Document:

Exhibit 4.1

 

NOVAGOLD RESOURCES INC.

 

 

and

 

 

COMPUTERSHARE
INVESTOR SERVICES INC.

 

as Rights
Agent

 

 

 

SHAREHOLDER
RIGHTS PLAN AGREEMENT

April 21, 2006

 

 

 

BLAKE, CASSELS & GRAYDON LLP

 

 

TABLE OF CONTENTS

 

	
  ARTICLE 1

  
	
  INTERPRETATION

  
	
   

  	
   

  	
   

  
	
  Section 1.1

  	
  Certain Definitions

  	
  1

  
	
  Section 1.2

  	
  Currency

  	
  11

  
	
  Section 1.3

  	
  Headings

  	
  11

  
	
  Section 1.4

  	
  Number and Gender

  	
  11

  
	
  Section 1.5

  	
  Acting Jointly or in Concert

  	
  12

  
	
  Section 1.6

  	
  Statutory References

  	
  12

  
	
   

  	
   

  	
   

  
	
  ARTICLE 2

  
	
  THE RIGHTS

  
	
   

  	
   

  	
   

  
	
  Section 2.1

  	
  Legend on Common Share Certificates

  	
  12

  
	
  Section 2.2

  	
  Initial Exercise Price; Exercise of Rights;
  Detachment of Rights

  	
  12

  
	
  Section 2.3

  	
  Adjustments to Exercise Price; Number of
  Rights

  	
  15

  
	
  Section 2.4

  	
  Date on Which Exercise is Effective

  	
  19

  
	
  Section 2.5

  	
  Execution, Authentication, Delivery and Dating
  of Rights Certificates

  	
  19

  
	
  Section 2.6

  	
  Registration, Registration of Transfer and
  Exchange

  	
  20

  
	
  Section 2.7

  	
  Mutilated, Destroyed, Lost and Stolen Rights
  Certificates

  	
  20

  
	
  Section 2.8

  	
  Persons Deemed Owners

  	
  21

  
	
  Section 2.9

  	
  Delivery and Cancellation of Rights
  Certificates

  	
  21

  
	
  Section 2.10

  	
  Agreement of Rights Holders

  	
  22

  
	
  Section 2.11

  	
  Rights Certificate Holder not Deemed a
  Shareholder

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE 3

  
	
  ADJUSTMENTS TO THE
  RIGHTS IN THE EVENT OF CERTAIN TRANSACTIONS

  
	
   

  	
   

  	
   

  
	
  Section 3.1

  	
  Flip-in Event

  	
  23

  
	
   

  	
   

  	
   

  
	
  ARTICLE 4

  
	
  THE RIGHTS AGENT

  
	
   

  	
   

  	
   

  
	
  Section 4.1

  	
  General

  	
  24

  
	
  Section 4.2

  	
  Merger or Amalgamation or Change of Name of
  Rights Agent

  	
  25

  
	
  Section 4.3

  	
  Duties of Rights Agent

  	
  25

  
	
  Section 4.4

  	
  Change of Rights Agent

  	
  27

  
	
   

  	
   

  	
   

  
	
  ARTICLE 5

  
	
  MISCELLANEOUS

  
	
   

  	
   

  	
   

  
	
  Section 5.1

  	
  Redemption and Waiver

  	
  27

  
	
  Section 5.2

  	
  Expiration

  	
  29

  
	
  Section 5.3

  	
  Issuance of New Rights Certificates

  	
  29

  
	
  Section 5.4

  	
  Supplements and Amendments

  	
  29

  
	
  Section 5.5

  	
  Fractional Rights and Fractional Shares

  	
  31

  
	
  Section 5.6

  	
  Rights of Action

  	
  31

  

 

i

 

	
  Section 5.7

  	
  Notice of Proposed Actions

  	
  31

  
	
  Section 5.8

  	
  Notices

  	
  31

  
	
  Section 5.9

  	
  Successors

  	
  32

  
	
  Section 5.10

  	
  Benefits of this Agreement

  	
  32

  
	
  Section 5.11

  	
  Governing Law

  	
  32

  
	
  Section 5.12

  	
  Severability

  	
  32

  
	
  Section 5.13

  	
  Effective Date

  	
  33

  
	
  Section 5.14

  	
  Determinations and Actions by the Board of
  Directors

  	
  33

  
	
  Section 5.15

  	
  Rights of Board, Corporation and Offeror

  	
  33

  
	
  Section 5.16

  	
  Regulatory Approvals

  	
  33

  
	
  Section 5.17

  	
  Declaration as to Non-Canadian Holders

  	
  33

  
	
  Section 5.18

  	
  Time of the Essence

  	
  34

  
	
  Section 5.19

  	
  Execution in Counterparts

  	
  34

  
	
   

  	
   

  	
   

  
	
  SCHEDULE 

  
	
   

  	
   

  	
   

  
	
  SCHEDULE
  2.2(3)

  	
   

  

 

ii

 

SHAREHOLDER RIGHTS PLAN AGREEMENT

 

THIS
AGREEMENT dated April 21, 2006 between NovaGold Resources Inc. (the “Corporation”),
a corporation incorporated under the laws of Nova Scotia, and, Computershare Investor Services Inc.,
a trust company existing under the laws of Canada, as rights agent (the “Rights Agent”, which term shall include any successor
Rights Agent hereunder).

 

WHEREAS:

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

ARTICLE 1

INTERPRETATION

 

Section 1.1                Certain
Definitions.

 

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

 

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

 

(i)            the
Corporation or any Subsidiary of the Corporation;

 

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

 

 

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

 

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

 

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

 

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

 

(c)           “Agreement” means this agreement as
amended, modified or supplemented from time to time.

 

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

 

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

 

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

 

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

 

2

 

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

 

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

 

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

 

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

 

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

 

3

 

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

 

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

 

(4)           such
Person is a Client of a Fund Manager and such security is owned at law or in
equity by the Fund Manager, or such Person is an Estate Account or an Other
Account of a Trust Company and such security is owned at law or in equity by
the Trust Company, or such Person is a Pension Fund and such security is owned
at law or in equity by the Independent Person; or

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

4

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

5

 

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

 

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

 

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

 

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

 

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

 

(u)           “Exempt Acquisition” means an acquisition:

 

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

 

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

 

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

 

(iv)          pursuant
to a distribution to the public by the Corporation of Voting Shares or
Convertible Securities made pursuant to a prospectus provided that the Person
in question does not thereby acquire a greater percentage of Voting Shares, or
Convertible Securities representing the right to acquire Voting Shares of such
class, than the percentage of Voting Shares of the class Beneficially Owned
immediately prior to such acquisition; or

 

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

 

6

 

aggregate number of outstanding Voting Shares immediately
prior to the private placement or securities exchange takeover bid).

 

(v)           “Exercise Price” means, as of any date, the
price at which a holder may purchase the securities issuable upon exercise of
one whole Right. Until adjustment thereof in accordance with the terms hereof,
the Exercise Price shall be $50.

 

(w)          “Expiration Time” means the earlier of: (i) the
Termination Time, and (ii) the close of business on the date immediately
following the date of the Corporation’s annual meeting of shareholders to be
held in 2009.

