EXHIBIT 6
to SCHEDULE 13D
SUPPORT AGREEMENT
THIS AGREEMENT made as of the 14th day of March, 2006,
BETWEEN:
PPC CANADA ENTERPRISES CORP., a company existing under the laws of
British Columbia with a registered and records office located at
2500 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇, ▇▇▇ ▇▇▇
(the "OFFEROR")
AND:
PAN PACIFIC COPPER CO., LTD., of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇-▇▇▇▇▇▇▇▇
21-17 ▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇-▇▇, ▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
("PPC")
AND:
REGALITO COPPER CORP., a company existing under the laws of
British Columbia, with its registered and records office located
at ▇▇▇▇-▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇
▇▇▇
(the "COMPANY")
WITNESSES THAT WHEREAS:
A. The Offeror wishes to make a take-over bid for all of the outstanding
Shares of the Company, other than Shares held by the Offeror and its
affiliates, subject to the terms and conditions of this Agreement;
B. The Board of Directors has determined that it would be in the best
interests of the Company and its Shareholders for the Board of Directors to
recommend acceptance of the Offer to the Shareholders and for the Company to
co-operate with the Offeror and take all reasonable action not inconsistent
with the fiduciary obligations of the directors of the Company to support the
Offer, all on the terms and subject to the conditions contained herein; and
C. The Board of Directors has determined that it would be in the best
interests of the Company and its Shareholders for the Company to enter into
this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto hereby
covenant and agree as follows:
-1-
ARTICLE 1
THE OFFER
1.1 THE OFFER
(a) Subject to the terms and conditions of this Agreement, the Offeror
agrees to mail no later than 30 days (the "LATEST MAILING TIME")
after execution and delivery of this Agreement, to the holders of
Shares (the "SHAREHOLDERS") of the Company an offer to purchase all
of the outstanding Shares, except Shares owned at the date the
Offer is mailed by the Offeror and its affiliates, for
consideration per Share of $6.00 in cash (as such offer may be
amended or extended from time to time as permitted under this
Agreement, the "OFFER"), subject only to the terms and conditions
set out in Schedule "B" to this Agreement (as such may be amended
in accordance with section 1.1(c) hereof), provided, however, that
if the mailing of the Offer is delayed by reason of (i) an
injunction or order made by a court or regulatory authority of
competent jurisdiction or (ii) the Offeror not having obtained any
regulatory waiver, consent or approval which is necessary to permit
the Offeror to mail the Offer Documents then, provided that such
injunction or order is being contested or appealed or such
regulatory waiver, consent or approval is being actively sought, as
applicable, the Latest Mailing Time shall be extended for a period
ending on the fifth business day following the date on which such
injunction or order ceases to be in effect or such waiver, consent
or approval is obtained, as applicable.
(b) The Offer will be made in accordance with Applicable Laws and
applicable securities legislation in Canada, the United States of
America and other jurisdictions where registered Shareholders are
located in the English and, if necessary under the Applicable Laws,
French language and shall be open for acceptance until a time that
is not earlier than 12:01 a.m. (Vancouver time) on the 36th day,
and not later than 12:01 a.m. (Vancouver time) on the 45th day,
after the day (the "MAILING DATE") that the Offer is mailed to
Shareholders, or such later time and date as may be required by the
Applicable Laws, subject to the right of the Offeror in its sole
discretion to extend the period during which Shares may be
deposited under the Offer to a maximum of 75 days from the Mailing
Date if the conditions set forth in Schedule "B" hereto are not
satisfied on the initial expiry date of the Offer (the time at
which the Offer, as it may be extended, expires being referred to
as the "EXPIRY TIME"). Subject to the satisfaction or waiver of the
conditions set forth in Schedule "B" hereto, the Offeror shall
within the time periods required by law take up and pay for all
Shares validly tendered (and not properly withdrawn) pursuant to
the Offer as soon as practicable after the Expiry Time. The Offeror
shall use all reasonable efforts to consummate the Offer, subject
only to the terms and conditions hereof.
(c) The Offeror expressly reserves the right, in its sole discretion,
to modify or waive any term or condition of the Offer except that,
without the prior written consent of the Company, the Offeror shall
not:
(i) reduce the consideration per Share;
(ii) change the form of consideration payable under the Offer
(other than to add additional consideration);
-2-
(iii) add to, amend or change any of the Offer terms or conditions
in any manner adverse to the Shareholders;
(iv) modify or waive the Minimum Tender Condition in paragraph
(a) of Schedule "B"; or
(v) decrease the number of Shares sought under the Offer.
(d) The Offeror agrees to provide the Company with a draft copy of the
Offer and take-over bid circular, and the Letter of Transmittal,
Notice of Guaranteed Delivery and other related documents,
including any other documents required to be prepared by the
Offeror under Applicable Laws in connection with the Offer, and any
supplements or amendments to such documents (the "OFFER DOCUMENTS")
prior to the filing or mailing thereof, on a confidential basis,
and to provide the Company with a reasonable opportunity (to the
extent possible with respect to supplements and amendments) to
review and provide comments thereon.
(e) The Company shall prepare and make available for distribution
contemporaneously with the Offer Documents and in accordance with
the terms set out in section 1.1(a), in both the English and French
languages as may be required by Applicable Laws, sufficient copies
of the Directors' Circular, and any other documents required to be
prepared by the Company under Applicable Laws in connection with
the Offer (the "COMPANY DOCUMENTS"), which shall be prepared in
accordance with Applicable Laws, which shall reflect the
determinations and recommendations set out in section 1.2(a) and
contain such other information as may be required under Applicable
Laws.
(f) Prior to the final approval of the Directors' Circular and any
other Company Documents required by Applicable Laws by the Board of
Directors, the Company shall provide the Offeror with an
opportunity to review and comment thereon.
(g) The obligation of the Offeror to make the Offer is conditional on
the prior satisfaction of the following conditions, all of which
conditions are included for the sole benefit of the Offeror and any
and all of which may be waived by the Offeror in whole or in part
in its sole discretion (other than the condition in paragraph (vii)
below, which may be waived only with the consent of the Company)
without prejudice to any other rights it may have under this
Agreement, which conditions shall be deemed to have been satisfied
or waived upon the Offer being made:
(i) following the date hereof, there shall not have occurred any
change or effect constituting a Material Adverse Effect in
respect of the Company of which the Offeror has given the
Company written notice and which the Company shall, if
curable, fail to cure within 10 business days of the receipt
of that notice. If such notice is given to the Company, the
Latest Mailing Time will be the later of (A) the Latest
Mailing Time without giving effect to this paragraph and (B)
the 11th business day following the receipt of such notice;
(ii) to the extent such covenants may be performed or complied
with prior to the date of the Offer, the Company shall have
complied in all material respects with the covenants set out
herein;
-3-
(iii) the obligations of the Offeror hereunder shall not have been
terminated pursuant to section 6.1;
(iv) no circumstance, fact, change, event or occurrence shall
have occurred, other than a circumstance, fact, change,
event or occurrence caused by the Offeror, that would render
it impossible for one or more of the conditions set out in
Schedule "B" to be satisfied;
(v) the special committee of the Board of Directors shall have
received the advice of Bear, ▇▇▇▇▇▇▇ & Co. Inc. (the
"ADVISOR") and the Board of Directors shall have resolved to
recommend that Shareholders accept the Offer and shall not
have withdrawn such recommendation or changed such
recommendation in a manner that has substantially the same
effect as a withdrawal of it;
(vi) the Advisor shall have delivered a written form of the
opinion described in section 1.2(b);
(vii) there shall not exist any prohibition at law, including a
cease trade order, injunction or other prohibition or order
against the Offeror or the Company which shall prevent the
making of the Offer, the consummation of the Offer or the
completion of any Second-Step Transaction; and
(viii) no act, action, suit or proceeding shall have been taken
before or by any domestic or foreign court or tribunal or
governmental entity (A) seeking to prohibit or restrict the
acquisition by the Offeror, directly or indirectly, of any
Shares, (B) seeking to restrain or prohibit the consummation
of the Offer or the completion of any Second-Step
Transaction, (C) seeking to obtain from the Offeror or the
Company any material damages directly or indirectly in
connection with the Offer or any Second-Step Transaction, or
(D) seeking to impose limitations on the ability of the
Offeror to acquire or hold, or exercise full rights of
ownership of, directly or indirectly, any Shares.
1.2 COMPANY APPROVAL
(a) The Company represents that its Board of Directors, upon
consultation with its advisors, has determined unanimously (other
than directors abstaining from voting by reason of conflict of
interest or financial interest) that:
(i) the Offer is fair to the Shareholders and is in the best
interests of the Company and the Shareholders;
(ii) the Board of Directors will recommend that Shareholders
accept the Offer; and
(iii) this Agreement is in the best interests of the Company and
the Shareholders,
provided that the Offer does not differ in any material respect
from the terms and conditions (as such may be amended in accordance
with section 1.1(c) hereof) of the Offer as described herein;
(b) The Company represents that the special committee of its Board of
Directors has received an opinion from the Advisor, that as at the
date of such opinion the Offer is fair, from a
-4-
financial point of view, to the Shareholders (excluding
shareholders who have entered into lock-up agreements with the
Offeror); and
(c) The Company represents that its directors have advised it that as
at the date hereof they intend to tender, or have agreed with the
Offeror to tender, their Shares to the Offer, which intention or
agreement will be disclosed in the Directors' Circular.
1.3 COMPANY CO-OPERATION
(a) Following the execution and delivery of this Agreement, the Company
shall cause its registrar and transfer agent to, as soon as
practicable, provide the Offeror with a list of the holders of
Shares and a list of participants in book-based nominee registrants
together with their addresses and respective holdings of Shares,
and such other information as the Offeror may reasonably request in
connection with communicating the Offer to registered and
beneficial owners of Shares including non-objecting beneficial
owners lists and supplemental lists, if any, and lists of
Optionholders.
(b) The Company will make, as soon as practicable, such enquiries as
the Company's legal counsel shall advise are necessary to
determine, to the extent feasible, the number of Shareholders in
the United States in order to confirm the availability of
exemptions for the Offer from U.S. laws respecting tender offers.
The Company will make, as soon as practicable, such enquiries as
are necessary to determine, to the extent feasible, the number of
Shareholders in the Province of Quebec.
(c) The Company shall from time to time furnish the Offeror with such
additional information, including updated or additional lists of
holders of Shares and lists of securities positions, non-objecting
beneficial owners and other assistance as the Offeror may
reasonably request in order for the Offeror to be able to
communicate the Offer to the holders of the Shares and to such
other persons as are entitled to receive the Offer under the
Applicable Laws.
1.4 POST OFFER COVENANTS
(a) Promptly upon the purchase by the Offeror pursuant to the Offer of
such number of Shares which, together with the Shares held by or on
behalf of the Offeror or its affiliates, represents at least a
majority of the outstanding Shares, and from time to time
thereafter, and subject to Applicable Laws, the Offeror shall be
entitled to and shall promptly following take-up and payment for
the Shares, designate such number of directors of the Company
(rounded up to the next whole number of directors), as is
proportionate (determined after giving effect to the directors to
be appointed or elected under this section) to the percentage of
the outstanding Shares owned by the Offeror and its affiliates, or,
following the purchase by the Offeror of such number of Shares
which, together with the Shares held by or on behalf of the Offeror
and its affiliates, represents at least 66?% of the outstanding
Shares, all of the directors of the Company, and the Company shall,
upon request by the Offeror, subject to Applicable Laws, promptly
increase the number of directors comprising the Board of Directors
or use its reasonable efforts to secure the resignations of such
number of directors as is necessary to enable the Offeror's
designees to be elected or appointed to the Board of Directors and
shall exercise its reasonable efforts to cause the Offeror's
designees to be so elected or appointed.
-5-
(b) The Offeror shall, if possible to do so under, and subject to
compliance with all Applicable Laws, upon Shares being taken up and
paid for under the Offer, utilize the compulsory acquisition
provisions of Section 300 of the BUSINESS CORPORATIONS ACT (British
Columbia) in respect of the Shares not tendered under the Offer. If
the Offeror is unable to use such compulsory acquisition
provisions, the Offeror shall use all commercially reasonable
efforts to acquire all Shares not acquired in the Offer as soon as
practicable after completion of the Offer by way of a statutory
arrangement, amalgamation, merger or other combination (such
transaction or compulsory acquisition hereinafter referred to as a
"SECOND-STEP TRANSACTION") of the Company with the Offeror or an
affiliate of the Offeror, if possible to do so under, and subject
to compliance with, all Applicable Laws. The Offeror agrees that if
any Second-Step Transaction is effected it will provide that the
holders of any Shares, other than those held by the Offeror or any
of its affiliates, shall be entitled to receive consideration per
Share at least equal to the amount paid per Share under the Offer.
