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TABLE OF CONTENTS
Exhibit 2.1
WESTWATER RESOURCES, INC.
as
the Parent
and
1143738 B.C. LTD.
as
the Purchaser
and
ALABAMA GRAPHITE CORP.
as
the Company
ARRANGEMENT AGREEMENT
December 13, 2017
TABLE OF CONTENTS
i
ii
ARRANGEMENT AGREEMENT
THIS AGREEMENT is made as of December 13, 2017,
AMONG:
Westwater Resources, Inc., a corporation existing under the laws of the State of Delaware
(the
"Parent")
—and—
1143738
B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and an indirect or direct subsidiary of the Parent
(the
"Purchaser")
—and—
Alabama
Graphite Corp., a corporation existing under the laws of the Province of British Columbia
(the
"Company").
NOW THEREFORE, in consideration of the covenants and agreements herein contained, the Parties agree as follows:
ARTICLE 1
INTERPRETATION
Section 1.1 Defined Terms.
As
used in this Agreement, the following terms have the following meanings:
"Acquisition Proposal" means, other than the transactions contemplated by this Agreement, any offer, proposal or inquiry (written or oral)
from any Person or group of Persons other than the Parent or the Purchaser after the date of this Agreement relating to: (i) any direct or indirect sale, disposition, alliance or joint venture
(or any lease, long-term supply agreement or other arrangement having the same economic effect as a sale), direct or indirect, in a single transaction or a series of related transactions, of assets
representing 20% or more of the consolidated assets or contributing 20% or more of the consolidated revenue of the Company and its Subsidiaries or of 20% or more of the voting, equity or other
securities of the Company or any of its Subsidiaries (or rights or interests
therein or thereto); (ii) any direct or indirect take-over bid, tender offer, exchange offer, treasury issuance or other transaction that, if consummated, would result in a Person or group of
Persons beneficially owning 20% or more of any class of voting, equity or other securities or any other equity interests (including securities convertible into or exercisable or exchangeable for
securities or equity interests) of the Company or any of its Subsidiaries; (iii) any plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination,
reorganization, recapitalization, liquidation, dissolution, winding up or exclusive license involving the Company or any of its Subsidiaries; (iv) any other similar transaction or series of
transactions involving the Company or any of its Subsidiaries; or (v) any other transaction, the consummation of which could reasonably be expected to impede, prevent or delay the transactions
contemplated by this Agreement, including the Arrangement.
"Affiliate" has the meaning specified in National Instrument 45-106—Prospectus and Registration
Exemptions.
"Agreement" means this arrangement agreement.
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"Arrangement" means an arrangement under Section 288 of the BCBCA on the terms and subject to the conditions set out in the Plan of
Arrangement, subject to any amendments or variations to the Plan of Arrangement made in accordance with the terms of this Agreement or made at the direction of the Court in the Final Order with the
prior written consent of the Company and the Purchaser, each acting reasonably.
"Arrangement Filings" means the records and information provided to the Registrar under section 292(a) of the BCBCA, together with
a copy of the entered Final Order.
"Arrangement Resolution" means the special resolution of the Company Securityholders approving the Plan of Arrangement to be considered at
the Company Meeting, substantially in the form set out in Schedule B.
"Authorization" means, with respect to any Person, any order, permit, approval, consent, waiver, licence or similar authorization of any
Governmental Entity having jurisdiction over the Person.
"BCBCA" means the Business Corporations Act (British Columbia).
"Breaching Party" has the meaning specified in Section 4.6(3).
"Budget" means the detailed budget for the exploration, development, management and operation of the Company using proceeds of a loan
provided by the Parent to the Company and other available funds, as well as to all other general, administrative and others costs and expenses of the Company, as such budget is updated, revised and
amended from time to time and approved by the Parent in its sole discretion;
"Business Day" means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in
Vancouver, British Columbia, Toronto, Ontario or Denver, Colorado.
"Collective Agreements" means collective agreements and related documents including benefit agreements, letters of understanding, letters
of intent and other written communications (including arbitration awards).
"Common Shares" means the common shares in the capital of the Company.
"Company" has the meaning specified in the Preamble.
"Company Board" means the board of directors of the Company as constituted from time to time.
"Company Board Recommendation" has the meaning specified in Section 2.4(2).
"Company Change in Recommendation" has the meaning specified in Section 7.2(1)(d)(ii).
"Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules,
appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Securityholders in connection with the Company Meeting, as
amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.
"Company Data Room" means the material contained as of 11:59 p.m. on December 12, 2017 in the virtual data room established
by the Company, the index of documents of which is appended to the Company Disclosure Letter.
"Company Disclosure Letter" means the disclosure letter dated the date of this Agreement and delivered by the Company to the Parent and
the Purchaser with this Agreement.
"Company Employees" means the officers and employees of the Company and its Subsidiaries.
"Company Expense Reimbursement" has the meaning specified in Section 8.2(1)(a).
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"Company Expense Reimbursement Event" has the meaning specified in Section 8.2(1)(b).
"Company Fairness Opinion" means an opinion of Echelon Wealth Partners Inc. to the effect that, as of the date of such opinion, and
subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be received by the Company Shareholders is fair, from a financial point of view, to such holders.
"Company Filings" means all documents publicly filed under the profile of the Company on the System for Electronic Document Analysis
Retrieval (SEDAR) since December 31, 2015.
"Company Matching Period" has the meaning specified in Section 5.4(1)(e).
"Company Meeting" means the special meeting of Company Securityholders, including any adjournment or postponement of such special meeting
in accordance with the terms of this Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution and for any other purpose as may be set out in the
Company Circular and agreed to in writing by the Parent and the Purchaser.
"Company Mineral Rights" has the meaning set forth in Paragraph (32)(a) of Schedule C.
"Company Optionholders" means the holders of Company Options.
"Company Options" means the outstanding options to purchase Common Shares issued pursuant to the Company Stock Option Plan.
"Company Representatives" has the meaning specified in Section 5.1(1).
"Company Securityholders" means, collectively, the Company Shareholders, the Company Optionholders and the Company Warrantholders.
"Company Shareholders" means the registered or beneficial holders of the Common Shares, as the context requires.
"Company Stock Option Plan" means the stock option plan of the Company dated December 16, 2011.
"Company Superior Proposal Notice" has the meaning specified in Section 5.4(1)(c).
"Company Warrant Agreements" means, collectively, the warrant agreements to purchase Company Warrants dated as of June 30, 2015,
May 19, 2016, September 6, 2016, September 21, 2016, May 5, 2017 and May 10, 2017, respectively.
"Company Warrants" means the outstanding common share purchase warrants of the Company to purchase Common Shares pursuant to the Company
Warrant Agreements.
"Company Warrantholders" means the holders of Company Warrants.
"Confidentiality Agreement" means the confidentiality agreement dated May 9, 2017 between the Parent and the Company.
"Consideration" means 0.08 of a Parent Share for each Common Share.
"Consideration Shares" means the Parent Shares to be issued in exchange for Common Shares pursuant to the Arrangement.
"Constating Documents" means articles of incorporation, amalgamation, or continuation, as applicable, by-laws and all amendments to such
articles or by-laws.
"Contract" means, with respect to any Person, any agreement, commitment, engagement, contract, franchise, licence, lease, obligation,
undertaking or joint venture (written or oral) to which such Person
3
is
a party or by which it or any of its Subsidiaries is bound or affected or to which any of its respective properties or assets is subject.
"Court" means the Supreme Court of British Columbia.
"Depositary" means Computershare Investor Services Inc.
"Dissent Rights" means the rights of dissent in respect of the Arrangement described in the Plan of Arrangement.
"EDGAR" means the Electronic Data Gathering, Analysis, and Retrieval system of the United States Securities and Exchange
Commission.
"Effective Date" means the date upon which the Arrangement becomes effective, as set out in the Plan of Arrangement.
"Effective Time" means the time on the Effective Date that the Arrangement becomes effective, as set out in the Plan of Arrangement.
"Employee Plans" has the meaning set forth in Paragraph (40) of Schedule C.
"Environmental Laws" means all Laws and agreements with Governmental Entities and all other statutory requirements relating to public
health and safety, noise control, pollution or the protection of the environment or to the generation, production, installation, use, storage, treatment, transportation, Release or threatened Release
of Hazardous Substances, including civil responsibility for acts or omissions with respect to the environment, mine reclamation, restoration or rehabilitation and all Authorizations issued pursuant to
such Laws, agreements or other statutory requirements.
"Final Order" means the final order of the Court pursuant to Section 291 of the BCBCA in a form acceptable to the Company and the
Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of the Company, the Parent and the Purchaser, each acting reasonably) at any
time prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to the Company, the Parent
and the Purchaser, each acting reasonably) on appeal.
"GAAP" means generally accepted accounting principles in the United States.
"Governmental Entity" means (i) any international, multinational, national, federal, provincial, state, regional, municipal, local
or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau, commissioner, minister, cabinet, governor in council, ministry, agency
or instrumentality, domestic or foreign, (ii) any subdivision or authority of any of the above, (iii) any quasi-governmental or private body exercising any regulatory, expropriation or
taxing authority under or for the account of any of the foregoing or (iv) any stock exchange.
"Hazardous Substances" means any element, waste or other substance, whether natural or artificial and whether consisting of gas, liquid,
solid or vapour that is prohibited, listed, defined, judicially interpreted, designated or classified as dangerous, hazardous, radioactive, explosive or toxic or a pollutant or a contaminant under or
pursuant to any applicable Environmental Laws, and specifically including petroleum and all derivatives thereof or synthetic substitutes therefor and asbestos or asbestos-containing materials or any
substance which is deemed under Environmental Laws to be deleterious to natural resources or worker or public health and safety.
"IFRS" means generally accepted accounting principles as set out in the CPA Canada Handbook—Accounting for an entity that
prepares its financial statements in accordance with International Financial Reporting Standards, at the relevant time, applied on a consistent basis.
4
"Intellectual Property" means domestic and foreign: (i) patents, applications for patents and reissues, divisions, continuations,
renewals, extensions and continuations-in-part of patents or patent applications; (ii) proprietary and non-public business information, including inventions (whether patentable or not),
invention disclosures, improvements, discoveries, trade secrets, confidential information, know-how, methods, processes, designs, technology, technical data, schematics, formulae and customer lists,
and documentation relating to any of the foregoing; (iii) copyrights, copyright registrations and applications for copyright registration; (iv) mask works, mask work registrations and
applications for mask work registrations; (v) designs, design registrations, design registration applications and integrated circuit topographies; (vi) trade names, business names,
corporate names, domain names, website names and world wide web addresses, common law trade-marks, trade-mark registrations, trade mark applications, trade dress and logos, and the goodwill associated
with any of the foregoing; (vii) software; and (viii) any other intellectual property and industrial property.
"Intellectual Property Rights" has the meaning specified in Paragraph (34) of Schedule C.
"Interim Order" means the interim order of the Court in a form acceptable to the Company, the Parent and the Purchaser, each acting
reasonably, providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended by the Court with the consent of the Company, the Parent and the Purchaser,
each acting reasonably.
"Law" means, with respect to any Person, any and all applicable law (statutory, civil, common or otherwise), constitution, treaty,
convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a
Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have (or are applied as if they have) the force
of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended.
"Lien" means any mortgage, charge, pledge, hypothec, security interest, prior claim, encroachment, option, right of first refusal or first
offer, occupancy right, covenant, assignment, lien (statutory or otherwise), defect of title, or restriction or adverse right or claim, or other third party interest or encumbrance of any kind, in
each case, whether contingent or absolute.
"Locked-up Securityholders" means all of the directors and senior officers of the Company.
"Material Adverse Effect" when used in connection with a Party means any change, event, occurrence, effect, state of facts or circumstance
that, either individually or in the aggregate, is or could reasonably be expected to be material and adverse to the business, operations, results of operations, assets, properties, condition
(financial or otherwise) or liabilities (contingent or otherwise) or prospects of that Party and its Subsidiaries, taken as a whole, and would, or would be reasonably expected to, prevent or
materially delay either Party from consummating the transactions contemplated by this Agreement by the Outside Date, except any such change, event, occurrence, effect, state of facts or circumstance
resulting from:
- (a)
- any
change in general political, economic, financial, currency exchange, securities, capital or credit market conditions in Canada or the United States;
- (b)
- any
change or proposed change in Law, IFRS or GAAP;
- (c)
- any
fluctuation in commodities prices;
- (d)
- any
change affecting the industries or markets in which such Party operates;
- (e)
- any
natural disaster or the commencement or continuity of any act of war, armed hostilities or acts of terrorism;
- (f)
- the
announcement of this Agreement or the transactions contemplated hereby;
5
- (g)
- any
action taken (or omitted to be taken) by a Party or its Subsidiaries which is required to be taken (or omitted to be taken) pursuant to this Agreement; or
- (h)
- any
change in the market price or trading volume of any securities of a Party (it being understood that the causes underlying such change in market price or trading
volume may be taken into account in determining whether a Material Adverse Effect has occurred);
provided,
however, that with respect to clauses (a) through to and including (d), such matters do not have a materially disproportionate effect on such Party and its Subsidiaries, taken as a
whole, relative to companies of similar size operating in the industries or markets in which such Party operates (in which case the incremental disproportionate effect may be taken into account in
determining whether there has been, or is reasonably expected to be, a Material Adverse Effect), and provided further, however, that unless expressly provided in any particular section of the
Agreement, references in certain sections of this Agreement to dollar amounts are not intended to be, and shall be deemed not to be, illustrative or interpretive for the purpose of determining whether
a "Material Adverse Effect" has occurred.
"Material Contract" means any Contract that:
- (a)
- if
terminated, breached or not renewed would or would reasonably be expected to have a Material Adverse Effect with respect to a Party;
- (b)
- relates
directly or indirectly to the guarantee of any liabilities or obligations or to indebtedness (currently outstanding or which may become outstanding) for
borrowed money in excess of $50,000 in the aggregate;
- (c)
- restricts
the incurrence of indebtedness by a Party or any of its Subsidiaries or (including by requiring the granting of an equal and rateable Lien) the incurrence
of any Liens on any properties or assets of a Party or its Subsidiaries, or restricts the payment of dividends by a Party or any of its Subsidiaries;
- (d)
- under
which a Party or any of its Subsidiaries is obligated to make or expects to receive payments on an annual basis in excess of $50,000 or in excess of $250,000
over the remaining term;
- (e)
- creates
an exclusive dealing arrangement, right of first offer or refusal or "most favored nation" obligation;
- (f)
- provides
for employment, severance or change in control payments;
- (g)
- provides
for the purchase, sale or exchange of, or option to purchase, sell or exchange, any property or asset where the purchase or sale price or agreed value or
fair market value of such property or asset exceeds $50,000;
- (h)
- limits
or restricts in any material respect (A) the ability of a Party or any Subsidiary to engage in any line of business or carry on business in any
geographic area, (B) the ability of a Party to solicit or hire any Person, or (C) the scope of Persons to whom a Party or any of its Subsidiaries may sell products or deliver services;
- (i)
- provides
for obligations or entitlements or termination payments of such Party, or which has an economic value to such Party, whether or not on a contingent basis,
in excess of either $50,000 per annum or $100,000 in total;
- (j)
- remains
in full force and effect and has been filed with the Securities Authorities as a material contract in accordance with applicable Securities Laws;
- (k)
- is
a partnership agreement, limited liability company agreement, joint venture agreement or similar agreement or arrangement relating to the formation, creation or
operation of any partnership, limited liability company or joint venture in which such Party and/or its Subsidiaries have an interest;
6
- (l)
- is
a royalty agreement, power supply agreement, water supply agreement or agreement with a Governmental Entity;
- (m)
- requires
the consent of any other party to the Contract to a change in control of a Party or any of its Subsidiaries; or
- (n)
- is
otherwise material to a Party and its Subsidiaries, taken as a whole.
"MI 61-101" means Multilateral Instrument 61-101—Protection of Minority Security Holders in
Special Transactions.
"Misrepresentation" has the meaning specified under Securities Laws.
"NASDAQ" means the Nasdaq Stock Market.
"NI 43-101" means National Instrument 43-101—Standards of Disclosure for Mineral
Projects of the Canadian Securities Administrators;
"Officer" has the meaning specified in the Securities Act (British Columbia).
"Ordinary Course" means, with respect to an action taken by a Party, that such action is consistent with the past practices of such Party,
is taken in the ordinary course of the normal day-to-day operations of the business of such Party and is not materially adverse to such Party.
"Outside Date" means June 30, 2018 or such later date as may be agreed to in writing by the Parties.
"Parent" has the meaning specified in the Preamble.
"Parent Board" means the board of directors of the Parent as constituted from time to time.
"Parent Board Recommendation" has the meaning specified in Section 2.6(1)(c).
"Parent Change in Recommendation" has the meaning specified in Section 7.2(1)(c)(ii).
"Parent Circular" means the notice of the Parent Meeting as part of a proxy statement pursuant to Section 14(a) of the U.S.
Exchange Act, including all schedules, appendices and exhibits to, and information incorporated by reference in, such proxy statement, to be sent to the Parent Shareholders in connection with the
Parent Meeting, if necessary, as amended, supplemented or otherwise modified from time to time in accordance with the terms of this Agreement.
"Parent Data Room" means the material contained as of 11:59 p.m. on December 12, 2017 in the virtual data room established
by the Parent, the index of documents of which is appended to the Parent Disclosure Letter.
"Parent Disclosure Letter" means the disclosure letter dated the date of this Agreement and delivered by the Parent and the Purchaser to
the Company with this Agreement.
"Parent Fairness Opinion" means an opinion of Roth Capital Partners, LLC to the effect that, as of the date of such opinion, and
subject to the assumptions, limitations and qualifications set forth therein, the Consideration to be paid by the Parent pursuant to the Arrangement Agreement is fair, from a financial point of view,
to the Parent.
"Parent Filings" means all documents publicly filed under the profile of the Parent on EDGAR since December 31, 2015.
"Parent Meeting" means the special meeting of Parent Shareholders, including any adjournment or postponement thereof, to be called for the
purpose of obtaining approval of the Parent Shareholder Approval Resolution.
"Parent Mineral Rights" has the meaning set forth in Paragraph (16)(a) of Schedule D.
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"Parent Omnibus Incentive Plan" means the Parent's 2013 Omnibus Incentive Plan, as amended from time to time.
"Parent Options" means the outstanding options to purchase Parent Shares issued pursuant to the Parent Stock Option Plan.
"Parent Shareholder Approval" means the approval by the Parent Shareholders of the Parent Shareholder Approval Resolution.
"Parent Shareholder Approval Resolution" means the special resolution of the Parent Shareholders approving the issuance of the
Consideration Shares, substantially in the form of Schedule B-1.
"Parent Shareholders" means the registered or beneficial holders of the Parent Shares, as the context requires.
"Parent Shares" means the common shares in the capital of the Parent.
"Parties" means the Company, the Parent and the Purchaser and "Party" means any one of
them.
"Permitted Liens" means, in respect of a Party or any of its Subsidiaries, any one or more of the following:
- (a)
- Liens
for Taxes which are not delinquent or that are being disputed in good faith;
- (b)
- inchoate
or statutory Liens of contractors, subcontractors, mechanics, workers, suppliers, materialmen, carriers and others arising in the Ordinary Course, provided
that such Liens are related to obligations not due or delinquent, are not registered against title to any assets of such Party or its Subsidiaries and in respect of which adequate holdbacks are being
maintained as required by Law;
- (c)
- the
right reserved to or vested in any Governmental Entity by any statutory provision or by the terms of any lease, licence, franchise, grant or permit of such party
or its Subsidiaries, to terminate any such lease, licence, franchise, grant or permit, or to require annual or other payments as a condition of their continuance;
- (d)
- easements,
including rights of way for, or reservations or rights of others relating to, sewers, water lines, gas lines, pipelines, electric lines, telegraph and
telephone lines and other similar services and any registered restrictions or covenants that run with the land, provided that there has been compliance with the material provisions thereof and that
they do not in the aggregate materially detract from the ability to use any leased properties and would not reasonably be expected to materially and adversely affect the ability of such Party to carry
on its business in the Ordinary Course; and
- (e)
- in
the case of the Company, Liens listed and described in Section 1.1(i) of the Company Disclosure Letter.
"Person" includes any individual, partnership, limited partnership, limited liability partnership, joint venture, association, body
corporate, corporation, company, unincorporated association, limited liability company, unlimited liability company, organization, trust, estate, trustee, executor, administrator, legal
representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.
"Plan of Arrangement" means the plan of arrangement, substantially in the form set out in Schedule A, subject to any amendments or
variations to such plan made in accordance with Section 8.1 or made at the direction of the Court in the Final Order with the prior written consent of the Company, the Parent and the Purchaser,
each acting reasonably.
8
"Pre-Acquisition Reorganization" has the meaning specified in Section 4.5.
"Purchaser" has the meaning specified in the Preamble.
"Registrar" means the Registrar of Companies appointed pursuant to section 400 of the BCBCA.
"Regulatory Approval" means any consent, waiver, permit, exemption, review, order, decision or approval of, or any registration and filing
with, any Governmental Entity, or the expiry, waiver or termination of any waiting period imposed by Law or a Governmental Entity, in each case that is required in connection with the Arrangement.
"Release" has the meaning prescribed in any Environmental Law and includes any sudden, intermittent or gradual release, spill, leak,
pumping, addition, pouring, emission, emptying, discharge, migration, injection, escape, leaching, disposal, dumping, deposit, spraying, burial, abandonment, incineration, seepage, placement or
introduction of a Hazardous Substance, whether accidental or intentional, into the environment.
"Replacement Options" has the meaning specified in Section 4.9(1).
"Required Approval" has the meaning specified in Section 2.2(3).
"Securities Authority" means the British Columbia Securities Commission and any other applicable securities commissions or securities
regulatory authority of a province or territory of Canada or the United States, including the United States Securities and Exchange Commission.
"Securities Laws" means the Securities Act (British Columbia) and any other applicable
provincial securities Laws and the U.S. Exchange Act and the U.S Securities Act.
"Special Committee" means the committee of independent directors of the Company Board consisting of Dr. Gareth P. Hatch.
"Subsidiary" means, with respect to a Person, any entity, whether incorporated or unincorporated: (i) of which such Person or any
other Subsidiary of such Person is a general partner; or (ii) at least a majority of the securities or other interests of which having by their terms ordinary voting power to elect a majority
of the board of directors or other Persons performing similar functions with respect to such corporation or other organization is directly or indirectly owned or controlled by such Person and/or by
any one or more of its Subsidiaries; and shall include any body corporate, partnership, joint venture or other entity over which it exercises direction or control. For purposes of this definition,
"control" when used with respect to any Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.
"Superior Proposal" means, any unsolicited bona fide written Acquisition Proposal from a
Person who is an arm's length third party to the Company to purchase or otherwise acquire, directly or indirectly, by means of a merger, take-over bid, amalgamation, plan of arrangement, business
combination, consolidation, recapitalization, liquidation, winding up or other transaction, not less than all of the outstanding Common Shares, not owned by the Person making such Acquisition Proposal
or its Affiliates, or all or substantially all of the assets of the Company, on a consolidated basis that: (a) complies with Securities Laws and did not result from or involve a breach of
Article 5 of this Agreement or any agreement between the Person making such Acquisition Proposal and the Company; (b) is reasonably capable of being completed without undue delay, taking
into account, all financial, legal, regulatory and other aspects of such proposal and the Person making such Acquisition Proposal; (c) is not subject to any financing contingency and in respect
of which adequate arrangements have been made to ensure that the required funds or other consideration will be available to effect payment in full for all of the Common Shares or assets, as the case
may be; (d) is not subject to any due diligence and/or access condition; (e) that the board of directors of the Company and any relevant
9
committee
thereof determines, in its good faith judgment, after receiving the advice of its outside legal counsel and financial advisors and after taking into account all the terms and conditions of
the Acquisition Proposal, including all legal, financial, regulatory and other aspects of such Acquisition Proposal and the Person making such Acquisition Proposal, would, if consummated in accordance
with its terms, but without assuming away the risk of non-completion, result in a transaction which is more favorable, from a financial point of view, to the Company Shareholders than the Arrangement
(including any amendments to the terms and conditions of the Arrangement that may be proposed by the Parent and the Purchaser pursuant to Section 5.4(2)); and (f) in the event that the
Company does not have the financial resources to pay the Company Expense Reimbursement, the terms of such Acquisition Proposal provide that the person making such Superior Proposal shall advance or
otherwise provide the Company the cash required for the Company to pay the Company Expense Reimbursement and such amount shall be advanced or provided on or before the date such Company Expense
Reimbursement becomes payable.
"Tax Act" means the Income Tax Act (Canada).
"Tax Returns" means any and all returns, reports, declarations, elections, notices, forms, designations, filings, and statements
(including estimated tax returns and reports, withholding tax returns and reports, and information returns and reports) filed or required to be filed in respect of Taxes.
"Taxes" means (i) any and all taxes, duties, fees, excises, premiums, assessments, imposts, levies and other charges or assessments
of any kind whatsoever imposed by any Governmental Entity, whether computed on a separate, consolidated, unitary, combined or other basis, including those levied on, or measured by, or described with
respect to, income, gross receipts, profits, gains, windfalls, capital, capital stock, production, recapture, transfer, land transfer, license, gift, occupation, wealth, environment, net worth,
indebtedness, surplus, sales, goods and services, harmonized sales, use, value-added, excise, special assessment, stamp, withholding, business, franchising, real or personal property, health, employee
health, payroll, workers' compensation, employment or unemployment, severance, social services, social security, education, utility, surtaxes, customs, import or export, and including all license and
registration fees and all employment insurance, health insurance and government pension plan premiums or contributions; (ii) all interest, penalties, fines, additions to tax or other additional
amounts imposed by any Governmental Entity on or in respect of amounts of the type described in clause (i) above or this clause (ii); (iii) any liability for the payment of any
amounts of the type described in clauses (i) or (ii) as a result of being a member of an affiliated, consolidated, combined or unitary group for any period; and (iv) any liability
for the payment of any amounts of the type described in clauses (i) or (ii) as a result of any express or implied obligation to indemnify any other Person or as a result of being a
transferee or successor in interest to any party.
"Technology" has the meaning specified in Paragraph (34) of Schedule C
"Terminating Party" has the meaning specified in Section 4.6(3).
"Termination Notice" has the meaning specified in Section 4.6(3).
"TSX-V" means the TSX Venture Exchange.
"Underlying Shares" means the Parent Shares to be received by a Company Optionholder and/or Company Warrantholder upon exercise of
Replacement Options and/or Company Warrants.
