Document:

Exhibit 10.1

NEENAH
PAPER

DEFERRED COMPENSATION PLAN

 

NEENAH
PAPER DEFERRED COMPENSATION PLAN

TABLE OF
CONTENTS

	
   

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE I

  	
   

  	
  INTRODUCTION

  	
   

  	
  1

  
	
  1.1

  	
   

  	
  Establishment of the Plan

  	
   

  	
  1

  
	
  1.2

  	
   

  	
  Purpose

  	
   

  	
  1

  
	
  1.3

  	
   

  	
  Type of Plan

  	
   

  	
  1

  
	
  1.4

  	
   

  	
  Effective Date

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
   

  	
  DEFINITIONS

  	
   

  	
  1

  
	
  2.1

  	
   

  	
  Affiliate

  	
   

  	
  1

  
	
  2.2

  	
   

  	
  Agreement

  	
   

  	
  1

  
	
  2.3

  	
   

  	
  Beneficiary

  	
   

  	
  2

  
	
  2.4

  	
   

  	
  Board

  	
   

  	
  2

  
	
  2.5

  	
   

  	
  Bonus

  	
   

  	
  2

  
	
  2.6

  	
   

  	
  Change of Control

  	
   

  	
  2

  
	
  2.7

  	
   

  	
  Code

  	
   

  	
  5

  
	
  2.8

  	
   

  	
  Company

  	
   

  	
  5

  
	
  2.9

  	
   

  	
  Compensation Committee

  	
   

  	
  5

  
	
  2.10

  	
   

  	
  Deferral

  	
   

  	
  5

  
	
  2.11

  	
   

  	
  Deferral Year

  	
   

  	
  5

  
	
  2.12

  	
   

  	
  Deferred Benefit Account

  	
   

  	
  5

  
	
  2.13

  	
   

  	
  Determination Date

  	
   

  	
  5

  
	
  2.14

  	
   

  	
  Disability

  	
   

  	
  5

  
	
  2.15

  	
   

  	
  Effective Date

  	
   

  	
  5

  
	
  2.16

  	
   

  	
  Eligible Employee

  	
   

  	
  5

  
	
  2.17

  	
   

  	
  Employee

  	
   

  	
  5

  
	
  2.18

  	
   

  	
  Employer

  	
   

  	
  5

  
	
  2.19

  	
   

  	
  ERISA

  	
   

  	
  6

  
	
  2.20

  	
   

  	
  Initial Election Deadline

  	
   

  	
  6

  
	
  2.21

  	
   

  	
  Investment Funds

  	
   

  	
  6

  
	
  2.22

  	
   

  	
  Participant

  	
   

  	
  6

  
	
  2.23

  	
   

  	
  Participating Employer

  	
   

  	
  6

  
	
  2.24

  	
   

  	
  Payment Eligibility Date

  	
   

  	
  6

  
	
  2.26

  	
   

  	
  Performance-based Bonus

  	
   

  	
  7

  
	
  2.26

  	
   

  	
  Plan

  	
   

  	
  7

  
	
  2.27

  	
   

  	
  Plan Administrative Committee

  	
   

  	
  7

  
	
  2.28

  	
   

  	
  Retirement Date

  	
   

  	
  7

  
	
  2.29

  	
   

  	
  Salary

  	
   

  	
  7

  
	
  2.30

  	
   

  	
  Specified Employee

  	
   

  	
  7

  
	
  2.31

  	
   

  	
  Termination of Employment

  	
   

  	
  7

  
	
  2.32

  	
   

  	
  Valuation Date

  	
   

  	
  8

  
	
  2.33

  	
   

  	
  Year of Service

  	
   

  	
  8

  

 

 i
 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  ARTICLE III

  	
   

  	
  ELIGIBILITY
  AND PARTICIPATION

  	
   

  	
  8

  
	
  3.1

  	
   

  	
  Eligibility

  	
   

  	
  8

  
	
  3.2

  	
   

  	
  Participation

  	
   

  	
  8

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
   

  	
  DEFERRALS,
  INVESTMENT AND VESTING

  	
   

  	
  9

  
	
  4.1

  	
   

  	
  Establishment of Accounts

  	
   

  	
  9

  
	
  4.2

  	
   

  	
  Deferral Elections

  	
   

  	
  9

  
	
  4.3

  	
   

  	
  General Deferral Rules

  	
   

  	
  10

  
	
  4.4

  	
   

  	
  Investment Elections

  	
   

  	
  11

  
	
  4.5

  	
   

  	
  Investment Changes

  	
   

  	
  12

  
	
  4.6

  	
   

  	
  Deferred Benefit Account Credits

  	
   

  	
  12

  
	
  4.7

  	
   

  	
  Determination of Accounts

  	
   

  	
  12

  
	
  4.8

  	
   

  	
  Vesting

  	
   

  	
  12

  
	
  4.9

  	
   

  	
  Effect on Other Plans

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
   

  	
  DISTRIBUTIONS

  	
   

  	
  13

  
	
  5.1

  	
   

  	
  Distribution of Benefits

  	
   

  	
  13

  
	
  5.2

  	
   

  	
  Tax Withholding

  	
   

  	
  15

  
	
  5.3

  	
   

  	
  Commencement of Payments

  	
   

  	
  15

  
	
  5.4

  	
   

  	
  Recipients of Payments; Designation of Beneficiary

  	
   

  	
  15

  
	
  5.5

  	
   

  	
  Inability to Locate Participant

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
   

  	
  PLAN
  ADMINISTRATIVE COMMITTEE

  	
   

  	
  16

  
	
  6.1

  	
   

  	
  Plan Administrative Committee

  	
   

  	
  16

  
	
  6.2

  	
   

  	
  Committee Membership

  	
   

  	
  16

  
	
  6.3

  	
   

  	
  Powers

  	
   

  	
  16

  
	
  6.4

  	
   

  	
  Organization and Procedures

  	
   

  	
  16

  
	
  6.5

  	
   

  	
  Rules and Decisions

  	
   

  	
  17

  
	
  6.6

  	
   

  	
  Authorization of Payments

  	
   

  	
  17

  
	
  6.7

  	
   

  	
  Books and Records

  	
   

  	
  17

  
	
  6.8

  	
   

  	
  Perpetuation of the Plan Administrative Committee

  	
   

  	
  17

  
	
  6.9

  	
   

  	
  Claims Procedure

  	
   

  	
  18

  
	
  6.10

  	
   

  	
  Allocation or Reallocation of Responsibilities

  	
   

  	
  21

  
	
  6.11

  	
   

  	
  Service of Process

  	
   

  	
  21

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
   

  	
  MISCELLANEOUS

  	
   

  	
  21

  
	
  7.1

  	
   

  	
  Unfunded Obligation

  	
   

  	
  21

  
	
  7.2

  	
   

  	
  Amendment and Termination

  	
   

  	
  22

  
	
  7.3

  	
   

  	
  Effect of Plan

  	
   

  	
  22

  
	
  7.4

  	
   

  	
  Offset

  	
   

  	
  22

  
	
  7.5

  	
   

  	
  Amounts Payable

  	
   

  	
  22

  

 

 ii
 

 

 

	
  

  	
   

  	
   

  	
   

  	
  Page

  
	
  7.6

  	
   

  	
  Rights and Obligations

  	
   

  	
  22

  
	
  7.7

  	
   

  	
  Notice

  	
   

  	
  22

  
	
  7.8

  	
   

  	
  Governing Law

  	
   

  	
  22

  
	
  7.9

  	
   

  	
  Assignment of Rights

  	
   

  	
  22

  
	
  7.10

  	
   

  	
  Liability

  	
   

  	
  23

  
	
  7.11

  	
   

  	
  Plan Sponsor

  	
   

  	
  23

  

 

 iii

NEENAH PAPER

DEFERRED
COMPENSATION PLAN

ARTICLE I

INTRODUCTION

1.1                                 Establishment
of the Plan.  Neenah Paper, Inc. (the
“Company”) hereby establishes a deferred compensation plan for certain
Employees, to be known as the Neenah Paper Deferred Compensation Plan (the “Plan”),
as set forth in this document.

1.2                                 Purpose.  In recognition of the valuable services
provided to the Company, and its Affiliates, by its employees, the Company
wishes to permit a select group of management or highly compensated employees
to defer income which would otherwise become payable to them.  It is the intent of the Company to permit
these deferrals under the terms and conditions hereinafter set forth.

1.3                                 Type
of Plan.  This Plan is intended to be
a nonqualified deferred compensation plan, which is unfunded and maintained
primarily for the purpose of providing deferred compensation for a select group
of management or highly compensated employees, pursuant to Sections 201, 301
and 401 of ERISA and, as such, exempt from the provisions of Parts II, III and
IV of Title I of ERISA.

1.4                                 Effective
Date.  The effective date of the Plan
is January 1, 2007.

ARTICLE
II

DEFINITIONS

Where the
following words and phrases appear in this Plan, they shall have the respective
meanings set forth below unless the context clearly indicates otherwise:

2.1                                 Affiliate.  Any company, person or organization which, on
the date of determination, (A) is a member of a controlled group of
corporations (as defined in Code Section 414(b)) which includes the Company;
(B) is a trade or business (whether or not incorporated) which controls, is
controlled by or is under common control with (within the meaning of Code
Section 414(c)) the Company; (C) is a member of an affiliated service group (as
defined in Code Section 414(m)) which includes the Company; or (D) is otherwise
required to be aggregated with the Company pursuant to Code Section 414(o) and
regulations promulgated thereunder.

2.2                                 Agreement.  The
agreement(s) executed between a Participant and the Employer, whereby a
Participant agrees to defer a portion of his or her Salary or Bonus, or both,
pursuant to the provisions of the Plan, and the Employer agrees to make benefit
payments in accordance with the provisions of the Plan.  In the event the terms of the Agreement
conflict with the terms of the Plan, the terms of the Plan shall be
controlling.

 

2.3                                 Beneficiary.  The person or persons who, under this Plan,
become entitled to receive a Participant’s interest in the event of the
Participant’s death.

2.4                                 Board.  The Board of Directors of the Company.

2.5                                 Bonus.  Any
amount(s) paid during a calendar year to the Participant under the Company’s
Management Incentive Plan or any successor or additional cash bonus program.

2.6                                 Change
of Control.  A Change of Control
shall be deemed to have taken place if a “change in the ownership of the
Company,” a “change in the effective control of the Company,” or a “change in
the ownership of a substantial portion of the Company’s assets” (as such terms
are defined below) occurs.

(A)                              A
change in the ownership of the Company. 
A “change in ownership of the Company” shall occur on the date that any
one person, or more than one person acting as a “Group” (as defined below),
acquires ownership of stock of the Company that, together with stock held by
such person or Group, constitutes more than fifty percent (50%) of the total
fair market value or total voting power of the stock of the Company; provided,
however, that, if any one person or more than one person acting as a Group, is
considered to own more than 50% of the total fair market value or total voting
power of the stock of the Company, the acquisition of additional stock by the
same person or persons is not considered to cause a change in the ownership of
the Company.  In addition, the following
shall not constitute a change in ownership of the Company:  (i) any acquisition by any one person, or
more than one person acting as a Group, who on the Effective Date is the “beneficial
owner” (within the meaning of Rule 13d-3 of the Rules and Regulations under the
Securities Exchange Act of 1934, as amended) (a “Beneficial Owner”) of thirty
percent (30%) or more of the combined voting power of the then outstanding
voting securities of the Company entitled to vote generally in the election of
directors (the “Outstanding Company Voting Securities”), (ii) any acquisition
directly from the Company, including without limitation, a public offering of
securities, (iii) any acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its Affiliates, or (v) any transaction described in Section 2.6(D).

(B)                                A
change in the effective control of the Company.  A “change in the effective control of the
Company” occurs on the date that:

(1)                                  Any
one person, or more than one person acting as a Group, acquires (or has
acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) ownership of stock of the Company
possessing thirty-five percent (35%) or more of the total voting power of the
stock of the Company; provided, however, if any one person, or more than one
person acting as a group, is considered to own thirty-five percent (35%) or
more of the total voting power of the stock of the Company, the acquisition of
additional stock by the same person or

 2
 

 

persons is not considered to cause a change in the
effective control of the Company. 
Notwithstanding the foregoing, the following shall not constitute a
change in the effective control of the Company: 
(i) any acquisition by any one person, or more than one person acting as
a Group, who on the Effective Date is the Beneficial Owner of thirty percent
(30%) or more of the Outstanding Company Voting Securities, (ii) any acquisition
directly from the Company, including without limitation, a public offering of
securities, (iii) any acquisition by the Company, (iv) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained by the Company
or any of its Affiliates, or (v) any transaction described in Section 2.6(D);
or

(2)                                  A
majority of the members of the Board is replaced during any 12-month period by
directors whose appointment or election is not endorsed by a majority of the
members of the Board prior to the date of the appointment or election;
provided, however, that this subparagraph (2) shall apply only to the Company
if no other corporation is a majority shareholder of the Company.

(C)                                A
change in the ownership of a substantial portion of the Company’s assets. A
“change in the ownership of a substantial portion of the Company’s assets”
occurs on the date that any one person, or more than one person acting as a
Group, acquires (or has acquired during the 12-month period ending on the date
of the most recent acquisition by such person or persons) assets from the
Company that have a total “Gross Fair Market Value” (as defined below) equal to
or more than 90% of the total Gross Fair Market Value of all of the assets of
the Company immediately prior to such acquisition or acquisitions; provided,
however, that, a transfer of assets by the Company is not treated as a change
in the ownership of such assets if the assets are transferred to:

(1)                                  a
shareholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;

(2)                                  an
entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by the Company;

(3)                                  a
person, or more than one person acting as a Group, that owns, directly or
indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Company;

(4)                                  an
entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in subparagraph (C)(3) hereof);
or

(5)                                  a
Successor Entity pursuant to a transaction described in Section 2.6(D).

(D)                               Consummation
of a reorganization, merger, or consolidation to which the Company is a party,
or a sale or other disposition of all or substantially all of the

 3
 

 

assets of the Company (a “Business Combination”) shall
not constitute a change in ownership of the Company, a change in the effective
control of the Company, or a change in the ownership of a substantial portion
of the Company’s assets, if following such Business Combination: (i) all or substantially
all the individuals or entities who were the Beneficial Owners of Outstanding
Voting Securities immediately prior to such Business Combination beneficially
own, directly or indirectly, more than sixty percent (60%) of the combined
voting power of the outstanding voting securities entitled to vote generally in
the election of the members of the board of directors of the company resulting
from the Business Combination (including, without limitation, a corporation
which as a result of such transaction owns the Company or all or substantially
all of the Company’s assets either directly or through one or more
subsidiaries) (the “Successor Entity”) in substantially the same proportions as
their ownership immediately prior to such Business Combination of the
Outstanding Company Voting Securities; (ii) no person or Group (excluding any
Successor Entity or any employee benefit plan, or related trust, of the Company
or such Successor Entity) beneficially owns, directly or indirectly, thirty percent
(30%) or more of the combined voting power of the then outstanding voting
securities of the Successor Entity, except to the extent that such ownership
existed prior to the Business Combination; and (iii) at least a majority of the
members of the board of directors of the Successor Entity were members of the
incumbent Board (including members of the Board whose appointment or election
is endorsed by a majority of the Board prior to the date of the appointment or
election) at the time of the execution of the initial agreement or of the
action of the Board providing for such Business Combination.

(E)                                 For
purposes of the definition of Change of Control:

(1)                                  “Group”
means persons acting as a group if they are owners of a corporation that enters
into a merger, consolidation, purchase, or acquisition of stock of the Company
or assets of the Company, or a similar business transaction with the Company
(the “Transaction”); provided, however, that with respect to any person who
owns stock of both the Company and the other corporation in a Transaction, such
person will only be treated as acting as a group with respect to his or her
interest in the other corporation prior to the Transaction;

(2)                                  “Gross
Fair Market Value” means the value of the assets of the Company, or the value
of the assets being disposed of, determined without regard to any liabilities
associated with such assets; and

(3)                                  Notwithstanding
any other provision  hereof, stock
ownership shall be determined under Code Section 409A, and no Change of Control
shall be deemed to have occurred hereunder unless such event constitutes a
change in the ownership or effective control of the Company or in a substantial
portion of the assets of the Company under Code Section 409A.

 4
 

 

2.7                                 Code.  The Internal Revenue Code for 1986, as
amended from time to time, and as construed and interpreted by valid
regulations and rulings issued thereunder.

2.8                                 Company.  Neenah Paper, Inc., a Delaware corporation.

2.9                                 Compensation Committee.  The
Compensation Committee of the Board.

2.10                           Deferral.  The amount a Participant
elects to defer from his Salary or Bonus to a Deferred Benefit Account pursuant
to the Agreement between the Employer and the Participant.

2.11                           Deferral
Year.  Any calendar year.

2.12                           Deferred
Benefit Account.  The cumulative
total dollar amount that a Participant elects to defer pursuant to Section 4.2,
as it may be adjusted for earnings, losses and distributions.  The Participant’s Deferrals pursuant to
Section 4.2 for each Deferral Year and all earnings, losses and distributions
attributable thereto shall be accounted for in a separate Deferred Benefit
Account.  A Participant’s Deferred
Benefit Account(s) shall not constitute or be treated as a trust fund of any
kind.

2.13                           Determination
Date.  The date on which the amount
of a Participant’s Deferred Benefit Accounts is determined as provided in
Article IV hereof.

2.14                           Disability.  A permanent and total disability such that
the Participant is unable to engage in any substantial gainful activity by
reason of any medically determinable physical or mental impairment which can be
expected to last for a continuous period of not less than 12 months, or is, by
reason of any medically determinable physical or mental impairment which can be
expected to result in death or can be expected to last for a continuous period
of not less than 12 months, receiving income replacement benefits for a period
not less than 3 months under an accident and health plan covering Employees of
the Employer.  A Participant will be
deemed to be subject to a Disability if the Participant is determined to be
disabled under a long-term disability plan of the Employer that uses a
definition of “disability” that complies with one or both of the
foregoing.  In addition, a Participant
will be deemed to be subject to a Disability if the Participant is determined
to be totally disabled by the U.S. Social Security Administration.

