Document:

EXHIBIT 4.12

 

AFFYMAX, INC.

 

and

 

                ,
AS WARRANT AGENT

 

FORM OF DEBT SECURITIES

WARRANT AGREEMENT

 

DATED AS OF       

 

 

 

AFFYMAX, INC.

 

FORM OF DEBT SECURITIES WARRANT AGREEMENT

 

DEBT SECURITIES WARRANT AGREEMENT (this “Agreement”), dated as
of
                    
between AFFYMAX, INC., a Delaware corporation
(the “Company”) and
                    ,
a [corporation] [national banking association] organized and existing under the
laws of                     
and having a corporate trust office in
                    ,
as warrant agent (the “Warrant Agent”).

 

WHEREAS, the Company has entered into an indenture dated as
of
[                     
(the “Senior Indenture”), with
                    ,
as trustee (such trustee, and any successors to such trustee, herein called the
“Senior Trustee”), providing for the issuance from time to time of its
unsubordinated debt securities, to be issued in one or more series as provided
in the Senior Indenture (the “Debt Securities”);]
[                    
(the “Subordinated Indenture”), with
                    ,
as trustee (such trustee, and any successors to such trustee, herein called the
“Subordinated Trustee”), providing for the issuance from time to time of its
subordinated debt securities, to be issued in one or more series as provided in
the Subordinated Indenture (the “Debt Securities”);]

 

WHEREAS, the Company proposes to sell [If Warrants are sold
with other securities—title of such other securities being offered (the “Other
Securities”) with] warrant certificates evidencing one or more warrants (the “Warrants”
or, individually, a “Warrant”) representing the right to purchase [title of
Debt Securities purchasable through exercise of Warrants] (the “Warrant Debt
Securities”), such warrant certificates and other warrant certificates issued
pursuant to this Agreement being herein called the “Warrant Certificates”; and

 

WHEREAS, the Company desires the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, registration, transfer, exchange, exercise and
replacement of the Warrant Certificates, and in this Agreement wishes to set
forth, among other things, the form and provisions of the Warrant Certificates
and the terms and conditions on which they may be issued, registered,
transferred, exchanged, exercised and replaced.

 

NOW, THEREFORE, in consideration of the premises and of the
mutual agreements herein contained, the parties hereto agree as follows:

 

ARTICLE 1

ISSUANCE OF WARRANTS AND EXECUTION AND DELIVERY OF
WARRANT CERTIFICATES

 

1.1          Issuance of Warrants. [If Warrants alone—Upon issuance, each
Warrant Certificate shall evidence one or more Warrants.] [If Other Securities
and Warrants—Warrant Certificates shall be [initially] issued in connection
with the issuance of the Other Securities [but shall be separately transferable
on and after                     
(the “Detachable Date”)]
[and shall not 

 

1

 

be separately
transferable] and each Warrant Certificate shall evidence one or more
Warrants.] Each Warrant evidenced thereby shall represent the right, subject to
the provisions contained herein and therein, to purchase one Warrant Debt
Security. [If Other Securities and Warrants—Warrant Certificates shall be
initially issued in units with the Other Securities and each Warrant
Certificate included in such a unit shall evidence                     
Warrants for each
[$                
principal amount]
[             shares]
of Other Securities included in such unit].

 

1.2          Execution and Delivery of Warrant
Certificates.
Each Warrant Certificate, whenever issued, shall be in registered form
substantially in the form set forth in Exhibit A hereto, shall be dated
the date of its countersignature by the Warrant Agent and may have such
letters, numbers, or other marks of identification or designation and such
legends or endorsements printed, lithographed or engraved thereon as the
officers of the Company executing the same may approve (execution thereof to be
conclusive evidence of such approval) 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 made pursuant thereto or with any rule or
regulation of any securities exchange on which the Warrants may be listed, or
to conform to usage. The Warrant Certificates shall be signed on behalf of the
Company by any of its present or future chief executive officers, presidents,
senior vice presidents, vice presidents, chief financial officers, chief legal
officers, treasurers, assistant treasurers, controllers, assistant controllers,
secretaries or assistant secretaries under its corporate seal reproduced
thereon. Such signatures may be manual or facsimile signatures of such
authorized officers and may be imprinted or otherwise reproduced on the Warrant
Certificates. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the Warrant
Certificates.

 

No Warrant Certificate shall be valid for any
purpose, and no Warrant evidenced thereby shall be exercisable, until such
Warrant Certificate has been countersigned by the manual signature of the
Warrant Agent. Such signature by the Warrant Agent upon any Warrant Certificate
executed by the Company shall be conclusive evidence that the Warrant
Certificate so countersigned has been duly issued hereunder.

 

In case any officer of the Company who shall have
signed any of the Warrant Certificates either manually or by facsimile
signature shall cease to be such officer before the Warrant Certificates so
signed shall have been countersigned and delivered by the Warrant Agent, such
Warrant Certificates may be countersigned and delivered notwithstanding that
the person who signed Warrant Certificates ceased to be such officer of the
Company; and any Warrant Certificate may be signed on behalf of the Company by
such persons as, at the actual date of the execution of such Warrant
Certificate, shall be the proper officers of the Company, although at the date
of the execution of this Agreement any such person was not such officer.

 

The term “holder” or “holder of a Warrant
Certificate” as used herein shall mean any person in whose name at the time any
Warrant Certificate shall be registered upon the books to be maintained by the
Warrant Agent for that purpose [If Other Securities and Warrants are not
immediately detachable—or upon the registration of the Other Securities prior
to the Detachable Date. Prior to the Detachable Date, the Company will, or will
cause the registrar of the Other Securities to, make available at all times to
the Warrant Agent such information as to holders of the Other Securities as may
be necessary to keep the Warrant Agent’s records up to date].

 

2

 

1.3          Issuance of Warrant Certificates. Warrant Certificates evidencing the
right to purchase Warrant Debt Securities may be executed by the Company and
delivered to the Warrant Agent upon the execution of this Warrant Agreement or
from time to time thereafter. The Warrant Agent shall, upon receipt of Warrant
Certificates duly executed on behalf of the Company, countersign such Warrant
Certificates and shall deliver such Warrant Certificates to or upon the order
of the Company.

