Document:

Quaterra Resources Inc.: Exhibit 4.1 - Filed by newsfilecorp.com

 

 

SHAREHOLDER RIGHTS PLAN AGREEMENT 

DATED AS OF THE 12th DAY OF JUNE, 2013 

BETWEEN 

QUATERRA RESOURCES INC. 

AND 

COMPUTERSHARE INVESTOR SERVICES INC. 

AS RIGHTS AGENT 

 

 

TABLE OF CONTENTS 

	  	  	Page No. 
	  	  	  
	ARTICLE 1 -
      INTERPRETATION 	2 
	               
         1.1 	Certain Definitions 	2 
	           
             1.2 	Continuation
      to Another Jurisdiction 	13

	               
         1.3 	Currency 	13 
	           
             1.4 	Descriptive
      Headings 	14

	               
         1.5 	References to Agreement
    	14 
	           
             1.6 	Number and
      Gender 	14

	               
         1.7 	Acting in Good Faith 	14 
	           
             1.8 	Holder
    	14

	                   1.9 	Calculation of Number and
      Percentage of Beneficial Ownership of Outstanding Voting Shares 	14 
	           
             1.10 	Acting
      Jointly or in Concert 	15

	  	  	  
	ARTICLE 2 -
      THE RIGHTS 	15

	               
         2.1 	Legend on Common Share
      Certificates 	15 
	           
             2.2 	Execution,
      Authentication, Delivery and Dating of Rights Certificates 	15

	               
         2.3 	Registration, Registration
      of Transfer and Exchange 	16 
	           
             2.4 	Mutilated,
      Destroyed, Lost and Stolen Rights Certificates 	16

	               
         2.5 	Persons Deemed Owners of
      Rights 	17 
	           
             2.6 	Delivery and
      Cancellation of Certificates 	17

	               
         2.7 	Agreement of Rights Holders
      	18 
	           
             2.8 	Rights
      Certificate Holder Not Deemed a Shareholder 	19

	  	  	  
	ARTICLE 3 -
      EXERCISE OF THE RIGHTS 	19

	               
         3.1 	Initial Exercise Price;
      Exercise of Rights; Detachment of Rights 	19 
	           
             3.2 	Adjustments
      to Exercise Price; Number of Rights 	22

	               
         3.3 	Date on Which Exercise is
      Effective 	26 
	  	  	  
	ARTICLE 4 - ADJUSTMENTS TO
      THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS
    	27 
	           
             4.1 	Flip-in
      Event 	27

	  	  	  
	ARTICLE 5 -
      THE RIGHTS AGENT 	28

	               
         5.1 	General 	28 
	           
             5.2 	Merger or
      Amalgamation or Change of Name of Rights Agent 	29

	               
         5.3 	Duties of Rights Agents
    	30 
	           
             5.4 	Change of
      Rights Agent 	31

	  	  	  
	ARTICLE 6 -
      MISCELLANEOUS 	32

	               
         6.1 	Redemption and Waiver
	32 
	           
             6.2 	Expiration
      	33

	               
         6.3 	Issuance of New Rights
      Certificates 	34 
	           
             6.4 	Fractional
      Rights and Fractional Shares 	34

	               
         6.5 	Supplements and Amendments
      	34 
	           
             6.6 	Rights of
      Action 	35

	               
         6.7 	Declaration as to
      Non-Canadian Holders 	36 
	           
             6.8 	Notices
    	36

	               
         6.9 	Costs of Enforcement 	37 
	           
             6.10 	Successors
      	37
  

ii 

	       
                 6.11
      	Benefits
      of this Agreement 	37
      
	           
             6.12
      	Governing
      Law 	37
      
	       
                 6.13
      	Counterparts
      	37
      
	           
             6.14
      	Severability
      	38
      
	       
                 6.15
      	Effective
      Date and Shareholder Confirmation 	38
      
	           
             6.16
      	Rights
      of Board, Corporation and Offeror 	38
      
	       
                 6.17
      	Determinations
      and Actions by the Board of Directors 	38
      
	           
             6.18
      	Successor
      Corporations 	38
      
	       
                 6.19
      	Time
      of the Essence 	39
      
	           
             6.20
      	Regulatory
      Approvals 	39
      
	       
                 6.21
      	Compliance
      with Money Laundering Legislation 	39
      
	           
             6.22
      	Privacy
      Provision 	39
      
	  	  	  
	EXHIBIT "A" - Form of Rights Certificate	  

SHAREHOLDER RIGHTS PLAN AGREEMENT 

MEMORANDUM OF AGREEMENT made as of the 12th day of June,
2013

BETWEEN: 

QUATERRA RESOURCES INC., a
corporation incorporated under the laws of British Columbia 

(the "Corporation") 

OF THE FIRST PART 

AND: 

COMPUTERSHARE INVESTOR SERVICES
INC., a corporation existing under the laws of Canada, as rights agent 

(the "Rights Agent") 

OF THE SECOND PART 

WHEREAS the Board of Directors of the Corporation has
determined that it is advisable for the Corporation to adopt a shareholder
rights plan (the "Rights Plan") to protect the Corporation and its shareholders
from unfair, abusive or coercive acquisition tactics; 

AND WHEREAS in order to implement the Rights Plan the
Board of Directors of the Corporation has authorized the issuance of: 

	1. 	
      one right (a "Right") in respect of each common share of
      the Corporation outstanding at the Record Time (as hereinafter defined);
      and

	 	 
	2. 	
      one Right in respect of each common 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 (or, in
certain cases, of certain other entities) pursuant to the terms and subject to
the conditions set forth herein; 

AND WHEREAS the Corporation desires to appoint the
Rights Agent to act on behalf of the Corporation and holders of Rights, and the
Rights Agent is willing to so act, 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
respective covenants and agreements set forth herein, the parties hereby agree
as follows: 

2 

ARTICLE 1 - INTERPRETATION 

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

	 	 	 	 	 
		(a) 	
      "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 of any class as a result of one or
      any combination of:

	 	 	 	 	 
				(A) 	
      an acquisition or redemption by the Corporation or a
      Subsidiary of the Corporation of Voting Shares which, by reducing the
      number of Voting Shares outstanding, increases the proportionate number of
      Voting Shares Beneficially Owned by such Person to 20% or more of the
      Voting Shares then outstanding (a "Voting Share Reduction");

	 	 	 	 	 
				(B) 	
      an acquisition of Voting Shares made pursuant to a
      Permitted Bid or a Competing Permitted Bid (a "Permitted Bid
      Acquisition"); or

	 	 	 	 	 
				(C) 	
      an acquisition of Voting Shares in respect of which the
      Board of Directors has waived the application of section 4.1 pursuant to
      the provisions of subsection 6.1(a) or 6.1(c) (an "Exempt Acquisition");
      or

	 	 	 	 	 
				(D) 	
      a Pro Rata Acquisition;

	 	 	 	 	 
				
      provided, however, that if a Person shall become 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 or a Pro Rata Acquisition and such
      Person's Beneficial Ownership of Voting Shares thereafter increases by
      more than 1.0% of the number of Voting Shares outstanding (other than
      pursuant to one or any combination of a Voting Share Reduction, a
      Permitted Bid Acquisition, an Exempt Acquisition or a Pro Rata
      Acquisition) then, as of the date such Person becomes the Beneficial Owner
      of such additional Voting Shares, such Person shall become an "Acquiring
      Person";

	 	 	 	 	 
			(iii) 	
      for the period of 10 days after the Disqualification Date
      (as defined below), any Person who becomes the Beneficial Owner of 20% or
      more of the outstanding Voting Shares as a result of such Person becoming
      disqualified from relying on clause 1.1(e)(vii) solely because such Person
      or the Beneficial Owner of such Voting Shares is making or has announced
      an intention to make a Take-over Bid, either alone or by acting jointly or
      in concert with any other Person. For the purposes of this
    definition, "Disqualification Date" means the first date of public
      announcement that such Person is making or has announced an intention to
make a Take-over Bid;

3 

	 	(iv) 	
      an underwriter or member of a banking or selling group
      acting in such capacity that becomes the Beneficial Owner of 20% or more
      of the Voting Shares in connection with a bona fide distribution to the
      public of securities of the Corporation; or

	 	 	 
	 	(v) 	
      a Person (a "Grandfathered Person") who is the Beneficial
      Owner of 20% or more of the outstanding Voting Shares determined as of the
      Record Time; provided, however, that this exemption shall not be, and
      shall cease to be, applicable to a Grandfathered Person in the event that
      such Grandfathered Person shall, after the Record Time, become the
      Beneficial Owner of additional Voting Shares that increases its Beneficial
      Ownership of Voting Shares by more than 1.0% of the number of Voting
      Shares outstanding as at the Record Time (other than through one or any
      combination of a Voting Share Reduction, a Permitted Bid Acquisition, an
      Exempt Acquisition or a Pro Rata Acquisition);

	 	(b) 	
      "Affiliate", when used to indicate a relationship
      with a specified Person, means a Person who directly, or indirectly
      through one or more intermediaries, controls, or is controlled by, or is
      under common control with, such specified Person;

	 	 	 	 
	 	(c) 	
      "Agreement" means this shareholder rights plan
      agreement dated as of the 12th day of June, 2013 between the Corporation
      and the Rights Agent, as amended, modified or supplemented from time to
      time;

	 	 	 	 
	 	(d) 	
      "Associate" means, when used to indicate a
      relationship with a specified Person:

	 	 	 	 
	 		(i) 	
      a corporation of which that Person owns, at law or in
      equity, shares or securities currently convertible into shares carrying
      more than 10% of the voting rights exercisable with respect to the
      election of directors under all circumstances or by reason of the
      occurrence of an event that has occurred and is continuing, or a currently
      exercisable option or right to purchase such shares or such convertible
      securities and with whom that Person is acting jointly or in
    concert;

	 	 	 	 
	 		(ii) 	
      a partner of that Person acting on behalf of the
      partnership of which they are partners;

	 	 	 	 
	 		(iii) 	
      a trust or estate in which that Person has a beneficial
      interest and with whom that Person is acting jointly or in concert or in
      which that Person has a beneficial interest of 50% or more or in respect
      of which that Person serves as a trustee or in a similar capacity
      provided, however, that a Person shall not be an associate of a trust by
      reason only of the fact that such Person serves as a trustee or any
      similar capacity in relation to such trust if such Person is duly licensed
      to carry on the business of a trust company under applicable laws or if
      the ordinary business of such Person includes the management of investment
      funds for unaffiliated investors and such Person acts as a
  trustee or in a similar capacity in relation to such trust in the
  ordinary course of such business; and

4 

	 	(iv) 	
      a spouse of that Person, any person of the same or
      opposite sex with whom that person is living in a conjugal relationship
      outside marriage, a child of that Person or a relative of that Person if
      that relative has the same residence as that
Person;

	 	(e) 	
      A Person shall be deemed the "Beneficial Owner"
      of, and to have "Beneficial Ownership" of, and to
      "Beneficially Own":

	 	 	 	 	 
	 		(i) 	
      any securities as to which such Person or any of such
      Person's Affiliates or Associates is the direct or indirect owner at law
      or in equity and for the purposes of this clause 1.1(e)(i), but without
      limiting the generality of the foregoing, a Person shall be deemed to be
      an owner at law or in equity of all securities:

	 	 	 	 	 
	 			(A) 	
      owned by a partnership of which the Person is a
      partner;

	 	 	 	 	 
	 			(B) 	
      owned by a trust in which the Person has a beneficial
      interest and which is acting jointly or in concert with that Person or in
      which the Person has a beneficial interest of 50% or more;