2.15                           Effective
Date.  January 1, 2007, or with
respect to a particular Affiliate, such later date as of which the Plan
Administrative Committee deems such Affiliate to be a Participating Employer in
the Plan.

2.16                           Eligible Employee.  Any Employee who is performing services in the
United States for an Employer as to whom the Employer reports wage payments on
Form W-2 and is eligible for the Management Incentive Plan.

2.17                           Employee.  A common law employee of an Employer, as
reflected in the payroll records of the Employer.

2.18                           Employer.  The Company and each Affiliate that the Plan
Administrative Committee shall from time to time designate as a Participating
Employer for purposes of the Plan.

 5
 

 

2.19                           ERISA.  The Employee Retirement Income Security Act
of 1974, as amended from time to time, and as construed and interpreted by
valid regulations and rulings issued thereunder.

2.20                           Initial
Election Deadline.  The Initial
Election Deadline refers to the Deferral election deadline applicable to an
Eligible Employee when he or she first becomes a Participant and shall mean (a)
December 31, 2006 if the Employee is an Eligible Employee as of December 1,
2006, or (b) if the Employee is not an Eligible Employee as of December 1,
2006, the thirtieth (30th) day
following the date he or she qualifies as an Eligible Employee.  Notwithstanding the foregoing, the Initial
Election Deadline shall be December 31 of the calendar year in which the
Eligible Employee qualifies as an Eligible Employee if the Eligible Employee,
at the time of such qualification, is a participant in any other plan of
deferred compensation maintained by the Employer or any Affiliate.

2.21                           Investment
Funds.  The phantom investment funds
established under this Plan which will accrue earnings and losses as if the
Participant’s Deferred Benefit Accounts were invested in the actual Investment
Funds as designated by the Company from time to time pursuant to Section 4.4.

2.22                           Participant.  Any Eligible Employee or former Eligible
Employee who has become a participant in the Plan pursuant to Article III, for
so long as his or her benefits hereunder have not been paid out.  In the event of the death or incompetency of
a Participant, the term shall mean the executor or administrator of the
Participant’s estate or the Participant’s legal guardian.

2.23                           Participating
Employer.  An Affiliate that has been
approved by the Compensation Committee as an Employer participating in the
Plan.

2.24                           Payment
Eligibility Date.  Payment
Eligibility Date shall mean (a) with respect to a Participant who is not a
Specified Employee, the first day following the Participant’s Termination of
Employment, or (b) with respect to a Participant who is a Specified Employee,
the first day of the seventh month following the Participant’s Termination of
Employment (or, if earlier, the date of the Participant’s death), except in the
case of a Termination of Employment due to death or Disability, in which case
it is the first day following the Participant’s Termination of Employment.

2.25                           Performance-based
Bonus.  A Bonus with respect to which
the amount of, or the entitlement to, the Bonus is contingent upon the
satisfaction of pre-established organizational or individual performance
criteria relating to a performance period of at least twelve (12) months that
are established in writing by no later than ninety (90) days after the
commencement of the period of service to which the criteria relates, provided
that the outcome is substantially uncertain at the time the criteria are
established.  Such pre-established
organizational or individual performance criteria may include subjective
performance criteria that relate to the performance of the Participant, a group
of service providers that includes the Participant, or a business unit
(including the Company and all Affiliates) for which the Participant provides
services.

 6

 

2.26                           Plan.  The Neenah Paper Deferred Compensation Plan
as set forth herein and as amended from time to time.

2.27                           Plan
Administrative Committee.  The
committee appointed by the Compensation Committee to administer and regulate
the Plan as provided in Article VI.

2.28                           Retirement
Date.  The date of Termination of
Employment of the Participant on or after he attains age 55.

2.29                           Salary.  The Participant’s base salary which would be
received during a calendar year if no election to defer were made, including any
contributions to the Neenah Paper 401(k) Retirement Plan or any pre-tax
contributions to the Neenah Paper Flexible Benefit Plan.  For purposes of this Plan, Salary shall not
include severance or other payments made in connection with a Participant’s Termination
of Employment.

2.30                           Specified
Employee.  A Participant who is a key
employee (as defined in Code Section 416(i) without regard to Code Section
416(i)(5)) of the Company (or an Affiliate) while the Company’s stock is
publicly traded on an established securities market or otherwise.  For this purpose, a Participant is a key
employee if the Participant meets the requirements of Code Section
416(i)(1)(A)(i), (ii) or (iii) (applied in accordance with the regulations
thereunder and disregarding Code Section 416(i)(5)) at any time during the
twelve (12) month period ending on December 31.  Notwithstanding the foregoing, a Participant
who is a key employee determined under the preceding sentence will be deemed to
be a Specified Employee solely for the period of April 1 through March 31
following such December 31 or as otherwise required by the Code Section 409A.

2.31                           Termination
of Employment.

(A)                              The
Participant’s cessation of his employment with the Employer and all Affiliates
for any reason whatsoever, whether voluntarily or involuntarily, including by
reasons of retirement, Disability or death.

(B)                                Notwithstanding
the foregoing, an event shall not be deemed to be a Termination of Employment
if it would not qualify as a “separation from service” pursuant to Code Section
409A.  For all purposes under the Plan, a
Participant shall not be considered to have experienced a Termination of
Employment if the Participant remains employed by an Affiliate.  However, if the Participant is employed by an
entity which is an Affiliate and such entity ceases to be an Affiliate as a
result of a sale or other reorganization, such sale or other reorganization
shall be treated as a Termination of Employment unless immediately following
such event and without any break in employment the Participant is employed by a
Participating Employer or an Affiliate.

(C)                                No
Termination of Employment shall occur while the Participant is on military
leave, sick leave, or other bona fide leave of absence if the period of such
leave does not exceed six months, or, if longer, so long as the Participant’s
right to reemployment is provided either by statute or contract.  If the period of leave exceeds six months and
the Participant’s right to reemployment is not provided

 7
 

 

either by statute or by contract, the employment
relationship is deemed to terminate on the first date immediately following
such six-month period.

2.32                           Valuation
Date.  Any business day on which
securities are traded on the New York Stock Exchange.

2.33                           Year
of Service.  Year of Service shall
have the same meaning herein as under the Neenah Paper 401(k) Retirement Plan.

2.34                           Construction.  Where appearing in the Plan, the masculine
shall include the feminine and the plural shall include the singular, unless
the context clearly indicates otherwise. 
The words “hereof,” “herein,” “hereunder” and other similar compounds of
the word “here” shall mean and refer to the entire Plan and not to any
particular Section or subsection.

ARTICLE
III

ELIGIBILITY AND PARTICIPATION

3.1                                 Eligibility.  An Employee may participate in the Plan only
if such Employee is an Eligible Employee and such Employee has affirmatively
elected to participate in the Plan.  An
Employee shall be eligible to participate in the Plan as of the later of: (a)
January 1, 2007, if the Employee is an Eligible Employee as of that date, or
(b) the date on which the Employee becomes an Eligible Employee.

3.2                                 Participation.

(A)                              An
Eligible Employee shall become a Participant in the Plan by electing to defer a
portion of his or her Salary and/or Bonus in accordance with Article IV hereof
and filing an Agreement with the Plan Administrative Committee, at such time
and in such form as the Plan Administrative Committee may require or permit in
accordance with Section 4.2.  The
election to participate shall be effective upon receipt by the Plan
Administrative Committee of the Agreement that is properly completed and
executed in conformity with the Plan.

(B)                                A
Participant who ceases to be an Eligible Employee will no longer be eligible to
make further Deferrals under the Plan pursuant to Article IV; provided,
however, that in any such circumstance, further Deferrals by the Participant
under Article IV shall continue for as long as necessary to preserve the
irrevocability of the election under Code Section 409A.  A Participant who ceases to be an Eligible
Employee shall continue to be subject to all other terms of the Plan so long as
he remains a Participant of the Plan.

(C)                                In
the event the Participant participates in a plan of a Participating Employer or
an Affiliate intended to qualify under Code Section 401(a) and containing a
tax-qualified cash or deferred arrangement qualified under Code Section 401(k),
the Participant shall be suspended from continued participation under this Plan
under Article III to the extent required by such other plan as a result of a
hardship withdrawal made by such Participant under such other plan, but only to
the extent

 8
 

 

such suspension would not affect the irrevocability of
the Participant’s outstanding Deferral elections under Code Section 409A.

ARTICLE
IV

DEFERRALS, INVESTMENT AND VESTING

4.1                                 Establishment
of Accounts.  The Company shall
create and maintain unfunded Deferred Benefit Accounts for each Participant
eligible to participate in the Plan, to which it shall credit the amounts
described in this Article IV.  The
Participant’s Deferrals pursuant to Section 4.2 for each Deferral Year and all
earnings, losses, and distributions attributable thereto shall be accounted for
in a separate Deferred Benefit Account for each Deferral Year.

4.2                                 Deferral
Elections.

(A)                              Initial
Election Deadline.  Each Participant
may elect to defer receipt of his or her Salary and/or Bonus by filing with the
Plan Administrative Committee an election that conforms to the requirements of
this Section 4.2, on a form provided by the Plan Administrative Committee, by
his or her Initial Election Deadline or such earlier date as may be required by
the Plan Administrative Committee.  An
election to defer Salary or Bonuses by an Initial Election Deadline shall be
effective with respect to Salary and Bonuses for services to be performed after
the election.  For this purpose, a Bonus
that is earned based on a specified performance period (e.g., an annual period)
shall be deemed to be with respect to services to be performed after the date
of the election as to the portion of the Bonus equal to the total amount of the
Bonus for the service period multiplied by a ratio of the number of days
remaining in the performance period after the election to the total number of
days in the performance period. 
Notwithstanding the foregoing, an election to defer a Performance-based
Bonus shall be given effect without the proration in the preceding sentence if
the Participant performs services continuously from a date no later than the
date the performance criteria are established, the election is made at least
six (6) months before the end of the applicable performance period and at the
date of the election the amount of the Performance-based Bonus is not readily ascertainable
or substantially certain to be paid.

(B)                                Elections
Other Than Elections During the Initial Election Deadline.  A Participant may subsequent to his or her
Initial Election Deadline elect to defer Salary and/or Bonus for a subsequent
Deferral Year by filing an election, on a form provided by the Plan
Administrative Committee.  Such election
shall be made on or before the last day of the preceding Deferral Year for
which the election is to apply, or such earlier date as may be required by the
Plan Administrative Committee.  An
election to defer Salary or Bonuses for such Deferral Year shall be effective
with respect to Salary and Bonuses for services to be performed for the
Deferral Year.  Notwithstanding the
foregoing, an election to

 9
 

 

defer a Performance-based Bonus shall be given effect
without the proration in the preceding sentence if the Participant performs
services continuously from a date no later than the date the performance
criteria are established, the election is made at least six (6) months before
the end of the applicable performance period and at the date of the election
the amount of the Performance-based Bonus is not readily ascertainable or
substantially certain to be paid.

(C)                                Duration
of Deferral Elections.  Any Deferral
election(s) made under subsection (A) or (B) shall be irrevocable and shall
apply only with respect to the Deferral Year for which the election is made;
provided, that a Participant may cancel his or her Deferral election for a
Deferral Year due to an unforeseeable emergency pursuant to Section 5.1(D) or a
hardship distribution pursuant to Treasury Regulation Section 1.401(k)-(d)(3)
under a plan of a Participating Employer or an Affiliate intended to qualify
under Code Section 401(a) and containing a tax-qualified cash or deferred
arrangement qualified under Code Section 401(k).  The Plan Administrative Committee may provide
that any Deferral election(s) are to be given continuing effect until
terminated or modified by the Participant; provided, however, in that event,
any such Deferral election(s) shall become irrevocable as to a Deferral Year as
of the immediately preceding December 31st.

4.3                                 General
Deferral Rules.

(A)                              Amount
of Deferrals.  Subject to such limits
and conditions as the Plan Administrative Committee may impose, an eligible
Participant may elect to defer from:

(1)                                  5%
to 75% of his or her Salary paid during a Deferral Year; and/or

(2)                                  5%
to 100% of his or her Bonus paid during a Deferral Year;

provided; however, that the Deferral election may not relate to any
payroll withholding amount, such as, but not limited to, required tax
withholding or employee contributions under Code Section 401(k) or 125 or for
group health plan premiums.

(B)                                Minimum
Deferral.  In no event may the amount
of a Participant’s Deferral election related to his or her Salary and/or Bonus
paid during a Deferral Year be projected at the time of the Deferral election
to be less than $5,000.

(C)                                Timing
of Deferral Credits.  The amount of Salary or Bonus, or both that a
Participant elects to defer in the Agreement shall cause an equivalent
reduction in the Participant’s Salary and Bonus, respectively.  Deferrals shall be credited throughout each
Deferral Year as the Participant is paid the nondeferred portion of Salary and
Bonus for such Deferral Year.

(D)                               Tax
Withholdings.  In the event a
Participant elects to defer an amount of his or her Salary and/or Bonus that
would not allow for the full payment of all FICA, federal, state and/or local
income tax liabilities, the Employer may withhold all or

 10
 

 

a portion of any applicable taxes from the Participant’s
Salary to the extent required by law.

4.4                                 Investment
Elections.

(A)                              Each
Participant’s Deferrals and Deferred Benefit Account for each Deferral Year
under this Plan shall be credited with earnings, gains and losses as if such
accounts held actual assets and such assets were among such Investment Funds as
the Company may designate.  Any such
direction of investment shall be subject to such rules as the Company and the
Plan Administrative Committee may prescribe, including, without limitation,
rules concerning the manner of providing investment directions, the frequency
of changing such investment directions, and method of crediting earnings, gains
and losses for any portion of a Deferred Benefit Account which is not covered
by any valid investment directions. 
Participants, retired Participants, and Beneficiaries shall allocate
their Deferred Benefit Accounts among the deemed investment options by making an
election with the Plan Administrative Committee at such time and in such form
as the Plan Administrative Committee may require or permit.  A Participant, retired Participant or
Beneficiary may elect to allocate his or her Deferrals and Deferred Benefit Accounts
among as many of the investment options which are offered by the Company.

(B)                                The
Investment Funds from which the Participant shall make such election shall be
selected by the Company.  The Company
shall have the sole discretion to determine the number of Investment Funds to
be designated hereunder and the nature of the funds and may change, add or
eliminate the Investment Funds provided hereunder from time to time and shall
communicate any such changes to Participants.

(C)                                The
Plan Administrative Committee shall determine the rate of earnings, gains and
losses to be credited to Participant’s Deferred Benefit Accounts under this
Plan with respect to any such Investment Fund for any period, taking into
account the return, net of any expenses which would have been incurred in
connection with the sale, investment and reinvestment of the Investment Funds
(such as brokerage, postage, express and insurance charges and transfer taxes),
of such Investment Funds for such period.

(D)                               Notwithstanding
the foregoing, the Plan Administrative Committee may, but is not required to,
direct the trustee (if any trust is established pursuant to Section 7.1) to
invest amounts credited to the Participant’s Deferred Benefit Accounts in
accordance with the Investment Fund designations of the Participant.  Upon
prior written notice to a Participant, the Plan Administrative Committee
may revise or give no effect to a
Participant’s investment selections.  If
no investment election has been properly or timely filed with the Plan
Administrative Committee or if the Plan
Administrative Committee, upon prior
written notice to the Participant, modifies the Participant’s election, an
account shall be credited with the net

 11
 

 

income or net loss of the
Investment Fund(s) selected by the Plan Administrative Committee.

4.5                                 Investment
Changes.  A Participant may elect as
of any Valuation Date to change the manner in which his or her Deferred Benefit
Accounts and his or her future Deferrals are deemed invested among the
available Investment Fund options.  Any
change of investment allocation received will be effective as of the close of
business on that business day if received by 4:00 p.m. Eastern Standard Time (or, if earlier, the closing
time of the New York Stock Exchange) or such other time and under such other
conditions as may be imposed by the recordkeeper or the Plan Administrative
Committee.  The determination of a
Participant’s having timely elected a change of investment allocation shall be
made in accordance with Plan Administrative Committee procedures.

4.6                                 Deferred
Benefit Account Credits.  As soon as
reasonably practicable after the date of withholding by the Employer, Deferrals
previously elected by a Participant for a Deferral Year shall be credited to
the Participant’s Deferred Benefit Account. 
As of the close of business on each Valuation Date the designated
Deferred Benefit Accounts of each Participant shall be capable of being valued
and adjusted to preserve for each Participant his or her proportionate interest
in the related funds as if such account held actual assets and such assets were
among such Investment Funds as the Participant, retired Participant or
Beneficiary elected pursuant to Section 4.4. 
As of each Valuation Date, the Deferred Benefit Accounts of each
Participant shall be capable of being adjusted to reflect the effect of income,
collected and accrued, realized and unrealized profits and losses, expenses
which would have been incurred in connection with the sale, investment and
reinvestment of the Investment Funds (such as brokerage, postage, express and
insurance charges and transfer taxes), and all other transactions with respect
to the related fund.  The effect of such
transactions shall be determined by the Plan Administrative Committee in
accordance with generally accepted valuation principles applied on a consistent
basis.  Each Participant’s Deferred
Benefit Accounts shall then be appropriately credited with his or her Deferrals
as set forth in Section 4.7.

