right, as defined below, or otherwise. 

        1.5    Use of Proceeds.    The Company shall use the proceeds from the
sale of Common Stock sold pursuant to the Stock Purchase Agreement, dated December 18, 1997, by and among the Company, SICOR and Sankyo solely (i) in connection with the Company's
obligations under the Amended and Restated Collaborative Research and Development and License Agreement, dated as of June 30, 1999, (the "R&D
Agreement"), between the Company and Sankyo, (ii) for general working capital purposes, but not for the repayment of debt and (iii) to pay $2,250,000 payable to
SICOR pursuant to the terms of the Asset and Liability Transfer Agreement dated as of December 17, 1997 between the Company and SICOR. The covenants of the Company contained in this
Section 1.5 shall expire and terminate upon the expiration of the Research Program Term (as defined in the R&D Agreement). 

3

 

        2.    REGISTRATION RIGHTS.    The Company and the Investors covenant
and agree as follows: 

        2.1    Definitions.    For purposes of this Section 2: 

        (a)   The terms "register," "registered," and  "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in compliance with the Securities
Act, and the declaration or ordering of effectiveness of such registration statement or document. 

        (b)   The term "Registrable Securities" means (i) the shares of Common
Stock issuable or issued upon conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in replacement of, the shares listed in (i); or (iii) other shares of Common Stock acquired by a holder of Registrable
Securities; provided, however, that the foregoing definition shall exclude in all cases any Registrable Securities sold by a person in a transaction in
which his or her rights under this Agreement are not assigned. Notwithstanding the foregoing, Common Stock or other securities shall only be treated as Registrable Securities if and so long as they
have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act
under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale. 

        (c)   The number of shares of "Registrable Securities then outstanding" shall
be determined by the number of shares of Common Stock outstanding which are, and the number of shares of Common Stock issuable pursuant to then exercisable or convertible securities which are,
Registrable Securities; provided, however, that the foregoing definition shall exclude in all cases any securities sold by a person in a transaction in
which his or her rights under this Agreement are not assigned, and any securities that have been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale. 

        (d)   The term "Series A Holder" means any person owning or having the
right to acquire (i) the shares of Common Stock issuable or issued upon conversion of the Series A Preferred Stock and (ii) any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of,
the shares listed in (i). 

        (e)   The term "Series B Holder" means any person owning or having the
right to acquire (i) the shares of Common Stock issuable or issued upon conversion of the Series B Preferred Stock and (ii) any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of,
the shares listed in (i). 

        (f)    The term "Series C Holder" means any person owning or having the
right to acquire (i) the shares of Common Stock issuable or issued upon conversion of the Series C Preferred Stock and (ii) any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of,
the shares listed in (i). 

        (g)   The term "Series D Holder" means any person owning or having the
right to acquire (i) the shares of Common Stock issuable or issued upon conversion of the Series D Preferred 

4

 

Stock
and (ii) any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or
other distribution with respect to, or in exchange for or in replacement of, the shares listed in (i). 

        (h)   The term "Series E Holder" means any person owning or having the
right to acquire (i) the shares of Common Stock issuable or issued upon conversion of the Series E Preferred Stock and (ii) any other shares of Common Stock of the Company issued
as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of,
the shares listed in (i). 

        (i)    The term "Preferred Holders" means the Series A Holders, the
Series B Holders, the Series C Holders, the Series D Holders and the Series E Holders. 

        (j)    The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any successor form under the Securities Act. 

        (k)   The term "SEC" means the Securities and Exchange Commission of the United
States. 

        (l)    The term "Qualified IPO" means a firm commitment underwritten public
offering by the Company of shares of its Common Stock pursuant to a registration statement on Form S-1 under the Securities Act, in which the public offering price per share of
Common Stock is at least $2.00 (as adjusted for stock splits, stock dividends, combinations, recapitalizations and the like) and the gross proceeds to the Company are not less than $25,000,000 (before
underwriting discounts, commissions and fees). 

        2.2    Request for Registration.    

        (a)   If the Company shall receive at any time at least six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or an SEC Rule 145 transaction), a written request from the holders of a majority of the Registrable Securities held by the Preferred Holders, on an
as-converted basis and including any shares of Common Stock held by the Preferred Holders resulting from conversion of their respective Preferred Stock, that the Company file a
registration statement under the Securities Act covering Registrable Securities, then the Company shall, within ten (10) days of the receipt thereof, give written notice of such request to all
Preferred Holders and shall, subject to the limitations of subsection 2.2(b), use commercially reasonable efforts to effect as soon as practicable, and in any event within 90 days of the
receipt of such request, the registration under the Securities Act of all Registrable Securities which the Preferred Holders request to be registered within twenty (20) days of the mailing of
such notice by the Company in accordance with the terms hereof; provided, however, that the Company shall not be obligated to effect such registration
if the Preferred Holders, together with the holders of any other securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (before underwriting discounts, commissions and fees) of less than $5,000,000. 

        (b)   If the Preferred Holders initiating the registration request hereunder ("Initiating
Holders") intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2.2 and the Company shall include such information in the written notice referred to in subsection 2.2(a). The underwriter will be selected by the Company subject to
the prior written consent of a majority of the then outstanding Registrable Securities proposed to be included in such registration, which consent shall not be unreasonably withheld; provided,
however, that no such consent shall be required if the Company selects a nationally recognized underwriter in the United States with demonstrable, pharmaceutical and/or biotechnology industry-specific
expertise 

5

 

and
experience. In such event, the right of any Preferred Holder to include Registrable Securities in such registration shall be conditioned upon such Preferred Holder's participation in such
underwriting and the inclusion of such Preferred Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such
Preferred Holder to the extent provided herein. All Preferred Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in subsection
2.5(e)) enter into an underwriting agreement in customary form (including without limitation the indemnities from the Company as set forth in Section 2.10) with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation
or the exclusion of the number of shares to be underwritten, then the Initiating Holders shall so advise all Preferred Holders of Registrable Securities which would otherwise participate in the
underwritten offering pursuant hereto, and, in the case of a limitation, of the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all
Preferred Holders (as applicable), including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities of the Company owned by each Preferred Holder (as
applicable); provided, however, that the shares of Registrable Securities to be included in such underwriting shall not be reduced in number or
completely excluded unless all other securities are first entirely excluded from the underwriting. No such reduction shall reduce the securities being offered by the Company for its own account to be
included in the registration and underwriting, and in no event shall the amount of Registrable Securities of the selling Preferred Holders included in the registration be reduced below
twenty-five (25%) of the total amount of securities included in such registration, unless such offering is the initial public offering of the Company's Common Stock under the Securities
Act, in which event any or all of the Registrable Securities of the Preferred Holders may be excluded in accordance with this Section 2.2(b). 

