UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2015
Commission File No. 001-32210
NORTHERN DYNASTY MINERALS
LTD.
(Translation of registrant's name into English)
15th Floor 1040 West Georgia
Street
Vancouver, British Columbia, V6E 4H8, Canada
(Address of principal executive office)
Indicate by check mark whether the registrant files or will
file annual reports under cover of Form 20-F or Form 40-F
Form 20-F [X]
Form 40-F [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1) [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7) [ ]
SUBMITTED HEREWITH
Exhibits |
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99.1 |
Arrangement Agreement between Northern Dynasty Minerals
Ltd. and Cannon Point Resources Ltd., dated August 31, 2015. |
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99.2 |
Loan Agreement between Cannon Point Resources Ltd. and
Northern Dynasty Minerals Ltd., dated August 31, 2015. |
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99.3 |
General Security Agreement between Northern Dynasty
Minerals Ltd. and Cannon Point Resources Ltd., dated August 31, 2015. |
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99.4 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Larry Copeland, dated August 31, 2015. |
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99.5 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and David Farrell, dated August 31, 2015. |
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99.6 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Fiore Financial & Advisory Corp., dated August 31,
2015. |
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99.7 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Frank Giustra, dated August 31, 2015. |
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99.8 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Gordon Keep, dated August 31, 2015. |
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99.9 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Peter Leitch, dated August 31, 2015. |
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99.10 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Radcliffe Foundation, dated August 31, 2015. |
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99.11 |
Voting and Support Agreement between Northern Dynasty
Minerals Ltd. and Jay Sujir, dated August 31, 2015. |
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
NORTHERN DYNASTY MINERALS LTD.
Date: October 8, 2015
/s/ Trevor
Thomas
Trevor
Thomas
Secretary
Execution Copy
ARRANGEMENT AGREEMENT
NORTHERN DYNASTY MINERALS LTD.
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CANNON POINT RESOURCES LTD.
August 31, 2015
TABLE OF CONTENTS
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ARRANGEMENT AGREEMENT
THIS AGREEMENT made the 31st day of August, 2015,
BETWEEN:
NORTHERN DYNASTY MINERALS LTD., a corporation existing
under the laws of the Province of British Columbia,
(hereinafter referred to as
the Acquiror),
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CANNON POINT RESOURCES LTD., a corporation existing
under the laws of the Province of British Columbia,
(hereinafter referred to as
the Company).
WHEREAS
the Acquiror desires to acquire all of the issued and outstanding securities of
the Company;
AND WHEREAS the parties are prepared and intend to carry out the transactions
contemplated herein by way of plan of arrangement pursuant to Division 5 of Part
9 of the BCBCA (as defined herein);
AND WHEREAS the boards of directors of each of the Acquiror and the Company have
unanimously determined that the Arrangement is in the best interests of their
respective companies, and have resolved to support the Arrangement and enter
into this Arrangement Agreement;
AND WHEREAS contemporaneously herewith, the Acquiror has entered into Support
Agreements with each of the Locked-Up Securityholders (as defined herein) who
hold, in aggregate 7,274,820 Common Shares, 1,593,665 Warrants and 2,937,500
Options, pursuant to which, among other things, each such Securityholder has
agreed to vote in favour of the Arrangement Resolution, all securities of the
Company now held or hereafter acquired by them that are entitled to vote on the
matter, on the terms and subject to the conditions set forth in such agreements;
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual
covenants and agreements hereinafter set forth and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged by
each party, the parties hereby covenant and agree as follows:
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ARTICLE 1
INTERPRETATION
1.1
Definitions
In
this Agreement, unless something in the subject matter or context is
inconsistent therewith, the following terms shall have the respective meanings
set out below and grammatical variations shall have the corresponding meanings:
Acquiror means Northern
Dynasty Minerals Ltd.;
Acquiror Board means the board
of directors of the Acquiror;
Acquiror Public Documents has
the meaning set out in Section 5 of Schedule D;
Acquiror Shares means the
common shares of the Acquiror;
Alternative Proposal means:
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(a) |
any direct or indirect sale, purchase, or acquisition of
the Company or of its securities (including by way of a subscription of
shares or the issuance of shares from treasury) that entitle the holder
thereof to, beneficially or jointly or in concert with others, own,
control or direct more than 20% of the voting rights attached to the
Companys securities, or of all or more than 20% (by value) of the assets
of Company; |
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(b) |
any similar transaction or other direct or indirect
acquisition, business combination, arrangement, merger or takeover bid
involving the Company, its subsidiaries, its securities, the securities of
its subsidiaries, or their assets, or |
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(c) |
any financing, loan, credit or other agreement (including
by way of the subscription, purchase or issuance of debentures, notes or
other debt instruments) pursuant to which the Company will incur
indebtedness, liabilities or obligations; |
Affiliate has the
meaning given to it in the Securities Act;
Agreement means this
arrangement agreement, including all Schedules annexed hereto, as the same may
be amended, supplemented or otherwise modified from time to time in accordance
with the terms hereof;
Alternative Transaction has
the meaning set out in Section 8.8;
Arrangement means the
arrangement of the Company under the provisions of Division 5 of Part 9 of the
BCBCA on the terms and subject to the conditions set out in the Plan of
Arrangement, subject to any amendments or variations thereto made in accordance
with Section 10.1 hereof or Article 5 of the Plan of Arrangement or made at the
direction of the Court in the Final Order (provided that any such amendment or
variation is acceptable to both the Acquiror and the Company, each acting
reasonably);
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''Arrangement Resolution means
the special resolution of the Securityholders of the Company approving the
Arrangement to be considered at the Meeting substantially in the form of
Schedule B;
Associate has the meaning
given to it in the Securities Act;
BCBCA means the Business
Corporations Act (British Columbia);
Benefit Plan has the meaning
set out in Section 16(a) of Schedule C;
Board means the board of
directors of the Company;
Board Approval has the meaning
set out in Section 0;
Business Day means a day,
other than a Saturday, a Sunday, or a statutory holiday in Vancouver, British
Columbia;
Cannon Point Nominee means a
qualified person nominated by the Company to be appointed to the Acquiror Board
by the Acquiror concurrently with the completion of the Arrangement;
Circular'' means the notice of
the Meeting and accompanying management information circular, including all
schedules, appendices and exhibits thereto and enclosures therewith, to be sent
to the Securityholders in connection with the Meeting, as amended, supplemented
or otherwise modified from time to time;
Code means the United
States Internal Revenue Code of 1986, as amended;
Common Shares means the common
shares of the Company;
Company means Cannon Point
Resources Ltd.;
Company Expense Reimbursement
Amount has the meaning set out in Section 9.3(b);
Company Governing Documents
has the meaning set out in Section 1 of Schedule C;
Company Public Documents has
the meaning set out in Section 9(b) of Schedule C;
Competition Act
means the Competition Act (Canada);
Concurrent Financing means the
Acquirors proposed special warrant financing to raise gross proceeds of a
minimum of $10 million and a maximum of $20 million as announced by the Acquiror
on August 10, 2015;
Confidentiality Agreement
means the confidentiality agreement dated July 28, 2015 between the Company and
the Acquiror;
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Contract means any contract,
license, franchise, grant, permit, lease, arrangement, commitment,
understanding, joint venture, partnership, note, bond, mortgage, indenture,
instrument, deed of trust or other agreement or obligation (whether written or
oral) to which the Company is a party or by which the Company is bound or
affected or to which any of its properties or assets is subject;
Court means the Supreme Court
of British Columbia;
Credit Facility has the
meaning set out in Section 5.7;
Depositary means Computershare
Trust Company of Canada as depositary at its offices as set out in the Letter of
Transmittal;
Disclosure Letter means the
disclosure letter delivered by the Company to the Acquiror contemporaneously
with the execution and delivery of this Agreement;
Dissent Rights means the
rights of dissent in respect of the Arrangement described in Section 3.1 of the
Plan of Arrangement;
Effective Date means the date
the Acquiror and the Company agree upon, acting reasonably, as the effective
date of the Arrangement after all of the conditions precedent to the completion
of the Arrangement as set out in this Agreement have been satisfied or waived,
including that the Final Order has been granted by the Court;
Effective Time means 12:01
a.m. (Vancouver time) on the Effective Date, or such other time as the parties
agree to in writing before the Effective Date;
Encumbrance includes any
mortgage, pledge, assignment, charge, lien, claim, security interest, adverse
interest, adverse claim, other third party interest or encumbrance of any kind,
whether contingent or absolute, and any agreement, option, right or privilege
(whether by Law, contract or otherwise) capable of becoming any of the
foregoing;
Environmental Laws has the
meaning set out in Section 18 of Schedule C;
Exchange Act means the
United States Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder;
Final Order means the order of
the Court approving the Arrangement under section 291 of the BCBCA, in a form
acceptable to the Company and the Acquiror, each acting reasonably, as such
order may be affirmed, amended, modified, supplemented or varied by the Court
(with the consent of both the Company and the Acquiror, each acting reasonably)
at any time prior to the Effective Date or, if appealed, as affirmed or amended
(provided that any such amendment is acceptable to both the Company and the
Acquiror, each acting reasonably) on appeal unless such appeal is
withdrawn, abandoned or denied;
Fiore means Fiore Management
and Advisory Corp.;
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Fiore Fee has the meaning set
out in Section 5.8;
IFRS means International
Financial Reporting Standards;
Interim Order means the
interim order of the Court contemplated by Section 2.2, in a form acceptable to
the Company and the Acquiror, each acting reasonably, providing for, among other
things, the calling and holding of the Meeting, as the same may be amended,
modified, supplemented or varied by the Court;
Law means any applicable laws,
including international, national, provincial, state, municipal and local laws,
treaties, statutes, ordinances, judgments, decrees, injunctions, writs,
certificates and orders, by-laws, rules, regulations, ordinances, or other
requirements of any Regulatory Authority having the force of law;
Letter Agreement means the
letter agreement dated August 10, 2015 between the Company and the Acquiror;
Letter of Transmittal means
the letter of transmittal for use by the Securityholders with respect to the
Arrangement in the form accompanying the Circular;
Locked-Up Securityholders
means each of the directors and officers and certain shareholders of the
Company;
Match Period has the meaning
set out in Section 7.3(b)(iv);
Material Adverse Effect means,
in respect of a person, any effect that is, or could reasonably be expected to
be, material and adverse to the business, condition (financial or otherwise),
properties, assets (tangible or intangible), prospects, liabilities (whether
absolute, accrued, conditional or otherwise), operations or results of
operations of such person and its subsidiaries taken as a whole, other than any
effect:
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(a) |
relating to the Canadian or United States economy,
political conditions or securities markets in general; |
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(b) |
affecting the gold mining industry in general; |
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(c) |
relating to a change in the market trading price of
shares of that person; or |
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(d) |
relating to any generally applicable change in applicable
Law (other than orders, judgments or decrees against such person, or any
of its subsidiaries) or in accounting principles or standards applicable
to that person; |
provided, however, that the effect
referred to in clause (a), (b) or (d) above does not primarily relate only to
(or have the effect of primarily relating only to) such person and its
subsidiaries, taken as a whole, or disproportionately adversely affect such
person and its subsidiaries taken as a whole, compared to other companies of
similar size operating in the industry in which it and its subsidiaries operate;
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material fact and material
change have the meaning set out in the Securities Act;
Meeting means the special
meeting of the Securityholders, including any adjournment or postponement
thereof, to be called and held in accordance with the Interim Order for the
purpose of considering and, if thought fit, approving the Arrangement Resolution
and all other matters requiring approval pursuant to the terms and conditions of
this Agreement or the Interim Order;
Minimum Closing Working
Capital has the meaning set out in Section 5.9;
MI 61-101 means Multilateral
Instrument 61-101 Protection of Minority Security Holders in Special
Transactions;
Misrepresentation means an
untrue statement of a material fact or an omission to state a material fact
required to be stated or that is necessary to make a statement not misleading in
light of the circumstances in which it was made;
NI 43-101 means National
Instrument 43-101 Standards of Disclosure for Mineral Projects;
NYSE MKT means the NYSE MKT
Equities Exchange;
Option Plan means the Company
share option plan in effect on the date hereof and the agreements entered into
thereunder;
Optionholders means holders of
the Options;
Options means the options
issued pursuant to the Option Plan;
Outside Date means November
30, 2015, or such later date as the parties may agree in writing;
party means a party to this
Agreement;
person means an
individual, general partnership, limited partnership, corporation, company,
limited liability company, unincorporated association, unincorporated syndicate,
unincorporated organization, trust, trustee, executor, administrator or other
legal representative;
Plan of Arrangement means the
plan of arrangement of the Company, substantially in the form of Schedule A, as
it may be amended, supplemented or otherwise modified from time to time in
accordance with its terms;
Regulatory Approvals means
those sanctions, rulings, consents, authorizations, orders, clearances,
exemptions, permits, waivers, decisions, decrees, rules, regulations and other
approvals (including the waiver or lapse, without objection, of a prescribed
time under a statute or regulation that states that a transaction may be
implemented if a prescribed time lapses following the giving of notice without
an objection being made) of a Regulatory Authority, that are
required to be obtained in connection with the transactions contemplated by this
Agreement;
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Regulatory Authority means:
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(a) |
any multinational or supranational body or organization,
nation, government, state, province, country, territory, municipality,
quasi-government, administrative, judicial or regulatory authority,
agency, board, body, bureau, commission, instrumentality, court or
tribunal or any political subdivision thereof, or any central bank (or
similar monetary or regulatory authority) thereof, any taxing authority,
any ministry or department or agency of any of the foregoing; |
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(b) |
any self-regulatory organization or stock exchange,
including the TSX, the NYSE MKT and the TSXV; |
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(c) |
any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government;
and |
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(d) |
any corporation or other entity owned or controlled,
through stock or capital ownership or otherwise, by any of such entities
or other bodies pursuant to the foregoing; |
Related Party in respect of a
person means any related party of such person, or any associated entity of a
related party of such person, as those terms are defined in MI 61-101;
Representative means, in
respect of a person, its subsidiaries and its Affiliates and its and their
directors, officers, employees, agents and representatives (including any
financial, legal or other advisors);
Securities Act means the
Securities Act (British Columbia);
Securities Laws means the
Securities Act, together with all other applicable provincial securities Laws,
rules and regulations and published policies thereunder;
Securityholder Approval
has the meaning set out in Section 2.2(d);
Securityholders means,
collectively, Shareholders, Optionholders and Warrantholders;
SEDAR means the System for
Electronic Document Analysis and Retrieval;
Shareholders means the holders
of Common Shares;
subsidiary means, with respect
to a person, any body corporate of which more than 50% of the outstanding shares
ordinarily entitled to elect a majority of the board of directors thereof
(whether or not shares of any other class shall or might be entitled to vote
upon the happening of any event or contingency) are at the time owned directly
or indirectly by such person and shall include any body corporate, partnership,
joint venture or other entity over which it exercises
direction or control or which is in a like relation to a subsidiary;
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Superior Proposal means a bona fide Alternative Proposal that:
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is made in writing after the date hereof; |
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(b) |
was not solicited after the date hereof in contravention
of Section 7.1(a) and did not result from the breach of either Section 4
of the Letter of Intent or Article 7 by the Company or its
Representatives; |
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(c) |
is made for all or substantially all of the consolidated
assets of the Company or all of the outstanding Common Shares not owned by
the person making such Alternative Proposal; |
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(d) |
in the good faith determination of the Board and in the
proper discharge of its fiduciary duties, after consultation with its
legal counsel and financial advisors: |
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(i) |
would, if consummated in accordance with its terms (but
not assuming away any risk of non-completion), result in a transaction
more favourable to the Shareholders from a financial point of view than
the Arrangement taking into account the form and amount of consideration,
the likelihood and timing of completion and the other terms thereof (after
due consideration of the legal, financial, regulatory and other aspects of
such proposal and other factors deemed relevant by the Board); |
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(ii) |
complies with applicable Law; |
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(iii) |
is not subject to a due diligence condition; |
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offers the same consideration on a per share basis to all
Shareholders (but for greater certainty, does not restrict the provision
of payments described in paragraphs (b) or (c) of the definition of
collateral benefits in MI 61- 101); |
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(v) |
is reasonably capable of being completed in accordance
with its terms without undue delay or uncertainty, taking into account all
legal, financial, regulatory and other aspects of such proposal and the
party making such proposal and taking into account that shareholder
approval might be required; and |
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(vi) |
in respect of which the financing is then committed or
confirmation is provided from the sources of financing to be used to
complete the transaction contemplated by such Alternative Proposal that
such financing is available subject to customary conditions;
and |
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that the taking of action in respect of such Alternative
Proposal is necessary for the Board in the discharge of its duties under
applicable Law; |
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Superior Proposal Notice has
the meaning set out in Section 7.3(b)(iii);
Support Agreements means,
collectively, the support agreements dated August 31, 2015 between the Acquiror
and each of the Locked-Up Securityholders;
Tax or Taxes means
all income taxes (including any tax on or based upon net income, gross income,
income as specially defined, earnings, profits or selected items of income,
earnings or profits) and all capital taxes, gross receipts taxes, environmental
taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer
taxes, franchise taxes, licence taxes, withholding taxes, payroll taxes,
employment taxes, Canada Pension Plan or Québec Pension Plan premiums, excise,
severance, social security, workers' compensation, unemployment insurance or
compensation, stamp taxes, occupation taxes, premium taxes, property taxes,
windfall profits taxes, alternative or add-on minimum taxes, goods and services
tax, customs duties or other taxes, fees, imposts, assessments or charges of any
kind whatsoever, together with any interest and any penalties or additional
amounts imposed by any taxing authority (domestic or foreign) on such entity,
and any interest, penalties, additional taxes and additions to tax imposed with
respect to the foregoing;
Tax Act means the Income
Tax Act (Canada), as amended;
Tax Returns means all returns,
declarations, reports, elections, information returns, statements and other
documents filed or required to be filed with any taxing authority relating to
Taxes;
Termination Payment has the
meaning set out in Section 9.3(a);
Termination Payment Event has
the meaning set out in Section 9.3(a);
Transaction Consideration
means the fraction of an Acquiror Share to be received based upon the WAP and
based on an initial deemed value of $0.15 for each Common Share. The initial
ratio of $0.15 divided by the WAP is the
Exchange Ratio, at the date of
this Agreement is 0.376, and is subject to adjustment pursuant to the provisions
of Section 5.9 of this Agreement;
Treasury Regulations means
Regulations of the United States Department of the Treasury and/or the United
States Internal Revenue Service promulgated under or in respect of the Code;
TSX means the Toronto
Stock Exchange;
TSXV means the TSX Venture
Exchange;
U.S. Securities Act
means the United States Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder;
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U.S. Securities Laws means all
applicable securities laws in the United States, including the U.S. Securities
Act, the Exchange Act and any applicable state securities laws;
WAP means the weighted average
price at which the Acquiror issues Acquiror Shares in the Concurrent Financing
being $0.399;
Warrantholders means the
holders of the Warrants; and
Warrants means the outstanding
share purchase warrants of the Company.
1.2
Construction
In
this Agreement, unless otherwise expressly stated or the context otherwise
requires:
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(a) |
references to Agreement, this Agreement, hereto,
herein, hereby, hereunder, hereof and similar expressions are
references to this Agreement and not to any particular Section of or
Schedule to this Agreement; |
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(b) |
references to an Article, Section or Schedule
followed by a number or letter refer to the specified Article or Section
of or Schedule to this Agreement; |
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(c) |
words importing the singular shall include the plural and
vice versa, and words importing gender shall include the masculine,
feminine and neuter genders; |
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(d) |
the use of headings is for convenience of reference only
and shall not affect the construction or interpretation hereof; |
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(e) |
if the date on which any action is required to be taken
hereunder by any of the parties is not a Business Day, such action shall
be required to be taken on the next succeeding day that is a Business
Day; |
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(f) |
a period of Business Days is to be computed as beginning
on the day following the event that began the period and ending at 4:30
p.m. (Vancouver time) on the last day of the period if the period is a
Business Day or at 4:30 p.m. (Vancouver time) on the next Business Day if
the last day of the period does not fall on a Business Day; |
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(g) |
the terms material and materially shall, when used in
this Agreement, be construed, measured or assessed on the basis of whether
the matter would materially affect a party and its subsidiaries, taken as
a whole; |
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(h) |
references to any legislation or to any provision of any
legislation shall include any modification or re-enactment thereof, any
legislation provision substituted therefor and all regulations, rules and
interpretations issued thereunder or pursuant
thereto; |
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(i) |
references to any agreement or document shall be to such
agreement or document (together with the schedules and exhibits attached
thereto), as it may have been or may hereafter be amended, modified,
supplemented, waived or restated from time to time; and |
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(j) |
wherever the term includes or including is used, it
shall be deemed to mean includes, without limitation or including,
without limitation, respectively. |
1.3
Currency
Unless
otherwise indicated, all dollar amounts referred to in this Agreement are
expressed in Canadian dollars.
1.4
Knowledge
References
to the knowledge of the Company means the actual knowledge, after due inquiry,
of the officers of the Company. References to the knowledge of the Acquiror
means the actual knowledge, after due inquiry, of the senior officers of the
Acquiror.
1.5
Disclosure Letter
Any
reference to a matter being disclosed or set out in the Disclosure Letter shall
mean disclosure in such section of the Disclosure Letter that is referred to in
the relevant section of this Agreement and disclosure in any section of the
Disclosure Letter shall not be disclosure for the purposes of any other section
of the Disclosure Letter.
1.6
Schedules
The
Schedules to this Agreement, as listed below, are an integral part of this
Agreement:
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Schedule |
Description |
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Schedule A |
Plan of
Arrangement |
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Schedule B |
Arrangement
Resolution |
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Schedule C |
Representations
and Warranties of the Company |
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Schedule D |
Representations
and Warranties of the Acquiror |
ARTICLE 2
THE
ARRANGEMENT
2.1
Arrangement
The
Company and the Acquiror agree that the Arrangement shall be implemented in
accordance with and subject to the terms and conditions contained in this
Agreement and the Plan of Arrangement.
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2.2 Interim
Order
The
Company agrees that as soon as reasonably practicable after the date hereof, but
in any event no later than September 22, 2015, or such other date as the
Acquiror and the Company may agree, the Company, in a manner reasonably
acceptable to the Acquiror, shall apply for the Interim Order pursuant to
Division 5 of Part 9 of the BCBCA and, in co-operation with the Acquiror,
prepare, file and diligently pursue an application for the Interim Order, which
shall provide, among other things:
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(a) |
for the class of persons to whom notice is to be provided
in respect of the Arrangement and the Meeting and for the manner in which
notice is to be provided; |
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(b) |
that the securities of the Company for which holders
shall be entitled to vote on the Arrangement Resolution shall be Common
Shares, Options and Warrants, voting together as a single class; |
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(c) |
that Securityholders shall be entitled to vote on the
Arrangement Resolution, with each Securityholder being entitled to one
vote for each Common Share, and one vote for each Common Share underlying
the Options and Warrants held by such Securityholder, as
applicable; |
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(d) |
that the requisite approval for the Arrangement
Resolution shall be: (i) at least 662/3% of the votes cast by the
Shareholders, present in person or represented by proxy at a Meeting,
voting as a single class; (ii) at least 662/3% of the votes cast by the
Securityholders, present in person or represented by proxy at a Meeting,
voting as a single class; and (iii) if required, a simple majority of the
votes cast on the Arrangement Resolution by Securityholders present or in
person or represented by proxy at the Meeting (excluding any votes cast by
certain related parties and interested parties (as such terms are
defined in MI 61-101) in accordance with the requirements of MI 61-101)
(collectively the Securityholder Approval) |
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(e) |
that, in all other respects, the terms, restrictions and
conditions of the Company Governing Documents, including quorum
requirements and all other matters, shall apply in respect of the
Meeting; |
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(f) |
that the Acquiror intends to rely upon the exemption from
registration provided by section 3(a)(10) of the U.S. Securities Act in
connection with the issuance of Acquiror Shares to be issued in exchange
for securities as contemplated by the Arrangement, subject to and
conditioned upon the Court's determination following a hearing that the
Arrangement is fair and reasonable to the Securityholders; |
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(g) |
for the grant of Dissent Rights as contemplated in the
Plan of Arrangement; |
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(h) |
for the notice requirements with respect to the
presentation of the application to the Court for the Final
Order; |
- 13 -
|
(i) |
that the Meeting may be adjourned or postponed from time
to time by the Company subject to the terms of this Agreement without the
need for additional approval of the Court; |
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(j) |
that the record date for the Securityholders entitled to
notice of, and to vote at, the Meeting shall not change in respect of any
adjournment(s) or postponement(s) of the Meeting; and |
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(k) |
for such other matters as the Acquiror may reasonably
require, subject to obtaining the prior consent of the Company, such
consent not to be unreasonably withheld or
delayed. |
2.3 Circular
and Meeting
(a)
As soon as is practicable after the date hereof, the Company shall prepare, in
consultation with the Acquiror, the Circular which, together with any other
documents required by applicable Law in connection with the Meeting, shall be
prepared in accordance with applicable Law. The Circular shall, subject to
Article 7, reflect the Board Approval, a statement that the Locked-Up
Securityholders have agreed to vote all of the Common Shares, Options and
Warrants held by such persons in favour of the Arrangement Resolution, subject
to the terms of the Support Agreements.
(b)
Prior to the printing of the Circular and during the course of its preparation,
the Company shall provide the Acquiror with timely opportunity to review and
comment on it, and the Company shall in good faith consider incorporating
therein all reasonable comments made by the Acquiror and shall consult in good
faith with the Acquiror regarding any comments it proposes not to incorporate.
(c)
The Acquiror shall provide to the Company for inclusion in the Circular such
information regarding the Acquiror as is required by applicable Law to be
included in the Circular. The Acquiror represents, warrants and covenants that
any information it provides to the Company for inclusion in the Circular shall
be accurate and complete in all material respects as of the relevant date of
such information and shall not contain any Misrepresentation. The Acquiror shall
indemnify and save harmless the Company and its directors and officers from and
against any and all liabilities, losses, damages, claims, costs, expenses,
interest awards, judgments and penalties suffered or incurred by any of them in
connection with or as a result of any Misrepresentation contained in any
information that was provided by the Acquiror to the Company for inclusion in
the Circular.
(d)
As soon as practicable after the issuance of the Interim Order, the Company
shall cause the Circular, together with other documents required by applicable
Law in connection with the Meeting, to be sent to the Securityholders and filed
as required by the Interim Order and applicable Law, and the Company shall call
and hold the Meeting in accordance with the Interim Order, the Company Governing
Documents and applicable Law.
(e)
The Company and the Acquiror shall diligently do all such reasonable acts and
things as may be necessary to comply in all material respects with National
Instrument 54-101 Communication with Beneficial Owners of Securities of a
Reporting Issuer in connection with the Meeting and, without limiting the generality of the
foregoing, use all reasonable efforts to call and hold the Meeting by no later
than October 23, 2015.
- 14 -
(f)
Subject to Article 7, the Company shall use its commercially reasonable
efforts to secure the approval of the Arrangement Resolution by
Securityholders and solicit proxies for the approval of the Arrangement
Resolution in accordance with applicable Law. If requested by the Acquiror, the
Company shall employ, at the Acquiror's cost, the services of dealers and proxy
solicitation agents selected by the Acquiror. The Company shall instruct any
such proxy solicitation agents: (i) to report to the Acquiror and its designated
Representatives concurrently with their reports to the Company and to advise the
Acquiror as the Acquiror may reasonably request, and on a daily basis on each of
the last seven Business Days prior to the Meeting, as to the aggregate tally of
the proxies received by the Company in respect of the Arrangement Resolution and
any other matters to be considered at the Meeting; and (ii) to cooperate with
the Acquiror and any solicitation agents or other Representative of the Acquiror
hired by the Acquiror to assist in the solicitation of proxies in respect of the
Meeting.
(g)
The Company shall provide the Acquiror with a copy of any purported exercise of
Dissent Rights and written communications with any Shareholder purportedly
exercising such Dissent Rights and shall not, except as required by the BCBCA,
settle or compromise any action brought by any present, former or purported
holder of any of its securities in connection with the Arrangement or the other
transactions contemplated by this Agreement, without the prior consent of the
Acquiror, acting reasonably.
(h)
The Meeting shall be held in Vancouver, British Columbia on a Business Day to be
agreed upon by the parties, acting reasonably. Subject to Article 7, the Company
shall not adjourn, postpone or cancel (or propose to adjourn, postpone or
cancel) the Meeting, except with the Acquiror's prior written consent or as
required by applicable Law or the Company Governing Documents. The Company shall
provide notice to the Acquiror of the Meeting and allow the Acquiror's
Representatives to attend the Meeting.
(i)
The Company and the Acquiror shall each promptly notify the other party if at
any time before the Meeting it becomes aware (in the case of the Company only
with respect to the Company and in the case of the Acquiror only with respect to
the Acquiror) that the Circular contains a Misrepresentation, or otherwise
requires an amendment or supplement to the Circular, and the parties shall
co-operate in the preparation of any amendment or supplement to the Circular, as
required or appropriate, and the Company shall promptly mail or otherwise
publicly disseminate any amendment or supplement to the Circular as required by
the Court or applicable Law.
2.4 U.S.
Securities Law Matters
The parties agree that the issuance of the Acquiror Shares on completion of the
Arrangement to the Shareholders shall be done in reliance on the exemption from
the registration requirements of the U.S. Securities Act provided by Section
3(a)(10) thereof. In order to ensure the availability of the exemption from
registration provided by Section 3(a)(10) of the U.S. Securities Act, the
parties agree that the Arrangement shall be carried out on the following basis:
- 15 -
|
(a) |
prior to the issuance of the Interim Order, the Court
shall be advised of the intention of the parties to rely on the exemption
from registration provided by Section 3(a)(10) of the U.S. Securities Act
with respect to the issuance of the Acquiror Shares pursuant to the
Arrangement, based on the Court's approval of the Arrangement; |
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(b) |
the Court shall be required to satisfy itself that the
Arrangement is fair and reasonable; |
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(c) |
the Company shall ensure that each Shareholder entitled
to receive Acquiror Shares under the Arrangement shall be given adequate
notice advising them of their right to attend the hearing of the Court to
give approval of the Arrangement and providing them with sufficient
information necessary for them to exercise that right; |
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(d) |
the Shareholders shall be advised that the Acquiror
Shares, to be issued in the Arrangement, have not been registered under
the U.S. Securities Act and shall be issued in reliance on the exemption
from registration provided by Section 3(a)(10) of the U.S. Securities
Act; |
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(e) |
the Interim Order shall specify that each Securityholder
shall have the right to appear before the Court at the hearing so long as
it enters an appearance within a reasonable time; and |
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(f) |
the Final Order shall expressly state that the
Arrangement is approved by the Court as being fair and reasonable to
Securityholders. |
2.5 Final
Order
If
the Interim Order is obtained and the Arrangement Resolution is passed at the
Meeting as provided for in the Interim Order and as required by applicable Law,
subject to the terms of this Agreement, the Company shall as soon as reasonably
practicable thereafter, and in any event within three Business Days thereafter,
take all steps necessary or desirable to submit the Arrangement to the Court and
diligently pursue an application for the Final Order pursuant to Division 5 of
Part 9 of the BCBCA.