"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as amended and the rules and regulations promulgated
thereunder.
"U.S. Securities Act" means the United States Securities Act of 1933, as amended and the rules and regulations promulgated thereunder.
10
"Voting Agreements" means the voting agreements (including all amendments thereto) between the Parent, the Purchaser and the Locked-up
Securityholders setting forth the terms and conditions upon which they have agreed, among other things, to vote their Common Shares, Company Options and Company Warrants, as applicable, in favour of
the Arrangement Resolution.
"wilful breach" means a material breach that is a consequence of an act undertaken by the breaching party with the actual knowledge that
the taking of such act would, or would be reasonably expected to, cause a breach of this Agreement.
Section 1.2 Certain Rules of Interpretation.
In
this Agreement, unless otherwise specified:
- (1)
- Headings, etc. The provision of a Table of Contents, the division of this Agreement into Articles and Sections and
the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement.
- (2)
- Currency. All references to dollars or to $ are references to Canadian dollars and all references to U.S.$ are
references to U.S. dollars.
- (3)
- Gender and Number. Any reference to gender includes all genders. Words importing the singular number only include the
plural and vice versa.
- (4)
- Certain Phrases and References, etc. The words "including", "includes" and "include" mean "including (or includes or include) without
limitation," and "the aggregate of", "the total of", "the sum of", or a phrase of
similar meaning means "the aggregate (or total or sum), without duplication,
of." Unless stated otherwise, "Article", "Section", and "Schedule" followed by a
number or letter mean and refer to the specified Article or Section of or Schedule to this Agreement. The term "Agreement" and any reference in this Agreement to this Agreement or any other agreement
or document includes, and is a reference to, this Agreement or such other agreement or document as it may have been, or may from time to time be, amended, restated, replaced, supplemented or novated
and includes all schedules to it. The term "made available" means (i) copies of the subject materials were included in the Company Data Room or
Parent Data Room, as applicable, (ii) copies of the subject materials were provided to the Parent, the Purchaser or the Company, as applicable, or (iii) the subject material was listed
in the Company Disclosure Letter or Parent Disclosure Letter, if applicable, or referred to in the Company Data Room or Parent Data Room, as applicable, and copies were provided to the applicable
Party if requested.
- (5)
- Capitalized Terms. All capitalized terms used in any Schedule, in the Company Disclosure Letter or in the Parent
Disclosure Letter have, unless otherwise defined, the meanings ascribed to them in this Agreement.
- (6)
- Knowledge. Where any representation or warranty is expressly qualified by reference to the knowledge of the Company,
it shall be deemed to refer to the actual knowledge of Tyler Dinwoodie, Douglas Bolton or Gareth Hatch, in each case, after reasonable and diligent inquiry. Where any representation or warranty is
expressly qualified by reference to the knowledge of the Parent or the Purchaser, it shall be deemed to refer to the actual knowledge of Christopher Jones, Jeffrey Vigil and Dain McCoig, in each case,
after reasonable and diligent inquiry.
- (7)
- Accounting Terms. All accounting terms are to be interpreted in accordance with IFRS or GAAP, as the case may be, and
all determinations of an accounting nature in respect of the Company required to be made shall be made in a manner consistent with IFRS or GAAP, as the case may be.
11
- (8)
- Statutes. Any reference to a statute refers to such statute and all rules and regulations made under it, as it or
they may have been or may from time to time be amended or re-enacted, unless stated otherwise.
- (9)
- Computation of Time. A period of time is to be computed as beginning on the day following the event that began the
period and ending at 4:30 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 4:30 p.m. on the next Business Day if the last day of the period is
not a Business Day.
- (10)
- Time References. References to time are to local time, Vancouver, British Columbia.
- (11)
- Subsidiaries. To the extent any covenants or agreements relate, directly or indirectly, to a Subsidiary of a Party,
each such provision shall be construed as a covenant by the such Party to cause (to the fullest extent to which it is legally capable) such Subsidiary to perform the required action.
- (12)
- Consent. If any provision requires approval or consent of a Party and such approval or consent is not delivered
within the specified time limit, the Party whose consent or approval is required shall be conclusively deemed to have withheld its approval or consent.
Section 1.3 Schedules.
- (1)
- The
schedules attached to this Agreement form an integral part of this Agreement for all purposes of it.
- (2)
- The
Company Disclosure Letter and the Parent Disclosure Letter and all information contained therein is confidential information and may not be disclosed unless
(i) it is required to be disclosed pursuant to Law unless such Law permits the Parties to refrain from disclosing the information for confidentiality or other purposes or (ii) a Party
needs to disclose it in order to enforce or exercise its rights under this Agreement.
ARTICLE 2
THE ARRANGEMENT
Section 2.1 Arrangement
The
Company, the Parent and the Purchaser agree that the Arrangement will be implemented in accordance with and subject to the terms and conditions of this Agreement and the Plan of
Arrangement.
Section 2.2 Interim Order
As
soon as reasonably practicable after the date of this Agreement, but in any event on or before January 22, 2018, the Company shall apply in a manner reasonably acceptable to
the Parent and the Purchaser, pursuant to the BCBCA and, in cooperation with the Parent and the Purchaser, prepare, file
and diligently pursue an application for the Interim Order, which shall provide, among other things:
- (1)
- for
the class of persons to whom notice is to be provided in respect of the Arrangement and the Company Meeting and for the manner in which such notice is to be
provided;
- (2)
- for
confirmation of the record date for the Company Meeting referred to in Section 2.3(5);
- (3)
- that
the required level of approval (the "Required Approval") for the Arrangement Resolution shall be the affirmative
vote of:
- (a)
- not
less than 662/3% of the votes cast on the Arrangement Resolution:
- (i)
- by
Company Securityholders, voting together as a single class, present in person or represented by proxy at the Company Meeting, and
- (ii)
- by
Company Shareholders present in person or represented by proxy at the Company Meeting; and
12
- (b)
- if
applicable, a majority of the votes attached to the Common Shares held by Company Shareholders present in person or represented by proxy at the Company Meeting
excluding for this purpose votes attached to the Common Shares held by Persons described in items (a) through (d) of Section 8.1(2) of MI 61-101;
- (4)
- that,
subject to the foregoing and the terms of the Interim Order, the terms, restrictions and conditions of the Company's Constating Documents, including quorum
requirements and all other matters, shall apply in respect of the Company Meeting;
- (5)
- for
the grant of Dissent Rights to those Company Shareholders who are registered Company Shareholders as contemplated in the Plan of Arrangement;
- (6)
- for
the notice requirements with respect to the presentation of the application to the Court for the Final Order;
- (7)
- that
the Company Meeting may be adjourned or postponed from time to time by the Company if required by this Agreement or otherwise with the consent of the Parent and
the Purchaser in accordance with the terms of this Agreement without the need for additional approval of the Court;
- (8)
- that
the record date for the Company Securityholders entitled to notice of and to vote at the Company Meeting will not change in respect of any adjournment(s) or
postponement(s) of the Company Meeting unless required by Law;
- (9)
- that
it is the Parent and the Purchaser's intention to rely upon the exemption from registration provided by Section 3(a)(10) of the U.S. Securities Act with
respect to the issuance of the Consideration Shares and Replacement Options, as applicable, to be issued pursuant to the Arrangement, based on the Court's approval of the Arrangement; and
- (10)
- for
such other matters as the Parent and the Purchaser may reasonably require.
Section 2.3 The Company Meeting
The
Company shall:
- (1)
- convene
and conduct the Company Meeting in accordance with the Interim Order, the Company's Constating Documents and Law on or before April 17, 2018 for the
purpose of considering the Arrangement Resolution and for any other proper purpose as may be set out in the Company Circular and agreed to by the Purchaser, acting reasonably, and not adjourn,
postpone or cancel (or propose the adjournment, postponement or cancellation of) the Company Meeting without the prior written consent of the Parent and the Purchaser, except as required or permitted
under Section 2.3(11), Section 4.6(3) or Section 5.4(5) or as required for quorum purposes (in which case, the Company Meeting shall be adjourned and not cancelled) or as required
by Law or by a Governmental Entity;
- (2)
- solicit
proxies in favour of the approval of the Arrangement Resolution and against any resolution submitted by any Company Shareholder that is inconsistent with the
Arrangement Resolution and the completion of any of the transactions contemplated by this Agreement, including, if so requested by the Parent and the Purchaser, and at the expense of the Parent and
the Purchaser, using such mutually agreeable dealer and proxy solicitation services firms as the Parent and the Purchaser may request, and cooperating with any Persons engaged by the Parent and the
Purchaser to solicit proxies in favour of the approval of the Arrangement Resolution;
- (3)
- provide
the Parent and the Purchaser with copies of or access to information regarding the Company Meeting generated by any dealer or proxy solicitation services
firm, as requested from time to time by the Parent and the Purchaser;
13
- (4)
- permit
the Parent and the Purchaser, on behalf of the management of the Company, directly or through the proxy solicitation services firm contemplated in
Section 2.3(2), to actively solicit proxies in favour of the Arrangement on behalf of management of the Company in compliance with Law and disclose in the Company Circular that the Purchaser
and the Parent may make such solicitations;
- (5)
- consult
with the Parent and the Purchaser in fixing the date of the Company Meeting and the record date of the Company Meeting, give notice to the Parent and the
Purchaser of the Company Meeting and allow the Parent and the Purchaser's representatives and legal counsel to attend the Company Meeting;
- (6)
- promptly
advise the Parent and the Purchaser, at such times as the Parent and the Purchaser may reasonably request and at least on a daily basis on each of the last
ten (10) Business Days prior to the date of the Company Meeting, as to the aggregate tally of the proxies received by the Company in respect of the Arrangement Resolution;
- (7)
- promptly
advise the Parent and the Purchaser of any communication (written or oral) from or claims brought by (or threatened to be brought by) any Person in
opposition to the Arrangement and/or purported exercise or withdrawal of Dissent Rights, and written communications sent by or on behalf of the Company to any Company Shareholder exercising or
purporting to exercise Dissent Rights;
- (8)
- not
make any payment or settlement offer, or agree to any payment or settlement prior to the Effective Time with respect to Dissent Rights without the prior written
consent of the Parent and the Purchaser;
- (9)
- not
change the record date for the Company Securityholders entitled to vote at the Company Meeting in connection with any adjournment or postponement of the Company
Meeting, or change any other matters in connection with the Company Meeting unless required by Law or approved by the Parent and the Purchaser;
- (10)
- at
the request of the Parent and the Purchaser from time to time, provide the Parent and the Purchaser with a list (in both written and electronic form) of
(i) the Company Shareholders, together with their addresses and respective holdings of Common Shares, (ii) the names, addresses and holdings of all Persons having rights issued by the
Company to acquire Common Shares (including Company Optionholders and Company Warrantholders), and (iii) participants and book-based nominee registrants such as CDS & Co.,
CEDE & Co. and DTC, and non-objecting beneficial owners of Common Shares, together with their addresses and respective holdings of Common Shares. The Company shall from time to time
require that its registrar and transfer agent furnish the Parent and the Purchaser with such additional information, including updated or additional lists of Company Shareholders, and lists of
securities positions and other assistance as the Parent and the Purchaser may reasonably request in order to be able to communicate with respect to the Arrangement with the Company Shareholders and
with such other Persons as are entitled to vote on the Arrangement Resolution; and
- (11)
- at
the request of the Parent and the Purchaser, adjourn or postpone the Company Meeting to a date specified by the Parent and the Purchaser that is not later than
15 Business Days after the date on which the Company Meeting was originally scheduled and in any event to a date that is not later than five Business Days prior to the Outside Date.
Section 2.4 The Company Circular
- (1)
- The
Company shall, as promptly as reasonably practicable, prepare and complete, in consultation with the Parent and the Purchaser, the Company Circular together with
any other
14
documents
required by Law in connection with the Company Meeting and the Arrangement, and the Company shall, promptly after obtaining the Interim Order, cause the Company Circular and such other
documents to be filed and sent to each Company Securityholder and other Person as required by the Interim Order and Law, in each case so as to permit the Company Meeting to be held by the date
specified in Section 2.3(1).
- (2)
- The
Company shall ensure that the Company Circular complies in all material respects with Law, does not contain any Misrepresentation (except that the Company shall
not be responsible for any information relating to the Parent and the Purchaser, including the Parent Shares) and provides the Company Securityholders with sufficient information to permit them to
form a reasoned judgement concerning the matters to be placed before the Company Meeting. Without limiting the generality of the foregoing, the Company Circular must include: (i) a copy
of the Company Fairness Opinion, (ii) a statement that the Special Committee has received the Company Fairness Opinion, and has, after receiving legal and financial advice, unanimously
recommended that the Company Board approve the Arrangement Agreement and that the Company Securityholders vote in favour of the Arrangement Resolution, (iii) a statement that the Company Board
has received the Company Fairness Opinion, and has unanimously, after receiving legal and financial advice and the recommendation of the Special Committee, determined that the Arrangement Resolution
is in the best interests of the Company and the Company Securityholders and recommends that the Company Securityholders vote in favour of the Arrangement Resolution (the
"Company Board Recommendation"), and (iv) a statement that the Locked-up Securityholders have entered into the Voting Agreements pursuant to
which, subject to the terms of the Voting Agreements and the terms of this Agreement, they have agreed to vote all their Common Shares, Company Options and Company Warrants, as applicable, in favour
of the Arrangement Resolution.
- (3)
- The
Company shall give the Parent and the Purchaser and its legal counsel a reasonable opportunity to review and comment on drafts of the Company Circular and other
related documents, and shall give reasonable consideration to any comments made by the Parent and the Purchaser and its counsel, and agrees that all information relating solely to the Parent and the
Purchaser included in the Company Circular must be in a form and content satisfactory to each of the Parent and the Purchaser, acting reasonably.
- (4)
- The
Parent and the Purchaser shall provide all necessary information concerning the Parent and the Purchaser that is required by Law to be included by the Company in
the Company Circular or other related documents to the Company in writing and shall ensure that such information does not include any Misrepresentation. The Parent and the Purchaser shall use
reasonable commercial efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required to be
included in the Company Circular and to the identification in the Company Circular of each such advisor and shall use reasonable commercial efforts to ensure that such information does not contain any
Misrepresentation concerning the Parent, the Purchaser or the Parent Shares.
- (5)
- Each
Party shall promptly notify the other Party if it becomes aware that the Company Circular contains a Misrepresentation, or otherwise requires an amendment or
supplement. The Parties shall cooperate in the preparation of any such amendment or supplement as required or appropriate, and the Company shall promptly mail, file or otherwise publicly disseminate
any such amendment or supplement to the Company Securityholders and, if required by the Court or by Law, file the same with the Securities Authorities or any other Governmental Entity as required.
15
Section 2.5 Parent Meeting
The
Parent shall:
- (1)
- convene
and conduct the Parent Meeting in accordance with the Parent's Constating Documents on or before April 17, 2018 for the purpose of considering the
Parent Shareholder Approval Resolution and for any other proper purpose as may be set out in the Parent Circular and agreed to by the Company, acting reasonably, and not adjourn, postpone or cancel
(or propose the adjournment, postponement or cancellation of) the Parent Meeting without the prior written consent of the Company, except as required or permitted under Section 4.6(3) or as
required for quorum purposes (in which case, the Purchaser Meeting shall be adjourned and not cancelled) or as required by Law or by a Governmental Entity;
- (2)
- solicit
proxies in favour of the approval of the Parent Shareholder Approval Resolution and against any resolution submitted by any Parent Shareholder that is
inconsistent with the Parent Shareholder Approval Resolution and the completion of any of the transactions contemplated by this Agreement, including, if so requested by the Company, acting reasonably,
using such mutually agreeable dealer and proxy solicitation services firms as the Company may request, at the Parent's expense;
- (3)
- consult
with the Company in fixing the date of the Parent Meeting and the record date for the Parent Meeting;
- (4)
- provide
the Company with copies of or access to information regarding the Parent Meeting generated by any dealer or proxy solicitation services firm, as requested
from time-to-time by the Company;
- (5)
- give
notice to the Company of the Parent Meeting and allow the Company Representatives and legal counsel to attend the Parent Meeting;
- (6)
- not
change the record date for the Parent Shareholders entitled to vote at the Parent Meeting in connection with any adjournment or postponement of the Parent
Meeting, or change any other matters in connection with the Parent Meeting unless required by Law or approved by the Company;
- (7)
- promptly
advise the Company of any communication (written or oral) from or claims brought by (or threatened to be brought by) any Person in opposition to the
Purchaser Shareholder Approval Resolution; and
- (8)
- promptly
advise the Company, at such times as the Company may reasonably request and at least on a daily basis on each of the last ten (10) Business Days
prior to the date of the Parent Meeting, as to the aggregate tally of the proxies received by the Parent in respect of the Parent Shareholder Approval Resolution.
Section 2.6 Parent Circular
- (1)
- The
Parent shall:
- (a)
- as
promptly as reasonably practicable following execution of this Agreement, (i) prepare the Parent Circular together with any other documents required by Law
in connection with the Parent Meeting, (ii) file the Parent Circular in all jurisdictions where the same is required to be filed, and (iii) mail the Parent Circular if and as required in
accordance with Law, in each case so as to permit the Company Meeting to be held by the date specified in Section 2.5(1);
- (b)
- ensure
that the Parent Circular complies in all material respects with Law and does not contain any Misrepresentation (except that the Parent and the Purchaser shall
not be
16
responsible
for any information relating to the Company and the Common Shares), and, without limiting the generality of the foregoing, the Parent Circular must include: (i) a statement that the
Parent Board has, after receiving legal and financial advice, unanimously determined that entering into this Agreement and completing the transactions contemplated by this Agreement are in the best
interests of the Parent and the Purchaser and the Parent Board is recommending that the Parent Shareholders vote in favour of the Parent Shareholder Approval Resolution (the
"Parent Board Recommendation"), (ii) a copy of the Parent Fairness Opinion and (iii) a statement that the Parent Board has received the
Parent Fairness Opinion;
- (c)
- take
all other actions that are reasonably necessary or desirable to seek approval of the Purchaser Shareholder Approval Resolution; and
- (d)
- provide
the Company with final copies of the Parent Circular prior to the mailing thereof to the Parent Shareholders.
- (2)
- The
Company and its legal counsel shall be given a reasonable opportunity to review and comment on the Parent Circular prior to the Parent Circular being printed and
filed with the Governmental Entities, and reasonable consideration shall be given to any comments made by the Company and its counsel, provided that all information relating solely to the Company, its
Affiliates and the Common Shares included in the Parent Circular shall be in form and content satisfactory to the Company, acting reasonably.
- (3)
- The
Company shall provide all necessary information concerning the Company that is required by Law to be included by the Parent in the Parent Circular or other
related documents to the Parent in writing, use reasonable commercial efforts to obtain any necessary consents from any of its auditors and any other advisors to the use of any financial, technical or
other expert information required to be included in the Parent Circular and to the identification in the Parent Circular of each such advisor and shall use reasonable commercial efforts to ensure that
such information does not contain any Misrepresentation concerning the Company.
- (4)
- The
Parent shall promptly notify the Company if at any time before the Effective Date the Parent becomes aware that the Parent Circular contains a Misrepresentation,
or that otherwise requires an amendment or supplement to the Parent Circular and the Parties shall co-operate in the preparation of any amendment or supplement to the Parent Circular as required or
appropriate, and the Parent shall promptly mail, file or otherwise publicly disseminate any amendment or supplement to the Parent Circular to Parent Shareholders and, if required by the Court or Law,
file the same with the Securities Authorities or any other Governmental Entities as required.
Section 2.7 Final Order
If
the Interim Order is obtained, the Arrangement Resolution is passed at the Company Meeting and the Parent Shareholder Approval is obtained as provided for in the Interim Order, the
Company shall take all steps necessary or desirable to submit the Arrangement to the Court and diligently pursue an application for the Final Order pursuant to Section 291 of the BCBCA, as soon
as reasonably practicable, but in any event not later than three (3) Business Days after the later of the approval of the Arrangement Resolution at the Company Meeting as provided for in the
Interim Order and the receipt of the Parent Shareholder Approval, or within such other time period as may be agreed upon by the Parties, each acting reasonably.
17
Section 2.8 Court Proceedings
In
connection with all Court proceedings relating to obtaining the Interim Order and the Final Order, the Company shall:
- (1)
- diligently
pursue, and cooperate with the Parent and the Purchaser in diligently pursuing, the Interim Order and the Final Order;
- (2)
- provide
the Parent and the Purchaser and its legal counsel with a reasonable opportunity to review and comment upon drafts of all material to be filed with the Court
in connection with the Arrangement, and will accept the reasonable comments of the Parent and the Purchaser and its legal counsel;
- (3)
- provide
legal counsel to the Parent and the Purchaser on a timely basis with copies of any notice of appearance, evidence or other documents served on the Company or
its legal counsel in respect of the application for the Interim Order or the Final Order or any appeal therefrom, and any notice, written or oral, indicating the intention of any Person to appeal, or
oppose the granting of, the Interim Order or the Final Order;
- (4)
- ensure
that all material filed with the Court in connection with the Arrangement is consistent in all material respects with the terms of this Agreement and the Plan
of Arrangement;
- (5)
- not
file any material with the Court in connection with the Arrangement or serve any such material, or agree to modify or amend any material so filed or served,
except as contemplated by this Agreement or with the Parent and the Purchaser's prior written consent, acting reasonably, provided the Parent is not required to agree or consent to any increase in, or
variation of the form of, the Consideration or other modification or amendment to such filed or served materials that expands or increases the Purchaser's or Parent's obligations, or diminishes or
limits the Parent's or Purchaser's rights, set forth in any such filed or served materials or under this Agreement;
- (6)
- oppose
any proposal from any Person that the Final Order contain any provision materially inconsistent with this Agreement, and if required by the terms of the Final
Order or by Law to return to Court with respect to the Final Order, do so only after notice to, and in consultation and cooperation with, the Parent and the Purchaser; and
- (7)
- not
object to legal counsel to the Parent and the Purchaser making such submissions on application for either the Interim Order or the Final Order as such counsel
considers appropriate, provided that the Company is advised of the nature of any submissions prior to the hearing and such submissions are not inconsistent with this Agreement or the Plan of
Arrangement.
Section 2.9 Payment of Consideration
The
Parent will, immediately prior to the Effective Time, ensure that the Depositary has been provided with sufficient Consideration Shares in escrow to pay the aggregate consideration
to be paid pursuant to the Arrangement to the Company Securityholders, as applicable.
Section 2.10 No Fractional Shares
In
no event shall any Company Securityholder be entitled to a fractional Parent Share. Where the aggregate number of Parent Shares to be issued to a person as consideration under or as a
result of the Arrangement would result in a fraction of a Parent Share being issuable, the number of Parent Shares to be received by such securityholder shall be rounded down to the nearest whole
Parent Share and no person will be entitled to any compensation in respect of a fractional Parent Share.
18
Section 2.11 Arrangement Filings and Effective Date
- (1)
- On
the second Business Day after the satisfaction or, where not prohibited, the waiver of the conditions (excluding conditions that, by their terms, cannot be
satisfied until the Effective Date, but subject to the satisfaction or, where not prohibited, the waiver of those conditions as of the Effective Date) set forth in Article 6, unless another
time or date is agreed to in writing by the Parties, the Parties shall send to the Registrar for filing under the BCBCA, the Arrangement Filings and such other documentation as may be required in
connection therewith under the BCBCA to give effect to the Arrangement, and the Arrangement shall become effective.
- (2)
- The
Company shall amend the Plan of Arrangement from time to time at the reasonable request of the Purchaser, provided that no such amendment is inconsistent with
the Interim Order or the Final Order or is prejudicial to the Company or the Company Securityholders.
- (3)
- The
closing of the Arrangement will take place at the offices of Stikeman Elliott LLP, or at such other location as may be agreed upon by the Parties.
Section 2.12 Withholding Taxes
- (1)
- The
Parent, the Purchaser, the Company and the Depositary, as applicable, shall be entitled to deduct and withhold from any consideration otherwise payable or
otherwise deliverable to any Company Securityholders under the Plan of Arrangement such amounts as the Parent, Purchaser, the Company or the Depositary, as applicable, are required or reasonably
believe to be required to deduct and withhold from such consideration under any provision of any Laws in respect of Taxes. Any such amounts will be deducted, withheld and remitted from the
consideration payable pursuant to the Plan of Arrangement and shall be treated for all purposes under this Agreement as having been paid to the Company Securityholders in respect of which such
deduction, withholding and/or remittance was made; provided that such consideration (or an equivalent amount) is actually remitted to the appropriate Governmental Entity. The Parent, Purchaser, the
Company and the Depositary, as applicable, shall be entitled to sell any Parent Shares which are withheld or to take any other steps necessary in order to convert such withheld consideration into cash
to be remitted to the appropriate Governmental Entity.
- (2)
- Notwithstanding
anything to the contrary set forth in this Agreement, no Parent Shares shall be delivered to a holder of Company Options or Company Warrants until
such holder has either: (a) provided the Parent with an amount in cash equal to any amounts required to be withheld from such holder under any provision of any Laws in respect of Taxes or
(b) provided the Parent with evidence satisfactory to the Parent, in its sole discretion, that no amounts are required to be withheld from such holder under any provision of any Laws in respect
of Taxes.
Section 2.13 U.S. Securities Law Matters
The
Parties agree that the Arrangement will be carried out with the intention that all Consideration Shares and Replacement Options issued on completion of the Arrangement to Company
Securityholders will be issued by the Parent in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereunder. In order to
ensure the availability of the exemption under Section 3(a)(10) of the U.S. Securities Act, the Parties agree that the Arrangement will be carried out on the following basis:
- (1)
- the
Arrangement will be subject to the approval of the Court;
19
- (2)
- the
Court will be advised as to the intention of the Parties to rely on the exemption under Section 3(a)(10) of the U.S. Securities Act prior to the hearing
required to approve the Arrangement;
- (3)
- the
Court will be required to satisfy itself as to the fairness of the Arrangement to the Company Securityholders, subject to the Arrangement;
- (4)
- the
Company will ensure that each Person entitled to receive Consideration Shares, Replacement Options, as applicable, on completion of the Arrangement will be given
adequate notice advising them of their right to attend the hearing of the Court to give approval of the Arrangement and providing them with sufficient information necessary for them to exercise that
right;
- (5)
- each
Person entitled to receive Consideration Shares and Replacement Options, as applicable, will be advised that the Consideration Shares and Replacement Options,
as applicable, issued pursuant to the Arrangement have not been registered under the U.S. Securities Act and will be issued by the Purchaser in reliance on the exemption under Section 3(a)(10)
of the U.S. Securities Act;
- (6)
- the
Final Order approving the Arrangement that is obtained from the Court will expressly state that the Arrangement is approved by the Court as being fair to the
Company Securityholders;
- (7)
- the
Interim Order approving the Company Meeting will specify that each Company Securityholder will have the right to appear before the Court at the hearing of the
Court to give approval of the Arrangement so long as they enter an appearance within a reasonable time; and
- (8)
- the
Company shall request that the Final Order shall include a statement to substantially the following effect:
"This
Order will serve as a basis of a claim to an exemption, pursuant to section 3(a)(10) of the United States Securities Act of 1933, as
amended, from the registration requirements otherwise imposed by that act, regarding the distribution of securities of the Parent, pursuant to the Plan of Arrangement.".
