Delaware
(State or other jurisdiction of
incorporation or organization)
3700 Buffalo Speedway, Suite 925 Houston, Texas
(Address of principal executive offices)
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001-35770
(Commission
File Number)
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27-3431051
(I.R.S. Employer
Identification No.)
77098
(Zip Code)
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Registrant’s Telephone Number, including area code: (713)
877-1311
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Title of each class
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Trading Symbol(s)
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Name of each exchange on which registered
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Common Stock, Par Value $0.01 per share
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CTGO
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NYSE American
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Item 1.01.
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Entry into a Material Definitive Agreement
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On April 9, 2022, Contango ORE, Inc. (the “Company”)
and Queen’s Road Capital Investment Ltd. (“QRC”), entered into an Investment Agreement (the “Investment Agreement”) pursuant to which the Company agreed to issue a $20,000,000 unsecured convertible debenture to QRC (the “Debenture”). The closing and issuance of the Debenture is expected to occur on or prior to April 29, 2022, subject to customary closing conditions.
The Debenture bears interest at the rate of 8% per annum, payable quarterly with 6% paid in cash and 2% paid in shares of the
Company’s common stock, par value $0.01 per share (the “Common Stock”) issued at the market price at the time of payment based on a 20-day volumetric
weighted average price (“VWAP”). The Debenture will be unsecured and will mature four years after issuance. QRC may convert the Debenture into Common
Stock at any time at a conversion price of $30.50 per share, subject to adjustment as set forth in the Debenture. The Company may redeem the Debenture at any time after the third anniversary of issuance at 105% of par, provided that the
market price (based on a 20-day VWAP) of the Common Stock is at least 130% of the conversion price. The Company may also redeem the Debenture, and QRC will have the right to put the Debenture to the Company, upon a Change of Control (as
defined in the Debenture) of the Company, at a price of 130% of par for the first three years following issuance and 115% of par thereafter plus accrued interest paid at the time of redemption or put in the same form as other interest
payments.
The proceeds from issuance of the Debenture will be used to fund the Company’s commitments to the Peak Gold, LLC joint venture,
the exploration and development at the Company’s Lucky Shot properties and for general corporate purposes.
Pursuant to the Investment Agreement, the Company agreed to pay QRC an establishment fee equal to 3% of the principal amount of
the Debenture, payable in either cash or shares of Common Stock (any such shares the “Establishment Fee Shares”) at QRC’s election. The Establishment
Fee Shares will be valued at $24.82 per share, the VWAP as of the date of the Investment Agreement. QRC has elected to receive payment of the establishment fee in Establishment Fee Shares.
Pursuant to the Investment Agreement, QRC will enter into an investor rights agreement with the Company in connection with the
issuance of the Debenture (the “Investor Rights Agreement”). The Investor Rights Agreement will require QRC and its affiliates, for so long as they own
5% or more of the outstanding Common Stock to (i) standstill, (ii) not participate in any unsolicited or hostile takeover of the Company, (iii) not tender their shares of Common Stock unless the Company’s board of directors recommends such
tender, (iv) vote their shares of Common Stock in the manner recommended by the Company’s board to its stockholders and (v) not transfer their shares of Common Stock representing more than 0.5% of the outstanding shares of Common Stock
without notifying the Company in advance whereupon the Company will have a right to identify a buyer for those shares.
The Debenture, the shares of Common Stock underlying the Debenture and the Establishment Fee Shares will be issued in
transactions exempt from the registration requirements of the Securities Act of 1933 (the “Securities Act”), as amended, pursuant to the exemption
afforded by Section 230.901 of the Securities Act.
The foregoing is a summary only and does not
purport to be a complete description of all of the terms, provisions, covenants and agreements contained in the Investment Agreement, Debenture and
Investor Rights Agreement, and is subject to and qualified in its entirety by reference to the full text of the Investment Agreement, form of Debenture and form of Investor Rights Agreement, which are filed herewith as Exhibits 10.1, 4.1
and 10.2, respectively, to this Current Report on Form 8-K and are incorporated into this Item 1.01 by reference.
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Item 2.03.
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Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant.
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The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 2.03 by reference.
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Item 3.02.
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Unregistered Sales of Equity Securities.
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The information set forth under Item 1.01 of this Current Report on Form 8-K is incorporated into this Item 3.02 by reference.
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Item 7.01.
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Regulation FD Disclosure.
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Item 9.01.
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Financial Statements and Exhibits.
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Exhibit No.
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Description of Exhibit
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4.1*
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10.1*
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10.2*
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99.1*
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CONTANGO ORE, INC.
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By: /s/ Leah Gaines
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Leah Gaines
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Vice President, Chief Financial Officer, Chief Accounting Officer, Treasurer and Secretary
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1.1
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Definitions
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(a) |
“Affiliate” means, when used with respect to another Person,
(i) a Person that is an “affiliate” of such other Person within the meaning ascribed to that term under Rule 405 of the US Securities Act; or (ii) a Person controlled by such other Person, and for the purpose of this paragraph (ii), the
term “control” has meaning ascribed to that term under Rule 405 of the US Securities Act, provided that, if a Person holds more than 10% of the voting rights attached to all outstanding voting securities of another Person, then the Person
is deemed, in the absence of evidence to the contrary, to control such other Person, provided that for the purposes of this paragraph (ii), such control or ownership shall be demonstrated to the satisfaction of the Corporation, acting
reasonably;
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(b) |
“Applicable Securities Laws” any and all securities laws
including, statutes, rules, regulations, by-laws, policies, guidelines, orders, decisions, rulings and awards, applicable in the United States and the jurisdictions in which the Securities will be offered, sold and issued;
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(c) |
“Board Resolution” means a copy of a resolution certified by
any officer of the Corporation to have been duly adopted by the board of directors of the Corporation and to be in full force and effect on the date of such certification;
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(d) |
“Business Day” means any day other than a Saturday, Sunday or
any other day on which commercial banks in the State of Texas are authorized or required by law to be closed;
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(e) |
“Change of Control” (i) the acquisition by any transaction,
directly or indirectly, by a Person or group of Persons acting jointly or in concert of voting control or direction over 50% or more of the outstanding Common Shares, (ii) the consolidation or merger of the Corporation with or into another
entity as a result of which the holders of the Common Shares immediately prior to such transaction, directly or indirectly, hold less than 50% of voting control or direction over the entity carrying on the business of the Corporation
following such transaction, or (iii) the sale, assignment, transfer or other disposition of all or substantially all of the property or assets of the Corporation to another entity in which the holders of the Common Shares immediately prior
to such transaction, directly or indirectly, hold less than 50% of voting control or direction following such transaction;
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(f) |
“Conversion Price” means $30.50, subject to adjustment in accordance with the provisions of Article 5;
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(g) |
“Corporation” has the meaning set forth in the preamble and
includes any successor to or of the Corporation which shall have complied with the provisions of Article 9;
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(h) |
“Corporation’s Auditors” or “Auditors of the Corporation” means the Corporation’s independent firm of public accountants duly appointed as auditors of the Corporation's financial statements;
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(i) |
“Counsel” means a lawyer or firm of lawyers retained or engaged
by the Corporation;
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(j) |
“Current Market Price” means the volume-weighted average
trading price per Share on the NYSE-A or other primary stock exchange or market on which the Shares are traded, for the twenty (20) consecutive trading days ending one (1) trading days preceding the date of the applicable event. The
volume-weighted average trading price shall be determined by dividing the aggregate sale price of all Shares sold on the said exchange or market, as the case may be, on each of the said twenty (20) consecutive trading days by the total
number of Shares so sold;
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(k) |
“Date of Conversion” has the meaning ascribed thereto in
Section 5.3(b);
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(l) |
“Debenture” means this 8% 2022 Unsecured Convertible Debenture
in the principal amount of $20,000,000 issued April [●], 2022, and “Debentures” means all of the outstanding 8% 2022 Unsecured
Convertible Debentures which have resulted from any transfers in part of this Debenture or division of this Debenture into more than one Debenture;
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(m) |
“Debentureholder” or “holder” means, at any time, the person at that time entered in the register of Debentures as registered holders of this Debenture, and “Debentureholders” means such persons that at that time are entered in the register of Debentures if there have been transfers of this Debenture which have resulted
in more than one person holding Debentures;
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(n) |
“directors” means the directors of the Corporation for the time
being;
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(o) |
“Event of Default” has the meaning ascribed thereto in Section
7.1;
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(p) |
“GAAP” means generally accepted accounting principles in the
United States;
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(q) |
“hereto”, “herein”, “hereby”, “hereunder”, “hereof” and similar expressions refer to this Debenture and not to any particular
Article, Section, Subsection, clause, subdivision or other portion hereof and include any and every instrument supplemental or ancillary hereto, as the same may be amended, amended and restated or supplemented from time to time;
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(r) |
“Indebtedness” means any and all indebtedness of the
Corporation (whether outstanding on the date of this Debenture or thereafter incurred) and including, for greater certainty and without limitation, any and all mortgages, debentures, charges or other encumbrances or financings in respect of
the personal or real property of the Corporation;
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(s) |
“Interest Obligation” means the obligation of the Corporation
to pay interest on this Debenture, as and when the same becomes due;
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(t) |
“Interest Payment Date” means a date specified herein as the
date on which an installment of interest on this Debenture is due and payable;
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(u) |
“Investor Rights Agreement” means the investor rights agreement
between the Corporation and Queen’s Road Capital Investment Ltd. dated April [●], 2022;
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(v) |
“Issuance Date” means the date indicated on the face page of
this Debenture;
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(w) |
“Material Property” means the Corporation’s Manh Choh Property,
as more particularly described in its public disclosure record;
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(x) |
“Maturity Date” has the meaning ascribed thereto in Section
2.1(b);
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(y) |
“Maturity Notice” means a notice in the form attached as
Schedule “D”;
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(z) |
“Maximum Conversion Shares” has the meaning ascribed thereto in
Section 2.1(f);
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(aa) |
“NYSE-A” means the NYSE American LLC or its successor or
successors;
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(bb) |
“Officer’s Certificate” means a certificate of the Corporation
signed by any one authorized officer of the Corporation, on behalf of the Corporation, in his or her capacity as an officer of the Corporation and not in his or her personal capacity;
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(cc) |
“Ordinary Resolution” means a resolution passed by the
favorable votes of the holders of not less than a majority in principal amount of the Debentures, present or represented by proxy at a meeting duly called for the purpose of voting on such resolution, or evidenced pursuant to an instrument
in writing signed in one or more counterparts by the holders of the requisite amount of such Debentures;
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(dd) |
“Person” or “person” includes an individual, corporation, company, partnership, joint venture, association, trust, trustee, unincorporated organization or government or any agency or political
subdivision thereof;
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(ee) |
“Purchase Money Obligation” means any monetary obligation
created or assumed as part of the purchase price of any real property, tangible personal property or fixture, whether or not secured, any extensions, renewals or refunds of any such obligation, provided that the principal amount of such
obligation outstanding on the date of such extension, renewal or refunding is not increased and further provided that any security given in respect of such obligation shall not extend to any property other than the property acquired in
connection with which such obligation was created or assumed and fixed improvements, if any, erected or constructed thereon and the proceeds thereof;
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(ff) |
“Redemption Date” has the meaning ascribed thereto in Section
4.3;
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(gg) |
“Redemption Notice” has the meaning ascribed thereto in Section
4.3 and in the form set out in Schedule “C”;
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(hh) |
“Redemption Price” means, in respect of a Debenture, the
amount, excluding interest, payable on the Redemption Date fixed for such Debenture;
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(ii) |
“Secured Financing Package” means any secured debt financing
completed by the Corporation after the date hereof;
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(jj) |
“Shareholder Rights Plan” means any shareholder rights plan
adopted or implemented by the Corporation, as the same may be amended, amended and restated or supplemented from time to time;
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(kk) |
“Shares” means shares of the Corporation’s common stock, par
value $0.01 per share;
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(ll) |
“Subsidiary” means, with respect to any person, each entity as
to which such person (either alone or through or together with any other Subsidiary) (i) owns beneficially or of record or has the power to vote or control, 50% or more of the voting securities of such entity or of any class of equity
interests of such entity the holders of which are ordinarily entitled to vote for the election of the members of the board of directors or other persons performing similar functions, (ii) in the case of partnerships, serves as a general
partner, (iii) in the case of a limited liability company, serves as a managing member or owns a majority of the equity interests or (iv) otherwise has the ability to elect a majority of the directors, trustees or managing members thereof;
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(mm) |
“Taxes” means any tax, duty, levy, impost, assessment or other
government charge imposed or levied by or on behalf of a Taxing Jurisdiction;
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(nn) |
“Time of Expiry” has the meaning ascribed thereto in Section
2.1(e);
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(oo) |
“trading day” means, with respect to the NYSE-A or any other
market for securities, any day on which such exchange or market is open for trading or quotation;
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(pp) |
“United States” means the United States of America, its
territories and possessions, any state of the United States and the District of Columbia;
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(qq) |
“US Securities Act” means the United States Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder; and
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(rr) |
“Written Direction of the Corporation” means an instrument in
writing signed by any one officer of the Corporation.
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1.2
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Meaning of “Outstanding”
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1.3
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Interpretation
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(a) |
words importing the singular number or masculine gender shall include the plural number or the feminine or neuter genders, and vice versa;
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(b) |
all references to Articles and Schedules refer, unless otherwise specified, to articles of and schedules to this Debenture;
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(c) |
all references to Sections refer, unless otherwise specified, to sections, subsections or clauses of this Debenture;
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(d) |
words and terms denoting inclusiveness (such as “include”, “includes” or “including”), whether or not so stated, are not limited by and do not imply limitation of
their context or the words or phrases which precede or succeed them;
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(e) |
references to any agreement or other instrument in writing means such agreement or other instrument in writing as amended, modified, replaced or supplemented from
time to time;
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(f) |
unless otherwise indicated, references to a statute shall be deemed to be references to such statute as amended, re-enacted or replaced from time to time; and
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(g) |
unless otherwise indicated, time periods within which a payment is to be made or any other action is to be taken hereunder shall be calculated by including the day on
which the period commences and excluding the day on which the period ends.