Nothing herein shall be construed to prevent the Offeror from
acquiring, directly or indirectly, additional Shares in the open
market, in privately negotiated transactions, in another take-over
bid, tender offer or exchange offer, or otherwise in accordance
with the Applicable Laws, following taking up and paying for Shares
under the Offer.
(c) The Offeror acknowledges and agrees that, on the date that Shares
are taken up and paid for under the Offer, the Company will make
the termination, severance and related payments in the amount of
$933,748 as set forth in the Disclosure Letter of the Company (the
"TERMINATION PAYMENTS") in respect of obligations that have been
incurred by or on behalf of the Company or its Subsidiary prior to
the date of this Agreement related to (A) the termination of the
lease of the Company's and its Subsidiary's principal business
offices, office equipment leases and office-related service
contracts, and (B) severance or other payment obligations of the
Company or its Subsidiary under director, employee, consulting and
similar agreements; provided, however, such payments will be
reduced to the extent determined pursuant to section 1.6(c).
(d) If the Termination Payments are made by the Company pursuant to
section 1.4(c), the Company will deliver fully executed
acknowledgements and releases from each director, officer and
employee of the Company or its Subsidiary (except for certain
Chilean employees, a list of whom have been provided to the
Offeror) acknowledging the payment in full of all severance and
other payment obligations and releasing the Company or its
Subsidiary, as the case may be, from any claims for further
severance or other payments related to their status as a director,
officer or employee of the Company and its Subsidiary, as the case
may be.
1.5 OUTSTANDING STOCK OPTIONS AND CHANGE OF CONTROL SHARES
(a) The Company agrees to give notice to all persons holding Options
pursuant to the Company's stock option plan of the vesting of all
unvested options and the termination of all non-exercised Options
at 4:00 p.m. (Vancouver time) on the 44th day after the Offer is
mailed, conditional upon the Offeror being bound to take up and pay
for Shares under the Offer. The Company further agrees to use its
commercially reasonable efforts to either:
(i) facilitate all persons holding Options pursuant to the
Company's stock option plan to exercise all of their Options
and tender all Shares issued in connection therewith under
the Offer, conditional upon the Offeror being bound to take
up and pay for Shares under the Offer, or
-6-
(ii) amend or modify the Company's stock option plan to provide
for the cashless exercise, or cash payout of the intrinsic
value, of vested and non-exercised Options in lieu of
exercise, conditional upon the Offeror being bound to take
up and pay for Shares under the Offer.
1.6 INDEMNIFICATION
(a) The Offeror covenants and agrees that after the Effective Time it
shall ensure that (i) the articles of the Company, and the
constating documents of any successor to the Company, and (ii) the
constating documents of the Subsidiary of the Company (or any
successor to any such Subsidiary), shall contain provisions with
respect to indemnification now set forth in the articles of the
Company and the constating documents of the Subsidiary of the
Company (or equivalent provisions), such that all rights to
indemnification existing in favour of the present and former
directors and officers of the Company or of any of the Subsidiary
of the Company and present and former directors and officers of the
Company or of any of the Subsidiary of the Company serving or who
served at the request of the Company or any Subsidiary of the
Company as a director, officer, employee, agent or representative
of another corporation, partnership, joint venture, trust, employee
benefit plan or other entity or enterprise (each such present or
former director or officer of the Company or of any Subsidiary of
the Company being herein referred to as an "INDEMNIFIED PARTY" and
such persons collectively being referred to as the "INDEMNIFIED
PARTIES") as provided in the articles of the Company or constating
documents of any of the Subsidiary of the Company, or equivalent
rights, shall survive and continue in full force and effect and
without modification, with respect to actions or omissions of the
Indemnified Parties occurring prior to the Effective Time, for a
period of not less than the limitation period applicable under the
statutes of limitation applicable to such matters.
(b) The Company and Offeror agree that all rights to indemnification
existing in favour of the Indemnified Parties as provided by
contracts or agreements between the Indemnified Parties and the
Company or its Subsidiary and in effect as of the date of this
Agreement, shall survive and shall continue in full force and
effect and without modification, and the Offeror shall cause the
Company, and any successor to the Company and its Subsidiary
(including any successors thereto), to honour such rights of
indemnification and indemnify the Indemnified Parties pursuant
thereto, with respect to acts or omissions of the Indemnified
Parties occurring prior to the Effective Time, for a period of not
less than the limitation period applicable under the statutes of
limitation applicable to such matters.
(c) The Offeror agrees that, notwithstanding any other provision of
this Agreement, the Company will secure officers' and directors'
liability insurance covering the Indemnified Parties on a six year
"trailing" or "run-off" basis, to the extent permitted by law and
the Offeror shall cause the Company and any successor to the
Company (including any surviving corporation) to, continue in
effect such director and officer liability insurance for the
benefit of the Indemnified Parties; provided, however, that the
Company shall be required to pay, in the aggregate, no more than
$500,000 to secure and continue in effect such coverage, unless the
Termination Payments are reduced by an amount equal to the amount
over $500,000 the Company is required to pay for such coverage.
(d) The provisions of this section 1.6 are (i) intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party,
his or her heirs, executors, administrators and other legal
representatives and (ii) are in addition to, and not in
substitution for, any other
-7-
rights to indemnification or contribution that any such person may
have by contract or otherwise, and such rights shall be held by the
Company, and any successor to the Company, in trust for such
persons, provided however that no approval of any beneficiary of
such trust shall be required in connection with an amendment or
variation of this section 1.6 prior to the Effective Time.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES
2.1 REPRESENTATIONS AND WARRANTIES OF PPC AND THE OFFEROR
PPC and the Offeror hereby jointly and severally represent and
warrant to the Company as to those matters set forth in Schedule "C" hereto
and acknowledge that the Company is relying upon those representations and
warranties in entering into this Agreement.
2.2 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Offeror as to
those matters set forth in Schedule "D" hereto and acknowledges that the
Offeror is relying upon those representations and warranties in entering into
this Agreement.
2.3 INVESTIGATION
No investigation by or on behalf of any party prior to the date of
this Agreement shall mitigate, diminish or affect the representations and
warranties made by any other party pursuant to this Agreement unless the first
party shall have actual knowledge prior to the date of this Agreement of any
specific representations or warranty being untrue.
2.4 KNOWLEDGE
Any reference in this Agreement to the "knowledge" of the Company
shall mean to the best of the actual knowledge, information and belief of any
of ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇ and,
unless such knowledge, information and belief would lead a reasonable
individual who owes the duty of care and enquiry under similar circumstances
to make further enquiries, it shall not be necessary for such persons to
enquire of the other employees, agents or representatives of the Company
generally or of any other person.
2.5 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties of the Company and the Offeror
contained in this Agreement shall not survive the completion of the
Second-Step Transaction, and shall expire and be terminated and extinguished
upon the consummation of the Second-Step Transaction.
2.6 PERFORMANCE OF THE OFFEROR
PPC hereby unconditionally guarantees the due and punctual
performance of each and every obligation of the Offeror arising under this
Agreement, including, without limitation, the making of the Offer, subject to
the terms of this Agreement
-8-
ARTICLE 3
CONDUCT OF BUSINESS
3.1 NEGATIVE COVENANTS
The Company covenants and agrees that, prior to the earlier of (i)
the time (the "EFFECTIVE TIME") of the appointment or election to the Board of
Directors and the Subsidiary of the persons designated by the Offeror who
represent at least a majority of the Board of Directors and the Subsidiary and
(ii) the time this Agreement is terminated, unless the Offeror shall otherwise
agree in writing or as otherwise expressly contemplated or permitted by this
Agreement, the Company shall not, and shall not permit its Subsidiary to:
(a) alter the memorandum or articles of the Company or alter the
constating documents of its Subsidiary;
(b) resolve to reduce its share capital in any way or repurchase,
redeem or otherwise acquire any of its Shares or any securities of
its Subsidiary (other than pursuant to the surrender to the Company
of Options currently outstanding and which are described in
Schedule "F" hereto, in accordance with the terms and conditions of
the Company's stock option plan);
(c) make an allotment of, issue, grant an option, warrant, call,
conversion or exchange privilege or right of any kind to subscribe
for, pledge or encumber (or agree to do any of the foregoing) any
of its shares or any securities of its Subsidiary (other than any
such allotment or issue made to the Company by its wholly-owned
Subsidiary and other than pursuant to the exercise of Options
currently outstanding and which are described in Schedule "F"
hereto);
(d) except in the ordinary course of business consistent with past
practice, purchase or otherwise acquire or sell, transfer, lease,
exchange, pledge or encumber or otherwise dispose of any interest
in or right to any asset or property having a value in excess of
$50,000 for any single asset or property or $50,000 in the
aggregate for the Company and its Subsidiary taken as a whole for
all such assets or properties (other than transactions between the
wholly-owned Subsidiary of the Company and the Company);
(e) except in the ordinary course of business consistent with past
practice, except as described in section 1.6(c), enter into,
modify, amend or terminate any agreement or licence of the Company
or any Subsidiary or implement any other change in its business,
where such new agreement or amendment, modification or termination
of an existing agreement or such implementation would result in a
Material Adverse Effect on the Company;
(f) except in the ordinary course of business consistent with past
practice, or except pursuant to existing credit facilities or debt
instruments (or the agreements, indentures or guarantees governing
or relating to such facilities or instruments) or renewal or
replacement credit facilities or debt instruments for a principal
amount approximately the same as the principal amount of the
facilities or instruments renewed or replaced, incur or commit to
incur or assume any indebtedness for borrowed money or issue any
debt securities, or guarantee, endorse or otherwise become liable
or responsible for the obligations of any other person, or make any
loans or advances;
-9-
(g) except in the ordinary course of business consistent with past
practice or except for the Termination Payments, satisfy any
material claims or liabilities except such as have been reserved
against in the Company's financial statements delivered to the
Offeror, relinquish any material contractual rights or enter into
any interest rate, currency or commodity swaps, ▇▇▇▇▇▇ or other
similar financial derivative instruments;
(h) except in the ordinary course of business consistent with past
practice, mortgage, pledge, lease, encumber or charge any property
of the Company or the Subsidiary;
(i) except for transactions between the wholly-owned Subsidiary of the
Company and the Company, amalgamate or merge or agree to amalgamate
or merge with any other person or resolve that it be wound up;
(j) except in the ordinary course of business consistent with past
practice, acquire or agree to acquire any person, corporation,
partnership, joint venture or other business organization or
division thereof or agree to acquire any material assets;
(k) appoint or permit the appointment of a liquidator, receiver or
trustee in bankruptcy for the Company or its Subsidiary or in
respect of the assets of the Company or its Subsidiary;
(l) permit the making of an order by a court for the winding-up or
dissolution of the Company or its Subsidiary;
(m) declare, set aside or pay any dividends, including for the purpose
of effecting a share subdivision, or make declare, set aside or
make any payment or distribution (in cash, stock, property or
otherwise) with respect to its Shares;
(n) establish, adopt, enter into, make or amend any collective
bargaining, bonus, profit sharing, compensation, stock option,
stock ownership, stock compensation, pension, retirement, deferred
compensation, employment, termination, severance or other plan,
agreement, trust, fund, policy or arrangement for the benefit of
any director, officer or employee of the Company or its Subsidiary,
or, subject to the limitations in section 1.4(c), make any award or
payment (whether by way of bonus, salary increase, stock option,
pension benefit, profit sharing, retirement allowance, deferred
compensation, incentive compensation, severance or termination pay
or any other form of compensation or profit sharing) to any
director, officer or employee of the Company or its Subsidiary
other than pursuant to agreements, plans, arrangements or policies
in effect (without amendment) on the date hereof and disclosed in
the Data Room Materials or pursuant to section 1.5 and,
notwithstanding the foregoing, neither the Company nor its
Subsidiary shall make or amend, or become obligated to make or
amend, any discretionary payment to or for the benefit of any
director (other than payments approved by the Board of Directors to
members of the special committee formed to consider the Offer),
officer or employee of the Company or its Subsidiary without the
prior written consent of the Offeror; provided, however, that the
Company and its Subsidiary shall not be restricted from making the
Termination Payments, obtaining the insurance coverage described in
section 1.6(c) or executing indemnities with ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇ in the form
attached hereto as Schedule "G".
