Document:

NTGR 2015.02.13 EX10.1

SEPARATION AGREEMENT AND RELEASE

This Separation Agreement and Release (“Agreement”) is made by and between Michael Clegg (“Employee”) and NETGEAR, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”).

RECITALS

WHEREAS, Employee is employed by the Company;

WHEREAS, Employee and the Company entered into a Change of Control and Severance Agreement dated January 25, 2012 (the “Severance Agreement”);
WHEREAS, the Company has granted Employee options to purchase shares of the Company’s Common Stock (the “Options”) and awards of restricted stock units, each unit representing the right to receive a share of Company Common Stock on the date it becomes vested (the “RSU Awards”, and together with the Options, the “Equity Awards”), in each case under the Company’s 2006 Long Term Incentive Plan (the “2006 Plan”); 

WHEREAS, Employee has separated from employment with the Company effective February 6, 2015 (the “Separation Date”); and
    
WHEREAS, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that the Employee may have against the Company and that the Company may have against Employee and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Employee’s employment with or separation from the Company;

NOW, THEREFORE, in consideration of the mutual promises made herein, the Company and Employee hereby agree as follows:

COVENANTS

1.Consideration.  In consideration of Employee’s execution of this Agreement and Employee’s fulfillment of all of its terms and conditions, and provided that Employee does not revoke the Agreement under paragraph 5 below, the Company agrees as follows:

a.Severance Payments.  The Company agrees to pay Employee continuing payments of severance pay at his base salary rate in effect on the Separation Date from the first regular payroll date following the Effective Date and continuing through until December 31, 2015, in accordance with the Company’s regular payroll practices.

b.COBRA.  The Company shall reimburse Employee for the payments Employee makes for coverage pursuant to the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”), for the period from the Effective Date and continuing through until December 31, 2015, provided Employee timely elects and pays for continuation coverage pursuant to COBRA, within the time period prescribed pursuant to COBRA.  COBRA 

reimbursements shall be made by the Company to Employee consistent with the Company’s normal expense reimbursement policy, provided that Employee submits documentation to the Company substantiating his payments for COBRA coverage.  Notwithstanding the foregoing provisions of this paragraph, if the Company determines in its sole discretion that it cannot provide the foregoing benefit without potentially violating, or being subject to an excise tax under, applicable law (including, without limitation, Section 2716 of the Public Health Service Act), the Company will in lieu thereof provide to Employee a taxable monthly payment, payable on the last day of a given month (except as provided by the following sentence), in an amount equal to the monthly COBRA premium that Employee would be required to pay to continue the group health coverage for Employee and/or Employee’s eligible dependents in effect on the Separation Date (which amount will be based on the premium for the first month of COBRA coverage), which payments will be made regardless of whether Employee and/or Employee’s eligible dependents elect COBRA continuation coverage and will commence on the month following the Separation Date, or if later, the month following the date the Company makes the determination that providing the foregoing benefit would violate applicable law, and will end on December 31, 2015. 

c.Accelerated Equity Vesting; Exercise Period Extension.  The Parties agree that the Equity Awards will vest as of the Separation Date as to that portion of the awards that would have otherwise vested in accordance with the vesting schedules applicable thereto as if Employee had continued providing services as an employee of the Company until the fourteen (14) month anniversary of the Separation Date (the “Vesting Date”); provided, that for purposes of such vesting calculation, RSU Awards that would not otherwise be fully vested as of the Vesting Date will be deemed to have vested in equal monthly installments rather than equal annual installments over the four-year vesting period of such RSU Awards.  The vesting acceleration of the Equity Awards is subject to this Agreement becoming effective and irrevocable.  For avoidance of doubt, and subject to the proviso above, any unvested portion of the Equity Awards that are not scheduled to vest as of the Vesting Date will terminate and be cancelled on the Separation Date.  The Company also agrees to extend Employee’s exercise period for the Options to three (3) months following the Vesting Date.  Except as expressly amended hereby, the Equity Awards will remain subject to the terms, definitions, and provisions of the 2006 Plan and the respective stock option and RSU award agreement(s) between the Company and Employee (the “Equity Award Agreements”).
             The Company shall have no further obligation to provide Employee with any payments,   benefits, or other consideration other than as set forth above.  

d.Tax Withholding.  All payments made pursuant to this Agreement will be subject to withholding of applicable taxes.  Employee agrees and acknowledges that he is giving the Company permission to withhold from any cash payments to be made hereunder an amount equal to any required tax withholding obligation due and payable as a result of the severance payments and benefits being provided under this Agreement.

e.Employment Counsel.  The Company will reimburse Employee for the reasonable fees, not to exceed $2,500, of an employment attorney of his choice related to the negotiation and drafting of this Agreement.  Employee shall submit receipts for reimbursement of such employment counsel fees prior to March 15, 2015.

f.Company Laptop; Cell Phone.  Within five (5) days of the Separation Date, Employee shall submit his Company laptop and cell phone to the Company for a reasonable time period so that the Company may wipe all Company information from such devices.  Employee will be entitled to keep both the laptop and cell phone, as well as his phone number.  In addition, Employee’s signature below constitutes his certification under penalty of perjury that he has returned all documents and other items that are currently in his possession, and that he will promptly return or destroy all documents and other items that he subsequently discovers that have been provided to Employee by the Company, developed or obtained by Employee in connection with his employment with the Company, or otherwise belonging to the Company, with the exception of copies of Employee’s agreements with the Company and compensation and benefits records.  Notwithstanding the foregoing, the Company also agrees that Employee shall be entitled to keep the Company issued router and Arlo system that currently are in his possession for his own personal use only.

2.Benefits.  Employee’s health insurance benefits shall cease on the last day of February 2015, subject to Employee’s right to continue his health insurance under COBRA. Employee’s participation in all other benefits and incidents of employment, including, but not limited to, the accrual of vacation, and paid time off, ceased as of the Separation Date.

3.Payment of Salary and Receipt of All Benefits.  The Company agrees that expenses submitted to the Company’s human resources department by Employee by no later than March 31, 2015 shall be paid in accordance with the terms of the NETGEAR Global Travel and Entertainment Policy.  Employee acknowledges and represents that, other than the consideration set forth in this Agreement, the Company has paid or provided all salary, wages, bonuses, accrued vacation/paid time off, premiums, leaves, housing allowances, relocation costs, interest, severance, outplacement costs, fees, reimbursable expenses, commissions, stock, stock options, vesting, and any and all other benefits and compensation due to Employee.  

4.Release of Claims.  Employee agrees that the foregoing consideration represents settlement in full of all outstanding obligations owed to Employee by the Company and its current and former officers, directors, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries, and predecessor and successor corporations and assigns (collectively, the “Releasees”).  Employee, on his own behalf and on behalf of his respective heirs, family members, executors, agents, and assigns, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, demand, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Employee may possess against any of the Releasees arising from any omissions, acts, facts, or damages that 

have occurred up until and including the Effective Date of this Agreement, including, without limitation:

a.any and all claims relating to or arising from Employee’s employment relationship with the Company and the conclusion of that relationship, including without limitation any claims under the Employment Agreement; 

b.    any and all claims relating to, or arising from, Employee’s right to purchase, or actual purchase of shares of stock of the Company, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state corporate law, and securities fraud under any state or federal law;

c.    any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;

d.    any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the Immigration Control and Reform Act; the California Family Rights Act; the California Labor Code; the California Workers’ Compensation Act; and the California Fair Employment and Housing Act;

e.    any and all claims for violation of the federal or any state constitution;

f.    any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;

g.    any claim for any loss, cost, damage, or expense arising out of any dispute over the nonwithholding or other tax treatment of any of the proceeds received by Employee as a result of this Agreement; and

h.    any and all claims for attorneys’ fees and costs.

           Employee agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released.  This release does not extend to any obligations incurred under this Agreement.  This release does not release claims that cannot be released as a matter of law, including, but not limited to, Employee’s right to file a charge with or participate 

in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company (with the understanding that any such filing or participation does not give Employee the right to recover any monetary damages against the Company; Employee’s release of claims herein bars Employee from recovering such monetary relief from the Company). In addition, Employee is not waiving or releasing under this Agreement any indemnification rights to which Employee may be entitled under the Company’s formation documents, by contract, or as a matter of law. Notwithstanding the foregoing, Employee acknowledges that any and all disputed wage claims that are released herein shall be subject to binding arbitration in accordance with Paragraph 19, except as required by applicable law.  Employee represents that he has made no assignment or transfer of any right, claim, complaint, charge, duty, obligation, demand, cause of action, or other matter waived or released by this Section.

5.Acknowledgment of Waiver of Claims under ADEA.  Employee acknowledges that he is waiving and releasing any rights he may have under the Age Discrimination in Employment Act of 1967 ("ADEA"), and that this waiver and release is knowing and voluntary.  Employee agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the Effective Date of this Agreement.  Employee acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Employee was already entitled.  Employee further acknowledges that he has been advised by this writing that: (a) he should consult with an attorney prior to executing this Agreement; (b) he has forty-five (45) days within which to consider this Agreement; (c) as set forth in the documentation provided to, and acknowledged by, Employee at the time of presentation of this Agreement, Employee has been advised in writing by the Company of the class, unit, or group of individuals covered by the Company’s recent reduction in force, the eligibility factors for such reduction in force, and the job titles and ages of all individuals who were and were not selected; (d) he has seven (7) days following his execution of this Agreement to revoke this Agreement; (e) this Agreement shall not be effective until after the revocation period has expired; and (f) nothing in this Agreement prevents or precludes Employee from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law.  In the event Employee signs this Agreement and returns it to the Company in less than the 45-day period identified above, Employee hereby acknowledges that he has freely and voluntarily chosen to waive the time period allotted for considering this Agreement.  Employee acknowledges and understands that revocation must be accomplished by a written notification to the person executing this Agreement on the Company’s behalf that is received prior to the Effective Date.  The parties agree that changes, whether material or immaterial, do not restart the running of the 45-day period.

6.California Civil Code Section 1542.  Employee acknowledges that he has been advised to consult with legal counsel and is familiar with the provisions of California Civil Code Section 1542, a statute that otherwise prohibits the release of unknown claims, which provides as follows:

A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.

Employee, being aware of said code section, agrees to expressly waive any rights he may have thereunder, as well as under any other statute or common law principles of similar effect.

7.No Pending or Future Lawsuits.  Employee represents that he has no lawsuits, claims, or actions pending in his name, or on behalf of any other person or entity, against the Company or any of the other Releasees.  Employee also represents that he does not intend to bring any claims on his own behalf or on behalf of any other person or entity against the Company or any of the other Releasees.

8.Confidentiality.  Employee agrees to maintain in complete confidence the existence of this Agreement, the contents and terms of this Agreement, and the consideration for this Agreement (hereinafter collectively referred to as “Separation Information”).  Except as required by law, Employee may disclose Separation Information only to his immediate family members, the Court in any proceedings to enforce the terms of this Agreement, Employee’s attorney(s), and Employee’s accountant and any professional tax advisor to the extent that they need to know the Separation Information in order to provide advice on tax treatment or to prepare tax returns, and must prevent disclosure of any Separation Information to all other third parties.  Employee agrees that he will not publicize, directly or indirectly, any Separation Information.

Employee acknowledges and agrees that the confidentiality of the Separation Information is of the essence.  The Parties agree that if the Company proves that Employee breached this Confidentiality provision, the Company shall be entitled to an award of its costs spent enforcing this provision, including all reasonable attorneys’ fees associated with the enforcement action, without regard to whether the Company can establish actual damages from Employee’s breach, except to the extent that such breach constitutes a legal action by Employee that directly pertains to the ADEA.  Any such individual breach or disclosure shall not excuse Employee from his obligations hereunder, nor permit him to make additional disclosures.  Employee warrants that he has not disclosed, orally or in writing, directly or indirectly, any of the Separation Information to any unauthorized party.

9.Trade Secrets and Confidential Information/Company Property.  Employee agrees and hereby acknowledges that by virtue of his employment relationship and fiduciary duties owed to the Company, he has always been subject to a confidentiality obligation to the Company.   Employee agrees at all times hereafter to hold in the strictest confidence, and not to use or disclose to any person or entity, any Confidential Information of the Company.  Employee understands that “Confidential Information” means any Company proprietary information, technical data, trade secrets or know-how, including, but not limited to, research, product plans, product strategy, product roadmaps, products, services, customer lists and customers (including, but not limited to, customers of the Company on whom Employee has called or with whom he became acquainted during the term of his employment), sales 

information and techniques, markets, software, developments, inventions, processes, formulas, technology, designs, drawings, engineering, hardware configuration information, marketing, finances, or other business information disclosed to Employee by the Company either directly or indirectly, in writing, orally, or by drawings or observation of parts or equipment.  Employee further understands that Confidential Information does not include any of the foregoing items that have become publicly known and made generally available through no wrongful act of Employee’s or of others who were under confidentiality obligations as to the item or items involved or improvements or new versions thereof.  Employee hereby grants consent to notification by the Company to any new employer about Employee’s obligations under this paragraph.  Employee represents that he has not to date misused or disclosed Confidential Information to any unauthorized party. 

10.Inventions.  

a.Inventions and Intellectual Property Rights. “Invention” means any ideas, concepts, information, materials, processes, data, programs, know-how, negative know-how, improvements, discoveries, developments, designs, artwork, formulae, other copyrightable works or works of authorship, and techniques and all Intellectual Property Rights in any of such items. “Intellectual Property Rights” means all trade secrets, copyrights, trademarks, mask work rights, patents and other intellectual property rights recognized by the laws of any jurisdiction or country.

b.Prior Inventions.  Employee has disclosed on Exhibit A all Inventions that (i) Employee has, or Employee has caused to be, alone or jointly with others, conceived, developed or reduced to practice prior to beginning his employment with the Company, (ii) in which Employee has an ownership interest or that Employee has a license to use, and (iii) that Employee wishes to exclude from this Agreement (collectively, “Prior Inventions”).  If Employee has listed no Prior Inventions in Exhibit A, Employee warrants that he has no such Prior Inventions.  Employee represents and warrants that he did not incorporate, or permit to be incorporated, Prior Inventions in any Company Inventions (defined below) without the Company’s prior written consent.  If, in the course of Employee’s employment with the Company, Employee incorporated a Prior Invention into a Company process, machine or other work, Employee hereby grants the Company a non-exclusive, perpetual, fully-paid and royalty-free, irrevocable and worldwide license, with rights to sublicense through multiple levels of sublicensees, to reproduce, make derivative works of, distribute, publicly perform, and publicly display in any form or medium, whether now known or later developed, make, have made, use, sell, import, offer for sale, and exercise any and all present or future rights in, such Prior Invention, all without need to account to Employee in any way for such uses.

c.Assignment of the Company Inventions.  “Company Inventions” are Inventions assigned to the Company or to a third party as directed by the Company.  Except for Inventions listed on Exhibit A and except for Inventions that Employee can prove qualify fully under the provisions of a Specific Inventions Law (as defined below), Employee hereby assigns (as of when any such Inventions or Intellectual Property Rights was first conceived, first reduced to practice, or first fixed in a tangible medium, as applicable) to the Company all 

of Employee’s right, title, and interest in and to any and all Inventions (and all Intellectual Property Rights with respect thereto) Employee made, conceived, reduced to practice or learned, either alone or with others, during the period of Employee’s employment by the Company.  Though the Company may ask Employee to sign specific assignments after the date of this Agreement, the assignment in this Agreement is automatically effective with respect to any and all prior Inventions without need for further documentation.  Employee agrees, as the Company directs, to assign all of Employee’s right, title, and interest in and to any particular Company Invention to a third party, including without limitation the United States government.

d.Specific Inventions Law.  Employee recognizes that, in the event of a specifically applicable state law, regulation, rule or public policy (“Specific Inventions Law”), this Agreement will not be deemed to require assignment of any invention which qualifies fully for protection under such Specific Inventions Law by virtue of the fact that any such invention was, for example, developed entirely on Employee’s own time without using the Company’s equipment, supplies, facilities, or trade secrets and neither related to the Company’s actual or anticipated business, research or development, nor resulted from work performed by Employee for the Company.

e.Obligation to Keep the Company Informed.  Employee represents and warrants to the Company that, during the period of Employee’s employment by the Company, Employee fully disclosed to the Company in writing (i) all Inventions Employee authored, conceived or reduced to practice, either alone or with others and including any that might be covered under California Labor Code Section 2870, and (ii) all patent applications Employee filed or in which Employee was named as an inventor or coinventor (collectively (i) and (ii), “Covered Inventions”).  For a period of one (1) year after the Separation Date, Employee will promptly and fully disclose to the Company in writing all Covered Inventions authored, conceived or reduced to practice or that are the subject of a patent application during such one (1) year period.

f.Enforcement of Intellectual Property Rights and Assistance.  At any time (and from time to time) after the Separation Date, Employee will assist the Company in every proper way to obtain and enforce United States and foreign Intellectual Property Rights relating to the Company Inventions.  If the Company cannot secure Employee’s signature on any document needed in connection with such purposes, Employee hereby irrevocably designates and appoints the Company and its duly authorized officers and agents as Employee’s agent and attorney-in-fact, which appointment is coupled with an interest, to act on Employee’s behalf to execute and file any such documents and to do all other lawfully permitted acts to further such purposes with the same legal force and effect as if Employee executed them himself.

g.Waiver of Moral Rights.  If Employee has any moral rights or other similar rights in any Company Inventions that Employee cannot assign to the Company, Employee hereby agrees to waive, and does waive, all enforcement of such moral rights against the Company or any of its successors or assigns.

h.Records.  Employee represents and warrants to the Company that he kept and maintained adequate and current records (in the form of notes, sketches, drawings 

and in any other form the Company requires) of all Inventions Employee made during his employment by the Company.  Employee acknowledges that such records remain the sole property of the Company at all times.

11.No Cooperation.  Employee agrees that he will not knowingly encourage, counsel, or assist any attorneys or their clients in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints by any third party against any of the Releasees, unless under a subpoena or other court order to do so or as related directly to the ADEA waiver in this Agreement.  Employee agrees both to immediately notify the Company upon receipt of any such subpoena or court order, and to furnish, within ten (10) business days of its receipt, a copy of such subpoena or other court order.  If approached by anyone for counsel or assistance in the presentation or prosecution of any disputes, differences, grievances, claims, charges, or complaints against any of the Releasees, Employee shall state no more than that he cannot provide counsel or assistance.

12.Nondisparagement.  Employee agrees to refrain from any disparagement, defamation, libel, or slander of any of the Releasees, and agrees to refrain from any tortious interference with the contracts and relationships of any of the Releasees.  The Company (on behalf of its officers and directors) agrees not to disparage Employee in any manner likely to be harmful to Employee or to Employee’s personal reputation; provided, however, that both Employee and the Company may respond accurately and fully to any question, inquiry or request for information when required by legal process.   Employee understands that the Company’s obligations under this paragraph extend only to the Company’s current executive officers and members of its Board of Directors and only for so long as each officer or member is an employee or Board member of the Company.  Employee shall direct any inquiries by potential future employers to the Company’s human resources department.

13.Breach.  In addition to the rights provided in the “Attorneys’ Fees” section below, Employee acknowledges and agrees that any material breach of this Agreement, unless such breach constitutes a legal action by Employee challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, shall entitle the Company immediately to recover and/or cease providing the consideration provided to Employee under this Agreement and to obtain damages, except as provided by law, provided, however, that the Company shall not recover One Hundred Dollars ($100.00) of the consideration already paid pursuant to this Agreement and such amount shall serve as full and complete consideration for the promises and obligations assumed by Employee under this Agreement.  

14.No Admission of Liability.  Employee understands and acknowledges that this Agreement constitutes a compromise and settlement of any and all actual or potential disputed claims by Employee.  No action taken by the Company hereto, either previously or in connection with this Agreement, shall be deemed or construed to be (a) an admission of the truth or falsity of any actual or potential claims or (b) an acknowledgment or admission by the Company of any fault or liability whatsoever to Employee or to any third party.

15.Nonsolicitation.  Employee agrees that for a period of twelve (12) months immediately following the Effective Date of this Agreement, Employee shall not directly or indirectly solicit any of the Company’s employees to leave their employment at the Company.  

16.Costs.  The Parties shall each bear their own costs, attorneys’ fees, and other fees incurred in connection with the preparation of this Agreement.

17.ARBITRATION.  THE PARTIES AGREE THAT ANY AND ALL DISPUTES ARISING OUT OF THE TERMS OF THIS AGREEMENT, THEIR INTERPRETATION, AND ANY OF THE MATTERS HEREIN RELEASED, SHALL BE SUBJECT TO ARBITRATION IN SANTA CLARA COUNTY, BEFORE JUDICIAL ARBITRATION & MEDIATION SERVICES (“JAMS”), PURSUANT TO ITS EMPLOYMENT ARBITRATION RULES & PROCEDURES (“JAMS RULES”).  THE ARBITRATOR MAY GRANT INJUNCTIONS AND OTHER RELIEF IN SUCH DISPUTES.  THE ARBITRATOR SHALL ADMINISTER AND CONDUCT ANY ARBITRATION IN ACCORDANCE WITH CALIFORNIA LAW, INCLUDING THE CALIFORNIA CODE OF CIVIL PROCEDURE, AND THE ARBITRATOR SHALL APPLY SUBSTANTIVE AND PROCEDURAL CALIFORNIA LAW TO ANY DISPUTE OR CLAIM, WITHOUT REFERENCE TO ANY CONFLICT-OF-LAW PROVISIONS OF ANY JURISDICTION.  TO THE EXTENT THAT THE JAMS RULES CONFLICT WITH CALIFORNIA LAW, CALIFORNIA LAW SHALL TAKE PRECEDENCE.  THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE, AND BINDING ON THE PARTIES TO THE ARBITRATION.  THE PARTIES AGREE THAT THE PREVAILING PARTY IN ANY ARBITRATION SHALL BE ENTITLED TO INJUNCTIVE RELIEF IN ANY COURT OF COMPETENT JURISDICTION TO ENFORCE THE ARBITRATION AWARD.  THE PARTIES TO THE ARBITRATION SHALL EACH PAY AN EQUAL SHARE OF THE COSTS AND EXPENSES OF SUCH ARBITRATION, AND EACH PARTY SHALL SEPARATELY PAY FOR ITS RESPECTIVE COUNSEL FEES AND EXPENSES; PROVIDED, HOWEVER, THAT THE ARBITRATOR SHALL AWARD ATTORNEYS’ FEES AND COSTS TO THE PREVAILING PARTY, EXCEPT AS PROHIBITED BY LAW.  THE PARTIES HEREBY AGREE TO WAIVE THEIR RIGHT TO HAVE ANY DISPUTE BETWEEN THEM RESOLVED IN A COURT OF LAW BY A JUDGE OR JURY.  NOTWITHSTANDING THE FOREGOING, THIS SECTION WILL NOT PREVENT EITHER PARTY FROM SEEKING INJUNCTIVE RELIEF (OR ANY OTHER PROVISIONAL REMEDY) FROM ANY COURT HAVING JURISDICTION OVER THE PARTIES AND THE SUBJECT MATTER OF THEIR DISPUTE RELATING TO THIS AGREEMENT AND THE AGREEMENTS INCORPORATED HEREIN BY REFERENCE.  SHOULD ANY PART OF THE ARBITRATION AGREEMENT CONTAINED IN THIS PARAGRAPH CONFLICT WITH ANY OTHER ARBITRATION AGREEMENT BETWEEN THE PARTIES, THE PARTIES AGREE THAT THIS ARBITRATION AGREEMENT SHALL GOVERN.