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1.4
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Headings, Etc.
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1.5
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Time of Essence
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1.6
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Day not a Business Day
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1.7
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Applicable Law
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1.8
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Monetary References
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1.9
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Invalidity, Etc.
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1.10
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Successors and Assigns
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1.11
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Accounting Terms
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1.12
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Calculations
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1.13
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Schedules
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2.1
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Terms of Debenture
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(a) |
The Debentures shall be dated as of the date on which the Debentures are issued by the Corporation pursuant to this Indenture (the “Issuance Date”) and shall bear interest from and including the date of issuance at the rate of 8.0% per annum, payable in quarterly installments in arrears on August 31, November 30, February 28 and May 31 in each year, the first such interest payment to fall due on August 31, 2022, and the last such interest payment
to fall due on April ___, 2026, payable after as well as before maturity and after as well as before default, demand and judgment, with interest on amounts in default at the same rate, compounded semi-annually and calculated based on a
360-day year consisting of twelve 30-day months.
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(b) |
Maturity. This Debenture shall mature on April [●], 2026 (the “Maturity Date”).
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(c) |
Payment of Interest. Subject to receipt of applicable regulatory approval
(including the approval of such stock exchange(s) on which the Shares are listed, if applicable) and compliance with the Shareholder Rights Plan, if any, the Corporation shall satisfy its Interest Obligation on this Debenture on each
Interest Payment Date (including, for greater certainty, following conversion or redemption or on the Maturity Date) by delivering: (i) cash for that portion of the interest equal to 6% per annum; and (ii) Shares for the balance of the
interest equal to 2% per annum, subject to any required regulatory approval and provided that such payment in Shares does not cause the interest expense to be a nondeductible expense for tax purposes by the Corporation. The Shares to be
issued in satisfaction of the Corporation’s Interest Obligation on this Debenture shall be issued at the Current Market Price. If the Current Market Price is lower than the price required by the policies or rules of any applicable stock
exchange or market, the Shares to be issued in satisfaction of the Corporation’s Interest Obligation on this Debenture shall be issued at the lowest price permitted by such stock exchange or market. If on the applicable Interest Payment
Date the Corporation is not a reporting issuer (or its equivalent) under Applicable Securities Laws, the Shares are not listed on the NYSE-A, applicable regulatory approvals (including the approval of such stock exchange(s) on which the
Shares are listed, if applicable) required to issue Shares in satisfaction of part of the Corporation’s Interest Obligation or to have such Shares listed on the stock exchange(s) on which the Shares are then listed have not been obtained or
the issuance of Shares in satisfaction of part of the Corporation’s Interest Obligation would trigger the operation of the Shareholder Rights Plan, if any, or a vote of the Corporation's shareholders, then the Corporation shall satisfy its
entire Interest Obligation in respect of such Interest Payment Date in cash. If part of the Corporation’s Interest Obligation payable on an Interest Payment Date is to be satisfied in Shares, the Corporation shall confirm by the end of the
business day before the Interest Payment Date by Officer’s Certificate compliance with the above noted conditions for issuance of the Shares, and confirm the Current Market Price and the number of Shares to be issued in connection with the
Interest Payment Date. If part of the Corporation’s Interest Obligation payable on an Interest Payment Date is to be satisfied in Shares, the Corporation shall issue or cause to be issued the Shares as at the Interest Payment Date, and
deliver or cause to be delivered such Shares to the Debentureholder accordingly.
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(d) |
Priority. This Debenture will be a direct, unsecured obligation of the
Corporation and rank equally in right of payment with all existing and future unsecured and unsubordinated Indebtedness of the Corporation.
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(e) |
Conversion. Upon and subject to the provisions and conditions of Article 5
and subject to applicable regulatory approval (including the approval of such stock exchange(s) on which the Shares are listed, if applicable), the Debentureholder shall have the right at the Debentureholder’s option, at any time and from
time to time from the Issuance Date of this Debenture until the earlier of (i) 5:00 p.m. (Houston time) on the Business Day preceding the Maturity Date and (ii) 5:00 p.m. (Houston time) on the Business Day immediately preceding the date
specified by the Corporation for redemption or conversion of this Debenture by notice to the Debentureholder in accordance with Section 2.1(i), Section 2.1(j), Section 2.1(m) or Article 4, as the case may be, (the earlier of which will be
the “Time of Expiry” for the purposes of Article 5), to convert the whole or any part which is $1,000 or an integral multiple thereof, of
the principal amount of this Debenture into that number of Shares equal to the quotient of such principal amount prior to the applicable Date of Conversion divided by the Conversion Price; provided that the aggregate number of Shares
issuable upon the conversion of this Debenture shall not exceed 655,738 Shares (the “Maximum Conversion Shares”) without prior approval
of such stock exchange(s) on which the Shares are listed. The Corporation shall confirm the Conversion Price and the number of Shares to be issued in respect of a conversion on the applicable Date of Conversion by way of Officer’s
Certificate.
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(f) |
Conversion Price. The Conversion Price in effect on the date hereof for
each Share to be issued upon the conversion of Debenture shall be equal to $ $30.50 per Share. The Conversion Price applicable to and the Shares, securities
or other property receivable on the conversion of this Debenture is subject to adjustment pursuant to the provisions of Section 5.4. The Corporation shall confirm the Conversion Price and the number of Shares to be issued in respect of a
conversion on the applicable Date of Conversion by way of Officer’s Certificate.
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(g) |
Payment of Principal Amount. On redemption or on maturity of this
Debenture, the Corporation shall satisfy its obligation to pay the principal amount of this Debenture which is to be redeemed or which has matured in cash.
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(h) |
Private Placement Legends. This Debenture (and the Shares issuable under
this Debenture) and any replacement Debenture (or Shares) shall bear, as of the Issuance Date, a legend substantially in the following form:
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(i) |
Redemption at the Option of the Corporation. This Debenture is redeemable
by the Corporation in accordance with this Section 2.1(i), provided that this Debenture will not be redeemable by the Corporation prior
to April [●], 2025, except in the event of the satisfaction of certain conditions after a Change of Control has occurred as outlined in Section 2.1(j) or upon request of the Debentureholder pursuant to Section 2.1(k). From April [●], 2025
and prior to the Maturity Date, this Debenture shall be redeemable, in whole at any time, or in part from time to time, at the option of the Corporation on notice as provided for in Section 4.3 at a redemption price equal to 105% of the
principal amount thereof plus accrued and unpaid interest up to the Redemption Date, provided that the Current Market Price on the date
immediately prior to the date the Redemption Notice is given exceeds 130% of the Conversion Price and the Corporation shall have provided to the Debentureholder an Officer’s Certificate confirming such Current Market Price.
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(j) |
Corporation Redemption Right upon a Change of Control. Upon the completion
of a Change of Control and subject to the provisions and conditions of this Section 2.1(j), the Corporation has a right to redeem this Debenture. The terms and conditions of such right are set forth below:
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(i) |
Upon the completion of a Change of Control, the Corporation has the right (the “Change of Control Redemption Right”) (but not the obligation) to redeem, on the date which is not later than 30 days following the date upon which the Corporation delivers a Change of Control Notice (as defined
below) to the Debentureholder (the “Change of Control Redemption Date”), all (and not less than all) of this Debenture in cash at a price
equal to (A) if the Change of Control occurred on or prior to April [●], 2025, 130% of the principal amount thereof and (B) if the Change of Control occurred after April [●], 2025, 115% of the principal amount thereof, plus, in each case,
accrued and unpaid interest, if any, on such Debentures up to, but excluding, the Change of Control Redemption Date (collectively, the “Total
Change of Control Redemption Price”).
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(ii) |
The Corporation will, as soon as practicable, and in any event no later than five Business Days after the completion of a Change of Control, give written notice to
the Debentureholder of the Change of Control (“Change of Control Notice”). The Change of Control Notice shall include a statement that
there has been a Change of Control and the following: (A) the date on which such Change of Control occurred, (B) the circumstances or events giving rise to such Change of Control, (C) a statement that the Corporation is exercising the
Change of Control Redemption Right, or a statement that the Corporation has decided not to exercise the Change of Control Redemption Right, and (D) if the Corporation is exercising the Change of Control Redemption Right, the Change of
Control Redemption Date and the Total Change of Control Redemption Price.
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(iii) |
The Corporation shall, on or before 11:00 a.m. (Houston time) on the Change of Control Redemption Date, pay to the Debentureholder such sum of money as is sufficient
to pay the Total Change of Control Redemption Price of this Debenture on the Change of Control Redemption Date. The Corporation shall satisfy this requirement by paying by wire transfer such amounts required under this Section 2.1(j)(iii).
Every such payment shall be irrevocable.
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(iv) |
If the Corporation has elected to redeem this Debenture in accordance with the Change of Control Redemption Right, this Debenture shall become due and payable at the
Total Change of Control Redemption Price on the Change of Control Redemption Date, in the same manner and with the same effect as if it were the date of maturity specified in this Debenture, anything therein or herein to the contrary
notwithstanding, and from and after such Change of Control Redemption Date, if the money necessary to redeem this Debenture shall have been paid to the Debentureholder as provided in this Section 2.1(j), interest on this Debenture shall
cease.
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(v) |
If this Debenture is redeemed and paid under this Section 2.1(j) the Debentureholder shall forthwith deliver this Debenture to the Corporation for cancellation and no
Debenture shall be issued in substitution therefor.
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(vi) |
If this Debenture is redeemed in accordance with this Section 2.1(j) and the Debentureholder fails on or before the Change of Control Redemption Date to surrender
this Debenture to the Corporation, provided payment of the Total Change of Control Redemption Price applicable to this Debenture has been made by the Corporation in accordance with this Section 2.1(j), this Debenture shall thereafter not be
considered as outstanding hereunder and the Debentureholder shall have no other rights in respect of this Debenture.
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(vii) |
The Corporation will comply with all Applicable Securities Laws if the Corporation exercises the Change of Control Redemption Right pursuant to this Section 2.1(j).
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(k) |
Put Right upon a Change of Control. Upon the completion of a Change of
Control, subject to the provisions and conditions of this Section 2.1(k), the Debentureholder has the right to require the Corporation to redeem this Debenture. The terms and conditions of such right is set forth below:
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(i) |
Upon the completion of a Change of Control, the Debentureholder shall have the right (the “Put Right”) to require the Corporation to redeem, on the date which is not later than 30 days following the date upon which the Corporation delivers a Change of Control Notice to the Debentureholder (the “Put Date”) pursuant to Section 2.1(j)(ii) above, all or any part of this Debenture in cash at a price equal to (A) if the Change of Control
occurred on or prior to April [●], 2025, 130% of the principal amount thereof and (B) if the Change of Control occurred after April [●], 2025, 115% of the principal amount thereof, plus, in each case, accrued and unpaid interest, if any, on
this Debenture up to, but excluding, the Put Date (collectively, the “Total Put Price”), provided that the Change of Control Notice indicates that the Corporation has decided to not exercise the Change of Control Redemption Right.
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(ii) |
To exercise the Put Right, the Debentureholder must deliver to the Corporation, not less than five Business Days prior to the Put Date, written notice of the holder’s
exercise of such right in the form attached as Schedule “E” together with this Debenture, duly endorsed for transfer.
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(iii) |
The Corporation shall, on or before 11:00 a.m. (Houston time) on the Put Date, pay to the Debentureholder such sums of money and Shares required pursuant to
Section 2.1(c), as is sufficient to pay the Total Put Price of this Debenture on the Put Date. The Corporation shall satisfy this requirement by paying by wire transfer such amounts required under this Section 2.1(k). Every such payment
shall be irrevocable.
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(iv) |
If this Debenture is being purchased in accordance with this Section 2.1(k) becomes subject to purchase in part only, the Corporation shall execute and deliver to the
Corporation and the Corporation shall deliver to the holder, without charge to such holder, a new Debenture (if applicable) or such other evidence of ownership representing the principal amount of this Debenture not purchased.
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(v) |
To the extent that the Debentureholder has exercised the Put Right in respect of this Debenture, this Debenture shall become due and payable at the Total Put Price on
the Put Date, in the same manner and with the same effect as if it were the date of maturity specified in this Debenture, anything therein or herein to the contrary notwithstanding, and from and after such Put Date, if the money and the
Shares necessary to purchase this Debenture shall have been paid and delivered as provided in this Section 2.1(k), interest on this Debenture shall cease.
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(vi) |
Subject to the provisions above related to the purchase of this Debenture in part, this Debenture repaid under this Section 2.1(k) shall forthwith be delivered to the
Corporation and cancelled and no Debenture shall be issued in substitution therefor
|
(vii) |
If this Debenture is redeemed in accordance with this Section 2.1(k) and the Debentureholder fails on or before the Put Date to surrender this Debenture to the
Corporation, provided payment of the Total Put Price applicable to this Debenture has been made by the Corporation in accordance with this Section 2.1(k), then to the extent the Put Right has been exercised in respect of this Debenture,
this Debenture shall thereafter not be considered as outstanding hereunder to the extent the Put Right has been exercised, and the Debentureholder shall have no other rights in respect of such part of the Debenture.
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(viii) |
The Corporation will comply with all Applicable Securities Laws if the Corporation is required to repurchase this Debenture pursuant to this Section 2.1(k).