4.7                                 Determination
of Accounts.  The balance of each
Participant’s Deferred Benefit Account as of each Valuation Date shall be
calculated, in a manner determined by the Plan Administrative Committee in
accordance with generally accepted valuation principles applied on a consistent
basis, as follows: the beginning balance of each Participant’s Deferred Benefit
Account; less distributions payable as of the Valuation Date coincident
with the Determination Date or, if none, the Valuation Date immediately
following such Determination Date; plus investment earnings, gains and
losses credited to each Participant’s Deferred Benefit Account; plus
Participant Deferrals credited to each Participant’s Deferred Benefit Account.

4.8                                 Vesting.  A Participant shall at all times be 100%
vested in his or her Deferred Benefit Accounts equal to the amount of Salary and
Bonus he or she deferred into the Deferred Benefit Accounts and the earnings,
gains or losses credited thereon.

 12
 

 

4.9                                 Effect
on Other Plans.  The amount of
contributions made on behalf of a Participant under this Article IV shall not
be deemed to be earnings or compensation for the purpose of calculating the
amount of a Participant’s benefits or contributions under a retirement or
deferral plan of a Participating Employer or the basis or amount for any other
benefit plan provided by a Participating Employer, except to the extent
provided in any such plan.  No amount
distributed under this Plan shall be deemed to be earnings or a part of the
Participant’s total compensation when determining a Participant’s benefit under
any benefit plan established by a Participating Employer, unless otherwise
provided in such plan.

ARTICLE V

DISTRIBUTIONS

5.1                                 Distribution
of Benefits.

(A)                              Retirement.  Upon a Participant’s Retirement Date, the
Participant’s Deferred Benefit Accounts shall be paid to the Participant as
soon as administratively feasible after the Participant’s Payment Eligibility
Date in one of the following forms as elected by the Participant on such forms
as designated by the Plan Administrative Committee during this applicable
election period(s) as set forth in Section 4.2 hereof.

(1)                                  a
lump sum distribution; or

(2)                                  ratable
annual installments over two (2) to ten (10) years.

Subject to the provisions of Article V, a Participant may make a
different payment election for each Deferred Benefit Account established to
hold Participant Deferrals for a given Deferral Year.  In the absence of the Participant making a
distribution election, or in the absence of an effective distribution election,
the default form of payment shall be a lump sum distribution.

Initially, the amount of any installments under the installment form of
payment shall be equal to the balance of the Participant’s Deferred Benefit
Account to be distributed divided by the number of installments to be
paid.  The amount of the installment
payments shall be recomputed annually and the installment payments shall be
increased or decreased to reflect any changes in the Participant’s Deferred
Benefit Account due to fluctuations in earnings, gains and losses on the
remaining balance and the number of remaining installments.

(B)                                Termination
of Employment Prior to Retirement Date. 
In the case of a Participant who incurs a Termination of Employment
prior to his Retirement Date, the Participant’s Deferred Benefit Accounts shall
be paid to the Participant in one lump sum as soon as administratively feasible
after the Participant’s Payment Eligibility Date.

 13
 

 

(C)                                Death.  Upon the death of a Participant, the
Beneficiary of such Participant shall receive all of the Participant’s
remaining Deferred Benefit Accounts in a lump sum as soon as administratively
feasible following the death of the Participant, regardless of whether the
Participant has commenced receiving payment of any of his or her Deferral
Benefit Accounts in installments.

(D)                               Unforeseen
Emergency Benefit and Waiver of Deferral.

(1)                                  In
the event that the Plan Administrative Committee, upon written petition of the
Participant or his or her Beneficiary, determines in its sole discretion, that
the Participant or his or her Beneficiary has suffered an “unforeseeable
emergency,” the Company shall pay to the Participant or his or her Beneficiary
an amount from the Participant’s Deferred Benefit Accounts not in excess of the
amount necessary to satisfy the unforeseeable emergency (which may include
amounts necessary to pay any Federal, state, or local income taxes or penalties
reasonably anticipated to result from the distribution).

(2)                                  For
these purposes, an “unforeseeable emergency” means a severe financial hardship
of the Participant or his Beneficiary resulting from an illness or accident of
the Participant or his Beneficiary, the Participant’s or Beneficiary’s spouse,
or the Participant’s or Beneficiary’s dependent (as defined by Code Section
152(a)); loss of the Participant’s or Beneficiary’s property due to casualty
(including the need to rebuild a home following damages to a home not otherwise
covered by insurance); or other similar extraordinary and unforeseeable
circumstances arising as a result of events beyond the control of the
Participant or Beneficiary as described in Code Section 409A and applicable
guidance and regulations promulgated thereunder.  The purchase of a home and the payment of
college tuition are not unforeseeable emergencies.

(3)                                  Payment
under this Section 5.1(D) may not be made to the extent such hardship is or may
be relieved:  (i) through reimbursement
or compensation by insurance or otherwise; (ii) by liquidation of the
Participant’s assets to the extent that the liquidation of such assets would
not itself cause severe financial hardship; or (iii) by cessation of Deferrals
pursuant to Section 4.2 hereof.

(4)                                  The
Plan Administrative Committee shall terminate the Participant’s Agreement under
the circumstances described in Section 4.2(C).

(5)                                  Subject
to the foregoing, payment of any amount for which a Participant has filed a
request under this Section 5.1(D) shall be made as soon as is administratively
feasible after approval of such request by the Plan Administrative Committee.

 14
 

 

(E)                                 Change
of Control.  On the initial election
form, the Participant may elect for the full amount of the Participant’s
Deferred Benefit Accounts to be distributed to the Participant in a lump sum as
soon as administratively practicable following a Change of Control.

(F)                                 Automatic
Lump Sum Distribution.  If, upon a Participant’s
Retirement Date, the aggregate balance of all a Participant’s Deferred Benefit
Accounts is less than $100,000, the Participant will be paid the entire balance
his or her Deferred Benefit Accounts as of the Participant’s Retirement Date,
in a final lump sum payment, notwithstanding the election for an installment
form of benefit payments.

5.2                                 Tax
Withholding.  To the extent required
by law, the Employer shall withhold any taxes required to be withheld by any
Federal, State or local government.

5.3                                 Commencement
of Payments.  Commencement of
payments under this Plan from a Participant’s Deferred Benefit Accounts shall
be as soon as administratively feasible following the Participant’s Payment
Eligibility Date.

5.4                                 Recipients
of Payments; Designation of Beneficiary. 
All payments to be made by the Employer under the Plan shall be made to
the Participant during his lifetime, provided that if the Participant dies
prior to the completion of such payments, then all subsequent payments under
the Plan shall be made by the Employer to the Beneficiary determined in
accordance with this Section.  The
Participant may designate a Beneficiary by filing a written notice of such
designation with the Plan Administrative Committee in such form as the Plan
Administrative Committee requires and may include contingent
Beneficiaries.  The Participant may from
time-to-time change the designated Beneficiary by filing a new designation in
writing with the Plan Administrative Committee. 
If no designation is in effect at the time when any benefits payable
under this Plan shall become due, the Beneficiary shall be the representative
of the Participant’s estate.

5.5                                 Inability
to Locate Participant.  In the event
that the Plan Administrative Committee is unable to locate a Participant or
Beneficiary within two years following the Participant’s Payment Eligibility
Date or other payment date, after making a reasonable effort to locate such
person, the amount allocated to the Participant’s Deferred Benefit Accounts
shall be forfeited.  In the event the
Participant or Beneficiary later notifies the Plan Administrative Committee of
his whereabouts and requests the payments due to him under the Plan, the
Employer shall re-credit the Participant’s account and provide for payment of
the re-credited amount (without interest or earnings) to the Participant or
Beneficiary as soon as administratively feasible.

 15

 

ARTICLE
VI

PLAN ADMINISTRATIVE COMMITTEE

6.1                                 Plan
Administrative Committee.  The
Compensation Committee shall designate one or more persons to serve as the Plan
Administrative Committee to perform the duties and responsibilities set forth
in Article VI.

6.2                                 Committee
Membership.

(A)                              The
Plan Administrative Committee shall consist of one or more persons who shall be
appointed by and serve at the pleasure of the Compensation Committee.

(B)                                The
Compensation Committee shall have the right to remove any member of the Plan
Administrative Committee at any time.  A
member may resign at any time by written resignation to the Compensation
Committee.  If a vacancy in the Plan
Administrative Committee should occur, a successor may be appointed by the
Compensation Committee.

6.3                                 Powers.  The Plan Administrative Committee shall have
all powers specified in the Plan in addition to all others as may be necessary
to discharge its duties hereunder, including, but not by way of limitation, the
power to construe or interpret the Plan, to determine all questions of
eligibility hereunder, to determine the method of payment of any Deferred
Benefit Account hereunder, to adopt rules relating to the giving of timely
notice, to select Investment Funds unless the Compensation Committee determines
otherwise, and to perform such other duties as may from time to time be
delegated to it by the Compensation Committee. 
The Plan Administrative Committee may take such voluntary correction
action as it considers necessary or appropriate to remedy any inequity that
results from incorrect information received or communicated in good faith or as
a consequence of administrative or operational error, including but not limited
to reallocation adjustments in amounts of future payments to Participants or
Beneficiaries and institution of prosecution of actions to recover benefit
payments made in error or on the basis of incorrect or incomplete
information.  The Plan Administrative
Committee may prescribe such forms and systems and adopt such rules and actuarial
methods and tables as it deems advisable. 
It may employ such agents, attorneys, accountants, actuaries, medical
advisors, or clerical assistants (none of whom need be members of the Plan
Administrative Committee) as it deems necessary for the effective exercise of
its duties, and may delegate to such agents any power and duties both
ministerial and discretionary, as it may deem necessary and appropriate.  The compensation of such agents who are not
full-time employees of an Employer shall be fixed by the Plan
Administrative Committee within limits set by the Compensation Committee and
shall be paid by the Company as determined by the Plan Administrative
Committee.

6.4                                 Organization
and Procedures.  The Plan
Administrative Committee shall elect one of its members as chairman.  Its members shall serve as such without
compensation.  Plan Administrative
Committee expenses shall be paid by the Company.  A majority of the Plan Administrative
Committee members shall constitute a quorum. 
The Plan

 16
 

 

Administrative Committee may take any action upon a
majority vote at any meeting at which a quorum is present, and may take any
action without a meeting upon the unanimous written consent of all
members.  All actions by the Plan
Administrative Committee shall be evidenced by a certificate signed by a member
of the Plan Administrative Committee. 
The Plan Administrative Committee shall appoint a secretary to the Plan
Administrative Committee who need not be a member of the Plan Administrative
Committee, and all acts and determinations of the Plan Administrative Committee
shall be recorded by the secretary, or under his supervision.  All such records, together with such other
documents as may be necessary for the administration of the Plan, shall be
preserved in the custody of the secretary.

6.5                                 Rules
and Decisions.  The Plan
Administrative Committee shall have absolute discretion in carrying out its
duties under the Plan.  The Plan Administrative Committee shall from time to time establish rules, not
contrary to the provisions of the Plan, for the administration of the Plan and
the transaction of its business.  The Plan
Administrative Committee shall have
discretionary authority to construe the terms of the Plan and shall determine
all questions arising in the administration, interpretation and application of
the Plan.  All determinations of the Plan
Administrative Committee shall be final
and binding on all parties.

6.6                                 Authorization
of Payments.  If a grantor trust is
established pursuant to Section 7.1, subject to the provisions hereof, it shall
be the duty of the Plan Administrative Committee to furnish the trustee of such
trust with all facts and directions necessary or pertinent to the proper
disbursement of the trust funds.

6.7                                 Books
and Records.  The records of the Employers
shall be conclusive evidence as to all information contained therein with
respect to the basis for participation in the Plan.  The Plan Administrative Committee shall keep
all individual and group records relating to Participants and Beneficiaries and
all other records necessary for the proper operation of the Plan.  Such records shall be made available to the
Employers and to each Participant and Beneficiary for examination during normal
business hours except that a Participant or Beneficiary shall examine only such
records as pertain exclusively to the examining Participant or Beneficiary and
the Plan.  The Plan Administrative
Committee shall prepare and shall file as required by law or regulation all
reports, forms, documents and other items required by ERISA, the Code and every
other relevant statute, each as amended, and all regulations thereunder.  This provision shall not be construed as
imposing upon the Plan Administrative Committee the responsibility or authority
for the preparation, preservation, publication or filing of any document
required to be prepared, preserved or filed by any other named fiduciary to
whom such responsibilities are delegated by law or by the Plan.

6.8                                 Perpetuation
of the Plan Administrative Committee. 
In the event that the Company shall for any reason cease to exist, then,
unless the Plan is adopted and continued by a successor, the members of the
Plan Administrative Committee at that time shall remain in office until the
final termination of the Plan, and any vacancies in the membership of the Plan
Administrative Committee caused by death, resignation, disability or other
cause,

 17
 

 

shall be filled by the remaining member or members of
the Plan Administrative Committee.

6.9                                 Claims
Procedure.

(A)                              Authorized
Representative.  A Participant or
Beneficiary under the Plan may name an authorized representative to act on his
or her behalf under the claims procedures of the Plan, by providing written
documentation of such authorization in such form as is acceptable to the Plan
Administrative Committee.

(B)                                Procedure
for Making Initial Claims.  Claims
for benefits under the Plan may be made by submitting forms to the Plan
Administrative Committee pursuant to procedures established by the Plan
Administrative Committee from time to time.

(C)                                Review
of Claims for Benefits.

(1)                                  Determination
Regarding Initial Claims.  If a claim
for Plan benefits is denied, the Plan Administrative Committee shall provide a
written notice within 90 days (45 days with respect to a denial of any claim
for benefits due to the Participant’s Disability) to the claimant that contains
(i) specific reasons for the denial; (ii) specific references to Plan
provisions on which the Plan Administrative Committee based its denial; (iii) a
description of any additional material or information necessary for the
claimant to perfect the claim and an explanation of why such material or
information is necessary; (iv) a description of the Plan’s claim review
procedures and time limits applicable to such procedures, including a statement
of the claimant’s right to bring a civil action under section 502(a) of ERISA
following an adverse benefit determination on review; (v) in the case of a
claim for benefits due to the Participant’s Disability, if an internal rule,
guideline, protocol or other similar criterion is relied upon in making the
adverse determination, either the specific rule, guideline, protocol or other
similar criterion; or a statement that such rule, guideline, protocol or other
similar criterion was relied upon in making the decision and that a copy of
such rule, guideline, protocol or other similar criterion will be provided free
of charge upon request; and (vi) in the case of a claim for benefits due to the
Participant’s Disability, if a denial of the claim is based on a medical
necessity or experimental treatment or similar exclusion or limit, an
explanation of the scientific or clinical judgment for the denial, an
explanation applying the terms of the Plan to the claimant’s medical
circumstances or a statement that such explanation will be provided free of
charge upon request.

If additional time is required to make a decision on
the claim, the Plan Administrative Committee shall notify the claimant of the
delay within the original 90 day period (or 45 day period, as applicable).  This extension period may not exceed 90 days
(30 days with respect to a denial of any claim for benefits due to the
Participant’s Disability) beyond the end of

 18
 

 

such initial period. 
With respect to a claim for benefits due to a Participant’s Disability,
an additional extension of up to 30 days beyond the initial 30-day extension
period may be required for processing the claim.  In such event, written notice of the
extension shall be furnished to the claimant within the initial 30-day extension
period.  Any extension notice will
indicate the special circumstances requiring the extension of time, the date by
which the Plan Administrative Committee expects to render the final decision,
the standards on which entitlements to benefits are based, the unresolved
issues that prevent a decision on a claim and the additional information needed
to resolve those issues.

(2)                                  Appeals.  The claimant may appeal a denied claim by
submitting a written request for an appeal review to the Plan Administrative
Committee (or the Appeals Fiduciary in the case of a claim for benefits due to
the Participant’s Disability).  The
appeal request must, however, be made within 60 days (180 days in the case of a
claim for benefits due to the Participant’s Disability) after the claimant’s
receipt of notice of the denial of the claim. 
Pertinent documents may be reviewed in preparing an appeal, and issues
and comments may be submitted in writing. 
The claimant shall be provided, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other
information relevant to the claimant’s claim for benefits (as determined under
applicable regulations).  An appeal shall
be given a complete review by the Plan Administrative Committee, taking into
account all comments, documents, records and other information submitted by the
claimant without regard to whether such information was submitted or considered
in the initial benefit determination.

With respect to any claim for benefits due to the
Participant’s Disability, in deciding an appeal of any denial based in whole or
in part on a medical judgment (including determinations with regard to whether
a particular treatment, drug, or other item is experimental, investigational,
or not medically necessary or appropriate), the Appeals Fiduciary shall (i)
consult with a health care professional who has appropriate training and
experience in the field of medicine involved in the medical judgment; and (ii)
identify the medical and vocational experts whose advice was obtained on behalf
of the Plan in connection with the denial without regard to whether the advice
was relied upon in making the determination to deny the claim.

Notwithstanding the foregoing, the health care
professional consulted shall be an individual who was not consulted with
respect to the initial denial of the claim that is the subject of the appeal or
a subordinate of such individual.

(3)                                  Decision
on Review.  No later than 60 days (45
days with respect to a claim for benefits due to the Participant’s Disability)
following the receipt

 19
 

 

of the written application for review, the Plan
Administrative Committee or the Appeals Fiduciary, as applicable, shall submit
its decision on the review in writing to the claimant involved and to his
representative, if any, unless the Plan Administrative Committee or Appeals
Fiduciary determines that special circumstances (such as the need to hold a
hearing) require an extension of time, to a day no later than 120 days (ninety
(90) days with respect to a claim for benefits due to the Participant’s
Disability) after the date of receipt of the written application for
review.  If the Plan Administrative
Committee or Appeals Fiduciary determines that the extension of time is
required, the Plan Administrative Committee or Appeals Fiduciary shall furnish
to the claimant written notice of the extension before the expiration of the
initial 60 day (45 days with respect to a claim for benefits due to the
Participant’s Disability) period.  The
extension notice shall indicate the special circumstances requiring an
extension of time and the date by which the Plan Administrative Committee or
Appeals Fiduciary expects to render its decision on review.