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Section 3.1 Representations and Warranties of the Company
- (1)
- Except
as set forth in the Company Disclosure Letter or as disclosed in the Company Filings (other than any forward-looking information or anything in the risks
factors section of the Company Filings or similar language contained therein), the Company represents and warrants to the Parent and the Purchaser as set forth in Schedule C and acknowledges
and agrees that the Parent and the Purchaser are relying upon such representations and warranties in connection with the entering into of this Agreement. Each section of the Company Disclosure Letter
shall be deemed to incorporate by reference all information disclosed in any other section of the Company Disclosure Letter to the extent it is reasonably apparent from reading of the disclosure or
through cross-reference that such disclosure is applicable to such other sections or subsections.
- (2)
- The
representations and warranties of the Company contained in this Agreement shall not survive the completion of the Arrangement and shall expire and be terminated
at the Effective Time.
20
Section 3.2 Representations and Warranties of the Parent and the Purchaser
- (1)
- Except
as set forth in the Parent Disclosure Letter or as disclosed in the Parent Filings (other than any forward-looking information or anything in the risks
factors section of the Parent Filings or similar language contained therein), each of the Parent and the Purchaser represent and warrant to the Company as set forth in Schedule D and
acknowledge and agree that the Company is relying upon such representations and warranties in connection with the entering into of this Agreement. Each section of the Parent Disclosure Letter shall be
deemed to incorporate by reference all information disclosed in any other section of the Parent Disclosure Letter to the extent it is reasonably apparent from reading of the disclosure or through
cross-reference that such disclosure is applicable to such other sections or subsections.
- (2)
- The
representations and warranties of the Parent and the Purchaser contained in this Agreement shall not survive the completion of the Arrangement and shall expire
and be terminated at the Effective Time.
ARTICLE 4
COVENANTS
Section 4.1 Conduct of Business of the Company.
- (1)
- The
Company covenants and agrees that, subject to applicable law, during the period from the date of this Agreement until the earlier of the Effective Time and the
time that this Agreement is terminated in accordance with its terms, except with the express prior written consent of the Parent and the Purchaser or as required or permitted by this Agreement, the
Company shall, and shall cause each of its Subsidiaries to, conduct its business in the Ordinary Course and in accordance with Law.
- (2)
- Without
limiting the generality of Section 4.1(1), subject to Law, the Company covenants and agrees that, during the period from the date of this Agreement
until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its terms, except with the express prior written consent of the Parent and the Purchaser or as
required or permitted by this Agreement or as set out in the Budget, the Company shall use its reasonable commercial efforts to maintain and preserve intact the current business organization, assets,
properties and business of the Company and its Subsidiaries, maintain in effect all material Authorizations of the Company, keep available the services of the present employees and agents of the
Company and its Subsidiaries and maintain good relations with, and the goodwill of, employees, suppliers, customers, creditors and all other Persons having business relationships with the Company and
its Subsidiaries and, except with the prior written consent of the Parent and the Purchaser, the Company shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
- (a)
- amend
its Constating Documents;
- (b)
- split,
combine, consolidate or reclassify any shares of its capital stock, undertake any capital reorganization or declare, set aside or pay any dividend or other
distribution (whether in cash, stock or property or any combination thereof);
- (c)
- redeem,
repurchase, or otherwise acquire or offer to redeem, repurchase or otherwise acquire any shares of its capital stock or reduce the stated capital in respect
of the Common Shares or any other shares of the Company and its Subsidiaries;
- (d)
- issue,
grant, deliver, sell, pledge or otherwise encumber, or authorize the issuance, grant, delivery, sale, pledge or other encumbrance of any shares of capital
stock, securities, options, warrants or similar rights exercisable or exchangeable for or convertible into such
21
capital
stock, of the Company or any of its Subsidiaries, except for the issuance of Common Shares (i) issuable upon the exercise of the currently outstanding Company Options or
(ii) pursuant to outstanding Company Warrants;
- (e)
- acquire
(by merger, consolidation, acquisition of stock or assets or otherwise), directly or indirectly, in one transaction or in a series of related transactions,
assets, securities, properties, interests or businesses;
- (f)
- reorganize,
amalgamate, combine or merge the Company with any other Person;
- (g)
- adopt
a plan of liquidation or resolutions providing for the liquidation or dissolution of the Company or any of its Subsidiaries;
- (h)
- sell,
pledge, lease, dispose of, surrender, lose the right to use, mortgage, license, encumber (other than Permitted Liens) or otherwise dispose of or transfer any
assets of the Company or of any of its Subsidiaries or any interest in any assets of the Company or its Subsidiaries;
- (i)
- make
any capital expenditure or similar commitments;
- (j)
- make
any loan or advance to, or any capital contribution or investment in, or assume, guarantee or otherwise become liable with respect to the liabilities or
obligations of, any Person;
- (k)
- prepay
any long-term indebtedness before its scheduled maturity or increase, create, incur, assume or otherwise become liable, in one transaction or in a series of
related transactions, with respect to any indebtedness for borrowed money or guarantees thereof; provided that any indebtedness created, incurred, refinanced, assumed or for which the Company or any
Subsidiary becomes liable in accordance with the foregoing shall be prepayable at the Effective Time without premium, penalty or other incremental costs (including breakage costs);
- (l)
- enter
into any interest rate, currency, equity or commodity swaps, hedges, derivatives, forward sales contracts or similar financial instruments;
- (m)
- make
any bonus or profit sharing distribution or similar payment of any kind except as may be required by the terms of a Contract listed in Section 4.1(2)(m)
of the Company Disclosure Letter;
- (n)
- grant
any general increase in the rate of wages, salaries, bonuses or other remuneration of any Company Employees except as may be required by a Contract listed in
Section 4.1(2)(n) of the Company Disclosure Letter;
- (o)
- except
as required by IFRS, make any change in the Company's methods of accounting;
- (p)
- make
any material Tax election, information schedule, return or designation, except as required by Law and in a manner consistent with past practice, settle or
compromise any material Tax claim, assessment, reassessment or liability, file any amended Tax Return, enter into any material agreement with a Governmental Entity with respect to Taxes, surrender any
right to claim a material Tax abatement, reduction, deduction, exemption, credit or refund, consent to the extension or waiver of the limitation period applicable to any material Tax matter or
materially amend or change any of its methods or reporting income, deductions or accounting for income Tax purposes except as may be required by Law;
- (q)
- create,
enter into or increase any severance, change of control or termination pay to (or amend any existing arrangement with) any Company Employee, director or
executive
22
- (3)
- If,
on or after the date of this Agreement, the Company declares or pays any dividend or other distribution on the Common Shares prior to the Effective Time, the
Consideration per Common Share shall be reduced by a number of Parent Shares equal to the amount of such dividends or distributions as of the record date thereof.
Section 4.2 Company Covenants Regarding the Arrangement.
- (1)
- The
Company shall perform, and shall cause its Subsidiaries to perform, all obligations required or desirable to be performed by the Company or any of its
Subsidiaries under this Agreement, cooperate with the Parent and the Purchaser in connection therewith, and do all
23
such
other commercially reasonable acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this
Agreement and, without limiting the generality of the foregoing, the Company shall and, where appropriate, shall cause each of its Subsidiaries to:
- (a)
- carry
out in accordance with and subject to the terms of this Agreement, the terms of the Interim Order and the Final Order applicable to it and comply promptly with
all requirements imposed by Law on it with respect to this Agreement or the Arrangement;
- (b)
- use
all commercially reasonable efforts to obtain and maintain all third party or other consents, waivers, permits, exemptions, orders, approvals, agreements,
amendments or confirmations that are (A) necessary or advisable to be obtained under the Material Contracts in connection with the Arrangement or (B) required in order to maintain the
Material Contracts in full force and effect following completion of the Arrangement, in each case, on terms that are reasonably satisfactory to the Parent and the Purchaser, and without paying, and
without committing itself or the Parent or the Purchaser to pay, any consideration or incur any liability or obligation without the prior written consent of the Parent and the Purchaser;
- (c)
- use
all commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities from the
Company and its Subsidiaries relating to the Arrangement;
- (d)
- use
all commercially reasonable efforts to, on prior written approval of the Parent and the Purchaser, oppose, lift or rescind any injunction, restraining or other
order, decree, judgment or ruling seeking to restrain, enjoin or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to
which it is a party or brought against it or its directors or officers challenging the Arrangement or this Agreement;
- (e)
- not
take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not taken, which is inconsistent with this
Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Arrangement or the transactions contemplated by this Agreement;
- (f)
- as
promptly as practicable, prepare and file all necessary documents, registrations, statements, petitions, filings and applications for any Regulatory Approvals and
use reasonable commercial efforts to obtain and maintain all Regulatory Approvals;
- (g)
- cooperate
with the Parent and the Purchaser in connection with obtaining any Regulatory Approvals including providing the Parent and the Purchaser with copies of all
notices and information or other correspondence supplied to, filed with or received from any Governmental Entity; and
- (h)
- assist
in obtaining the resignations and releases (in a form satisfactory to the Parent and the Purchaser, acting reasonably) of each member of the Company Board and
each member of the board of directors of the Company's Subsidiaries, and causing them to be replaced by Persons nominated by the Parent and the Purchaser effective as of the Effective Time.
- (2)
- The
Company shall promptly notify the Parent and Purchaser in writing of:
- (a)
- any
Material Adverse Effect with respect to the Company or any change, effect, event, development, occurrence, circumstance or state of facts which could reasonably
be expected to have a Material Adverse Effect with respect to the Company;
24
- (b)
- any
notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of
such Person (or another Person) is or may be required in connection with this Agreement or the Arrangement;
- (c)
- any
notice or other communication from any material supplier, customer or other third party to the effect that such supplier, customer or third party is terminating,
may terminate or is otherwise materially adversely modifying or may materially adversely modify its relationship with the Company or any of its Subsidiaries as a result of this Agreement or the
Arrangement;
- (d)
- any
notice or other communication from any Governmental Entity in connection with this Agreement (and the Company shall contemporaneously provide a copy of any such
written notice or communication to the Purchaser); or
- (e)
- any
filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting
the Company, its Subsidiaries or their respective assets or properties.
- (3)
- The
Company will, in all material respects, subject to applicable law, conduct itself so as to keep the Parent and the Purchaser fully informed as to the material
decisions required to be made or actions required to be taken with respect to the operation of its business.
Section 4.3 Parent and Purchaser Covenants Regarding Conduct of Business and regarding the
Arrangement.
- (1)
- Each
of the Parent and the Purchaser shall perform, and shall cause its Subsidiaries to perform, all obligations required or desirable to be performed by the each of
the Parent and the Purchaser or any of its Subsidiaries under this Agreement, cooperate with the Company in connection therewith, and do all such other commercially reasonable acts and things as may
be necessary or desirable in order to consummate and make effective, as soon as reasonably practicable, the transactions contemplated by this Agreement and, without limiting the generality of the
foregoing, each of the Parent and the Purchaser shall and, where appropriate, shall cause each of its Subsidiaries to:
- (a)
- carry
out in accordance with and subject to the terms of this Agreement, the terms of the Interim Order and the Final Order applicable to it and comply promptly with
all requirements imposed by Law on it with respect to this Agreement or the Arrangement;
- (b)
- use
all commercially reasonable efforts to effect all necessary registrations, filings and submissions of information required by Governmental Entities from each of
the Parent and the Purchaser relating to the Arrangement;
- (c)
- no
later than 15 calendar days prior to the Effective Time, file with NASDAQ a Listing of Additional Shares Notification Form with respect to the Consideration
Shares issuable pursuant to the Arrangement and Underlying Shares and shall use commercially reasonable efforts to cause each of the Consideration Shares and Underlying Shares to be listed on NASDAQ;
- (d)
- use
all commercially reasonable efforts to oppose, lift or rescind any injunction, restraining or other order, decree, judgment or ruling seeking to restrain, enjoin
or otherwise prohibit or adversely affect the consummation of the Arrangement and defend, or cause to be defended, any proceedings to which it is a party or brought against it or its directors or
officers challenging the Arrangement or this Agreement;
25
- (e)
- as
promptly as practicable, prepare and file all necessary documents, registrations, statements, petitions, filings and applications for any Regulatory Approvals and
use reasonable commercial efforts to obtain and maintain all Regulatory Approvals;
- (f)
- cooperate
with the Company in connection with obtaining any Regulatory Approvals including providing the Company with copies of all notices and information or other
correspondence supplied to, filed with or received from any Governmental Entity (provided that, notwithstanding anything to the contrary set forth in this Agreement, each of the Parent and the
Purchaser are under no obligation to take any steps or actions that would, in their sole discretion, affect the Parent or the Purchaser's right to own, use or exploit its business, operations or
assets or those of the Company);
- (g)
- subject
to Section 4.3(1)(f), not take any action, or refrain from taking any commercially reasonable action, or permitting any action to be taken or not
taken, which is inconsistent with this Agreement or which would reasonably be expected to prevent, delay or otherwise impede the consummation of the Arrangement or the transactions contemplated by
this Agreement.
- (2)
- Each
of the Parent and Purchaser shall promptly notify the Company of:
- (a)
- any
Material Adverse Effect with respect to the Parent and the Purchaser or any change, effect, event, development, occurrence, circumstance or state of facts which
could reasonably be expected to have a Material Adverse Effect with respect to the Parent and the Purchaser;
- (b)
- any
notice or other communication from any Person alleging that the consent (or waiver, permit, exemption, order, approval, agreement, amendment or confirmation) of
such Person (or another Person) is or may be required in connection with this Agreement or the Arrangement;
- (c)
- any
notice or other communication from any Governmental Entity in connection with this Agreement (and contemporaneously provide a copy of any such written notice or
communication to the Company); and
- (d)
- any
filing, actions, suits, claims, investigations or proceedings commenced or, to its knowledge, threatened against, relating to or involving or otherwise affecting
the Parent and the Purchaser relating to this Agreement or the Arrangement.
Section 4.4 Access to Information; Confidentiality
- (1)
- From
the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, subject to compliance with Laws and the
terms of any existing Contracts upon reasonable notice, each of the Purchaser and the Company shall, and shall cause their respective representatives to, afford to the other Party and to
representatives of the other Party, such access as the other Party may reasonably require at all reasonable times during normal business hours, including for the purpose of facilitating integration
business planning, to their officers, employees, agents, properties, books, records and contracts, and shall furnish the other Party with all data and information as the other Party may reasonably
request.
- (2)
- Investigations
made by or on behalf of the Parent, the Purchaser or the Company, whether under this Section 4.4 or otherwise, will not waive, diminish the
scope of, or otherwise affect any representation or warranty made by the other in this Agreement.
- (3)
- Each
of the Parties acknowledges that the Confidentiality Agreement continues to apply and that any information provided under Section 4.4(1) above that is
non-public and/or proprietary
26
in
nature shall be subject to the terms of the Confidentiality Agreement; provided that to the extent any provision of the Confidentiality Agreement conflicts with the terms of this Agreement, the
terms of this Agreement shall prevail. If this Agreement is terminated in accordance with its terms, the obligations under the Confidentiality Agreement shall survive the termination of this
Agreement.
Section 4.5 Pre-Acquisition Reorganization
- (1)
- Subject
to Section 4.5(2), the Company agrees that, upon request of the Parent and the Purchaser, the Company shall (i) perform such reorganizations of
its corporate structure, capital structure, business, operations and assets or such other transactions as the Purchaser may request, acting reasonably (each a "Pre-Acquisition
Reorganization"), and (ii) cooperate with the Parent and the Purchaser and its advisors to determine the nature of the Pre-Acquisition Reorganizations that might be
undertaken and the manner in which they would most effectively be undertaken.
- (2)
- The
Company will not be obligated to participate in any Pre-Acquisition Reorganization under Section 4.5(1) unless such Pre-Acquisition
Reorganization:
- (a)
- can
be completed prior to the Effective Date, and can be unwound in the event the Arrangement is not consummated without adversely affecting the Company in any
material manner;
- (b)
- is
not prejudicial to the Company or to the Company Shareholders in any material respect; and
- (c)
- does
not impair the ability of the Company to consummate, and will not materially delay the consummation of, the Arrangement.
- (3)
- Furthermore,
such Pre-Acquisition Reorganization will not be considered in determining whether a representation or warranty of the Company under this Agreement has
been breached (including where any such Pre-Acquisition Reorganization requires the consent of any third party under a Contract).
- (4)
- The
Parent and the Purchaser must provide written notice to the Company of any proposed Pre-Acquisition Reorganization at least 15 Business Days prior to the
Effective Date. Upon receipt of such notice, the Company, the Parent and the Purchaser shall work cooperatively and use their best efforts to prepare prior to the Effective Time all documentation
necessary and do such other acts and things as are necessary to give effect to such Pre-Acquisition Reorganization, including any amendment to this Agreement or the Plan of Arrangement and shall seek
to have any such Pre-Acquisition Reorganization made effective as of the last moment of the Business Day ending immediately prior to the Effective Date (but after the Purchaser has waived or confirmed
that all of the conditions set out in Section 6.1 and Section 6.2 have been satisfied).
- (5)
- The
Parent and the Purchaser agree that they will be responsible for all costs and expenses (including any reasonable professional fees and expenses) associated with
any Pre-Acquisition Reorganization to be carried out at their request and shall indemnify and save harmless the Company and its affiliates from and against any and all liabilities, losses, damages,
claims, costs, expenses, interest awards, judgements and penalties suffered or incurred by any of them in connection with or as a result of any such Pre-Acquisition Reorganization if after
participating in any Pre-Acquisition Reorganization the Arrangement is not completed other than due to a breach by the Company of the terms and conditions of this Agreement.
27
Section 4.6 Notice and Cure Provisions
- (1)
- Each
Party shall promptly notify the other Parties of the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would, or would
be reasonably likely to:
- (a)
- cause
any of the representations or warranties of such Party contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date
of this Agreement to the Effective Time; or
- (b)
- result
in the failure, in any material respect, to comply with or satisfy any covenant, condition or agreement to be complied with or satisfied by such Party under
this Agreement.
- (2)
- Notification
provided under this Section 4.8 will not affect the representations, warranties, covenants, agreements or obligations of the Parties (or remedies
with respect thereto) or the conditions to the obligations of the Parties under this Agreement.
- (3)
- The
Parent and the Purchaser may not elect to exercise their right to terminate this Agreement pursuant to Section 7.2(1)(d)(i) and the Company may not elect
to exercise its right to terminate this Agreement pursuant to Section 7.2(1)(c)(i), unless the Party seeking to terminate the Agreement (the "Terminating
Party") has delivered a written notice ("Termination Notice") to the other Party (the "Breaching
Party") specifying in reasonable detail all breaches of covenants, representations and warranties or other matters which the Terminating Party asserts as the basis for
termination. After delivering a Termination Notice, provided the Breaching Party is proceeding diligently to cure such matter and such matter is capable of being cured prior to the Outside Date, the
Terminating Party may not exercise such termination right until the earlier of (a) the Outside Date, and (b) the date that is 10 Business Days following receipt of such Termination
Notice by Breaching Party, if such matter has not been cured by such date. If the Terminating Party delivers a Termination Notice prior to the date of the Company Meeting or the Parent Meeting, if
necessary, unless the Parties agree otherwise, the Company shall postpone or adjourn the Company Meeting, and the Parent shall postpone or adjourn the Parent Meeting, if necessary, to the earlier of
(a) five (5) Business Days prior to the Outside Date and (b) the date that is 10 Business Days following receipt of such Termination Notice by the Breaching Party.
Section 4.7 Public Communications
The
Parties shall cooperate in the preparation of presentations, if any, to the Company Securityholders and the Parent Shareholders regarding the Arrangement. A Party must not issue any
press release or make any other public statement or disclosure with respect to this Agreement or the Arrangement without the consent of the other Parties (which consent shall not be unreasonably
withheld or delayed), and neither Party may make any filing with any Governmental Entity with respect to this Agreement or the Arrangement without the consent of the other Party (which consent shall
not be unreasonably withheld or delayed); provided that any Party that, in the opinion of its outside legal counsel, is required to make disclosure by Law may make such disclosure provided it shall
use its best efforts to give the other Parties prior oral or written notice and a reasonable opportunity to review or comment on the disclosure or filing (other than with respect to confidential
information contained in such disclosure or filing). The Party making such disclosure shall give reasonable consideration to any comments made by the other Parties or their counsel, and if such prior
notice is not possible, shall give such notice immediately following the making of such disclosure or filing.
Section 4.8 Insurance
Prior
to the Effective Date, the Company shall purchase customary "tail" policies of directors' and officers' liability insurance providing protection no less favorable in the aggregate
than the protection
28
provided
by the policies maintained by the Company which are in effect immediately prior to the Effective Date and providing protection in respect of claims arising from facts or events which occurred
on or prior to the Effective Date and the Parent and the Purchaser will, or will cause the Company to maintain such tail policies in effect without any reduction in scope or coverage for six
(6) years from the Effective Date; provided that neither the Parent nor the Purchaser will be required to pay any amounts in respect of such coverage prior to the Effective Time and provided
further that the cost of such policies shall not exceed 200% of the Company's current annual aggregate premium for policies currently maintained by the Company.
Section 4.9 Company Options and Company Warrants
- (1)
- As
part of the Plan of Arrangement the Parent shall issue options (the "Replacement Options") in exchange for the
Company Options under the Arrangement, which replacement options shall have terms and conditions substantially similar to the original Company Options, other than as set out in the Plan of
Arrangement. The Company represents that all of the Company Options listed on Schedule E have been terminated with the consent of such Company Optionholder.
- (2)
- In
accordance with the terms of the Company Warrant Agreements, each holder of a Company Warrant outstanding immediately prior to the Effective Time shall receive
upon the subsequent exercise of such holder's Company Warrant, in accordance with its terms, and shall accept in lieu of each Company Common Share to which such holder was theretofore entitled upon
such exercise but for the same aggregate consideration payable therefor, 0.08 of a Parent Share. The Company represents that all of the Company Warrants listed on Schedule E have been
terminated with the consent of such Company Warrantholder.
ARTICLE 5
ADDITIONAL COVENANTS REGARDING NON-SOLICITATION
Section 5.1 Company Non-Solicitation
- (1)
- Except
as expressly provided in this Article 5, the Company and its Subsidiaries shall not, directly or indirectly, through any officer, director, employee,
representative (including any financial or other adviser) or agent of the Company or of any of its Subsidiaries (collectively "Company
Representatives"), or otherwise, and shall not permit any such Person to:
- (a)
- solicit,
assist, initiate, encourage or otherwise knowingly facilitate (including by way of furnishing or providing copies of, access to, or disclosure of, any
confidential information, properties, facilities, books or records of the Company or any of its Subsidiaries or entering into any form of agreement, arrangement or understanding, other than a
confidentiality agreement permitted by an in accordance with Section 5.3) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition
Proposal for the Company;
- (b)
- enter
into or otherwise engage or participate in any discussions or negotiations with any Person (other than the Parent, the Purchaser and its Affiliates) regarding
any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition Proposal for the Company;
- (c)
- make
a Company Change in Recommendation;
- (d)
- accept,
approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral with respect to, any
Acquisition Proposal for the Company (it being understood that publicly taking no position or a neutral position with respect to a publicly announced, or otherwise publicly disclosed,
29
Acquisition
Proposal for the Company for a period of no more than five Business Days following such public announcement or public disclosure will not be considered to be in violation of this
Section 5.1(1) provided the Company Board has rejected such Acquisition Proposal and reaffirmed the Company Board Recommendation before the end of such five Business Day period (or in the event
that the Company Meeting is scheduled to occur within such five Business Day period, prior to the third Business Day prior to the date of the Company Meeting)); or
- (e)
- accept
or enter into (other than a confidentiality agreement permitted by and in accordance with Section 5.3) or publicly propose to accept or enter into any
agreement, understanding or arrangement in respect of an Acquisition Proposal for the Company.
- (2)
- The
Company shall, and shall cause its Subsidiaries and the Company Representatives to, immediately cease and terminate, and cause to be terminated, any
solicitation, encouragement, discussion, negotiations, or other activities commenced prior to the date of this Agreement with any Person (other than the Parent, the Purchaser and its Affiliates) with
respect to any inquiry, proposal or offer that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition Proposal for the Company, and in connection therewith the Company
shall:
- (a)
- immediately
discontinue access to and disclosure of all information, including the Company Data Room and any other data room, and any confidential information,
properties, facilities, books and records of the Company or any of its Subsidiaries; and
- (b)
- promptly
request, and exercise all rights it has to require: (i) the return or destruction of all copies of any confidential information regarding the Company
or any Subsidiary provided to any Person other than the Purchaser, and (ii) the destruction of all material including or incorporating or otherwise reflecting such confidential information
regarding the Company or any Subsidiary, using its commercially reasonable efforts to ensure that such requests are fully complied with in accordance with the terms of such rights or entitlements.
- (3)
- The
Company represents and warrants that, since January 1, 2016, the Company has not waived any confidentiality, standstill, non-disclosure, non-solicitation,
use, business purpose or similar agreement, restriction or covenant to which the Company or any Subsidiary is a party, and further covenants and agrees that (i) the Company shall take all
necessary action to enforce each confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement, restriction or covenant to which the Company or any
Subsidiary is a party, and (ii) neither the Company, nor any Subsidiary, nor any of the Company Representatives have or will, without the prior written consent of the Parent and the Purchaser
(which may be withheld or delayed in the Parent and Purchaser's sole and absolute discretion), release any Person from, or waive, amend, suspend or otherwise modify such Person's obligations
respecting the Company or any of its Subsidiaries under any confidentiality, standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement, restriction or covenant to which
the Company or any Subsidiary is a party (it being acknowledged by the Parent and the Purchaser that the automatic termination or release of any standstill restrictions of any such agreements as the
result of entering into of this Agreement will not constitute a breach of this Section 5.1(3)).