        (c)   Notwithstanding the foregoing, if the Company shall furnish to the Initiating Holders requesting a registration statement
pursuant to this Section 2.2, a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such registration statement to be filed at such time and it is therefore essential to defer the filing of such registration statement, the Company
shall have the right to defer such filing for a period of not more than 90 days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in any twelve month period. 

        (d)   In addition, the Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to
this Section 2.2: 

          (i)  After the Company has effected two (2) registrations pursuant to this Section 2.2 and such registrations
have been declared or ordered effective (excluding any such registration in which the amount of the Registrable Securities of the selling Preferred Holders included therein shall have been reduced by
twenty-five percent (25%) or more to accommodate the inclusion of the securities being offered by the Company pursuant to Section 2.2(b)), or within six (6) months of the
effective date of another registration; 

         (ii)  During the period of one hundred eighty (180) days following the effective date of a registration subject to
Section 2.3 hereof; 

       (iii)  If the Initiating Holders propose to dispose of shares of Registrable Securities that may be currently registered on
Form S-3 pursuant to a request made pursuant to Section 2.4 below; provided, however, that if the Company so refuses to effect
a registration by the 

6

 

Preferred
Holders pursuant to this Section 2.2(d)(iii), they shall be entitled to an additional registration pursuant to Section 2.4 for each such registration so refused; or 

        (iv)  If the Company delivers notice to the Initiating Holders within thirty (30) days of a registration request
pursuant to this Section 2.2 stating the Company's intent to file a registration statement for a public offering within ninety (90) days of the date of such notice, provided that
the Company is actively employing in good faith all reasonable efforts to cause such registration statement to be filed and become effective. 

        2.3    Company Registration.    If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Preferred Holders) any of its securities under the Securities
Act in connection with the public offering of such securities solely for cash (other than a registration relating solely to the sale of securities to participants in a Company stock plan or a
transaction covered by Rule 145 under the Securities Act, a registration in which the only stock being registered is Common Stock issuable upon conversion of debt securities which are also
being registered, or any registration on any form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of the
Registrable Securities), the Company shall, at such time, promptly give each Preferred Holder written notice of such registration. Upon the written request of each Holder given within twenty
(20) days after mailing of such notice by the Company in accordance with the terms hereof, the Company shall, subject to the provisions of Section 2.8, cause to be registered under the
Securities Act all of the Registrable Securities that each such holder has requested to be registered. 

        2.4    Form S-3 Registration.    In case the
Company shall receive from Preferred Holders of the Registrable Securities then outstanding a written request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the Registrable Securities owned by such holder or holders, the Company will: 

        (a)   promptly give written notice of the proposed registration, and any related qualification or compliance, to all other
Preferred Holders; and 

        (b)   as soon as practicable, effect such registration and all such qualifications and compliances as may be so requested and
as would permit or facilitate the sale and distribution of all or such portion of such Preferred Holder's Registrable Securities as are specified in such request, together with all or such portion of
the Registrable Securities of any other Preferred Holders joining in such request as are specified in a written request given within 15 days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect any such registration, qualification or compliance, pursuant to this
Section 2.4: (i) if Form S-3 is not available for such offering by the Preferred Holders; (ii) if the Preferred Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to sell Registrable Securities and such other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the Company shall furnish to the Preferred Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such Form S-3 Registration to be effected
at such time, in which event the Company shall have the right to defer the filing of the Form S-3 registration statement for a period of not more than 90 days after receipt
of the request of the Preferred Holders under this Section 2.4; provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (iv) if the Company has, within the twelve (12) month period preceding the date of such request, already effected two (2) registrations on
Form S-3 for such holders pursuant to this Section 2.4 or within six (6) months of the effective date of another registration; (v) in any particular
jurisdiction in which the Company would be 

7

 

required
to qualify to do business or to execute a general consent to service of process in effecting such registration, qualification or compliance; or (vi) during the period ending one
hundred eighty (180) days after the effective date of a registration statement subject to Section 2.3. 

        (c)   Subject to the foregoing, the Company shall file a registration statement covering the Registrable Securities and
other securities so requested to be registered as soon as practicable after receipt of the request or requests of the Preferred Holders. Registrations effected pursuant to this Section 2.4
shall not be counted as demands for registration or registrations effected pursuant to Sections 2.2 or 2.3, respectively. 

        (d)   If the registration is to be underwritten, the underwriter will be selected by the Company subject to the prior written
consent of a majority of the holders of the then outstanding Registrable Securities proposed to be included in such registration, which consent shall not be unreasonably withheld; provided, however,
that no such consent shall be required if the Company selects a nationally recognized underwriter in the United States with demonstrable, pharmaceutical and/or biotechnology industry-specific
expertise and experience. 

        2.5    Obligations of the Company.    Whenever required under this
Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible: 

        (a)   Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best
efforts to cause such registration statement to become effective, and, upon the request of the Holders of a majority of the Registrable Securities registered thereunder, keep such registration
statement effective for up to one hundred twenty (120) days. 

        (b)   Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration
statement for up to one hundred twenty (120) days. 

        (c)   Furnish to each Preferred Holder covered by such registration statement such numbers of copies of a prospectus, including
a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them. 

        (d)   Use its best efforts to register and qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Preferred Holders covered by such registration statement,  provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions. 

        (e)   In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement,
in usual and customary form (including without limitation the indemnities from the Company as set forth in Section 2.10), with the managing underwriter of such offering. Each Preferred Holder
participating in such underwriting shall also enter into and perform its obligations under such an agreement. 

        (f)    Notify each Preferred Holder of Registrable Securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the
circumstances then existing, such obligation to continue for one hundred twenty (120) days. In such event, the Company shall use all reasonable efforts to amend 

8

 

promptly
the registration statement to conform the prospectus to the requirement of the Securities Act and applicable regulations. 

        (g)   Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed. 

        (h)   Provide a transfer agent and registrar for all Registrable Securities registered pursuant hereunder and a CUSIP number
for all such Registrable Securities, in each case not later than the effective date of such registration. 

        (i)    Use its best efforts to furnish, at the request of any Preferred Holder requesting registration of Registrable Securities
pursuant to this Section 2, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 2, if such
securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an
underwritten public offering, addressed to the underwriters, if any, and to the Preferred Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Preferred Holders requesting registration of Registrable Securities. 