	 	 	 	 	 
	 			(C) 	
      owned jointly or in common with others; and

	 	 	 	 	 
	 			(D) 	
      of which the Person may be deemed to be the beneficial
      owner (whether or not of record) pursuant to the provisions of the BCABC
      (B.C.) or the Securities Act (B.C.) or pursuant to Rule 13d- 3 or
      13d-5 under the 1934 Exchange Act (or pursuant to any comparable or
      successor laws, regulations or rules enacted in relation to the provisions
      of the BCABC (B.C.) or the Securities Act (B.C.) in effect as at
      the date of this Agreement;

	 	 	 	 	 
	 		(ii) 	
      any securities as to which such Person or any of such
      Person's Affiliates or Associates has, directly or indirectly:

	 	 	 	 	 
	 			(A) 	
      the right to become the owner at law or in equity
      (whether such right is exercisable immediately or within a period of 75
      days thereafter and whether or not on condition or the happening of any
      contingency or otherwise) pursuant to any agreement, arrangement or
      understanding, whether or not in writing (other than (x) customary
      agreements with and between underwriters and banking group or selling
      group members with respect to a bona fide public offering of securities;
      (y) bona fide pledges of securities in the ordinary course of business
      that meet all the conditions specified in Rule 13d-3(d)(3) under the
      1934 Exchange Act (except for the condition in Rule 13d-
      3(d)(3)(ii)); and (z) pledge agreements with a registered securities
      dealer relating to the extension of credit for purchases of securities on
      margin in the ordinary course of the dealer's business) or upon the
      exercise of any conversion right, exchange right, share purchase right
      (other than the Rights), warrant or option, or otherwise;
  or

5 

	 	(B) 	
      the right to vote such securities (whether such right is
      exercisable immediately or within a period of 75 days thereafter and
      whether or not on condition or the happening of any contingency or
      otherwise) pursuant to any agreement, arrangement, pledge (other than (x)
      bona fide pledges of securities in the ordinary course of business that
      meet all the conditions specified in Rule 13d- 3(d)(3) under the 1934
      Exchange Act (except for the condition in Rule 13d- 3(d)(3)(ii)); and
      (y) pledge agreements with a registered securities dealer relating to the
      extension of credit for purchases of securities on margin in the ordinary
      course of the dealer's business) or understanding (whether or not in
      writing), or otherwise; and

	 	(iii) 	
      any securities which are Beneficially Owned, directly or
      indirectly, within the meaning of the foregoing provisions of this
      subsection 1.1(e) by any other Person with which such Person or any of
      such Person's Affiliates or Associates has any agreement, arrangement or
      understanding, whether or not in writing (other than (x) customary
      agreements with and between underwriters and banking group or selling
      group members with respect to a bona fide public offering of securities;
      (y) bona fide pledges of securities in the ordinary course of business
      that meet all the conditions specified under the 1934 Exchange Act
      (except for the condition in Rule 13d-3(d)(3)(ii)) and (z) pledge
      agreements with a registered securities dealer relating to the extension
      of credit for purchases of securities on margin in the ordinary course of
      the dealer's business) with respect to or for the purpose of acting
      jointly or in concert in acquiring, holding, voting or disposing of any
      Voting Shares of any class;

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 where: 

	 	(iv) 	
      such security has been deposited or tendered pursuant to
      any Take-over Bid made by such Person, made by any of such Person's
      Affiliates or Associates or made by any Person acting jointly or in
      concert with such Person until such deposited or tendered security has
      been taken up or paid for, whichever shall occur first;

	 	 	 
	 	(v) 	
      such Person, any of such Person's Affiliates or
      Associates or any other Person acting jointly or in concert with such
      Person has or shares the power to vote or direct the voting of such
      security pursuant to a revocable proxy given in response to a public proxy
      solicitation made pursuant to and in accordance with the applicable rules
      and regulations under the BCABC (B.C.) and the Securities Act
      (B.C.);

	 	 	 
	 	(vi) 	
      such Person, any of such Person's Affiliates or
      Associates or any other Person acting jointly or in concert with such
      Person has or shares the power to vote or direct the voting of such a
      security in connection with or in order to participate in a public proxy
      solicitation made or to be made pursuant to and in accordance with the
      applicable rules and regulations referred to in clause 1.1(e)(v) above;
      or

6 

	 	(vii) 	
      such Person, any of such Person's Associates or
      Affiliates or any other Person acting jointly or in concert with such
      Person holds or exercises voting or dispositive power over such security,
      provided that:

	 	 	 	 
	 		(A) 	
      a substantial portion of the ordinary business of such
      Person (the "Investment Manager") is the management of investment funds
      for others (which others, for greater certainty, may include or be limited
      to one or more employee benefit plans or pension plans) and such voting or
      dispositive power over such security is held by the Investment Manager in
      the ordinary course of such business in the performance of such Investment
      Manager's duties for the fully managed account of any other Person (a
      "Client");

	 	 	 	 
	 		(B) 	
      such Person (the "Trust Company") is licensed to carry on
      the business of a trust company under applicable laws and, as such, acts
      as trustee or administrator or in a similar capacity in relation to the
      estates of deceased or incompetent Persons (each an "Estate Account") or
      in relation to other accounts (each an "Other Account") and holds such
      voting or dispositive power over such security in the ordinary course of
      such duties for the Estate Account or for such Other Accounts;

	 	 	 	 
	 		(C) 	
      such Person is established by statute for purposes that
      include, and a substantial portion of the ordinary business or activity of
      such Person (the "Statutory Body") is, the management of investment funds
      for employee benefit plans, pension plans, insurance plans or various
      public bodies, or

	 	 	 	 
	 		(D) 	
      such Person (the "Administrator") is the administrator or
      trustee of one or more pension funds or plans (a "Plan") registered under
      applicable laws and holds such security in the ordinary course of such
      duties;

	 	 	 	 
	 	(viii) 	
      such Person is:

	 	 	 	 
	 		(A) 	
      a Client of the same Investment Manager as a another
      Person on whose account the Investment Manager holds or exercises voting
      or dispositive power over such security;

	 	 	 	 
	 		(B) 	
      an Estate Account or an Other Account of the same Trust
      Company as another Person on whose account the Trust Company holds or
      exercises voting or dispositive power over such security; or

	 	 	 	 
	 		(C) 	
      a Plan with the same Administrator as another Plan;
    or

	 	 	 	 
	 	(ix) 	
      such Person is:

	 	 	 	 
	 		(A) 	
      a Client of an Investment Manager and such security is
      owned at law or in equity by the Investment
Manager;

7 

	 	(B) 	
      an Estate Account or an Other Account of a Trust Company
      and such security is owned at law or in equity by the Trust Company;
    or

	 	 	 
	 	(C) 	
      a Plan and such security is owned at law or in equity by
      the Administrator of the Plan;

	 	(f) 	
      "Board of Directors" means the board of directors
      of the Corporation or, if duly constituted and whenever duly empowered,
      the executive committee of the board of directors for the
    Corporation;

	 	 	 	 
	 	(g) 	
      "BCABC" means the Business Corporation Act,
      S.B.C. 2002, c.57, as amended, and the regulations made thereunder,
      and any successor laws or regulations thereto;

	 	 	 	 
	 	(h) 	
      "Business Day" means any day other than a
      Saturday, Sunday or a day on which banking institutions in Vancouver,
      British Columbia are authorized or obligated by law to close;

	 	 	 	 
	 	(i) 	
      "close of business" on any given 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 principal transfer office in
      Vancouver, British Columbia of the transfer agent for the Common Shares
      (or, after the Separation Time, the principal office in Vancouver, British
      Columbia of the Rights Agent) are closed to the public in the city in
      which such transfer agent or Rights Agent has an office for the purposes
      of this Agreement;

	 	 	 	 
	 	(j) 	
      "Common Shares" means the common shares without
      par value of the Corporation and any other shares of the Corporation into
      which such shares may be subdivided, consolidated, reclassified or
      changed;

	 	 	 	 
	 	(k) 	
      "Competing Permitted Bid" means a Take- over Bid
      that:

	 	 	 	 
	 		(i) 	
      is made after a Permitted Bid has been made and prior to
      the expiry of the Permitted Bid;

	 	 	 	 
	 		(ii) 	
      satisfies all components of the definition of a Permitted
      Bid other than the requirements set out in clause (ii) of the definition
      of a Permitted Bid; and

	 	 	 	 
	 		(iii) 	
      contains, and the take-up and payment for securities
      tendered or deposited is subject to, an irrevocable and unqualified
      condition that no Voting Shares will be taken up or paid for pursuant to
      the Take-over Bid prior to the close of business on a date that is not
      earlier than the later of: (A) the 90th day after the date on which the
      earliest Permitted Bid which preceded the Competing Permitted Bid was
      made; and (B) 21 days after the date of the Take-over Bid constituting the
      Competing Permitted Bid; and only if at the date that the Voting Shares
      are to be taken up more than 50% of the Voting Shares held by Independent
      Shareholders have been deposited or tendered pursuant to the Competing
      Permitted Bid and not withdrawn;

	 	 	 	 
	 	(l) 	
      "controlled" a corporation is "controlled" by
      another Person if:

8 

	 	(i) 	
      securities entitled to vote in the election of directors
      carrying more than 50% of the votes for the election of the directors are
      held, directly or indirectly, by or for the benefit of the other Person;
      and

	 	 	 
	 	(ii) 	
      the votes carried by such securities are entitled, if
      exercised, to elect a majority of the board of directors of such
      corporation;

	 		
      and "controls", "controlling" and "under common control
      with" shall be interpreted accordingly;

	 	 	 	 
	 	(m) 	
      "Disposition Date" has the meaning ascribed
      thereto in subsection 6.1(c);

	 	 	 	 
	 	(n) 	
      "Dividend Reinvestment Acquisition" means an
      acquisition of Voting Shares pursuant to a Dividend Reinvestment
    Plan;

	 	 	 	 
	 	(o) 	
      "Dividend Reinvestment Plan" means any regular
      dividend reinvestment or other plan of the Corporation made available by
      the Corporation to holders of its securities where such plan permits the
      holder to direct that some or all of:

	 	 	 	 
	 		(i) 	
      dividends paid in respect of shares of any class of the
      Corporation;

	 	 	 	 
	 		(ii) 	
      proceeds of redemption of shares of the
    Corporation;

	 	 	 	 
	 		(iii) 	
      interest paid on evidences of indebtedness of the
      Corporation; or

	 	 	 	 
	 		(iv) 	
      optional cash payments;

	 	 	 	 
	 		
      be applied to the purchase from the Corporation of Voting
      Shares;

	 	 	 	 
	 	(p) 	
      "dividends paid in the ordinary course" 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 average 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;

	 	 	 	 
	 	(q) 	
      "Exempt Acquisition" has the meaning ascribed
      thereto in paragraph 1.1(a)(ii)(C);

	 	 	 	 
	 	(r) 	
      "Exercise Price" means, as of any date, the price
      at which a holder of a Right may purchase the securities issuable upon
      exercise of such Right. Until adjustment thereof in accordance with the
      terms hereof, the Exercise Price for a Right shall be $100;

	 	 	 	 
	 	(s) 	
      "Expansion Factor" has the meaning ascribed
      thereto in clause 3.2(a)(x);

9 

	 	(t) 	
      "Expiration Time" means the close of business on
      the date which is the earlier of:

	 	 	 	 
	 		(i) 	
      the date of termination of this Agreement pursuant to
      section 6.15; and

	 	 	 	 
	 		(ii) 	
      the day on which the first annual general meeting of the
      Corporation is held following the fifth anniversary of the date of this
      Agreement;

	 	 	 	 
	 	(u) 	
      "Flip-in Event" means a transaction or event in or
      pursuant to which any Person shall become an Acquiring Person;