Section 5.2 Notification of Acquisition Proposals
If
the Company or any of its Subsidiaries or any of the Company Representatives, receives or otherwise becomes aware of any inquiry, proposal or offer that constitutes or may reasonably
be expected to constitute or lead to an Acquisition Proposal for the Company, or any request for copies of, access to, or disclosure of, confidential information relating to the Company or any
Subsidiary in
30
connection
with an Acquisition Proposal for the Company, including but not limited to information, access, or disclosure relating to the properties, facilities, books or records of the Company or any
Subsidiary, the Company shall promptly notify the Parent and the Purchaser, at first orally, and then as soon as practicable and in any event within 24 hours in writing, of such Acquisition
Proposal for the Company, inquiry, proposal, offer or request, including a description of its material terms and conditions, the identity of all Persons making the Acquisition Proposal for the
Company, inquiry, proposal, offer or request, and shall provide the Parent and the Purchaser with copies of all written documents, material or substantive correspondence or other material received in
respect of, from or on behalf of any such Persons. The Company shall keep the Parent and the Purchaser fully informed on a current basis of the status of developments and (to the extent permitted by
Section 5.3) negotiations with respect to such Acquisition Proposal for the Company, inquiry, proposal, offer or request, including any changes, modifications or other amendments to any such
Acquisition Proposal for the Company, inquiry, proposal, offer or request and shall provide to the Purchaser copies of all material or substantive correspondence if in writing or electronic form, and
if not in writing or electronic form, a description of the material terms of such correspondence communicated to the Company by or on behalf of any Person making any such Acquisition Proposal for the
Company, inquiry, proposal, offer or request.
Section 5.3 Responding to an Acquisition Proposal for the Company
Notwithstanding
Section 5.1, if at any time prior to obtaining the Required Approval of the Arrangement Resolution, the Company receives a written Acquisition Proposal for the
Company, the Company may (i) contact the Person making such Acquisition Proposal for the Company and its representatives solely for the purpose of clarifying the terms and conditions of such
Acquisition Proposal for the Company, and (ii) engage in or participate in discussions or negotiations with such Person regarding such Acquisition Proposal for the Company, and may, for a
maximum of 10 calendar days after the day on which access or disclosure is first afforded to the Person making the Acquisition Proposal for the Company, provide copies of, access to or disclosure of
information, properties, facilities, books or records of the Company or its Subsidiaries, if and only if, in the case of this clause (ii):
- (1)
- the
Company Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that such Acquisition Proposal for
the Company constitutes or would reasonably be expected to constitute a Superior Proposal, and, after consultation with its outside legal counsel, that the failure to engage in such discussions or
negotiations would be inconsistent with its fiduciary duties;
- (2)
- such
Person was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, non-disclosure, use, business purpose or
similar restriction with the Company or any of its Subsidiaries;
- (3)
- the
Company has been, and continues to be, in compliance with its obligations under this Article 5;
- (4)
- prior
to providing any such copies, access or disclosure to such Person, the Company enters into a confidentiality and standstill agreement with such Person (unless
such Person is already a party to a confidentiality and standstill agreement with the Company) that contains a standstill provision that is no less onerous or more beneficial to such Person than that
in the Confidentiality Agreement and is otherwise on terms that are no less favorable to the Company than those found in the Confidentiality Agreement, and any such copies, access or disclosure
provided to such Person shall have already been (or simultaneously be) provided to the Purchaser (by posting such information to the Company Data Room or otherwise); and
31
- (5)
- the
Company promptly provides the Parent and the Purchaser with:
- (a)
- two
business days prior written notice stating the Company's intention to participate in such discussions or negotiations and to provide such copies, access or
disclosure and that the Company Board has determined that failure to take such action would be inconsistent with its fiduciary duties; and
- (b)
- prior
to providing any such copies, access or disclosure to such Person, the Company provides the Parent and the Purchaser with a true, complete and final executed
copy of the confidentiality and standstill agreement referred to in Section 5.3(4).
Section 5.4 Purchaser Right to Match
- (1)
- If
the Company receives an Acquisition Proposal for the Company that constitutes a Superior Proposal prior to receipt of the Required Approval of the Arrangement
Resolution, the Company may, subject to compliance with Article 7 and Section 8.2, enter into a definitive agreement with respect to such Acquisition Proposal, if and only
if:
- (a)
- the
Person making the Superior Proposal was not restricted from making such Acquisition Proposal pursuant to an existing confidentiality, standstill, non-disclosure,
use, business purpose or similar restriction with the Company or any of its Subsidiaries;
- (b)
- the
Company has been, and continues to be, in compliance with its obligations under this Article 5;
- (c)
- the
Company has delivered to the Parent and the Purchaser a written notice of the determination of the Company Board that such Acquisition Proposal constitutes a
Superior Proposal and of the intention of the Company to enter into such definitive agreement with respect to such Superior Proposal, together with a written notice from the Company Board regarding
the value and financial terms that the Company Board, in consultation with its financial advisors, has determined should be ascribed to any non-cash consideration offered under such Superior Proposal
(the "Company Superior Proposal Notice");
- (d)
- the
Company has provided the Purchaser a copy of the proposed definitive agreement for the Superior Proposal and all supporting materials, including any financing
documents supplied to the Company in connection therewith;
- (e)
- at
least five (5) Business Days (the "Company Matching Period") have elapsed from the date that is the later
of the date on which the Parent and the Purchaser received the Company Superior Proposal Notice and the date on which the Parent and the Purchaser received all of the materials set forth in
Section 5.4(1)(d);
- (f)
- during
any Company Matching Period, the Parent and the Purchaser have had the opportunity (but not the obligation), in accordance with Section 5.4(2), to
offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal;
- (g)
- after
the Company Matching Period, the Company Board (i) has determined in good faith, after consultation with its outside legal counsel and financial
advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (if applicable, compared to the terms of the Arrangement as proposed to be amended by the Parent and the Purchaser
under Section 5.4(2)) and (ii) has determined in good faith, after consultation with its outside legal counsel and financial advisors, that the failure by the Company Board to recommend
that the Company enter into a definitive agreement with respect to such Superior Proposal would be inconsistent with its fiduciary duties; and
32
- (h)
- prior
to or concurrently with entering into such definitive agreement the Company terminates this Agreement pursuant to Section 7.2(1)(c)(iii) and pays the
Company Expense Reimbursement pursuant to Section 8.2.
- (2)
- During
the Company Matching Period, or such longer period as the Company may approve in writing for such purpose: (a) the Company Board shall review any offer
made by the Parent and the Purchaser under Section 5.4(1)(f) to amend the terms of this Agreement and the Arrangement in good faith in order to determine whether such proposal would, upon
acceptance, result in the Acquisition Proposal for the Company previously constituting a Superior Proposal ceasing to be a Superior Proposal; and (b) the Company shall negotiate in good faith
with the Parent and the Purchaser to make such amendments to the terms of this Agreement and the Arrangement as would enable the Parent and the Purchaser to proceed with the transactions contemplated
by this Agreement on such amended terms. If the Company Board determines that such Acquisition Proposal would cease to be a Superior Proposal, the Company shall promptly so advise the Parent and the
Purchaser and the Company and the Parent and the Purchaser shall amend this Agreement to reflect such offer made by the Parent and the Purchaser, and shall take and cause to be taken all such actions
as are necessary to give effect to the foregoing.
- (3)
- Each
successive amendment or modification to any Acquisition Proposal that results in an increase in, or modification of, the consideration (or value of such
consideration) to be received by the Company Securityholders or other material terms or conditions thereof shall constitute a new Acquisition Proposal for the purposes of this Section 5.4, and
the Parent and the Purchaser shall be afforded a new five (5) Business Day Company Matching Period from the later of the date on which the Parent and the Purchaser received the Company Superior
Proposal Notice and the date on which the Parent and the Purchaser received all of the materials set forth in Section 5.5(1)(d) from the Company.
- (4)
- The
Company Board shall promptly reaffirm the Company Board Recommendation by press release after any Acquisition Proposal for the Company which is not determined to
be a Superior Proposal is publicly announced or publicly disclosed or the Company Board determines that a proposed amendment to the terms of this Agreement as contemplated under Section 5.4(2)
would result in an Acquisition Proposal no longer being a Superior Proposal. The Company shall provide the Parent and the Purchaser and their outside legal counsel with a reasonable opportunity to
review the form and content of any such press release and shall make all reasonable amendments to such press release as requested by the Parent and the Purchaser and their counsel.
- (5)
- If
the Company provides a Company Superior Proposal Notice to the Parent and Purchaser after a date that is less than ten (10) Business Days before the
Company Meeting, the Company shall either proceed with or shall postpone the Company Meeting to a date that is not more than fifteen (15) Business Days after the scheduled date of the
Company Meeting, as directed by the Parent and the Purchaser acting reasonably; provided, however, that the Company Meeting shall not be adjourned or postponed to a date later than five
(5) Business Days prior to the Outside Date.
- (6)
- Nothing
in this Agreement shall prevent the Company Board from, subject to its obligations under Section 8.2, complying with Section 2.17 of
Multilateral Instrument 62-104—Takeover Bids and Issuer Bids and similar provisions under Securities Laws relating to the provision
of a directors' circular in respect of an Acquisition Proposal for the Company.
33
Section 5.5 Breach by Representatives
Without
limiting the generality of the foregoing, the Company shall advise the Company Representatives of the prohibitions set out in this Article 5 and any violation of the
restrictions set forth in this Article 5 by the Company or the Company Representatives is deemed to be a breach of this Article 5 by the Company.
ARTICLE 6
CONDITIONS
Section 6.1 Mutual Conditions Precedent
The
Parties are not required to complete the Arrangement unless each of the following conditions is satisfied on or prior to the Effective Time, which conditions may only be waived, in
whole or in part, by the mutual consent of each of the Parties:
- (1)
- Arrangement Resolution. The Arrangement Resolution has been approved and adopted by the Company Securityholders at
the Company Meeting in accordance with the Interim Order.
- (2)
- Interim and Final Order. The Interim Order and the Final Order have each been obtained on terms consistent with this
Agreement, and have not been set aside or modified in a manner unacceptable to either the Company, the Parent or the Purchaser, each acting reasonably, on appeal or otherwise.
- (3)
- Parent Shareholder Approval. The Parent Shareholder Approval shall have been obtained.
- (4)
- Illegality. No Law is in effect or threatened that makes the consummation of the Arrangement illegal or otherwise
prohibits or enjoins the Company, the Parent or the Purchaser from consummating the Arrangement.
- (5)
- NASDAQ Approval. The conditional approval from NASDAQ shall have been obtained by the Parent with respect to the
issuance of the Consideration Shares.
Section 6.2 Additional Conditions Precedent to the Obligations of the Parent and the Purchaser
The
Purchaser is not required to complete the Arrangement unless each of the following conditions is satisfied on or before the Effective Time, which conditions are for the exclusive
benefit of the Purchaser and may only be waived, in whole or in part, by the Purchaser in its sole discretion:
- (1)
- Representations and Warranties. The representations and warranties of the Company were true and correct as of the
date of this Agreement and are true and correct as of the Effective Time, in each case except for representations and warranties made as of a specified date, the accuracy of which shall be determined
as of such specified date, and the Company has delivered a certificate confirming same to the Parent and the Purchaser, executed by two (2) senior officers of the Company (in each case
without personal liability) addressed to the Parent and the Purchaser and dated the Effective Date.
- (2)
- Performance of Covenants. The Company has fulfilled or complied in all material respects with each of the covenants
of the Company contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate confirming same to the Parent and the Purchaser,
executed by two (2) senior officers of the Company (in each case without personal liability) addressed to the Parent and the Purchaser and dated the Effective Date.
- (3)
- Regulatory Approvals. Each required Regulatory Approval has been made, given or obtained on terms acceptable to the
Purchaser and each such Regulatory Approval is in force and has not been modified.
34
- (4)
- No Legal Action. There is no action or proceeding (whether, for greater certainty, by a Governmental Entity or any
other Person) pending or threatened in any jurisdiction to:
- (a)
- cease
trade, enjoin, prohibit, or impose any limitations, damages or conditions on, the Purchaser's ability to acquire, hold, or exercise full rights of ownership
over, any Common Shares, including the right to vote the Common Shares;
- (b)
- prohibit,
restrict or impose terms or conditions on, the Arrangement, or the ownership or operation by the Parent and the Purchaser of the business or assets of the
Parent, the Purchaser, the Company or their respective Subsidiaries, or compel the Parent or the Purchaser to dispose of or hold separate any of the business or assets of the Parent, the Purchaser,
the Company or their respective Subsidiaries as a result of the Arrangement; or
- (c)
- prevent
or materially delay the consummation of the Arrangement, or if the Arrangement were to be consummated, have a Material Adverse Effect with respect to the
Company.
- (5)
- Dissent Rights. Dissent Rights have not been exercised with respect to more than 5% of the issued and outstanding
Common Shares.
- (6)
- Material Adverse Effect. There shall not have been or occurred a Material Adverse Effect with respect to the Company
that has not been publicly disclosed by the Company prior to the date hereof.
- (7)
- Voting Agreements. There has not been any breach of any of the Voting Agreements by any party to any such agreement
other than the Parent and the Purchaser.
Section 6.3 Additional Conditions Precedent to the Obligations of the Company
The
Company is not required to complete the Arrangement unless each of the following conditions is satisfied on or before the Effective Time, which conditions are for the exclusive
benefit of the Company and may only be waived, in whole or in part, by the Company in its sole discretion:
- (1)
- Representations and Warranties. The representations and warranties of the Parent and the Purchaser were true and
correct as of the date of this Agreement and are true and correct as of the Effective Time, in each case except for representations and warranties made as of a specified date, the accuracy of which
shall be determined as of such specified date, and each of the Parent and the Purchaser has delivered a certificate confirming same to the Company, executed by two (2) senior officers of each
of the Parent and the Purchaser (in each case without personal liability) addressed to the Company and dated the Effective Date.
- (2)
- Performance of Covenants. Each of the Parent and the Purchaser has fulfilled or complied in all material respects
with each of the covenants of the Parent and the Purchaser contained in this Agreement to be fulfilled or complied with by it on or prior to the Effective Time, and has delivered a certificate
confirming same to the Company, executed by two (2) senior officers of each of the Parent and the Purchaser (in each case without personal liability) addressed to the Company and dated the
Effective Date.
- (3)
- Material Adverse Effect. There shall not have been or occurred a Material Adverse Effect with respect to the Parent
that has not been publicly disclosed by the Parent prior to the date hereof.
Section 6.4 Satisfaction of Conditions
The
conditions precedent set out in Section 6.1, Section 6.2 and Section 6.3 will be conclusively deemed to have been satisfied, waived or released at the Effective
Time.
35
ARTICLE 7
TERM AND TERMINATION
Section 7.1 Term
This
Agreement shall be effective from the date hereof until the earlier of the Effective Time and the termination of this Agreement in accordance with its terms.
Section 7.2 Termination
- (1)
- This
Agreement may be terminated prior to the Effective Time by:
- (a)
- the
mutual written agreement of the Parties; or
- (b)
- either
the Company or the Purchaser if:
- (i)
- the
Parent Shareholder Approval Resolution is not approved by the requisite vote at the Parent Meeting provided that a Party may not terminate this Agreement
pursuant to this Section 7.2(1)(b)(i) if the failure to obtain the Parent Shareholder Approval has been caused by, or is a result of, a breach by such Party of any of its representations or
warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;
- (ii)
- the
Arrangement Resolution is not approved by the Company Securityholders at the Company Meeting in accordance with the Interim Order provided that a Party may not
terminate this Agreement pursuant to this Section 7.2(1)(b)(ii) if the failure to obtain the approval of the Company Securityholders has been caused by, or is a result of, a breach by such
Party of any of its representations or warranties or the failure of such Party to perform any of its covenants or agreements under this Agreement;
- (iii)
- after
the date of this Agreement, any Law is enacted, made, enforced or amended, as applicable, that makes the consummation of the Arrangement illegal or otherwise
permanently prohibits or enjoins the Company, the Parent or the Purchaser from consummating the Arrangement, and such Law has, if applicable, become final and non-appealable; or
- (iv)
- the
Effective Time does not occur on or prior to the Outside Date, provided that a Party may not terminate this Agreement pursuant to this
Section 7.2(1)(b)(iv) if the failure of the Effective Time to so occur has been caused by, or is a result of, a breach by such Party of any of its representations or warranties or the failure
of such Party to perform any of its covenants or agreements under this Agreement; or
- (c)
- the
Company if:
- (i)
- a
breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Parent or the Purchaser under this Agreement occurs
that would cause any condition in Section 6.3(1) or Section 6.3(2) not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not
cured in accordance with the terms of Section 4.6(3); provided that any wilful breach shall be deemed to be incurable and the Company is not then in breach of this Agreement so as to cause any
condition in Section 6.2(1) or Section 6.2(2) not to be satisfied;
- (ii)
- the
Parent Board or any committee of the Parent Board fails to unanimously recommend or withdraws, amends, modifies or qualifies the Parent Board
36
- (d)
- the
Parent if:
- (i)
- a
breach of any representation or warranty or failure to perform any covenant or agreement on the part of the Company under this Agreement occurs that would cause
any condition in Section 6.2(1) or Section 6.2(2) not to be satisfied, and such breach or failure is incapable of being cured on or prior to the Outside Date or is not cured in
accordance with the terms of Section 4.6(3); provided that any wilful breach shall be deemed to be incurable and the Parent is not then in breach of this Agreement so as to cause any condition
in Section 6.3(1) or Section 6.3(2) not to be satisfied;
- (ii)
- (A)
the Company Board or any committee of the Company Board (1) fails to unanimously recommend or withdraws, amends, modifies or qualifies the Company Board
Recommendation, or publicly proposes or states its intention to do so, (2) accepts, approves, endorses or recommends, or publicly proposes to accept, approve, endorse or recommend an
Acquisition Proposal for the Company or takes no position or remains neutral with respect to a publicly announced, or otherwise publicly disclosed, Acquisition Proposal for the Company for more than
five Business Days (or beyond the third Business Day prior to the date of the Company Meeting, if sooner), (3) accepts or enters into (other than a confidentiality agreement permitted by and in
accordance with Section 5.3(4)) or publicly proposes to accept or enter into any agreement, understanding or arrangement in respect of an Acquisition Proposal for the Company, or
(4) fails to publicly recommend or reaffirm the Company Board Recommendation within five Business Days after having been requested in writing by the Parent to do so (or in the event that the
Company Meeting is scheduled to occur within such five Business Day period, prior to the third Business Day prior to the date of the Company Meeting) (each of the actions described in this
clause (A), a "Company Change in Recommendation"), or (B) the Company breaches Article 5 in any material respect;
- (iii)
- the
condition set forth in Section 6.2(5) is not capable of being satisfied by the Outside Date; or
- (iv)
- there
has occurred a Material Adverse Effect with respect to the Company that has not been publicly disclosed by the Company prior to the date hereof.
- (2)
- The
Party desiring to terminate this Agreement pursuant to this Section 7.2 (other than pursuant to Section 7.2(1)(a)) shall give notice of such
termination to the other Party, specifying in reasonable detail the basis for such Party's exercise of its termination right.
37
Section 7.3 Effect of Termination/Survival
If
this Agreement is terminated pursuant to Section 7.1 or Section 7.2, this Agreement shall become void and of no further force or effect without liability of any Party
(or any shareholder, director, officer, employee, agent, consultant or representative of such Party) to any other Party to this Agreement, except that: (a) in the event of termination under
Section 7.1 as a result of the Effective Time occurring, Section 4.8 shall survive for a period of six (6) years following such termination; and (b) in the event of
termination under Section 7.2, this Section 7.3, Section 8.2 through to and including Section 8.16, all related definitions set forth in Section 1.1 and the
provisions of the Confidentiality Agreement, shall survive any such termination of this Agreement, and provided further that no Party shall be relieved of any liability for any wilful breach by it of
this Agreement.
ARTICLE 8
GENERAL PROVISIONS
Section 8.1 Amendments
This
Agreement and the Plan of Arrangement may, at any time and from time to time before or after the holding of the Company Meeting but not later than the Effective Time, be amended by
mutual written agreement of the Parties, without further notice to or authorization on the part of the Company Securityholders, and any such amendment may, subject to the Interim Order and Final Order
and Laws, without limitation:
- (1)
- change
the time for performance of any of the obligations or acts of the Parties;
- (2)
- modify
any representation or warranty contained in this Agreement or in any document delivered pursuant to this Agreement;
- (3)
- modify
any of the covenants contained in this Agreement and waive or modify performance of any of the obligations of the Parties; and/or
- (4)
- modify
any mutual conditions contained in this Agreement.
Section 8.2 Expense Reimbursement
- (1)
- For
the purposes of this Agreement,
- (a)
- "Company Expense Reimbursement" means US$1,500,000.
- (b)
- "Company Expense Reimbursement Event" means the termination of this Agreement:
- (i)
- by
the Purchaser, pursuant to Section 7.2(1)(d)(ii);
- (ii)
- by
the Company, pursuant to Section 7.2(1)(c)(iii);
- (iii)
- pursuant
to any Subsection of Section 7.2(1) if at such time the Parent and the Purchaser are entitled to terminate this Agreement pursuant to
Section 7.2(1)(d)(ii) (other than a termination by the Parent and the Purchaser pursuant to Section 7.2(1)(d)(ii) where the Company Change in Recommendation resulted from the occurrence
of a Material Adverse Effect with respect to the Parent);
- (iv)
- by
the Company, the Parent or the Purchaser pursuant to Section 7.2(1)(b)(ii) or Section 7.2(1)(b)(iv), or by the Parent and the Purchaser pursuant to
Section 7.2(1)(d)(i), if:
- (A)
- prior
to such termination, an Acquisition Proposal for the Company is made or publicly announced or otherwise publicly disclosed by any Person (other than the Parent
and the Purchaser or any of its Affiliates) or any Person (other than the
38
For
purposes of the foregoing, the term "Acquisition Proposal" shall have the meaning specified in Section 1.1, except that references to "20% or more" in the definition of "Acquisition
Proposal" in Section 1.1 shall be deemed to be references to "50% or more".
- (2)
- The
Company Expense Reimbursement shall be paid by the Company to the Parent (or as the Purchaser may direct by notice in writing) as follows, by wire transfer of
immediately available funds, if a Company Expense Reimbursement Event occurs due to:
- (a)
- a
termination of this Agreement described in Section 8.2(1)(b)(i) or Section 8.2(1)(b)(iii), within two (2) Business Days of the occurrence of
such Company Expense Reimbursement Event;
- (b)
- a
termination of this Agreement described in Section 8.2(1)(b)(ii), prior to or simultaneously with the occurrence of such Company Expense Reimbursement
Event; and
- (c)
- a
termination of this Agreement described in Section 8.2(1)(b)(iv), upon the consummation/closing of the Acquisition Proposal for the Company referred to
therein.
- (3)
- The
Company acknowledge that the agreements contained in this Section 8.2 are an integral part of the transactions contemplated by this Agreement, and that
without these agreements, neither the Parent, the Purchaser nor the Company would enter into this Agreement, and that the amounts set out in this Section 8.2 represent liquidated damages which
are a genuine pre-estimate of the damages, including opportunity costs, reputational damages, and out-of-pocket expenditures, which the Parent and the Purchaser, will suffer or incur as a result of
the event giving rise to such damages and resultant termination of this Agreement, and are not penalties. The Company irrevocably waives any right they may have to raise as a defence that any such
liquidated damages are excessive or punitive. In the event the amounts set out in Section 8.2 are paid to the Parent and the Purchaser (or as they direct), no other amounts will be due and
payable as damages or otherwise by the Company, and the Parent and the Purchaser hereby accept that such payments are the maximum aggregate amount that the Company shall be required to pay in lieu of
any damages or any other payments or remedy which the Parent and the Purchaser may be entitled to in connection with this Agreement or the transactions contemplated by this Agreement; provided,
however, that this limitation shall not apply in the event of a wilful breach by the Company of its representations, warranties, covenants or agreements set forth in this Agreement (which breach and
liability, therefore, shall not be affected by termination of this Agreement or any payment of the amounts set out in Section 8.2, as applicable).
39
Section 8.3 Expenses
Except
as expressly otherwise provided in this Agreement, all out-of-pocket third party transaction expenses incurred in connection with this Agreement and the Plan of Arrangement,
including all costs, expenses and fees incurred prior to or after the Effective Date in connection with, or incidental to, the Plan of Arrangement, shall be paid by the Party incurring such expenses,
whether or not the Arrangement is consummated.
Section 8.4 Notices.
Any
notice, or other communication given regarding the matters contemplated by this Agreement must be in writing, sent by personal delivery, courier or facsimile (but not by electronic
mail) and addressed:
|
|
|
|
|
|
| |
(a) |
|
to the Parent and the Purchaser at: |
|
|
|
Westwater Resources, Inc.
300-6950 South Potomac Street
Centennial, Colorado, USA
80112 |
|
|
|
Attention: |
|
Christopher M. Jones |
| |
|
|
Facsimile: |
|
(303) 531-0519 |
|
with copies to: |
|
|
|
Stikeman Elliott LLP
5300 Commerce Court West
199 Bay Street
Toronto, ON M5L 1B9 |
|
|
|
Attention: |
|
Amanda Linett |
| |
|
|
Facsimile: |
|
(416) 947-0866 |
|
|
|
Hogan Lovells US LLP
1601 Wewatta, Suite 900
Denver, CO
80202 |
|
|
|
Attention: |
|
Paul Hilton |
| |
|
|
Facsimile: |
|
(303) 454-2414 |
|
(b) |
|
to the Company at: |
|
|
|
Alabama Graphite Corp.