In the case of a decision adverse to the claimant, the
Plan Administrative Committee or Appeals Fiduciary shall provide to the
claimant written notice of the denial which shall include:  (i) specific reasons for the decision; (ii)
specific references to pertinent Plan provisions on which the decision is
based; (iii) a statement that the claimant is entitled to receive, upon request
and free of charge, reasonable access to, and copies of, all documents,
records, and other information relevant to the claimant’s claim for benefits;
(iv) a description of the Plan’s claim review procedures and a statement of the
claimant’s right to bring a civil action under Section 502(a) of ERISA
following an adverse benefit determination on review; (v) in the case of a
claim for benefits due to the Participant’s Disability, if an internal rule,
guideline, protocol or other similar criterion is relied upon in making the
adverse determination, either the specific rule, guideline, protocol or other
similar criterion; or a statement that such rule, guideline, protocol or other
similar criterion was relied upon in making the decision and that a copy of
such rule, guideline, protocol or other similar criterion will be provided free
of charge upon request; (vi) in the case of a claim for benefits due to a
Participant’s Disability, if a denial of the claim is based on a medical
necessity or experimental treatment or similar exclusion or limit, an
explanation of the scientific or clinical judgment for the denial, an
explanation applying the terms of the Plan to the claimant’s medical
circumstances or a statement that such explanation will be provided free of
charge upon request; and (vii) in the case of a claim for benefits due to the
Participant’s Disability, a statement regarding the availability of other
voluntary alternative dispute resolution options.

(4)                                  Notwithstanding
the foregoing, the special rules for a claim for benefits due to a Participant’s
Disability provided in this Section 6.9(C) shall not apply if the Participant
is determined to be subject to a Disability hereunder as a result as a result
of being determined to be totally disabled

 20
 

 

by the U.S. Social Security Administration or if the
determination of “Disability” that complies with the definition of Disability
hereunder is made pursuant to the Employer’s long-term disability plan.

(D)                               Appeals
Fiduciary.  For purposes of this
Section 6.9, the Appeals Fiduciary means an individual or group of individuals
appointed to review appeals of claims for benefits payable due to the
Participant’s Disability.  The Plan
Administrative Committee shall appoint the Appeals Fiduciary.  The Appeals Fiduciary shall be required to
review claims for benefits payable due to the Participant’s Disability that are
initially denied by the Plan Administrative Committee and for which the
claimant requests a full and fair review pursuant to this Section.  The Appeals Fiduciary may not be the
individual who made the initial adverse determination with respect to any claim
he reviews and may not be a subordinate of any individual who made the initial
adverse determination.  The Appeals
Fiduciary may be removed in the same manner in which appointed or may resign at
any time by written notice of resignation to the Plan Administrative
Committee.  Upon such removal or
resignation, the Plan Administrative Committee shall appoint a successor.

6.10                           Allocation
or Reallocation of Responsibilities. 
The Plan Administrative Committee may allocate their responsibilities
under the Plan among themselves.  Any
such allocation, reallocation, or designation shall be in writing and shall be
filed with and retained by the secretary of the Plan Administrative Committee
with the records of the Plan Administrative Committee.

6.11                           Service
of Process.  The Company shall be the
designated recipient of service of process with respect to legal actions
regarding the Plan.

ARTICLE
VII

MISCELLANEOUS

7.1                                 Unfunded
Obligation.  The obligation to make
payments hereunder shall constitute a contractual liability to the Participant
of the Employer which employed the Eligible Employee during the period the
Deferral was made (the “Applicable Employer”). 
Such payments shall be made from the general funds of the Applicable
Employer, and the Applicable Employer shall not be required to establish or
maintain any special or separate fund, or otherwise to segregate assets to
assure the such payments shall be made, and the Participant shall not have any
interest in any particular assets of the Applicable Employer by reason of its
obligations hereunder.  To the extent
that any person acquires a right to receive payment from the Applicable Employer,
such right shall be no greater than the right of an unsecured creditor of the
Applicable Employer.  The Company may
establish a grantor trust as a source for the payment of benefit obligations
under the Plan.  If established, the
grantor trust shall be unfunded for purposes of the Code and for purposes of
Title I of ERISA and all assets of the grantor trust shall be held in the
United States.  The establishment of a
grantor trust is not intended to cause Participants to realize current

 21
 

 

income on the amounts contributed thereto, and the
grantor trust shall be so interpreted and administered.  Nothing
contained in the Plan constitutes a guarantee by any Applicable Employer that the assets of the Applicable
Employer shall be sufficient to pay any
benefit to any person.

7.2                                 Amendment
and Termination.  The Company, by
action of the Compensation Committee, shall have the right at any time to amend
this Plan in any respect, or to terminate this Plan and may permit or require
the acceleration of payment of Deferred Benefit Accounts in connection
therewith to the extent permitted under Code Section 409A and the regulations
thereunder; provided, however, that no such amendment or termination shall
operate to reduce the benefit that has accrued for any Participant who is
participating in the Plan.  Continuance
of the Plan is completely voluntary and is not assumed as a contractual
obligation of the Company or any Participating Employer.

7.3                                 Effect
of Plan.  Nothing contained herein
(a) shall be deemed to exclude a Participant from any compensation, bonus,
pension, insurance, termination pay or other benefit to which he otherwise is
or might become entitled to as an Employee or (b) shall be construed as
conferring upon an Employee the right to continue in the employ of the Employer
as an officer or in any other capacity.

7.4                                 Offset.  If, at
the time payments are to be made hereunder, the Participant or the Beneficiary
is indebted or obligated to the Employer, then the payments remaining to be
made to the Participant or the Beneficiary may, at the discretion of the
Employer, be reduced by the amount of such indebtedness or obligation,
provided, however, that an election by the Employer not to reduce any such
payment or payments shall not constitute a waiver of its claim for such
indebtedness or obligation.

7.5                                 Amounts
Payable.  Any amounts payable by the
Employer hereunder shall not be deemed salary or other compensation to a
Participant for the purposes of computing benefits to which the Participant may
be entitled under any other arrangement established by the Employer for the
benefit of its Employees.

7.6                                 Rights
and Obligations.  The rights and
obligations created hereunder shall be binding on a Participant’s heirs,
executors and administrators and on the successors and assigns of the Employer.

7.7                                 Notice.  Any notice required or
permitted to be given under the Plan shall be sufficient if in writing and hand
delivered, or sent by registered or certified mail, and if given to the
Company, delivered to the principal office of the Company, directed to the
attention of the Plan Administrative Committee. 
Such notice shall be deemed given as of the date of delivery or, if
delivery is made by mail, as of the date shown on the postmark or the receipt
for registration or certification.

7.8                                 Governing
Law.  The Plan shall be construed and
governed by the laws of the State of Georgia.

7.9                                 Assignment
of Rights.  The rights of any
Participant under this Plan are personal and may not be assigned, transferred,
pledged or encumbered.  Any attempt to do
so shall be void.

 22
 

 

7.10                           Liability.  Neither the Employer, its Employees, agents,
any member of the Board or the Compensation Committee, the plan administrator
nor the Plan Administrative Committee shall be responsible or liable in any
manner to any Participant, Beneficiary, or any person claiming through them for
any benefit or action taken or omitted in connection with the granting of
benefits, the continuation of benefits or the interpretation and administration
of this Plan.

7.11                           Plan
Sponsor.  The Company is the plan
sponsor within the meaning of ERISA.  All
actions shall be taken by the Company in its sole discretion, not as a
fiduciary, and need not be applied uniformly to similarly situated individuals.

 

IN WITNESS WHEREOF, the
Company has caused this Plan to be executed by its duly authorized officer.

	
   

  	
  NEENAH PAPER, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Richard Read

  	
   

  
	
   

  	
   

  
	
   

  	
  Name:

  	
  Richard Read

  	
   

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  VP, Human
  Resources

  	
   

  
	
   

  	
   

  
	
   

  	
  Date:

  	
  12/14/06

  	
   

  
							

 

 23Exhibit
4.1

NOVAGOLD RESOURCES INC.

and

COMPUTERSHARE INVESTOR
SERVICES INC.

as Rights Agent

 

 

 

 

 

SHAREHOLDER RIGHTS PLAN AGREEMENT

December 7, 2006

 

 

 1

 

TABLE OF
CONTENTS

	
  ARTICLE 1

  
	
  INTERPRETATION

  
	
   

  
	
  Section 1.1

  	
  Certain Definitions

  	
  1

  
	
  Section 1.2

  	
  Currency

  	
  11

  
	
  Section 1.3

  	
  Headings

  	
  11

  
	
  Section 1.4

  	
  Number and Gender

  	
  11

  
	
  Section 1.5

  	
  Acting Jointly or in Concert

  	
  11

  
	
  Section 1.6

  	
  Statutory References

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  THE
  RIGHTS

  
	
   

  
	
  Section 2.1

  	
  Legend on Common Share Certificates

  	
  12

  
	
  Section 2.2

  	
  Initial Exercise Price; Exercise of Rights;
  Detachment of Rights

  	
  12

  
	
  Section 2.3

  	
  Adjustments to Exercise Price; Number of Rights

  	
  15

  
	
  Section 2.4

  	
  Date on Which Exercise is Effective

  	
  19

  
	
  Section 2.5

  	
  Execution, Authentication, Delivery and Dating of
  Rights Certificates

  	
  19

  
	
  Section 2.6

  	
  Registration, Registration of Transfer and Exchange

  	
  20

  
	
  Section 2.7

  	
  Mutilated, Destroyed, Lost and Stolen Rights
  Certificates

  	
  20

  
	
  Section 2.8

  	
  Persons Deemed Owners

  	
  21

  
	
  Section 2.9

  	
  Delivery and Cancellation of Rights Certificates

  	
  21

  
	
  Section 2.10

  	
  Agreement of Rights Holders

  	
  22

  
	
  Section 2.11

  	
  Rights Certificate Holder not Deemed a Shareholder

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  ADJUSTMENTS
  TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

  
	
   

  
	
  Section 3.1

  	
  Flip-in Event

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  THE
  RIGHTS AGENT

  
	
   

  
	
  Section 4.1

  	
  General

  	
  24

  
	
  Section 4.2

  	
  Merger or Amalgamation or Change of Name of Rights
  Agent

  	
  25

  
	
  Section 4.3

  	
  Duties of Rights Agent

  	
  25

  
	
  Section 4.4

  	
  Change of Rights Agent

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  MISCELLANEOUS

  
	
   

  
	
  Section 5.1

  	
  Redemption and Waiver

  	
  28

  
	
  Section 5.2

  	
  Expiration

  	
  29

  
	
  Section 5.3

  	
  Issuance of New Rights Certificates

  	
  29

  
	
  Section 5.4

  	
  Supplements and Amendments

  	
  30

  
	
  Section 5.5

  	
  Fractional Rights and Fractional Shares

  	
  31

  
	
  Section 5.6

  	
  Rights of Action

  	
  31

  
	
  Section 5.7

  	
  Notice of Proposed Actions

  	
  32

  

 i
 

 

 

	
  Section 5.8

  	
  Notices

  	
  32

  
	
  Section 5.9

  	
  Successors

  	
  32

  
	
  Section 5.10

  	
  Benefits of this Agreement

  	
  32

  
	
  Section 5.11

  	
  Governing Law

  	
  33

  
	
  Section 5.12

  	
  Severability

  	
  33

  
	
  Section 5.13

  	
  Effective Date

  	
  33

  
	
  Section 5.14

  	
  Determinations and Actions by the Board of Directors

  	
  33

  
	
  Section 5.15

  	
  Rights of Board, Corporation and Offeror

  	
  33

  
	
  Section 5.16

  	
  Regulatory Approvals

  	
  34

  
	
  Section 5.17

  	
  Declaration as to Non-Canadian Holders

  	
  34

  
	
  Section 5.18

  	
  Time of the Essence

  	
  34

  
	
  Section 5.19

  	
  Execution in Counterparts

  	
  34

  
	
   

  	
   

  	
   

  
	
  SCHEDULE

  
	
  SCHEDULE 2.2(3)

  	
   

  

 

 ii

 

SHAREHOLDER RIGHTS PLAN AGREEMENT

THIS AGREEMENT dated
December 7, 2006 between
NovaGold Resources Inc. (the “Corporation”), a corporation incorporated under the laws of
Nova Scotia, and, Computershare Investor Services Inc., a trust company
existing under the laws of Canada, as rights agent (the “Rights
Agent”, which term shall include any successor Rights Agent
hereunder).

WHEREAS:

(1)           The
Board of Directors has determined that it is advisable and in the best
interests of the Corporation to adopt and maintain this Agreement;

(2)           In
order to implement the adoption of this Agreement, the Board of Directors has
authorized the issuance of one Right:

(i)          effective
at the Record Time in respect of each Common Share outstanding at the Record
Time; and

(ii)         in
respect of each Common Share issued after the Record Time and prior to the
earlier of the Separation Time and the Expiration Time;

(3)           Each
Right entitles the holder thereof, after the Separation Time, to purchase
securities of the Corporation pursuant to the terms and subject to the
conditions set forth in this Agreement; and

(4)           The
Corporation desires to appoint the Rights Agent to act on behalf of the
Corporation, and the Rights Agent is willing to so act, in connection with the
issuance, transfer, exchange and replacement of Rights Certificates, the
exercise of Rights and other matters referred to in this Agreement.

NOW THEREFORE, in
consideration of the foregoing premises and the respective covenants and
agreements set forth herein, the parties hereby agree as follows:

ARTICLE 1

INTERPRETATION

Section 1.1                Certain
Definitions.

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

(a)           “Acquiring Person” means, any Person who is
the Beneficial Owner of twenty percent (20%) or more of the outstanding Voting
Shares of the Corporation; 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 twenty percent (20%) or more of the
outstanding Voting Shares of the Corporation as a result of any one or any
combination of: (A) Corporate Acquisitions, (B) Permitted Bid Acquisitions, (C)
Corporate Distributions, (D) Exempt Acquisitions, or (E) Convertible Security
Acquisitions; provided, however, that if a Person shall become the Beneficial
Owner of twenty percent (20%) or more of the Voting Shares of the Corporation
then outstanding by reason of one or more or any combination of a Corporate
Acquisition, Permitted Bid Acquisition, Corporate Distribution, Exempt
Acquisition or Convertible Security Acquisition and, after such Corporate

 

Acquisition,
Permitted Bid Acquisition, Corporate Distribution, Exempt Acquisition or
Convertible Security Acquisition, becomes the Beneficial Owner of an additional
one percent (1%) or more of the outstanding Voting Shares of the Corporation
other than pursuant to Corporate Acquisitions, Permitted Bid Acquisitions,
Corporate Distributions, Exempt Acquisitions or Convertible Security
Acquisitions, then as of the date of such acquisition, such Person shall become
an Acquiring Person;

(iii)          for
a period of ten (10) days after the Disqualification Date (as hereinafter
defined), any Person who becomes the Beneficial Owner of twenty percent (20%)
or more of the outstanding Voting Shares of the Corporation as a result of such
Person becoming disqualified from relying on Clause 1.1(e)(3) hereof solely
because such Person makes or proposes to make a Take-over Bid in respect of
securities of the Corporation alone or by acting jointly or in concert with any
other Person (the first date of public announcement (which, for the purposes of
this definition, shall include, without limitation, a report filed pursuant to
section 111 of the Securities Act
(British Columbia)) by such Person or the Corporation of a current intent to
commence such a Take-over Bid being herein referred to as the “Disqualification Date”); and

(iv)          an
underwriter or member of a banking or selling group that acquires Voting Shares
of the Corporation from the Corporation in connection with a distribution of
securities (including, for greater certainty, by way of private placement of
such securities) to the public.

(b)           “Affiliate” when used to indicate a
relationship with a specified Person, means a Person that 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 agreement as
amended, modified or supplemented from time to time.

(d)           “Associate” when used to indicate a
relationship with a specified Person, means any relative of such specified
Person who has the same home as such specified Person, or any Person to whom
such specified Person is married or with whom such specified Person is living
in a conjugal relationship outside marriage, or any relative of such spouse or
other Person who has the same home as such specified Person.