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(l) |
Put Right upon Secured Financing. Upon the completion of a Secured
Financing Package, subject to the provisions and conditions of this Section 2.1(l), the Debentureholder has the right to require the Corporation to redeem this Debenture. The terms and conditions of such right is set forth below:
|
(i) |
Upon the completion of any Secured Financing Package, the Debentureholder shall have the right (the “Secured Financing Put Right”) to require the Corporation to redeem, on the date which is not
later than 30 days following the date upon which the Corporation delivers a notice to the Debentureholder of such Secured Financing Package completion (the “Secured Financing Put Date”), all (and not less than all) of this Debenture in cash at a price equal to the
principal amount thereof, plus, accrued and unpaid interest, if any, on this Debenture up to, but excluding, the Secured Financing Put Date (collectively, the “Total Secured Financing Put Price”), payable from the proceeds of the Secured Financing Package.
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(ii) |
To exercise the Secured Financing Put Right, the Debentureholder must deliver to the Corporation, not less than five Business Days prior to the Secured Financing Put
Date, written notice of the holder’s exercise of such right in the form attached as Schedule “E” together with this Debenture, duly endorsed for transfer.
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(iii) |
The Corporation shall, on or before 11:00 a.m. (Houston time) on the Secured Financing Put Date, pay to the Debentureholder the Total Secured Financing Put Price
(including such sums of money and Shares required pursuant to Section 2.1(c)) as is sufficient to pay the Total Secured Financing Put Price of this Debenture on the Secured Financing Put Date. The Corporation shall satisfy this requirement
by paying by wire transfer such amounts required under this Section 2.1(l). Every such payment shall be irrevocable.
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(iv) |
To the extent that the Debentureholder has exercised the Secured Financing Put Right in respect of this Debenture, this Debenture shall become due and payable at the
Total Secured Financing Put Price on the Secured Financing Put Date, in the same manner and with the same effect as if it were the date of maturity specified in this Debenture, anything therein or herein to the contrary notwithstanding, and
from and after such Secured Financing Put Date, if the money and the Shares necessary to purchase this Debenture shall have been paid and delivered as provided in this Section 2.1(l), interest on this Debenture shall cease.
|
(v) |
This Debenture repaid under this Section 2.1(l) shall forthwith be delivered to the Corporation and cancelled and no Debenture shall be issued in substitution
therefor
|
(vi) |
If this Debenture is redeemed in accordance with this Section 2.1(l) and the Debentureholder fails on or before the Secured Financing Put Date to surrender this
Debenture to the Corporation, provided payment of the Total Secured Financing Put Price applicable to this Debenture has been made by the Corporation in accordance with this Section 2.1(l), then to the extent the Secured Financing Put Right
has been exercised in respect of this Debenture, this Debenture shall thereafter not be considered as outstanding hereunder to the extent the Secured Financing Put Right has been exercised, and the Debentureholder shall have no other rights
in respect of such part of the Debenture.
|
(vii) |
The Corporation will comply with all Applicable Securities Laws if the Corporation is required to repurchase this Debenture pursuant to this Section 2.1(l).
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(m) |
Conditional Early Conversion Upon Announcement of Change of Control. From
and after the announcement by the Corporation of a Change of Control that is recommended by the directors, subject to the provisions and conditions of this Section 2.1(m), the Corporation shall have a right (the “Early Conversion Right”) to require the Debentureholder to convert some or the whole or any part which is $1,000 or an multiple thereof, of the principal
amount of this Debenture into Shares at the Conversion Price. The terms and conditions of such right are set forth below:
|
(i) |
The Early Conversion Right may only be exercised by the Corporation provided
that: (i) the directors have recommended that the shareholders of the Corporation approve such Change of Control and such recommendation is included in the announcement of the Change of Control; (ii) the amount that the holders of
Debentures will receive upon completion of the Change of Control per Share received on conversion of this Debenture exceeds the Conversion Price; and (iii) either (A) such amount is payable in cash, or (B) such amount is payable, in whole
or in part, in property or securities which the holder of this Debenture, in its sole discretion, wishes to receive.
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(ii) |
The conversion of this Debenture pursuant to the Early Conversion Right shall be conditional upon completion of the Change of Control, and will be null and void if
the Change of Control does not occur.
|
(iii) |
The Debentureholder may elect, in its sole discretion, to not have this Debenture converted pursuant to the Early Conversion Right if the consideration to be received
per Share consists, in whole or in part, of property or securities, by delivering to the Corporation, no later than the close of business on the fifth Business Day after the date on which the Corporation mails pursuant to Section 13.2 the
Early Conversion Notice (as defined below), an electronic mail transmission or a letter setting forth the name of such registered holder, the principal amount of this Debenture held by such holder and a statement that such holder has
elected to not have this Debenture converted pursuant to the Early Conversion Right.
|
(iv) |
The Corporation will, as soon as practicable, and in any event no later than two Business Days after the announcement of a Change of Control that has been publicly
recommended by the directors and for which the directors have determined to exercise the Early Conversion Right, give written notice to the Debentureholder of the pending Change of Control (the “Early Conversion Notice”). The Early Conversion Notice shall be prepared by the Corporation and shall include (A) a description of the pending Change of Control, including the
price to be paid for each Share in the Change of Control and the form of consideration such price will take; (B) a statement of the Corporation’s intention to exercise the Early Conversion Right, including confirmation of compliance with
the conditions set forth in Section 2.1(m)(i) above; (C) the Conversion Price then in effect; (D) a statement that informs the Debentureholder of its right to elect, in its sole discretion, to not have this Debenture converted pursuant to
the Early Conversion Right by providing the notice to the Corporation called for in subsection (iii) above in the event the amount to be received by Debentureholder is payable, in whole or in part, in property or securities; and (E) a
statement that the conversion pursuant to the Early Conversion Right is conditional upon the completion of the Change of Control and if such Change of Control is not completed, this Debenture will remain outstanding.
|
(v) |
To the extent applicable, paragraphs 5.2, 5.3, 5.5. and 5.7 of this Debenture shall apply mutatis mutandis to the exercise by the Corporation of the Early Conversion
Right.
|
(n) |
The Debentureholder shall be provided with an Officer’s Certificate detailing the Conversion Price and the number of resulting Shares to be issued in respect of a
conversion of this Debenture on the Business Day immediately preceding the applicable Date of Conversion.
|
(o) |
The Corporation and its Affiliates shall treat the Debenture as indebtedness for U.S. federal income tax and all other reporting purposes.
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2.2
|
Mutilation, Loss, Theft or Destruction
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2.3
|
Concerning Interest
|
(a) |
This Debenture shall bear interest (i) from and including the Issuance Date, or (ii) from and including the last Interest Payment Date to which interest shall have
been paid or on the outstanding principal amount of this Debenture, whichever shall be the later, to but excluding the next Interest Payment Date.
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(b) |
Interest for any period of less than six months shall be computed on the basis of a year of 360 days consisting of twelve 30-day months (the “deemed year”). Whenever interest is computed on the basis of the deemed year, interest shall be expressed as a yearly rate by multiplying
such rate of interest by the actual number of days in the calendar year of calculation and dividing it by the number of days in the deemed year.
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2.4
|
Payment of Interest
|
(a)
|
As interest becomes due on this Debenture (except on conversion, at maturity or on redemption, when interest may at the option of the Corporation
be paid upon surrender of this Debenture) the Corporation (which shall be confirmed by the Corporation by Officer’s Certificate pursuant to Section 2.1(c)) shall send or forward a check by prepaid ordinary mail, wire, electronic transfer of
funds or such other means as may be agreed to by the Debentureholder and, if applicable, deliver the Shares, pursuant to Section 2.1(c), in payment of such interest to the order of the registered holder of such Debenture appearing on the
registers maintained by the Corporation as at the close of business on the fifth Business Day prior to the applicable Interest Payment Date and addressed to the holder at the holder’s last address appearing on the register (or in the case
of joint holders, to such address of one of the joint holders), unless such holder otherwise directs in writing to the Corporation in advance. If cash payment is made by check, such check shall be forwarded at least three days prior to the
Interest Payment Date and if payment is made by other means (such as wire or electronic transfer of funds), such payment shall be made in a manner whereby the holder receives credit for such payment on the Interest Payment Date. The mailing
of such check or the making of such payment by other means shall, to the extent of the sum represented thereby, satisfy and discharge all liability for interest on this Debenture, unless in the case of payment by check, such check is not
paid at par on presentation. In the event of non-receipt of any check for or other payment of interest by the person to whom it is so sent as aforesaid, the Corporation will issue to such person a replacement check or other payment for a
like amount upon being furnished with such evidence of non-receipt as it shall reasonably require and upon being indemnified to its satisfaction. Notwithstanding the foregoing, if the Corporation is prevented by circumstances beyond its
control (including, without limitation, any interruption in mail service) from making payment of any interest due on this Debenture in the manner provided above, the Corporation may make payment of such interest in any other manner
acceptable to the Debentureholder with the same effect as though payment had been made in the manner provided above.
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2.5
|
Regarding Taxes
|
(a)
|
The Corporation will be entitled to deduct and withhold any applicable Taxes or similar charges (including interest, penalties or similar amounts
in respect thereof) imposed or levied by or on behalf of any government or of any state, province or territory thereof, or any authority or agency therein or thereof, having power to tax, from any payment to be made on or in connection with
this Debenture (including, for greater certainty, the issuance of Shares upon any conversion of Debentures and in respect of an Interest Obligation), provided that the Corporation forthwith remits such withheld amount to such government,
authority or agency and files all required forms in respect thereof and, at the same time, provides copies of such remittance and filing to the Debentureholder, the amount of any such deduction or withholding will be considered an amount
paid in satisfaction of the Corporation’s obligations under this Debenture.
|
(b)
|
The Corporation will pay any stamp, issue, registration, documentary or other similar Taxes and other duties (including interest and penalties)
payable in respect of the creation, issue, offering, execution or enforcement of this Debenture, or any documentation with respect thereto.
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3.1
|
Transfers of Debenture
|
3.2
|
Registered Debentures
|
(a)
|
The Corporation shall cause to be kept at the principal office of the Corporation in Houston, Texas a register in which shall be entered the
name(s) and address(es) of the holder(s) of this Debenture, particulars of the Debentures held by them respectively and of all Debenture transfers.
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(b)
|
No transfer of this Debenture shall be valid unless made on such register referred to in Section 3.2(a) by the registered holder or such holder’s
executors, administrators or other legal representatives or an attorney duly appointed by an instrument in writing in form and execution satisfactory to the Corporation upon surrender of this Debenture together with a duly executed form of
transfer in the form attached as Schedule “A”, or in a form acceptable to the Corporation upon compliance with such other reasonable requirements as the Corporation may prescribe, and unless the name of the transferee shall have been noted
on this Debenture by the Corporation.
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3.3
|
Transferee Entitled to Registration
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3.4
|
No Notice of Trusts
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3.5
|
Exchanges of Debentures
|
(a) |
Subject to Section 3.6, this Debenture may be exchanged for Debentures in any other denomination, of the same date of maturity, bearing the same interest rate and
of the same aggregate principal amount as this Debenture.
|
(b) |
In respect of exchanges of this Debenture permitted by Section 3.5(a), this Debenture may be surrendered for exchange to the Corporation only at the principal
offices of the Corporation in the City of Houston, Texas or at such other place or places, if any, as may be specified in this Debenture and at such other place or places as may from time to time be designated by the Corporation. The
Corporation shall execute all Debentures necessary to carry out exchanges as aforesaid. On surrender for exchange, this Debenture shall be cancelled.
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(c) |
Debentures issued in exchange for this Debenture, which at the time of such issue have been selected or called for redemption at a later date, shall be deemed to
have been selected or called for redemption in the same manner and shall have noted thereon a statement to that effect.
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3.6
|
Closing of Registers
|
(a)
|
The Corporation shall not be required to:
|
(i)
|
make transfers or exchanges, or accept conversions, of this Debenture on any Interest Payment Date or during the four preceding Business Days; or
|
(ii)
|
make transfers or exchanges, or accept conversions of this Debenture if it has been selected or called for redemption unless upon due
presentation thereof for redemption this Debenture is not redeemed.
|
3.7
|
Charges for Registration, Transfer and Exchange
|
(a)
|
for any exchange of this Debenture resulting from a partial redemption; or
|
(b)
|
for any exchange of this Debenture resulting from a partial conversion.
|
3.8
|
Ownership of Debenture
|
(a) |
Unless otherwise required by law, the person in whose name this Debenture is registered in accordance with the terms of this Debenture shall for all the purposes of
this Debenture be and be deemed to be the owner thereof, and the Corporation will not be affected by any notice or knowledge to the contrary except as required by statute or by order of a court of competent jurisdiction, and payment of or
on account of the principal of and premium, if any, on this Debenture and interest thereon shall be made to such registered holder.
|
(b) |
The registered holder for the time being of the registered Debenture shall be entitled to the principal, premium, if any, and interest evidenced by such
instruments, respectively, free from all equities or rights of set-off or counterclaim between the Corporation and the original or any intermediate holder thereof and all persons may act accordingly and the receipt of any such registered
holder for any such principal, premium or interest shall be a good discharge to the Corporation for the same and the Corporation shall not be bound to inquire into the title of any such registered holder.
|
(c) |
If this Debenture is registered in more than one name, the principal, premium, if any, and interest from time to time payable in respect thereof will be paid to the order of all such holders, and the receipt of any one of such holders therefor shall be a valid discharge to the Corporation.