	 	 	 	 
	 	(v) 	
      "Grandfathered Person" has the meaning attributed
      thereto in clause 1.1(a)(v);

	 	 	 	 
	 	(w) 	
      "Independent Shareholders" means holders of Voting
      Shares other than:

	 	 	 	 
	 		(i) 	
      any Acquiring Person;

	 	 	 	 
	 		(ii) 	
      any Offeror;

	 	 	 	 
	 		(iii) 	
      any Associate or Affiliate of any Offeror or Acquiring
      Person;

	 	 	 	 
	 		(iv) 	
      any Person acting jointly or in concert with any Offeror,
      Acquiring Person or with any Associate or Affiliate of any Offeror or
      Acquiring Person; and

	 	 	 	 
	 		(v) 	
      any employee benefit plan, deferred profit-sharing plan,
      stock participation plan and any other similar plan or trust for the
      benefit of employees of the Corporation unless the beneficiaries of the
      plan or trust direct the manner in which the Voting Shares are to be voted
      or direct whether the Voting Shares are to be tendered to a Take-Over
      Bid;

	 	 	 	 
	 	(x) 	
      "Market Price" per share of any securities on any
      date of determination means the average of the daily closing prices per
      share of such securities (determined as described below) on each of the 20
      consecutive Trading Days through and including the Trading Day immediately
      preceding such date; provided, however, that if an event described in
      section 3.2 shall have caused the closing price in respect of any Trading
      Day used to determine the Market Price 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 3.2
      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 share 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 share of such securities as reported by the principal stock
      exchange in Canada on which such securities are listed and posted for
      trading;

10 

	 	(ii) 	
      if for any reason none of such prices is available on
      such day or the securities are not listed and posted for trading on any
      stock exchange in Canada, the last closing board lot sale price or, if
      such price is not available, the average of the closing bid and asked
      prices for each share of such securities as reported in the principal
      consolidated transaction reporting system with respect to securities
      listed or admitted to trading on the principal national securities
      exchange in the United States on which such securities are listed or
      admitted to trading;

	 	 	 
	 	(iii) 	
      if for any reason none of such prices are available on
      such day or the securities are not listed and posted for trading on a
      stock exchange in Canada or a national securities exchange in the United
      States, the last quoted price, or if not so quoted, the average of the
      high bid and low asked prices for each share of such securities in the
      over-the-counter market as reported by the National Association of
      Securities Dealers, Inc. Automated Quotation System ("NASDAQ") or, if the
      securities are not quoted on NASDAQ, as reported by the NASDAQ OTC
      Bulletin Board or The Canadian Dealing Network, or another such system
      then in use; or

	 	 	 
	 	(iv) 	
      if on any such date the securities are not quoted by any
      such organization, the average of the closing bid and asked prices 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 the
      securities are not traded on any exchange or in the over-the-counter
      market and the price referred to in clause (iv) above is not available,
      the closing price per share of such securities on such date shall mean the
      fair value per share of such securities on such date as determined in good
      faith by the Board of Directors, after consultation with a nationally or
      internationally recognized investment dealer or investment banker with
      respect to the fair value per share of such securities. 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 the United States, such amount shall be translated to
      Canadian dollars at the then current exchange rate for the conversion of
      United States dollars, into Canadian dollars;

	 	 	 	 
	 	(y) 	
      "1934 Exchange Act" means the
      Securities Exchange Act of 1934 of the United States of America, as
      amended, and the rules and regulations thereunder as now in effect or as
      the same may from time to time be amended, re-enacted or
  replaced;

	 	 	 	 
	 	(z) 	
      "Offer to Acquire" includes

	 	 	 	 
	 		(i) 	
      an offer to purchase, or a solicitation of an offer to
      sell, Voting Shares; and

	 	 	 	 
	 		(ii) 	
      an acceptance of an offer to sell Voting Shares, 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; 

11 

	 	(aa) 	
      "Offeror" means a Person who has announced an
      intention to make or who has made a Take- over Bid;

	 	 	 	 
	 	(bb) 	
      "Offeror's Securities" means Voting Shares
      Beneficially Owned by any Offeror on the date of an Offer to
    Acquire;

	 	 	 	 
	 	(cc) 	
      "Permitted Bid" means a Take-over Bid which is
      made by means of a take-over bid circular and which also complies with the
      following additional provisions:

	 	 	 	 
	 		(i) 	
      the Take-over Bid is made for all outstanding Voting
      Shares and to all holders of Voting Shares as registered on the books of
      the Corporation, other than the Offeror;

	 	 	 	 
	 		(ii) 	
      the Take- over Bid contains, and the take-up and payment
      for securities tendered or deposited thereunder is subject to, an
      irrevocable and unqualified condition that no Voting Shares will be taken
      up or paid for pursuant to the Take-over Bid prior to the close of
      business on the date which is not less than 90 days following the date of
      the Take-over Bid and only if at such date more than 50% of the Voting
      Shares held by Independent Shareholders have been deposited or tendered
      pursuant to the Take-over Bid and not withdrawn;

	 	 	 	 
	 		(iii) 	
      the Take- over Bid contains an irrevocable and
      unqualified provision that, unless the Take-over Bid is withdrawn, Voting
      Shares may be deposited pursuant to such Take-over Bid at any time during
      the period of time between the date of the Take-over Bid and the date on
      which Voting Shares may be taken up and paid for and that any Voting
      Shares deposited pursuant to the Take-over Bid may be withdrawn until
      taken up and paid for; and

	 	 	 	 
	 		(iv) 	
      the Take-over Bid contains an irrevocable and unqualified
      provision that if, on the date on which Voting Shares may be taken up and
      paid for, more than 50% of the Voting Shares held by Independent
      Shareholders have been deposited or tendered pursuant to the Take-over Bid
      and not withdrawn, 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 for not less than 10 Business Days from the date of such
      public announcement;

	 		
      provided always that a Permitted Bid shall cease to be a
      Permitted Bid at the time when such bid ceases to meet any of the
      provisions of subsection 1.1(cc), and any acquisitions of Voting Shares of
      any class theretofor made, shall cease to be a Permitted Bid
      Acquisition;

	 	 	 
	 	(dd) 	
      "Permitted Bid Acquisition" has the meaning
      ascribed thereto in paragraph 1.1(a)(ii)(B);

	 	 	 
	 	(ee) 	
      "Person" includes any individual, firm,
      partnership, association, trust, trustee, executor, administrator, legal
      personal representative, group, body corporate, corporation,
      unincorporated organization, syndicate or other entity;

	 	 	 
	 	(ff) 	
      "Pro Rata Acquisition" means an acquisition by a
      Person of Voting Shares pursuant to:

12 

	 		(i) 	
      a Dividend Reinvestment Acquisition;

	 	 	 	 
	 		(ii) 	
      a stock dividend, stock split or other event in respect
      of securities of the Corporation pursuant to which a Person becomes the
      Beneficial Owner of Voting Shares on the same pro rata basis as all other
      holders of the securities;

	 	 	 	 
	 		(iii) 	
      the acquisition or the exercise by the Person of only
      those rights to purchase Voting Shares distributed to that Person in the
      course of a distribution to all holders of securities of the Corporation
      of one or more particular classes or series pursuant to a bona fide
      rights offering or pursuant to a prospectus; or

	 	 	 	 
	 		(iv) 	
      a distribution of Voting Shares, or securities
      convertible into or exchangeable for Voting Shares (and the conversion or
      exchange of such convertible or exchangeable securities) made pursuant to
      a prospectus or by way of private placement, provided such Person does not
      thereby acquire a greater percentage of Voting Shares, or securities
      convertible into or exchangeable for Voting Shares, so offered than the
      Person's percentage of Voting Shares Beneficially Owned immediately prior
      to such acquisition;

	 	 	 	 
	 	(gg) 	
      "Record Time" means 4:00 p.m. (Vancouver time) on
      June 12, 2013;

	 	 	 	 
	 	(hh) 	
      "Right" has the meaning ascribed thereto in the
      recitals hereto;

	 	 	 	 
	 	(ii) 	
      "Rights Certificate" means the certificates
      representing the Rights after the Separation Time which shall be in the
      form attached hereto as Exhibit "A";

	 	 	 	 
	 	(jj) 	
      "Securities Act (B.C)" means
      the Securities Act, R.S.B.C. 1996, c.418, as amended, and the
      regulations and rules thereunder, and any successor laws or regulations
      thereto;

	 	 	 	 
	 	(kk) 	
      "Separation Time" means the close of business on
      the eighth Trading Day after the earlier of:

	 	 	 	 
	 		(i) 	
      the Stock Acquisition Date; and

	 	 	 	 
	 		(ii) 	
      the date of the commencement of, or first public
      announcement (provided such announcement is made after the Record Time) of
      the intent 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 a Competing Permitted Bid),

	 	 	 	 
	 		
      or such later date as may be determined by the Board of
      Directors; provided that if the foregoing results in the Separation Time
      being prior to the Record Time, the Separation Time shall be the Record
      Time and provided further that if any Take- over Bid referred to in clause
      (ii) of this subsection 1.1(kk) expires, is cancelled, terminated or
      otherwise withdrawn prior to the Separation Time, such Take-over Bid shall
      be deemed, for the purposes of this subsection 1.1(kk), never to have been
      made;

	 	 	 	 
	 	(ll) 	
      "Stock Acquisition Date" means the date of the
      first public announcement (which, for purposes of this definition,
      includes, without limitation, the filing of a
report pursuant to section 5.2 of Multilateral Instrument 62-104
        Take-Over Bids and Issuer Bids or section 13(d) of the 1934
      Exchange Act ) by the Corporation or an Acquiring Person of facts
indicating that a Person has become an Acquiring Person;

13 

	 	(mm) 	
      "Subsidiary" a corporation is deemed to be a
      subsidiary of another corporation if:

	 	 	 	 	 
	 		(i) 	
      it is controlled by:

	 	 	 	 	 
	 			(A) 	
      that other; or

	 	 	 	 	 
	 			(B) 	
      that other and one or more corporations, each of which is
      controlled by that other; or

	 	 	 	 	 
	 			(C) 	
      two or more corporations, each of which is controlled by
      that other; or

	 	 	 	 	 
	 		(ii) 	
      it is a Subsidiary of a corporation that is that other's
      Subsidiary;

	 	 	 	 	 
	 	(nn) 	
      "Take-over Bid" means an Offer to Acquire Voting
      Shares or other securities of the Corporation where the Voting Shares or
      other securities subject to the Offer to Acquire, together with Voting
      Shares Beneficially Owned by the Person making the Offer to Acquire,
      constitute in the aggregate 20% or more of the outstanding Voting Shares
      at the date of the Offer to Acquire;

	 	 	 	 	 
	 	(oo) 	
      "Trading Day", when used with respect to any
      securities, means a day on which the principal Canadian or United States
      securities exchange 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 Canadian or United States
      securities exchange, a Business Day; and

	 	 	 	 	 
	 	(pp) 	
      "Voting Share Reduction" has the meaning ascribed
      thereto in paragraph 1.1(a)(ii)(A);

	 	 	 	 	 
	 	(qq) 	
      "Voting Shares" means the Common Shares of the
      Corporation and any other shares of the Corporation entitled to vote
      generally in the election of directors.

1.2      Continuation to Another Jurisdiction 

            If
the Corporation is continued under the laws of another jurisdiction, all
references herein to provisions of the BCABC shall be deemed to refer to
comparable provisions of the corporate laws of that other jurisdiction to which
the Corporation shall then be subject, and the regulations thereunder, and any
successor laws or regulations thereto; provided that if there are no comparable
provisions under the corporate laws of the other jurisdiction, or the
regulations thereunder, or under the successor laws or regulations thereto, such
references shall continue to be to the relevant provisions of the BCABC.