-10-
(o) implement any other material change in the present business,
affairs, capitalization, dividend policy or financial condition of
the Company and its Subsidiary, taken as a whole;
(p) except pursuant to section 1.6(c), enter into any material
agreement of any nature, whether or not in the ordinary course of
business, with a term of longer than 30 days pursuant to which the
Company or its Subsidiary is or may become obligated to make
payments or incur liabilities, in the aggregate over the term of
such agreement, in excess of $500,000;
(q) except in the ordinary course of business consistent with past
practice, settle or abandon any claim, litigation, action, suit,
cause of action or other proceeding by or before any domestic or
foreign arbitrator or Agency;
(r) make or permit to be made any change to any accounting method,
policy or principle used by the Company and the Subsidiary, except
as may be prescribed by the Canadian Institute of Chartered
Accountants including any prescribed changes to GAAP; or
(s) bind itself to take any of the other actions set forth in
subsections 3.1(a) through (r) hereof.
3.2 POSITIVE COVENANTS
The Company covenants and agrees with the Offeror that, except as
expressly contemplated or permitted by this Agreement or to the extent the
Offeror has otherwise consented in writing, prior to the earlier of the
Effective Time and the time this Agreement is terminated, the Company shall:
(a) cooperate with the Offeror and take all reasonable action to
support the Offer;
(b) carry on its business and cause its Subsidiary to carry on its
business only in, and not take any action except in, the ordinary
course of business consistent with past practice and shall not
otherwise authorize any capital expenditures in excess of $250,000
for any item or series of items constituting parts of a single item
or $500,000 in the aggregate for the Company and its Subsidiary
taken as a whole for all such items; provided that the Company and
its Subsidiary shall be authorized to make all capital expenditures
in accordance with all commitments and contracts with third parties
in existence at the date hereof as disclosed in the Data Room
Materials or pursuant to capital budgets of the Company or its
Subsidiary approved by the Board of Directors on or prior to the
date hereof as disclosed in the Data Room Materials; provided,
however, that the Company and its Subsidiary shall not be
restricted from making the Termination Payments or the payment
described in section 1.6(c) .
(c) confer on a regular basis with the Offeror with respect to
operational matters and promptly advise the Offeror, orally and
then promptly in writing, of any Material Adverse Change in respect
of the Company and of any material governmental or third party
complaints, investigations, or hearings (or communications
indicating that the same may be contemplated);
(d) use its commercially reasonable efforts to maintain the current
insurance (or re-insurance) policies of it and its Subsidiary and
not allow the same to be cancelled or
-11-
terminated or any other coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse,
replacement policies underwritten by insurance and re-insurance
companies of nationally recognized standing providing coverage
equal to or greater than the coverage under the cancelled,
terminated or lapsed policies for substantially similar premiums
are in full force and effect;
(e) use, and cause its Subsidiary to use, its commercially reasonable
efforts to preserve intact their respective business organizations,
assets and goodwill, to maintain their mining leases, mining
concessions, mining claims, exploration permits or prospecting
permits or other property or proprietary interests or rights in
good standing, to keep available the services of their respective
officers and employees as a group and to maintain satisfactory
relationships with governmental entities, suppliers, distributors,
customers and others with whom they have business relationships and
inform the Offeror orally and then promptly in writing if any
officer submits a resignation;
(f) subject to the provisions of section 3.4(b), furnish the Offeror
with a copy of all information and reports (including financial
statements, officer's certificates, operating statements, reports
of operations and operating plans) prepared by the Company and
provided to directors and management of the Company after the date
hereof;
(g) as soon as reasonably practicable, send the notice to all holders
of Options contemplated by section 1.5 herein and the Board of
Directors shall take such actions as are required to cause such
Options to terminate in accordance with section 1.5 herein;
(h) not take any action or omit to take any action, or not permit the
Subsidiary to take any action or omit to take any action, which
would render, or which reasonably would be expected to render, any
representation or warranty made by it in this Agreement untrue in
any material respect at any time prior to the date of the Effective
Time if then made;
(i) continue to file all documents or information required to be filed
by the Company under applicable Securities Laws, in accordance with
timelines prescribed under applicable Securities Laws and all such
documents or information, when filed, shall comply as to form in
all material respects with the requirements of applicable
Securities Laws;
(j) make or cooperate as necessary in the preparation of any exemption
applications or orders and any other documents deemed reasonably
necessary by the Company or the Offeror, acting reasonably, to
discharge their respective obligations under Applicable Laws in
connection with the Offer or as required under Securities Laws in
order to permit the making or consummation of the Offer; and
(k) provided the conditions of the Offer described in Schedule "B" have
been satisfied or waived, deliver the certificate of the chief
executive officer and chief financial officer contemplated in
paragraphs (h) and (i) of Schedule "B".
3.3 NON-SOLICITATION
(a) On and after the date hereof, except as expressly contemplated by
this Agreement, the Company shall not, and shall cause its
Subsidiary not to, directly or indirectly, through any officer,
director, employee, investment banker, legal advisor,
representative or agent of the Company or its Subsidiary:
-12-
(i) solicit, initiate, knowingly encourage or facilitate
(including by way of furnishing any confidential, non-public
information or entering into any form of agreement,
arrangement or understanding) the submission or initiation
of any inquiries, proposals or offers regarding any merger,
amalgamation, reorganization, consolidation, arrangement,
business combination, recapitalization, take over bid, sale
of all or a material portion of the assets of the Company or
its Subsidiary on a consolidated basis (or any lease, long
term supply agreement or other transaction having the same
economic effect as a sale of such assets), liquidation,
issue or sale of shares or rights or interests therein or
thereto or similar transactions involving the Company or its
Subsidiary from any person other than the Offeror (any of
the foregoing inquiries or proposals being referred to
herein as an "ACQUISITION PROPOSAL");
(ii) engage in any negotiations concerning, or provide any
confidential information to, or have any discussions with or
otherwise cooperate with, any person relating to an
Acquisition Proposal, or otherwise knowingly facilitate any
effort or attempt to make or implement an Acquisition
Proposal;
(iii) withdraw the Board of Directors' recommendation of the Offer
or change such recommendation in a manner adverse to the
Offeror; or
(iv) approve or recommend any Acquisition Proposal or enter into
any agreement related to any Acquisition Proposal,
provided that, subject to sections 3.3(e) and 4.4, nothing
contained in this section 3.3(a) or other provisions of this
Agreement shall prevent the Company from considering, engaging in
discussions or negotiations with a third party or providing
information in respect of, or otherwise responding to, or
negotiating, approving and recommending to the Shareholders, an
unsolicited BONA FIDE written Acquisition Proposal that did not
result from a breach of this Agreement that the Board of Directors
shall have determined, in good faith, after consultation with its
outside legal and financial advisors, is reasonably capable of
being completed and would, if consummated in accordance with its
terms, result in a transaction more favourable, from a financial
point of view, to the Shareholders than the Offer or, if
applicable, any amended or new Offer by the Offeror (any such
Acquisition Proposal being referred to herein as a "SUPERIOR
PROPOSAL") and the Board of Directors, after consultation with
outside legal advisors, determines in good faith that the failure
to take such action would be inconsistent with its fiduciary
duties. Nothing in this section 3.3 will preclude the Company or
its officers and Board of Directors from responding, within the
time and in the manner required by the Applicable Laws, to any
unsolicited take over bid made by way of offer and takeover bid
circular made for the Shares or other securities of the Company.
(b) The Company shall immediately cease and cause to be terminated any
existing solicitations, encouragements, activities, discussions or
negotiations with any parties (other than the Offeror) with respect
to any Acquisition Proposal. Subject to section 3.3(e) below, the
Company shall not allow or permit access to any data or information
rooms regarding the Company except to the Offeror and its
representatives and advisors. The Company agrees not to release or
permit the release of any third party from or waive any
confidentiality or standstill agreement to which the Company and
such third party are a party (except to allow such third party to
make an Acquisition Proposal to the Company).
-13-
(c) Subject to section 3.3(e), the Company shall immediately cease to
provide any party, other than the Offeror and PPC, with access to
material non-public information concerning the Company and the
Subsidiary with respect to any Acquisition Proposal.
(d) The Company shall notify the Offeror promptly (but in no event
later than 24 hours) after receipt by the Company of any
Acquisition Proposal or any request for non-public information
relating to the Company or its Subsidiary known by the Company to
be in connection with any Acquisition Proposal or for access to the
properties, books or records of the Company or any Subsidiary by
any person or entity that may be considering making, or that has
made, an Acquisition Proposal. Such notice to the Offeror shall be
made at first orally and then promptly in writing, and shall
indicate the identity of the person making such proposal, inquiry
or contact and all material terms thereof and such other details of
the proposal, inquiry or contact as the Offeror may reasonably
request and which is in the possession of, or under the control of,
the Company or its representatives or advisors. The Company shall
keep the Offeror promptly and fully informed of the status,
including any change to the material terms, of any such proposal,
inquiry, offer or request, or any amendment to the foregoing, and
will respond promptly to all reasonable inquiries by the Offeror
with respect thereto.
(e) In the event that the Board of Directors receives a request for
material non-public information from a party in connection with a
possible or actual unsolicited BONA FIDE Acquisition Proposal to
the Company and the Board of Directors determines in good faith
after consultation with its outside financial advisors and legal
advisors that such proposal is likely to, if consummated in
accordance with its terms, result in a Superior Proposal and the
Board of Directors, after consultation with its outside legal
advisors, determines in good faith that the failure to provide such
party with access to such information would be inconsistent with
its fiduciary duties, then, and only in such case, the Company may,
subject to the execution of a confidentiality and standstill
agreement substantially similar to that then in effect between the
Company and the Offeror, provide such party with access to any
information regarding the Company and its Subsidiary. The Offeror
will be provided with any information related to the business of
the Company provided to such person that was not previously
provided to the Offeror in the Data Room Materials.
(f) The Company shall ensure that the officers and directors of the
Company and its Subsidiary and any investment bankers or other
advisors, representatives or agents retained by the Company in
connection with the transactions contemplated hereunder are aware
of the provisions of this section 3.3, and the Company shall be
responsible for any breach of this section 3.3 by any of such
parties.
(g) Information provided under section 3.3(d) shall constitute
information which is subject to the Confidentiality Agreement.
3.4 ACCESS TO INFORMATION
(a) From the date hereof until the earlier of the Expiry Time and the
time this Agreement is terminated, and subject to the existing
confidentiality agreement between the Company and PPC dated October
4, 2004 (the "CONFIDENTIALITY AGREEMENT"), the Company shall (and
shall cause its Subsidiary to) afford the Offeror's officers,
employees, counsel, accountants and other authorized
representatives and advisors of PPC or the Offeror
("REPRESENTATIVES") access to information, confidential or
otherwise, with respect to the Company and its Subsidiary and their
respective businesses, assets and properties,
-14-
including books, contracts and records as well as access to
management personnel and employees, subject to such access not
interfering with the ordinary conduct of the business of the
Company and its Subsidiary. PPC, the Offeror and their
Representatives will not contact any Agency (other than Agencies
with registries or information available by request from members of
the public), any employees of the Company or its Subsidiary, any
supplier of the Company or its Subsidiary, or any third party who
is a party to any agreement, arrangement or understanding under
which the Company or its Subsidiary (or any of their assets) is
bound or affected, without the prior written consent of the
Company, which shall not be unreasonably withheld, and the Company
shall (and shall cause its Subsidiary to) furnish promptly to the
Offeror all information concerning its business, assets, properties
and personnel as the Offeror may reasonably request.
(b) Notwithstanding the foregoing, except as expressly provided for
herein, the Company shall not be obligated to make available to the
Offeror any of the Company's management or Board of Directors'
materials relating to the assessment or evaluation of the
transactions contemplated hereby or any alternative transaction
(including any Acquisition Proposal proposed by any other person)
nor any information supplied by any of its officers, directors,
employees, financial advisors, legal advisors, auditors,
representatives, agents or other advisors in connection therewith
or any confidentiality agreement made between the Company and any
other person in respect of any alternative transaction.
(c) Without limiting the generality of the provisions of the
Confidentiality Agreement, the parties acknowledge that all
information provided under section 3.4(a), or otherwise pursuant to
this Agreement or in connection with the transactions contemplated
hereby, is subject to the Confidentiality Agreement, which shall
remain in full force and effect notwithstanding any other provision
of this Agreement or any termination of this Agreement. If any
provision of this Agreement conflicts or is inconsistent with any
provision of the Confidentiality Agreement, the provisions of this
Agreement will supersede those of the Confidentiality Agreement but
only to the extent of the conflict or inconsistency and all other
provisions of the Confidentiality Agreement will remain in full
force and effect.
