Exhibit 2.1
Option
Agreement
to
form joint venture
Made
between
Trilogy
Metals Inc.
and
NovaCopper
US Inc.
and
South32
Group Operations Pty Ltd
Upper
Kobuk Mineral Projects
April
10, 2017
| Table of Contents (Options Agreement) |
Table
of Contents
| 1. |
Definitions
and Interpretation |
1 |
5.10 |
Parallel
Funded Program and Budget |
40 |
| 1.1 |
Definitions |
1 |
6. |
Operations |
41 |
| 1.2 |
Interpretation |
16 |
6.1 |
Operator |
41 |
| 1.3 |
Parties
and Other Matters |
17 |
6.2 |
Removal
of Operator |
41 |
| 1.4 |
Schedules |
17 |
6.3 |
Affiliate
as Operator and Third Party Operator |
41 |
| 2. |
Representations
and Warranties |
18 |
6.4 |
Authority
of Operator |
41 |
| 2.1 |
Mutual
Representations and Warranties |
18 |
6.5 |
Programs
and Budgets |
42 |
| 2.2 |
Trilogy
Parties Representations and Warranties |
19 |
6.6 |
Trilogy
Parallel Funding |
42 |
| 2.3 |
When
Warranties Given and Breach |
24 |
6.7 |
Operator’s
Obligations |
43 |
| 2.4 |
Trilogy
Indemnity |
25 |
6.8 |
Indemnity
on Access |
44 |
| 2.5 |
South32
Indemnity |
26 |
6.9 |
Obligations
to Inform |
44 |
| 2.6 |
Indemnification
and Third-Party Claims |
26 |
6.10 |
Property
Matters |
44 |
| 2.7 |
South32
Due Diligence |
27 |
6.11 |
Technical
Committee |
45 |
| 3. |
Option |
28 |
6.12 |
Audit |
46 |
| 3.1 |
Right
to Subscribe |
28 |
7. |
Assignment |
47 |
| 3.2 |
First
Tranche |
28 |
7.1 |
Assignment
by Trilogy Party |
47 |
| 3.3 |
Second
Tranche |
29 |
7.2 |
Assignment
by South32 |
47 |
| 3.4 |
Third
Tranche |
29 |
7.3 |
Exceptions |
48 |
| 3.5 |
Extension
of Option Period |
30 |
8. |
Force
Majeure |
48 |
| 3.6 |
Extension
of Approved Program |
31 |
8.1 |
Notice
of Force Majeure |
48 |
| 3.7 |
Application
of South32 Initial Funding |
31 |
8.2 |
Force
Majeure notice |
48 |
| 3.8 |
Tax
Exclusive |
32 |
8.3 |
Obligation
to remedy and mitigate |
48 |
| 4. |
Exercise
and Termination of Option |
33 |
8.4 |
Effect
of Force Majeure on Time and Payment |
49 |
| 4.1 |
Condition
of Exercise of Option |
33 |
9. |
Confidential
Information |
49 |
| 4.2 |
Further
Initial Funding or Exercise of Option |
33 |
9.1 |
Confidentiality |
49 |
| 4.3 |
Obligations
of the Parties Prior to Completion |
35 |
9.2 |
Public
Announcements |
50 |
| 4.4 |
Completion
Date and Location |
36 |
9.3 |
Effect
of Disclosure |
50 |
| 4.5 |
Subscription
Price and Documents to be Delivered by South32 |
36 |
10. |
Area
of Interest |
51 |
| 4.6 |
Documents
to be Delivered by Trilogy Parties |
36 |
10.1 |
General |
51 |
| 4.7 |
Operation
of Operating Agreement |
37 |
11. |
Termination
and Remedies |
51 |
| 4.8 |
Certification
of Completion |
37 |
11.1 |
Events
of Default |
51 |
| 4.9 |
South32’s
Election to Terminate Without Cause |
37 |
11.2 |
Consequences
of Termination |
52 |
| 4.10 |
Effect
of Termination |
37 |
11.3 |
Interpretation
and Other Matters |
52 |
| 5. |
Covenants
of the Trilogy Parties |
37 |
12. |
Disputes
and Arbitration |
52 |
| 5.1 |
General |
37 |
12.1 |
Disputes |
52 |
| 5.2 |
Encumbrances
on Property |
38 |
12.2 |
Dispute
Representatives to Seek Resolution |
52 |
| 5.3 |
Grant
of Surface Rights |
38 |
12.3 |
Arbitration |
53 |
| 5.4 |
No
Transfer of Property or Assets |
38 |
12.4 |
Inconsistency
between Rules and Agreement |
54 |
| 5.5 |
No
Transfer of Shares or Control |
38 |
12.5 |
Effect
of Arbitration |
54 |
| 5.6 |
Other
Dealings |
39 |
12.6 |
Enforcement |
54 |
| 5.7 |
No
Dividends of the Company |
40 |
12.7 |
Performance
of Obligations During Dispute |
54 |
| 5.8 |
Conduct
of Business of the Company |
40 |
12.8 |
Consolidation
of Arbitration |
54 |
| 5.9 |
NANA
Agreement |
40 |
13. |
Notice |
54 |
| |
|
|
13.1 |
Notices |
54 |
| |
|
Page |
|
|
Page |
| 13.2 |
Address
for Notice |
55 |
14.13 |
Costs
and outlays |
57 |
| 14. |
General |
55 |
14.14 |
Manner
of Payment |
58 |
| 14.1 |
Parties |
55 |
14.15 |
Further
Assurances |
58 |
| 14.2 |
Relationship
of Parties |
55 |
14.16 |
Special
Remedies |
58 |
| 14.3 |
No
Holding Out |
56 |
14.17 |
Survival |
58 |
| 14.4 |
No
Obligations |
56 |
14.18 |
Governing
Law |
58 |
| 14.5 |
Other
Activities and Interests |
56 |
14.19 |
Violation
of Law of another Jurisdiction |
59 |
| 14.6 |
United
States Securities Law Matters |
56 |
14.20 |
Corrupt
Practices |
59 |
| 14.7 |
Recording
of this Agreement |
56 |
14.21 |
Severability |
60 |
| 14.8 |
Entire
Agreement |
57 |
14.22 |
Successors
and Assigns |
60 |
| 14.9 |
Amendment
and variation |
57 |
14.23 |
Counterparts |
60 |
| 14.10 |
Consents
or Approvals |
57 |
14.24 |
Execution
- Authorized Officer to Sign |
61 |
| 14.11 |
Pre-Conditions |
57 |
|
|
|
| 14.12 |
Waiver |
57 |
|
|
|
Schedule
1 - Property Description
Schedule
2 - Material Agreements
Schedule
3 - Form of Operating Agreement
Schedule
4 - Form of Annual Exploration Report
Schedule
5 - Form of Services Agreement
Schedule
6 - Form of Contribution Agreement
Option
Agreement
To Form Joint Venture
This
Agreement made as of the 10th day of April, 2017
Between:
Trilogy
Metals Inc. of 1950 - ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(“Trilogy”)
and:
NovaCopper
US Inc. c/o Trilogy Metals Inc. of 1950 - ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(“Company”)
and:
South32
Group Operations Pty Ltd of ▇▇▇ ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ 6000
(“South32”)
Introduction
| A. | Trilogy
is the legal and beneficial owner of all the issued and outstanding shares of the Company. |
| B. | The
Company is the legal and beneficial owner of the Ambler Lands. |
| C. | The
Company has the exclusive right to explore for Minerals on, in and under both the Lands
and the ANCSA Lands. |
| D. | In
accordance with the terms of this Agreement, the Trilogy Parties have agreed to grant
to South32 an option to subscribe for 50% of the Membership Interests in the LLC. |
In
consideration of, among other things, the mutual promises contained
in this Agreement, the Parties agree as follows:
| 1. | Definitions
and Interpretation |
Unless
the context otherwise expressly requires, in this Agreement:
| (1) | “Additional
Qualifying Expenditure” means the amount of Qualifying Expenditure in any Year
which is approved by the Technical Committee pursuant to section 6.11(9); |
| (2) | “Affiliate”
means any person which directly or indirectly Controls, is Controlled by, or is under
common Control with, a person; |
| (3) | “Agreement”
or “this Agreement” means this document including any schedule or
appendix to it; |
| (4) | “Ambler
Lands” means the mineral claims and patented mining claims held by the Company,
as more particularly described in Schedule 1; |
| (5) | “AMDIAP”
means the Ambler Mining District Industrial Access Project; |
| (6) | “ANCSA
Lands” means the lands now owned by NANA or which after the Execution Date
may be conveyed to or acquired by NANA within that certain area, as more particularly
described in Schedule 1; |
| (7) | “Annual
Exploration Report” means a report substantially in the form of the Upper Kobuk
Mineral Projects Annual Report 2013, prepared for NANA; |
| (8) | “Anti-Corruption
Law” means any anti-corruption Law applicable to either Party (including any
Affiliate) or this Agreement, and includes (but is not limited to) the Criminal Code
▇▇▇ ▇▇▇▇ and other applicable Laws of Australia, Canadian Corruption of Foreign
Public Officials Act, the Canadian Proceeds of Crime (Money Laundering) and Terrorist
Financing Act, the Criminal Code of Canada, Federal and applicable state law
of the United States of America regarding corruption and the U.S. Foreign Corrupt
Practices Act; |
| (9) | “AOI
Property” means any interest or right including any Mineral Rights or Other
Rights (direct or indirect) in any property which is all or partly within the Area of
Interest; |
| (10) | “Approved
Budget” means a budget of estimated Qualifying Expenditure approved by the
Technical Committee, or failing approval, as approved by South32, relating to the carrying
out of an Approved Program or otherwise to be incurred during the period to which an
Approved Budget relates and, for certainty, includes any Approved Budget which is increased
pursuant to section 6.11(9); |
| (11) | “Approved
Program” means the Year 1 Approved Program, the Year 2 Approved Program or
the Year 3 Approved Program, as the context dictates, and, for certainty, includes any
Approved Program which is altered or modified pursuant to section 6.11(9); |
| (12) | “Arctic
Deposit” means that part of the Property that as at the Execution Date consists
of the volcanogenic massive sulfide deposit commonly referred to as Arctic, all as more
particularly described in Schedule 1; |
| (13) | “Area
of Interest” means the land included within the area which is more particularly
described and depicted as the NANA - NovaCopper Area of Interest in Schedule 1; |
| (14) | “Assets”
means all property or assets of any nature or kind, whether real or personal, tangible
or intangible, corporeal or incorporeal, and includes any other interest in that property
or those assets; |
| (15) | “Assumed
Obligations” has the meaning given in the Contribution Agreement; |
| (16) | “BCICAC”
means the British Columbia International Commercial Arbitration Centre and includes any
entity which replaces the BCICAC or which substantially succeeds to its powers or functions; |
| (17) | “Bornite
Deposit” means that part of the Property that as at the Execution Date consists
of untested conceptual zones of mineralization proximal and distal to the two mineralized
zones known as the Ruby Creek Zone and the South Reef Zone, all as more particularly
described in Schedule 1; |
| (18) | “Bornite
Environmental Matters” means the environmental cleanup now being performed
by NANA pursuant to the NANA Agreement to bring the former mining camp on the Bornite
Lands to the standards required by the Alaska Department of Environmental Conservation; |
| (19) | “Bornite
Lands” means the patented mining claims held by NANA, as more particularly
described in Schedule 1; |
| (20) | “Bribery”
means the offering, authorising, giving, soliciting or accepting any monetary or other
benefit to influence action of a Government Official in an official capacity, or to otherwise
influence any person to act improperly. Bribery includes the making of facilitation payments,
which are improper payments made to induce required routine official action; |
| (21) | “Business
Day” means any day other than a Saturday, Sunday or a public or statutory holiday
in the place where an act is to be performed or a payment is to be made; |
| (22) | “Charter
Documents” means a constitution, articles, articles of incorporation, notice
of articles, memoranda, by-laws or any similar constating document of a corporate entity; |
| (23) | “Claim”
means any claim, action, proceeding, damage, loss, liability, cost, charge, expense,
outgoing, payment or demand of any nature and whether present or future, fixed or unascertained,
actual or contingent and whether at law, in equity, under statute, contract or otherwise; |
| (24) | “Closing”
has the meaning given to that term in the Contribution Agreement; |
| (25) | “Company
Assets” means all of the Assets of the Company including: |
| (a) | all
of the right, title and interest of the Company in and to the Property; |
| (b) | the
Material Agreements; |
| (c) | any
South32 Funding not used to incur Qualifying Expenditure prior to Completion; and |
| (d) | subject
to section 5, any agreements entered into by the Company after the Execution Date which
relate to the Property, |
but
Company Assets does not include the Excluded Assets;
| (26) | “Company
Shares” means shares in the capital of the Company; |
| (27) | “Completion”
means completion by the Parties of the issue and sale of the Membership Interests to
South32 as provided in section 4; |
| (28) | “Completion
Date” means the date of Completion; |
| (29) | “Confidential
Information” has the meaning given in section 9.1; |
| (30) | “Confidentiality
Agreement” means the confidentiality agreement dated January 25, 2017 between
Trilogy and South32; |
| (31) | “Contribution
Agreement” means a contribution agreement between Trilogy, the Company and
LLC, in substantially the form set out in Schedule 6; |
| (32) | “Control”
means, in relation to any person, possession, directly or indirectly, of the power to
direct or cause direction of management and policies of that person through ownership
of voting securities, contract, voting trust or otherwise; |
| (33) | “Core
Property” means: |
| (d) | all
other areas of the Property where Site Disturbance Work at any time prior to the Execution
Date been carried out or undertaken by or on behalf of Trilogy, NovaGold Resources Inc.,
the Company or any of their respective Affiliates; and |
| (e) | all
other areas of the Property where any activities (other than Site Disturbance Work) have
at any time prior to the Execution Date been carried out or undertaken by or on behalf
of Trilogy, NovaGold Resources Inc., the Company or any of their respective Affiliates
which have created or given rise to or which may create or give rise to Environmental
Liabilities; |
| (34) | “Defaulting
Party” has the meaning given in section 11.1(1); |
| (35) | “Delay
Notice” has the meaning given in section 3.5(2); |
| (36) | “Disclosure
Material” means any item of information or any document or communication (whether
written or oral or embodied in tangible or electronic form) disclosed and provided by
or on behalf of a Trilogy Party to South32 or its Personnel; |
| (37) | “Dispute”
means a dispute, controversy or Claim arising out of or in relation to this Agreement
including in relation to its existence, validity, interpretation, performance, breach
or termination of this Agreement; |
| (38) | “Dispute
Notice” has the meaning given in section 12.1; |
| (39) | “Dispute
Representative” has the meaning given in section 12.2; |
| (40) | “Encumbrance”
means any mortgage, charge, pledge, hypothecation, security interest, assignment, lien
(statutory or otherwise), charge, title retention agreement or arrangement, option, earn-in,
licence or licence fee, royalty, production payment, back-in right, claw-back right,
restrictive covenant or other encumbrance of any nature or any agreement to give or create
any of the foregoing, whether registerable or not; |
| (41) | “Environment”
means components of the earth including: |
| (b) | any
layer of the atmosphere; |
| (c) | any
organic or inorganic matter and any living organism, |
and
includes interacting natural ecosystems that include any of the components of the kind referred to in sections 1.1(41)(a) to 1.1(41)(c);
| (42) | “Environmental
Law” means any applicable Law relating to pollution or protection of public
health, safety or welfare or the Environment, including those relating to emissions,
discharges, releases or threatened releases of Regulated Substances into the Environment
(including ambient air, surface water, ground water and land), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport
or handling of Regulated Substances; |
| (43) | “Environmental
Liabilities” means all claims, actions, causes of action, damages, losses,
liabilities, obligations, penalties, judgments, settlements, costs, disbursements or
expenses (including without limitation attorney's fees and experts' fees) of any kind
or of any nature whatsoever (including without limitation liability for study, testing
or investigatory costs, cleanup costs, response actions or costs, removal actions or
costs, remediation costs, containment costs, restoration costs, reclamation costs, corrective
action costs, closure costs, natural resources damages, nuisances, property damages,
business losses, penalties or fines) arising out of, based upon or resulting from, relating
to, connected with or caused by the Company Assets or operations on or related to the
Company Assets, however and by whomsoever caused, and whether caused by a breach of or
arising under Environmental Laws, or otherwise, including without limiting the generality
of the foregoing those existing as, arising from or related to: |
| (a) | the
presence, release, threatened release, discharge or emission into the Environment of
any Regulated Substance; |
| (b) | the
violation or alleged violation of any Environmental Law; |
| (c) | surface,
underground, air, ground water, surface water or marine environment contamination; |
| (d) | reclamation
obligations; |
| (e) | the
removal of or failure to remove foundations, structures or equipment; and |
| (f) | losses
or damages suffered, sustained, paid or incurred by third parties as a result of any
of the matters described in the foregoing provisions of this definition; |
| (44) | “Excluded
Assets” has the meaning given in the Contribution Agreement; |
| (45) | “Execution
Date” means the date of this Agreement; |
| (46) | “Existing
Royalty” means the 1% net smelter returns royalty and certain other rights
and obligations contemplated by the Net Smelter Returns Royalty Agreement dated January 7,
2010 among Kennecott Exploration Company, Kennecott Arctic Company, Alaska Gold Company
and NovaGold Resources Inc. and assigned to MF2, LLC by Kennecott Exploration Company
and Kennecott Royalty Company pursuant to a Royalty Assignment and Assumption Agreement
effective December 28, 2012; |
| (47) | “Expenditure”
means all costs and expenses of whatever kind or nature funded, spent or incurred in
the conduct of the Operations on or in relation to the Property including: |
| (a) | in
holding the Property in good standing (including land maintenance costs and any monies
expended as required to comply with applicable Law), in curing title defects and in acquiring
and maintaining surface and other ancillary rights; |
| (b) | in
preparing for and in the application for and acquisition of environmental and other Permits
necessary or desirable to commence and complete exploration and development activities; |
| (c) | in
connection with any applications and necessary studies in order to obtain Permits including
the preparation for and attendance at hearings and other meetings related to the Property, |
| (d) | in
undertaking geophysical, geological surveys and airborne surveys, drilling, assaying
and metallurgical testing in, on or in respect of the Property, including costs of surface
access, assays, metallurgical testing and other tests and analyses (including downhole
photography) to determine the quantity and quality of Minerals, water and other materials
or substances; |
| (e) | in
the preparation of work programs and the presentation and reporting of data and other
results obtained from those work programs including any program for the preparation of
any preliminary assessment, technical report, pre-feasibility study, feasibility study
or other evaluation of the Property; |
| (f) | in
searching for, digging, trenching, sampling, assaying, testing or working Minerals; |
| (g) | in
transporting samples of Minerals, personnel, supplies, buildings, machinery, tools, appliances
or equipment in, to or from the Property; |
| (h) | in
acquiring, erecting and installing improvements or maintenance to site facilities, tools,
appliances or equipment to the extent necessary to carry out the Operations the subject
of an Approved Program; |
| (i) | for
environmental remediation and rehabilitation as required by applicable Law in connection
with the Operations; |
| (j) | in
acquiring or obtaining the use of facilities, equipment or machinery, and for all parts,
supplies and consumables; |
| (k) | for
salaries, wages and related costs for Personnel assigned to exploration, evaluation and
development activities (other than non-cash items such as stock-based compensation payments); |
| (l) | in
paying assessments or contributions under worker’s compensation, employment insurance,
pension or other similar legislation or ordinances relating to the Personnel described
in section 1.1(47)(k); |
| (m) | travelling
expenses of all persons engaged in work with respect to and for the benefit of the Property,
including for their food, lodging and other reasonable needs; |
| (n) | payments
to contractors or consultants for work done, services rendered or materials supplied; |
| (o) | the
cost of insurance premiums and performance bonds or other security; |
| (p) | in
the case of a Parallel Funded Program and Budget only, payments made to, or investments
made in connection with, any local communities or other stakeholders; |
| (q) | the
costs to be incurred in respect of maintenance and reporting of accounts and Expenditures;
and |
| (r) | all
Taxes levied against, or in respect of, the foregoing items of Expenditure, the Property,
or activities on, or in respect of, the Property, |
but
Expenditure will not in any circumstances include:
| (s) | any
amount paid under any Related Party Agreement which represents: |
| (i) | any
profit element, ▇▇▇▇ up or margin on the provision of goods and services; or |
| (ii) | payment
for services which exceeds the cash cost of providing such services (such that any payment
which relates to stock based compensation payments to Personnel or others will not be
or constitute Expenditure); |
| (t) | severance
payments to the extent they relate to periods prior to the Option Period or to periods
during the Option Period when Personnel of the Trilogy Parties were dedicated to activities
other than the Operations; |
| (u) | any
allocation of cost (including overhead) which does not fairly reflect the proportion
of such allocated cost properly attributable to the Operations; |
| (v) | any
Tax on goods and services provided under a Related Party Agreement; or |
| (w) | any
payment made by way of indemnity contained in a Related Party Agreement or in respect
of breach of a Related Party Agreement; |