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

(i)            any
securities of which such Person or any Affiliate or Associate of such Person is
the owner at law or in equity;

(ii)           any
securities as to which such Person or any of such Person’s Affiliates or
Associates has the right to acquire (A) upon the exercise of any Convertible
Securities, or (B) pursuant to any agreement, arrangement or understanding, in
each case if such right is exercisable immediately or within a period of 60
days thereafter whether or not on condition or the happening of any contingency
(other than customary agreements with and between underwriters and banking
group or selling group members with respect to a distribution of securities or
pursuant to a pledge of securities in the ordinary course of business); and

 2
 

 

(iii)          any
securities that are Beneficially Owned within the meaning of
Clause 1.1(e)(i) or (ii) hereof by any other Person with whom such Person
is acting jointly or in concert;

provided,
however, that a Person shall not be deemed the “Beneficial
Owner”, or to have “Beneficial Ownership”
of, or to “Beneficially Own”, any security as a
result of the existence of any one or more of the following circumstances:

(1)           such
security has been deposited or tendered, pursuant to a Take-over Bid made by
such Person or made by any Affiliate or Associate of such Person or made by any
other Person acting jointly or in concert with such Person, unless such
deposited or tendered security has been accepted unconditionally for payment or
exchange or has been taken up and paid for, whichever shall first occur;

(2)           such Person or any
Affiliate or Associate of such Person or any other Person acting jointly or in
concert with such Person, holds such security; provided that (i) the ordinary
business of any such Person (the “Fund Manager”)
includes the management of mutual funds or investment funds for others (which
others may include or be limited to one or more employee benefit plans or
pension plans) and/or includes the acquisition or holding of securities for a
non-discretionary account of a Client (as defined below) by a dealer or broker
registered under applicable securities laws to the extent required, and such
security is held by the Fund Manager in the ordinary course of such business in
the performance of such Fund Manager’s duties for the account of any other
Person (a “Client”), (ii) such Person (the “Trust Company”) is licensed to carry on the business of a
trust company under applicable law and, as such, acts as trustee or
administrator or in a similar capacity in relation to the estates of deceased
or incompetent Persons or in relation to other accounts and holds such security
in the ordinary course of such duties for the estate of any such deceased or
incompetent Person (each an “Estate Account”)
or for such other accounts (each an “Other Account”),
(iii) the Person (the “Statutory Body”)
is an independent Person established by statute for purposes that include, and
the ordinary business or activity of such person includes, the management of
investment funds for employee benefit plans, pension plans, insurance plans of
various public bodies and the Statutory Body holds such security for the
purposes of its activities as such, (iv) the ordinary business of any such
Person includes acting as an agent of the Crown in the management of public
assets (the “Crown Agent”), or (v) the Person
is the administrator or the trustee of one or more pension funds or plans (each
a “Pension Fund”) registered under the
laws of Canada or any province thereof or the United Kingdom or the United
States or any state thereof (the “Independent Person”),
or is a Pension Fund and holds such securities for the purposes of its
activities as an Independent Person or as a Pension Fund, and further provided
that such Pension Fund or Independent Person does not hold more than thirty
percent (30%) of the Voting Shares of the Corporation;

provided,
however, that in any of the foregoing cases no one of the Fund Manager, the
Trust Company, the Statutory Body, the Crown Agent, the Independent Person or
the Pension Fund makes or announces a current intention to make a Take-over Bid
in respect of securities of the Corporation alone or by acting jointly or in
concert with any other Person (other than pursuant to a distribution by the
Corporation or by means of ordinary market transactions (including prearranged
trades entered in the ordinary course of business of such

 3
 

 

Person)
executed through the facilities of a stock exchange or organized
over-the-counter market);

(4)           such Person
is a Client of the same Fund Manager as another Person on whose account the
Fund Manager holds such security, or such Person is an Estate Account or an
Other Account of the same Trust Company as another Person on whose account the
Trust Company holds such security, or such Person is a Pension Fund with the
same Independent Person as another Pension Fund;

(5)           such Person
is a Client of a Fund Manager and such security is owned at law or in equity by
the Fund Manager, or such Person is 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 such Person is a Pension Fund and such security is owned at law or
in equity by the Independent Person; or

(6)           such Person
is a registered holder of securities as a result of carrying on the business
of, or acting as a nominee of, a securities depository.

For
purposes of this Agreement, the percentage of Voting Shares Beneficially Owned
by any Person, shall be and be deemed to be the product of one hundred (100)
and the number of which the numerator is the number of votes for the election
of all directors generally attaching to the Voting Shares Beneficially Owned by
such Person and the denominator of which is 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 shall be deemed to
be issued and outstanding for the purpose of calculating the percentage of
Voting Shares Beneficially Owned by such Person in both the numerator and the
denominator, but no other unissued Voting Shares which may be acquired pursuant
to any other outstanding Convertible Securities shall, for purposes of that
calculation, be deemed to be outstanding.

(f)            “Board of Directors” means, at any time,
the duly constituted board of directors of the Corporation.

(g)           “Business Day” means any day other than a
Saturday, Sunday or a day on which banking institutions in Vancouver are
authorized or obligated by law to close.

(h)           “Canadian-U.S. Exchange Rate” shall mean on
any date the inverse of the U.S. Canadian Exchange Rate.

(i)            “Canadian Dollar Equivalent” of any amount
which is expressed in United States dollars shall mean on any day the Canadian
dollar equivalent of such amount determined by reference to the Canadian-U.S.
Exchange Rate on such date.

(j)            “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 office of the transfer agent for the
Common Shares in the City of Vancouver (or, after the Separation Time, the
office of the Rights Agent in the City of Vancouver) is closed to the public.

(k)           “Common Shares”, when used with reference
to the Corporation, means the common shares in the capital of the Corporation
as constituted at the Record Time.

 4
 

 

(l)            “Competing Permitted Bid” means a Take-over
Bid that: (i) is made while another Permitted Bid is in existence, and (ii)
satisfies all the components of the definition of a Permitted Bid, except that
the requirements set out in Clause (ii) of the definition of a Permitted
Bid shall be satisfied if the Take-over Bid shall contain, and the take up and
payment for securities tendered or deposited thereunder shall be subject to, an
irrevocable and unqualified condition that no Voting Shares shall be taken up
or paid for pursuant to the Competing Permitted Bid prior to the close of
business on the date that is no earlier than the date which is the later of
thirty-five (35) days after the date the Competing Permitted Bid is made or
sixty (60) days after the earliest date on which any other Permitted Bid or
Competing Permitted Bid that is then in existence was made and only if at that
date, more than fifty percent (50%) of the then outstanding Voting Shares held
by Independent Shareholders have been deposited or tendered to the Competing
Permitted Bid and not withdrawn.

(m)          A
Person is “controlled” by another
Person or two or more other Persons acting jointly or in concert if:

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

(ii)           in
the case of a Person which is not a body corporate, more than 50% of the voting
or equity interests of such entity are held, directly or indirectly, by or for
the benefit of the other Person or Persons

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

(n)           “Convertible Security” means at any time:

(i)            any
right (regardless of whether such right constitutes a security) to acquire
Voting Shares from the Corporation; and

(ii)           any
securities issued by the Corporation from time to time (other than the Rights)
carrying any exercise, conversion or exchange right;

in
each case pursuant to which the holder thereof may acquire Voting Shares or
other securities which are convertible into or exercisable or exchangeable for
Voting Shares.

(o)           “Convertible Security Acquisition” means
the acquisition of Voting Shares upon the exercise, conversion or exchange of
Convertible Securities received by a Person pursuant to a Permitted Bid
Acquisition, Exempt Acquisition or a Corporate Distribution.

(p)           “Corporate Acquisition” means an
acquisition by the Corporation or a Subsidiary of the Corporation or the
redemption by the Corporation of Voting Shares of the Corporation which by
reducing the number of Voting Shares of the Corporation outstanding increases
the proportionate number of Voting Shares Beneficially Owned by any Person.

(q)           “Corporate Distribution” means an
acquisition as a result of:

 5
 

 

(i)            a
stock dividend or a stock split or other event pursuant to which a Person
receives or acquires Voting Shares on the same pro rata basis as all other
holders of Voting Shares of the same class; or

(ii)           any
other event pursuant to which all holders of Voting Shares of the Corporation
are entitled to receive Voting Shares or Convertible Securities on a pro rata
basis, including, without limiting the generality of the foregoing, pursuant to
the receipt or exercise of rights issued by the Corporation and distributed to
all the holders of a class of Voting Shares to subscribe for or purchase Voting
Shares or Convertible Securities of the Corporation, provided that such rights
are acquired directly from the Corporation and not from any other Person and
provided further that the Person in question does not thereby acquire a greater
percentage of Voting Shares, or Convertible Securities representing the right
to acquire Voting Shares of such class, than the percentage of Voting Shares of
the class Beneficially Owned immediately prior to such acquisition.

(r)            “Disqualification Date” has the meaning
ascribed thereto in Section 1.1(a)(iii) hereof.

(s)           “Effective Date” has the meaning ascribed
thereto in Section 5.13 hereof.

(t)            “Election to Exercise” has the meaning
ascribed thereto in Section 2.2(4) hereof.

(u)           “Exempt Acquisition” means an acquisition:

(i)            in
respect of which the Board of Directors has waived the application of
Section 3.1 hereof pursuant to the provisions of Section 5.1(2),
5.1(3) or 5.1(4) hereof;

(ii)           which
was made on or prior to the Record Time;

(iii)          which
was made pursuant to a dividend reinvestment plan of the Corporation or other
similar share purchase plan made available to the holders of shares of the
Corporation generally; or

(iv)          pursuant
to an issuance and sale by the Corporation of Voting Shares or Convertible
Securities by way of a private placement or a securities exchange takeover bid
circular by the Corporation, provided that (x) all necessary stock exchange
approvals for such distribution have been obtained and such distribution
complies with the terms and conditions of such approvals, and (y) the purchaser
does not become the Beneficial Owner of more than 25% of the Voting Shares
outstanding immediately prior to the private placement or securities exchange
takeover bid (and in making this determination, the securities to be issued to
such purchaser on the private placement or securities exchange takeover bid
shall be deemed to be held by such purchaser but shall not be included in the
aggregate number of outstanding Voting Shares immediately prior to the private
placement or securities exchange takeover bid).

(v)           “Exercise Price” means, as of any date, the
price at which a holder may purchase the securities issuable upon exercise of
one whole Right.  Until adjustment
thereof in accordance with the terms hereof, the Exercise Price shall be $75.

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(w)          “Expiration Time” means the earlier of: (i)
the Termination Time, and (ii) the close of business on the date immediately
following the date of the Corporation’s annual meeting of shareholders to be
held in 2010.

(x)            “Flip-in Event” means a transaction in or
pursuant to which any Person becomes an Acquiring Person provided, however,
that a Flip-in Event shall be deemed to occur at the close of business on the
tenth day (or such later date as the Board of Directors may determine) after
the Stock Acquisition Date.

(y)           “Independent Shareholders” means holders of
Voting Shares of the Corporation, but shall not include (i) any Acquiring
Person or any Offeror, or any Affiliate or Associate of such Acquiring Person
or such Offeror, or any Person acting jointly or in concert with such Acquiring
Person or such Offeror, or (ii) any employee benefit plan, stock purchase
plan, deferred profit sharing plan or any similar plan or trust for the benefit
of employees of the Corporation or a Subsidiary of the Corporation, unless the
beneficiaries of any such 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; and for greater certainty shall include any Person referred
to in Clause 1.1(e)(3) hereof (other than any Person who pursuant to Clause
1.1(e)(3) is deemed to Beneficially Own the Voting Shares).

(z)            “Market Price” per security of any
securities on any date of determination shall mean the average of the daily
Closing Price Per Security 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 of a type
analogous to any of the events described in Section 2.3 hereof shall have
caused the price used to determine the Closing Price Per Security on any
Trading Day not to be fully comparable with the price used to determine the
Closing Price Per Security on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading Day,
each such price so used shall be appropriately adjusted in a manner analogous
to the applicable adjustment provided for in Section 2.3 hereof in order to
make it fully comparable with the price per security used to determine the Closing
Price Per Security on such date of determination or, if the date of
determination is not a Trading Day, on the immediately preceding Trading
Day.  The “Closing Price Per Security” of
any securities on any date shall be:

(i)            the
closing board lot sale price or, if such price is not available, the average of
the closing bid and asked prices, for such securities as reported by the
principal Canadian stock exchange on which such securities are listed or
admitted to trading, or if for any reason neither of such prices is available
on such day or the securities are not listed or admitted to trading on a
Canadian stock exchange, the closing board lot sale price or, if such price is
not available, the average of the closing bid and asked prices, for such securities
as reported by such other securities exchange or national securities quotation
system on which such securities are listed or admitted for trading on which the
largest number of such securities were traded during the most recently
completed calendar year;

(ii)           if,
for any reason, none of such prices is available on such date or the securities
are not listed or admitted to trading on a Canadian stock exchange or other
securities exchange or on a national securities quotation system, the last sale
price, or in case no sale takes place on such date, the average of the high bid
and low asked prices for such securities in the over-the-counter market, as
quoted by any reporting system then in use (as selected by the Board of
Directors); or

 7
 

 

(iii)          if
the securities are not listed or admitted to trading as contemplated in clause
1.1(z)(i) or (ii), the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the securities provided,
however, that if on any such date the Closing Price Per Security cannot be
determined in accordance with the foregoing, the Closing Price Per Security 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 an 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 United States dollars, such amount shall be translated
into Canadian dollars at the Canadian Dollar Equivalent thereof.

(aa)         “1933 Securities Act” shall mean the
Securities Act of 1933 of the United States, as amended, and the rules and
regulations thereunder, and any comparable or successor laws or regulations
thereto.

(bb)         “1934 Exchange Act” shall mean the
Securities Exchange Act of 1934 of the United States, as amended, and the rules
and regulations thereunder, and any comparable or successor laws or regulations
thereto.

(cc)         “NSCA” means the Companies
Act (Nova Scotia),
and the regulations thereunder, and any comparable or successor laws or
regulations thereto.

(dd)         “Offer to Acquire” shall include:

(i)            an
offer to purchase, a public announcement of an intention to make an offer to
purchase, or a solicitation of an offer to sell; and

(ii)           an
acceptance of an offer to sell, 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.

(ee)         “Offeror” means a Person who has announced
a current intention to make, or who makes and has outstanding, a Take-over Bid.

(ff)           “Offeror’s Securities” means Voting Shares
of the Corporation Beneficially Owned by an Offeror, any Affiliate or Associate
of such Offeror or any Person acting jointly or in concert with the Offeror.

(gg)         “Permitted Bid” means a Take-over Bid that
is made by means of a Take-over Bid circular and which also complies with the
following additional provisions:

(i)            the
Take-over Bid shall be made to all registered holders of Voting Shares (other
than the Voting Shares held by the Offeror), and for all Voting Shares (other
than the Voting Shares held by the Offeror);

(ii)           the
Take-over Bid shall contain, and the take up and payment for securities
tendered or deposited thereunder shall be subject to, an irrevocable and

 8
 

 

unqualified
condition that no Voting Shares shall 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
sixty (60) days following the date of the Take-over Bid and that no Voting
Shares shall be taken up or paid for pursuant to the Take-over Bid unless, at
such date, more than fifty percent (50%) of the then outstanding Voting Shares
held by Independent Shareholders have been deposited to the Take-over Bid and
not withdrawn;

(iii)          the
Take-over Bid shall contain an irrevocable and unqualified provision that,
unless the Take-over Bid is withdrawn, Voting Shares of the Corporation may be
deposited pursuant to such Take-over Bid at any time during the period of time
described in Clause (ii) of this Section 1.1(gg) and that any Voting Shares
deposited pursuant to the Take-over Bid may be withdrawn at any time until
taken up and paid for; and

(iv)          the
Take-over Bid shall contain an irrevocable and unqualified provision that
should the condition referred to in Clause (ii) of this Section 1.1(gg)  be met: (A) the Offeror will make a public
announcement of that fact on the date the Take-over Bid would otherwise expire;
and (B) the Take-over Bid will be extended for a period of not less than ten
(10) Business Days from the date it would otherwise expire; and

(v)           the
Take-over Bid shall comply with any applicable requirements of the 1933
Securities Act and the 1934 Exchange Act.

(hh)         “Permitted Bid Acquisitions” means share
acquisitions made pursuant to a Permitted Bid or a Competing Permitted Bid.

(ii)           “Person” means any individual, firm,
partnership, limited partnership, limited liability company or partnership,
association, trust, trustee, executor, administrator, legal or personal
representative, government, governmental body, entity or authority, group, body
corporate, corporation, unincorporated organization or association, syndicate,
joint venture or any other entity, whether or not having legal personality, and
any of the foregoing in any derivative, representative or fiduciary capacity and
pronouns have a similar extended meaning.

(jj)           “Record Time” means 12:01 a.m. (Vancouver
time) on December 7, 2006.

(kk)         “Redemption Price” has the meaning ascribed
thereto in Section 5.1(1) hereof.

(ll)           “regular periodic cash dividends” 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)            two
hundred percent (200%) of the aggregate amount of cash dividends declared
payable by the Corporation on its Common Shares in its immediately preceding
fiscal year; and

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

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(mm)       “Right” means a right issued pursuant to
this Agreement.

(nn)         “Rights Certificate” has the meaning
ascribed thereto in Section 2.2(3) hereof.

(oo)         “Rights Register” has the meaning ascribed
thereto in Section 2.6(1) hereof.

(pp)         “Securities Act (British Columbia)” means
the Securities Act (British
Columbia), and the regulations and rules thereunder, and any comparable or
successor laws, regulations and rules thereto.

(qq)         “Separation Time” means the close of
business on the tenth (10th) Trading Day after the earlier of (i) the Stock
Acquisition Date, (ii) the date of the commencement of, or first public
announcement 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 Competing Permitted Bid) or such later date as may be
determined by the Board of Directors and (iii) the date on which a Permitted
Bid or Competing Permitted Bid ceases to qualify as such or such later date as
may be determined by the Board of Directors provided that, if any Take-over Bid
referred to in Clause (ii) of this Section 1.1(qq) or any Permitted Bid or
Competing Permitted Bid referred to in Clause (iii) of this Section 1.1(qq)
expires, is cancelled, terminated or otherwise withdrawn prior to the
Separation Time, such Take-over Bid, Permitted Bid or Competing Permitted Bid,
as the case may be, shall be deemed, for the purposes of this Section 1.1(qq),
never to have been made and provided further that if the Board of Directors
determines pursuant to Sections 5.1(2),(3) or (4) hereof to waive the
application of Section 3.1 hereof to a Flip-in Event, the Separation Time
in respect of such Flip-in Event shall be deemed never to have occurred.

(rr)           “Stock Acquisition Date” means the first
date of public announcement (which, for purposes of this definition, shall
include, without limitation, a report filed pursuant to section 111 of the Securities Act (British Columbia)) or
Section 13(d) under the 1934 Exchange Act by the Corporation or an Offeror or
Acquiring Person of facts indicating that a Person has become an Acquiring
Person.

(ss)         “Subsidiary”: a corporation shall be deemed
to be a Subsidiary of another corporation if:

(i)            it
is controlled by:

(A)          that
other;

(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.