(d) Nothing in this section 3.4 shall require the Company or its
Subsidiary to disclose information subject to a written
confidentiality agreement with a third party or supplier specific
or competitively sensitive information. For greater certainty,
until the date on which the Offeror takes up and pays for Shares
under the Offer, access to and exchange of supplier specific and
competitively sensitive information ("CONFIDENTIAL DATA") as
between the parties shall be limited to what is reasonably
necessary for the purposes of securing all necessary regulatory
approvals, the preparation and settlement of definitive documents
and the consummation of the Offer and shall be limited such that
the dissemination of Confidential Data shall be confined to the
representatives of the parties and their counsel who have a need to
know such information for such purposes and who agree to respect
such confidentiality in their dealings with Confidential Data. In
particular, with reference to access to and the sharing of
Confidential Data of one party with representatives of the other
party for purposes of preparing any filings or submissions in
respect of any required regulatory approvals, the general principle
which shall be applied is that such information shall be made
available to, exchanged or shared with counsel to the parties
rather than the parties or their representatives.
-15-
3.5 STRUCTURE OF TRANSACTION
The Company shall use reasonable commercial efforts to co-operate
with the Offeror in structuring the acquisition by the Offeror of the Company
in a tax efficient manner provided that no such co-operation shall be required
where such structuring shall have an adverse effect on the Company or cause
any breach of or default under this Agreement by the Company or any other
agreement, arrangement or understanding under which the Company or its
Subsidiary (or any of their assets) is bound or affected.
ARTICLE 4
FEES AND OTHER ARRANGEMENTS
4.1 NON-COMPLETION FEE - COMPANY
If at any time after the execution of this Agreement:
(a) the Board of Directors withdraws or modifies in a manner adverse to
the Offeror any of its recommendations or determinations referred
to in section 1.2 or resolves to do so prior to the Expiry Time;
(b) the Board of Directors accepts or recommends any Acquisition
Proposal or causes the Company to enter into any agreement related
to any Acquisition Proposal;
(c) the Board of Directors fails to reaffirm its unanimous
recommendation that Shareholders accept the Offer by press release
within a reasonable time after the public announcement or
commencement of any Acquisition Proposal and having been requested
to do so by the Offeror (or if the Offer is scheduled to expire,
prior to the scheduled expiry of the Offer);
(d) the Offer is not completed in accordance with the conditions set
out in Schedule "B" as a result of the Company being in material
default of any of its covenants or obligations contained in section
3.3;
(e) the Company terminates this Agreement pursuant to section 6.1(h);
or
(f) the Minimum Tender Condition in paragraph (a) of Schedule "B" has
not been satisfied or waived at the Expiry Time and the Offeror has
not elected to extend the Offer and:
(i) an Acquisition Proposal has been publicly announced by any
person (the "ACQUISITION PROPOSAL OFFEROR"), other than the
Offeror, prior to the Expiry Time; and
(ii)
(A) the Acquisition Proposal Offeror, or a person acting
jointly or in concert with the Acquisition Proposal
Offeror (within the meaning of that expression as
used in the Applicable Laws) consummates an
Acquisition Proposal prior to the expiration of 365
days following termination of this Agreement; or
(B) the Company enters into a definitive agreement with
respect to an Acquisition Proposal with the
Acquisition Proposal Offeror, or a person
-16-
acting jointly or in concert with the Acquisition
Proposal Offeror, prior to the expiration of 270 days
following the termination of this Agreement, and
thereafter consummates such Acquisition Proposal
within 365 days of the termination of this Agreement;
(each of the above being a "FEE EVENT") then in any such case the Company
shall pay to the Offeror $4.1 million (the "COMPANY BREAK FEE") in immediately
available funds by way of bank draft or wire transfer. Such payment will be
due (i) in the case of a Fee Event specified in sections 4.1(a), (b), (c) or
(d) within three business days after termination of this Agreement; (ii) in
the case of a Fee Event specified in section 4.1(e), prior to the time of
termination of this Agreement by the Company; or (iii) in the case of a Fee
Event specified in section 4.1(f), on the day of consummation of the
transaction referred to therein. The Company shall not be obligated to make
more than one payment pursuant to this section 4.1.
4.2 EXPENSE REIMBURSEMENT
(a) If this Agreement is terminated by the Offeror upon the occurrence
of an event contemplated in sections 6.1(c) and (k) herein, the Company shall
pay $2.0 million to the Offeror in immediately available funds by way of bank
draft or wire transfer no later than the third business day following the
termination of this Agreement.
(b) If this Agreement is terminated by the Offeror upon the occurrence
of an event contemplated in section 6.1(f) herein, the Company shall issue an
amount of Shares to the Offeror determined by dividing $2.0 million by the
simple average of the daily volume weighted average price of one Share on each
of the 10 trading days following the date on which the Expiry Time occurs. The
daily volume weighted average price of the Shares shall be calculated with
reference to the normal trading hours of the applicable trading day on the
American Stock Exchange as reported by Bloomberg L.P., or if such report is
not available, such other nationally recognized reporting source as is
reasonably satisfactory to the Offeror and the Company. The Company shall
issue such Shares to the Offeror no later than the third business day
following the tenth trading day following the date on which the Expiry Time
occurs.
(c) If this Agreement is terminated by the Company upon the occurrence
of an event contemplated in sections 6.1(b), (i) and (j) herein, the Offeror
shall pay $2.0 million to the Company in immediately available funds by way of
bank draft or wire transfer no later than the third business day following the
termination of this Agreement.
4.3 EFFECT OF PAYMENTS
Each party acknowledges that all of the payment amounts set out in
this Article 4 (excluding section 4.2) are payments of liquidated damages
which are genuine pre-estimates of the damages which the party entitled to
such damages will suffer or incur as a result of the event giving rise to such
damages and the resultant termination of this Agreement and are not penalties.
Each Party irrevocably waives any right that it may have to raise as a defence
that any such liquidated damages are excessive or punitive. For greater
certainty, the parties agree that the payment of an amount pursuant to this
Article 4 (excluding section 4.2) is the sole monetary remedy of the party
receiving such payment.
4.4 RIGHT TO MATCH SUPERIOR PROPOSAL
(a) If, before the Expiry Time or termination of the Offer, the Board
of Directors determines that an Acquisition Proposal is a Superior
Proposal, the Company shall immediately notify the Offeror in
writing thereof and provide to the Offeror a copy of the document
-17-
evidencing such Superior Proposal, with such deletions thereto as
are necessary to protect confidential portions of such Superior
Proposal, provided that the material terms or conditions of the
Superior Proposal may not be deleted.
(b) Until the expiration of the five business day period after the
Offeror is notified in writing as provided for in section 4.4(c),
the Company shall not take any action to withdraw, modify or change
its recommendation with respect to the Offer or to approve or
implement or enter into any agreement to approve or implement such
Superior Proposal.
(c) The Company acknowledges and agrees that during the period ending
five business days after the later of the date of such notification
and the date the Offeror receives a copy of the document evidencing
such Superior Proposal as described in section 4.4(a), the Offeror
shall have the opportunity, but not the obligation, to offer to
amend the terms of the Offer and this Agreement. The Board of
Directors shall review any offer by the Offeror to amend the terms
of the Offer and this Agreement in order to determine, in good
faith and in accordance with its fiduciary duties, whether the
Offeror's offer to amend the Offer and this Agreement would result
in the Acquisition Proposal not being a Superior Proposal compared
to the proposed amendment to the Offer and this Agreement. If the
Board of Directors so determines, the Company and the Offeror shall
amend this Agreement to reflect such offer and the Company shall
not take any action to withdraw, modify or change its
recommendation with respect to the Offer, as amended, or to approve
or implement or enter into any agreement to approve or implement
such Acquisition Proposal. If the Offeror does not offer to amend
the terms of the Offer and this Agreement or the Board of Directors
does not make the determination referred to above, the Company
shall be entitled to terminate this Agreement and enter into an
agreement in respect of the Superior Proposal or withdraw, modify
or change its recommendation concerning the Offer and recommend the
Superior Proposal, as applicable, provided that it shall forthwith
pay to the Offeror the payment contemplated by section 4.1.
(d) The Board of Directors shall promptly reaffirm its recommendation
of the Offer by press release after: (i) any Acquisition Proposal
(which is determined not to be a Superior Proposal) is publicly
announced or made; or (ii) the Board of Directors determines that a
proposed amendment to the terms of the Offer would result in the
Acquisition Proposal not being a Superior Proposal, and the Offeror
has so amended the terms of the Offer.
ARTICLE 5
MUTUAL COVENANTS
5.1 CONSULTATION
The parties shall jointly issue a press release following the
execution of this Agreement relating to the terms of the Offer and this
Agreement. Thereafter, the parties agree to consult with each other in issuing
any subsequent press releases or otherwise making public statements with
respect to the Offer and in making any filings with any federal, provincial or
state governmental or regulatory agency or with any securities exchange with
respect thereto. Subject to the requirements of the Applicable Laws, each
party shall use its commercially reasonable efforts to enable the other party
to review and consent to all such press releases prior to release thereof.
-18-
5.2 FURTHER ASSURANCES
Subject to the terms and conditions herein, the parties agree to
use their respective reasonable commercially reasonable efforts to take, or
cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations, to
consummate the transactions contemplated by this Agreement and the Offer,
including the execution and delivery of such documents as the other party may
reasonably require, and using commercially reasonable efforts to effect all
necessary registrations, filings and submissions requested by governmental
authorities. Each of the Offeror and the Company will, and the Company will
cause its Subsidiary to, use their commercially reasonable efforts (i) to
obtain all necessary waivers, consents and approvals from other parties to
material loan agreements, leases and other contracts or agreements (including,
in particular but without limitation, the agreement of any persons as may be
required pursuant to any material agreement, arrangement or understanding
relating to the Company's operations), (ii) to obtain all necessary consents,
approvals and authorizations as are required to be obtained under any federal,
provincial or foreign law or regulations with respect to this Agreement or the
Offer, (iii) to lift or rescind any injunction or restraining order or other
order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby or by the Offer, and (iv) to fulfil all
conditions and satisfy all provisions of this Agreement and the Offer.
ARTICLE 6
TERMINATION, AMENDMENT & WAIVER
6.1 TERMINATION
This Agreement (other than the provisions of sections 3.3(f),
3.4(c), 4.1, 4.2 and 4.3 which shall survive any such termination) may be
terminated at any time prior to the first date on which the Offeror takes up
and pays for Shares under the Offer:
(a) by agreement in writing executed by the Offeror and the Company;
(b) by the Company at any time by written notice to the Offeror if the
Offeror is in default of any material covenant or obligation under
this Agreement or any representation or warranty of the Offeror in
this Agreement is untrue or incorrect in any material respect, and
such default or inaccuracy is not curable, or if curable, is not
cured by the earlier of the date which is ten business days from
the date of written notice of such breach and the Expiry Time;
(c) by the Offeror at any time by written notice to the Company if the
Company is in default of any material covenant or obligation under
this Agreement or any representation or warranty of the Company in
this Agreement is untrue or incorrect where such inaccuracies in
the representations and warranties, individually or in the
aggregate, would have a Material Adverse Effect on the Company, and
such default or inaccuracy is not curable, or if curable, is not
cured by the earlier of the date which is ten business days from
the date of written notice of such breach and the Expiry Time;
(d) by either party after the 75th day after the date the Offer is
mailed to the Shareholders by written notice to the other party if
the Offeror has not purchased any Shares pursuant to the Offer,
otherwise than as a result of the breach by the party wishing to
terminate this Agreement of any material covenant or obligation
under this Agreement or as a result of any representation or
warranty of such party in this Agreement being untrue or incorrect
in any material respect; provided, however, that if the taking up
and payment by the
-19-
Offeror for Shares deposited under the Offer is delayed by (i) an
injunction or order made by a court or regulatory authority of
competent jurisdiction, or (ii) the Offeror not having obtained any
regulatory waiver, consent or approval which is necessary to permit
the Offeror to take up and pay for the Shares deposited under the
Offer, then, provided that such injunction or order is being
contested or appealed or such regulatory waiver, consent or
approval is being actively sought, as applicable, this Agreement
shall not be terminated by the Company or the Offeror pursuant to
this section 6.1(d) until the earlier of (i) the 90th day after the
date the Offer is mailed to the Shareholders and (ii) the fifth
business day following the date on which such injunction or order
ceases to be in effect or such waiver, consent or approval is
obtained, as applicable; and provided further, however, that this
Agreement shall not be terminated by the Offeror pursuant to this
section 6.1(d) if all of the conditions of the Offer have been
satisfied or waived;
(e) by the Offeror if any condition of the Offer set forth in Schedule
B, other than the Minimum Tender Condition, has not been satisfied
or waived at the Expiry Time (other than as a result of the
Offeror's default hereunder) and the Offeror has not elected to
waive such condition or extend the Offer;
(f) by the Offeror if the Minimum Tender Condition has not been
satisfied at the Expiry Time (other than as a result of the
Offeror's default hereunder) and the Offeror has not elected to
waive such condition;
(g) by the Offeror upon the occurrence of a Fee Event specified in
section 4.1(a);
(h) by the Company pursuant to section 4.4(c);
(i) by the Company if the Offeror does not mail the Offer within the
time contemplated by section 1.1(a) (other than a failure to mail
as a result of a condition in section 1.1(g) not being satisfied);
or
(j) by the Company if:
(i) the terms or conditions of the Offer are amended so as to
conflict in any material respect with the provisions of this
Agreement; or
(ii) the Offer having expired and all of the conditions thereto
having been satisfied or waived, the Offeror has not
purchased or taken up and paid for the Shares deposited and
not withdrawn under the Offer as required under the terms of
the Offer or the Applicable Laws; or
(k) by the Offeror if the conditions in section 1.1(g) are not
satisfied or waived prior to the latest date the Offer is required
to be mailed pursuant to section 1.1(a) other than as a result of
the Offeror's default hereunder.