2.6 Court
Proceedings
The
Company shall provide the Acquiror with reasonable opportunity to review and
comment upon drafts of all material to be filed with the Court in connection
with the Arrangement, and shall give reasonable consideration to all such
comments. The Company shall provide to the Acquiror, on a timely basis, copies
of any notice of appearance or other Court documents served on the Company in
respect of the application for the Interim Order or the Final Order or any
appeal therefrom and of any notice, whether written or oral, received by the
Company indicating any intention to oppose the granting of the Interim Order or
the Final Order or to appeal the Interim Order or the Final Order. Subject to
applicable Law, the Company shall not file any material with the Court in
connection with the Arrangement or serve any such material, and shall not agree
to modify or amend materials so filed or served, except as contemplated hereby or with the Acquiror's prior written
consent, such consent not to be unreasonably withheld or delayed, provided that
nothing herein shall require the Acquiror to agree or consent to any increased
purchase price or other consideration or other modification or amendment to such
filed or served materials that expands or increases the Acquiror's obligations
set forth in any such filed or served materials or under this Agreement. The
Company shall ensure that all materials filed with the Court in connection with
the Arrangement are consistent in all material respects with the terms of this
Agreement and the Plan of Arrangement. The Company shall not object to legal
counsel to the Acquiror making submissions on the hearing of the motion for the
Interim Order and the application for the Final Order. The Company shall oppose
any proposal from any party that the Final Order contain any provision
inconsistent with this Agreement, and, if at any time after the issuance of the
Final Order and prior to the Effective Date, the Company is required by the
terms of the Final Order or by Law to return to Court with respect to the Final
Order, it shall do so after notice to, and in consultation and co-operation
with, the Acquiror.
- 16 -
2.7 Effective
Date
The
Arrangement shall become effective at the Effective Time on the Effective Date.
Upon issuance of the Final Order and subject to the satisfaction or, where not
prohibited, the waiver of the conditions (excluding conditions that, by their
terms, cannot be satisfied until the Effective Date, but subject to the
satisfaction or, where not prohibited, the waiver of those conditions as of the
Effective Date) set forth in Article 6, unless another date is agreed to in
writing by the parties, each of the parties on or before the Effective Date
shall proceed to file any documents as required pursuant to Section 292 of the
BCBCA, and such other documents as may be required to give effect to the
Arrangement pursuant to Division 5 of Part 9 of the BCBCA, whereupon at the
Effective Time on the Effective Date, the transactions comprising the
Arrangement shall be deemed to occur in the order set out in the Plan of
Arrangement without any further act or formality. From and after the Effective
Time, the Plan of Arrangement shall have all of the effects provided by
applicable Law, including the BCBCA. The Company agrees to negotiate in good
faith with the Acquiror to amend the Plan of Arrangement at any time prior to
the Effective Time in accordance with Section 10.1 of this Agreement to include
such other terms determined to be necessary or desirable by the Acquiror, acting
reasonably, provided that the Plan of Arrangement shall not be amended in any
manner which is inconsistent with the provisions of this Agreement, which would
reasonably be expected to delay, impair or impede the satisfaction of any
condition set forth in Article 6 or which has the effect of reducing the
Transaction Consideration or which is otherwise prejudicial to the Shareholders
or other parties to be bound by the Plan of Arrangement.
2.8 Company
Board Approval
The
Company represents and warrants to and in favour of the Acquiror, and
acknowledges that the Acquiror is relying upon such representations and
warranties in entering into this Agreement, that, as of the date hereof the
Board, after consultation with its financial advisors and legal counsel, has
unanimously determined that the Arrangement is fair from a financial point of
view to the Securityholders and is in the best interests of the Company, and
accordingly has unanimously approved the entering into of this Agreement and the
making of a recommendation that Securityholders vote in favour of the
Arrangement Resolution (collectively, the Board Approval).
- 17 -
2.9 Payment
of Consideration
The
Acquiror shall, following receipt of the Final Order and the Regulatory
Approvals, and prior to the Effective Time, deliver or cause to be delivered
sufficient Acquiror Shares to the Depositary to pay in full the aggregate
Transaction Consideration payable to the Shareholders (other than Shareholders
exercising Dissent Rights and who have not withdrawn their notice of objection)
pursuant to the Plan of Arrangement.
2.10 Announcement and
Shareholder Communications
The
Company may publicly announce the transactions contemplated hereby promptly
following the execution of this Agreement, the text and timing of such
announcement to be approved in writing by the Acquiror in advance, acting
reasonably. The Acquiror and the Company agree to co-operate in the preparation
of presentations, if any, to Securityholders regarding the transactions
contemplated by this Agreement and this Arrangement and the Company agrees to
consult with the Acquiror in connection with any communications or meeting with
Securityholders that it may have, and neither party shall (a) issue any press
release or otherwise make public announcements with respect to this Agreement or
the Plan of Arrangement without the prior written consent of the other party
(which consent shall not be unreasonably withheld or delayed), except as
permitted by Article 7, or (b) subject to Section 8.6, make any filing with any
Regulatory Authority with respect thereto without the prior written consent of
the other party; provided, however, that the foregoing shall be subject to each
party's overriding obligation to make any disclosure or filing required under
applicable Law or stock exchange rules, and the party making such disclosure
shall use commercially reasonable efforts to give prior oral or written notice
to the other party and reasonable opportunity to review or comment on the
disclosure or filing, and if such prior notice is not possible, to give such
notice immediately following the making of such disclosure or filing.
2.11 Adjustment to
Consideration Regarding Distributions
If
on or after the date hereof, the Company declares, sets aside or pays any
dividend or other distribution to the Shareholders of record as of a time prior
to the Effective Time, the Acquiror shall make such adjustments to the
Transaction Consideration as it determines acting in good faith to be necessary
to restore the original agreement of the parties in the circumstances. For
greater certainty, if the Company takes any of the actions referred to above,
the aggregate consideration to be paid by the Acquiror shall be decreased by an
equivalent amount.
2.12 List of
Securityholders
At
the reasonable request of the Acquiror from time to time, the Company shall
provide the Acquiror with a list (in both written and electronic form) of the
registered Shareholders, together with their addresses and respective holdings
of Common Shares, with a list of the names together with their addresses and
respective holdings of all persons holding securities or other rights to acquire
Common Shares (including Optionholders and Warrantholders) and a list of non-objecting beneficial owners
of Common Shares, together with their addresses and respective holdings.
- 18 -
2.13 Closing
The
closing of the Arrangement shall take place at the offices of McMillan LLP,
Royal Centre, 1055 West Georgia Street, Suite 1500, Vancouver, British Columbia
at 10:00 a.m. (Vancouver time) on the Effective Date, or at such other time and
place as may be agreed to by the parties.
ARTICLE 3
REPRESENTATIONS AND
WARRANTIES OF THE COMPANY
3.1
Representations and Warranties
The
Company hereby makes to the Acquiror the representations and warranties set out
in Schedule C and acknowledges that the Acquiror is relying upon these
representations and warranties in connection with the entering into of this
Agreement.
3.2
Investigation
Any
investigation by the Acquiror or its Representatives shall not mitigate,
diminish or affect the representations and warranties of the Company pursuant to
this Agreement.
3.3 Survival
of Representations and Warranties
The
representations and warranties of the Company contained in this Agreement shall
survive the execution and delivery of this Agreement and shall expire and be
terminated and extinguished at the Effective Time.
ARTICLE 4
REPRESENTATIONS AND
WARRANTIES OF THE ACQUIROR
4.1
Representations and Warranties
The
Acquiror hereby makes to the Company the representations and warranties set out
in Schedule D and acknowledges that the Company is relying upon these
representations and warranties in connection with the entering into of this
Agreement.
4.2
Investigation
Any
investigation by the Company or its Representatives shall not mitigate, diminish
or affect the representations and warranties of the Acquiror pursuant to this
Agreement.
- 19 -
4.3 Survival
of Representations and Warranties
The
representations and warranties of the Acquiror contained in this Agreement shall
survive the execution and delivery of this Agreement and shall expire and be
terminated and extinguished at the Effective Time.
ARTICLE 5
COVENANTS
5.1 Covenants
of the Company Regarding the Conduct of Business
The
Company agrees that, prior to the Effective Time, unless the Acquiror shall
otherwise agree in writing, such agreement not to be unreasonably withheld,
delayed or conditioned, or as otherwise expressly contemplated or permitted by
this Agreement, the Company shall:
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(a) |
conduct its business only in, not take any action except
in, and maintain its facilities in, the usual, ordinary and regular course
of business consistent with past practice and use commercially reasonable
efforts to: (i) preserve intact its present business organization, assets
(including intellectual property) and goodwill; (ii) maintain its real
property interests (including title to, and leasehold interests in respect
of, any real property) in good standing; (iii) keep available the services
of its officers and employees as a group; and (iv) preserve the current
relationships with consultants, and others having business relationships
with it; |
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(b) |
not: |
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(i) |
issue, sell, pledge, lease, dispose of, encumber or agree
to issue, sell, pledge, lease, dispose of or encumber: (A) any additional
shares of, or any options, warrants, calls, conversion privileges or
rights of any kind to acquire any shares or other securities of, the
Company (other than the issuance of Common Shares pursuant to the exercise
in accordance with their terms of Options or Warrants currently
outstanding); or (B) any assets of the Company; |
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(ii) |
amend or agree to amend any of the terms of any of the
Options or the Warrants, or amend, extend, terminate or otherwise alter
(or agree to do any of the foregoing in respect of) any other contractual
arrangement of the Company; |
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(iii) |
amend or propose to amend the notice of articles,
articles, by-laws or other constating documents of the Company; |
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(iv) |
split, combine or reclassify any outstanding Common
Shares or declare, set aside or pay any dividend or other distribution in
cash, stock, property or otherwise with respect to the Common
Shares; |
- 20 -
|
(v) |
redeem, purchase or offer to purchase any Common Shares
or other securities of the Company; |
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(vi) |
reorganize, amalgamate or merge by plan of arrangement or
otherwise the Company with any other person, company, partnership or other
business organization whatsoever or incorporate any
subsidiaries; |
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(vii) |
reduce the stated capital of the Company; |
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(viii) |
acquire or agree to acquire (by merger, amalgamation,
plan of arrangement, acquisition of shares or assets or otherwise) any
company, partnership or other business organization or division, or
incorporate or form any company, partnership or other business
organization or make any investment either by purchase of shares or
securities, contributions of capital, property transfer or purchase of any
property or assets of any other person, company, partnership or other
business organization; |
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(ix) |
enter into or agree to the terms of any joint venture or
similar agreement, arrangement or relationship; |
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(x) |
incur or commit to incur any indebtedness for borrowed
money, capital expenditures, or any other material liability, contractual
commitment or obligation or issue any debt securities; |
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(xi) |
enter into any agreement with, or make any payments to,
any Related Party of the Company other than the Fiore Fee; |
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(xii) |
endorse, or otherwise as an accommodation become
responsible for, the obligations of any other person, company, partnership
or other business organization, or make any loans or advances; |
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(xiii) |
adopt a plan of liquidation or resolutions providing for
the liquidation or dissolution of the Company; |
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(xiv) |
take any action or enter into any transaction that would
preclude the Acquiror from obtaining the tax bump, determined under
paragraph 88(1)(d) of the Tax Act, in respect of the non-depreciable
capital property of the Company upon a wind-up, or amalgamation with, the
Company; |
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(xv) |
pay, discharge or satisfy any material claims,
liabilities or obligations other than the payment, discharge or
satisfaction, in the ordinary course of business consistent with past
practice, of liabilities reflected or reserved against in the Company's
financial statements or incurred in the ordinary course of business
consistent with past practice; |
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(xvi) |
authorize, recommend, propose or agree to any release or
relinquishment of any material contractual right or other material right
under any licence or permit or material
contract; |
- 21 -
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(xvii) |
abandon or fail to diligently pursue any application for
any material licence, permit, order, authorization, consent, approval or
registration which is currently pending or contemplated to be sought or
required; |
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(xviii) |
waive, release, grant or transfer any rights of value or
modify or change in any material respect any existing licence, lease,
permit, material contract or other material document, other than in the
ordinary course of business consistent with past practice; or |
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(xix) |
enter into new commitments of a capital expenditure
nature or incur any new contingent
liabilities; |
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(c) |
not enter into or modify any employment, consulting,
severance, change of control or similar agreements or arrangements with,
or grant any bonuses, salary or fee increases, severance or termination
pay to, any officers or directors or, in the case of employees or
consultants who are not officers or directors, take any action other than
in the ordinary, regular and usual course of business and consistent with
past practice (none of which actions shall be unreasonable or unusual)
with respect to the grant of any bonuses, salary or fee increases,
severance or termination pay or with respect to any increase of benefits
payable in effect on the date hereof and shall not pay or agree to pay any
bonuses, salary or fee increases, severance or termination pay to any
director, officer, employee or consultant in connection with the
transactions contemplated by this Agreement; |
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(d) |
not adopt or amend any bonus, profit sharing, incentive,
compensation, stock option, pension, retirement, deferred compensation,
employment or other employee benefit plan, agreement, trust, fund or
arrangement for the benefit or welfare of any employee; |
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(e) |
not take any action, which would render, or which
reasonably may be expected to render, any representation or warranty made
by it in this Agreement untrue in any material respect at any time prior
to the Effective Time if then made, and promptly notify the Acquiror first
immediately orally and then promptly in writing of the occurrence of any
event or condition that has, or is reasonably likely to have, a Material
Adverse Effect in respect of the Company in the course of its business or
in the operation of its properties and of any material governmental or
third party complaints, investigations or hearings (or communications
indicating that the same may be contemplated); |
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(f) |
not authorize or propose or enter into or modify any
contract, agreement, commitment or arrangement to do any of the matters
prohibited by the other paragraphs of this Section 5.1; |
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(g) |
not enter into or adopt any shareholder rights plan or
similar agreement or arrangement; |
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(h) |
(i) duly and timely file all Tax Returns required to be
filed by it on or after the date hereof and all such Tax Returns shall be
true, complete and correct in all material respects, (ii) timely pay all Taxes which are
due and payable, (iii) not make or rescind any material express or deemed
election relating to Taxes, (iv) not make a request for a Tax ruling or
enter into a closing agreement with any taxing authorities, (v) not settle
or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to Taxes, and
(vi) not change in any material respect any of its methods of reporting
losses, deductions or accounting for income tax purposes from those
employed in the preparation of its Tax Return for the taxation year ending
December 31, 2014, except as may be required by applicable Law; |
- 22 -
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(i) |
not engage in any business, enterprise or other activity
different from that carried on by it at the date of this Agreement that
would reasonably be expected to have a Material Adverse Effect on the
Company; and |
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(j) |
make or cooperate as necessary in the making of all
necessary filings and applications under all applicable Law required in
connection with the transactions contemplated herein and take all
reasonable action necessary to be in compliance with such
Laws. |
5.2 Covenants
of the Acquiror Regarding the Conduct of Business
The
Acquiror covenants and agrees that, except as contemplated in this Agreement,
until the Effective Time or the day upon which this Agreement is terminated,
whichever is earlier:
|
(a) |
the Acquiror shall use commercially reasonable efforts to
preserve intact its business organizations; |
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(b) |
the Acquiror shall not, directly or indirectly, do or
permit to occur any of the following without the prior consent of the
Company, such consent not to be unreasonably withheld or
delayed: |
|
(i) |
amend its articles or by-laws or the articles or by-laws
of any of its subsidiaries or the terms of its shares or transfer it or
any of its subsidiaries out of its current jurisdiction of incorporation
in a manner that could have a material adverse effect on the market price
or value of the Acquiror Shares to be issued pursuant to the
Arrangement; |
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(ii) |
split, consolidate or reclassify any of its shares nor
undertake any other capital reorganization; |
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(iii) |
reduce capital in respect of its shares; |
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(iv) |
take any action that could reasonably be expected to
interfere with or be inconsistent with the consummation of the Arrangement
or the transactions contemplated in this Agreement;
and |
- 23 -
|
(v) |
issue any shares in its capital stock or the capital
stock of any of its subsidiaries (or securities convertible, exchangeable
or exercisable into its shares or the shares of any of its subsidiaries)
except upon the exercise of convertible securities outstanding as of the
date of this Agreement. Notwithstanding the foregoing, the Acquiror shall
be permitted to: |
|
(A) |
grant up to 6,000,000 service provider share purchase
options under its option plan and allowable shares pursuant to its
restricted share unit plan; and |
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(B) |
raise the Concurrent Financing through the issuance of
Acquiror Shares or Acquiror Share equivalents; |
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(c) |
the Acquiror shall not, directly or indirectly, do or
permit to occur any of the following without the prior consent of the
Company, such consent not to be unreasonably withheld or
delayed: |
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(i) |
lend money to or invest money in any third party, whether
by loan, acquisition of shares, acquisition of debt obligations or any
other manner whatsoever or guarantee, endorse or otherwise become surety
for or upon the obligations of any other person except as herein
provided; |
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(ii) |
enter into any material transactions or transaction out
of the ordinary course of business or enter into any material changes to
the terms or provisions of any agreement which is material (other than in
respect of the Concurrent Financing); |
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(iii) |
create, assume or suffer to exist (i) any liens upon or
with respect to any of the equity interests in any subsidiary, whether now
owned or hereafter acquired, or (ii) create or assume any liens or
security interest upon or with respect to any of its assets, property or
undertaking except under the Credit Facility; |
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(iv) |
sell, lease or otherwise transfer any material
assets; |
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(v) |
acquire or invest in any securities issued by any person
or participate in any partnership or joint venture or the acquisition of
any business assets or unincorporated business operations; |
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(vi) |
declare or pay any dividends, purchase, redeem, retire,
defease or otherwise acquire for value any of its equity interests now or
hereafter outstanding, return any capital to its stockholders, directors
or officers (or the equivalent persons thereof), make any distribution of
assets, equity interests, obligations or securities to its stockholders,
directors or officers (or the equivalent persons thereof) or pay or agree
to pay any bonus, directors fees, consulting fees or other similar fees to
any stockholders, directors or officers (or the equivalent persons
thereof), or amend any existing service agreement, provided however, that
the foregoing will not restrict the Acquiror from making routine payments of
salaries or benefits to any salaried or hourly employees of who are not
directors or officers with the terms of employment or consulting
arrangements in place as at the date hereof) and the Acquiror shall have
the right to implement change of control payment agreements with its
senior executives on terms acceptable to the TSX; and |
- 24 -
|
(vii) |
other than as herein provided, enter into any contract,
agreement or transaction whatsoever, including for the sale, purchase,
lease or other dealing in any property or the provision of any services
(other than office and administration services provided in the ordinary
course of business), with any non-arms length party. Notwithstanding the
foregoing, the Acquiror may upon notice to the Company, enter into a
non-arms length transaction which does not involve any remuneration, is
not material and is made upon fair and reasonable terms, which terms are
not less favorable to that party, as the case may be, than it would obtain
in an arms length transaction and, if applicable, for consideration which
equals the fair market value of such property or the fair market rental as
regards to leased property. |
5.3 Covenants
of the Company Relating to the Arrangement
The
Company shall use commercially reasonable efforts to perform all obligations
required to be performed by the Company under this Agreement, co-operate with
the Acquiror in connection therewith, and do all such other acts and things as
may be necessary or desirable in order to consummate and make effective as soon
as reasonably practicable, the transactions contemplated by this Agreement and,
without limiting the generality of the foregoing, the Company shall:
|
(a) |
use commercially reasonable efforts to obtain as soon as
practicable following execution of this Agreement all third party
consents, approvals and notices required under any material
Contract; |
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(b) |
use commercially reasonable efforts to defend all
lawsuits or other legal, regulatory or other proceedings against the
Company challenging or affecting this Agreement or the consummation of the
transactions contemplated hereby and use commercially reasonable efforts
to have lifted or rescinded any injunction or restraining order or other
order relating to the Company which may materially adversely affect the
ability of the parties to consummate the Arrangement; and |
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(c) |
use commercially reasonable efforts to satisfy all
conditions precedent in this Agreement and take all steps set forth in the
Interim Order and Final Order applicable to it and comply promptly with
all requirements which applicable Law may impose on the Company with
respect to the transactions contemplated by this
Agreement. |
- 25 -
5.4 Covenants
of the Acquiror Relating to the Arrangement
The
Acquiror shall use commercially reasonable efforts to perform all obligations
required to be performed by the Acquiror under this Agreement, co-operate with
the Company in connection therewith, and do all such other acts and things as
may be necessary or desirable in order to consummate and make effective as soon
as reasonably practicable, the transactions contemplated by this Agreement and,
without limiting the generality of the foregoing, the Acquiror shall:
|
(a) |
use commercially reasonable efforts to defend all
lawsuits or other legal, regulatory or other proceedings against the
Acquiror challenging or affecting this Agreement or the consummation of
the transactions contemplated hereby and use commercially reasonable
efforts to have lifted or rescinded any injunction or restraining order or
other order relating to the Acquiror which may materially adversely affect
the ability of the parties to consummate the Arrangement; |
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|
(b) |
use commercially reasonable efforts to satisfy all
conditions precedent in this Agreement and take all steps set forth in the
Interim Order and Final Order applicable to it and comply promptly with
all requirements which applicable Law may impose on the Acquiror with
respect to the transactions contemplated by this Agreement; and |
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(c) |
prepare and file with the applicable Regulatory
Authorities, including the NYSE MKT and the TSX, all necessary
applications and forms required in order to permit the valid issue and
listing of Acquiror Shares issued pursuant to the Arrangement on such
exchanges. |
5.5
Options
All
outstanding Options will be converted to options to purchase Acquiror Shares
pursuant to the Plan of Arrangement. The Acquiror covenants and agrees that the
Options granted to charities, Fiore and any Optionholders who will be continuing
as directors of the Acquiror outstanding on the Effective Date shall continue in
effect on the same terms and conditions (subject to adjustments required after
giving effect to the Arrangement including, without limitation, multiplying the
number of Options by the Exchange Ratio and dividing the exercise price by the
Exchange Ratio and that such Options shall be exercisable for Acquiror Shares).
All other Options shall continue in effect on the same terms and conditions
(subject to adjustments required after giving effect to the Arrangement
including, without limitation, multiplying the number of Options by the Exchange
Ratio and dividing the exercise price by the Exchange Ratio and that such
Options shall be exercisable for Acquiror Shares) but shall expire ninety (90)
days after the Effective Date without any other cost or obligation to the
Acquiror. The Acquiror shall take all corporate action necessary to reserve for
issuance a sufficient number of Acquiror Shares for delivery upon exercise of
the Options assumed in accordance with this Section 5.5.
- 26 -
5.6
Warrants
All
outstanding Warrants will be converted to warrants to purchase Acquiror Shares
pursuant to the Plan of Arrangement. The Acquiror covenants and agrees that the
Warrants outstanding on the Effective Date shall continue in effect on the same
terms and conditions (subject to adjustments required after giving effect to the
Arrangement including, without limitation, multiplying the number of Warrants by
the Exchange Ratio and dividing the exercise price by the Exchange Ratio, and
that such Warrants shall be exercisable for Acquiror Shares). The Acquiror shall
take all corporate action necessary to reserve for issuance a sufficient number
of Acquiror Shares for delivery upon exercise of the Acquiror Warrants assumed
in accordance with this Section 5.6.
5.7 Bridge
Loan
The
Company agrees that concurrently with executing this Agreement and as a term
thereof, it will make available a credit facility (the Credit Facility)
to the Acquiror for an amount of $4,250,000 which will be advanced on execution
of this Agreement. The Credit Facility will be secured by a customary general
security agreement signed by the Acquiror (but not any subsidiaries), bear
interest at 15% per annum with interest for a 6-month period accrued in advance
conditional on the Arrangement completing, and will be deemed to be included in
the amount of the loan that must be repaid after completion of the Arrangement.
The loan shall have a minimum term of 12 months unless the Arrangement
terminates without consummation as provided below. The advance accrued interest
amount does not form part of the Minimum Closing Working Capital required to be
held by the Company at completion but has been included in valuing the Common
Shares at $0.15 each. The Credit Facility will be repayable on demand made by
the Company anytime after 30 days from the date of termination of this Agreement
if it terminates without the Arrangement completing due to a breach of this
Agreement by the Acquiror and 180 days from termination of the Arrangement if
the cause is Securityholders not voting in favour of the Arrangement or the
Acquiror terminating because of the Companys breach. In the event of
termination of the Arrangement without consummation, the amount of the Credit
Facility which is repayable will be reduced by the portion of the advance
accrued interest which is in excess of the amount of interest that would be
otherwise accrued on a per diem basis for the actual number of days the loan was
outstanding.
5.8
Transaction Fee Payable to Fiore
The
Company shall concurrently with the first advance under the Credit Facility
described in Section 5.7 pay Fiore a transaction fee of $280,000 (the Fiore
Fee). Fiore may use the fee to purchase Acquiror Shares at the WAP on or
before September 9, 2015.
5.9 Minimum
Closing Working Capital
The
Exchange Ratio is based on the Company having 34,258,876 Common Shares
outstanding and adjusted net working capital of $4,700,000 as of the date
hereof. The Company must have minimum adjusted closing net working capital
(Minimum Closing Working Capital) of not less than $4,700,000 on the
Effective Date. Minimum Closing Working Capital means cash on hand, the Credit
Facility to the Acquiror made under Section 5.7 but excluding any prepaid interest, less all accrued
liabilities for operating and other costs after the date hereof (other than the
costs incurred by the Company in connection with the Arrangement (legal,
printing, mailing and regulatory not to exceed $125,000) and the Fiore Fee). To
the extent the Company working capital is less than Minimum Closing Working
Capital on the Effective Date, the Exchange Ratio shall be adjusted downwards by
multiplying the Exchange Ratio by the number which is the actual closing working
capital calculated as per above divided by $4,700,000.
- 27 -
ARTICLE 6
CONDITIONS
6.1 Mutual
Conditions Precedent
The
obligations of the parties to complete the Arrangement are subject to the
fulfillment of each of the following conditions precedent on or before the
Effective Date, each of which may only be waived in whole or in part with the
mutual consent of the parties:
|
(a) |
the Arrangement Resolution shall have been approved and
adopted by the Securityholders at the Meeting in accordance with the
Interim Order; |
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|
(b) |
the Interim Order and the Final Order shall each have
been obtained on terms consistent with this Agreement and shall not have
been set aside or modified in a manner unacceptable to the Company or the
Acquiror, acting reasonably, on appeal or otherwise; |
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|
(c) |
no Regulatory Authority shall have enacted, issued,
promulgated, enforced or entered any Law which is then in effect and has
the effect of making the Arrangement illegal or otherwise preventing or
prohibiting consummation of the Arrangement; |
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|
(d) |
the Regulatory Approvals shall have been obtained on
terms satisfactory to the Acquiror, acting reasonably, and there shall be
no appeal, stop-order, stay or revocation or proceeding seeking an appeal,
stop-order, stay or revocation of the Regulatory Approvals; |
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|
(e) |
the issuance of Acquiror Shares issuable pursuant to the
Arrangement shall be exempt from registration requirements under the U.S.
Securities Act pursuant to section 3(a)(10) thereof and the registration
and qualification requirements of all applicable state securities laws;
and |
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|
(f) |
this Agreement shall not have been terminated in
accordance with its terms. |
6.2
Conditions Precedent to the Obligations of the
Acquiror
The obligation of the Acquiror to complete the Arrangement is subject to the
fulfillment of each of the following conditions precedent on or before the
Effective Date:
- 28 -
|
(a) |
the representations and warranties made by the Company in
this Agreement that are qualified by Material Adverse Effect shall be true
and correct in all respects and the representations and warranties that
are made by the Company in this Agreement that are not so qualified shall
be true and correct in all material respects, in each case as of the
Effective Date as if made on and as of such date (except to the extent
that any such representation or warranty speaks as of an earlier date or
except as affected by transactions contemplated or permitted by this
Agreement), except where any failures or breaches of representations and
warranties would not, either individually or in the aggregate, have a
Material Adverse Effect on the Company or prevent, or materially delay the
consummation of the Arrangement and the Company shall have provided to the
Acquiror a certificate of two senior officers of the Company certifying
such accuracy on the Effective Date; |
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|
(b) |
subject to Section 6.4, the Company shall have complied
in all material respects with its covenants herein and provided to the
Acquiror a certificate of two senior officers of the Company certifying
that it has so complied with its covenants herein; |
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(c) |
from the date hereof up to and including the Effective
Date, there shall have been no change, effect, event, circumstance, fact
or occurrence that, individually or in the aggregate, has had or would
reasonably be expected to have a Material Adverse Effect on the Company
and the Company shall have provided to the Acquiror a certificate of two
senior officers of the Company to such effect; |
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(d) |
Shareholders holding no more than 10% of the outstanding
Common Shares shall have validly exercised their Dissent Rights (and not
withdrawn such exercise) and the Acquiror shall have received a
certificate dated the day immediately preceding the Effective Date of two
officers of the Company to such effect; |
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(e) |
the Support Agreements shall not have been
terminated; |
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(f) |
the Board shall (i) have adopted all necessary
resolutions, and all other necessary corporate action shall have been
taken by the Company, to permit the consummation of the Arrangement, and
(ii) the Board shall not have withdrawn any recommendation made by it that
Securityholders vote in favour of the Arrangement Resolution or changed
any such recommendation in a manner that has substantially the same effect
or issued a recommendation that Securityholders not vote in favour of the
Arrangement Resolution; |
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(g) |
there shall not be threatened in writing or pending any
suit, action or proceeding by any Regulatory Authority challenging this
Agreement or the transactions contemplated hereby, that would reasonably
be expected to result in a judgment, order or decree delaying, restraining
or prohibiting the Arrangement (or the Acquiror's direct or indirect
ownership of the Company on or following the Effective Date) or compelling
the Acquiror to dispose of or hold separate
any material portion of the business or assets of the Company
(or any equity interest in the Company); and |
- 29 -
|
(h) |
the Acquiror shall not have become aware of any
Misrepresentation (after giving effect to all subsequent filings in
relation to all matters covered in earlier filings) in any document filed
or released by or on behalf of the Company with any securities regulatory
authority in Canada or elsewhere, including any annual report, financial
statements, material change report, press release or management
information circular, that the Acquiror shall have determined, acting
reasonably, constitutes a Material Adverse Effect in respect of the
Company. |
The
foregoing conditions are for the exclusive benefit of the Acquiror and may be
waived, in whole or in part, by the Acquiror in writing at any time. The
Acquiror may not rely on the failure to satisfy any of the conditions in this
Section 6.2 if the condition was not satisfied solely as a result of a material
default by the Acquiror in complying with its obligations under this Agreement.