 

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

 

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

 

(z)            “Market Price” per security of any securities on any date of
determination shall mean the average of the daily Closing Price Per Security of
such securities (determined as described below) on each of the 20 consecutive
Trading Days through and including the Trading Day immediately preceding such
date; provided, however, that if an event of a type analogous to any of the
events described in Section 2.3 hereof shall have caused the price used to
determine the Closing Price Per Security on any Trading Day not to be fully
comparable with the price used to determine the Closing Price Per Security on
such date of determination or, if the date of determination is not a Trading
Day, on the immediately preceding Trading Day, each such price so used shall be
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in order to make it fully comparable with
the price per security used to determine the Closing Price Per Security on such
date of determination or, if the date of determination is not a Trading Day, on
the immediately preceding Trading Day. The “Closing Price Per Security” of any
securities on any date shall be:

 

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

 

7

 

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

 

(iii)          if
the securities are not listed or admitted to trading as contemplated in clause
1.1(z)(i) or (ii), the average of the closing bid and asked prices as furnished
by a professional market maker making a market in the securities provided,
however, that if on any such date the Closing Price Per Security cannot be
determined in accordance with the foregoing, the Closing Price Per Security of
such securities on such date shall mean the fair value per share of such
securities on such date as determined in good faith by an internationally
recognized investment dealer or investment banker with respect to the fair
value per share of such securities.

 

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

 

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

 

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

 

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

 

(dd)         “Offer to Acquire” shall include:

 

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

 

(ii)           an
acceptance of an offer to sell, whether or not such offer to sell has been
solicited;

 

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

 

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

 

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

 

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

 

8

 

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

 

(ii)           the
Take-over Bid shall contain, and the take up and payment for securities
tendered or deposited thereunder shall be subject to, an irrevocable and
unqualified condition that no Voting Shares shall be taken up or paid for
pursuant to the Take-over Bid prior to the close of business on the date which
is not less than sixty (60) days following the date of the Take-over Bid and
that no Voting Shares shall be taken up or paid for pursuant to the Take-over
Bid unless, at such date, more than fifty percent (50%) of the then outstanding
Voting Shares held by Independent Shareholders have been deposited to the
Take-over Bid and not withdrawn;

 

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

 

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

 

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

 

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

 

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

 

(jj)           “Record Time” means the close of business
on April 21, 2006.

 

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

 

(ll)           “regular periodic cash dividends”
means cash dividends paid at regular intervals in any fiscal year of the
Corporation to the extent that such cash dividends do not exceed, in the
aggregate, the greatest of:

 

9

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(i)            it
is controlled by:

 

(A)          that
other;

 

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

 

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

 

10

 

(ii)           it
is a Subsidiary of a corporation that is that other’s Subsidiary.

 

(tt)           “Take-over Bid” means an Offer to Acquire
Voting Shares of the Corporation or securities convertible into or exchangeable
for or carrying a right to purchase Voting Shares of the Corporation where the
Voting Shares of the Corporation subject to the Offer to Acquire, together with
the Voting Shares of the Corporation into which the securities subject to the
Offer to Acquire are convertible, exchangeable or exercisable, and the Offeror’s
Securities, constitute in the aggregate twenty percent (20%) or more of the
outstanding Voting Shares of the Corporation at the date of the Offer to
Acquire.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Section 1.2                Currency.

 

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

 

Section 1.3                Headings.

 

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

 

Section 1.4                Number
and Gender.

 

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

 

11

 

Section 1.5                Acting
Jointly or in Concert.

 

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

 

Section 1.6                Statutory
References.

 

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

 

ARTICLE 2

THE RIGHTS

 

Section 2.1                Legend
on Common Share Certificates.

 

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

 

Until the Separation Time (defined in the
Rights Agreement referred to below), this certificate also evidences rights of
the holder described in a Shareholder Rights Plan Agreement, dated April 21,
2006, as amended and restated from time to time (the “Rights
Agreement”), between the Corporation and Computershare Investor
Services Inc. as Rights Agent, a copy of which is on file at the principal
executive offices of the Corporation and is available upon written request. Under
certain circumstances set out in the Rights Agreement, the rights may be
redeemed, may expire, may become null and void or may be evidenced by separate
certificates and no longer evidenced by this certificate.

 

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

 

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

 

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

 

12

 

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

 

(3)           Delivery of Rights Certificate and disclosure statement.
From and after the Separation Time and prior to the Expiration Time, (i) the
Rights shall be exercisable, and (ii) the registration and transfer of the
Rights shall be separate from, and independent of, Common Shares. Promptly
following the Separation Time, the Corporation will prepare and the Rights
Agent will mail to each holder of record of Rights as of the Separation Time
(other than an Acquiring Person and, in respect of any Rights Beneficially
Owned by such Acquiring Person which are not held of record by such Acquiring
Person, the holder of record of such Rights (a “Nominee”))
at such holder’s address as shown by the records of the Corporation (the
Corporation hereby agreeing to furnish copies of such records to the Rights
Agent for this purpose), (A) a certificate (a “Rights
Certificate”) in substantially the form of Schedule 2.2(3) hereto
appropriately completed, representing the number of Rights held by such holder
at the Separation Time, and having such marks of identification or designation
and such legends, summaries or endorsements printed thereon as the Corporation
may deem appropriate and as are not inconsistent with the provisions of this
Agreement, or as may be required to comply with any law, rule, regulation or
judicial or administrative order or with any rule or regulation made pursuant
thereto or with any rule or regulation of any self-regulatory organization,
stock exchange or quotation system on which the Rights may from time to time be
listed or traded, or to conform to usage, and (B) a disclosure statement
describing the Rights, provided that a Nominee shall be sent the materials
provided for in (A) and (B) in respect of all Common Shares held of record by
it which are not Beneficially Owned by an Acquiring Person. In order for the
Corporation to determine whether any Person is holding Common Shares which are
Beneficially Owned by another Person, the Corporation may require such first
mentioned Person to furnish it with such information and documentation as the
Corporation considers advisable.

 

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

 

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

 

13

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(d)           cause to be reserved and kept available out of
its authorized and unissued Common Shares, the number of Common Shares that, as
provided in this Agreement, will from time to time be sufficient to permit the
exercise in full of all outstanding Rights;

 

(e)           pay
when due and payable any and all Canadian federal and provincial transfer taxes
and charges (not including any income or capital taxes of the holder or
exercising holder or any liability of the Corporation to withhold tax) which
may be payable in respect of the original issuance or delivery of the Rights
Certificates, provided that the Corporation shall not be required to pay any
transfer tax or charge which may be payable in respect of any transfer involved
in the transfer or delivery of Rights Certificates or the issuance or

 

14

 

delivery of certificates for shares or other
securities in a name other than that of the registered holder of the Rights
being transferred or exercised; and

 

(f)            after
the Separation Time, except as permitted by Sections 5.1 or 5.4 hereof, not
take (or permit any Subsidiary to take) any action if at the time such action
is taken it is reasonably foreseeable that such action will diminish
substantially or otherwise eliminate the benefits intended to be afforded by
the Rights.

 

Section 2.3                Adjustments
to Exercise Price; Number of Rights.

 

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

 

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

 

(i)            declare
or pay a dividend on the Common Shares payable in Common Shares (or other
securities exchangeable for or convertible into or giving a right to acquire
Common Shares or other securities) other than the issue of Common Shares or
such exchangeable or convertible securities to holders of Common Shares in lieu
of but not in an amount which exceeds the value of regular periodic cash
dividends;

 

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

 

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

 

(iv)          issue
any Common Shares (or other securities exchangeable for or convertible into or
giving a right to acquire Common Shares or other securities) in respect of, in
lieu of or in exchange for existing Common Shares in a reclassification,
amalgamation, merger, statutory arrangement, consolidation or otherwise, except
as otherwise provided in this Section 2.3;

 

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

 

(b)           Adjustment to Exercise Price upon issue of rights, options and warrants.
In the event the Corporation shall at any
time after the Record Time fix a record date for the

 