| (48) | “Exploration
Data” means any map, drill core, sample, assay, geological, geophysical, geochemical
or other technical report or technical information and any study, design, plan and financial
or other record (whether in tangible or electronic form) related to the Property or Operations
in the possession, or under the control of, a Party or its Affiliates; |
| (49) | “First
Tranche” means an amount of not less than $10,000,000 to be advanced by South32
to the Company in accordance with section 3.2 together with, if applicable, any Additional
Qualifying Expenditure approved by the Technical Committee; |
| (50) | “Force
Majeure” means, other than as a consequence of the negligence or default of
a Party, an event or cause which is beyond the control of the Party claiming force majeure,
not able to be overcome by the exercise of reasonable care, proper precautions and the
consideration of reasonable alternatives with the intention of avoiding the effects of
the force majeure by that Party, and which could not have been reasonably foreseen, and
includes (subject to satisfying the requirements of the foregoing): |
| (a) | an
act of God (other than adverse weather); |
| (b) | earthquakes,
cyclones, blizzards, fire or flood; |
| (c) | acts
of war, acts of public enemies, terrorist acts, riots or civil commotions; |
| (d) | shortages
of labour or strikes, interference of trade unions, lockout, secondary boycott, other
labour difficulties (without regard to whether such difficulties can be resolved by acceding
to the demands of the union); |
| (e) | break
down or destruction of machinery, plant or equipment, delays in transportation, shortages
or inability to obtain contractors, machinery, plant or equipment, fuel, transportation
or power; |
| (f) | any
action or failure to act within a reasonable time without justifiable cause by any Governmental
Authority (including any action or failure to act within a reasonable time without justifiable
cause by any duly authorized agent of any such Governmental Authority), including the
denial of or delay in granting any Drilling Permit or other Permit upon due application
and diligent effort by the Party to obtain same, or the failure once granted to remain
(without justifiable cause) in full force and effect or to be renewed on substantially
similar terms; |
| (g) | laws,
rules and regulations or orders of any Governmental Authority enacted or made after the
Execution Date that cause the Operations to cease; |
| (h) | injunctions,
civil disobedience, protests and other delays and disturbances caused by aboriginal or
indigenous peoples that cause the Operations to cease; or |
| (i) | protests,
demonstrations, blockades or other events by environmental lobbyists, non-governmental
organisations or local community groups that cause the Operations to cease, |
but
does not include:
| (j) | economic
hardship, lack of money, credit or markets or inability to pay any sum of money; or |
| (k) | delays
in the performance of the obligations of a Party or its Personnel unless that delay is
itself caused by Force Majeure or by the default or negligence of the other Party or
its Personnel; |
| (51) | “Governmental
Authority” means any federal, provincial, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
local government or authority, quasi government authority, fiscal or judicial body, government
or self-regulatory organisation, commission, board, tribunal, organisation, stock exchange
or any regulatory, administrative or other agency, or any political or other subdivision,
department, or branch of any of the foregoing; |
| (52) | “Government
Official” includes any: |
| (a) | individual
who is employed by or acting on behalf of a Governmental Authority, a person Controlled
by a Governmental Authority (including state owned enterprises) or a public international
organisation; |
| (b) | political
party, party official or political office candidate; |
| (c) | individual
who holds or performs the duties of an appointment, office or position created by custom
or convention, including, potentially, some tribal leaders and members of royal families;
or |
| (d) | individual
who holds themselves out to be the authorised intermediary of any person specified in
sections 1.1(52)(a), 1.1(52)(b), and 1.1(52)(c); |
| (53) | “Indemnified
Party” has the meaning given in section 2.6(2); |
| (54) | “Indemnifying
Party” has the meaning given in section 2.6(2); |
| (55) | “Insolvent
Party” has the meaning given in section 11.1(2); |
| (56) | “Lands”
means the Ambler Lands, the ANCSA Lands and the Bornite Lands; |
| (a) | Federal,
Provincial, State and local government legislation including regulations and by-laws; |
| (b) | legislation
of any jurisdiction other than those referred to in section 1.1(57)(a) with which a Party
must comply; |
| (c) | common
law and equity; |
| (d) | judgments,
decrees, writs, administrative interpretations, guidelines, policies, injunctions, orders
or the like, of any Governmental Authority with which a Party is legally required to
comply; and |
| (e) | Governmental
Authority requirements and consents, certificates, licences, permits and approvals (including
conditions in respect of those consents, certificates, licences, permits and approvals); |
| (58) | “Liability
Limit” means: |
| (a) | in
the event that the Option is exercised, fifty million dollars ($50,000,000); and |
| (b) | prior
to the exercise of the Option or in the event that the Option is not exercised, an amount
equal to the South32 Initial Funding advanced by South32 to the Company as at the date
that a written notice of claim is given pursuant to section 2 or section 12 (or both,
as the case may be); |
| (59) | “LLC”
means a limited liability company to be formed on or before Completion pursuant to the
laws of Delaware in accordance with section 4.3(1)(a); |
| (60) | “Matched
Parallel Funding” means: |
| (a) | where
South32 exercises the Option on or before the date specified in section 4.2(1)(b), an
amount that is equal to the lesser of the actual amount, if any, of the Parallel Funding
expended by the Trilogy Parties in Year 1 in undertaking Trilogy Operations or five million
dollars ($5,000,000); or |
| (b) | where
South32 exercises the Option on or before the date specified in section 4.2(2)(b), an
amount that is equal to the lesser of the actual amount, if any, of the Parallel Funding
expended by the Trilogy Parties in Year 1 and Year 2 in undertaking Trilogy Operations
or ten million dollars ($10,000,000); or |
| (c) | where
South32 exercises the Option on or before the Year 3 Option Exercise Date, an amount
that is equal to the lesser of the actual amount, if any, of the Parallel Funding expended
by the Trilogy Parties in Year 1, Year 2, and Year 3 in undertaking Trilogy Operations
or fifteen million dollars ($15,000,000); |
| (61) | “Material
Agreements” means those agreements listed in Schedule 2; |
| (62) | “Material
Decision” means a decision relating to one or more of the following: |
| (a) | financial
accommodation - the Company entering into borrowings or other financial accommodation
resulting in total financial accommodation to, or borrowings of, the Company exceeding
fifty thousand dollars ($50,000); |
| (b) | unusual
transactions - the Company entering into any transaction that is not in the ordinary
course of its business, or that requires the Company to outlay funds exceeding one percent
(1%) of its net tangible Assets; |
| (c) | provision
of loans - the provision of any loan to any person; |
| (d) | guarantees
- the Company entering into or becoming liable under any guarantee or indemnity, or similar
arrangement under which the Company may incur liability in respect of the financial obligation
of any other person; |
| (e) | encumbrance
- the creation of any Encumbrance over the Assets of the Company in favour of any person; |
| (f) | Assets
- except as expressly contemplated by this Agreement, the sale, transfer, lease, assignment,
disposal or acquisition of Assets or any contract to do so where the market value of
such Assets or the consideration in respect of the sale or acquisition of such Assets
is in excess of twenty five thousand dollars ($25,000); |
| (g) | winding
up - the appointment of a receiver, liquidator or administrator to the Company or any
proposal to wind up the Company or make any composition or arrangement with creditors; |
| (h) | litigation
- the commencement or settlement of any litigation, arbitration or other proceedings
that will cause, or is likely to cause, the Company to incur liabilities, losses, damages,
costs or expenses (including legal costs) in excess of twenty five thousand dollars ($25,000)
in aggregate; |
| (i) | Directors’
fees - the payment of any fee or other remuneration to a director for his or her service
as a director of the Company; |
| (j) | Related
Party Transactions - the making or entry into by the Company of any agreement, contract,
arrangement or understanding with an Affiliate of the Company, a shareholder of the Company
or a shareholder of any Affiliate of the Company; or |
| (k) | Non-Arm’s
Length - the making or entry into by the Company of any agreement, contract, arrangement
or understanding which is not in the ordinary course of business or which is not on an
arm’s length basis at market terms, or both, as the case may be; |
| (63) | “Membership
Interest” has the meaning given in the Operating Agreement; |
| (64) | “Mineral
Rights” means any claim, prospecting licence, exploration licence, exploration
or mining lease, mining licence, mining claim, mineral concession, mineral claim and
other forms of mineral tenure (including any application for the grant or issue of any
of the foregoing) or other rights to minerals, or to work upon lands for the purpose
of searching for, developing or extracting minerals under any form of mineral title recognized
under applicable Law in the State of Alaska, whether contractual, statutory or otherwise; |
| (65) | “Minerals”
means gold, silver, copper, cobalt, lead, zinc, tin, and all other minerals, mineral
products, mineral by-products, and mineral materials except: |
| (a) | oil,
gas, coal, oil shale, and any and all hydrocarbons associated with any of them; |
| (b) | fissionable
minerals and materials; |
| (d) | sand,
gravel, stone, and common variety rock; and |
| (66) | “NANA”
means the NANA Regional Corporation, Inc., a corporation organized pursuant to the provisions
of the Alaska Native Claims Settlement Act, 43 U.S.C § 1601 et seq. and the laws
of the State of Alaska; |
| (67) | “NANA
Agreement” means the Exploration Agreement and Option to Lease between the
Company and NANA Regional Corporation, Inc. dated October 19, 2011, as amended by an
Amending Agreement between the Company and NANA dated May 10, 2012, as further amended
by an Amending Agreement between the Company and NANA dated February 13, 2013 and as
further amended by an Amending Agreement between the Company and NANA dated January 13,
2015; |
| (68) | “NANA
Consent” means the prior written consent of the NANA Regional Corporation pursuant
to the NANA Agreement to this Agreement and to the assignment of the rights, interests
and obligations of the Company under the NANA Agreement to the LLC pursuant to section
4.3(1)(c) in the form agreed to by the Parties; |
| (69) | “Non-Core
Property” means all parts of the Property other than the Core Property; |
| (70) | “Non-Defaulting
Party” has the meaning given in section 11.1; |
| (71) | “Non-operating
Party” has the meaning given in section 6.8; |
| (72) | “Notice”
or “notice” has the meaning given in section 13; |
| (73) | “Operating
Agreement” means the limited liability company agreement attached as Schedule
3; |
| (74) | “Operations”
means every kind of work done, or activity performed on or in respect of the Property
to explore for Minerals including investigating, prospecting, exploring, drilling, analysing,
property maintenance, permitting, sampling, assaying, preparation of reports, estimates
and studies (including feasibility studies), surveying, rehabilitation, reclamation and
environmental protection, and any management and administration necessary to conduct
the foregoing work or activities and, in the case of a Parallel Funded Program and Budget
only, will include government and community relations, and activities undertaken to advance
the AMDIAP; |
| (75) | “Operator”
means the operator of the Operations prior to the execution of the Operating Agreement; |
| (76) | “Option”
has the meaning given in section 3.1; |
| (77) | “Option
Agreement Account” has the meaning given in section 3.7(1); |
| (78) | “Option
Condition” has the meaning given in section 4.1; |
| (79) | “Option
Exercise Notice” has the meaning given in section 4.2(5); |
| (80) | “Option
Period” means the period from the Execution Date to the earlier of: |
| (a) | the
date on which Completion has been completed; or |
| (b) | the
date on which this Agreement is terminated; |
| (81) | “Other
Rights” means any interest in
real property, whether freehold, leasehold, licence, right of way, easement, any other
surface or other right in relation to real property, and any right, licence or permit
in relation to the use or diversion of water, but excluding any Mineral Rights or any
of the hydrocarbons, minerals or other substances described in sections 1.1(65)(a) to
1.1(65)(e) (inclusive); |
| (82) | “Oversight
Committee” has the meaning given in the NANA Agreement; |
| (83) | “Parallel
Funded Program and Budget” has the meaning given in section 6.6(1); |
| (84) | “Parallel
Funding” means any Expenditure funded by Trilogy in connection with any Parallel
Funded Program and Budget; |
| (85) | “Party”
means either Trilogy, the Company or South32, as the context dictates; |
| (86) | “Parties”
means Trilogy, the Company and South32; |
| (87) | “Permit”
means any applicable permit, consent, authorisation, registration, filing, lodgement,
notarisation, certificate, endorsement, permission, licence, approval, authority or exemption
by or with a Governmental Authority or other person or body having jurisdiction or authority
in any way over the subject matter of this Agreement, the Property or the Operations; |
| (88) | “Permitted
Encumbrances” means, with respect to the Property: |
| (b) | all
rights, and all restrictions and obligations arising under, the NANA Agreement; |
| (c) | any
Encumbrance given or granted by NANA prior to or after the Execution Date, including
but not limited to any Encumbrance against, in or over those parts of the Lands owned
or acquired by NANA in accordance to the NANA Agreement, but excluding any Encumbrance
given or granted by NANA prior to the Execution Date against, in or over any part of
the Arctic Deposit or the Bornite Deposit; |
| (d) | the
exceptions and reservations contained in the original grant of the Mineral Rights or
contained in any other grant or disposition from the relevant Governmental Authority; |
| (e) | bona
fide easements, rights of way, servitudes or other similar surface rights, including
rights of way and servitudes for highways, railways, sewers, drains, gas and oil pipelines,
gas and water mains, electric light, power, telephone or cable television conduits, poles,
wires or cables, which are required to be granted under applicable Law or do not materially
impair the use of the Property for the purposes for which it is held, which purposes
include the exploration for Minerals and the development of a mining project within the
Property, and Surface Rights granted by the Company that are required to be granted under
applicable Law, or that have been determined to be a Permitted Encumbrance pursuant to
section 5.3, and do not materially impair the use of the Property for the purposes for
which it is held which purposes include the exploration for Minerals and the development
of a mining project within the Property; |
| (f) | rights
in the Property which are reserved to or vested in any Governmental Authority by applicable
Law; |
| (g) | any
mineral royalty due to any Governmental Authority, including but not limited to the three
percent (3%) production royalty due on net income to the State of Alaska pursuant to
Alaska Statute 38.05.212 and Alaska regulations 11 AAC 86.760-796; |
| (h) | liens
granted in the ordinary course of business to a public utility, municipality or Governmental
Authority with respect to operations pertaining to any part of the Property; |
| (i) | liens
for taxes, charges, rates, duties, levies and assessments which relate to obligations
not at the time due or delinquent; |
| (j) | builder’s,
mechanic’s, materialmen’s and similar liens in respect of services rendered
or goods supplied and undetermined or inchoate liens and charges incidental to current
construction or current operation or which relate to obligations not at the time due
or delinquent; |
| (k) | any
defect or irregularity in title to any part of the Property, which defect or irregularity
is of a minor nature and in the aggregate with all other defects and irregularities in
the title of such Property does not materially impair the use of the Property for the
purposes for which it is held which purposes include the exploration for Minerals and
the development of a mining project within the Property; and |
| (l) | any
Encumbrance expressly created by or arising from this Agreement. |
| (a) | in
relation to a Party, any of its (or any Affiliates) directors, officers, employees, agents,
consultants, invitees, Subcontractors (including Subcontractors’ Personnel) and
representatives involved either directly or indirectly in the performance of the Party’s
obligations under this Agreement; and |
| (b) | in
relation to a Subcontractor, any of its directors, officers, employees, agents, consultants,
invitees, subcontractors or representatives involved either directly or indirectly in
the performance of a Party’s obligations under this Agreement; |
| (90) | “Property”
means the Lands, together with any present or future renewal, extension, modification,
substitution, amalgamation or variation of any of the Mineral Rights or Other Rights
that comprise or derive directly from the Lands (whether granting or conferring the same,
similar or any greater rights and whether extending over the same or a greater or lesser
domain); |
| (91) | “Qualified
Warranty” has the meaning given in section 2.3(4)(a); |
| (92) | “Qualified
Warranty Breach” has the meaning given in section 2.3(4)(b); |
| (93) | “Qualifying
Expenditure” means an item of Expenditure that, in accordance with an Approved
Program, is permitted to be or qualifies as Qualifying Expenditure for the purposes of
this Agreement and, for certainty, Qualifying Expenditure will include any Additional
Qualifying Expenditure; |
| (94) | “Regulated
Substances” means all pollutants, contaminants, chemicals, industrial, toxic,
hazardous or noxious substances or wastes or any other materials or substances that are
now or hereafter prohibited, controlled, prescribed or regulated by any Governmental
Authority or applicable Law, or the presence or quantity of which now or hereafter requires
reporting, monitoring, investigation, removal or remediation by any Governmental Authority
or applicable Law, including but not limited to: |
| (a) | any
petroleum or petroleum compound (refined or crude), natural gas, natural gas liquids
or related hydrocarbons, flammable substance, explosive, radioactive material or any
other material or pollutant that poses a hazard or potential hazard to the Environment
or any person; |
| (b) | asbestos
or any asbestos-containing material of any kind or character, any materials or substances
containing polychlorinated biphenyls or urea formaldehyde insulation; |
| (c) | any
materials or substances designated as a “hazardous waste”, “hazardous
substance”, “toxic pollutant” or “contaminant” under any
Environmental Law; and |
| (d) | any
materials or substances that are toxic, explosive, corrosive, flammable, ignitable, infectious,
radioactive, reactive, carcinogenic, mutagenic or otherwise hazardous; |
| (95) | “Representative”
means the individual appointed from time to time by a Party to act as a Party’s
representative in respect of this Agreement and its subject matter; |
| (96) | “Related
Party” means Trilogy or an Affiliate of Trilogy; |
| (97) | “Related
Party Agreement” means any contract or other legally binding transaction, arrangement
or understanding between the Company and a Related Party; |
| (98) | “Rules”
has the meaning given in section 12.3(1); |
| (99) | “Second
Tranche” means the amount of not less than $10,000,000 to be advanced by South32
to the Company in accordance with section 3.3 together with, if applicable, any Additional
Qualifying Expenditure approved by the Technical Committee; |
| (100) | “Services
Agreement” means a services agreement between Trilogy and the Company, in form
set out in Schedule 5; |
| (101) | “Site
Disturbance Work” means exploration, development or mining activities, such
as drilling, that result in a physical disturbance on, in or under the Property; |
| (102) | “South32
Initial Funding” means, together, any of the First Tranche, Second Tranche
or Third Tranche advanced by South32 to the Company during the Option Period; |
| (103) | “Subcontractor”
means any person engaged by a Party to perform any part of that Party’s obligations
under this Agreement and includes a supplier of that Party; |
| (104) | “Subscription
Amount” means the aggregate of the Subscription Price and all advances made
by South32 to the Company pursuant to the South32 Initial Funding; |
| (105) | “Subscription