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(d) | Subject to the Corporation’s receipt of appropriate supporting documentation, in the case of the death of one or more joint holders of this Debenture the principal, premium, if any, and interest from time to time payable thereon may be paid to the order of the survivor or survivors of such registered holders and the receipt of any such survivor or survivors therefor shall be a valid discharge to the Corporation. |
4.1
|
Applicability
|
4.2
|
Partial Redemption
|
4.3
|
Notice of Redemption
|
4.4
|
Debenture Due on Redemption Date
|
4.5
|
Payment of Redemption Monies
|
4.6
|
Failure to Surrender Debenture Called for Redemption
|
4.7
|
Cancellation of Debentures Redeemed
|
4.8
|
Purchase of Debenture by the Corporation
|
(a)
|
The Corporation may, at any time and from time to time, purchase this Debenture in the market (which shall include purchase from or through an
investment dealer or a firm holding membership on a recognized stock exchange) or by tender offer or by private contract, at any price, subject to compliance with Applicable Securities Laws regarding issuer tender offers. If an Event of
Default has occurred and is continuing, the Corporation may purchase all or any of this Debenture as aforesaid. All Debentures so purchased shall be cancelled and no Debentures shall be issued in substitution therefor.
|
(b)
|
If, upon a partial tender offer, more Debentures are tendered at the same lowest price that the Corporation is prepared to accept, the Debentures
to be purchased by the Corporation shall be selected by the Corporation, in such manner (which may include selection by lot, selection on a pro
rata basis, random selection by computer or any other method) or in such other manner consented to by the exchange or market on which the Debentures are then listed and the Corporation considers appropriate, from the Debentures
tendered by each tendering Debentureholder who tendered at such lowest price. The Debentureholder of which a part only is purchased, upon surrender of such Debenture for payment, shall be entitled to receive, without expense to such holder,
one or more new Debentures for the unpurchased part so surrendered, and the Corporation shall deliver such new Debenture or Debentures upon receipt of the Debenture so surrendered.
|
5.1
|
Applicability
|
(a) |
Subject to applicable regulatory approval (including the approval of such stock exchange(s) on which the Shares are listed, if applicable), this Debenture (subject,
however, to any applicable restriction on the conversion of this Debenture contained in Sections 2.1(e), 2.1(m) and/or 5.3(a)) will be convertible into Shares, at such conversion rate or rates, and on such date or dates and in accordance
with such other provisions as shall have been determined at the time of issue of this Debenture and shall have been expressed in this Debenture or in an Officer’s Certificate.
|
(b) |
Such right of conversion shall extend only to the maximum number of whole Shares into which the aggregate principal amount of this Debenture surrendered for
conversion at any one time by the holder thereof may be converted. Fractional interests in Shares shall be dealt with in the manner provided in Section 5.5.
|
5.2
|
Revival of Right to Convert
|
5.3
|
Manner of Exercise of Right to Convert
|
(a) |
The holder of this Debenture desiring to convert this Debenture in whole or in part into Shares shall surrender this Debenture to the Corporation at its principal
office in Houston, Texas, together with the conversion notice in the form attached as Schedule “B” to this Debenture or any other written notice in a form satisfactory to the Corporation, in either case duly executed by the holder or its
executors or administrators or other legal representatives or its or their attorney duly appointed by an instrument in writing in form and executed in a manner satisfactory to the Corporation, exercising its right to convert this
Debenture in accordance with the provisions of this Article 5. If the number of Shares issuable upon a conversion of this Debenture would result in the Maximum Conversion Shares being exceeded such that the approval of one or more stock
exchange(s) on which the Shares are then listed is required for the Shares issuable upon a conversion this Debenture to be listed on such stock exchange(s), the Corporation shall use its reasonable commercial efforts to obtain the
approval of such stock exchange(s) (provided, for greater certainty, such commercially reasonable efforts shall not require the Corporation to seek securityholder approval, if required by such stock exchange(s)) and the conversion shall
be conditional on such approval(s) being obtained. Thereupon such Debentureholder or, subject to payment of all applicable stamp or security transfer taxes or other governmental charges and compliance with all reasonable requirements of
the Corporation, its nominee(s) or assignee(s), shall be entitled to be entered in the books of the Corporation as at the Date of Conversion (or such later date as is specified Section 5.3(b) or, if stock exchange approval is required in
respect of a conversion, as soon as practicable following the date such approval is obtained) as the holder of the number of Shares into which this Debenture is convertible in accordance with the provisions of this Article 5 and, as soon
as practicable thereafter, the Corporation shall deliver to such Debentureholder or, subject as aforesaid, its nominee(s) or assignee(s), a certificate or other evidence of such Shares.
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(b) |
For the purposes of this Article, this Debenture shall be deemed to be surrendered for conversion on the date (herein called the “Date of Conversion”) on which it is so surrendered in accordance with the provisions of this Article 5 and, in if this Debenture is surrendered by post or other
means of transmission, on the date on which it is received by Corporation at its principal office in Houston, Texas; provided that if this Debenture is surrendered for conversion on a day on which the register of Shares is closed, the
person or persons entitled to receive Shares shall become the holder or holders of record of such Shares as at the date on which such registers are next reopened.
|
(c) |
Any part, being $1,000 or an integral multiple thereof, of this Debenture in a denomination in excess of $1,000 may be converted as provided in this Article and all
references in this Debenture to conversion of this Debenture shall be deemed to include conversion of such parts.
|
(d) |
The holder of this Debenture of which only a part is converted shall, upon the exercise of its right of conversion surrender this Debenture to the Corporation, and
the Corporation shall cancel the same and shall, if applicable, without charge forthwith deliver to the holder a new Debenture in an aggregate principal amount equal to the unconverted part of the principal amount of this Debenture so
surrendered.
|
(e) |
The holder of this Debenture surrendered for conversion in accordance with this Section 5.3 shall be entitled to receive accrued and unpaid interest in accordance
with Section 2.1(c) in respect thereof up to but excluding the Date of Conversion of this Debenture and the Shares issued upon such conversion shall rank only in respect of distributions or dividends declared in favour of shareholders of
record on and after the Date of Conversion or such later date as such holder shall become the holder of record of such Shares pursuant to Section 5.3, from which applicable date they will for all purposes be and be deemed to be issued and
outstanding as fully paid, non-assessable Shares.
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5.4
|
Adjustment of Conversion Price
|
(a) |
If and whenever at any time prior to the Time of Expiry the Corporation shall (i) subdivide or redivide the outstanding Shares into a greater number of Shares, (ii)
reduce, combine or consolidate the outstanding Shares into a smaller number of Shares, or (iii) issue Shares or securities convertible into or exchangeable for Shares to the holders of all or substantially all of the outstanding Shares by
way of a dividend or distribution (other than pursuant to any dividend re-investment or Share purchase plans or similar arrangements), the Conversion Price in effect on the effective date of such subdivision, redivision, reduction,
combination or consolidation or on the record date for such issue of Shares by way of a dividend or distribution, as the case may be, shall in the case of any of the events referred to in (i) and (iii) above be decreased in proportion to
the number of outstanding Shares resulting from such subdivision, redivision, dividend or distribution (including, in the case where securities convertible into or exchangeable for Shares are distributed, the number of Shares that would
have been outstanding had all such securities been exchanged for or converted into Shares on such effective date or record date), or shall, in the case of any of the events referred to in (ii) above, be increased in proportion to the number
of outstanding Shares resulting from such reduction, combination or consolidation. Such adjustment shall be made successively whenever any event referred to in this 5.4(a) shall occur. Any such issue of Shares by way of a dividend or
distribution shall be deemed to have been made on the record date for the dividend or distribution for the purpose of calculating the number of outstanding Shares under Subsections 5.4(b) and 5.4(c) of this Section 5.4.
|
(b) |
If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the issuance of options, rights or warrants, but not including
issuances of options, rights or warrants to employees of the Corporation pursuant to an equity incentive plan of the Corporation, to all or substantially all the holders of its outstanding Shares entitling them, for a period expiring not
more than 45 days after such record date, to subscribe for or purchase Shares (or securities convertible or exchangeable into Shares) at a price per Share (or having a conversion or exchange price per Share) less than 95% of the Current
Market Price of a Share on such record date, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in effect on such record date by a
fraction, of which the numerator shall be the total number of Shares outstanding on such record date plus that number of Shares equal to the number arrived at by dividing the aggregate price of the total number of additional Shares offered
for subscription or purchase (or the aggregate conversion or exchange price of the convertible or exchangeable securities so offered) by the Current Market Price per Share, and of which the denominator shall be the total number of Shares
outstanding on such record date plus the total number of additional Shares offered for subscription or purchase (or into which the convertible or exchangeable securities so offered are convertible). Such adjustment shall be made
successively whenever such a record date is fixed. To the extent that any such options, rights or warrants are not so issued or any such options, rights or warrants are not exercised prior to the expiration thereof, the Conversion Price
shall be readjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which would then be in effect based upon the number of Shares (or securities convertible or
exchangeable into Shares) actually issued upon the exercise of such options, rights or warrants, as the case may be.
|
(c) |
If and whenever at any time prior to the Time of Expiry the Corporation shall fix a record date for the making of a distribution to all or substantially all the
holders of its outstanding Shares of (i) shares of any class other than Shares (other than pursuant to any dividend re-investment or share purchase plans or similar arrangements), (ii) rights, options or warrants (excluding rights, options
or warrants entitling the holders thereof for a period of not more than 45 days to subscribe for or purchase Shares or securities convertible or exchangeable into Shares), (iii) evidences of its indebtedness, or (iv) other assets (excluding
dividends or distributions paid in the ordinary course) then, in each such case, the Conversion Price shall be adjusted immediately after such record date so that it shall equal the price determined by multiplying the Conversion Price in
effect on such record date by a fraction, of which the numerator shall be the total number of Shares outstanding on such record date multiplied by the Current Market Price per Share on such record date, less the fair market value (as
determined by an investment dealer chosen by the Corporation and subject to applicable exchange or market approval, which determination shall be conclusive) of such shares or rights, options or warrants or evidences of indebtedness or
assets so distributed, and of which the denominator shall be the total number of Shares outstanding on such record date multiplied by such Current Market Price per Share. Such adjustment shall be made successively whenever such a record
date is fixed. To the extent that such distribution is not so made, the Conversion Price shall be re-adjusted to the Conversion Price which would then be in effect if such record date had not been fixed or to the Conversion Price which
would then be in effect based upon such shares or rights, options or warrants or evidences of indebtedness or assets actually distributed, as the case may be.
|
(d) |
Subject to Section 9.1, if and whenever at any time prior to the Time of Expiry, there is a reclassification of the Shares or a capital reorganization of the
Corporation other than as described in Section 5.4(a) or a merger or consolidation, of the Corporation with or into any other person, or a sale or conveyance of all or substantially all the assets of the Corporation to any other person, or
a liquidation, dissolution or winding up of the Corporation, any holder of a Debenture who has not exercised its right of conversion prior to the effective date of such reclassification, capital reorganization, merger, consolidation, sale
or conveyance, or liquidation, dissolution or winding-up, upon the exercise of such right thereafter, shall be entitled to receive and shall accept, in lieu of the number of Shares then sought to be acquired by it, the number of shares or
other securities or property of the Corporation or of the person resulting from such merger, amalgamation or consolidation, or to which such sale or conveyance may be made, as the case may be, that such holder of a Debenture would have been
entitled to receive on such reclassification, capital reorganization, merger, consolidation, sale or conveyance, or liquidation, dissolution or winding-up, if, on the record date or the effective date thereof, as the case may be, the holder
had been the registered holder of the number of Shares sought to be acquired by it and to which it was entitled to acquire upon the exercise of the conversion right.
|
(e) |
In any case in which this Section 5.4 shall require that an adjustment shall become effective immediately after a record date for an event referred to herein, the
Corporation shall defer, until the occurrence of such event, issuing to the holder of any Debenture converted after such record date and before the occurrence of such event the additional Shares issuable upon such conversion by reason of
the adjustment required by such event before giving effect to such adjustment; provided, however, that the Corporation shall deliver to such holder an appropriate instrument evidencing such holder’s right to receive such additional Shares
upon the occurrence of the event requiring such adjustment and the right to receive any dividends or distributions made on such additional Shares declared in favour of holders of record of Shares on and after the Date of Conversion or such
later date as such holder would, but for the provisions of this Section 5.4(e), have become the holder of record of such additional Shares pursuant to Section 5.4(b).
|
(f) |
The adjustments provided for in this Section 5.4 are cumulative and shall apply to successive subdivisions, redivisions, reductions, combinations, consolidations,
distributions, issues or other events resulting in any adjustment under the provisions of this Section, provided that, notwithstanding any other provision of this Section, no adjustment of the Conversion Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in the Conversion Price then in effect; provided however, that any adjustments which by reason of this Section 5.4(f) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment
|
(g) |
For the purpose of calculating the number of Shares outstanding, Shares owned by or for the benefit of the Corporation or any Subsidiary of the Corporation shall not
be counted.
|
(h) |
If any question or dispute arises with respect to the adjustments provided in this Section 5.4, such question or dispute shall be conclusively determined by a firm of
chartered accountants appointed by the Corporation (who may be the Auditors of the Corporation); such accountants shall have access to all necessary records of the Corporation and such determination shall be binding upon the Corporation,
and the Debentureholder (subject to manifest error).
|
(i) |
In case the Corporation shall take any action affecting the Shares other than action described in this Section 5.4, which in the opinion of the directors would
materially adversely affect the rights of Debentureholders, the Conversion Price shall be adjusted in such manner and at such time as the directors in their sole discretion may determine to be equitable in the circumstances. Failure of the
directors to make such an adjustment shall be conclusive evidence that the directors have determined that it is equitable to make no adjustment in the circumstances.
|
(j) |
Subject to the prior written consent of any stock exchange or market upon which the Shares are then listed, as the case may be, and if required, no adjustment in the
Conversion Price shall be made in respect of any event described in Section 5.4(a), Section 5.4(b) or Section 5.4(c) if the holders of the Debentures are entitled to participate in such event on the same terms mutatis mutandis as if they had converted their Debentures prior to the effective date or record date, as the case may be, of such event.
|
(k) |
Except as stated above in this Section 5.4, no adjustment will be made in the Conversion Price for any Debentures as a result of the issuance of Shares at less than
the Current Market Price for such Shares on the date of issuance.