6.3
Conditions Precedent to the Obligations of the Company
The
obligation of the Company to complete the Arrangement is subject to the
fulfillment of each of the following conditions precedent on or before the
Effective Date:
|
(a) |
As part of the Concurrent Financing, the Acquiror shall
have raised by way of completed special warrant transactions or legally
binding agreements where the financing funds have been escrowed to be
released concurrently with completion of the transactions contemplated
herein of at least $10,000,000; |
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(b) |
the Cannon Point Nominee shall have been appointed to the
Acquiror Board effective on or before the Effective Date; |
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(c) |
the representations and warranties made by the Acquiror
in this Agreement that are qualified by Material Adverse Effect shall be
true and correct in all respects and the representations and warranties
that are made by the Acquiror in this Agreement that are not so qualified
shall be true and correct in all material respects, in each case as of the
Effective Date as if made on and as of such date (except to the extent
that any such representation or warranty speaks as of an earlier date or
except as affected by transactions contemplated or permitted by this
Agreement), except where any failures or breaches of representations and
warranties would not, either individually or in the aggregate, have a
Material Adverse Effect on the Acquiror or prevent, or materially delay
the consummation of the Arrangement and the Acquiror shall have provided
to the Company a certificate of two senior officers of the Acquiror
certifying such accuracy on the Effective Date; |
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(d) |
there shall not be threatened in writing or pending any
suit, action or proceeding by any Regulatory Authority challenging this
Agreement or the transactions contemplated hereby, that would reasonably
be expected to result in a judgment, order or decree delaying, restraining
or prohibiting the Arrangement (or the Acquiror's direct or indirect ownership of the Company on
or following the Effective Date) or compelling the Acquiror to dispose of
or hold separate any material portion of the business or assets of the
Company (or any equity interest in the Company); |
- 30 -
|
(e) |
subject to Section 6.4, the Acquiror shall have complied
in all material respects with its covenants herein, except those in
Section 2.9, in which case it shall have complied in all respects, and the
Acquiror shall have provided to the Company a certificate of two senior
officers of the Acquiror certifying that the Acquiror has so complied with
its covenants herein; |
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(f) |
from the date hereof and up to and including the
Effective Date, there shall have been no change, effect, event,
circumstance, fact or occurrence that, individually or in the aggregate,
has had or would reasonably be expected to have a Material Adverse Effect
on the Acquiror and the Acquiror shall have provided to the Company a
certificate of two senior officers of the Acquiror to such effect;
and |
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(g) |
the Company shall not have become aware of any
Misrepresentation (after giving effect to all subsequent filings in
relation to all matters covered in earlier filings) in any document filed
or released by or on behalf of the Acquiror with any securities regulatory
authority in Canada or elsewhere, including any annual report, financial
statements, material change report, press release or management
information circular, that the Company shall have determined, acting
reasonably, constitutes a Material Adverse Effect in respect of the
Acquiror. |
The
foregoing conditions precedent are for the exclusive benefit of the Company and
may be waived, in whole or in part, by the Company in writing at any time. The
Company may not rely on the failure to satisfy any of the conditions in this
Section 6.3 if the condition was not satisfied solely as a result of a material
default by the Company in complying with its obligations under this Agreement.
6.4
Notice and Cure Provisions
Each
party shall give prompt notice to the other party of the occurrence, or failure
to occur, at any time from the date hereof until the Effective Date, of any
event or state of facts which occurrence of failure would, or would reasonably
be likely to:
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(a) |
cause any of the representations or warranties of either
party contained herein to be untrue or inaccurate in any material respect
on the date hereof or at the Effective Date; |
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(b) |
result in the failure to comply with or satisfy any
covenant, condition or agreement to be complied with or satisfied by
either party prior to or at the Effective Date; or |
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(c) |
result in the failure to satisfy any of the conditions
precedent in its favour contained in Sections 6.1, 6.2 or 6.3, as the case
may be. |
- 31 -
Except
as herein provided, a party may elect not to complete the transactions
contemplated hereby pursuant to the conditions contained in Sections 6.1, 6.2
and 6.3 or exercise any termination right arising therefrom; provided, however,
that (i) promptly, and in any event prior to the Effective Time, the party
intending to rely thereon has delivered a written notice to the other party
specifying in reasonable detail all breaches of covenants, representations and
warranties or other matters which the party delivering such notice is asserting
as the basis for the non-fulfillment of the applicable condition precedent or
termination right, as the case may be, and (ii) if any such notice is delivered,
and a party is proceeding diligently to cure such matter, if such matter is
susceptible to being cured, the other party may not terminate this Agreement
(except pursuant to Section 9.2(c)) unless the default or breach shall not have
been cured at the earlier of the Effective Date and the expiration of a period
of 15 days from the date of such notice.
6.5
Satisfaction of Conditions
The
conditions precedent set out in Sections 6.1, 6.2 or 6.3 shall be conclusively
deemed to have been satisfied, waived or released at the Effective Time.
ARTICLE 7
COVENANTS RELATING TO
ALTERNATIVE PROPOSALS
7.1
Non-Solicitation
(a)
Except as otherwise provided in this Agreement, the Company shall not, directly
or indirectly through any Representative of the Company:
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(i) |
solicit, assist, initiate, encourage or facilitate
(including by way of discussion, negotiation, furnishing information,
permitting any visit to any facilities or properties of the Company or
entering into any form of written or oral agreement, arrangement or
understanding) any inquiries, proposals or offers regarding, or that may
reasonably be expected to lead to, any Alternative Proposal; |
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(ii) |
engage or participate in any discussions or negotiations
regarding, or provide any information with respect to or otherwise
cooperate in any way with any person (other than the Acquiror and its
Representatives) regarding, any Alternative Proposal or potential
Alternative Proposal; |
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(iii) |
withdraw, modify or qualify, or propose publicly to
withdraw, modify or qualify, in any manner adverse to the Acquiror, the
approval or recommendation of this Agreement or the Arrangement by the
Board or any of its committees; |
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(iv) |
approve or recommend, or remain neutral with respect to,
or propose publicly to approve or recommend, any Alternative Proposal,
provided that remaining neutral with respect to an Alternative Proposal
and/or failing to reaffirm its recommendation of this Agreement and the
Offer until the earlier of (i) five calendar days following the
public announcement of such Alternative Proposal, and (ii) three Business
Days prior to the Meeting, shall not constitute a breach of this Section
7.1(a)(iv); |
- 32 -
|
(v) |
accept or enter into, or publicly propose to accept or
enter into, any letter of intent, agreement in principle, agreement,
arrangement or undertaking related to any Alternative Proposal;
or |
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(vi) |
release any person from or waive or otherwise forebear in
the enforcement of any confidentiality or standstill agreement or any
other agreement with such person that would facilitate the making or
implementation of any Alternative Proposal (it being acknowledged and
agreed that the automatic termination or automatic release of any
standstill provisions of any such agreement described in Section
7.1(a)(vi) of the Disclosure Letter as the result of the entering into or
announcement of this Agreement pursuant to the terms of any such agreement
shall not be a breach of this Section 7.1(a)(vi)). |
(b)
The Company shall immediately cease and cause to be terminated any existing
solicitation, discussion, negotiation, encouragement or activity with any person
(other than the Acquiror or any of its Representatives) by the Company or any of
its Representatives with respect to any Alternative Proposal or any potential
Alternative Proposal. The Company shall immediately cease to provide any person
(other than the Acquiror or any of its Representatives) with access to
information concerning the Company in respect of any Alternative Proposal or any
potential Alternative Proposal, and shall request the return or destruction of
all confidential information provided to any person (other than the Acquiror or
any of its Representatives) that has entered into a confidentiality agreement
with the Company relating to any Alternative Proposal or potential Alternative
Proposal to the extent provided for in such confidentiality agreement and shall
use all commercially reasonable efforts to ensure that such requests are
honoured.
(c)
The Company shall ensure that its Representatives are aware of the prohibitions
in this Section 7.1 and the Company shall be responsible for any breach of this
Section 7.1 by its Representatives.
7.2 Notification
of Alternative Proposals
The
Company shall promptly (and in any event within 24 hours) notify the Acquiror,
at first orally and then in writing, of any proposal, inquiry, offer or request
received by the Company or its Representatives: (i) relating to an Alternative
Proposal or potential Alternative Proposal or inquiry that could reasonably lead
or be expected to lead to an Alternative Proposal; (ii) for discussions or
negotiations in respect of an Alternative Proposal or potential Alternative
Proposal; (iii) for non-public information relating to the Company or access to
properties, books, records or a list of Securityholders; (iv) for representation
on the Board; or (v) for any material amendments to the foregoing. Such notice
shall include the identity of the person making such proposal, inquiry, offer or
request, a description of the terms and conditions of such proposal, inquiry, offer or request, copies of all
written communications in respect of such proposal, inquiry, offer, or request,
including any term sheet, summary or letter of intent or similar document
(including drafts thereof) relating to such Alternative Proposal or potential
Alternative Proposal and such other details of the proposal, inquiry, offer or
request that the Acquiror may reasonably request. The Company shall keep the
Acquiror promptly and fully informed of the status, including any change to the
material terms, of such proposal, inquiry, offer or request and shall respond
promptly to all inquiries by the Acquiror with respect thereto.
- 33 -
7.3
Responding to Alternative Proposals and Superior Proposals
(a)
Notwithstanding Section 7.1(a) or any other provision of this Agreement, if at
any time following the date of this Agreement and prior to the Meeting the
Company receives a bona fide written Alternative Proposal (that was not
solicited, assisted, initiated, encouraged or facilitated in contravention of
Section 4 of the Letter of Intent or, after the date hereof, in contravention of
Section 7.1(a)), the Company and its Representatives may:
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(i) |
contact the person making such Alternative Proposal and
its Representatives solely for the purpose of clarifying the terms and
conditions of such Alternative Proposal and the likelihood of its
consummation so as to determine whether such Alternative Proposal is, or
is reasonably likely to lead to, a Superior Proposal; and |
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(ii) |
if the Board determines, after consultation with its
legal counsel and financial advisors, that such Alternative Proposal is,
or is reasonably likely to lead to, a Superior Proposal and that the
failure to take the relevant action would be inconsistent with its
fiduciary duties: |
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(A) |
furnish information with respect to the Company to the
person making such Alternative Proposal and its Representatives only if
such person has entered into a confidentiality and standstill agreement
that contains provisions that are not less favourable to the Company than
those contained in the Confidentiality Agreement (except that it shall
permit the disclosure to the Acquiror required by this Section
7.3(a)(ii)(A)), provided that the Company sends a copy of such
confidentiality and standstill agreement to the Acquiror promptly
following its execution and the Acquiror is promptly provided with a list
of, and access to (to the extent not previously provided to the Acquiror),
the information provided to such person; and |
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(B) |
engage in discussions and negotiations with the person
making such Alternative Proposal and its Representatives, provided that
all such discussions and negotiations shall cease during the Match
Period. |
(b) Notwithstanding Section 7.1(a) or
any other provision of this Agreement, the Company may at any time prior to the
Meeting (x) enter into an agreement (other than a confidentiality and standstill agreement contemplated by
Section 7.3(a)(ii)(A)) with respect to an Alternative Proposal that is a
Superior Proposal and/or (y) withdraw, modify or qualify its approval or
recommendation of the Arrangement and recommend or approve an Alternative
Proposal that is a Superior Proposal, provided:
- 34 -
|
(i) |
the Company shall have complied with its obligations
under this Article 7; |
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(ii) |
the Board has determined, after consultation with its
legal counsel and financial advisors, that such Alternative Proposal is a
Superior Proposal and that the failure to take the relevant action would
be inconsistent with its fiduciary duties; |
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(iii) |
the Company has delivered written notice to the Acquiror
(A) of the determination of the Board that the Alternative Proposal is a
Superior Proposal, (B) of the intention of the Board to approve or
recommend such Superior Proposal and/or of the Company to enter into an
agreement with respect to such Superior Proposal, together with a copy of
such agreement executed by the person making such Superior Proposal that
is capable of acceptance by the Company, and (C) providing a summary of
the valuation analysis attributed by the Board in good faith to any
non-cash consideration included in such Alternative Proposal after
consultation with its financial advisors (the Superior Proposal
Notice); |
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(iv) |
at least five Business Days have elapsed since the date
the Superior Proposal Notice was received by the Acquiror, which five
Business Day period is referred to as the Match Period (for
greater certainty, the Match Period shall expire at 5:00 p.m. (Vancouver
time) on the fifth Business Day following day that the Superior Proposal
Notice was delivered to the Acquiror); |
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(v) |
if the Acquiror has offered to amend the terms of the
Arrangement and this Agreement during the Match Period pursuant to Section
7.3(c), such Alternative Proposal continues to be a Superior Proposal
compared to the amendment to the terms of the Arrangement and this
Agreement offered by the Acquiror at the termination of the Match Period;
and |
|
|
|
|
(vi) |
the Company terminates this Agreement pursuant to Section
9.2(h) and the Company has previously paid or, concurrently with
termination pays, the Termination Payment to the
Acquiror. |
(c)
During the Match Period, the Acquiror shall have the opportunity, but not the
obligation, to offer to amend the terms of the Arrangement and this Agreement
and the Company shall cooperate with the Acquiror with respect thereto,
including negotiating in good faith with the Acquiror to enable the Acquiror to
make such amendments to the Arrangement and this Agreement as the Acquiror deems
appropriate as would enable the Acquiror to proceed with the Arrangement on such
adjusted provisions. The Board shall review any such offer by the Acquiror to
amend the terms of the Arrangement and this Agreement in order to determine, in
the good faith exercise of its fiduciary duties, whether the
Acquiror's offer to amend the Arrangement and this Agreement, upon its
acceptance, would result in the Alternative Proposal ceasing to be a Superior
Proposal compared to the amendment to the terms of the Arrangement and this
Agreement offered by the Acquiror. If the Board determines that the Alternative
Proposal would cease to be a Superior Proposal, the Acquiror shall amend the
Arrangement and the Company and the Acquiror shall enter into an amendment to
this Agreement reflecting the offer by the Acquiror to amend the terms of the
Arrangement and this Agreement.
- 35 -
(d)
The Board shall promptly reaffirm its recommendation of the Arrangement by press
release after: (i) any Alternative Proposal (which is determined not to be a
Superior Proposal) is publicly announced or made; (ii) the Board determines that
a proposed amendment to the terms of the Arrangement and this Agreement would
result in the Alternative Proposal not being a Superior Proposal, and the
Acquiror has so amended the terms of the Arrangement; or (iii) the written
request of the Acquiror. The Acquiror shall be given a reasonable opportunity to
review and comment on the form and content of any such press release and the
Company shall consider in good faith any comments made by the Acquiror.
(e)
Nothing in this Agreement shall prevent the Board from: (i) responding through a
directors' circular or otherwise as required by applicable Law to an Alternative
Proposal that it determines is not a Superior Proposal; (ii) complying with any
requirement to hold a meeting of shareholders of the Company requisitioned under
the BCBCA; or (iii) taking all actions as may be mandated by a court or
Regulatory Authority having jurisdiction. The Acquiror shall be given a
reasonable opportunity to review and comment on the form and content of any such
response prior to its printing, publication or announcement and the Company
shall in good faith consider incorporating therein all reasonable comments made
by the Acquiror.
(f)
Each successive material modification of any Alternative Proposal shall
constitute a new Alternative Proposal for purposes of Section 7.3(b) .
ARTICLE 8
OTHER
COVENANTS
8.1
Further Assurances
Subject
to the terms and conditions of this Agreement, each party agrees to use
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable (a) to satisfy (or
cause the satisfaction of) the conditions set out in Article 6 to the extent the
same is within its control and to consummate and make effective as promptly as
is practicable the transactions contemplated herein, and (b) for the discharge
by each party of its respective obligations under this Agreement and the
Arrangement, including its obligations under applicable Law, in each case
including the execution and delivery of such documents as the other party hereto
may reasonably require. Each of the parties, where appropriate, shall reasonably
cooperate with the other party in taking such actions.
- 36 -
8.2 Access
Upon
reasonable notice and subject to the Confidentiality Agreement, each party
agrees to continue to provide the other party and its Representatives with
reasonable and immediate access (without disruption to the conduct of either
party's business) to all books, records, information and files in its possession
and control and access to its personnel on an as reasonably requested basis as
well as reasonable and immediate access to the properties of such party in order
to allow the other party to continue to conduct such investigations as the other
party may consider necessary or advisable, and further agrees to assist the
other party in all reasonable ways in any investigations which the other party
may wish to conduct. Any investigation by a party or its Representatives shall
not mitigate, diminish or affect the representations and warranties of the other
party contained in this Agreement or any document or certificate given pursuant
hereto.
8.3
Shareholder Claims
The
Company shall notify the Acquiror of any claim brought by any present, former or
purported holder of any securities of the Company in connection with the
transactions contemplated by this Agreement prior to the Effective Time and the
Company shall not settle or compromise any such claim without prior written
consent of the Acquiror which shall not be unreasonably withheld.
8.4 Public
Statements
The
Company and the Acquiror shall issue a joint press release with respect to this
Agreement and the Arrangement as soon as practicable, in a form acceptable to
each party. Each party shall consult with the other party prior to issuing any
other press releases or otherwise making public statements or public filings
with respect to the Arrangement or this Agreement and shall provide the other
party with a reasonable period of time to review and comment on all such press
releases, statements or filings prior to the release thereof.
8.5 Directors'
and Officers' Insurance and Indemnification
(a)
From and after the Effective Time, the Acquiror and the Company shall ensure
that articles, by-laws and/or other constating documents of the Company (or its
successor) shall contain the provisions with respect to indemnification set
forth in the Company's current articles and/or by-laws, which provisions shall
not, except to the extent required by applicable Law, be amended, repealed or
otherwise modified for a period of six years from the Effective Time in any
manner that would adversely affect the rights thereunder of individuals who,
immediately prior to the Effective Time, were directors or officers of the
Company.
(b)
This Section 8.5 shall survive the termination of this Agreement if such
termination occurs following the Effective Time.
- 37 -
8.6
Regulatory Filings and Approvals
(a)
As soon as reasonably practicable after the date hereof, each party shall make
all necessary filings, applications and submissions with Regulatory Authorities
under all applicable Law in respect of the transactions contemplated herein.
(b) Each party shall use its
reasonable best efforts to obtain all Regulatory Approvals.
8.7
Co-operation Regarding Regulatory Filings and Approvals
(a)
Subject to applicable Law, each party shall provide the other party (or its
legal counsel in respect of competitively-sensitive, privileged or confidential
matters) with reasonable opportunity to review and comment on all filings,
applications and submissions with Regulatory Authorities to be made by it and
the other party shall use its commercially reasonable efforts to cooperate with
and assist such party in the preparation and making of all such filings,
applications and submissions and the obtaining of all Regulatory Approvals
required to be obtained by such party (including participating and appearing in
any proceedings before Regulatory Authorities).
(b)
Each party shall promptly notify the other party of any material communication
to such party from any Regulatory Authority in respect of the transactions
contemplated herein (and provide a copy thereof if such communication is in
writing) and, subject to applicable Law, provide the other party (or its legal
counsel in respect of competitively-sensitive, privileged or confidential
matters) with reasonable opportunity to review and comment on any proposed
written material communication to any such Regulatory Authority. Each party
shall consult with the other party (or its legal counsel in respect of
competitively-sensitive, privileged or confidential matters) prior to
participating in any substantive meeting or discussion with any Regulatory
Authority in respect of the transactions contemplated herein and give the other
party (or its legal counsel in respect of competitively-sensitive, privileged or
confidential matters) the opportunity to attend and participate thereat.
8.8
Alternative Transaction
(a)
In the event that the Acquiror concludes that it is necessary or desirable to
proceed with another form of transaction (such as a take-over bid or
amalgamation) whereby the Acquiror or its Affiliates would effectively acquire
all of the Common Shares or the assets of the Company within approximately the
same time periods and on economic terms and other terms and conditions
(including tax treatment) and having consequences to the Company and its
Shareholders that are equivalent to or better than those contemplated by this
Agreement (an Alternative Transaction), the Company agrees to support
the completion of such Alternative Transaction in the same manner as the
Arrangement and shall otherwise fulfill its covenants contained in this
Agreement in respect of such Alternative Transaction.
(b)
In the event of any proposed Alternative Transaction, any reference in this
Agreement to the Arrangement shall refer to the Alternative Transaction to the
extent applicable, all terms, covenants, representations and warranties of this
Agreement shall be and shall be deemed to have been made in the context of the
Alternative Transaction and all references to time periods regarding the
Arrangement, including the Effective Time, herein shall refer to the date of closing of the transactions contemplated by the
Alternative Transaction (as such date may be extended from time to time).
- 38 -
ARTICLE 9
TERM, TERMINATION,
AMENDMENT AND WAIVER
9.1
Term
This
Agreement shall be effective from the date hereof until the earlier of the
Effective Date and the termination of this Agreement in accordance with its
terms (except to the extent any terms are specifically noted herein as surviving
the termination of this Agreement).
9.2
Termination
This Agreement may be terminated at any time prior to the Effective Date:
|
(a) |
by mutual written agreement of the Acquiror and the
Company; |
|
|
|
|
(b) |
by the Acquiror or the Company, if the Securityholders do
not approve the Arrangement Resolution at the Meeting in the manner
required by the Interim Order; |
|
|
|
|
(c) |
by the Acquiror or the Company, if the Effective Date has
not occurred on or prior to the Outside Date, other than as a result of
the breach by such party of any covenant or obligation under this
Agreement or as a result of any representation or warranty of such party
in this Agreement being untrue or incorrect; provided, however, that if
the Effective Date is delayed by (i) an injunction or order made by a
Regulatory Authority of competent jurisdiction, or (ii) any regulatory
waiver, consent or approval which is necessary to permit the Effective
Date to occur, then, provided that such injunction or order is being
contested or appealed in good faith or such regulatory waiver, consent or
approval is being actively sought in good faith, as applicable, this
Agreement shall not be terminated by the Company pursuant to this Section
9.2 until the fifth Business Day following the earlier of the date on
which such injunction or order ceases to be in effect or such waiver,
consent or approval is obtained, as applicable, and December 31,
2015; |
|
|
|
|
(d) |
by either the Company or the Acquiror, if any Regulatory
Authority shall have enacted any law or issued an order, decree or ruling
permanently restraining or enjoining or otherwise prohibiting any of the
transactions contemplated herein (unless such law, order, decree or ruling
has been withdrawn, reversed or otherwise made inapplicable) which order,
decree or ruling is final and non- appealable; |
|
|
|
|
(e) |
by either the Company or the Acquiror, subject to Section
6.4, if: |
|
(i) |
any representation or warranty of the other party under
this Agreement is untrue or incorrect or shall have become untrue or
incorrect such that the condition contained in Section 6.2(a) or 6.3(a), as
applicable, would be incapable of satisfaction; or |
- 39 -
|
(ii) |
the other party is in default of a material covenant or
obligation hereunder such that the condition contained in Section 6.2(b)
or 6.3(e), as applicable, would be incapable of
satisfaction; |
|
(i) |
the Board withdraws, modifies, changes or qualifies its
approval or recommendation of this Agreement or the Arrangement Resolution
in any manner adverse to the Acquiror; |
|
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|
(ii) |
the Board fails to reaffirm its recommendation of the
Arrangement within three Business Days of any written request to do so by
the Acquiror; |
|
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|
(iii) |
the Board recommends or approves an Alternative
Proposal; |
|
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|
(iv) |
the Board has resolved to do either (i) or (iii) above;
or |
|
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|
(v) |
the Company is in material default of any covenant or
obligation under Article 7; |
|
(g) |
by the Acquiror, if the Meeting has not been held by
October 31, 2015 unless the failure to hold the Meeting is the result of
the Acquiror failing to provide the information set out in Section
2.3(c); |
|
|
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|
(h) |
by the Company, if the Company proposes to enter into a
definitive agreement with respect to a Superior Proposal in compliance
with the provisions of Section 7.3, provided the Company has paid to the
Acquiror the applicable Termination Payment in compliance with Section 9.3
and provided the Company is not in breach of any of its covenants or
obligations under this Agreement; or |
|
|
|
|
(i) |
by the Acquiror or the Company, if the Acquiror elects
not to match a Superior Proposal in accordance with the terms of Section
7.3(b), provided the Company has paid to the Acquiror the applicable
Termination Payment in compliance with Section
9.3. |
9.3
Termination Payment
(a)
The Acquiror shall be entitled to a payment equal to all of its reasonable
out-of-pocket expenses incurred by it in connection with the Arrangement (the
Termination Payment) upon the occurrence of any of the following events
(each a Termination Payment Event) which shall be paid by the Company
within the time specified in respect of such Termination Payment Event:
- 40 -
|
(i) |
this Agreement is terminated by the Acquiror pursuant to
Section 9.2(f), in which case the Termination Payment shall be paid to the
Acquiror by 1:00 p.m. (Vancouver time) on the first Business Day following
termination; |
|
|
|
|
(ii) |
this Agreement is terminated by the Acquiror pursuant to
Section 9.2(e), in which case the Termination Payment shall be paid to the
Acquiror by 1:00 p.m. (Vancouver time) on the first Business Day following
termination; |
|
|
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|
(iii) |
this Agreement is terminated by the Acquiror pursuant to
either Section 9.2(h) or Section 9.2(i), in which case the Termination
Payment shall be paid to the Acquiror prior to or concurrently with such
termination; and |
|
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|
(iv) |
this Agreement is terminated by the Company for any
reason other than a breach of this Agreement by the Acquiror and, within
six (6) months of such termination, the Company announces and subsequently
completes any transaction that would have been an Alternative Proposal
hereunder, whether made to the Company before or after the date of
termination of this Agreement, in which case the Termination Payment shall
be made to the Acquiror prior to or concurrently with the completion of
such transaction. |
(b)
If the Agreement is terminated by the Company pursuant to Section 9.2(e)(i), or
if this Agreement is terminated by the Acquiror other than pursuant to Section
9.2(e), the Acquiror shall pay such amount (the Company Expense
Reimbursement Amount) as is required to reimburse the Company for all
reasonable out-of-pocket expenses incurred by it in connection with the
Arrangement by 1:00 p.m. (Vancouver time) on the first Business Day following
termination.
(c) The Termination
Payment or Company Expense Reimbursement Amount shall be paid by wire transfer
in immediately available funds to an account specified by the Acquiror or the
Company, as applicable.
9.4 Effect of
Termination
Where
a Termination Payment Event occurs or where the Company Expense Reimbursement
Amount becomes payable, such payment of the Termination Payment or the Company
Expense Reimbursement Amount, as the case may be, to be received pursuant to
Section 9.3 is the sole remedy in compensation or damages of a party in respect
to the event or events giving rise to the termination of this Agreement and the
resulting Termination Payment Event or requirement to pay the Company Expense
Reimbursement Amount; provided, however, that nothing contained in this Section
9.4, and no payment of any Termination Payment or Company Expense Reimbursement
Amount, shall relieve or have the effect of relieving any party in any way from
liability for damages incurred or suffered by a party as a result of a breach of
this Agreement or as a result of any representation or warranty of the other
party set out in this Agreement being materially untrue or incomplete. In the
event of termination of this Agreement pursuant to Section 9.2, this Agreement shall be of no further
force and effect, except that Section 9.3, this Section 9.4 and Article 10 shall
survive the termination of this Agreement.
- 41 -
9.5
Remedies
Subject
to Section 9.4, the parties acknowledge and agree that an award of money damages
would be inadequate for any breach of this Agreement by any party or its
Representatives and any such breach would cause the non-breaching party
irreparable harm. Accordingly, the parties agree that, in the event of any
breach or threatened breach of this Agreement by one of the parties, the
non-breaching Party shall also be entitled, without the requirement of posting a
bond or other security, to equitable relief, including injunctive relief and
specific performance and the parties shall not object to the granting of
injunctive or other equitable relief on the basis that there exists an adequate
remedy at Law. Such remedies shall not be the exclusive remedies for any breach
of this Agreement but shall be in addition to all other remedies available at
Law or equity to each of the parties.
ARTICLE 10
GENERAL
PROVISIONS
10.1 Amendment
(a)
Subject to the provisions of the Interim Order, the Plan of Arrangement and
applicable Law, this Agreement and the Plan of Arrangement may, at any time and
from time to time before or after the holding of the Meeting but not later than
the Effective Date, be amended by mutual written agreement of the parties,
without further notice to or authorization on the part of the Securityholders,
and any such amendment may without limitation:
|
(i) |
change the time for performance of any of the obligations
or acts of the parties; |
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|
(ii) |
waive any inaccuracies or modify any representation or
warranty contained herein or in any document delivered pursuant
hereto; |
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|
(iii) |
waive compliance with or modify any of the covenants
herein contained and waive or modify performance of any of the obligations
of the parties; and |
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|
(iv) |
waive compliance with or modify any conditions precedent
herein contained. |
(b)
Notwithstanding the foregoing, the Plan of Arrangement may only be supplemented
or amended in accordance with the provisions thereof.
10.2 Waiver
Any
party may (a) extend the time for the performance of any of the obligations or
acts of the other party, (b) waive compliance, except as provided herein, with
any of the other party's agreements or the fulfilment of any conditions to its
own obligations contained herein, or (c) waive inaccuracies in any of the other party's
representations or warranties contained herein or in any document delivered by
the other party; provided, however, that any such extension or waiver shall be
valid only if set forth in an instrument in writing signed on behalf of such
party and, unless otherwise provided in the written waiver, shall be limited to
the specific breach or condition waived and shall not extend to any other matter
or occurrence. No failure or delay in exercising any right, power or privilege
under this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise thereof preclude any other or further exercise or the exercise
of any right, power or privilege under this Agreement.
- 42 -
10.3 Expenses;
Advisors
(a) The parties agree that all costs
and expenses of the parties relating to the transactions contemplated herein,
including legal fees, accounting fees, financial advisory fees, regulatory
filing fees, stock exchange fees, all disbursements of advisors and printing and
mailing costs, shall be paid by the party incurring such expenses except as
specifically provided otherwise herein.
(b)
Other than the Fiore Fee, the Company represents and warrants to the Acquiror
that, no Securityholder, director, officer, employee, consultant, broker, finder
or investment banker is entitled to any brokerage, finder's or other fee or
commission, or to the reimbursement of any of its expenses, in connection with
the transactions contemplated herein based upon arrangements made by or on
behalf of the Company.