1.3      Currency 

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

14 

1.4      Descriptive Headings 

            Descriptive
headings appear herein for convenience only and shall not control or affect the
meaning or construction of any of the provisions hereof. 

1.5      References to Agreement 

            References
to "this Agreement", "hereto", "herein", "hereby", "hereunder", "hereof" and
similar expressions refer to this Agreement and not to any particular Article,
section, subsection, paragraph, subparagraph, clause, subdivision or other
portion hereof and include any and every instrument supplemental or ancillary
hereto. 

1.6      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. 

1.7      Acting in Good Faith 

            For
the purposes of this Agreement, when any determination or decision is made by
the Board of Directors pursuant to this Agreement, the Board of Directors shall
exercise its power and discharge its duties honestly and in good faith with a
view to the best interests of the Corporation and each director shall exercise
the care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances. 

1.8      Holder 

            As
used in this Agreement, unless the context otherwise requires, the term "holder"
when used with reference to Rights, means the registered holder of such Rights
or, prior to the Separation Time, the Common Shares with which such Rights are
associated. 

1.9      Calculation of Number and Percentage of
Beneficial Ownership of Outstanding Voting Shares 

            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 (expressed as a
percentage) 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
any Person is deemed to Beneficially Own unissued Voting Shares, such Voting
Shares will be deemed to be outstanding for the purpose of calculating the
percentage of Voting Shares of the particular class Beneficially Owned by such
Person. 

15 

1.10    Acting Jointly or in Concert 

            For
the purpose of this Agreement, a Person is acting jointly or in concert with
another Person if such Person has any agreement, arrangement or understanding
(whether formal or informal and whether or not in writing) with such other
Person for the purpose of acquiring or Offering to Acquire any Voting Shares
(other than customary agreements with and between underwriters and banking group
or selling group members with respect to an offering of securities and other
than bona fide pledges of securities in the ordinary course of business). 

ARTICLE 2 - THE RIGHTS 

2.1      Legend on Common Share Certificates 

            Certificates
representing Common Shares which are issued after the Record Time but prior to
the earlier of the Separation Time and the Expiration Time, shall evidence, in
addition to the Common Shares, one Right for each Common Share represented
thereby and shall or shall be deemed to have impressed on, printed on, written
on or otherwise affixed to them a legend substantially as follows: 

Until the Separation Time (defined in
the Rights Agreement below), this certificate also evidences the holder's rights
described in a Shareholder Rights Plan Agreement dated as of June 12, 2013 (the
"Rights Agreement") between Quaterra Resources Inc. (the “Corporation”) and
Computershare Investor Services Inc., as the same may from time to time be
amended, the terms of which are incorporated herein by reference and a copy of
which is on file at the principal office of the Corporation. Under certain
circumstances set out in the Rights Agreement, the Rights may be amended or
redeemed, may expire, may become void (if, in certain circumstances, they are
"Beneficially Owned" by an "Acquiring Person", as such terms are defined in the
Rights Agreement, or a transferee thereof) or may be evidenced by separate
certificates and no longer evidenced by this certificate. The Corporation will
mail or arrange for the mailing of a copy of the Rights Agreement to the holder
of this certificate without charge as soon as practicable after the receipt of a
written request therefor. 

            Certificates
representing Common Shares that are issued and outstanding at the Record Time
shall also evidence one Right for each Common Share represented thereby,
notwithstanding the absence of the foregoing legend, until the earlier of the
Separation Time and the Expiration Time. 

2.2      Execution, Authentication, Delivery and Dating of Rights
Certificates 

	 	(a) 	
      The Rights Certificates shall be executed on behalf of
      the Corporation by any of the Chairman of the Board, the President or any
      Vice-President together with any other of such persons or together with
      any one of the Secretary, the Treasurer, any Assistant Secretary or
      Assistant Treasurer, under the corporate seal of the Corporation or
      otherwise. The signature of any of the officers of the Corporation 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.

16 

	 	(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 disclosure
      statements describing the Rights, and the Rights Agent shall countersign
      in a manner satisfactory to the Corporation such Rights Certificates and
      deliver such Rights Certificates and disclosure statements to the holders
      of the Rights pursuant to subsection 3.1(c). No Rights Certificate shall
      be valid for any purpose until countersigned by the Rights Agent as
      aforesaid.

2.3      Registration, Registration of Transfer and Exchange

	 	(a) 	
      After the Separation Time, the Corporation will cause to
      be kept a register (the "Rights Registrar") in which, subject to such
      reasonable regulation as it may prescribe, the Corporation will provide
      for the registration and transfer of Rights. The Rights Agent is hereby
      appointed the registrar for the Rights (the "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 (c) of
      this section 2.3, the Corporation will execute, and the Rights Agent will
      manually countersign and deliver, in the name of the holder 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 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 section 2.3, 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)
      in connection therewith.

2.4      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 manually countersign and deliver in exchange therefor a new Rights
      Certificate evidencing the same number of Rights as the Rights Certificate
  surrendered.

17 

	 	(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 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 2.4, 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 2.4 in lieu of any destroyed, lost or stolen Rights Certificate
      shall evidence the 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 by the Corporation.

2.5      Persons Deemed Owners of Rights 

            Prior
to due presentment of a Rights Certificate (or, prior to the Separation Time,
the associated Common Share certificate), 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, the
associated Common Share certificate) is registered as the absolute owner thereof
and of the Rights evidenced thereby for all purposes whatsoever. As used in this
Agreement, unless the context otherwise requires, the term "holder" of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated Common Shares). 

2.6      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
2.6, except as expressly permitted by this Agreement. The Rights Agent shall destroy all cancelled Rights
Certificates and deliver a certificate of destruction to the Corporation on
request. 

18 

2.7      Agreement of Rights Holders 

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

	 	(a) 	
      such holder is bound by and subject to the provisions of
      this Agreement, as amended from time to time in accordance with the terms
      hereof, in respect of the 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 Common Share representing such Right;

	 	 	 
	 	(c) 	
      after the Separation Time, the Rights Certificates 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 Common 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 Common 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
      Common 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 has waived his right to receive any
      fractional Rights or any fractional Common Shares upon exercise of a Right
      (except as provided herein); and

	 	 	 
	 	(f) 	
      subject to the provisions of section 6.5, 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 supplemented or amended from time to time to cure any ambiguity or
      to correct or supplement any provision contained herein which may be
      inconsistent with the intent of this Agreement or is otherwise defective,
      as provided herein; and 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 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 governmental,
      regulatory or administrative agency or commission, or any statute, rule,
      regulation or executive order promulgated or enacted by a governmental
      authority, prohibiting or otherwise restraining performance of such
      obligations.

2.8      Rights Certificate Holder Not Deemed a Shareholder

            No
holder, as such, of any Rights or Rights Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose whatsoever the holder of any
Common Share or any other share of the Corporation which may at any time be issuable
  on the exercise of the Rights represented thereby, nor shall anything contained
  herein or in any Rights Certificate be construed or deemed to confer upon the
  holder of any Right or Rights Certificate, as such, any of the rights, titles,
  benefits or privileges of a holder of Common Shares or any other shares or
  securities of the Corporation or any right to vote at any meeting of
  shareholders of the Corporation whether for the election of directors or
  otherwise or upon any matter submitted to holders of Common Shares or any other
  shares of the Corporation at any meeting thereof, or to give or withhold consent
  to any action of the Corporation, or to receive notice of any meeting or other
  action affecting any holder of Common Shares or any other securities of the
  Corporation except as expressly provided herein, or to receive dividends,
  distributions or subscription rights, or otherwise, until the Right or Rights
  evidenced by any Rights Certificate shall have been duly exercised in accordance
with the terms and provisions hereof. 

19 

ARTICLE 3 - EXERCISE OF THE RIGHTS 

3.1      Initial Exercise Price; Exercise of Rights; Detachment
of Rights 

	 	(a) 	
      Subject to adjustment as hereinafter provided, 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). Notwithstanding any other
      provision of this Agreement, any Rights held by the Corporation or any of
      its Subsidiaries shall be void.

	 	 	 	 
	 	(b) 	
      Until the Separation Time:

	 	 	 	 
	 		(i) 	
      the Rights shall not be exercisable and no Right may be
      exercised; and

	 	 	 	 
	 		(ii) 	
      each Right will be evidenced by the certificate for the
      associated Common Share registered in the name of the holder thereof
      (which certificate shall also be deemed to be a Rights Certificate) and
      will be transferable only together with, and will be transferred by a
      transfer of, such associated Common Share.

	 	 	 	 
	 	(c) 	
      From and after the Separation Time and prior to the
      Expiration Time:

	 	 	 	 
	 		(i) 	
      the Rights shall be exercisable; and

	 	 	 	 
	 		(ii) 	
      the registration and transfer of the Rights shall be
      separate from and independent of Common Shares.

	 	 	 	 
	 		
      Promptly following the Separation Time, the Corporation
      will prepare and the Rights Agent will mail to each holder of record of
      Common Shares as of the Separation Time (other than an Acquiring Person,
      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 (a "Nominee")), at such holder's address as shown by
      the records of the Corporation (and the Corporation hereby agrees to
      furnish copies of such records to the Rights Agent for this
    purpose):

	 	 	 	 
	 		(iii) 	
      Rights Certificates 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, rule, or regulation or with any
      rule or regulation of any self-regulatory organization, stock exchange or
      quotation system on which the Rights may from time to time be listed or
  traded, or to conform to usage; and

20 

	 		(iv) 	
      a disclosure statement describing the Rights;

	 	 	 	 
	 		provided that a Nominee shall be sent the materials
      provided for in clauses (iii) and (iv)
      in respect of all Common 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 Common Shares which
        are Beneficially Owned by another Person, the Corporation may require such
        first mentioned person to furnish it with such information and
    documentation as the Corporation considers advisable.
	 	 	 	 
	 	(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:

	 	 	 	 
	 		(i) 	
      the Rights Certificate evidencing such Rights;

	 	 	 	 
	 		(ii) 	
      an election to exercise such Rights (an "Election to
      Exercise") substantially in the form attached to the Rights Certificate
      appropriately completed and executed by the holder or his executors or
      administrators or other personal representatives or his or their legal
      attorney duly appointed by an instrument in writing in form and executed
      in a manner satisfactory to the Rights Agent; and

	 	 	 	 
	 		(iii) 	
      payment by certified cheque, banker's draft or money
      order payable to the order of the Rights Agent, of a sum equal to the
      applicable 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 any transfer involved in 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 exercised.

	 	 	 	 
	 	(e) 	
      Subject to section 3.2, upon receipt of the Rights
      Certificate which is accompanied by:

	 	 	 	 
	 		(i) 	
      a completed Election to Exercise executed in accordance
      with clause 3.1(d)(ii), which does not indicate that such Right is null
      and void as provided by subsection 4.1(b); and

	 	 	 	 
	 		(ii) 	
      payment as set forth in clause 3.1(d)(iii);

	 	 	 	 
	 		
      the Rights Agent (unless otherwise instructed by the
      Corporation in the event that the Corporation is of the opinion that the
      Rights cannot be exercised in accordance with the Agreement) will
      thereupon promptly:

21 

	 		(iii) 	
      requisition from the transfer agent for the Common
      Shares, certificates representing the number of Common Shares to be
      purchased (the Corporation hereby irrevocably authorizing its transfer
      agent to comply with all such requisitions);

	 	 	 	 
	 		(iv) 	
      after receipt of such certificates referred to in clause
      3.1(e)(iii), deliver the same to or upon the order of the registered
      holder of such Rights Certificates, registered in such name or names as
      may be designated by such holder; and

	 	 	 	 
	 		(v) 	
      tender to the Corporation all payments received on
      exercise of the Rights.