First Canadian Place
Toronto, Ontario, Canada
M5X 1C7 |
|
|
|
Attention: |
|
Tyler W.P. Dinwoodie |
| |
|
|
Facsimile: |
|
(416) 352-5597 |
|
with a copy to: |
|
|
|
Miller Thomson LLP
40 King Street West
Toronto, Ontario, Canada
M5H 3S1 |
|
|
|
Attention: |
|
Geoff Clarke |
| |
|
|
Facsimile: |
|
(416) 595-8695 |
40
Any
notice or other communication is deemed to be given and received (i) if sent by personal delivery or same day courier, on the date of delivery if it is a Business Day and the
delivery was made prior to 4:00 p.m. (local time in place of receipt) and otherwise on the next Business Day, (ii) if sent by overnight courier, on the next Business Day, or
(iii) if sent by facsimile, on the Business Day following the date of confirmation of transmission by the originating facsimile. A Party may change its address for service from time to time by
providing a notice in accordance with the foregoing. Any subsequent notice or other communication must be sent to the Party at its changed address. Any element of a Party's address that is not
specifically changed in a notice will be assumed not to be changed. Sending a copy of a notice or other communication to a Party's legal counsel as contemplated above is for information purposes only
and does not constitute delivery of the notice or other communication to that Party. The failure to send a copy of a notice or other communication to legal counsel does not invalidate delivery of that
notice or other communication to a Party.
Section 8.5 Time of the Essence.
Time
is of the essence in this Agreement.
Section 8.6 Injunctive Relief.
The
Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy at law in the event that any of the provisions of this Agreement were not
performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to injunctive and other equitable relief to prevent breaches
or threatened breaches of this Agreement, and to enforce compliance with the terms of this Agreement without any requirement for the securing or posting of any bond in connection with the obtaining of
any such injunctive or other equitable relief, this being in addition to any other remedy to which the Parties may be entitled at law or in equity.
Section 8.7 No Third Party Beneficiaries.
The
Parties intend that this Agreement will not benefit or create any right or cause of action in favour of, any Person, other than the Parties. No Person, other than the Parties to this
Agreement, is entitled to rely on the provisions of this Agreement in any action, suit, proceeding, hearing or other forum.
Section 8.8 Waiver.
No
waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the
Party to be bound by the waiver. A Party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not
preclude a Party from any other or further exercise of that right or the exercise of any other right.
Section 8.9 Entire Agreement.
This
Agreement, together with the Confidentiality Agreement, constitutes the entire agreement between the Parties with respect to the transactions contemplated by this Agreement and
supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties; provided that to the extent any provisions of the Confidentiality Agreement
conflict with the terms of this Agreement, the terms of this Agreement shall prevail. There are no representations, warranties, covenants, conditions or other agreements, express or implied,
collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as specifically set forth in this Agreement. The Parties have not relied and are
not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
41
Section 8.10 Successors and Assigns.
- (1)
- This
Agreement becomes effective only when executed by the Company, the Parent and the Purchaser. After that time, it will be binding upon and enure to the benefit
of the Company, the Parent and the Purchaser and their respective successors and permitted assigns.
- (2)
- Neither
this Agreement nor any of the rights or obligations under this Agreement are assignable or transferable by any Party without the prior written consent of the
other Party.
Section 8.11 Severability.
If
any provision of this Agreement is determined to be illegal, invalid or unenforceable by any court of competent jurisdiction, that provision will be severed from this Agreement and
the remaining provisions shall remain in full force and effect. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the fullest extent possible.
Section 8.12 Governing Law.
- (1)
- This
Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada
applicable therein.
- (2)
- Each
Party irrevocably attorns and submits to the non-exclusive jurisdiction of the British Columbia courts situated in the City of Vancouver and waives objection to
the venue of any proceeding in such court or that such court provides an inconvenient forum.
Section 8.13 Rules of Construction.
The
Parties to this Agreement waive the application of any Law or rule of construction providing that ambiguities in any agreement or other document shall be construed against the party
drafting such agreement or other document.
Section 8.14 No Liability.
No
director or officer of the Parent or the Purchaser shall have any personal liability whatsoever to the Company under this Agreement or any other document delivered in connection with
the transactions contemplated hereby on behalf of the Parent or the Purchaser. No director or officer of the Company or any of its Subsidiaries shall have any personal liability whatsoever to the
Parent or the Purchaser under this Agreement or any other document delivered in connection with the transactions contemplated hereby on behalf of the Company or any of its Subsidiaries.
Section 8.15 Language.
The
Parties expressly acknowledge that they have requested that this Agreement and all ancillary and related documents thereto be drafted in the English language only. Les parties aux
présentes
reconnaissent avoir exigé que la présente entente et tous les documents qui y sont accessoires soient rédigés en anglais seulement.
Section 8.16 Counterparts.
This
Agreement may be executed in any number of counterparts (including counterparts by facsimile) and all such counterparts taken together shall be deemed to constitute one and the same
instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy
shall be legally effective to create a valid and binding agreement between the Parties.
[Remainder of page intentionally left blank. Signature page follows.]
42
IN WITNESS WHEREOF the Parties have executed this Arrangement Agreement.
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WESTWATER RESOURCES, INC. |
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By: |
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/s/ CHRISTOPHER M. JONES
Authorized Signing Officer |
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1143738 B.C. LTD. |
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By: |
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/s/ CHRISTOPHER M. JONES
Authorized Signing Officer |
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ALABAMA GRAPHITE CORP. |
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By: |
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/s/ GARETH P. HATCH
Authorized Signing Officer |
[Signature Page to Arrangement Agreement]
SCHEDULE A
PLAN OF ARRANGEMENT
UNDER SECTION 288
OF THE BUSINESS CORPORATIONS ACT (BRITISH COLUMBIA)
ARTICLE 1
INTERPRETATION
1.1 Definitions.
Unless indicated otherwise, where used in this Plan of Arrangement, capitalized terms used but not defined shall have the meanings ascribed thereto in the
Arrangement Agreement and the following terms shall have the following meanings (and grammatical variations of such terms shall have corresponding meanings):
"Affiliate" has the meaning specified in National Instrument 45-106—Prospectus and Registration
Exemptions.
"Arrangement" means the arrangement under Section 288 of the BCBCA on the terms and subject to the conditions set out in this Plan
of Arrangement, subject to any amendments or variations made in accordance with the terms of the Arrangement Agreement or Section 5.1 of this Plan of Arrangement or made at the direction of the
Court in the Final Order with the prior written consent of the Company, Parent and Purchaser, each acting reasonably.
"Arrangement Agreement" means the arrangement agreement dated as of December 13, 2017 between Parent, Purchaser and the Company,
including all schedules annexed thereto, as it may be amended, modified or supplemented from time to time in accordance with its terms.
"Arrangement Resolution" means the special resolution of the Company Securityholders approving this Plan of Arrangement, which is to be
considered at the Company Meeting.
"BCBCA" means the Business Corporations Act (British Columbia).
"Business Day" means any day of the year, other than a Saturday, Sunday or any day on which major banks are closed for business in
Vancouver, British Columbia.
"Common Shares" means the common shares in the capital of the Company.
"Company" means Alabama Graphite Corp.
"Company Circular" means the notice of the Company Meeting and accompanying management information circular, including all schedules,
appendices and exhibits to, and information incorporated by reference in, such management information circular, to be sent to the Company Securityholders in connection with the Company Meeting, as
amended, supplemented or otherwise modified from time to time in accordance with the terms of the Arrangement Agreement.
"Company Meeting" means the special meeting of Company Securityholders, including any adjournment or postponement of such special meeting
in accordance with the terms of the Arrangement Agreement, to be called and held in accordance with the Interim Order to consider the Arrangement Resolution.
"Company Options" means the outstanding options to purchase Common Shares issued pursuant to the Company Stock Option Plan.
"Company Optionholders" means the holders of Company Options.
"Company Securityholders" means, collectively, the Company Shareholders, the Company Optionholders and the Company Warrantholders.
SCH-A-1
"Company Shareholders" means the registered or beneficial holders of the Common Shares, as the context requires, and
"Company Shareholder" means any one of them.
"Company Stock Option Plan" means the stock option plan of the Company dated December 16, 2011, as amended.
"Company Warrant Agreements" means, collectively, the warrant agreements to purchase Company Warrants dated as of June 30, 2015,
May 19, 2016, September 6, 2016, September 21, 2016, May 5, 2017 and May 10, 2017, respectively.
"Company Warrants" means the outstanding common share purchase warrants of the Company to purchase Common Shares pursuant to the Company
Warrant Agreements.
"Company Warrantholders" means the holders of Company Warrants.
"Consideration" means 0.08 of a Parent Share for each Common Share.
"Court" means the Supreme Court of British Columbia.
"Depositary" means Computershare Investor Services Inc.
"Dissent Rights" has the meaning ascribed thereto in Section 3.1.
"Dissenting Holder" means a registered Company Shareholder who has validly exercised its Dissent Rights and has not withdrawn or been
deemed to have withdrawn such exercise of Dissent Rights, but only in respect of the Common Shares in respect of which Dissent Rights are validly exercised by such registered Company Shareholder.
"Dissenting Shares" has the meaning ascribed thereto in Section 3.1.
"Effective Date" means the date upon which the Plan of Arrangement becomes effective in accordance with the BCBCA.
"Effective Time" means 12:01 a.m. (Vancouver time) on the Effective Date, or such other time as the Parties agree to in writing
before the Effective Date.
"Final Order" means the final order of the Court pursuant to Section 291 of the BCBCA in a form acceptable to the Company, Parent
and Purchaser, each acting reasonably, approving the Arrangement, as such order may be amended by the Court (with the consent of the Company, Parent and Purchaser, each acting reasonably) at any time
prior to the Effective Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to the Company, Parent and
Purchaser, each acting reasonably) on appeal.
"Governmental Entity" means (i) any international, multinational, national, federal, provincial, state, regional, municipal, local
or other government, governmental or public department, central bank, court,
tribunal, arbitral body, commission, board, bureau, commissioner, minister, cabinet, governor in council, ministry, agency or instrumentality, domestic or foreign, (ii) any subdivision or
authority of any of the above, (iii) any quasi-governmental or private body exercising any regulatory, expropriation or taxing authority under or for the account of any of the foregoing or
(iv) any stock exchange.
"Interim Order" means the interim order of the Court in a form acceptable to the Company, Parent and Purchaser, each acting reasonably,
providing for, among other things, the calling and holding of the Company Meeting, as such order may be amended by the Court with the consent of the Company, Parent and Purchaser, each acting
reasonably.
"In-The-Money Amount" in respect of a Company Option or Replacement Option, as applicable, means the amount, if any, by which the total
fair market value of the Company Shares or Parent Shares, as applicable, that a holder is entitled to acquire on exercise of the Company Option or
SCH-A-2
Replacement
Option, as applicable, immediately before the Effective Time exceeds the aggregate exercise price to acquire such Company Shares or Parent Shares, as applicable, at that time.
"Law" means, with respect to any Person, any and all applicable law (statutory, civil, common or otherwise), constitution, treaty,
convention, ordinance, code, rule, regulation, order, injunction, judgment, decree, ruling or other similar requirement, whether domestic or foreign, enacted, adopted, promulgated or applied by a
Governmental Entity that is binding upon or applicable to such Person or its business, undertaking, property or securities, and to the extent that they have (or are applied as if they have) the force
of law, policies, guidelines, notices and protocols of any Governmental Entity, as amended.
"Lien" means any mortgage, charge, pledge, hypothec, security interest, prior claim, encroachment, option, right of first refusal or first
offer, occupancy right, covenant, assignment, lien (statutory or otherwise), defect of title, or restriction or adverse right or claim, or other third party interest or encumbrance of any kind, in
each case, whether contingent or absolute.
"Letter of Transmittal" means the letter of transmittal sent to holders of Common Shares for use in connection with the Arrangement.
"Parent" means Westwater Resources, Inc.
"Parent Shares" means the common shares in the capital of Parent.
"Parties" means the Company, Parent and Purchaser and "Party" means any one of them.
"Person" includes any individual, partnership, association, body corporate, organization, trust, estate, trustee, executor, administrator,
legal representative, government (including Governmental Entity), syndicate or other entity, whether or not having legal status.
"Plan of Arrangement" means this plan of arrangement proposed under Section 288 of the BCBCA, and any amendments or variations made
in accordance with the Arrangement Agreement or Section 5.1 of this Plan of Arrangement or made at the direction of the Court in the Final Order with the consent of the Company, Parent and
Purchaser, each acting reasonably.
"Purchaser" means 1143738 B.C. Ltd., an indirect or direct subsidiary of the Purchaser.
"Replacement Option" has the meaning set out in Section 2.3(c) of this Plan of Arrangement.
"Tax Act" means the Income Tax Act (Canada).
1.2 Certain Rules of Interpretation.
In this Plan of Arrangement, unless otherwise specified:
- (1)
- Headings, etc. The division of this Plan of Arrangement into Articles and Sections and the insertion of headings are
for convenient reference only and do not affect the construction or interpretation of this Plan of Arrangement.
- (2)
- Currency. All references to dollars or to $ are references to Canadian dollars and all references to U.S.$ are
references to U.S. dollars.
- (3)
- Gender and Number. Any reference to gender includes all genders. Words importing the singular number only include the
plural and vice versa.
- (4)
- Certain Phrases, etc. The words (i) "including", "includes" and "include" mean "including (or includes or include) without
limitation," (ii) "the aggregate of", "the total of", "the sum of", or a phrase
of similar meaning means "the aggregate (or total or sum), without duplication,
of," and (iii) unless stated otherwise, "Article", "Section", and "Schedule"
SCH-A-3
ARTICLE 2
THE ARRANGEMENT
2.1 Arrangement Agreement.
This Plan of Arrangement is made pursuant to the Arrangement Agreement.
2.2 Binding Effect.
This Plan of Arrangement and the Arrangement, upon the filing of the Articles of Arrangement and the issuance of the Certificate of Arrangement, will become
effective, and be binding on Parent, Purchaser, the Company, all holders and beneficial owners of Common Shares (including Dissenting Holders), Company Optionholders, Company Warrantholders, the
registrar and transfer agent of the Company, the Depositary and all other Persons, at and after the Effective Time without any further act or formality required on the part of any Person.
2.3 Arrangement.
At the Effective Time each of the following events shall occur and shall be deemed to occur sequentially as set out below without any further authorization, act
or formality, in each case, unless stated otherwise, effective as at five minute intervals starting at the Effective Time:
- (a)
- each
of the following steps shall occur simultaneously:
- (i)
- each
Common Share outstanding immediately prior to the Effective Time (other than any Common Share in respect of which a Company Shareholder has validly exercised,
and has not withdrawn or been deemed to have withdrawn, its Dissent Right, and Common Shares held by Parent or any Affiliate thereof) shall be transferred to, and acquired by Purchaser, without any
further act or formality on the part of the holder of such Common Share or Purchaser, free and clear of all Liens, and the name of each such Company Shareholder will be removed from the register of
holders of Common Shares and added to the register of holders of Parent Shares, and Purchaser will be recorded as the registered holder of such Common Shares so exchanged and will be deemed to be the
legal and beneficial owner thereof;
- (ii)
- in
exchange for each Common Share transferred in section 2.3(a)(i), Parent shall issue the Consideration to each Company Shareholder who transferred such
Common Share;
SCH-A-4
- (iii)
- Purchaser
shall issue to Parent (or an affiliate of Parent, as directed by Parent) that number of common shares of Purchaser equal in value to the aggregate
Consideration; and
- (iv)
- there
shall be added to the stated capital account maintained by Purchaser for its common shares an amount equal to the fair market value of the Consideration
issued by Parent in section 2.3(a)(ii);
- (b)
- each
Common Share outstanding immediately prior to the Effective Time held by a Company Shareholder in respect of which Dissent Rights have been validly exercised
and have not been withdrawn or deemed to have been withdrawn shall be deemed to have been transferred without any further act or formality, to Purchaser, free and clear of any Liens, in consideration
for a debt claim against Purchaser in an amount and payable in accordance with Article 3, and:
- (i)
- such
Company Shareholder will cease to be the holder of such Dissenting Shares and will cease to have any rights as holder of such Common Shares other than the right
to be paid fair value for such Dissenting Shares as set out in Section 3.1(a);
- (ii)
- such
Company Shareholder's name will be removed as the registered holder of such Dissenting Shares from the registers of Common Shares maintained by or on behalf of
the Company; and
- (iii)
- Purchaser
will be deemed to be the transferee of such Dissenting Shares, free and clear of any Liens.
- (c)
- each
Company Option outstanding immediately prior to the Effective Time shall be exchanged for an option (each, a "Replacement
Option") to acquire from Parent the number of Parent Shares equal to the product of: (A) the number of Company Common Shares subject to the Company Option immediately
before the Effective Time, and (B) 0.08 of a Parent Share, provided that if the foregoing would result in the issuance of a fraction of a Parent Share, then the number of Parent Shares
otherwise issued shall be rounded down to the nearest whole number of Parent Shares. The exercise price per Parent Share subject to any such Replacement Option shall be an amount equal to the quotient
of (A) the exercise price per Company Common Share subject to such Company Option immediately before the Effective Time divided by (B) 0.08 (provided that the aggregate exercise price
payable on any particular exercise of Replacement Options shall be rounded up to the nearest whole cent). Except as set out above, all terms and conditions of each Replacement Option, including the
vesting schedule, term to expiry, conditions to and manner of exercising, shall be the same as the terms of the Company Option exchanged therefor pursuant to the Company Stock Option Plan and any
agreement evidencing the grant thereof prior to the Effective Time, except notwithstanding the termination provisions in the Company option plan, that such Replacement Option shall provide that a
director or officer of the Company that ceases to be a director or officer of the Company may exercise his or her Replacement Options for 90 days following the date such director or officer
ceases to be a director or officer of the Company and that all others including, but not limited to, employees and consultants of the Company, may exercise his, her or its Replacement Options for
30 days following the date such other person ceases to be employed by or provide services to the Company. It is intended that subsection 7(1.4) of Tax Act apply to such exchange of
options. Accordingly, and notwithstanding the foregoing, if required, the exercise price of a Replacement Option will be increased, with effect at and from the Effective Time, such that the
In-The-Money Amount of the Replacement Option immediately after the exchange does not exceed the In-The-Money Amount of the Company Option immediately before the exchange; and
SCH-A-5
- (d)
- in
accordance with the terms of the Company Warrant Agreements, each holder of a Company Warrant outstanding immediately prior to the Effective Time shall receive
upon the subsequent exercise of such holder's Company Warrant, in accordance with its terms, and shall accept in lieu of each Company Common Share to which such holder was theretofore entitled upon
such exercise but for the same aggregate consideration payable therefor, 0.08 of a Parent Share.
2.4 No Fractional Shares
In no event shall any holder of Common Shares be entitled to a fractional Parent Share. Where the aggregate number of Parent Shares to be issued to a person as
consideration under or as a result of this Arrangement would result in a fraction of a Parent Share being issuable, the number of Parent Shares to be received by such Company Securityholder shall be
rounded down to the nearest whole Parent Share and no person will be entitled to any compensation in respect of a fractional Parent Share.
ARTICLE 3
RIGHTS OF DISSENT
3.1 Rights of Dissent.
Pursuant to the Interim Order, registered holders of Common Shares may exercise dissent rights ("Dissent Rights")
under Division 2 of Part 8 of the BCBCA, as modified by this Article 3, the Interim Order and the Final Order, with respect to their Common Shares in connection with the Arrangement,
provided however that written objection to the Arrangement Resolution contemplated by subsection 242(1)(a) of the BCBCA must be received by the Company not later than 5:00 p.m.
(Vancouver time) on the Business Day that is two Business Days immediately preceding the date of the Company Meeting (as it may be adjourned or postponed from time to time). Registered holders of
Common Shares who duly exercise their Dissent Rights with respect to their Common Shares ("Dissenting Shares") shall be deemed to have transferred the
Common Shares held by them and in respect of which Dissent Rights have been validly exercised to Purchaser free and clear of all Liens, as provided in Section 2.3(a), and if
they:
- (a)
- ultimately
are entitled to be paid fair value for their Dissenting Shares: (i) shall be deemed not to have participated in the transactions in
Article 2 (other than Section 2.3(a)), (ii) will be entitled to be paid by Purchaser the fair value of such Dissenting Shares, which fair value, notwithstanding anything to the
contrary contained in the BCBCA, shall be determined as of the close of business on the day before the Arrangement Resolution was adopted; and (iii) will not be entitled to any other payment or
consideration, including any payment that would be payable under the Arrangement had such holders not exercised their Dissent Rights in respect of such Dissenting Shares; or
- (b)
- ultimately
are not entitled, for any reason, to be paid fair value for such Dissenting Shares shall be deemed to have participated in the Arrangement on the same
basis as a non-dissenting holder of Common Shares;
but
in no case will the Company be required to recognize such persons as holding Common Shares on or after the Effective Date.
3.2 Recognition of Dissenting Holders.
- (a)
- In
no circumstances shall Purchaser, Parent, the Company or any other Person be required to recognize a Person exercising Dissent Rights unless such Person is the
registered holder of those Common Shares in respect of which such rights are sought to be exercised.
SCH-A-6
- (b)
- For
greater certainty, in no case shall Parent, Purchaser, the Company or any other Person be required to recognize Dissenting Holders as holders of Common Shares in
respect of which Dissent Rights have been validly exercised after the completion of the transfer under Section 2.3(a), and the names of such Dissenting Holders shall be removed from the
registers of holders of the Common Shares in respect of which Dissent Rights have been validly exercised at the same time as the event described in Section 2.3(a) occurs. In addition to any
other restrictions under Division 2 of Part 8 of the BCBCA, none of the following shall be entitled to exercise Dissent Rights: (i) holders of Company Options or Company Warrants; and
(ii) Company Shareholders who have failed to exercise all the voting rights carried by the Common Shares held by such holders against the Arrangement Resolution.
ARTICLE 4
CERTIFICATES
4.1 Depositary and Procedures.
- (a)
- Parent
will deposit Parent Shares with the Depositary to satisfy the consideration issuable to the Company Shareholders pursuant to this Plan of Arrangement (other
than Company Shareholders validly exercising Dissent Rights and who have not withdrawn their notice of objection).
- (b)
- After
the Effective Date, certificates formerly representing Common Shares which are held by a Company Shareholder will, except for Common Shares held by Dissenting
Holders, represent only the right to receive the Consideration issuable therefor pursuant to Section 2.3 in accordance with the terms of this Plan of Arrangement.
- (c)
- No
dividends or other distributions declared or made after the Effective Date with respect to Parent Shares with a record date after the Effective Date will be
payable or paid to the holder of any unsurrendered certificate or certificates for Common Shares which, immediately prior to the Effective Date, represented outstanding Common Shares and will not be
payable or paid until the surrender of certificates for Common Shares for exchange for the Consideration issuable therefor pursuant to Section 2.3 in accordance with the terms of this Plan of
Arrangement.
- (d)
- As
soon as reasonably practicable after the Effective Date, the Depositary will (i) forward to each Company Shareholder that submitted a duly completed Letter
of Transmittal to the Depositary, together with the certificate (if any) representing the Common Shares held by such Company Shareholder, the certificates representing Parent Shares issued to such
Company Shareholder pursuant to Section 2.3, which shares will be registered in such name or names and either (A) delivered to the address or addresses as such Company Shareholder
directed in their Letter of Transmittal or (B) made available for pick up at the offices of the Depositary in accordance with the instructions of the Company Shareholder in the Letter of
Transmittal.
- (e)
- Company
Shareholders that did not submit an effective Letter of Transmittal prior to the Effective Date may take delivery of the Consideration issuable to them by
delivering the certificates representing Common Shares formerly held by them to the Depositary at the offices indicated in the Letter of Transmittal. Such certificates must be accompanied by a duly
completed Letter of Transmittal, together with such other documents as the Depositary may require. Certificates representing Parent Shares issued to such Company Shareholder pursuant to
Section 2.3 will be registered in such name or names as such Company Shareholder directed in their Letter of Transmittal and such certificates representing Parent Shares will be delivered to
the address or addresses such Company Shareholder directed in their Letter of Transmittal or made available for pick up at the offices of the Depositary in accordance with
SCH-A-7
4.2 Lost Certificates.
In the event any certificate, which immediately before the Effective Time represented one or more outstanding Common Shares that was exchanged pursuant to
Section 2.3, is lost, stolen or destroyed, upon the making of an affidavit of that fact by the Person claiming such certificate to be lost, stolen or destroyed, the Depositary will issue and/or
pay in exchange for such lost, stolen or destroyed certificate, the consideration to which such Person is entitled in respect of the Common Shares represented by such lost, stolen, or destroyed
certificate pursuant to Section 2.3 deliverable in accordance with such Person's Letter of Transmittal. When authorizing such issuances in exchange for any lost, stolen or destroyed
certificate, the Person to whom consideration is to be issued will, as a condition precedent to the issuance thereof, give a bond satisfactory to Parent, Purchaser and the Depositary (acting
reasonably) in such sum as Parent may direct or otherwise indemnify Parent, Purchaser and the Company in a manner satisfactory to Parent, Purchaser and the Company, acting reasonably, against any
claim that may be made against Parent, Purchaser and/or the Company with respect to the certificate alleged to have been lost, stolen or destroyed.
4.3 No Liens.
Any exchange or transfer of securities pursuant to this Plan of Arrangement shall be free and clear of any Liens or other claims of third parties of any kind.
4.4 Withholding Rights.
Parent, Purchaser, the Company and the Depositary, as applicable, shall be entitled to deduct and withhold from any consideration otherwise payable or otherwise
deliverable to any Company Securityholders under the Plan of Arrangement (including, without limitation, any amounts payable pursuant to Article 3) such amounts as Purchaser, Parent, the
Company or the Depositary, as applicable, determines, acting reasonably, are required or permitted to be deducted and withheld from such consideration under the Tax Act, the United States Internal
Revenue Code of 1986 or any provision of any other Law. To the extent that consideration is so withheld, such consideration shall be treated for all purposes hereof as having been paid to the Company
Securityholders in respect of which such deduction, withholding and/or remittance was made; provided that such consideration is actually remitted to the appropriate Governmental Entity.
4.5 Paramountcy.
From and after the Effective Time: (a) this Plan of Arrangement shall take precedence and priority over any and all Common Shares, Company Options and
Company Warrants issued or
SCH-A-8
outstanding
prior to the Effective Time, (b) the rights and obligations of the Company Securityholders, the Company, Parent, Purchaser, the Depositary and any transfer agent or other depositary
therefor in relation thereto, shall be solely as provided for in this Plan of Arrangement, and (c) all actions, causes of action, claims or proceedings (actual or contingent and whether or not
previously asserted) based on or in any way relating to any Common Shares, Company Options or Company Warrants shall be deemed to have been settled, compromised, released and determined without
liability except as set forth in this Plan of Arrangement.
ARTICLE 5
AMENDMENTS
5.1 Amendments to Plan of Arrangement.
- (a)
- The
Company, Parent and Purchaser may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time prior to the Effective Time,
provided that each such amendment, modification and/or supplement must (i) be set out in writing, (ii) be approved by the Company, Parent and Purchaser, each acting reasonably,
(iii) filed with the Court and, if made following the Company Meeting, approved by the Court, and (iv) communicated to the Company Securityholders if and as required by the Court.