10.4 Notices
Any
notice, consent, waiver, direction or other communication required or permitted
to be given under this Agreement by a party shall be in writing and may be given
by delivering same or sending same by email, facsimile transmission or by
delivery addressed to the party to which the notice is to be given at its
address for service herein. Any notice, consent, waiver, direction or other
communication aforesaid shall, if delivered, be deemed to have been given and
received on the date on which it was delivered to the address provided herein
(if a Business Day, if not, the next succeeding Business Day) and if sent by
email or facsimile transmission be deemed to have been given and received at the
time of receipt (if a Business Day, if not the next succeeding Business Day)
unless actually received after 4:30 p.m. (Vancouver time) at the point of
delivery in which case it shall be deemed to have been given and received on the
next Business Day.
The
address for service for each of the parties hereto shall be as follows:
|
(a) |
if to the Company: |
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Suite 3123, |
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Three Bentall Centre, 595 Burrard Street,
Vancouver, BC V7X 1J1 |
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Fax:
(604) 609 6145 |
|
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Email: dfarrell@davisaconsulting.com |
- 43 -
|
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Attention:
David Farrell, President & CEO |
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with a copy to: |
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Farris, Vaughn, Wills & Murphy LLP 2500 - 700
West Georgia Street, Vancouver BC, V7Y 1B3 |
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Attention:
Jay Sujir
Tel:
(604) 684-9151
Email:
jsujir@farris.com |
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|
(b) |
if to the Acquiror: |
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1500 1040 West Georgia Street, Vancouver, BC, V6E
4H1, |
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Fax:
(640) 681-2741 |
|
|
Email:
trevorthomas@hdimining.com> Attention:
Trevor Thomas, Secretary |
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with a copy to: |
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McMillan LLP Royal Centre |
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1055 West Georgia Street Suite 1500, PO Box 11117
Vancouver, B.C. V6E 4N7 |
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Attention:
Bernhard J. Zinkhofer
Fax:
(604) 685-7084 |
|
|
Email:
bernhard.zinkhofer@mcmillan.ca |
10.5 Severability
If
any term, provision, covenant or restriction of this Agreement is held by a
court of competent jurisdiction to be invalid, void or unenforceable, such term,
provision, covenant or restriction shall be deemed severed herefrom and the
remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated and the parties shall thereupon promptly and in good faith
negotiate to modify this Agreement to the extent practicable with replacement
provisions which are lawfully effective and which will preserve to the maximum
extent each party's benefits under the severed term, provision, covenant or
restriction.
- 44 -
10.6 Entire
Agreement
This
Agreement and the Confidentiality Agreement (together with all other documents
and instruments referred to herein) constitute the entire agreement and
supersede all other prior agreements and undertakings, both written and oral,
among the parties with respect to the subject matter hereof.
10.7
Assignment
(a)
This Agreement shall enure to the benefit of and be binding upon the parties and
their respective successors and permitted assigns. This Agreement may not be
assigned by either party without the prior written consent of the other party.
(b)
The Company acknowledges that the Acquiror may wish to have a direct or indirect
wholly-owned subsidiary of the Acquiror acquire all of the Common Shares of the
Company as contemplated by the Plan of Arrangement. The Company agrees that the
Acquiror may assign all or any part of its rights under this Agreement, except
for the obligation to issue Acquiror Shares in exchange for the Common Shares or
upon exercise of Options and Warrants, to, and its obligations under this
Agreement may be assumed by, a wholly-owned direct or indirect subsidiary of the
Acquiror, provided that the Acquiror shall continue to be jointly and severally
liable with such subsidiary for all obligations hereunder.
10.8 Governing
Law
This
Agreement shall be governed in all respects, including validity, interpretation
and effect, by the Laws of the Province of British Columbia and the federal Laws
of Canada applicable therein, without giving effect to any principles of
conflict of Laws thereof which would result in the application of the Laws of
any other jurisdiction, and all actions and proceedings arising out of or
relating to this Agreement shall be heard and determined exclusively in the
courts of the Province of British Columbia.
10.9 Contra
Proferentem
The
parties waive the application of any rule of Law which otherwise would be
applicable in connection with the construction of this Agreement that ambiguous
or conflicting terms or provisions should be construed against the party who (or
whose legal counsel) prepared the executed agreement or any earlier draft of the
same.
10.10 No Third Party
Beneficiaries
This
Agreement is not intended to confer to any person other than the parties any
rights or remedies.
10.11 Time of Essence
Time shall be of the essence in this Agreement.
- 45 -
10.12 Counterparts
This
Agreement may be executed in one or more counterparts, each of which shall be
deemed to be an original but all of which together shall constitute one and the
same instrument, and it shall not be necessary in making proof of this Agreement
to produce more than one counterpart.
[The remainder of this page has been left blank
intentionally.]
- 46 -
IN
WITNESS WHEREOF, this Agreement has been executed and delivered as of the date
first above written, by the duly authorized representatives of the parties
hereto.
NORTHERN DYNASTY MINERALS LTD.
|
by |
/s/ Trevor Thomas |
|
|
Authorized Signatory
|
CANNON POINT RESOURCES LTD.
|
by |
/s/ Jay Sujir |
|
|
Authorized Signatory
|
SCHEDULE A
PLAN OF ARRANGEMENT
PLAN OF ARRANGEMENT UNDER DIVISION 5 OF PART 9
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
ARTICLE 1
INTERPRETATION
1.1
Definitions
In
this Plan of Arrangement, unless the context otherwise requires, capitalized
terms used but not defined shall have the meanings ascribed thereto in the
Arrangement Agreement and terms with the initial letter or letters thereof
capitalized shall have the meanings ascribed to them below:
Acquiror means Northern Dynasty Minerals Ltd.;
Acquiror Shares means the common shares of the
Acquiror;
Arrangement means the arrangement proposed by
the Company under the provisions of Division 5 of Part 9 of the BCBCA on the
terms and subject to the conditions set out herein, subject to any amendments or
variations thereto made in accordance with Section 10.1 of the Arrangement
Agreement or Article 5 of this Plan of Arrangement or made at the direction of
the Court in the Final Order (provided that any such amendment or variation is
acceptable to both the Acquiror and the Company, each acting reasonably);
Arrangement Agreement means the arrangement agreement,
including all schedules annexed thereto, dated as of August 31, 2015 between the
Acquiror and the Company, as amended, supplemented or otherwise modified from
time to time in accordance with its terms;
Arrangement Resolution means the special resolution of
the Securityholders of the Company approving the Arrangement to be considered at
the Meeting, substantially in the form of Schedule B to the Arrangement
Agreement;
BCBCA means the Business Corporations Act
(British Columbia);
Business Day means any day, other than a Saturday, a
Sunday, or a statutory holiday in Vancouver, British Columbia;
Circular means the notice of the Meeting and
accompanying management information circular, including all schedules,
appendices and exhibits thereto and enclosures therewith, to be sent to the
Securityholders in connection with the Meeting, as amended, supplemented or
otherwise modified from time to time;
Common Shares means the common shares of the Company;
Company means Cannon Point Resources Ltd.;
2
Court means the Supreme Court of British Columbia;
Depositary means Computershare Trust Company of
Canada, as depositary at its offices as set out in the Letter of Transmittal;
Disclosure Letter means the disclosure letter
delivered by the Company to the Acquiror contemporaneously with the execution
and delivery of the Arrangement Agreement;
Dissent Rights has the meaning set out in Section 3.1;
Dissenting Shareholder means a registered holder of
Common Shares who has validly exercised his, her or its Dissent Rights and has
not withdrawn or been deemed to have withdrawn such exercise of Dissent Rights,
but only in respect of the Common Shares in respect of which Dissent Rights are
validly exercised by such holder;
Effective Date means the date the Acquiror and the
Company agree upon, acting reasonably, as the effective date of the Arrangement
after all of the conditions precedent to the completion of the Arrangement as
set out in the Arrangement Agreement have been satisfied or waived, including
that the Final Order has been granted by the Court;
Effective Time means 12:01 a.m. (Vancouver time), on
the Effective Date, or such other time as Acquiror and the Company agree to in
writing before the Effective Date;
Encumbrance includes any mortgage, pledge, assignment,
charge, lien, claim, security interest, adverse interest, adverse claim, other
third party interest or encumbrance of any kind, whether contingent or absolute,
and any agreement, option, right or privilege (whether by Law, contract or
otherwise) capable of becoming any of the foregoing;
Final Order means the order of the Court approving the
Arrangement under section 291 of the BCBCA, in a form acceptable to the Company
and the Acquiror, each acting reasonably, as such order may be affirmed,
amended, modified, supplemented or varied by the Court (with the consent of both
the Company and the Acquiror, each acting reasonably) at any time prior to the
Effective Date or, if appealed, as affirmed or amended (provided that any such
amendment is acceptable to both the Company and the Acquiror, each acting
reasonably) on appeal unless such appeal is withdrawn, abandoned or denied;
Final Proscription Date has the meaning set out in
Section 4.3;
Interim Order means the interim order of the Court
contemplated by Section 2.2 of the Arrangement Agreement, in a form acceptable
to the Company and the Acquiror, each acting reasonably, providing for, among
other things, the calling and holding of the Meeting, as the same may be
amended, modified, supplemented or varied by the Court;
Letter of Transmittal means the letter of transmittal
for use by the Securityholders with respect to the Arrangement in the form
accompanying the Circular;
Meeting means the special meeting of the
Securityholders, including any adjournment or postponement thereof, to be called
and held in accordance with the Interim Order for the purpose of considering and, if thought fit, approving the Arrangement
Resolution and all other matters requiring approval pursuant to the terms and
conditions of the Arrangement Agreement or the Interim Order;
3
Option Plan means the Company share option plan in
effect on the date hereof and the agreements entered into thereunder;
Optionholders means holders of the Options;
Options means the options issued pursuant to the
Option Plan;
Plan of Arrangement means this plan of arrangement as
it may be amended, supplemented or otherwise modified from time to time in
accordance with the terms hereof;
Regulatory Authority means:
(a) Any multinational or supranational
body or organization, nation, government, state, province, country, territory,
municipality, quasi-government, administrative, judicial or regulatory
authority, agency, board, body, bureau, commission, instrumentality, court or
tribunal or any political subdivision thereof, or any central bank (or similar
monetary or regulatory authority) thereof, any taxing authority, any ministry or
department or agency of any of the foregoing;
(b) any self-regulatory organization
or stock exchange, including the TSX, the NYSE MKT and the TSXV;
(c) any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government; and
(d) any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
such entities or other bodies pursuant to the foregoing;
Securityholders means, collectively, Shareholders,
Optionholders and Warrantholders;
Shareholders means the holders of Common Shares;
Tax Act means the Income Tax Act (Canada), as
amended;
Transaction Consideration means the fraction of an
Acquiror Share to be received based upon the WAP and based on an initial deemed
value of $0.15 for each Common Share. The initial ratio of $0.15 divided by the
WAP is the Exchange Ratio, as at the date of the Arrangement Agreement
in 0.376, and is subject to adjustment pursuant to the provisions of Section 5.9
of the Arrangement Agreement;
WAP means the weighted average price at which the
Acquiror issues Acquiror Shares in the Concurrent Financing being $0.399;
Warrantholders means holders of the Warrants; and
4
Warrants means the outstanding share purchase warrants
of the Company.
1.2
Construction
Except
as may be otherwise specifically provided in this Plan of Arrangement and unless
the context otherwise requires, in this Plan of Arrangement:
(a) the terms Plan of Arrangement,
this Plan of Arrangement, the Plan of Arrangement, hereto, hereof,
herein, hereby, hereunder and similar expressions refer to this Plan of
Arrangement in its entirety and not to any particular provision hereof;
(b) references to an Article,
Section, or Schedule followed by a number or letter refer to the specified
Article or Section of or Schedule to this Plan of Arrangement;
(c) the division of this Plan of
Arrangement into articles and sections and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Plan of Arrangement;
(d) words importing the singular
number only shall include the plural and vice versa and words importing the use
of any gender shall include all genders;
(e) references to any agreement or
document shall be to such agreement or document (together with the schedules and
exhibits attached thereto) as it may have been or may hereafter be amended,
modified, supplemented, waived or restated from time to time;
(f) if the date on which any action is
required to be taken hereunder by the Company or the Acquiror is not a Business
Day, such action shall be required to be taken on the next succeeding day that
is a Business Day;
(g) references to any legislation or
to any provision of any legislation shall include any modification or
re-enactment thereof, any legislation provision substituted therefor and all
regulations, rules and interpretations issued thereunder or pursuant thereto;
and
(h) wherever the term includes or
including is used, it shall be deemed to mean includes, without limitation
or including, without limitation, respectively.
1.3
Currency
Unless
otherwise stated, all references in this Plan of Arrangement to sums of money
are expressed in lawful money of Canada and $ refers to Canadian dollars.
1.4
Time
Time
shall be of the essence in every matter or action contemplated hereunder. All
times expressed herein are local time (Vancouver, British Columbia) unless
otherwise stipulated herein.
5
ARTICLE 2
THE ARRANGEMENT
2.1
Arrangement Agreement
This
Plan of Arrangement is made pursuant to the Arrangement Agreement and forms a
part of the Arrangement Agreement. If there is any conflict or inconsistency
between the provisions of the Plan of Arrangement and the provisions of the
Arrangement Agreement regarding the Arrangement, the provisions of the Plan of
Arrangement shall govern.
2.2
Binding Effect
This
Plan of Arrangement will become effective at the Effective Time and shall be
binding upon the Acquiror, the Company and the Securityholders (including the
Dissenting Shareholders).
2.3
Arrangement
Commencing
at the Effective Time, the following shall occur and shall be deemed to occur in
the following sequence, except where noted, without any further act or formality
of or by the Company, the Acquiror or any other person:
(a) each Common Share held by a
Dissenting Shareholder shall be irrevocably transferred to the Acquiror (free
and clear of all Encumbrances) without any further act or formality and:
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(i) |
such Dissenting Shareholder shall cease to be the holder
of such Common Shares so transferred and to have any rights as holder of
such Common Shares other than the right to be paid fair value for such
Common Shares by the Acquiror as set out in Section 3.1; |
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(ii) |
such Dissenting Shareholder's name shall be removed as
the holder of such Common Shares from the central securities register of
holders of Common Shares maintained by or on behalf of the Company;
and |
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(iii) |
the Acquiror shall become the sole legal and beneficial
holder of such Common Shares so transferred (free and clear of all
Encumbrances) and shall be entered in the central securities register of
holders of Common Shares maintained by or on behalf of the Company;
and |
(b) concurrently with the step
described in Section 2.3(a), each Common Share (other than those held by
Dissenting Shareholders or the Acquiror) shall be irrevocably transferred to the
Acquiror (free and clear of all Encumbrances), and the holder thereof shall be
entitled to receive from the Acquiror the Transaction Consideration for such
Common Share and upon the transfer of each such Common Share from such holder to
the Acquiror pursuant to this Section 2.3(b):
6
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(i) |
each such holder shall cease to be a holder of the Common
Shares so transferred and cease to have any rights as a holder of such
Common Shares other than the right to be paid the Transaction
Consideration for such Common Shares and the name of such holder shall be
removed as the holder of such Common Shares from the central securities
register of holders of Common Shares maintained by or on behalf of the
Company; and |
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(ii) |
the Acquiror shall become the sole legal and beneficial
holder of the Common Shares so transferred (free and clear of all
Encumbrances) and shall be entered in the central securities register of
holders of Common Shares maintained by or on behalf of the
Company. |
Each holder of each Common Share, with respect to each step set
out above applicable to such holder, shall be deemed, at the time such step
occurs, to have executed and delivered all consents, releases, assignments and
waivers, statutory or otherwise, required to transfer such Common Share in
accordance with such step.
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(c) |
each holder of an Option which is outstanding and has not
been duly exercised prior to the Effective Time, shall receive (and such
holder shall accept), upon the exercise of such holders Option, in lieu
of each Common Share to which such holder was theretofore entitled upon
such exercise and for the same aggregate consideration payable therefore,
the number of Acquiror Shares equal to the Exchange Ratio multiplied by
the number of Common Shares subject to such Option immediately prior to
the Effective Time, provided that if the foregoing would result in the
issuance of a fraction of a Acquiror Share on any particular exercise of
such Option, then the number of Acquiror Shares otherwise issued shall be
rounded down to the nearest whole number of Acquiror Shares if such
fraction is 0.5 or less and shall be rounded up to the nearest whole
number if such fraction is greater than 0.5. Such Option shall otherwise
continue to be governed by and subject to its terms. The Options granted
to charities, Fiore and any Optionholders who will be continuing as
directors of the Acquiror outstanding on the Effective Date shall continue
in effect on the same terms and conditions (subject to adjustments
required after giving effect to the Arrangement including, without
limitation, that such Options shall be exercisable for Acquiror Shares).
All other Options shall continue in effect on the same terms and
conditions (subject to adjustments required after giving effect to the
Arrangement including, without limitation, that such Options shall be
exercisable for Acquiror Shares) but shall expire ninety (90) days after
the Effective Date without any other cost or obligation to the
Acquiror. |
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(d) |
each holder of a Warrant which is outstanding and has not
been duly exercised prior to the Effective Time, shall receive (and such
holder shall accept), upon the exercise of such holders Warrant, in lieu
of each Common Share to which such holder was theretofore entitled upon
such exercise and for the same aggregate consideration payable therefore,
the number of Acquiror Shares equal to the Exchange Ratio multiplied by
the number of Common Shares subject to such Warrant immediately prior to the
Effective Time, provided that if the foregoing would result in the issuance of a
fraction of a Acquiror Share on any particular exercise of such Warrant, then
the number of Common Shares otherwise issued shall be rounded down to the
nearest whole number of Common Shares if such fraction is 0.5 or less and shall
be rounded up to the nearest whole number if such fraction is greater than 0.5.
Such Warrant shall otherwise continue to be governed by and subject to its
terms. All Warrants shall continue in effect on the same terms and conditions
(subject to adjustments required after giving effect to the Arrangement
including, without limitation, that such Warrants shall be exercisable for
Acquiror Shares). |
7
2.4
No Fractional Shares
Following
the Effective Time, if the aggregate number of Acquiror Shares to which a former
holder of Common Shares would otherwise be entitled would include a fractional
share, then the number of Acquiror Shares that such former holder of Common
Shares is entitled to receive shall be rounded down to the nearest whole number
if such fraction is 0.5 or less and shall be rounded up to the nearest whole
number if such fraction is greater than 0.5.
ARTICLE 3
RIGHTS OF DISSENT
3.1
Rights of Dissent
Each
registered Shareholder may exercise rights of dissent (Dissent Rights)
pursuant to and in the manner set forth under Division 2 of Part 8 of the BCBCA,
the Interim Order and this Section 3.1 in connection with the Arrangement,
provided that the written objection to the Arrangement Resolution contemplated
by Section 242 of the BCBCA must be sent to and received by the Company at least
two days before the Meeting. Shareholders who duly exercise such Dissent Rights
and who:
(a) are ultimately determined to be
entitled to be paid fair value by the Acquiror for the Common Shares in respect
of which they have validly exercised Dissent Rights will be deemed to have
irrevocably transferred such Common Shares to the Acquiror (free and clear of
all Encumbrances) pursuant to Section 2.3(a); or
(b) are ultimately not entitled, for
any reason, to be paid fair value by the Acquiror for the Common Shares in
respect of which they have exercised Dissent Rights, will be deemed to have
participated in the Arrangement on the same basis as a holder of Common Shares
to which Section 2.3(b) applies;
but in no case will the Company, the Acquiror or any other
person, including the Depositary, be required to recognize any Dissenting
Shareholder as a holder of Common Shares after the completion of the steps set
out in Section 2.3(a) and each Dissenting Shareholder will cease to be entitled
to the rights of a Shareholder in respect of the Common Shares in relation to
which such Dissenting Shareholder has exercised Dissent Rights and the names of
each Dissenting Shareholder will be removed from the central securities register
of the Company as at such time.
8
For greater certainty, and in addition to any other restriction
under Section 242 of the BCBCA, neither:
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(i) |
Optionholders; nor |
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(ii) |
Warrantholders; nor |
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(iii) |
Shareholders who vote, or who have instructed a
proxyholder to vote, in favour of the Arrangement
Resolution; |
shall be entitled to exercise Dissent Rights.
ARTICLE 4
CERTIFICATES AND PAYMENTS
4.1
Payment of Consideration
(a)
At or before the Effective Time, the Acquiror will deposit or cause to be
deposited with the Depositary Acquiror Shares in the aggregate amount sufficient
to satisfy the payment obligations contemplated by Section 2.3(b) for all
Shareholders (calculated without reference to whether any Shareholders have
exercised Dissent Rights). Such amount will be held for the purpose of
satisfying such obligations.
(b)
As soon as practicable following the later of the Effective Time and the
delivery to the Depositary by or on behalf of a former holder of Common Shares
of a duly completed Letter of Transmittal and such additional documents and
instruments as the Depositary may reasonably require including a certificate
which immediately prior to the Effective Time represented the outstanding Common
Shares that were transferred under Section 2.3(b) and such other documents and
instruments as would have been required to effect such transfer under the BCBCA
and the articles of the Company after giving effect to Sections 2.3(b), the
former holder of such Common Shares will be entitled to receive the Transaction
Consideration which such former holder is entitled to receive pursuant to
Section 2.3(b), less any amounts withheld pursuant to Section 4.5.
(c)
From and after the Effective Time, each certificate which immediately prior to
the Effective Time represented Common Shares will be deemed after the time
described in Section 2.3(b) to represent only the right to receive from the
Depositary upon such surrender of the applicable Transaction Consideration in
lieu of such certificate as contemplated in Section 4.1(b), or in the case of
Dissenting Shareholders who are ultimately determined to be entitled to be paid
fair value by the Acquiror for the Common Shares in respect of which they have
validly exercised Dissent Rights, the fair value of their Common Shares, less,
in each case, any amounts withheld pursuant to Section 4.5.
(d)
Subject to Section 4.3, the Company and the Acquiror will cause the Depositary,
as soon as practicable following the later of the Effective Time and the date of
deposit by any former holder of Common Shares of the documentation required
pursuant to Section 4.1(b), to:
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(i) |
deliver or cause to be delivered to such former holder of
Common Shares at the address specified in the Letter of
Transmittal; |
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(ii) |
if requested by such former holder of Common Shares in
the Letter of Transmittal, make available at the offices of the Depositary
specified in the Letter of Transmittal for pick-up by such former holder
of Common Shares; or |
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(iii) |
if the Letter of Transmittal neither specifies an address
as described in Section 4.1(d)(i) nor contains a request as described in
Section 4.1(d)(ii), deliver or cause to be delivered to such former holder
of Common Shares at the address of such former holder as shown on the
securities register of the Company maintained by or on behalf of the
Company immediately prior to the Effective Time; |
a certificate representing the Acquiror Shares to which such
former holder of Common Shares is entitled to in accordance with the provisions
hereof, less any amounts withheld pursuant to Section 4.5.
4.2
Lost Certificates
In
the event any certificate, which immediately prior to the Effective Time
represented any outstanding Common Shares that were acquired by the Acquiror or
the Company pursuant to Section 2.3, has been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the former holder of such Common
Shares claiming such certificate to be lost, stolen or destroyed, the Depositary
will issue in exchange for such lost, stolen or destroyed certificate, the
Transaction Consideration to which such holder is entitled pursuant to Section
2.3. When authorizing such payment in exchange for any lost, stolen or destroyed
certificate, the former holder of such Common Shares may be required, upon
request, as a condition precedent to the delivery thereof, to give a bond
satisfactory to the Depositary, the Acquiror and the Company in such sum as the
Acquiror may direct or otherwise indemnify the Acquiror and the Company in a
manner satisfactory to the Acquiror and the Company against any claim that may
be made against the Acquiror or the Company with respect to the certificate
alleged to have been lost, stolen or destroyed.
4.3
Extinction of Rights
If
any former holder of Common Shares fails to deliver to the Depositary the
certificates, documents or instruments required to be delivered to the
Depositary under Section 4.1 or Section 4.2 in order for such former holder to
receive the Transaction Consideration which such former holder is entitled to
receive pursuant to Section 2.3 on or before the date which is six years after
the Effective Date (the Final Proscription Date), then:
(a) the Acquiror Shares which such
former holder was entitled to receive shall be automatically transferred to the
Acquiror and the certificates representing such Acquiror Shares shall be
delivered to Acquiror by the Depositary for cancellation, and the interest of
the former holder in such Acquiror Shares to which it was entitled shall be
terminated as of the Final Proscription Date; and
10
(b)
any certificate representing Common Shares formerly held by such former holder
will cease to represent a claim of any nature whatsoever and will be deemed to
have been surrendered to the Acquiror and will be cancelled. Neither the Company
nor the Acquiror, or any of their respective successors, will be liable to any
person in respect of any Acquiror Shares (including any Acquiror Shares
previously held by the Depositary in trust for any such former holder) which is
forfeited to the Acquiror or delivered to any public official pursuant to any
applicable abandoned property, escheat or similar law.
4.4
Dividends or Other Distributions
No
dividends or distributions declared or made after the Effective Date with
respect to Acquiror Shares with a record date after the Effective Date will be
payable or paid to the holder of any unsurrendered certificate or certificates
which, immediately prior to the Effective Date, represented outstanding Common
Shares unless and until the holder of such certificate shall have complied with
the provisions of this Article 4. Subject to applicable Law and to Article 4
hereof, at the time of such compliance, there shall, in addition to the delivery
of a certificate representing the Acquiror Shares to which such holder is
thereby entitled, be delivered to such holder, without interest, the amount of
the dividend or other distribution with a record date after the Effective Date
theretofore paid with respect to such Acquiror Shares.
4.5
Withholding Rights
The
Acquiror, the Company and the Depositary shall be entitled to deduct and
withhold from any consideration, dividend or other distribution otherwise
payable to any person hereunder or under the Arrangement Agreement such amounts
as the Acquiror, the Company or the Depositary determines, acting reasonably,
are required or permitted to be deducted and withheld with respect to such
payment under Canadian or United States tax laws or any other applicable Law. To
the extent that the withheld amount may be reduced, the Acquiror, the Company
and the Depositary, as the case may be, acting reasonably, shall withhold on
such lower amount. To the extent that amounts are so withheld, such withheld
amounts shall be treated for all purposes under this Agreement or the
Arrangement Agreement as having been paid to the person in respect of which such
deduction and withholding was made, provided that such withheld amounts are
actually remitted to the appropriate Regulatory Authority.
ARTICLE 5
AMENDMENTS AND TERMINATION
5.1
Amendments to Plan of Arrangement
(a)
The Company reserves the right to amend, modify or supplement this Plan of
Arrangement at any time and from time to time prior to the Effective Time,
provided that each such amendment, modification or supplement must be (i) set
out in writing, (ii) approved by the Acquiror, (iii) filed with the Court and,
if made following the Meeting, approved by the Court, and (iv) communicated to
the Securityholders if and as required by the Court.
(b)
Any amendment, modification or supplement to this Plan of Arrangement may be
proposed by the Company at any time prior to the Meeting (provided that the
Acquiror shall have consented thereto) with or without any other prior notice or
communication and, if so proposed and accepted by the persons voting at the Meeting (subject to
the requirements of the Interim Order), shall become part of this Plan of
Arrangement for all purposes.
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(c)
Any amendment, modification or supplement to this Plan of Arrangement that is
approved or directed by the Court following the Meeting shall be effective only
if such amendment, modification or supplement (i) is consented to by each of the
Company and the Acquiror, and (ii) if required by the Court, is consented to by
the Securityholders voting in the manner directed by the Court.
(d)
Any amendment, modification or supplement to this Plan of Arrangement may be
made following the Effective Date unilaterally by the Acquiror, provided that it
concerns a matter which, in the reasonable opinion of the Acquiror, is of an
administrative nature required to better give effect to the implementation of
this Plan of Arrangement and is not adverse to the economic interests of any
former Securityholders.
5.2
Termination
This
Plan of Arrangement may be withdrawn prior to the Effective Time in accordance
with the terms of the Arrangement Agreement.
ARTICLE 6
FURTHER ASSURANCES
6.1
Further Assurances
Notwithstanding
that the transactions and events set out herein shall occur and shall be deemed
to occur in the order set out in this Plan of Arrangement without any further
act or formality, each of the parties to the Arrangement Agreement shall make,
do and execute, or cause to be made, done and executed, all such further acts,
deeds, agreements, transfers, assurances, instruments or documents as may
reasonably be required by either of them in order to further document or
evidence any of the transactions or events set out herein.
SCHEDULE B
ARRANGEMENT RESOLUTION
RESOLUTION OF THE SECURITYHOLDERS
OF CANNON POINT
RESOURCES LTD. (the Company)
BE IT RESOLVED AS A SPECIAL RESOLUTION THAT:
(a)
The arrangement (as it may be modified or amended, the Arrangement)
under Section 288 of the Business Corporations Act (British Columbia)
involving the Company and its securityholders, all as more particularly
described and set forth in the plan of arrangement (as it may be modified or
amended, the Plan of Arrangement) attached as Appendix A to the
Management Information Circular of the Company dated September 14, 2015 (the
Circular), is hereby authorized, approved and agreed to.
(b)
The plan of arrangement (the Plan of Arrangement) involving the Company
and implementing the Arrangement, the full text of which is set out in Schedule
A to the Circular (as the Plan of Arrangement may be, or may have been, amended,
supplemented or otherwise modified from time to time in accordance with its
terms), is hereby authorized, approved and adopted.
(c)
The Arrangement Agreement dated as of August 31, 2015 between the Company and
Northern Dynasty Minerals Ltd. and all of the transactions contemplated therein,
as it may be amended from time to time (the Arrangement Agreement), the
actions of the directors of the Company in approving the Arrangement and the
Arrangement Agreement and the actions of the directors and officers of the
Company in executing and delivering the Arrangement Agreement and causing the
performance by the Company of its obligations thereunder are hereby confirmed,
ratified, authorized and approved.
(d)
Notwithstanding that this resolution has been passed (and the Arrangement
approved and agreed to) by securityholders of the Company or that the
Arrangement has been approved by the Supreme Court of British Columbia, the
directors of the Company are hereby authorized and empowered without further
approval of any securityholders of the Company (i) to amend the Arrangement
Agreement or the Plan of Arrangement to the extent permitted by the Arrangement
Agreement or Plan of Arrangement and (ii) subject to the terms of the
Arrangement Agreement, not to proceed with the Arrangement and related
transactions.