 

ARTICLE 2

WARRANT PRICE, DURATION AND EXERCISE OF WARRANTS

 

2.1          Warrant Price. During the period specified in Section 2.2,
each Warrant shall, subject to the terms of this Warrant Agreement and the
applicable Warrant Certificate, entitle the holder thereof, to purchase the
principal amount of Warrant Debt Securities specified in the applicable Warrant
Certificate at an exercise price of                     % of the principal amount thereof [plus
accrued amortization, if any, of the original issue discount of the Warrant
Debt Securities] [plus accrued interest, if any, from the most recent date from
which interest shall have been paid on the Warrant Debt Securities or, if no
interest shall have been paid on the Warrant Debt Securities, from the date of
their initial issuance.] [The original issue discount ($          for each $1,000 principal amount of
Warrant Debt Securities) will be amortized at a          % annual rate, computed on a[n] [semi-]
annual basis [using a 360-day year consisting of twelve 30-day months].] Such
purchase price for the Warrant Debt Securities is referred to in this Agreement
as the “Warrant Price.”

 

2.2          Duration of Warrants. Each Warrant may be exercised in whole
or in part at any time, as specified herein, on or after [the date thereof] [                    ] and at or before [                    ] p.m., [City] time, on                      or such later date as the Company may
designate by notice to the Warrant Agent and the holders of Warrant
Certificates mailed to their addresses as set forth in the record books of the
Warrant Agent (the “Expiration Date”). Each Warrant not exercised at or before
[             ] p.m., [City] time, on the
Expiration Date shall become void, and all rights of the holder of the Warrant
Certificate evidencing such Warrant under this Agreement shall cease.

 

2.3          Exercise Of Warrants.

 

(a)           During the period specified in Section 2.2, the
Warrants may be exercised to purchase a whole number of Warrant Debt Securities
in registered form by providing certain information as set forth on the reverse
side of the Warrant Certificate and by paying in full, in lawful money of the
United States of America, [in cash or by certified check or official bank check
in New York Clearing House funds] [by bank wire transfer in immediately
available funds] the Warrant Price for each Warrant Debt Security with respect
to which a Warrant is being exercised to the Warrant Agent at its corporate
trust office, provided that such exercise is subject to receipt within five
business days of such payment by the Warrant Agent of the Warrant Certificate
with the form of election to purchase Warrant Debt Securities set forth on the
reverse side of the Warrant Certificate properly completed and duly executed.
The date on which payment in full of the Warrant Price is received by the
Warrant Agent shall, subject to receipt of the Warrant Certificate as
aforesaid, be deemed to be the date on which the Warrant is exercised; 

 

3

 

provided, however, that
if, at the date of receipt of such Warrant Certificates and payment in full of
the Warrant Price, the transfer books for the Warrant Debt Securities
purchasable upon the exercise of such Warrants shall be closed, no such receipt
of such Warrant Certificates and no such payment of such Warrant Price shall be
effective to constitute the person so designated to be named as the holder of
record of such Warrant Debt Securities on such date, but shall be effective to
constitute such person as the holder of record of such Warrant Debt Securities
for all purposes at the opening of business on the next succeeding day on which
the transfer books for the Warrant Debt Securities purchasable upon the
exercise of such Warrants shall be opened, and the certificates for the Warrant
Debt Securities in respect of which such Warrants are then exercised shall be
issuable as of the date on such next succeeding day on which the transfer books
shall next be opened, and until such date the Company shall be under no duty to
deliver any certificate for such Warrant Debt Securities. The Warrant Agent
shall deposit all funds received by it in payment of the Warrant Price in an
account of the Company maintained with it and shall advise the Company by
telephone at the end of each day on which a payment for the exercise of
Warrants is received of the amount so deposited to its account. The Warrant
Agent shall promptly confirm such telephone advice to the Company in writing.

 

(b)           The Warrant Agent shall, from time to time, as
promptly as practicable, advise the Company of (i) the number of Warrant
Debt Securities with respect to which Warrants were exercised, (ii) the
instructions of each holder of the Warrant Certificates evidencing such
Warrants with respect to delivery of the Warrant Debt Securities to which such
holder is entitled upon such exercise, (iii) delivery of Warrant
Certificates evidencing the balance, if any, of the Warrants for the remaining
Warrant Debt Securities after such exercise, and (iv) such other information
as the Company or the [Senior] [Subordinated] Trustee shall reasonably require.

 

(c)           As soon as practicable after the exercise of any
Warrant, the Company shall issue, pursuant to the Indenture, in authorized
denominations, to or upon the order of the holder of the Warrant Certificate
evidencing such Warrant, the Warrant Debt Securities to which such holder is
entitled, in fully registered form, registered in such name or names as may be
directed by such holder. If fewer than all of the Warrants evidenced by such
Warrant Certificate are exercised, the Company shall execute, and an authorized
officer of the Warrant Agent shall manually countersign and deliver, a new
Warrant Certificate evidencing Warrants for the number of Warrant Debt
Securities remaining unexercised.

 

(d)           The Company shall not be required to pay any stamp or
other tax or other governmental charge required to be paid in connection with
any transfer involved in the issue of the Warrant Debt Securities, and in the
event that any such transfer is involved, the Company shall not be required to
issue or deliver any Warrant Debt Securities until such tax or other charge
shall have been paid or it has been established to the Company’s satisfaction
that no such tax or other charge is due.

 

(e)           Prior to the issuance of any Warrants there shall have
been reserved, and the Company shall at all times through the Expiration Date
keep reserved, out of its authorized but unissued Warrant Debt Securities, a number of shares sufficient to
provide for the exercise of the Warrants.

 

4

 

ARTICLE 3

OTHER PROVISIONS RELATING TO RIGHTS OF HOLDERS OF
WARRANT CERTIFICATES

 

3.1          No Rights As Holders of Warrant Debt
Securities Conferred By Warrants or Warrant Certificates. No Warrant Certificate or Warrant
evidenced thereby shall entitle the holder thereof to any of the rights of a
holder of Warrant Debt Securities, including, without limitation, the right to
receive the payment of principal of (or premium, if any) or interest, if any,
on the Warrant Debt Securities or to enforce any of the covenants in the
Indenture.