- (b)
- Any
amendment, modification or supplement to this Plan of Arrangement may be proposed by the Company, Parent or Purchaser at any time prior to the Company Meeting
(provided that the Company, Parent or Purchaser, as applicable, shall have consented thereto) with or without any other prior notice or communication, and if so proposed and accepted by the Persons
voting at the Company Meeting (other than as may be required under the Interim Order), shall become part of this Plan of Arrangement for all purposes.
- (c)
- Any
amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Company Meeting shall be effective only
if (i) it is consented to in writing by each of the Company, Parent and Purchaser (in each case, acting reasonably), and (ii) if required by the Court, it is consented to by some or all
of the Company Securityholders voting in the manner directed by the Court.
- (d)
- Any
amendment, modification or supplement to this Plan of Arrangement may be made following the Effective Date unilaterally by Parent and Purchaser, provided that it
concerns a matter which, in the reasonable opinion of Parent and Purchaser, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement.
ARTICLE 6
FURTHER ASSURANCES
6.1 Further Assurances.
Notwithstanding that the transactions and events set out in this Plan of Arrangement shall occur and shall be deemed to occur in the order set out in this Plan of
Arrangement without any further act or formality, each of the parties to the Arrangement Agreement shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds,
agreements, transfers, assurances, instruments or documents as may reasonably be required by either of them in order to further document or evidence any of the transactions or events set out in this
Plan of Arrangement.
SCH-A-9
SCHEDULE B
ARRANGEMENT RESOLUTION
BE IT RESOLVED THAT:
- 1.
- The
arrangement (the "Arrangement") under Section 288 of the Business Corporations
Act (British Columbia) (the "BCBCA") involving Alabama Graphite Corp. (the
"Company"), Westwater Resources, Inc. (the "Parent") and 1143738 B.C. Ltd. (the
"Purchaser"), pursuant to the arrangement agreement (the "Arrangement Agreement") between the Parent,
the Purchaser and the Company dated December 13, 2017, all as more particularly described and set forth in the management information circular (the
"Circular") dated · , 2018 of the Company accompanying the
notice of this meeting (as the Arrangement may be amended, modified or supplemented in accordance with its terms) is hereby authorized, approved and adopted.
- 2.
- The
plan of arrangement of the Company (as it has been or may be amended, modified or supplemented in accordance with the Arrangement Agreement and its terms, the
"Plan of Arrangement"), the full text of which is set out as
Appendix · to the Circular, is hereby authorized, approved and adopted.
- 3.
- The
Arrangement Agreement and related transactions, the actions of the directors of the Company in approving the Arrangement Agreement, and the actions of the
directors and officers of the Company in executing and delivering the Arrangement Agreement, and any amendments, modifications or supplements thereto, are hereby ratified and approved.
- 4.
- Notwithstanding
that this resolution has been passed (and the Arrangement adopted) by the Company Securityholders (as defined in the Arrangement Agreement) or that
the Arrangement has been approved by the Supreme Court of British Columbia (the "Court"), the directors of the Company are hereby authorized and
empowered, at their discretion, without notice to or approval of the Company Securityholders: (i) to amend, modify or supplement the Arrangement Agreement or the Plan of Arrangement to the
extent permitted by the Arrangement Agreement and (ii) subject to the terms of the Arrangement Agreement, not to proceed with the Arrangement.
- 5.
- Any
officer or director of the Company be and is hereby authorized and directed for and on behalf of the Company to make an application to the Court for an order
approving the Arrangement and to execute, whether under the corporate seal or otherwise, such documents and instruments as are necessary or desirable to give effect to the Arrangement in accordance
with the Arrangement Agreement, such determination to be conclusively evidenced by the execution and delivery of such documents.
- 6.
- Any
officer or director of the Company is hereby authorized and directed for and on behalf of the Company to execute or cause to be executed, whether under the
corporate seal or otherwise, and to deliver or cause to be delivered all such other documents and instruments and to perform or cause to be performed all such other acts and things as, in such
person's opinion, may be necessary or desirable to give full force and effect to the foregoing resolutions and the matters authorized thereby, such determination to be conclusively evidenced by the
execution and delivery of such document or instrument or the doing of any such act or thing.
SCH-B-1
SCHEDULE B-1
PARENT SHAREHOLDER APPROVAL RESOLUTION
BE IT RESOLVED THAT:
- 1.
- the
issuance of such number of common shares of Westwater Resources, Inc. (the "Parent") as may be required to
be issued pursuant to the terms of the arrangement (the "Arrangement") under Section 288 of the Business Corporations
Act (British Columbia) (the "BCBCA") involving Alabama Graphite Corp. (the
"Company"), the Parent and 1143738 B.C. Ltd. (the "Purchaser"), pursuant to the arrangement
agreement (the "Arrangement Agreement") between the Parent, the Purchaser and the Company dated December 13, 2017 and all as more particularly
described and set forth in the proxy statement of the Purchaser dated · , 2018, containing the notice of
this meeting, is hereby authorized, approved and adopted;
- 2.
- notwithstanding
that this resolution has been passed by the Parent Shareholders (as defined in the Arrangement Agreement), the board of directors of the Parent is
hereby authorized and empowered, at its discretion, without further notice to, or approval of, the Parent Shareholders:
- (a)
- to
amend the terms of the Arrangement to the extent permitted by the Arrangement Agreement as it may deem appropriate in any manner, other than to increase the
number of the Parent's common shares to be paid under the Arrangement; and
- (b)
- subject
to the terms of the Arrangement Agreement, not to proceed with the Arrangement; and
- 3.
- any
officer or director of the Parent is hereby authorized and directed for and on behalf of the Parent to execute or cause to be executed, whether under the
corporate seal or otherwise, and to deliver or cause to be delivered all such documents and instruments and to perform or cause to be performed all such other acts and things as, in such person's
opinion, may be necessary or desirable to give full force and effect to the foregoing resolutions, the Arrangement Agreement and the completion of the Arrangement in accordance with the terms thereof
and the matters authorized thereby, such determination to be conclusively evidenced by the execution and delivery of such document or instrument or the doing of any such act or thing.
SCH-B-1-1
SCHEDULE C
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
- (1)
- Organization and Qualification. The Company and each of its Subsidiaries is a corporation or other entity duly
incorporated or organized, as applicable, validly existing and in good standing under the laws of the jurisdiction of its incorporation, organization or formation, as applicable, and has all requisite
power and authority to own, lease and operate its assets and properties and conduct its business as now owned and conducted. The Company and each of its Subsidiaries is duly qualified, licensed or
registered to carry on business and is in good standing in each jurisdiction in which the character of its assets and properties, owned, leased, licensed or otherwise held, or the nature of its
activities make such qualification, licensing or registration necessary, and has all Authorizations required to own, lease and operate its properties and assets and to conduct its business as now
owned and conducted, except for those Authorizations the absence of which do not have and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with
respect to the Company.
- (2)
- Corporate Authorization. The Company has the requisite corporate power and authority to enter into and perform its
obligations under this Agreement. The execution, delivery and performance by the Company of its obligations under this Agreement and the consummation of the Arrangement and the other transactions
contemplated hereby have been duly authorized by all necessary corporate action on the part of the Company and no other corporate proceedings on the part of the Company are necessary to authorize this
Agreement or the consummation of the Arrangement and the other transactions contemplated hereby other than approval by the Company Securityholders in the manner required by the Interim Order, Law and
approval by the Court.
- (3)
- Execution and Binding Obligation. This Agreement has been duly executed and delivered by the Company, and constitutes
a legal, valid and binding agreement of the Company enforceable against it in accordance with its terms subject only to any limitation under bankruptcy, insolvency or other Laws affecting the
enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and injunction.
- (4)
- Governmental Authorization. The execution, delivery and performance by the Company of its obligations under this
Agreement and the consummation of the Arrangement and the other transactions contemplated hereby do not require any Authorization or other action by or in respect of, or filing with, or notification
to, any Governmental Entity by the Company or by any of its Subsidiaries other than: (i) the Interim Order and any approvals required by the Interim Order; (ii) the Final Order;
(iii) filings with the Securities Authorities and the TSX-V; and (iv) the Arrangement Filings with the Registrar.
- (5)
- Non-Contravention. The execution, delivery and performance by the Company of its obligations under this Agreement and
the consummation of the Arrangement and the other transactions contemplated hereby do not and will not (or would not with the giving of notice, the lapse of time or the happening of any other event or
condition):
- (a)
- contravene,
conflict with, or result in any violation or breach of the Company's Constating Documents or the organizational documents of any of its Subsidiaries;
- (b)
- assuming
compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law;
- (c)
- other
than as set out in Section 3.1(5)(c) of the Company Disclosure Letter, allow any Person to exercise any rights, require any consent or other action by
any Person, or constitute a default under, or cause or permit the termination, cancellation, acceleration or other change of any right or obligation or the loss of any benefit to which the Company or
any of its Subsidiaries are entitled (including by triggering any rights of first refusal or first offer, change
SCH-C-1
in
control provision or other restriction or limitation) under any Contract, lease or other instrument, indenture, deed of trust, mortgage, bond or any Authorization to which the Company or any of its
Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound; or
- (d)
- result
in the creation or imposition of any Lien upon any of the properties or assets of the Company or its Subsidiaries;
with
such exceptions, in the case of clauses (b) through (d), as would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the
Company.
- (6)
- Capitalization.
- (a)
- The
authorized capital of the Company consists of an unlimited number of Common Shares. As of the close of business on the date of this Agreement, there were:
(i) 143,325,187 Common Shares issued and outstanding, (ii) Company Options to purchase 4,550,000 Common Shares and (iii) Company Warrants to purchase 26,804,730 Common Shares. All
outstanding Common Shares have been duly authorized and validly issued, are fully paid and non-assessable. All of the Common Shares issuable upon the exercise of rights under the Company Stock Option
Plan, including outstanding Company Options, have been duly authorized and, upon issuance in accordance with their respective terms, will be validly issued as fully paid and non-assessable and are not
and will not be subject to or issued in violation of, any pre-emptive rights. All of the Common Shares issuable upon the exercise of rights under the Company Warrant Agreements, including outstanding
Company Warrants, have been duly authorized and, upon issuance in accordance with their respective terms, will be validly issued as fully paid and non-assessable and are not and will not be subject to
or issued in violation of, any pre-emptive rights. No Common Shares have been issued and no Company Options or Company Warrants have been granted in violation of any Law or any pre-emptive or similar
rights applicable to them.
- (b)
- Section 3.1(6)(b)
of the Company Disclosure Letter sets forth, in respect of each Company Option outstanding as of the date of this Agreement: (i) the
number of Common Shares issuable upon exercise (including the aggregate total of all Common Shares issuable upon exercise of all outstanding Company Options); (ii) the purchase price payable;
(iii) the date of grant; (iv) the date of expiry; (v) the name of the registered holder, identifying whether such holder is not an employee of the Company or of its Subsidiaries;
and (vi) the vesting schedule. The Company Stock Option Plan and the issuance of Common Shares under such plan (including all outstanding Company Options) have been duly authorized by the
Company Board in compliance with Law and the terms of the Company Stock Option Plan, and have been recorded on the Company's financial statements in accordance with IFRS, and no such grants involved
any "back dating," "forward dating," "spring loading" or similar practices.
- (c)
- Section 3.1(6)(c)
of the Company Disclosure Letter sets forth, in respect of each Company Warrant outstanding as of the date of this Agreement: (i) the
number of Common Shares issuable upon exercise (including the aggregate total of all Common Shares issuable upon exercise of all outstanding Company Warrants); (ii) the exercise price;
(iii) the date of issuance; (iv) the date of expiry; and (v) the name of the registered holder, identifying whether such holder is not an employee of the Company or of its
Subsidiaries.
- (d)
- Except
for rights under the Company Stock Option Plan, and pursuant to the terms of the Company Warrant Agreements, there are no issued, outstanding or authorized
options, equity-based awards, warrants, calls, conversion, pre-emptive, redemption, repurchase, stock appreciation or other rights, or any other agreements, arrangements, instruments or commitments of
any kind that obligate the Company or any of its Subsidiaries to, directly or
SCH-C-2
indirectly,
issue or sell any securities of the Company or of any of its Subsidiaries, or give any Person a right to subscribe for or acquire, any securities of the Company or of any of its
Subsidiaries.
- (e)
- There
are no issued, outstanding or authorized:
- (i)
- obligations
to repurchase, redeem or otherwise acquire any securities of the Company or of any of its Subsidiaries, or qualify securities for public distribution in
Canada, the U.S. or elsewhere, or with respect to the voting or disposition of any securities of the Company or of any of its Subsidiaries; or
- (ii)
- notes,
bonds, debentures or other evidences of indebtedness or any other agreements, arrangements, instruments or commitments of any kind that give any Person,
directly or indirectly, the right to vote with holders of Common Shares on any matter.
- (7)
- Shareholders' and Similar Agreements. Except as disclosed in Section 3.1(7) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries is subject to, or affected by, any unanimous shareholders agreement and is not a party to any shareholder, pooling, voting, or other similar arrangement
or agreement relating to the ownership or voting of the securities of the Company or of any of its Subsidiaries or pursuant to which any Person may have any right or claim in connection with any
existing or past equity interest in the Company or in any of its Subsidiaries.
- (8)
- Subsidiaries.
- (a)
- The
following information with respect to each Subsidiary of the Company is accurately set out in Section 3.1(8)(a) of the Company Disclosure Letter:
(i) its name; (ii) the number, type and principal amount, as applicable, of its outstanding equity securities or other equity interests and a list of registered holders of capital stock
or other equity interests; and (iii) its jurisdiction of incorporation, organization or formation.
- (b)
- Each
Subsidiary is a corporation, partnership, trust or limited partnership, as the case may be, duly organized, validly existing and in good standing under the laws
of the jurisdiction of its incorporation, organization or formation, as the case may be, and has all requisite corporate, trust or partnership power and authority, as the case may be, to own, lease
and operate its properties and assets and to carry on its business as now being conducted, except where the failure to be so organized, validly existing, qualified or in good standing, or to have such
power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Company.
- (c)
- Except
as disclosed in Section 3.1(8)(c) of the Company Disclosure Letter, the Company is, directly or indirectly, the registered and beneficial owner of all
of the outstanding common shares or other equity interests of each of its Subsidiaries, free and clear of any Liens, all such shares or other equity interests so owned by the Company have been validly
issued and are fully paid and non-assessable, as the case may be, and no such shares or other equity interests have been issued in violation of any pre-emptive or similar rights. Except for the shares
or other equity interests owned by the Company in any Subsidiary and except as disclosed in Section 3.1(8)(c) of the Company Disclosure Letter, the Company does not own, beneficially or of
record, any equity interests of any kind in any other Person.
- (9)
- Securities Law Matters. The Company is a "reporting issuer" under Canadian Securities Laws in the provinces of
British Columbia, Alberta and Ontario. The Common Shares are listed and posted for trading on the TSX-V. None of the Company's Subsidiaries are subject to any continuous or periodic, or other
disclosure requirements under any securities laws in any jurisdiction. The Company is not in default of any material requirements of any Securities Laws or
SCH-C-3
the
rules and regulations of the TSX-V. The Company has not taken any action to cease to be a reporting issuer in the provinces of British Columbia, Alberta or Ontario, nor has the Company
received notification from any Securities Authority seeking to revoke the reporting issuer status of the Company. No delisting, suspension of trading or cease trade or other order or restriction with
respect to any securities of the Company is pending, in effect, has been threatened, or is expected to be implemented or undertaken, and the Company is not subject to any formal or informal review,
enquiry, investigation or other proceeding relating to any such order or restriction. The Company has timely filed or furnished with any Governmental Entity all material forms, reports, schedules,
statements and other documents required to be filed or furnished by the Company with the appropriate Governmental Entity since August 31, 2015. The documents comprising the Company Filings
complied as filed in all material respects with Law and did not, as of the date filed (or, if amended or superseded by a subsequent filing prior to the date of this Agreement, on the date of such
filing), contain any Misrepresentation. The Company has not filed any confidential material change report (which at the date of this Agreement remains confidential) or any other confidential filings
(including redacted filings) filed to or furnished with, as applicable, any Securities Authority. There are no outstanding or unresolved comments in comment letters from any Securities Authority with
respect to any of the Company Filings and neither the Company nor any of the Company Filings is subject of an ongoing audit, review, comment or investigation by any Securities Authority or the TSX-V.
- (10)
- U.S. Securities Law Matters
- (a)
- The
Company does not have, nor is it required to have, any class of securities registered under the U.S. Exchange Act, nor is the Company subject to any reporting
obligation (whether active or suspended) pursuant to Section 15(d) of the U.S. Exchange Act.
- (b)
- The
Company is not, and has never been, subject to any requirement to register any class of its equity securities pursuant to Section 12(g) of the U.S.
Exchange Act, is not an investment company registered or required to be registered under the Investment Company Act of 1940 of the United States of America, and is a "foreign private issuer" (as such
term is defined in Rule 3b-14 under the U.S. Exchange Act).
- (c)
- No
securities of the Company have been traded on any national securities exchange in the United States during the past 12 calendar months.
- (11)
- Financial Statements.
- (a)
- The
audited consolidated financial statements and the consolidated interim financial statements of the Company (including, in each case, any of the notes or
schedules to and the auditor's report on such financial statements) included in the Company Filings: (i) were prepared or shall be prepared, as applicable, in accordance with IFRS and Law;
(ii) complied or shall comply, as applicable, as to form in all material respects with applicable accounting requirements in Canada; and (iii) fairly present or shall fairly present, as
applicable, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise), consolidated financial position, results of operations or financial performance and
cash flows of the Company and its Subsidiaries as of their respective dates and the consolidated financial position, results of operations or financial performance and cash flows of the Company and
its Subsidiaries for the respective periods covered by such financial statements (except as may be expressly indicated in the notes to such financial statements). The Company does not intend to
correct or restate, nor, to the knowledge of the Company is there any basis for any correction or restatement of, any aspect of any of the financial statements referred to in this
Paragraph (11). There are no, nor are there any commitments to become a party to, any off-balance sheet transaction, arrangement, obligation (including contingent obligations) or
SCH-C-4
- (12)
- Disclosure Controls and Internal Control over Financial Reporting.
- (a)
- The
Company has established and maintains disclosure controls and procedures (as such term is defined in National
Instrument 52-109—Certification of Disclosure in Issuers' Annual and Interim Filings) to provide reasonable assurance that
information required to be disclosed by the Company in its annual filings, interim filings or other reports filed or submitted by it under Securities Laws is recorded, processed, summarized and
reported within the time periods specified in Securities Laws. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by
the Company in its annual filings, interim filings or other reports filed or submitted under Securities Laws are accumulated and communicated to the Company's management, including its chief executive
officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure.
- (b)
- The
Company has established and maintains a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.
- (c)
- To
the knowledge of the Company, there is no material weakness (as such term is defined in National Instrument 52-109—Certification of Disclosure
in Issuers' Annual and Interim Filings) relating to the design, implementation or maintenance of its internal control over financial reporting, or fraud, whether or not material, that involves
management or other employees who have a significant role in the internal control over financial reporting of the Company. To the knowledge of the Company, none of the Company, any of its Subsidiaries
or any director, officer, employee, auditor, accountant or representative of the Company or any of its Subsidiaries has received or otherwise obtained knowledge of any complaint, allegation,
assertion, or claim, whether written or oral, regarding accounting, internal accounting controls or auditing matters, including any complaint, allegation, assertion, or claim that the Company or any
of its Subsidiaries has engaged in questionable accounting or auditing practices, or any expression of concern from its employees regarding questionable accounting or auditing matters.
- (13)
- Auditors. The auditors of the Company are independent public accountants as required by Laws and there is not now,
and there has never been, any reportable event (as defined in National Instrument 51-102—Continuous Disclosure Obligations) with the
present or any former auditors of the Company.
- (14)
- No Undisclosed Liabilities. Except as set out in Section 3.1(14) of the Company Disclosure Letter, there are
no liabilities or obligations of the Company or of any of its Subsidiaries of any kind
SCH-C-5
whatsoever,
whether accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (i) disclosed in the Company's financial statements or in the
notes thereto; (ii) incurred directly pursuant to this Agreement, or (iii) as disclosed in Section 3.1(14) of the Company Disclosure Letter. An itemized list setting forth the
principal amount of all indebtedness for borrowed money of the Company and its Subsidiaries (and all accrued interest thereon) as of the date hereof, including capital leases, is disclosed in
Section 3.1(14) of the Company Disclosure Letter.
- (15)
- Absence of Certain Changes or Events. Since August 31, 2016, other than the transactions contemplated in this
Agreement or as otherwise disclosed in the Company Filings, the business of the Company and its Subsidiaries has been conducted in the Ordinary Course and there has not been any event, circumstance or
occurrence which has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Company.
- (16)
- Ordinary Course.
- (a)
- Since
August 31, 2016, other than as disclosed in the Company Filings:
- (i)
- the
Company and each of its Subsidiaries has conducted their respective business only in the Ordinary Course;
- (ii)
- no
liability or obligation of any nature (whether absolute, accrued, contingent or otherwise), which has had, or is reasonably likely to have, a Material Adverse
Effect with respect to the Company, has been incurred;
- (iii)
- there
has not been any change in the accounting practices used by the Company and its Subsidiaries;
- (iv)
- except
for Ordinary Course adjustments to employees (other than directors or officers), there has not been any increase in the salary, bonus, or other remuneration
payable to any non-executive employees of any of the Company or its Subsidiaries;
- (v)
- there
has not been any redemption, repurchase or other acquisition of Common Shares by the Company, or any declaration, setting aside or payment of any dividend or
other distribution (whether in cash or otherwise) with respect to the Common Shares;
- (vi)
- there
has not been a material change in the level of accounts receivable or payable, inventories or employees, other than those changes in the Ordinary Course;
- (vii)
- there
has not been any entering into, or an amendment of, any Material Contract other than in the Ordinary Course;
- (viii)
- there
has not been any satisfaction or settlement of any material claims or material liabilities that were not reflected in the Company's audited financial
statements, other than the settlement of claims or liabilities incurred in the Ordinary Course; and
- (ix)
- except
for Ordinary Course adjustments, there has not been any increase in the salary, bonus, or other remuneration payable to any officers of the Company or its
Subsidiaries or any amendment or modification to the vesting or exercisability schedule or criteria, including any acceleration, right to accelerate or acceleration event or other entitlement under
any stock option, restricted stock, deferred compensation or other compensation award of any officer of the Company or any of its Subsidiaries.
- (17)
- Long-Term and Derivative Transactions. Neither the Company nor any of its Subsidiaries have any material obligations
or liabilities, direct or indirect, vested or contingent in respect of any rate swap transactions, basis swaps, forward rate transactions, commodity swaps, commodity options, equity or equity index
swaps, equity or equity index options, bond options, interest rate options,
SCH-C-6
foreign
exchange transactions, cap transactions, floor transactions, collar transactions, currency swap transactions, cross-currency rate swap transactions or currency options or any other similar
transactions (including any option with respect to any of such transactions) or any combination of such transactions.
- (18)
- Related Party Transactions. Except as disclosed in Section 3.1(18)(i) of the Company Disclosure Letter,
neither the Company nor any of its Subsidiaries is indebted to any director, officer, employee or agent of, or independent contractor to, the Company or any of its Subsidiaries or any of their
respective affiliates or associates (except for amounts due in the Ordinary Course as salaries, bonuses and director's fees or the reimbursement of Ordinary Course expenses). Except as disclosed in
Section 3.1(18)(ii) of the Company Disclosure Letter, there are no Contracts (other than employment arrangements) with, or advances, loans, guarantees, liabilities or other obligations to, on
behalf or for the benefit of, any shareholder, officer or director of the Company or any of its Subsidiaries, or any of their respective affiliates or associates.
- (19)
- No "Collateral Benefit". Except as disclosed in Section 3.1(19) of the Company Disclosure Letter, no person
will receive a "collateral benefit" (within the meaning of MI 61-101) from the Company or any of the Company's Subsidiaries as a consequence of the transactions contemplated by the Arrangement.
- (20)
- Compliance with Laws. Each of the Company and each of its Subsidiaries is, and since September 1, 2014 has
been, in compliance in all material respects with Law. Since September 1, 2015, neither the Company nor any of its Subsidiaries is or has been under any investigation with respect to, is or has
been charged or threatened to be charged with, or has received notice of, any violation or potential violation of any Law or disqualification by a Governmental Entity.
- (21)
- Authorizations and Licenses.
- (a)
- The
Company and each of its Subsidiaries own, possess or have obtained all Authorizations that are required by Law in connection with the operation of the business
of the Company and its Subsidiaries as presently or previously conducted, or in connection with the ownership, operation or use of the assets of the Company and its Subsidiaries.
- (b)
- The
Company or its Subsidiaries, as applicable, lawfully hold, own or use, and have complied with, all such Authorizations. Each Authorization is valid and in full
force and effect, and is renewable by its terms or in the Ordinary Course of business without the need for the Company or its Subsidiaries to comply with any special rules or procedures, agree to any
materially different terms or conditions or pay any amounts other than routine filing fees.
- (c)
- No
action, investigation or proceeding is pending in respect of or regarding any such Authorization and none of the Company or any of its Subsidiaries or, to the
knowledge of the Company, any of their respective officers or directors has received notice, whether written or oral, of revocation, non-renewal or material amendments of any such Authorization, or of
the intention of any Person to revoke, refuse to renew or materially amend any such Authorization.
- (d)
- Neither
the Company, any of its Subsidiaries, or to the knowledge of the Company any of their respective officers or directors, owns or has any proprietary,
financial or other interests (direct or indirect) in any such Authorization.
- (22)
- Opinions of Company Financial Advisor. The Company Board and the Special Committee have received the Company
Fairness Opinion. A true and complete copy of the engagement letter between the Company and Echelon Wealth Partners Inc. has been provided to the Purchaser and the Company has made true and
complete disclosure to the Purchaser of all fees, commissions or
SCH-C-7
other
payments that may be incurred pursuant to such engagement or that may otherwise be payable to Echelon Wealth Partners Inc..
- (23)
- Finders' Fees. Except for the engagement letter between the Company and Echelon Wealth Partners Inc. and the
fees payable under or in connection with such engagement, no investment banker, broker, finder, financial adviser or other intermediary has been retained by or is authorized to act on behalf of the
Company or any of its Subsidiaries, or any of their respective officers, directors or employees, or is entitled to any fee, commission or other payment from the Company or any of its Subsidiaries, or
any of their respective officers, directors or employees, in connection with the Agreement.