(e)
Any one director or officer of the Company is hereby authorized, empowered and
instructed, acting for, in the name and on behalf of the Company, to execute or
cause to be executed, under the seal of the Company or otherwise, and to deliver
or to cause to be delivered, all such other documents and to do or to cause to
be done all such other acts and things as in such person's opinion may be
necessary or desirable in order to carry out the intent of the foregoing
paragraphs of these resolutions and the matters authorized thereby, such
determination to be conclusively evidenced by the execution and delivery of such
document or the doing of such act or thing.
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
1.
Organization and Qualification
The
Company is validly existing as a corporation under the Law of the Province of
British Columbia and has the requisite corporate power and authority to own its
assets and conduct its business as now owned and conducted. The Company is duly
qualified to carry on business, and is in good standing, in each jurisdiction in
which the character of its properties, owned or leased, or the nature of its
activities makes such qualification necessary. Copies of the amended Articles of
the Company dated December 2, 2013 and the Notice of Articles of the Company
dated April 26, 2013 (collectively, the Company Governing Documents)
heretofore delivered to the Acquiror are accurate and complete as of the date
hereof and have not been amended or superseded, and the Company has not taken
any action to amend or supersede such documents.
2.
Subsidiaries and Joint Ventures
The
Company does not have any subsidiaries or material interest in any person,
company, partnership, joint venture or other business organization. The Company
has no interest in any entity that may be characterized as a joint venture.
3.
Compliance with Law and Licences
The
Company has complied with and is in compliance with all Law applicable to the
operation of its business and, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect in respect of
the Company, the Company has all concessions, licences, permits, orders or
approvals of, and has made all required registrations with, any governmental or
regulatory body that is required in connection with the ownership of its assets
or the conduct of its operations and the Company has fully complied with and is
in compliance with all such concessions, licences, permits, orders, approvals
and registrations, except where failure to so comply would not, individually or
in the aggregate, have a Material Adverse Effect in respect of the Company. The
Company is not in conflict with, or in default (including cross defaults) under
or in violation of, (a) its articles or notice of articles, or (b) any agreement
or understanding to which it or by which any of its properties is bound or
affected, except for any conflict, default or breach, which would not,
individually or in the aggregate, have a Material Adverse Effect in respect of
the Company.
4.
Capitalization
(a)
The authorized equity capital of the Company consists of an unlimited number of
Common Shares. As at the date hereof, 34,258,876 Common Shares (and no other
shares) are issued and outstanding and all such shares are fully-paid and
non-assessable shares. In addition, as of the date hereof, there are outstanding
3,312,500 Options and 8,375,000 Warrants providing for the issuance of an
aggregate of 11,687,500 Common Shares upon the exercise thereof, the details of
which are set out in Section 4(a) of the Disclosure Letter.
2
(b)
Except as described in Section 4(a) of this Schedule C or in Section 4(b) of the
Disclosure Letter, there are no options, warrants, conversion privileges, calls
or other rights, agreements, arrangements, commitments or obligations of the
Company to issue or sell any shares of any capital stock of the Company or
securities or obligations of any kind convertible into or exchangeable for any
shares or other securities of the Company or any other person, nor are there
outstanding any stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the book value, income or any
other attribute of the Company. The holders of outstanding Common Shares are not
entitled to pre-emptive or other similar rights.
5.
Authority Relative to this Agreement
The
Company has the requisite corporate power and authority to enter into this
Agreement and to perform its obligations hereunder. The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated by this Agreement have been duly authorized by the
Board and no other corporate proceedings on the part of the Company are
necessary to authorize this Agreement and the Arrangement, other than the
approval by the Securityholders of the Arrangement Resolution, the TSXV and,
with respect to the Circular and other matters related thereto, the approval of
the Board. This Agreement has been duly executed and delivered by the Company
and constitutes a legal, valid and binding obligation of the Company,
enforceable by the Acquiror against the Company in accordance with its terms,
subject, however, to limitations with respect to enforcement imposed by law in
connection with bankruptcy, insolvency or similar proceedings and to the extent
that equitable remedies such as specific performance and injunction are in the
discretion of the court from which they are sought. The execution and delivery
by the Company of this Agreement and performance by it of its obligations
hereunder and the completion of the Arrangement and the consummation of the
transactions contemplated hereby shall not:
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(a) |
result (with or without notice or the passage of time) in
a violation, conflict or breach of, or constitute a default under, in
respect of or require any consent to be obtained under or give rise to any
third party right of termination, amendment, first refusal, shot-gun,
cancellation, acceleration, penalty or payment obligation or right of
purchase or sale under any provision of: |
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(i) |
the Company Governing Documents; |
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(ii) |
any applicable Law to which the Company is subject or by
which the Company is bound; or |
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(iii) |
any Contract; |
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(b) |
give rise to any right of termination, amendment,
acceleration or cancellation of indebtedness of the Company, or cause any
such indebtedness to come due before its stated maturity, under any
Contract or cause any available credit to cease to be available; |
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(c) |
give rise to any rights of first refusal or change in
control payment or similar obligation or any restriction or limitation
under any such Contract or result in the imposition of any encumbrance, charge or lien upon any of
the Company's assets; or |
3
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(d) |
result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due to any
Related Party of the Company. |
No
authorization, licence, permit, certificate, registration, consent or approval
of, or filing with, or notification to, any Regulatory Authority is required to
be obtained or made by or with respect to the Company for the execution and
delivery of this Agreement or, the performance by the Company of its obligations
hereunder or the completion by the Company of the Arrangement, other than:
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(a) |
the Interim Order and any filings required in order to
obtain, and approvals required under, the Interim Order; |
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(b) |
the Final Order, and any filings required in order to
obtain the Final Order; and |
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(c) |
such filings and other actions required under applicable
Securities Laws and the rules and policies of the TSXV as are contemplated
by this Agreement. |
6.
Operational Matters
All
costs, expenses, liabilities payable, and obligations under the terms of any
Contracts to which the Company is directly or indirectly bound have been
properly and timely paid or performed in all material respects.
7.
Material Agreements
(a)
All Contracts material to the business or assets or the equity value of the
Company are set out in Section 7(a) of the Disclosure Letter and the Company has
made available to the Acquiror for inspection true and complete copies of all
such Contracts.
(b)
All such Contracts are in full force and effect, and the Company is party
thereto is entitled to all rights and benefits thereunder in accordance with the
terms thereof. The Company has complied in all material respects with all terms
of such Contracts, has paid all amounts due thereunder, has not waived any
material rights thereunder and no material default or breach exists in respect
thereof on the part of the Company.
(c)
No Contract is subject to any termination fees, cancellation costs or other
similar penalties that would be or become payable by the Company upon
termination of such Contract or agreement following a change of control of the
Company or upon completion of the transactions contemplated by this Agreement.
(d)
No approval or consent of any person is needed in order that such Contracts
continue in full force and effect following consummation of the transactions
contemplated hereby and the Company is not a party to any such Contract that
contains any non-competition obligation or otherwise restricts in any material
way the business of the Company.
4
(e)
The Company is in compliance with the terms of the Letter Agreement.
8.
Shareholder and Similar Agreements
The
Company is not party to or aware of any (a) shareholder, pooling, voting trust
or other agreements relating to the issued and outstanding shares of the Company
and the Company is not aware of any such shareholder, pooling, voting trust or
other agreements, or (b) contracts, agreements or understandings relating to any
securities of the Company with any director or, officer of, or consultant to,
the Company.
9.
Filings
(a)
The Company is a reporting issuer in British Columbia and Alberta (and in no
other jurisdiction in Canada). The Company is not subject to reporting
requirements under the Exchange Act or of any jurisdiction outside Canada and
the United States. The Company is not in default in the performance any of any
of its obligations under legislation of such provinces and is in compliance with
the applicable rules and regulations of the TSXV.
(b)
Documents or information filed by the Company under applicable Law, including:
(i) the Company's management information circular dated October 10, 2014 in
respect of the annual general meeting of Shareholders held November 20, 2014;
(ii) the Company's audited consolidated financial statements for the years ended
December 31, 2014 and 2013 and the related management discussion and analysis;
(iii) the Company's interim unaudited consolidated financial statements for the
three months ended March 31, 2015 and 2014 and the related management discussion
and analysis; (iv) any material change reports that have been filed by the
Company between December 31, 2013 and the date hereof; (v) all press releases
filed by the Company on SEDAR after December 31, 2013; and (vi) any such
documents or information filed by the Company after the date hereof and before
the Effective Time (collectively items (i) through (vi) above, the Company
Public Documents), are or shall be, as of their respective dates, in
compliance in all material respects with applicable Law and do not contain any
Misrepresentation as of the respective dates.
(c)
There is no material change which has occurred with respect to which the
requisite material change report has not been filed by the Company with the
securities regulatory authorities in the applicable provinces of Canada. The
Company has not filed any confidential material change reports that remain
confidential. All material agreements required to be filed by the Company with
the securities regulatory authorities, in the applicable provinces of Canada
have been filed.
(d)
The Company is in compliance with the provisions of NI 43-101 in all material
respects.
10.
Books and Records
The
books, records and accounts of the Company: (i) have been maintained in
accordance with good business practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of the Company; and (iii) accurately
and fairly reflect the basis for the consolidated financial statements of the Company, in each case, in all material
respects. The Company has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that: (i) transactions are
executed in accordance with management's general or specific authorization; and
(ii) transactions are recorded as necessary (A) to permit preparation of
financial statements in conformity with IFRS and (B) to maintain accountability
for assets and liabilities. The Company's minute books have been maintained in
compliance with applicable Law and are complete and accurate in all material
respects.
5
11. Financial
Statements
(a)
The audited balance sheets and related statements of loss and comprehensive loss
and deficit and statements of cash flows of the Company as at and for the
financial years ended December 31, 2014 and 2013 and the unaudited balance sheet
and related statements of loss and comprehensive loss and deficit and statements
of cash flows of the Company as at and for the six months ended June 30, 2015
and 2014 contained in the Company Public Documents were prepared in accordance
with IFRS. Such statements present fairly, in all material respects, the
financial condition and results of operations of the Company as of the
respective dates thereof and for the respective periods covered thereby applied
on a basis consistent with the immediately prior period and throughout the
periods indicated (except as may be indicated expressly in the notes thereto).
Such financial statements reflect appropriate and adequate reserves in respect
of contingent liabilities, if any, of the Company. Since December 31, 2014, the
Company has not effected any change in its accounting methods, principles or
practices, except as otherwise set out in the Company's financial statements,
including the notes thereto.
(b)
The Company has (A) designed such disclosure controls and procedures, or caused
them to be designed under the supervision of the Chief Executive Officer and
Chief Financial Officer of the Company, to provide reasonable assurance that
material information relating to the Company is made known to the Chief
Executive Officer and Chief Financial Officer, particularly during the period in
which the annual or interim filings are being prepared, and (B) designed such
internal control over financial reporting, or caused it to be designed under
such Chief Executive Officer's and Chief Financial Officer's supervision, to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with Canadian GAAP and IFRS, as the case may be. The Company has not failed to
disclose in the Company Public Documents or to the Acquiror in writing prior to
the date of this Agreement, any information regarding any event, circumstance or
action taken or failed to be taken since December 31, 2014 within the knowledge
of the Company and not within the knowledge of the Acquiror as at the date of
this Agreement having an effect which could constitute a Material Adverse
Effect. From December 31, 2014 to the date of this Agreement, the Company has
received no material complaints from any source regarding accounting, internal
accounting controls or auditing matters or expressions of concern from
employees, consultants and/or independent contractor of the Company regarding
questionable accounting or auditing matters.
(c)
As at the date hereof, the obligations or liabilities of the Company, including
obligations and liabilities due or to become due for transaction expenses and
severance costs are not more than $405,000.
6
12.
Undisclosed Liabilities
The
Company has no liabilities or obligations of any nature required to be set forth
in a consolidated balance sheet or in the notes to the financial statements of
the Company under IFRS whether or not accrued, absolute, contingent, determined,
determinable or otherwise, that are not so set forth and there is no existing
condition, situation or set of circumstances that could be expected to result in
such a liability or obligation, except (a) liabilities or obligations disclosed
in the balance sheet forming part of the Company's audited consolidated
financial statements for the year ended December 31, 2014, and (b) other
liabilities and obligations of similar character incurred since the date of such
financial statements in the ordinary course of business. All of the liabilities
and obligations (including accounts payable), as defined under IFRS, of the
Company as at June 30, 2015 that are individually, or in the aggregate, material
to the Company, taken as a whole, are set out in Section 12 of the Disclosure
Letter.
13.
Absence of Certain Changes or Events
Except
as set out in the Company Public Documents, since December 31, 2014: (a) the
Company has conducted its business only in the usual, ordinary and regular
course and consistent with past practice; (b) no liability or obligation of any
nature (whether absolute, accrued, contingent or otherwise) that has had or is
reasonably likely to have a Material Adverse Effect in respect of the Company,
has been incurred; (c) there has not been any acquisition or sale by the Company
of any interest in any material property or assets; (d) the Company has not
declared or paid any dividends or made any other distributions on any of the
Common Shares; (e) the Company has not effected or passed any resolution to
approve a split, consolidation or reclassification of any of the outstanding
Common Shares; (f) there has not been any increase or modification of the
compensation payable to or to become payable by the Company to any of its
directors, officers, employees or consultants or any grant to any such director,
officer, employee or consultant of any increase in severance or termination pay
or any increase or modification of any bonus, pension, insurance or benefit
arrangement (including, without limitation, the granting of Options) to, for or
with any of such directors, officers employees or consultants, other than in the
ordinary and regular course of business consistent with past practice; (g) the
Company has not adopted any, or materially amended any, collective bargaining
agreement, bonus, pension profit sharing, stock purchase, stock option or other
benefit plan; and (h) there has not been any event which has had or is
reasonably likely to have a Material Adverse Effect in respect of the Company.
14.
No Defaults
The
Company is not in default under, and there exists no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default, any Contract to which it is a party which would, if terminated due to
such default, individually or in the aggregate, have a Material Adverse Effect
in respect of the Company.
15. Severance
and Employment Agreements
(a)
The Company has not entered into any written or oral agreement or understanding
providing for severance, termination or other payments to any director, officer,
employee or consultant in connection with the termination of his or her
position or his or her employment following a change in control of the Company
or on a change in control of the Company. The details of all such payment
requirements, including the amounts and a description of the circumstances in
which they must be paid, have been previously provided to the Acquiror.
7
(b)
The Company is not a party to any collective bargaining agreement or subject to
any application for certification or threatened or apparent union organizing
campaigns for employees not covered under a collective bargaining agreement nor
are there any current pending or threatened strikes, lock-outs or work slowdowns
or stoppages at the Company and there has not been any such strike, lock-out or
work slowdown or stoppage in the last five years.
(c)
The Company is not subject to any claim for wrongful dismissal, constructive
dismissal or any other tort claim, actual or, to the knowledge of the Company,
threatened, or any litigation, actual or, to the knowledge of the Company,
threatened, relating to employment or termination of employment of employees,
consultants or independent contractors.
(d)
The Company has operated in accordance, in all material respects, with all
applicable Law with respect to employment and labour, including, but not limited
to, employment and labour standards, occupational health and safety, employment
equity, pay equity, workers' compensation, human rights and labour relations and
there are no current, pending or, to the knowledge of the Company, threatened
proceedings before any board or tribunal with respect to any of the areas listed
herein.
(e)
The Company has no employees.
(f)
The only independent contractor is Fiore and the only consulting Contract is
with Fiore.
16.
Pension and Employee Benefits
(a)
The Company has complied in all material respects with all the terms of, and all
applicable Law in respect of, employee compensation and benefit obligations of
the Company. Other than the Option Plan, the Company does not have any pension
or retirement income plans or other employee compensation or benefit plans,
agreements, policies, programs, arrangements or practices, whether written or
oral, (Benefit Plan) which are maintained by or binding upon the
Company. The Company is in compliance with the terms of the Option Plan and all
applicable Law related thereto.
(b)
The Company does not have any stock option plan or similar arrangement other
than the Option Plan. Section 4(a) of the Disclosure Letter sets forth a
complete, up-to-date and accurate list of all Optionholders under the Option
Plan, together with the number of Options granted, the exercise price, vesting
provisions and the expiry date thereof.
17.
Litigation, etc.
There
is no claim, action, proceeding or investigation pending or, threatened against
or relating to the Company or affecting any of its properties or assets before
or by any court, governmental or regulatory authority or body (including a
Regulatory Authority) which, if adversely determined, would, individually or in the aggregate
reasonably be expected to result in liability to the Company or prevent or
materially delay consummation of the transactions contemplated by this
Agreement, nor is the Company aware of any basis for any such claim, action,
proceeding or investigation. The Company is not subject to any outstanding
order, writ, injunction, decree or settlement in relation to any action or
claim.
8
18.
Environmental
The
Company has disclosed to the Acquiror all material documents (including claims,
notices, orders, judgments, reports, audits, assessments, results, licences,
permits, orders, authorizations, approvals and registrations) relating to
environmental, health and safety matters affecting the Company operations, or
any properties currently or formerly owned, occupied or used by the Company and
any activities carried out thereon. All operations, or any properties currently
or formerly owned, occupied or used by the Company and any activities carried
out thereon, have been, and are now, in compliance with all applicable Law
relating to the protection of the environment or health and safety, closure or
other reclamation obligations or the use, storage, handling, release, disposal,
remediation, treatment or transportation of any substance, including pollutants,
contaminants, waste, or hazardous or toxic materials (collectively,
Environmental Laws), and no liability under Environmental Laws exists
or is reasonably anticipated in relation to such operations, properties or
activities, except where the failure to be in compliance or the liability under
Environmental Laws would not, individually or in the aggregate, have a Material
Adverse Effect in respect of the Company. The Company has all permits, consents,
authorizations and registrations required under Environmental Laws. The Company
is not aware of, or is subject to:
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(a) |
any investigation, proceeding, application, order or
directive which relates to environmental, health or safety or closure or
other reclamation matters, and which may require any material work,
repairs, construction, reclamation, remediation or expenditures;
or |
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(b) |
any claim, demand or notice, with respect to the breach
of or liability under any Environmental Laws, including any regulations
respecting the use, storage, handling, release, disposal, remediation,
treatment or transportation of any substance (including pollutants,
contaminant, waste of any nature, hazardous material, toxic substance,
dangerous substance or dangerous good as defined in any applicable
Environmental Laws), |
which would, individually or in the aggregate, have a Material
Adverse Effect in respect of the Company.
19. Taxes
(a)
The Company has timely filed, or caused to be filed, all Tax Returns required to
be filed by it (all of which returns were correct and complete in all material
respects) and have paid, collected, withheld or remitted, or caused to be paid,
collected, withheld or remitted, all Taxes that are due and payable (including
all instalments on account of Taxes for the current year, that are due and
payable by the Company whether or not assessed (or reassessed) by the appropriate governmental entity), and the Company has provided
adequate accruals in accordance with IFRS in its most recently published
consolidated financial statements for any Taxes for the period covered by such
financial statements that have not been paid, whether or not shown as being due
on any Tax Returns. Since the publication date of such financial statements, no
material Tax liability not reflected in such statements or otherwise provided
for has been assessed, proposed to be assessed, incurred or accrued other than
in the ordinary course of business.
9
(b)
There are no proceedings, investigations, audits or claims now pending or
threatened against the Company in respect of any Taxes and there are no matters
under discussion, audit or appeal with any governmental entity relating to
Taxes.
(c)
There are no material proposed (but unassessed) additional Taxes and none has
been asserted in writing by the Canada Revenue Agency or any other taxing
authority, including any sales tax authority, in connection with any of the Tax
Returns referred to above. No Tax liens have been filed in respect of any of the
assets or properties of the Company.
(d)
The Company is not and has not been a member of any consolidated group for Tax
purposes. The Company is not a party to or bound by any tax allocation or
sharing agreement, tax indemnity obligation or similar agreement, arrangement or
practice with respect to Taxes.
(e) The Company has not requested, or
entered into any agreement or other arrangement, or executed any waiver
providing for, any extension of time within which:
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(i) |
to file any Tax Return (which has not since been filed)
in respect of any Taxes for which the Company is or may be
liable; |
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(ii) |
to file any elections, designations or similar filings
relating to Taxes (which have not since been filed) for which the Company
is or may be liable; |
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(iii) |
the Company is required to pay or remit any Taxes or
amounts on account of Taxes (which have not since been paid or remitted);
or |
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(iv) |
any governmental authority may assess or collect Taxes
for which the Company is liable. |
(f)
The Company will not be required to include any item of income in, or exclude
any item of deduction from, taxable income for any taxable period (or portion
thereof) ending after the Effective Date as a result of any:
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(i) |
change in method of accounting for a taxable period
ending on or prior to the Effective Date; |
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(ii) |
closing agreement as described in Code Section 7121
executed on or prior to the Effective Date; |
10
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(iii) |
intercompany transactions or excess loss account
described in Treasury Regulations under Code Section 1502; |
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(iv) |
instalment sale or open transaction disposition made on
or prior to the Effective Date; or |
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(v) |
prepaid amount received on or prior to the Effective
Date. |
(g)
The Company has duly and timely deducted, collected or withheld from any amount
paid or credited by it to or for the account or benefit of any person and has
duly and timely remitted the same (or is properly holding for such remittance)
to the appropriate governmental authority all income taxes, employment insurance
premiums, pension plan contributions, employer health tax remittances, sales
taxes, use taxes, goods and services taxes, non-resident withholding taxes and
other Taxes and amounts it is required by applicable Law to so deduct, or
collect or withhold and remit.
(h)
The Company has not acquired property or services from, or disposed of property
or provided services to, any person with whom it does not deal at arm's length
for an amount that is other than the fair market value of such property or
services.
(i)
The Company has complied in all material respects with the intercompany transfer
pricing provisions of each applicable Law relating to Taxes, including the
contemporaneous documentation and disclosure requirements thereunder.
(j)
No circumstances exist or could reasonably be expected to arise as a result of
matters existing before the Effective Date that may result in the Company being
subject to the application of Section 159 or 160 of the Tax Act or comparable
provisions of any other legislation or otherwise cause the Company to be liable
for Taxes of any other person.
(k)
The balance in the low rate income pool (as defined in Subsection 89(1) of the
Tax Act) of the Company for the purposes of the Tax Act is, and will be as of
the Effective Date, nil.
(l)
No facts, circumstances or events exist or have existed that have resulted or
may result in the application to the Company of any debt forgiveness, debt
parking or property seizure provisions under any applicable Tax Law.
(m)
No claim has ever been made by any governmental authority in a jurisdiction
where the Company does not file Tax Returns that the Company is or may be
subject to Taxes or is required to file Tax Returns in that jurisdiction.
(n)
Any corporate reorganizations of the Company has been completed in accordance
with applicable Tax requirements, including the filing of all necessary
documents, and no Tax liabilities are pending in relation to any such corporate
reorganizations.
(o)
There are no rulings or closing agreements relating to the Company which could
affect the Company's liability for Taxes for any taxable period after the
Effective Date. The Company has not requested a private letter ruling from the
United States Internal Revenue Service or comparable rulings from other taxing
authorities.
11
(p)
The Company does not have any contractual liability for Taxes of any person
other than the Company under Treasury Regulations Section 1.1502 -6 (or any
similar provision of state, local or foreign Law), as a successor or transferee
or otherwise.
(q)
The Company has not participated in a listed transaction within the meaning of
Treasury Regulations Section 1.6011 -4(b)(2) or in any other reportable
transaction within the meaning of U.S. Treasury Regulation Section 1.6011
-4(b)(1).
(r)
During the last three years, the Company has not been a party to any transaction
(other than a transaction described in Section 355(e)(2)(C) of the Code) treated
by the parties thereto as one to which Section 355 of the Code (or any similar
provision of state, local, or foreign Law) applied.
(s)
There are no Tax credits, grants or similar amounts that are or will be subject
to clawback or recapture as a result of the transactions contemplated by this
Agreement or an act (or failure to act) by the Company to satisfy any
requirement on which the credit, grant or similar amount is or was conditioned.
(t)
None of the assets of the Company is tax-exempt use property within the
meaning of Section 168(h) of the Code and none of the property of the Company is
properly treated as owned by persons other than the Company for Tax purposes.
(u)
The Company is not, and all times during the five-year period ending at the
Effective Date was not, a United States real property holding corporation, as
such term is defined in Section 897(c) of the Code.
(v)
The Company has not taken a reporting position on a Tax Return, which reporting
position (i) if not sustained would be reasonably likely to give rise to a
penalty for substantial understatement of U.S. federal income tax under Section
6662 of the Code (or any similar provision of state, provincial, local or
foreign tax law), and (ii) has not adequately been disclosed on such Tax Return
in accordance with Section 6662(d)(2)(B) of the Code (or any similar provision
of state, provincial, local or foreign tax law).
(w)
The Company has not ever engaged in a trade or business in the United States
as that term is defined in Section 864 of the Code through a permanent
establishment in the United States, and neither has conducted any activity in a
state or local taxing jurisdiction in the United States that would result in the
imposition of any state or local Tax on the Company.
20.
No Insolvency
No
act or proceeding has been taken by or against the Company in connection with
the dissolution, liquidation, winding up, bankruptcy or reorganization of the
Company or the appointment of a trustee, receiver, manager or other
administrator of the Company or any of its properties or assets nor, to the
knowledge of the Company, is any threatened. The Company has not sought
protection under the Bankruptcy and Insolvency Act (Canada) or the
Company Creditors Arrangement Act (Canada) or similar
legislation in other Canadian or foreign jurisdictions. Neither the Company nor
any of its properties or assets is subject to any outstanding judgment, order,
writ, injunction or decree that involves or may involve, or restricts or may
restrict, the right or ability of the Company to conduct its business in all
material respects as it has been carried on prior to the date hereof, or that
would or could materially impede the completion of the Arrangement or other
transactions contemplated by this Agreement, except to the extent any such
matter would not have a Material Adverse Effect in respect of the Company or the
value of its assets.
12
21. Intellectual
Property
The
Company does not own or possess any intellectual property rights including any
patents, copyrights, trade secrets, trademarks, service marks or trade names.
22. Insurance
The
Company has no policies of insurance in force as of the date hereof.
23. Guarantees
The
Company has not given or agreed to give, nor is it a party to or bound by, any
guarantee of indebtedness, indemnity or suretyship of other obligations of any
person (collectively, Guarantees), nor are any of them contingently
responsible for any such indemnity or suretyship or obligations other than any
Guarantees which, if enforced in accordance with their terms, would not
individually or in the aggregate, have a Material Adverse Effect in respect of
the Company. No claims have been made, and, to the knowledge of the Company are
threatened, under or in respect of any Guarantee of, or delivered by, the
Company.
24.
Business
There
is no agreement, judgment, injunction, order or decree binding upon the Company
that has, or could reasonably be expected to have, the effect of materially
prohibiting, restricting or impairing any business practice of the Company, any
acquisition of property by the Company, or the conduct of business by the
Company as currently conducted.
25. Full
Disclosure
All
information provided to the Acquiror and its Representatives in relation to its
and their due diligence requests was accurate in all material respects as at its
respective date as stated therein or, if any such information is undated, the
date it was delivered to the Acquiror or its Representatives, and no material
facts have been omitted from such information which would make such information
misleading, except to the extent, in each such case, subsequent information has
been provided to the Acquiror prior to the date of this Agreement, which has
corrected any inaccuracy contained in the original information. There is no
matter, thing, information, fact, data, circumstance or interpretation thereof
relative to the Company, the business or any of its property and assets which
could reasonably be expected to be material which has not been disclosed to the
Acquiror or its Representatives.
13
26.
Change of Control
The
Company is not a party to any contract, agreement or understanding or any series
of contracts, agreements or understandings and which contain a change of
control or similar provision.
27. United
States Securities Laws
(a)
The Company is a foreign private issuer within the meaning of Rule 3b-4 under
the Exchange Act.
(b)
No securities of the Company are registered or required to be registered under
Section 12 of the Exchange Act, and the Company is not required to file reports
under Section 13 or Section 15(d) of the Exchange Act.
(c)
The Company is not registered, and is not required to be registered, as an
investment company under the United States Investment Company Act of 1940, as
amended.
28. Related
Party Transactions; Collateral Benefits
The
Company is not indebted to any director, officer, employee or agent of, or
independent contractor to, the Company or any of its Affiliates or Associates
(except for amounts due as normal salaries and bonuses and in reimbursement of
ordinary expenses). Except as disclosed in the Company Public Documents, on or
before the date hereof, no director, officer, employee or agent of the Company
or any of its Affiliates or Associates is a party to any loan, contract,
arrangement or understanding or other transactions with the Company required to
be disclosed pursuant to applicable securities Law. There are no contracts or
other transactions between the Company, on the one hand, and any (i) officer or
director of the Company, (ii) any holder of record or beneficial owner of 2% or
more of any class of the voting or non-voting equity securities of the Company,
or (iii) any Affiliate or Associate of any such officer, director or beneficial
owner, on the other hand.
29.
Finder's Fees
Other
than the Fiore Fee, there is no investment bank, broker, finder or other
intermediary that has been retained by or is authorized to act on behalf of the
Company who is entitled to any fee or commission from the Company in connection
with the Arrangement.
30.
Foreign Corrupt Practices Act
None
of the Company or, to the knowledge of the Company, any director, officer,
agent, employee, affiliate or other person acting on behalf of the Company is
aware of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the Foreign Corrupt Practices Act of 1977, as
amended, and the rules and regulations thereunder (the FCPA) or the
Corruption of Foreign Public Officials Act (Canada), as amended
(the CFPOA) and the Company has conducted its business in compliance
with the FCPA or the CFPOA and has instituted and maintains policies and
procedures designed to ensure continued compliance therewith.
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31. Money
Laundering Laws
(a)
The operations of the Company are, and have been conducted at all times in
compliance with the financial record-keeping and reporting requirements of
anti-money laundering statutes of all applicable jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or
guidelines, issued, administered or enforced by any governmental entity to which
the Company is subject, the Proceeds of Crime (Money Laundering) and
Terrorist Financing Act (Canada) (collectively, the Money Laundering
Laws), and no action, suit or proceeding by or before any governmental
entity or body or arbitrator involving the Company with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened.
(b)
There are no proceedings under any corruption Laws pending against the Company
or, to the knowledge of the Company, threatened against or affecting the
Company.
32. OFAC
The
Company has not had and, to the knowledge of the Company, no director, officer,
agent, employee or affiliate of the Company has had any sanctions administered
by the Office of Foreign Assets Control of the U.S. Treasury Department
(OFAC) imposed upon such person; and the Company is not in violation of
any of the economic sanctions of the United States administered by OFAC or any
Law or executive order relating thereto (the U.S. Economic Sanctions)
or conducting business with any person subject to any U.S. Economic Sanctions.
33.