(tt)           “Take-over Bid” means an Offer to Acquire
Voting Shares of the Corporation or securities convertible into or exchangeable
for or carrying a right to purchase Voting Shares of the Corporation where the
Voting Shares of the Corporation subject to the Offer to Acquire, together with
the Voting Shares of the Corporation into which the securities subject to the
Offer to Acquire are convertible, exchangeable or exercisable,

 10
 

 

and the
Offeror’s Securities, constitute in the aggregate twenty percent (20%) or more
of the outstanding Voting Shares of the Corporation at the date of the Offer to
Acquire.

(uu)         “Termination Time” means the time at which
the right to exercise Rights shall terminate pursuant to Sections 5.1(1) or (5)
hereof.

(vv)         “Trading Day”, when used with respect to
any securities, means a day on which the principal stock exchange or market on
which such securities are listed or admitted to trading is open for the
transaction of business or, if the securities are not listed or admitted to
trading on any stock exchange or market, a Business Day.

(ww)       “U.S. Canadian Exchange Rate” shall mean on
any date:

(i)            if
on such date the Bank of Canada sets an average noon spot rate of exchange with
a conversion of one United States dollar into Canadian dollars, such rate;

(ii)           in
any other case, the rate for such date for the conversion of one United States
dollar into Canadian dollars which is calculated in the manner which shall be
determined by the Board of Directors from time to time acting in good faith.

(xx)          “U.S. Dollar Equivalent” of any amount which
is expressed in Canadian dollars shall mean on any day the United States dollar
equivalent of such amount determined by reference to the U.S.-Canadian Exchange
Rate on such date.

(yy)         “Voting Shares” means the Common Shares and
any other shares of capital stock or voting interests of the Corporation
entitled to vote generally in the election of all directors.

Section 1.2                Currency.

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

Section 1.3                Headings.

The division of this
Agreement into Articles, Sections and Clauses and the insertion of headings,
subheadings and a table of contents are for convenience of reference only and
shall not affect the construction or interpretation of this Agreement.

Section 1.4                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 only one gender shall include all
others.

Section 1.5                Acting Jointly or
in Concert.

For the purposes of this
Agreement, a Person is acting jointly or in concert with every Person who is a
party to an agreement, commitment or understanding, whether formal or informal,
with the first Person or any Associate or Affiliate of the first Person to
acquire or make an Offer to Acquire Voting Shares of the Corporation (other
than customary agreements with and between underwriters or banking group
members or selling group members with respect to a distribution of securities
or to a pledge of securities in the ordinary course of business).

 11
 

 

Section 1.6                Statutory
References.

Unless the context
otherwise requires or except as expressly provided herein, any reference herein
to a specific part, section, clause or Rule of any statute or regulation shall
be deemed to refer to the same as it may be amended, re-enacted or replaced or,
if repealed and there shall be no replacement therefor, to the same as it is in
effect on the date of this Agreement.

ARTICLE 2

THE RIGHTS

Section 2.1                Legend on Common
Share Certificates.

(1)           Certificates
issued for Common Shares after the Record Time but prior to the close of
business on the earlier of the Separation Time and the Expiration Time shall
evidence one Right for each Common Share represented thereby and, commencing as
soon as reasonably practicable after the effective date of this Agreement,
shall have impressed on, printed on, written on or otherwise affixed to them, a
legend in substantially the following form:

Until the
Separation Time (defined in the Rights Agreement referred to below), this
certificate also evidences rights of the holder described in a Shareholder
Rights Plan Agreement, dated December 7, 2006, as amended and restated from
time to time (the “Rights Agreement”),
between the Corporation and Computershare Investor Services Inc. as Rights
Agent, a copy of which is on file at the principal executive offices of the
Corporation and is available upon written request.  Under certain circumstances set out in the Rights
Agreement, the rights may be redeemed, may expire, may become null and void or
may be evidenced by separate certificates and no longer evidenced by this
certificate.

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

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

(1)           Right to entitle holder to purchase one Common Share
prior to adjustment.  Subject
to adjustment as herein set forth and subject to Section 3.1(1) hereof, each
Right will entitle the holder thereof, from and after the Separation Time and
prior to the Expiration Time, to purchase, for the Exercise Price as at the
Business Day immediately preceding the date of exercise of the Right, one
Common Share (which price and number of Common Shares are subject to adjustment
as set forth below and are subject to Section 3.1(1) hereof).  Notwithstanding any other provision of this
Agreement, any Rights held by the Corporation or any of its Subsidiaries shall
be void.

(2)           Rights not exercisable until Separation Time.  Until the Separation Time, (i) the Rights
shall not be exercisable and no Right may be exercised, and (ii) for
administrative purposes each Right will be evidenced by the certificates for
the associated Common Shares registered in the names of the holders thereof
(which certificates shall also be deemed to be Rights Certificates) and will be
transferable only together with, and will be transferred by a transfer of, such
associated Common Shares.

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(3)           Delivery of Rights Certificate and disclosure
statement.  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 Rights 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 (the Corporation
hereby agreeing to furnish copies of such records to the Rights Agent for this
purpose), (A) a certificate (a “Rights
Certificate”) in substantially the form of Schedule 2.2(3) hereto
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, regulation or
judicial or administrative order or with any rule or regulation made pursuant
thereto 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 (B) a disclosure statement
describing the Rights, provided that a Nominee shall be sent the materials
provided for in (A) and (B) 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.

(4)           Exercise of Rights. 
Rights may be exercised in whole or in part on any Business
Day after the Separation Time and prior to the Expiration Time by submitting to
the Rights Agent (at the office of the Rights Agent in the City of Toronto or
any other office of the Rights Agent in the cities designated from time to time
for that purpose by the Corporation) the Rights Certificate evidencing such
Rights together with an election to exercise such Rights (an “Election to Exercise”) substantially in
the form attached to the Rights Certificate duly completed and executed,
accompanied by payment by certified cheque, banker’s draft or money order
payable to the order of the Rights Agent, for credit to or to the order of the
Corporation, of a sum equal to the Exercise Price multiplied by the number of
Rights being exercised and a sum sufficient to cover any transfer tax or charge
which may be payable in respect of 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, all of the above to be received before the Expiration Time by the
Rights Agent at its principal office in any of the cities listed on the Rights
Certificate.

(5)           Duties of Rights Agent upon receipt of Election to
Exercise.  Upon receipt of a
Rights Certificate, which is accompanied by (i) a completed and duly executed
Election to Exercise, and (ii) payment as set forth in Section 2.2(4)
above, the Rights Agent (unless otherwise instructed by the Corporation) will
thereupon promptly:

(a)           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);

(b)           when
appropriate, requisition from the Corporation the amount of cash to be paid in
lieu of issuing fractional Common Shares;

 13
 

 

(c)           after
receipt of such certificates, deliver the same to or upon the order of the
registered holder of such Rights Certificate, registered in such name or names
as may be designated by such registered holder;

(d)           when
appropriate, after receipt, deliver such cash (less any amounts required to be
withheld) to or to the order of the registered holder of the Rights
Certificate; and

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

(6)           Partial Exercise of Rights.  In case the holder of any Rights shall
exercise less than all of the Rights evidenced by such holder’s Rights
Certificate, a new Rights Certificate evidencing the Rights remaining
unexercised will be issued by the Rights Agent to such holder or to such holder’s
duly authorized assigns.

(7)           Duties of the Corporation.  The Corporation covenants and agrees that it
will:

(a)           take
all such action as may be necessary and within its power to ensure that all
Common Shares or other securities delivered upon exercise of Rights shall, at
the time of delivery of the certificates for such shares (subject to payment of
the Exercise Price), be duly and validly authorized, executed, issued and
delivered and fully paid and non-assessable;

(b)           take
all such action as may be necessary and within its power to ensure compliance
with the provisions of Section 3.1 hereof including, without limitation,
all such action to comply with any applicable requirements of the NSCA, the Securities Act (British Columbia) and
any applicable comparable securities legislation of each of the provinces of
Canada, the 1933 Securities Act, the 1934 Exchange Act, and the rules and
regulations thereunder 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 or other securities upon exercise of Rights;

(c)           use
reasonable efforts to cause, from and after such time as the Rights become
exercisable, all Common Shares issued upon exercise of Rights to be listed upon
issuance on the principal stock exchange on which the Common Shares were traded
prior to the Stock Acquisition Date;

(d)           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;

(e)           pay
when due and payable any and all Canadian federal and provincial transfer taxes
and charges (not including any income 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, 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 shares or other securities in a name other than that of the
registered holder of the Rights being transferred or exercised; and

(f)            after
the Separation Time, except as permitted by Sections 5.1 or 5.4 hereof, 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.

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(8)           If
after the Separation Time, the number of Common Shares which are authorized but
not issued or allotted or reserved for issue (other than upon the exercise of
the Rights) is insufficient to permit the exercise in full of the Rights in
accordance with this section 2.2, then each Right shall be deemed to be
adjusted such that when it is aggregated with a sufficient number of Rights to
acquire a whole number of Common Shares, it will entitle the holder thereof to
purchase from the Corporation, subject to adjustment as set forth in this
Agreement, at the Exercise Price per Common Share, that number of Common Shares
equal to the quotient determined by dividing: (i) 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 (other than upon
exercise of the Rights); by (ii) the number of Rights then outstanding.

Section 2.3                Adjustments to
Exercise Price; Number of Rights.

The Exercise Price, the
number and kind of Common Shares or other securities subject to purchase upon
exercise of each Right and the number of Rights outstanding are subject to
adjustment from time to time as provided in this Section 2.3:

(a)           Adjustment to Exercise Price upon changes to share
capital.  In the event the
Corporation shall at any time after the Record Time:

(i)            declare
or pay 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 the issue of Common Shares or
such exchangeable or convertible securities to holders of Common Shares in lieu
of but not in an amount which exceeds the value of regular periodic cash
dividends;

(ii)           subdivide
or change the outstanding Common Shares into a greater number of Common Shares;

(iii)          combine
or change the outstanding Common Shares into a smaller number of Common Shares;
or

(iv)          issue
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 in a reclassification,
amalgamation, merger, statutory arrangement, consolidation or otherwise, except
as otherwise provided in this Section 2.3;

the Exercise Price
in effect at the time of the record date for such dividend or of the effective
date of such subdivision, combination or reclassification, and the number and
kind of Common Shares, or other securities, as the case may be, issuable on
such date, shall be proportionately adjusted so that the holder of any Right
exercised after such time shall be entitled to receive, upon payment of the
Exercise Price then in effect, the aggregate number and kind of Common Shares
or other securities, as the case may be, which, if such Right had been
exercised immediately prior to such date and at a time when the Common Share
transfer books of the Corporation were open, such holder would have owned upon
such exercise and been entitled to receive by virtue of such dividend,
subdivision, combination or reclassification. 
If an event occurs which would require an adjustment under both this
Section 2.3 and Section 3.1 hereof, the adjustment provided for in
this Section 2.3 shall be in addition to and, shall be made prior to, any
adjustment required pursuant to Section 3.1 hereof.

 15
 

 

(b)           Adjustment to Exercise Price upon issue of rights,
options and warrants.  In the
event the Corporation shall at any time after the Record 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 forty-five (45) calendar days
after such record date) to subscribe for or purchase Common Shares (or shares
having the same rights, privileges and preferences as Common Shares (“equivalent common shares”)) or securities
convertible into or exchangeable for or carrying a right to purchase Common
Shares or equivalent common shares at a price per Common Share or per
equivalent common share (or having a conversion price or exchange price or
exercise price per share, if a security convertible into or exchangeable for or
carrying a right to purchase Common Shares or equivalent common shares) less
than ninety percent (90%) of 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, 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 and/or equivalent
common shares so to be offered (and/or the aggregate initial conversion,
exchange or exercise price of the convertible or exchangeable securities or
rights so to be offered, including the price required to be paid to purchase
such convertible or exchangeable securities or rights so to be offered) would
purchase at such Market Price per Common Share, and the denominator of which
shall be the number of Common Shares outstanding on such record date, plus the
number of additional Common Shares and/or equivalent common shares to be
offered for subscription or purchase (or into which the convertible or
exchangeable securities are initially convertible, exchangeable or
exercisable).  In case such subscription
price may be paid by delivery of consideration, part or all 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 certificate 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 or warrants are not so issued, 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.

For purposes of
this Agreement, the granting of the right to purchase Common Shares (or
equivalent common shares) (whether from treasury shares or otherwise) pursuant
to any dividend or interest reinvestment plan and/or any Common Share purchase
plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and/or the investment of periodic optional
payments and/or employee benefit, stock option or similar plans (so long as
such right to purchase is in no case evidenced by the delivery of rights or
warrants) shall not be deemed to constitute an issue of rights, options or
warrants by the Corporation; provided, however, that, in the case of any dividend
or interest reinvestment plan, the right to purchase Common Shares (or
equivalent common shares) is at a price per share of not less than ninety
percent (90%) of the current market price per share (determined as provided in
such plans) of the Common Shares.

(c)           Adjustment to Exercise Price upon Corporate
Distributions.  In the event
the Corporation shall at anytime after the Record Time fix a record date for a
distribution to all holders of Common Shares (including any such distribution
made in connection with a merger, amalgamation, arrangement, plan, compromise
or reorganization in which the Corporation is the continuing or successor
corporation) of evidences of indebtedness, cash (other than a regular periodic
cash dividend or a regular periodic cash dividend paid

 16
 

 

in Common
Shares, but including any dividend payable in securities other than Common
Shares), assets or subscription rights, options or warrants (excluding those
referred to in Section 2.3(b) above), 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, 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) of
the portion of the cash, assets or evidences of indebtedness so to be
distributed or of such subscription rights, options or warrants applicable to a
Common Share and 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)           De minimis threshold for adjustment to Exercise Price.  Notwithstanding anything herein to the
contrary, no adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least one percent (1%)
in the Exercise Price; provided, however, that any adjustments which by reason
of this Section 2.3(d) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment.  All calculations under this Section 2.3
shall be made to the nearest cent or to the nearest one-hundredth of a Common
Share or other share, as the case may be. 
Notwithstanding the first sentence of this Section 2.3(d), any
adjustment required by this Section 2.3 shall be made no later than the
earlier of (i) three (3) years from the date of the transaction which mandates
such adjustment or (ii) the Expiration Time.

(e)           Corporation may provide for alternate means of
adjustment.  Subject to the
prior consent of the holders of Voting Shares or Rights obtained as set forth
in Section 5.4(2) or (3) hereof, as applicable, in the event the
Corporation shall at any time after the Record Time issue any shares of capital
stock (other than Common Shares), or rights 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 Sections 2.3(a)(i)
or (iv) or 2.3(b) or (c) above, if the Board of Directors acting in good faith
determines that the adjustments contemplated by Sections 2.3(a), (b) and (c)
above in connection with such transaction will not appropriately protect the
interests of the holders of Rights, the Corporation shall be entitled to
determine what other adjustments to the Exercise Price, number of Rights and/or
securities purchasable upon exercise of Rights would be appropriate and,
notwithstanding Sections 2.3(a), (b) and (c) above, such adjustments, rather
than the adjustments contemplated by Sections 2.3(a), (b) and (c) above, shall
be made.  The Corporation and the Rights
Agent shall amend this Agreement as appropriate to provide for such
adjustments.

(f)            Adjustment to Rights exercisable into shares other
than Common Shares.  If as a
result of an adjustment made pursuant to Section 3.1 hereof, the holder of
any Right thereafter exercised shall become entitled to receive any shares
other than Common Shares, thereafter the number of such other shares so
receivable upon exercise of any Right and the Exercise Price thereof shall be
subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Common Shares
contained in Sections 2.3(a), (b), (c), (d), (e), (g), (h), (i), (j), (k)
and (l) above and below, as the case may be, and the provisions of this
Agreement with respect to the Common Shares shall apply on like terms to any
such other shares.

 17

 

(g)                                 Rights to evidence right to purchase Common Shares at
adjusted Exercise Price.  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 such Right, all subject to further adjustment
as provided herein.

(h)                                 Adjustment to number of Common Shares purchasable upon
adjustment to Exercise Price. 
Unless the Corporation shall have exercised its election as provided in
Section 2.3(i) below, upon each adjustment of the Exercise Price as a
result of the calculations made in Sections 2.3(b) and (c) above, each
Right outstanding immediately prior to the making of such adjustment shall
thereafter evidence the right to purchase, at the adjusted Exercise Price, that
number of Common Shares (calculated to the nearest one ten-thousandth) obtained
by (A) multiplying (x) the number of shares purchasable upon exercise of a
Right immediately prior to this adjustment by (y) the Exercise Price in effect
immediately prior to such adjustment of the Exercise Price, and (B) dividing
the product so obtained by the Exercise Price in effect immediately after such
adjustment of the Exercise Price.

(i)                                     Election to adjust number of Rights upon adjustment to
Exercise Price.  The
Corporation shall be entitled to elect on or after the date of any adjustment
of the Exercise Price to adjust the number of Rights, in lieu of any adjustment
in the number of Common Shares purchasable upon the exercise of a Right.  Each of the Rights outstanding after the
adjustment in the number of Rights shall be exercisable for the number of
Common Shares for which a Right was exercisable immediately prior to such
adjustment.  Each Right held of record
prior to such adjustment of the number of Rights shall become that number of
Rights (calculated to the nearest one ten-thousandth) obtained by dividing the
Exercise Price in effect immediately prior to adjustment of the Exercise Price
by the Exercise Price in effect immediately after adjustment of the Exercise
Price.  The Corporation shall make a
public announcement of its election to adjust the number of Rights, indicating
the record date for the adjustment and, if known at the time, the amount of the
adjustment to be made.  This record date
may be the date on which the Exercise Price is adjusted or any day thereafter
but, if Rights Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. 
If Rights Certificates have been issued, upon each adjustment, of the
number of Rights pursuant to this Section 2.3(i), the Corporation shall,
as promptly as practicable, cause to be distributed to holders of record of Rights
Certificates on such record date Rights Certificates evidencing, subject to
Section 5.5 hereof, the additional Rights to which such holders shall be
entitled as a result of such adjustment, or, at the option of the Corporation,
shall cause to be distributed to such holders of record in substitution and
replacement for the Rights Certificates held by such holders prior to the date
of adjustment, and upon surrender thereof, new Rights Certificates evidencing
all the Rights to which such holders shall be entitled after such
adjustment.  Rights Certificates so to be
distributed shall be issued, executed and countersigned in the manner provided
for herein and may bear, at the option of the Corporation, the adjusted Exercise
Price and shall be registered in the names of the holders of record of Rights
Certificates on the record date for the adjustment specified in the public
announcement.