 

3.2          Lost, Stolen, Mutilated or Destroyed
Warrant Certificates. Upon receipt by the Warrant Agent of evidence reasonably satisfactory
to it and the Company of the ownership of and the loss, theft, destruction or
mutilation of any Warrant Certificate and/or indemnity reasonably satisfactory
to the Warrant Agent and the Company and, in the case of mutilation, upon
surrender of the mutilated Warrant Certificate to the Warrant Agent for
cancellation, then, in the absence of notice to the Company or the Warrant
Agent that such Warrant Certificate has been acquired by a bona fide purchaser,
the Company shall execute, and an authorized officer of the Warrant Agent shall
manually countersign and deliver, in exchange for or in lieu of the lost,
stolen, destroyed or mutilated Warrant Certificate, a new Warrant Certificate
of the same tenor and evidencing Warrants for a like principal amount of
Warrant Debt Securities. Upon the issuance of any new Warrant Certificate under
this Section 3.2, the Company 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 Warrant
Agent) in connection therewith. Every substitute Warrant Certificate executed
and delivered pursuant to this Section 3.2 in lieu of any lost, stolen or
destroyed Warrant Certificate shall represent an additional contractual
obligation of the Company, whether or not the lost, stolen or destroyed Warrant
Certificate shall be at any time enforceable by anyone, and shall be entitled
to the benefits of this Agreement equally and proportionately with any and all
other Warrant Certificates duly executed and delivered hereunder. The
provisions of this Section 3.2 are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement of
mutilated, lost, stolen or destroyed Warrant Certificates.

 

3.3          Holder Of Warrant Certificate May Enforce
Rights.
Notwithstanding any of the provisions of this Agreement, any holder of any
Warrant Certificate, without the consent of the Warrant Agent, the [Senior]
[Subordinated] Trustee, the holder of any Warrant Debt Securities or the holder
of any other Warrant Certificate, may, in such holder’s own behalf and for such
holder’s own benefit, enforce, and may institute and maintain any suit, action
or proceeding against the Company suitable to enforce, or otherwise in respect
of, such holder’s right to exercise the Warrants evidenced by such holder’s
Warrant Certificate in the manner provided in such holder’s Warrant
Certificates and in this Agreement.

 

3.4          Merger, Sale, Conveyance or Lease. In case of (a) any share exchange,
merger or similar transaction of the Company with or into another person or
entity (other than a share exchange, merger or similar transaction in which the
Company is the acquiring or surviving corporation) or (b) the sale,
exchange, lease, transfer or other disposition of all or substantially all of
the properties and assets of the Company as an entirety (in any such case, a “Reorganization
Event”), then, as a condition of such Reorganization Event, lawful provisions 

 

5

 

shall be made, and duly
executed documents evidencing the same from the Company’s successor shall be
delivered to the holders of the Warrants, so that such successor shall succeed
to and be substituted for the Company, and assume all the Company’s obligations
under, this Agreement and the Warrants. The Company shall thereupon be relieved
of any further obligation hereunder or under the Warrants, and the Company as
the predecessor corporation may thereupon or at any time thereafter be
dissolved, wound up or liquidated. Such successor or assuming entity thereupon
may cause to be signed, and may issue either in its own name or in the name of
the Company, any or all of the Warrants issuable hereunder which heretofore
shall not have been signed by the Company, and may execute and deliver
securities in its own name, in fulfillment of its obligations to deliver
Warrant Debt Securities upon exercise of the Warrants. All the Warrants so
issued shall in all respects have the same legal rank and benefit under this
Agreement as the Warrants theretofore or thereafter issued in accordance with
the terms of this Agreement as though all of such Warrants had been issued at
the date of the execution hereof. In any case of any such Reorganization Event,
such changes in phraseology and form (but not in substance) may be made in the
Warrants thereafter to be issued as may be appropriate.

 

The Warrant Agent may receive a written opinion of
legal counsel as conclusive evidence that any such Reorganization Event
complies with the provisions of this Section 3.4.

 

3.5          Notice To Warrantholders. In case the Company shall (a) effect
any Reorganization Event or (b) make any distribution on or in respect of
the [title of Warrant Debt Securities] in connection with the dissolution,
liquidation or winding up of the Company, then the Company shall mail to each
holder of Warrants at such holder’s address as it shall appear on the books of
the Warrant Agent, at least ten days prior to the applicable date hereinafter
specified, a notice stating the date on which such Reorganization Event,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of [title of Warrant Debt
Securities] of record shall be entitled to exchange their shares of [title of
Warrant Debt Securities] for securities or other property deliverable upon such
Reorganization Event, dissolution, liquidation or winding up. No failure to
mail such notice nor any defect therein or in the mailing thereof shall affect
any such transaction.

 

ARTICLE 4

EXCHANGE AND TRANSFER OF WARRANT CERTIFICATES

 

4.1          Exchange and Transfer of Warrant
Certificates. [If
Other Securities with Warrants which are immediately detachable—Upon] [If Other
Securities with Warrants which are not immediately detachable—Prior to the
Detachable Date, a Warrant Certificate may be exchanged or transferred only
together with the Other Security to which the Warrant Certificate was initially
attached, and only for the purpose of effecting or in conjunction with an
exchange or transfer of such Other Security. Prior to any Detachable Date, each
transfer of the Other Security shall operate also to transfer the related
Warrant Certificates. After the Detachable Date, upon] surrender at the
corporate trust office of the Warrant Agent, Warrant Certificates evidencing
Warrants may be exchanged for Warrant Certificates in other denominations
evidencing such Warrants or the transfer thereof may be registered in whole or
in part; provided that such other Warrant Certificates evidence Warrants for
the same aggregate principal amount of Warrant Debt Securities as the Warrant
Certificates so surrendered. The Warrant Agent shall 

 