- (24)
- Board and Special Committee Approval.
- (a)
- The
Special Committee, after consultation with its financial and legal advisors, has unanimously recommended that the Company Board approve the Arrangement and that
the Company Securityholders vote in favor of the Arrangement Resolution.
- (b)
- The
Company Board, acting on the unanimous recommendation in favor of the Arrangement by the Special Committee, has unanimously (i) determined that the
consideration to be received by the Company Securityholders pursuant to the Arrangement and this Agreement is fair to such holders and that the Arrangement is in the best interests of the Company and
the Company Securityholders; (ii) resolved to unanimously recommend that the Company Securityholders vote in favour of the Arrangement Resolution; and (iii) authorized the entering into
of this Agreement and the performance by the Company of its obligations under this Agreement, and no action has been taken to amend, or supersede such determinations, resolutions, or authorizations.
- (c)
- Each
of the directors and officers of the Company has advised the Company and the Company believes that they intend to vote or cause to be voted all Common Shares
beneficially held by them in favour of the Arrangement Resolution, as applicable, and the Company shall make a statement to that effect in the Company Circular.
- (25)
- Material Contracts.
- (a)
- Section 3.1(25)
of the Company Disclosure Letter sets out a complete and accurate list of all Material Contracts. True and complete copies of the Material
Contracts have been disclosed in the Company Data Room and no such Contract has been modified, rescinded or terminated.
- (b)
- Each
Material Contract is legal, valid, binding and in full force and effect and is enforceable by the Company or its Subsidiaries, as applicable, in accordance with
its terms (subject to bankruptcy, insolvency and other Laws affecting creditors' rights generally, and to general principles of equity).
- (c)
- Each
of the Company and each of its Subsidiaries has performed in all material respects all respective obligations required to be performed by them to date under the
Material Contracts and neither the Company nor any of its Subsidiaries is in breach or default under any Material Contract, nor does the Company have knowledge of any condition that with the passage
of time or the giving of notice or both would result in such a breach or default.
- (d)
- None
of the Company or any of its Subsidiaries knows of, or has received any notice (whether written or oral) of, any breach or default under nor, to the knowledge
of the Company, does there exist any condition which with the passage of time or the giving of notice or both would result in such a breach or default under any such Material Contract by any other
party to a Material Contract.
SCH-C-8
- (e)
- None
of the Company or any of its Subsidiaries has received any notice (whether written or oral), that any party to a Material Contract intends to cancel, terminate
or otherwise modify or not renew its relationship with the Company or with any of its Subsidiaries, and, to the knowledge of the Company, no such action has been threatened.
- (26)
- Real Property.
- (a)
- The
Company or one of its Subsidiaries, as applicable, has valid, good and marketable title to all of the real or immovable property owned by the Company or its
Subsidiaries (the "Owned Properties") free and clear of any Liens, except for Permitted Liens. There are no outstanding options or rights of first
refusal to purchase the Owned Properties, or any portion thereof or interest therein.
- (b)
- Except
as disclosed in Section 26(b) of the Company Disclosure Letter, each lease, sublease, license or occupancy agreement for real or immovable property
leased, subleased, licensed or occupied by the Company or its Subsidiaries (the "Leased Properties") is valid, legally binding and enforceable against
the Company or its Subsidiary, as applicable, in accordance with its terms and in full force and effect unamended by oral or written agreement, true and complete copies of which (including all related
amendments, supplements, notices and ancillary agreements) have been disclosed in the Company Data Room, and none of the Company or any of its Subsidiaries is in breach of, or default under, such
lease, sublease, license or occupancy agreement, and no event has occurred which, with notice, lapse of time or both, would constitute such a breach or default by the Company or any of its
Subsidiaries or permit termination, modification or acceleration by any third party thereunder.
- (c)
- No
third party has repudiated or has the right to terminate or repudiate any such lease, sublease, license or occupancy agreement (except for the normal exercise of
remedies in connection with a default thereunder or any termination rights set forth in the lease, sublease, license or occupancy agreement) or any provision thereof.
- (d)
- None
of the leases, subleases, licenses or occupancy agreements has been assigned by the Company or any of its Subsidiaries in favour of any Person or sublet or
sublicensed.
- (27)
- Personal Property. The Company and/or its Subsidiaries have good title to all material personal or movable property
of any kind or nature which the Company or any of its Subsidiaries purports to own, free and clear of all Liens (other than Permitted Liens). The Company and its Subsidiaries, as lessees, have the
right under valid and subsisting leases to use, possess and control all personal or movable property leased by and material to the Company or any of its Subsidiaries as used, possessed and controlled
by the Company or its Subsidiaries, as applicable.
- (28)
- Title to the Assets. The Company and its Subsidiaries own (with good title) all of the properties and assets
(whether real, personal or mixed and whether tangible or intangible) that they purports to own including all the properties and assets reflected as being owned by the Company or its Subsidiaries in
its financial books and records. The Company or its Subsidiaries have legal and beneficial ownership of such assets free and clear of all Liens, except for Permitted Liens. No other Person owns any
property or assets which are being used in the business of the Company or its Subsidiaries except for the Leased Properties, the personal property leased by the Company pursuant to the Material
Contracts and the Intellectual Property licensed to the Company or its Subsidiaries and disclosed in Section 28 of the Company Disclosure Letter.
- (29)
- Title to the Assets and Condition of Properties. The Company and its Subsidiaries has sufficient title (whether in
fee simple or equivalent or by means of an exploration, retention, reconnaissance, development or mining permit, right or licence or similar), free and clear of any title defect or encumbrance, to its
mineral projects with proven and probable reserves or Liens (other than Permitted Liens) and other than the Leased Properties, such properties being described in
SCH-C-9
Section 29
of the Company Disclosure Letter. All real and tangible personal property of the Company and its Subsidiaries is in generally good repair and is operational and usable in the manner
in which it is currently being utilized, subject to normal wear and tear and technical obsolescence, repair or replacement. The Company has provided the Purchaser with a true and complete list of the
royalty and similar type interests which are owned or held, directly or indirectly, by the Company or its Subsidiaries and the Company has, applying customary standards in the mining industry,
sufficient title to all of such royalty or other interests, free and clear of any title defects or encumbrances. All required permits or registrations necessary to perfect title in and to such assets
have been carried out in compliance with Law and are in full force and effect.
- (30)
- No Options, etc. to Purchase Assets. No Person has any written or oral agreement, option, understanding or
commitment, or any right or privilege capable of becoming such for the purchase or other acquisition from the Company of any of its assets.
- (31)
- Technical Reports. The Company has duly and timely filed all technical reports required by NI 43-101 to be
filed with the Securities Authorities and all such technical reports have been prepared and disclosed in accordance with the requirements of, and in compliance with, NI 43-101, including
Form 43-101F1. There has been no change of which the Company is or should be aware that would disaffirm, misrepresent or change any material aspect of any such technical report or that would
require the filing of a new technical report under NI 43-101 and applicable Securities Laws. All of the material assumptions contained in such technical reports are reasonable and appropriate.
Each such filed technical report was prepared by, or under the supervision of, a qualified person within the meaning of NI 43-101.
- (32)
- Interest in Properties and Mineral Rights.
- (a)
- All
of the mineral interests and rights (including any claims, mineral leases, concessions, exploration licenses, exploitation and/or mining licenses and prospecting
permits) (collectively, the "Company Mineral Rights") that are currently in effect and held by the Company or any of its Subsidiaries, are disclosed in
the Company Data Room. Other than the Company Mineral Rights, the Company does not own or have any interest in any real property or any mineral interests and rights. The Company Mineral Rights grant
the Company or one of its Subsidiaries the right to explore for, mine and extract in commercial quantities, minerals under the terms and conditions of the Parent Mineral Rights.
- (b)
- The
Company or one of its Subsidiaries is the recorded holder of the Company Mineral Rights, free and clear of any Liens except Permitted Liens.
- (c)
- All
of the Company Mineral Rights have been properly located and recorded in compliance with Law and are comprised of valid and subsisting claims, mineral leases,
concessions, exploration licenses, exploitation and/or mining licenses and prospecting permits.
- (d)
- The
Company Mineral Rights are in good standing in all respects under Law and except as would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect with respect to the Company, all work required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other
payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.
- (e)
- There
is no material adverse claim against or challenge to the title to or ownership of any of the Company Mineral Rights, subject to Law.
- (f)
- The
Company has the exclusive right to deal with all of the Company Mineral Rights.
- (g)
- Other
than as disclosed in Section 3.1(32)(g) of the Company Disclosure Letter, no Person other than the Company has any interest in any of the Company
Mineral Rights or the
SCH-C-10
- (33)
- Operational Matters. Except as would not, individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect with respect to the Company:
- (a)
- except
as disclosed in Section 3.1(33)(a) of the Company Disclosure Letter, all rentals, royalties, overriding royalty interests, production payments, net
profits, interest burdens, payments and obligations due and payable, or performable, as the case may be, on or prior to the date hereof under, with respect to, or on account of, any direct or indirect
assets of the Company, have been: (A) duly paid; (B) duly performed; or (C) provided for prior to the date hereof; and
- (b)
- except
as disclosed in Section 3.1(33)(b) of the Company Disclosure Letter, all costs, expenses, and liabilities payable on or prior to the date hereof under
the terms of any contracts and agreements to which the Company is directly or indirectly bound have been properly and timely paid, except for such expenses that are being currently paid prior to
delinquency in the Ordinary Course.
- (34)
- Intellectual Property. Except as would not and would not be reasonably expected to have, individually or in the
aggregate, a Material Adverse Effect with respect to the Company: (i) the Company, and/or its Subsidiaries own all right, title and interest in and to, or have validly licensed (and are not in
material breach of such licenses), all Intellectual Property that is material to the conduct of the business, as presently conducted, of the Company and its Subsidiaries (collectively, the
"Intellectual Property Rights"); (ii) all such Intellectual Property Rights that are owned by or licensed to the Company, and/or its Subsidiaries
are sufficient, in all material respects, for conducting the business, as presently conducted, of the Company and its Subsidiaries; (iii) to the knowledge of the Company, all Intellectual
Property Rights owned or leased by the Company and/or its Subsidiaries are valid and enforceable, and to the knowledge of the Company, the carrying on of the business of the Company and its
Subsidiaries and the use by the Company and its Subsidiaries of any of the Intellectual Property Rights or Technology (as defined below) owned by or licensed to them does not breach, violate, infringe
or interfere with any rights of any other Person; (iv) to the knowledge of the Company, no third party is infringing upon the Intellectual Property Rights owned or licensed by the Company or
its Subsidiaries; (v) all computer hardware and associated firmware and operating systems, application software, database engines and processed data, technology infrastructure and other
computer systems used in connection with the conduct of the business, as presently conducted, of the Company and its Subsidiaries (collectively,
SCH-C-11
the
"Technology") are sufficient, in all material respects, for conducting the business, as presently conducted, of the Company and its Subsidiaries;
and (vi) the Company and its Subsidiaries own or have validly licensed or leased (and are not in material breach of such licenses or leases) such Technology.
- (35)
- Restrictions on Conduct of Business. Neither the Company nor any of its Subsidiaries is a party to or bound by any
non-competition agreement, any non-solicitation agreement, or any other agreement, obligation, judgment, injunction, order or decree which purports to: (i) limit in any material respect the
manner or the localities in which all or any portion of the business of the Company or its Subsidiaries are conducted; (ii) limit any business practice of the Company or of any of its
Subsidiaries in any material respect; or (iii) restrict any acquisition or disposition of any property by the Company or by any of its Subsidiaries in any material respect. Neither the Company
nor any of its Subsidiaries or any of their respective properties or assets is subject to any outstanding judgment, order, writ, injunction or decree that would have or would be reasonably expected to
have, individually or in the aggregate, a Material Adverse Effect with respect to the Company or that would or would be reasonably expected to prevent or delay the consummation of the Arrangement or
the transactions contemplated hereby.
- (36)
- Litigation. Except as set out in Section 3.1(36) of the Company Disclosure Letter, there are no claims,
actions, suits, arbitrations, inquiries, audits, investigations or proceedings pending, or, to the knowledge of the Company threatened, against or relating to the Company or any of its Subsidiaries,
the business of the Company or of any of its Subsidiaries or affecting any of their respective current or former properties or assets by or before any Governmental Entity that, if determined adverse
to the interests of the Company or its Subsidiaries, could potentially result in criminal sanction, or would be reasonably expected to prevent or delay the consummation of the Arrangement or the
transactions contemplated hereby or would or would be reasonably expected to materially affect the Purchaser's ability to own or operate the business of the Company or its Subsidiaries, nor to the
knowledge of the Company are there any events or circumstances which could reasonably be expected to give rise to any such claim, action, suit, arbitration, inquiry, investigation or proceeding. There
is no bankruptcy, liquidation, winding-up or other similar proceeding pending or in progress, or, to the knowledge of the Company, threatened against or relating to the Company or any of its
Subsidiaries before any Governmental Entity.
- (37)
- Corrupt Practices Legislation. Neither the Company or its Subsidiaries, nor any of their respective officers,
directors or employees acting on behalf of any of them, has taken, committed to take or been alleged to have taken any action which would cause the Company or any of its Subsidiaries to be in
violation of the Corruption of Foreign Public Officials Act (Canada) (and the regulations promulgated thereunder) or any Law of similar effect of any
other jurisdiction, and to the knowledge of the Company no such action has been taken by any of its agents, representatives or other Persons acting on behalf of the Company or any of its Subsidiaries.
- (38)
- Environmental Matters.
- (a)
- No
written notice, order, complaint or penalty has been received by the Company or any of its Subsidiaries alleging that the Company or any of its Subsidiaries is in
violation of, or has any liability or potential liability under, any Environmental Law, and there are no judicial, administrative or other actions, suits or proceedings pending or threatened against
the Company or any of its Subsidiaries which allege a violation of, or any liability or potential liability under, any Environmental Laws; and the Company is not aware of any facts or circumstances
that reasonably could be expected to give rise to any such notice, claim, order, complaint or penalty.
- (b)
- The
Company and each of its Subsidiaries has all environmental permits necessary for the operation of their respective businesses and to comply with all
Environmental Laws; and
SCH-C-12
(iii) the
operations of the Company and each of its Subsidiaries are, and since September 1, 2014 have been, in compliance in all respects with Environmental Laws.
- (c)
- To
the knowledge of the Company, there are no Hazardous Substances in the soil or groundwater at the site of any of the Company Mineral Rights that would result or
reasonably be expected to result in material liability to the Company or any of its Subsidiaries.
- (39)
- Employment Matters.
- (a)
- Except
as disclosed in Section 3.1(39) of the Company Disclosure Letter, (i) the Company has not entered into any written or oral agreement or
understanding providing for a retention or change of control bonus or severance or termination payments to any director, officer or Company Employees in connection with the termination of their
position or their employment as a direct result of a change in control of the Company (including as a result of the Arrangement), and (ii) no Company Employee has any agreement as to length of
notice or severance payment required to terminate his or her employment, other than such as results by Law from the employment of an employee without an agreement as to notice or severance.
- (b)
- Except
as disclosed in Section 3.1(39)(b) of the Company Disclosure Letter, the Company is not a party to any Collective Agreement with respect to any Company
Employees; no Person holds bargaining rights with respect to any Company Employees and, to the knowledge of the Company, no Person has applied or, to the knowledge of the Company, threatened to be
certified as the bargaining agent of any Company Employees. No trade union has applied to have the Company declared a common or related employer pursuant to the Labour
Relations Code (British Columbia), the Ontario Labour Relations Act or any similar legislation in any jurisdiction in which the
Company carries on business.
- (c)
- The
Company is in material compliance with all terms and condition of employment and all Laws respecting employment, including pay equity, accessibility, wages,
hours of work, overtime, human rights and occupational health and safety. The Company is not subject to any claim for wrongful dismissal, constructive dismissal or any other tort claim, actual or, to
the knowledge of the Company, threatened, or any litigation actual, or to the knowledge of the Company, threatened, relating to employment or termination of employment of employees or independent
contractors.
- (d)
- The
Company has not and is not engaged in any unfair labour practice and not unfair labour practice complaint, grievance or arbitration proceeding is pending, or to
the knowledge of the Company, threatened against the Company. No labour strike, lock-out, slowdown or work stoppage is pending or to the knowledge of the Company, threatened against or directly
affecting the Company and no such event has occurred in the last two years.
- (e)
- Each
independent contractor and consultant has been properly classified by the Company as an independent contractor and the Company has not received notification
from any Governmental Entity challenging the classification of any individual who performs services for the Company's business as an independent contractor or consultant.
- (f)
- There
are no outstanding assessments, penalties, fines, liens, charges, surcharges, or other amounts due or owing pursuant to any workplace safety and insurance
legislation and there are no orders under applicable occupational health and safety legislation relating to the Company which are currently outstanding.
- (40)
- Employee Plans.
- (a)
- Section 3.1(40)(a)
of the Company Disclosure Letter lists and describes all the employee benefit, fringe benefit, health, welfare, dental, disability, life
insurance, supplemental unemployment benefit, bonus, profit sharing, option, incentive, incentive compensation,
SCH-C-13
deferred
compensation, share purchase, share compensation, phantom stock, severance, termination, retirement, savings, pension, and similar plans, policies, trusts, funds, policies, arrangements,
Contracts or other agreements for the benefit of directors or former directors of the Company, Company Employees or former Company Employees, which are maintained, sponsored or funded by the Company,
whether written or oral, funded or unfunded, insured or self-insured, registered or unregistered in respect of which the Company may have any liability contingent or otherwise, other than benefit
plans established pursuant to statute (collectively, the "Employee Plans"). The Company has furnished to the Purchaser true, correct and complete copies
of all the Employee Plans as amended as of the date hereof, together with all related documentation. No changes have occurred or are expected to occur which would materially affect the information
required to be provided to the Purchaser pursuant to this provision.
- (b)
- No
Employee Plan is or is intended to be a "registered pension plan", a "deferred profit sharing plan", a "retirement compensation arrangement", a "registered
retirement savings plan", or a "tax-free savings account" as such terms are defined in the Tax Act.
- (c)
- Each
Employee Plan is and has been operated in accordance with Law, in all material respects. The Company has made all contributions and paid all premiums in respect
of each Employee Plan in a timely fashion in accordance with Law and the terms of each Employee Plan.
- (d)
- Other
than routine claims for benefits, no Employee Plan is subject to any pending action, investigation, examination, claim (including claims for income taxes,
interest, penalties, fines or excise taxes) or any other proceeding initiated by any Person, and there exists no state of facts which could reasonably be expected to give rise to any such action,
investigation, examination, claim or other proceeding.
- (e)
- No
insurance policy or any other agreement affecting any Employee Plan requires or permits a retroactive increase in contributions, premiums or other payments due
thereunder. The level of insurance reserves under each Employee Plan which provides group benefits and contemplates the holding of such reserves is reasonable and sufficient to provide for all
incurred but unreported claims.
- (f)
- None
of the Employee Plans provide for retiree or post-termination benefits or for benefits to retired or terminated employees or to the beneficiaries or dependants
of retired or terminated employees, except as required by Law.
- (g)
- Subject
to the requirements of Laws, no provision of any Employee Plan or of any agreement, and no act or omission of the Company in any way limits, impairs,
modifies or otherwise affects the right of the Company to unilaterally amend or terminate any Employee Plan, and no commitments to improve or otherwise amend any Employee Plan have been made.
- (h)
- No
advance tax rulings have been sought or received in respect of any Employee Plan.
- (i)
- All
employee data necessary to administer each Employee Plan in accordance with its terms and conditions and all Laws is in possession of the Company and such data
is complete, correct, and in a form which is sufficient for the proper administration of each Employee Plan.
- (41)
- Insurance
- (a)
- Each
of the Company and each of its Subsidiaries is, and has been continuously since September 1, 2014, insured by reputable third party insurers with
reasonable and prudent policies appropriate for the size and nature of the business of the Company and its Subsidiaries and their respective assets.
SCH-C-14
- (b)
- A
true and complete list of all material insurance policies currently in effect that insure the physical properties, business, operations and assets of the Company
and its Subsidiaries has been provided in the Company Data Room. To the knowledge of the Company each material insurance policy currently in effect that insures the physical properties, business,
operations and assets of the Company and its Subsidiaries is valid and binding and in full force and effect and there is no material claim pending under any such policies as to which coverage has been
questioned, denied or disputed. There is no material claim pending under any insurance policy of the Company or its Subsidiaries that has been denied, rejected, questioned or disputed by any insurer
or as to which any insurer has made any reservation of rights or refused to cover all or any material portion of such claims. All material proceedings covered by any insurance policy of the Company or
its Subsidiaries have been properly reported to and accepted by the applicable insurer.
- (42)
- Taxes.
- (a)
- The
Company and each of its Subsidiaries has duly and timely filed all Tax Returns required to be filed by them prior to the date hereof and all such Tax Returns are
complete and correct in all material respects.
- (b)
- The
Company and each of its Subsidiaries has paid on a timely basis all Taxes which are due and payable, all assessments and reassessments, and all other Taxes due
and payable by them on or before the date hereof, other than those which are being or have been contested in good faith and in respect of which reserves have been provided in the most recently
published consolidated financial statements of the Company. The Company and its Subsidiaries have provided adequate accruals in accordance with IFRS in the most recently published consolidated
financial statements of the Company for any Taxes of the Company and each of its Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being
due on any Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed,
incurred or accrued, other than in the ordinary course of business. None of the Company or its Subsidiaries has received a refund to which it was not entitled.
- (c)
- No
material deficiencies, litigation, proposed adjustments or matters in controversy exist or have been asserted with respect to Taxes of the Company or any of its
Subsidiaries, and neither the Company nor any of its Subsidiaries is a party to any action or proceeding for assessment or collection of Taxes and no such event has been asserted or, to the knowledge
of the Company, threatened against the Company or any of its Subsidiaries or any of their respective assets.
- (d)
- No
claim has been made by any Government Entity in a jurisdiction where the Company and any of its Subsidiaries does not file Tax Returns that the Company or any of
its Subsidiaries is or may be subject to Tax by that jurisdiction.
- (e)
- There
are no Liens (other than Permitted Liens) with respect to Taxes upon any of the assets of the Company or any of its Subsidiaries.
- (f)
- The
Company and each of its Subsidiaries has withheld or collected all amounts required to be withheld or collected by it on account of Taxes and has remitted all
such amounts to the appropriate Governmental Entity when required by Law to do so.
- (g)
- There
are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or
assessment or reassessment of Taxes due from the Company or any of its Subsidiaries for any taxable period and no request for any such waiver or extension is currently pending.
SCH-C-15
- (h)
- The
Company and each of its Subsidiaries has made available to the Purchaser true, correct and complete copies of all Tax Returns, examination reports and statements
of deficiencies for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired.
- (i)
- The
terms and conditions made or imposed in respect of every transaction (or series of transactions) between the Company and any Person that is (x) a
non-resident of Canada for purposes of the Tax Act, and (y) not dealing at arm's length with the Company, for purposes of the Tax Act, do not differ from those that would have been made between
persons dealing at arm's length for purposes of the Tax Act, and all documentation or records as required by applicable Law has been made or obtained in respect of such transactions (or series of
transactions).
- (j)
- There
are no circumstances existing which could result in the application of Section 78 or Sections 80 to 80.04 of the Tax Act, or any equivalent
provision under provincial Law, to the Company.
- (k)
- Neither
the Company nor any of its Subsidiaries has participated in any "listed transaction" within the meaning of United States Treasury Regulations
Section 1.6011-4.
- (43)
- Disclosure. The Company has made available to the Purchaser all material information concerning the Company, its
Subsidiaries and their respective businesses through SEDAR, information disclosed in the Company Data Room or the Company Disclosure Letter and all such information as made available to the Purchaser
is accurate, true and correct in all material respects. No forecast, budget or projection provided by or on behalf of the Company to the Purchaser contains any Misrepresentation and such forecasts,
budgets and projections were prepared in good faith and contain reasonable estimates of the prospects of the business of the Company and its Subsidiaries.
- (44)
- Confidentiality Agreements. All agreements entered into by the Company or any of its Subsidiaries with Persons other
than the Purchaser regarding the confidentiality of information provided to such Person or reviewed by such Persons with respect to any transaction in the nature described in the definition of
Acquisition Proposal contain customary provisions, including standstill provisions, which do not provide for any waiver or release thereof other than with the consent of the Company or its Subsidiary
and the Company or, if applicable, its Subsidiary has not waived, released or amended the standstill or other provisions of any such agreements. The Company or any of its Subsidiaries have not
negotiated or engaged in any discussions with respect to any such proposal with any Person who has not entered into such a confidentiality agreement.
SCH-C-16
SCHEDULE D
REPRESENTATIONS AND WARRANTIES OF THE PARENT AND THE PURCHASER
- (1)
- Organization and Qualification. Each of the Parent and the Purchaser is a corporation duly incorporated, validly
existing and in good standing under the laws of the jurisdiction of its incorporation and has all requisite power and authority to own, lease and operate its assets and properties and conduct its
business as now owned and conducted. Each of the Parent and the Purchaser and each of their Subsidiaries is duly qualified, licensed or registered to carry on business and is in good standing in each
jurisdiction in which the character of its assets and properties, owned, leased, licensed or otherwise held, or the nature of its activities make such qualification, licensing or registration
necessary, and has all Authorizations required to own, lease and operate its properties and assets and to conduct its business as now owned and conducted, except for those Authorizations the absence
of which do not have and would not be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Purchaser.
- (2)
- Corporate Authorization. Each of the Parent and the Purchaser has the requisite corporate power and authority to
enter into and perform its obligations under this Agreement. The execution, delivery and performance by each of the Parent and the Purchaser of their respective obligations under this Agreement and
the consummation of the Arrangement and the other transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of each of the Parent and the Purchaser and
no other corporate proceedings on the part of each of the Parent and the Purchaser are necessary to authorize this Agreement or the consummation of the Arrangement and the other transactions
contemplated hereby other than the Parent Shareholder Approval.
- (3)
- Execution and Binding Obligation. This Agreement has been duly executed and delivered by each of the Parent and the
Purchaser, and constitutes a legal, valid and binding agreement of each of them enforceable against each of them in accordance with its terms subject only to any limitation under bankruptcy,
insolvency or other Laws affecting the enforcement of creditors' rights generally and the discretion that a court may exercise in the granting of equitable remedies such as specific performance and
injunction.