(j)                                     Rights Certificates may contain Exercise Price before
adjustment.  Irrespective of
any adjustment or change in the 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 share and
the number of shares which were expressed in the initial Rights Certificates
issued hereunder.

 18
 

 

(k)                                  Corporation may in certain cases defer issues of
securities.  In any case in
which this Section 2.3 shall require that an adjustment in the Exercise
Price be made effective as of a record date for a specified event, the
Corporation may elect to defer until the occurrence of such event the issuance
to the holder of any Right exercised after such record date 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
Exercise Price in effect prior to such adjustment; provided, however, that the
Corporation shall deliver to such holder an appropriate instrument evidencing
such holder’s right to receive such additional shares (fractional or otherwise)
or securities upon the occurrence of the event requiring such adjustment.

(l)                                     Corporation has discretion to reduce Exercise Price
for tax reasons. 
Notwithstanding anything in this Section 2.3 to the contrary, the
Corporation shall be entitled to make such reductions in the Exercise Price, in
addition to those adjustments expressly required by this Section 2.3, as
and to the extent that in their good faith judgment, the Board of Directors
shall determine to be advisable in order that any (A) consolidation or
subdivision of the Common Shares, (B) issuance of any Common Shares at less
than the Market Price, (C) issuance of securities convertible into or
exchangeable for Common Shares, (D) stock dividends or (E) issuance of rights,
options or warrants, referred to in this Section 2.3 hereafter made by the
Corporation to holders of its Common Shares, shall not be taxable to such
shareholders.

(m)                               Notification of Rights Agent.  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 2.3, 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.

Section 2.4            Date on Which Exercise
is Effective.

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

Section 2.5            Execution,
Authentication, Delivery and Dating of Rights Certificates

(1)                                  The
Rights Certificates shall be executed on behalf of the Corporation by its
Chairman, Chief Executive Officer, Chief Operating Officer or Chief Financial
Officer under its corporate seal

 19
 

 

reproduced
thereon attested by its Secretary or one of its Assistant Secretaries.  The signature of any of these officers on the
Rights Certificates may be manual or facsimile. 
Rights Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Corporation shall
bind the Corporation, notwithstanding that such individuals or any of them have
ceased to hold such offices prior to the countersignature and delivery of such
Rights Certificates.

(2)                                  Promptly
after the Corporation learns of the Separation Time, the Corporation will
notify the Rights Agent of such Separation Time and will deliver Rights
Certificates executed by the Corporation to the Rights Agent for
countersignature and a disclosure statement as described in Section 2.2(3), and
the Rights Agent shall manually or by facsimile signature countersign and send
such Rights Certificates and disclosure statement to the holders of the Rights
pursuant to Section 2.2(3) hereof. 
No Rights Certificate shall be valid for any purpose until countersigned
by the Rights Agent as aforesaid.

(3)                                  Each
Rights Certificate shall be dated the date of countersignature thereof.

Section 2.6            Registration,
Registration of Transfer and Exchange.

(1)                                  The
Corporation will cause to be kept a register (the “Rights Register”) in which, subject to such reasonable
regulations as it may prescribe, the Corporation will provide for the
registration and transfer of Rights.  The
Rights Agent is hereby appointed “Rights
Registrar” for the purpose of maintaining the Rights Register for
the Corporation and registering Rights and transfers of Rights as herein
provided.  In the event that the Rights
Agent shall cease to be the Rights Registrar, the Rights Agent will have the
right to examine the Rights Register at all reasonable times.

After the
Separation Time and prior to the Expiration Time, upon surrender for
registration of transfer or exchange of any Rights Certificate and subject to
the provisions of Section 2.6(3) below and the other provisions of this
Agreement, the Corporation will execute and the Rights Agent will countersign,
register 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.

(2)                                  All
Rights issued upon any registration of transfer or exchange of Rights
Certificates shall be the valid obligations of the Corporation, and such Rights
shall be entitled to the same benefits under this Agreement as the Rights surrendered
upon such registration of transfer or exchange.

(3)                                  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 registered 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 2.6, the
Corporation or the Rights Agent may require the payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and the Corporation may require payment of a sum sufficient to cover
any other expenses (including the fees and expenses of the Rights Agent) in
connection therewith.

Section 2.7            Mutilated, Destroyed,
Lost and Stolen Rights Certificates.

(1)                                  If
any mutilated Rights Certificate is surrendered to the Rights Agent prior to
the Expiration Time, the Corporation shall execute and the Rights Agent shall
countersign and deliver in

 20
 

 

exchange
therefor a new Rights Certificate evidencing the same number of Rights as did
the Rights Certificate so surrendered.

(2)                                  If
there shall be delivered to the Corporation and the Rights Agent prior to the
Expiration Time (i) evidence to their reasonable satisfaction of the
destruction, loss or theft of any Rights Certificate, and (ii) such indemnity
or other security as may be required by each of them, in their sole discretion,
to save each of them and any of their agents harmless then, in the absence of
notice to the Corporation or the Rights Agent that such Rights Certificate has
been acquired by a bona fide purchaser, the Corporation shall execute and upon
its request the Rights Agent shall countersign and deliver, in lieu of any such
destroyed, lost or stolen Rights Certificate, a new Rights Certificate
evidencing the same number of Rights as did the Rights Certificate so
destroyed, lost or stolen.

(3)                                  As
a condition to the issuance of any new Rights Certificate under this
Section 2.7, the Corporation or the Rights Agent may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and the Corporation may require payment of a sum sufficient
to cover any other expenses (including the fees and expenses of the Rights
Agent) in connection therewith.

(4)                                  Every
new Rights Certificate issued pursuant to this Section 2.7 in lieu of any
destroyed, lost or stolen Rights Certificate shall evidence an original
additional contractual obligation of the Corporation, whether or not the
destroyed lost or stolen Rights Certificate shall be at any time enforceable by
anyone, and the holder thereof shall be entitled to all the benefits of this
Agreement equally and proportionately with any and all other holders of Rights
duly issued by the Corporation.

Section 2.8            Persons Deemed Owners.

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 shall be
entitled to deem and treat the person in whose name a 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).

Section 2.9            Delivery and
Cancellation of Rights Certificates.

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

 21
 

 

Section 2.10         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:

(a)                                  to
be bound by and subject to the provisions of this Agreement, as amended or
supplemented from time to time in accordance with the terms hereof, in respect
of all Rights held;

(b)                                 that
prior to the Separation Time each Right will be transferable only together
with, and will be transferred by a transfer of, the Common Share certificate
representing such Right;

(c)                                  that
after the Separation Time, the Rights Certificates will be transferable only on
the Rights Register as provided herein;

(d)                                 that
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 shall be entitled to 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)                                  that
such holder of Rights has waived his right to receive any fractional Rights or
any fractional shares upon exercise of Right;

(f)                                    that,
in accordance with Section 5.4 hereof, without the approval of any holder of
Rights 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 pursuant
to and as provided herein; and

(g)                                 that
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 any
governmental authority, prohibiting or otherwise restraining performance of
such obligation.

Section 2.11         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 or security 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

 22
 

 

meeting of shareholders of
the Corporation whether for the election of directors or otherwise or upon any
matter submitted to holders of 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 shares or 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 Rights Certificates shall
have been duly exercised in accordance with the terms and provisions hereof.

ARTICLE 3

ADJUSTMENTS TO THE RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

Section 3.1            Flip-in Event.

(1)                                  Subject
to Section 3.1(2) below, and Sections 5.1(2), (3) and (4) hereof, in
the event that prior to the Expiration Time a Flip-in Event shall occur, the
Corporation shall take such action as may be necessary to ensure and provide
within eight (8) Business Days of such occurrence, or such longer period as may
be required to satisfy all applicable requirements of the Securities Act (British Columbia),
and the securities legislation of each other province of Canada, the 1933
Securities Act, the 1934 Exchange Act, and the rules and regulations thereunder,
and any other applicable law, rule or regulation that, except as provided
below, each Right shall thereafter constitute the right to purchase from the
Corporation upon exercise thereof in accordance with the terms hereof that
number of Common Shares of the Corporation having an aggregate Market Price on
the date of the occurrence of such Flip-in Event equal to twice the Exercise
Price for an amount in cash equal to the Exercise Price (such Right to be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in the event that after such date of
occurrence an event of a type analogous to any of the events described in
Section 2.3 hereof shall have occurred with respect to such Common Shares).

(2)                                  Notwithstanding
anything in this Agreement to the contrary, upon the occurrence of any Flip-in
Event, any Rights that are Beneficially Owned 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 such
Acquiring Person, or any Affiliate or Associate of such Person so acting
jointly or in concert, or (ii) a transferee or other successor in title of
Rights, directly or indirectly, of an Acquiring Person (or of any Affiliate or
Associate of an Acquiring Person) or of any Person acting jointly or in concert
with an Acquiring Person or any Associate or Affiliate of an Acquiring Person
(or of any Affiliate or Associate of such Person so acting jointly or in
concert) who becomes a transferee or successor in title concurrently with or
subsequent to the Acquiring Person becoming such, shall become null and void
without any further action, and any holder of such Rights (including
transferees or successors in title) shall not have any rights whatsoever to
exercise such Rights under any provision of this Agreement and shall not have
thereafter any other rights whatsoever with respect to such Rights, whether
under any provision of this Agreement or otherwise.

(3)                                  Any
Rights Certificate that represents Rights Beneficially Owned by a Person
described in either clause 3.1(2)(i) or (ii), 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 (all
capitalized terms used herein have the meaning given to such terms in the
Shareholder Rights Plan Agreement, dated January 17, 2006, as amended and

 23
 

 

restated from time
to time, (the “Rights Agreement”))
or a Person who was acting jointly or in concert with an Acquiring Person
(including, without limitation, a Person who has entered into an agreement or
arrangement to sell Common Shares to an Acquiring Person).  This Rights Certificate and the Rights
represented hereby are void or shall become void in the circumstances specified
in Section 3.1(2) of the Rights Agreement.

provided, however,
that the Rights Agent shall not be under any responsibility to ascertain the
existence of facts that would require the imposition of such legend but shall
be required to impose such legend only if instructed to do so in writing by the
Corporation or if a holder fails to certify upon transfer or exchange in the
space provided on the Rights Certificate that such holder is not a Person
described in such legend.  This issuance
of a Rights Certificate without the legend referred to in this Section 3.1(3)
shall have no effect on the provisions of Section 3.1.

(4)                                  Notwithstanding
any other provision hereof, if the number of Common Shares which are authorized
but not issued or allotted or reserved for issue (other than upon the exercise
of Rights) is not sufficient to permit the exercise in full of the Rights upon
the occurrence of a Flip-in Event in accordance with clause 3.1(1) then, upon
such occurrence, each Right which is not void pursuant to clause 3.1(2), when
such Right is aggregated with a sufficient number of Rights to acquire a whole
number of Common Shares, shall constitute, effective on the Stock Acquisition
Date, upon exercise thereof in accordance with the terms hereof, the right to
purchase from the Corporation that number of Common Shares, at the price of
$0.01 per Common Share, equal to the quotient determined by dividing: (i) 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 (other than upon the exercise of Rights); by (ii) the number of
Rights then outstanding and which are not void pursuant to clause 3.1(2).

ARTICLE 4

THE RIGHTS AGENT

Section 4.1            General.

(1)                                  The
Corporation hereby appoints the Rights Agent to act as agent for the
Corporation 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 as
it may deem necessary or desirable, subject to the prior approval of the Rights
Agent.  In the event the Corporation
appoints one or more co-Rights Agents, the respective duties of the Rights
Agents and co-Rights Agents shall be as the Corporation may determine, with the
approval of the Rights Agent.  The
Corporation agrees to pay to the Rights Agent reasonable compensation for all
services rendered by it hereunder and, from time to time, on demand of the
Rights Agent, its reasonable expenses (including reasonable counsel fees and
disbursements) incurred in the administration and execution of this Agreement
and the exercise and performance of its duties hereunder.  The Corporation also agrees to indemnify the
Rights Agent, its officers, directors and employees for, and to hold such
persons harmless against, any loss, liability, cost, claim, action, suit,
damage, or expense incurred (that is not the result of negligence, bad faith or
wilful misconduct on the part of any one or all of the Rights Agent, its
officers, directors or employees) for anything done or omitted by the Rights
Agent in connection with the acceptance and administration of this Agreement,
including the costs and expenses of defending against any claim of liability,
which right to indemnification will survive the termination of this Agreement
or the resignation or removal of the Rights Agent.

 24
 

 

(2)                                  The
Rights Agent shall be protected from 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 or any Rights Certificate or 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.

(3)                                  The
Corporation shall inform the Rights Agent in a reasonably timely manner of
events which may materially affect the administration of this Agreement by the
Rights Agent and at any time, upon request, shall provide to the Rights Agent
an incumbency certificate certifying the then current officers of the
Corporation.

Section 4.2            Merger or Amalgamation
or Change of Name of Rights Agent.

(1)                                  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, statutory arrangement 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 4.4 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 have not been countersigned, any successor Rights Agent may countersign
such Rights Certificates either in the name of the predecessor Rights Agent or
in the name of the successor Rights Agent; and in all such cases such Rights
Certificates will have the full force provided in the Rights Certificates and
in this Agreement.

(2)                                  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.

Section 4.3            Duties of Rights
Agent.

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

(a)                                  The
Rights Agent may retain and consult with legal counsel (who may be legal
counsel for the Corporation) and the opinion of such counsel will be full and
complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion.  Subject to the prior written consent
of the Corporation, which consent shall not be unreasonably withheld, the
Rights Agent may also consult with such other experts as the Rights Agent shall
consider

 25
 

 

necessary or
appropriate to properly carry out the duties and obligations imposed under this
Agreement (at the expense of the Corporation) 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 proved or established by the
Corporation prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proven and established by a certificate
signed by a person believed by the Rights Agent to be the Chairman of the
Board, the Chief Executive Officer, the Chief Operating Officer or the Chief
Financial Officer 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 events which are the result of
its own negligence, bad faith or wilful misconduct and that of its officers,
directors and employees.

(d)                                 The
Rights Agent will not be liable for or by reason of any of the statements of
fact or recitals contained in this Agreement or in the certificates for Common
Shares or the Rights Certificates (except its countersignature thereof) or be
required to verify the same, but all such statements and recitals are and will
be deemed to have been made by the Corporation only.

(e)                                  The
Rights Agent will not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Common Share certificate or Rights
Certificate (except its countersignature thereof); nor will it be responsible
for any breach by the Corporation of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(2) hereof) or any adjustment required under the
provisions of Section 2.3 hereof 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 2.3 hereof
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 or fully paid and non-assessable.

(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 Chief Executive Officer,
the Chief Operating Officer or the Chief Financial Officer 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

 26
 

 

or suffered by
it in good faith in accordance with instructions of any such person.  It is understood that instructions to the
Rights Agent shall, except where circumstances make it impracticable or the
Rights Agent otherwise agrees, be given in writing and, where not in writing,
such instructions shall be confirmed in writing as soon as reasonably possible
after the giving of such instructions.

(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 Rights Agent under this Agreement. 
Nothing herein shall preclude the Rights Agent from acting in any other
capacity for the Corporation or for any other legal entity.

(i)                                     The
Rights Agent may execute and exercise any of the rights or powers hereby vested
in it or perform any duty hereunder either itself or, with the prior written
consent of the Corporation, by or through its attorneys or agents.  The Rights Agent will not be answerable or
accountable for any act, omission, default, neglect or misconduct of any such
attorneys or agents or for any loss to the Corporation resulting from any such
act, omission, default, neglect or misconduct, provided the prior written
consent of the Corporation was obtained and reasonable care was exercised in
the selection and continued employment thereof.

Section 4.4            Change of Rights
Agent.

The Rights Agent may
resign and be discharged from its duties under this Agreement upon sixty (60)
days’ notice (or such lesser notice as is acceptable to the Corporation) in
writing mailed to the Corporation and to each transfer agent of Voting Shares
of the Corporation by registered or certified mail, and to the holders of the
Rights in accordance with Section 5.8 hereof (all of which shall be at the
expense of the Corporation).  The
Corporation may remove the Rights Agent upon thirty (30) days’ notice in
writing, mailed to the Rights Agent and to each transfer agent of the Voting Shares
of the Corporation by registered or certified mail and to the holders of the
Rights in accordance with Section 5.8 hereof.  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 sixty (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 or
the holder of any Rights may apply to any court of competent jurisdiction for
the appointment of a new Rights Agent at the Corporation’s expense.  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. 
After appointment, the successor Rights Agent will be vested with the
same powers, rights, duties and responsibilities as if it had been originally
named as Rights Agent without further act or deed; but the predecessor Rights
Agent, upon receiving from the Corporation payment in full of all amounts
outstanding under this Agreement, shall deliver and transfer to the successor
Rights Agent any property at the time held by it hereunder, and execute and
deliver any further assurance, conveyance, act or deed necessary for the
purpose.  Not later than the effective
date of any such appointment, the Corporation will file notice thereof in
writing with the predecessor Rights Agent and each transfer agent of the Voting
Shares of the Corporation, and mail a notice thereof in writing to the holders
of the Rights.  The cost of giving any
notice required under this Section 4.4 shall be borne solely by the
Corporation.  Failure to give any notice
provided for in this Section 4.4 however, or any defect therein, shall not
affect the legality or validity of the resignation or removal of the Rights
Agent or the appointment of the successor Rights Agent, as the case may be.