Price”, determined as at the date of the Option Exercise Notice, means: |
| (a) | 150%
of the Trilogy Funding; |
plus
| (b) | 100%
of any Matched Parallel Funding; |
plus
| (i) | zero,
if the Option is exercised on or before March 31, 2018 pursuant to section 4.2(1)(b); |
| (ii) | five
million dollars ($5,000,000), if the Option is exercised on or before March 31, 2019
pursuant to section 4.2(2)(a)(i); or |
| (iii) | ten
million dollars ($10,000,000), if the Option is exercised on or before January 31, 2020,
or such later date pursuant to section 4.2(4)(a); |
less
| (d) | the
aggregate of all South32 Initial Funding. |
| (106) | “Sunshine
Deposit” means the part of the Property to the west of the Arctic Deposit that
as at the Execution Date consists of the volcanogenic massive sulfide deposit commonly
referred to as Sunshine, as more particularly described in Schedule 1; |
| (107) | “Surface
Right Notice” has the meaning given in section 5.3(1); |
| (108) | “Surface
Rights” means the bona fide easements, rights of way, servitudes or other similar
surface rights as more particularly described in section 1.1(88)(e); |
| (a) | a
tax, levy, charge, impost, duty, fee, deduction, compulsory loan or withholding; or |
| (b) | income,
stamp or transaction duty, tax or charge, |
that
is or may be at any time assessed, levied, imposed or collected by a Governmental Authority and includes interest, fines, penalties,
charges, fees or other amounts imposed on or in respect of any of the foregoing;
| (110) | “Technical
Committee” has the meaning given in section 6.11(1); |
| (111) | “Third-Party
Claim” has the meaning given in section 2.6(2); |
| (112) | “Third
Tranche” means the amount of not less than $10,000,000 to be advanced by South32
to the Company in accordance with section 3.4 together with, if applicable, any Additional
Qualifying Expenditure approved by the Technical Committee; |
| (113) | “Tranche”
means the First Tranche, the Second Tranche or the Third Tranche, as the context dictates; |
| (114) | “Transferred
Assets” has the meaning given in section 4.3(1)(c); |
| (115) | “Trilogy
Funding” means one hundred million dollars ($100,000,000); |
| (116) | “Trilogy
Operations” has the meaning given in section 6.6(2); |
| (117) | “Trilogy
Party” means either Trilogy or the Company, as the context dictates; |
| (118) | “Trilogy
Parties” means Trilogy and the Company; |
| (119) | “Trilogy
Records” has the meaning given in section 2.7(2); |
| (120) | “US
GAAP” means United States generally accepted accounting principles; |
| (121) | “Warranty
Period”, as applicable, means: |
| (a) | in
the case of the representations and warranties set out in sections 2.1(1), 2.2(10), 2.2(12),
2.2(22) to 2.2(28) (inclusive), 2.2(35), 2.2(37), 2.2(39) and 2.2(47) to 2.2(50) (inclusive),
the period commencing on the Execution Date and expiring twelve (12) months after the
Completion Date; and |
| (b) | in
the case of the representations and warranties set out in sections 2.2(1) to 2.2(9) (inclusive),
2.2(11), 2.2(13) to 2.2(21) (inclusive), 2.2(29) to 2.2(34) (inclusive), 2.2(36), 2.2(38),
2.2(40) to 2.2(46) (inclusive) and 2.2(51) to 2.2(57) (inclusive), the period commencing
on the Execution Date and expiring twenty four (24) months after the Completion Date; |
| (122) | “Year”
means each period of 12 successive months, with the first such period commencing on the
Execution Date and each successive period commencing on an anniversary of the Execution
Date and, for the avoidance of doubt, the “Final Year” will, as the
context requires, be the period commencing on an anniversary of the Execution Date occurring
immediately prior to the earlier of: |
| (a) | the
date of satisfaction of the Option Condition; or |
| (b) | the
date of termination or expiry of this Agreement; |
| (123) | “Year
1 Approved Program” means the Program of Operations (and related Approved Budget)
to be undertaken in Year 1 as approved by the members of the Technical Committee in accordance
with section 6.11(7) or approved by South32 in accordance with section 6.11(10) (as the
case may be), as altered or modified pursuant to section 6.11(9) (as the case may be),
but for certainty excludes any Parallel Funded Program and Budget; |
| (124) | “Year
2 Approved Program” means the Program of Operations (and related Approved Budget)
to be undertaken in Year 2 as approved by the members of the Technical Committee in accordance
with section 6.11(7) or approved by South32 in accordance with section 6.11(10) (as the
case may be), as altered or modified pursuant to section 6.11(9) (as the case may be),
but for certainty excludes any Parallel Funded Program and Budget; |
| (125) | “Year
3 Approved Program” means the Program of Operations (and related Approved Budget)
to be undertaken in Year 3 as approved by the members of the Technical Committee in accordance
with section 6.11(7) or approved by South32 in accordance with section 6.11(10) (as the
case may be), as altered or modified pursuant to section 6.11(9) (as the case may be),
but for certainty excludes any Parallel Funded Program and Budget; and |
| (126) | “Year
3 Option Exercise Date” has the meaning given in section 4.2(3). |
Unless
the context otherwise expressly requires, in this Agreement:
| (1) | the
singular includes the plural and conversely and a gender includes all genders; |
| (2) | if
a word or phrase is defined, its other grammatical forms have a corresponding meaning; |
| (3) | a
reference to a person (including a Party) includes an individual, company, other body
corporate, association, partnership, firm, joint venture, trust or Governmental Authority; |
| (4) | a
reference to a section, schedule or annexure is a reference to a section of or a schedule
or annexure to this Agreement; |
| (5) | a
reference to any party (including a Party) includes that party’s executors, administrators,
substitutes (including, but not limited to, persons taking by novation), successors and
permitted assigns; |
| (6) | a
reference to an agreement or document (including a reference to this Agreement) is to
the agreement or document as amended, varied, supplemented, novated or replaced except
to the extent prohibited by this Agreement or that other agreement or document; |
| (7) | a
reference to legislation or to a provision of legislation includes a modification or
re-enactment of it, a legislative provision substituted for it and a regulation, code,
by-law, ordinance or statutory instrument issued under it; |
| (8) | a
reference to writing includes a facsimile or electronic mail transmission and any means
of reproducing words in a tangible and permanently visible form; |
| (9) | a
reference to, “dollars”, “$” or “USD”
is to currency of the United States of America; |
| (10) | the
word “including” means “including without limitation”
and “include” and, “includes” will be construed
similarly; |
| (11) | headings
and any table of contents or index are for convenience only and do not form part of this
Agreement or affect its interpretation; |
| (12) | a
provision of this Agreement must not be construed to the disadvantage of a Party merely
because that Party was responsible for the preparation of this Agreement or the inclusion
of the provision in this Agreement; |
| (13) | if
an act is prescribed to be done on a specified day which is not a Business Day, it must
be done instead on the next Business Day; |
| (14) | where
any representation, warranty or other statement in this Agreement is expressed to be
given or made by Trilogy (or the Trilogy Parties) or South32, as applicable, to its knowledge
or is otherwise expressed to be limited in scope to facts or matters known to Trilogy
(or the Trilogy Parties) or South32, as applicable, or of which Trilogy (or the Trilogy
Parties) or South32, as applicable, is aware, it will mean such knowledge as is actually
known to the Chief Executive Officer or Chief Financial Officer of Trilogy or the Chief
Executive Officer or Chief Financial Officer of South32, as applicable, in each case
after having made due inquiry; and |
| (15) | a
reference to a thing (including a right, obligation or concept) includes a part of that
thing but nothing in this section 1.2(15) implies that performance of part of an obligation
constitutes performance of the obligation. |
| 1.3 | Parties
and Other Matters |
During
the Option Period the Parties agree that for the purposes of this Agreement:
| (1) | a
notice given by South32 to one Trilogy Party will be deemed to have been given to each
Trilogy Party; |
| (2) | any
consent given, or agreement made, by a Trilogy Party will be deemed to have been given
or made (as the case may be) by each Trilogy Party; |
| (3) | any
consultation by South32 with one Trilogy Party will be deemed to be consultation by South32
with each Trilogy Party; |
| (4) | any
election by one Trilogy Party will be deemed to have been made by each Trilogy Party
and any failure by one Trilogy Party to make an election will be deemed to be a failure
of each Trilogy Party to make an election; |
| (5) | a
Dispute Representative nominated by a Trilogy Party will be the Dispute Representative
for each Trilogy Party; |
| (6) | a
breach of any representation or warranty given or made by a Trilogy Party under this
Agreement or a breach of, or failure by, a Trilogy Party or its Personnel to perform
any covenant or obligation of that Trilogy Party under this Agreement will be deemed
to be a breach of failure by each Trilogy Party; |
| (7) | if
a Trilogy Party commits or is the subject of an Insolvency Event then each Trilogy Party
will be deemed to have committed or be the subject of that Insolvency Event; and |
| (8) | any
right, power, authority, discretion, right of enforcement or remedy that is capable of
exercise by each Trilogy Party under or in connection with this Agreement will, when
exercised by one Trilogy Party, be deemed to have been exercised by each Trilogy Party. |
The
following schedules are attached to and incorporated in this Agreement:
| (1) | Schedule
1 - Property Description; |
| (2) | Schedule
2 - Material Agreements; |
| (3) | Schedule
3 - Form of Operating Agreement; |
| (4) | Schedule
4 - Form of Annual Exploration Report; |
| (5) | Schedule
5 - Form of Services Agreement; and |
| (6) | Schedule
6 - Form of Contribution Agreement. |
| 2. | Representations
and Warranties |
| 2.1 | Mutual
Representations and Warranties |
| (1) | Each
Party represents and warrants to each other Party that: |
| (a) | it
is duly formed, incorporated, amalgamated or continued (as the case may be) and validly
exists under the law of its place of formation, incorporation, amalgamation or continuance; |
| (b) | it
is in good standing under the legislation under which it was formed, incorporated, amalgamated
or continued (as the case may be); |
| (c) | it
has full legal capacity and power: |
| (i) | to
own its property and assets and to carry on its business; and |
| (ii) | to
enter into this Agreement and to perform its obligations under this Agreement. |
| (d) | it
is or at the relevant time will be directly or indirectly (through an Affiliate) qualified
to do business in the State of Alaska and lawfully authorized to hold Mineral Rights
in the State of Alaska; |
| (e) | it
has taken all action (whether corporate or otherwise) that is necessary to authorize
its entry into this Agreement and to perform its obligations under this Agreement; |
| (f) | this
Agreement constitutes a legal, valid and binding obligation of it enforceable in accordance
with its terms by appropriate legal remedy subject to laws generally affecting creditors’
rights and to principles of equity (where applicable); |
| (g) | the
execution, delivery and performance by it of this Agreement does not or will not (with
or without the lapse of time, the giving of notice or both) contravene, conflict with
or result in a breach of or default under: |
| (i) | its
Charter Documents; |
| (ii) | any
material term or provision of any security arrangement, undertaking, agreement or deed;
or |
| (iii) | any
writ, order or injunction, judgment, law, rule or regulation to which it is a party or
is subject or by which it or any of its property is bound; |
| (h) | no
litigation, arbitration, mediation, conciliation or administrative proceedings are taking
place, pending or, to its knowledge, threatened against it which if adversely decided
could, in the reasonable opinion of the Party’s management, have a material adverse
effect on the Party’s business, assets (including the Property) or financial condition
such as to materially impair its ability to perform its obligations under this Agreement; |
| (i) | no
liquidator, trustee in bankruptcy, receiver or receiver and manager or other external
administrator is currently appointed in relation to it or any of its property; |
| (j) | to
its knowledge, there are no facts, matters or circumstances which give any person the
right to appoint or to apply to appoint (as the case may be) a liquidator, trustee in
bankruptcy, receiver or receiver and manager or other external administrator to it or
any of its property; and |
| (k) | it
is unaware of any material facts or circumstances that have not been disclosed in this
Agreement, which should be disclosed to each other Party in order to prevent the representations
and warranties in this section 2.1(1) from being materially misleading. |
| (2) | The
representations and warranties contained in section 2.1(1) will be treated as made and
be binding upon each Party continuously during the term of this Agreement and each Party
must immediately notify each other Party if any of its representations and warranties
set out in this section 2.1 are not true and correct in any material respect. |
| 2.2 | Trilogy
Parties Representations and Warranties |
Each
Trilogy Party jointly and severally represents and warrants to South32 that:
Absence
of Approvals Required
| (1) | Other
than the NANA Consent, which has been obtained, no authorization, approval, order, licence,
permit or consent of any Governmental Authority or other third person, and no registration,
declaration or filing by any Trilogy Party with any such Governmental Authority is required
in order for any Trilogy Party: |
| (a) | to
consummate the transactions contemplated by this Agreement; |
| (b) | to
execute and deliver all of the documents and instruments to be delivered by a Trilogy
Party under this Agreement; |
| (c) | to
duly perform and observe the terms and provisions of this Agreement; and |
| (d) | to
render this Agreement legal, valid, binding and enforceable; |
The
Property and Related Matters
| (2) | the
Property is properly and accurately described in Schedule 1; |
| (3) | subject
to the Permitted Encumbrances, the Company is the legal and beneficial owner of a 100%
undivided interest in the Ambler Lands; |
| (4) | the
Company has the non-exclusive right to enter upon and the exclusive right to explore
for Minerals on, in and under the Bornite Lands and the ANCSA Lands, as more particularly
set out in the NANA Agreement; |
| (5) | the
Company is legally entitled to hold the Ambler Lands and will remain so entitled until
Completion until such time as they are transferred to the LLC; |
| (6) | all
of the Mineral Rights comprising the Property are current and in good standing and have
been validly and properly located, staked, tagged and recorded (as the case may be) in
accordance with the laws of the jurisdiction in which the Property is located and there
are no disputes, threatened or now existing of which a Trilogy Party is aware, as to
title to or the staking or recording of, those Mineral Rights; |
| (7) | except
for the Permitted Encumbrances, the Property and each Trilogy’s Party’s interest
in the Property (whether direct or indirect) is free and clear of any Encumbrance; |
| (8) | without
limiting section 2.2(7) and except as contemplated by the NANA Agreement or pursuant
to the Existing Royalty, there are no outstanding agreements, options or other arrangements
to acquire or purchase the Property or any interest in the Property and no person has
any royalty or other interest whatsoever in production or profits from the Property; |
| (9) | each
Trilogy Party has made available to South32 all material Exploration Data in its possession
as at the Execution Date and such Exploration Data is true and correct (to the knowledge
of the Trilogy Parties) in all material respects and no relevant Exploration Data in
respect of the Property has been withheld; |
| (10) | the
Company has obtained or acquired all authorizations, rights or powers necessary in, over
or to the surface area of the Property to access the Property and to conduct Operations
on the Property necessary to be obtained or acquired as at the Execution Date; |
| (11) | all
work or expenditure obligations applicable to the Property, all reports of the work or
expenditure and other requirements to be satisfied or filed to keep the Property in good
standing which were to have been satisfied by the Execution Date have been satisfied
or filed to the satisfaction of the applicable Governmental Authority; |
| (12) | all
rentals, taxes, assessments and renewal fees and other governmental charges applicable
to, or imposed on, the Property which were due to be paid on or before the Execution
Date have been paid in full; |
| (13) | there
are no actual, alleged, or, to the knowledge of the Trilogy Parties, potential or future
adverse claims, challenges, suits, actions, prosecutions, investigations or proceedings
against or to, the ownership of, or title to, the Property or of any challenge to the
Company’s right, title or interest in the Property nor to its knowledge is there
any basis for any of the foregoing; |
| (14) | each
Trilogy Party has no notice, or knowledge, of any proposal to terminate or vary the terms
of or rights attaching to, the Property from any Governmental Authority; |
| (15) | the
Property does not lie within any protected area, rescued area, reserve, reservation or
reserved area as designated by any Governmental Authority having jurisdiction, that would
impair the exploration for Minerals or the development of a mining project on the Property; |
| (16) | except
for the Bornite Environmental Matters, there are no orders or directions relating to
environmental matters requiring any work, repairs, construction or capital expenditures
with respect to the Property or the conduct of the business related to the Property,
nor to the best of the Trilogy Parties’ knowledge has any activity on the Property
been in violation of any applicable Environmental Law, and to their knowledge, conditions
on and relating to the Property are in compliance with that Environmental Law; |
| (17) | except
for the Bornite Environmental Matters, to the knowledge of each Trilogy Party, there
has been no material spill, discharge, leak, emission, ejection, escape, dumping, or
any release or threatened release of any Regulated Substance from, on, in or under the
Property or into the Environment, except releases expressly permitted or otherwise authorized
by applicable Law; |
| (18) | except
as is expressly permitted by the terms of the Mineral Rights comprising the Property,
no Regulated Substance has been treated, disposed of or is located or stored on the Property
as a result of activities of a Trilogy Party or its predecessors in title or interest; |
| (19) | to
the knowledge of each Trilogy Party, there is no pending or ongoing claims or actions
taken by or on behalf of any native or aboriginal persons with respect to any lands included
in the Property; |
Compliance
with Applicable Law
| (20) | the
Company and its Personnel have conducted its business, operations and activities (including
all activities on or in respect of the Property) in compliance in all material respects
with all applicable Law (including Anti-corruption Law); |
| (21) | each
Trilogy Party, its Personnel and its Affiliates have not engaged in any conduct that
is in breach of section 14.20; |
Company
Shares
| (22) | Trilogy
is the registered, legal and beneficial owner of 100% of the Company Shares, has good
and marketable title to the Company Shares and the Company Shares are free and clear
of any Encumbrance or third party claim; |
| (23) | Trilogy
has not given or agreed to give any Encumbrance over any of the Company Shares; |
| (24) | the
Company Shares have been, will be, validly issued and fully paid and no moneys are owing
in respect of them; |
| (25) | none
of the Company Shares has been issued in violation of any pre-emptive or other third
party rights and the Company has not declared any dividend or other distribution and
is not under any obligation to redeem or repurchase any shares or other securities issued
by it; |
| (26) | there
is no shareholder agreement, voting trust, proxy or other agreement or understanding
relating to the voting of the Company Shares; |
| (27) | except
for this Agreement, there are no agreements, arrangements or understandings in effect
under which the Company is obliged at any time to issue any shares or other securities
of the Company; |
| (28) | no
person has any agreement, right (including any pre-emptive right) or option, present
or future, contingent, absolute or capable of becoming an agreement, or which will with
the passage of time or the occurrence of any event become an agreement, right (including
a pre-emptive right) or option to acquire any Company Shares; |
No
Indebtedness, Security or Claims
| (29) | except
for the Permitted Encumbrances, the Company and its Assets are not the subject of any
Encumbrance and the Company has not given or agreed to give any Encumbrance over it or