Patriot Act
(a)
Neither the Company, nor to the Company's knowledge, any of its affiliates, is
in violation of Executive Order No. 13224 on Terrorist Financing, effective
September 24, 2001 and relating to Blocking Property and Prohibiting
Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism
(the Executive Order) and/or to the Company's knowledge, the Uniting
and Strengthening America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001 (the Patriot Act).
(b)
Neither the Company, nor to the Company's knowledge, any of its respective
affiliates, is a Prohibited Person which is defined as follows: (i) a
person or entity that is listed in the Annex to, or is otherwise subject to the
provisions of, the Executive Order; (ii) a person or entity owned or controlled
by, or acting for or on behalf of, any person or entity that is listed in the
Annex to, or is otherwise subject to the provisions of, the Executive Order;
(iii) a person or entity with whom the Acquiror or its successor or assignee is
prohibited from dealing or otherwise engaging in any transaction by the
Executive Order or the Patriot Act; (iv) a person or entity who commits,
threatens or conspires to commit or supports terrorism as defined in the
Executive Order; (v) a person or entity that is named as a specially designated
national and blocked person on the most current list published by the U.S.
Treasury Department Office of Foreign Assets Control at its official website,
http:/www.treas.gov/ofac/tllsdn.pdf, or at any replacement website or other
replacement official publication of such list; and (vi) a person or entity who
is affiliated with a person or entity listed above.
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(c)
Neither the Company nor, to the Company's knowledge, any of its affiliates, has:
(i) conducted any business or engaged in any transaction or dealing with any
Prohibited Person, including the making or receiving of any contribution of
funds, goods or services to or for the benefit of any Prohibited Person; (ii)
dealt in or otherwise engaged in any transaction relating to, any property or
interests in property blocked pursuant to the Executive Order; or (iii) engaged
in or conspired to engage in any transaction that evades or avoids, or has the
purpose of evading or avoiding, or attempts to violate, any of the prohibitions
set forth in the Executive Order or the Patriot Act.
SCHEDULE D
REPRESENTATIONS AND WARRANTIES OF THE ACQUIROR
1.
Organization and Qualification
The
Acquiror is validly existing as a corporation under the Laws of the Province of
British Columbia and has the requisite corporate power and authority to own its
assets and conduct its businesses as they are now being conducted.
2.
Capitalization
The
authorized capital of the Acquiror consists of an unlimited number of common
shares. As at the date hereof there are: (i) 130,972,599 Acquiror Shares issued
and outstanding; and (ii) an aggregate of 31,799,108 Acquiror Shares reserved
for issuance pursuant to outstanding options, warrants, convertible securities
and other rights to acquire Acquiror Shares. All outstanding Acquiror Shares
have been authorized and are validly issued and outstanding as fully paid and
non-assessable shares, free of pre-emptive rights.
3.
Authority Relative to this Agreement
The
Acquiror has the requisite corporate power, authority and capacity to enter into
this Agreement and to perform its obligations hereunder. The execution and
delivery of this Agreement by the Acquiror and the consummation by the Acquiror
of the transactions contemplated by this Agreement have been duly authorized by
its board of directors and no other corporate proceedings on its part are
necessary to authorize this Agreement and the Arrangement or the completion by
the Acquiror of the transactions contemplated hereby. This Agreement has been
duly executed and delivered by the Acquiror and constitutes a legal, valid and
binding obligation of the Acquiror, enforceable against it in accordance with
its terms, subject, however, to limitations with respect to enforcement imposed
by law in connection with bankruptcy, insolvency or similar proceedings and to
the extent that equitable remedies such as specific performance and injunction
are in the discretion of the court from which they are sought.
The
authorization of this Agreement, the execution and delivery by the Acquiror of
this Agreement and the performance by it of its obligations under this Agreement
and the Arrangement shall not result (with or without notice or the passage of
time) in a violation, conflict or breach of, or constitute a default under, in
respect of or require any consent to be obtained under or give rise to any third
party right of termination, amendment, first refusal, shotgun, cancellation,
acceleration, penalty or payment obligation or right of purchase or sale under
any provision of: (a) the articles or notice of articles of the Acquiror; (b)
any applicable Law to which the Acquiror is subject or by which the Acquiror is
bound; or
2
(c) any agreement, contract,
indenture, deed of trust, mortgage, bond, note, instrument, licence, franchise,
grant or permit to which the Acquiror is a party or by which it is bound, which
would, individually or in the aggregate, have a Material Adverse Effect in
respect of the Acquiror or materially impede the completion of the transactions
contemplated by this Agreement.
4.
Ownership of Common Shares
As
at the date hereof, the Acquiror owns, directly or indirectly, no Common Shares.
5.
Filings
(a)
The Acquiror is a reporting issuer in British Columbia, Alberta, and Ontario
(and in no other jurisdiction in Canada). The Acquiror is not subject to
reporting requirements of any jurisdiction outside Canada and the United States.
The Acquiror is not in default in the performance any of any of its obligations
under legislation of such provinces and is in compliance with the applicable
rules and regulations of the TSX and NYSE MKT.
(b)
Documents or information filed by the Acquiror under applicable Law since and
including December 31, 2014, including the Acquiror's (a) annual information
form dated March 30, 2015, (b) audited consolidated financial statements as at
and for the years ended December 31, 2014, 2013 and 2012 and related management
discussion and analysis, (c) unaudited consolidated financial statements as at
and for the three and six months ended June 30, 2015 and related management
discussion and analysis, (d) management information circular dated June 8, 2015
in respect of the Acquiror's annual general meeting of shareholders held July 7,
2015, and (e) any material change reports that have been filed by the Acquiror
between December 31, 2014 and the date hereof are, and any such documents or
information filed by the Acquiror after the date hereof and before the
Arrangement is completed (collectively, the Acquiror Public Documents)
shall be, as of their respective dates, in compliance in all material respects
with applicable Law and do not contain any Misrepresentation as of their
respective dates.
(c)
Since December 31, 2014, there is no material change which has occurred with
respect to which the requisite material change report has not been filed by the
Acquiror with the securities regulatory authorities in the applicable provinces
of Canada. The Acquiror has not filed any confidential material change reports
that remain confidential. All material agreements required to be filed by the
Acquiror with the securities regulatory authorities, in the applicable provinces
of Canada have been filed.
(d)
The Acquiror is in compliance with the provisions of NI 43-101 in all material
respects.
6.
Financial Statements
(a)
The audited consolidated balance sheets and related consolidated statements of
earnings and shareholders' equity and cash flows of the Acquiror as at and for
the financial year ended December 31, 2014 and the unaudited consolidated balance
sheet and consolidated statements of earnings and shareholders' equity and cash
flows of the Acquiror as at and for the period ended June 30, 2015 contained in
the Acquiror Public Documents were prepared in accordance with IFRS.
3
(b)
Such statements present fairly, in all material respects, the consolidated
financial condition and results of operations of the Acquiror as of the
respective dates thereof and for the respective periods covered thereby applied
on a basis consistent with the immediately prior period and throughout the
periods indicated (except as may be indicated expressly in the notes thereto).
Such statements reflect appropriate and adequate reserves in respect of
contingent liabilities, if any, of the Acquiror on a consolidated basis. Since
December 31, 2014, the Acquiror has not effected any change in its accounting
methods, principles or practices, except as otherwise set out in the Acquiror's
financial statements, including the notes thereto.
7.
Litigation, etc.
Except
as disclosed in the Acquiror Public Documents, there is no claim, action,
proceeding or investigation pending or, threatened against or relating to the
Acquiror or affecting any of its properties or assets before or by any court,
governmental or regulatory authority or body (including a Regulatory Authority)
which, if adversely determined, would, individually or in the aggregate
reasonably be expected to result in liability to the Acquiror or prevent or
materially delay consummation of the transactions contemplated by this
Agreement, nor is the Acquiror aware of any basis for any such claim, action,
proceeding or investigation. The Acquiror is not subject to any outstanding
order, writ, injunction, decree or settlement in relation to any action or
claim.
8.
No Insolvency
The
Acquiror is not insolvent within the meaning of applicable bankruptcy,
insolvency or fraudulent conveyance laws. No act or proceeding has been taken by
or against the Acquiror in connection with the dissolution, liquidation,
winding-up, bankruptcy or reorganization of the Acquiror or the appointment of a
trustee, receiver, manager or other administrator of the Acquiror or any of its
properties or assets.
9.
Compliance with Law and Licences
The
Acquiror has complied with and is in compliance with all Law applicable to the
operation of its business and, except where failure to so comply would not,
individually or in the aggregate, have a Material Adverse Effect in respect of
the Acquiror, the Acquiror has all concessions, licences, permits, orders or
approvals of, and has made all required registrations with, any governmental or
regulatory body that is required in connection with the ownership of its assets
or the conduct of its operations and the Acquiror has fully complied with and is
in compliance with all such concessions, licences, permits, orders, approvals
and registrations, except where failure to so comply would not, individually or
in the aggregate, have a Material Adverse Effect in respect of the Acquiror. The
Acquiror has not received any notice, whether written or oral, of revocation or
non-renewal of any such concessions, licences, permits, orders, approvals or
registrations, or of any intention of any government or Regulatory Authority to
revoke or refuse to renew any of such concessions, licences,
permits, orders, approvals or registrations, and to the best of the knowledge of
the Acquiror, all such concessions, licences, permits, orders, approvals and
registrations shall continue to be effective and any required renewals thereof
shall be available in order for the Acquiror to continue to conduct its business
as it is currently being conducted and in accordance with the existing plans of
the Acquiror. The Acquiror is not in conflict with, or in default (including
cross defaults) under or in violation of, (a) its articles or notice of
articles, or (b) any agreement or understanding to which it or by which any of
its properties is bound or affected, except for any conflict, default or breach,
which would not, individually or in the aggregate, have a Material Adverse
Effect in respect of the Acquiror.
4
10. Shareholder
Approval
No
vote or approval of the holders of Acquiror Shares or the holder of any other
securities of the Acquiror is necessary to approve this Agreement, the
Arrangement or the other transactions contemplated herein.
11. Reporting
Issuer Status
The
Acquiror (i) is a reporting issuer not in default or the equivalent thereof
under the securities Law of British Columbia, Alberta and Ontario and the
Acquiror Shares are registered under Section 12 of the Exchange Act, (ii) is not
subject to any cease trade order or stop order under applicable securities Law,
and (iii) is current with all material filings required to be made under
applicable securities Law. The outstanding Acquiror Shares are listed on the TSX
and NYSE MKT.
12.
Issuance of Acquiror Shares under the Arrangement
The
Acquiror Shares to be issued pursuant to the Arrangement shall be duly and
validly issued and fully paid and non-assessable shares of the Acquiror.
13. United
States Securities Law Matters
The
Acquiror: (i) is a foreign private issuer as defined in Rule 405 under the
U.S. Securities Act; and (ii) is not registered or required to register as an
investment company under the United States Investment Company Act of 1940, as
amended.
14.
Support Agreements
The
Acquiror has entered into Support Agreements with each of the Locked-Up
Securityholders and, except as disclosed to the Company, has not entered into
any other agreements with such holders or other Shareholders in respect of the
Arrangement.
15.
Investment Canada
The
Acquiror is a Canadian within the meaning of the Investment Canada Act (Canada).
5
16. Operational
Matters
All
costs, expenses, liabilities payable, and obligations under the terms of any
Contracts to which the Acquiror is directly or indirectly bound have been
properly and timely paid or performed in all material respects.
17. Material
Agreements
(a)
The Acquiror has made available to the Company for inspection true and complete
copies of all such Contracts material to the business or assets or the equity
value of the Acquiror.
(b)
All such Contracts are in full force and effect, and the Acquiror as party
thereto is entitled to all rights and benefits thereunder in accordance with the
terms thereof. The Acquiror has complied in all material respects with all terms
of such Contracts, has paid all amounts due thereunder, has not waived any
material rights thereunder and no material default or breach exists in respect
thereof on the part of the Acquiror.
(c)
Except as set out in the Acquirors Public Documents or as otherwise disclosed
to the Company in writing, no Contract is subject to any termination fees,
cancellation costs or other similar penalties that would be or become payable by
the Acquiror upon termination of such Contract or agreement or upon completion
of the transactions contemplated by this Agreement.
(d)
No approval or consent of any person is needed in order that such Contracts
continue in full force and effect following consummation of the transactions
contemplated hereby and the Acquiror is not a party to any such Contract that
contains any non-competition obligation or otherwise restricts in any material
way the business of the Acquiror.
(e) The Acquiror is in compliance with
the terms of the Letter Agreement.
18. Books
and Records
The
books, records and accounts of the Acquiror: (i) have been maintained in
accordance with good business practices on a basis consistent with prior years;
(ii) are stated in reasonable detail and accurately and fairly reflect the
transactions and dispositions of the assets of the Acquiror; and (iii)
accurately and fairly reflect the basis for the consolidated financial
statements of the Acquiror, in each case, in all material respects. The Acquiror
has devised and maintains a system of internal accounting controls sufficient to
provide reasonable assurances that: (i) transactions are executed in accordance
with management's general or specific authorization; and (ii) transactions are
recorded as necessary (A) to permit preparation of financial statements in
conformity with IFRS and (B) to maintain accountability for assets and
liabilities. The Acquiror's minute books have been maintained in compliance with
applicable Law and are complete and accurate in all material respects.
6
19.
Undisclosed Liabilities
The
Acquiror has no liabilities or obligations of any nature required to be set
forth in a consolidated balance sheet or in the notes to the financial
statements of the Acquiror under IFRS whether or not accrued, absolute,
contingent, determined, determinable or otherwise, that are not so set forth and
there is no existing condition, situation or set of circumstances that could be
expected to result in such a liability or obligation, except (a) liabilities or
obligations disclosed in the Acquirors Public Documents, including the balance
sheet forming part of the Acquiror's audited consolidated financial statements
for the year ended December 31, 2014, (b) contingent liabilities which may arise
in connection with legal proceedings to which the Acquiror is a party or is
subject to, and related matters as set out in the Acquirors Public Documents
and (c) other liabilities and obligations of similar character incurred since
the date of such financial statements in the ordinary course of business.
20. Absence
of Certain Changes or Events
Except
as set out in the Acquiror Public Documents, since December 31, 2014: (a) the
Acquiror has conducted its business only in the usual, ordinary and regular
course and consistent with past practice; (b) no liability or obligation of any
nature (whether absolute, accrued, contingent or otherwise) that has had or is
reasonably likely to have a Material Adverse Effect in respect of the Acquiror,
has been incurred; (c) there has not been any acquisition or sale by the
Acquiror of any interest in any material property or assets; (d) the Acquiror
has not declared or paid any dividends or made any other distributions on any of
the Acquiror Shares; (e) the Acquiror has not effected or passed any resolution
to approve a split, consolidation or reclassification of any of the outstanding
Acquiror Shares; (f) except as disclosed to the Company in writing, there has
not been any increase or modification of the compensation payable to or to
become payable by the Acquiror to any of its directors, officers, employees or
consultants or any grant to any such director, officer, employee or consultant
of any increase in severance or termination pay or any increase or modification
of any bonus, pension, insurance or benefit arrangement (including, without
limitation, the granting of Options) to, for or with any of such directors,
officers employees or consultants, other than in the ordinary and regular course
of business consistent with past practice; (g) the Acquiror has not adopted any,
or materially amended any, collective bargaining agreement, bonus, pension
profit sharing, stock purchase, stock option or other benefit plan; and (h)
there has not been any event which has had or is reasonably likely to have a
Material Adverse Effect in respect of the Acquiror.
21. No
Defaults
The
Acquiror is not in default under, and there exists no event, condition or
occurrence which, after notice or lapse of time or both, would constitute such a
default, any Contract to which it is a party which would, if terminated due to
such default, individually or in the aggregate, have a Material Adverse Effect
in respect of the Acquiror.
22. Employment
Matters
(a)
The Acquiror is not a party to any collective bargaining agreement or subject to
any application for certification or threatened or apparent union organizing
campaigns for employees not covered under a collective bargaining agreement
nor are there any current pending or threatened strikes, lock-outs or work
slowdowns or stoppages at the Acquiror and there has not been any such strike,
lock-out or work slowdown or stoppage in the last five years.
7
(b)
The Acquiror is not subject to any claim for wrongful dismissal, constructive
dismissal or any other tort claim, actual or, to the knowledge of the Acquiror,
threatened, or any litigation, actual or, to the knowledge of the Acquiror,
threatened, relating to employment or termination of employment of employees,
consultants or independent contractors.
(c)
The Acquiror has operated in accordance, in all material respects, with all
applicable Law with respect to employment and labour, including, but not limited
to, employment and labour standards, occupational health and safety, employment
equity, pay equity, workers' compensation, human rights and labour relations and
there are no current, pending or, to the knowledge of the Acquiror, threatened
proceedings before any board or tribunal with respect to any of the areas listed
herein.
23. Environmental
The
Acquiror has disclosed to the Company all material documents (including claims,
notices, orders, judgments, reports, audits, assessments, results, licences,
permits, orders, authorizations, approvals and registrations) relating to
material environmental, health and safety matters affecting the Acquiror
operations, or any properties currently or formerly owned, occupied or used by
the Acquiror and any activities carried out thereon. All operations, or any
properties currently or formerly owned, occupied or used by the Acquiror and any
activities carried out thereon, have been, and are now, in compliance with all
applicable Environmental Laws, and no liability under Environmental Laws exists
or is reasonably anticipated in relation to such operations, properties or
activities, except where the failure to be in compliance or the liability under
Environmental Laws would not, individually or in the aggregate, have a Material
Adverse Effect in respect of the Acquiror. The Acquiror has all permits,
consents, authorizations and registrations currently required under
Environmental Laws. The Acquiror is not aware of, or is subject to:
(a) any
investigation, proceeding, application, order or directive which relates to
environmental, health or safety or closure or other reclamation matters, and
which may require any material work, repairs, construction, reclamation,
remediation or expenditures; or
(b) any claim, demand or notice, with respect to
the breach of or liability under any Environmental Laws, including any
regulations respecting the use, storage, handling, release, disposal,
remediation, treatment or transportation of any substance (including pollutants,
contaminant, waste of any nature, hazardous material, toxic substance, dangerous
substance or dangerous good as defined in any applicable Environmental Laws),
which would, individually or in the aggregate, have a Material Adverse Effect in
respect of the Acquiror.
8
24.
Insurance
Policies
of insurance in force as of the date hereof naming the Acquiror as an insured
adequately cover all risks reasonably and prudently foreseeable in the operation
and conduct of the business of the Acquiror for which, having regard to the
nature of such risk and the relative cost of obtaining insurance, it is in the
opinion of the Acquiror, acting reasonably, prudent to seek such insurance
rather than provide for self-insurance. All such policies of insurance shall
remain in full force and effect and shall not be cancelled or otherwise
terminated as a result of the Arrangement.
25. Guarantees
The
Acquiror has not given or agreed to give, nor is it a party to or bound by, any
guarantee of indebtedness, indemnity or suretyship of other obligations of any
person (collectively, Guarantees), nor are any of them contingently
responsible for any such indemnity or suretyship or obligations other than any
Guarantees which, if enforced in accordance with their terms, would not
individually or in the aggregate, have a Material Adverse Effect in respect of
the Acquiror. No claims have been made, and, to the knowledge of the Acquiror
are threatened, under or in respect of any Guarantee of, or delivered by, the
Acquiror.
26. Business
There
is no agreement, judgment, injunction, order or decree binding upon the Acquiror
that has, or could reasonably be expected to have, the effect of materially
prohibiting, restricting or impairing any business practice of the Acquiror, any
acquisition of property by the Acquiror, or the conduct of business by the
Acquiror as currently conducted.
27.
Full Disclosure
All
information provided to the Company and its Representatives in relation to its
and their due diligence requests was accurate in all material respects as at its
respective date as stated therein or, if any such information is undated, the
date it was delivered to the Company or its Representatives, and no material
facts have been omitted from such information which would make such information
misleading, except to the extent, in each such case, subsequent information has
been provided to the Company prior to the date of this Agreement, which has
corrected any inaccuracy contained in the original information. There is no
matter, thing, information, fact, data, circumstance or interpretation thereof
relative to the Acquiror, the business or any of its property and assets which
could reasonably be expected to be material which has not been disclosed to the
Company or its Representatives.
9
28. Ownership
of Subsidiaries
All
of the issued and outstanding shares of capital stock and other ownership
interests in the subsidiaries of Acquiror are duly authorized, validly issued,
fully paid and non-assessable, and all such shares and other ownership interests
held directly or indirectly by Acquiror are legally and beneficially owned free
and clear of all Liens, and there are no outstanding options, warrants, rights,
entitlements, understandings or commitments (contingent or otherwise) regarding
the right to purchase or acquire, or securities convertible into or exchangeable for, any such shares of capital stock or other
ownership interests in or material assets or properties of any of the
subsidiaries of Acquiror. There are no contracts, commitments, agreements,
understandings, arrangements or restrictions which require any subsidiaries of
Acquiror to issue, sell or deliver any shares in its share capital or other
ownership interests, or any securities or obligations convertible into or
exchangeable for, any shares of its share capital or other ownership interests.
There are no outstanding options, rights, entitlements, understandings or
commitments (contingent or otherwise) providing to any third-party the right to
acquire any shares or other ownership interests in any subsidiaries of Acquiror.
EXECUTION COPY
LOAN AGREEMENT
THIS AGREEMENT dated the date set forth below,
BETWEEN:
CANNON POINT RESOURCES LTD., a company formed
pursuant to the laws of British Columbia having an office at Suite 3123, 595
Burrard Street, Vancouver, British Columbia V7X 1J1
(the Lender)
AND:
NORTHERN DYNASTY MINERALS LTD., a corporation
formed pursuant to the laws of British Columbia having an office at Suite 1500,
1040 West Georgia Street, Vancouver, British Columbia V6E 4H1
(the Borrower)
BACKGROUND:
A. |
The Borrower and the Lender have entered into an
Arrangement Agreement (the Arrangement Agreement) dated August
31, 2015. |
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B. |
Pursuant to the Arrangement Agreement the Lender has
agreed to lend the Borrower $4,250,000 and the Borrower wishes to borrow
and the Lender is willing to lend to the Borrower such amount on the terms
and conditions of this Agreement. |
THEREFORE in consideration of the premises and of the
mutual covenants and agreements hereinafter set forth, the Lender and the
Borrower agree as follows:
1. |
DEFINITIONS; INTERPRETATION |
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1.1 |
For the purpose of this Agreement, the following words
and phrases will have meanings set forth below unless the parties or the
context otherwise require(s): |
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(a) |
Advance Accrued Interest means interest on the
Principal Amount accrued in advance for the six (6) month period
commencing on the Advance Date. |
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(b) |
Advance Date means the date of this
Agreement. |
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(c) |
Agreement and this Agreement means this
agreement as the same may be amended, modified, replaced or restated from
time to time. |
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(d) |
Arrangement has the meaning set out in the
Arrangement Agreement. |
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(e) |
Borrowers Indebtedness means at any point in
time the principal amount outstanding under the Loan and all accrued and
outstanding interest thereon plus all other
amounts owing by the Borrower to the Lender hereunder or under
the General Security Agreement. |
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(f) |
Business Day means any day, other than a
Saturday, a Sunday, or a civic or statutory holiday in Vancouver, British
Columbia. |
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(g) |
Event of Default means any of the events
specified in Section 11.1. |
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(h) |
General Security Agreement means a general
security agreement between the Lender and the Borrower entered into
concurrently with this Agreement, creating a security interest in the
Borrowers present and after-acquired personal property. |
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(i) |
Interest Rate means fifteen per cent (15%) per
annum, calculated as herein provided. |
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(j) |
Loan means the loan of $4,250,000 established by
the Lender in favour of the Borrower pursuant to this Agreement. |
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(k) |
Maturity Date means the earlier of: |
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(i) |
August 31, 2016; |
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(ii) |
the date that is thirty (30) days from the date of
termination of the Arrangement Agreement if the Arrangement Agreement is
terminated without the Arrangement completing due to a breach of the
Arrangement Agreement by the Borrower; and |
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(iii) |
the date that is one hundred and eighty (180) days from
the date of termination of the Arrangement Agreement if the Arrangement
Agreement is terminated without the Arrangement completing due to the
shareholders of the Lender not voting in favour of the Arrangement or due
to a breach of the Arrangement Agreement by the
Lender. |
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(l) |
Person means and includes an individual, a
partnership, a joint venture, a corporation, a limited liability company,
a trust, an unincorporated organization and a government or any department
or agency thereof. |
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(m) |
Plan of Arrangement has the meaning set out in
the Arrangement Agreement. |
1.2 |
For the purpose of this Agreement, the following meanings
of interpretation will apply: |
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(a) |
herein, hereunder, and similar terms refer to this
Agreement as a whole and not to any specific, section, clause or provision
thereof; |
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(b) |
when the context makes it possible, the singular includes
the plural and vice versa, and all references to any person, whether a
party to this Agreement or not, will be read with such changes in number
or gender as the party or reference requires; |
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(c) |
any reference in this Agreement to a statute will include
any amendment or successor statute and any regulations thereunder in force
from time to time; and |
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(d) |
the headings appearing in this Agreement have been
inserted for convenience of reference only and in no way define, limit, or
enlarge the scope or meaning of the provisions of this
Agreement. |
2. |
LOAN |
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2.1 |
The Lender agrees to make the Loan on the terms and
subject to the conditions of this Agreement. |
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3. |
PURPOSE |
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3.1 |
The Loan will be made available to the Borrower for its
general purposes. |
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4. |
AVAILABILITY |
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4.1 |
On the Advance Date, the Lender will advance the
principal amount of the Loan in the amount of $4,250,000 without deduction
or offset for Advance Accrued Interest to the Borrower. |
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5. |
REPAYMENT AND PREPAYMENT |
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5.1 |
Unless demanded earlier due to an Event of Default, the
Loan is due and payable in full on the Maturity Date. |
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5.2 |
Unless demanded earlier due to an Event of Default, the
Borrower covenants to pay to the Lender the Borrowers Indebtedness on the
Maturity Date. |
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5.3 |
The Borrower may prepay in whole or in part, the
Borrowers Indebtedness at any time, without notice or penalty. |
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5.4 |
In the event of termination of the Arrangement Agreement
without the Arrangement completing, the principal amount of the Loan which
is repayable will be reduced by the portion of the Advance Accrued
Interest which is in excess of the amount of interest that would otherwise
be accrued on a per diem basis for the actual number of days the Loan was
outstanding. |
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6. |
INTEREST |
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6.1 |
The Borrower covenants to pay to the Lender all accrued
and unpaid interest, including Advance Accrued Interest, on the Maturity
Date. |
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6.2 |
Interest will accrue at the Interest Rate and the Advance
Accrued Interest will be calculated as herein provided on the outstanding
principal balance of the Loan, in advance, on the basis of a 365-day year,
on a nominal rate basis. Thereafter, interest will accrue at the Interest
Rate and be calculated as herein provided on the outstanding principal
balance of the Loan, quarterly, not in advance, on the basis of a 365-day
year, on a nominal rate basis. |
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7. |
METHOD OF PAYMENTS |
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7.1 |
All payments made by the Borrower to the Lender hereunder
will be made by wire transfer in accordance with such instructions as the
Lender may provide to the Borrower or by cheque delivered to the Lenders
address as set out below or as the Lender otherwise notifies the Borrower
in writing. |
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7.2 |
Notwithstanding anything in this Agreement to the
contrary, any payment of the Borrowers Indebtedness that is due on a date
other than a Business Day will be made on the next succeeding Business
Day. |
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7.3 |
All payments made by the Borrower to the Lender hereunder
shall be made without set-off or counterclaim and without any deductions
or withholdings whatsoever, other than as provided in Section
5.4. |
8. |
REPRESENTATIONS AND WARRANTIES |
| | | |
8.1 |
The Borrower represents and warrants as follows: |
| | | |
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(a) |
the Borrower is a corporation duly organized, validly existing and in good standing under the laws of British Columbia; |
| | | |
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(b) |
the Borrower has the corporate power and capacity to carry on business as currently conducted by it, own property or interests therein, borrow money, grant security, make, keep, observe and perform representations, warranties,
covenants and agreements and obligations and incur liabilities, all as contemplated hereby; and |
| | | |
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(c) |
the execution and delivery by it of this Agreement and the General Security Agreement and the performance by it of its obligations hereunder and thereunder, do not and will not conflict with or result in a material breach of any
of the terms, conditions, or provisions of: |
| | | |
| |
(i) |
its constating documents, |
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| |
(ii) |
any law, regulation, or decree applicable or binding on it or any of its property, assets and undertaking, or |
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| |
(iii) |
any agreement, contract, indenture, deed of trust, mortgage, bond, note, instrument, licence, franchise, grant or permit to which the Borrower is a party or by which it is bound. |
9. |
COVENANTS
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| | |
9.1 |
The Borrower hereby covenants that it will:
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| | |
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(a) |
pay, observe and perform its debts, obligations and liabilities hereunder, when due; and
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(b) |
comply with all applicable laws, ordinances or governmental rules or regulations to which it or any of its property, assets and undertaking are subject.
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10. |
SECURITY
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| | |
10.1 |
As security for payment, observance and performance of the Borrower’s Indebtedness, the Borrower, concurrently with the execution of this Agreement, will execute and deliver to the Lender the General Security Agreement.