15

 

issuance of rights, options or warrants to all
holders of Common Shares entitling them (for a period expiring within
forty-five (45) calendar days after such record date) to subscribe for or
purchase Common Shares (or shares having the same rights, privileges and
preferences as Common Shares (“equivalent common shares”))
or securities convertible into or exchangeable for or carrying a right to
purchase Common Shares or equivalent common shares at a price per Common Share
or per equivalent common share (or having a conversion price or exchange price
or exercise price per share, if a security convertible into or exchangeable for
or carrying a right to purchase Common Shares or equivalent common shares) less
than ninety percent (90%) of the Market Price per Common Share on such record
date, the Exercise Price to be in effect after such record date shall be
determined by multiplying the Exercise Price in effect immediately prior to such
record date by a fraction, the numerator of which shall be the number of Common
Shares outstanding on such record date, plus the number of Common Shares that
the aggregate offering price of the total number of Common Shares and/or
equivalent common shares so to be offered (and/or the aggregate initial
conversion, exchange or exercise price of the convertible or exchangeable
securities or rights so to be offered, including the price required to be paid
to purchase such convertible or exchangeable securities or rights so to be
offered) would purchase at such Market Price per Common Share, and the
denominator of which shall be the number of Common Shares outstanding on such
record date, plus the number of additional Common Shares and/or equivalent
common shares to be offered for subscription or purchase (or into which the
convertible or exchangeable securities are initially convertible, exchangeable
or exercisable). In case such subscription price may be paid by delivery of
consideration, part or all of which may be in a form other than cash, the value
of such consideration shall be as determined in good faith by the Board of
Directors, whose determination shall be described in a certificate filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of
the Rights. Such adjustment shall be made successively whenever such a record
date is fixed and, in the event that such rights or warrants are not so issued,
the Exercise Price shall be adjusted to be the Exercise Price which would then
be in effect if such record date had not been fixed.

 

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

 

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

 

16

 

Section 2.3(b) above), the Exercise Price
to be in effect after such record date shall be determined by multiplying the
Exercise Price in effect immediately prior to such record date by a fraction,
the numerator of which shall be the Market Price per Common Share on such
record date, less the fair market value (as determined in good faith by the
Board of Directors, whose determination shall be described in a statement filed
with the Rights Agent) of the portion of the cash, assets or evidences of
indebtedness so to be distributed or of such subscription rights, options or
warrants applicable to a Common Share and the denominator of which shall be
such Market Price per Common Share. Such adjustments shall be made successively
whenever such a record date is fixed, and in the event that such distribution
is not so made, the Exercise Price shall be adjusted to be the Exercise Price
which would have been in effect if such record date had not been fixed.

 

(d)           De minimis threshold for adjustment to Exercise Price. Notwithstanding
anything herein to the contrary, no adjustment in the Exercise Price shall be
required unless such adjustment would require an increase or decrease of at
least one percent (1%) in the Exercise Price; provided, however, that any
adjustments which by reason of this Section 2.3(d) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 2.3 shall be made to the
nearest cent or to the nearest one-hundredth of a Common Share or other share, as
the case may be. Notwithstanding the first sentence of this
Section 2.3(d), any adjustment required by this Section 2.3 shall be
made no later than the earlier of (i) three (3) years from the date of the
transaction which mandates such adjustment or (ii) the Expiration Time.

 

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

 

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

 

(g)           Rights to evidence right to purchase Common Shares at adjusted Exercise
Price. Each Right originally issued by the
Corporation subsequent to any adjustment made to

 

17

 

the Exercise Price hereunder shall evidence the
right to purchase, at the adjusted Exercise Price, the number of Common Shares
purchasable from time to time hereunder upon exercise of such Right, all
subject to further adjustment as provided herein.

 

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

 

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

 

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

 

18

 

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

 

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

 

(m)          Notification of Rights Agent. Whenever
an adjustment to the Exercise Price or a change in the securities purchasable
upon exercise of the Rights is made at any time after the Separation Time
pursuant to this Section 2.3, the Corporation shall promptly:

 

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

 

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

 

Section 2.4                Date
on Which Exercise is Effective.

 

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

 

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

 

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

 

19

 

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

 

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

 

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

 

Section 2.6                Registration,
Registration of Transfer and Exchange.

 

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

 

After the Separation Time and prior to the
Expiration Time, upon surrender for registration of transfer or exchange of any
Rights Certificate and subject to the provisions of Section 2.6(3) below
and the other provisions of this Agreement, the Corporation will execute and
the Rights Agent will countersign, register and deliver, in the name of the
holder or the designated transferee or transferees as required pursuant to the
holder’s instructions, one or more new Rights Certificates evidencing the same
aggregate number of Rights as did the Rights Certificates so surrendered.

 

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

 

(3)           Every
Rights Certificate surrendered for registration of transfer or exchange shall
be duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Corporation or the Rights Agent, as the case may be, duly
executed by the registered holder thereof or such holder’s attorney duly
authorized in writing. As a condition to the issuance of any new Rights
Certificate under this Section 2.6, the Corporation or the Rights Agent
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and the Corporation
may require payment of a sum sufficient to cover any other expenses (including
the fees and expenses of the Rights Agent) in connection therewith.

 

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

 

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

 

20

 

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

 

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

 

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

 

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

 

Section 2.8                Persons
Deemed Owners.

 

Prior to due
presentment of a Rights Certificate (or, prior to the Separation Time, the
associated Common Share certificate) for registration of transfer, the
Corporation, the Rights Agent and any agent of the Corporation or the Rights
Agent shall be entitled to deem and treat the person in whose name a Rights
Certificate (or, prior to the Separation Time, the associated Common Share certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
for all purposes whatsoever. As used in this Agreement, unless the context
otherwise requires, the term “holder” of any
Rights shall mean the registered holder of such Rights (or, prior to the
Separation Time, the associated Common Shares).

 

Section 2.9                Delivery
and Cancellation of Rights Certificates.

 

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

 

21

 

Section 2.10         Agreement
of Rights Holders.

 

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

 

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

 

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

 

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

 

(d)           that
prior to due presentment of a Rights Certificate (or, prior to the Separation
Time, the associated Common Share certificate) for registration of transfer,
the Corporation, the Rights Agent and any agent of the Corporation or the
Rights Agent shall be entitled to deem and treat the person in whose name the
Rights Certificate (or prior to the Separation Time, the associated Common
Share certificate) is registered as the absolute owner thereof and of the
Rights evidenced thereby (notwithstanding any notations of ownership or writing
on such Rights Certificate or the associated Common Share certificate made by
anyone other than the Corporation or the Rights Agent) for all purposes
whatsoever, and neither the Corporation nor the Rights Agent shall be affected
by any notice to the contrary;

 

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

 

(f)            that,
in accordance with Section 5.4 hereof, without the approval of any holder
of Rights and upon the sole authority of the Board of Directors acting in good
faith this Agreement may be supplemented or amended from time to time
pursuant to and as provided herein; and

 

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

 

Section 2.11         Rights
Certificate Holder not Deemed a Shareholder.

 

No holder, as such, of any Rights or Rights Certificate
shall be entitled to vote, receive dividends or be deemed for any purpose
whatsoever the holder of any Common Share or any other share or security of the
Corporation which may at any time be issuable on the exercise of the
Rights represented thereby, nor shall anything contained herein or in any
Rights Certificate be construed or deemed to confer upon the holder of any
Right or Rights Certificate, as such, any of the rights, titles, benefits or
privileges of a holder of Common Shares or any other shares or securities of
the Corporation or any right to vote at any

 

22

 

meeting of shareholders of the Corporation
whether for the election of directors or otherwise or upon any matter submitted
to holders of shares of the Corporation at any meeting thereof, or to give or
withhold consent to any action of the Corporation, or to receive notice of any meeting
or other action affecting any holder of Common Shares or any other shares or
securities of the Corporation except as expressly provided herein, or to
receive dividends, distributions or subscription rights, or otherwise, until
the Right or Rights evidenced by Rights Certificates shall have been duly
exercised in accordance with the terms and provisions hereof.