its Assets (or both); |
| (30) | other
than as disclosed in writing to South32 by the Trilogy Parties prior to the Execution
Date, to the Trilogy Parties’ knowledge, no person has any Claim of any nature
against the Company or its Assets; |
Absence
of Investments or Agreements
| (31) | the
Company does not own any shares or other securities in any person and has no obligation
to acquire any Assets from, or any interest in, any person; |
Assets
of Company
| (32) | except
for the Permitted Encumbrances, the Company owns and possesses and has a good marketable
title to its Assets free and clear of all Encumbrances; |
| (33) | except
for the Permitted Encumbrances, no person has any agreement, right (including any pre-emptive
right) or option, present or future, contingent, absolute or capable of becoming an agreement,
or which will with the passage of time or the occurrence of any event become an agreement,
right (including a pre-emptive right) or option to acquire the Assets of the Company
or any of them; |
| (34) | all
Permits required as at the Execution Date for the uses to which the Assets of the Company
have been put, have been obtained and, to the knowledge of each Trilogy Party, are in
good standing; |
Corporate
Records/Books and Records of the Company
| (35) | the
corporate records of the Company, as required to be maintained by it pursuant to applicable
Law, are accurate, complete and up to date in all material respects, and are maintained
at the records office of the Company. Without limiting the foregoing, the minute books
of the Company contain true, correct and complete copies of the minutes of every meeting
of its board of directors and of its shareholders and every written resolution of its
directors and shareholders during the periods covered by such minute books. All corporate
proceedings and actions reflected in the corporate records of the Company (including
the minute books) have been, in all material respects, conducted or taken in compliance
with applicable Law and with the Charter Documents of the Company; |
| (36) | all
transactions of the Company have been properly and accurately recorded in the appropriate
books and records of the Company and such books and records are correct and complete
in all material respects and have been maintained and retained in accordance with applicable
Law, including tax and corporate laws and regulations, accounting requirements and good
business practice in the jurisdictions where the Company operates; |
Tax
and Tax Returns of the Company
| (37) | all
Tax and other information returns required to be filed with respect to the Company or
its Assets (including the relevant parts of the Property), business or income, for all
previous years or other reporting periods, under applicable Law (including the laws of
Canada and the United States) have been prepared and duly filed on or before their respective
due dates or as such dates may have been extended in accordance with applicable Law,
and all amounts due and owing in respect of such returns, for all previous years or other
reporting periods, whether for Tax, interest, penalties or otherwise, have been duly
paid, and all required instalments that have become due have been paid by their due dates; |
NANA
Agreement
| (38) | the
NANA Agreement is in full force and effect and, except as expressly disclosed in this
Agreement, is unamended and the Company is not in default of any covenant or agreement
arising under or by virtue of the NANA Agreement; |
| (39) | the
Company has made available to South32 a complete, true and accurate copy of the NANA
Agreement; |
| (40) | the
NANA Agreement is legal, valid, binding and enforceable on NANA in accordance with its
terms and constitutes legal, valid, binding and enforceable obligations of NANA; |
| (41) | the
NANA Agreement is the entire agreement between NANA and the Company with respect to the
Property and there are no other material agreements, arrangements or understandings between
NANA and the Company in respect of the Property other than contracts for services or
such other agreements as may be contemplated by the NANA Agreement; |
| (42) | the
creation of the Option and the execution of this Agreement by the Company does not constitute
a breach of, or default under, the NANA Agreement; |
| (43) | the
NANA Consent has been obtained; |
Other
Agreements
| (44) | the
Company is not in default of any covenant or agreement arising under or by virtue of
the Material Agreements; |
| (45) | the
Company has made available to South32 complete, true and accurate copies of the Material
Agreements; |
| (46) | the
creation of the Option, the execution and delivery of this Agreement and the performance
by the Trilogy Parties of their respective obligations under this Agreement and the other
documents and agreements referred to in this Agreement, does not and will not constitute
a breach of, or default under, any Material Agreement; |
LLC
| (47) | at
the Completion Date the LLC will be duly formed and will validly exist under the law
of its place of formation; |
| (48) | at
the Completion Date the LLC will in good standing under the legislation under which it
was formed; |
| (49) | at
the Completion Date the LLC will be qualified to do business in the State of Alaska and
lawfully authorized to hold Mineral Rights in the State of Alaska; |
| (50) | at
the Completion Date the LLC will not be indebted to the Company or Trilogy or any of
their respective Personnel or any Affiliate of any of them, on any account whatsoever; |
| (51) | except
for the Permitted Encumbrances or the Assumed Obligations, at the Completion Date Trilogy
and the LLC will not have given or agreed to give any Encumbrance over the LLC or any
of its Assets; |
| (52) | at
the Completion Date and except for this Agreement and the Operating Agreement, there
will be no agreements, arrangements or understandings in effect under which the LLC is
obliged at any time to issue or transfer any Membership Interest or other interest of
or in the LLC; |
| (53) | at
the Completion Date no person will have any agreement, right (including any pre-emptive
right) or option, present or future, contingent, absolute or capable of becoming an agreement,
or which will with the passage of time or the occurrence of any event become an agreement,
right (including a pre-emptive right) or option to acquire any Membership Interest in
the LLC other than pursuant to this Agreement and the Operating Agreement; |
| (a) | the
Assumed Obligations; |
| (b) | the
obligations to be performed by the LLC under the Material Agreements and any other agreement
assigned to the LLC pursuant to the Contribution Agreement; and |
| (c) | if
Completion under this Agreement does not occur simultaneously with Closing under the
Contribution Agreement, any liabilities or obligations that may be incurred in the ordinary
course of business following Closing under the Contribution Agreement, as long as such
liabilities or obligations do not, in the aggregate, exceed $50,000 without the prior
written consent of South32, |
as
at the Completion Date the LLC will have no liabilities or obligations whatsoever (whether accrued, absolute, contingent or otherwise),
and will not be a party to any agreement, arrangement or understanding (or purported agreement, arrangement or understanding);
Accuracy
of Information
| (55) | the
Disclosure Material that was provided by or on behalf of each Trilogy Party was provided
in good faith and in so doing each Trilogy Party has, to its knowledge, not: |
| (a) | omitted
anything material to the Assets of the Company including the relevant parts of the Property
or the Company from such Disclosure Material that has not separately been disclosed in
writing to South32; or |
| (b) | included
anything materially misleading in such Disclosure Material; and |
| (56) | without
limiting section 2.2(55), the financial records and other documents provided by or on
behalf of each Trilogy Party to South32 in order to substantiate the calculation of the
Matched Parallel Funding are true and accurate in every material respect; |
| (57) | it
is unaware of any material facts or circumstances that have not been disclosed in this
Agreement, which should be disclosed to South32 in order to prevent the representations
and warranties in this section 2.2 from being materially misleading. |
| 2.3 | When
Warranties Given and Breach |
| (1) | The
representations and warranties given in and under section 2.2: |
| (a) | will
be treated as made and be binding upon each Trilogy Party continuously during the period
commencing on and from the Execution Date to that date which is the day immediately prior
to the date of exercise by South32 of the Option; and |
| (b) | without
limiting section 2.3(1)(a), will be treated as re-made and be binding upon each Trilogy
Party as at the time immediately before Completion. |
| (2) | For
the purposes of section 2.3(1)(b), a reference in section 2.2(34) to the Execution Date
will be taken to be a reference to the time immediately before Completion. |
| (3) | A
Trilogy Party will not be liable for a breach of any representation or warranty given
or made by a Trilogy Party in sections 2.1 and 2.2 to the extent that such breach is
caused by a Material Decision expressly consented to in writing by South32 pursuant to
section 5.6(2)(f). |
| (4) | Except
in the case of fraud (including fraudulent misrepresentation) and notwithstanding anything
else in this Agreement to the contrary: |
| (a) | to
the extent that any representation or warranty given or made by a Trilogy Party in section
2.2(3) to 2.2(19) (inclusive), 2.2(29) and sections 2.2(32) to 2.2(34) (inclusive) relates
to the Non-Core Property, each such representation and warranty will be deemed to have
been given or made to the knowledge of each Trilogy Party (“Qualified Warranty”);
and |
| (b) | if
at any time after the Execution Date and during the Option Period a Trilogy Party becomes
aware that any Qualified Warranty is not true and correct in any material respect (“Qualified
Warranty Breach”) then as long as the Trilogy Party immediately notifies South32
in writing of the Qualified Warranty Breach, the Trilogy Party will not liable to make
any payment pursuant to the indemnity in section 2.4(1) for or in respect of the Qualified
Warranty Breach. |
| (5) | Except
in the case of fraud (including fraudulent misrepresentation), Trilogy is not liable
to make any payment pursuant to the indemnity in section 2.4(1) for any breach of any
representation or warranty set out in sections 2.1 and 2.2 unless a claim is made in
writing by South32 against Trilogy on or before the expiration of the applicable Warranty
Period. Notwithstanding any other provision of this Agreement to the contrary, Trilogy’s
liability under section 2.4(1) for breach of any representation or warranty set out in
sections 2.1 and 2.2 will cease and be extinguished on the expiration of the applicable
Warranty Period but this section 2.3(4) does not apply to any breach of any representation
or warranty in respect of which a written claim has been given to Trilogy under this
section 2.3(4) prior to the expiration of the applicable Warranty Period. |
| (6) | Except
in the case of fraud (including fraudulent misrepresentation), South32 is not liable
to make any payment pursuant to the indemnity in section 2.5(1) for any breach of any
representation or warranty set out in section 2.1 unless a claim is made in writing by
Trilogy against South32 on or before the expiration of the applicable Warranty Period.
Notwithstanding any other provision of this Agreement to the contrary, South32’s
liability under section 2.5(1) for breach of any representation or warranty set out in
section 2.1 will cease and be extinguished on the expiration of the applicable Warranty
Period but this section 2.3(6) does not apply to any breach of any representation or
warranty in respect of which a written claim has been given to South32 under this section
2.3(6) prior to the expiration of the applicable Warranty Period. |
| (1) | Subject
to sections 2.3, 2.4(3), 2.4(4) and 2.6, Trilogy indemnifies and must keep indemnified
South32 from and against any Claim which South32 suffers, sustains or incurs arising
out of or in connection with: |
| (a) | the
breach of any representation or warranty given or made by a Trilogy Party under this
Agreement; |
| (b) | the
breach of, or failure by, a Trilogy Party or its Personnel to perform any covenant or
obligation of that Trilogy Party under this Agreement; or |
| (c) | any
act, matter, event or other circumstance that occurred or arose in connection with the
Property or the Company prior to the Execution Date including the presence, release or
discharge of any Regulated Substance. |
| (2) | It
is not necessary for South32 to incur expense or make payment before enforcing a right
of indemnity conferred by this Agreement. |
| (3) | Except
in the case of fraud (including fraudulent misrepresentation), any obligation of Trilogy
under this Agreement to indemnify will be limited to direct damages only and, for greater
certainty, in no event will Trilogy be liable to South32 or to any third party for any
consequential, incidental, indirect, exemplary, special or punitive damages whether arising
out of breach of contract, tort (including negligence) or otherwise, regardless of whether
such damage was foreseeable and whether or not Trilogy has been advised of the possibility
of such damages. |
| (4) | Except
in the case of fraud (including fraudulent misrepresentation), the maximum liability
of Trilogy to indemnify South32 under section 2.4(1) is limited, in aggregate, to the
Liability Limit. |
| (5) | A
Trilogy Party must promptly give notice to South32 in the event that there is a breach
of a representation or warranty given or made by a Trilogy Party under this Agreement. |
| (1) | Subject
to sections 2.3(6), 2.5(3), 2.5(4) and 2.6, South32 indemnifies and must keep indemnified
Trilogy from and against any Claim which Trilogy suffers, sustains or incurs arising
out of or in connection with: |
| (a) | the
breach of any representation or warranty given or made by South32 under this Agreement;
or |
| (b) | the
breach of, or failure by, a South32 or its Personnel to perform any covenant or obligation
of South32 under this Agreement. |
| (2) | It
is not necessary for Trilogy to incur expense or make payment before enforcing a right
of indemnity conferred by this Agreement. |
| (3) | Except
in the case of fraud (including fraudulent misrepresentation), any obligation of South32
under this Agreement to indemnify will be limited to direct damages only and, for greater
certainty, in no event will South32 be liable to a Trilogy Party or to any third party
for any consequential, incidental, indirect, exemplary, special or punitive damages whether
arising out of breach of contract, tort (including negligence) or otherwise, regardless
of whether such damage was foreseeable and whether or not South32 has been advised of
the possibility of such damages. |
| (4) | Except
in the case of fraud (including fraudulent misrepresentation), the maximum liability
of South32 to indemnify Trilogy under section 2.5(1) is limited, in aggregate, to the
Liability Limit. |
| (5) | South32
must promptly give notice to the Trilogy Parties in the event that there is a breach
of a representation or warranty given or made by South32 under this Agreement. |
| 2.6 | Indemnification
and Third-Party Claims |
| (1) | All
claims for indemnification by any indemnified Party under section 2.4 or section 2.5
(as the case may be) as to a third party claim asserted or initiated against such indemnified
Party must be asserted and resolved as set out in this section 2.6. |
| (2) | If
any third person notifies any Party indemnified under section 2.4 or section 2.5 (“Indemnified
Party”) with respect to any matter (a “Third-Party Claim”)
that may give rise to a claim for indemnification against a Party (“Indemnifying
Party”) under section 2.4 or section 2.5 (as the case may be), then the Indemnified
Party must promptly (and in any event within ten (10) Business Days after receiving notice
of the Third-Party Claim from such third party) notify the Indemnifying Party of the
Third-Party Claim. |
| (3) | Notwithstanding
section 2.6(2), no delay on the part of an Indemnified Party in notifying the Indemnifying
Party will relieve the Indemnifying Party of any of its obligations under section 2.4
or section 2.5 (as the case may be) unless and then solely to the extent that the Indemnifying
Party is irrevocably prejudiced by such delay. |
| (4) | The
notice given by an Indemnified Party under section 2.6(2) must include a description
of the Third-Party Claim and copies of all documents relating to the Third-Party Claim.
Any Indemnifying Party will have the right to assume and thereafter conduct the defence
of the Third-Party Claim with counsel of its choice reasonably satisfactory to the Indemnified
Party, except in the event of a conflict of interest, in which case the Indemnified Party
will have the right to retain its own counsel at the cost of the Indemnifying Party.
Notwithstanding the foregoing the Indemnifying Party must not consent to the entry of
any judgment or enter into any settlement with respect to the Third-Party Claim without
the prior written consent of the Indemnified Party (not to be unreasonably withheld,
conditioned or delayed) unless the judgment or proposed settlement fully releases such
Indemnified Party with respect to such Third-Party Claim or involves only the payment
of money damages that are covered in full by the indemnity and does not impose an injunction
or other equitable relief upon the Indemnified Party and is subject to confidentiality
provisions acceptable to the Indemnified Party (which approval of such provisions must
not be unreasonably withheld, conditioned or delayed by the Indemnified Party). |
| (5) | An
election to assume the defence of a Third-Party Claim will not be deemed to be an admission
that the Indemnifying Party is liable to the Indemnified Party in respect of such Third-Party
Claim. Unless and until an Indemnifying Party assumes the defence of the Third-Party
Claim as provided for in this section 2.6 the Indemnified Party may defend against the
Third-Party Claim in any manner it reasonably may deem appropriate. |
| (6) | To
the extent the Indemnifying Party controls or participates in the defence, settlement
or compromise of a Third-Party Claim, the Indemnified Party must, from time to time: |
| (a) | provide
the Indemnifying Party and its counsel access to, during normal business hours, documentation
and other information of the Indemnified Party relevant to the Third-Party Claim but
excluding any documentation or advice (whether in permanent or electronic form): |
| (i) | the
disclosure of which would cause the Indemnified Party to breach any contract of insurance
to which the Indemnified Party or its Affiliates is a party; or |
| (ii) | which
is the subject of legal professional privilege; or |
| (iii) | which
is confidential or proprietary information of the Indemnified Party; |
| (b) | permit
the Indemnifying Party and its counsel to consult with the Personnel and counsel of the
Indemnified Party; and |
| (c) | cooperate
with the Indemnifying Party in any reasonable manner requested by the Indemnifying Party
and use commercially reasonable efforts to assist the Indemnifying Party in the defence,
settlement or compromise of such Third-Party Claim as and when requested by the Indemnifying
Party. |
| (1) | At
any time prior to the expiration of the Option Period and upon reasonable prior written
notice, the Trilogy Parties will deliver, grant access or otherwise cause to be made
available to South32 and its Personnel all information (whether in tangible or electronic
form) relating to the Company Assets, the Property, the LLC and its Assets. Nothing in
this section 2.7(1) limits, prejudices or otherwise affects the rights of South32 or
its Affiliates under the Operating Agreement to require the delivery of, to have access
to or to otherwise require to be made available to South32 or its Affiliates all information
(whether in tangible or electronic form) relating to the Company Assets, the Property,
the LLC and its Assets. |
| (2) | The
Trilogy Parties authorize South32 (and any of its authorized Personnel) to access, examine,
audit and make copies (in a paper and electronic form) of any of the information and
other documents and records provided pursuant to section 2.7(1) (“Trilogy Records”). |
| (3) | The
Trilogy Parties will, at the risk and cost of South32 and upon reasonable notice, give
South32 and any of its authorized Personnel access to the Property to conduct such inspections
and investigations of the Property as South32 considers fit. In connection with and to
facilitate such access to the Property by South32 and any of its authorized Personnel,
reasonable assistance will be provided by the Trilogy Parties to South32 at no additional
cost to South32. |
| (4) | In
connection with any due diligence conducted by South32 pursuant to this section 2.7,
the Trilogy Parties will, upon reasonable notice, grant access to or otherwise make available
for the purposes of conducting interviews or meetings, any relevant Personnel of the
Trilogy Parties. |
Subject
to this Agreement, the Trilogy Parties hereby grant to South32 the sole, exclusive and irrevocable right to subscribe for, from
the LLC, and have issued to it by the LLC fifty percent (50%) of all Membership Interests issued to the Company and South32 on
Completion (“Option”) free and clear of any Encumbrance.