18.Section 409A.  It is intended that this Agreement comply with, or be exempt from, Code Section 409A and the final regulations and official guidance thereunder (“Section 409A”) and any ambiguities herein will be interpreted to so comply and/or be exempt from Section 409A.  Each payment and benefit to be paid or provided under this Agreement is 

intended to constitute a series of separate payments for purposes of Section 1.409A-2(b)(2) of the Treasury Regulations.  With respect to any amount eligible for reimbursement under this Agreement (i) the amount of the reimbursement in one calendar year may not affect the amount eligible for reimbursement in any other calendar year (except that a plan providing medical or health benefits may, to the extent permitted by Section 409A, impose a generally applicable limit on the amount that may be reimbursed or paid), (ii) the right to reimbursement will not be subject to liquidation or exchange for another benefit or payment, and (iii) subject to any shorter time periods provided herein or in the applicable reimbursement arrangement, any such reimbursement of an expense must be made on or before the last day of the calendar year following the calendar year in which the expense was incurred.  The Company and Employee will work together in good faith to consider either (i) amendments to this Agreement; or (ii) revisions to this Agreement with respect to the payment of any awards, which are necessary or appropriate to avoid imposition of any additional tax or income recognition prior to the actual payment to Employee under Section 409A.  In no event will the Company reimburse Employee for any taxes that may be imposed on Employee as a result of Section 409A.

19.Authority.  The Company represents and warrants that the undersigned has the authority to act on behalf of the Company and to bind the Company and all who may claim through it to the terms and conditions of this Agreement.  Employee represents and warrants that he has the capacity to act on his own behalf and on behalf of all who might claim through him to bind them to the terms and conditions of this Agreement.  Each Party warrants and represents that there are no liens or claims of lien or assignments in law or equity or otherwise of or against any of the claims or causes of action released herein.

20.No Representations.  Employee represents that he has had an opportunity to consult with an attorney, and has carefully read and understands the scope and effect of the provisions of this Agreement.  Employee has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement.

21.Severability.  In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.

22.Attorneys’ Fees.  Except with regard to a legal action challenging or seeking a determination in good faith of the validity of the waiver herein under the ADEA, in the event that either Party brings an action to enforce or effect its rights under this Agreement, the prevailing Party shall be entitled to recover its costs and expenses, including the costs of mediation, arbitration, litigation, court fees, and reasonable attorneys’ fees incurred in connection with such an action.

23.Entire Agreement.  This Agreement represents the entire agreement and understanding between the Company and Employee concerning the subject matter of this Agreement and Employee’s employment with and separation from the Company and the events leading thereto and associated therewith, and supersedes and replaces any and all prior agreements and understandings concerning the subject matter of this Agreement and 

Employee’s relationship with the Company, with the exception of the Confidentiality Agreement and the Equity Award Agreements, except as modified herein. 

24.No Oral Modification.  This Agreement may only be amended in a writing signed by Employee and the Company’s Chief Executive Officer.

25.Governing Law.  This Agreement shall be governed by the laws of the State of California, without regard for choice-of-law provisions.  Employee consents to personal and exclusive jurisdiction and venue in the State of California.

26.Effective Date.  Employee understands that this Agreement shall be null and void if not executed by him within the forty-five (45) day period set forth under paragraph 5 above.   Each Party has seven (7) days after that Party signs this Agreement to revoke it.  This Agreement will become effective on the eighth (8th) day after Employee signed this Agreement, so long as it has been signed by the Parties and has not been revoked by either Party before that date (the “Effective Date”).

27.Counterparts.  This Agreement may be executed in counterparts and by facsimile, and each counterpart and facsimile shall have the same force and effect as an original and shall constitute an effective, binding agreement on the part of each of the undersigned.

28.Voluntary Execution of Agreement.  Employee understands and agrees that he executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of his claims against the Company and any of the other Releasees.  Employee acknowledges that:
(a)    he has read this Agreement;
		
	(b)
	he has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of his own choice or has elected not to retain legal counsel;

		
	(c)
	he understands the terms and consequences of this Agreement and of the releases it contains; and

(d)    he is fully aware of the legal and binding effect of this Agreement.

(signature page follows)

IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.

      	
			
	 
	 
	MICHAEL CLEGG, an individual

	 
	 
	 

	Dated:  February 10, 2015
	 
	/s/ Michael Clegg    

	 
	 
	Michael Clegg

 

	
			
	 
	 
	NETGEAR, INC.

	 
	 
	 

	Dated:  February 10, 2015
	By:
	/s/ Andrew Kim

	 
	 
	Andrew Kim

	 
	 
	SVP of Corp. Dev. & General Counsel

EXHIBIT A
LIST OF PRIOR INVENTIONS
AND ORIGINAL WORKS OF AUTHORSHIP
	
			
	Title
	Date
	Identifying Number or Brief Description

	 
	 
	 

	 
	 
	 

_x_ No inventions or improvements
___ Additional Sheets Attached

	
			
	Date: February 10, 2015
	 
	/s/ Michael Clegg

	 
	 
	 Signature    

	 
	 
	 

	 
	 
	Michael Clegg

	 
	 
	 Name of Employee (typed or printed)

CALIFORNIA LABOR CODE SECTION 2870
INVENTION ON OWN TIME-EXEMPTION FROM AGREEMENT

“(a)    Any provision in an employment agreement which provides that an employee shall assign, or offer to assign, any of his or her rights in an invention to his or her employer shall not apply to an invention that the employee developed entirely on his or her own time without using the employer’s equipment, supplies, facilities, or trade secret information except for those inventions that either:

(1)    Relate at the time of conception or reduction to practice of the invention to the employer’s business, or actual or demonstrably anticipated research or development of the employer; or
(2)    Result from any work performed by the employee for the employer.

(b)    To the extent a provision in an employment agreement purports to require an employee to assign an invention otherwise excluded from being required to be assigned under subdivision (a), the provision is against the public policy of this state and is unenforceable.”Northern Dynasty Minerals Ltd.: Exhibit 4.1 - Filed by newsfilecorp.com

Execution Copy 

NORTHERN DYNASTY MINERALS LTD. 

SUBSCRIPTION AGREEMENT FOR SPECIAL WARRANTS 

THE SPECIAL WARRANTS BEING ARE OFFERED FOR SALE ONLY WHERE
PERMITTED BY 
APPLICABLE LAW AND ONLY TO ELIGIBLE SUBSCRIBERS RESIDENT IN
CANADA, THE UNITED 
STATES OR OTHER INTERNATIONAL
JURISDICTIONS

	IMPORTANT 
	 
		The
      following items in this Subscription Agreement must be completed (please
      tick applicable boxes when returning this form with funds):
  
	 	 
	    I. 	All Subscribers: 
	 	 
	    [ ] 	
      All Subscriber information, as applicable, in the boxes
      on pages 1 to 3 hereof; 

	 	
       

	    [ ] 	
      A certified cheque or bank draft payable to Northern
      Dynasty Minerals Ltd. or funds wired as per below; 

	 	
       

	    [ ] 	
      If you are purchasing less than CDN$150,000 of Special
      Warrants you must qualify as an “accredited investor” as defined under
      National Instrument 45-106 - Prospectus and Registration Exemptions
      (generally a high net worth or high income investor), complete and
      sign Schedule “B” - Accredited Investor Certificate (other exemptions for
      lesser amounts may be available please contact the Company as per below);
      

	 	
       

	    II. 	U.S. Persons: 
	 	 
	    [ ] 	
      If you are U.S. Person you must also complete Schedule
      “C” – U.S. Accredited Investor Certificate and execute the Registration
      Rights Agreement – Schedule “D”. 

A completed and executed copy of this Subscription Agreement
must be delivered by courier, email or fax, together with certified or wired
funds confirmation by no later than 3:00 p.m. (Vancouver time) on
December 30, 2014. Deliver, fax or email completed
and signed pages (only) to:

Northern Dynasty Minerals Ltd. 
c/o Trevor Thomas. Esq.,
General Counsel 
Email: TrevorThomas@hdimining.com Fax
+1-604-684-8092, 
15th Floor - 1040 W. Georgia St., Vancouver BC V6E 4H1
Canada.
For further information you may also contact Mr. Thomas by phone: Dir
+1-778-373-6723 T +1-604-649-6673. 

Until accepted by the Company, this document is an offer to
subscribe for Special Warrants by the Subscriber. All monetary figures are
Canadian dollars. 

Wire funds as follows: 
Bank Name and Address: xxx

Bank: xxx 
Branch: xxx 
Account Number: xxx (CAD) 
Account Number:
xxx (USD) 
Swift # xxxx 
Beneficiary Name: Northern Dynasty Minerals Ltd.

- 1 - 

SUBSCRIPTION AGREEMENT FOR SPECIAL WARRANTS 

	TO: 	Northern Dynasty Minerals Ltd. (the
      “Company”) 

The undersigned (hereinafter referred to as the
“Subscriber”) hereby irrevocably subscribes for and agrees to purchase
the number of special warrants (the “Special Warrants”) of the Company as
set forth below for the aggregate subscription price set forth below (the
“Aggregate Subscription Price”), representing a subscription price of
$0.431 per Special Warrant, upon and subject to the terms and conditions
set forth herein. In addition to this face page, the Subscriber must also
complete the Schedules B or C & D attached hereto, if applicable (see cover
page for applicability guidelines). 

Please print all information (other than signatures), as
applicable, in the space provided below. 

	  	 	 	Number of Special
      Warrants:__________________ 	 
	 
    	 	 	  	 
	(Name of
      Subscriber- please print) 	 	 	Aggregate 	 
	  	 	 	Subscription Price: $_______________________ 	 
	By:
      ________________________________________________	 	 	  	 
	     
                         
             Authorized Signature 	 	 	If
      the person signing this subscription is not 	 
	  	 	 	purchasing, nor deemed by applicable securities 	 
	 _______________________________________________________	 	 	regulation to be purchasing, as principal and is 	 
	(Official
      Capacity or Title – please print) 	 	 	signing as agent for one or more principals (a 	 
	  	 	 	“Disclosed Principal”), complete the following for 	 
	 _______________________________________________________	 	 	each
      such principal (attach additional pages if 	 
	Please print name
      of individual whose signature 	 	 	required): 	 
	appears above if
      different than the name of the 	 	 	 
    	 
	purchaser printed
      above. 	 	 	 
    	 
	  	 	 	  	 
	 
    	 	 	  	 
	(Address of
      Residence) 	 	 	(Name
      of Disclosed Principal) 	 
	  	 	 	  	 
	  	 	 	  	 
	  	 	 	  	 
	  	 	 	  	 
	  	 	 	(Address of Residence of Disclosed Principal) 	 
	 
    	 	 	  	 
	(Subscriber’s
      E-mail) 	 	 	(Disclosed Principal’s E-mail) 	 
	 	 	 	 	 
	(Subscriber’s
      Telephone No.) 	 	 	  	 
	  	 	 	(Disclosed Principal’s Telephone No.) 	 
	 	 	 	 	 

- 2 - 

The Company is hereby directed to issue and register any
certificates representing the Special Warrants subscribed for, and deliver them,
as follows: 

	Registration Instructions: 	 	 	Delivery Instructions: 	 
	As
      above [  ] or 	 	 	As above
      [  ] or 	 
	 	 	 	 	 
	Name [Please Print] 	 	 	Account reference, if applicable 	 
	 	 	 	 	 
	Account reference, if applicable 	 	 	Contact Name [Please Print] 	 
	 	 	 	 	 
	Address 	 	 	Address 	 
	 	 	 	 	 
	  	 	 	(Telephone Number) 	 

ACCEPTANCE: The Company hereby accepts the subscription
for Special Warrants as set forth above on the terms and conditions contained in
this Subscription Agreement. 

Dated December ______, 2014. 

NORTHERN DYNASTY MINERALS LTD. 

Per:
___________________________________________

                                    
Authorized Signatory 

- 3 - 

	TO: 	Northern Dynasty Minerals Ltd.
  

	1. 	
      Subscription Offer. The undersigned (the
      “Subscriber”) hereby tenders to the Company this subscription offer
      which, upon acceptance by the Company and subject to the terms set out
      herein, will constitute an agreement (the “Subscription Agreement”)
      of the Subscriber with the Company to purchase from the Company and, on
      the part of the Company, to sell to the Subscriber, the number of Special
      Warrants (the “Special Warrants”) set out on page one hereof at the
      price (the “Purchase Price”) of $0.431 per Special Warrant,
      all on the terms and subject to the conditions set forth in this
      Subscription Agreement, including the term sheet (the “Term Sheet”)
      attached as Schedule “A” hereto. The Subscriber acknowledges that the
      Special Warrants such Subscriber is purchasing is part of a larger
      offering by the Company of up to 35,962,877 Special Warrants for an
      aggregate gross proceeds of up to $15.5 million (the “Offering”).
      No executed Subscription Agreement is contingent on execution or
      completion of any other Subscription Agreement and there is no minimum
      Offering size or subscription amount.

	 	 	 
	2. 	
      Subscriber as Trustee, Agent, Representative or
      Nominee for Beneficial Purchaser. If the Subscriber is acting as
      trustee, agent, representative or nominee for a beneficial purchaser,
      including a Disclosed Principal (“Beneficial Purchaser”), the
      Subscriber understands and acknowledges that the representations,
      warranties, and agreements made herein are made by the Subscriber, with
      respect to the Subscriber, and with respect to the Beneficial Purchaser.
      Unless the context otherwise requires or as specifically stated,
      references to the Subscriber in this Subscription Agreement are to the
      Subscriber and any such Beneficial Purchaser.

	 	 	 
	3. 	
      Definitions. In this Subscription Agreement,
      unless the context otherwise requires:

	 	 	 
		(a) 	
      “Accredited Investor Certificate” means the
      certificate attached hereto as Schedule “B” to be used by non-U.S. Persons
      subscribing for less than $150,000 of Special Warrants;

	 	 	 
		(b) 	
      “beneficially own(s)” means to own within the
      meaning of Section 13(d) of the U.S. Exchange Act and the rules and
      regulations of the SEC promulgated thereunder;

	 	 	 
		(c) 	
      “CDN Qualification Date” generally means the date
      a receipt is issued by Canadian securities regulators for the Final
      Prospectus as described in Section 4(b);

	 	 	 
		(d) 	
      “Closing” means a completion of an issue and sale
      by the Company and the purchase by one or more Subscribers of Special
      Warrants pursuant to this Subscription Agreement;

	 	 	 
		(e) 	
      “Closing Date(s)” means December 31, 2014 and such
      later dates as the Company may determine within the rules of the TSX and
      the terms hereof;

	 	 	 
		(f) 	
      “Common Stock Equivalent” means any securities of
      the Company which would entitle the holder thereof to acquire at any time
      Shares, including, without limitation, any debt, preferred stock,
      warrants, options or other instruments convertible into or exercisable or
      exchangeable for Shares;

	 	 	 
		(g) 	
      “Designated Provinces” means each of the Provinces
      of Canada (other than Quebec) in which Canadian resident Subscribers
      reside and where the Final Prospectus will be filed;

	 	 	 
		(h) 	
      “Final Prospectus” means the final prospectus
      qualifying in Canada the distribution of the Shares to be issued upon the
      voluntary or deemed exercise of the Special Warrants;

	 	 	 
		(i) 	
      “Group” means a group of beneficial owners within
      the meaning of Section 13(d) of the U.S. Securities Exchange Act and the
      rules and regulations of the SEC promulgated thereunder;

	 	 	 
		(j) 	
      “International Jurisdiction” means a country other
      than Canada or the United States;

- 4 - 

	 	(k) 	
      “NYSE MKT” means the NYSE MKT Stock
    Exchange;

	 	 	 
	 	(l) 	
      “Registration Rights Agreement” means the
      agreement attached as Schedule “D” to be entered into concurrently
      herewith between the Company and each of the Subscribers who is a U.S.
      Persons;

	 	 	 
	 	(m) 	
      “Resale Filings” means the Final Prospectus and
      the U.S. Registration Statement;

	 	 	 
	 	(n) 	
      “Resale Filings Termination Date” means for each
      holder of Special Warrants the second anniversary of the (first)
      Closing.

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

	 	 	 
	 	(p) 	
      “Securities” means the Special Warrants and the
      Shares;

	 	 	 
	 	(q) 	
      “Securities Commissions” means, collectively, the
      Canadian securities commission or other securities regulatory authority in
      each of the Designated Provinces;

	 	 	 
	 	(r) 	
      “Securities Laws” means the securities laws,
      regulations, rules, and instruments adopted by the securities regulator as
      applicable in each Designated Province and the U.S. Securities Act and the
      U.S. Exchange Act and the rules and regulations of the SEC promulgated
      under the U.S. Securities Act and the U.S. Exchange Act and the policies
      of the TSX and NYSE MKT;

	 	 	 
	 	(s) 	
      “Shares” means common shares without par value in
      the capital of the Company of the type listed on the TSX and NYSE
    MKT;

	 	 	 
	 	(t) 	
      “Special Warrant Certificates” means the
      certificates to be dated as of the Closing Date which will govern the
      Special Warrants;

	 	 	 
	 	(u) 	
      “Special Warrants” means the special warrants to
      be issued by the Company to the Subscriber hereunder exercisable
      one-for-one into Shares and having the other characteristics described in
      section 4 below;

	 	 	 
	 	(v) 	
      “Subscribers” means the persons who offer to
      purchase Special Warrants by completion of this Agreement and upon the
      acceptance of this Agreement by the Company means the purchasers of the
      Special Warrants hereunder;

	 	 	 
	 	(w) 	
      “TSX” means the Toronto Stock Exchange;

	 	 	 
	 	(x) 	
      “Underlying Shares” means the Shares to be issued
      on the voluntary or deemed exercise of the Special Warrants;

	 	 	 
	 	(y) 	
      “U.S. Exchange Act” means the U.S. Securities
      Exchange Act of 1934, as amended;

	 	 	 
	 	(z) 	
      “U.S. Person” has the meaning ascribed thereto in
      Section 10(s);

	 	 	 
	 	(u) 	
      “U.S. Qualification Date” has the meaning ascribed
      thereto in Section 4(c);

	 	 	 
	 	(v) 	
      “U.S. Registration Statement” means a registration
      statement on Form F-3 or other appropriate securities registration form
      filed with the SEC to permit the resale within the United States of the
      Underlying Shares; and

	 	 	 
	 	(w) 	
      “U.S. Securities Act” has the meaning ascribed
      thereto in Section 10(s).

- 5 - 

	4. 	
      Special Warrant Certificate. The Special Warrants
      will be governed by the Special Warrant Certificate, which will contain
      provisions to the following effect:

	 	 	 
		(a) 	
      Right to Acquire Underlying Shares. Each
      Special Warrant, upon voluntary exercise at any time for up to two years
      from Closing, or upon deemed (automatic) exercise, in each case as
      described below, will entitle the Subscriber to receive one Underlying
      Share, for no further payment or additional consideration. The Company
      agrees to use reasonable best efforts to qualify the distribution of the
      Underlying Shares by filing the Resale Filings in Canada and the United
      States promptly after Closing and for the U.S. Registration Statement, in
      accordance with the Registration Rights Agreement.

	 	 	 
		(b) 	
      Deemed Exercise for non-U.S. Holders under 9.9%.
      Any unexercised Special Warrants held by non-U.S. Persons,
      other than Special Warrants issued to or held by a non-U.S. Person
      holder who, upon exercise of all of its Special Warrants, would be deemed
      to beneficially own together with its affiliates and each other person or
      persons with whom such non-U.S. Person holder may be deemed to be a Group,
      disregarding for this purpose the limitation on conversion described in
      Section 4(f) and similar limitation on conversion or exercise contained in
      any other Common Stock Equivalent, in each case, held by such non-U.S.
      Person holder and its affiliates and such other person or persons with
      whom such non-U.S. Person holder may be deemed to be a Group, in excess of
      9.9% of the Company’s then outstanding Shares and who have elected to be
      treated as if they were U.S Persons under 4(c) and 4(f), will be deemed to
      be exercised at 4:00 p.m. (Vancouver time) on the earlier of (i) the date
      that is the sixth business day after the date on which the Company obtains
      a receipt for the Final Prospectus from the Securities Commissions
      qualifying the distribution of the Underlying Shares to be issued upon
      deemed exercise of the Special Warrants (the “CDN Qualification
      Date”) and (ii) the date that is 120 days after Closing.

	 	 	 
		(c) 	
      Deemed Exercise for Holders over 9.9%. Any
      unexercised Special Warrants held by a U.S. Person holder who, upon
      exercise of its Special Warrants, would be deemed to beneficially own
      together with its affiliates and each other person or persons with whom
      such U.S. Person holder may be deemed to be a Group, disregarding for this
      purpose the limitation on conversion described in Section 4(f) of the
      Special Warrants and similar limitation on conversion or exercise
      contained in any other Common Stock Equivalent, in each case, held by such
      U.S. Person holder and its affiliates and such other person or persons
      with whom such non-U.S. Person holder may be deemed to be a Group, in
      excess of 9.9% of the Company’s then outstanding Shares, and non- U.S.
      Persons who hold such a number of Shares and elect to be treated as U.S.
      Persons, will be deemed to be exercised at 4:00 p.m. (Vancouver time) on
      the Resale Filings Termination Date.

	 	 	 
		(d) 	
      Deemed Exercise for U.S. Persons under
      9.9%. Any unexercised Special Warrants issued to or held by a U.S.
      Person holder who, upon exercise of its Special Warrants, would be deemed
      to beneficially own together with its affiliates and each other person or
      persons with whom such non-U.S. Person holder may be deemed to be a Group,
      disregarding for this purpose the limitation on conversion described in
      Section 4(f) and similar limitation on conversion or exercise contained in
      any other Common Stock Equivalent, in each case, held by such non-U.S.
      Person holder and its affiliates and such other person or persons with
      whom such non-U.S. Person holder may be deemed to be a Group, less than
      9.9% of the Company’s then outstanding Shares, will be deemed to be
      exercised at 4:00 p.m. (Vancouver time) on the date that is 180 days after
      Closing.

	 	 	 
		(e) 	
      Voluntary Conversion. Subject to the
      restrictions in 4(f), Special Warrants may be voluntarily exercised by
      their holder at anytime prior to their deemed exercise by delivery of an
      exercise form to the Company. In such event the certificate representing
      the underlying shares will bear any restrictive legends required by
      applicable Securities Laws.