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11. |
EVENTS OF DEFAULT
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| | |
11.1 |
At the option of and upon demand by the Lender, the Borrower’s Indebtedness will immediately become due and payable and this Agreement and the General Security Agreement will become enforceable upon the happening of any one
or more of the following events:
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| | |
|
(a) |
the Borrower fails to pay the principal of the Loan or accrued and outstanding interest thereon, subject to set-off provided for in Section 5.4, within 5 days of when the same becomes due and payable hereunder;
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| | |
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(b) |
the Borrower ceases or threatens to cease to carry on business generally or admits in writing its inability or fails to pay its liabilities generally;
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(c) |
the Borrower neglects to observe or perform any covenant
or obligation contained herein or in the General Security Agreement on its
part to be observed or performed and the Borrower fails to remedy such
default, if capable of remedy, within a period of 15 days from occurrence
of such default; |
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(d) |
any representation or warranty made by the Borrower in
this Agreement or in the General Security Agreement or in any certificate
or other document at any time delivered hereunder to the Lender proves to
have been incorrect or misleading in any material respect on and as of the
date that it was made or was deemed to have been made; |
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(e) |
the Borrower files a voluntary petition in bankruptcy or
a voluntary petition to seek reorganization or to effect a plan or other
arrangement with creditors; or makes an assignment for the benefit of
creditors or to an agent authorized to liquidate any substantial amount of
its assets; or applies for or consent to or suffer the appointment of any
receiver or trustee for it or any of its property; |
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(f) |
an order is entered by any court or governmental entity
having jurisdiction over the Borrower relating to bankruptcy or to any act
purporting to be amendatory thereof approving an involuntary petition
seeking reorganization of the Borrower; or |
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(g) |
an order is entered appointing any receiver or trustee
for the Borrower or for any property of the Borrower and the same shall
not be stayed or vacated within thirty (30)
days. |
12. |
WAIVER |
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12.1 |
The Lender may waive, in writing, any breach by the
Borrower of any of the provisions contained in this Agreement or in the
General Security Agreement or any default by the Borrower in the
observance or performance of any covenant or condition required to be
observed or performed by the Borrower under the terms of this Agreement or
the General Security Agreement; but any waiver by the Lender of such
breach or default, or any failure to take any action to enforce its rights
hereunder or under the General Security Agreement, will not extend to or
be taken in any manner whatsoever to affect any subsequent breach or
default or the rights resulting therefrom. |
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13. |
REMEDIES UNDER THIS AGREEMENT AND THE GENERAL SECURITY
AGREEMENT |
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13.1 |
All rights and remedies stipulated for the Lender
hereunder or in the General Security Agreement will be deemed to be in
addition to and not restrictive of the right and remedies which the Lender
might be entitled to at law or in equity; and the Lender may realize on
the General Security Agreement or any part thereof in any manner and in
such order as it may be advised, and any such realization by any means
will not bar realization of any other security or any part or parts
thereof, nor will any single or partial exercise of any right or remedy
preclude any other or further exercise thereof, nor will any failure on
the part of the Lender to exercise, or any delay in exercising any rights
under this Agreement or the General Security Agreement operate as a
waiver. |
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13.2 |
The acceptance by the Lender of any further security or
of any payment of or on account of any of the Borrowers Indebtedness
after a default or of any payment on account of any past default will not
be construed to be a waiver of any right in respect of any future default
or of any past default not completely cured thereby; and the Lender may,
in its uncontrolled discretion, exercise any and all rights, powers,
remedies and recourses available to it in accordance with this Agreement
and the General Security Agreement concurrently or individually without
the necessity of any election. |
14. |
MISCELLANEOUS |
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|
14.1 |
The Borrower will forthwith at all times, and from time
to time, do, execute, acknowledge and deliver, or cause to be done,
executed, acknowledged and delivered, all such further acts, deeds,
documents and assurances which, in the opinion of the Lender, acting
reasonably, are necessary or advisable for the better accomplishing and
effecting of the intent of this Agreement. |
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14.2 |
No amendment, waiver or modification of, or agreement
collateral to, this Agreement or the General Security Agreement will be
enforceable unless it is by a formal instrument in writing expressed to be
a modification of this Agreement or the General Security Agreement, as the
case may be, and executed in the same manner as this Agreement. |
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14.3 |
All covenants and other agreements in this Agreement
contained by or on behalf of any of the parties hereto will bind and enure
to the benefit of the respective successors and assigns of the parties
hereto (including, without limitation, any transferee) whether so
expressed or not; provided, however, that neither party may assign or
transfer its respective rights or obligations hereunder to any Person
without the other partys prior written consent. |
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14.4 |
Any notice delivered or sent by electronic mail or other
means of electronic communication capable of producing a printed copy on a
Business Day will be deemed conclusively to have been effectively given on
the day the notice was delivered, or the transmission was sent
successfully, to the address (physical or electronic), as the case may be,
set out below. Any notice sent by prepaid registered mail will be deemed
conclusively to have been effectively given on the third Business Day
after posting; but if at the time of posting or between the time of
posting and the third Business Day thereafter there is a strike, lockout,
or other labour disturbance affecting postal service, then the notice will
not be effectively given until actually delivered. |
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Notice details for: |
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Lender |
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CANNON POINT RESOURCES LTD. |
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Suite 3123, 595 Burrard Street PO Box 49139
Vancouver, British Columbia V7X 1J1 |
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Attention: David Farrell |
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Email: dfarrell@davisaconsulting.com |
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Borrower |
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NORTHERN DYNASTY MINERALS LTD. |
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Suite 1500, 1040 West Georgia Street Vancouver,
British Columbia V6E 4H1 |
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Attention:
Trevor Thomas |
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Email:
trevorthomas@hdimining.com |
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14.5 |
Any provision of this Agreement that is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall (to the full
extent permitted by law) not invalidate or render unenforceable such
provision in any other jurisdiction. |
14.6 |
This Agreement and any documents or instruments referred
to in, or delivered pursuant to, or in connection with, this Agreement
constitute the whole and entire agreement between the Lender and the
Borrower with respect to the Loan. |
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14.7 |
This Agreement will be construed and enforced in
accordance with, and the rights of the parties will be governed by the
laws of the Province of British Columbia and applicable federal laws
thereto. The Lender and the Borrower hereby attorn to the courts of
competent jurisdiction located in the Province of British Columbia in any
proceedings hereunder. |
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14.8 |
This Agreement may be executed simultaneously in two or
more counterparts, each of which will be deemed an original, and it will
not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart. This Agreement may be executed by
delivery of executed signature pages by fax or other form of electronic
transmission and such transmission will be effective for all
purposes. |
[SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered on the 31st day of
August, 2015.
BORROWER
NORTHERN DYNASTY MINERALS LTD.
Per: |
/s/
Trevor Thomas |
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|
Authorized Signatory |
|
LENDER
CANNON POINT RESOURCES LTD.
Per: |
/s/
Jay Sujir |
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|
Authorized Signatory |
|
[Signature page to loan agreement with respect $4,250,000
loan]
GENERAL SECURITY AGREEMENT
THIS GENERAL SECURITY AGREEMENT is dated
the date set out below and made,
BETWEEN:
NORTHERN DYNASTY MINERALS LTD., a corporation
existing under the Business Corporations Act of British Columbia;
(the Debtor)
AND:
CANNON POINT RESOURCES LTD., a corporation
existing under the Business Corporations Act of British Columbia;
(the Secured Party)
ARTICLE 1
DEFINITIONS
1.1
Definitions
In
this Agreement the following words and phrases will have the meanings set out
below unless the parties or the context otherwise require(s).
|
(a) |
Act means the Personal Property Security Act
of British Columbia and the regulations thereunder, as amended,
restated or replaced by successor legislation of comparable
effect. |
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(b) |
Agreement or this Agreement means this
Agreement including all recitals and schedules hereto, as modified,
amended, restated or replaced from time to time. |
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(c) |
Collateral means all of the Debtors present and
after-acquired personal property and interests therein of every nature and
kind and wherever situate, including all personal property and interests
therein now or hereafter held by the Debtor in trust for any person(s) or
by any person(s) in trust for the Debtor, including all proceeds derived
therefrom that are present or after-acquired personal property or other
assets or undertaking of any nature or kind, tangible or intangible, legal
or equitable, wherever the same may be situate, (including proceeds
derived directly or indirectly from any dealing with the personal property
charged hereby (including proceeds), all rights to insurance payments and
other payments as indemnity or compensation for loss thereof or damage
thereto, and all payments made in total or partial discharge or redemption
of securities, instruments, chattel paper or intangibles (including
accounts) comprised therein). |
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(d) |
Debtor means the party so described above and
its successors and assigns, whether immediate or derivative. |
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(e) |
Encumbrances means any grant, mortgage, pledge,
charge (whether fixed or floating), hypothec, assignment, security
interest, lien, privilege title retention agreement, levy, execution
attachment or other encumbrance (whether statutory or otherwise)
whatsoever or any nature or kind and howsoever
created. |
-2-
|
(f) |
Events of Default means the events of default
described in Article 7 of this Agreement and Event of Default
means any one of them. |
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(g) |
Loan means the $4,250,000 loan made or to be
made by the Secured Party to the Debtor pursuant to the Loan
Agreement. |
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(h) |
Loan Agreement means the loan agreement dated
the date hereof between the Debtor and the Secured Party, as amended,
modified, restated or replaced from time to time. |
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(i) |
Persons or Person means and includes
any individual, sole proprietorship, corporation, partnership, bank, joint
venture, trust, unincorporated association, association, institution,
entity, party or government (whether national, federal, provincial, state,
municipal, city, county or otherwise and including any instrumentality,
division, agency, body or department thereof). |
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(j) |
Permitted Encumbrances means: |
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(i) |
carriers, warehousemens, builders and mechanics and
other like Encumbrances arising in the ordinary course of business or by
operation of law and other Encumbrances resulting from judgments or awards
the time for the appeal or petition for re-hearing of which shall not have
expired or in respect of which Debtor shall in good faith be prosecuting
an appeal or proceeding for review and in respect of which a stay of
execution pending such appeal or proceeding for review shall have been
obtained; |
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(ii) |
Encumbrances or trusts for taxes, assessments and other
governmental charges either not yet due and payable or in respect of which
enforcement proceedings shall have been effectively stayed; |
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(iii) |
pledges or deposits made under workers compensation laws
or similar legislation or good faith deposits or bonds or similar
instruments to secure the performance of bids, tenders, leases, contracts,
expropriation proceedings, or deposits to secure surety and appeal bonds
or deposits as security for contested taxes or export or import duties,
levies, charges or surcharges; |
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(iv) |
the right reserved to or vested in any governmental
authority by the terms of any lease, franchise, tenure, contract, grant or
permit, or by any statutory provisions, to terminate any such lease,
licence, franchise, tenure, contract, grant or permit (provided that such
right is not then being exercised), or to require annual or other periodic
payments or the performance of obligations or imposition of conditions, as
a condition of the continuance thereof; |
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(v) |
security given to a public utility or to any governmental
authority when required by such public utility or governmental authority
in connection with operations in the ordinary course of business of Debtor
or any of its subsidiaries; |
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(vi) |
the reservations, limitations, provisos and conditions,
if any, expressed in any grants from the Crown in the right of Canada or
in the right of any Province or Territory thereof; |
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(vii) |
minor survey exceptions, minor encumbrances, leases,
rights or options to repurchase, restrictions, easements or reservations
of or rights of others for rights of way, sewers, electric lines,
telegraph and telephone lines and other similar purposes, title defects or
irregularities or zoning or other restrictions as to the
use of real properties or Encumbrances incidental to the
conduct of business or the ownership of properties which were not incurred
in connection with extensions of credit and which do not in the aggregate
materially detract from the value of such properties or materially impair
their use in the operation of the business of Debtor; |
-3-
|
(viii) |
as of any particular time in respect of any particular
Collateral, any Encumbrances consented to in writing by the Secured
Party; |
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(ix) |
the charges or security interests, if any, shown on
Schedule A hereto; |
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(x) |
any Encumbrance renewing, extending or refunding any
Encumbrance permitted by paragraphs (i) through (ix); provided
that |
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(A) |
the principal amount of indebtedness secured by such
Encumbrance immediately prior to such extension, renewal or refunding is
not materially increased or the maturity thereof materially
reduced; |
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(B) |
such Encumbrance is not extended to any other property;
and |
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(C) |
immediately after such extension, renewal or refunding no
Event of Default would exist; and |
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(xi) |
any other Encumbrances which by their terms rank
subsequent in priority to the Secured
Obligations. |
|
(k) |
Secured Obligations means the obligations of the
Debtor to the Secured Party in connection with the Loan (including all
future advances and re-advances) whether direct or indirect, absolute or
contingent, joint, several or joint and several, matured or not, extended
or renewed, wherever and however incurred, of whatever nature or
kind. |
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(l) |
Secured Party means the party so described above
and its successors and assigns, whether immediate or
derivative. |
1.2
Applicability of Act
Words
used in this Agreement that are defined in the Act will have the respective
meanings ascribed to them in the Act, unless otherwise defined herein.
ARTICLE 2
SECURITY INTEREST
2.1
Creation of Security Interest
For
valuable consideration and as continuing security for the payment, observance
and performance of each and all of the Secured Obligations:
|
(a) |
Fixed Security Interest: the Debtor: |
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(i) |
grants to the Secured Party (who takes from the Debtor) a
continuing security interest in the Collateral; and |
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(ii) |
grants, mortgages and charges the Collateral to the
Secured Party by way of a fixed and specific
charge. |
-4-
2.2
Exceptions
There
shall be excepted out of or excluded from the assignment(s), charge(s) and or
security interest(s) created by this Agreement:
|
(a) |
Last 10 Days of Lease: the last 10 days of the
term created by any lease or agreement therefor (but the Debtor shall
stand possessed of the reversion thereby remaining upon trust to assign
and dispose thereof to any third party as the Secured Party shall
direct); |
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(b) |
Consumer Goods: any consumer goods of the Debtor;
and |
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(c) |
Agreements Requiring Consent: with respect to each
agreement or other asset that requires the consent or approval of another
party thereto for the creation of a security interest or charge therein,
the security interests or charges created hereby will not become effective
therein until all such consents or approvals have been obtained, or until
such other assurances as may be acceptable to the Secured Party have been
received, but until then the Debtor shall stand possessed of such asset in
trust to dispose of as the Secured Party may
direct. |
2.3
Attachment
The
Debtor acknowledges that value has been given, the security interests hereby
created attach upon the execution of this Agreement (or in the case of any after
acquired property, upon the date of acquisition thereof by or on behalf of the
Debtor) and the Debtor has (or in the case of after acquired property will have)
rights in the Collateral.
2.4 Purchase
Money Security Interests
The Debtor acknowledges that the security interest created hereunder secures
advances made and future advances to be made by the Secured Party to the Debtor
for the purpose of enabling the Debtor to acquire rights in the Collateral.
ARTICLE 3
SECURED OBLIGATIONS
3.1
Secured Obligations
This
Agreement, the Collateral and the security and other interests hereby created
are in addition to and not in substitution for any other security interest now
or hereafter held by the Secured Party from the Debtor or from any other Person
whomsoever and will be general and continuing security for the payment,
performance and observance of the Secured Obligations.
ARTICLE 4
DEBTORS REPRESENTATIONS AND WARRANTIES
4.1 General
The
Debtor makes the representations and warranties set out in this paragraph 4.1 to
and for the benefit of the Secured Party.
|
(a) |
Proceedings and Enforceability: The Debtor
represents and warrants that this Agreement is granted in accordance with
resolutions of the directors of the Debtor and all other matters and
things have been done and performed so as to authorize and make the
execution and delivery of this Agreement and the performance of the
Secured Obligations hereunder, a valid and legally binding obligation of the
Debtor enforceable in accordance with its terms, subject only to
bankruptcy, insolvency or other statutes or judicial decisions affecting
the enforcement of creditors rights generally and to general principles
of equity. |
-5-
|
(b) |
Non-Conflict: Neither the execution nor the
performance of this Agreement requires the approval of any regulatory
agency having jurisdiction over the Debtor nor is this Agreement in
contravention of or in conflict with the articles, by-laws or resolutions
of the directors (or shareholders) of the Debtor, or of the provisions of
any agreement to which the Debtor is a party or by which any of its
property may be bound or of any statute, regulation, by-law, ordinance or
other law, or of any judgment, decree, award, ruling or order to which the
Debtor or any of its property may be subject. |
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(c) |
No Default: The Debtor is not in breach or default
under any agreement to which it is a party which if not cured would have a
material adverse effect upon the Debtor or the Collateral. |
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(d) |
No Liens: Except for Permitted Encumbrances, the
Debtor has paid and discharged all claims and demands of all employees,
contractors, subcontractors, material men, mechanics, carriers,
warehousemen, landlords, and other like persons, and all governmental
taxes, assessments, withholdings, remittances, charges, levies, and claims
levied or imposed, which, if unpaid, become or might become an Encumbrance
upon any or all of the properties, assets, earnings, or operations of the
Debtor. |
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(e) |
Ownership and Collateral Free of Encumbrances: The
Debtor is the owner of or has rights in the Collateral free and clear of
all Encumbrances whatsoever save only Permitted
Encumbrances. |
ARTICLE 5
DEBTORS COVENANTS
5.1 General Covenants
The Debtor covenants and agrees with the Secured Party as set forth in this Section 5.1 unless compliance with any such covenants is waived by the Secured Party in writing, or unless non-compliance with any such covenants is otherwise consented to by the Secured Party by written agreement with the Debtor.
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(a) |
Compliance with Secured Obligations: The Debtor shall strictly comply with all of the Secured Obligations. |
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(b) |
Keep Collateral in Good Repair: The Debtor shall keep the Collateral in good order, condition and repair. |
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(c) |
Conduct of Business: The Debtor shall carry on and conduct its affairs in a proper and efficient manner so as to protect and preserve the Collateral. |
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(d) |
Payment of Other Sums Due: The Debtor shall pay when due all amounts which are payable by it in connection with the Collateral, howsoever arising, including without limiting the generality of the foregoing, all rents, charges, taxes, rates, levies, assessments, fees and duties of every nature which may be levied, assessed or imposed against or in respect of the Collateral or the Debtor and shall provide the Secured Party with evidence of such payment upon request. |
-6-
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(e) |
Notice of Encumbrances and Proceedings: The Debtor
shall promptly notify the Secured Party of any Encumbrance made or
asserted against any of the Collateral, and of any suit, action or
proceeding affecting any of the Collateral or which could affect the
Debtor. The Debtor shall, at its own expense, defend the Collateral
against any and all Encumbrances (other than any Permitted Encumbrances)
and against any and all such suits, actions or proceedings. |
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(f) |
No Accessions or Fixtures: The Debtor shall
prevent the Collateral from becoming an accession to any property other
than other items of the Collateral or from becoming a Fixture unless the
security interests hereby created rank prior to the interests of all other
persons in the applicable property. |
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(g) |
Marking the Collateral: The Debtor shall, at the
request of the Secured Party, mark, or otherwise take appropriate steps to
identify, the Collateral to indicate clearly that it is subject to the
security interests hereby created. |
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(h) |
Notice of Loss of Collateral: The Debtor shall
give immediate written notice to the Secured Party of all loss or damage
to or loss or possession of the Collateral otherwise than by disposition
in accordance with the terms hereof. |
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(i) |
Inspection of Records and Collateral: The Debtor
shall at all times keep accurate and complete records of the Collateral as
well as proper books of account for its business all in accordance with
generally accepted accounting principles, consistently applied. |
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(j) |
Delivery of Documents: The Debtor shall promptly
deliver to the Secured Party upon request: |
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(i) |
all policies and certificates of insurance relating to
the Collateral; |
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(ii) |
any documents of title and instruments representing or
relating to the Collateral; |
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(iii) |
deliver a true and complete copy of each agreement or
contract or other document included in the Collateral; and |
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(iv) |
such information concerning the Collateral, the Debtor
and the Debtors operations and affairs as the Secured Party may request,
acting reasonably. |
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(k) |
Proceeds in Trust: The Debtor shall hold all
proceeds in trust, separate and apart from other money, instruments or
property, for the benefit of the Secured Party until all amounts owing by
the Debtor to the Secured Party have been paid in full. |
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(l) |
Reliance and Survival: All representations and
warranties of the Debtor made herein or in any certificate or other
document or agreement delivered by or on behalf of the Debtor for the
benefit of the Secured Party are material, will survive the execution and
delivery of this Agreement and will continue in full force and effect
without time limit. The Secured Party is deemed to have relied upon each
such representation and warranty notwithstanding any investigation made by
or on behalf of the Secured Party at any time. |
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(m) |
Compliance with Agreements and Laws: The Debtor
shall not use the Collateral in violation of this Agreement or any other
agreement relating to the Collateral or any policy insuring the Collateral
or any applicable statute, law, by-law, rule, regulation, court order or
ordinance. |
-7-
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(n) |
Disposition of Collateral: Provided that so long
as no Event of Default remains outstanding, the Debtor shall not, except
in the ordinary course of business or with the prior written consent of
the Secured Party, such consent not to be unreasonably delayed or
withheld: |
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(i) |
assign, sell, lease, exchange, or otherwise dispose of
the Collateral or any interest therein; or |
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(ii) |
release, surrender or abandon possession of any of the
Collateral or terminate or cancel any material agreement included in the
Collateral. |
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For any item of the Collateral which has become worn out,
damaged or otherwise unsuitable for its purpose, the Debtor may substitute
for such item property of equal value free from all Encumbrances except
Permitted Encumbrances. All substituted property shall become part of the
Collateral as soon as the Debtor acquires any interest in it. |
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(o) |
Encumbrances: The Debtor shall not create, assume
or suffer to exist any Encumbrance in, of or on any of the Collateral
except for Permitted Encumbrances. |
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(p) |
Liability for Deficiency: If the aggregate sum
realized as a result of any realization pursuant hereto is not sufficient
to pay the whole amount of the Secured Obligations, the Debtor shall
forthwith pay to the Secured Party the full amount of the deficiency plus
interest thereon at the rate or rates applicable to the Secured
Obligations. |
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(q) |
Notification: The Debtor shall notify the Secured
Party promptly: |
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(i) |
Litigation: the details of any claims or
litigation affecting the Debtor or the Collateral other than as disclosed
in the Debtors filings on SEDAR or in the Debtors dataroom;
and |
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(ii) |
Account Debtors: any default by any account debtor
in payment or other performance of obligations of that Person comprised in
the Collateral. |
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(r) |
Payments: The Debtor shall forthwith
pay: |
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(i) |
Employee obligations: all obligations to its
employees and all obligations to others which relate to its employees when
due, including, without limitation, all taxes, duties, levies, government
fees, claims and dues related to its employees; |
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(ii) |
Taxes: all taxes, assessments, rates, duties,
levies, government fees, claims and dues lawfully levied, assessed or
imposed upon it or the Collateral when due, unless the Debtor shall in
good faith contests its obligations so to pay and furnishes such security
as the Secured Party may require; and |
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(iii) |
Prior Encumbrances: all Encumbrances which rank or
could in any event rank in priority to or pari passu with the
security constituted by this Agreement. |
-8-
ARTICLE 6
PERFORMANCE OF OBLIGATIONS
6.1
Perform Obligations
If
the Debtor fails to perform its obligations hereunder, the Secured Party may,
but will not be obligated to, perform any or all of such obligations without
prejudice to any other rights and remedies of the Secured Party hereunder, and
any payments made and any costs, charges, expenses and legal fees and
disbursements (on a solicitor and his own client basis) incurred in connection
therewith will be payable by the Debtor to the Secured Party forthwith with
interest until paid at the highest rate borne by any of the Secured Obligations
and such amounts will be a charge upon and security interest in the Collateral
in favour of the Secured Party prior to all claims subsequent to this Agreement.
ARTICLE 7
DEFAULT
7.1
Default
The
Debtor shall be in default under this Agreement upon the occurrence of any of
the following events:
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(a) |
if, pursuant to the Loan Agreement, the Secured Party is
entitled to accelerate the Loan; or |
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(b) |
if a receiver or receiver-manager is appointed by a Court
or any other Person in respect of the Debtor, or any part of the property,
assets or undertakings charged by this Agreement; or |
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(c) |
if the Debtor or any other Person who becomes an owner of
an interest in any of the Collateral while this Agreement is in effect,
without the prior consent in writing of the Secured Party, grants or
proposes to grant an Encumbrance upon or in respect of that Collateral
other than pursuant to this Agreement or a Permitted Encumbrance;
or |
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(d) |
if any execution, sequestration, extent or any other
process of any other kind is levied or enforced upon or against the
Collateral or any part thereof by any Person other than the Secured Party
and remains unsatisfied for a period of 10 days; or |
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(e) |
if the holder (other than the Secured Party) of any
Encumbrance against any of the Collateral does anything to enforce or
realize on such Encumbrance; or |
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(f) |
a material portion of the Collateral is lost, damaged or
destroyed; or |
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(g) |
if any of the moneys secured under this Agreement as part
of the Secured Obligations are used for any purpose other than as declared
to and agreed upon by the Secured Party; or |
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(h) |
any material portion of the Collateral becomes the
subject of expropriation proceedings. |
-9-
ARTICLE 8
RIGHTS, REMEDIES AND POWERS
8.1
Before and After Default
At
any time and from time to time without notice, whether before or after an Event
of Default, the Secured Party will have the right and power (but will not be
obligated):
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(a) |
Inspection and Records: to inspect the Collateral
whenever the Secured Party considers it appropriate to do so, acting
reasonably, and to inspect, review, audit and copy any or all information
relating thereto or to the Collateral or to any other transactions between
the parties hereto wherever and however such information is stored, and
for such purposes may at any time with or without notice enter into and
upon any lands, buildings and premises where the Collateral or any such
information is or may be; |
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(b) |
Set-Off: to set off the Secured Obligations
against any or all debts and liabilities, direct and indirect, absolute
and contingent, in any currency, now existing or hereafter incurred by the
Secured Party in any capacity in favour of the Debtor; |
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(c) |
Perfection of Charges: to file such financing
statements and financing change statements and do such other acts, matters
and things as the Secured Party may consider appropriate to perfect,
preserve, continue and realize upon the security interest created hereby,
all without the consent of or notice to the Debtor; and |
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(d) |
Extensions and Other Indulgences: to grant
extensions of time and other indulgences, take and give up security,
accept compositions, compound, compromise, settle, grant releases and
discharges, refrain from perfecting or maintaining perfection of
Encumbrances, and otherwise deal with the Debtor and other obligors of the
Debtor, sureties and others and with the Collateral and Encumbrances as
the Secured Party may consider appropriate, acting reasonably, all without
prejudice to the liability of the Debtor or the Secured Partys rights to
hold and realize on the security interest created
hereby. |
8.2 After
Default
Upon
the occurrence of an Event of Default and at any time thereafter, the Secured
Party may exercise any or all of the rights, remedies and powers of the Secured
Party under the Act, or otherwise existing, whether under this Agreement or any
other agreement or at law or in equity, all of which other rights, remedies and
powers are hereby incorporated as if expressly set out herein. In addition to
the foregoing, the Secured Party will have the right and power (but will not be
obligated):
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(a) |
Withhold Advances: to withhold any or all
advances, including future advances; |
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(b) |
Accelerate Secured Obligations: to declare any or
all of the Secured Obligations to be immediately due and
payable; |
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(c) |
Enter and Take Possession: to take possession of
the Collateral and to collect and get in the same, and for such purposes
may at any time, with or without notice or legal process and to the
exclusion of all others including the Debtor and its servants, agents and
employees, enter into and upon, use and occupy any lands, buildings and
premises wheresoever and whatsoever, where the Collateral is or may be
located and do any act and take any proceedings in the name of the Debtor
or otherwise, as the Secured Party may consider
appropriate; |
-10-
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(d) |
Receive Payments: to receive income, rents,
profits, increases, payments, damages and proceeds from and in respect of
the Collateral and to demand, collect (by legal proceedings or otherwise),
endorse, sue on, enforce, realize, recover, receive and get in the same,
and for such purposes may give valid and binding receipts and discharges
therefor and in respect thereof and may do any act and take any
proceedings in the name of the Debtor or otherwise as the Secured Party
may consider appropriate; |
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(e) |
Control of Proceeds: to take control of any or all
proceeds where the Collateral (including proceeds) is dealt with or
otherwise gives rise to proceeds; |
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(f) |
Use and Protection of the Collateral: to use,
hold, insure, preserve, repair, process, maintain, protect and prepare the
Collateral for disposition and to renew or replace such of the Collateral
as may be worn out, lost or otherwise unserviceable, in the manner and to
the extent that the Secured Party may consider appropriate; |
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(g) |
Disposition of the Collateral: to sell, lease,
rent or otherwise dispose of or concur in the sale, lease, rental or other
disposition of the Collateral, whether in or out of the ordinary course of
business, by private or public sale, lease or other disposition, with or
without notice, advertising or any other formality, either for cash or in
any manner involving deferred payment in whole or in part, at such time or
times and upon such terms and conditions as the Secured Party may consider
appropriate and for such prices or consideration as can reasonably be
obtained at such time therefor, and to carry any such disposition into
effect by conveying title and executing agreements and assurances in the
name of the Debtor or otherwise as the Secured Party may consider
appropriate, and to make any stipulations as to title or conveyance or
commencement of title or otherwise as the Secured Party may consider
appropriate, and to buy in or rescind or vary any contract for the
disposition of the Collateral and to re-dispose of the same without being
answerable for any loss occasioned thereby; |
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(h) |
Exercise and Enforcement of Debtors Rights: to
exercise as to the Collateral any or all of the rights, remedies and
powers of the Debtor, and to enforce the observance and performance by
others of all other obligations and liabilities under or in respect of the
Collateral; |
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(i) |
Payment of Liabilities: to pay any or all debts
and liabilities in connection with the Collateral; |
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(j) |
Arrangements: to enter into any compromise,
extension, reorganization, deposit, merger or consolidation agreement or
similar arrangement in any way relating to or affecting the Collateral,
and in connection therewith may deposit, exchange or surrender control of
the Collateral and accept other property upon such terms as the Secured
Party may consider appropriate, and either with or without payment or
exchange of money for equality of exchange or otherwise; |
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(k) |
Institution and Defence of Actions: to institute
and prosecute all suits, proceedings and actions which the Secured Party
may consider necessary or advisable for the proper protection or
enforcement of the Collateral, and to defend all suits, proceedings and
actions against the Debtor, and to appear in and conduct the prosecution
and defence of any suit, proceeding or action then pending or thereafter
instituted, and to appeal any suit, proceeding or action; |
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(l) |
Foreclosure: to exercise its rights under the Act,
as amended from time to time, to give notice of a proposal to take, and to
subsequently take, the Collateral in satisfaction of the Secured
Obligations; |
-11-
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(m) |
Other Means of Enforcement: to otherwise enforce
this Agreement and realize upon the security interest created hereby by
any method permitted by law, including by bringing action to recover a
judgment or by taking proceedings to obtain a certificate under the
Creditor Assistance Act of British Columbia against the Debtor, and
to do all such other acts and things as it may consider incidental or
conducive to any of its rights, remedies and powers; and |
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(n) |
Appointment of Receiver: to appoint by instrument
in writing with or without bond, or to take proceedings in any court of
competent jurisdiction for the appointment of, a receiver or receiver
manager of the Debtor or the Collateral, including all or any part or
parts of the undertaking and business or businesses of the Debtor, and to
remove any receiver or receiver manager appointed by the Secured Party and
to appoint another in his stead, (and any person so appointed, whether by
the Secured Party or a court, will be referred to herein as the
Receiver). |
8.3 Receiver
Any
Receiver will be entitled to exercise any and all rights, remedies and powers of
the Secured Party under the Act as amended from time to time or any other
applicable legislation or otherwise existing, whether under this Agreement or
any other agreement or at law or in equity, all of which other rights, remedies
and powers are hereby incorporated as if expressly set out herein, and in
addition will have the right and power (but will not be obligated):
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(a) |
Carry on Business: to carry on or concur in
carrying on all or any part of the business or businesses of the
Debtor; |
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(b) |
Employ Agents: to employ and discharge such
agents, managers, clerks, lawyers, accountants, servants, workmen and
others upon such terms and with such salaries, wages or remuneration as
the Receiver may consider appropriate; |
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(c) |
Raise Funds and Grant Security: to borrow or
otherwise raise on the security of the Collateral or otherwise any sum or
sums of money required for the seizure, retaking, repossession, holding,
insuring, repairing, processing, maintaining, protecting, preparing for
disposition and disposing of the Collateral, or for the carrying on of all
or any part of the business or businesses of the Debtor, or to complete
any construction or repair of lands owned by the Debtor or any part
thereof, or for any other enforcement of this Agreement, in such sum or
sums as will in the opinion of the Receiver be sufficient for obtaining
the amounts from time to time required, and in so doing may issue
certificates which may be payable either to order or to bearer and may be
payable at such time or times as the Receiver may consider appropriate and
may bear interest as stated therein, and the amounts from time to time
payable by virtue of such certificates will form an Encumbrance in and
upon the Collateral in priority to the security interest created hereby;
and |
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(d) |
Other Rights: to exercise any or all rights,
remedies and powers conferred or delegated by the Secured
Party. |
8.4 Rights
of Transferees
No purchaser, lessee or other transferee pursuant to any disposition made or
purporting to be made pursuant to this Agreement will be bound or concerned to
see or enquire whether an Event of Default has occurred or continues, or whether
any notice required hereunder has been given, or as to the necessity or
expediency of the stipulations subject to which such disposition is to be made,
or otherwise as to the propriety of such disposition or the regularity of its
proceedings, or be affected by notice that no Event of Default has occurred or continues or that any required
notice has not been given or that the disposition is otherwise unnecessary,
improper or irregular, and, notwithstanding any impropriety or irregularity
whatsoever or notice thereof, the disposition as regards such purchaser, lessee
or other transferee will be deemed to be within the powers conferred by this
Agreement and will be valid accordingly, and the remedy (if any) of the Debtor
in respect of any impropriety or irregularity whatsoever in any such disposition
will be in damages only.