3.2 First
Tranche
| (1) | To
maintain the Option in good standing in Year 1, South32 must, within ten (10) Business
Days after the proposed program of Operations and budget of Qualifying Expenditure for
Year 1 (referred to in section 6.5(1)(a)) has been approved by the Technical Committee
pursuant to section 6.11(7) or by South32 pursuant to section 6.11(10) (as the case may
be) advance the Company the First Tranche to fund the Qualifying Expenditures to be incurred
in undertaking the Operations contemplated by the Year 1 Approved Program. |
| (2) | If
pursuant to section 6.11(9) the Technical Committee approves an alteration or modification
of the Year 1 Approved Program and an increase in the Approved Budget that relates to
the Year 1 Program, then within five (5) Business Days of the date of that approval,
South32 must advance the Additional Qualifying Expenditure to the Company. |
| (3) | Subject
to and in accordance with section 6, the Operator must use reasonable efforts to apply
the entire First Tranche to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 1 Approved Program within the exploration season
the subject of the Year 1 Approved Program. |
| (4) | If
the Operator does not apply the entire First Tranche as required by section 3.2(3) then
as long as the Operator has otherwise complied with its obligations under section 3.2(3): |
| (a) | no
Party will be taken to be in default of this Agreement; and |
| (b) | any
amount of the First Tranche not applied will be held by the Operator and carried forward
and applied solely to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 2 Approved Program. |
3.3 Second
Tranche
| (1) | Subject
to exercise of the Option, to maintain the Option in good standing in Year 2, South32
must on or before that date that is seven (7) Business Days after the date on which South32
gives the Trilogy Parties notice under section 4.2(1)(a)(i), advance to the Company ten
million dollars ($10,000,000) to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 2 Approved Program. If when approved pursuant
to sections 6.11(7) and 6.11(8), the Year 2 Approved Program has an Approved Budget that
exceeds ten million dollars ($10,000,000), then South32 must advance the amount of such
excess to the Company within ten (10) Business Days of the date of that approval. |
| (2) | If
pursuant to section 6.11(9) the Technical Committee approves an alteration or modification
of the Year 2 Approved Program and an increase in the Approved Budget that relates to
the Year 2 Program, then within five (5) Business Days of the date of that approval,
South32 must advance the Additional Qualifying Expenditure to the Company. |
| (3) | Subject
to and in accordance with section 6, the Operator must use reasonable efforts to apply
the entire Second Tranche to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 2 Approved Program within the exploration season
the subject of the Year 2 Approved Program. |
| (4) | If
the Operator does not apply the entire Second Tranche as required by section 3.3(3) then
as long as the Operator has otherwise complied with its obligations under section 3.3(3): |
| (a) | no
Party will be taken to be in default of this Agreement; and |
| (b) | any
amount of the Second Tranche not applied will be held by the Operator and carried forward
and applied solely to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 3 Approved Program. |
3.4 Third
Tranche
| (1) | Subject
to the exercise of the Option, to maintain the Option in good standing in Year 3, South32
must on or before that date that is seven (7) Business Days after the date on which South32
gives the Trilogy Parties notice under section 4.2(2)(a)(i), advance to the Company ten
million dollars ($10,000,000) to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 3 Approved Program. If when approved pursuant
to sections 6.11(7) and 6.11(8), the Year 3 Approved Program has an Approved Budget that
exceeds ten million dollars ($10,000,000), then South32 must advance the amount of such
excess to the Company within ten (10) Business Days of the date of that approval. |
| (2) | If
pursuant to section 6.11(9) the Technical Committee approves the alteration or modification
of the Year 3 Approved Program and an increase in the Approved Budget that relates to
the Year 3 Program, then within five (5) Business Days of the date of that approval,
South32 must advance the Additional Qualifying Expenditure to the Company. |
| (3) | Subject
to and in accordance with section 6, the Operator must use reasonable efforts to apply
the entire Third Tranche to fund the Qualifying Expenditures to be incurred in undertaking
the Operations contemplated by the Year 3 Approved Program within the exploration season
the subject of the Year 3 Approved Program. |
| (4) | If
the Operator does not apply the entire Third Tranche as required by section 3.4(3) then
as long as the Operator has otherwise complied with its obligations under section 3.4(3): |
| (a) | no
Party will be taken to be in default of this Agreement; |
| (b) | if
the Option Period is extended pursuant to section 3.5 then any amount of the Third Tranche
not applied will be held by the Operator and carried forward and applied solely to fund
the Qualifying Expenditures to be incurred in undertaking the Operations to be conducted
in such extension; |
| (c) | if
South32 exercises the Option pursuant to section 4.2(3), any amount of the Third Tranche
not applied will be applied solely towards the initial program and budget prepared and
approved pursuant to the Operating Agreement; and |
| (d) | if
South32 terminates this Agreement without exercising the Option, then any amount of the
Third Tranche not applied will remain in the Company and South32 will have no Claim against
a Trilogy Party with respect to it. |
| (5) | If
the Operator does not apply the entire Third Tranche as required by section 3.4(3) and
has not otherwise complied with its obligations under section 3.4(3) and South32 terminates
this Agreement without exercising the Option, then any amount of the Third Tranche not
applied will be reimbursed to South32 by the Company as soon as is practicably possible. |
3.5 Extension
of Option Period
| (1) | Without
limiting section 8, the Parties agree that if for any reason (other than South32 failing
to advance the Third Tranche in accordance with section 3.4(1)) the Operator is unable
to complete the Operations and incur at least 75% of all the Qualifying Expenditure contemplated
by the Year 3 Approved Program within Year 3 then the Year 3 Option Exercise Date will
be extended by the period that is necessary to complete such Operations and incur such
Qualifying Expenditure but in no event will the Year 3 Option Exercise Date be extended
under this section 3.5(1) for a period exceeding twelve (12) months. |
| (2) | The
Operator must, as soon as reasonably possible after it becomes aware that the Operator
is unable to complete the Operations and incur at least 75% of all the Qualifying Expenditure
contemplated by the Year 3 Approved Program within Year 3, give notice (“Delay
Notice”) to each other Party which must specify: |
| (a) | (in
reasonable detail) the events or circumstances that have caused or will cause (as the
case may be) the Operator to be unable to complete the Operations contemplated by the
Year 3 Approved Program within Year 3; |
| (b) | an
estimate of all the Qualifying Expenditure incurred by the Operator in carrying out the
Operations contemplated by the Year 3 Approved Program up to and including the date of
the Delay Notice; and |
| (c) | an
estimate of the time required within the Year 4 exploration season for the Operator to
complete the Operations. |
| (3) | Within
twenty (20) Business Days after receipt by South32 of the Delay Notice the Parties must
meet and confer (either in person or by electronic means) to determine and agree the
extension to the Year 3 Option Exercise Date. Failing agreement but subject to section
3.5(1), the extension to the Year 3 Option Exercise Date will be determined by South32. |
| (4) | In
the event of an extension of the Year 3 Option Exercise Date pursuant to this section
3.5, any date or period provided for in this Agreement will (as applicable) be extended
by a period equivalent to the extension of the Year 3 Option Exercise Date. |
| (5) | South32
acknowledges and agrees that the Year 3 Option Exercise Date may only be extended once
pursuant to this section 3.5. |
3.6 Extension
of Approved Program
| (1) | Without
limiting section 8, the Parties agree that if for any reason (other than South32 failing
to advance the relevant Tranche) the Operator in Year 1 or Year 2 (as the case may be)
incurs less than 60% of all the Qualifying Expenditure contemplated by the relevant Approved
Program and Approved Budget for the relevant Year then: |
| (a) | the
incomplete Operations will be completed and the associated Qualifying Expenditure (all
as contemplated by the relevant Approved Program) will be completed and incurred in the
following Year; |
| (b) | the
relevant Year and the following Year (referred to in section 3.6(1)(a)) will together,
for the purposes of this Agreement, constitute Year 1 or Year 2 (as the case may be); |
| (c) | any
date or period provided for in this Agreement will (as applicable) be extended by a period
equivalent to a Year; and |
| (d) | unless
the Parties otherwise expressly agree, the Operator will not, in accordance with section
6.5(1) be required to prepare and submit a program and budget for the following Year
(referred to in section 3.6(1)(a)) unless such following Year is Year 3. |
| (2) | Without
limiting section 8, the Parties agree that if for any reason (other than South32 failing
to advance the relevant Tranche) the Operator in Year 1 or Year 2 (as the case may be)
incurs more than 60% but less than 100% of all the Qualifying Expenditure contemplated
by the relevant Approved Program and Approved Budget for the relevant Year then: |
| (a) | the
amount of the Qualifying Expenditure that was not expended (as contemplated by the relevant
Approved Program and Approved Budget) must be included by the Operator in the following
Year’s Program and Budget (that is to be prepared in accordance with section 6.5)
and will be incurred in the following Year; and |
| (b) | for
certainty, there will be no extension to any date or period provided for in this Agreement. |
| 3.7 | Application
of South32 Initial Funding |
| (1) | The
Company must open in its own name and maintain a special purpose bank account (which
must be interest-bearing if possible) to be styled the “Option Agreement Account”
into which account all advances by South32 on account of any Tranche must be deposited
and from which all Qualifying Expenditure which is to be funded by South32 will be paid
or reimbursed to the Company. |
| (2) | Subject
to section 3.7(3) and for greater certainty all advances of Qualifying Expenditure by
South32 will be held by the Company in the Option Agreement Account in trust for South32
subject to the following: |
| (a) | the
approval of any Approved Program by the Technical Committee will be deemed to be South32’s
consent for the Company to withdraw and remit (without deduction of any kind) to the
Operator the funds in the Option Agreement Account to be expended by the Operator as
contemplated by such Approved Program; and |
| (b) | South32
will have no further rights or interests in the Option Agreement Account or the South32
Initial Funding upon the expiry or exercise of the Option or upon the termination of
this Agreement in accordance with its terms. |
| (3) | If
the Company or the Operator is the subject of any of the events described in section
11.1(2) such that the Company or the Operator becomes an Insolvent Party then immediately
preceding the happening of any such event, any consent of South32 and any right or authority
of the Company to withdraw any funds standing in the Option Agreement Account or to remit
to the Operator any funds withdrawn from the Option Agreement Account will be deemed
immediately terminated. |
| (4) | Unless
otherwise expressly agreed in writing by South32, all South32 Initial Funding must be
applied solely in funding Qualifying Expenditures incurred in undertaking Operations
on or in respect of the Bornite Deposit pursuant to Approved Programs and Approved Budgets. |
| (5) | Without
limiting section 3.7(1) and except as expressly agreed otherwise in writing by South32,
no part of the Initial Funding (whether in cash or other form or thing to which any part
of the Initial Funding may be converted) may be paid, transferred or applied (either
directly or indirectly) for the benefit of Trilogy, any Affiliate of Trilogy or any director,
officer, consultant or adviser of a Trilogy Party except as reimbursement (pursuant to
the Services Agreement) of the cost of activities undertaken by Trilogy (as Operator)
or its Personnel as part of the Operations authorized by the relevant Approved Program
and where the cost of such activities is Qualifying Expenditure contemplated by the relevant
Approved Budget. |
| (1) | Each
Party acknowledges and agrees that: |
| (a) | the
amounts for each Tranche and the Subscription Amount are exclusive of any and all Taxes
imposed by a Governmental Authority on those advances or payments; |
| (b) | the
Parties have a common understanding and belief that as at the date of this Agreement
the payments to be made under this Agreement on account of each Tranche and the Subscription
Price ought not to be subject to any deduction or withholding under applicable Law; and |
| (c) | each
Party must act reasonably including to provide to each other Party with any necessary
documentation or assistance in order to ensure, to the extent reasonably possible, that
the payments to be made under this Agreement on account of each Tranche and the Subscription
Price are not to be subject to any deduction or withholding under applicable Law. |
| (2) | If
notwithstanding sections 3.8(1)(b) and 3.8(1)(c), South32, pursuant to applicable Law
is required to deduct or withhold any Taxes from payments to be made under this Agreement
on account of each Tranche and the Subscription Price, then: |
| (a) | the
sum payable will be increased as necessary, so that, after making all deductions or withholdings
required by applicable Law, Trilogy receives an amount equal to the sum it would have
received had no such deduction or withholding been made; |
| (b) | South32
will make such deduction or withholding; and |
| (c) | South32
will pay to the relevant Governmental Authority in accordance with the applicable Law
the full amount deducted or withheld. If Trilogy receives a refund of any of the foregoing
Taxes for which South32 has paid additional amounts pursuant to this section 3.8, Trilogy
must pay over such refund amount to South32 (but only to the extent of such additional
amounts paid by South32 under this section 3.8 with respect to Taxes giving rise to such
refund). Notwithstanding the foregoing, South32, upon request of Trilogy, must repay
the amount paid to South32 on account of such refund if Trilogy is required to repay
such refund to the Governmental Authority. |
| (3) | Each
Party will be responsible for its own corporate and income taxes with respect to any
payments contemplated under this Agreement. |
| 4. | Exercise
and Termination of Option |
| 4.1 | Condition
of Exercise of Option |
The
exercise of the Option is conditional on South32:
| (1) | in
the case where South32 elects to exercise the Option on or before March 31, 2018, having
performed all of its obligations under section 3.2; |
| (2) | in
the case where South32 elects to exercise the Option on or before March 31, 2019, having
performed all of its obligations under section 3.3; or |
| (3) | in
the case where South32 elects to exercise the Option on or before January 31, 2020, having
performed all of its obligations under section 3.4, |
(“Option
Condition”).
| 4.2 | Further
Initial Funding or Exercise of Option |
| (1) | Subject
to section 3.6 and the Company having given to South32, on or before December 31,
2017, an Annual Exploration Report with respect to the Year 1 Approved Program, South32
will: |
| (a) | on
or before January 31, 2018, give the Trilogy Parties: |
| (i) | written
notice of its intention to advance further South32 Initial Funding in accordance with
section 3.3; or |
| (ii) | written
notice of its intention not to advance any further South32 Initial Funding; and |
| (b) | on
or before March 31, 2018, give the Trilogy Parties the Option Exercise Notice in accordance
with section 4.2(5) or written notice of its election not to exercise the Option at that
time, and |
if
South32:
| (c) | has
not given written notice to the Trilogy Parties under section 4.2(1)(a)(i); and |
| (d) | fails
to give the Option Exercise Notice or gives written notice of its election not to exercise
the Option at that time under section 4.2(1)(b) then, |
this
Agreement and the Option will automatically terminate and be of no further force and effect, and South32 will have no further
claims against the Trilogy Parties in respect of any interest in the LLC, any interest in the Property, the Exploration Data or
any of the South32 Initial Funding.
| (2) | Subject
to section 3.6 and the Company having given to South32, on or before December 31,
2018, an Annual Exploration Report with respect to the Year 2 Approved Program, South32
will: |
| (a) | on
or before January 31, 2019, give the Trilogy Parties: |
| (i) | written
notice of its intention to advance further South32 Initial Funding in accordance with
section 3.4; or |
| (ii) | written
notice of its intention not to advance any further South32 Initial Funding; and |
| (b) | on
or before March 31, 2019, give the Trilogy Parties the Option Exercise Notice in accordance
with section 4.2(5) or written notice of its election not to exercise the Option at that
time, and |
if
South32:
| (c) | has
not given written notice to the Trilogy Parties under section 4.2(1)(a)(i); and |
| (d) | fails
to give the Option Exercise Notice or gives written notice of its election not to exercise
the Option at that time under section 4.2(2)(b) then, |
this
Agreement and the Option will automatically terminate and be of no further force and effect, and South32 will have no further
claims against the Trilogy Parties in respect of any interest in the LLC, any interest in the Property, the Exploration Data or
any of the South32 Initial Funding.
| (3) | Subject
to sections 3.5 and 4.2(4) and the Company having given to South32, on or before November
30, 2019, an Annual Exploration Report with respect to the Year 3 Approved Program South32
will, on or before January 31, 2020 (“Year 3 Option Exercise Date”)
give the Trilogy Parties: |
| (a) | the
Option Exercise Notice in accordance with section 4.2(5); or |
| (b) | written
notice of its termination of this Agreement and the Option, as a consequence of which
this Agreement and the Option will automatically terminate and be of no further force
and effect, and South32 will have no further claims against the Trilogy Parties in respect
of any interest in the LLC, any interest in the Property, the Exploration Data or any
of the South32 Initial Funding, |
failing
which, this Agreement and the Option will automatically terminate and be of no further force and effect, and South32 will have
no further claims against the Trilogy Parties in respect of any interest in the LLC, any interest in the Property, the Exploration
Data or any of the South32 Initial Funding.
| (4) | If
the Operator has not expended all South32 Initial Funding advanced to December 31, 2019
such that the Year 3 Option Exercise Date has been extended in accordance with section
3.5(3), then South32 will, on or before two (2) months from the date on which the Company
has given to South32 an Annual Exploration Report (updated to reflect any material Exploration
Data learned or obtained from the Operations conducted to complete the Year 3 Program)
with respect to the Year 3 Approved Program, give the Trilogy Parties: |
| (a) | the
Option Exercise Notice in accordance with section 4.2(5); or |
| (b) | written
notice of its termination of this Agreement and the Option, as a consequence of which
this Agreement and the Option will automatically terminate and be of no further force
and effect, and South32 will have no further claims against the Trilogy Parties in respect
of any interest in the LLC, any interest in the Property, the Exploration Data or any
of the South32 Initial Funding, |
failing
which, this Agreement and the Option will automatically terminate and be of no further force and effect, and South32 will have
no further claims against the Trilogy Parties in respect of any interest in the LLC, any interest in the Property, the Exploration
Data or any of the South32 Initial Funding.
| (5) | South32
may, on or before the dates or within the periods specified in sections 4.2(1), 4.2(2),
4.2(3) or 4.2(4) (as the case may be), give Trilogy and the Company a notice (“Option
Exercise Notice”) by which: |
| (a) | South32
confirms its exercise of the Option; and |
| (b) | states
its intention to complete the subscription for 50% of the Membership Interests in the
LLC contemplated by the exercise of the Option in accordance with sections 4.3 to 4.8
inclusive. |
| (6) | If
the Operator does not give South32 an Annual Exploration Report on or before the date
specified for the same in any of sections 4.2(1), 4.2(2), 4.2(3) or 4.2(4) then each
other date in the relevant section will be automatically extended by a period equivalent
to the period of delay in receipt by South32 of the relevant Annual Exploration Report. |
| 4.3 | Obligations
of the Parties Prior to Completion |
| (1) | From
the date of receipt of the Option Exercise Notice until immediately prior to Completion,
the Trilogy Parties must take all steps and actions necessary to: |
| (a) | establish
and form the LLC in accordance with Delaware Law by the filing of a certificate of formation
for the LLC with the Delaware Secretary of State; |
| (b) | cause
the LLC to issue that number of Membership Interests to the Company such that the Company
will hold 50% of the total Membership Interests on Completion; and |
| (c) | in
consideration for and concurrently with the issue by the LLC of the Membership Interests
to the Company, cause the Company and the LLC to execute and deliver the Contribution
Agreement by which, among other things, the Company will sell, assign and transfer to
the LLC, which will purchase and accept the assignment and transfer of, all Assumed Obligations
and all Company Assets free from all Encumbrances (other than the Permitted Encumbrances)
(“Transferred Assets”). |
Any
third party costs reasonably incurred by the Trilogy Parties for the purpose of the performance of the obligations of the Trilogy
Parties under this section 4.3 will be to the account of the LLC and must be reimbursed by the LLC to the relevant payee of such
third party costs following Completion.