|
5.5
|
No Requirement to Issue Fractional Shares
|
5.6
|
Corporation to Reserve Shares
|
5.7
|
Cancellation of Converted Debentures
|
5.8
|
Certificate as to Adjustment
|
5.9
|
Notice of Special Matters
|
6.1
|
General Covenants
|
6.2
|
To Give Notice of Default
|
6.3
|
Preservation of Existence, Etc.
|
6.4
|
Keeping of Books
|
6.5
|
Maintenance of Listing
|
(a) |
The Corporation will use reasonable commercial efforts to maintain the listing of the Shares on the NYSE-A, OTC Markets, Toronto Stock Exchange or a comparable
public stock exchange or over the counter market, provided that, for greater certainty, the foregoing covenant shall not prevent or restrict the Corporation from carrying out a transaction to which Article 9 would apply if carried out in
compliance with Article 9 even if as a result of such transaction the Shares cease to be listed on a stock exchange or market.
|
(b) |
The Corporation will use reasonable commercial efforts to maintain its status as a “reporting issuer”, or the equivalent thereof, not in default of Applicable
Securities Laws; provided that, for greater certainty, the foregoing covenant shall not prevent or restrict the Corporation from carrying out a transaction to which Article 9 would apply if carried out in compliance with Article 9 even if
as a result of such transaction the Corporation no longer maintains its status as a “reporting issuer”, or the equivalent thereof.
|
6.6
|
Negative Covenants
|
(a) |
except in connection with a Change of Control, sell, transfer or otherwise dispose of all or any substantial part of its Material Property, in any manner whatsoever,
including by way of spin-off, split-off, business separation or the sale or other disposal of the capital of a Subsidiary of the Corporation holding the Material Property, or any interest therein; or
|
(b) |
directly or indirectly, create, incur, issue, assume, guarantee or otherwise become directly or indirectly liable, contingently or otherwise, with respect to any
unsecured Indebtedness without the prior consent of the Debentureholders by Ordinary Resolution provided that this Section 6.6(b) will not prohibit the incurrence of (A) this Debenture, (B) Purchase Money Obligations of the Corporation, (C)
liabilities, accounts payable and other accrued liabilities of trade creditors, suppliers and service providers, (D) liabilities incurred in the ordinary course and operation of the Corporation’s business, or (E) a project finance facility
provided by a commercial lender.
|
6.7
|
Annual Certificate of Compliance
|
6.8
|
Reporting Requirements
|
(a)
|
The Corporation will deliver to the Debentureholder a copy of all quarterly and annual financial statements of the Corporation and the report of
the Corporation’s Auditors thereon (in the case of annual financial statements) and the associated “Management’s Discussion and Analysis” (collectively, “Financial Reports”) at the same time as they are required to be filed under Applicable Securities Laws. Any such obligation to provide such Financial Reports shall continue in the event that the Corporation
ceases to be a “reporting issuer” (or its equivalent) as if it had continued to be a “reporting issuer” (or its equivalent). Unless the Corporation advises the Debentureholder in writing otherwise, the Debentureholder shall assume that the
Corporation is a “reporting issuer” and filing the documents on the Securities and Exchange Commission’s EDGAR website pursuant to this Section. Notwithstanding the foregoing, all Financial Reports will be deemed to have been provided to
the Debentureholder once filed on the Securities and Exchange Commission’s EDGAR website or any successor system thereto. For greater certainty, the Debentureholder shall have no obligation or responsibility to participate in the
preparation of, or to review or analyze, any such Financial Reports.
|
6.9
|
No Distributions on Shares if Event of Default
|
(a)
|
declare or pay any cash distribution to the holders of its issued and outstanding Shares; or
|
(b)
|
purchase for cancellation any Shares, (other than Shares which the Corporation is obligated to purchase under its equity incentive plans in
effect on the date of this Debenture),
|
6.10
|
Maintenance of Office or Agency
|
7.1
|
Events of Default
|
(a) |
Each of the following events constitutes, and is herein sometimes referred to as, an “Event of Default”:
|
(i) |
failure for 30 days to pay interest on this Debenture when due;
|
(ii) |
failure to pay principal or premium, if any, on this Debenture when due whether at maturity, upon redemption, by declaration, acceleration or otherwise;
|
(iii) |
default in the observance or performance of any covenant or condition of this Debenture by the Corporation (other than those referred to in (i) or (ii) above) which
remains unremedied for a period of 30 days after notice in writing has been given by the Debentureholder to the Corporation specifying such default and requiring the Corporation to remedy such default;
|
(iv) |
if a decree or order of a court having jurisdiction is entered adjudging the Corporation a bankrupt or insolvent under any bankruptcy, insolvency or analogous laws
the United States or any state thereof, or issuing sequestration or process of execution against, or against any substantial part of, the property of the Corporation, or appointing a receiver of, or of any substantial part of, the
property of the Corporation or ordering the winding-up or liquidation of its affairs, and any such decree or order continues unstayed and in effect for a period of 60 days or any substantial part of the property of the Corporation shall
be sequestered or attached and shall not be returned to the possession of the Corporation or released from such attachment, as the case may be, whether by filing of a bond or stay or otherwise within 60 consecutive days thereafter;
|
(v) |
if the Corporation institutes proceedings to be adjudicated a bankrupt or insolvent, or consents to the institution of bankruptcy or insolvency proceedings against
it under any bankruptcy, insolvency or analogous laws the United States or any state thereof, or consents to the filing of any such petition or to the appointment of a receiver, or liquidator or trustee or assignee in bankruptcy or
insolvency for it, or of any substantial part of the property of the Corporation or makes a general assignment for the benefit of creditors, or is unable to or admits in writing its inability to pay its debts generally as they become due;
|
(vi) |
if a resolution is passed for the winding-up or liquidation of the Corporation except in the course of carrying out or pursuant to a transaction in respect of which
the conditions of Section 9.1 are duly observed and performed; or
|
(vii) |
if any proceedings with respect to the Corporation are taken with respect to a compromise or arrangement, with respect to creditors of the Corporation generally,
under the applicable legislation of any jurisdiction.
|
(b) |
In each and every such Event of Default, subject to the provisions of Section 7.3, by notice in writing to the Corporation the Debentureholders may declare the
principal of, and premium, if any, and accrued interest on this Debenture then outstanding and all other monies outstanding hereunder to be due and payable and the same shall forthwith become immediately due and payable to the
Debentureholder, and the Corporation shall forthwith pay to the Debentureholder such principal of, and premium, if any, accrued and unpaid interest and interest on amounts in default on such Debenture and all other monies outstanding
hereunder, together with subsequent interest at the rate borne by this Debenture on such principal, interest and such other monies from the date of such declaration until payment is received by the Debentureholder, such subsequent
interest to be payable at the times and places and in the monies mentioned in and according to the tenor of this Debenture. Such payment when made shall be deemed to have been made in discharge of the Corporation’s obligations hereunder.
|
7.2
|
Notice of Events of Default
|
(a) |
If an Event of Default shall occur and be continuing the Corporation shall, within 30 days after it receives written notice of the occurrence of such Event of
Default, give notice of such Event of Default to the Debentureholder in the manner provided in Section 13.2,
|
(b) |
Where notice of the occurrence of an Event of Default has been given and the Event of Default is thereafter cured, notice that the Event of Default is no longer
continuing shall be given by the Corporation to the Debentureholder within 15 days after the Corporation becomes aware the Event of Default has been cured.
|
7.3
|
Waiver of Default
|
(a) |
Upon the happening of any Event of Default hereunder, the Debentureholders shall have the power by requisition in writing by the holders of not less than a
majority in principal amount of Debentures then outstanding or by Ordinary Resolution of Debentureholders at a meeting held in accordance with Article 12, to waive any Event of Default, except a default in the payment of the principal
of, or premium, if any, or interest on any Debentures, or in respect of a covenant or provision hereof that under this Debenture cannot be modified or amended without the consent of the holder of each outstanding Debenture affected;
and
|
(b) |
No such act or omission of the Debentureholder shall extend to or be taken in any manner whatsoever to affect any subsequent Event of Default or the rights
resulting therefrom.
|
7.4
|
Waiver of Declaration
|
(a) |
all overdue interest on the Debentures;
|
(b) |
the principal of (and premium, if any, on) any of the Debentures which have become due otherwise than by such declaration of acceleration, and interest thereon at the
rate or rates prescribed therefor in such Debentures; and
|
(c) |
to the extent that payment of such interest is lawful and applicable, interest upon overdue installments of interest at the rate or rates prescribed therefor in such
Debentures; and
|
7.5
|
Enforcement by Debentureholder
|
7.6
|
Remedies Cumulative
|
7.7
|
Rights of Holder to Receive Payment
|
7.8
|
Delay or Omission Not Waiver
|
7.9
|
Immunity of Directors, Officers and Others
|
8.1
|
Cancellation and Destruction
|
8.2
|
Non-Presentation of Debenture
|
8.3
|
Satisfaction
|
(a) |
The Corporation shall be deemed to have fully paid, satisfied and discharged this Debenture and the Debentureholder, at the expense of the Corporation, shall
execute and deliver proper instruments acknowledging the full payment, satisfaction and discharge of this Debenture, when, with respect to the outstanding Debenture, the Corporation has paid to the Debentureholder the funds or property
required to make of payment on this Debenture and interest, if any, to maturity or any repayment date or Redemption Dates, as the case may be, of this Debenture and the Corporation has delivered to the Debentureholder an Officer’s
Certificate stating that all conditions precedent herein provided relating to the payment, satisfaction and discharge of all such Debentures have been complied with. Any payments to the Debentureholder referred to in this Section 8.3
shall be irrevocable.
|
(b) |
Upon the satisfaction of the conditions set forth in this Section 8.3 with respect to this Debenture, the terms and conditions of this Debenture, (other than those
contained in Article 2, Article 4, Article 5 pertaining to this Section 8.3) shall no longer be binding upon or applicable to the Corporation.
|
9.1
|
Restrictions on Merger and Sale of Certain Assets, Etc.
|
(a) |
prior to or contemporaneously with the consummation of such transaction, the Corporation and the Successor shall have executed such instruments and done such things
as, in the opinion of Counsel, are necessary or advisable to establish that upon the consummation of such transaction:
|
(i) |
the Successor will have assumed all the covenants and obligations of the Corporation under this Debenture; and
|
(ii) |
this Debenture will be valid and binding obligations of the Successor entitling the holders thereof, as against the Successor, to all the rights of Debentureholder.
|
(b) |
such transaction, in the opinion of Counsel, shall be on such terms as to substantially preserve and not impair any of the rights and powers of the Debentureholder
hereunder; and
|
(c) |
no condition or event shall exist as to the Corporation (at the time of such transaction) or the Successor (immediately after such transaction) which constitutes or
would, with the giving of notice or the lapse of time or both, constitute an Event of Default hereunder.
|
9.2
|
Vesting of Powers in Successor
|
10.1
|
Definitions In this Article:
|
(a) |
“Affiliate” the meaning ascribed to that term under Rule 405
of the US Securities Act;
|
(b) |
“Dissenting Debentureholders” means a Debentureholder who
does not accept an Offer referred to in Section 10.2 and includes any assignee of this Debenture to whom such an Offer is made;
|
(c) |
“Offer” means an offer to acquire outstanding Debentures
where, as of the date of the offer to acquire, the Debentures that are subject to the offer to acquire, together with the Offeror’s Debentures, constitute in the aggregate 20% or more of the outstanding principal amount of the Debentures;
|
(d) |
“offer to acquire” includes an acceptance of an offer to sell;
|
(e) |
“Offeror” means a person, or two or more persons acting
jointly or in concert, who make an Offer to acquire Debentures;
|
(f) |
“Offeror’s Notice” means the notice described in Section
10.3; and
|
(g) |
“Offeror’s Debentures” means Debentures beneficially owned,
or over which control or direction is exercised, on the date of an Offer by the Offeror, any Affiliate of the Offeror or any person acting jointly or in concert with the Offeror.
|
10.2
|
Offer for Debentures
|
(a) |
within the time provided in the Offer for its acceptance, the Offer is accepted by holders of Debentures representing at least 90% of the outstanding principal amount
of the Debentures, other than the Offeror’s Debentures;
|
(b) |
the Offeror is bound to take up and pay for, or has taken up and paid for the Debentures of the Debentureholders who accepted the Offer; and
|
(c) |
the Offeror complies with Sections 10.3 and 10.5;
|
10.3
|
Offeror’s Notice to Dissenting Debentureholders
|
(a) |
Debentureholders holding at least 90% of the principal amount of all outstanding Debentures, other than Offeror’s Debentures, have accepted the Offer;
|
(b) |
the Offeror is bound to take up and pay for, or has taken up and paid for, the Debentures of the Debentureholders who accepted the Offer;
|
(c) |
Dissenting Debentureholders must transfer their respective Debentures to the Offeror on the terms on which the Offeror acquired the Debentures of the Debentureholders
who accepted the Offer within 21 days after the date of the sending of the Offeror’s Notice; and
|
(d) |
Dissenting Debentureholders must send their respective Debenture(s) of such series to the Corporation in trust within 21 days after the date of the sending of the
Offeror’s Notice.