	 	 	 
		(f) 	
      Certain Restrictions on Conversion for U.S.
      Persons. No automatic or deemed conversion will be permitted to
      the extent that would after giving effect to such exercise, the holder
      (together with the holder’s affiliates, and any other Persons
      acting as a group together with the holder or any of the holder’s
      affiliates), would beneficially own in excess of the Beneficial Ownership
      Limitation (as defined below). To the extent that the limitation contained
      in this Section 4(f)applies, the determination of whether the Special
      Warrant is exercisable (in relation to other securities owned by the
      holder together with any affiliates) and of which portion of this Special
      Warrant is exercisable shall be in the sole discretion of the holder, and
      the submission of a notice of exercise shall be deemed to be the holder’s
      determination that the Special Warrant is exercisable in accordance with
      the terms hereof (in relation to other securities owned by the holder
      together with any affiliates) and of which portion of the Special Warrant
      is exercisable, in each case subject to the Beneficial Ownership
      Limitation, and the Company shall have no obligation to verify or confirm
      the accuracy of such determination. For purposes of this Section 4(f), in
      determining the number of outstanding Shares, a holder may rely on the
      number of outstanding Shares as reflected in (A) the Company’s most recent
      report filed with the SEC, (B) a more recent public announcement by the
      Company or (C) a more recent written notice by the Company or its transfer
      agent setting forth the number of Shares outstanding. Upon the written or
      oral request of a holder, the Company shall within two Business Days
      confirm orally and in writing to the holder the number of Shares then
      outstanding. The “Beneficial Ownership Limitation” shall be 9.9% of the
      number of Shares outstanding immediately after giving effect to the
      issuance of Shares issuable upon exercise of the Special Warrant. The
      holder, upon not less than 61 days’ prior notice to the Company, may
      increase or decrease the Beneficial Ownership Limitation provisions of
      this Section 4(f), provided that the Beneficial Ownership Limitation in no
      event exceeds 19.99% of the number of Shares of outstanding immediately
      after giving effect to the issuance of Shares upon exercise of the Special
      Warrant held by the holder and the provisions of this Section 4(f)shall
      continue to apply. Any such increase or decrease will not be effective
      until the 61st day after such notice is delivered to the Company. The
      provisions of this paragraph shall be construed and implemented in a
      manner otherwise than in strict conformity with the terms of this Section
      4(f)to correct this paragraph (or any portion hereof) which may be
      defective or inconsistent with the intended Beneficial Ownership
      Limitation herein contained or to make changes or supplements necessary or
      desirable to properly give effect to such limitation.

- 6 - 

	 	 	 
	 	(g) 	
      Adjustment Provisions. There are no
      anti-dilution provisions. The number of Underlying Shares issuable upon
      exercise of the Special Warrants will be subject to customary adjustment
      provisions relating to corporate actions or transactions affecting all
      outstanding Shares such as splits and reverse-splits, mergers, stock
      dividend, all of which will be more particularly to be set out in the
      Special Warrant Certificate.

	5. 	
      Delivery of Closing Documentation. The Subscriber
      agrees that the following must be delivered to the Company by December 30,
      2014 at 3:00 p.m. (Vancouver time) by fax, email or courier as per and
      including the cover page hereof:

	 	 	 
		(a) 	
      the ticked cover page and completed and signed pages of
      this Subscription Agreement;

	 	 	 
		(b) 	
      if the Subscriber is subscribing for less than $150,000
      of Special Warrants, a completed and executed copy of the Accredited
      Investor Certificate in the form attached as Schedule “B”
hereto;

	 	 	 
		(c) 	
      if the Subscriber is a U.S. Person, a completed and
      executed U.S. Accredited Investor Certificate, in the form attached hereto
      as Schedule “C”, and the Registration Rights Agreement attached as
      Schedule “D”;

	 	 	 
		(d) 	
      delivery by certified cheque or bank draft or wired funds
      for the total Subscription Amount.

The Subscriber acknowledges and agrees
that such documents, when executed and delivered by the Subscriber, will form
part of and will be incorporated into this Subscription Agreement with the same
effect as if each constituted a representation and warranty or covenant of the
Subscriber hereunder in favour of the Company. The Subscriber consents to the
filing of such documents as may be required to be filed with the TSX, NYSE MKT
or other securities regulatory authority in connection with the transactions
contemplated hereby.

- 7 - 

	6. 	
      Closing. Closing will be completed at the offices
      of the Company’s Canadian attorneys McMillan LLP in Vancouver, British
      Columbia, on the morning of December 31, 2014, or such other place or
      time(s) as the Company may determine (the “Closing Time”) within
      the requirements of the TSX and the NYSE MKT. At the Closing, the Company
      will issue and deliver the Special Warrants, and the Special Warrant
      Certificates representing such Special Warrants, to the Subscriber. The
      Subscriber acknowledges it does not require any prior notice of Closing
      and that the Offering may close in one or more tranches.

	 	 	 
		
      If the Closing does not occur by January 15, 2015, the
      Company shall on written request of any Subscriber return this
      Subscription Agreement and any funds, certified cheques and bank drafts
      delivered by the Subscriber to the Company representing the purchase price
      for the Special Warrants, without interest, to the Subscriber.

	 	 	 
	7. 	
      Representations, Warranties and Covenants of the
      Company. The Company represents, warrants and covenants to the
      Subscriber (except as described in the Disclosure Documents as defined
      below), as follows and acknowledges that the Subscriber is relying thereon
      that:

	 	 	 
		(a) 	
      the Company has been duly incorporated and organized, is
      validly existing and in good standing under the laws of the Province of
      British Columbia, and has the corporate power, directly or through its
      subsidiaries, to own or lease its property and to carry on its business as
      currently conducted by it;

	 	 	 
		(b) 	
      each of the Company’s subsidiaries has been duly
      incorporated and organized, is validly existing and in good standing under
      the laws of the jurisdiction of its formation, and has the corporate power
      to own or lease its property and to carry on its business as currently
      conducted by it;

	 	 	 
		(c) 	
      it has the full power, legal right and authority to
      execute and deliver this Subscription Agreement and the Special Warrant
      Certificate and has such power, legal right and authority to do all such
      acts and things as are required hereunder to be done, observed or
      performed by it, subject to and in accordance with the terms
  hereof;

	 	 	 
		(d) 	
      all necessary corporate action of the directors of the
      Company to authorize the execution, delivery and performance of this
      Subscription Agreement and the Special Warrant Certificate has been taken;
      this Subscription Agreement and the Special Warrant Certificate have been
      duly executed and delivered on behalf of the Company and each constitutes
      a legal, valid and binding obligation of the Company, enforceable by the
      Subscriber in accordance with its terms;

	 	 	 
		(e) 	
      the delivery by the Company to the Subscriber of the
      Resale Filings shall constitute the Company’s representation and warranty
      to the Subscriber that (i) each of the Resale Filings, as the case may be,
      contains, at the date of such document, no misrepresentation and
      constitutes full, true and plain disclosure of all material facts relating
      to the Underlying Shares; (ii) no material fact has been omitted from the
      any of the Resale Filings, as the case may be, which is required to be
      stated or which is necessary to make any statements or information
      contained therein not misleading in light of the circumstances in which
      they are made; (iii) each of the Resale Filings, as the case may be,
      complies fully with the requirements of the applicable legislation in the
      Designated Provinces; (iv) and the financial statements of the Company
      included or incorporated by reference in each of the Resale Filings, as
      the case may be, including any auditor’s reports thereon and the notes
      thereto, fairly present, in accordance with International Financial
      Reporting Standards (“IFRS”), consistently applied, the financial position
      and condition, the results of operations, cash flows and the other
      information purported to be shown therein of the Company as at the dates
      thereof and for the periods then ended and reflect all assets, liabilities
      and obligations (absolute, accrued, contingent or otherwise) of the
      Company as at the dates thereof required to be disclosed by IFRS, and
      include all adjustments necessary for a fair
  presentation.

- 8 - 

	 	(f) 	
      the issue of the Special Warrants will, as at the Closing
      Date, have been approved by all requisite corporate action, and all
      requisite corporate action has been taken by the Company to reserve for
      issuance the Underlying Shares and such Underlying Shares will, upon issue
      and delivery, be validly issued as fully paid and non-assessable
      shares;

	 	 	 
	 	(g) 	
      as at the Closing Date, there shall not be any consents,
      approvals, authorizations, orders or agreements of any stock exchanges,
      securities commissions or similar authorities in Canada, governmental
      agencies or regulators, courts or any other persons which may be required
      for the issuance of the Special Warrants not obtained and not in
      effect;

	 	 	 
	 	(h) 	
      its Shares are listed and posted for trading on the TSX
      and the NYSE MKT. The Company has not, in the 12 months preceding the date
      hereof, received notice from the TSX or the NYSE MKT to the effect that
      the Company is not in compliance with the listing or maintenance
      requirements of the TSX or the NYSE MKT, as applicable. The Company is,
      and has no reason to believe that it will not in the foreseeable future
      continue to be, in compliance with all such listing and maintenance
      requirements;

	 	 	 
	 	(i) 	
      the authorized capital of the Company consists of an
      unlimited number of Shares, of which immediately prior to the Closing
      Time, 95,009,864 Shares are issued and outstanding and no person has any
      right, agreement or option, present or future, contingent or absolute, or
      any right capable of becoming such a right, agreement or option, (i) for
      the issue or allotment of any unissued shares in the capital of the
      Company or any other security convertible into or exchangeable for any
      such shares; or (ii) to require the Company to purchase, redeem or
      otherwise acquire any of the issued and outstanding shares in its capital,
      in each case, except as provided in the Disclosure Documents and as
      contemplated by this Agreement;

	 	 	 
	 	(j) 	
      there is no order ceasing or suspending trading in
      securities of the Company nor prohibiting the sale of such securities has
      been issued and is outstanding against the Company or its officers,
      directors or promoters;

	 	 	 
	 	(k) 	
      the Company shall not take any action which would be
      reasonably expected to result in the delisting or suspension of the Shares
      on or from the TSX or NYSE MKT or from any stock exchange, market or
      trading or quotation facility on which the Shares are listed or quoted and
      the Company shall comply, in all material respects, with the rules and
      regulations thereof;

	 	 	 
		(l) 	
      the Company is, and has been for a period of at least
      four (4) months preceding the Closing Date, a reporting issuer only in the
      provinces of British Columbia, Alberta and Ontario;

	 	 	 
	 	(m) 	
      the issue and sale of the Special Warrants and the
      Underlying Shares by the Company, and the execution and delivery of this
      Subscription Agreement and the performance and compliance with the terms
      hereof, do not and will not conflict with, and do not and will not result
      in a breach of, any of the terms of the Company’s incorporating documents,
      resolutions of the Company, any agreements or instruments to which the
      Company is a party, or any judgment, decree, order, statute, rule or
      regulation applicable to the Company;

	 	 	 
		(n) 	
      the Company and each of its subsidiaries is in all
      material respects conducting its business in material compliance with all
      applicable laws, rules and regulations (including all environmental laws
      and regulations) of each jurisdiction in which its business is carried on,
      and has not received a notice of non-compliance, nor knows of, nor has
      reasonable grounds to know of, any facts that could give rise to a notice
      of non-compliance with any such laws, rules and regulations;

	 	 	 
	 	(o) 	
      the Company is in compliance in all material respects
      with the timely and continuous disclosure obligations under applicable
      legislation (including stock exchange policies);

- 9 - 

	 	(p) 	
      neither the Company nor any of its subsidiaries is a
      party to any actions, suits or proceedings which could materially affect
      its respective business or financial condition, and to the best of the
      Company’s knowledge no such actions, suits or proceedings are contemplated
      or have been threatened;

	 	 	 
	 	(q) 	
      to the Company’s knowledge, information and belief, none
      of the directors or officers of the Company is currently subject to
      regulatory, criminal or bankruptcy proceedings in Canada or elsewhere
      which, if determined adversely, would materially adversely affect the
      consummation of the transactions contemplated in this Subscription
      Agreement;

	 	 	 
	 	(r) 	
      the Company, through its subsidiaries, is the legal and
      beneficial owner of and has good and marketable title to the properties,
      business and assets or the interests in the properties, business or assets
      referred to in the Disclosure Documents, all agreements by which the
      Company holds an interest in a property, business or assets are in good
      standing according to their terms and the properties are in good standing
      under the applicable laws of the jurisdictions in which they are situated
      and all filings and work commitments required to maintain the properties
      in good standing have been properly recorded and filed in a timely manner
      with the appropriate regulatory body and there are no mortgages, liens,
      charges, encumbrances or any other interests in or on such properties
      other than as disclosed in the Disclosure Record or that are not
      material;

	 	 	 
	 	(s) 	
      the financial statements of the Company contained in the
      Disclosure Documents have been prepared in accordance with IFRS and
      present fairly, fully and correctly, in all material respects, the
      financial position and all material liabilities (accrued, absolute,
      contingent or otherwise) of the Company and its subsidiaries, as
      applicable, as of the date thereof;

	 	 	 
	 	(t) 	
      neither the Company nor any of its subsidiaries has
      caused or permitted the release, in any manner whatsoever, of any
      pollutants, contaminants, chemicals or industrial toxic or hazardous waste
      or substances (collectively, the “Hazardous Substances”) on or from
      any of its properties or assets nor has it received any notice that it is
      potentially responsible for a clean-up site or corrective action under any
      applicable laws, statutes, ordinances, by-laws, regulations, or any
      orders, directions or decisions rendered by any government, ministry,
      department or administrative regulatory agency relating to the protection
      of the environment, occupational health and safety or otherwise relating
      to dealing with Hazardous Substances except where such release or notice
      would not reasonably be expected to have a material adverse effect on the
      Company;

	 	 	 
	 	(u) 	
      the Company has all licences, permits, approvals,
      consents, certificates, registrations and other authorizations
      (collectively the “Permits”) under all applicable laws and
      regulations necessary for the operation of the businesses carried on or
      proposed to be commenced by the Company except for (i) any permits
      relating to potential future mine construction and operation or (ii) where
      the failure to have such Permits would not reasonably be expected to have
      a material adverse effect on the Company and each Permit is valid,
      subsisting and in good standing and the Company is not in material default
      or breach of any Permit, and to the best of the knowledge of the Company,
      no proceeding is pending or threatened to revoke or limit any
    Permit;

	 	 	 
	 	(v) 	
      the Company has filed all federal, provincial, local and
      foreign tax returns which are required to be filed, or has requested
      extensions thereof, and has paid all taxes required to be paid by it and
      any other assessment, fine or penalty levied against it, or any amounts
      due and payable to any governmental authority, to the extent that any of
      the foregoing is due and payable;

	 	 	 
	 	(w) 	
      there is not presently, and will not be until the
      Closing, any material change or change in any material fact, as such terms
      are defined under applicable Securities Laws, relating to the Company or
      any of its subsidiaries, which has not been or will not be fully disclosed
      to the public except for the Offering contemplated
  hereby;

- 10 - 

	 	(x) 	
      the Company has materially complied with all requirements
      of National Instrument 43-101 including, but not limited to, the
      preparation and filing of technical reports provided that the Subscriber
      acknowledges an updated NI 43-101 is being prepared for purposes of filing
      with the Canadian Prospectus;

	 	 	 
	 	(y) 	
      none of the Company, its subsidiaries or any of their
      respective officers, directors or employees acting on behalf of the
      Company or any of its subsidiaries has taken, committed to take or been
      alleged to have taken any action which would cause the Company or any of
      its subsidiaries to be in violation of the Corruption of Foreign Public
      Officials Act (Canada) (and the regulations promulgated thereunder) or
      any applicable law of similar effect of another jurisdiction, and to the
      knowledge of the Company no such action has been taken by any of its
      agents, representatives or other persons acting on behalf of the Company
      or any of its subsidiaries;

	 	 	 
	 	(z) 	
      the operations of the Company are and have been conducted
      at all times in compliance with the anti-money laundering statutes of all
      applicable jurisdictions, the rules and regulations thereunder and any
      related or similar rules, regulations or guidelines, issued, administered
      or enforced by any governmental agency to which they are subject
      (collectively, the “Anti-Money Laundering Laws”) and no action,
      suit or proceeding by or before any governmental authority or any
      arbitrator involving the Company with respect to the Anti-Money Laundering
      Laws is, to the knowledge of the Company, pending or threatened;

	 	 	 
	 	(aa) 	
      no person, firm or corporation acting or purporting to
      act at the request of the Company is entitled to any brokerage, agency or
      finder’s fee in connection with the transactions described herein except
      finders’ fees of up to 6% may be paid in connection with individual
      Subscription Agreements subscribing for amounts of less than
      $5,000,000;

	 	 	 
	 	(bb) 	
      the Company has filed all forms, reports, documents and
      information required to be filed by it, pursuant to applicable Securities
      Laws (the “Disclosure Documents”). The Company is registered under
      the Section 12(b) of the U.S. Exchange Act and is a “foreign private
      issuer” within the meaning of the U.S. Exchange Act and the rules and
      regulations of the SEC promulgated thereunder. When filed, each of its
      Disclosure Documents complied in all material respects with the
      requirements of applicable Securities Laws; and (ii) none of the
      Disclosure Documents contained any untrue statement of a material fact or
      omitted to state a material fact required to be stated therein or
      necessary in order to make the statements therein, in the light of the
      circumstances under which they were made, not misleading;

	 	 	 
	 	(cc) 	
      until the earliest of the time that (i) no Subscriber
      owns any Special Warrants or Underlying Shares, the Company covenants to
      maintain the registration of the Shares under Section 12(b) or 12(g) of
      the U.S. Exchange Act and to timely file (or obtain extensions in respect
      thereof and file within the applicable grace period) all reports required
      to be filed by the Company after the date hereof pursuant to the U.S.
      Exchange Act even if the Company is not then subject to the reporting
      requirements of the U.S. Exchange Act;

	 	 	 
	 	(dd) 	
      since the date of the latest audited financial statements
      included within the Disclosure Documents, except as specifically disclosed
      in a subsequent Disclosure Document filed prior to the date hereof, there
      has been no event, occurrence or development that has had or that could
      reasonably be expected to result in a material adverse effect on the
      results of operations, assets, business, prospects or condition (financial
      or otherwise) of the Company and its subsidiaries, taken as a
  whole;

	 	 	 
	 	(ee) 	
      assuming the accuracy of the Subscriber’s representations
      and warranties set forth below, neither the Company, nor any of its
      affiliates, nor any person acting on its or their behalf has, directly or
      indirectly, made any offers or sales of any security or solicited any
      offers to buy any security, under circumstances that would cause this
      Offering of the Special Warrants and the Underlying Shares to be
      integrated with prior offerings by the Company for purposes of (i) the
      U.S. Securities Act which would require the registration of any such
      securities under the U.S. Securities Act, or (ii) any applicable
      shareholder approval provisions of the TSX or the NYSE
  MKT;

- 11 - 

	 	(ff) 	
      the Company is not currently and has not previously been
      an issuer of the type described in paragraph (i) of Rule 144 under the
      U.S. Securities Act;

	 	 	 
	 	(gg) 	
      except with respect to the material terms and conditions
      of the transactions contemplated hereby, the Company confirms that neither
      it nor any other person acting on its behalf has provided any Subscriber
      or its agents or counsel with any information that it believes constitutes
      or might constitute material, non-public information. The Company
      covenants and agrees that neither it, nor any other person acting on its
      behalf, will provide any Subscriber or its agents or counsel with any
      information that the Company believes constitutes material non-public
      information, unless prior thereto such Subscriber shall have entered into
      a written agreement with the Company regarding the confidentiality and use
      of such information. The Company understands and confirms that each
      Subscriber shall be relying on the foregoing provisions in effecting
      transactions in securities of the Company; and

	 	 	 
	 	(hh) 	
      the Company shall (i) by 9:30 a.m. (New York City time)
      on the Business Day immediately following the date hereof, issue a press
      release disclosing the material terms of the transactions contemplated
      hereby, and (ii) file a Current Report on Form 6-K, including this
      Subscription Agreement, the Special Warrant Certificate and the
      Registration Rights Agreement as exhibits thereto, with the Commission
      within four Business Days after the date of this Subscription Agreement.
      The Company acknowledges and agrees that after the filing of such press
      release, no Subscriber shall be deemed to be in possession of any
      material, non-public information regarding the
Company.

In addition, the Company covenants to
the Subscriber that it will use its reasonable best efforts to qualify the
distribution of the Underlying Shares by filing the Resale Filings with the
applicable regulatory authorities as soon as practicable after Closing.
The Company will continue to use its reasonable best efforts to obtain
regulatory clearance for the Resale Filings for up to 180 days from Closing. In
respect of the filing of the Resale Filings and any supplementary materials, the
Company: (A) shall, until the conclusion of the distribution of the Underlying
Shares, promptly take all additional steps and proceedings that from time to
time may be required under the applicable Securities Laws in each Designated
Province to continue to qualify such distribution or, in the event that the
Underlying Shares have, for any reason, ceased to so qualify, to again qualify
such distribution and (B) shall use its commercially reasonable efforts to take
or cause to be taken all such other steps and proceedings, including fulfilling
all legal, regulatory and other requirements, as required under applicable
legislation to qualify the distribution of the Underlying Shares in the
Designated Provinces. 

	8. 	
      Conditions of Closing. Any obligation of the
      Company to sell, and the Subscriber to purchase, the Special Warrants is
      subject to (a) performance by the other party of its covenants under and
      in accordance with this Subscription Agreement; (b) the truth, at the time
      of acceptance and at the Closing Date, of the other party’s
      representations and warranties in this Subscription Agreement; (c) the
      trade of the Special Warrants to the Subscriber being exempt from the
      prospectus requirements of applicable Securities Laws on the basis
      provided herein; (d) the Company having obtained TSX and NYSE MKT
      conditional approval for the Offering without any requirement for
      shareholder approval; and (e) the other party executing and delivering all
      requisite documentation as required by this Subscription Agreement and
      applicable Securities Laws.

	 	 
	9. 	
      Acceptance or Rejection of Subscription. The
      Company will have the right to accept or reject this offer in whole or in
      part at any time at or prior to the Closing Time. The Subscriber
      acknowledges and agrees that the acceptance of this offer will be
      conditional upon the sale of the Special Warrants to the Subscriber being
      exempt from any prospectus or offering memorandum requirements of all
      applicable Securities Laws and the equivalent provisions of securities
      laws of any other applicable jurisdiction. The Company will be deemed to
      have accepted this offer upon the Company’s execution of the acceptance
      form on page 3 of this Subscription Agreement and the delivery at the
      Closing of any certificate(s) representing the Special Warrants to or upon
      the direction of the Subscriber in accordance with the provisions hereof.
      If this Subscription Agreement is rejected in whole, the Subscriber
      understands that any funds, certified cheques and bank drafts delivered by
      the Subscriber to the Company representing the purchase price for Special
      Warrants will be promptly returned to the Subscriber without interest. If
      this Subscription Agreement is accepted only in part, the Subscriber
      understands that a cheque representing the portion of the purchase price
      for that portion of its subscription for Special Warrants that is not
      accepted will be promptly delivered to the Subscriber without interest.
      