The
Company and South32 intend that the contribution of the Transferred Assets to the LLC by the Company pursuant to the Contribution
Agreement and the subscription for Membership Interests by South32 pursuant to this Agreement will be a single integrated transaction
qualifying as tax-deferred contributions under Section 721(a) of the U.S. Internal Revenue Code.
| (2) | From
the date of exercise of the Option until the assignment and transfer of Transferred Assets
to the LLC in accordance with the Contribution Agreement: |
| (a) | the
Transferred Assets will be held by the Company, in trust for the exclusive benefit and
use of the LLC; and |
| (b) | the
Company may only deal with, or make use of, the Transferred Assets in strict accordance
with this Agreement, the Contribution Agreement and the Operating Agreement. |
| 4.4 | Completion
Date and Location |
The
subscription of the Membership Interests by South32 contemplated by the exercise of the Option will be completed within forty-five
(45) Business Days after the date on which South32 has given the Trilogy Parties the Option Exercise Notice at the offices of
South32’s counsel, Fasken ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP at Suite 2900 - 550 Burrard Street, Vancouver, British Columbia, or on
or at such other date, time or location as may be agreed upon in writing by the Parties.
| 4.5 | Subscription
Price and Documents to be Delivered by ▇▇▇▇▇▇▇ |
▇▇▇▇▇▇▇
must, subject to the performance by the Trilogy Parties of their respective obligations under section 4.6, at Completion:
| (1) | pay
the Subscription Price to the LLC by way of wire transfer, certified cheque or other
immediately available funds; |
| (2) | deliver
a certified copy of resolutions of the directors of South32 authorizing the execution
and delivery of the Operating Agreement and any other documents required to be executed
or delivered (or both, as the case may be) on Completion by South32 under this Agreement;
and |
| (3) | deliver
to the Trilogy Parties the Operating Agreement duly executed by South32. |
| 4.6 | Documents
to be Delivered by Trilogy Parties |
At
Completion, the Trilogy Parties must deliver or cause to be delivered to South32:
| (1) | evidence,
in form and substance satisfactory to South32, of the sale, assignment or transfer (as
the case may be) of the Transferred Assets from the Company to the LLC free from all
Encumbrances (other than the Permitted Encumbrances) in accordance with the Contribution
Agreement together with notarized or certified copies of all such other deeds, instruments,
notarizations or documents, duly executed, which in the opinion of South32 acting reasonably
are necessary to effect and evidence the issuance of the Membership Interests to South32; |
| (2) | evidence,
in form and substance satisfactory to South32, of the registration of 50% of the Membership
Interests in the name of South32 and 50% of the Membership Interests in the name of the
Company, in accordance with the applicable Law; |
| (3) | a
certified copy of resolutions of the directors of the Company authorizing the execution
and delivery of the Operating Agreement and any other documents required to be executed
or delivered (or both, as the case may be) on Completion by the Company under this Agreement; |
| (4) | a
certified copy of resolutions of the directors of Trilogy authorizing the execution and
delivery of the Operating Agreement and any other documents required to be executed or
delivered (or both, as the case may be) on Completion by the Trilogy under this Agreement; |
| (5) | the
Operating Agreement duly executed by the Company and the LLC; and |
| (6) | the
Contribution Agreement duly executed by the Company and the LLC. |
| 4.7 | Operation
of Operating Agreement |
At
any time after the Execution Date, a Party may require another Party to consider in good faith whether the terms of the Operating
Agreement should be amended to reflect a contractual rather than a corporate structure, or a varied form of corporate structure,
and if so agreed, use reasonable endeavors to agree a revised form of agreement governing the relationship between the Parties
following the exercise of the Option as long as:
| (1) | none
of the substantive business or commercial provisions, arrangements or understandings
or rights, powers or obligations held or owed by a Party in or under the Operating Agreement
are to be altered or amended in any new form of agreement in any way without the agreement
of the Parties; and |
| (2) | if
the Parties are unable to fully agree on all terms of the amended structure and agreement,
no change will be made and the Parties will be required to enter into the Operating Agreement
on the terms of the Operating Agreement set out in Schedule 3. |
| 4.8 | Certification
of Completion |
Subject
to the performance by each Party of its obligations under sections 4.5 and 4.6, at Completion each Party must execute a certificate
by which each Party certifies that Completion has been completed.
| 4.9 | South32’s
Election to Terminate Without Cause |
| (1) | South32
may at any time elect to terminate this Agreement by delivering notice to that effect
to Trilogy. |
| (2) | The
notice given under section 4.9(1) must specify the date on which the termination of this
Agreement will take effect. |
| 4.10 | Effect
of Termination |
| (1) | Subject
to section 14.17, if this Agreement is terminated in accordance with section 4.2 or 4.9,
then: |
| (a) | South32
will have no interest in the Company, the LLC, the South32 Initial Funding nor any interest
in the Property or any Exploration Data relating to the Property; and |
| (b) | each
Party will be released from further performance of its obligations under this Agreement. |
| (2) | Notwithstanding
the foregoing, termination will not release or discharge any Party from any Claim that
arose or accrued prior to the date of termination. |
| 5. | Covenants
of the Trilogy Parties |
| (1) | During
the term of this Agreement Trilogy: |
| (a) | must
cause the Company to observe and perform each covenant and obligation to be observed
and performed by the Company under this Agreement; and |
| (b) | unconditionally
and irrevocably guarantees to South32 the due and punctual performance by the Company
of each covenant and obligation to be observed and performed by the Company under this
Agreement. |
| (2) | The
liability of Trilogy under section 5.1(1) will not be affected by any act, omission,
matter or thing that would otherwise operate in Law or in equity to reduce or release
Trilogy from that liability. |
| 5.2 | Encumbrances
on Property |
| (1) | Except
as expressly provided otherwise by this Agreement, during the term of this Agreement
Trilogy must not allow or permit the Company to create, or if created, permit to remain,
any Encumbrance, other than the Permitted Encumbrances upon the Property without the
express prior written approval of South32 first being obtained (which approval may be
refused, withheld or conditioned at the absolute discretion of South32). |
| (2) | Without
being taken to limit or otherwise affect any restrictions or prohibitions on the grant
of Encumbrances under the NANA Agreement, the Parties agree to mutually pursue with NANA
further binding assurances pursuant to which NANA agrees, among other things, not to
grant or give or agree to grant or give any Encumbrances in, against or over the Lands
that could materially impair the use of the Property for the purposes for which it is
held, which purposes include the exploration for Minerals and the development of a mining
project within the Property. |
| 5.3 | Grant
of Surface Rights |
| (1) | Prior
to the grant by the Company of any Surface Rights not required by applicable Law, and
unless otherwise required by applicable Law, the Company must, at least twenty (20) Business
Days prior to the grant by the Company of any such Surface Rights not required by applicable
Law, give notice to South32 describing the Surface Right that the Company proposes to
grant and the part or area of the Property which will be subject to that Surface Right
(“Surface Right Notice”) and must obtain South32’s prior written
agreement to the grant of the Surface Right. |
| (2) | If
within ten (10) Business Days after receipt by South32 of a Surface Right Notice, South32
does not give notice to the Company objecting to the grant of the Surface Right described
in the Surface Right Notice (together with, in summary form, the reasons for its objection)
then South32 will be deemed to have agreed to the grant of the Surface Right referred
to in the Surface Right Notice and it shall be a Permitted Encumbrance. |
| (3) | If
South32 objects to the grant of a Surface Right in accordance with section 5.3(2), then
such objection will constitute a Dispute which either the Company or South32 may require
be resolved in accordance with section 12. |
| (4) | Unless
otherwise required by applicable Law, South32 may by notice to the Company, require that
the grant of any Surface Right or memorandum of such grant be recorded in the recording
district where the Property (or the relevant part of it) is located and the Company must
promptly effect any such recording. |
| 5.4 | No
Transfer of Property or Assets |
Except
as expressly provided otherwise by this Agreement, during the term of this Agreement Trilogy must not allow or permit the Company
to enter into any agreement or understanding to, sell, transfer, assign or otherwise dispose of the Property or any interest in
the Property without the express written consent of South32 first being obtained.
| 5.5 | No
Transfer of Shares or Control |
| (1) | Except
as expressly provided otherwise by this Agreement, during the term of this Agreement
Trilogy must not and must not allow or permit the Company: |
| (a) | to
transfer, assign or otherwise dispose of any of the Company Shares; or |
| (b) | to
create, or if created, permit to remain, any Encumbrance upon any of the Company Shares. |
| (2) | During
the term of this Agreement Trilogy must ensure that the Company is Controlled by Trilogy
and remains a wholly owned subsidiary of Trilogy. |
| (3) | For
greater certainty, nothing in this Agreement will prohibit or restrict in any manner
a change of Control of Trilogy. |
During
the term of this Agreement Trilogy must:
| (1) | not
allow the Company to issue, enter into or grant any right, agreement, warrant, option
or commitment, present or future, contingent or absolute, or anything capable of becoming
a right, agreement or option with the passage of time or the occurrence of any event
or otherwise: |
| (a) | to
require the Company to issue any further or other shares or any other security or other
instrument convertible or exchangeable into shares of the Company or to convert or exchange
any security or other instrument into or for shares of the Company; |
| (b) | for
the issue or allotment of any of the unissued shares of the Company ; |
| (c) | to
require the Company to purchase, redeem or otherwise acquire any of the Company Shares; |
| (d) | to
purchase or acquire any of the Company Shares; or |
| (e) | for
the Company to incur any indebtedness, except for such indebtedness as may be incurred
in the normal and ordinary course of business consistent with past practices; |
| (2) | cause
the Company not to: |
| (a) | amalgamate,
merge, consolidate or otherwise enter into an arrangement, scheme or other business combination
or corporate reorganization (including any and all spin offs) with any other person or
acquire all or substantially all of the shares or the business or assets of any other
person, or agree to do any of the foregoing; |
| (b) | except
as expressly contemplated by this Agreement, or as may be required to give effect to
the arrangements and agreements contemplated by the Operating Agreement, make changes
to its Charter Documents; |
| (c) | increase,
reduce or otherwise change its share capital, or transfer an amount to its share capital
account from any of its other accounts, or allot or issue any shares or any securities
or loan capital convertible into shares, or purchase, redeem, retire or acquire any such
shares or securities, or agree to do so, or sell or give any option, right to purchase,
mortgage, charge, pledge, lien or other form of security or encumbrance over any such
shares or securities; |
| (d) | without
the prior written consent of South32, acquire or dispose of any of its material Assets
or acquire any Mineral Rights, dispose of any Mineral Rights, enter into a capital commitment
or make any unusual or extraordinary expenditures (whether capital or operating); |
| (e) | change
the nature of its business or do any act or thing that would materially adversely affect
its business, Assets, prospects or financial condition; or |
| (f) | without
the prior written consent of South32, make or implement a Material Decision. |
| 5.7 | No
Dividends of the Company |
During
the term of this Agreement, Trilogy must cause the Company not to declare, pay or commit itself to pay any dividend or other distribution
with respect to any share in the capital of the Company or other ownership interest in the Company or in any of its Assets or
business without the express written consent of South32 first being obtained.
| 5.8 | Conduct
of Business of the Company |
During
the term of this Agreement, Trilogy must cause the Company to carry on its business only in the normal and ordinary course consistent
with past practices which includes the maintenance of all insurance policies existing at the Execution Date. South32 and its Personnel
will be entitled to inspect and copy the corporate, financial and other records and documents pertaining to the Company at all
reasonable times upon reasonable notice.
| (1) | During
the term of this Agreement Trilogy must: |
| (a) | cause
the Company to observe and perform each covenant and obligation to be observed and performed
by the Company under the NANA Agreement; and |
| (b) | ensure
that the Company does not assign, transfer, encumber or otherwise deal with its rights
and interests under the NANA Agreement. |
| (2) | During
the term of this Agreement, the Trilogy Parties must give to South32: |
| (a) | copies
of all minutes of the Oversight Committee produced on or after the Execution Date; |
| (b) | a
copy of each annual report given by the Company to NANA pursuant to the NANA Agreement
on or after the Execution Date; and |
| (c) | the
documents (whether in tangible or electronic form) requested by South32 (acting reasonably)
which record or are evidence of the Company’s observance and performance of each
covenant and obligation to be observed and performed by the Company under the NANA Agreement. |
| 5.10 | Parallel
Funded Program and Budget |
For
the avoidance of doubt, each Trilogy Party acknowledges and agrees any approval under this Agreement of a Parallel Funded Program
and Budget:
| (1) | will
not constitute or be taken to be the consent of South32 for a Trilogy Party to do or
not do any matter or thing for which the consent of South32 is required under this section
5; or |
| (2) | lessen,
prejudice or otherwise affect any of the obligations of a Trilogy Party or the rights
of South32 under this section 5. |
Subject
to section 6.2, commencing on the Execution Date, Trilogy will be the Operator until the exercise of the Option by South32 or
the termination of this Agreement, whichever is the earlier.
The
Operator will be deemed to have resigned and South32 (or its nominee) will become Operator, upon written notice from South32 to
Trilogy and effective on the date designated in the notice, if:
| (a) | fails
to perform any obligation imposed upon it as Operator under section 6.7 or section 14.20;
and |
| (b) | such
failure, in the opinion of South32, acting reasonably, has, or is likely to have, a material
adverse effect on: |
| (i) | the
Property or the Option; or |
| (ii) | South32’s
rights and interests (direct or indirect) under this Agreement; |
and
action to rectify or remedy that failure is not taken within twenty (20) Business Days after receiving a written notice from South32
demanding performance; or
| (2) | the
Operator becomes an Insolvent Party. |
If
the Operator is removed pursuant to section 6.2(2), then the appointment of any successor Operator will be deemed to pre-date
the date on which the Operator becomes the subject of an Insolvency Event.
| 6.3 | Affiliate
as Operator and Third Party Operator |
| (1) | Where
a Party’s Affiliate acts as Operator that Party must cause the Affiliate to comply
with the terms of this Agreement as if the Affiliate was bound by it. |
| (2) | Except
for a Party’s Affiliate, no third party may be retained to act as the Operator
unless: |
| (a) | Trilogy
and South32 agree in writing but Trilogy’s agreement will not be required where
the Operator is deemed to have resigned pursuant to section 6.2; and |
| (b) | the
third party agrees in writing to be bound by all of the same duties and obligations imposed
on the Operator under this Agreement and, in particular, under this section 6. |
Subject
to this Agreement, the Operator will have:
| (1) | full
physical possession and control of the Assets of the Company and all powers and authorities
necessary or desirable to enable the Operator to carry out or procure the carrying out
of all Operations; and |
| (2) | without
limiting section 6.4(1), the sole and exclusive right to: |
| (a) | enter
in, under or upon the Property and to conduct the Operations and related activities on
the Property; |
| (b) | exclusive
and quiet possession of the Property; |
| (c) | bring
upon and erect upon the Property buildings, plant, machinery and equipment as the Operator
may deem advisable; |
| (d) | remove
from the Property and dispose of, reasonable quantities of ores, minerals and metals
for the purpose of obtaining assays or making other tests; and |
| (e) | do
such prospecting, exploration, development or other mining work on and under the Property
as contemplated by an Approved Program. |
| (a) | on
or before the date that is 30 days following the Execution Date prepare and submit to
the Technical Committee a proposed program of Operations and budget of Qualifying Expenditure
for Year 1 (or such other period otherwise unanimously agreed by the Parties) for approval
by the members of the Technical Committee; |
| (b) | on
or before November 30 in Year 1 prepare and submit to the Technical Committee a proposed
program of Operations and budget of Qualifying Expenditure for Year 2 (or such other
period otherwise unanimously agreed by the Parties) for approval by the members of the
Technical Committee; |
| (c) | on
or before November 30 in Year 2 prepare and submit to the Technical Committee a proposed
program of Operations and budget of Qualifying Expenditure for Year 3 (or such other
period otherwise unanimously agreed by the Parties) for approval by the members of the
Technical Committee. |
| (2) | Each
proposed program and budget must contain the detail specified by South32. |
| 6.6 | Trilogy
Parallel Funding |
| (1) | Subject
to this Agreement, the Parties acknowledge and agree that during the Option Period Trilogy
will be entitled to fund Expenditure to undertake Operations on the Arctic Deposit or
elsewhere in the Property (a “Parallel Funded Program and Budget”). |
| (2) | If
any Year Trilogy intends to fund Expenditure to undertake Operations on the Arctic Deposit
or elsewhere in the Property pursuant to a Parallel Funded Program and Budget (“Trilogy
Operations”), then Trilogy must submit to the Technical Committee the proposed
Parallel Funded Program and Budget. Trilogy must use reasonable efforts to (but does
not guarantee to) submit the proposed Parallel Funded Program and Budget to the Technical
Committee at the same time as the Operator submits a proposed program of Operations and
budget of Qualifying Expenditure to the Technical Committee pursuant to section 6.5(1)
or within a reasonable time thereafter so as to allow the Technical Committee sufficient
time in which to assess and discuss the proposed Parallel Funded Program and Budget. |
| (3) | Trilogy
acknowledges and agrees that: |
| (a) | any
proposed Parallel Funded Program and Budget and its right and ability to undertake the
Trilogy Operations will be subject to the prior written approval of the Technical Committee,
which approval must not be unreasonably withheld or delayed; |
| (b) | neither
South32 or any of its Affiliates will be obliged to fund any Expenditure to be incurred
under or in connection with the Parallel Funded Program and Budget and Trilogy and its
Affiliates will have no Claim (whether under this Agreement or otherwise) against South32
or any of its Affiliates or the Company or its Assets in respect of such Expenditure; |
| (c) | in
undertaking the Trilogy Operations Trilogy must conduct all such Trilogy Operations in
a manner consistent with sections 6.7(1) and 6.7(2); and |
| (d) | Trilogy
will be solely responsible and liable for, and indemnifies and must keep indemnified
South32 and its Affiliates from and against any third party Claim which South32 or any
of its Affiliates suffers, sustains or incurs arising out of or in connection with Trilogy
Operations. |
| 6.7 | Operator’s
Obligations |
For
so long as it is Operator, the Operator covenants to and must:
| (1) | conduct
all Operations in accordance with practices, methods, standards (including standards
of health and safety) and procedures which are generally engaged in, utilized, observed
and applied by international mining companies who have experience in undertaking exploration
and operating and maintaining mining operations in the subarctic and arctic regions; |
| (2) | without
limiting section 6.7(1), conduct all Operations in a manner consistent with good exploration,
engineering and mining practice and in compliance with any applicable Law; |
| (3) | carry
out each Approved Program in accordance with the Approved Budget; |
| (4) | pay
all Qualifying Expenditure properly incurred pursuant to an Approved Program promptly
as and when due; |
| (5) | keep
the Property in good standing as required by applicable Law including by payment of taxes
or other charges, the doing and filing of all necessary work and by the doing of all
other acts and things and making all other payments which may be necessary in that regard
and upon the written request of the Non-operating Party, provide it with evidence of
such payments; |
| (6) | except
for the Permitted Encumbrances, keep the Property free and clear of all Encumbrances
(except liens for taxes not yet due, other inchoate liens and liens contested in good
faith by the Operator) and to proceed with all diligence to contest and discharge any
such Encumbrance that is filed; |
| (7) | subject
to section 6.8, permit any Personnel of the Non-operating Party: |
| (a) | at
their own expense and risk, access to the Property at all reasonable times; and |
| (b) | access
to all records (whether in tangible or electronic form) of the Operator pertaining to
the Operations and the Property; |
| (8) | permit
the Non-operating Party, upon being provided with reasonable notice, to inspect and copy,
at all reasonable times, any Exploration Data including any Exploration Data learned
or obtained in connection with a Parallel Funded Program and Budget; |
| (9) | maintain
an internal account controls system and anti-corruption policy and procedures that meet
South32’s anti-corruption/anti-bribery requirements (as applicable to the Company)
to ensure the proper authorisation, recording and reporting of all transactions, and
to provide reasonable assurance that it (and its Personnel) will comply with the requirements
of section 14.20 and that violations of Anti-corruption Law will be prevented, detected
and deterred; |
| (10) | during
the term of this Agreement and for a period of 2 years after the expiry or termination
of this Agreement maintain true and correct books, accounts and records of Expenditure
and otherwise in accordance with US GAAP; |
| (11) | during
the execution of each Approved Program deliver to each Party monthly progress reports
indicating the status of any Operations being conducted on the Property (including pursuant
to a Parallel Funded Program and Budget) and disclosing any significant Exploration Data
learned or obtained in connection with such work, but no reports will be required during
those periods in which there is no work being conducted; |
| (12) | deliver
to each Party as soon as is practicable and in any event on or before December 31 in
each Year, an Annual Exploration Report which must, if a Parallel Funded Program and
Budget has been carried out during that Year, contain all material Exploration Data learned
or obtained in connection with that Parallel Funded Program and Budget; |
| (13) | promptly
notify each Party of any material exploration results or adverse events; and |
| (14) | place
and maintain, with a reputable insurer or insurers, not less than $5,000,000 in third
party liability insurance in respect of its operations on the Property, and upon the
written request of the Non-operating Party, provide the Non-operating Party with documents
that record or are evidence of the existence and coverage of such insurance. |
The
Party that is not the Operator ("Non-operating Party") must indemnify the Operator and its Personnel from and
against any Claim that the Operator or its Personnel suffer, sustain or incur arising out of or in connection with any injury
(including injury causing death) to any Personnel of the Non-operating Party while in or on the Property, except to the extent
that any injury is caused by the negligence or default of the Operator or its Personnel.