 

ARTICLE 3

ADJUSTMENTS TO THE RIGHTS IN THE EVENT
OF CERTAIN TRANSACTIONS

 

Section 3.1            Flip-in
Event.

 

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

 

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

 

(3)           Any
Rights Certificate that represents Rights Beneficially Owned by a Person
described in either clause 3.1(2)(i) or (ii), and any Rights Certificate
issued upon transfer, exchange, replacement or adjustment of any other Rights
Certificate referred to in this sentence, shall contain the following legend:

 

The Rights represented by this
Rights Certificate were issued to a Person who was an Acquiring Person or an
Affiliate or an Associate of an Acquiring Person (all capitalized terms used herein
have the meaning given to such terms in the Shareholder Rights Plan Agreement,
dated January 17, 2006,
as amended and

 

23

 

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

 

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

 

ARTICLE 4

THE RIGHTS AGENT

 

Section 4.1            General.

 

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

 

(2)           The
Rights Agent shall be protected from and shall incur no liability for or in
respect of any action taken, suffered or omitted by it in connection with its
administration of this Agreement in reliance upon any certificate for Common
Shares or any Rights Certificate or certificate for other securities of the
Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document believed by it to be genuine and to be
signed, executed and, where necessary, verified or acknowledged, by the proper
Person or Persons.

 

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

 

24

 

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

 

(1)           Any
corporation into which the Rights Agent or any successor Rights Agent may be
merged or amalgamated or with which it may be consolidated, or any
corporation resulting from any merger, amalgamation, statutory arrangement or
consolidation to which the Rights Agent or any successor Rights Agent is a
party, or any corporation succeeding to the shareholder or stockholder services
business of the Rights Agent or any successor Rights Agent, will be the
successor to the Rights Agent under this Agreement without the execution or
filing of any paper or any further act on the part of any of the parties
hereto, provided that such corporation would be eligible for appointment as a
successor Rights Agent under the provisions of Section 4.4 hereof. In case
at the time such successor Rights Agent succeeds to the agency created by this
Agreement any of the Rights Certificates have been countersigned but not
delivered, any such successor Rights Agent may adopt the countersignature
of the predecessor Rights Agent and deliver such Rights Certificates so
countersigned; and in case at that time any of the Rights Certificates have not
been countersigned, any successor Rights Agent may countersign such Rights
Certificates either in the name of the predecessor Rights Agent or in the name
of the successor Rights Agent; and in all such cases such Rights Certificates
will have the full force provided in the Rights Certificates and in this
Agreement.

 

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

 

Section 4.3            Duties
of Rights Agent.

 

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

 

(a)           The
Rights Agent may retain and consult with legal counsel (who may be
legal counsel for the Corporation) and the opinion of such counsel will be full
and complete authorization and protection to the Rights Agent as to any action
taken or omitted to be taken by it in good faith and in accordance with such
opinion. Subject to the prior written consent of the Corporation, which consent
shall not be unreasonably withheld, the Rights Agent may also consult with
such other experts as the Rights Agent shall consider necessary or appropriate
to properly carry out the duties and obligations imposed under this Agreement
(at the expense of the Corporation) and the Rights Agent shall be entitled to
act and rely in good faith on the advice of any such expert.

 

(b)           Whenever
in the performance of its duties under this Agreement the Rights Agent deems it
necessary or desirable that any fact or matter be proved or established by the
Corporation prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed to be conclusively proven and established by a
certificate signed by a person believed by the Rights Agent to be the Chairman
of the Board, the Chief Executive Officer, the Chief Operating Officer or the
Chief Financial Officer of the Corporation and delivered to the Rights Agent;
and such certificate will be full authorization to the Rights Agent for any

 

25

 

action taken or suffered
in good faith by it under the provisions of this Agreement in reliance upon
such certificate.

 

(c)           The
Rights Agent will be liable hereunder only for events which are the result of
its own negligence, bad faith or wilful misconduct and that of its officers,
directors and employees.

 

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

 

(e)           The
Rights Agent will not be under any responsibility in respect of the validity of
this Agreement or the execution and delivery hereof (except the due
authorization, execution and delivery hereof by the Rights Agent) or in respect
of the validity or execution of any Common Share certificate or Rights
Certificate (except its countersignature thereof); nor will it be responsible
for any breach by the Corporation of any covenant or condition contained in
this Agreement or in any Rights Certificate; nor will it be responsible for any
change in the exercisability of the Rights (including the Rights becoming void
pursuant to Section 3.1(2) hereof) or any adjustment required under
the provisions of Section 2.3 hereof or responsible for the manner, method
or amount of any such adjustment or the ascertaining of the existence of facts
that would require any such adjustment (except with respect to the exercise of
Rights after receipt of the certificate contemplated by Section 2.3 hereof
describing any such adjustment); nor will it by any act hereunder be deemed to
make any representation or warranty as to the authorization of any Common
Shares to be issued pursuant to this Agreement or any Rights or as to whether
any Common Shares will, when issued, be duly and validly authorized, executed,
issued and delivered or fully paid and non-assessable.

 

(f)            The
Corporation agrees that it will perform, execute, acknowledge and deliver or
cause to be performed, executed, acknowledged, and delivered all such further
and other acts, instruments and assurances as may reasonably be required
by the Rights Agent for the carrying out or performing by the Rights Agent of
the provisions of this Agreement.

 

(g)           The
Rights Agent is hereby authorized and directed to accept instructions with
respect to the performance of its duties hereunder from any person believed by
the Rights Agent to be the Chairman of the Board, the Chief Executive Officer,
the Chief Operating Officer or the Chief Financial Officer of the Corporation
and to apply to such persons for advice or instructions in connection with its
duties, and it shall not be liable for any action taken or suffered by it in
good faith in accordance with instructions of any such person. It is understood
that instructions to the Rights Agent shall, except where circumstances make it
impracticable or the Rights Agent otherwise agrees, be given in writing and,
where not in writing, such instructions shall be confirmed in writing as soon as
reasonably possible after the giving of such instructions.

 

(h)           The
Rights Agent and any shareholder or stockholder, director, officer or employee
of the Rights Agent may buy, sell or deal in Common Shares, Rights or
other securities of the Corporation or become pecuniarily interested in any
transaction in which the Corporation may be interested or contract with or
lend money to the Corporation or otherwise act as fully and freely as though it
were not Rights Agent under this Agreement. Nothing

 

26

 

herein shall preclude
the Rights Agent from acting in any other capacity for the Corporation or for
any other legal entity.

 

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

 

Section 4.4            Change
of Rights Agent.

 

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

 

ARTICLE 5

MISCELLANEOUS

 

Section 5.1            Redemption
and Waiver.

 

(1)           Subject
to the prior consent of the holders of Voting Shares or Rights obtained as set
forth in Section 5.4(2) or Section 5.4(3) hereof, as
applicable, the Board of Directors acting in good faith may, at any time prior
to the occurrence of a Flip-in Event, elect to redeem all but not less than all
of the then outstanding Rights at a redemption price of $0.00001 per Right
appropriately adjusted in a manner analogous to the applicable adjustment
provided for in Section 2.3 hereof in the event

 

27

 

that an event of the
type described in Section 2.3 hereof shall have occurred (such redemption
price being herein referred to as the “Redemption Price”).

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

(6)           If
the Corporation is obligated under Section 5.1(5) above to redeem the
Rights, or if the Board of Directors elects under Section 5.1(1) above
or Section 5.1(8) below to redeem the Rights, the right to exercise
the Rights will thereupon, without further action and without notice, terminate
and each Right will after redemption be null and void and the only right
thereafter of the holders of Rights shall be to receive the Redemption Price.