        2.6    Furnish Information.    It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Preferred Holder that such holder shall furnish to the
Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such
holder's Registrable Securities. The Company shall have no obligation with respect to any registration requested pursuant to Section 2.2 or Section 2.4 of this Agreement if, as a result
of the application of the preceding sentence, the number of shares or the anticipated aggregate offering price of the Registrable Securities to be included in the registration does not equal or exceed
the number of shares or the anticipated aggregate offering price required to originally trigger the Company's obligation to initiate such registration as specified in subsection 2.2(a) or subsection
2.4(b)(ii), whichever is applicable. 

        2.7    Expenses of Registration.    

        (a)   Demand Registration.    All expenses other than underwriting discounts and commissions, incurred in connection
with two (2) demand registrations, pursuant to Section 2.2, including (without limitation) all registration, filing and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company, and the reasonable fees and disbursements (not to exceed $30,000) of one counsel for the selling Preferred Holders selected by them (collectively
"Registration Expenses") shall be borne by the Company, provided, however, that if the Preferred Holders
bear the Registration Expenses for any registration proceeding begun pursuant to Section 2.2 and subsequently withdrawn by registering shares therein, such registration proceeding shall not be
counted as a requested registration pursuant to Section 2.2 hereof; provided further that in the event that such withdrawal is based upon material adverse information relating to the Company
that is different from the information known or available (upon request from the Company or otherwise) to the Preferred Holders requesting registration at the time of their request for registration
under Section 2.2, such registration shall not be treated as a counted registration for purposes of Section 2.2 hereof, even though the Preferred Holders do not bear the Registration
Expenses for such registration. 

9

 

        (b)   Company Registration.    All expenses other than underwriting discounts and commissions incurred in connection
with registrations, filings or qualifications of Registrable Securities pursuant to Section 2.3 for each Preferred Holder (which right may be assigned as provided in Section 2.12),
including (without limitation) all registration, filing, and qualification fees, printers' and accounting fees, fees and disbursements of counsel for the Company and the reasonable fees and
disbursements (not to exceed $30,000) of one counsel for the selling Preferred Holders selected by them shall be borne by the Company. 

        (c)   Registration on Form S-3.    All expenses other than underwriting discounts and commissions
incurred in connection with two (2) registrations requested pursuant to Section 2.4, including (without limitation) all registration, filing, qualification, printers' and accounting fees
and the reasonable fees and disbursements (not to exceed $30,000) of one counsel for the selling Preferred Holders selected by them shall be borne by the Company. 

        2.8    Underwriting Requirements.    In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company shall not be required under Section 2.3 to include any of the Preferred Holders' securities in such underwriting
unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it (or by other persons entitled to select the underwriters), provided that such
agreement does not require indemnification by any of them except to the extent contemplated by Section 2.10 hereof. If the total amount of securities, including Registrable Securities,
requested by the Preferred Holders to be included in such offering exceeds the amount of securities sold that the underwriters determine in their sole discretion is compatible with the success of the
offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters determine in their sole discretion
will not jeopardize the success of the offering. The Company will include in such registration (i) first, the securities the Company proposes to sell for its own account; (ii) second, to
the extent that the number of securities the Company proposes to sell is less than the number of securities which the Company has been advised can be sold in such offering, such number of Registrable
Securities which the Preferred Holders have requested to be included in such registration pursuant to Section 2.3 hereof; provided, however, in
no event will shares of any other selling stockholder be included in such registration which would reduce the number of shares which have been requested to be included by the Preferred Holders (or
completely exclude the shares held by Preferred Holders) without the written consent of a majority of the then outstanding Registrable Securities proposed to be sold in the offering; and
(iii) third, to the extent that the number of securities which are to be included in such registration pursuant to clauses (i) and (ii) is, in the aggregate, less than the number
of securities which the Company has been advised can be sold in such offering, such number of other securities requested to be included in the offering for the account of any holders not contractually
entitled to registration which, in the opinion of the underwriters, is compatible with the success of the offering. The number of Registrable Securities included in such registration statement shall
be allocated pro rata among the holders of Registrable Securities based on the number of Registrable Securities held by each of them or in such other proportions as shall mutually be agreed to by
them, but in no event shall any shares being sold by such a holder exercising a demand registration right similar to that granted in Section 2.2 or 2.4 be excluded from such offering. For
purposes of the preceding sentence concerning apportionment, for any selling stockholder which is a holder of Registrable Securities and which is a partnership or corporation, the partners, retired
partners and stockholders of such holder, or the estates and family members of any such partners and retired partners and any trusts for the benefit of any of the foregoing persons shall be deemed to
be a single "selling stockholder" and any pro-rata reduction with respect to such "selling stockholder" shall be based upon the aggregate amount of shares carrying registration rights
owned by all entities and individuals included in such "selling stockholder," as defined in this sentence. In no event shall the amount of Registrable Securities 

10

 

the
Preferred Holders request to be included in the registration pursuant to Section 2.3 be reduced below twenty-five (25%) of the total amount of securities included in such
registration, unless such offering is the initial public offering of the Company's Common Stock under the Securities Act, in which event any or all of the Registrable Securities of the Preferred
Holders may be excluded in accordance with this Section 2.8. 

        2.9    Delay of Registration.    No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such registration as the result of any controversy that might arise with respect to the interpretation or implementation of this
Section 2. 

        2.10    Indemnification.    In the event any Registrable Securities
are included in a registration statement under this Section 2: 

        (a)   To the extent permitted by law, the Company will indemnify and hold harmless each Preferred Holder, its partners,
officers and directors, its legal counsel, its accountants, any underwriter (as defined in the Securities Act) for such holder and each person, if any, who controls such holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses, claims, damages, or liabilities (joint or several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages, or liabilities (or actions in respect thereof) arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements thereto, (ii) the omission or alleged omission to state therein a material
fact required to be stated therein, or necessary to make the statements therein not misleading, or (iii) any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under the Securities Act, the Exchange Act or any state securities law; and the Company will pay to each such holder, partner,
officer, director, underwriter or controlling person, as incurred, any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained in this subsection 2.10(a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is effected without the consent of the Company (which consent shall not be unreasonably withheld), nor shall the Company be
liable to any holder, underwriter or controlling person for any such loss, claim, damage, liability, or action to the extent that it arises out of or is based upon a Violation which occurs in reliance
upon and in conformity with written information furnished expressly for use in connection with such registration by any such holder, underwriter or controlling person. 