During
the term of this Agreement, each Trilogy Party must, and must cause its Affiliates to:
| (1) | promptly
deliver to South32 any notice, demand or other material communication relating to any
of the Assets of the Company that it or any of its Affiliates receive; and |
| (2) | obtain
the prior written consent of South32 to the sending by it or its Affiliates of any notice,
demand or other material communication relating to the Property, the Material Agreements
or any of the other significant Assets of the Company to any third person including any
adjacent property owner or any Governmental Authority where such notice, demand or other
material communication is likely to have a material adverse effect on the Property, the
Company or the Option or South32’s rights and interests (direct or indirect) under
this Agreement. |
| (1) | During
the term of this Agreement the Company must: |
| (a) | subject
to applicable Law and the terms of the Mineral Rights comprising the Property, not (directly
or indirectly) abandon, surrender, excise or relinquish by any means any of the Mineral
Rights or the Other Rights comprising the Property without the prior written consent
of South32; and |
| (b) | to
the maximum extent possible under applicable Law and the terms of the Mineral Rights
comprising the Property, ensure that the Company remains the registered holder and beneficial
owner of the Mineral Rights that comprise a part of the Property. |
| (2) | If
the Company is required by applicable Law or by virtue of a condition or covenant of
any Mineral Right forming part of the Property to relinquish (whether periodically or
otherwise) any Mineral Right or part of a Mineral Right comprising the Property then
within twenty (20) Business Days prior to the date on which such relinquishment will
take place, the Company must by notice to South32: |
| (a) | identify
the Mineral Right or part of it that the Company recommends and proposes be relinquished
and the reasons for that recommendation; and |
| (b) | include
with the notice all Exploration Data (if any) that pertains to the geographical area
the subject of the Mineral Right or part of it that the Company recommends and proposes
be relinquished. |
| (1) | Upon
the Execution Date, a technical committee (“Technical Committee”)
will be formed comprised of two (2) representatives of Trilogy and two (2) representatives
of South32. |
| (2) | The
first meeting of the Technical Committee will be held within seven (7) Business Days
after receipt by South32 from the Operator of the proposed program of Operations and
budget of Qualifying Expenditure for Year 1 contemplated by section 6.5(1)(a). |
| (3) | Meetings
of the Technical Committee will be held: |
| (a) | during
any part of a Year in which no Operations are being conducted, quarterly in Vancouver
(or at such other intervals or places as Trilogy and South32 may agree); and |
| (b) | during
any part of a Year in which Operations are being conducted, monthly in Vancouver (or
at such other intervals or places as Trilogy and South32 may agree). |
| (4) | Meetings
will be called on ten (10) Business Days’ notice by either Trilogy or South32.
Either Trilogy or South32 may on ten (10) Business Days’ notice call an ad hoc
meeting. |
| (5) | For
each meeting an agenda must, at least five (5) Business Days prior to that meeting, be
distributed to Trilogy and South32 by the person calling that meeting. The Company must
cause minutes of each meeting to be taken and distributed to South32 for comments within
ten (10) Business Days subsequent to that meeting and will be the subject of approval
at the next meeting. A representative of Trilogy or South32 may attend any meeting by
conference telephone, so long as all attendees at that meeting can hear and be heard
by all other attendees. |
| (6) | The
Technical Committee will, among other things, review: |
| (a) | each
program and budget prepared and proposed by the Operator for the purposes of Year 1,
Year 2 and Year 3; |
| (b) | any
Parallel Funded Program and Budget; and |
| (c) | all
Exploration Data learned or obtained in connection with the Operations. |
| (7) | Subject
to section 6.11(8), the Technical Committee must endeavour to approve each program and
budget proposed by the Operator: |
| (a) | for
the purposes of Year 1, by no later than April 30, 2017; and |
| (b) | for
the purposes of Year 2 and Year 3, by no later than February 28 of each respective calendar
year in which Year 2 and Year 3 commences. |
The
Technical Committee may approve programs and budgets proposed by the Operator with or without amendment, addition, deletion or
other alteration or modification as the Technical Committee considers fit or reject the same and in the case of rejection the
Technical Committee may give such directions to the Operator regarding the preparation and submission of a further program and
budget in respect of the Year concerned as the Technical Committee may determine. In the case of a Parallel Funded Program and
Budget, South32 must not unreasonably withhold its approval.
| (8) | Each
program and budget approved by the Technical Committee or in the absence of approval
by the members of the Technical Committee, by South32, must: |
| (a) | provide
for Qualifying Expenditure of not less than ten million dollars ($10,000,000); and |
| (b) | be
reasonably capable of being practically executed by the Operator in accordance with its
obligations under section 6.7 within the relevant exploration season. |
| (9) | Subject
to section 6.11(8)(b), each Party acknowledges and agrees that the Technical Committee
may approve the alteration or modification proposed by South32 of an Approved Program
to expand the Operations to be undertaken as part of that Approved Program and to increase
the Approved Budget that relates to that Approved Program and any such approval will
not be unreasonably withheld. |
| (10) | In
the absence of agreement by the members of the Technical Committee in respect of any
program and budget proposed by the Operator (excluding a Parallel Funded Program and
Budget), any direction or decision concerning, or final approval of, programs and budgets
during the term of this Agreement will be given or made (as the case may be) solely by
South32. |
| (1) | Within
forty (40) Business Days following the completion of an Approved Program, the Operator
must provide each Party with a certified itemized statement of Qualifying Expenditure
incurred during the completion of that Approved Program. The itemized statement of Qualifying
Expenditure incurred in any period certified to be correct by an officer of the Operator
will be conclusive evidence of the making of the Qualifying Expenditure recorded in the
statement unless within the sixty (60) Business Days after receipt of that statement
a Party delivers a written objection to the statement to the Operator. If a Party delivers
such an objection, then it will be entitled to request that the auditor of the Operator
audit the Qualifying Expenditure recorded in the statement of Qualifying Expenditure
that is the subject of the objection. At the conclusion of that audit: |
| (a) | if
the auditor determines that the statement of Qualifying Expenditure was accurate within
five percent (5%) percent of actual Qualifying Expenditure, then the reasonable costs
of the audit will be borne by the objecting Party; or |
| (b) | if
the auditor determines that the statement of Qualifying Expenditure overstated or understated
Qualifying Expenditure actually made by greater than a five percent (5%) margin, then
the costs of the audit will be borne by the Operator, |
and,
in all events and whatever the misstatement, only the actual Qualifying Expenditure so determined will constitute Qualifying Expenditure
for the purposes of the relevant Year.
| (2) | Notwithstanding
anything in this Agreement to the contrary, the auditor’s determination of Qualifying
Expenditure will be final and determinative of the amounts stated in the statement in
question, and will not be or constitute a Dispute subject to section 12. |
| (3) | The
Parties acknowledge and agree that the rights of the Parties under this section 6.12
will extend and apply to the Expenditure incurred during the completion of an approved
Parallel Funded Program and Budget and if a Party exercises its rights under this 6.12(3)
a reference in section 6.12(1) or section 6.12(2) (or both, as the case may be) to: |
| (a) | an
Approved Program will be taken to be a reference to an approved Parallel Funded Program
and Budget; |
| (b) | Qualifying
Expenditure will be taken to be a reference to be Expenditure which comprises Parallel
Funding. |
| 7.1 | Assignment
by Trilogy Party |
| (1) | Each
Trilogy Party must not assign or otherwise deal with its rights or obligations under
this Agreement without the prior written consent of South32, (which consent may be refused,
withheld or conditioned at the absolute discretion of South32). No assignment of this
Agreement will be effective unless and until the proposed assignee has entered into an
agreement with South32, in form and substance satisfactory to South32 (acting reasonably),
by which the proposed assignee agrees to be bound by the provisions of this Agreement
as if it was an original party to this Agreement in place of the assigning Party. |
| (2) | In
this section 7 “assign” includes, either directly or indirectly, to: |
| (a) | sell,
assign, transfer, licence or otherwise dispose or part with possession of; or |
| (b) | mortgage,
charge, ▇▇▇▇▇ ▇ ▇▇▇▇, pledge, hypothecate, declare a trust in respect of or grant any
interest in, by way of security or otherwise; |
| (3) | Notwithstanding
sections 7.1(1) and 7.1(2), a change of Control of Trilogy after the Execution Date will
not be considered an assignment by Trilogy or the Company for the purposes of section
7.1(1). |
▇▇▇▇▇▇▇
may assign, transfer, novate or otherwise deal with any or all of South32's rights or obligations under this Agreement at any
time to any Affiliate of South32. Subject to the foregoing, South32 may not assign or otherwise deal with its rights or obligations
under this Agreement without the prior written consent of Trilogy, which consent (which consent may be refused, withheld or conditioned
at the absolute discretion of Trilogy). No assignment of this Agreement will be effective unless and until the proposed assignee
has entered into an agreement with Trilogy, in form and substance satisfactory to Trilogy (acting reasonably), by which the proposed
assignee agrees to be bound by the provisions of this Agreement as if it was an original party to this Agreement in place of the
assigning Party.
Nothing
in this section 7 or elsewhere in this Agreement applies to or restricts in any manner an amalgamation, plan of arrangement, public
listing or corporate reorganization involving a Party (other than the Company) which has the effect in law of the amalgamated,
resulting or surviving corporation possessing substantially all the property, rights and interests and being subject to substantially
all the debts, liabilities and obligations of each amalgamating or predecessor corporation, or the transfer of Control of a Party
whose shares are listed on one or more stock exchanges to an arm’s length third party pursuant to an unsolicited or solicited
take-over bid or similar transaction.
| 8.1 | Notice
of Force Majeure |
Subject
to section 8.4, a Party will not be liable for any delay or failure to perform any of its obligations under this Agreement
(other than an obligation of indemnification or to pay money) if as soon as possible after the beginning of the Force Majeure
affecting the ability of the Party to perform any of its obligations under this Agreement, it gives a notice to each other Party
that complies with section 8.2.
A
notice given under section 8.1 must:
| (1) | specify
the obligations the Party cannot perform; |
| (2) | fully
describe the Force Majeure; |
| (3) | estimate
the time during which the Force Majeure will continue; and |
| (4) | specify
the measures proposed to be adopted to remedy or ▇▇▇▇▇ the Force Majeure. |
| 8.3 | Obligation
to remedy and mitigate |
| (1) | The
Party that is prevented from carrying out its obligations under this Agreement as a result
of Force Majeure must: |
| (a) | remedy
the Force Majeure to the extent reasonably practicable and resume performance of its
obligations as soon as reasonably possible; |
| (b) | take
all action reasonably practicable (but without any obligation to make any monetary payment)
to mitigate any liability suffered by any other Party as a result of its failure to carry
out its obligations under this Agreement; and |
| (c) | inform
each other Party in writing every twenty (20) Business Days (or any other period agreed
in writing by the Parties) after the date of notification of the Force Majeure pursuant
to section 8.2 of the ongoing effect of, and the steps taken to remove the effects of,
the Force Majeure. |
| (2) | Notwithstanding
section 8.3(1), nothing in this section 8.3 will require the Party that is prevented
from performing its obligations under this Agreement as a result of Force Majeure to
resolve or compromise any labour or industrial dispute or to question or to test the
validity of any Law or to perform its obligations under this Agreement if Force Majeure
renders performance impossible. |
| 8.4 | Effect
of Force Majeure on Time and Payment |
| (1) | In
the event of Force Majeure, any time period provided for in this Agreement will be extended
by a period equivalent to the period of delay caused by the event of Force Majeure or
such longer period as is reasonable in the circumstances. |
| (2) | If
at any time before the exercise of the Option by South32 Force Majeure arises, then from
the date the Force Majeure arises until the Force Majeure is remedied or abates South32
will not be obliged to advance the relevant Tranche or part of it, as the case may be.
Notwithstanding the foregoing, during the period of Force Majeure South32 must advance
such Qualifying Expenditure as is necessary to pay any maintenance, rental, holding fee,
or other payment required to maintain the Property in good standing. |
| (3) | If
the Force Majeure is subsequently remedied or abates then, subject to section 8.4(1),
South32 must advance the relevant Tranche or part of it, as the case may be that, but
for the Force Majeure, South32 would have been required to advance during the period
of Force Majeure. |
| 9. | Confidential
Information |
The
Parties agree that this Agreement (including any drafts of it), all information (whether in tangible or electronic form) exchanged
between the Parties or their Affiliates under this Agreement and all information concerning or relating to the Property or the
Operations of which it becomes aware (“Confidential Information”) is confidential and must be kept confidential
and must not be disclosed to any person at any time or in any manner except:
| (2) | with
the prior written consent of each other Party; |
| (3) | disclosure
of Confidential Information by a Party to its Affiliates; |
| (4) | to
the extent that the Confidential Information was publicly available at the Execution
Date or becomes publicly available subsequent to the Execution Date without breach of
this Agreement; |
| (5) | as
may be necessary in seeking approval of any Governmental Authority: |
| (a) | in
seeking to maintain the Property or acquire additional Mineral Rights or Other Rights;
or |
| (b) | to
perform the Operations; |
| (6) | by
a Party to legal, financial and other professional or technical advisers, auditors and
other consultants, officers and employees of: |
| (b) | that
Party’s Affiliates, |
in
any case requiring the information for the purposes of this Agreement (or any transactions contemplated by this Agreement), or
for the purpose of advising that Party in relation to this Agreement;
| (7) | to
the extent required by Law or by a lawful requirement of any Governmental Authority or
stock exchange having jurisdiction over a Party or its Affiliates (and the Parties expressly
acknowledge that this Agreement may be required to be filed under Trilogy’s SEDAR
profile at ▇▇▇.▇▇▇▇▇.▇▇▇ and on ▇▇▇▇▇ under ▇▇▇.▇▇▇▇▇.▇▇▇, subject to such redactions
permitted under such Law or lawful requirements as a Party may require); |
| (8) | if
required in connection with legal proceedings or arbitration relating to this Agreement
or for the purpose of advising a Party in relation to legal proceedings or arbitration; |
| (9) | to
any bona fide enquirer contemplating purchase of an interest of a Party under this Agreement
under section 7 as long as the enquirer has first entered into an agreement in favour
of the Parties to preserve confidentiality of information disclosed in a manner at least
as onerous on the enquirer as this section 9.1 is onerous on the Parties; |
| (10) | to
a banker or other financial institution considering the provision of or, which has provided
financial accommodation to, a Party or an Affiliate of a Party or to a trustee, representative
or agent of that banker or financial institution; or |
| (11) | to
a stock exchange (including any regulator or securities commission having jurisdiction
over a stock exchange) or similar public market for trading shares upon which securities
of a Party or of an Affiliate of a Party are quoted after the reasonable prior consultation,
if practicable, with the other Party taking place as to the nature and form of the disclosure
(which does not imply that the consent or approval, of the other Party must or need be
obtained). Notwithstanding the foregoing, any disclosure must be to the standards required
by the applicable stock exchange, regulator, securities commission or applicable Law. |
| (1) | Any
initial public announcement of the transaction the subject of this Agreement will be
in the form agreed between the Parties prior to the Execution Date. |
| (2) | Subject
to section 9.2(1), a Party may not make any public announcement in relation to this Agreement
or any matter arising under this Agreement unless: |
| (a) | the
wording of the announcement is agreed between the Parties, such agreement not to be unreasonably
withheld; or |
| (b) | the
announcement is otherwise permitted under section 9.2(3). |
| (3) | A
Party is entitled to make announcements only to the extent necessary to comply with the
listing rules of an applicable stock exchange on which its shares (or that of its Affiliate)
are listed or the requirements of a regulator, securities commission or Law. The Party
proposing to make such an announcement will endeavour to give the other Party as much
notice as is possible (and in any event will endeavour to give at least 24 hours’
notice) of its intention to make the announcement, and will take into account the reasonable
requests of the other Party in relation to the wording of the announcement. |
Any
consent of a Party given to another Party to disclose Confidential Information or to make a public announcement will not be considered
an approval or certification of the consenting Party:
| (1) | as
to the accuracy of any information contained in that Confidential Information or public
announcement; or |
| (2) | that
the Confidential Information or public announcement complies with applicable Law or the
rules, policies, by-laws and disclosure standards of any Governmental Authority, stock
exchange, regulator or securities commission. |
Each
Party and its Affiliates must not acquire (either directly or indirectly) any AOI Property during the term of this Agreement without
the prior written consent of each other Party. The Parties agree that if an opportunity arises to acquire an AOI Property during
the term of this Agreement, the Parties will, each acting reasonably, candidly discuss the advantages and disadvantages of acquiring
such AOI Property.
| 11. | Termination
and Remedies |
A
Party (“Non-Defaulting Party”) may terminate this Agreement by notice in writing to the other Parties if:
| (1) | a
Party (“Defaulting Party”) commits a material breach of any material
provision of this Agreement and: |
| (a) | the
breach is incapable of remedy; or |
| (b) | the
breach is capable of remedy and: |
| (i) | the
Non-Defaulting Party has given notice to the Defaulting Party specifying the breach and
requesting that it be remedied; and |
| (ii) | the
Defaulting Party has failed to remedy that breach or has failed to take reasonable steps
to commence rectifying that breach (or overcome its effects) within twenty (20) Business
Days of receiving that notice; |
| (2) | any
one of the following occurs in relation to a Party (“Insolvent Party”): |
| (a) | the
Insolvent Party becomes, or informs the other Party, creditors of the Insolvent Party
generally or any particular creditor of the Insolvent Party that it is, insolvent or
unable to pay its debts as and when they fall due; |
| (b) | a
liquidator or provisional liquidator is appointed in respect of the Insolvent Party; |
| (c) | a
receiver or receiver and manager or an analogous person is appointed to the Insolvent
Party or any of its property; |
| (d) | the
Insolvent Party has a mortgagee seeking to exercise a right of possession or control
over the whole or a part of its property; |
| (e) | the
Insolvent Party enters into, or calls a meeting of its members or creditors with a view
to entering into, a composition, compromise or arrangement with, or an assignment for
the benefit of, any of its members or creditors, or a court orders that a meeting be
convened in respect of a proposed composition, compromise or arrangement between the
Insolvent Party and its creditors or any class of its creditors, other than for the purpose
of reconstruction or amalgamation; |
| (f) | the
Insolvent Party has any execution, writ of execution, mareva or standstill injunction
or similar order, attachment or other process made, levied or issued against it or in
relation to any of its assets which has material adverse effect on the Party’s
business, assets or financial condition or its ability to perform its obligations under
this Agreement; |
| (g) | any
application is made or other process commenced (not being an application or process withdrawn,
discontinued or dismissed within twenty (20) Business Days of being filed) seeking an
order for the appointment of a provisional liquidator, a liquidator, a receiver or a
receiver and manager to the Insolvent Party; |
| (h) | the
Insolvent Party is declared bankrupt or has filed for some form of protection from its
creditors under applicable Law relating to or governing bankruptcy; |
| (i) | there
is a resolution of creditors or members, or an order of a court, to place in liquidation
or bankruptcy or wind up the Insolvent Party; or |
| (j) | an
event happens analogous to an event specified in sections 11.1(2)(a) to 11.1(2)(i) to
which the law of another jurisdiction applies and the event has an effect in that jurisdiction
similar to the effect which the event would have had if the law of Canada applied; or |
| (3) | except
as expressly permitted or contemplated by this Agreement, a change of Control occurs
in relation to the Company and the original Control position is not restored with ten
(10) Business Days of the occurrence of the change of Control. |
| 11.2 | Consequences
of Termination |
Termination
of this Agreement under this section 11 or pursuant to another provision of this Agreement will not derogate from, affect or prejudice
any rights or remedies of a Party whether arising under this Agreement or at Law that have accrued prior to the date of, or arise
as a consequence of, termination.
| 11.3 | Interpretation
and Other Matters |
Notwithstanding
anything in this section 11 to the contrary, during the Option Period:
| (1) | if
a Trilogy Party is a Defaulting Party then no other Trilogy Party may exercise any rights
or remedies of a Non-Defaulting Party under this section 11 or at Law; or |
| (2) | if
a Trilogy Party is an Insolvent Party then no other Trilogy Party may exercise any rights
or remedies of a Party under section 11 or at Law. |
| 12. | Disputes
and Arbitration |
If
there is any Dispute between the Parties concerning or arising out of or in relation to this Agreement, whether before or after
the expiration of this Agreement (including any Dispute as to whether any issue or matter is arbitral), then a Party may give
to each other Party a notice (“Dispute Notice”) specifying the Dispute and requiring its resolution under this
section 12. All Disputes must be resolved solely in accordance with this section 12.