-12-
8.5
Application of Proceeds
Any
proceeds of any disposition of the Collateral, any net profits of carrying on
all or any part of the business or businesses of the Debtor, and any proceeds of
any other realization will, at the option of the Secured Party, be held in whole
or in part unappropriated in a separate account (as security for any or all of
the Secured Obligations including such part or parts thereof as may be
contingent or not yet due) or be applied in whole or in part (subject to
applicable legislation and the claims of any creditors ranking in priority to
the security interest created hereby):
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(a) |
Receivers Costs: firstly, to the payment of all
reasonable costs, charges and expenses of and incidental to the
appointment of any Receiver and the exercise by the Receiver of any or all
of its rights, remedies and powers with respect to the Debtor, the
Collateral and this Agreement, including the remuneration of the Receiver
and all amounts properly payable by the Receiver together with all legal
costs in respect thereof; |
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(b) |
Costs of Repossession and Disposition: secondly,
to the payment of all reasonable costs, charges and expenses incurred or
paid in connection with seizing, repossessing, collecting, holding,
repairing, processing, preparing for disposition and disposing of the
Collateral and any other expenses of enforcing this Agreement incurred by
the Secured Party (including legal fees and all taxes, costs and charges
in respect of the Collateral); |
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(c) |
Secured Obligations: thirdly, to the payment of
the Secured Obligations; and |
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(d) |
Surplus: fourthly, any surplus will, subject to
the rights of any other creditors of the Debtor, be paid to the
Debtor. |
8.6
Rights Cumulative
All
rights, remedies and powers of the Secured Party and any Receiver set out in
this Agreement are cumulative. No right, remedy or power set out herein is
intended to be exclusive but each will be in addition to every other right,
remedy and power contained herein or in any other existing or future agreement
or now or hereafter existing by statute, at law or in equity.
8.7
Order of Realization
The
Secured Party may realize upon the security interest created hereby and any
other Encumbrances it may now or hereafter have in such order as it may consider
appropriate, and any such realization by any means upon any such Encumbrance
will not bar realization upon any other Encumbrance(s).
8.8 Waiver
The
Secured Party in its absolute discretion may at any time and from time to time
by written notice waive any breach by the Debtor of any of its covenants or
agreements herein. No course of dealing between the Debtor and the Secured Party
will operate as a waiver of any of the Secured Partys rights, remedies or
powers. No failure or delay on the part of the Secured Party to exercise any
right, remedy or power given herein or by any other existing or future agreement
or now or hereafter existing by statute, at law or in equity will operate as a waiver thereof,
nor will any single or partial exercise of any such right, remedy or power
preclude any other exercise thereof or the exercise of any other such right,
remedy or power, nor will any waiver by the Secured Party be deemed to be a
waiver of any subsequent, similar or other event.
-13-
ARTICLE 9
MISCELLANEOUS
9.1
No Merger
This
Agreement will not operate so as to create any merger or discharge of any of the
Secured Obligations, or any assignment, transfer, guarantee, lien, contract,
promissory note, bill of exchange or security interest of any form held or which
may hereafter be held by the Secured Party from the Debtor or from any other
person whomsoever. The taking of a judgment with respect to any of the Secured
Obligations will not operate as a merger of any of the covenants contained in
this Agreement.
9.2
Set-Off or Counterclaim
The
obligation of the Debtor to make all payments comprising part of the Secured
Obligations is absolute and unconditional and will not be affected by:
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(a) |
any circumstance, including any set-off, compensation,
counterclaim, recoupment, defence or other right which the Debtor may now
or hereafter have against the Secured Party or any one or more others for
any reason whatsoever; or |
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(b) |
any insolvency, bankruptcy, reorganization or similar
proceedings by or against the Debtor. |
9.3 Assignment
The
Secured Party may, without further notice to the Debtor, at any time assign,
transfer or grant a security interest in this Agreement and the security
interests granted hereby. The Debtor expressly agrees that the assignee,
transferee or secured party, as the case may be, will have all of the Secured
Partys rights and remedies under this Agreement and the Debtor shall not assert
any defence, counterclaim, right of set-off or otherwise any claim which it now
has or hereafter acquires against the Secured Party in any action commenced by
such assignee, transferee or secured party, as the case may be, and will pay the
Secured Obligations to the assignee, transferee or secured party, as the case
may be, as the Secured Obligations become due. The Debtor shall not assign this
Agreement or any of its rights or benefits hereunder without the prior written
consent of the Secured Party.
9.4
Further Assurances
The
Debtor shall at all times, do, execute, acknowledge and deliver or cause to be
done, executed, acknowledged or delivered all such further acts, deeds,
transfers, assignments, security agreements and assurances as the Secured Party
may reasonably require in order to give effect to the provisions hereof and for
the better granting, transferring, assigning, charging, setting over, assuring,
confirming or perfecting the security interests hereby created and the priority
accorded to them by law or under this Agreement.
9.5
Notices
Notice
hereunder may be given to either party in the manner contemplated by the Loan
Agreement.
-14-
9.6
Discharge
Any
partial payment or satisfaction of the Secured Obligations will be deemed not to
be a redemption or discharge of this Agreement. The Debtor shall be entitled to
a release and discharge of this Agreement upon full payment and satisfaction of
all Secured Obligations and upon written request by the Debtor.
9.7 Delivery
of Copy/Waiver
The
Debtor acknowledges receiving a copy of this Agreement. The Debtor waives all
rights to receive from the Secured Party a copy of any financing statement,
financing change statement or verification statement filed at any time in
respect of this Agreement.
ARTICLE 10
INTERPRETATION
10.1
Amendment
Any
amendment of this Agreement shall not be binding unless in writing and signed by
the Secured Party and the Debtor.
10.2
Headings
All
headings and titles in this Agreement are for reference only and are not to be
used in the interpretation of the terms hereof.
10.3
Hereof, Etc.
All
references in this Agreement to the words hereof, herein or
hereunder will be construed to mean and refer to this Agreement as a
whole and will not be construed to refer only to a specific Article, Section,
paragraph or clause of this Agreement unless the context clearly requires such
construction.
10.4
Severability
If
any of the terms of this Agreement are or are held to be unenforceable or
otherwise invalid, such holding will not in any way affect the enforceability or
validity of the remaining terms of this Agreement.
10.5
Governing Law
This
Agreement will be governed by and construed in accordance with the laws of the
Province of British Columbia, and each party hereby submits to the jurisdiction
of the courts of the Province of British Columbia provided that the foregoing
will in no way limit the right of the Secured Party to commence suits, actions
or proceedings based on this Agreement in any other jurisdiction.
10.6
Interpretation
Wherever
the singular or masculine gender is used throughout this Agreement the same will
be construed as meaning the plural or the feminine or the body corporate or
politic where the context or the parties hereto so require.
-15-
10.7 Binding
Effect
This
Agreement shall be binding on the Debtor and its heirs, executors, personal
representatives, successors and permitted assigns and shall enure to the benefit
of the Secured Party and its successors and assigns.
10.8 Entire
Agreement
The
Secured Party has made no representations, warranties, covenants or
acknowledgements affecting any Collateral, other than as expressly set out
herein in writing.
10.9 Counterparts
This
Agreement may be executed in counterparts and an executed copy of this Agreement
may be delivered by electronic facsimile transmission or other means of
electronic communication capable of producing a signed printed copy of this
Agreement. Any such execution and delivery will be deemed to have occurred as
of the date set forth below by the party so delivering such copy.
EXECUTED by the Debtor and the Secured Party as of the 31st day
of August, 2015.
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NORTHERN DYNASTY MINERALS
LTD. |
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Per: |
/s/ Trevor Thomas |
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Authorized Signatory |
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CANNON
POINT RESOURCES LTD. |
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Per: |
/s/ Jay Sujir |
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Authorized Signatory
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VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon
Point Resources Ltd. (Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
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(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
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(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
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(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
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(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
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(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
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(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
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(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
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(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
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(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
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(b) |
The Shareholder shall not, and hereby agrees not
to: |
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(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
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(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
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(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8.
Termination.
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(a) |
This Agreement shall automatically terminate on the first
to occur of: |
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(i) |
the date that the Securityholder Approval is
obtained; |
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(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
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(iii) |
the termination of the Arrangement Agreement. |
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(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
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(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
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(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
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(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
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(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
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(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
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(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
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(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
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(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
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(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
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(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
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(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
LARRY COPELAND
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Name of Shareholder (please print) |
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/s/ Larry
Copeland |
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Signature of Shareholder or, if not an individual, |
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Authorized Signatory |
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Number of Cannon Point Shares held: |
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5,000
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Number of Cannon Point stock options held: |
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362,500
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Number of Cannon Point warrants held: |
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NIL
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VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon Point Resources
Ltd. (Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
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(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
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|
|
|
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
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|
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|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
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(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
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(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
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(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
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|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
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(b) |
The Shareholder shall not, and hereby agrees not
to: |
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|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
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|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
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|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8. |
Termination. |
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(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
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|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
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|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
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|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
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(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
|
|
|
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
|
|
|
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
DAVID FARRELL
|
|
Name of Shareholder (please print) |
|
|
|
/s/ David
Farrell |
|
Signature of Shareholder or, if not an individual, |
|
Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
375,000
|
|
|
|
Number of Cannon Point stock options held: |
|
|
|
300,000 |
|
|
|
Number of Cannon Point warrants held: |
|
|
|
15,000
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon
Point Resources Ltd. (Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
|
|
|
|
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
|
|
|
|
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
|
|
|
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
|
|
|
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8. |
Termination. |
|
|
|
|
|
(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
|
|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
|
|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
|
|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
|
|
|
|
|
(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
|
|
|
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
|
|
|
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
FIORE FINANCIAL
& ADVISORY CORP. |
|
Name of Shareholder (please print) |
|
|
|
/s/ Gordon Keep
|
|
Signature of Shareholder or, if not an individual, |
|
Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
NIL
|
|
|
|
Number of Cannon Point stock options held: |
|
|
|
675,000 |
|
|
|
Number of Cannon Point warrants held: |
|
|
|
NIL
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon Point Resources Ltd.
(Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
1
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
2
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
|
|
|
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. No Sale,
Transfer or Encumbrance, Additional Purchases.
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The Shareholder agrees that any Cannon Point Shares purchased or acquired after
the date hereof shall be subject to the terms of the Agreement to the same
extent as the Cannon Point Subject Securities.
3
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
4
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8. |
Termination. |
|
|
|
|
|
(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
|
|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
|
|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
|
|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
|
|
|
|
|
(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
5
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily quantifiable, the Shareholder
agrees not to plead sufficiency of damages as a defense in any such
proceeding and the Shareholder further agrees to not oppose Northern
Dynasty in seeking or the granting of such relief. |
|
|
|
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province of
British Columbia. |
6
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
7
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
FRANK GIUSTRA
|
|
Name of Shareholder (please print) |
|
|
|
/s/ Frank
Giustra |
|
Signature of Shareholder or, if not an |
|
individual, Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
3,075,000 |
|
|
|
Number of Cannon Point stock options held: |
|
|
|
NIL |
|
|
|
Number of Cannon Point warrants held: |
|
|
|
NIL
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon Point Resources Ltd.
(Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
|
|
|
|
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
|
|
|
|
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
|
|
|
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
|
|
|
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8. |
Termination. |
|
|
|
|
|
(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
|
|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
|
|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
|
|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
|
|
|
|
|
(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
|
|
|
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
|
|
|
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
GORDON KEEP
|
|
Name of Shareholder (please print) |
|
|
|
/s/ Gordon Keep
|
|
Signature of Shareholder or, if not an individual, |
|
Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
1,391,320 |
|
|
|
Number of Cannon Point stock options held: |
|
|
|
575,000
|
|
|
|
Number of Cannon Point warrants held: |
|
|
|
1,578,665
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re: Cannon Point Resources Ltd.
(Cannon Point)
Northern
Dynasty Minerals Ltd. (Northern Dynasty) and Cannon Point have entered
into an agreement (the Arrangement Agreement) dated August 31, 2015,
pursuant to which Northern Dynasty will acquire all of the issued and
outstanding securities of Cannon Point (the Arrangement). Capitalized
terms used herein but which are not defined herein shall have the meanings set
forth in the Arrangement Agreement.
The
undersigned (the Shareholder) is the beneficial owner of that
number of Cannon Point common shares (the Cannon Point Shares), Cannon
Point stock options and Cannon Point warrants (collectively, the Cannon
Point Subject Securities) set forth on the Shareholders signature page
attached to this agreement (the Agreement) and has agreed to enter into
this Agreement in connection with the Arrangement. For greater certainty, the
term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
|
|
|
|
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
|
|
|
|
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
|
|
|
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
|
|
|
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8. |
Termination. |
|
|
|
|
|
(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
|
|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
|
|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
|
|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
|
|
|
|
|
(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
|
|
|
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
|
|
|
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
PETER LEITCH
|
|
Name of Shareholder (please print) |
|
|
|
/s/ Peter
Leitch |
|
Signature of Shareholder or, if not an individual, |
|
Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
5,000
|
|
|
|
Number of Cannon Point stock options held: |
|
|
|
362,500
|
|
|
|
Number of Cannon Point warrants held: |
|
|
|
NIL
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re:
Cannon Point Resources Ltd. (Cannon Point)
Northern Dynasty Minerals Ltd. (Northern
Dynasty) and Cannon Point have entered into an agreement (the
Arrangement Agreement) dated August 31, 2015, pursuant to which
Northern Dynasty will acquire all of the issued and outstanding securities of
Cannon Point (the Arrangement). Capitalized terms used herein but which
are not defined herein shall have the meanings set forth in the Arrangement
Agreement.
The undersigned (the Shareholder) is the
beneficial owner of that number of Cannon Point common shares (the Cannon
Point Shares), Cannon Point stock options and Cannon Point warrants
(collectively, the Cannon Point Subject Securities) set forth on the
Shareholders signature page attached to this agreement (the Agreement)
and has agreed to enter into this Agreement in connection with the Arrangement.
For greater certainty, the term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW THEREFORE, for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Northern Dynasty and the Shareholder (collectively, the Parties) agree
as follows:
1. Agreement to
Vote Cannon Point Subject Securities
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
|
|
|
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. No Sale,
Transfer or Encumbrance, Additional Purchases.
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
3
6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8.
Termination.
|
(a) |
This Agreement shall automatically terminate on the first
to occur of: |
|
|
|
|
|
|
(i) |
the date that the Securityholder Approval is
obtained; |
|
|
|
|
|
|
(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
|
|
|
|
|
|
(iii) |
the termination of the Arrangement Agreement. |
|
|
|
|
|
(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
|
|
|
|
|
(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
|
|
|
|
(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
|
|
|
|
(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
4
|
(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
|
|
|
|
(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
|
|
|
|
(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
|
|
|
|
(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
|
|
|
|
(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
|
|
|
|
(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
|
|
|
|
(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
|
|
|
|
(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
RADCLIFFE
FOUNDATION |
|
Name of Shareholder (please print) |
|
|
|
/s/ Frank
Giustra |
|
|
|
Signature of Shareholder or, if not an individual,
Authorized Signatory |
|
|
|
Number of Cannon Point Shares held: |
|
|
|
2,423,500
|
|
|
|
Number of Cannon Point stock options held: |
|
|
|
175,000
|
|
|
|
Number of Cannon Point warrants held: |
|
|
|
NIL
|
|
VOTING AND SUPPORT AGREEMENT
August 31, 2015
To: The Undersigned Shareholder of Cannon Point Resources
Ltd.
Ladies and Gentlemen:
Re:
Cannon Point Resources Ltd. (Cannon Point)
Northern Dynasty Minerals Ltd. (Northern Dynasty) and
Cannon Point have entered into an agreement (the Arrangement Agreement)
dated August 31, 2015, pursuant to which Northern Dynasty will acquire all of
the issued and outstanding securities of Cannon Point (the
Arrangement). Capitalized terms used herein but which are not defined
herein shall have the meanings set forth in the Arrangement Agreement.
The undersigned (the Shareholder) is the
beneficial owner of that number of Cannon Point common shares (the Cannon
Point Shares), Cannon Point stock options and Cannon Point warrants
(collectively, the Cannon Point Subject Securities) set forth on the
Shareholders signature page attached to this agreement (the Agreement)
and has agreed to enter into this Agreement in connection with the Arrangement.
For greater certainty, the term Cannon Point Subject Securities shall include:
|
(i) |
all of the Cannon Point Shares that may become
beneficially owned, or in respect of which the voting may become, directly
or indirectly, controlled or directed by, the Shareholder after the date
hereof and prior to the Meeting, including all of the Cannon Point Shares
issued upon the conversion, exchange or exercise of any securities of
Cannon Point convertible into or exchangeable or exercisable to Cannon
Point Shares held by the Shareholder or which may otherwise be acquired by
the Shareholder after the date hereof and prior to the Meeting;
and |
|
|
|
|
(ii) |
all of the Cannon Point Shares or other securities for
which the Cannon Point Subject Securities may be exchanged, received or
into which the Cannon Point Subject Securities may be converted or
otherwise changed pursuant to any stock split, stock consolidation,
merger, reorganization, recapitalization, amalgamation, plan of
arrangement or other business combination involving Cannon Point prior to
the Meeting. |
NOW
THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, Northern Dynasty and the Shareholder
(collectively, the Parties) agree as follows:
1. |
Agreement to Vote Cannon Point Subject
Securities |
|
(a) |
The Shareholder hereby covenants, undertakes and agrees
that it shall: |
|
(i) |
vote (or cause to be voted) all of the Cannon Point
Subject Securities (to the extent that such Cannon Point Subject
Securities are entitled to a vote in respect of such
matters): |
1
|
(A) |
in favour of the approval, consent, ratification and
adoption of the resolution approving the Arrangement (the Arrangement
Resolution), and the Arrangement Agreement (and any actions required
in furtherance thereof), including as required by the TSX Venture Exchange
(TSXV) and pursuant to the Business Corporations Act
(British Columbia), and at every meeting of the securityholders of
Cannon Point at which such matters are considered and at every adjournment
or postponement thereof, and not withdraw any proxies or change its vote
in respect thereof; and |
|
|
|
|
(B) |
against any resolution proposed by Cannon Point or any
other person that could adversely affect or reduce the likelihood of the
successful completion of the Arrangement or delay or interfere with, the
completion of the Arrangement; |
|
(ii) |
deliver, or cause to be delivered, to Cannon Point's
transfer agent, or as otherwise directed by Cannon Point, after receipt of
proxy materials for, and no later than fifteen (15) calendar days before
the date of the Cannon Point Meeting, or any other meeting of the
securityholders (or any of them) of Cannon Point called for the purpose of
approving the Arrangement Resolution and the Arrangement Agreement, a duly
executed proxy or form of proxy directing that the Cannon Point Subject
Securities be voted at such meeting in favour of the Arrangement
Resolution and the foregoing related matters; |
|
|
|
|
(iii) |
not support any action that is intended or could be
expected to impede, interfere with, delay, postpone or discourage the
completion of the Arrangement; and |
|
|
|
|
(iv) |
not do anything that could be expected to frustrate or
hinder the consummation of the Arrangement. |
|
(b) |
The Shareholder shall not, and hereby agrees not
to: |
|
|
|
|
|
|
(i) |
assert or exercise any dissent rights in respect of the
Arrangement that the Shareholder may have; or |
|
|
|
|
|
|
(ii) |
commence or participate in, and shall, and hereby agrees
to, take all actions necessary to opt out of any class in any class action
with respect to, any claim, derivative or otherwise, against Cannon Point
or Northern Dynasty or any of their subsidiaries (or any of their
respective successors) relating to the negotiation, execution and delivery
of the Arrangement Agreement or the consummation of the
Arrangement. |
|
(c) |
The Shareholder hereby revokes any and all previous
proxies granted that may conflict or be inconsistent with the matters set
forth in this Agreement and the Shareholder agrees not to, directly or
indirectly, grant any other proxy or power of attorney with respect to the
matters set forth in this Agreement except as expressly required or
permitted by this Agreement. |
2. |
No Sale, Transfer or Encumbrance, Additional
Purchases. |
2
Except
with the prior written consent of Northern Dynasty, the Shareholder agrees and
covenants in favour of Northern Dynasty not to option, transfer, sell, gift,
pledge, hypothecate, encumber, or otherwise dispose of any of the Cannon Point
Subject Securities, or enter into any agreement, arrangement or understanding in
connection therewith (including any derivative Arrangement that has the effect
of reducing the economic exposure of the Shareholder to the Cannon Point Subject
Securities), provided that the Shareholder may transfer any of the Cannon Point
Subject Securities to a trust or other legal entity over which the Shareholder
has control and is able to direct the voting of such Cannon Point Subject
Securities, or sell any of the Cannon Point Subject Securities without the prior
written consent of Northern Dynasty, so long as the purchaser agrees to be bound
by the terms of this Agreement and enter into an agreement with Northern Dynasty
on the same terms and conditions as this Agreement.
The
Shareholder agrees that any Cannon Point Shares purchased or acquired after the
date hereof shall be subject to the terms of the Agreement to the same extent as
the Cannon Point Subject Securities.
3.
Representations and Warranties of the Shareholder
The
Shareholder represents and warrants that: (a) it owns, directly or indirectly,
or has direction or control over, the Cannon Point Subject Securities free and
clear of all encumbrances, and does not own, directly or indirectly, or exercise
control or direction over, any other securities of Cannon Point; (b) it has the
sole right to vote the Cannon Point Subject Securities; (c) other than this
Agreement, none of the Cannon Point Subject Securities are subject to any
adverse claim or voting agreement, proxy, voting trust, vote pooling or other
agreement with respect to the right to vote the Cannon Point Subject Securities
or call meetings of holders of Cannon Point Shares; (d) no person, firm, or
corporation has any agreement or option, or any right or privilege capable of
becoming an agreement or option, for the purchase, acquisition or transfer from
the Shareholder of any of the Cannon Point Subject Securities; (e) it has full
power and authority to make, enter into and carry out the terms of this
Agreement; and (f) there are no legal proceedings in progress before any public
body, court or authority or, to the knowledge of the Shareholder, pending or
threatened against the Shareholder that would adversely affect in any manner the
ability of the Shareholder to enter into and carry out the terms of this
Agreement.
4.
Representations and Warranties of Northern Dynasty
Northern
Dynasty represents and warrants that: (a) it is a corporation validly existing,
duly organized and in good standing under the laws of its jurisdiction of
incorporation; (b) it has the requisite power and authority to enter into and
carry out the terms of this Agreement; and (c) this Agreement has been duly
executed and delivered by Northern Dynasty and constitutes a legal, valid and
binding obligation of Northern Dynasty, enforceable against it in accordance
with its terms, except as may be limited by bankruptcy, insolvency and other
Laws affecting the enforcement of creditors rights generally and subject to the
qualification that equitable remedies may only be granted in the discretion of a
court of competent jurisdiction.
5.
Control
If
any of the Cannon Point Subject Securities are held through a nominee or
corporation or trust or other legal entity over which the Shareholder has
control, as defined in the legislation governing the ownership of the property
of such nominee or corporation or trust or other legal entity (either
alone or in conjunction with any other person), the Shareholder shall vote or
shall cause to be voted such Cannon Point Subject Securities and exercise his or
her power and authority to ensure that this Agreement is complied with by said
nominee or corporation or trust or other legal entity.
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6. Capacity as
Shareholder
If
the Shareholder is a member of the board of directors of Cannon Point, the
Shareholder is bound hereunder solely in his capacity as a Shareholder.
7.
Disclosure
The
Shareholder agrees that the details of this Agreement may be set out in any
press release, information circular or other communication of Cannon Point
and/or Northern Dynasty issued, made or given in connection with the
Arrangement or the Arrangement Agreement and that this Agreement may be made
publicly available on SEDAR or filed with the securities regulatory authorities
in Canada and otherwise to the extent required by Law.
8.
Termination.
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(a) |
This Agreement shall automatically terminate on the first
to occur of: |
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(i) |
the date that the Securityholder Approval is
obtained; |
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(ii) |
the date that the Arrangement Resolution is not approved
at a duly called and held Cannon Point Meeting; and |
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(iii) |
the termination of the Arrangement Agreement. |
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(b) |
This Agreement may be terminated by the Shareholder if
(i) Northern Dynasty breaches or is in default of any of its covenants or
obligations under this Agreement in a material way; or (ii) any of the
representations or warranties of Northern Dynasty under this Agreement
shall have been at the date hereof, or subsequently become, untrue or
incorrect in any material respect; provided the Shareholder has notified
Northern Dynasty in writing of any of the foregoing events and the same
has not been cured by Northern Dynasty within ten (10) calendar days of
the date such notice was received by Northern Dynasty. |
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(c) |
Upon termination of this Agreement in accordance with
this Section 8, the provisions of this Agreement will become void and no
party shall have liability to any other party, except in respect of a
breach of any covenant, agreement or obligation hereunder, or a
misrepresentation in this Agreement occurring prior to such
termination. |
9. |
Miscellaneous. |
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(a) |
Each of the Parties agrees to execute such further and
other deeds, documents, instruments and assurances and to do such further
and other acts as may be necessary to carry out the true intent and
meaning of this Agreement fully and effectually. |
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(b) |
It is understood and agreed that monetary damages would
not be a sufficient remedy for any breach of this Agreement by the
Shareholder. Without prejudice to the rights and remedies otherwise
available to it, Northern Dynasty shall be entitled to equitable relief by
way of injunction or otherwise if the Shareholder breaches, or threatens
to breach, any of the provisions of this Agreement. Northern Dynasty shall
not be required to obtain or furnish any bond or similar instrument in
connection with or as a condition to obtaining or seeking any such remedy.
Notwithstanding that damages may be readily
quantifiable, the Shareholder agrees not to plead sufficiency of
damages as a defense in any such proceeding and the Shareholder further
agrees to not oppose Northern Dynasty in seeking or the granting of such
relief. |
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(c) |
This Agreement constitutes the entire agreement between
the Parties concerning the subject matter hereof and supersedes all prior
or contemporaneous representations, discussions, proposals, negotiations,
communications and agreements, whether oral or written, between the
Parties relating to the same. |
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(d) |
No amendment, modification or waiver of any provision of
this Agreement shall be effective unless in writing and signed by duly
authorized signatories of the Parties. The waiver by either party of a
breach of or a default under any provision of this Agreement shall not be
construed as a waiver of any subsequent breach of or default under the
same or any other provision of this Agreement, nor shall any delay or
omission on the part of either party to exercise or avail itself of any
right, power, privilege or remedy that it has or may have hereunder
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any further exercise of any such right, power, privilege
or remedy hereunder. |
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(e) |
Nothing in this Agreement shall be construed to require
the Shareholder or Northern Dynasty to violate any judgement, ruling,
order, writ, injunction, award, Law, decree, statute, ordinance, rule or
regulation applicable to either party. |
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(f) |
This Agreement shall be governed by the laws of the
Province of British Columbia and the federal laws of Canada applicable
therein. Each of the Parties hereby irrevocably attorns to the exclusive
jurisdiction of the Courts of the Province of British Columbia in respect
of all matters arising under and in relation to this Agreement and waives
any defences to the maintenance of an action in the Courts of the Province
of British Columbia. |
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(g) |
In the event that any of the provisions of this Agreement
shall be held by a court or other tribunal of competent jurisdiction to be
invalid or unenforceable, the remaining portions hereof shall remain in
full force and effect and such provision shall be enforced to the maximum
extent possible so as to effect the intent of the Parties, and shall in no
way be affected, impaired or invalidated. |
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(h) |
This Agreement will enure to the benefit of and be
binding upon the parties hereto and their respective successors, permitted
assigns, trustees, representatives, heirs and executors. This Agreement
may not be assigned by either party without the prior written consent of
the other party. |
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(i) |
Each of the parties acknowledges that it has had the
opportunity to obtain legal advice satisfactory to it concerning the
nature and effect of this Agreement, which it executes without reliance on
any representation, advice, or inducement by the other party. |
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(j) |
This Agreement may be executed in one or more
counterparts and delivered by facsimile or other means of electronic
reproduction, and each copy so executed and delivered will be deemed to be
an original copy of this Agreement and all of which, when taken together,
will be deemed to constitute one and the same
instrument. |
[Signature Page Follows]
5
Please confirm your agreement with the foregoing
by signing a copy of this Agreement where indicated below and returning the same
to the undersigned by facsimile or email.
Sincerely yours,
NORTHERN DYNASTY MINERALS LTD.
/s/ Trevor Thomas
Per: Authorized Signatory
Accepted and agreed to with effect from the date first written
above.
JAY SUJIR
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Name of Shareholder (please print) |
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/s/ Jay Sujir
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Signature of Shareholder or, if not an individual,
Authorized Signatory |
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Number of Cannon Point Shares held: |
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NIL |
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Number of Cannon Point stock options held: |
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487,500
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Number of Cannon Point warrants held: |
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NIL
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