6.2 EFFECT OF TERMINATION
If this Agreement is terminated as provided in section 6.1 above,
it shall, except for the payment obligations, if any, pursuant to sections
4.1, 4.2 and 4.4 and obligations of confidentiality in sections 3.3(g) and
3.4(c), become void and of no further force and effect and no party shall have
any further liability or obligation to the other party hereunder.
-20-
6.3 AMENDMENT OR WAIVER
This Agreement may be amended, modified or superseded, and any of
the terms, covenants, representations, warranties or conditions hereof may be
waived, but only by written instrument executed by each of the parties hereto;
provided, however, that either of the Company or the Offeror may in its
discretion waive a condition herein which is solely for its benefit without
the consent of the other. No waiver of any nature, in any one or more
instances, shall be deemed or construed as a further or continued waiver of
any condition or any breach of any other term, representation or warranty in
this Agreement.
ARTICLE 7
MISCELLANEOUS
7.1 HEADINGS AND REFERENCES
The division of this Agreement into articles, sections and the
insertion of descriptive headings are for convenience of reference only and do
not control or affect the meaning, interpretation or construction of any
provisions of this Agreement. Unless otherwise specified, references to
articles or sections are to articles and sections of this Agreement.
7.2 NUMBER AND PERSONS
In this Agreement, unless the contrary intention appears, words
importing the singular include the plural and vice versa, and words importing
persons shall include a natural person, firm, trust, partnership, association,
corporation, joint venture or government (including any governmental board,
agency or instrumentality thereof).
7.3 NOTICES
All notices or other communications which are permitted or required
hereunder shall be communicated confidentially and in writing and shall be
sufficient if delivered personally, or sent by confidential facsimile
addressed as follows:
To the Offeror:
PPC Canada Enterprises Corp.
▇▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To PPC:
Pan Pacific Copper Co., Ltd.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇-▇▇-▇▇▇▇▇▇▇▇
21-17 ▇▇▇▇▇▇▇▇▇ ▇-▇▇▇▇▇, ▇▇▇▇▇▇-▇▇,
▇▇▇▇▇ ▇▇▇-▇▇▇▇, ▇▇▇▇▇
Facsimile: ▇▇▇-▇-▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-21-
In each case, with a copy to:
Farris, Vaughan, ▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
2500 - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
To the Company:
Regalito Copper Corp.
▇▇▇▇ - ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP
1200 Waterfront Centre
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇ ▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
7.4 ENTIRE AGREEMENT
This Agreement, together with the Confidentiality Agreement,
supersede all prior agreements, commitments, arrangements or understandings
between the parties hereto with respect to the subject matter hereof and
constitute the entire agreement between the parties with respect to the
subject matters hereof.
7.5 ASSIGNMENT
This Agreement and the rights, interests and obligations hereunder
shall not be assignable by either party without the prior written consent of
the other party.
7.6 EXPENSES
Except as otherwise provided in sections 4.1 and 4.2, all costs and
expenses incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense, whether or not the Offer is consummated. The
Company represents and warrants that, except for Bear, ▇▇▇▇▇▇▇ & Co. Inc. and
ASSET-Chile, no broker, finder or investment banker retained by the Company is
entitled to any brokerage, finder's or other fee or commission, or to the
reimbursement of any of its expenses, in connection with the Offer. The
Offeror acknowledges that the Company has provided the Offeror an opportunity
to review a correct and complete copy of all agreements between the Company
and each of its financial advisors as are in existence as at the date hereof.
The Company covenants not to amend
-22-
the terms of any such agreements relating to the payment of fees and expenses
with respect to the Offer without the prior written approval of the Offeror.
7.7 REMEDIES
The parties hereto agree that irreparable damage would occur in the
event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that the parties shall be entitled to an injunction or
restraining order to remedy or prevent non-compliance or breaches with the
terms of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the Province of British Columbia having jurisdiction;
provided that, subject to the other provisions of this Agreement, such
remedies shall be in addition to, and not in substitution for, any other
remedy to which the parties may be entitled at law or in equity.
7.8 CHOICE OF LAW
This Agreement shall be governed by, construed and interpreted in
accordance with the laws of the Province of British Columbia and the laws of
Canada applicable therein (excluding any conflict of laws rule or principle
which might refer such construction to the laws of another jurisdiction).
7.9 CURRENCY
Except as expressly indicated otherwise, all sums of money referred
to in this Agreement are expressed and shall be payable in United States
dollars.
7.10 SCHEDULES
The following are the Schedules and Exhibit to this Agreement,
which form an integral part hereof:
Schedule "A" - Definitions
Schedule "B" - Conditions of the Offer
Schedule "C" - Representations and Warranties of the Offeror
Schedule "D" - Representations and Warranties of the Company
Schedule "E" - Subsidiary
Schedule "F" - Schedule of Options
Schedule "G" - Form of Indemnity
7.11 THIRD PARTIES
Nothing contained in this Agreement shall create any rights in, or
be deemed to have been executed for the benefit of, any person that is not a
party hereto, or a successor or permitted assign of such a party; provided
however, that the parties hereto specifically acknowledge that the provisions
of section 1.6 are intended to be for the benefit of, and shall be enforceable
by, the employees, officers and directors of the Company and its Subsidiary
affected thereby and their heirs and representatives.
-23-
7.12 NO PERSONAL LIABILITY
(a) No director, officer or employee of the Company shall have any
personal liability to the Offeror under this Agreement.
(b) No director, officer or employee of the Offeror shall have any
personal liability to the Company under this Agreement.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
-24-
7.13 COUNTERPARTS
This Agreement may be executed in any number of counterparts, and
delivered by facsimile or otherwise, and each such counterpart shall be deemed
to be an original instrument but all such counterparts together shall
constitute but one Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed in Tokyo, Japan on their behalf as of the date first written above.
PPC CANADA ENTERPRISES CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇
---------------------------
SIGNED BY PAN PACIFIC COPPER CO., LTD. PAN PACIFIC COPPER CO., LTD.
IN THE PRESENCE OF NIPPON MINING &
METALS CO., LTD.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
--------------------------------- ---------------------------
SIGNED BY PAN PACIFIC COPPER CO., LTD.
IN THE PRESENCE OFMITSUI MINING &
SMELTING CO., LTD.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
REGALITO COPPER CORP.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
-25-
SCHEDULE "A"
TO SUPPORT AGREEMENT
DEFINITIONS
"ACQUISITION PROPOSAL" has the meaning set out in section 3.3(a).
"AFFILIATE" shall have the meaning attributed to it under the BUSINESS
CORPORATIONS ACT (British Columbia).
"AGENCY" means any domestic or foreign government, court or tribunal or
governmental department, agency or other regulatory authority or
administrative agency or commission or any elected or appointed public
official.
"AGREEMENT" means this Agreement including the Schedules hereto.
"APPLICABLE LAWS" means the BUSINESS CORPORATIONS ACT (British Columbia), the
securities legislation of the United States of America, the states thereof and
each province and territory of Canada, the rules, regulations and forms made
or promulgated under any such legislation, and the published policies,
bulletins and notices of the regulatory authorities administering any such
legislation and the rules, regulations, bylaws and policies of the Toronto
Stock Exchange and the American Stock Exchange, as any of the foregoing may be
amended from time to time.
"BOARD OF DIRECTORS" means the board of directors of the Company or a duly
constituted committee thereof.
"BUSINESS DAY" means any day other than a Saturday, Sunday or a day observed
as a holiday in Vancouver, British Columbia or a day on which Canadian
chartered banks in Vancouver, British Columbia are not generally open for
business during normal business hours.
"COMPANY" means Regalito Copper Corp., a corporation existing under the laws
of British Columbia.
"COMPANY BREAK FEE" has the meaning set out in section 4.1.
"COMPANY'S DISCLOSURE DOCUMENTS" means the Company's Management Information
Circular and Form of Proxy dated April 9, 2005, Annual Information Form for
the year ended December 31, 2004 and Management's Discussion and Analysis
contained in the Company's 2004 Annual Report, financial statements contained
in the Company's 2004 Annual Report, and all interim financial statements,
interim Management's Discussion and Analysis and material change reports filed
pursuant to the Applicable Laws since December 31, 2004.
"CONTRACT" means any contract, commitment or understanding (including any
lease, license, loan agreement, guarantee, security, indemnity, indenture or
other instrument), whether written or oral.
"DATA ROOM MATERIALS" means the documents and other information disclosed in
writing to the Offeror by the Company on or prior to the date of this
Agreement as identified in the Disclosure Letter of the Company.
"DIRECTORS' CIRCULAR" means the directors' circular of the Board of Directors
relating to the Offer, as amended from time to time.
A-1
"DISCLOSURE LETTER OF THE COMPANY" means the letter of the Company dated the
date of this Agreement and delivered by the Company to the Offeror and PPC
concurrently herewith.
"EFFECTIVE TIME" has the meaning set out in section 3.1.
"ENCUMBRANCE" means any lien, charge, title retention right, security
interest, pledge, hypothecation or encumbrance of any nature or kind
whatsoever.
"EXPIRY TIME" has the meaning set out in section 1.1(b).
"FEE EVENT" has the meaning set out in section 4.1.
"GAAP" means generally accepted accounting principles in Canada.
"LOSSES" means, in respect of any matter, all claims, demands, proceedings,
losses, damages, liabilities, liabilities for Taxes, deficiencies, costs and
expenses (including, without limitation, all legal and other professional fees
and disbursements, interest, penalties and amounts paid in settlement) arising
directly or indirectly as a consequence of such matter.
"MATERIAL ADVERSE CHANGE" means, (a) any change, effect, event or occurrence
that, individually or in the aggregate, is, or would reasonably be expected to
be, material and adverse to the validity or enforceability of this Agreement,
or (b) with respect to a person, any change, effect, event or occurrence that,
individually or in the aggregate, is, or would reasonably be expected to be,
material and adverse to the business, operations, financial condition, assets
or liabilities (contingent or otherwise) of such person and its subsidiaries,
taken as a whole, other than any change, effect, event or occurrence (i) in or
relating to general political, economic or financial conditions, including in
Canada, the United States or Chile, (ii) in or relating to the state of
securities markets in general, including any reduction in market indices,
(iii) in or relating to currency exchange rates, (iv) in or relating to the
industries in which such person operates in general or the market for copper
in general, (v) reasonably attributable to the announcement of this Agreement
and the transactions contemplated hereby, (vi) in or relating to the trading
price of the Shares, (vii) in or relating to generally accepted accounting
principles or regulatory accounting requirements, or (vii) in or relating to
any laws, bylaws, rules, regulations, orders, ordinances, protocols, codes,
guidelines, policies, notices, directions, judgments or other requirements of
any Agency of general application or any interpretation thereof by any Agency.
"MATERIAL ADVERSE EFFECT" means, (a) any effect of a Material Adverse Change
on the validity or enforceability of this Agreement or (b), with respect to a
person, any effect of a Material Adverse Change on such person.
"OFFER" has the meaning set out in section 1.1(a).
"OFFEROR" means PPC Canada Enterprises Corp., a company existing under the
laws of British Columbia.
"OPTION" means an option to purchase Shares granted by the Company pursuant to
its stock option plan or other employee compensation arrangement.
"OPTIONHOLDER" means a holder of an Option.