- (4)
- Governmental Authorization. The execution, delivery and performance by each of the Parent and the Purchaser of their
respective obligations under this Agreement and the consummation by the Parent and the Purchaser of the Arrangement and the transactions contemplated hereby do not require any Authorization or other
action by or in respect of, or filing with, or notification to, any Governmental Entity by the Parent and the Purchaser other than: (i) the Interim Order and any approvals required by the
Interim Order; (ii) the Final Order; (iii) filings with the Securities Authorities and NASDAQ; and (iv) the Arrangement Filings with the Registrar.
- (5)
- Non-Contravention. The execution, delivery and performance by each of the Parent and the Purchaser of its obligations
under this Agreement and the consummation of the Arrangement and the transactions contemplated hereby do not and will not (or would not with the giving of notice, the lapse of time or the happening of
any other event or condition):
- (a)
- contravene,
conflict with, or result in any violation or breach of the organizational documents of the Parent or the Purchaser; or
- (b)
- assuming
compliance with the matters referred to in Paragraph (4) above, contravene, conflict with or result in a violation or breach of Law except as would
not, individually or in the aggregate, materially impede the ability of the Parent and the Purchaser to consummate the Arrangement and the transactions contemplated hereby.
SCH-D-1
- (6)
- Capitalization.
- (a)
- The
authorized capital of the Purchaser consists of one hundred (100) shares. As of the close of business on the date of this Agreement, there were 100 common
shares of the Purchased issued and outstanding.
- (b)
- The
authorized capital of the Parent consists of one hundred million (100,000,000) shares. As of the close of business on the date of this Agreement, there were:
(i) 27,640,324 Common Shares issued and outstanding, (ii) Company Options to purchase 293,991 Common Shares, (iii) Company Warrants to purchase 183,333 Common Shares and
(iv) restricted stock units to purchase 273,373 Common Shares. All of the Parent Shares issuable upon the exercise of rights under the Parent Omnibus Incentive Plan, including outstanding
Parent Options, have been duly authorized and, upon issuance in accordance with their respective terms, will be validly issued as fully paid and non-assessable and are not and will not be subject to
or issued in violation of, any pre-emptive rights. No Parent Shares have been issued and no Parent Options have been granted in violation of any Law or any pre-emptive or similar rights applicable to
them. The Parent Omnibus Incentive Plan and the issuance of Parent Shares under such plan (including all outstanding Parent Options) have been duly authorized by the Parent Board in compliance with
Law and the terms of the Parent Omnibus Incentive Plan, and have been recorded on the Purchaser's financial statements in accordance with GAAP, and no such grants involved any "back dating," "forward
dating," "spring loading" or similar practices.
- (c)
- Except
for rights under the Parent Omnibus Incentive Plan, there are no issued, outstanding or authorized options, equity-based awards, warrants, calls, conversion,
pre-emptive, redemption, repurchase, stock appreciation or other rights, or any other agreements, arrangements, instruments or commitments of any kind that obligate the Parent, Purchaser or any of its
Subsidiaries, as applicable, to, directly or indirectly, issue or sell any securities of the Parent or the Purchaser, as applicable, or of any of their Subsidiaries, or give any Person a right to
subscribe for or acquire, any securities of the Parent and the Purchaser or of any of their Subsidiaries.
- (d)
- There
are no issued, outstanding or authorized:
- (i)
- obligations
to repurchase, redeem or otherwise acquire any securities of the Parent, the Purchaser or of any of their Subsidiaries, or qualify securities for public
distribution in the U.S., or elsewhere, or with respect to the voting or disposition of any securities of the Parent, the Purchaser or of any of their Subsidiaries; or
- (ii)
- notes,
bonds, debentures or other evidences of indebtedness or any other agreements, arrangements, instruments or commitments of any kind that give any Person,
directly or indirectly, the right to vote with holders of Parent Shares on any matter.
- (7)
- Shareholders' and Similar Agreements. Except as disclosed in Section 3.2(7) of the Parent Disclosure Letter,
neither the Parent, the Purchaser nor any of their Subsidiaries is subject to, or affected by, any unanimous shareholders agreement and is not a party to any shareholder, pooling, voting, or other
similar arrangement or agreement relating to the ownership or voting of the securities of the Parent, the Purchaser or of any of their Subsidiaries or pursuant to which any Person may have any right
or claim in connection with any existing or past equity interest in the Parent, the Purchaser or in any of their Subsidiaries.
- (8)
- Subsidiaries.
- (a)
- Other
than Purchaser and those subsidiaries disclosed in the Parent Filings (the "Parent Subsidiaries"), the Parent
has no Subsidiaries.
SCH-D-2
- (b)
- Each
Parent Subsidiary is a corporation, partnership, trust or limited partnership, as the case may be, duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation, organization or formation, as the case may be, and has all requisite corporate, trust or partnership power and authority, as the case may be, to own,
lease and operate its properties and assets and to carry on its business as now being conducted, except where the failure to be so organized, validly existing, qualified or in good standing, or to
have such power or authority, would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect with respect to the Parent.
- (c)
- The
Parent is, directly or indirectly, the registered and beneficial owner of all of the outstanding common shares or other equity interests of each Parent
Subsidiary, free and clear of any Liens, all such shares or other equity interests so owned by the Parentr have been validly issued and are fully paid and non-assessable, as the case may be, and no
such shares or other equity interests have been issued in violation of any pre-emptive or similar rights.
- (9)
- Securities Law Matters. The Parent Shares are listed and posted for trading on NASDAQ and are registered as a class
under section 12(b) of the U.S. Exchange Act. The Parent has filed or furnished all reports or other information required to be filed or furnished under section 13(a) of the U.S.
Exchange Act. None of the Parent's Subsidiaries are subject to any continuous or periodic, or other disclosure requirements under any securities laws in any jurisdiction. The Parent is not in default
of any material requirements of any Securities Laws or the rules and regulations of NASDAQ. No delisting, suspension of trading or cease trade or other order or restriction with respect to any
securities of the Parent is pending, in effect, has been threatened, or is expected to be implemented or undertaken, and the Parent is not subject to any formal or informal review, enquiry,
investigation or other proceeding relating to any such order or restriction. The Parent has timely filed or furnished with any Governmental Entity all material forms, reports, schedules, statements
and other documents required to be filed or furnished by the Parent with the appropriate Governmental Entity since December 31, 2014. The documents comprising the Parent Filings complied as
filed in all material respects with Law and did not, as of the date filed (or, if amended or superseded by a subsequent filing prior to the date of this Agreement, on the date of such filing), contain
any Misrepresentation. The Parent has not filed any confidential filings (which at the date of this Agreement remains confidential) or any other confidential filings (including redacted filings) filed
to or furnished with, as applicable, any Securities Authority. There are no outstanding or unresolved comments in comment letters from any Securities Authority with respect to any of the Parent
Filings and neither the Parent nor any of the Parent Filings is subject of an ongoing audit, review, comment or investigation by any Securities Authority or NASDAQ.
- (10)
- Financial Statements.
- (a)
- The
audited consolidated financial statements and the consolidated interim financial statements of the Parent (including, in each case, any of the notes or schedules
to and the auditor's report on such financial statements) included in the Parent Filings: (i) were prepared or shall be prepared, as applicable, in accordance with GAAP and Law;
(ii) complied or shall comply, as applicable, as to form in all material respects with applicable accounting requirements in the U.S.; and (iii) fairly present or shall fairly present,
as applicable, in all material respects, the assets, liabilities (whether accrued, absolute, contingent or otherwise), consolidated financial position, results of operations or financial performance
and cash flows of the Parent and its Subsidiaries as of their respective dates and the consolidated financial position, results of operations or financial performance and cash flows of the Parent and
its Subsidiaries for the respective periods covered by such financial statements (except as may be expressly indicated in the notes to such financial statements). The Parent does not intend to correct
or restate, nor, to the knowledge of the Parent is there any basis for any correction or restatement of, any aspect of any of the financial statements referred to in this
SCH-D-3
Paragraph (10).
There are no, nor are there any commitments to become a party to, any off-balance sheet transaction, arrangement, obligation (including contingent obligations) or other
relationship of the Parent or of any of its Subsidiaries with unconsolidated entities or other Persons.
- (b)
- The
financial information included in the Parent Filings present fairly the information shown in the Parent Filings and have been compiled on a basis consistent with
that of the audited financial statements included in the Parent Filings. The other financial and operational information included in the Parent Filings presents fairly the information included in the
Parent Filings.
- (c)
- The
financial books, records and accounts of the Parent and each of its Subsidiaries: (i) have been maintained, in all material respects, in accordance with
GAAP; (ii) are stated in reasonable detail; (iii) accurately and fairly reflect all the material transactions, acquisitions and dispositions of the Parent and its Subsidiaries; and
(iv) accurately and fairly reflect the basis of the Parent's financial statements.
- (11)
- Disclosure Controls and Internal Control over Financial Reporting.
- (a)
- The
Parent has established and maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required
to be disclosed by the Parent in its annual filings, interim filings or other reports filed or submitted by it under Securities Laws is recorded, processed, summarized and reported within the time
periods specified in Securities Laws. Such disclosure controls and procedures include controls and procedures designed to ensure that information required to be disclosed by the Parent in its annual
filings, interim filings or other reports filed or submitted under Securities Laws are accumulated and communicated to the Parent's management, including its chief executive officer and chief
financial officer, as appropriate, to allow timely decisions regarding required disclosure.
- (b)
- The
Parent has established and maintains a system of internal control over financial reporting that is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP.
- (c)
- To
the knowledge of the Parent, there is no material weakness relating to the design, implementation or maintenance of its internal control over financial reporting,
or fraud, whether or not material, that involves management or other employees who have a significant role in the internal control over financial reporting of the Parent. To the knowledge of the
parent, none of the Parent, any of its Subsidiaries or any director, officer, employee, auditor, accountant or representative of the Parent or any of its Subsidiaries has received or otherwise
obtained knowledge of any complaint, allegation, assertion, or claim, whether written or oral, regarding accounting, internal accounting controls or auditing matters, including any complaint,
allegation, assertion, or claim that the Parent or any of its Subsidiaries has engaged in questionable accounting or auditing practices, or any expression of concern from its employees regarding
questionable accounting or auditing matters.
- (12)
- Auditors. The auditors of the Parent are independent public accountants as required by Laws and there is not now,
and there has never been, any reportable event with the present or any former auditors of the Parent.
- (13)
- No Undisclosed Liabilities. There are no liabilities or obligations of the Parent, the Purchaser or of any of their
Subsidiaries of any kind whatsoever, whether accrued, contingent, absolute, determined, determinable or otherwise, other than liabilities or obligations: (i) disclosed in the Parent's financial
statements or in the notes thereto; (ii) incurred in the Ordinary Course; or (iii) incurred in connection with this Agreement. The principal amount of all indebtedness for
SCH-D-4
borrowed
money of the Parent and its Subsidiaries as of the date hereof, including capital leases, is disclosed in Section 3.2(12) of the Parent Disclosure Letter.
- (14)
- Absence of Certain Changes or Events. Since December 31, 2016, other than the transactions contemplated in
this Agreement and as disclosed in Section 3.2(13) of the Parent Disclosure Letter, the business of the Parent and its Subsidiaries has been conducted in the Ordinary Course and there has not
been any event, circumstance or occurrence which has had or would be reasonably expected to have, individually or in the aggregate, a Material Adverse Effect with respect to the Parent.
- (15)
- Compliance with Laws. Each of the Parent and each of its Subsidiaries is, and since January 1, 2013 has been,
in compliance in all material respects with Law. Since January 1, 2014, neither the Parent nor any of its Subsidiaries is or has been under any investigation with respect to, is or has been
charged or threatened to be charged with, or has received notice of, any violation or potential violation of any Law or disqualification by a Governmental Entity.
- (16)
- Interest in Properties and Mineral Rights.
- (a)
- All
of the mineral interests and rights (including any claims, mineral leases, concessions, exploration licenses, exploitation and/or mining licenses and prospecting
permits) (collectively, the "Parent Mineral Rights") that are currently in effect and held by the Parent or any of its Subsidiaries, are disclosed in
the Parent Data Room and/or by public filing on EDGAR. Other than the Parent Mineral Rights, the Parent does not own or have any interest in any real property or any mineral interests and rights. The
Parent Mineral Rights grant the Parent or one of its Subsidiaries the right to explore for, mine and extract in commercial quantities, minerals under the terms and conditions of the Parent Mineral
Rights.
- (b)
- The
Parent or one of its Subsidiaries is the recorded holder of the Parent Mineral Rights, free and clear of any Liens except Permitted Liens.
- (c)
- All
of the Parent Mineral Rights have been properly located and recorded in compliance with Law and are comprised of valid and subsisting claims, mineral leases,
concessions, exploration licenses, exploitation and/or mining licenses and prospecting permits.
- (d)
- The
Parent Mineral Rights are in good standing in all respects under Law and except as would not, individually or in the aggregate, be reasonably expected to result
in a Material Adverse Effect with respect to the Parent, all work required to be performed and filed in respect thereof has been performed and filed, all Taxes, rentals, fees, expenditures and other
payments in respect thereof have been paid or incurred and all filings in respect thereof have been made.
- (e)
- There
is no material adverse claim against or challenge to the title to or ownership of any of the Parent Mineral Rights.
- (f)
- The
Parent and/or one or more of its Subsidiaries have the exclusive right to deal with all of the Parent Mineral Rights, subject to Law.
- (g)
- Other
than as disclosed in Section 3.2(15)(g) of the Parent Disclosure Letter, no Person other than the Parent or any of its Subsidiaries has any interest in
any of the Parent Mineral Rights or the production or profits therefrom or any royalty in respect thereof or any right to acquire any such interest.
- (h)
- There
are no back-in rights, earn-in rights, rights of first refusal or similar provisions or rights which would affect the Parent's or any of its Subsidiaries'
interest in any of the Parent Mineral Rights other than as disclosed in Section 3.2(15)(h) of the Parent Disclosure Letter.
SCH-D-5
- (i)
- There
are no material restrictions on the ability of the Parent or any of its Subsidiaries to use, transfer or exploit any of the Parent Mineral Rights, except
pursuant to Law and the terms of the relevant Parent Mineral Rights.
- (j)
- The
Parent has not received any notice, whether written or oral, from any Governmental Entity of any revocation or intention to revoke any interest of the Parent in
any of the Parent Mineral Rights, nor has the Parent received any notice, whether written or oral, from any such entity noting the Parent Mineral Rights in arrears or default of any nature.
- (k)
- The
Parent has all necessary rights to conduct mining activities on the mineral claims constituting in the Parent Mineral Rights as currently conducted on such
mineral claims.
- (17)
- Operational Matters. Except as would not, individually or in the aggregate, be reasonably expected to result in a
Material Adverse Effect with respect to the Parent:
- (a)
- all
rentals, royalties, overriding royalty interests, production payments, net profits, interest burdens, payments and obligations due and payable, or performable,
as the case may be, on or prior to the date hereof under, with respect to, or on account of, any direct or indirect assets of the Parent, have been: (A) duly paid; (B) duly performed; or
(C) provided for prior to the date hereof; and
- (b)
- all
costs, expenses, and liabilities payable on or prior to the date hereof under the terms of any contracts and agreements to which the Parent is directly or
indirectly bound have been properly and timely paid, except for such expenses that are being currently paid prior to delinquency in the Ordinary Course.
- (18)
- Litigation. Other than as disclosed in Section 3.2(17) of the Parent Disclosure Letter, there are no claims,
actions, suits, arbitrations, inquiries, investigations or proceedings pending, or, to the knowledge of the Parent threatened, against or relating to the Parent before any Governmental Entity nor is
the Parent subject to any outstanding judgment, order, writ, injunction or decree that, either individually or in the aggregate, is reasonably likely to prevent or materially delay consummation of the
Arrangement or the transactions contemplated hereby.
- (19)
- Corrupt Practices Legislation. Neither the Parent or its Subsidiaries, nor any of their respective officers,
directors or employees acting on behalf of any of them, has taken, committed to take or been alleged to have taken any action which would cause the Parent or any of its Subsidiaries to be in violation
of 18 U.S. Code § 201, the Foreign Corrupt Practices Act, or any Law of similar effect of any other jurisdiction, and to the knowledge of the Parent, no such action has been taken
by any of its agents, representatives or other Persons acting on behalf of the Parent or any of its Subsidiaries.
- (20)
- Environmental Matters.
- (a)
- No
written notice, order, complaint or penalty has been received by the Parent or any of its Subsidiaries alleging that the Parent or any of its Subsidiaries is in
violation of, or has any liability or potential liability under, any Environmental Law, and there are no judicial, administrative or other actions, suits or proceedings pending or threatened against
the Parent or any of its Subsidiaries which allege a violation of, or any liability or potential liability under, any Environmental Laws; and the Parent is not aware of any facts or circumstances that
reasonably could be expected to give rise to any such notice, claim, order, complaint or penalty.
- (b)
- The
Parent and each of its Subsidiaries has all environmental permits necessary for the operation of their respective businesses and to comply with all Environmental
Laws; and (iii) the operations of the Parent and each of its Subsidiaries are in compliance in all respects with Environmental Laws.
SCH-D-6
- (c)
- To
the knowledge of the Parent, there are no Hazardous Substances in the soil or groundwater at the site of any of the Parent Mineral Rights that would result or
reasonably be expected to result in material liability to the Parent or any of its Subsidiaries.
- (21)
- Taxes.
- (a)
- The
Parent and each of its Subsidiaries has duly and timely filed all Tax Returns required to be filed by them prior to the date hereof and all such Tax Returns are
complete and correct in all material respects.
- (b)
- The
Parent and each of its Subsidiaries has paid on a timely basis all Taxes which are due and payable, all assessments and reassessments, and all other Taxes due
and payable by them on or before the date hereof, other than those which are being or have been contested in good faith and in respect of which reserves have been provided in the most recently
published consolidated financial statements of the Parent. The Parent and its Subsidiaries have provided adequate accruals in accordance with GAAP in the most recently published consolidated financial
statements of the Parent for any Taxes of the Parent and each of its Subsidiaries for the period covered by such financial statements that have not been paid whether or not shown as being due on any
Tax Returns. Since such publication date, no material liability in respect of Taxes not reflected in such statements or otherwise provided for has been assessed, proposed to be assessed, incurred or
accrued, other than in the ordinary course of business. None of the Parent or its Subsidiaries has received a refund to which it was not entitled.
- (c)
- No
material deficiencies, litigation, proposed adjustments or matters in controversy exist or have been asserted with respect to Taxes of the Parent or any of its
Subsidiaries, and neither the Parent nor any of its Subsidiaries is a party to any action or proceeding for assessment or collection of Taxes and no such event has been asserted or, to the knowledge
of the Parent, threatened against the Parent or any of its Subsidiaries or any of their respective assets.
- (d)
- No
claim has been made by any Government Entity in a jurisdiction where the Parent and any of its Subsidiaries does not file Tax Returns that the Parent or any of
its Subsidiaries is or may be subject to Tax by that jurisdiction.
- (e)
- There
are no Liens (other than Permitted Liens) with respect to Taxes upon any of the assets of the Parent or any of its Subsidiaries.
- (f)
- The
Parent and each of its Subsidiaries has withheld or collected all amounts required to be withheld or collected by it on account of Taxes and has remitted all
such amounts to the appropriate Governmental Entity when required by Law to do so.
- (g)
- There
are no outstanding agreements extending or waiving the statutory period of limitations applicable to any claim for, or the period for the collection or
assessment or reassessment of Taxes due from the Parent or any of its Subsidiaries for any taxable period and no request for any such waiver or extension is currently pending.
- (h)
- The
Parent and each of its Subsidiaries has made available to the Parent true, correct and complete copies of all Tax Returns, examination reports and statements of
deficiencies for taxable periods, or transactions consummated, for which the applicable statutory periods of limitations have not expired.
- (22)
- Disclosure. The Parent and the Purchaser have made available to the Company all material information concerning the
Parent, the Purchaser, their Subsidiaries and their respective businesses through EDGAR, information disclosed in the Parent Data Room or the Parent Disclosure Letter, as applicable, and all such
information as made available to the Company is accurate, true and correct in all material respects. No forecast, budget or projection provided by or on behalf of the Parent to the Company contains
any Misrepresentation and such forecasts, budgets and projections were prepared in good faith and contain reasonable estimates of the prospects of the business of the Parent and its Subsidiaries.
SCH-D-7
SCHEDULE E
TERMINATED OPTIONS AND WARRANTS
Option Surrenders:
|
|
|
|
|
|
|
|
|
|
|
Person Surrendering
|
|
Grant Date |
|
Number of
Options |
|
Exercise
Price |
|
Expiry Date |
Jean Depatie |
|
3-Sep-13 |
|
|
25,000 |
|
$ |
0.35 |
|
3-Sep-18 |
Jean Depatie |
|
3-Feb-14 |
|
|
100,000 |
|
$ |
0.145 |
|
3-Feb-19 |
Jean Depatie |
|
12-Jun-15 |
|
|
590,000 |
|
$ |
0.27 |
|
12-Jun-20 |
Jean Depatie |
|
19-May-16 |
|
|
100,000 |
|
$ |
0.155 |
|
19-May-18 |
Jean Depatie |
|
2-Sep-16 |
|
|
300,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Jean Depatie |
|
10-May-17 |
|
|
250,000 |
|
$ |
0.15 |
|
10-May-21 |
Gareth P. Hatch |
|
8-Aug-16 |
|
|
400,000 |
|
$ |
0.15 |
|
8-Aug-18 |
Gareth P. Hatch |
|
2-Sep-16 |
|
|
300,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Gareth P. Hatch |
|
10-May-17 |
|
|
250,000 |
|
$ |
0.15 |
|
10-May-21 |
Daniel P. Goffaux |
|
18-Jul-14 |
|
|
400,000 |
|
$ |
0.18 |
|
18-Jul-19 |
Daniel P. Goffaux |
|
12-Jun-15 |
|
|
50,000 |
|
$ |
0.27 |
|
12-Jun-20 |
Daniel P. Goffaux |
|
19-May-16 |
|
|
100,000 |
|
$ |
0.155 |
|
19-May-18 |
Daniel P. Goffaux |
|
2-Sep-16 |
|
|
300,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Daniel P. Goffaux |
|
10-May-17 |
|
|
250,000 |
|
$ |
0.15 |
|
10-May-21 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
17-Jun-15 |
|
|
500,000 |
|
$ |
0.27 |
|
17-Jun-20 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
19-May-16 |
|
|
500,000 |
|
$ |
0.155 |
|
19-May-18 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
2-Sep-16 |
|
|
750,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Dinwoodie Consulting Ltd. (Tyler W. P. Dinwoodie) |
|
19-May-16 |
|
|
500,000 |
|
$ |
0.155 |
|
19-May-18 |
Dinwoodie Consulting Ltd. (Tyler W. P. Dinwoodie) |
|
2-Sep-16 |
|
|
500,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Jesse R. Edmondson |
|
3-Sep-13 |
|
|
75,000 |
|
$ |
0.35 |
|
3-Sep-18 |
Jesse R. Edmondson |
|
20-Jan-14 |
|
|
21,000 |
|
$ |
.105 |
|
30-Jan-19 |
Jesse R. Edmondson |
|
3-Feb-14 |
|
|
105,000 |
|
$ |
0.145 |
|
3-Feb-19 |
Jesse R. Edmondson |
|
12-Jun-15 |
|
|
275,000 |
|
$ |
0.27 |
|
12-Jun-20 |
Jesse R. Edmondson |
|
19-May-16 |
|
|
100,000 |
|
$ |
0.155 |
|
19-May-18 |
Jesse R. Edmondson |
|
2-Sep-16 |
|
|
350,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Douglas C. Bolton |
|
19-May-16 |
|
|
200,000 |
|
$ |
0.155 |
|
19-May-18 |
Douglas C. Bolton |
|
2-Sep-16 |
|
|
250,000 |
|
$ |
0.16 |
|
2-Sep-19 |
G&W Consulting Inc. (Ann-Marie M. Pamplin) |
|
19-May-16 |
|
|
500,000 |
|
$ |
0.155 |
|
19-May-18 |
G&W Consulting Inc. (Ann-Marie M. Pamplin) |
|
2-Sep-16 |
|
|
200,000 |
|
$ |
0.16 |
|
2-Sep-19 |
Venture Liquidity Providers Inc. |
|
02-Sep-16 |
|
|
500,000 |
|
$ |
0.16 |
|
02-Sep-19 |
SCH-E-1
Warrant Surrenders:
|
|
|
|
|
|
|
|
|
|
|
|
|
Person Surrendering
|
|
Warrant
Certificate No. |
|
Date of Issuance |
|
No. of Warrants |
|
Exercise
Price |
|
Expiry Date |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
E070 |
|
June 30, 2015 |
|
|
50,000 |
|
$ |
0.20 |
|
June 30, 2018 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
2016-05-05 |
|
May 19, 2016 |
|
|
670,000 |
|
$ |
0.20 |
|
May 19, 2018 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
2016-09-08 |
|
Sept. 21, 2016 |
|
|
2,030,000 |
|
$ |
0.20 |
|
Sept. 21, 2018 |
1163863 Ontario Ltd. (Donald K. D. Baxter) |
|
2017-05-01 |
|
May 5, 2017 |
|
|
1,333,333 |
|
$ |
0.20 |
|
May 5, 2020 |
Dinwoodie Consulting Ltd. (Tyler W. P. Dinwoodie) |
|
2016-09-35 |
|
Sept. 21, 2016 |
|
|
100,000 |
|
$ |
0.20 |
|
Sept. 21, 2018 |
Dinwoodie Consulting Ltd. (Tyler W. P. Dinwoodie) |
|
2017-10-2 |
|
May 10, 2017 |
|
|
500,000 |
|
$ |
0.20 |
|
May 10, 2017 |
G&W Consulting Inc. (Ann-Marie M. Pamplin) |
|
2016-19-06 |
|
Sept. 6, 2016 |
|
|
33,334 |
|
$ |
0.20 |
|
Sept. 6, 2018 |
Daniel P. Goffaux |
|
2016-09-26 |
|
Sept. 21, 2016 |
|
|
66,670 |
|
$ |
0.20 |
|
Sept. 21, 2018 |
Douglas C. Bolton |
|
2016-09-09 |
|
Sept. 21, 2016 |
|
|
100,000 |
|
$ |
0.20 |
|
Sept. 21, 2018 |
SCH-E-2