 

28

 

(7)           Within
ten (10) days after the Corporation is obligated under Section 5.1(5) above
to redeem the Rights, or the Board of Directors elects under Section 5.1(1) above
or Section 5.1(8) below to redeem the Rights, the Corporation shall
give notice of redemption to the holders of the then outstanding Rights by
mailing such notice to all such holders at their last address as they appear
upon the Rights Register or, prior to the Separation Time, on the registry
books of the transfer agent for the Common Shares. Any notice which is mailed
in the manner herein provided shall be deemed given, whether or not the holder
receives the notice. Each such notice of redemption will state the method by
which the payment of the Redemption Price will be made. The Corporation may not
redeem, acquire or purchase for value any Rights at any time in any manner
other than that specifically set forth in this Section 5.1 and other than
in connection with the purchase of Common Shares prior to the Separation Time.

 

(8)           Where
a Take-over Bid that is not a Permitted Bid is withdrawn or otherwise
terminated after the Separation Time has occurred and prior to the occurrence
of a Flip-in Event, the Board of Directors may elect to redeem all the
outstanding Rights at the Redemption Price.

 

(9)           Notwithstanding
the Rights being redeemed pursuant to Section 5.1(8) above, all the
provisions of this Agreement shall continue to apply as if the Separation Time
had not occurred and Rights Certificates representing the number of Rights held
by each holder of record of Common Shares as of the Separation Time had not
been mailed to each such holder and for all purposes of this Agreement the
Separation Time shall be deemed not to have occurred and the Rights shall
remain attached to outstanding Voting Shares, subject to and in accordance with
the provisions of this Agreement.

 

Section 5.2            Expiration.

 

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

 

Section 5.3            Issuance
of New Rights Certificates.

 

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

 

Section 5.4            Supplements
and Amendments.

 

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

 

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

 

(2)           Subject
to Section 5.4(1) above, the Corporation may, with the prior consent
of the holders of the Voting Shares obtained as set forth below, at any time
prior to the Separation Time amend, vary

 

29

 

or rescind any of the
provisions of this Agreement and the Rights (whether or not such action would
materially adversely affect the interests of the holders of Rights generally). Such
consent shall be deemed to have been given if provided by the holders of Voting
Shares at a meeting of the holders of Voting Shares, which meeting shall be
called and held in compliance with applicable laws and regulatory requirements
and the requirements in the articles and by-laws of the Corporation. Subject to
compliance with any requirements imposed by the foregoing, consent shall be deemed
to have been given if the proposed amendment, variation or revision is approved
by the affirmative vote of a majority of the votes cast by all holders of
Voting Shares (other than any holder of Voting Shares who is an Offeror
pursuant to a Take-over Bid that is not a Permitted Bid or Competing Permitted
Bid with respect to all Voting Shares Beneficially Owned by such Person),
represented in person or by proxy at the meeting.

 

(3)           Subject
to Section 5.4(1) above, the Corporation may, with the prior consent
of the holders of Rights, at any time after the Separation Time and before the
Expiration Time, amend, vary or rescind any of the provisions of this Agreement
and the Rights (whether or not such action would materially adversely affect
the interests of the holders of Rights generally).

 

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

 

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

 

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

 

(a)           if
made before the Separation Time, be submitted to the shareholders of the
Corporation at the next meeting of shareholders and the shareholders may, by
the majority referred to in Section 5.4(2) above confirm or reject
such amendment; and

 

(b)           if
made after the Separation Time, be submitted to the holders of Rights at a
meeting to be called for on a date not later than immediately following the
next meeting of shareholders of the Corporation and the holders of Rights may,
by resolution passed by the majority referred to in Section 5.4(4) above,
confirm or reject such amendment.

 

A supplement or amendment of
the nature referred to in this Section 5.4(6) shall be effective from
the date of the resolution of the Board of Directors adopting such supplement
or amendment until it is confirmed or rejected or until it ceases to be
effective (as described in the next sentence) and, where such supplement or
amendment is confirmed, it continues in effect in the form so confirmed. If
such supplement or amendment is rejected by the shareholders or the holders of
Rights or is not submitted to the shareholders or holders of Rights as
required, then such supplement or amendment shall cease to be effective from
and after the termination of the meeting at which it was rejected or to which
it should have been but was not submitted or from and after the date of the
meeting of holders of Rights that should have been but was not held, and

 

30

 

no subsequent resolution of the
Board of Directors to amend, vary or delete any provision of this Agreement to
substantially the same effect shall be effective until confirmed by the
shareholders or holders of Rights, as the case may be.

 

Section 5.5            Fractional
Rights and Fractional Shares.

 

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

 

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

 

Section 5.6            Rights
of Action.

 

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

 

Section 5.7            Notice
of Proposed Actions.

 

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

 

Section 5.8            Notices.

 

(1)           Notices
or demands authorized or required by this Agreement to be given or made by the
Rights Agent or by the holder of any Rights to or on the Corporation shall be
sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:

 

31

 

NovaGold
Resources Inc.

P.O. Box 24

#2300 – 200
Granville Street

Vancouver, BC  V6C 1S4

 

Attention:               Vice-President,
Finance

Facsimile No.:       (604)
669-6272

 

(2)           Any
notice or demand authorized or required by this Agreement to be given or made
by the Corporation or by the holder of any Rights to or on the Rights Agent
shall be sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Corporation) as follows:

 

Computershare Investor Services Inc.

3rd Floor, 510 Burrard Street

Vancouver, BC 
V6C 3B9

 

Attention:               General
Manager, Client Services

Facsimile No.:       (604) 661-9401

 

(3)           Notices
or demands authorized or required by this Agreement to be given or made by the
Corporation or the Rights Agent to or on the holder of any Rights shall be
sufficiently given or made if delivered or sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as it
appears upon the Rights Register or, prior to the Separation Time, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice.

 

Section 5.9            Successors.

 

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

 

Section 5.10         Benefits
of this Agreement.

 

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

 

Section 5.11         Governing
Law.

 

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

 

Section 5.12         Severability.

 

If any Section, Clause, term or provision hereof or the
application thereof to any circumstances or any right hereunder shall, in any
jurisdiction and to any extent, be invalid or unenforceable, such Section,
Clause, term or provision or such right shall be ineffective only in such
jurisdiction and to the extent of such invalidity or unenforceability in such
jurisdiction without invalidating or rendering unenforceable or ineffective the
remaining Sections, Clauses, terms and provisions hereof or rights hereunder in
such

 

32

 

jurisdiction or the application of such Section,
Clause, term or provision or rights hereunder in any other jurisdiction or to
circumstances other than those as to which it is specifically held invalid or
unenforceable.

 

Section 5.13         Effective
Date.

 

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

 

Section 5.14         Determinations
and Actions by the Board of Directors.

 

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

 

Section 5.15         Rights
of Board, Corporation and Offeror.

 

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

 

Section 5.16         Regulatory
Approvals.

 

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

 

Section 5.17         Declaration
as to Non-Canadian Holders.

 

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

 

33

 

Section 5.18         Time
of the Essence.

 

Time shall be of the essence in this Agreement.

 

Section 5.19         Execution
in Counterparts.

 

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

 

IN WITNESS WHEREOF, the parties have executed
this Agreement.

 

 

	
   

  	
   

  	
  NOVAGOLD
  RESOURCES INC.

  
	
   

  	
   

  	
  By:

  	
  “Rick
  Van Nieuwenhuyse”

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  “Robert
  J. (Don) MacDonald”

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  COMPUTERSHARE
  INVESTOR

  SERVICES INC.

  
	
   

  	
   

  	
  By:

  	
  “Kim
  M. Wong”

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
  “Jenny
  Karim”

  	
   

  
	
   

  	
   

  	
   

  	
  Authorized
  Signing Officer

  

 

34

 

SCHEDULE 2.2(3)

 

FORM OF RIGHTS CERTIFICATE

 

	
  Certificate No.              