|
10.4
|
Delivery of Debenture Certificates
|
10.5
|
Payment of Consideration to Corporation
|
10.6
|
Consideration to be held in Trust
|
10.7
|
Completion of Transfer of Debentures to Offeror
|
(a) |
do all acts and things and execute and cause to be executed all instruments as in the Corporation’s opinion, relying on Counsel, may be necessary or desirable to
cause the transfer of the applicable Debentures of the Dissenting Debentureholders to the Offeror;
|
(b) |
send to each Dissenting Debentureholder who has complied with Section 10.4 the consideration to which such Dissenting Debentureholder is entitled under this Article
10; and
|
(c) |
send to each Dissenting Debentureholder who has not complied with Section 10.4 a notice stating that:
|
(i) |
his or her Debentures have been transferred to the Offeror;
|
(ii) |
the Corporation or some other person designated in such notice is holding in trust the consideration for such Debentures; and
|
(iii) |
the Corporation, or such other person, will send the consideration to such Dissenting Debentureholder as soon as possible after receiving such Dissenting
Debentureholder’s Debenture certificate(s) or such other documents as the Corporation or such other person may require in lieu thereof;
|
10.8
|
Appointment of Corporation by Offeror
|
10.9
|
Communication of Offer to the Corporation
|
11.1
|
Ordinary Consent
|
(i) |
any acceleration of this Debenture may be rescinded;
|
(ii) |
any existing default or Event of Default (other than an Event of Default in the payment of the principal of, and premium, (if any) and accrued interest on this
Debenture, except if such Event of Default results from an acceleration in accordance with Section 7.1(b) that has been rescinded in accordance with Section 7.4) and its consequences, may be waived; and
|
(iii) |
compliance by the Corporation with any provision of this Debenture may be waived.
|
11.2
|
Special Consent
|
(a) |
reduce the principal amount of this Debenture;
|
(b) |
change the fixed maturity of this Debenture, or alter the provisions with respect to the redemption or conversion of this Debenture, or waive a redemption payment
with respect to this Debenture;
|
(c) |
reduce the rate of or change the time for payment of interest, including default interest, on this Debenture;
|
(d) |
waive a default or Event of Default in the payment of principal of, or interest or premium, if any, on, this Debenture;
|
(e) |
make this Debenture payable in money or property other than that stated in this Debenture;
|
(f) |
in the event of a Change of Control that has occurred, amend, modify, or change the right of the Debentureholder to exercise the Put Right and the obligations of the
Corporation in connection therewith in accordance with Section 2.1(k), or modify any of the provisions or definitions with respect thereto;
|
(g) |
make any change in the provisions of this Debenture relating to waivers of past defaults or the rights of holders to receive payments of principal of, or interest or
premium, if any, on, this Debenture;
|
(h) |
impair the right of any holder to demand payment of principal of, premium (if any) and interest on this Debenture on or after the due dates therefor, or to institute
suit for the enforcement of any payment on or with respect to this Debenture;
|
(i) |
modify or change any provision of this Debenture or the related definitions affecting the ranking of the Debentures in a manner that adversely affects the holders
based on the opinion of Counsel; or
|
(j) |
make any change in the preceding amendment and waiver provisions.
|
11.3
|
Without Consent
|
(a) |
to cure any ambiguity, omission, defect or inconsistency;
|
(b) |
to provide for the assumption of the Corporation’s obligations to holders in the case of a merger, amalgamation or consolidation or sale of all or substantially all
of the Corporation’s property and assets;
|
(c) |
to make any change that would provide any additional rights or benefits to the holders or that does not adversely affect the legal rights under this Debenture of any
such holder based on the opinion of Counsel;
|
(d) |
to comply with requirements of applicable law relating to trust indentures;
|
(e) |
to add a guarantor of the Corporation’s obligations under this Debenture; or
|
(f) |
to evidence or provide for the acceptance of the appointment of a successor trustee; provided that the successor trustee is otherwise qualified and eligible to act as
such under the terms of this Debenture.
|
11.4
|
Form of Consent
|
11.5
|
Regulatory Approvals
|
12.1
|
Right to Convene Meeting
|
12.2
|
Notice of Meetings
|
12.3
|
Chair
|
12.4
|
Quorum
|
12.5
|
Power to Adjourn
|
12.6
|
Poll
|
12.7
|
Voting
|
12.8
|
Proxies
|
(a) |
the voting by proxy by Debentureholders and the form of the instrument appointing a proxy, which shall be in writing, and the manner in which the same shall be
executed and the production of the authority of any person signing on behalf of a Debentureholder;
|
(b) |
the deposit of instruments appointing proxies at such place as the Corporation or the Debentureholder convening the meeting, as the case may be, may, in the notice
convening the meeting, direct and the time, if any, before the holding of the meeting or any adjournment thereof by which the same must be deposited; and
|
(c) |
the deposit of instruments appointing proxies at some approved place or places other than the place at which the meeting is to be held and enabling particulars of
such instruments appointing proxies to be mailed, faxed or sent by other electronic means before the meeting to the Corporation at the place where the same is to be held and for the voting of proxies so deposited as though the instruments
themselves were produced at the meeting.
|
12.9
|
Persons Entitled to Attend Meetings
|
12.10
|
Powers Cumulative
|
12.11
|
Minutes
|
12.12
|
Instruments in Writing
|
12.13
|
Binding Effect of Resolutions
|
12.14
|
Evidence of Rights of Debentureholders
|
(a)
|
Any request, direction, notice, consent or other instrument which this Debenture may require or permit to be signed or executed by the
Debentureholder may be in any number of concurrent instruments of similar tenor signed or executed by such Debentureholder.
|
(b)
|
The Corporation may, in its discretion, require proof of execution in cases where it deems proof desirable and may accept such proof as it shall
consider proper.
|
13.1
|
Notice to Corporation
|
13.2
|
Notice to Debentureholder
|
(a) |
All notices to be given hereunder with respect to the Debentures shall be deemed to be validly given to the holders thereof if sent by first class mail, postage
prepaid, by letter or circular addressed to such holders at their addresses appearing in any of the registers hereinbefore mentioned and shall be deemed to have been effectively given three Business Days following the day of mailing.
Accidental error or omission in giving notice or accidental failure to mail notice to the Debentureholder or the inability of the Corporation to give or mail any notice due to anything beyond the reasonable control of the Corporation
shall not invalidate any action or proceeding founded thereon.
|
(b) |
If any notice given in accordance with the foregoing paragraph would be unlikely to reach the Debentureholder to whom it is addressed in the ordinary course of post
by reason of an interruption in mail service, whether at the place of dispatch or receipt or both, the Corporation shall give such notice by issuance of a press release.
|
(c) |
Any notice given to the Debentureholder by publication shall be deemed to have been given on the day on which publication shall have been effected at least once in
each of the newspapers in which publication was required.
|
(d) |
All notices with respect to the Debenture if registered in the name of one or more joint holders shall be given to all joint holders at the address appearing on the
register.
|
13.3
|
Mail Service Interruption
|
CONTANGO ORE, INC. | ||
By: | ||
Authorized Signatory
|
||
□ |
If transfer is to any entity that is not an affiliate of Queen’s Road Capital Investment Ltd., check this box. Corporation written consent shall be required pursuant to
Section 3.1 of the Debenture.
|
1.
|
The registered holder of this Debenture is responsible for the payment of any documentary, stamp or other transfer taxes that
may be payable in respect of the transfer of this Debenture.
|
Signature
of Guarantor
|
Signature of Transferring Registered Holder
|
|||
Authorized Officer | ||||
Guarantor’s Name and Stamp |
Name: |
||
Address: |
||
To: |
Holders of 8% 2022 Unsecured Convertible Debentures (the “Debentures”)
of Contango ORE, Inc. (the “Corporation”)
|
Note: |
All capitalized terms used herein have the meaning ascribed thereto in the Debenture (as defined below), unless otherwise indicated.
|
CONTANGO ORE, INC. | ||
By: | ||
Authorized Signatory
|
||
To: |
Holders of 8% 2022 Unsecured Convertible Debentures (the “Debentures”)
of Contango ORE, Inc. (the “Corporation”)
|
Note: |
All capitalized terms used herein have the meanings ascribed thereto in the Debenture (as defined below), unless otherwise indicated.
|
CONTANGO ORE, INC. | ||
By: | ||
Authorized Signatory
|
||
TO: |
CONTANGO ORE, INC.
|
Note: |
All capitalized terms used herein have the meaning ascribed thereto in the Debenture (as defined below), unless otherwise indicated.
|
Dated:
|
(Signature of Registered Holder) |
* |
If less than the full principal amount of such Debenture, indicate in the space provided the principal amount (which must be $1,000 or integral multiples thereof).
|
Subscriber Signature
Queen’s Road Capital Investment Ltd.
____/s/Warren Gilmaan________________________
(Name of Subscriber - please print)
By: WARREN GILMAN
(Authorized Signature)
CEO and Director
Official Capacity or Title - please print)
___________________________________________
Please print name of individual whose signature appears above if different than the name of the Subscriber printed above.
|
Number of Securities:
US$20,000,000 principal amount of Subscribed Debentures
|
|
Aggregate Subscription Price:
US$20,000,000
|
||
Subscriber Information
Cheung Kong Centre
Suite 2006, 2 Queen’s Road Central
Hong Kong, Hong Kong
__________________________________________
(Subscriber’s Address)
__________________________________________
(Telephone Number)
___________________
(Fax Number)
__________________________________________
(Email Address)
Number and type of securities of the Corporation currently owned: Nil
|
|
Register the Securities as set forth below:
Queen’s Road Capital Investment Ltd.
Cheung Kong Centre Suite 2006, 2 Queen’s Road Central Hong Kong, Hong Kong |
Deliver the Securities as set forth below:
Stikeman Elliott LLP Suite 1700 666 Burrard Street Vancouver, BC V6C 2X8 Canada Attention: Neville McClure |
TO BE COMPLETED BY THE CORPORATION ONLY |
The Corporation accepts the subscription on the terms and conditions of this Agreement, including the attached “Terms and Conditions of Investment”.
|
Date: April 9, 2022
|
CONTANGO ORE, INC.
By: _/s/ Rick Van Nieuwenhuyse________________
Authorized Signing Officer
Official Capacity or Title:
|
(a)
|
The following conditions which are for the exclusive benefit of the Corporation and may be waived, in whole or in part, by the Corporation in its sole
discretion:
|
(i)
|
the Subscriber delivering a fully completed and duly executed copy of this Agreement;
|
|
(ii)
|
the Subscriber delivering a duly executed copy of an investor rights agreement (the “Investor Rights Agreement”) between
the Corporation and the Subscriber, substantially in the form set forth in Schedule C;
|
|
(iii)
|
the Subscriber delivering fully completed and duly executed copies of all other documentation contemplated by this Agreement;
|
|
(iv)
|
evidence of completed wire transfer as specified on Schedule A representing the aggregate Subscription Price payable for the Subscribed Debentures subscribed
for by the Subscriber;
|
|
(v)
|
the offer, sale and issuance of the Securities being exempt from the registration requirements of Applicable Securities Laws. As used in this Agreement, “Applicable Securities Laws” means any and all securities laws including, statutes, rules, regulations, by-laws, policies, guidelines, orders, decisions, rulings and awards, applicable in the United
States and the jurisdictions in which the Securities will be offered, sold and issued;
|
(vi)
|
the Subscriber executing and delivering to the Corporation all reports, undertakings or other documents required under Applicable Securities Laws in connection
with the offer, sale and issuance of the Securities to the Subscriber;
|
|
(vii)
|
the Corporation obtaining all orders, permits, approvals, waivers, consents, licenses or similar authorizations of Regulators necessary to complete the offer,
sale and issuance of (A) the Subscribed Debentures and the Establishment Fee Shares and (B) at least 655,738 Underlying Shares. As used in this Agreement, “Regulator” means (I) any governmental or
public entity department, court, commission, board, bureau, agency or instrumentality, (II) any quasi-governmental, self regulatory or private body exercising any regulatory authority under Applicable Securities Laws and (III) the NYSE
American LLC (“NYSE”) and any other stock exchange having jurisdiction;
|
|
(viii)
|
the representations and warranties of the Subscriber contained in this Agreement having been true and correct in all material respects as of the date of this
Agreement and being true and correct in all material respects at the Time of Closing with the same effect as though made at and as of such date (except, in each case, with respect to any representations and warranties that speak as of a
specific date or time, the truth and accuracy of which need only be measured as of such date and time);
|
|
(ix)
|
all documentation relating to the offer, sale and issuance of the Securities being in form and substance satisfactory to the Corporation; and
|
|
(x)
|
none of the Offering nor any other of the transactions or Documents contemplated by this Agreement shall need to be approved by the Corporation’s shareholders
pursuant to Applicable Securities Laws or as a condition to being approved by a Regulator;
|
|
(b)
|
The following conditions which are for the exclusive benefit of the Subscriber and may be waived, in whole or in part, by the Subscriber in its sole discretion:
|
(i)
|
the representations and warranties of the Corporation contained in this Agreement having been true and correct as of the date of this Agreement and being true and
correct at the Time of Closing;
|
|
(ii)
|
the NYSE approving the issuance and sale of the Securities and conditionally approving the listing of the Establishment Fee Shares and at least 655,738 Underlying
Shares;
|
|
(iii)
|
all documentation relating to the offer, sale and issuance of the Securities, including the Subscribed Debentures, the Investor Rights Agreement, corporate
resolutions and closing certificates, being in form and substance satisfactory to the Subscriber;
|
|
(iv)
|
the Corporation delivering duly executed copies of the Subscribed Debenture and the Investor Rights Agreement;
|
|
(v)
|
the Corporation delivering fully completed and duly executed copies of all other documentation contemplated by this Agreement;
|
|
(vi)
|
the Subscriber receiving at the Time of Closing a legal opinion addressed to it, in form and substance acceptable to it and its counsel, acting reasonably, by
Holland and Knight LLP, counsel to the Corporation (who may rely, to the extent appropriate in the circumstances, certificates of officers of the Corporation and government officials) as to:
|
|
(A)
|
the Corporation being validly existing and in good standing under the laws of its jurisdiction of incorporation;
|
|
(B)
|
the Corporation having the corporate power to execute and deliver this Agreement, the Subscribed Debenture and the Investor Rights Agreement (the “Documents”) and to perform its obligations hereunder and thereunder and issue the Securities;
|
|
(C)
|
the authorized capital of the Corporation;
|
|
(D)
|
all necessary corporate action having been taken by the Corporation to authorize the execution and delivery by it of each of the Documents and the performance
of its obligations thereunder;
|
|
(E)
|
all necessary corporate action having been taken by the Corporation to authorize (I) the issue and sale of the Subscribed Debentures; (II) the reservation and
issuance of the Underlying Shares in accordance with their terms; and (III) the issuance of the Establishment Fee Shares;
|
|
(F)
|
the Subscribed Debentures having been validly executed and delivered by the Corporation and, upon the Corporation receiving payment of the price therefor, the
Subscribed Debentures being validly issued and outstanding;
|
|
(G)
|
upon the conversion of the Subscribed Debentures in accordance with their terms, the Underlying Shares being validly issued and outstanding as fully paid and
non-assessable Common Shares;
|
|
(H)
|
upon the Corporation receiving payment of the applicable consideration therefor, the Establishment Fee Shares being validly issued and outstanding as fully paid
and non-assessable Common Shares;
|
|
(I)
|
the issuance and sale of the Subscribed Debentures and the Establishment Fee Shares being exempt from the registration requirements of the Securities Act of
1933, as amended;
|
|
(J)
|
the issuance and sale of the Underlying Shares in accordance with their terms being exempt from the registration requirements of the Securities Act of 1933, as
amended; and
|
|
(vii)
|
since December 31, 2021 no material adverse change shall have occurred in the assets, properties, operations, business, liabilities (actual or contingent) or
condition (financial or otherwise) of the Corporation; and
|
|
(viii)
|
since December 31, 2021, there shall not have developed, occurred or come into effect or existence any event, action, state, condition or major financial
occurrence of national or international consequence or any law or regulation which in the opinion of the Subscriber, acting reasonably and in good faith, seriously adversely affects, or involves, or will seriously adversely affect, or
involve, the financial markets or the business, operations or affairs of the Corporation.