"PERSON" includes an individual, corporation, incorporated or unincorporated
association, syndicate or organization, partnership, limited partnership,
limited liability company, joint venture, association, joint stock company,
trust, trustee, executor, administrator or other legal representative or other
entity.
A-2
"PPC" means Pan Pacific Copper Co., Ltd.
"SECOND-STEP TRANSACTION" has the meaning set out in section 1.4(b).
"SECURITIES LAWS" means the Securities Act (British Columbia) and the
equivalent laws in the other provinces of Canada and the securities laws of
the United States of America and the states thereof, and the published rules,
regulations and policies of any Agency administering any such laws, as well as
the rules, regulations, by-laws and policies of the Toronto Stock Exchange and
the American Stock Exchange, in each case as now in effect and as they may be
amended from time to time prior to the Effective Time.
"SHARES" means common shares without par value in the capital of the Company as
constituted on the date hereof.
"SHAREHOLDERS" means the holders of the Shares.
"SUBSIDIARY" means, in relation to a party, a body corporate that is a
subsidiary of such party within the meaning of the BUSINESS CORPORATIONS ACT
(British Columbia) and "SUBSIDIARIES" means, in relation to such party, all of
such bodies corporate and in the case of the Company includes, without
limitation, Minera Lumina Copper Chile S.A.
"SUPERIOR PROPOSAL" has the meaning set out in section 3.3(a).
"TAXES" means all taxes, however denominated, including any interest,
penalties or other additions that may become payable in respect thereof,
imposed by any government or governmental body, which taxes shall include,
without limiting the generality of the foregoing, all income or profits taxes
(including, but not limited to, federal income taxes and provincial income
taxes), capital taxes, payroll and employee withholding taxes, unemployment
insurance, social insurance taxes (including Canada Pension Plan payments),
sales and use taxes, ad valorem taxes, excise taxes, franchise taxes, gross
receipt taxes, business licence taxes, occupation taxes, real and personal
property taxes, stamp taxes, environmental taxes, transfer taxes, workers
compensation, pension assessment and other governmental charges and other
obligations of the same or of a similar nature to any of the foregoing, which
the Company or its Subsidiary is required to pay, withhold or collect.
A-3
SCHEDULE "B"
TO SUPPORT AGREEMENT
CONDITIONS OF THE OFFER
The Offeror shall have the right to withdraw the Offer and not take
up and pay for, or extend the period of time during which the Offer is open
and postpone taking up and paying for, any Shares deposited thereunder if any
of the following conditions are not satisfied or waived by the Offeror at or
prior to the Expiry Time:
(a) there shall have been validly deposited under the Offer and
not withdrawn at the Expiry Time that number of Shares that
constitute not less than 66?% of the outstanding Shares on a
fully diluted basis, excluding the Shares held by the
Offeror and its affiliates (the "Minimum Tender Condition");
(b) all governmental and regulatory approvals, orders, rulings,
exemptions and consents (including, without limitation,
those of any stock exchange or securities or other
regulatory authorities) the failure of which to obtain:
(i) would have a Material Adverse Effect on the Offeror
or the Company, as the case may be, shall have been
obtained on terms and conditions that would not
have a Material Adverse Effect on the Offeror or
the Company; and
(ii) would prevent the Offeror from proceeding with the
Offer or would impose material limitations or
conditions on the purchase by or the sale to the
Offeror of the Shares under the Offer or the right
of the Offeror to own or exercise full rights of
ownership of the Shares or the Offeror's ability to
effect a Second-Step Transaction, shall have been
obtained on terms and conditions that would not
prevent the Offeror from proceeding with the Offer
or that would not impose material limitations or
conditions on the purchase by or the sale to the
Offeror of the Shares under the Offer or the right
of the Offeror to own or exercise full rights of
ownership of the Shares or the Offeror's ability to
effect a Second-Step Transaction,
including, without limiting the generality of the foregoing,
(y) the relevant waiting period in section 123 of the
COMPETITION ACT (Canada) shall have expired and (i) an
advance ruling certificate ("ARC") pursuant to section 102
of the COMPETITION ACT (Canada) shall have been issued by
the Commissioner of Competition (the "COMMISSIONER")
appointed under that Act; or (ii) a "no action" letter
indicating that the Commissioner has determined not to make
an application for an order under section 92 of the
COMPETITION ACT (Canada) shall have been received from the
Commissioner, and any terms and conditions attached to any
such letter would not have a Material Adverse Effect on
either the Offeror or the Company as determined by the
Offeror in its sole judgment, acting reasonably; or (iii) in
the event that no ARC or "no action" letter is issued, there
shall be no threatened or actual application by the
Commissioner for an order under section 92 or 100 of the
COMPETITION ACT (Canada) in respect of the transactions
contemplated hereby which would have a Material Adverse
Effect on either the Offeror or the Company, as determined
by the Offeror in its sole judgment, acting reasonably, and
(z) the waiting period, if any, under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvements Act of 1976, as amended (the "HSR
ACT"), shall have expired or terminated, or Offeror shall
have been
B-1
reasonably satisfied that the transactions contemplated by
this Support Agreement are not subject to the reporting and
notification requirements of the HSR Act;
(c) no act, action, suit or proceeding shall have been
threatened or taken before or by any domestic or foreign
court or tribunal or governmental agency or other regulatory
authority, stock exchange or administrative agency or
commission or by any elected or appointed public official or
private person (including, without limitation, any
individual, corporation, firm, group or other entity) in
Canada, the United States of America or elsewhere, whether
or not having the force of law and no law, regulation or
policy shall have been proposed, enacted, promulgated or
applied:
(i) which has the effect or may have the effect to
cease trade, enjoin, prohibit or impose material
limitations or conditions on the purchase by or the
sale to the Offeror of the Shares under the Offer
or the right of the Offeror to own or exercise full
rights of ownership of the Shares; or
(ii) which, if the Offer were consummated, would have a
Material Adverse Effect on the Company or the
Offeror or impose material limitations or
conditions on the Offeror's ability to effect a
Second-Step Transaction;
(d) there shall not exist any prohibition at law against the
Offeror making the Offer or taking up and paying for any
Shares deposited under the Offer or completing a Second-Step
Transaction;
(e) since the announcement of the Offer, the Company and its
Subsidiary shall not have taken or proposed to take any
action that has not been publicly disclosed prior to
announcement of the Offer, or publicly disclosed that they
intend to take any action prior to the announcement of the
Offer, and the Offeror shall not have otherwise learned of
any previous action taken by the Company or its Subsidiary
which had not been publicly disclosed prior to the
announcement of the Offer, that would have a Material
Adverse Effect on the Company or that would prevent the
Offeror from proceeding with the Offer or that would impose
material limitations or conditions on the purchase by or the
sale to the Offeror of the Shares under the Offer or the
right of the Offeror to own or exercise full rights of
ownership of the Shares or the Offeror's ability to effect a
Second-Step Transaction;
(f) there shall not have occurred any Material Adverse Effect on
the Company;
(g) all of the Options shall have been either exercised or
otherwise terminated in accordance with the terms of the
Company's stock option plan or this Agreement;
(h) representations and warranties of the Company qualified by
references to materiality or to Material Adverse Effect
shall be true and correct, and all representations and
warranties not qualified by materiality or to Material
Adverse Effect shall be true and correct in all material
respects, and in either case, as if made on and as of the
date of the Effective Time (except for representations and
warranties that speak as of a specific date which shall
speak of that date only) and the Offeror shall have received
a certificate of the chief executive officer and chief
financial officer of the Company (in each case without
personal liability) addressed to the Offeror and dated as of
the date of the Effective Time confirming the same;
B-2
(i) the Company shall have complied in all material respects
with all covenants that are to be complied with at or before
the date of the Effective Time, and the Offeror shall have
received a certificate of the chief executive officer and
chief financial officers of the Company (in each case
without personal liability) addressed to the Offeror and
dated as of the date of the Effective Time confirming the
same;
(j) the Offeror shall have received a legal opinion from ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇-Cotapos as to the current lawful status of the
Company's Subsidiary's title, according to the laws of
Chile, to (i) the mineral claims comprising the Regalito
copper property in Chile (the "REGALITO PROPERTY"), (ii) the
mineral claims comprising the Nemesis copper property in
Chile, (iii) the surface rights substantially covering the
Regalito Property, (iv) the water rights of 439.5 lts./sec.
in aggregate, along with other water rights the Company owns
in connection with the Regalito Property and (v) such other
ancillary property rights such as easements or rights of way
as the Company owns in connection with the Regalito
Property, in form and substance satisfactory to the Offeror,
acting reasonably; and
(k) this Agreement shall not have been terminated by the Offeror
or the Company in accordance with its terms.
B-3
SCHEDULE "C"
TO SUPPORT AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE OFFEROR
(a) ORGANIZATION AND QUALIFICATION. The Offeror has been duly
incorporated and is validly existing as a company under the laws of
British Columbia and has full corporate power and authority to own
its assets and conduct its business as now owned and conducted.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. The Offeror has the requisite
corporate power and authority to enter into this Agreement and to
perform its obligations hereunder. The execution and delivery of this
Agreement by the Offeror and the consummation by the Offeror of the
transactions contemplated by this Agreement, including, without
limitation, the making of the Offer and the taking up of and payment
for Shares thereunder, have been duly authorized by all requisite
corporate action on the part of the Offeror and no other corporate
proceedings on the part of the Offeror are necessary to authorize
this Agreement and the transactions contemplated hereby, including,
without limitation, the making of the Offer and the taking up of and
payment for Shares thereunder. This Agreement has been duly executed
and delivered by the Offeror and constitutes a legal, valid and
binding obligation of the Offeror, enforceable against the Offeror in
accordance with its terms, subject to the availability of equitable
remedies and the enforcement of creditors' rights generally. The
execution and delivery by the Offeror of this Agreement and the
performance by it of its obligations hereunder, including, without
limitation, the making of the Offer and the taking up of and payment
for Shares thereunder, will not result in a violation or breach of
any provision of its constating documents or any resolutions of its
directors and shareholders or a material violation or breach of any
applicable law, or, to its knowledge, any regulation, order, judgment
or decree (subject to obtaining the consents referred to below) or
any agreement, arrangement or understanding to which it or its
Subsidiary is a party or by which its or any of their properties are
bound.
(c) APPROVALS. Other than in connection with or in compliance with the
provisions of the COMPETITION ACT (Canada), the HSR Act (if
applicable) and the Applicable Laws, no authorization, consent or
approval of, or filing with, any public body, court or authority is
necessary for the consummation by the Offeror of its obligations
under this Agreement, including, without limitation, the making of
the Offer and the taking up of and payment for Shares thereunder,
except for such authorizations, consents, approvals and filings the
failure to obtain or make which would not, individually or in the
aggregate, prevent or materially delay the consummation of the
transactions contemplated by this Agreement.
(d) ACTIONS. There are no claims, actions, proceedings, suits,
investigations or reviews pending or, to the best of the knowledge of
the Offeror, threatened against the Offeror or its Subsidiary or any
of its or their properties or assets by or before any domestic or
foreign government, court or tribunal or government department,
agency or other regulatory authority or administrative agency or
commission or any elected or appointed public official or existing
facts or conditions which may reasonably be expected, individually or
in the aggregate, to be a proper basis for claims, actions,
proceedings, suits, investigations or reviews that, either
individually or in the aggregate, could prevent or hinder the
consummation of the transactions contemplated hereby, including,
without limitation, the making of the Offer and the taking up of and
payment for Shares thereunder.
(e) FINANCING. The Offeror has made adequate arrangements to ensure that
the required funds are available to effect payment in full for all of
the Shares to be acquired pursuant to the Offer.
C-1
(f) INFORMATION IN THE OFFER DOCUMENTS. The Offer Documents will comply
in all material respects with the provisions of applicable Securities
Laws and, on the date first published or sent or given to the
Shareholders, will not contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading, except that Offeror makes no representation or warranty
with respect to information furnished by the Company expressly for
inclusion in the Offer Documents.
(g) COMPLIANCE WITH APPLICABLE LAWS. To the best of its knowledge, the
Offeror has complied with all Applicable Laws in connection with this
Agreement and the transactions contemplated hereby.
C-3
SCHEDULE "D"
TO SUPPORT AGREEMENT
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
(a) ORGANIZATION AND QUALIFICATION. The Company is validly existing as a
company under the BUSINESS CORPORATIONS ACT (British Columbia) and
has full corporate power and authority to own its property and
conduct its businesses as currently owned and conducted. The Company
and its Subsidiary are duly qualified to carry on business, and are
in good-standing, in each jurisdiction in which the character of
their properties, owned or leased, or the nature of their activities
makes such qualification necessary, except where the failure to be so
qualified or in good standing will not have a Material Adverse Effect
on the Company.