        (b)   To the extent permitted by law, each selling Preferred Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who has signed the registration statement, each person, if any, who controls the Company within the meaning of the Securities Act, its legal counsel, its accountants,
any underwriter, any other holder selling securities in such registration statement and any controlling person of any such underwriter or other holder, against any losses, claims, damages, or
liabilities (joint or several) to which any of the foregoing persons may become subject, under the Securities Act, the Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are based upon any Violation, in each case to the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such holder expressly for use in connection with such registration; and each such holder will reimburse any legal or other expenses reasonably
incurred by any person intended to be indemnified pursuant to this subsection 2.10(b), in connection with investigating or defending any such loss, claim, damage, liability, or action if it is
judicially determined that there was such a violation; provided,  

11

 

 however,that the indemnity agreement contained in this subsection 2.10(b) shall not apply to amounts paid in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the holder, which consent shall not be unreasonably withheld; provided, that in no event shall any indemnity under this subsection 2.10(b) exceed the
net proceeds from the offering received by such holder, except in the case of willful fraud by such holder. 

        (c)   Promptly after receipt by an indemnified party under this Section 2.10 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim in respect thereof is to be made against any indemnifying party under this Section 2.10, deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying party shall have the right to participate in, and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel mutually satisfactory to the parties; provided, however, that an
indemnified party (together with all other indemnified parties which may be represented without conflict by one counsel) shall have the right to retain one separate counsel, with the reasonable fees
and expenses to be paid by the indemnifying party, if representation of such indemnified party by the counsel retained by the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party represented by such counsel in such proceeding. The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action, if materially prejudicial to its ability to defend such action, shall relieve such indemnifying party of any liability to the indemnified party
under this Section 2.10, but the omission so to deliver written notice to the indemnifying party will not relieve it of any liability that it may have to any indemnified party otherwise than
under this Section 2.10. 

        (d)   If the indemnification provided for in this Section 2.10 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, liability, claim, damage or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party
hereunder, shall, to the extent permitted by applicable law, contribute to the amount paid or payable by such indemnified party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand and of the indemnified party on the other in connection with the statements or omissions that
resulted in such
loss, liability, claim, damage or expense as well as any other relevant equitable considerations; provided, that in no event shall any contribution by a holder under this Subsection 2.10(d) exceed the
net proceeds from the offering received by such holder, except in the case of willful fraud by such holder. The relative fault of the indemnifying party and of the indemnified party shall be
determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties' relative intent, knowledge, access to information, and opportunity to correct or prevent such statement or omission. 

        (e)   Notwithstanding the foregoing, to the extent that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten public offering are in conflict with the foregoing provisions, the provisions in the underwriting agreement shall control. 

12

  

        (f)    The obligations of the Company and the Preferred Holders under this Section 2.10 shall survive the completion of
any offering of Registrable Securities in a registration statement under this Section 2, and otherwise. 

        (g)   No indemnifying party, in the defense of any such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect of such claim or litigation. 

        2.11    Reports Under Exchange Act.    With a view to making available
to the Preferred Holders the benefits of Rule 144 promulgated under the Securities Act and any other rule or regulation of the SEC that may at any time permit a holder to sell securities of the
Company to the public without registration or pursuant to a registration on Form S-3, the Company agrees to: 

        (a)   make and keep public information available, as those terms are understood and defined in SEC Rule 144, at all
times after ninety (90) days after the effective date of the first registration statement filed by the Company for the offering of its securities to the general public so long as the Company
remains subject to the periodic reporting requirements under Sections 13 or 15(d) of the Exchange Act; 

        (b)   take such action, including the voluntary registration of its Common Stock under Section 12 of the Exchange Act,
as is necessary to enable the Preferred Holders to utilize Form S-3 for the sale of their Registrable Securities; 

        (c)   file with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and
the Exchange Act; and 

        (d)   furnish to any Preferred Holder, so long as the holder owns any Registrable Securities, forthwith upon request
(i) a written statement by the Company that it has complied with the reporting requirements of SEC Rule 144 (at any time after ninety (90) days after the effective date of the
first registration statement filed by the Company), the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent annual or quarterly report of the Company
and such other reports and documents so filed by the Company, and (iii) such other information as may be reasonably requested in
availing any Preferred Holder of any rule or regulation of the SEC which permits the selling of any such securities without registration or pursuant to such form. 

        2.12    Assignment of Registration Rights.    The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be assigned (but only with all related obligations) by a Preferred Holder to (i) a transferee or assignee of at
least 50,000 shares of such securities, (ii) a transferee or assignee of all of such Registrable Securities held by such transferring holder, if less than 50,000 shares, (iii) a general
partner, limited partner, retired partner, member or retired member, affiliate, parent or majority-owned subsidiary of the transferee or (iv) in the case of the Wellcome Trust Limited, any
successor trustee of the Wellcome Trust or additional trustee or trustees of the Wellcome Trust from time to time, or any company whose shares are all held directly or indirectly by the Wellcome
Trust, or any nominee or custodian of any such person; provided the Company is, within a reasonable time after such transfer, furnished with written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights are being assigned; and provided, further, that such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or assignee is restricted under the Securities Act. For the purposes of determining the number of shares of Registrable Securities
held by a transferee or assignee, the 

13

 

holdings
of transferees and assignees of a partnership who are partners or retired partners of such partnership (including spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate succession) shall be aggregated together and with the partnership; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a single attorney-in-fact for the purpose of exercising any rights, receiving notices or taking any action
under Section 2. 

        2.13    Limitations on Subsequent Registration Rights.    From and
after the Effective Date, the Company shall not, without the prior written consent of the holders of 662/3% of the then outstanding Registrable Securities, enter into any agreement with
any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder to include such securities in any registration filed under Section 2.2
hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of his securities will
not reduce the amount of the Registrable Securities of the Preferred Holders which are included. 

        2.14    "Market Stand-Off" Agreement.    Each holder of
Registrable Securities hereby agrees that, during the period of duration (up to, but not exceeding, 180 days) specified by the Company and an underwriter of Common Stock or other securities of
the Company, following the effective date of a registration statement of the Company filed under the Securities Act, it shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without limitation, any short sale), grant any option to purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held
by it at any time during such period except Common Stock included in such registration; provided, however, that: 

        (a)   such agreement shall be applicable only to the first such registration statement of the Company which covers Common Stock
(or other securities) to be sold on its behalf to the public in an underwritten offering; and 

        (b)   all officers, directors, and key employees of the Company, all five-percent security holders, and all other
persons with registration rights (whether or not pursuant to this Agreement) enter into similar agreements. 