6

 

keep, at its corporate
trust office, books in which, subject to such reasonable regulations as it may
prescribe, it shall register Warrant Certificates and exchanges and transfers
of outstanding Warrant Certificates, upon surrender of the Warrant Certificates
to the Warrant Agent at its corporate trust office for exchange or registration
of transfer, properly endorsed or accompanied by appropriate instruments of
registration of transfer and written instructions for transfer, all in form
satisfactory to the Company and the Warrant Agent. No service charge shall be
made for any exchange or registration of transfer of Warrant Certificates, but
the Company may require payment of a sum sufficient to cover any stamp or other
tax or other governmental charge that may be imposed in connection with any
such exchange or registration of transfer. Whenever any Warrant Certificates
are so surrendered for exchange or registration of transfer, an authorized
officer of the Warrant Agent shall manually countersign and deliver to the
person or persons entitled thereto a Warrant Certificate or Warrant
Certificates duly authorized and executed by the Company, as so requested. The
Warrant Agent shall not be required to effect any exchange or registration of
transfer which will result in the issuance of a Warrant Certificate evidencing
a Warrant for a fraction of a Warrant Debt Security or a number of Warrants for
a whole number of Warrant Debt Securities and a fraction of a Warrant Debt
Security. All Warrant Certificates issued upon any exchange or registration of
transfer of Warrant Certificates shall be the valid obligations of the Company,
evidencing the same obligations and entitled to the same benefits under this
Agreement as the Warrant Certificate surrendered for such exchange or registration
of transfer.

 

4.2          Treatment of Holders of Warrant
Certificates. [If
Other Securities and Warrants are not immediately detachable—Prior to the
Detachable Date, the Company, the Warrant Agent and all other persons may treat
the owner of the Other Security as the owner of the Warrant Certificates
initially attached thereto for any purpose and as the person entitled to
exercise the rights represented by the Warrants evidenced by such Warrant
Certificates, any notice to the contrary notwithstanding. After the Detachable
Date and prior to due presentment of a Warrant Certificate for registration of
transfer, the] [The] Company, the Warrant Agent and all other persons may treat
the registered holder of a Warrant Certificate as the absolute owner thereof
for any purpose and as the person entitled to exercise the rights represented
by the Warrants evidenced thereby, any notice to the contrary notwithstanding.

 

4.3          Cancellation of Warrant Certificates. Any Warrant Certificate surrendered for
exchange, registration of transfer or exercise of the Warrants evidenced
thereby shall, if surrendered to the Company, be delivered to the Warrant Agent
and all Warrant Certificates surrendered or so delivered to the Warrant Agent
shall be promptly canceled by the Warrant Agent and shall not be reissued and,
except as expressly permitted by this Agreement, no Warrant Certificate shall
be issued hereunder in exchange therefor or in lieu thereof. The Warrant Agent
shall deliver to the Company from time to time or otherwise dispose of canceled
Warrant Certificates in a manner satisfactory to the Company.

 

ARTICLE 5

CONCERNING THE WARRANT AGENT

 

5.1          Warrant Agent. The Company hereby appoints
                      
as Warrant Agent of the Company in respect of the Warrants and the Warrant
Certificates upon the terms and 

 

7

 

subject to the conditions
herein set forth, and
                      
hereby accepts such appointment. The Warrant Agent shall have the powers and
authority granted to and conferred upon it in the Warrant Certificates and
hereby and such further powers and authority to act on behalf of the Company as
the Company may hereafter grant to or confer upon it. All of the terms and
provisions with respect to such powers and authority contained in the Warrant
Certificates are subject to and governed by the terms and provisions hereof.

 

5.2          Conditions of Warrant Agent’s
Obligations. The
Warrant Agent accepts its obligations herein set forth upon the terms and
conditions hereof, including the following to all of which the Company agrees
and to all of which the rights hereunder of the holders from time to time of
the Warrant Certificates shall be subject:

 

(a)           Compensation and Indemnification. The Company agrees promptly to pay the Warrant
Agent the compensation to be agreed upon with the Company for all services
rendered by the Warrant Agent and to reimburse the Warrant Agent for reasonable
out-of-pocket expenses (including reasonable counsel fees) incurred without
negligence, bad faith or willful misconduct by the Warrant Agent in connection
with the services rendered hereunder by the Warrant Agent. The Company also
agrees to indemnify the Warrant Agent for, and to hold it harmless against, any
loss, liability or expense incurred without negligence, bad faith or willful
misconduct on the part of the Warrant Agent, arising out of or in connection
with its acting as Warrant Agent hereunder, including the reasonable costs and
expenses of defending against any claim of such liability.

 

(b)           Agent for the Company. In acting under this Warrant Agreement
and in connection with the Warrant Certificates, the Warrant Agent is acting
solely as agent of the Company and does not assume any obligations or
relationship of agency or trust for or with any of the holders of Warrant
Certificates or beneficial owners of Warrants.

 

(c)           Counsel. The Warrant Agent may consult with
counsel satisfactory to it, which may include counsel for the Company, and the
written advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the advice of such counsel.

 

(d)           Documents. The Warrant Agent shall be protected
and shall incur no liability for or in respect of any action taken or omitted
by it in reliance upon any Warrant Certificate, notice, direction, consent,
certificate, affidavit, statement or other paper or document reasonably
believed by it to be genuine and to have been presented or signed by the proper
parties.

 

(e)           Certain Transactions. The Warrant Agent, and its officers,
directors and employees, may become the owner of, or acquire any interest in,
Warrants, with the same rights that it or they would have if it were not the
Warrant Agent hereunder, and, to the extent permitted by applicable law, it or
they may engage or be interested in any financial or other transaction with the
Company and may act on, or as depositary, trustee or agent for, any committee
or body of holders of Warrant Debt Securities or other obligations of the Company as freely as if
it were not the Warrant Agent hereunder. Nothing in this Warrant Agreement
shall be deemed to prevent the Warrant Agent from acting as [Senior]
[Subordinated] Trustee under the 

 

8

 

[Senior] [Subordinated]
Indenture.

 

(f)            No Liability for Interest. Unless otherwise agreed with the
Company, the Warrant Agent shall have no liability for interest on any monies
at any time received by it pursuant to any of the provisions of this Agreement
or of the Warrant Certificates.

 

(g)           No Liability for Invalidity. The Warrant Agent shall have no
liability with respect to any invalidity of this Agreement or any of the
Warrant Certificates (except as to the Warrant Agent’s countersignature
thereon).

 

(h)           No Responsibility for
Representations.
The Warrant Agent shall not be responsible for any of the recitals or
representations herein or in the Warrant Certificates (except as to the Warrant
Agent’s countersignature thereon), all of which are made solely by the Company.