| 12.2 | Dispute
Representatives to Seek Resolution |
| (1) | If
the Dispute is not resolved within ten (10) Business Days after a Dispute Notice is given
by a Party to each other Party, each Party must nominate one (1) representative from
its senior management to resolve the Dispute (each, a “Dispute Representative”),
who must negotiate in good faith using their respective commercially reasonable efforts
to attain a resolution of the Dispute. |
| (2) | If
the Dispute is not resolved within ten (10) Business Days of the Dispute being referred
to the respective Dispute Representatives, then any Party may submit the Dispute to arbitration
in accordance with section 12.3. |
| (1) | Any
Dispute which has not been resolved under section 12.2 must be referred to and finally
resolved by arbitration under the then current domestic commercial arbitration rules
of the BCICAC (“Rules”). |
| (2) | The
Parties agree that: |
| (a) | the
seat, or legal place of arbitration, will be Vancouver, British Columbia. The language
used in the arbitral proceedings will be English; |
| (b) | all
arbitral proceedings will be private and confidential and may be attended only by the
arbitrators, the Parties and their representatives, and witnesses to the extent they
are testifying in the proceedings; |
| (c) | subject
to section 12.3(2)(d), any Dispute will be heard by a single arbitrator and the Parties
must attempt to agree upon a qualified individual to serve as arbitrator. If the Parties
are unable to so agree within twenty (20) Business Days of the first attempt by the Parties
to select the arbitrator, then the arbitrator will be selected and appointed by the BCICAC; |
| (d) | if
any Party’s claim or counterclaim equals or exceeds five million dollars ($5,000,000),
exclusive of interest or legal fees, then the Dispute must be heard and determined by
three (3) arbitrators and in the event that three (3) arbitrators will hear the Dispute,
each Party must, within twenty (20) Business Days after commencement of the arbitration,
select one (1) person to act as arbitrator. The two (2) arbitrators so selected must,
within ten (10) Business Days of their appointment, select a third arbitrator who will
serve as the chairperson of the arbitral panel; |
| (e) | if
a Party fails to appoint an arbitrator as required under section 12.3(2)(d), or if the
arbitrators selected by the Parties are unable or fail to agree upon a third arbitrator
within ten (10) Business Days of their appointment, then that arbitrator will be selected
and appointed by the BCICAC; |
| (f) | the
arbitrator (or each of them as the case may be) must be independent of the Parties, a
senior qualified and practising lawyer in Canada with expertise in the subject matter
of the Dispute; |
| (g) | if
an arbitrator dies, resigns, refuses to act, or becomes incapable of performing his or
her functions as an arbitrator, then the BCICAC may declare a vacancy on the panel and
the vacancy must be filled by the method by which that arbitrator was originally appointed; |
| (h) | the
arbitral panel may determine all questions of law and jurisdiction (including questions
as to whether or not a Dispute is arbitrable) and all matters of procedure relating to
the arbitration; |
| (i) | arbitration
will be the sole and exclusive forum for resolution of a Dispute and any award or determination
of the arbitral panel will be final and binding upon the Parties in respect of all matters
relating to the arbitration, the procedure, the conduct of the Parties during the proceedings
and the final determination of the issues in the arbitration; and |
| (j) | there
will be no appeal from any award or determination of the arbitral panel to any court
and judgment on any arbitral award may be entered in any court of competent jurisdiction. |
| (3) | If
for any reason the BCICAC cannot or does not make the appointment or appointments required
under the Rules or this section 12, either Party may apply to the Supreme Court of British
Columbia to appoint the arbitrator or arbitrators, as the case may be. |
| (4) | No
arbitration proceeding may be commenced under this section 12 unless commenced within
the time period permitted for actions by the applicable statute of limitations. |
| (5) | All
papers, notices or process pertaining to an arbitration under this Agreement may be served
on a Party in accordance with section 13. |
| (6) | The
Parties must treat as Confidential Information, in accordance with the provisions of
section 9, the existence of the arbitral proceedings; written notices, pleadings and
correspondence in relation to the arbitration; reports, summaries, witness statements,
memorials, briefs and other documents prepared in respect of the arbitration; contemporaneous
or historical documents exchanged or produced for the purposes of the arbitration; and
the contents of any award or ruling made in respect of the arbitration. Notwithstanding
the foregoing, a Party may disclose such Confidential Information in judicial proceedings
to enforce an award or ruling and as permitted under this section 12. |
| 12.4 | Inconsistency
between Rules and Agreement |
If
there is a conflict between the provisions of this Agreement and the provisions of the Rules, then the provisions of this Agreement
will prevail.
| 12.5 | Effect
of Arbitration |
Nothing
in this section 12 will prejudice the right of a Party to institute legal proceedings to seek urgent interlocutory or declaratory
relief, including in the circumstances described in section 14.16. Subject to the foregoing, the arbitration will be the sole
and exclusive forum for resolution of a Dispute and the award will be final and binding.
The
award rendered by an arbitral panel may be enforced by an order or judgment of any court having jurisdiction or an application
may be made to such court for acceptance of the award and an order of enforcement, as the case may be.
| 12.7 | Performance
of Obligations During Dispute |
During
the existence of any Dispute, the Parties must continue to perform all of their obligations under this Agreement which are not
the subject of the Dispute without prejudice to their position in respect of such Dispute, unless the Parties otherwise agree.
| 12.8 | Consolidation
of Arbitration |
If
a Party is or becomes involved in any arbitration proceeding with another Party and with any Affiliate of another Party, all such
arbitrations may at such Party's discretion be consolidated or joined with the other arbitration or arbitrations such that all
Disputes between the Parties and any Affiliates of the Parties, are resolved by a single arbitral panel.
A
notice, demand, consent or other communication required, given or made under this Agreement (“Notice”) must
be in writing, signed by the sender and either left at the delivery address or sent to the addressee by courier, facsimile or
email. If it is sent by courier, it is taken to have been received as at the date of confirmed delivery. If it is sent by facsimile,
it is taken to have been received at the time shown in the transmission report as the time the facsimile was received. If it is
sent by email it is taken to have been received only when acknowledged by an addressee. Each Party’s delivery address, email
address and facsimile number will be as specified in section 13.2 or as notified in writing from time to time.
| (1) | Trilogy’s
delivery address, facsimile number and electronic mail address are: |
Trilogy
Metals Inc.
▇▇▇▇
- ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Corporate Secretary and Chief Financial Officer
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
| (2) | the
Company’s delivery address, facsimile number and electronic mail address are: |
NovaCopper
US Inc.
c/o
Trilogy Metals Inc.
1950
- ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ - Director
Fax
No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
| (3) | South32’s
delivery address and electronic mail address are: |
South32
Group Operations Pty Ltd
▇▇▇
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Australia
6000
Attention: ▇▇▇▇
▇▇▇▇▇▇▇▇
Email: ▇▇▇▇▇▇▇.▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Where
a Party comprises two or more persons, each of them is, to the extent permitted by Law, jointly and severally liable for the obligations
and liabilities of that Party created by, arising under or in connection with this Agreement.
| 14.2 | Relationship
of Parties |
The
Parties agree and declare that this Agreement is not and must not be construed as constituting an association, corporation, mining
partnership or any other kind of partnership and, except as expressly provided otherwise in this Agreement, nothing in this Agreement
will be deemed to:
| (1) | constitute
a Party a partner, agent or legal representative of any other Party for any purpose whatsoever;
or |
| (2) | create
a fiduciary relationship between the Parties. |
No
Party may, except as expressly permitted by this Agreement, directly or indirectly use or permit the use of the name of any other
Party for any purpose related to the Property or this Agreement.
No
term of this Agreement and no act or omission of South32 will oblige South32:
| (1) | to
exercise the Option; or |
| (2) | to
take any action, other than those actions expressly required by this Agreement. |
| 14.5 | Other
Activities and Interests |
| (1) | The
rights and obligations of the Parties under this Agreement are strictly limited to the
Area of Interest. Each Party may enter into, conduct and benefit from any business venture
of any kind whatsoever, whether or not competitive with the activities undertaken under
this Agreement, without disclosing those activities to any other Party or inviting or
allowing any other Party to participate in that business venture. |
| (2) | Except
to the extent expressly provided otherwise in this Agreement and without limiting section
14.5(1), nothing in this Agreement will prevent or may be construed to prevent a Party
from: |
| (a) | acquiring
any Mineral Right or interest in any Mineral Right outside of the Area of Interest; |
| (b) | acquiring
any Mineral Right or interest in any Mineral Right within the Area of Interest that has
been abandoned or surrendered in accordance with this Agreement; or |
| (c) | using,
for any reason not related to the Area of Interest, any geological, geophysical, geochemical,
metallurgical or operational concept, model or principle of any kind, |
and
each Party will be free to so acquire and use with no obligation whatsoever to any other Party.
| 14.6 | United
States Securities Law Matters |
South32
represents and warrants to Trilogy and the Company that South32 is acquiring the Option as principal for its, including its Affiliates,
own account and not for the benefit of any other person. South32 acknowledges that the Option has not been and will not be registered
under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”) or the securities laws
of any state of the United States and that the Option may not be offered or sold, directly or indirectly, in the United States
without registration under the U.S. Securities Act or compliance with the requirements of an exemption from registration. Upon
exercise of the Option, South32 acknowledges that it will be required to make the same representations and warranties to the LLC.
| 14.7 | Recording
of this Agreement |
This
Agreement, or a memorandum of this Agreement, will, be recorded in the recording district or office of the applicable Governmental
Authority where the Property is located, in order to give notice to third persons of South32’s interests (whether direct
or indirect) in the Property or that arise under this Agreement. Each Trilogy Party agrees with South32 to execute, notarize,
deliver, file or register (as the case may be) those documents that may be necessary to perfect such recording or registration.
| (a) | is
the entire agreement and understanding between the Parties on everything connected with
the subject matter of this Agreement; and |
| (b) | supersedes
any prior agreement or understanding on anything connected with that subject matter. |
| (2) | The
Parties acknowledge and agree that with effect from the Execution Date the Confidentiality
Agreement will automatically terminate and be of no further force or effect. |
| 14.9 | Amendment
and variation |
This
Agreement may not be amended, modified, varied or supplemented except in writing signed by the Parties.
| 14.10 | Consents
or Approvals |
Except
where expressly specified otherwise in this Agreement, if the doing of any act, matter or thing under this Agreement is dependent
on the consent or approval of a Party or is within the discretion of a Party, then the consent or approval may be given or the
discretion may be exercised conditionally or unconditionally or withheld by the Party in its absolute discretion.
Where
in this Agreement a pre-condition is prescribed in relation to any right or benefit that a Party might become entitled to enjoy,
the Party will only be entitled to the right or benefit if the pre-condition is satisfied.
The
Parties agree that:
| (1) | a
Party’s failure or delay to exercise a power or right does not operate as a waiver
of that power or right; |
| (2) | the
exercise of a power or right does not preclude either its exercise in the future or the
exercise of any other power or right; |
| (3) | a
waiver is not effective unless it is in writing; and |
| (4) | waiver
of a power or right is effective only in respect of the specific instance to which it
relates and for the specific purpose for which it is given. |
Each
Party must pay its own costs and expenses connected with the preparation, negotiation and execution of this Agreement including
all legal, accounting and brokers or finders fees and disbursements relating to this Agreement. Under no circumstances will any
Party’s legal, accounting and brokers or finders fees and disbursements relating to this Agreement constitute Qualifying
Expenditure for the purposes of this Agreement.
Any
payment to be made to a Party may be made by electronic funds transfer to that Party’s bank as designated by that Party
by notice from time to time. That bank will be deemed the agent of the designating Party for the purposes of receiving, collecting
and receipting such payment.
Each
Party must promptly at its own cost do all things (including executing and if necessary delivering all documents) reasonably necessary
or desirable to give full effect to this Agreement and the transactions contemplated by it.
Each
Party acknowledges and agrees that:
| (1) | any
breach by it of section 7 or section 9 would constitute an injury and cause
damage to the other Party which is impossible to measure monetarily; |
| (2) | monetary
damages alone would not be a sufficient remedy for a breach of section 7 or section 9; |
| (3) | in
addition to any other remedy which may be available in law or equity, a Party is entitled
to interim, interlocutory and permanent injunctions or any of them to prevent breach
of section 7 or section 9 and to compel specific performance of any one or more of those
sections; and |
| (4) | any
Party intending to breach or which breaches section 7 or section 9 hereby waives any
defence it may have at law, in equity or under statute to such injunctive or equitable
relief. |
Sections
2.4, 2.5, 9, 11.2, and 12 and all limitations of liability and rights accrued prior to completion, termination, or expiration
of this Agreement will not merge on completion, termination, or expiration of this Agreement, but will continue in full force
and effect after any termination or expiration of this Agreement as will any other provision of this Agreement which expressly
or by implication from its nature is intended to survive the termination or expiration of this Agreement.
| (1) | Except
for matters of title to the Property or its assignment or transfer, which will be governed
by the law of its situs, this Agreement is solely governed by the law in force in British
Columbia and the laws of Canada applicable in British Columbia without giving effect
to the conflict of laws principles in British Columbia and without reference to the laws
of any other jurisdiction. |
| (2) | Subject
to section 12, each Party: |
| (a) | irrevocably
and unconditionally submits to and accepts the exclusive jurisdiction of the courts exercising
jurisdiction in British Columbia, and any court that may hear appeals from any of those
courts, for any proceeding in connection with this Agreement, subject to the right to
enforce a judgement obtained in any of those courts in any other jurisdiction; and |
| (b) | irrevocably
waives any objection to the venue of any legal process commenced in the courts of British
Columbia on any basis including that the process has been brought in an inconvenient
forum. |
| 14.19 | Violation
of Law of another Jurisdiction |
If
this Agreement is intended to be performed in more than one jurisdiction, and its performance would be a violation of the applicable
law of a jurisdiction where it is intended to be performed, then this Agreement is binding in those jurisdictions in which it
is valid and the Parties will use their reasonable efforts to re-negotiate and amend this Agreement so that its performance does
not involve a violation of the applicable law of the jurisdiction where its performance would be a violation.
| (1) | Each
Party, including the Operator, represents, warrants and agrees that, in connection with
this Agreement, the Mineral Rights comprising the Property, and its operation of the
Assets and Property: |
| (a) | neither
it, nor any of its Affiliates nor its Personnel, directly or indirectly, has engaged
(prior to entering into this Agreement), or will engage, in the Bribery of a Government
Official or any person; |
| (b) | it
(including its Affiliates and Personnel) has and will otherwise comply with any Anti-corruption
Laws; |
| (c) | except
as disclosed to the other Party, neither it (including any of its Personnel) nor any
other entity in which the Party has an ownership interest: |
| (i) | is
directly or indirectly owned or controlled, in whole or in part, by any Government Official
unless the interest held is less than 5% of any securities of the Party that are publicly
traded on a major stock exchange; and |
| (ii) | has
an officer, director, or employee who is, or currently expects to become, such a Government
Official during the term of this Agreement; |
| (d) | it
must notify each other Party promptly, and in any event not less than five (5) Business
Days, upon becoming aware that any officer, director, employee or owner becomes, or expects
to become, a Government Official in a position to take or influence official action for
or against the Property or this Agreement; |
| (e) | if
it engages a Subcontractor or other third party to interact with others on its behalf,
it will perform appropriate risk based anti-corruption due diligence on that Subcontractor
or third party, will keep records of the same, and take reasonable measures to ensure
they comply with sections 14.20(1)(a), 14.20(1)(b) and 14.20(1)(c); and |
| (f) | it
will notify each other Party promptly upon becoming aware of any potential breach of
sections clause 14.20(1)(a), 14.20(1)(b), 14.20(1)(c) or 14.20(1)(d). |
| (2) | Each
Party represents, warrants and agrees that, in connection with this Agreement, it will: |
| (a) | keep
and maintain accurate and reasonably detailed books and financial records of expenses
and receipts in connection with its performance under, and payments made or received
in connection with, this Agreement; and |
| (b) | upon
request, as soon as reasonably practicable but no later than seven (7) Business Days,
provide any information and reasonable assistance to the other Party to audit any books
and financial records to verify compliance with the representations, warranties and undertakings
under this Agreement, and otherwise reasonably co-operate with any Party investigation
of any related matters. |
| (1) | If
anything in this Agreement is unenforceable, illegal or void then it is severed and the
rest of this Agreement remains in force. |
| (2) | Where
a provision of this Agreement is prohibited or unenforceable, the Parties must negotiate
in good faith to replace the invalid provision by a provision which is in accordance
with the applicable Law and which must be as close as possible to the Parties’
original intent and appropriate consequential amendments (if any) will be made to this
Agreement. |
| 14.22 | Successors
and Assigns |
This
Agreement will enure to the benefit of and be binding upon the Parties and their respective successors and permitted assigns.
This
Agreement may be executed in any number of counterparts. Each counterpart is an original, but the counterparts together are one
and the same document. This Agreement is binding on the Parties on the exchange of counterparts. A copy of a counterpart sent
by facsimile machine or by electronic mail:
| (1) | must
be treated as an original counterpart; |
| (2) | is
sufficient evidence of the execution of the original; and |
| (3) | may
be produced in evidence for all purposes in place of the original. |
| 14.24 | Execution
- Authorized Officer to Sign |
Each
person signing this Agreement as an authorized officer of a Party hereby represents and warrants that he or she is duly authorized
to sign this Agreement for that Party and that this Agreement will, upon having been so executed, be binding on that Party in
accordance with its terms.
EXECUTED
AS AN AGREEMENT
| Trilogy
Metals Inc. |
|
NovaCopper
US Inc. |
By: |
“▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇” |
|
By: |
“▇▇▇▇▇▇
▇▇▇▇▇▇▇” |
|
Authorized officer |
|
|
Authorized officer |
| |
▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ |
|
|
▇▇▇▇▇▇
▇▇▇▇▇▇▇ |
| |
Name |
|
|
Name |
|
President
& CEO |
|
|
Director |
| |
Title |
|
|
Title |
| South32
Group Operations Pty Ltd |
|
|
By: |
“▇▇▇▇▇
▇▇▇▇▇” |
|
|
|
Authorized officer |
|
|
| |
▇▇▇▇▇
▇▇▇▇▇ |
|
|
| |
Name |
|
|
|
Director |
|
|
| |
Title |
|
|
Schedule 1 - Property Description
Schedule
1 - Property Description
[Detailed
Property Description redacted.]
Schedule 2 - Material
Agreements
Schedule
2 - Material Agreements
| 2. | The
Net Smelter Returns Royalty Agreement among Kennecott Exploration Company, Kennecott
Arctic Company, Alaska Gold Company, and NovaGold Resources Inc. dated effective January
7, 2010, as assigned by Kennecott Exploration Company and Kennecott Royalty Company (formerly
Kennecott Arctic Company) to MF2, LLC pursuant to a royalty assignment and assumption
agreement dated December 28, 2012. |
Schedule 3 - Form of Operating
Agreement
Schedule
3 - Form of Operating Agreement
[Form
of Operating Agreement redacted.]
Schedule 4 - Form of Annual
Exploration Report
Schedule
4 - Form of Annual Exploration Report
[Form
of Annual Exploration Report redacted.]
Schedule 5 - Form of Services Agreement
Schedule
5 - Form of Services Agreement
[Form
of Services Agreement redacted.]
Schedule 6 - Form of
Contribution Agreement
Schedule
6 - Form of Contribution Agreement
[Form
of Contribution Agreement redacted.]
Page
67