(b) CAPITALIZATION. The authorized capital of the Company consists of an
unlimited number of Shares and as at 12:00 hours, Tokyo time, on
March 14, 2006: (i) 21,922,442 Shares are issued and outstanding as
fully paid and non-assessable shares in the capital of the Company;
and (ii) there are outstanding Options issued under the Company's
stock option plan (at the prices and to the persons set out in
Schedule "F" hereto), providing for the issuance of 950,000 Shares
upon the exercise thereof. Except for the rights of the parties and
the securityholders of the Company under this Agreement and the
transactions contemplated herein, the Options described in Schedule
"F" and except as disclosed in the Data Room Materials, there are no
options, warrants, conversion privileges, calls or other rights,
agreements, arrangements, commitments or obligations of the Company
to issue, sell or acquire any securities of the Company or securities
or obligations of any kind convertible into or exchangeable for any
securities of the Company or any other person, nor are there
outstanding any stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based upon the share
price, book value, income or any other attribute of the Company.
(c) SUBSIDIARY. The only Subsidiary of the Company and the jurisdiction
of its incorporation is set out in Schedule "E" hereto. Such
Subsidiary has been duly formed and organized and is validly existing
under applicable law and has full power to own its property and
conduct its businesses as currently owned and conducted. All of the
outstanding shares and other ownership interests of the Subsidiary
described in such Exhibit are validly issued, fully paid and
non-assessable and all securities and other ownership interests owned
directly or indirectly by the Company are owned free and clear of all
Encumbrances, except as set out in the Company's Disclosure Documents
or disclosed in the Data Room Materials. There are no options,
warrants, conversion privileges or other rights, agreements,
arrangements or commitments obligating the Company or its Subsidiary
to issue, sell or acquire any securities of that Subsidiary or
securities or obligations of any kind convertible into or
exchangeable for securities or other ownership interests of that
Subsidiary or any other person. There are no outstanding stock
appreciation rights, equity or similar rights, agreements,
arrangements or commitments based on the book value, income or any
other attribute of the Subsidiary.
(d) AUTHORITY RELATIVE TO THIS AGREEMENT. The Company has the requisite
corporate power and authority to enter into this Agreement and all
documents and agreements contemplated herein to which it is or will
be a party and to perform its obligations hereunder and thereunder.
The execution and delivery of this Agreement by the Company has been
duly authorized by the Board of Directors and no other corporate
proceedings on the part of the Company are necessary to authorize
this Agreement and the transactions contemplated hereunder. This
agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of the Company
enforceable by the Offeror against the Company in accordance with its
terms, subject to the availability of equitable remedies and the
enforcement of creditors' rights generally.
D-1
Except as disclosed in the Data Room Materials, the execution and
delivery by the Company of this Agreement and performance by it of
its obligations hereunder and the transactions contemplated hereby,
including, but not limited to, the making of the Offer by the
Offeror, the taking up and payment for Shares deposited thereunder
and any subsequent Second-Step Transaction carried out and
consummated in accordance with the Applicable Laws, will not result
in:
(i) a violation or breach of any provision of or constitute a
default (or an event that with notice or lapse of time or
both would become a default) under, or give to others any
rights of termination, amendment, shot-gun, acceleration or
cancellation of or under,
(1) its constating documents or any resolution of its
directors or shareholders or those of its
Subsidiary;
(2) any applicable law or, to its knowledge, any
regulation, order, judgment or decree (subject to
obtaining the authorizations, consents and
approvals referred to in paragraph (e)); or
(3) any agreement, arrangement or understanding to
which it or its Subsidiary is a party or by which
any of them or their properties is bound or
affected that, individually or in the aggregate,
could reasonably be expected to result in a
Material Adverse Effect on the Company;
(ii) the imposition of any Encumbrance upon any of its assets or
the assets of its Subsidiary that, individually or in the
aggregate, could reasonably be expected to result in a
Material Adverse Effect on the Company; or
(iii) the obligation on the Company to make any "change of
control" payment or other similar obligation.
(e) APPROVALS. Other than in connection with or in compliance with the
provisions of the COMPETITION ACT (Canada), Investment Canada Act,
the HSR Act (if applicable) and the Applicable Laws, no
authorization, consent or approval of, or filing with, any public
body, court or authority is necessary for the consummation by the
Company of its obligations under this Agreement, except for such
authorizations, consents, approvals and filings the failure by any
party to obtain or make which would not, individually or in the
aggregate, prevent or materially delay the consummation of the
transactions contemplated hereunder.
(f) FINANCIAL STATEMENTS AND DISCLOSURE DOCUMENTS. The audited financial
statements of the Company prepared on a consolidated basis, for and
as at the year ended December 31, 2004, have been prepared in
accordance with generally accepted accounting principles including
those recommended in the handbook of the Canadian Institute of
Chartered Accountants applied on a consistent basis and fairly
present the consolidated financial position of the Company and its
Subsidiary as at the respective dates thereof and the consolidated
results of their operations and the changes in their financial
position for the periods indicated therein. The Company has filed
with the appropriate Agency true and complete copies of all forms,
reports, schedules, statements and other documents required to be
filed by it under the Applicable Laws. The Company's Disclosure
Documents were, as of their respective dates, in compliance in all
material respects with the Applicable Laws and did not, when filed,
contain a "misrepresentation" within the meaning of the Applicable
Laws and complied in all material respects with the requirements of
Applicable Laws and make full disclosure of and provision for all
material actual and contingent liabilities.
D-2
(g) ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 2004, except
as contemplated by this Agreement and except as has been disclosed in
the Company's Disclosure Documents filed prior to the date of this
Agreement or disclosed in the Data Room Materials:
(i) each of the Company and its Subsidiary has conducted its
business only in the ordinary course of business consistent
with past practice;
(ii) no liability or obligation of any nature (whether absolute,
accrued, contingent or otherwise) material to the Company
and its Subsidiary, taken as a whole, has been incurred
other than in the ordinary course of business consistent
with past practice;
(iii) there has not been any Material Adverse Change with respect
to the Company; and
(iv) as of the date of this Agreement, there are no material
change reports filed on a confidential basis with any Agency
which remain confidential.
(h) DISCLOSURE. The Company has not failed to disclose in the Company's
Disclosure Documents or to the Offeror in writing on or prior to the
date of this Agreement, any information regarding any event,
circumstance or action taken or failed to be taken since December 31,
2004 within the knowledge of the Company and not within the knowledge
of the Offeror as at the date of this Agreement which could
reasonably be expected to have a Material Adverse Effect on the
Company. Without limitation, except as disclosed in writing to the
offeror on or prior to the date of this Agreement and except as set
forth in the Company's Disclosure Documents that have been filed
prior to the date of this Agreement pursuant to the Applicable Laws:
(i) none of the Company nor its Subsidiary has become a party to
any written or oral agreement providing for severance or
termination payments to, or any employment agreement with,
any person;
(ii) except as contemplated pursuant to this Agreement, none of
the Company nor its Subsidiary has incurred any liabilities
or obligations of any nature (whether absolute, accrued,
contingent or otherwise) that, either individually or in the
aggregate, are material to the Company and its Subsidiary,
taken as a whole, except those incurred in the ordinary
course of business and consistent with past practices;
(iii) there have been no claims, actions, proceedings, suits,
investigations or reviews and, to the best of the Company's
knowledge, no facts or conditions have arisen which may
reasonably be expected, individually or in the aggregate, to
be a proper basis for claims, actions, proceedings, suits,
investigations or reviews, commenced or, to the best of the
knowledge of the Company, threatened against the Company or
its Subsidiary or any of their properties by or before any
Agency that, either individually or in the aggregate, if
adversely determined would have a Material Adverse Effect on
the Company nor is the Company aware of any basis for any
such claim, action, proceeding, suit, investigation or
review; and
(iv) none of the Company nor its Subsidiary nor any of their
properties has been the subject of a judgement, order, writ,
injunction or decree that has had, or could reasonably be
expected to have, a Material Adverse Effect on the Company.
(i) COMPLIANCE. Except for any conflicts, defaults or violations that
could not, individually or in the aggregate (taking into account the
impact of any cross defaults), reasonably be expected to have a
D-3
Material Adverse Effect on the Company, none of the Company nor its
Subsidiary is in conflict with, or in default (including cross
defaults) under or in violation of:
(i) its constating documents or any resolutions of its directors
or shareholders;
(ii) any law, rule, regulation, order, permit, judgement or
decree applicable to it or by which any of its properties is
bound or affected; or
(iii) any agreement, arrangement or understanding to which it is a
party or by which any of its properties is bound or
affected.
(j) PROPERTY. Each of the Company and its Subsidiary has good and
sufficient right and title to or is entitled to the benefits of all
of its properties and assets (real and personal, tangible and
intangible, including leasehold interests) including all the
properties and assets reflected in the balance sheet forming part of
the financial statements referred to above, except as indicated in
the notes thereto, together with all additions thereto and less all
dispositions thereof in the ordinary course of business consistent
with past practice, and such properties and assets are not subject to
any Encumbrance or defect in title of any kind except those
Encumbrances expressly permitted by the terms of any financing or
security agreement to which the Company or its Subsidiary is a party
or as is reflected in the balance sheets forming part of such
financial statements and in the notes thereto and except where the
failure to have such title, or the existence of such Encumbrance or
defects in title, individually or in the aggregate, would not have a
Material Adverse Effect on the Company. Each of the Company and its
Subsidiary may enter into and upon and hold and enjoy the properties
owned or leased by them for the residue of such properties'
respective terms for their own use and benefit without any lawful
interruption of or by any other person.
(k) MINERAL RESERVES AND RESOURCES. The proven and probable mineral
reserves and mineral resources for various mineral properties in
which the Company or its Subsidiary holds an interest, as set forth
in the Company's Disclosure Documents, were prepared in accordance
with sound mining, engineering, geoscience and other applicable
industry standards and practices, and in accordance with requirements
of National Instrument 43-101, STANDARDS OF DISCLOSURE FOR MINERAL
PROJECTS and were, at such date, true and correct in all material
respects.
(l) TAX MATTERS. Each of the Company and its Subsidiary has filed all tax
returns required to be filed by it (and such returns are true,
complete and correct in all material respects), has paid in full on a
timely basis all Taxes that are imposed under any laws or by any
relevant taxing authority that are due and payable and has made
adequate provision in the financial statements referred to above for
the payment of all Taxes not then due and payable including all Taxes
shown to be payable on the returns or on subsequent assessments with
respect thereto and no other Taxes are payable by the Company or its
Subsidiary with respect to the items or time periods covered by the
returns. Each of the Company and its Subsidiary has made adequate and
timely payment of instalments of the Taxes for the taxation period
ending on or immediately before the Expiry Time. With respect to any
taxation period up to and including the Expiry Time for which tax
returns have not yet been filed or for which Taxes are not yet due
and payable, each of the Company and its Subsidiary, has only
incurred liabilities for Taxes in the ordinary course of its business
consistent with past practice. Except as disclosed in the Data Room
Materials, there are no outstanding waivers of any limitation periods
or agreements providing for an extension of time for the filing of
any tax return or the payment of any Taxes. No deficiencies exist or
have been asserted with respect to Taxes of the Company or its
Subsidiary, neither the Company nor any Subsidiary is a party to any
action or proceeding or assessment or collection of Taxes, nor has
any such event been asserted or threatened against the Company nor
its Subsidiary or any of their respective assets and, to the
D-4
best of the Company's knowledge, as of the date of this Agreement
none of the Company or its Subsidiary is subject to any assessments,
penalties or levies with respect to Taxes that will result in any
liability on its part in respect of any period ending on or before
the Expiry Time in excess of the amount provided for in the financial
statements referred to above. Except as disclosed in the Data Room
Materials on or prior to the date of this Agreement, to the knowledge
of the Company and its Subsidiary, no audit, investigation,
assessment or reassessment of Taxes is reasonably anticipated or
imminent.
(m) ENVIRONMENTAL LAWS. Except as disclosed in the Company's Disclosure
Documents or disclosed in the Data Room Materials, the Company and
its Subsidiary (and their respective businesses and operations):
(i) are in compliance with all applicable environmental laws and
environmental permits in Canada and in other applicable
foreign jurisdictions with environmental regulatory
jurisdiction over the Company or its Subsidiary; and
(ii) have obtained all environmental permits that are required to
carry on their respective businesses and operations under
all applicable environmental laws;
where non-compliance with such laws or permits or failure to obtain
those permits could reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect on the Company.