- 12 - 

	10. 	
      Representations, Warranties and Covenants of the
      Subscriber. By executing this Subscription Agreement, the Subscriber
      represents, warrants and covenants to the Company, and acknowledges that
      the Company is relying thereon that:

	 	 	 
		(a) 	
      the Subscriber understands that the Special Warrants
      subscribed for by the Subscriber hereunder form part of the Offering by
      the Company upon and subject to the terms and conditions set forth herein
      and in the Special Warrant Certificate; furthermore, the Subscriber
      understands that the Offering is not subject to any minimum subscription
      level and therefore any funds invested are available to and will be paid
      to the Company on the Closing Date and need not be refunded to the
      Subscriber unless the Closing Date does not occur by January 15,
    2015;

	 	 	 
		(b) 	
      the Subscriber acknowledges and agrees that the Company
      may be required to provide to the applicable securities regulatory
      authorities and to the TSX or the NYSE MKT a list setting forth the
      identities of the Beneficial Purchasers of the Special Warrants.
      Notwithstanding that the Subscriber may be purchasing Special Warrants as
      an agent on behalf of an undisclosed principal, the Subscriber agrees to
      provide, on request, particulars as to the identity of such undisclosed
      principal as may be reasonably required by the Company in order to comply
      with the foregoing and the Subscriber will have completed, executed and
      delivered as principal, or, if the Subscriber is contracting hereunder as
      trustee, agent, representative or nominee for one or more Beneficial
      Purchasers, on behalf of each such Beneficial Purchaser, the Accredited
      Investor Certificate attached as Schedule “B” hereto or for U.S. Persons,
      the U.S. Accredited Investor Certificate in the form attached as Schedule
      “C” hereto, if applicable together with the Registration Rights Agreement
      form attached as Schedule “D” hereto;

	 	 	 
		(c) 	
      as customarily required by the TSX and NYSE MKT, the
      Subscriber will promptly and accurately complete and submit any customary
      investor questionnaire or personal information form;

	 	 	 
		(d) 	
      the Subscriber is aware of the characteristics of the
      Special Warrants and the underlying securities, the risks relating to an
      investment therein and agrees that the Subscriber must bear the economic
      risk of his or her investment in the Special Warrants. The Subscriber
      understands that he or she will not be able to resell the Special Warrants
      or the underlying securities until expiry of the applicable hold period
      under applicable Securities Laws except in accordance with limited
      exemptions and compliance with other requirements of applicable law, and
      the Subscriber (and not the Company) is responsible for compliance with
      applicable resale restrictions or hold periods and will comply with all
      relevant Securities Laws in connection with any resale of the Special
      Warrants;

	 	 	 
		(e) 	
      the Subscriber has such knowledge in financial and
      business affairs as to be capable of evaluating the merits and risks of
      the Subscriber’s proposed investment in the Special Warrants;

	 	 	 
		(f) 	
      the Subscriber will execute and deliver within the
      applicable time periods all documentation as may be required by applicable
      Securities Laws to permit the purchase of the Special Warrants on the
      terms set forth herein and the Subscriber will execute, deliver, file and
      otherwise assist the Company in filing such reports, undertakings and
      other documents with respect to the issue of the Special Warrants as may
      be required by applicable Securities Laws or by any securities regulatory
      authority or stock exchange or other regulatory
  authority;

- 13 - 

	 	(g) 	
      the Subscriber is aware that any certificates evidencing
      the Special Warrants and any Underlying Shares issued prior to the earlier
      of the CDN Qualification Date and the date that is four months and one day
      after Closing will be endorsed with, or the ownership statement issued
      under a direct registration system or other electronic book-entry system
      will bear, a legend setting out resale restrictions under applicable
      Securities Laws in substantially the following
form:

	
      “UNLESS PERMITTED UNDER SECURITIES LEGISLATION,
      THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY
      BEFORE [THE DATE THAT IS FOUR MONTHS AND ONE DAY FROM
      CLOSING].” 

Additionally, the Subscriber is aware
that any certificates representing the Special Warrants and any underlying
securities issued to the Subscriber will be endorsed with a legend setting out
resale restrictions pursuant to policies of the TSX in substantially the
following form: 

	
      “THE SECURITIES REPRESENTED BY THIS CERTIFICATE
      ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWVER THE
      SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF THE TSX
      SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY
      CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY”
      IN SETTLEMENT OF TRANSACTIONS ON THE TSX.”

	 	(h) 	
      if the Subscriber is an individual, he/she has attained
      the age of majority and is legally competent to execute this Subscription
      Agreement and to take all actions required pursuant hereto;

	 	 	 
	 	(i) 	
      if the Subscriber is a corporation, partnership,
      unincorporated association or other entity, the Subscriber has the legal
      capacity and competence to execute this Subscription Agreement and to take
      all actions required pursuant hereto;

	 	 	 
	 	(j) 	
      if the Subscriber is not an individual, the Subscriber
      has not been created solely or primarily to use exemptions from the
      registration and prospectus exemptions under applicable Securities Laws
      and has a pre-existing purpose other than to use such
exemptions;

	 	 	 
	 	(k) 	
      the execution and delivery of this Subscription Agreement
      and the performance and compliance with the terms hereof will not result
      in any breach of, or be in conflict with, or constitute a default under,
      or create a state of facts which after notice or lapse of time or both
      would constitute a default under, any term or provision of any constating
      documents, by-laws or resolutions of the Subscriber or any indenture,
      contract, agreement (whether written or oral), instrument or other
      document to which the Subscriber is a party or subject, or any judgment,
      decree, order, statute, rule or regulation applicable to the
      Subscriber;

	 	 	 
	 	(l) 	
      the Subscriber has not received, nor has the Subscriber
      requested, nor does the Subscriber have any need to receive in connection
      with the sale of the Special Warrants, any prospectus, sales or
      advertising literature, offering memorandum or any other disclosure
      document (other than an annual or interim report, financial statements or
      any other document previously filed by the Company with securities
      regulatory authorities under applicable Securities Laws and the Resale
      Filings);

	 	 	 
	 	(m) 	
      the Subscriber has relied only upon publicly available
      information relating to the Company and not upon any verbal or written
      representation as to fact, and the Subscriber acknowledges that the
      Company has not made any written representations, warranties or covenants
      in respect of such publicly available information, except as set forth in
      this Subscription Agreement. Without limiting the generality of the
      foregoing, except as may be provided herein, no person has made any
      written or oral representation to the Subscriber that any person will
      re-sell or re-purchase the Special Warrants, or refund any of the purchase
      price of the Special Warrants, or that the Special Warrants will be listed
      on any exchange and no person has given any undertaking to the Subscriber
      relating to the future value or price of the Special Warrants or
      Underlying Shares;

- 14 - 

	 	(n) 	
      the Subscriber agrees that it is solely responsible for
      obtaining such legal, tax and other advice as the Subscriber considers
      appropriate in connection with the execution, delivery and performance of
      this Subscription Agreement and the transactions contemplated hereunder
      and without limiting the generality of the foregoing, the Subscriber
      acknowledges that purchasing, holding and disposing of the Special
      Warrants may have tax consequences under the laws of Canada, and that it
      is solely responsible for determining the tax consequences applicable to
      its particular circumstances and that the Subscriber has been advised by
      the Company to consult its own tax advisors concerning investment in the
      Special Warrants;

	 	 	 
	 	(o) 	
      the Subscriber acknowledges that the description of the
      Special Warrants set out in this Subscription Agreement is a summary only
      and is subject to the detailed provisions of the Special Warrant
      Certificate under which such Special Warrants will be issued;

	 	 	 
	 	(p) 	
      the Purchaser has no knowledge of a “material fact” or
      “material change” (as those terms are defined in the Securities Laws) in
      the affairs of the Company that has not been generally disclosed to the
      public, except knowledge of the Offering;

	 	 	 
	 	(q) 	
      the Subscriber is entitled under applicable Securities
      Laws to purchase such Special Warrants without the benefit of a prospectus
      qualified under such securities laws;

	 	 	 
	 	(r) 	
      the Subscriber certifies that each of the Subscriber and
      Beneficial Purchaser, if any, is a resident of the jurisdiction referred
      to above “Subscriber’s Residential Address” set out on the face page
      hereof and has received and accepted the offer to purchase the Special
      Warrants in such jurisdiction and if the Subscriber is acting as agent or
      trustee for a Disclosed Principal, the Disclosed Principal is a resident
      of the jurisdiction referred to above “Disclosed Principal’s Residential
      Address” on the face page hereof;

	 	 	 
	 	(s) 	
      unless the Subscriber executes and delivers Schedules “C”
      and “D” to the Company, the Subscriber, whether acting as principal,
      trustee or agent, is neither (i) a “U.S. Person” (as defined in
      Rule 902(k) of Regulation S promulgated under the United States
      Securities Act of 1933, as amended (the “U.S. Securities
      Act”)), which definition includes, but is not limited to, an
      individual resident in the United States, an estate or trust of which any
      executor or administrator or trustee is a U.S. Person, and any partnership
      or corporation organized or incorporated under the laws of the United
      States, nor (ii) purchasing the Special Warrants for the account of a U.S.
      Person or a person in the United States or for resale in the United
      States, and the Special Warrants have not been offered to the Subscriber
      in the United States and the Subscriber was not in the United States when
      the order was placed or when this Subscription Agreement was executed and
      delivered; this subscription has not been solicited in any other manner
      contrary to any applicable legislation, the U.S. Securities Act or any
      state securities laws of the United States;

	 	 	 
	 	(t) 	
      subject to the satisfaction by the Company of the
      conditions set out in Section 8, this subscription is irrevocable (subject
      to the Subscriber’s right to withdraw the subscription and to terminate
      the obligations as set out in this Subscription Agreement) and requires
      acceptance by the Company and approval of the TSX and NYSE MKT;

	 	 	 
	 	(u) 	
      the Subscriber will not offer or sell the Special
      Warrants in the United States or to a U.S. Person, unless such securities
      are registered under the U.S. Securities Act and the laws of all
      applicable states of the United States or an exemption from such
      registration requirements is available, and further that the Subscriber
      will not resell the Special Warrants, except in accordance with the
      provisions of applicable Securities Laws;

- 15 - 

	 	
      (v) 
	
      the Subscriber, if resident in an International
      Jurisdiction, further acknowledges, represents, warrants and covenants to
      and with the Company that, as at the date given above and at
    Closing:

	 	
       
	 	 
	 		i. 	
      the Subscriber is knowledgeable of, or has been
      independently advised as to, the International Securities Laws (which is
      defined herein to mean, in respect of each and every offer or sale of
      Special Warrants, any securities laws having application to the Subscriber
      and the Offering other than the laws of Canada and the United States and
      all regulatory notices, orders, rules, regulations, policies and other
      instruments incidental thereto) which apply to this subscription, if
      any;

	 	
       
	 	 
	 		ii. 	
      the Subscriber is purchasing the Special Warrants
      pursuant to exemptions from any prospectus, registration or similar
      requirements under the International Securities Laws or, if such is not
      applicable, the Subscriber is permitted to purchase the Special Warrants
      under the International Securities Laws without the need to rely on
      exemptions;

	 	
       
	 	 
	 		iii. 	
      the International Securities Laws do not require the
      Company to make any filings or seek any approvals of any kind whatsoever
      from any regulatory authority of any kind whatsoever in the International
      Jurisdiction in connection with the transactions contemplated herein;
      and

	 	
       
	 	 
	 		iv. 	
      the subscription for the Special Warrants by the
      Subscriber does not contravene any of the International Securities Laws
      applicable to the Subscriber and the Company and does not trigger any
      obligation to prepare and file a prospectus or similar document, or any
      other report with respect to such purchase or to register the Securities
      or to be registered with any governmental or regulatory
  authority.

	 	
       
	 	 
	 	
      (aa) 
	
      the funds representing the Aggregate Subscription Price
      which will be advanced by the Subscriber to the Company hereunder will not
      represent proceeds of crime for the purposes of the Proceeds of Crime
      (Money Laundering) and Terrorist Financing Act (Canada) (the
      “PCMLTFA”) or the United States Uniting and Strengthening
      America by Providing Appropriate Tools Required to Intercept and Obstruct
      Terrorism Act (the “PATRIOT Act”) and the Subscriber
      acknowledges that the Company may in the future be required by law to
      disclose the Subscriber’s name and other information relating to this
      Subscription Agreement and the Subscriber’s subscription hereunder, on a
      confidential basis, pursuant to the PCMLTFA or the PATRIOT Act. To the
      best of its knowledge (a) none of the subscription funds to be provided by
      the Subscriber (i) have been or will be derived from or related to any
      activity that is deemed criminal under the law of Canada, the United
      States, or any other jurisdiction, or (ii) are being tendered on behalf of
      a person or entity who has not been identified to the Subscriber, and (b)
      the Subscriber shall promptly notify the Company if the Subscriber
      discovers that any of such representations ceases to be true, and to
      provide the Company with appropriate information in connection
      therewith.

	11. 	
      Reliance Upon Representations, Warranties and
      Covenants by Company. The Subscriber acknowledges that the
      representations, warranties and covenants made by the Subscriber in this
      Subscription Agreement (including without limitation those made in each
      Schedule to be executed and delivered in accordance with this Subscription
      Agreement) are made with the intent that they may be relied upon by the
      Company and its counsel to, among other things, determine the Subscriber’s
      eligibility to purchase the Special Warrants, including without limitation
      the availability of exemptions from the registration and prospectus
      requirements of applicable Securities Laws in connection with the issuance
      of the Special Warrants to the Subscriber. The Subscriber further
      covenants to the Company that by accepting the Special Warrants, the
      Subscriber shall be representing and warranting that such representations
      and warranties are true as at the Closing Date with the same force and
      effect as if they had been made by the Subscriber at the Closing Date and
      that the covenants of the Subscriber made by it in this Subscription
      Agreement to be performed prior to the Closing Date have been performed.
      The Subscriber undertakes to immediately notify the Company of any change
      in any statement or other information relating to the Subscriber set forth
      herein or in a Subscriber Certificate that takes place prior to the
      Closing Date.

- 16 - 

	12. 	
      Reliance Upon Representations, Warranties and
      Covenants by Subscriber. The Company acknowledges that the
      representations, warranties and covenants made by the Company in this
      Subscription Agreement are made with the intent that they may be relied
      upon by the Subscriber in entering into this Subscription Agreement and
      purchasing the Special Warrants hereunder. The Company further covenants
      to the Subscriber that by issuing and delivering the Special Warrants, the
      Company shall be representing and warranting that such representations and
      warranties are true as at the Closing Date with the same force and effect
      as if they had been made by the Company at the Closing Date and that the
      covenants of the Company made by it in this Subscription Agreement to be
      performed prior to the Closing Date have been performed. The Company
      undertakes to immediately notify the Subscriber of any change in any
      statement or other information relating to the Company set forth herein or
      in a Company Certificate that takes place prior to the Closing
  Date.

	 	 	 
	13. 	
      Indemnification.

	 	 	 
		(a) 	
      The Company agrees to indemnify and hold harmless the
      Subscriber and its directors, officers, affiliates, members, managers,
      employees, agents, successors and assigns (collectively, “Indemnified
      Parties”) from and against any and all losses, liabilities,
      deficiencies, costs, damages and expenses (including, without limitation,
      reasonable attorneys' fees, charges and disbursements) incurred by any
      Indemnified Party as a result of, arising out of or based upon (i) any
      inaccuracy in or breach of the Company's representations or warranties in
      this Subscription Agreement; (ii) the Company's breach of agreements or
      covenants made by the Company in this Subscription Agreement or the
      Special Warrant Certificate, the Registration Rights Agreement, the Resale
      Filings and each other agreement, instrument and certificate executed and
      delivered by the Company or any of its subsidiaries thereof in connection
      with the foregoing (collectively, the “Transaction Documents”);
      (iii) any third party claims arising out of or resulting from the
      transactions contemplated by this Subscription Agreement or any other
      Transaction Document (unless such claim is based upon conduct by such
      Indemnified Party that constitutes fraud, gross negligence or wilful
      misconduct); (iv) any breach by the Company of applicable Securities Laws
      or the rules promulgated thereunder, or (v) any third party claims arising
      directly or indirectly out of such Indemnified Party's status as owner of
      the Securities or the actual, alleged or deemed control or ability to
      influence the Company or any of its subsidiaries (unless such claim is
      based upon conduct by the Subscriber that constitutes fraud, gross
      negligence or wilful misconduct). This provision shall survive the
      termination of this Subscription Agreement and the Transaction
      Documents.

	 	 	 
		(b) 	
      With respect to any third-party claims giving rise to a
      claim for indemnification, the Indemnified Party will give written notice
      to the Company of such third party claim; provided, that the failure of
      any party entitled to indemnification hereunder to give notice as provided
      herein shall not relieve the Company of its obligations under this Section
      13 except to the extent that the Company is actually materially prejudiced
      by such failure to give notice. In case any such action, proceeding or
      claim is brought against an Indemnified Party in respect of which
      indemnification is sought hereunder, the Company shall be entitled to
      participate in and, unless in the reasonable judgment of the Indemnified
      Party an actual conflict of interest between it and the Company exists
      with respect to such action, proceeding or claim (in which case the
      Company shall be responsible for the reasonable fees and expenses of one
      separate counsel for the Indemnified Parties), to assume the defense
      thereof with counsel satisfactory to the Indemnified Party. In the event
      that the Company advises an Indemnified Party that it will not contest
      such a claim for indemnification hereunder, or fails, within 10 days of
      receipt of any indemnification notice to notify, in writing, such person
      or entity of its election to defend, settle or compromise, at its sole
      cost and expense, any action, proceeding or claim (or discontinues its
      defense at any time after it commences such defense), then the Indemnified
      Party may, at its option, defend, settle or otherwise compromise or pay
      such action or claim. In any event, unless and until the Company elects in
      writing to assume and does so assume the defense of any such claim,
      proceeding or action, the Indemnified Party's costs and expenses arising
      out of the defense, settlement or compromise of any such action, claim or
      proceeding shall be losses subject to indemnification hereunder. The
      Company shall keep the Indemnified Party fully apprised at all times as to
      the status of the defense or any settlement negotiations with respect thereto. If the Company elects
      to defend any such action or claim, then the Indemnified Party shall be
      entitled to participate in such defense with counsel of its choice at its
      sole cost and expense. Notwithstanding anything in this Section 13 to the
      contrary, the Company shall not, without the Indemnified Party's prior
      written consent, settle or compromise any claim or consent to entry of any
      judgment in respect thereof. The indemnification obligations to defend the
      Indemnified Party required by this Section 13 shall be made by periodic
      payments of the amount thereof during the course of investigation or
      defense, as and when bills are received or expense, loss, damage or
      liability is incurred, so long as the Indemnified Party shall refund such
      moneys if it is ultimately determined by a court of competent jurisdiction
      that such party was not entitled to indemnification. The indemnity
      agreements contained herein shall be in addition to (i) any cause of
      action or similar rights of the Indemnified Party against the Company or
      others, and (ii) any liabilities the Company may be subject to pursuant to
      the law. In no event shall the Company be required to indemnify any
      Indemnified Party for its wilful breach of any of the Transaction
      Documents as determined by a court of competent jurisdiction pursuant to a
      final and non-appealable order.

- 17 - 

	 	(c) 	
      If the indemnification provided for in Section 13 is
      unavailable to any Indemnified Party thereunder in respect of any losses,
      liabilities, deficiencies, costs, damages or expenses (or actions in
      respect thereof) referred to in such Section, then the Company shall
      contribute to the amount paid or payable by such Indemnified Party as a
      result of such losses, liabilities, deficiencies, costs, damages or
      expenses (or actions in respect thereof) in such proportion as is
      appropriate to reflect the relative fault of the Company on the one hand
      and such Indemnified Party on the other.

	14. 	
      Additional Acknowledgements. The Subscriber
      acknowledges and agrees that:

	 	 	 
		(a) 	
      no securities commission or similar regulatory authority
      has received or passed on the merits of the Securities;

	 	 	 
		(b) 	
      there is no government or other insurance covering the
      Securities;

	 	 	 
		(c) 	
      there are risks associated with the purchase of the
      Special Warrants;

	 	 	 
		(d) 	
      there are restrictions on the Subscriber’s ability to
      resell the Special Warrants and it is the responsibility of the Subscriber
      to find out what those restrictions are and to comply with them;
  and

	 	 	 
		(e) 	
      as a consequence of acquiring the Special Warrants
      pursuant to exemptions from prospectus requirements under the Securities
      Laws, certain protections, rights and remedies provided by the Securities
      Laws, including statutory rights of rescission or damages, will not be
      available to the Subscriber.

	15. 	
      Contractual Right of Action for Rescission. By its
      acceptance and acknowledgement of this offer, the Company hereby provides
      a right of rescission as set out below, which right shall be exercisable
      by the Subscriber and any subsequent holders from time to time of the
      Subscriber’s Special Warrants:

	 	 
		
      In the event that a holder of a Special Warrant who
      acquires Underlying Shares upon the deemed exercise of a Special Warrant
      as provided for in the Final Prospectus, is or becomes entitled under
      applicable Securities Laws to the remedy of rescission by reason of the
      Final Prospectus or any amendment thereto containing a misrepresentation,
      such holder shall be entitled to rescission not only of the holder's
      exercise of its Special Warrant, but also of the private placement
      transaction pursuant to which the Special Warrant was initially acquired
      and shall be entitled in connection with such rescission to a full refund
      from the Company of the amount of the purchase price paid on Closing to
      the Company, on the acquisition of the Special Warrant. In the event such
      holder is a permitted assignee of the interest of the original Special
      Warrant subscriber in accordance with the Special Warrant Certificate,
      such permitted assignee shall be entitled to exercise such rights of
      rescission and refund as if such permitted assignee were such original
      subscriber. The provisions of this section are a direct contractual right
      extended by the Company alone (but specifically not by the directors,
      officers or other agents of the Company) to holders of Special Warrants,
      permitted assignees of such holders and holders of Underlying Shares
      acquired by such holders on exercise of Special Warrants and are in
      addition to any other right or remedy available to a holder of Special
      Warrants under applicable law.

- 18 - 

	 	 
		
      The foregoing contractual rights of action for rescission
      will be subject to the applicable defences, limitations and other
      provisions set out in the Securities Act (British Columbia) and the
      equivalent provisions of the securities legislation of the Designated
      Provinces.