	 	 	 	 
	 	(f) 	
      In case the holder of any Rights exercises less than all
      the Rights evidenced by such holder's Rights Certificate, a new Rights
      Certificate evidencing the Rights remaining unexercised (subject to the
      provisions of subsection 6.4(a)) 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 Common Shares delivered upon exercise of Rights
      shall, at the time of delivery of the certificates representing such
      Common Shares (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 BCABC, the
      Securities Act (B.C.) and the securities laws or comparable
      legislation of each of the provinces of Canada 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 on the stock exchanges on which the
      Common Shares were traded prior to the Stock Acquisition Date;

	 	 	 	 
	 		(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;

	 	 	 	 
	 		(v) 	
      pay when due and payable, if applicable, any and all
      federal, provincial and municipal transfer taxes and charges (for greater
      certainty, not including any income taxes or capital taxes of the holder
      or exercising holder or any liability of the Corporation to withhold tax)
      which may be payable in respect of the original issuance or delivery of
      the Rights Certificates, or certificates for Common Shares to be issued
      upon exercise of any Rights, provided that the Corporation shall not be
      required to pay any transfer tax or charge which may be payable in respect
      of any transfer involved in 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; and

22 

	 		(vi) 	
      after the Separation time, except as permitted by section
      6.1, not take (or permit any Subsidiary 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.

	 	 	 	 
	 	(h) 	
      If the number of Common Shares which are not issued or
      reserved for issue is insufficient to permit the exercise in full of the
      Rights in accordance with this section 3.1, then each Right, when such
      Right is aggregated with a sufficient number of Rights to acquire a whole
      number of Common Shares, will entitle the holder thereof, after the
      Separation Time, to purchase that number of Common Shares at the Exercise
      Price per Common Share equal to the quotient determined by dividing the
      difference between the number of authorized Common Shares and the number
      of Common Shares then issued or allotted or reserved for issuance by the
      Corporation, by the number of Rights then
outstanding.

3.2       Adjustments to Exercise Price; Number of Rights 

            The
Exercise Price, the number and kind of Common Shares or other securities subject
to purchase upon the exercise of each Right and the number of Rights outstanding
are subject to adjustment from time to time as provided in this section 3.2.

	 	(a) 	
      In the event the Corporation at any time after the Record
      Time and prior to the Expiration Time:

	 	 	 	 
	 		(i) 	
      declares or pays a dividend on the Common Shares payable
      in Common Shares (or other securities exchangeable for or convertible into
      or giving a right to acquire Common Shares or other securities) other than
      pursuant to any optional stock dividend program,

	 	 	 	 
	 		(ii) 	
      subdivides or changes the outstanding Common Shares into
      a greater number of Common Shares,

	 	 	 	 
	 		(iii) 	
      combines or changes the outstanding Common Shares into a
      smaller number of Common Shares; or

	 	 	 	 
	 		(iv) 	
      issues any Common Shares (or other securities
      exchangeable for or convertible into or giving a right to acquire Common
      Shares or other securities) in respect of, in lieu of or in exchange for
      existing Common Shares, except as otherwise provided in this section
      3.2,

	 	 	 	 
	 		
      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 as of the payment or effective date in the manner set forth
      below.

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

	 	 	 	 
	 		(i) 	
      the Exercise Price in effect after such adjustment will
      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; and

23 

	 		(ii) 	
      each Right held prior to such adjustment will become that
      number of Rights as results from the application of 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 shares issued
      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 in effect following the payment
      or effective date of the event referred to in clause 3.2(a)(i), (ii),
      (iii) or (iv), as the case may be.

	 	 	 	 
	 		
      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 of such dividend, subdivision,
      change, consolidation or issuance.

	 	 	 	 
	 		
      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 3.2(a)(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 agree to amend
      this Agreement in order to effect such treatment.

	 	 	 	 
	 		
      In the event 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 3.2(a),
      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.

	 	 	 	 
	 	(b) 	
      If the Corporation shall at any time after the Record
      Time and prior to the Expiration Time fix a record date for the issuance
      of rights, options or warrants to all holders of Common Shares entitling
      them (for a period expiring within 45 calendar days after such record
      date) to subscribe for or purchase Common Shares (or securities
      convertible into or exchangeable for or carrying a right to purchase
      Common Shares) at a price per Common Share (or, if a security convertible
      into or exchangeable for or carrying a right to purchase Common Shares,
      having a conversion, exchange or exercise price, including the price
      required to be paid to purchase such convertible or exchangeable security
      or right per share) less than the Market Price per Common Share on such
      record date, the Exercise Price to be in effect after such record date
      shall be determined by multiplying the Exercise Price in effect
      immediately prior to such record date by a fraction:

	 	 	 	 
	 		(i) 	
      the numerator of which 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 security or right) would purchase at such
      Market Price per Common Share; and

24 

	 	(ii) 	
      the denominator of which 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).

	 		
      of which may 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 the Rights. Such adjustment shall be made successively whenever
      such a record date is fixed and, in the event that such rights, options or
      warrants are not so issued, or if issued, are not exercised prior to the
      expiration thereof, the Exercise Price shall be adjusted to be the
      Exercise Price which would then be in effect if such record date had not
      been fixed, or to the Exercise Price which would be in effect based upon
      the number of Common Shares (or securities convertible into, or
      exchangeable or exercisable for Common Shares) actually issued upon the
      exercise of such rights, options or warrants, as the case may
be.

	 	 	 
	 		
      For the purposes of this Agreement, the granting of the
      right to purchase Common Shares (whether from treasury or otherwise)
      pursuant to the Dividend Reinvestment Plan or any employee benefit stock
      option or similar plans shall be deemed not to constitute an issue of
      rights, options or warrants by the Corporation; provided, however, that,
      in all such cases, 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.

	 	 	 
	 	(c) 	
      If the Corporation shall at any time after the Record
      Time and prior to the Expiration Time fix a record date for a distribution
      to all holders of Common Shares (including any such distribution made in
      connection with a merger or amalgamation) of evidences of indebtedness,
      cash (other than a dividend paid in the ordinary course or a dividend paid
      in Common Shares, but including any dividend payable in securities other
      than Common Shares), assets or rights, options or warrants (excluding
      those referred to in subsection 3.2(b)), the Exercise Price to be in
      effect after such record date shall be determined by multiplying the
      Exercise Price in effect immediately prior to such record date by a
      fraction:

	 	(i) 	
      the numerator of which shall be the Market Price per
      Common Share on such record date, less the fair market value (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 the Rights), on a per share
      basis, of the portion of the cash, assets, evidences of indebtedness,
      rights, options or warrants so to be distributed;
and

25 

	 		(ii) 	
      the denominator of which shall be such Market Price per
      Common Share.

	 	 	 	 
	 		
      Such adjustments shall be made successively whenever such
      a record date is fixed and, in the event that such distribution is not so
      made, the Exercise Price shall be adjusted to be the Exercise Price which
      would have been in effect if such record date had not been
fixed.

	 	 	 	 
	 	(d) 	
      Notwithstanding anything herein to the contrary, no
      adjustment to the Exercise Price shall be required unless such adjustment
      would require an increase or decrease of at least 1.0% in the Exercise
      Price; provided, however, that any adjustments which by reason of this
      subsection 3.2(d) are not required to be made shall be carried forward and
      taken into account in any subsequent adjustment. All calculations under
      this section 3.2 shall be made to the nearest cent or to the nearest
      ten-thousandth of a Common Share or other share, as the case may be.
      Notwithstanding the first sentence of this subsection 3.2(d), any
      adjustment required by this section 3.2 shall be made no later than the
      earlier of:

	 	 	 	 
	 		(i) 	
      three years from the date of the transaction which
      mandates such adjustment; and

	 	 	 	 
	 		(ii) 	
      the Expiration Time.

	 	 	 	 
	 	(e) 	
      If the Corporation shall at any time after the Record
      Time and prior to the Expiration 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 3.2(a)(i) or (iv), if the Board of Directors acting in good faith
      determines that the adjustments contemplated by subsections 3.2(a), (b)
      and (c) 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 3.2(a), (b) and (c), such adjustments,
      rather than the adjustments contemplated by subsections 3.2(a), (b) and
      (c), shall be made. The Corporation and the Rights Agent shall have
      authority, without the approval of the holders of the Common Shares or the
      holders of Rights, to amend this Agreement as appropriate to provide for
      such adjustments.

	 	 	 	 
	 	(f) 	
      Each Right originally issued by the Corporation
      subsequent to any adjustment made to the 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
      Right immediately prior to such issue, all subject to further adjustment
      as provided herein.

	 	 	 	 
	 	(g) 	
      Irrespective of any adjustment or change in an Exercise
      Price or the number of Common Shares issuable upon the exercise of the
      Rights, the Rights Certificates theretofore and thereafter issued may
      continue to express the Exercise Price per Common Share and the number of
      Common Shares which were expressed in the initial Rights Certificates
      issued hereunder.

26 

	 	(h) 	
      In any case in which this section 3.2 shall require that
      an adjustment in an 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 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.

	 	 	 	 
	 	(i) 	
      Notwithstanding anything in this section 3.2 to the
      contrary, the Corporation shall be entitled to make such reductions in
      each Exercise Price, in addition to those adjustments expressly required
      by this section 3.2, as and to the extent that in their good faith
      judgment the Board of Directors shall determine to be advisable in order
      that any:

	 	 	 	 
	 		(i) 	
      consolidation or subdivision of the Common
  Shares;

	 	 	 	 
	 		(ii) 	
      issuance (wholly or for in part cash) of any Common
      Shares or securities that by their terms are convertible into or
      exchangeable for Common Shares;

	 	 	 	 
	 		(iii) 	
      stock dividends; or

	 	 	 	 
	 		(iv) 	
      issuance of rights, options or warrants referred to in
      this section 3.2,

hereafter made by the Corporation to
holders of its Common Shares, shall not be taxable to such shareholders. 

Whenever an adjustment to the Exercise
Price or a change in the securities purchasable upon exercise of the Rights is
made at any time after the Separation Time pursuant to this Section 3.2, the
Corporation shall promptly: 

	 	(i) 	
      file with the Rights Agent and with the transfer agent
      for the Common Shares a certificate specifying the particulars of such
      adjustment or change; and

	 	 	 
	 	(ii)	cause notice of the particulars of such adjustment or
      change to be given to the holders of the Rights; provided that failure to
      file such certificate or cause such notice to be given as aforesaid, or
      any defect therein, shall not affect the validity of any such adjustment
      or change 

3.3      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 on, and such certificate shall be
dated, the date upon which the Rights Certificate evidencing such Rights was
duly surrendered in accordance with subsection 3.1(d) (together with a duly
completed Election to Exercise) and payment of the relevant 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 transfer books
of the Common Shares are closed, such Person shall be deemed to have become the
holder of record of such Common Shares on, and such certificate
shall be dated, the next succeeding Business Day on which the transfer books of
the Common Shares are open. 

27 

ARTICLE 4 - ADJUSTMENTS TO THE RIGHTS IN THE 
EVENT OF
CERTAIN TRANSACTIONS 

4.1      Flip-in Event 

	 	(a) 	
      Subject to subsection 4.1(b) and section 6.1, if prior to
      the Expiration Time a Flip-in Event shall occur, each Right shall
      constitute, effective at the close of business on the tenth Trading Day
      after 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 relevant Exercise Price
      (such right to be appropriately adjusted in a manner analogous to the
      applicable adjustments provided for in section 3.2 in the event that after
      such date of consummation or occurrence, any event of a type analogous to
      any of the events described in section 3.2 shall have occurred).