|
(a) |
An investment in the Securities is not without risk and the Subscriber may lose HIS, HER OR ITS entire investment;
|
(b) |
The offer, sale and issuance of the Securities is exempt from the registration requirements of Applicable Securities Laws and, as a result: (i) Subscriber must bear the economic risk of the investment indefinitely unless a subsequent
disposition thereof is registered or exempted under the U.S. Securities Act and other Applicable Securities Laws, (ii) the Securities cannot be resold or transferred unless they are subsequently registered under the U.S. Securities Act and
such applicable state securities laws or unless an exemption from such registration is available, (iii) the Corporation does not have any obligation or intention to register the Securities for resale under the U.S. Securities Act, any state
securities laws or of supplying the information which may be necessary to enable Subscriber to sell Securities and that Subscriber has no right to require the registration of the Securities under the U.S. Securities Act, any state
securities laws or other applicable securities regulations, and (iv) sales or transfers of Securities are further restricted by the provisions of the Documents;
|
(c) |
No prospectus or registration statement has been filed with any Regulator in connection with the Offering and no Regulator has made any finding or determination as to the merit for investment in, or made any recommendation or endorsement
with respect to, the Securities;
|
(d) |
The Securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or any
state securities laws, and are being offered and sold in transactions not subject to such registration requirements, and therefore the Securities may not be offered or sold in the United States of America, its territories and possessions,
any state of the United States or the District of Columbia (collectively, the “United States”) or to, or for the account or benefit of, a “U.S. Person” (as that
term is defined in Regulation S promulgated under the U.S. Securities Act, which definition includes, but is not limited to, an individual resident in the United States, an estate or trust of which any executor or administrator or trustee,
respectively, is a U.S. Person and any partnership or company organized or incorporated under the laws of the United States) or a person in the United States except in compliance with the requirements of an exemption from registration under
the U.S. Securities Act and any applicable state securities laws;
|
(e) |
The Corporation may be required to file reports with all applicable Regulators containing personal information about the Subscriber. Such reports will include the full name, residential address and telephone number of the Subscriber,
the number and type of securities purchased, the total purchase price paid for such securities, the date of the Closing and the registration exemption relied upon under Applicable Securities Laws to complete such purchase. The Corporation may also be required pursuant to Applicable Securities Laws to file this Agreement on EDGAR. By completing this Agreement, the Subscriber authorizes the indirect collection of the
information described in this Section 4(e) by all applicable Regulators and consents to the disclosure of such information to the public through (i) the filing of reports with all applicable Regulators and (ii) the filing of this Agreement
on EDGAR;
|
(f) |
The Subscribed Debentures are being offered on a “private placement” basis and the Subscribed Debentures are not and will not be listed on the NYSE or any other stock exchange; and
|
(g) |
The certificates representing the Subscribed Debentures, and the DRS Advices, the DRS Advices representing the Establishment Fee Shares and the Underlying Shares (and any replacement certificate issued prior to the expiration of the
applicable hold periods), if any, will bear the following legend in accordance with Applicable Securities Laws:
|
(a) |
The Subscriber has knowledge in financial and business affairs, is capable of evaluating the merits and risks of an investment in the Securities, and is able to bear the economic risk of such investment even if the entire investment is
lost;
|
(b) |
The Subscriber has not been provided with a prospectus, an offering memorandum or any other document in connection with its subscription for Securities and the Subscriber’s decision to subscribe for Subscribed Debentures and execute this
Agreement has not been based on, and the Subscriber has not relied on, any verbal or written representation as to the facts made by or on behalf of the Corporation or any employee or agent of the Corporation and has been based entirely on
this Agreement and the other Documents;
|
(c) |
The distribution of the Securities has not been made through, or as a result of, and is not being accompanied by, (i) a general solicitation, (ii) any advertisement including articles, notices or other communications published in any
newspaper, magazine or similar media or broadcast over radio or television, or (iii) any seminar or meeting whose attendees have been invited by general solicitation or general advertising;
|
(d) |
The Subscriber is knowledgeable of, or has been independently advised as to, the Applicable Securities Laws which would apply to this Agreement. The Subscriber is eligible to purchase or receive the Securities pursuant to an exemption
from the registration requirements of Applicable Securities Laws. The Applicable Securities Laws of a jurisdiction outside of the United States in which the Subscriber might be subject do not require the Corporation to file a prospectus,
offering memorandum or similar document or to register or qualify the distribution of the Securities, or for the Corporation to be registered with or to make any filings or seek any approvals of any kind whatsoever from any governmental or
regulatory authority of any kind whatsoever in such jurisdiction outside of the United States. The delivery of this Agreement, the acceptance of it by the Corporation and the issue of the Securities to the Subscriber complies with all
applicable laws of the Subscriber’s jurisdiction of residence or domicile and all other applicable laws and will not cause the Corporation to become subject to or comply with any continuous disclosure, registration or other periodic filing
or reporting requirements under any such applicable laws;
|
(e) |
The Subscriber was offered the Securities in, and is resident in, the jurisdiction set out as the “Subscriber’s Address” on the first page of this Agreement and intends the Applicable Securities Laws of that jurisdiction to govern the
offer, sale and issuance of the Securities to the Subscriber, provided that, the Subscriber understands that no action has been or will be taken in any jurisdiction by the Company that would permit a public offering of the Securities, or
possession or distribution of any other offering or publicity material relating to the Securities, in any jurisdiction where action for that purpose is required and it has complied and will comply with all applicable laws and regulations in
each jurisdiction in which it acquires the Securities, in all cases at its own expense.
|
(f) |
The Subscriber is not in the United States or a U.S. Person, did not receive an offer to acquire the Securities within the United States, is not acquiring the Securities for the account of or benefit of a U.S. Person or a person in the
United States, and did not execute this Agreement or otherwise place its order to purchase the Securities from within the United States;
|
(g) |
The Subscriber has been independently advised as to and is aware of the resale restrictions under Applicable Securities Laws with respect to the Securities, including any Common Shares issued on conversion of the Subscribed Debentures,
and acknowledges receipt of a written notice of the legend(s) or restriction(s) notation applicable to the resale of the Securities;
|
(h) |
The Subscriber has not received, nor does it expect to receive any financial assistance from the Corporation, directly or indirectly, in respect of the Subscriber’s purchase of Securities;
|
(i) |
No person has made any oral or written representations to the Subscriber: (i) that any person will resell or repurchase; (ii) that any person will refund the purchase price of the Securities; or (iii) as to the future value or price of
any of the Securities;
|
(j) |
The Subscriber (i) has the legal capacity and competence to execute, deliver and perform its obligations under this Agreement; and (ii) the execution and delivery of and performance by the Subscriber of this Agreement have been
authorized by all necessary corporate or other action on the part of the Subscriber;
|
(k) |
This Agreement has been duly executed and delivered by the Subscriber, and constitutes a legal, valid and binding agreement of the Subscriber enforceable against him, her or it in accordance with its terms;
|
(l) |
The Subscriber was not created or is used solely to purchase or hold securities without a prospectus in reliance on an exemption from the registration requirements provided for in Applicable Securities Laws;
|
(m) |
The execution and delivery of and performance by the Subscriber of this Agreement do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event of condition) result in a breach or
violation of or a conflict with, or allow any other person to exercise any rights under any of the terms or provisions of the Subscriber’s constating documents or by-laws, if applicable, or any other contract, agreement, instrument,
undertaking or covenant to which the Subscriber is a party or by which it is bound;
|
(n) |
The Subscriber has obtained such legal and tax advice as it considers appropriate in connection with the offer, sale and issuance of the Securities and the execution, delivery and performance by it of this Agreement and the transactions
contemplated by this Agreement. The Subscriber is not relying on the Corporation or its affiliates or counsel in this regard;
|
(o) |
There are no agreements, commitments or understandings between the Subscriber and/or its insiders regarding the transactions contemplated herein or the securities of the Corporation;
|
(p) |
Neither the Subscriber nor any of its beneficial owners, appears on the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control of the United States Department of the Treasury or in the Annex to
United States Executive Order 13224 – Blocking Property and Prohibiting Transactions with Persons Who Commit, Threaten to Commit, or Support Terrorism, nor are they otherwise a prohibited party under the laws of the United States. The
Subscriber further represents that the monies used to fund the Subscription Price are not derived from, invested for the benefit of, or related in any way to, the governments of, or persons within, any country (i) under a U.S. embargo
enforced by the Office of Foreign Assets Control, (ii) that has been designated as a “non-cooperative country or territory” by the Financial Action Task Force on Money Laundering, or (iii) that has been designated by the U.S. Secretary of
the Treasury as a “primary money laundering concern”;
|
(q) |
The Subscriber does not know or have any reason to suspect that (i) the monies used to fund the Subscription Price have been or will be derived from or related to any illegal activities, including but not limited to, money laundering
activities, (ii) the proceeds from the Subscriber’s investment will be used to finance any illegal or illegitimate activities, or (iii) the monies used to fund the Subscription Price are being tendered on behalf of a person or entity who
has not been identified to the Subscriber;
|
(r) |
None of Subscriber, any person controlling or controlled by Subscriber, any person having a beneficial interest in Subscriber is: (A) a senior official in the executive, legislative, administrative, military or judicial branches of a
non-U.S. government (whether elected or not), a senior official of a major non-U.S. political party, or a senior executive of a non-U.S. government owned corporation (“SFPF”); (B) an immediate family
member of any SFPF; (C) a person who is widely or publicly known (or should be known by Subscriber) to maintain a close personal relationship with any SFPF; or (D) a person that has been formed by or for the benefit of any SFPF; and
|
(s) |
The Subscriber is not a “distributor” as that term is defined in Rule 902 of the U.S. Securities Act.
|
(t) |
As of the date hereof, the Subscriber, and any person who may be deemed to beneficially own securities owned by the Subscriber under the US securities laws, own in the aggregate 15,800 Common Shares.
|
(1)
|
The Subscriber will comply with Applicable Securities Laws concerning the subscription, purchase, holding and resale of the Securities and will consult with its legal advisers with respect to complying with
resale restrictions under Applicable Securities Laws with respect to the Securities.
|
(2)
|
The Subscriber will not engage in hedging transactions with regard to the Securities unless in compliance with the U.S. Securities Act.
|
(3)
|
The Subscriber will execute, deliver, file and otherwise assist the Corporation in filing any reports, undertakings and other documents required under Applicable Securities Laws in connection with the offer,
sale and issuance of the Securities.