 

(i)            No Implied Obligations. The Warrant Agent shall be obligated to
perform only such duties as are herein and in the Warrant Certificates
specifically set forth and no implied duties or obligations shall be read into
this Agreement or the Warrant Certificates against the Warrant Agent. The
Warrant Agent shall not be under any obligation to take any action hereunder
which may tend to involve it in any expense or liability, the payment of which
within a reasonable time is not, in its reasonable opinion, assured to it. The
Warrant Agent shall not be accountable or under any duty or responsibility for
the use by the Company of any of the Warrant Certificates authenticated by the
Warrant Agent and delivered by it to the Company pursuant to this Agreement or
for the application by the Company of the proceeds of the Warrant Certificates.
The Warrant Agent shall have no duty or responsibility in case of any default
by the Company in the performance of its covenants or agreements contained
herein or in the Warrant Certificates or in the case of the receipt of any
written demand from a holder of a Warrant Certificate with respect to such
default, including, without limiting the generality of the foregoing, any duty
or responsibility to initiate or attempt to initiate any proceedings at law or
otherwise or, except as provided in Section 6.2 hereof, to make any demand
upon the Company.

 

5.3          Resignation , Removal and Appointment
of Successors.

 

(a)           The Company agrees, for the benefit of the holders
from time to time of the Warrant Certificates, that there shall at all times be
a Warrant Agent hereunder until all the Warrants have been exercised or are no
longer exercisable.

 

(b)           The Warrant Agent may at any time resign as agent by
giving written notice to the Company of such intention on its part, specifying
the date on which its desired resignation shall become effective; provided that
such date shall not be less than three months after the date on which such
notice is given unless the Company otherwise agrees. The Warrant Agent
hereunder may be removed at any time by the filing with it of an instrument in
writing signed by or on behalf of the Company and specifying such removal and
the intended date when it shall become effective. Such resignation or removal
shall take effect upon the appointment by the Company, as hereinafter provided,
of a successor Warrant Agent (which shall be a bank or trust company authorized
under the laws of the jurisdiction of its organization to exercise corporate
trust powers) and the acceptance of such appointment by such successor Warrant 

 

9

 

Agent. The obligation of
the Company under Section 5.2(a) shall continue to the extent set
forth therein notwithstanding the resignation or removal of the Warrant Agent.

 

(c)           In case at any time the Warrant Agent shall resign, or
shall be removed, or shall become incapable of acting, or shall be adjudged a
bankrupt or insolvent, or shall commence a voluntary case under the Federal
bankruptcy laws, as now or hereafter constituted, or under any other applicable
Federal or state bankruptcy, insolvency or similar law or shall consent to the
appointment of or taking possession by a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or other similar official) of the Warrant
Agent or its property or affairs, or shall make an assignment for the benefit
of creditors, or shall admit in writing its inability to pay its debts
generally as they become due, or shall take corporate action in furtherance of
any such action, or a decree or order for relief by a court having jurisdiction
in the premises shall have been entered in respect of the Warrant Agent in an
involuntary case under the Federal bankruptcy laws, as now or hereafter
constituted, or any other applicable Federal or state bankruptcy, insolvency or
similar law, or a decree or order by a court having jurisdiction in the
premises shall have been entered for the appointment of a receiver, custodian, liquidator,
assignee, trustee, sequestrator (or similar official) of the Warrant Agent or
of its property or affairs, or any public officer shall take charge or control
of the Warrant Agent or of its property or affairs for the purpose of
rehabilitation, conservation, winding up or liquidation, a successor Warrant
Agent, qualified as aforesaid, shall be appointed by the Company by an
instrument in writing, filed with the successor Warrant Agent. Upon the
appointment as aforesaid of a successor Warrant Agent and acceptance by the
successor Warrant Agent of such appointment, the Warrant Agent shall cease to
be Warrant Agent hereunder.

 

(d)           Any successor Warrant Agent appointed hereunder shall
execute, acknowledge and deliver to its predecessor and to the Company an
instrument accepting such appointment hereunder, and thereupon such successor
Warrant Agent, without any further act, deed or conveyance, shall become vested
with all the authority, rights, powers, trusts, immunities, duties and
obligations of such predecessor with like effect as if originally named as
Warrant Agent hereunder, and such predecessor, upon payment of its charges and
disbursements then unpaid, shall thereupon become obligated to transfer,
deliver and pay over, and such successor Warrant Agent shall be entitled to
receive, all monies, securities and other property on deposit with or held by
such predecessor, as Warrant Agent hereunder.

 

(e)           Any corporation into which the Warrant Agent hereunder
may be merged or converted or any corporation with which the Warrant Agent may
be consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Warrant Agent shall be a party, or any corporation
to which the Warrant Agent shall sell or otherwise transfer all or substantially
all the assets and business of the Warrant Agent, provided that it shall be
qualified as aforesaid, shall be the successor Warrant 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.

 

ARTICLE 6

 

MISCELLANEOUS

 

6.1          Amendment. This Agreement may be amended by the
parties hereto, without the 

 

10

 

consent of the holder of
any Warrant Certificate, for the purpose of curing any ambiguity, or of curing,
correcting or supplementing any defective provision contained herein, or making
any other provisions with respect to matters or questions arising under this
Agreement as the Company and the Warrant Agent may deem necessary or desirable;
provided that such action shall not materially adversely affect the interests
of the holders of the Warrant Certificates.

 

6.2          Notices and Demands to the Company and
Warrant Agent. If
the Warrant Agent shall receive any notice or demand addressed to the Company
by the holder of a Warrant Certificate pursuant to the provisions of the
Warrant Certificates, the Warrant Agent shall promptly forward such notice or
demand to the Company.

 

6.3          Addresses. Any communication from the Company to
the Warrant Agent with respect to this Agreement shall be addressed to                     , Attention:                       and any communication from the Warrant
Agent to the Company with respect to this Agreement shall be addressed to
Affymax, Inc., 4001 Miranda Avenue, Palo Alto, CA 94304, Attn: Chief
Financial Officer (or such other address as shall be specified in writing by
the Warrant Agent or by the Company).

 

6.4          Governing Law. This Agreement and each Warrant
Certificate issued hereunder shall be governed by and construed in accordance
with the laws of the State of New York.