        In
order to enforce the foregoing covenant, the Company may impose stop-transfer instructions with respect to the Registrable Securities of each holder (and the shares or
securities of every other person subject to the foregoing restriction) until the end of such period, and each holder agrees that, if so requested, such holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent with the provisions of this Section 2.14. 

        Notwithstanding
the foregoing, the obligations described in this Section 2.14 shall not apply to a registration relating solely to employee benefit plans on
Form S-1 or Form S-8 promulgated under the Securities Act or similar forms which may be promulgated in the future, or a registration relating solely to an SEC
Rule 145 transaction on Form S-4 promulgated under the Securities Act or similar forms which may be promulgated in the future. 

        2.15    Termination of Registration Rights.    No holder of
Registrable Securities shall be entitled to exercise any right provided for in this Section 2 after six (6) years following the consummation of the firm commitment underwritten initial
public offering of the Company's Common Stock. 

        3.    EXCHANGE RIGHT.    

        3.1    General.    The holders of a majority of Series A
Preferred Stock (or Common Stock into which the shares of Series A Preferred Stock have been converted, collectively, the "Exchange  

14

 

 Stock") shall have the right to exchange the Exchange Stock held by them for shares of Common Stock ("SICOR Common Stock") of
SICOR in accordance with this Section 3 (the "Exchange Right"). For purposes of this Section 3 only, "Registrable
Securities" means 851,939 shares of Common Stock issuable on conversion of the shares of the Company's Series A Preferred Stock issued to Sankyo pursuant to the Stock
Purchase Agreement, dated December 18, 1997, by and among Sankyo, SICOR and the Company. 

        3.2    Notice of Exercise.    The holders of a majority of the
Exchange Stock shall have the right upon forwarding a written notice (an "Exercise Notice") to SICOR and the Company within thirty (30) days
after January 10, 2001, and each one year anniversary thereafter until and including January 10, 2005 to elect to exchange up to twenty percent (20%) of the Exchange Stock held by the
Series A Holders for shares of SICOR Common Stock ("SICOR Shares"). Each Exercise Notice shall state that it constitutes an election hereunder
and shall specify the number of Exchange Stock to be exchanged for SICOR Shares. Upon receiving any Exercise Notice, SICOR shall cause the shares of Exchange Stock specified therein to be exchanged
promptly for SICOR Shares as provided in this Section 3. An election to exchange Exchange Stock hereunder shall be irrevocable. The failure by the Series A Holders to elect to convert
Exchange Stock during any exercise period specified above shall not limit in any respect their right to exercise such right any subsequent exercise period. For the avoidance of doubt, SICOR hereby
expressly acknowledges and agrees that no corporate transaction or other event relating to the Company, including, without limitation, its bankruptcy, insolvency or merger with or into another entity
shall limit, expand or accelerate in any respect the rights of the Series A Holders hereunder. 

        3.3    SICOR Exchange Shares.    The number of SICOR Shares which a
Series A Holder shall be entitled to receive upon exercise of the Exchange Right (the "SICOR Exchange Shares") shall be determined pursuant to
the following formula: 

	A	 	x	 	B	 	=	 	D	 	 
	 	 	 	 	C	 	 	 	 	 	 

        Where
  

	D	 	=	 	Number of SICOR Exchange Shares;
	

A	
 	

=	
 	

Number of shares of Registrable Securities held by such Series A Holder (or deemed to be held from conversion of such holder's Series A Preferred Stock) as of the date of mailing the most recent Exercise Notice ("Exercise Date") and specified in the
Exercise Notice.
	

B	
 	

=	
 	

Initially, $7.09 (the original issue price of Series A Preferred Stock), as proportionally adjusted for any stock splits, stock combinations, stock dividends, reclassifications, recapitalizations and the like (collectively referred to as a
"Recapitalization"); and
	

C	
 	

=	
 	

The arithmetic average of the closing price for SICOR Common Stock as quoted on the Nasdaq National Market ("Nasdaq") for the twenty (20) consecutive days on which SICOR Common Stock was traded on Nasdaq ending immediately before the Exercise Date
(the "SICOR Market Price").

        3.4    Adjustment for Recapitalization.    If at any time during the
period from the Effective Date to the most recent Exercise Date, the SICOR Common Stock is changed into the same or a different number of shares of any class or classes of stock, by any form of
Recapitalization other than (i) a subdivision or combination of shares or stock dividend, for which no adjustment pursuant to this Section 3.4 shall be made and (ii) a merger,
acquisition (whether of SICOR or another entity) or sale of substantially all of SICOR's assets (collectively referred to as a "Reorganization"), for
which adjustment shall be made pursuant to Section 3.5, each Series A 

15

 

Holder
shall have the right to receive upon exercise of the Exchange Right the kind and amount of stock and other securities and property receivable upon such Recapitalization by holders of the
maximum number of SICOR Common Shares into which Exchange Stock held by such Series A Holder could have been exchanged immediately prior to such Recapitalization (assuming for purposes of this
Section 3.4 that the Exchange Right was exercisable, and such exchange was completed, immediately prior to the closing of such Recapitalization), subject to further adjustment as provided with
respect to such other securities or property pursuant the terms thereof. 

        3.5    Adjustment for Reorganization.    If at any time during the
period from the Effective Date to the most recent Exercise Date, SICOR effects a Reorganization, provision shall be made so that each Series A Holder shall have the right to receive upon
exercise of the Exchange Right the kind and amount of stock and other securities and property receivable upon such Reorganization by holders of the maximum number of SICOR Common Shares into which
Exchange Stock could have been exchanged immediately prior to such Reorganization (assuming for purposes of this Section 3.5 that the Exchange Right was exercisable, and such exchange was
completed, immediately prior to the closing of such Reorganization), subject to further adjustment as provided with respect to such other securities or property pursuant to the terms thereof. 

        3.6    Certificate of Adjustment.    Within 15 days following
the completion of a Recapitalization or Reorganization, SICOR, at its expense, shall compute the adjustment required in connection therewith pursuant to Section 3.4 or Section 3.5, as
applicable, and shall deliver to each Series A Holder a certificate showing such adjustment. The certificate shall set forth in reasonable detail SICOR's calculation of the adjustment and the
type and amount of other property which would be received by the Series A Holders upon exchange of their Exchange Stock pursuant to this Section 3. 