  	
   

  	
                 Rights      

  

 

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

 

RIGHTS
CERTIFICATE

 

This certifies that                                or registered assigns, is the
registered holder of the number of Rights set forth above each of which
entitles the registered holder thereof, subject to the terms, provisions and
conditions of the Shareholder Rights Plan Agreement dated April 21, 2006, as amended and restated
from time to time (the “Rights Agreement”), between
NovaGold Resources Inc., a corporation incorporated under the laws of Nova
Scotia (the “Corporation”), and Computershare
Investor Services Inc., a trust company existing under the laws of Canada, as
rights agent (the “Rights Agent”,
which term shall include any successor Rights Agent under the Rights Agreement)
to purchase from the Corporation at any time after the Separation Time (as such
term is defined in the Rights Agreement) and prior to the Expiration Time (as
such term is defined in the Rights Agreement) (or such earlier expiration time as is provided in
the Rights Agreement) one fully paid and non-assessable Common Share of the
Corporation (a “Common Share”) at the Exercise
Price referred to below, upon presentation and surrender of this Rights
Certificate together with the Form of Election to Exercise duly executed
and submitted to the Rights Agent at its principal offices in the City of
Toronto. The Exercise Price shall initially be $50 (Canadian) per Right and
shall be subject to adjustment in certain events as provided in the Rights
Agreement.

 

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

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

Dated l

 

	
   

  	
   

  	
  NOVAGOLD
  RESOURCES INC.

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Authorized Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Authorized Signing Officer

  

 

2

 

	
   

  	
   

  	
  COMPUTERSHARE
  INVESTOR

  SERVICES INC.

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Authorized Signing Officer

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
    Authorized Signing Officer

  

 

3

 

(To be
attached to each Rights Certificate)

 

FORM OF
ELECTION TO EXERCISE

 

TO:         NOVAGOLD RESOURCES INC.

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  (NAME)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (ADDRESS)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (CITY AND
  STATE OR PROVINCE)

  	
   

  

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  (NAME)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (ADDRESS)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  (CITY AND
  STATE OR PROVINCE)

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  SOCIAL
  INSURANCE, SOCIAL SECURITY OR OTHER TAXPAYER NUMBER

  	
   

  
					

 

	
  Dated

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

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

  
					

 

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

 

 

To be completed if true

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

2

 

NOTICE

 

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

 

 

FORM OF
ASSIGNMENT

 

(To be
executed by the registered holder if such 

holder desires to transfer the Rights Certificate)

 

FOR VALUE RECEIVED                                                                                                
hereby sells,

 

assigns and transfers unto                                                                                 

 

	
   

  	
   

  	
   

  
	
   

  	
  (Please print name and address of
  transferee)

  	
   

  

 

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

 

	
  Dated

  	
   

  	
   

  
	
   

  	
   

  
	
  Signature Guaranteed

  	
   

  	
   

  
	
   

  	
  Signature

  
	
   

  	
   

  
	
   

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

  
					

 

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

 

To be completed if true

 

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

 

	
   

  	
   

  	
   

  
	
   

  	
  Signature

  

 

 

NOTICE

 

In the event the certification set forth in the Form of
Assignment is not completed, the Corporation will deem the Beneficial Owner of
the Rights evidenced by this Rights Certificate to be an Acquiring Person or an
Affiliate or Associate thereof (as defined in the Rights Agreement) and
accordingly such Rights shall be null and void.Exhibit 10.1

 

Grant No.: _______

 

REGAL ENTERTAINMENT GROUP

2002 STOCK INCENTIVE PLAN, AS AMENDED

PERFORMANCE SHARE AGREEMENT

                Regal Entertainment Group, a
Delaware corporation (the “Company”), hereby grants performance shares relating
to restricted shares of its class A common stock, $.001 par value (the “Common
Stock”), to the Grantee named below, the shares of restricted stock subject
thereto being subject to achieving the performance criteria and the vesting
conditions set forth in the attached agreement (the “Agreement”).  Additional terms and conditions of the grant
are set forth in this cover sheet to the Agreement, in the Agreement, and in
the Company’s 2002 Stock Incentive Plan, as amended (the “Plan”).

Grant Date:  __________________, 20­­___

Name of Grantee: 
_________________________________________________

Grantee’s Social Security
Number:   _____-____-_____

Maximum
No. of Shares of Common Stock (175% of Target LTI (defined below)): ______________

Vesting
Date: __________________

Purchase Price per share of
Common Stock:  $0.001

                By signing this cover sheet, you agree to all of the terms and
conditions described in the attached Agreement and in the Plan, a copy of which
is also attached.  You acknowledge that
you have carefully reviewed the Plan, and agree that the Plan will control in
the event any provision of this Agreement should be or appear to be
inconsistent.

	
  Grantee:

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature)

  	
   

  
	
  Company:

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
  (Signature)

  	
   

  
	
   

  	
   

  	
  Name:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Title:

  	
   

  	
   

  

 

Attachment

This is neither a stock certificate
nor a negotiable instrument.

 

 

REGAL ENTERTAINMENT GROUP

2002 STOCK INCENTIVE PLAN, AS AMENDED

PERFORMANCE SHARE AGREEMENT

	
  Award of Performance
  Shares/Number of Shares of Restricted Stock Issuable upon Achievement of
  Performance Criteria

  	
   

  	
            This
  grant is an award of performance shares (the “Performance Shares”) entitling
  the Grantee hereof to the number of shares of Common Stock to be determined
  as set forth below, at the Purchase Price set forth on the cover sheet, which
  shares of Common Stock when issued will be subject to the vesting conditions
  described below (such shares when issued and subject to the vesting
  conditions, the “Restricted Stock”). The Purchase Price for the Performance
  Shares and the Restricted Stock is deemed paid by your services to the
  Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            The
  number of shares of Restricted Stock, if any, that may be issued pursuant to
  the terms of this Agreement shall be calculated based on the attainment of
  specified performance goals, as set forth on the attached Exhibit A,
  by the             anniversary
  of the Grant Date (the “Calculation Date”). The maximum number of shares of
  Restricted Stock that may be issued to you hereunder shall be as set forth on
  the cover sheet, which number has been determined by multiplying            
  shares (such number of shares, your “Target Long Term Incentive” or “Target
  LTI”) by 175%.

  
	
   

  	
   

  	
   

  
	
  Nontransferability and
  Forfeiture

  	
   

  	
            Neither
  your Performance Shares granted hereby nor any shares of Restricted Stock
  issued hereunder prior to the vesting thereof may be transferred, assigned,
  pledged or hypothecated, whether by operation of law or otherwise, nor may
  your Performance Shares or shares of Restricted Stock, if any, be made
  subject to execution, attachment or similar process. If your service
  terminates for any reason prior to the Calculation Date, you will forfeit
  your Performance Shares and not have any right to receive any Restricted
  Stock or Common Stock in respect of this award of Performance Shares.

  
	
   

  	
   

  	
   

  
	
  Issuance and Vesting of
  Restricted Stock

  	
   

  	
            The
  Performance Shares awarded hereby are evidenced solely by this Agreement and
  the cover sheet. The Company will issue any Restricted Stock earned pursuant
  hereto in your name as of the Calculation Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            Except
  as otherwise set forth herein, your right to the Common Stock, after the
  issuance of the Restricted Stock as of the Calculation Date pursuant to this
  grant, vests as to 100% of the total number of shares of Restricted Stock
  issued pursuant to this grant on
             , provided
  you then continue in service (the “Vesting Date”). If the Vesting Date would
  otherwise occur during a period in which you are: (a) subject to a
  lock-up agreement restricting your ability to sell shares of Common Stock in
  the open market or (b) restricted from selling shares of Common Stock in the
  open market because you are not then eligible to 

  

 

 

	
   

  	
   

  	
  sell under the Company’s
  insider trading or similar plan as then in effect (whether because a trading
  window is not open or you are otherwise restricted from trading), the Vesting
  Date will be delayed until the first date on which you are no longer
  prohibited from selling shares of Common Stock due to a lock-up agreement or
  insider trading plan restriction; provided, however, you shall not be deemed
  to be restricted pursuant to subparagraph (b) above if you have in place
  at the Vesting Date an enforceable 10b5-1 trading plan. You cannot vest in
  more than the number of shares covered by this grant.