	 	 
	16. 	
      Collection of Personal Information. The
      information provided by the Subscriber on the face page of this
      Subscription Agreement identifying the name, address and telephone number
      of the Subscriber, the number of Special Warrants being purchased
      hereunder and the total purchase price as well as the Closing Date and the
      exemption that the Subscriber is relying on in purchasing the Special
      Warrants will be disclosed to securities regulators in the selling
      jurisdictions including the Ontario Securities Commission, and such
      information is being indirectly collected by such securities regulatory
      authorities, including the Ontario Securities Commission under the
      authority granted to it under securities legislation. This information is
      being collected for the purposes of the administration and enforcement of
      the securities legislation of Ontario. Each Subscriber (and for certainty,
      including each Disclosed Principal) hereby authorizes the indirect
      collection of such information by the Ontario Securities Commission. In
      the event the Subscriber has any questions with respect to the indirect
      collection of such information by the Ontario Securities Commission, the
      Subscriber should contact the Ontario Securities Commission,
      Administrative Support Clerk, at (416) 593-3684 or by facsimile at (416)
      593-8122 or in person or writing at Suite 1903, Box 55, 20 Queen Street
      West, Toronto, Ontario M5H 3S8.

	 	 
	17. 	
      Modification. Subject to the terms hereof, neither
      this Subscription Agreement nor any provision hereof shall be modified,
      changed, discharged or terminated except by an instrument in writing
      signed by the party against whom any waiver, change, discharge or
      termination is sought.

	 	 
	18. 	
      Assignment. The terms and provisions of this
      Subscription Agreement shall be binding upon and enure to the benefit of
      the Subscriber, the Company and their respective successors and assigns;
      provided that this Subscription Agreement shall not be assignable by any
      party without the prior written consent of the other party.

	 	 
	19. 	
      Survival. This Subscription Agreement, including
      without limitation the representations, warranties and covenants contained
      herein and in each Accredited Investor Certificate and the U.S. Accredited
      Investor Certificate, shall survive and continue in full force and effect
      and be binding upon the Company and the Subscriber, notwithstanding the
      completion of the purchase of the Special Warrants by the Subscriber
      pursuant hereto, the issuance of any underlying securities, or the
      subsequent disposition of the Special Warrants or the underlying
      securities by the Subscriber.

	 	 
	20. 	
      Governing Law. This Subscription Agreement shall
      be governed by and construed in accordance with the laws of the Province
      of Ontario and the federal laws of Canada applicable therein. The
      Subscriber hereby irrevocably attorns to the non-exclusive jurisdiction of
      the courts of the Province of Ontario with respect to any matters arising
      out of this Subscription Agreement.

	 	 
	21. 	
      Facsimile and E-mail Deliveries and Counterparts.
      The Company shall be entitled to rely on delivery by facsimile or
      electronic mail of a copy of this Subscription Agreement executed by the
      Subscriber, and acceptance by the Company of such executed Subscription
      Agreement shall be legally effective to create a valid and binding
      agreement between the Subscriber and the Company in accordance with the
      terms hereof. In addition, this Subscription Agreement may be executed in
      counterparts, each of which shall be deemed to be an original and all of
      which shall constitute one and the same document.

	 	 
	22. 	
      Extended Meanings and Headings. In this
      Subscription Agreement words importing the singular number include the
      plural and vice versa, words importing any gender include all genders and
      words importing persons include individuals, partnerships, associations,
      trusts and unincorporated associations. The headings contained herein are
      for convenience of reference only and shall not affect the construction or
      interpretation hereof.

- 19 - 

	23. 	
      Entire Agreement and Headings. This Subscription
      Agreement (including the schedules hereto) contains the entire agreement
      of the parties hereto relating to the subject matter hereof and supersedes
      all prior agreements, understanding, negotiations and discussions, whether
      oral or written. This Subscription Agreement may be amended or modified in
      any respect by written instrument only. The headings contained herein are
      for convenience only and shall not affect the meanings or interpretation
      hereof.

	 	 
	24. 	
      Currency. All references to currency herein are to
      lawful money of Canada

	 	 
	25. 	
      Time of Essence. Time shall be of the essence of
      this Subscription Agreement.

	 	 
	26. 	
      Further Assurances. Each of the parties hereto
      shall from time to time execute and deliver all such further documents and
      instruments and do all acts and things as the other party may, either
      before or after the closing of the transactions contemplated hereby,
      reasonably require to effectively carry out or better evidence the terms
      of this Subscription Agreement.

balance of page left blank 

 

- 20 - 

	SCHEDULE “A” 
	 
	TERM SHEET 
	 
	Northern Dynasty Minerals Ltd. 
	 
	Private
      Placement of Special Warrants for Underlying Shares

	Issuer: 	
      Northern Dynasty Minerals Ltd. (“NDM” or
      “Company”) 

	  	
      

	  	
      

	Issue: 	
      Up to C$15.5 million in a (non-brokered) private
      placement offering of NDM special warrants (“Special Warrants”) at
      $0.431 per Special Warrant. There is no minimum aggregate
      subscription. 

	  	
      

	  	
      

	Special Warrants
      
Description: 	
      The Special Warrants will convert into NDM common shares
      on a one-for-one basis (the “Underlying Shares”) at anytime at the
      option of the holder or automatically, as described in “Conversion of
      Special Warrants” below. 

	  	
      

	  	
      

	Resale Filings 	
      NDM will use reasonable best efforts to clear resale
      restrictions that are or may be applicable to the Underlying Shares by (i)
      seeking to clear a final prospectus in Canada (the “Canadian
      Prospectus”) qualifying the distribution of the Underlying Shares for
      resale in Canada, and (ii) concurrently filing a selling shareholder
      registration statement with the United States Securities and Exchange
      Commission (the “SEC”) on Form F-3 or other appropriate SEC form
      (“U.S. Registration Statement”) to seek to qualify the
      resale of such Underlying Shares in the United States. The Canadian
      Prospectus and the U.S. Registration Statement are herein together the
      “Resale Filings”. The Company shall use reasonable best efforts to
      cause the U.S. Registration Statement to be declared effective by the SEC
      by not later than 90 days after the closing of the Offering and to cause
      such US Registration Statement to remain continuously effective until two
      years from closing (“Resale Filing Termination Date”) The Company
      shall cause the Canadian Prospectus to remain effective and current until
      the earlier of: (i) 90 days following the issuance of a receipt for the
      Canadian Prospectus; and (ii) the expiry of the Canadian hold period on
      the Special Warrants. U.S. Persons who alone, or as part of a group,
      beneficially own (where “group” and “beneficially own” have the meanings
      in 13(d) of the U.S. Securities Exchange Act, inclusive of related rules,
      etc.), Shares and/or unexercised Special Warrants which if exercised would
      together with the Shares aggregate more than 9.9% of the Company’s then
      outstanding Shares, shall be entitled to up to two demand registrations in
      the two years following the Resale Filings Termination Date in accordance
      with the Registration Rights Agreement. 

	  	
      

	  	
      

	Conversion of 
Special
      Warrants: 	
      After 120 days from Closing, all unconverted Special
      Warrants held by non-U.S. Persons will automatically convert into the
      Underlying Shares, except as provided below with respect to non-U.S.
      persons that beneficially own, alone or as part of a group, more than 9.9%
      of the outstanding NDM shares. Special Warrants held by U.S. Persons who
      would beneficially own, alone or as part of a group, less than 9.9% of
      issued NDM shares after conversion of their Special Warrants will be
      automatically converted on effectiveness of the Canadian Prospectus.
      Special Warrants held by holders who would then beneficially own, alone or
      as part of a group, more that 9.9% of NDM shares will not automatically
      convert into the Underlying Shares until the Resale Filing Termination
      Date. 

	  	
      

		
      No voluntary or automatic conversion of Special Warrants
      will be permitted to the extent that conversion would result in the holder
      alone or as part of group, beneficially owning, prior to the Resale
      Filings Termination Date, more than 9.9% of the issued and outstanding
      shares of NDM Any U.S. Person to whom this restriction applies will be
      entitled to waive application of the restriction upon delivery of 61 days
      advance written notice to NDM. At its option, any non US person that is
      deemed to beneficially own more than 9.9% of the outstanding NDM shares
      may request that the Special Warrants issued to such non-US Person to be
      subject to the same beneficial ownership restriction as the Special
      Warrants issued to US persons who would hold more than 9.9% of issued NDM
      shares after conversion of their Special Warrants, in which case automatic
      conversion of such Special Warrants will be deferred until the Resale
      Filings Termination Date. 

- 21 - 

	  	  
	Conditions and 
Resale Filings 	
      The Offering is subject to execution and delivery of
      subscription documentation containing customary representations and
      warranties, covenants, conditions, indemnities, termination provisions and
      other provisions; delivery of standard closing documents and will be
      conditional on compliance with all applicable legal and regulatory
      requirements including TSX and NYSE MKT regulatory approvals. NDM will
      enter into a registration rights agreement in favour of the purchasers of
      the Special Warrants on closing pursuant to which it will agree to file
      the U.S. Registration Statement with the SEC. It is a condition of the
      Offering that no shareholders’ approval under TSX or NYSE MKT is required
      to complete it. Therefore no subscription for Special Warrants will be
      permitted to the extent where the Subscriber would alone or as part of
      group, beneficially own on exercise of the Special Warrants, more 19.99%
      of NDM common shares currently outstanding, nor may insiders subscribe for
      Special Warrants in an amount greater than 10% of the currently issued and
      outstanding Shares (95,009,864 Shares). 

	  	
      

	  	
      

	Use of Proceeds: 	
      The net proceeds of the offering will be used to fund the
      activities of the Pebble Limited Partnership, a subsidiary entity of NDM,
      related to advancing the development of the Pebble Project, and for
      general corporate and working capital purposes. 

	  	
      

	  	
      

	Exempt Offering 
of Special
      Warrants: 	
      Private placement in Canada pursuant to applicable
      prospectus and registration exemptions, and in the United States pursuant
      to the exemption from registration under the U.S. Securities Act of 1933,
      as amended (the “U.S. Securities Act”), afforded by Rule 506 of
      Regulation D under the U.S. Securities Act. Details of these exemptions
      will be set out in the Subscription Agreement for the Offering and will
      generally require that Subscribers in Canada acquire either a minimum of
      $150,000 of Underlying Shares, be “accredited” as defined by applicable
      securities legislation, or that Subscribers qualify for another available
      exemption, and that investors in the United States qualify as “accredited
      investors” as defined under Rule 501(a) of Regulation D of the U.S.
      Securities Act. The Company may include a limited number of
      “non-accredited” Canadian Subscribers at its discretion. 

	  	
      

	  	
      

	Hold Period for 
Special Warrants: 	
      The Special Warrants and Underlying Shares (if acquired
      prior to clearance of the Resale Filings) will be subject to applicable
      resale restrictions in Canada and the United States and will bear resale
      restriction legends where required. Responsibility to comply with
      applicable resale restrictions rests with solely the Subscribers.
  

	  	
      

	  	
      

	  	
      

	
      US Securities Law 
Matters related to
      
Special Warrants 
and Underlying Shares

	
      Any Special Warrants and Underlying Shares acquired by a
      purchaser in the United States will be considered “restricted securities”
      within the meaning of Rule 144(a)(3) under the U.S. Securities Act and may
      not be offered, sold, pledged, or otherwise transferred, directly or
      indirectly, unless: (A) the transfer is to the Company; (B) the transfer
      is made outside the United States in accordance with Regulation S and in
      compliance with applicable Canadian local laws or regulations; (C) the
      transfer is made in compliance with an exemption from registration under
      the U.S. Securities Act provided by Rule 144 there under, if available,
      and in accordance with applicable state securities laws; (D) in another
      transaction that does not require registration under the U.S. Securities
      Act or any applicable state securities laws; or (E) pursuant to an
      effective registration statement under the U.S. Securities Act, and in
      each case in accordance with any applicable state securities laws in the
      United States, provided that, in the case of transfers pursuant to (C) or
      (D) above, the holder has, prior to such transfer, furnished to the
      Company an opinion of counsel or other evidence of exemption, in either
      case reasonably satisfactory to the Company. 

- 22 - 

	  	  
		
      Upon issuance and until such time as it is no longer
      required under applicable requirements of the U.S. Securities Act or
      applicable state securities laws, all certificates representing the
      Special Warrants and Underlying Shares sold in the United States or to, or
      for the account or benefit of, persons in the United States or U.S.
      persons, and all certificates issued in exchange therefore or in
      substitution thereof, shall bear restrictive legends to the foregoing
      effect. 

	  	
       

	  	
       

	Eligibility: 	
      The Underlying Shares will be eligible under certain
      statutes as well as for Canadian RRSPs, RRIFs, RESPs, TFSAs and DPSPs.
    

	  	
       

	  	
       

	Listing: 	
      Application will be made to list the Underlying Shares on
      the Toronto Stock Exchange (”TSX”) and the NYSE MKT. NDM common shares are
      currently listed on the TSX under the symbol “NDM” and on the NYSE MKT
      under the symbol “NAK.”. The Special Warrants will not be listed but will
      be transferable subject to compliance with applicable securities laws.
    

	  	
       

	  	
       

	Governing Law: 	
      The terms and conditions as set out in this term sheet
      are governed by the laws of the Province of Ontario. 

	  	
       

	  	
       

	Selling Concession: 	
      Up to 6% cash will be paid to eligible persons who refer
      certain Subscribers subject to finder’s fee or commission arrangements
      which participate in the Offering where permitted by applicable law.
    

	  	
       

	  	
       

	Closing Date: 	
      Closing means the issuance of Special Warrants against
      payment. The closing of the Offering (the “Closing”) may take place with a
      targeted subscription cut-off date of December 30, 2014 and closing on
      December 31, 2014 at which time all subscription funds must be advanced
      and available for NDM use. 

- 23 - 

SCHEDULE “B” 

ACCREDITED INVESTOR CERTIFICATE

(Only for Investors investing less than $150,000)

	TO: 	Northern Dynasty Minerals Ltd. (the
      “Company”) 

Reference is made to the subscription agreement between the
Company and the undersigned (referred to herein as the “Subscriber”)
dated as of the date hereof (the “Subscription Agreement”). Upon
execution of this Accredited Investor Certificate by the Subscriber, this
Accredited Investor Certificate shall be incorporated into and form a part of
the Subscription Agreement. Terms not otherwise defined herein have the
meanings attributed to them in the Subscription Agreement and in National
Instrument 45-106 Prospectus and Registration Exemptions (“NI
45-106”)1. All monetary references are in Canadian dollars. 

In connection with the purchase of the Special Warrants by the
Subscriber, the Subscriber represents, warrants and covenants (on its own behalf
or, if applicable, on behalf of any Disclosed Principal) and certifies to the
Company and acknowledges that the Company is relying thereon that: 

Prospectus Exemption 

	A. 	the clause checked below applies: 
	 	 
	 [   ]	(i) 	 the Subscriber is purchasing the Special Warrants as
      principal; 
	 	 	 
	 [   ]	(ii) 	 the Subscriber has purchased the Special Warrants as
      agent for one or more Disclosed Principals; 
	  	or 	 
    
	 	 	 
	 [   ]	(iii) 	 the Subscriber is deemed to be purchasing as principal
      under applicable Securities Laws, in accordance with the following
      statutory provision: 
	  	
		[State particulars, including statutory provision and
      basis on which Subscriber is deemed to be purchasing as
      principal] _______________________________________________
	 	 ______________________________________________________________________________________________________________________________________________
	 
    	  	  
	
      B. 
	the Subscriber or if the Subscriber is purchasing on behalf of
      a Disclosed Principal, the Disclosed Principal, is an “Accredited
      Investor” as such term is defined in NI 45-106, and as at the Closing
      Time, the Subscriber or the Disclosed Principal, as applicable, falls
      within the following categories: 
	 	 
	 [   ]	(a) 	a
      Canadian financial institution, or a Schedule III bank, 
	 	 	 
	 [   ]	(b) 	the Business Development Bank of Canada
      incorporated under the Business Development Bank of Canada Act
      (Canada), 

 

________________________

1 Terms used herein that are defined in National Instrument
14-101 (“NI 14-101”) as adopted by the securities regulatory authority in the
jurisdiction of the Subscriber have the meaning given to them in NI 14-101 and
terms used herein that are defined in the securities legislation of the
jurisdiction of the Subscriber have the meaning given to them in that
legislation. Reference should be made to NI 45-106 itself for its complete text,
including other definitions, and to the Companion Policy to NI 45-106 for
matters of interpretation and application.

A-1 

	 [   ]	(c) 	
      a subsidiary of any person referred to in paragraphs (a)
      or (b), if the person owns all of the voting securities of the subsidiary,
      except the voting securities required by law to be owned by directors of
  that subsidiary, 

	     	  	
    
	
  

	 [   ]	(d) 	
      a person registered under the securities legislation of a
      jurisdiction of Canada as an adviser or dealer, other than a person
      registered solely as a limited market dealer under one or both of the
      Securities Act (Ontario) or the Securities Act (Newfoundland
      and Labrador), 

	     	  	
    
	
  

	 [   ]	(e) 	
      an individual registered or formerly registered under the
      securities legislation of a jurisdiction of Canada as a representative of
      a person referred to in paragraph (d), 

	     	  	
    
	
  

	 [   ]	(f) 	
      the Government of Canada or a jurisdiction of Canada, or
      any crown corporation, agency or wholly owned entity of the Government of
      Canada or a jurisdiction of Canada, 

	     	  	
    
	
  

	 [   ]	(g) 	
      a municipality, public board or commission in Canada and
      a metropolitan community, school board, the Comité de gestion de la taxe
      scolaire de l’île de Montréal or an intermunicipal management board in
      Québec; 

	     	  	
    
	
  

	 [   ]	(h) 	
      any national, federal, state, provincial, territorial or
      municipal government of or in any foreign jurisdiction, or any agency of
      that government, 

	     	  	
    
	
  

	 [   ]	(i) 	
      a pension fund that is regulated by the Office of the
      Superintendent of Financial Institutions (Canada), a pension commission or
      similar regulatory authority of a jurisdiction of Canada, 

	     	  	
    
	
  

	 [   ]	(j) 	
      an individual who, either alone or with a spouse,
      beneficially owns financial assets having an aggregate realizable value
      that before taxes, but net of any related liabilities, exceeds
      $1,000,0002, 

	     	  	
    
	
  

	 [   ]	(k) 	
      an individual whose net income before taxes exceeded
      $200,000 in each of the 2 most recent calendar years or whose net income
      before taxes combined with that of a spouse exceeded $300,000 in each of
      the 2 most recent calendar years and who, in either case, reasonably
      expects to exceed that net income level in the current calendar year,
    

	     	  	
    
	
  

	 [   ]	(l) 	
      an individual who, either alone or with a spouse3, has
      net assets of at least $5,000,000, 

	     	  	
    
	
  

	 [   ]	(m) 	
      a person, other than an individual or investment fund,
      that has net assets of at least $5,000,000 as shown on its most recently
      prepared financial statements, and such person has not been created or
      used solely to purchase or hold securities as an accredited investor,
  

	 [   ]	(n) 	
      an investment fund that distributes or has distributed
      its securities only to 

	 
    	  	
    
	
  

	  	  	
    (i) 
	
      a person that is or was an Accredited Investor at the
      time of the distribution, 

	 
    	  	
    
	
			
    (ii) 
	
      a person that acquires or acquired securities in the
      circumstances referred to in sections 2.10 of NI 45-106 [Minimum amount
      investment], or 2.19 of NI 45-106 [Additional investment in investment funds], or

____________________

2 For purposes of this certificate, (i) “financial assets”
means cash, securities, or a contract of insurance, a deposit or an evidence of
a deposit that is not a security for the purposes of securities legislation, and
(ii) “related liabilities” means liabilities incurred or assumed for the purpose
of financing the acquisition or ownership of financial assets, or liabilities
that are secured by financial assets.

3 For purposes of this certificate, the term “spouse” means an
individual who (i) is married to another individual and is not living separate
and apart within the meaning of the Divorce Act (Canada) from the other
individual, (ii) is living with another individual in a marriage-like
relationship, including a marriage-like relationship between individuals of the
same gender, or (iii) in Alberta, is an individual referred to in paragraph (i)
or (ii) above, or is an adult interdependent partner within the meaning of the
Adult Interdependent Relationships Act (Alberta).

A-2 

			
    (iii) 
	
      a person described in paragraph (i) or (ii) that acquires
      or acquired securities under section 2.18 of NI 45-106 [Investment fund
      reinvestment], 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (o) 
	
      an investment fund that distributes or has distributed
      securities under a prospectus in a jurisdiction of Canada for which the
      regulator or, in Québec, the securities regulatory authority, has issued a
      receipt, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (p) 
	
      a trust company or trust corporation registered or
      authorized to carry on business under the Trust and Loan
      Companies Act (Canada) or under comparable legislation in a
      jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a
      fully managed account managed by the trust company or trust corporation,
      as the case may be, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (q) 
	
      a person acting on behalf of a fully managed account4
      managed by that person, if that person 

	
	
    
	
    
	
  

	 	 	 	 
			
    (i) 
	
      is registered or authorized to carry on business as an
      adviser or the equivalent under the securities legislation of a
      jurisdiction of Canada or a foreign jurisdiction, and 

	
	
    
	
    
	
  

	 	 	 	 
	
      
	
    
	
    (ii) 
	
      in Ontario, is purchasing a security that is not a
      security of an investment fund, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (r) 
	
      a registered charity under the Income Tax Act
      (Canada) that, in regard to the trade, has obtained advice from an
      eligibility adviser5 or an adviser registered under the securities
      legislation of the jurisdiction of the registered charity to give advice
      on the securities being traded, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (s) 
	
      an entity organized in a foreign jurisdiction that is
      analogous to any of the entities referred to in paragraphs (a) to (d) or
      paragraph (i) in form and function, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (t) 
	
      a person in respect of which all of the owners of
      interests, direct, indirect or beneficial, except the voting securities
      required by law to be owned by directors, are persons that are Accredited
      Investors, 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (u) 
	
      an investment fund that is advised by a person registered
      as, an adviser or, a person that is exempt from registration as an
      adviser, or 

	
	
    
	
    
	
  

	 	 	 	 
	
       [   ]
	
    (v) 
	
      a person that is recognized or designated by the
      securities regulatory authority or, except in Ontario and Québec, the
      regulator as an Accredited Investor; 

_____________________

4 A “fully managed account” means an account of a client for
which a person makes the investment decisions if that person has full discretion
to trade in securities for the account without requiring the client’s express
consent to a transaction.

5 For the purposes of this certificate, an “eligibility
adviser” means (a) a person that is registered as an investment dealer and
authorized to give advice with respect to the Special Warrants; and (b) in
Saskatchewan or Manitoba, also means a lawyer who is a practising member in good
standing with a law society of a jurisdiction of Canada or a public accountant
who is a member in good standing of an institute or association of chartered
accountants, certified general accountants or certified management accountants
in a jurisdiction of Canada, provided that the lawyer or public accountant must
not (a) have a professional, business or personal relationship with the Company,
or any of its directors, executive officers, founders or control persons, and
(b) have acted for or been retained personally or otherwise as an employee,
executive officer, director, associate or partner of a person that has acted for
or been retained by the Company or any of its directors, executive officers,
founders or control persons within the previous 12 months.