 

6.5          Delivery Of Prospectus. The Company shall furnish to the Warrant
Agent sufficient copies of a prospectus meeting the requirements of the
Securities Act of 1933, as amended, relating to the Warrant Debt Securities
deliverable upon exercise of the Warrants (the “Prospectus”), and the Warrant
Agent agrees that upon the exercise of any Warrant, the Warrant Agent will
deliver to the holder of the Warrant Certificate evidencing such Warrant, prior
to or concurrently with the delivery of the Warrant Debt Securities issued upon
such exercise, a Prospectus. The Warrant Agent shall not, by reason of any such
delivery, assume any responsibility for the accuracy or adequacy of such
Prospectus.

 

6.6          Obtaining of Governmental Approvals. The Company will from time to time take
all action which may be necessary to obtain and keep effective any and all
permits, consents and approvals of governmental agencies and authorities and
securities act filings under United States Federal and state laws (including
without limitation a registration statement in respect of the Warrants and
Warrant Debt Securities under the Securities Act of 1933, as amended), which
may be or become requisite in connection with the issuance, sale, transfer, and
delivery of the Warrant Debt Securities issued upon exercise of the Warrants,
the issuance, sale, transfer and delivery of the Warrants or upon the
expiration of the period during which the Warrants are exercisable.

 

6.7          Persons Having Rights Under Warrant
Agreement.
Nothing in this Agreement shall give to any person other than the Company, the
Warrant Agent and the holders of the Warrant Certificates any right, remedy or
claim under or by reason of this Agreement.

 

6.8          Headings. The descriptive headings of the several
Articles and Sections of this Agreement are inserted for convenience only and
shall not control or affect the meaning or construction of any of the
provisions hereof.

 

11

 

 

 

6.9          Counterparts. This Agreement may be executed in any
number of counterparts, each of which as so executed shall be deemed to be an
original, but such counterparts shall together constitute but one and the same
instrument.

 

6.10        Inspection of Agreement. A copy of this Agreement shall be
available at all reasonable times at the principal corporate trust office of
the Warrant Agent for inspection by the holder of any Warrant Certificate. The
Warrant Agent may require such holder to submit his Warrant Certificate for
inspection by it.

 

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

 

	
   

  	
   

  	
   

  	
  AFFYMAX,
  INC.

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
   

  

 

	
   

  	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Warrant Agent

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Its

  	
   

  
	
  Attest:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

[SIGNATURE
PAGE TO DEBT SECURITIES WARRANT AGREEMENT]

 

 

12

 

 

EXHIBIT A 

 

FORM OF WARRANT CERTIFICATE

[FACE OF WARRANT CERTIFICATE]

 

	
  [[Form if Warrants
  are attached to Other Securities and are not immediately detachable.]

  	
   

  	
  [Prior to
                      ,
  this Warrant Certificate cannot be transferred or exchanged unless attached
  to a [Title of Other Securities].]

  
	
   

  	
   

  	
   

  
	
  [Form of Legend if
  Warrants are not immediately exercisable.]

  	
   

  	
  [Prior to
                      ,
  Warrants evidenced by this Warrant Certificate cannot be exercised.]

  

 

EXERCISABLE
ONLY IF COUNTERSIGNED BY THE WARRANT AGENT AS PROVIDED HEREIN

 

VOID
AFTER [        ] P.M., [CITY]
TIME, ON                     ,

 

 

 

 

AFFYMAX, INC. 

WARRANT CERTIFICATE REPRESENTING 

WARRANTS TO PURCHASE 

[TITLE OF WARRANT DEBT SECURITIES]

 

	
  No.

  	
  Warrants

  

 

This certifies that
                               
or registered assigns is the registered owner of the above indicated number of
Warrants, each Warrant entitling such owner [If Warrants are attached to Other
Securities and are not immediately detachable —, subject to the registered
owner qualifying as a “Holder” of this Warrant Certificate, as hereinafter
defined)] to purchase, at any time [after [   ] p.m.,
[City] time, on                                
and] on or before [   ] p.m., [City] time, on
                               ,
$ principal amount of [Title of Warrant Debt Securities] (the “Warrant Debt
Securities”), of Affymax, Inc. (the “Company”), issued or to be issued
under the Indenture (as hereinafter defined), on the following basis: during
the period from                                ,
through and including                                ,
each Warrant shall entitle the Holder thereof, subject to the provisions of
this Agreement, to purchase the principal amount of Warrant Debt Securities
stated in the Warrant Certificate at the warrant price (the “Warrant Price”) of
% of the principal amount thereof [plus accrued amortization, if any, of the
original issue discount of the Warrant Debt Securities] [plus accrued interest,
if any, from the most recent date from which interest shall have been paid on
the Warrant Debt Securities or, if no interest shall have been paid on the
Warrant Debt Securities, from the date of their original issuance]. [The
original issue discount ($        for each
$1,000 principal amount of Warrant Debt Securities) will be amortized at a    %
annual rate, computed on a[n] [semi-]annual basis [using a 360-day year
consisting of twelve 30-day months]. The Holder may exercise the Warrants
evidenced hereby by providing certain information set forth on the back hereof
and by paying in full, in lawful money of the United States of America, [in
cash or by certified check or official bank check in New York Clearing House
funds] [by bank wire transfer in immediately available funds], the Warrant
Price for each Warrant Debt Security with respect to which this Warrant is exercised
to the Warrant Agent (as hereinafter defined) and by surrendering this Warrant
Certificate, with the purchase form on the back hereof duly executed, at the
corporate trust office of [name of Warrant Agent], or its successor as warrant
agent (the “Warrant Agent”), which is, on the date hereof, at the address
specified on the reverse hereof, and upon compliance with and subject to the
conditions set forth herein and in the Warrant Agreement (as hereinafter
defined).

 

The term “Holder” as used herein shall mean [If
Warrants are attached to Other Securities and are not immediately detachable—,
prior to
                           ,
            (the “Detachable
Date”), the registered owner of the Company’s [title of Other Securities] to
which this Warrant Certificate was initially attached, and after such
Detachable Date,] the person in whose name at the time this Warrant Certificate
shall be registered upon the books to be maintained by the Warrant Agent for
that purpose pursuant to Section 4 of the Warrant Agreement.