	 	 	 	 
	 	(b) 	
      Notwithstanding anything in this Agreement to the
      contrary, upon the occurrence of any Flip-in Event, any Rights that are
      Beneficially Owned on or after the earlier of the Separation Time and the
      Stock Acquisition Date by:

	 	 	 	 
	 		(i) 	
      an Acquiring Person (or any Affiliate or Associate of an
      Acquiring Person or any Person acting jointly or in concert with an
      Acquiring Person or any Affiliate or Associate of an Acquiring Person);
      or

	 	 	 	 
	 		(ii) 	
      a transferee of Rights, directly or indirectly, from an
      Acquiring Person (or any Affiliate or Associate of an Acquiring Person or
      any Person acting jointly or in concert with an Acquiring Person or any
      Affiliate or Associate of an Acquiring Person) where such transferee
      becomes a transferee concurrently with or subsequent to the Acquiring
      Person becoming such in a transfer that the Board of Directors has
      determined is part of a plan, arrangement 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 or any Affiliate or
      Associate of an Acquiring Person), that has the purpose or effect of
      avoiding clause 4.1(b)(i),

	 	 	 	 
	 		
      shall become null and void without any further action,
      and any holder of such Rights, including transferees, shall thereafter
      have no right to exercise such Rights under any provision of this
      Agreement and further shall thereafter not have any other rights
      whatsoever with respect to such Rights, whether under any provision of
      this Agreement or otherwise.

	 	 	 	 
	 	(c) 	
      In the event that there shall not be sufficient Common
      Shares authorized for issuance to permit the exercise in full of the
      Rights in accordance with this section 4.1, the Corporation shall take all
      such action as may be necessary to authorize additional Common Shares for
      issuance upon the exercise of the Rights.

28 

	 	(d) 	
      Any Rights Certificate that represents Rights
      Beneficially Owned by a Person described in either clauses 4.1(b)(i) or
      4.1(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 (as such terms are defined in the
Shareholder Rights Plan Agreement) or a Person who was acting jointly or in
concert with an Acquiring Person or an Affiliate or Associate of an Acquiring
Person. This Rights Certificate and the Rights represented hereby shall become
void in the circumstances specified in subsection 4.1(b) of the Shareholder
Rights Plan Agreement." 

provided 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 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. 

	 	(e) 	
      From and after the Separation Time, the Corporation shall
      do all such acts and things as shall be necessary and within its power to
      ensure compliance with provisions of this section 4.1, including without
      limitation, all such acts and things as may be required to satisfy the
      requirements of the BCABC (B.C.), the Securities Act (B.C.)
      and the securities laws or comparable legislation in each of the provinces
      of Canada in respect of the issue of Common Shares upon the exercise of
      Rights in accordance with this Agreement.

ARTICLE 5 - THE RIGHTS AGENT 

5.1      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 such co-Rights
      Agents ("Co-Rights Agents") as it may deem necessary or desirable subject
      to the consent of the Rights Agent. In the event the Corporation appoints
      one or more Co-Rights Agents, the respective duties of the Rights Agent
      and the Co-Rights Agents shall be as the Corporation may determine subject
      to the consent of the Rights Agent. The Company will fully indemnify and
      hold the Rights Agent, its officers, directors and employees and agents
      harmless from and against any and all actions and suits whether groundless
      or otherwise and from and against any and all losses, damages, costs,
      charges, counsel fees, payments, expenses and liabilities arising directly
      or indirectly out of its agency relationship to the Company, which right
      to indemnification will survive the termination of this Agreement or the
      resignation or removal of the Rights Agent except for any liability
      arising out of the gross negligence or intentional misconduct by the
      Rights Agent. In the absence of gross negligence
or intentional misconduct on its part, the Rights Agent
      shall not be liable for any action taken, suffered, or omitted by it or
      for any error of judgement made by it in the performance of its duties
      under this Agreement. In no event will the Rights Agent be liable for
      special, indirect, consequential or punitive loss or damages of any kind
      whatsoever (including but not limited to lost profits), even if the Rights
      Agent has been advised of the possibility of such damages. Any liability
      of the Rights Agent will be limited in the aggregate to an amount equal to
  the annual fee paid by the Company pursuant to this Agreement.

29 

	 	(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 covenants that it will pay to the Rights
      Agent from time to time reasonable remuneration for its services hereunder
      and will pay to or reimburse the Rights Agent upon its request for all
      reasonable expenses, disbursements and advances made or incurred by the
      Rights Agent in the administration or execution of the trusts hereby
      created (including reasonable compensation and disbursements of its legal
      counsel and all other advisers and assistants not regularly in its employ)
      both before and after any default hereunder until all of the duties of the
      Rights Agent hereunder have been fully and finally
  performed.

5.2      Merger or Amalgamation 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
      or stockholder 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 5.4 hereof. In case at the time such successor
      Rights Agent succeeds to the agency created by 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 has 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
Rights Certificates so countersigned; and in case at that time any of
the Rights Certificates shall not have 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 shall have the full force
provided in the Rights Certificates and in this Agreement. 

30 

5.3      Duties of Rights Agents 

            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, at the expense of the Corporation, may
      retain 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; the
      Rights Agent may also, with the approval of the Corporation (where such
      approval may reasonably be obtained and such approval not be unreasonably
      withheld), consult with such other experts as the Rights Agent shall
      consider necessary or appropriate to properly carry out the 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 any such expert;

	 	 	 
	 	(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 provided 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 a Person
      believed by the Rights Agent to be the Chairman of the Board, the
      President or any Vice-President and by the Treasurer or any Assistant
      Treasurer or 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 or suffered in good
      faith by it under the provisions of this Agreement in reliance upon such
      certificate;

	 	 	 
	 	(c) 	
      the Rights Agent will be liable hereunder only for its
      own gross negligence, bad faith or wilful misconduct;

	 	 	 
	 	(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 void pursuant
      to subsection 4.1(b)) or any adjustment required under the provisions of
      section 3.2 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 section 3.2
      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 as fully paid and non-
  assessable;

31 

	 	(f) 	
      the Corporation agrees that it 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 instructions with respect to the performance of its duties
      hereunder from any Person believed by the Rights Agent to be the 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 Persons for advice or instructions in
      connection with its duties, and it shall not be liable for any action
      taken or suffered by it in good faith in accordance with instructions of
      any such Person; it is understood that instructions to the Rights Agent
      will, except where circumstances make it impracticable or the Rights Agent
      otherwise agrees, be given in writing and, where not in writing, such
      instructions will be confirmed in writing as soon as reasonably possible
      after the giving of such instructions

	 	 	 
	 	(h) 	
      the Rights Agent and any shareholder or stockholder,
      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 the 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;
      and

	 	 	 
	 	(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, default, neglect or
      misconduct of any such attorneys or agents or for any loss to the
      Corporation resulting from any such act, default, neglect or misconduct,
      provided reasonable care was exercised in the selection and continued
      employment thereof.

5.4      Change of Rights Agent 

            The
Rights Agent may resign and be discharged from its duties under this Agreement
upon 60 days' notice (or such lesser notice as is acceptable to the Corporation)
in writing mailed to the Corporation and to the transfer agent for the Common
Shares by registered or certified mail. The Corporation may remove the Rights
Agent upon 60 days' notice in writing, mailed to the Rights Agent and to the
transfer agent for the Common Shares by registered or certified mail. 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 60 days after such
removal or after it has been notified in writing of such resignation or
incapacity by the resigning or incapacitated Rights Agent or by the holder of
any Rights (which holder shall, with such notice, submit such holder's Rights
Certificate for inspection by the Corporation), then the Rights Agent (at the
Corporation’s expense) 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; following payment
of any outstanding fees and expenses owed to it under this agreement the
predecessor Rights Agent 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 for 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 5.4,
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. 

32 

ARTICLE 6 - MISCELLANEOUS 

6.1      Redemption and Waiver 

	 	(a) 	
      The Board of Directors acting in good faith may, until
      the occurrence of a Flip-in Event, upon prior written notice delivered to
      the Rights Agent, determine to waive the application of section 4.1 to any
      particular Flip-in Event (which for greater certainty shall not include
      the circumstances described in subsection 6.1(c)); provided that if the
      Board of Directors waives the application of section 4.1 to a particular
      Flip-in Event pursuant to this subsection 6.1(a), the Board of Directors
      shall be deemed to have waived the application of section 4.1 to any other
      Flip-in Event which may arise in respect of any Take- Over Bid then in
      effect or made prior to the public announcement of the completion or
      termination of the transaction in respect of which the Board of Directors
      waived the application of section 4.1.

	 	 	 
	 	(b) 	
      Subject to the prior consent of the holders of the Voting
      Shares or the holders of Rights obtained in accordance with subsection
      6.5(b) and 6.5(c), as applicable, the Board of Directors acting in good
      faith may, at its option, at any time prior to the provisions of section
      4.1 becoming applicable as a result of the occurrence of a Flip- in Event,
      elect to redeem all but not less than all of the then outstanding Rights
      at a redemption price of $0.0001 per Right appropriately adjusted in a
      manner analogous to the applicable adjustment provided for in section 3.2,
      if an event of the type analogous to any of the events described in
      section 3.2 shall have occurred (such redemption price being herein
      referred to as the "Redemption Price").

	 	 	 
	 	(c) 	
      The Board of Directors may waive the application of
      section 3.1 in respect of the occurrence of any Flip-in Event if the Board
      of Directors has determined within ten Trading Days following a Stock
      Acquisition Date that a Person became an Acquiring Person by inadvertence
      and without any intention to become, or knowledge that it would become, an Acquiring Person under
      this Agreement and, in the event that such a waiver is granted by the
      Board of Directors, such Stock Acquisition Date shall be deemed not to
      have occurred. Any such waiver pursuant to this subsection 6.1(c) must be
      on the condition that such Person, within 14 days after the foregoing
      determination by the Board of Directors or such earlier or later date as
      the Board of Directors may determine (the "Disposition Date"), has reduced
      its Beneficial Ownership of Voting Shares such that the Person is no
      longer an Acquiring Person. If the Person remains an Acquiring Person at
      the close of business on the Disposition Date, the Disposition Date shall
      be deemed to be the date of occurrence of a further Stock Acquisition Date
and section 4.1 shall apply thereto.

33 

	 	(d) 	
      In the event that prior to the occurrence of a Flip-in
      Event, a Person acquires, pursuant to a Permitted Bid or a Competing
      Permitted Bid, not less than 90% of the outstanding Voting Shares other
      than Voting Shares Beneficially Owned at the date of the Permitted Bid or
      the Competing Permitted Bid by such Person, then the Board of Directors of
      the Corporation shall immediately upon the consummation of such
      acquisition without further formality be deemed to have elected to redeem
      the Rights at the Redemption Price.

	 	 	 
	 	(e) 	
      Where a Take-Over Bid that is not a Permitted Bid
      Acquisition is withdrawn or otherwise terminated 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 the outstanding Rights at the Redemption
      Price. Upon the Rights being redeemed pursuant to this subsection 4.1(e),
      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 Common 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.

	 	 	 
	 	(f) 	
      If the Board of Directors elects or is deemed to have
      elected to redeem the Rights, 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.

	 	 	 
	 	(g) 	
      Within 10 days after the Board of Directors elects or is
      deemed to have elected to redeem the Rights, the Corporation shall give
      notice of redemption to the holders of the then outstanding Rights by
      mailing such notice to each such holder at his last address as it appears
      upon the registry books of the Rights Agent or, prior to the Separation
      Time, on the registry books of the transfer agent for the Common Shares.
      Any notice which is mailed in the manner herein provided shall be deemed
      given, whether or not the holder receives the notice. Each such notice of
      redemption will state the method by which the payment of the Redemption
      Price will be made.