A-3 

	 	Name of
      Subscriber 
	 	 
	 	By:
      ___________________________________________________
	 	
               
      Signature 

	 	 
	 	Print name of Signatory 
	 	(if different from Subscriber) 
	 	 
	 	Title 

A-4 

SCHEDULE “C” 

U.S. ACCREDITED INVESTOR CERTIFICATE (U.S. PERSONS ONLY)

	TO: 	NORTHERN DYNASTY MINERALS LTD. (the
      "Issuer") 
	 	 
	RE: 	SUBSCRIPTION FOR SECURITIES OF THE
      COMPANY 

Capitalized terms not specifically defined in this
certification have the meaning ascribed to them in the Subscription Agreement to
which this Schedule C is attached. In the event of a conflict between the terms
of this certification and such Subscription Agreement, the terms of this
certification shall prevail. 

In addition to the covenants, representations and warranties
contained in the Subscription Agreement to which this Schedule C is attached,
the undersigned Subscriber covenants, represents and warrants to the Company
that: 

	(a) 	
      It is (i) a U.S. Person or a person in the United States
      and (ii) authorized to consummate the purchase of the Special
    Warrants.

	 	 
	(b) 	
      It has such knowledge, skill and experience in financial,
      investment and business matters as to be capable of evaluating the merits
      and risks of an investment in the Special Warrants and it is able to bear
      the economic risk of loss of its entire investment.

	 	 
	(c) 	
      The Company has provided to it the opportunity to ask
      questions and receive answers concerning the terms and conditions of the
      offering and it has had access to such information concerning the Company
      as it has considered necessary or appropriate in connection with its
      investment decision to acquire the Special Warrants, including access to
      the Company's public filings available on the Internet at www.sedar.com,
      and that any answers to questions and any request for information have
      been complied with to the Subscriber's satisfaction.

	 	 
	(d) 	
      It is acquiring the Special Warrants for its own account,
      for investment purposes only and not with a view to any resale,
      distribution or other disposition of the Special Warrants in violation of
      the United States securities laws, provided the foregoing representation
      shall not be deemed to prohibit the resale of the Special Warrants or
      Underlying Shares in compliance with Securities Laws.

	 	 
	(e) 	
      The address of the Subscriber set out on the front page
      of the Subscription Agreement is the true and correct principal address of
      the Subscriber and can be relied on by the Company for the purposes of
      state blue-sky laws and the Subscriber has not been formed for the
      specific purpose of purchasing the Special Warrants.

	 	 
	(f) 	
      It understands (i) the Special Warrants and any Common
      Shares issued on exercise of the Special Warrants have not been registered
      under the United States Securities Act of 1933, as amended (the "U.S.
      Securities Act") or the securities laws of any state of the United
      States and will be "restricted securities", as defined in Rule 144 under
      the U.S. Securities Act; (ii) the sale contemplated hereby is being made
      in reliance on an exemption from such registration requirements; and (iii)
      subject to certain exceptions provided under the U.S. Securities Act, the
      Securities and any Common Shares issued upon conversion of the Special
      Warrants may not be transferred or exercised in the United States or by or
      on behalf of a U.S. Person unless such Securities and any Common Shares
      issued upon conversion of the Special Warrants, are registered under the
      U.S. Securities Act and applicable state securities laws, or unless an
      exemption from such registration requirements is available.

	 	 
	(g) 	
      The Subscriber is an "accredited investor" as defined in
      Rule 501 of Regulation D of the U.S. Securities Act by virtue of meeting
      one of the following criteria (please hand-write your initials on the
      appropriate lines):

	 	1. Initials _______	A bank, as defined in Section 3(a)(2) of the
      U.S. Securities Act, whether acting in its individual or fiduciary
      capacity; or 
	 	  	  
	 	2. Initials _______	A savings and loan association or other
      institution as defined in Section 3(a)(5)(A) of the U.S. Securities Act,
      whether acting in its individual or fiduciary capacity; or

2 

		3. Initials _______	A broker or dealer registered pursuant to
      Section 15 of the United States Securities Exchange Act of
      1934; or 
	 	  	  
		4. Initials _______	An insurance company as defined in Section
      2(a)(13) of the U.S. Securities Act; or 
	 	  	  
		5. Initials _______	
      An investment company registered under the United States
      Investment Company Act of 1940; or 

	 	  	  
		6. Initials _______	
      A business development company as defined in Section
      2(a)(48) of the United States Investment Company Act of 1940; or
      

	 	  	  
		7. Initials _______	
      A small business investment company licensed by the U.S.
      Small Business Administration under Section 301 (c) or (d) of the United
      States Small Business Investment Act of 1958; or 

	 	  	  
		8. Initials _______	
      A plan established and maintained by a state, its
      political subdivisions or any agency or instrumentality of a state or its
      political subdivisions, for the benefit of its employees, with total
      assets in excess of US$5,000,000; or 

	 	  	  
		9. Initials _______	
      An employee benefit plan within the meaning of the United
      States Employee Retirement Income Security Act of 1974 in
      which the investment decision is made by a plan fiduciary, as defined in
      Section 3(21) of such Act, which is either a bank, savings and loan
      association, insurance company or registered investment adviser, or an
      employee benefit plan with total assets in excess of US$5,000,000 or, if a
      self-directed plan, with investment decisions made solely by persons who
      are Accredited Investors; or 

	 	  	  
		10. Initials _______	A private business development company as
      defined in Section 202(a)(22) of the United States Investment Advisers
      Act of 1940; or 
	 	  	  
		11. Initials _______	
      An organization described in Section 501(c)(3) of the
      United States Internal Revenue Code, a corporation, a
      Massachusetts or similar business trust, or a partnership, not formed for
      the specific purpose of acquiring the Securities offered, with total
      assets in excess of US$5,000,000; or 

	 	  	  
		12. Initials _______	Any director or executive officer of the
      Company; or 
	 	  	  
		13. Initials _______ 	
      A natural person whose individual net worth, or joint net
      worth with that person’s spouse, at the time of his or her purchase
      exceeds US$1,000,000 as determined on the following basis: 

	 	  	  
	 	  	(i) the person’s primary residence shall not be
      included as an asset; 
	 	  	  
			
      (ii) indebtedness that is secured by the person’s primary
      residence, up to the estimated fair market value of the primary residence
      at the time of the sale and purchase of securities contemplated by the
      accompanying Subscription Agreement, shall not be included as a liability
      (except that if the amount of such indebtedness outstanding at the time of
      the sale and purchase of securities contemplated by the accompanying
      Subscription Agreement exceeds the amount outstanding 60 days before such
      time, other than as a result of the acquisition of the primary residence,
      the amount of such excess shall be included as a liability); and

	 	  	  
			
      (iii) indebtedness that is secured by the person’s
      primary residence in excess of the estimated fair market value of the
      primary residence shall be included as a liability; or 

	 	  	  
	 	14. Initials _______ 	A natural person that had annual gross income
      during the last two full calendar years in excess of US$200,000 (or
      together with his or her spouse in excess of US$300,000) and reasonably
      expects to have annual gross income in excess of US$200,000 (or together
      with his or her spouse in excess of US$300,000) during the current
      calendar year, and no reason to believe that his or her annual gross
      income will not remain in excess of US$200,000 (or that together with his
      or her spouse will not remain in excess of US$300,000) for the foreseeable
      future; or 

3 

	 	  	  
		15. Initials _______ 	
      A trust, with total assets in excess of US$5,000,000, not
      formed for the specific purpose of acquiring the Special Warrants offered,
      whose purchase is directed by a sophisticated person as described in Rule
      506(b)(2)(ii) under the U.S. Securities Act; or 

	 	  	  
		16. Initials _______	
      Any entity in which all of the equity owners meet the
      requirements of at least one of the above categories.

	(h) 	
      The Subscriber has not purchased the Special Warrants as
      a result of any form of general solicitation or general advertising (as
      those terms are used in Regulation D under the U.S. Securities Act),
      including advertisements, articles, notices or other communications
      published in any newspaper, magazine or similar media or broadcast over
      radio or television, or other form of telecommunications, including
      electronic display, or any seminar or meeting whose attendees have been
      invited by general solicitation or general advertising.

	 	 	 
	(i) 	
      If the Subscriber decides to offer, sell or otherwise
      transfer any of the Special Warrants or any Common Shares issued upon
      conversion of the Special Warrants it will not offer, sell or otherwise
      transfer any of such Special Warrants or any Common Shares issued upon
      conversion of the Special Warrants directly or indirectly,
  unless:

	 	 	 
		(i) 	
      the sale is to the Company;

	 	 	 
		(ii) 	
      the sale is made outside the United States in a
      transaction meeting the requirements of Rule 904 of Regulation S under the
      U.S. Securities Act and in compliance with applicable local laws and
      regulations;

	 	 	 
		(iii) 	
      the sale is made pursuant to the exemption from the
      registration requirements under the U.S. Securities Act provided by Rule
      144 thereunder, if available, and in accordance with any applicable state
      securities or "blue sky" laws;

	 	 	 
		(iv) 	
      the securities are sold in a transaction that does not
      require registration under the U.S. Securities Act or any applicable state
      laws and regulations governing the offer and sale of securities;
  or

	 	 	 
		(v) 	
      pursuant to an effective resale registration statement
      filed under the U.S. Securities Act.

	 	 	 
		
      and, in the case of each of (iii) and (iv) it has prior
      to such sale furnished to the Company an opinion of counsel reasonably
      satisfactory to the Company stating that such transaction is exempt from
      registration under applicable securities laws and that the legends
      referred to in paragraph (1) below may be removed.

	 	 	 
	(j) 	
      It understands and agrees that the Special Warrants and
      any Common Shares issued upon conversion of the Special Warrants may not
      be acquired in the United States by or on behalf of a U.S. Person or a
      person in the United States unless registered under the U.S. Securities
      Act and any applicable state securities laws or unless an exemption from
      such registration requirements is available.

	 	 	 
	(k) 	
      It acknowledges that it has not purchased the Special
      Warrants and any Common Shares issued upon conversion of the Special
      Warrants as a result of, and will not itself engage in, any "directed
      selling efforts" (as defined in Regulation S under the U.S. Securities
      Act) in the United States in respect of the Special Warrants and any
      Common Shares issued upon conversion of the Special Warrants which would
      include any activities undertaken for the purpose of, or that could
      reasonably be expected to have the effect of, conditioning the market in
      the United States for the resale of the Special Warrants or any Common
      Shares issued upon conversion of the Special Warrants.

	 	 	 
	(l) 	
      The certificates representing the Special Warrants issued
      hereunder and any Common Shares issued upon conversion of the Special
      Warrants, as well as all certificates issued in exchange for or in
      substitution of the foregoing, until such time as is no longer required
      under the applicable requirements of the U.S. Securities Act or applicable
      state securities laws, will bear, on the face of such certificate, the
      following legends:

4 

	
      "THE SECURITIES REPRESENTED HEREBY [IF A SPECIAL
      WARRANT INCLUDE: "AND THE SECURITIES ISSUABLE UPON EXERCISE
      THEREOF"] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
      ACT OF 1933, AS AMENDED (THE "U.S. SECURITIES ACT") OR THE SECURITIES LAWS
      OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING SUCH
      SECURITIES, AGREES FOR THE BENEFIT OF THE COMPANY THAT SUCH SECURITIES MAY
      BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY; (B)
      OUTSIDE THE UNITED STATES IN ACCORDANCE WITH RULE 904 OF REGULATION S
      UNDER THE U.S. SECURITIES ACT; (C) IN ACCORDANCE WITH THE EXEMPTION FROM
      REGISTRATION UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144
      THEREUNDER, IF AVAILABLE, AND IN COMPLIANCE WITH ANY APPLICABLE STATE
      SECURITIES LAWS; OR (D) IN A TRANSACTION THAT DOES NOT REQUIRE
      REGISTRATION UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE
      SECURITIES LAWS, AND, IN THE CASE OF PARAGRAPH (C) OR (D), THE SELLER
      FURNISHES TO THE COMPANY AN OPINION OF COUNSEL OF RECOGNIZED STANDING IN
      FORM AND SUBSTANCE SATISFACTORY TO THE COMPANY TO SUCH EFFECT." 

	
       

	
      "[FOR CERTIFICATES EVIDENCING COMMON SHARES ONLY:]
      THE PRESENCE OF THIS LEGEND MAY IMPAIR THE ABILITY OF THE HOLDER
      HEREOF TO EFFECT "GOOD DELIVERY" OF THE SECURITIES REPRESENTED HEREBY ON A
      CANADIAN STOCK EXCHANGE. A CERTIFICATE WITHOUT A LEGEND MAY BE OBTAINED
      FROM THE REGISTRAR AND TRANSFER AGENT OF THE CORPORATION IN CONNECTION
      WITH A SALE OF THE SECURITIES REPRESENTED HEREBY AT A TIME WHEN THE
      CORPORATION IS A "FOREIGN ISSUER" AS DEFINED IN REGULATION S UNDER THE
      U.S. SECURITIES ACT, UPON DELIVERY OF THIS CERTIFICATE, AN EXECUTED
      DECLARATION AND, IF REQUESTED BY THE CORPORATION OR THE TRANSFER AGENT, AN
      OPINION OF COUNSEL OF RECOGNIZED STANDING, EACH IN FORM SATISFACTORY TO
      THE TRANSFER AGENT OF THE CORPORATION AND THE CORPORATION, TO THE EFFECT
      THAT SUCH SALE OF THE SECURITIES REPRESENTED HEREBY IS BEING MADE IN
      COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT.";
      

		
      provided, that if the Special Warrants or Common Shares
      are being sold outside the United States in compliance with the
      requirements of Rule 904 of Regulation S at a time when the Company is a
      "foreign issuer" as defined in Regulation S at the time of sale, the
      legends set forth above may be removed by providing an executed
      declaration to the registrar and transfer agent of the Company, in
      substantially the form set forth as Appendix A attached hereto (or in such
      other forms as the Company may prescribe from time to time) and, if
      requested by the Company or the transfer agent, an opinion of counsel of
      recognized standing in form and substance satisfactory to the Company and
      the transfer agent to the effect that such sale is being made in
      compliance with Rule 904 of Regulation S; and provided, further, that, if
      any Special Warrants or Common Shares are being sold otherwise than in
      accordance with Regulation S and other than to the Company, the legend may
      be removed by delivery to the registrar and transfer agent and the Company
      of an opinion of counsel, of recognized standing reasonably satisfactory
      to the Company, that such legend is no longer required under applicable
      requirements of the U.S. Securities Act or state securities laws. The
      Company agrees that it shall cause its U.S. counsel to deliver any legal
      opinion required by this paragraph at the Company’s expense.

	 	 
	(m) 	
      Notwithstanding anything contained herein to the
      contrary, certificates evidencing Shares issued upon exercise of the
      Special Warrants shall not contain any legend (including the legend set
      forth above): (i) while a registration statement covering the resale of
      such security is effective under the U.S. Securities Act, (ii) following
      any sale of such Shares pursuant to Rule 144, (iii) if such Shares are
      eligible for sale under Rule 144 without volume or manner-of-sale
      restrictions or (iv) if such legend is not required under applicable
      requirements of the U.S. Securities Act (including judicial
      interpretations and pronouncements issued by the staff of the SEC). The
      Company will take all steps necessary to remove any legends to give effect
      to the foregoing, including, without limitation, procuring an opinion of
      U.S. counsel to the Company at the Company’s
expense.

5 

	(n) 	
      It understands and agrees that there may be material tax
      consequences to the Subscriber of an acquisition, disposition or exercise
      of any of the Special Warrants and any Common Shares issued upon
      conversion of the Special Warrants. The Company gives no opinion and makes
      no representation with respect to the tax consequences to the Subscriber
      under United States, state, local or foreign tax law of the undersigned’s
      acquisition or disposition of such Special Warrants and any Common Shares
      issued upon conversion of the Special Warrants; in particular, no
      determination has been made whether the Company will be a “passive foreign
      investment company” within the meaning of Section 1297 of the United
      States Internal Revenue Code.

	 	 
	(o) 	
      It understands and acknowledges that the Company is
      incorporated outside the United States. Consequently, it may be difficult
      to provide service of process on the Company and it may be difficult to
      enforce any judgment against the Company.

	 	 
	(p) 	
      It understands and agrees that the financial statements
      of the Company have been prepared in accordance with International
      Financial Reporting Standards and therefore may be materially different
      from financial statements prepared under U.S. generally accepted
      accounting principles and therefore may not be comparable to financial
      statements of United States companies.

	 	 
	(q) 	
      It consents to the Company making a notation on its
      records or giving instructions to any transfer agent of the Company in
      order to implement the restrictions on transfer set forth and described in
      this certification and the Subscription Agreement.

	 	 
	(r) 	
      It understands and acknowledges that the Company is not
      obligated to remain a "foreign issuer".

	 	 
	(s) 	
      It has no intention to distribute, and shall not
      transfer, either directly or indirectly any of the Special Warrants and
      any Common Shares issued upon conversion of the Special Warrants to any
      person within the United States or to U.S. persons except pursuant to an
      effective registration statement under the U.S. Securities Act, or an
      exemption therefrom or otherwise in compliance with Securities
  Laws.

	 	 
	(t) 	
      It represents that the funds representing the Purchase
      Price which will be advanced by the Subscriber to the Corporation
      hereunder will not represent proceeds of crime for the purposes of the
      Uniting and Strengthening America by Providing Appropriate Tools
      Required to Intercept and Obstruct Terrorism Act (the “PATRIOT
      Act”) and the Subscriber acknowledges that the Company may in the
      future be required by law to disclose the Subscriber's name and other
      information relating to the subscription agreement and the Subscriber's
      subscription hereunder, on a confidential basis, pursuant to the PATRIOT
      Act. No portion of the Subscription Price to be provided by the Subscriber
      (i) has been or will be derived from or related to any activity that is
      deemed criminal under the laws of the United States of America, or any
      other jurisdiction, or (ii) is being tendered on behalf of a person or
      entity who has not been identified to or by the Subscriber, and it shall
      promptly notify the Company if the Subscriber discovers that any of such
      representations ceases to be true and provide the Corporation with
      appropriate information in connection therewith.

	 	 
	(u) 	
      It acknowledges that the representations, warranties and
      covenants contained in this Certification are made by it with the intent
      that they may be relied upon by the Company in determining its eligibility
      or the eligibility of others on whose behalf it is contracting thereunder
      to purchase Special Warrants. It agrees that by accepting Special Warrants
      it shall be representing and warranting that the representations and
      warranties above are true as at the Closing Date with the same force and
      effect as if they had been made by it at the Closing Date and that they
      shall survive the purchase by it of Special Warrants and shall continue in
      full force and effect notwithstanding any subsequent disposition by it of
      such Special Warrants.

6 

ONLY U.S. PURCHASERS NEED COMPLETE AND SIGN 

	Dated ______________ 2014. 		 
	  	X
    _______________________________________	 
	  	Signature of individual (if Subscriber is
      an individual) 	 
	 	 	 
	  	X
    _______________________________________	 
	  	Authorized signatory (if Subscriber is not
      an individual) 	 
	 	 	 
	  	Name of Subscriber (please print) 	 
	 	 	 
	  	Name of authorized signatory (please
      print) 	 
	 	 	 
	  	Official capacity of authorized signatory
      (please print) 	 

McMill

Appendix "A" to

U.S. ACCREDITED INVESTOR CERTIFICATE 

Form of Declaration for Removal of Legend 

	TO: 	Northern Dynasty Minerals Ltd. (the
      "Corporation") 
	 	 
	TO: 	Registrar and transfer agent for the shares of
      the Corporation 

The undersigned (A) acknowledges that the sale of the
securities of the Corporation to which this declaration relates is being made in
reliance on Rule 904 of Regulation S under the United States Securities Act of
1933, as amended (the "U.S. Securities Act"), and (B) certifies that (1) the
undersigned is not (a) an "affiliate" of the Corporation (as that term is
defined in Rule 405 under the U.S. Securities Act) (b) a "distributor" as
defined in Regulation S or (c) an affiliate of a distributor; (2) the offer and
sale of such securities was made in an “offshore transaction” within the meaning
of Regulation S and either (a) at the time the buy order was originated, the
buyer was outside the United States, or the seller and any person acting on its
behalf reasonably believed that the buyer was outside the United States, or (b)
the transaction was executed on or through the facilities of the TSX Venture
Exchange and neither the seller nor any person acting on its behalf knows that
the transaction has been prearranged with a buyer in the United States; (3)
neither the seller nor any affiliate of the seller nor any person acting on
their behalf has engaged or will engage in any directed selling efforts in the
United States in connection with the offer and sale of such securities; (4) the
sale is bona fide and not for the purpose of "washing off" the resale
restrictions imposed because the securities are “restricted securities” (as that
term is defined in Rule 144(a)(3) under the U. S. Securities Act); and (5) the
contemplated sale is not a transaction, or part of a series of transactions,
which, although in technical compliance with Regulation S, is part of a plan or
scheme to evade the registration provisions of the U. S. Securities Act. Terms
used herein have the meanings given to them by Regulation S under the U.S.
Securities Act. 

	Dated  ________________ 20__. 	X
      __________________________________________
	  	Signature of individual (if Purchaser is
      an individual) 
	  	X
      __________________________________________
	  	Authorized signatory (if Purchaser is not
      an individual) 
	 	 
	  	Name of Purchaser (please print) 
	 	 
	  	Name of authorized signatory (please
      print) 
	 	 
	  	Official capacity of authorized signatory
      (please print) 

Affirmation by Seller’s Broker-Dealer 

We have read the foregoing representations of our customer,
_________________________(the "Seller") dated _______________________, with
regard to the sale, for such Seller’s account, of the
_________________represented by certificate number ______________of the
Corporation described therein, and we hereby affirm that, to the best of our
knowledge and belief, the facts set forth therein are full, true and
correct.

Name of Firm 

	 	 	 
		Name of Firm 	 
	By: 	 
    	 
		Authorized Officer 	 
	Dated: 	___________________ 20__. 	 

2 

SCHEDULE “D” 

REGISTRATION RIGHTS AGREEMENT 

     REGISTRATION RIGHTS AGREEMENT (this “Agreement”),
dated as of December __, 2014, by and among Northern Dynasty Minerals Ltd., a
corporation organized under the laws of the Province of British Columbia (the
“Company”), and the undersigned purchasers (each, a “Purchaser,”
and collectively, the “Purchasers”). 

          WHEREAS: 

          A.      In connection with the
Subscription Agreements, dated as of December __, 2014, by and among the Company
and the Purchasers (the “Subscription Agreements”), the Company has
agreed, upon the terms and subject to the conditions set forth in the
Subscription Agreements, to issue and sell to each Purchaser special warrants of
the Company (the “Special Warrants”), each of which Special Warrants is
convertible into one common share of the Company (the “Common Shares”).