  
	
   

  	
   

  	
   

  
	
  Book Entry Restrictions/Escrow

  	
   

  	
            Any
  Restricted Stock issued hereunder may be issued in book entry form. In such
  event, the Company shall cause the transfer agent for the shares of its
  Common Stock to make a book entry record showing ownership for the shares of
  Restricted Stock in your name subject to the terms and conditions of this
  Agreement. The Company shall issue or cause to be issued to you an account
  statement acknowledging your ownership of the shares of such Restricted
  Stock.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            In
  the event that certificates are issued evidencing the shares of Restricted
  Stock issued hereunder, the certificates for the Restricted Stock shall be
  deposited in escrow with the Secretary of the Company to be held in
  accordance with the provisions of this paragraph. Each such deposited
  certificate shall be accompanied by a duly executed Assignment Separate from
  Certificate in the form attached hereto as Exhibit B. The deposited
  certificates shall remain in escrow until such time or times as the
  certificates are to be released or otherwise surrendered for cancellation as
  discussed elsewhere herein. Upon delivery of the certificates to the Company,
  you shall be issued an instrument of deposit acknowledging the number of
  shares of Restricted Stock delivered in escrow to the Secretary of the
  Company.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            Not
  later than 30 days after the Vesting Date, the Company shall release from
  escrow and deliver to you any certificates representing Common Stock held by
  it in escrow.

  
	
   

  	
   

  	
   

  
	
  Dividend Equivalents

  	
   

  	
            Upon
  the Calculation Date or as soon as reasonably practicable thereafter (the
  “Initial Dividend Payment Date”), provided you then continue in service, the
  Company shall pay to you in cash a single lump sum amount equal to (1) the
  total dividends paid by the Company with respect to a single share of Common
  Stock from the Grant Date to the Calculation Date times (2) the number of
  shares of Restricted Stock issued hereunder as determined above in respect of
  the Performance Shares as to which the performance goals have been satisfied
  as of the Calculation Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            If
  the Company pays a dividend with respect to its Common Stock after the
  Initial Dividend Payment Date, the Company shall pay to you as soon as
  reasonably practicable thereafter, provided you then continue in service, an
  amount equal to (1) the amount of such dividend with respect to a single
  share of Common Stock times (2) the number of 

  

 

2

 

	
   

  	
   

  	
  shares of Restricted Stock
  issued hereunder as determined above in respect of the Performance Shares as
  to which the performance goals have been satisfied as of the Calculation
  Date.

  
	
   

  	
   

  	
   

  
	
  Lapse of Common Stock
  Restrictions on Death, Disability, [or] Retirement [or Termination Without
  Cause]

  	
   

  	
            On
  or after the Calculation Date, your right to any Common Stock hereunder vests
  as to 100% of the total number of shares of Restricted Stock issued pursuant
  to this grant, such number as determined on the Calculation Date, if your
  service is terminated due to death, Disability or Retirement[, or by the
  Company without Cause].

  
	
   

  	
   

  	
   

  
	
  Forfeiture of Unvested
  Common Stock

  	
   

  	
            In
  the event that your service is terminated on or after the Calculation Date
  but before the Vesting Date for any reason other than due to death,
  Disability or Retirement, or by the Company without Cause, you will forfeit
  to the Company all of the shares of Restricted Stock subject to this grant,
  which shares if certificated will be in such event surrendered by the
  Secretary to the Company on your behalf for cancellation.

  
	
   

  	
   

  	
   

  
	
  Withholding Taxes

  	
   

  	
            You
  agree, as a condition of this grant, that you will make acceptable
  arrangements to pay any withholding or other taxes that may be due as a
  result of the grant of the Performance Shares, your acquisition of Restricted
  Stock or Common Stock under this grant, or the payment to you of any
  dividends hereunder. In the event that the Company determines that any
  federal, state, local or foreign tax or withholding payment is required relating
  to this grant, the Company will have the right to: (1) require that you
  arrange such payments to the Company; (2) withhold such amounts from other
  payments due to you from the Company or any affiliate; or (3) cause an
  immediate forfeiture of shares of Restricted Stock or Common Stock subject to
  the Performance Shares granted pursuant to this Agreement in an amount equal
  to the withholding or other taxes due.

  
	
   

  	
   

  	
   

  
	
  Section 83(b)

  Election

  	
   

  	
            If
  you file an election with respect to the shares of Common Stock covered by
  this grant under Section 83(b) of the Internal Revenue Code with the Internal
  Revenue Service, you will immediately forfeit to the Company all of the
  shares of Common Stock subject to this grant.

  
	
   

  	
   

  	
   

  
	
  Retention Rights

  	
   

  	
            This
  Agreement does not give you the right to be retained by the Company (or any
  parent, Subsidiaries or affiliates) in any capacity. The Company (and any
  parent, Subsidiaries or affiliates) reserves the right to terminate your
  service at any time and for any reason.

  
	
   

  	
   

  	
   

  
	
  Shareholder Rights

  	
   

  	
            You
  have the right to vote the Restricted Stock and to receive any dividends
  declared or paid on such Restricted Stock. Any distributions you receive as a
  result of any stock split, stock dividend, combination of shares or other
  similar transaction shall be deemed to be a part of the Restricted Stock and
  subject to the same conditions and restrictions applicable thereto. Except as
  described herein and in the Plan, no adjustments are made for dividends or
  other rights if the applicable record date occurs before your Restricted
  Stock certificate is 

  

 

3

 

	
   

  	
   

  	
  issued or book entry made.

  
	
   

  	
   

  	
   

  
	
  Adjustments

  	
   

  	
            In
  the event of any stock dividend, stock split, change in the corporate
  structure affecting the Common Stock, or any change in the corporate
  structure (including any event contemplated by Section 5(a) of the Plan) that
  is not a Change in Control, the number or kind of shares covered by this
  grant may be adjusted pursuant to the Plan so that thereafter, subject to the
  terms and conditions of the adjusted Awards, such Awards shall entitle the
  Grantee to receive the kind and amount of securities or property or cash
  receivable upon any such event by a holder of the number of Shares that would
  have been receivable with respect to such Award immediately prior thereto.
  Your Performance Shares and Restricted Stock, as applicable, shall be subject
  to the terms of any such agreement of merger, liquidation or reorganization
  in the event the Company is subject to such corporate activity.

  
	
   

  	
   

  	
   

  
	
  Change in Control

  	
   

  	
            In
  the event of a Change in Control prior to the first year anniversary of the
  Grant Date, you will forfeit your Performance Shares and not have any right
  to receive any Restricted Stock or Common Stock in respect of this award of
  Performance Shares.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            In
  the event of a Change in Control on or after the first year anniversary of
  the Grant Date but prior to the second year anniversary of the Grant Date, you
  will be entitled to receive in respect of your Performance Shares one-third
  of the number of shares of Restricted Stock you would have received had the
  TSRA (as defined below) as calculated pursuant to Exhibit A for the
  Change in Control been achieved on the Calculation Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            In
  the event of a Change in Control on or after the second year anniversary of
  the Grant Date but prior to the Calculation Date, you will be entitled to
  receive in respect of your Performance Shares two-thirds of the number of
  shares of Restricted Stock you would have received had the TSRA as calculated
  pursuant to Exhibit A for the Change in Control been achieved on the
  Calculation Date.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            All
  shares of Restricted Stock issued hereunder in respect of a Change in Control
  shall for purposes of the Plan be deemed to have been issued and outstanding
  immediately prior to the effective time of any such Change in Control.