|
(a) |
The Corporation is incorporated and existing in good standing under the laws of the State of Delaware; |
|
(b) | The execution and delivery of, and performance by the Corporation of this Agreement have been authorized by all necessary corporate action on the part of the Corporation; |
|
(c) | This Agreement has been duly executed and delivered by the Corporation and constitutes a legal, valid and binding agreement of the Corporation enforceable against it in accordance with
its terms, provided that enforcement thereof may be limited by laws affecting creditors’ rights generally, that specific performance and other equitable remedies may only be granted in the discretion of a court of competent jurisdiction; |
|
(d) | The Corporation has complied with Applicable Securities Laws in connection with the offer, sale and issuance of the Securities; |
(e) | All material information concerning the Corporation filed by or on behalf of the Corporation under its profile on EDGAR (including, without limitation, annual reports, quarterly reports,
annual and interim financial information, proxy statement, current reports and all other documents filed by or on behalf of the Corporation under the Corporation’s profile on EDGAR) (the “Public Record”) when filed did not contain any untrue
statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the context in which they were made, not misleading; |
|
(f) | The Corporation is not in possession of any undisclosed material information regarding the Corporation, its assets or the Securities, which it would be required to disclose under
Applicable Securities Laws; |
|
(g) | Except as disclosed in the Public Record, all agreements by which the Corporation holds an interest in a material property or asset are in effect in all material respects according to
their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, or similar laws relating to or affecting enforcement of the rights and remedies of creditors or by general equitable
principles. To the knowledge of the Corporation, the Corporation has good and marketable title to its material properties and assets, free and clear of all liens, charges, encumbrances and security interests of any nature or kind, other than
as disclosed in the Public Record. The Corporation is not aware of any material defects, failures or impairments in the title of the Corporation to its material properties or assets whether or not an action, suit, proceeding or inquiry is
pending or threatened or whether or not discovered by any third party; |
|
(h) | To the knowledge of the Corporation, all material interests in mining claims, concessions, exploitation or extraction rights or similar rights (“Mining Claims”) relating to the
Corporation’s properties are in good standing, are valid and enforceable, are free and clear of any material liens or charges, and no material royalty is payable in respect of any of them, except as disclosed in the Public Record or except as
the enforcement thereof may be limited by bankruptcy, insolvency, fraudulent transfer, moratorium, or similar laws relating to or affecting enforcement of the rights and remedies of creditors or by general equitable principles. Except as
disclosed in the Public Record, no other property rights are necessary for the conduct of the Corporation’s business as presently conducted, and there are no material restrictions on the ability of the Corporation to use, transfer or
otherwise exploit any such property rights except as required by applicable law or the provisions of the applicable agreements related to such properties; |
|
|
(i)
|
The financial statements of the Corporation included in the Public Record present fairly in all material respects the financial condition, results of operations and cash flows of the Corporation on a
consolidated basis as of the dates and for the periods indicated, comply in all material respects as to form with the applicable accounting requirements of Applicable Securities Laws and have been prepared in conformity with United States
generally accepted accounting principles; and |
|
|
|
|
(j)
|
No action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator, involving the Corporation or its property is pending or, to the knowledge of the
Corporation, threatened that could reasonably be expected to result in any material adverse change in the assets, properties, operations, business, liabilities (actual or contingent) or condition (financial or otherwise) of the Corporation. |
(1)
|
The Corporation will pay, on the Closing Date, all of the Subscriber’s due diligence, investment committee expenses and reasonable legal fees in relation to the transactions proposed in this Agreement up to
an aggregate maximum of US$100,000, inclusive of any taxes and any related travel and other out of pocket expenses. Except as provided in the preceding sentence, each party shall bear its own expenses.
|
(2)
|
The Corporation will pay to the Subscriber, on the Closing Date, an establishment fee (the “Establishment Fee”) equal to 3% of the principal amount of the Subscribed
Debentures, payable in cash or Establishment Fee Shares, or a combination thereof, at the election of the Subscriber. Any Establishment Fee Shares will be issued at a price per Establishment Fee Share equal the 20 day volume weighted
average price of the Corporation’s Common Shares on the NYSE prior to the date hereof, subject to NYSE approval.
|
Schedule A
|
Payment Information
|
Schedule B
|
Form of Debenture
|
Schedule C
|
Form of Investor Rights Agreement
|
1.1 |
Defined Terms
|
1.2 |
Rules of Construction
|
(a) |
the terms “Agreement”, “this Agreement”, “the Agreement”, “hereto”, “hereof”, “herein”, “hereby”, “hereunder” and similar expressions refer to this Agreement in its
entirety and not to any particular provision hereof;
|
(b) |
references to an “Article” or “Section” followed by a number or letter refer to the specified Article or Section to this Agreement;
|
(c) |
the division of this Agreement 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 Agreement;
|
(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) |
the word “including” is deemed to mean “including without limitation”;
|
(f) |
any reference to this Agreement means this Agreement as amended, modified, replaced or supplemented from time to time;
|
(g) |
any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or replaced, and
any reference to a statute shall include any regulations or rules made thereunder;
|
(h) |
any time period within which any action is to be taken hereunder shall be calculated excluding the day on which the period commences and including the day on which
the period ends; and
|
(i) |
whenever any action is required to be taken or period of time is to expire on a day other than a Business Day, such action shall be taken or period shall expire on
the next following Business Day.
|
1.3 |
Entire Agreement
|
1.4 | Time of Essence |
1.5 | Governing Law and Submission to Jurisdiction |
1.6 | Severability |
2.1 | Standstill |
(a) |
acquire, agree to acquire, or make any proposal or offer to acquire, directly or indirectly, ownership of (or control or direction over) any securities of the Company
or any of its Affiliates (other than securities issued in accordance with the terms of the Debentures);
|
(b) |
solicit proxies from shareholders or other security holders of the Company or any of its Affiliates or otherwise attempt to influence the conduct of the shareholders or
other security holders of the Company or any of its Affiliates;
|
(c) |
solicit, initiate or engage in any discussions or negotiations, or enter into any agreement, commitment or understanding, or otherwise act jointly or in concert with
any Person in order to propose or effect any tender or exchange offer, merger, arrangement or other business combination involving the Company or any of its Affiliates or propose or effect any acquisition of assets from the Company or any of
its Affiliates;
|
(d) |
in any manner, directly or indirectly, seek to control or influence the Board or the board of directors of any Affiliate of the Company or the management or policies of
the Company or affect control of the Company or any of its Affiliates (which covenant shall not prevent the Investor Nominee from acting in a manner consistent with fulfilling his or her fiduciary duties as a director of the Company);
|
(e) |
make any public announcement with respect to the foregoing or inconsistent with the foregoing, or assist, advise, encourage or agree, discuss, negotiate or otherwise
act in concert with, any Person to do any of the foregoing (including by providing or arranging any financing);
|
(f) |
take any action with respect to the Company or its Affiliates that would reasonably be expected to require the Company or its Affiliates to make a public announcement
regarding any of the types of matters described in items (a) through (d) above; or
|
(g) |
request the Company, directly or indirectly, to amend or waive any of these standstill provisions.
|
3.1 | Change of Control Voting Alignment |
(a) |
it will not convert the Debentures in the circumstances of an unsolicited (hostile) tender offer or exchange offer being made, and will not tender or agree to tender
the Debentures to such a bid, unless and until the Board shall subsequently recommend that shareholders of the Company accept such bid or the bidder takes-up and pays for sufficient Common Shares that it, and Persons acting jointly or in
concert with it, hold more than 66 2/3% of the outstanding Common Shares on a fully-diluted basis;
|
(b) |
it will not tender or agree to tender any Common Shares it holds, including as a result of the conversion of the Debentures or otherwise acquired by it by any means, to
an unsolicited (hostile) tender offer or exchange offer being made, unless and until the Board shall subsequently recommend that shareholders of the Company accept such bid or the bidder takes-up and pays for sufficient Common Shares that it,
and Persons acting jointly or in concert with it, hold more than 66 2/3% of the outstanding Common Shares on a fully-diluted basis; and
|
(c) |
it will (A) vote any and all Common Shares it holds as a result of the conversion of the Debentures and otherwise acquired by or issued to it and, to the extent it is
afforded a voting right, the Debentures, in the manner recommended by the Board to the shareholders of the Company in respect of any Change of Control transaction, and deposit or tender such Common Shares to the Change of Control transaction
in the manner recommended by the Board, and (B) abstain from voting or withhold such votes if any Person is proposing to elect one or more individuals to the Board who are not nominees proposed by the Company’s management or the Investor
Nominee.
|
3.2 | Non-Change of Control Voting Alignment |
4.1 |
Third-Party Sales |
5.1 |
Termination |
5.2 |
Notices |
5.3 |
Amendments and Waivers |
5.4 | Assignment |
5.5 |
Successors and Assigns |
5.6 |
Further Assurances
|
5.7 |
Right to Injunctive Relief |
5.8 |
Counterparts |
CONTANGO ORE, INC.
|
||||
By:
|
||||
Name:
|
||||
Title:
|
QUEEN’S ROAD CAPITAL
INVESTMENT LTD.
|
||||
By:
|
||||
Name:
|
||||
Title:
|
HOUSTON--(BUSINESS WIRE)--April 9, 2022--Contango ORE, Inc. (“Contango,” "CORE" or the “Company”) (NYSE American: CTGO) announced today that it had entered into a binding agreement to issue a $20,000,000 unsecured convertible debenture to Queen’s Road Capital Investment, Ltd. ("QRC"). The debenture will be purchased at par. The closing and issuance of the debenture is expected to occur on or prior to April 29, 2022, subject to customary closing conditions. The Company will use the proceeds from the sale of the debenture to fund commitments to its Peak Gold, LLC (Manh Choh) joint venture, the exploration and development at its Lucky Shot properties and for general corporate purposes.
Rick Van Nieuwenhuyse, the Company’s President and CEO, stated:
"Management is pleased to finalize this financing with Queen’s Road Capital. I have known Warren Gilman, the principal of QRC, for a long time and have been impressed with his grasp of the mining sector, particularly for recognizing investment opportunities in quality exploration/development stage companies. We intend to use the proceeds from this financing to fund our share through completion of the feasibility study at our 30% owned Manh Choh project managed by Kinross (70%), as well as our planned underground exploration program at our 100% owned Lucky Shot project. Both projects are progressing according to plan with Manh Choh in the middle of the NEPA permitting process. The feasibility study is expected to be completed in the second half of 2022. Underground development mining is underway at Lucky Shot and we expect to drill a pilot hole next month to determine where to place the underground drift parallel to and in the footwall of the historically mined Lucky Shot vein. The exploration drift should be completed by late summer when exploration drilling will start. With strong fundamentals in the gold market, Management is excited to advance our portfolio of high-quality projects in Alaska."
The Debenture
The debenture will bear interest at 8% per annum, payable quarterly with 6% paid in cash and 2% paid in shares of Contango common stock issued at the market price at the time of payment based on a 20-day volumetric weighted average price (VWAP). The debenture will be unsecured, with a maturity of four years after issuance. The holder may convert the debenture into Contango common stock at any time at a conversion price of $30.50 per share, subject to adjustment. The Company may redeem the debenture after the third anniversary of issuance at 105% of par, provided that the market price (based on a 20-day VWAP) of Contango common stock is at least 130% of the conversion price. The Company may also redeem the debenture, and the holder will have rights to put the debenture to the Company, upon a change of control of the Company, with the redemption or put price being 130% of par for the first three years following issuance and 115% of par thereafter and accrued interest at the time of redemption or put being paid in the same form as other interest payments.
QRC will enter into an investor rights agreement with the Company in connection with the issuance of the debenture. The investor rights agreement contains provisions that require QRC and its affiliates while they own 5% or more of the outstanding Contango common stock to standstill, not participate in any unsolicited or hostile takeover of the Company, not tender its shares of the Company's common stock unless the Company's board recommends such tender, vote its shares of Contango common stock in the manner recommended by the Company's board to its stockholders, and not transfer its shares of Contango common stock representing more than 0.5% of the outstanding shares without notifying the Company in advance whereupon the Company will have a right to purchase those shares.
ABOUT CORE
CORE is a company that engages in the exploration in Alaska for gold and associated minerals through a 30% interest in Peak Gold, LLC, which leases approximately 675,000 acres for exploration and development, and through Contango Minerals Alaska, LLC, its wholly owned subsidiary, which leases approximately 200,000 acres for exploration. The Company also owns the rights to the Lucky Shot, Coleman and War Baby mines, and approximately 16,600 acres of surrounding mining claims located in Willow Mining District about 75 miles north of Anchorage, Alaska. Additional information can be found on our web page at www.contangoore.com.
FORWARD-LOOKING STATEMENTS
This press release contains forward-looking statements regarding CORE that are intended to be covered by the safe harbor for “forward-looking statements” provided by the Private Securities Litigation Reform Act of 1995, based on CORE’s current expectations and includes statements regarding future results of operations, quality and nature of the asset base, the assumptions upon which estimates are based and other expectations, beliefs, plans, objectives, assumptions, strategies or statements about future events or performance (often, but not always, using words such as “expects”, “projects”, “anticipates”, “plans”, “estimates”, “potential”, “possible”, “probable”, or “intends”, or stating that certain actions, events or results “may”, “will”, “should”, or “could” be taken, occur or be achieved). Forward-looking statements are based on current expectations, estimates and projections that involve a number of risks and uncertainties, which could cause actual results to differ materially from those, reflected in the statements. These risks include, but are not limited to: the risks of the exploration and the mining industry (for example, operational risks in exploring for, developing mineral reserves; risks and uncertainties involving geology; the speculative nature of the mining industry; the uncertainty of estimates and projections relating to future production, costs and expenses; the volatility of natural resources prices, including prices of gold and associated minerals; the existence and extent of commercially exploitable minerals in properties acquired by CORE or Peak Gold LLC; ability to realize the anticipated benefits of the recent transactions with an affiliate of Kinross; disruption from the transactions and transition of the Peak Gold, LLC’s management to an affiliate of Kinross, including as it relates to maintenance of business and operational relationships; potential delays or changes in plans with respect to exploration or development projects or capital expenditures; the interpretation of exploration results and the estimation of mineral resources; the loss of key employees or consultants; health, safety and environmental risks and risks related to weather and other natural disasters); uncertainties as to the availability and cost of financing; CORE’s inability to retain or maintain its relative ownership interest in Peak Gold, LLC; inability to realize expected value from acquisitions; inability of our management team to execute its plans to meet its goals; the extent of disruptions caused by the COVID-19 outbreak; and the possibility that government policies may change, political developments may occur or governmental approvals may be delayed or withheld, including as a result of the recent presidential and congressional elections in the U.S. or the inability to obtain mining permits. Additional information on these and other factors which could affect CORE’s exploration program or financial results are included in CORE’s other reports on file with the U.S. Securities and Exchange Commission. Investors are cautioned that any forward-looking statements are not guarantees of future performance and actual results or developments may differ materially from the projections in the forward-looking statements. Forward-looking statements are based on the estimates and opinions of management at the time the statements are made. CORE does not assume any obligation to update forward-looking statements should circumstances or management’s estimates or opinions change.
Contango ORE, Inc.
Rick Van Nieuwenhuyse
(713) 877-1311
www.contangoore.com