          B.      In accordance with the terms
of the Subscription Agreements, the Company has agreed to provide certain
registration rights under the Securities Act of 1933, as amended, and the rules
and regulations thereunder, or any similar successor statute (collectively, the
“Securities Act”), and applicable state securities laws. 

          NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Company and each
of the Purchasers hereby agree as follows: 

ARTICLE 1 

DEFINITIONS

Capitalized terms used herein and not otherwise defined herein
shall have the respective meanings set forth in the Subscription Agreements. As
used in this Agreement, the following terms shall have the following meanings:

     1.1      “Additional Registration Period” has the meaning set
forth in section 3.1.

     1.2      “Additional Registration Statement” has the meaning
set forth in section 3.1. 

     1.3      “Business Day” means
any day other than Saturday, Sunday or any other day on which commercial banks
in The City of New York or the City of Toronto are authorized or required by law
to remain closed. 

     1.4      “Closing Date” shall have the meaning set forth in
the Subscription Agreements. 

     1.5      “Effective Date” means
the date the Registration Statement has first been declared effective by the
SEC. 

     1.6      “Targeted Effectiveness
Deadline” means the date which is 90 calendar days after the Closing Date.

     1.7      “Targeted Filing Date” means the date which is 30
days after the Closing Date. 

     1.8      “Initial Registration Period” has the meaning set
forth in section 3.1.

     1.9      “Initial Registration Statement” has the meaning set
forth in section 3.1. 

3 

     1.10      “Investor” means a
Purchaser or any transferee or assignee thereof to whom a Purchaser or another
Investor assigns its rights under this Agreement and who agrees to become bound
by the provisions of this Agreement in accordance with Article 9. 

     1.11      “Person” means an
individual, a limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, a government or any
department or agency thereof, or other entity of any kind. 

     1.12      “register,”
“registered,” and “registration” refer to a registration effected
by preparing and filing one or more Registration Statements (as defined below)
in compliance with the Securities Act and pursuant to Rule 415 and the
declaration or ordering of effectiveness of such Registration Statement(s) by
the SEC. 

     1.13      “Registrable
Securities” means (i) the Common Shares issued issuable on exercise of the
Special Warrants, and (ii) any share capital of the Company issued with respect
to such Common Shares as a result of any split, dividend, recapitalization,
exchange or similar event or otherwise. 

     1.14      “Registration
Statement” means a registration statement or registration statements of the
Company filed under the Securities Act covering the Registrable Securities, any
amendments, supplements, and exhibits thereto and any material incorporated by
reference (or deemed to be incorporated by reference) therein, and includes the
Initial Registration Statement and any Additional Registration Statement. 

     1.15      “Required Holders” means the holders of at least
50% of the Registrable Securities. 

     1.16      “Rule 415” means Rule
415 under the Securities Act or any successor rule providing for offering
securities on a continuous or delayed basis. 

     1.17      “SEC” means the United States Securities and
Exchange Commission. 

ARTICLE 2 

REGISTRATION 

     2.1      Mandatory
Registration. The Company shall prepare, and, as soon as practicable but in
no event later than the Targeted Filing Date, file with the SEC the Registration
Statement on Form F-3 covering the resale of all of the Registrable Securities
(the “Initial Registration Statement”). In the event that Form F-3 is
unavailable for such a registration, the Company shall use such other form as is
available for such a registration, subject to the provisions of Section 2.4. The
Initial Registration Statement prepared pursuant hereto shall register for
resale all of the Registrable Securities issuable as of the date the
Registration Statement is initially filed with the SEC. The Registration
Statement shall contain (except if otherwise directed by the Required Holders)
the “Selling Stockholders” and “Plan of Distribution”
sections in substantially the form attached hereto as Exhibit A. The
Company shall use reasonable best efforts to have the Registration Statement
declared effective by the SEC as soon as practicable, but in no event later than
the Targeted Effectiveness Date. By 9:30 a.m. on the Business Day immediately
following the Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the Securities Act the final prospectus to be used in
connection with sales pursuant to such Registration Statement. The Company shall
keep such Initial Registration Statement continuously effective pursuant to Rule
415 at all times until the second anniversary of this Agreement (the “Initial
Registration Period”). If after the expiry of the Initial Registration
Period, there are one or more Investors that individually (together with such
Investor’s affiliates and any other person with whom they may be deemed to be a
“group” within the meaning of Rule 13d-5 under the US Securities Exchange Act)
are the beneficial owner, as calculated in accordance with Rule 13d-1 of the
Exchange Act, of more than 9.9% of the then issued and outstanding shares of the
Company and the Company has withdrawn any Registration Statement filed within
the Initial Registration Period, then such Investors will have a demand
registration right to cause the Company to file a further Registration Statement
covering the registration of such Registrable Securities then owned by such
Investors (the “Additional Registration Statement”). The Company will
file such Additional Registration Statement within twenty (20) days of written
receipt of a request from an Investor further to this demand registration right
and will maintain the effectiveness of such Additional Registration Statement until the earlier of (i) the date as on which the
Investors may sell all of the Registrable Securities covered by such
Registration Statement without limitation or restriction pursuant to Rule 144
(or any successor thereto) promulgated under the Securities Act without the
requirement for the Company to be in compliance with the current public
information requirements under Rule 144, (ii) the date on which no Investor
(together with such Investor’s affiliates and any other person with whom they
may be deemed to be a “group” within the meaning of Rule 13d-5 under the US
Securities Exchange Act) is the beneficial owner, as calculated in accordance
with Rule 13d-1 of the Exchange Act, of more than 9.9% of the issued and
outstanding shares of the Company, and (iii) the one year anniversary of the
date of effectiveness of the Additional Registration Statement (the
“Additional Registration Period”). If after expiry of the Additional
Registration Period, there remain one or more Investors that individually
(together with such Investor’s affiliates and any other person with whom they
may be deemed to be a “group” within the meaning of Rule 13d-5 under the US
Securities Exchange Act) are the beneficial owner, as calculated in accordance
with Rule 13d-1 of the Exchange Act, of more than 9.9% of the issued and
outstanding shares of the Company and the Company has withdrawn any Additional
Registration Statement filed within the Additional Registration Period, such
Investor or Investors will have one additional demand registration right to
cause the Company to file a further Additional Registration Statement for a
further Additional Registration Period on the equivalent terms for the initial
demand registration right described above in this paragraph. 

4 

     2.2      Limitation to Registrable
Securities. In no event shall the Company include any securities other than
Registrable Securities on any Registration Statement without the prior written
consent of the Required Holders. 

     2.3      Legal Counsel. Each
Investor may designate legal counsel from time to time to review and oversee at
the expense of such Investor any registration pursuant to this Article 2 (the
“Legal Counsel”). The Company and Legal Counsel shall reasonably
cooperate with each other in performing the Company’s obligations under this
Agreement. 

     2.4      Ineligibility for Form
F-3. In the event that Form F-3 is not available for the registration of the
resale of Registrable Securities hereunder, the Company shall (i) register the
resale of the Registrable Securities on another appropriate form that covers the
resale of all of the Registrable Securities pursuant to the provisions of this
Agreement and (ii) undertake to register the Registrable Securities on Form F-3
as soon as such form is available, provided that the Company shall maintain the
effectiveness of the Registration Statement then in effect until such time as a
Registration Statement on Form F-3 covering the Registrable Securities has been
declared effective by the SEC. 

     2.5      Effect of Failure to
Obtain Effectiveness of Registration Statement. If a Registration Statement
covering all of the Registrable Securities is not declared effective by the SEC
on or before the applicable Targeted Effectiveness Date then the Company shall
continue to use its reasonable best efforts to have it declared effective.

ARTICLE 3 

RELATED OBLIGATIONS 

               At such time as the Company is obligated to file a Registration
Statement with the SEC pursuant to Section 2.1, the Company will use reasonable
best efforts to effect the registration of the Registrable Securities in
accordance with the intended method of disposition thereof and, pursuant
thereto, the Company shall have the following obligations: 

     3.1      Acceleration; Adequate
Disclosure. The Company shall submit to the SEC, within two Business Days
after the Company learns that no review of a particular Registration Statement
will be made by the staff of the SEC or that the staff has no further comments
on a particular Registration Statement, as the case may be, a request for
acceleration of effectiveness of such Registration Statement to a time and date
not later than 48 hours after the submission of such request. The Company shall
keep each Registration Statement continuously effective pursuant to Rule 415 at
all times during the Initial Registration Period and any Additional Registration
Period. The Company shall ensure that each Registration Statement (including any
amendments or supplements thereto and prospectuses contained therein) does not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein, or necessary to make the statements therein (in
the case of prospectuses, in the light of the circumstances in which they were
made) not misleading. 

5 

     3.2      Amendments to Registration
Statement. The Company shall prepare and file with the SEC such amendments
(including post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such Registration
Statement, which prospectus is to be filed pursuant to Rule 424 promulgated
under the Securities Act, as may be necessary to keep such Registration
Statement continuously effective at all times during the Initial Registration
Period and any Additional Registration Period, and, during such period, comply
in all material respects with the provisions of the Securities Act with respect
to the disposition of all Registrable Securities of the Company covered by such
Registration Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such Registration
Statement. In the case of amendments and supplements to a Registration Statement
which are required to be filed pursuant to this Agreement (including pursuant to
this Section 3.2) by reason of the Company filing with or furnishing to the SEC
a report under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), the Company shall have incorporated such report by reference into
such Registration Statement, if applicable, or shall file such amendments or
supplements with the SEC on the same day on which the Exchange Act report is
filed which created the requirement for the Company to amend or supplement such
Registration Statement. The Company shall respond as promptly as reasonably
practicable to any comments received from the SEC with respect to each
Registration Statement or any amendment thereto and, as promptly as reasonably
possible, provide the Investors true and complete copies of all correspondence
from and to the SEC relating to such Registration Statement that pertains to the
Investors as “Selling Stockholders” but not any comments that would result in
the disclosure to the Investors of material and non-public information
concerning the Company. 

     3.3      Review by Legal Counsel;
Information Rights. The Company shall (A) permit Legal Counsel to review and
comment upon (i) a Registration Statement at least three Business Days prior to
its filing with the SEC and (ii) all amendments and supplements to all
Registration Statements (except for Form 20-F, Form 6-K and similar continuous
disclosure reports) at least three Business Days prior to their filing with the
SEC, and (B) not file any Registration Statement or amendment or supplement
thereto in a form to which Legal Counsel reasonably objects. Legal Counsel shall
provide any comments within two Business Days after receipt of a document for
review pursuant to the previous sentence. The Company shall, as promptly as
practicable, furnish to Legal Counsel, without charge, (i) copies of any
correspondence from the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii) after the same is
prepared and filed with the SEC, one copy of any Registration Statement and any
amendment(s) thereto, including financial statements and schedules, all
documents incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of any Registration Statement, one
copy of the prospectus included in such Registration Statement and all
amendments and supplements thereto. The Company shall reasonably cooperate with
Legal Counsel in performing the Company’s obligations pursuant to this Article
3. 

     3.4      Prospectus Delivery.
The Company shall, as promptly as practicable, furnish to each Investor whose
Registrable Securities are included in any Registration Statement, without
charge, (i) after the same is prepared and filed with the SEC, at least one copy
of such Registration Statement and any amendment(s) thereto, including financial
statements and schedules, all documents incorporated therein by reference, if
requested by an Investor, all exhibits and each preliminary prospectus, (ii)
upon the effectiveness of any Registration Statement, an electronic copy of the
prospectus included in such Registration Statement and all amendments and
supplements thereto; provided, that the Company shall promptly provide each
Investor with such number of copies of such prospectus as such Investor may
reasonably request and (iii) such other documents, including copies of any
preliminary or final prospectus, as such Investor may reasonably request from
time to time in order to facilitate the disposition of the Registrable
Securities owned by such Investor. 

     3.5      Blue Sky Compliance.
The Company shall use reasonable best efforts to (i) register and qualify or
cooperate with the selling Investors in connection with the registration or
qualification (or exemption from the registration or qualification) of
Registrable Securities for the resale by Investors of the Registrable Securities
covered by a Registration Statement under such other securities or “blue sky”
laws of all applicable jurisdictions in the United States, (ii) prepare and file
in those jurisdictions, such amendments (including post-effective amendments)
and supplements to such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Initial Registration Period and
any Additional Registration Period, (iii) take such other actions as may be
necessary to maintain such registrations and qualifications in effect at all
times during the Initial Registration Period and any Additional Registration
Period, and (iv) take all other actions reasonably necessary or advisable to
qualify the Registrable Securities for sale in such jurisdictions; provided,
however, that the Company shall not be required in connection therewith or as a
condition thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section 3.5, (y) subject
itself to general taxation in any such jurisdiction, or (z) file a general
consent to service of process in any such jurisdiction. The Company shall
promptly notify Legal Counsel and each Investor who holds Registrable Securities
of the receipt by the Company of any notification with respect to the suspension
of the registration or qualification of any of the Registrable Securities for
sale under the securities or “blue sky” laws of any jurisdiction in the United
States or its receipt of notice of the initiation or threatening of any
proceeding for such purpose. 

6 

     3.6      Updates to Prospectus.
The Company shall notify Legal Counsel and each Investor in writing of the
happening of any event, as promptly as practicable after becoming aware of such
event, or the passage of time as a result of which a Registration Statement or
the prospectus included in a Registration Statement, as then in effect, includes
an untrue statement of a material fact or an omission to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading
(provided that in no event shall such notice contain any material non-public
information), and, subject to Section 3.16, promptly prepare a supplement or
amendment to such Registration Statement to correct such untrue statement or
omission and deliver ten (10) copies of such supplement or amendment to Legal
Counsel and each Investor (or such other number of copies as Legal Counsel or
such Investor may reasonably request). The Company shall also promptly notify
Legal Counsel and each Investor in writing (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed, and when a
Registration Statement or any post-effective amendment has become effective
(notification of such effectiveness shall be delivered to Legal Counsel and each
Investor by facsimile on the same day of such effectiveness and by overnight
mail), (ii) of any request by the SEC or any other federal or state government
authority for amendments or supplements to a Registration Statement or related
prospectus or related information, (iii) of the Company’s reasonable
determination that a post-effective amendment to a Registration Statement would
be appropriate, and (iv) when the SEC notifies the Company whether there will be
a “review” of such Registration Statement and whenever the SEC comments in
writing on any Registration Statement (in which case the Company shall provide
to each of the Investors true and complete copies of all comments that pertain
to the Investors as a “Selling Stockholder” or to the “Plan of Distribution” and
all written responses thereto, but not information that the Company believes
would constitute material and non-public information). The Company shall notify
Legal Counsel and each Investor in writing not more than one Business Day after
(x) the Company becoming aware of the issuance by the SEC or any other federal
or state governmental authority of any stop order suspending the effectiveness
of a Registration Statement covering any or all of the Registrable Securities or
the initiation of any action, claim, suit, investigation or proceeding
(including, without limitation, an investigation or partial proceeding, such as
a deposition), whether commenced or threatened (collectively, “Proceeding”), for
that purpose; or (y) the receipt by the Company of any notification with respect
to the suspension of the qualification or exemption from qualification of any of
the Registrable Securities for sale in any jurisdiction, or the initiation or
threatening of any Proceeding for such purpose. 

     3.7      Prevention of Suspension
of Effectiveness. The Company shall use commercially reasonable efforts to
prevent the issuance of any stop order or other suspension of effectiveness of a
Registration Statement, or the suspension of the qualification (or exemption
from qualification) of any of the Registrable Securities for sale in any
jurisdiction and, if such an order or suspension is issued, to obtain the
withdrawal of such order or suspension at the earliest possible moment and to
notify Legal Counsel and each Investor who holds Registrable Securities being
sold of the issuance of such order and the resolution thereof or its receipt of
notice of the initiation or threat of any proceeding for such purpose. 

     3.8      Underwriter Status.
If, after the execution of this Agreement, the SEC informs the Company that one
or more of the Investors may be an underwriter of Registrable Securities, the
Company shall not name such Investors as Underwriters without the consent of
such Investors and failing the timely receipt of such consent, such Investor’s
Registrable Securities shall be removed from the Registration Statement. 

     3.9      Confidentiality. The
Company shall hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i) disclosure of such
information is necessary to comply with federal or state securities laws or
Canadian Securities Laws, (ii) the disclosure of such information is necessary
to avoid or correct a misstatement or omission in any Registration Statement,
(iii) the release of such information is ordered pursuant to a subpoena or other
order from a court or governmental body of competent jurisdiction, or (iv) such
information has been made generally available to the public. The Company agrees
that it shall to the extent lawfully possible, upon learning that
disclosure of such information concerning an Investor is sought in or by a court
or governmental body of competent jurisdiction or through other means, give
prompt written notice to such Investor and allow such Investor, at the
Investor’s expense, to undertake reasonable and appropriate action to prevent
disclosure of, or to obtain a protective order for, such information. 

7 

     3.10      Listing of Registrable
Securities. The Company shall cause all of the Registrable Securities
covered by a Registration Statement to be listed on the Toronto Stock Exchange
and the NYSE MKT and each other securities exchange or automated quotation
system on which securities of the same class or series issued by the Company are
then listed. The Company shall pay all fees and expenses in connection with
satisfying its obligation under this Section 3.10. 

     3.11      Certificates. The
Company shall cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legend) representing the
Registrable Securities to be offered pursuant to a Registration Statement and
enable such certificates to be in such amounts as the Investors may reasonably
request and registered in such names as the Investors may request. 

     3.12      Prospectus Supplements
Requested by Investor. If reasonably requested by an Investor, the Company
shall, as soon as practicable (i) incorporate in a prospectus supplement or
post-effective amendment such information as an Investor reasonably requests to
be included therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect to the
number of Registrable Securities being offered or sold, the purchase price being
paid therefor and any other terms of the offering of the Registrable Securities
to be sold in such offering; (ii) make all required filings of such prospectus
supplement or post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective amendment; and
(iii) supplement or make amendments to any Registration Statement if reasonably
requested by an Investor holding any Registrable Securities. 

     3.13      Compliance with
Regulations. The Company shall otherwise use commercially reasonable efforts
to comply with all applicable rules and regulations of the SEC, the British
Columbia Securities Commission, and all other applicable regulatory authorities
in connection with any registration hereunder, including without limitation Rule
172 under the Securities Act. Further, the Company shall notify the Investors
promptly if the Company no longer satisfies the conditions of Rule 172. 

     3.14      Reporting Issuer
Status. During the Initial Registration Period and any Additional
Registration Period, the Company shall continue to be a “reporting issuer” or
the equivalent thereof in good standing under the applicable Canadian Securities
Laws in each of the provinces of Canada in which it is currently a “reporting
issuer” and shall continue to be in compliance with all applicable Canadian
Securities Laws in all material respects and will make all necessary filings
(including, without limitation, the filing of all continuous disclosure
materials) required to be filed by the Company pursuant to the Canadian
Securities Laws, but will not be required to qualify the Registrable Securities
for sale in Canada. 

     3.15      Confirmation of
Effectiveness to Transfer Agent. Within one Business Day after a
Registration Statement that covers Registrable Securities is ordered effective
by the SEC, the Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable Securities (with
copies to the Investors whose Registrable Securities are included in such
Registration Statement) written confirmation that such Registration Statement
has been declared effective by the SEC. 

     3.16      Disclosure Grace
Period. Notwithstanding anything to the contrary herein, at any time after
the Effective Date, the Company may delay the disclosure of material non-public
information concerning the Company the disclosure of which at the time is not,
in the good faith opinion of the Board of Directors of the Company, in the best
interest of the Company and, in the opinion of counsel to the Company, otherwise
required (a “Grace Period”); provided, that the Company shall promptly
(i) notify the Investors in writing of the existence of material non-public
information giving rise to a Grace Period (provided that in each notice the
Company will not disclose the content of such material non-public information to
the Investors) and the date on which the Grace Period will begin, (ii) use
reasonable best efforts to terminate a Grace Period as promptly as practicable,
and (iii) notify the Investors in writing of the date on which the Grace Period
ends; and, provided further, that no Grace Period shall exceed 10 consecutive days and no more than two Grace Periods shall occur
during any 365 day period and the first day of any Grace Period must be at least
two trading days after the last day of any prior Grace Period (each, an
“Allowable Grace Period”). For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the date the
Investors receive the notice referred to in clause (i) and shall end on and
include the later of the date the Investors receive the notice referred to in
clause (ii) and the date referred to in such notice. The provisions of Section
2.5 hereof shall not be applicable during the period of any Allowable Grace
Period. Upon expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3.6 with respect to the information giving rise
thereto unless such material non-public information is no longer applicable.
Notwithstanding anything to the contrary, the Company shall cause its transfer
agent to deliver unlegended shares of Common Shares to a transferee of an
Investor in accordance with the terms of the Subscription Agreements in
connection with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the Investor’s receipt of
the notice of a Grace Period and for which the Investor has not yet settled.

8 

     3.17      F-3 Eligibility. The
Company shall use reasonable best efforts to maintain compliance with the
eligibility requirements of Form F-3 so that such form is continuously available
for the registration of the resale of Registrable Securities during the Initial
Registration Period and any Additional Registration Period. 

ARTICLE 4 

OBLIGATIONS OF THE INVESTORS 

     4.1      Information to be Included
in Registration Statement. At least five Business Days prior to the first
anticipated filing date of a Registration Statement other than the Initial
Registration Statement, the Company shall notify each Investor in writing of the
information the Company requires from each such Investor if such Investor elects
to have any of such Investor’s Registrable Securities included in such
Registration Statement. It shall be a condition precedent to the obligations of
the Company to complete the registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such Investor
furnish to the Company such information regarding itself, the Registrable
Securities held by it and the intended method of disposition of the Registrable
Securities held by it as shall be reasonably required to effect the
effectiveness of the registration of such Registrable Securities and shall
execute such documents in connection with such registration as the Company may
reasonably request.

     4.2      Cooperation. Each
Investor, by such Investor’s acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company in connection
with the preparation and filing of any Registration Statement hereunder, unless
such Investor has notified the Company in writing of such Investor’s election to
exclude all of such Investor’s Registrable Securities from such Registration
Statement. 

     4.3      Cease Disposition.
Each Investor agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3.6, such Investor will
immediately discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities until such
Investor’s receipt of notice that the supplemented or amended prospectus
contemplated by Section 3.6 has been filed with the SEC or receipt of notice
that no supplement or amendment is required. Notwithstanding anything to the
contrary, the Company shall cause its transfer agent to deliver unlegended
shares of Common Shares to a transferee of an Investor in accordance with the
terms of the Subscription Agreements in connection with any sale of Registrable
Securities with respect to which an Investor has entered into a contract for
sale prior to the Investor’s receipt of a notice from the Company of the
happening of any event of the kind described in Section 3.6 and for which the
Investor has not yet settled. For the avoidance of doubt, each Investor may
continue to resell any Registrable Securities pursuant to Rule 144 or any other
available exemption from registration. 