  
	
   

  	
   

  	
   

  
	
  Legends

  	
   

  	
            All
  certificates representing the Restricted Stock issued in connection with this
  grant shall, where applicable, have endorsed thereon the following legend:

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            “THE
  SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON
  TRANSFER SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED
  HOLDER, OR HIS OR HER PREDECESSOR IN INTEREST. A COPY OF SUCH AGREEMENT IS ON
  FILE AT THE 

  

 

4

 

	
   

  	
   

  	
  PRINCIPAL OFFICE OF THE
  COMPANY AND WILL BE FURNISHED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
  COMPANY BY THE HOLDER OF RECORD OF THE SHARES REPRESENTED BY THIS
  CERTIFICATE.”

  
	
   

  	
   

  	
   

  
	
  Applicable Law

  	
   

  	
            This
  Agreement will be interpreted and enforced under the laws of the State of
  Delaware, other than any conflicts or choice of law rule or principle that
  might otherwise refer construction or interpretation of this Agreement to the
  substantive law of another jurisdiction.

  
	
   

  	
   

  	
   

  
	
  Market Stand-Off

  	
   

  	
            In
  connection with any underwritten public offering by the Company of the
  Company’s securities pursuant to an effective registration statement filed
  under the Securities Act of 1933, for such period as the underwriters may
  request (such period not to exceed 180 days following the date of the
  applicable offering), you shall not, directly or indirectly, sell, make any
  short sale of, loan, hypothecate, pledge, offer, grant or sell any option or
  other contract for the purchase of, purchase any option or other contract for
  the sale of, loan, hypothecate, pledge, offer, grant or dispose of or
  transfer, or agree to engage in any of the foregoing transactions with
  respect to, any shares of capital stock of the Company covered by this grant
  without the prior written consent of the underwriters of such public
  offering.

  
	
   

  	
   

  	
   

  
	
  The Plan 

  	
   

  	
            The
  text of the Plan is incorporated in this Agreement by reference. Certain
  capitalized terms used in this Agreement are defined in the Plan, and have
  the meaning set forth in the Plan.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            This
  Agreement, the cover page and the Plan constitute the entire understanding
  between you and the Company regarding this grant of Performance Shares and
  any shares of underlying Restricted Stock and Common Stock. Any prior
  agreements, commitments or negotiations concerning this grant are superseded.

  
	
   

  	
   

  	
   

  
	
  Data Privacy

  	
   

  	
            In
  order to administer the Plan, the Company may process personal data about
  you. Such data includes, but is not limited to, the information provided in
  this Agreement and any changes thereto, other appropriate personal and
  financial data about you such as home address and business addresses and
  other contact information, payroll information and any other information that
  might be deemed appropriate by the Company to facilitate the administration
  of the Plan.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
            By
  accepting this grant, you give explicit consent to the Company to process any
  such personal data. You also give explicit consent to the Company to transfer
  any such personal data outside the country in which you work or are employed,
  including, with respect to non-U.S. resident Grantees, to the United States,
  to transferees who shall include the Company and other persons who are
  designated by the Company to administer the Plan.

  
	
   

  	
   

  	
   

  
	
  Consent to Electronic
  Delivery

  	
   

  	
            The
  Company may choose to deliver certain statutory materials 

  

 

5

 

	
   

  	
   

  	
  relating to the Plan in
  electronic form. By accepting this grant, you agree that the Company may
  deliver the Plan prospectus and the Company’s annual report to you in an
  electronic format. If at any time you would prefer to receive paper copies of
  these documents, as you are entitled to, the Company would be pleased to
  provide copies. Please contact the Company Secretary at 865/922-1123 to
  request paper copies of these documents.

  
	
   

  	
   

  	
   

  
	
  Stock Ownership
  Guidelines

  	
   

  	
            If
  applicable, your right to sell, exchange, transfer, gift, pledge, alienate or
  otherwise dispose of the vested shares of Common Stock awarded to you
  pursuant to this Agreement is subject to your compliance with the stock ownership
  guidelines (“Stock Ownership Guidelines”) that the Company has adopted as of
  the Grant Date, a copy of which has been delivered to you together with this
  Agreement. The Company shall have the right to enforce the Stock Ownership
  Guidelines through the use of an escrow arrangement or through restrictions
  communicated to the Company’s transfer agent limiting transfers of your
  shares of Common Stock. This provision is not intended to prohibit you from
  exercising your previously granted stock options of disposing of the shares
  of Common Stock acquired upon exercise of such options.

  

 

                By signing the cover sheet of this Agreement, you
agree to all of the terms and

conditions described above and in the Plan.

 

6

 

EXHIBIT A

PERFORMANCE GOALS

AND NUMBER OF SHARES OF
RESTRICTED STOCK

	
  Total Shareholder Return
  Attained (“TSRA”)*

  	
   

  	
  Shares of Restricted Stock

  	
   

  
	
  12.5%
  < TSRA < 15.0%

  	
   

  	
  50%
  of Target LTI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  15.0%
  < TSRA < 17.5%

  	
   

  	
  100%
  of Target LTI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  17.5%
  < TSRA < 20.0%

  	
   

  	
  125%
  of Target LTI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  20.0%
  < TSRA < 25.0%

  	
   

  	
  150%
  of Target LTI

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  25.0%
  < TSRA

  	
   

  	
  175%
  of Target LTI

  	
   

  

 

*
On the Calculation Date, TSRA is defined as the average of the annual total
shareholder returns attained by the Company for each full twelve month period
ending on a yearly anniversary of the Grant Date through and including the
Calculation Date.  As used in connection
with any calculation of the number of shares of Restricted Stock to be issued
in respect of the Performance Shares, if any, upon the occurrence of a Change
in Control prior to the Calculation Date, TSRA is defined as the average of the
total shareholder returns attained by the Company for each full twelve month
period ended on a yearly anniversary of the Grant Date prior to the date of the
Change in Control, and for the portion of the twelve month period during which
the Change in Control occurs (excluding from such calculation the date of the
Change in Control).

 

7

 

EXHIBIT B

 

ASSIGNMENT
SEPARATE FROM CERTIFICATE

 

 

    
FOR VALUE RECEIVED,            
hereby sells, assigns and transfers to Regal Entertainment Group, a Delaware
corporation (the “Company”),            
(           ) shares of
the Company’s class A common stock represented by Certificate No.      
and does hereby irrevocably constitute and appoint            
to transfer the said common stock on the books of the Company with full power
of substitution in the premises.

 

Dated:
           , 20     

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Print
  Name

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

 

Spousal
Consent (if applicable)

 

                                      
(Purchaser’s spouse) indicates by the execution of this Assignment his or her
consent to be bound by the terms herein as to his or her interests, whether as
community property or otherwise, if any, in the shares of class A common stock
of the Company.

 

	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Signature

  

 

 

 

 

 

INSTRUCTIONS:  PLEASE DO NOT FILL IN ANY BLANKS OTHER THAN
THE SIGNATURE LINE.  THE PURPOSE OF THIS
ASSIGNMENT IS TO ENABLE THE COMPANY TO CAUSE THE FORFEITURE OF YOUR UNVESTED
SHARES AS SET FORTH IN THE AGREEMENT WITHOUT REQUIRING ADDITIONAL SIGNATURES ON
THE PART OF PURCHASER.

 

 

 

8

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