6.2      Expiration 

            No
Person shall have any rights whatsoever pursuant to this Agreement or in respect
of any Right after the Expiration Time, except the Rights Agent as specified in
section 5.1. 

34 

6.3      Issuance of New Rights Certificates 

            Notwithstanding
any provision 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 securities purchasable
upon exercise of Rights made in accordance with the provisions of this
Agreement. 

6.4      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.

	 	 	 
	 	(b) 	
      The Corporation shall not be required to issue fractions
      of Common Shares upon exercise of the Rights or to distribute certificates
      which evidence fractional Common Shares.

6.5      Supplements and Amendments 

	 	(a) 	
      The Corporation may make amendments to this Agreement to
      correct any clerical or typographical error or which are required to
      maintain the validity of this Agreement as a result of any change in any
      applicable legislation or regulations thereunder. The Corporation may,
      prior to the date of the shareholders' meeting referred to in section
      6.15, supplement or amend this Agreement without the approval of any
      holders of Rights or Voting Shares 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 6.5 to the contrary, no such
      supplement or amendment shall be made to the provisions of Article 5
      except with the written concurrence of the Rights Agent to such supplement
      or amendment.

	 	 	 
	 	(b) 	
      Subject to subsection 6.5(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, vary 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 be voted at a meeting of the holders of
      Voting Shares duly called and held in compliance with applicable laws and
      the articles of the Corporation.

	 	 	 
	 	(c) 	
      The Corporation may, with the prior consent of the
      holders of Rights, at any time on or after the Separation Date, amend,
      vary or delete 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), provided that no such
      amendment, variation or deletion shall be made to the provisions of
      Article 5 except with the written concurrence of the Rights Agent thereto.
      Such consent shall be deemed to have been given if such amendment,
      variation or deletion is authorized by the affirmative votes of the
      holders of Rights present or represented at and entitled to be voted at a
      meeting of the holders and representing 50% plus one of the votes cast in
      respect thereof.

35 

	 	(d) 	
      Any approval of the holders of Rights shall be deemed to
      have been given if the action requiring such approval is authorized by the
      affirmative votes of the holders of Rights present or represented at and
      entitled to be voted at a meeting of the holders of Rights and
      representing a majority of the votes cast in respect thereof. For the
      purposes hereof, each outstanding Right (other than Rights which are void
      pursuant to the provisions hereof) shall be entitled to one vote, and the
      procedures for the calling, holding and conduct of the meeting shall be
      those, as nearly as may be, which are provided in the Corporation's
      articles and the BCABC (B.C.) with respect to meetings of
      shareholders of the Corporation.

	 	 	 	 
	 	(e) 	
      Any amendments made by the Corporation to this Agreement
      pursuant to subsection 6.5(a) which are required to maintain the validity
      of this Agreement as a result of any change in any applicable legislation
      or regulation thereunder shall:

	 	 	 	 
	 		(i) 	
      if made before the Separation Time, be submitted to the
      shareholders of the Corporation at the next meeting of shareholders and
      the shareholders may, by the majority referred to subsection 6.5(b),
      confirm or reject such amendment;

	 	 	 	 
	 		(ii) 	
      if made after the Separation Time, be submitted to the
      holders of Rights at a meeting to be called for on a date not later than
      immediately following the next meeting of shareholders of the Corporation
      and the holders of Rights may, by resolution passed by a majority referred
      to in subsection 6.5(c), confirm or reject such amendment.

	 	 	 	 
	 		
      Any such amendment shall be effective from the date of
      the resolution of the Board of Directors adopting such amendment, until it
      is confirmed or rejected or until it ceases to be effective (as described
      in the next sentence) and, where such amendment is confirmed, it continues
      in effect in the form so confirmed. If such amendment is rejected by the
      shareholders or the holders of Rights or is not submitted to the
      shareholders or holders of Rights as required, then such amendment 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 from and after the date of the meeting of holders of Rights
      that should have been but was not held, and no subsequent resolution of
      the Board of Directors to amend this Agreement to substantially the same
      effect shall be effective until confirmed by the shareholders or holders
      of Rights as the case may be.

	 	 	 	 
	 	(f)	The Corporation shall give notice
      in writing to the Rights Agent of any supplement, amendment, deletion,
      variation or rescission to this Agreement pursuant to Section 6.5 within
      five Business Days of the date of any such supplement, amendment,
      deletion, variation or rescission, provided that failure to give such
      notice, or any defect therein, shall not affect the validity of any such
      supplement, amendment, deletion, variation or rescission.

6.6      Rights of Action 

            Subject
to the terms of this Agreement, all 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. Any holder of any Right, without
the consent of the Rights Agent or the holder of any other Right, 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 Rights 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. 

36 

6.7      Declaration as to Non-Canadian Holders 

            If
in the opinion of the Board of Directors (who may rely upon the advice of
counsel) any action or event contemplated by this Agreement would require
compliance by the Corporation with the securities laws or comparable legislation
of a jurisdiction outside Canada, the Board of Directors acting in good faith
shall 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 exercise of Rights to persons who are
citizens, residents or nationals of any jurisdiction other than Canada, in which
such issue or delivery would be unlawful without registration of the relevant
persons or securities for such purposes. 

6.8      Notices 

            Notices
or demands authorized or required by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights to or on the Corporation shall be
sufficiently given or made if delivered, sent by registered or certified mail,
postage prepaid, or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, addressed (until
another address is filed in writing with the Rights Agent) as follows: 

Quaterra Resources Inc.
1100, 1199
West Hastings Street 
Vancouver, BC
V6E 3T5 

Attention: President – Thomas
Patton

Fax No.: 604-641-2740 

            Notices
or demands authorized or required by this Agreement to be given or made by the
Corporation or by the holder of any Rights to or on the Rights Agent shall be
sufficiently given or made if delivered, sent by registered or certified mail,
postage prepaid, or sent by facsimile or other form of recorded electronic
communication, charges prepaid and confirmed in writing, addressed (until
another address is filed in writing with the Corporation) as follows: 

Computershare Investor Services Inc.

3rd floor, 510 Burrard St. 
Vancouver, BC V6C 3B9 

Attention: Manager 

Fax No.: 604-661-9401 

37 

            Notices
or demands authorized or required by this Agreement to be given or made 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, addressed to such holder at the address of such holder as it appears
upon the registry books of the Rights Agent or, prior to the Separation Time, on
the registry books of the Corporation for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. 

            Any
notice given or made in accordance with this section 6.8 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 telegraphing, telecopying
or sending of the same by other means of recorded electronic communication
(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 to the other given in the manner aforesaid. 

6.9      Costs of Enforcement 

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

6.10    Successors 

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

6.11    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; but this Agreement shall
be for the sole and exclusive benefit of the Corporation, the Rights Agent and
the holders of the Rights. 

6.12    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 such laws. 

6.13    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. 

38 

6.14    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. 

6.15    Effective Date and Shareholder Confirmation 

            This
Agreement is effective and in full force and effect in accordance with its terms
from and after the date hereof. At the first annual meeting of shareholders of
the Corporation following the date hereof, the Corporation shall request
confirmation of this Agreement by the holders of its Voting Shares. If this
Agreement is not confirmed by a majority of votes cast by holders of Voting
Shares who vote in respect of the confirmation of this Agreement at such
meeting, then this Agreement and all outstanding Rights shall terminate and be
void and of no further force and effect on and from the close of business on the
date of termination of such meeting. 

6.16    Rights of Board, Corporation and Offeror 

            Without
limiting the generality of the foregoing, nothing contained herein shall be
construed to suggest or imply that the Board of Directors shall not be entitled
to recommend that holders of Voting Shares reject or accept any Take-over Bid or
take any other action (including, without limitation, the commencement,
prosecution, defence or settlement of any litigation and the submission of
additional or alternative Take-over Bids or other proposals to the shareholders
of the Corporation) with respect to any Take-over bid otherwise that the Board
of Directors believes is necessary or appropriate in the exercise of its
fiduciary duties. 

6.17    Determinations and Actions by the Board of
Directors 

            The
Board of Directors, upon the advice of outside counsel, shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors or the Corporation as may
be necessary or advisable in the administration of this Agreement. All such
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, shall not subject the Board of Directors or any director of the
Corporation to any liability to the holders of the Rights. 

6.18    Successor Corporations 

            The
Corporation shall not consummate or permit or suffer to occur any consolidation,
amalgamation, merger or transfer of the undertaking or assets of the Corporation
as an entirety or substantially as an entirety to another Corporation (the
"Successor Corporation") unless the Successor Corporation resulting from such
consolidation, amalgamation, merger or transfer (if not the Corporation) shall
expressly assume, by supplemental agreement in form satisfactory to the Rights
Agent and executed and delivered to the Rights Agent, the due and punctual
performance and observance of each and every covenant and condition of this
Agreement to be performed and observed by the Corporation. 

39 

6.19    Time of the Essence 

            Time
shall be of the essence in this Agreement. 

6.20    Regulatory Approvals 

            Any
obligation of the Corporation or action or event contemplated by this Agreement
shall be subject to the receipt of any requisite approval or consent from any
governmental or regulatory authority, and without limiting the generality of the
foregoing, any necessary approvals of the TSX Venture Exchange and other
exchanges will be obtained, such as to the issuance of Common Shares upon the
exercise of Rights under subsection 3.1(d). Notwithstanding anything to the
contrary in this Agreement, no supplement or amendment to this Agreement or to
the terms of the Rights may be made without the prior consent of the TSX Venture
Exchange, if necessary. 

6.21    Compliance with Money Laundering
Legislation 

            The
Rights Agent shall retain the right not to act and shall not be liable for
refusing to act if, due to a lack of information or for any other reason
whatsoever, the Rights Agent reasonably determines that such an act might cause
it to be in non-compliance with any applicable anti-money laundering or
anti-terrorist legislation, regulation or guideline. Further, should the Rights
Agent reasonably determine at any time that its acting under this Agreement has
resulted in it being in non-compliance with any applicable anti-money laundering
or anti-terrorist legislation, regulation or guideline, then it shall have the
right to resign on 10 days' written notice to the Corporation, provided: (i)
that the Rights Agent's written notice shall describe the circumstances of such
non-compliance; and (ii) that if such circumstances are rectified to the Rights
Agent's satisfaction within such 10-day period, then such resignation shall not
be effective. 

6.22    Privacy Provision 

            The
parties acknowledge that federal and/or provincial legislation that addresses
the protection of individual's personal information (collectively, "Privacy
Laws") applies to obligations and activities under this Agreement. Despite any
other provision of this Agreement, neither party will take or direct any action
that would contravene, or cause the other to contravene, applicable Privacy
Laws. The Corporation will, prior to transferring or causing to be transferred
personal information to the Rights Agent, obtain and retain required consents of
the relevant individuals to the collection, use and disclosure of their personal
information, or will have determined that such consents either have previously
been given upon which the parties can rely or are not required under the Privacy
Laws. The Rights Agent will use commercially reasonable efforts to ensure that
its services hereunder comply with Privacy Laws. 

 

EXHIBIT "A" 

[FORM OF RIGHTS CERTIFICATE] 

	CERTIFICATE NO.  _______	_______ RIGHTS

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE OPTION OF
QUATERRA RESOURCES INC., ON THE TERMS SET FORTH IN THE SHAREHOLDER RIGHTS PLAN
AGREEMENT. UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN SUBSECTION 4.1(b) OF THE
SHAREHOLDER RIGHTS PLAN AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN ACQUIRING
PERSON OR CERTAIN RELATED PARTIES OR ANY TRANSFEREES OF RIGHTS HELD BY THE
FOREGOING MAY BECOME VOID. 