     4.4      Prospectus Delivery.
Each Investor covenants and agrees that it will comply with the prospectus
delivery requirements of the Securities Act as applicable to it or an exemption
therefrom in connection with sales of Registrable Securities pursuant to the
Registration Statement. 

ARTICLE 5 

EXPENSES OF REGISTRATION 

9 

               All expenses, other than underwriting discounts and commissions
or as otherwise provided in this Agreement, incurred in connection with
registrations, filings or qualifications pursuant to Articles 2 and 3,
including, without limitation, all registration, listing and qualifications
fees, printer’s and accounting fees, and fees and disbursements of counsel for
the Company shall be paid by the Company. 

ARTICLE 6 

INDEMNIFICATION 

In the event any Registrable Securities are included in a
Registration Statement under this Agreement: 

     6.1      Indemnification by
Company. To the fullest extent permitted by law, the Company will, and
hereby does, indemnify, hold harmless and defend each Investor, the directors,
officers, members, partners, employees, agents, representatives of, and each
Person, if any, who controls any Investor within the meaning of the Securities
Act or the Exchange Act (each, an “Indemnified Person”), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys’ fees, amounts paid in settlement or expenses, joint
or several, (collectively, “Claims”) incurred in investigating, preparing
or defending any action, claim, suit, inquiry, proceeding, investigation or
appeal taken from the foregoing by or before any court or governmental,
administrative or other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a party thereto
(“Indemnified Damages”), to which any of them may become subject insofar
as such Claims (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of or are based upon: (i) any untrue statement or
alleged untrue statement of a material fact in a Registration Statement or any
post-effective amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other “blue sky” laws of
any jurisdiction in which Registrable Securities are offered (“Blue Sky
Filing”), or the omission or alleged omission to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the effective date
of such Registration Statement, or contained in the final prospectus (as amended
or supplemented, if the Company files any amendment thereof or supplement
thereto with the SEC) or the omission or alleged omission to state therein any
material fact necessary to make the statements made therein, in the light of the
circumstances under which the statements therein were made, not misleading,
(iii) any violation or alleged violation by the Company of the Securities Act,
the Exchange Act, the Canadian Securities Laws, any other law, including,
without limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a Registration Statement or (iv) any violation of this Agreement (the matters
in the foregoing clauses (i) through (iv) being, collectively,
“Violations”). Subject to Section 6.3, the Company shall reimburse the
Indemnified Persons, promptly as such Indemnified Damages are incurred and are
due and payable, for any legal fees or other reasonable expenses incurred by
them in connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the indemnification
agreement contained in this Section 6.1: (i) shall not apply to a Claim by an
Indemnified Person arising out of or based upon a Violation which occurs in
reliance upon and in strict conformity with information furnished in writing to
the Company by such Indemnified Person expressly for use in the Registration
Statement or any amendment thereof or supplement thereto, if such prospectus was
timely made available by the Company to such Indemnified Person pursuant to
Section 3.3; and (ii) shall not apply to amounts paid in settlement of any Claim
if such settlement is effected without the prior written consent of the Company,
which consent shall not be unreasonably withheld or delayed. Such indemnity
shall remain in full force and effect regardless of any investigation made by or
on behalf of the Indemnified Person and shall survive the transfer of the
Registrable Securities by the Investors pursuant to Article 9. 

     6.2      Indemnification by
Investor. In connection with any Registration Statement in which an Investor
is participating, each such Investor agrees to severally and not jointly
indemnify, hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6.1, the Company, each of its directors, each of its
officers who signs the Registration Statement and each Person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act (each, an “Indemnified Party”), against any Claim or Indemnified
Damages to which any of them may become subject, under the Securities Act, the
Exchange Act. Canadian Securities Laws or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in strict conformity with written information furnished to the
Company by such Investor expressly for use in the Registration Statement or any
amendment thereof or supplement thereto and, subject to Section 6.3, such
Investor will reimburse any legal or other expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 6.2
and the agreement with respect to contribution contained in Article 7 shall not
apply to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that the Investor
shall be liable under this Section 6.2 for only that amount of a Claim or
Indemnified Damages as does not exceed the dollar amount of the net proceeds
received by such Investor as a result of the sale of Registrable Securities
pursuant to such Registration Statement. Such indemnity shall remain in full
force and effect regardless of any investigation made by or on behalf of such
Indemnified Party and shall survive the transfer of the Registrable Securities
by the Investors pursuant to Article 9. Notwithstanding anything to the contrary
contained herein, the indemnification agreement contained in this Section 6.2
with respect to any preliminary prospectus shall not inure to the benefit of any
Indemnified Party if the untrue statement or omission of material fact contained
in the preliminary prospectus was corrected on a timely basis in the prospectus,
as then amended or supplemented. 

10 

     6.3      Participation;
Cooperation. Promptly after receipt by an Indemnified Person or Indemnified
Party under this Article 6 of notice of the commencement of any action or
proceeding (including any governmental action or proceeding) involving a Claim,
such Indemnified Person or Indemnified Party shall, if a Claim in respect
thereof is to be made against any indemnifying party under this Article 6,
deliver to the indemnifying party a written notice of the commencement thereof,
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume control of the defense thereof with counsel
mutually satisfactory to the indemnifying party and the Indemnified Person or
the Indemnified Party, as the case may be; provided, however, that an
Indemnified Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for such
Indemnified Person or Indemnified Party to be paid by the indemnifying party,
if, in the reasonable opinion of counsel retained by the indemnifying party, the
representation by such counsel of the Indemnified Person or Indemnified Party
and the indemnifying party would be inappropriate due to actual or potential
differing interests between such Indemnified Person or Indemnified Party and any
other party represented by such counsel in such proceeding. In the case of an
Indemnified Person, legal counsel referred to in the proviso of the immediately
preceding sentence shall be selected by the Investors holding at least a
majority in interest of the Registrable Securities included in the Registration
Statement to which the Claim relates. The Indemnified Party or Indemnified
Person shall cooperate fully with the indemnifying party in connection with any
negotiation or defense of any such action or Claim by the indemnifying party and
shall furnish to the indemnifying party all information reasonably available to
the Indemnified Party or Indemnified Person that relates to such action or
Claim. The indemnifying party shall keep the Indemnified Party or Indemnified
Person reasonably apprised at all times as to the status of the defense or any
settlement negotiations with respect thereto. No indemnifying party shall be
liable for any settlement of any action, claim or proceeding effected without
its prior written consent, provided, however, that the indemnifying party shall
not unreasonably withhold, delay or condition its consent. No indemnifying party
shall, without the prior written consent of the Indemnified Party or Indemnified
Person, consent to entry of any judgment or enter into any settlement or other
compromise that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person of a
release from all liability in respect to such Claim or litigation, and such
settlement shall not include any admission as to fault on the part of the
Indemnified Party. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or corporations
relating to the matter for which indemnification has been made. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this Article 6,
except to the extent that the indemnifying party is materially prejudiced in its
ability to defend such action. 

     6.4      Payment of
Indemnification. The indemnification required by this Article 6 shall be
made by periodic payments of the amount thereof during the course of the
investigation or defense, as and when bills are received or Indemnified Damages
are incurred. 

11 

     6.5      Non-Exclusive Remedy.
The indemnity agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified Person
against the indemnifying party or others, and (ii) any liabilities the
indemnifying party may be subject to pursuant to the law. 

ARTICLE 7 

CONTRIBUTION 

               To the extent any indemnification by an indemnifying party is
prohibited or limited by law, the indemnifying party agrees to make the maximum
contribution with respect to any amounts for which it would otherwise be liable
under Article 6 to the fullest extent permitted by law; provided, however, that:
(i) no Person involved in the sale of Registrable Securities that is guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who was not
guilty of fraudulent misrepresentation; and (ii) contribution by any seller of
Registrable Securities shall be limited in amount to the net amount of proceeds
received by such seller from the sale of such Registrable Securities pursuant to
such Registration Statement. 

ARTICLE 8 

REPORTS UNDER THE EXCHANGE ACT

     8.1      With a view to making
available to the Investors the benefits of Rule 144 promulgated under the
Securities Act or any other similar rule or regulation of the SEC that may at
any time permit the Investors to sell securities of the Company to the public
without registration (“Rule 144”), the Company agrees to: 

               (a)      make and keep public
information available, as those terms are understood and defined in Rule 144;

               (b)      file with the SEC in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act so long as the Company remains subject to
such requirements and the filing of such reports and other documents is required
for the applicable provisions of Rule 144; and 

               (c)      furnish to each Investor so
long as such Investor owns Registrable Securities, promptly upon request, (i) a
written statement by the Company, if true, that it has complied with the
reporting requirements of Rule 144, the Securities Act and the Exchange Act, and
(ii) such other information as may be reasonably requested to permit the
Investors to sell such securities pursuant to Rule 144 without registration.

ARTICLE 9 

ASSIGNMENT OF REGISTRATION RIGHTS

               The rights under this Agreement shall be automatically
assignable by the Investors to any transferee of all or any portion of such
Investor’s Registrable Securities if: (i) the Investor agrees in writing with
the transferee or assignee to assign such rights, and a copy of such agreement
is furnished to the Company within a reasonable time after such assignment; (ii)
the Company is, within a reasonable time after such transfer or assignment,
furnished with written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such registration rights
are being transferred or assigned; (iii) immediately following such transfer or
assignment the further disposition of such securities by the transferee or
assignee is restricted under the Securities Act or applicable state securities
laws; (iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or assignee agrees
in writing with the Company to be bound by all of the provisions contained
herein; and (v) such transfer shall have been made in accordance with the
applicable requirements of the Subscription Agreements, and in accordance with
all applicable securities laws. 

12 

ARTICLE 10 

AMENDMENT OF REGISTRATION RIGHTS 

               Provisions of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of the Company
and the Required Holders. Any amendment or waiver effected in accordance with
this Article 10 shall be binding upon each Investor and the Company. No such
amendment shall be effective to the extent that it applies to less than all of
the holders of the Registrable Securities. No consideration shall be offered or
paid to any Person to amend or consent to a waiver or modification of any
provision of any of this Agreement unless the same consideration also is offered
to all of the parties to this Agreement. 

ARTICLE 11 

MISCELLANEOUS 

     11.1      Holders of Record. A
Person is deemed to be a holder of Registrable Securities whenever such Person
owns or is deemed to own of record such Registrable Securities. If the Company
receives conflicting instructions, notices or elections from two or more Persons
with respect to the same Registrable Securities, the Company shall act upon the
basis of instructions, notice or election received from the record owner of such
Registrable Securities. 

     11.2      Notices. Any notices,
consents, waivers or other communications required or permitted to be given
under the terms of this Agreement must be in writing and will be deemed to have
been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt,
when sent by facsimile (provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party); or (iii) one
Business Day after deposit with a nationally recognized overnight delivery
service, in each case properly addressed to the party to receive the same. The
addresses and facsimile numbers for such communications shall be: 

If to the Company:

Northern Dynasty Minerals Ltd.

15th Floor - 1040 West Georgia Street 
Vancouver, BC, Canada V6E 4H1

Fax: (604) 684-8092 
Attention: Trevor Thomas
[TrevorThomas@hdimining.com] 

If to the Purchasers as per Schedule or
as they may notify the Company.

With courtesy copies (which shall not
be required for valid notice) to counsel:

For Company: 
McMillan LLP 
1500
1055 West Georgia Street, 
Vancouver, BC, Canada 
V6E 4N7 
Fax 604 685
7084
Attention: Bernhard Zinkhofer, Esq.(Bernhard.Zinkhofer@mcmillan.ca) 

For Investors: 
Goodmans LLP

Bay Adelaide Centre 
333 Bay Street, Suite 3400 
Toronto, ON M5H 2S7

13 

Attention Bill Gorman, Esq. wgorman@goodmans.ca

and 

Haynes and Boone, LLP 
30
Rockefeller Plaza, 26th Floor 
New York, New York 10112 

Attention: Greg Kramer Esq.,
greg.kramer@haynesboone.com 

If to a Purchaser, to its address and facsimile number set
forth on the Schedule of Purchasers attached hereto, with copies to such
Purchaser’s representatives as set forth on the Schedule of Purchasers, or to
such other address and/or facsimile number and/or to the attention of such other
Person as the recipient party has specified by written notice given to each
other party five days prior to the effectiveness of such change. Written
confirmation of receipt (A) given by the recipient of such notice, consent,
waiver or other communication, (B) mechanically or electronically generated by
the sender’s facsimile machine containing the time, date, recipient facsimile
number and an image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a nationally recognized overnight
delivery service in accordance with clause (i), (ii) or (iii) above,
respectively. 

     11.3      No Waiver. Failure of
any party to exercise any right or remedy under this Agreement or otherwise, or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof. 

     11.4      Governing Law; Waiver of
Jury Trial. This Registration Rights Agreement shall be governed by and
construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein. Each Investor hereby irrevocably attorns to
the non-exclusive jurisdiction of the courts of the Province of Ontario with
respect to any matters arising out of this Registration Rights Agreement .
EACH PARTY HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER OR IN
CONNECTION HEREWITH OR ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION
CONTEMPLATED HEREBY. 

     11.5      Entire Agreement.
This Agreement, the Subscription Agreements and the agreements entered into
pursuant to the Subscription Agreement and the instruments referenced herein and
therein constitute the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof. There are no restrictions, promises,
warranties or undertakings, other than those set forth or referred to herein and
therein. This Agreement, the other Transaction Documents and the instruments
referenced herein and therein supersede all prior agreements and understandings
among the parties hereto with respect to the subject matter hereof and thereof.

     11.6      Successors and
Assigns. Subject to the requirements of Article 9, this Agreement shall
inure to the benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto. 

     11.7      Headings. The
headings in this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof. 

     11.8      Counterparts; Facsimile
Signatures. This Agreement may be executed in identical counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same agreement. This Agreement, once executed by a party, may be delivered
to the other party hereto by facsimile transmission of a copy of this Agreement
bearing the signature of the party so delivering this Agreement. 

     11.9      Further Assurances; No
Inconsistent Agreements. Each party shall do and perform, or cause to be
done and performed, all such further acts and things, and shall execute and
deliver all such other agreements, certificates, instruments and documents, as any other party may
reasonably request in order to carry out the intent and accomplish the purposes
of this Agreement and the consummation of the transactions contemplated hereby.
Neither the Company nor any of its subsidiaries (as such term is defined in the
Business Corporations Act (British Columbia)) (the “subsidiaries”)
has entered, as of the date hereof, nor shall the Company or any of the
Subsidiaries, on or after the date hereof, enter into any agreement with respect
to its securities, that would have the effect of impairing the rights granted to
the Investors in this Agreement or otherwise conflicts with the provisions
hereof. 

14 

     11.10      Required Consent.
All consents and other determinations required to be made by the Investors
pursuant to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Holders. 

     11.11      Construction. The
language used in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict construction will
be applied against any party.

     11.12      No Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties
hereto and their respective permitted successors and assigns, and is not for the
benefit of, nor may any provision hereof be enforced by, any other Person,
except to the extent set forth in Article 6. 

     11.13      Several Liability.
The obligations of each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this Agreement is
intended to confer any obligations on any Investor vis-à-vis any other Investor.
Nothing contained herein, and no action taken by any Investor hereto, shall be
deemed to constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity or group, or create a presumption that the
Investors are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated herein. 

[Signature Page Follows] 

IN WITNESS WHEREOF, each Purchaser and the Company have
caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above. 

COMPANY: 

NORTHERN DYNASTY MINERALS LTD.

	 	By:            
      __________________________________
	 	 
	 	           
             Name: 
	 	 
	 	           
             Title: 

[Signature Page to Registration Rights Agreement] 

IN WITNESS WHEREOF, each Purchaser and the Company have
caused their respective signature page to this Registration Rights Agreement to
be duly executed as of the date first written above. 

PURCHASER: 

	 	By:            
      __________________________________
	 	 
	 	           
             Name: 
	 	 
	 	           
             Title: 

[Purchaser Signature Page to Registration Rights Agreement] 

SCHEDULE OF PURCHASERS 

	  	Purchaser’s Address 	Purchaser’s Representative’s
  
	  	  	Address, email 
	Purchaser Name 	and Facsimile Number and email
    	  
	  	  	and Facsimile Number

EXHIBIT A 

SELLING STOCKHOLDERS 

For additional information regarding the issuance of the Common
Shares, see “Private Placement of Special Warrants” above. We are registering
the shares of Common Shares in order to permit the selling stockholders to offer
the shares for resale from time to time. Except for the issuance of the Special
Warrants pursuant to the Subscription Agreements and the conversion of these
Special Warrants into Common Shares, the selling stockholders have not had any
material relationship with us within the past three years. 

The table below lists the selling stockholders and other
information regarding the beneficial ownership of the shares of Common Shares by
each of the selling stockholders. The second column lists the number of shares
of Common Shares beneficially owned by each selling stockholder, based on its
ownership of the Special Warrants issued pursuant to the Subscription Agreements
and assuming full conversion of such Special Warrants, as of January ___, 2015.
The third column lists the shares of Common Shares being offered by this
prospectus by the selling stockholders. The fourth column assumes the sale of
all of the shares offered by the selling stockholders pursuant to this
prospectus. The selling stockholders may sell all, some or none of their shares
in this offering. See “Plan of Distribution.” 

	  	  	Maximum Number of 	  
	  	Number of Shares 	Shares 	  
	Name of Selling 	Beneficially Owned Prior 	to be Sold Pursuant to 	Number of Shares 
	Stockholder 	to Offering 	this Prospectus 	Owned After Offering
  

PLAN OF DISTRIBUTION 

We are registering the shares of Common Shares to permit the
resale of these shares of Common Shares by the selling stockholders from time to
time after the date of this prospectus. We will not receive any of the proceeds
from the sale by the selling stockholders of the shares of Common Shares. 

The selling stockholders may sell all or a portion of the
shares of Common Shares beneficially owned by them and offered hereby from time
to time directly or through one or more underwriters, broker-dealers or agents.
If the shares of Common Shares are sold through underwriters or broker-dealers,
the selling stockholders will be responsible for underwriting discounts or
commissions or agent’s commissions. The shares of Common Shares may be sold in
one or more transactions at fixed prices, at prevailing market prices at the
time of the sale, at varying prices determined at the time of sale, or at
negotiated prices. These sales may be effected in transactions, which may
involve crosses or block transactions,

	
  on any national securities exchange or quotation service on which the
  securities may be listed or quoted at the time of sale; 

  
	
  in the over-the-counter market; 

  
	
  in transactions otherwise than on these exchanges or systems or in the
  over-the-counter market; 

  
	
  through the writing of options, whether such options are listed on an
  options exchange or otherwise; 

  
	
  ordinary brokerage transactions and transactions in which the broker-dealer
  solicits purchasers; 

  
	
  block trades in which the broker-dealer will attempt to sell the shares as
  agent but may position and resell a portion of the block as principal to
  facilitate the transaction; 

  
	
  purchases by a broker-dealer as principal and resale by the broker-dealer
  for its account; 

  
	
  an exchange distribution in accordance with the rules of the applicable
  exchange; 

  
	
  privately negotiated transactions; 

  
	
  short sales; 

  
	
  sales pursuant to Rule 144; 

  
	
  broker-dealers may agree with the selling stockholders to sell a specified
  number of such shares at a stipulated price per share; 

  
	
  a combination of any such methods of sale; and 

  
	
  any other method permitted pursuant to applicable law. 

If the selling stockholders effect such transactions by selling
shares of Common Shares to or through underwriters, broker-dealers or agents,
such underwriters, broker-dealers or agents may receive commissions in the form
of discounts, concessions or commissions from the selling stockholders or
commissions from purchasers of the shares of Common Shares for whom they may act
as agent or to whom they may sell as principal (which discounts, concessions or
commissions as to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved). In connection
with sales of the shares of Common Shares or otherwise, the selling stockholders
may enter into hedging transactions with broker-dealers, which may in turn
engage in short sales of the shares of Common Shares in the course of hedging in
positions they assume. The selling stockholders may also sell shares of Common
Shares short and deliver shares of Common Shares covered by this prospectus to
close out short positions and to return borrowed shares in connection with such
short sales. The selling stockholders may also loan or pledge shares of Common
Shares to broker-dealers that in turn may sell such shares. 

The selling stockholders may pledge or grant a security
interest in some or all of the warrants or notes owned by them and, if they
default in the performance of their secured obligations, the pledgees or secured
parties may offer and sell the shares of Common Shares from time to time
pursuant to this prospectus or any amendment to this prospectus under Rule
424(b)(3) or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling stockholders to include the
pledgee, transferee or other successors in interest as selling stockholders
under this prospectus. The selling stockholders also may transfer and donate the
shares of Common Shares in other circumstances in which case the transferees,
donees, pledgees or other successors in interest will be the selling beneficial
owners for purposes of this prospectus. 

At the time a particular offering of the shares of Common
Shares is made, a prospectus supplement, if required, will be distributed which
will set forth the aggregate amount of shares of Common Shares being offered and
the terms of the offering, including the name or names of any broker-dealers or
agents, any discounts, commissions and other terms constituting compensation
from the selling stockholders and any discounts, commissions or concessions
allowed or reallowed or paid to broker-dealers. 

Under the securities laws of some states, the shares of Common
Shares may be sold in such states only through registered or licensed brokers or
dealers. In addition, in some states the shares of Common Shares may not be sold
unless such shares have been registered or qualified for sale in such state or
an exemption from registration or qualification is available and is complied
with. 

There can be no assurance that any selling stockholder will
sell any or all of the shares of Common Shares registered pursuant to the
registration statement, of which this prospectus forms a part. 

The selling stockholders and any other person participating in
such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder,
including, without limitation, to the extent applicable, Regulation M of the
Exchange Act, which may limit the timing of purchases and sales of any of the
shares of Common Shares by the selling stockholders and any other participating
person. To the extent applicable Regulation M may also restrict the ability of
any person engaged in the distribution of the shares of Common Shares to engage
in market-making activities with respect to the shares of Common Shares. All of
the foregoing may affect the marketability of the shares of Common Shares and
the ability of any person or entity to engage in market-making activities with
respect to the shares of Common Shares. 

We will pay all expenses of the registration of the shares of
Common Shares pursuant to the registration rights agreements, estimated to be $[
] in total, including, without limitation, Securities and Exchange Commission
filing fees and expenses of compliance with state securities or “blue sky” laws;
provided, however, that a selling stockholder will pay all underwriting
discounts and selling commissions, if any. We will indemnify the selling
stockholders against liabilities, including some liabilities under the
Securities Act, in accordance with the registration rights agreements, or the
selling stockholders will be entitled to contribution. We may be indemnified by
the selling stockholders against civil liabilities, including liabilities under
the Securities Act, that may arise from any written information furnished to us
by the selling stockholder specifically for use in this prospectus, in
accordance with the related registration rights agreements, or we may be
entitled to contribution. 

Once sold under the registration statement, of which this
prospectus forms a part, the shares of Common Shares will be freely tradable
under the Securities Act in the hands of persons other than our affiliates.

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