 

The Warrants evidenced by this Warrant Certificate
may be exercised to purchase Warrant Debt Securities in the principal amount of
$1,000 or any integral multiple thereof in registered form. Upon any exercise
of fewer than all of the Warrants evidenced by this Warrant

 

 

 

 

Certificate, there shall be
issued to the Holder hereof a new Warrant Certificate evidencing Warrants for
the aggregate principal amount of Warrant Debt Securities remaining
unexercised.

 

This Warrant Certificate is issued under and in
accordance with the Warrant Agreement dated as of
                       ,
          (the “Warrant Agreement”),
between the Company and the Warrant Agent and is subject to the terms and
provisions contained in the Warrant Agreement, to all of which terms and
provisions the Holder of this Warrant Certificate consents by acceptance
hereof. Copies of the Warrant Agreement are on file at the above-mentioned
office of the Warrant Agent.

 

The Warrant Debt Securities to be issued and
delivered upon the exercise of Warrants evidenced by this Warrant Certificate
will be issued under and in accordance with an Indenture, [dated as of
                     ,
             
(the “Senior Indenture”), between the Company and                                ,
as trustee (such trustee, and any successors to such trustee, the “Senior
Trustee”)] [dated as of
                               ,
                               ,
(the “Subordinated Indenture”), between the Company and
                               ,
as trustee (such trustee, and any successors to such trustee, the “Subordinated
Trustee”)] and will be subject to the terms and provisions contained in the
Warrant Debt Securities and in the Indenture. Copies of the [Senior]
[Subordinated] Indenture, including the form of the Warrant Debt Securities,
are on file at the corporate trust office of the Trustee.

 

[If Warrants are attached to Other Securities and
are not immediately detachable—Prior to the Detachable Date, this Warrant
Certificate may be exchanged or transferred only together with the [Title of
Other Securities] (the “Other Securities”) to which this Warrant Certificate
was initially attached, and only for the purpose of effecting or in conjunction
with, an exchange or transfer of such Other Security. Additionally, on or prior
to the Detachable Date, each transfer of such Other Security on the register of
the Other Securities shall operate also to transfer this Warrant Certificate.
After such date, transfer of this] [If Warrants are attached to Other Securities
and are immediately detachable—Transfer of this] Warrant Certificate may be
registered when this Warrant Certificate is surrendered at the corporate trust
office of the Warrant Agent by the registered owner or such owner’s assigns, in
the manner and subject to the limitations provided in the Warrant Agreement.

 

[If Other Securities with Warrants which are not
immediately detachable-Except as provided in the immediately preceding
paragraph, after] [If Other Securities with Warrants which are immediately detachable
or Warrants alone—After] countersignature by the Warrant Agent and prior to the
expiration of this Warrant Certificate, this Warrant Certificate may be
exchanged at the corporate trust office of the Warrant Agent for Warrant
Certificates representing Warrants for the same aggregate principal amount of
Warrant Debt Securities.

 

This Warrant Certificate shall not entitle the
Holder hereof to any of the rights of a holder of the Warrant Debt Securities,
including, without limitation, the right to receive payments of principal of
(and premium, if any) or interest, if any, on the Warrant Debt Securities or to
enforce any of the covenants of the Indenture.

 

Reference is hereby made to the further provisions
of this Warrant Certificate set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set

 

 

 

 

forth at this place.

 

This Warrant Certificate shall not be valid or
obligatory for any purpose until countersigned by the Warrant Agent.

 

IN WITNESS WHEREOF, the Company has caused this
Warrant to be executed in its name and on its behalf by the facsimile
signatures of its duly authorized officers.

 

	
  Dated:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  AFFYMAX, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Its

  	
   

  
	
   

  	
   

  	
   

  
	
  Attest:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Countersigned:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  As
  Warrant Agent

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By

  	
   

  
	
   

  	
   

  	
  Authorized Signature

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

 

 

 

[REVERSE OF WARRANT CERTIFICATE]

 

(Instructions
for Exercise of Warrant)

 

To exercise any Warrants evidenced hereby for
Warrant Debt Securities (as hereinafter defined), the Holder must pay, in
lawful money of the United States of America, [in cash or by certified check or
official bank check in New York Clearing House funds] [by bank wire transfer in
immediately available funds], the Warrant Price in full for Warrants exercised,
to [Warrant Agent] [address of Warrant Agent], Attn: 
                       ,
which payment must specify the name of the Holder and the number of Warrants
exercised by such Holder. In addition, the Holder must complete the information
required below and present this Warrant Certificate in person or by mail
(certified or registered mail is recommended) to the Warrant Agent at the
appropriate address set forth above. This Warrant Certificate, completed and
duly executed, must be received by the Warrant Agent within five business days
of the payment.

 

(To
be executed upon exercise of Warrants)

 

The undersigned hereby irrevocably elects to
exercise
                  
Warrants, represented by this Warrant Certificate, to purchase
$            principal
amount of the [Title of Warrant Debt Securities] (the “Warrant Debt Securities”)
of Affymax, Inc. and represents that he has tendered payment for such
Warrant Debt Securities, in lawful money of the United States of America, [in
cash or by certified check or official bank check in New York Clearing House
funds] [by bank wire transfer in immediately available funds], to the order of
Affymax, Inc., c/o [insert name and address of Warrant Agent], in the
amount of
$             in
accordance with the terms hereof. The undersigned requests that said principal
amount of Warrant Debt Securities be in fully registered form in the authorized
denominations, registered in such names and delivered all as specified in
accordance with the instructions set forth below.

 

If the number of Warrants exercised is less than all
the Warrants evidenced hereby, the undersigned requests that a new Warrant
Certificate evidencing the Warrants for the aggregate principal amount of
Warrant Debt Securities remaining unexercised be issued and delivered to the
undersigned unless otherwise specified in the instructions below.

 

	
  Dated

  	
   

  	
   

  	
  Name

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  Please
  Print

  
	
   

  	
   

  	
   

  	
   

  
	
  Address:

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  

 

	
   

  	
   

  	
   

  
	
  (Insert Social Security or
  Other Identifying Number of Holder)

  	
   

  	
   

  

 

	
  Signature Guaranteed

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Signature

  	
   

  	
   

  	
   

  

 

 

(Signature must conform in
all respects to name of holder as specified on the face of this Warrant
Certificate and must bear a signature guarantee by a bank, trust company or
member broker of the New York, Midwest or Pacific Stock Exchange).