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 Shareholder Rights Plan Agreement dated
as of the 12th day of June 2013, (the "Rights Agreement") between Quaterra
Resources Inc., a corporation incorporated under the laws of British Columbia
(the "Corporation") and Computershare Investor Services Inc., 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 together with the Form of Election to Exercise duly executed and
submitted to the Rights Agent at its principal office in Vancouver. The Exercise
Price shall initially be $100 per Right and shall be subject to adjustment in
certain events 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 Certificates.
Copies of the Rights Agreement are on file at the registered office of the
Corporation and are available upon written request.

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 is
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 Rights Certificate may be, and under certain circumstances are
required to be, redeemed by the Corporation at a redemption price of $0.0001 per
Right. 

No fractional Common Shares will be issued upon the exercise of
any Right or Rights evidenced hereby. 

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 of any other shares of the Corporation 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 of the
Corporation at any meeting thereof, or to give or withhold consents to any
corporate action, or to receive notice of meetings or other actions affecting
shareholders of the Corporation (except as provided in the Rights Agreement), or
to receive dividends or subscription rights, or otherwise, until the Rights
evidenced by this Rights Certificate have been exercised as provided in the
Rights Agreement. 

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

IN WITNESS WHEREOF QUATERRA RESOURCES INC. has caused
this Rights Certificate to be signed by its duly authorized officers as of
the __ day of , ____. 

	Date: 		 
	 	  	 
	QUATERRA RESOURCES INC. 	 
	
By: 		 
	 	President 	 
	
By: 		 
	 	Secretary 	 
	 	  	 
	 	 	 
	Countersigned: 	 
	
COMPUTERSHARE INVESTOR SERVICES INC.
    	 
	
By: 		 
	 	Authorized Signatory 	 

QUATERRA RESOURCES INC. 

FORM OF ASSIGNMENT 

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

FOR VALUE RECEIVED hereby sells, assigns and transfers
unto ____________________________________________

	 
	(Please print name and address of transferee) 
	 
	 
 

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

	Date: 	
	 	  
	Signature Guaranteed: 	
	 	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 must be Signature Guaranteed by a Canadian Schedule I
chartered bank or a member of one of the recognized medallion programs –
Securities Transfer Agents Medallion Program (STAMP), Stock Exchange Medallion
Program (SEMP) or New York Stock Exchange, Inc Medallion Signature Program
(MSP). 

	 
	CERTIFICATE 
(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 a Person acting jointly or in concert with any of the foregoing (as such
terms are defined in the Rights Agreement). 

	 	 
	 	Signature 

QUATERRA RESOURCES INC. 

FORM OF ELECTION TO EXERCISE

TO: COMPUTERSHARE INVESTOR SERVICES INC.

The undersigned hereby irrevocably elects to exercise _______
whole Rights represented by the attached Rights Certificate to purchase the
Common Shares or other securities, if applicable, issuable upon the exercise of
such Rights and requests that certificates for such securities be issued in the
name of: 

	 
	(Name) 
	 
	(Address) 
	 
	(City, Province and Postal Code) 
	 
	(Social Insurance, Social Security or 
	other Taxpayer Identification Number)

If such number of Rights shall not be all the Rights evidenced
by this Rights Certificate, a new Rights Certificate for the balance of such
Rights shall be registered in the name of and delivered to: 

	 
	(Name) 
	 
	(Address) 
	 
	(City, Province and Postal Code) 
	 
	(Social Insurance, Social Security or 
	other Taxpayer Identification Number)

	Date: 	
	 	  
	Signature Guaranteed: 	
	 	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 must be Signature Guaranteed by a Canadian Schedule I
chartered bank or a member of one of the recognized medallion programs –
Securities Transfer Agents Medallion Program (STAMP), Stock Exchange Medallion
Program (SEMP) or New York Stock Exchange, Inc Medallion Signature Program
(MSP). 

	 
	CERTIFICATE 

(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 a Person acting jointly or in concert with any of the foregoing (as defined
in the Rights Agreement). 

	 	 
	 	Signature 

	 
	NOTICE 

In the event the certification set forth above in the Forms of
Assignment and Election is not completed, the Company will deem the Beneficial
Owner of the Rights evidenced by this Rights Certificate to be an Acquiring
Person or an Affiliate or Associate thereof or a Person acting jointly or in
concert with any of the foregoing (as such terms are defined in the Rights
Agreement) and accordingly such Rights will be null and void. No Rights
Certificates shall be issued in exchange for a Rights Certificate owned or
deemed to have been owned by an Acquiring Person or an Affiliate or Associate
thereof or a Person acting jointly or in concert with any of the foregoing.Exhibit 1023 Final

		
			 
		

		
			 
		

		
			 
		

		
			EXHIBIT 10.23
		

		
			 
		

		
			Letter Agreement dated October 21, 2013 with Amendments to the License and Collaboration Agreements between the Registrant and King Pharmaceuticals, Inc.
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			October 21, 2013
		

		
			 
		

		
			Via Email
		

		
			Remi Barbier
		

		
			Chairman, President & CEO Pain Therapeutics, Inc.
		

		
			7801 N Capital of Texas Highway Suite 260
		

		
			Austin, Texas 78731
		

		
			 
		

		
			 
		

		
			Re:Agreement between Pain Therapeutic, Inc. ("PTI") and Pfizer Inc ., as successor in interest to King Pharmaceuticals, Inc. ("Pfizer")
		

		
			 
		

		
			 
		

		
			The signatories below are parties to agreements by which Pfizer is the sublicensee of rights granted by PTI as set forth in the License Agreement ("LA") dated as of November 9, 2005, as amended , by and between PTI and Pfizer,  and the Collaboration Agreement ("CA"), dated as of November 9, 2005, as amended, by and between PTI and Pfizer.  PTI is the licensee of rights granted by Durect Corporation ("Durect") as set forth in the Development and License Agreement dated as of December 19, 2002, as amended (the "DLA"), by and between PTI and Durect related to the development and commercialization of opioid agonist products incorporating the SABER Technology, the first of these being the oxycodone product Remoxy as defined in the CA.
		

		
			 
		

		
			The parties hereby agree to the following matters:
		

		
			 
		

		
			1.  Return of Products other than Remoxy: Effective as of the date hereof, Pfizer hereby elects to terminate all of Pfizer's rights and obligations under the LA and CA with respect to hydrocodone, oxymorphone, and hydromorphone, hence forth Terminated Products pursuant to Section 3.1.4 of the CA (provided that the ninety (90) day prior written notice required by Section 3.1.4 shall not apply).  PTI agrees and acknowledges Pfizer shall not be subject to Section 3.1.3 (a) and (b) of the CA.  For clarity, Pfizer shall not be required to designate replacements for the Terminated Products or to maintain a minimum of four (4) Products.  PTI shall not designate any replacement Product on Pfizer's behalf. Remoxy shall be the only Product subject to the CA and LA.
		

		
			 
		

			
	
			
				 2.
			

			
	
			
			All rights and obligations with regard to the Terminated Products shall immediately    revert to PTI and vest exclusively in PTI without any royalty or other obligation to Pfizer in accordarice with Section 9.2.2(a) of the CA and Section 2.2.3 of the LA.  Except for rights and obligations under the DLA, LA and CA with respect to Remoxy, as of the date 

		

		

		 

 

		hereof Pfizer shall have no further right or obligation to develop, commercialize or sub­ license the Terminated Products or any product other than Remoxy under the DLA, LA and CA.  Pfizer shall no longer be subject to and shall have no further obligations with respect to any provisions of the DLA in connection with the Terminated Products or any products other than Remoxy.
		

		
			 
		

			
	
			
				 3.
			

			
	
			
			Freedom to Develop Any Opioid Product:  Section 7.1 of the CA is hereby amended to provide that the provisions of Section 7.1 of the CA shall not apply to the Terminated Products.  For the avoidance of doubt, PTI shall be free to develop or market Terminated Products in the Field in the Territory on its own or with or through an Affiliate, Sublicensee, licensee or other Third party, or grant to any Affiliate, Sublicensee, licensee or other Third party any right, option, or license to do so without notice or approval from Pfizer.

		
			 
		

			
	
			
				 4.
			

			
	
			
			The fourth sentence of Section 3.6 of the CA "King will spend at least $10 million ..." to the end of the Section 3.6 shall be deleted in its entirety.

		
			 
		

			
	
			
				 5.
			

			
	
			
			Minimum Annual Spend: All obligations of Pfizer with respect to the Minimum Spend whether under the DLA or CA or LA, shall be considered to be fully satisfied and discharged and Pfizer shall have no further obligation or liability in respect thereof Pfizer shall not seek repayment of any amounts paid to PTI, and PTI shall not seek any further payments from Pfizer, with respect to the Minimum Spend under the DLA for the term of the CA.

		
			 
		

			
	
			
				 6.
			

			
	
			
			Miscellaneous: Nothing in this Agreement shall be construed or inferred by PTI or any other party as indicating Pfizer's "go/no go" decision with respect to Remoxy.

		
			 
		

			
	
			
				 7.
			

			
	
			
			Publicity: Neither Party may publicly disclose the existence or terms of this Agreement without the prior written consent of the other Party, except that PTI may disclose the existence and terms of this Agreement in a press release or other filing with the Securities and Exchange Commission.  PTI agrees to provide Pfizer with a draft copy of any such press release or filing prior to its public disclosure.

		
			 
		

			
	
			
				 8.
			

			
	
			
			Expenses related to Returned Products: PTI agrees that Pfizer is not obligated to pay the costs of any clinical trials or other development expenses related to the Terminated Products, pursuant to Section 9.2.2(a)(i) of the CA, provided that Pfizer shall continue to be bound by the other provisions of Section 9.2.2(a), and provided further that if Pfizer shall terminate its rights and obligations to Develop Remoxy, or terminates the CA or LA, Pfizer shall be obligated to pay all costs of clinical trials and other development expenses in connection with Remoxy as set forth in Section 9.2.2(a) of the CA.

		
			 
		

			
	
			
				 9.
			

			
	
			
			Non-disparagement: Neither party shall discourage or otherwise prevent any consultant, contractors, vendors or third-parties from providing products or services to the other with respect to the development and commercialization of Terminated Products or Remoxy.

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			2
		

		
			 
		

		 

 

			
	
			
				 10.
			

			
	
			
			Full-force: Except as expressly set forth in this Agreement, the CA and LA remain in full force and effect.

		
			 
		

			
	
			
				 11.
			

			
	
			
			Defined Terms: Capitalized terms unless defined in this letter shall have the meanings ascribed to them in the relevant agreements between the parties hereto.

		
			 
		

			
	
			
				 12.
			

			
	
			
			Counterparts: This letter may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. A facsimile or .pdf signature to this letter shall be effective as an original signature.

		
			 
		

		
			 
		

		
			Please sign below to acknowledge your acceptance and agreement to this letter.
		

		
			 
		

		
			 
		

		
			Pain Therapeutics, Inc.
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			By:/s/ REMI BARBIER
		

		
			 
		

		
			Name:Remi Barbier
		

		
			 
		

		
			Title:Chairman, President and CEO 
		

		
			 
		

		
			'
		

		
			 
		

		
			 
		

		
			 
		

		
			Pfizer Inc.
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			By:/s/ STEVEN J. ROMANO, M.D. 
		

		
			 
		

		
			Name:Steven J. Romano, M.D.
		

		
			 
		

		
			Title:SVP, Medicines Development Group Head 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			 
		

		
			3

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