        3.7    Exchange Mechanics.    Series A Holders shall deliver
the certificate(s) representing the Exchange Stock such Series A Holders desire to exchange pursuant to this Section 3 to SICOR, and a copy of such certificate(s) to the Company,
together with the Exercise Notice. Upon receipt of the Exercise Notice and such certificates, SICOR shall calculate the number of SICOR Exchange Shares receivable by each such Series A Holder
pursuant to Section 3.3 and, within ten (10) business days of SICOR's receipt of the Exercise Notice, deliver to each such holder (i) certificates representing such
Series A Holder's SICOR Exchange Shares issued as of the applicable Exercise Date, (ii) a reasonably detailed statement indicating such calculation pursuant to Section 3.3 (which
calculation shall be binding upon such Series A Holder in the absence of manifest mathematical error or misstatement of the closing prices for the SICOR Common Stock for purposes of calculation
of the SICOR Market Price) and (iii) any cash payable in respect of fractional SICOR Exchange Shares pursuant to Section 3.9. Within ten (10) business days of SICOR's receipt of
the Exercise Notice, SICOR shall deliver a written notice to the Company (and a copy of such notice to the Series A Holders) stating the balance of shares of Exchange Stock, if any, surrendered
to SICOR under this Section 3.7 that remain unexercised pursuant to this Section 3, and within ten (10) business days of the Company's receipt of such notice, the Company shall
deliver to the Series A Holder a share certificate(s) for such balance. 

        3.8    SICOR Obligations in Respect of SICOR Exchange Shares.    SICOR
at all times shall reserve and keep available, solely for issuance and delivery upon exercise of each Series A Holder's Exchange Right, such number of SICOR Exchange Shares as may be issuable
upon such exchange. SICOR, at its expense, shall further cause a registration statement on Form S-3 registering the resale of the SICOR Exchange Shares to be filed and declared
effective in accordance with applicable law as soon as practicable following SICOR's receipt of any Exercise Notice. 

16

 

        3.9    Fractional Shares.    No fractional SICOR Exchange Shares shall
be issued upon exchange of Exchange Stock. All SICOR Exchange Shares (including fractions thereof) issuable upon exchange of Exchange Stock shall be aggregated for purposes of determining whether the
exchange would result in the issuance of any fractional share. If, after such aggregation, the exchange would result in any fractional share, SICOR shall, in lieu of issuing any fractional share, pay
cash equal to the product of such fraction multiplied by the SICOR Market Price. 

        3.10    Payment of Taxes.    SICOR will pay all taxes (other than
taxes based upon income) and other governmental charges that may be imposed with respect to the issue or delivery of SICOR Exchange Shares upon exchange of Exchange Stock. 

        4.    [RESERVED.]    

        5.    MISCELLANEOUS.    

        5.1    [RESERVED.]    

        5.2    [RESERVED.]    

        5.3    Waivers and Amendments.    With the written consent of the
Company and the holders of more than 662/3% of the Registrable Securities the obligations of the Company and the rights of the holders of Registrable Securities under this Agreement may
be waived (either generally or in a particular instance, either retroactively or prospectively and either for a specified period of time or indefinitely), and with the same consent, the Company, when
authorized by resolution of its Board of Directors, may amend this Agreement or enter into a supplementary agreement for the purpose of adding any provisions of this Agreement. Neither this Agreement
nor any provisions hereof may be amended, changed, waived, discharged or terminated orally, but only by a signed statement in writing evidencing the consents required pursuant to the preceding
sentence. Any amendment, waiver or supplementary agreement effected in accordance with this paragraph shall be binding upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities and the Company. Notwithstanding the foregoing, (i) the written consent of a majority of the holders of Series C, Series D and
Series E Preferred Stock, voting together on an as-if-converted basis, shall be obtained prior to any amendment or waiver of the rights, preferences or privileges of the
holders of Series C, Series D or Series E Preferred Stock contained in Sections 1 and 4 of this Agreement and this Section 5.3 and (ii) the written consent of 67% of
the holders of the Series A Preferred Stock and Series B Preferred Stock shall be obtained prior to any amendment or waiver of the rights, preferences or privileges of the holders of the
Series A Preferred Stock and the Series B Preferred Stock, as the case may be, contained in Sections 1 and 3 of this Agreement and this Section 5.3. By executing this Agreement,
the holders of Series C and Series D Preferred Stock hereby agree and acknowledge that the right of first refusal set forth in Section 4 of the Prior Agreement shall not apply to,
and is hereby waived with respect to, the shares of Series E Preferred Stock issued pursuant to the Purchase Agreement. 

        5.4    Delays or Omissions.    It is agreed that no delay or omission
to exercise any right, power, or remedy accruing to any Series A Holder, Series B Holder, Series C Holder, Series D Holder or Series E Holder, upon any breach,
default, or noncompliance of the Company under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default, or noncompliance, or
any acquiescence therein, or of any similar breach, default, or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any
such holder's part of any breach, default, or noncompliance under the Agreement or any waiver on such holder's part of any provisions or conditions of this Agreement must be in writing and shall be
effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to the Series A Holders, Series B Holders,
Series C Holders, Series D Holders or Series E Holders, shall be cumulative and not alternative. 

17

 

        5.5    Notices.    All notices and other communications required or
permitted hereunder shall be in writing and, except as otherwise noted herein, shall be deemed effectively given (i) upon personal delivery, (ii) in the case of notices being delivered
to the Company, SICOR or any other Investor except for Sankyo by any party except for Sankyo, delivery by a nationally recognized courier or upon deposit with the United States Post Office (by first
class mail, postage prepaid) and (iii) in the case of notices being delivered to or by Sankyo, delivery by an internationally recognized courier service. All communications shall be sent to the
party to be notified at the following addresses or at such other address as such party may designate by ten (10) days advance written notice to the other parties: a) if to the Company,
at 9390 Towne Centre Drive, San Diego, California 92121, attention of the Chief Executive Officer, (b) if to SICOR, at 19 Hughes Street, Irvine, CA 92121, Attention: John Sayward, (c) if
to Sankyo, at Hiromachi 1258, Shinagawaku, Tokyo, 1408710 Japan, Attention: Dr. Yoshiki Matsui, Research Planning Department, or (d) if to any other Investor, at its respective address
listed on the signature page hereof; provided, however, that, if any such notice is to be delivered by the Company to a holder of Registrable
Securities, the Company may deliver such notice to the latest address of such person shown on the Company's records. 

        5.6    Descriptive Headings.    The descriptive headings herein have
been inserted for convenience only and shall not be deemed to limit or otherwise affect the construction of any provisions hereof. 

        5.7    Governing Law.    This Agreement shall be governed by and
interpreted under the laws of the State of California as applied to agreements among California residents, made and to be performed entirely within the State of California. 

        5.8    Counterparts.    This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original and all of which shall constitute the same instrument, but only one of which need be produced. 