 

This Warrant may be
exercised at the following addresses:

 

	
  By hand at

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By mail at

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  

 

[Instructions as to form and
delivery of Warrant Debt Securities and, if applicable, Warrant Certificates
evidencing Warrants for the number of Warrant Debt Securities remaining
unexercised—complete as appropriate.]

 

 

ASSIGNMENT

 

[Form of
assignment to be executed if Warrant Holder desires to transfer Warrant]

 

 

FOR VALUE RECEIVED,
                    
hereby sells, assigns and transfers unto:

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  (Please print name and address including zip code)

  	
   

  	
  Please print Social Security or other identifying number

  

 

the right represented by the
within Warrant to purchase
$            aggregate
principal amount of [Title of Warrant Debt Securities] of Affymax, Inc. to
which the within Warrant relates and appoints                     
attorney to transfer such right on the books of the Warrant Agent with full
power of substitution in the premises.

 

	
  Dated

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  Signature

  

 

(Signature must conform in
all respects to name of holder as specified on the face of the Warrant)

 

Signature GuaranteedSeries AA Designation of Rights and Preferences

CERTIFICATE OF DESIGNATION

of
the

RIGHTS AND PREFERENCES

of
the

SERIES C PREFERRED STOCK

of

KLONDIKE STAR MINERAL CORPORATION

The undersigned, the President of Klondike Star Mineral
Corporation, a Delaware corporation (the “Corporation”), does hereby certify
that, pursuant to the authority conferred upon the Board of Directors (the
“Board”) by the Articles of Incorporation of the Corporation, the following
resolution creating a series of Series C Preferred Stock was duly adopted
by the Board of the Corporation.

RESOLVED, that pursuant to the authority expressly granted to and
vested in this Board by the provisions of the Articles of Incorporation of the
Corporation, this Board hereby creates a series of preferred stock, no par value
per share, of the Corporation to be designated as Series C Preferred Stock,
initially consisting of 2,000,000 shares.  Except as provided herein or as
required by law, the relative rights and the preferences of the Series C
Preferred Stock shall be as follows:

The Corporation hereby designates 2,000,000 shares of the
Preferred Stock as Series C Preferred Stock (the “Series C Preferred Stock”),
which shall have the following rights, preferences and terms:

Section 1. Dividends.  The holder(s) of the
Series C Preferred Stock shall be not entitled to receive dividends. 

Section 2.  Liquidation, Dissolution or Winding
Up.  The holder(s) of the Series C Preferred Stock shall not be
entitled to receive any assets in distribution upon the liquidation, dissolution
or winding up of the Corporation.

Section 3.  Voting Power.  Except as
otherwise expressly provided herein or as required by law, the holder of each
share of Series C Preferred Stock shall be entitled to cast such number of votes
as is equal to seventy-five (75) shares of common stock of the Corporation.
 the holder(s) of Series C Preferred stock shall be entitled to vote only
on the matters set forth herein, which shall include:

(a)

The merger, consolidation or other combination of the Corporation
with any other corporation or other business entity which shall not result in
the Corporation being the surviving corporation;

(b)

The sale, or other transfer, of all, or substantially all, of the
assets of the corporation;

(c) 

A shareholder rights plan;

- 2 -

(d) A tender offer or any other bid to acquire a controlling
interest in the issued and outstanding common stock of the Corporation; or

(e) Any other transaction or series of transactions which will, or
are intended to, directly or indirectly, to result in the effective change of
control of the Corporation.

The holder(s) of Series C Preferred Stock shall be required to
cast the votes represented by the Series C Preferred Stock, either “for” or
“against” the matter submitted to a vote, in the same manner as the Board of the
Corporation.  If the Board votes to approve the matter then the holder(s)
of the Series C Preferred Stock shall be required to cast the votes represented
by the Series C Preferred Stock in favor of the matter submitted to a vote.
 If the Board votes against the matter then the holder(s) of the Series C
Preferred Stock shall be required to cast the votes represented by the Series C
Preferred Stock against the matter submitted to a vote.  If the matter
submitted to a shareholder vote is not a matter on which the Board is required
to vote, or the Board has not voted, the holder(s) of the Series C Preferred
Stock shall be entitled to cast the votes represented by the Series C Preferred
Stock in such manner in their sole and absolute discretion.

Section 4.  Conversion.  The Series C
Preferred Stock shall not be convertible into any other series of class of stock
of the Corporation.

Section 5.  Re-issuance of Series C Preferred
Stock.  Shares of the Series C Preferred Stock acquired by the
Corporation by reason of redemption, purchase or otherwise shall be allowed to
be reissued by the Corporation at such times, for such consideration and in such
manner as may be approved by the Board.  The Corporation may from time to
time take such appropriate corporate action as may be necessary to reduce or
increase the authorized number of shares of the Series C Preferred Stock.

Section 6.  Protective Provision.  So long
as any shares of the Series C Preferred Stock remain outstanding, the
Corporation shall not without the affirmative vote or written consent of the
holder(s) of a majority in interest of the Series C Preferred Stock, voting as a
class, alter or change the rights, preferences or privileges of the Series C
Preferred so as to materially and adversely affect such shares.

Section 7.  Redemption.  The shares of
Series C Preferred Stock shall be redeemable, at the same price per share as the
shares of Series C Preferred Stock were issued to the holder(s) thereof:: 

(a)

upon the resignation, from office, of any holder that is an
officer or director of the Corporation; or

(b)

at the sole option of the Corporation, at the same price per share
as the shares of Series C Preferred Stock were issued to the holder(s)
thereof.

.

 

- 3 -

Section 8.  Transferability.  Except as
approved by the Board, the Series C Preferred Stock shall be non-transferable by
the holder(s) thereof.

Section 9.  Notice.  Notice is given to a
holder if sent electronically (read receipt required), via facsimile or via
overnight delivery, signature required, to the holder at the address provided by
the holder to the Corporation’s transfer agent.

IN WITNESS WHEREOF, the undersigned has executed and subscribed
this Certificate and does affirm the foregoing as true as of the 25th
day of February, 2008.

KLONDIKE
STAR MINERAL CORPORATION

a
Delaware corporation

By

Its:
President

.

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