 27
 

 

ARTICLE 5

MISCELLANEOUS

Section 5.1            Redemption and Waiver.

(1)                                  Subject
to the prior consent of the holders of Voting Shares or Rights obtained as set
forth in Section 5.4(2) or Section 5.4(3) hereof, as applicable, the
Board of Directors acting in good faith may, at any time prior to 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 $0.00001 per Right
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in the event that an event of the type
described in Section 2.3 hereof shall have occurred (such redemption price
being herein referred to as the “Redemption
Price”).

(2)                                  Subject
to the prior consent of the holders of Voting Shares obtained as set forth in
Section 5.4(2) hereof, the Board of Directors may, at any time prior to
the occurrence of a Flip-in Event as to which the application of
Section 3.1 hereof has not been waived pursuant to this Section 5.1,
if such Flip-in Event would occur by reason of an acquisition of Voting Shares
otherwise than pursuant to a Take-over Bid made by means of a Take-over Bid
circular to all registered holders of Voting Shares and otherwise than in the
circumstances set forth in Section 5.1(4) hereof, waive the application of
Section 3.1 hereof to such Flip-in Event. 
In such event, the Board of Directors shall extend the Separation Time
to a date at least ten (10) Business Days subsequent to the meeting of
shareholders called to approve such waiver.

(3)                                  The
Board of Directors acting in good faith, may, prior to the occurrence of a
Flip-in Event, and upon prior written notice delivered to the Rights Agent,
determine to waive the application of Section 3.1 hereof to a Flip-in
Event that may occur by reason of a Take-over Bid made by means of a Take-over
Bid circular to all registered holders of Voting Shares; provided that if the
Board of Directors waives the application of Section 3.1 hereof to a
particular Flip-in Event pursuant to this Section 5.1(3), the Board of
Directors shall be deemed to have waived the application of Section 3.1
hereof to any other Flip-in Event occurring by reason of any Take-over Bid made
by means of a Take-over Bid circular to all registered holders of Voting Shares
prior to the expiry of any Take-over Bid in respect of which a waiver is, or is
deemed to have been granted, pursuant to this Section 5.1(3).

(4)                                  The
Board of Directors acting in good faith may, in respect of a Flip-in Event,
waive or agree to waive the application of Section 3.1 hereof to that
Flip-in Event, provided that either:

(a)           both of the following
conditions are satisfied:

(i)                                     the
Board of Directors has determined that a Person became an Acquiring Person by
inadvertence and without any intention to become, or knowledge that Person
would become, an Acquiring Person; and

(ii)                                  such
Acquiring Person has reduced its Beneficial Ownership of Voting Shares (or has
entered into a contractual arrangement with the Corporation, acceptable to the
Board of Directors, to do so within thirty (30) days of the date on which such
contractual arrangement is entered into) such that at the time the waiver
becomes effective pursuant to this Section 5.1(4) it is no longer an
Acquiring Person; or

(b)                                 the
Flip-In Event has occurred solely due to an issuance and sale by the
Corporation of Voting Shares or Convertible Securities by way of a private
placement from its treasury;

 28
 

 

provided that all
necessary stock exchange approvals for such distribution have been obtained and
such distribution complies with the terms and conditions of such approvals,

and in the event
of such a waiver, for the purposes of this Agreement, the Flip-in Event shall
be deemed never to have occurred.

(5)                                  Where
a Person acquires pursuant to a Permitted Bid, a Competing Permitted Bid or an
Exempt Acquisition under Section 5.1(3) above, outstanding Voting Shares,
then the Corporation shall immediately upon the consummation of such
acquisition redeem the Rights at the Redemption Price.

(6)                                  If
the Corporation is obligated under Section 5.1(4) above to redeem the
Rights, or if the Board of Directors elects under Section 5.1(1) above or
Section 5.1(8) below to redeem the Rights, the right to exercise the
Rights will thereupon, without further action and without notice, terminate and
each Right will after redemption be null and void and the only right thereafter
of the holders of Rights shall be to receive the Redemption Price.

(7)                                  Within
ten (10) days after the Corporation is obligated under Section 5.1(4)
above to redeem the Rights, or the Board of Directors elects under
Section 5.1(1) above or Section 5.1(8) below to redeem the Rights,
the Corporation shall give notice of redemption to the holders of the then
outstanding Rights by mailing such notice to all such holders at their last
address as they appear upon the Rights Register 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.  The Corporation may not redeem,
acquire or purchase for value any Rights at any time in any manner other than
that specifically set forth in this Section 5.1 and other than in
connection with the purchase of Common Shares prior to the Separation Time.

(8)                                  Where
a Take-over Bid that is not a Permitted Bid 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.

(9)                                  Notwithstanding
the Rights being redeemed pursuant to Section 5.1(8) above, 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 and the Rights shall remain
attached to outstanding Voting Shares, subject to and in accordance with the
provisions of this Agreement.

Section 5.2            Expiration.

No person shall have any
rights whatsoever pursuant to or arising out of this Agreement or in respect of
any Right after the Expiration Time, except the Rights Agent as specified in
Section 4.1(1) hereof.

Section 5.3            Issuance of New Rights
Certificates.

Notwithstanding any of
the provisions of this Agreement or of the Rights to the contrary, the
Corporation may, at its option, issue new Rights Certificates evidencing Rights
in such form as may be

 29
 

 

approved by its Board of
Directors to reflect any adjustment or change in the number or kind or class of
shares purchasable upon exercise of Rights made in accordance with the provisions
of this Agreement.

Section 5.4            Supplements and
Amendments.

(1)                                  The
Corporation may, prior to any shareholders’ meeting called to approve this
Agreement, supplement or amend this Agreement without the approval of any
holder of Rights or Voting Shares.  Thereafter, the Corporation may from time to
time supplement or amend this Agreement without the approval of any holders of
Rights or Voting Shares to correct any clerical or typographical error or to
maintain the validity of the Agreement as a result of a change in any
applicable legislation or regulations or rules thereunder.

Notwithstanding
anything in this Section 5.4 to the contrary, no supplement or amendment
shall be made to the provisions of Article 4 hereof except with the written
concurrence of the Rights Agent to such supplement or amendment.

(2)                                  Subject
to Section 5.4(1) above, the Corporation may, with the prior consent of
the holders of the 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 provided by the holders of Voting Shares at a meeting of the holders of
Voting Shares, which meeting shall be called and held in compliance with
applicable laws and regulatory requirements and the requirements in the
articles and by-laws of the Corporation. 
Subject to compliance with any requirements imposed by the foregoing,
consent shall be deemed to have been given if the proposed amendment, variation
or revision is approved by the affirmative vote of a majority of the votes cast
by all holders of Voting Shares (other than any holder of Voting Shares who is
an Offeror pursuant to a Take-over Bid that is not a Permitted Bid or Competing
Permitted Bid with respect to all Voting Shares Beneficially Owned by such
Person), represented in person or by proxy at the meeting.

(3)                                  Subject
to Section 5.4(1) above, the Corporation may, with the prior consent of
the holders of Rights, at any time after the Separation Time and before the
Expiration 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).

(4)                                  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 by-laws and
the NSCA with respect to a meeting
of shareholders of the Corporation.

(5)                                  The
Corporation shall be required to provide the Rights Agent with notice in
writing of any such amendment, variation or deletion to this Agreement as
referred to in this Section 5.4 within 5 days of effecting such amendment,
variation or deletion.

(6)                                  Any
supplements or amendments made by the Corporation to this Agreement pursuant to
Section 5.4(1) above which are required to maintain the validity of this
Agreement as a result of any change in any applicable legislation or
regulations or rules thereunder shall:

 30
 

 

(a)                                  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 in Section 5.4(2) above confirm or reject such
amendment; and

(b)                                 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 the majority referred to in Section 5.4(4) above,
confirm or reject such amendment.

A supplement or
amendment of the nature referred to in this Section 5.4(6) shall be effective
from the date of the resolution of the Board of Directors adopting such
supplement or amendment until it is confirmed or rejected or until it ceases to
be effective (as described in the next sentence) and, where such supplement or
amendment is confirmed, it continues in effect in the form so confirmed.  If such supplement or 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 supplement or
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, vary or delete any provision of this Agreement to
substantially the same effect shall be effective until confirmed by the
shareholders or holders of Rights, as the case may be.

Section 5.5            Fractional Rights and
Fractional Shares.

(1)                                  The
Corporation shall not be required to issue fractions of Rights or to distribute
Rights Certificates which evidence fractional Rights.  Any such fractional Right shall be null and
void and the Corporation will not have any obligation or liability in respect
thereof.

(2)                                  The
Corporation shall not be required to issue fractions of Common Shares or other
securities upon exercise of the Rights or to distribute certificates which
evidence fractional Common Shares or other securities.  In lieu of issuing fractional Common Shares
or other securities, the Corporation shall pay to the registered holders of
Rights Certificates at the time such Rights are exercised as herein provided,
an amount in cash equal to the same fraction of the Market Price of one Common
Share.  The Rights Agent shall have no
obligation to make any payments in lieu of fractional Common Shares unless the
Corporation shall have provided the Rights Agent with the necessary funds to
pay in full all amounts payable in accordance with Section 2.2(5).

Section 5.6            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 registered holders of the Rights; and any registered holder of any
Rights, without the consent of the Rights Agent or of the registered holder of
any other Rights, may, on such holder’s own behalf and for such holder’s own
benefit and the benefit of other holders of Rights enforce, and may institute
and maintain any suit, action or proceeding against the Corporation to enforce
such holder’s right to exercise such holder’s 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.

 31
 

 

Section 5.7            Notice of Proposed
Actions.

In case the Corporation
shall propose after the Separation Time and prior to the Expiration Time to
effect the liquidation, dissolution or winding-up of the Corporation or the
sale of all or substantially all of the Corporation’s assets, then, in each
such case, the Corporation shall give to each holder of a Right, in accordance
with Section 5.8 hereof, a notice of such proposed action, which shall
specify the date on which such liquidation, dissolution, winding up, or sale is
to take place, and such notice shall be so given at least twenty (20) Business
Days prior to the date of taking of such proposed action.

Section 5.8            Notices.

(1)                                  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 or sent by first-class mail, postage
prepaid, addressed (until another address is filed in writing with the Rights
Agent) as follows:

NovaGold Resources Inc.

P.O. Box 24

#2300 – 200 Granville Street

Vancouver, BC  V6C 1S4

Attention:          Vice-President,
Finance

Facsimile No.:   (604) 669-6272

(2)                                  Any
notice or demand 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 or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:

Computershare Investor Services Inc.

3rd Floor, 510 Burrard Street

Vancouver, BC  V6C 3B9

Attention:          General
Manager, Client Services

Facsimile No.:   (604) 661-9401

(3)                                  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 Rights Register 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.

Section 5.9            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.

Section 5.10         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

 32
 

 

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

Section 5.11         Governing Law.

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

Section 5.12         Severability.

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

Section 5.13         Effective Date.

This Agreement is effective
and in full force and effect in accordance with its terms and conditions as of
and from the date of this Agreement (the “Effective Date”).  If this Agreement is not confirmed by a
majority of the votes cast by holders of Voting Shares permitted to vote on a
resolution under Section 5.4 or the confirmation of this Agreement, at a
meeting to be held no later than 6 months from the date of this Agreement then
this Agreement and any then outstanding Rights will be of no further force and
effect from the earlier of the close of business on the date immediately
following the date of the meeting and the close of business on the date which is 6 months from the date of this
Agreement.

Section 5.14         Determinations and
Actions by the Board of Directors.

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

Section 5.15         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 holders of Voting Shares
of the Corporation) with respect to any Take-over Bid or otherwise that the
Board of Directors believes is necessary or appropriate in the exercise of its
fiduciary duties.

 33
 

 

Section 5.16         Regulatory Approvals.

This Agreement shall be
subject in any jurisdiction to the receipt of any required prior or subsequent
approval or consent from any governmental or regulatory authority in such
jurisdiction including any securities regulatory authority or stock exchange.

Section 5.17         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 with the
securities laws or comparable legislation of a jurisdiction outside Canada, the
Board of Directors acting in good faith may take such actions as it may deem
appropriate to ensure such compliance. 
In no event shall the Corporation or the Rights Agent be required to
issue or deliver Rights or securities issuable on exercise of Rights to Persons
who are citizens, residents or nationals of any jurisdiction other than Canada,
the United States or the United Kingdom in which such issue or delivery would
be unlawful without registration of the relevant Persons or securities for such
purposes, or (until such notice is given as required by law) without advance
notice to any regulatory or self-regulatory body.

Section 5.18         Time of the Essence.

Time shall be of the
essence in this Agreement.

Section 5.19         Execution in
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 one and the same instrument.

IN WITNESS WHEREOF, the
parties have executed this Agreement.

	
   

  	
   

  
	
  

  	
  NOVAGOLD RESOURCES INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. Van Nieuwenhuyse

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ R. J. (Don) MacDonald

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  COMPUTERSHARE INVESTOR

  
	
   

  	
  SERVICES INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Glover

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Karim

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  

 

 34

 

SCHEDULE
2.2(3)

FORM OF RIGHTS CERTIFICATE

	
  Certificate No.                    

  	
                    Rights

  

 

THE RIGHTS ARE SUBJECT TO REDEMPTION, AT THE
OPTION OF THE CORPORATION, ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.  UNDER CERTAIN CIRCUMSTANCES (SPECIFIED IN
SECTION 3.1(2) OF THE RIGHTS AGREEMENT), RIGHTS BENEFICIALLY OWNED BY AN
ACQUIRING PERSON, ANY PERSON ACTING JOINTLY OR IN CONCERT WITH AN ACQUIRING
PERSON OR THEIR RESPECTIVE ASSOCIATES AND AFFILIATES (AS SUCH TERMS ARE DEFINED
IN THE RIGHTS AGREEMENT) AND THEIR RESPECTIVE TRANSFEREES SHALL BECOME VOID
WITHOUT ANY FURTHER ACTION.

RIGHTS
CERTIFICATE

This certifies that                        or
registered assigns, is the registered holder of the number of Rights set forth
above each of which entitles the registered holder thereof, subject to the
terms, provisions and conditions of the Shareholder Rights Plan Agreement dated
December 7, 2006, as amended
and restated from time to time (the “Rights Agreement”),
between NovaGold Resources Inc., a corporation incorporated under the laws of
Nova Scotia (the “Corporation”), and Computershare
Investor Services Inc., a trust company existing 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 (as such
term is defined in the Rights Agreement) and prior to the Expiration Time (as
such term is defined in the Rights Agreement) (or such earlier expiration time as is provided in
the Rights Agreement) one fully paid and non-assessable 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 offices in the City of
Toronto.  The Exercise Price shall
initially be $75 (Canadian) per Right and shall be subject to adjustment in
certain events as provided in the Rights Agreement.

In certain circumstances
described in the Rights Agreement, each Right evidenced hereby may entitle the
registered holder thereof to purchase or receive assets, debt securities or
other equity securities of the Corporation (or a combination thereof) all as
provided in the Rights Agreement.

This Rights Certificate
is subject to all of the terms, provisions and conditions of the Rights
Agreement, which terms, provisions and conditions are hereby incorporated
herein by reference and made a part hereof and to which Rights Agreement
reference is hereby made for a full description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Rights Agent, the
Corporation and the holders of the Rights. 
Copies of the Rights Agreement are on file at the principal executive
offices 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 entitling the holder to purchase a like aggregate
number of Common Shares as the Rights evidenced by the Rights Certificate or
Rights Certificates surrendered.  If this
Rights Certificate shall be exercised in part, the registered holder shall be
entitled to receive, upon surrender hereof, another Rights Certificate or
Rights Certificates for the number of whole Rights not exercised.

 

Subject to the
provisions of the Rights Agreement, the Rights evidenced by this Rights
Certificate may be, and under certain circumstances are required to be,
redeemed by the Corporation at a redemption price of $0.00001 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, receive dividends or be deemed
for any purpose the holder of Common Shares or of any other securities 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 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 consent to any corporate action, or to receive notice of
meetings or other actions affecting shareholders of the Corporation (except as
expressly provided in the Rights Agreement), or to receive dividends,
distributions or subscription rights, or otherwise until the Rights evidenced
by this Rights Certificate shall have been exercised as provided in the Rights
Agreement.

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

WITNESS the
facsimile signature of the proper officers of the Corporation.

Dated ·

	
   

  	
   

  
	
  

  	
  NOVAGOLD RESOURCES INC.

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  

 2
 

 

 

	
  

  	
   

  
	
  

  	
  COMPUTERSHARE INVESTOR

  
	
   

  	
  SERVICES INC.

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
  Authorized
  Signing Officer

  

 

 3

 

(To be attached to
each Rights Certificate)

FORM OF
ELECTION TO EXERCISE

TO:         NOVAGOLD
RESOURCES INC.

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

(NAME)

(ADDRESS)

(CITY AND STATE OR PROVINCE)

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 AND STATE OR PROVINCE)

SOCIAL INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER

	
   

  
	
  Dated

  	
   

  	
   

  
	
   

  
	
  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
guaranteed by a Canadian chartered bank, a major Canadian trust company or a
member of a recognized stock exchange or a member of a recognized Medallion
Program.

 

To be completed if true

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

	
   

  	
   

  
	
  

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 2

 

NOTICE

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

 

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.

 

	
  

  
	
  Dated

  	
   

  	
   

  
	
   

  
	
  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
guaranteed by a Canadian chartered bank, a major Canadian trust company or a
member of a recognized stock exchange or a member of a recognized Medallion
Program.

To be completed if true

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

	
   

  	
   

  
	
  

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

NOTICE

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

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