        5.9    Expenses.    If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be entitled to reasonable attorney's fees, costs and necessary disbursements in addition to any other relief to which such
party may be entitled. 

        5.10    Successors and Assigns.    Except as otherwise expressly
provided in this Agreement, this Agreement shall benefit and bind the successors, assigns, heirs, executors and administrators of the parties to this Agreement. 

        5.11    Entire Agreement.    This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the subject matter of this Agreement. 

        5.12    Separability; Severability.    Unless expressly provided in
this Agreement, the rights of each Investor under this Agreement are several rights, not rights jointly held with any other Investors. Any invalidity, illegality or limitation on the enforceability of
this Agreement with respect to any Investor shall not affect the validity, legality or enforceability of this Agreement with respect to the other Investors. If any provision of this Agreement is
judicially determined to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not be affected or impaired unless the severed provision is
material to the rights and benefits received by any party hereto. In such event the parties hereto shall use reasonable commercial efforts to negotiate, in good faith, a substitute, valid and
enforceable provision or agreement which most nearly effects the intent of the parties entering into this Agreement. 

        5.13    Stock Splits.    All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split, combination or other recapitalization of shares by the Company occurring after the Effective Date. 

18

 

        5.14    Tax Matters.    Notwithstanding anything herein to the
contrary, any party to this Agreement (and any employee, representative, or other agent of any party to this Agreement) may disclose to any and all persons, without limitation of any kind, the tax
treatment and tax structure of the transactions contemplated by this Agreement and all materials of any kind (including opinions or other tax analyses) that are provided to it relating to such tax
treatment and tax structure; provided however, that such disclosure may not be made to the extent reasonably necessary to comply with any applicable federal or state securities laws. For the purposes
of the foregoing sentence, (i) the "tax treatment" of a transaction means the purported or claimed federal income tax treatment of the transaction and (ii) the "tax structure" of a
transaction means any fact that may be relevant to understanding the purported or claimed federal income tax treatment of the transaction. Thus, for the avoidance of doubt, the parties acknowledge and
agree that the tax treatment and tax structure of any transaction does not include the name of any party to a transaction or any sensitive business information (including, without limitation,
the name and other specific information about any party's intellectual property or other proprietary assets) unless such information may be related or relevant to the purported or claimed federal
income tax treatment of the transaction. 

        5.15    Signatory Capacity.    With respect to its signatory capacity
and liability as the trustee of the Wellcome Trust, the Wellcome Trust Limited (the "Trustee") enters into this Agreement in its capacity as the trustee
for the time being of the Wellcome Trust but not otherwise and it is hereby agreed and declared that notwithstanding anything to the contrary contained or implied in this Agreement: 

        (a)   the obligations incurred by the Trustee under or in consequence of this Agreement shall be enforceable against it or the
other trustees of the Wellcome Trust from time to time; and 

        (b)   the liabilities of the Trustee (or such other trustees as are referred to in paragraph (a) above) in respect of
such obligations shall be limited to such liabilities as can, and may lawfully and properly be met out of the assets of the Wellcome Trust for the time being in the hands or under the control of the
Trustee or such other trustees. 

[THIS SPACE INTENTIONALLY LEFT BLANK]  

19

        IN WITNESS WHEREOF, the parties have executed this Amended and Restated Investors' Rights Agreement on the day and year first set forth
above. 

	 	 	COMPANY:
	

 	
 	
METABASIS THERAPEUTICS, INC.
	

 	
 	
By:	
 	

/s/  PAUL K. LAIKIND      
 Paul K. Laikind, Chief Executive Officer

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	SICOR:
	

 	
 	
SICOR INC.
	

 	
 	
By:	
 	

/s/ WESLEY N. FACH

	

 	
 	

Name:	
 	

Wesley N. Fach

	

 	
 	

Title:	
 	

Senior Vice President, General
Counsel & Secretary

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	SANKYO:
	

 	
 	
SANKYO COMPANY, LTD.
	

 	
 	
By:	
 	

/s/  MOSATU KONDA      

	

 	
 	

Name:	
 	

Mosatu Konda

	

 	
 	

Title:	
 	

Director, Finance Department

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
MPM BIOVENTURES II, L.P.
	

 	
 	
By:	
 	

MPM Asset Management II, L.P.,

its General Partner
	

 	
 	

By:	
 	

MPM Asset Management II LLC,

its General Partner
	

 	
 	

By:	
 	

/s/ LUKE B. EVNIN

	

 	
 	

Name:	
 	

Luke B. Evnin

	

 	
 	

Title:	
 	

Manager

	

 	
 	
MPM BIOVENTURES II-QP, L.P.
	

 	
 	
By:	
 	

MPM Asset Management II, L.P.,

its General Partner
	

 	
 	

By:	
 	

MPM Asset Management II LLC,

its General Partner
	

 	
 	

By:	
 	

/s/ LUKE B. EVNIN

	

 	
 	

Name:	
 	

Luke B. Evnin

	

 	
 	

Title:	
 	

Manager

	

 	
 	
MPM BIOVENTURES GMBH & CO.

PARALLEL-BETEILIGUNGS KG
	

 	
 	
By:	
 	

MPM Asset Management II, L.P.,

in its capacity as the Special Limited Partner
	

 	
 	

By:	
 	

MPM Asset Management II LLC,

its General Partner
	

 	
 	

By:	
 	

/s/ LUKE B. EVNIN

	

 	
 	

Name:	
 	

Luke B. Evnin

	

 	
 	

Title:	
 	

Manager

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
MPM ASSET MANAGEMENT INVESTORS

2000 B LLC
	

 	
 	
By:	
 	

/s/ LUKE B. EVNIN

	

 	
 	

Name:	
 	

Luke B. Evnin

	

 	
 	

Title:	
 	

Manager

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
INTERWEST PARTNERS VII, L.P.
	

 	
 	
By:	
 	

/s/ W. STEPHEN HOLMES

	

 	
 	

Name:	
 	

W. Stephen Holmes

	

 	
 	

Title:	
 	

Managing Director

	

 	
 	
INTERWEST INVESTORS VII, L.P.
	

 	
 	
By:	
 	

/s/ W. STEPHEN HOLMES

	

 	
 	

Name:	
 	

W. Stephen Holmes

	

 	
 	

Title:	
 	

Managing Director

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
GC&H INVESTMENTS
	

 	
 	
By:	
 	

/s/ KENNETH L. GUERNSEY

	

 	
 	

Name:	
 	

Kenneth L. Guernsey

	

 	
 	

Title:	
 	

Executive Partner

	

 	
 	
GC&H INVESTMENTS, LLC
	

 	
 	
By:	
 	

/s/ KENNETH L. GUERNSEY

	

 	
 	

Name:	
 	

Kenneth L. Guernsey

	

 	
 	

Title:	
 	

Managing Member

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
DAVID F. HALE AND LINDA C. HALE

AS TRUSTEES UDT DATED FEBRUARY 28, 1986
	
 	
 	

 	
 	

/s/ DAVID F. HALE

	

 	
 	

By:	
 	

David F. Hale, Trustee

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
DLJ CAPITAL CORP.
	

 	
 	
/s/ KATHLEEN LAPORTE

	 	 	By:	 	Kathleen LaPorte
	 	 	Its:	 	Managing Director
	

 	
 	
SPROUT ENTREPRENEURS FUND, L.P.
	

 	
 	
By:	
 	

DLJ Capital Corp.
	 	 	Its:	 	General Partner
	

 	
 	

/s/ KATHLEEN LAPORTE

	 	 	By:	 	Kathleen LaPorte
	 	 	Its:	 	Managing Director
	

 	
 	
SPROUT CAPITAL IX, L.P.
	

 	
 	
By:	
 	

DLJ Capital Corp.
	 	 	Its:	 	Managing General Partner
	

 	
 	

/s/ KATHLEEN LAPORTE

	 	 	By:	 	Kathleen LaPorte
	 	 	Its:	 	Managing Director
	

 	
 	
SPROUT IX PLAN INVESTORS, L.P.
	

 	
 	
By:	
 	

DLJ LBO Plans Management Corporation II
	 	 	Its:	 	General Partner
	

 	
 	

/s/ KATHLEEN LAPORTE

	 	 	By:	 	Kathleen LaPorte
	 	 	Its:	 	Attorney in fact

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
 HEINZ W. GSCHWEND & CYNTHIA T. HEALY, TRUSTEES OF THE H.W. GSCHWEND & C.T. HEALY REVOCABLE TRUST
	

 	
 	

 	
 	
/s/ HEINZ W. GSCHWEND

	 	 	By:	 	Heinz W. Gschwend, Trustee

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
LB I GROUP INC.
	

 	
 	
By:	
 	

/s/ JOHN CHAMBERS

	

 	
 	

Name:	
 	

John Chambers

	

 	
 	

Title:	
 	

Managing Director

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
WELLCOME TRUST LIMITED, AS TRUSTEE OF THE WELLCOME TRUST
	

 	
 	

 	
 	
/s/ GARY STEINBERG

	 	 	By:	 	Gary Steinberg

Chief Investment Officer

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
ITOCHU CORPORATION
	

 	
 	

 	
 	
/s/ EIZO KOBAYASHI

	 	 	By:	 	Eizo Kobayashi

Managing Director

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
MAVERICK FUND, L.D.C.
	

 	
 	
By:	
 	

Maverick Capital, Ltd.
	 	 	Its:	 	Investment Advisor
	

 	
 	

By:	
 	

/s/ SHARYL ROBERTSON

	

 	
 	

Name:	
 	

Sharyl Robertson

	

 	
 	

Title:	
 	

CFO

	

 	
 	
MAVERICK FUND USA, LTD.
	

 	
 	
By:	
 	

Maverick Capital, Ltd.
	 	 	Its:	 	Investment Advisor
	

 	
 	

By:	
 	

/s/ SHARYL ROBERTSON

	

 	
 	

Name:	
 	

Sharyl Robertson

	

 	
 	

Title:	
 	

CFO

	

 	
 	
MAVERICK FUND II, LTD.
	

 	
 	
By:	
 	

Maverick Capital, Ltd.
	 	 	Its:	 	Investment Advisor
	

 	
 	

By:	
 	

/s/ SHARYL ROBERTSON

	

 	
 	

Name:	
 	

Sharyl Robertson

	

 	
 	

Title:	
 	

CFO

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

	 	 	INVESTORS:
	

 	
 	
PAN-PACIFIC VENTURE CAPITAL CO., LTD.
	

 	
 	
By:	
 	

/s/ DAVID Y. S. CHAO

	

 	
 	

Name:	
 	

David Y. S. Chao

	

 	
 	

Title:	
 	

President

[SIGNATURE PAGE TO

AMENDED AND RESTATED INVSTORS' RIGHTS AGREEMENT] 

Exhibit A

INVESTORS  

SERIES A PREFERRED STOCK:  

Sankyo
Company, Ltd.

SICOR Inc. 

SERIES B PREFERRED STOCK:  

Sankyo
Company, Ltd. 

SERIES C PREFERRED STOCK:  

MPM
Bioventures II, L.P.

MPM Bioventures II-QP, L.P.

MPM Bioventures GmbH & Co. Parallel-Beteiligungs KG

MPM Asset Management Investors 2000 B LLC

InterWest Partners VII, L.P.

InterWest Investors VII, L.P.

GC&H Investments 

SERIES D PREFERRED STOCK:  

MPM
Bioventures II, L.P.

MPM Bioventures II-QP, L.P.

MPM Bioventures GmbH & Co. Parallel-Beteiligungs KG

MPM Asset Management Investors 2000 B LLC

InterWest Partners VII, L.P.

InterWest Investors VII, L.P.

GC&H Investments, LLC

David F. Hale and Linda C. Hale as Trustees UDT Dated February 28, 1986

DLJ Capital Corp.

Sprout IX Plan Investors, L.P.

Sprout Entrepreneurs Fund, L.P.

Sprout Capital IX, L.P. 

SERIES E PREFERRED STOCK:  

MPM
Bioventures II, L.P.

MPM Bioventures II-QP, L.P.

MPM Bioventures GmbH & Co. Parallel-Beteiligungs KG

MPM Asset Management Investors 2000 B LLC

InterWest Partners VII, L.P.

InterWest Investors VII, L.P.

DLJ Capital Corp.

Sprout IX Plan Investors, L.P.

Sprout Entrepreneurs Fund, L.P.

Sprout Capital IX, L.P.

Heinz W. Gschwend & Cynthia T. Healy, Trustees of the H.W. Gschwend & C.T. Healy Revocable Trust

LB I Group Inc.

Wellcome Trust Limited, as Trustee of the Wellcome Trust

ITOCHU Corporation

Maverick Fund, L.D.C.

Maverick Fund USA, Ltd.

Maverick Fund II, Ltd.

Pan-Pacific Venture Capital Co., Ltd. 

QuickLinks

Exhibit 4.11

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