(n) ENVIRONMENTAL COMPLIANCE. Except as disclosed in the Company's
Disclosure Documents that have been filed prior to the date of this
Agreement pursuant to the Applicable Laws or disclosed in the Data
Room Materials, prior to the date of this Agreement none of the
Company nor its Subsidiary has, with respect to its businesses and
operations, at any time received any written notice, written notice
of default, order, summons, or notice of judgment or commencement of
proceedings of any nature related to any material breach, liability
or remedial action (or alleged material breach, liability or remedial
action) arising under the environmental laws and environmental
permits that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company, and neither
of the Company nor its Subsidiary have (with respect to such
businesses and operations) at any time given any written undertakings
with respect to remedying any breach of, or liability under,
environmental laws that have not been duly performed, which breach or
liability could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect on the Company.
(o) DETERMINATIONS BY THE BOARD. The Board of Directors (after receiving
advice from its legal and financial advisors) has unanimously (other
than directors abstaining from voting by reason of conflict of
interest or financial interest) determined at its meeting held in
Vancouver, British Columbia, on March 13, 2006 that the Offer and the
performance by the Company of its obligations under this Agreement
are in the best interests of the Company and its Shareholders.
(p) SUBSIDIARY. The Company is, and, at the Effective Time, will be, the
owner of all of the shares of its Subsidiary specified in Schedule
"E", as the sole legal and beneficial owner, free and clear of all
Encumbrances, except as set out in the Company's Disclosure Documents
or disclosed in the Data Room Materials.
(q) BOOKS AND RECORDS. The corporate records and minute books of the
Company and its Subsidiary have been maintained substantially in
accordance with all Applicable Laws and are complete and accurate in
all material respects.
D-5
(r) INSURANCE. Policies of insurance in force as of the date hereof
naming the Company and its Subsidiary as insureds adequately cover
all risk reasonably and prudently foreseeable in the operation and
conduct of their respective businesses for which, having regard to
the nature of such risk and the relative cost of obtaining insurance,
it is in the opinion of the Company, acting reasonably, prudent to
seek insurance rather than provide for self insurance. All such
policies of insurance shall remain in force and effect and shall not
be cancelled or otherwise terminated as a result of the transactions
contemplated hereby.
(s) EMPLOYMENT AGREEMENTS. Except as disclosed in the Data Room
Materials, neither the Company nor any Subsidiary has any written or
oral employment, service or consulting agreement relating to any one
or more individuals, except for oral employment agreements which are
of indefinite term and without any special arrangements or
commitments with respect to the continuation of employment or payment
of any particular amount upon termination of employment or change of
control of the Company that, in the aggregate, exceed the maximum
amount contemplated for such payments in section 1.4(c).
(t) PENSION AND EMPLOYEE BENEFITS. Except as disclosed in the Data Room
Materials, neither the Company nor any Subsidiary has, or is subject
to, any present or future obligation or liability under, any pension
plan, deferred compensation plan, retirement income plan, stock
option or stock purchase plan, profit sharing plan, bonus plan or
policy, employee group insurance plan, program policy or practice,
formal or informal, with respect to its employees.
(u) MATERIAL AGREEMENTS. Other than as referred to in the Company's
Disclosure Documents there are (i) no agreements to which the Company
or its Subsidiary is bound or (ii) licences, leases, permits,
authorities and permissions held by the Company or its Subsidiary,
which are material to the conduct of the Company's business or the
business of its Subsidiary that were not disclosed to the Offeror in
the Data Room Materials. Except as disclosed in writing to the
Offeror, no approval or consent of any person is needed in order that
any material agreements or licences of the Company continue in full
force and effect following consummation of the transactions
contemplated hereby. All material contracts constitute valid and
binding obligations of the Company or its Subsidiary and the other
parties to those contracts and licences enforceable by the Company or
its Subsidiary against those other parties in accordance with their
respective terms (subject to bankruptcy, insolvency, fraudulent
transfer and similar laws of general applicability relating to or
affecting creditor's rights and to general equity principles) and are
in full force and effect. There is no pending or, to the knowledge of
the Company or its Subsidiary, any threatened cancellation or
termination, existing default, or event, condition or occurrence
which, after notice or lapse of time, or both, would constitute a
default of or under any contract or licence to which the Company or
its Subsidiary is a party or otherwise bound, including all material
agreements and licences of the Company, which would have a Material
Adverse Effect on the Company.
(v) COMPLIANCE WITH APPLICABLE LAWS. To the best of its knowledge, the
Company has complied with all Applicable Laws in connection with this
Agreement and the transactions contemplated hereby.
(w) NON-ARM'S LENGTH AGREEMENTS. Other than:
(i) as referred to in the Company's Disclosure Documents; or
(ii) as set forth in a list provided to the Offeror in writing,
and copies of which were provided to the Offeror,
D-6
there are no agreements entered into by the Company or its Subsidiary
with any person (other than the Company or its Subsidiary) that is not
at "arm's length" with the Company (within the meaning of that
expression in the INCOME TAX ACT (Canada).
(x) BROKERS AND FINDERS; ADVISORY FEES. No broker, investment banker,
financial advisor or other person, other than the Advisor and
ASSET-Chile, the fees and expenses of which will be paid by the
Company, is entitled to any broker's, finder's or financial advisor's
fee based upon arrangements made by or on behalf of the Company in
respect of the Offer. The Data Room Materials contain true and
complete copies of all agreements under which any such fees or
expenses are payable and all indemnification and other agreement
related to the engagement of the persons to who such fees are
payable.
(y) EXEMPTION FROM US TENDER OFFER RULES. To the best of the Company's
knowledge, the Offer contemplated by this Agreement may be made by
the Offeror pursuant to Regulation 14d-1(b) under the U.S. Securities
Exchange Act of 1934, as amended, applicable to tender offers made
under the U.S.-Canadian multi-jurisdictional disclosure system.
D-7
SCHEDULE "E"
TO SUPPORT AGREEMENT
SUBSIDIARY
JURISDICTION OF NUMBER AND PERCENTAGE OWNERSHIP OF
SUBSIDIARY INCORPORATION CLASS OF SHARES VOTING AND EQUITY SHARES
---------- ------------- --------------- ------------------------
Minera Lumina Copper Chile S.A. Chile 12,237,989 99.99%
nominative shares
E-1
SCHEDULE "F"
TO SUPPORT AGREEMENT
SCHEDULE OF OPTIONS
NUMBER OF EXERCISE
NAME OF HOLDER EXPIRY DATE SHARES PRICE
-------------- ----------- ------ -----
(CDN$)
VESTED UNVESTED
F-1
SCHEDULE "G"
TO SUPPORT AGREEMENT
FORM OF INDEMNITY
THIS INDEMNITY AGREEMENT made as of the day of _____________ is
BETWEEN:
REGALITO COPPER CORP., a corporation formed under the laws of
British Columbia
(the "Parent Company")
AND:
[ ]
(the "Appointee")
WHEREAS:
A. The Appointee has, at the request of the Parent Company, agreed to
act as a director, officer, or member of the management committee or in a
similar capacity in respect of the Parent Company and(or) a corporation, joint
venture or partnership in which the Parent Company has an ownership interest.
B. The Appointee is willing to act as set out in Recital A hereof on
the condition that the Parent Company enter into this indemnity.
NOW THEREFORE in consideration of the Appointee consenting to act
as set out in Recital A hereof and for other good and valuable consideration,
the receipt and sufficiency of which is acknowledged by the Parent Company,
the Parent Company agrees with the Appointee as follows:
1. INDEMNITY
1.1 GENERAL SCOPE: The Parent Company shall indemnify the Appointee and
his or her heirs, executors, administrators and personal representatives
(collectively the "Indemnitees" and individually an "Indemnitee") for all
costs, charges, expenses, fees, liabilities or obligations imposed under or
incurred by the Indemnitees at law, in equity or by, pursuant to, or under,
any statute, law or regulation ("Liability") in relation to any claim, action,
proceeding, investigation, or order whether civil, criminal or administrative
(collectively or individually a "Claim") arising as a result of or in
connection with the Appointee acting as a director, officer, member of the
management committee or in any similar capacity in respect of the Parent
Company and(or) any corporation, joint venture, partnership or other
organization in which the Parent Company has an ownership interest either
directly or indirectly through one or more corporations, partnerships, joint
ventures or other organizations and, including, without limitation, legal fees
and disbursements and all other costs of investigation and defence incurred by
the Indemnitees or any of them in relation to a Claim, whether or not any
action or proceeding is commenced, and all amounts paid or payable by the
G-1
Indemnitees or any of them to settle a Claim or to satisfy a judgment,
including, without limitation, the payment of interest and costs, or otherwise
to discharge a Liability imposed or incurred.
1.2 ABSOLUTE LIABILITY: Without limiting the generality of paragraph
1.1, the Parent Company shall indemnify the Indemnitees against any Liability
in relation to a Claim which is statutorily imposed upon the Appointee,
regardless of the Appointee's conduct, and whether or not the Appointee is at
fault.
1.3 NEGLIGENCE AND OTHER TORTIOUS CONDUCT: Without limiting the
generality of paragraph 1.1, the Parent Company shall indemnify the
Indemnitees against any Liability in relation to a Claim arising from the
negligent or intentionally tortious conduct of the Appointee, but shall not
apply in the event of fraud or illegal conduct directed for personal benefit
against the Parent Company or subsidiaries.
1.4 APPLICABLE LAW: Notwithstanding any other provision of this
Indemnity Agreement, the Parent Company is not obligated to make a payment
that is prohibited by applicable law.
1.5 ACTUAL PAYMENT: The Parent Company shall pay all amounts due to an
Indemnitee hereunder forthwith upon demand by the Indemnitee.
2. TAXABLE BENEFITS
The Parent Company shall gross up any indemnity payment made
pursuant to this Indemnity Agreement by the amount of any income tax payable
by an Indemnitee in respect of that payment.
3. ENFORCEMENT COSTS
3.1 APPLICATION TO COURT: If any payment by the Parent Company under
Section 1 first requires the approval of any court, the Parent Company at its
own expense and in good faith will promptly take proceedings to obtain that
approval. The Parent Company shall indemnify the Indemnitees for the amount of
all costs incurred by any or all of them in obtaining any court approval
required to enable or require the Parent Company to make a payment under this
Indemnity Agreement or to enforce this Indemnity Agreement, including without
limitation all legal fees and disbursements.
3.2 INDEPENDENT COUNSEL: The Indemnitees may retain their own
independent legal counsel to represent them in relation to a Claim and the
cost of that representation shall be considered a Liability to which this
Indemnity Agreement also applies and, notwithstanding any dispute in
connection with this Indemnity Agreement, Parent Company shall directly pay
any account rendered by such independent legal counsel when so rendered,
including any reasonable retainer requested by such independent legal counsel.
4. APPOINTEE CEASING TO ACT
The Appointee may resign at any time. The obligations of the Parent
Company hereunder shall continue after and are not affected in any way by the
Appointee ceasing to act whether by resignation, removal, death, incapacity,
disqualification under applicable law or otherwise.
G-2
5. CONTINUING INDEMNITY
The obligations of the Parent Company under this Indemnity
Agreement are not diminished or in any way affected by:
5.1 SALARY/COMPENSATION: Payment by the Parent Company or by any person
affiliated with or otherwise related to the Parent Company to the Appointee of
director's fees or any salary, wages or other compensation;
5.2 INTERESTED CONTRACTS: Payment by the Parent Company or by any
person affiliated with or otherwise related to the Parent Company to the
Appointee or to any firm of which the Appointee is a partner, associate,
director, officer or employee, of any fees for services rendered; or
5.3 D & O INSURANCE: Any directors' or officers' liability insurance or
other indemnity placed by or for the benefit of the Appointee by the
Appointee, the Parent Company or any entity related to the Parent Company.
6. SEVERABILITY
If a provision of this Indemnity Agreement is wholly or partially
invalid, this Indemnity Agreement will be interpreted as if the invalid
provision, or part thereof, had not been a part of this Indemnity Agreement.
7. ENUREMENT
This Indemnity Agreement enures to the benefit of the Appointee and
his or her heirs, executors, administrators and personal representatives. This
Indemnity Agreement is binding upon the Parent Company and its successors and
assigns.
8. CHOICE OF LAW
This Indemnity Agreement shall be governed by, construed and
interpreted in accordance with the laws of the Province of British Columbia
and the laws of Canada applicable therein (excluding any conflict of laws
rules or principle which might refer such construction to the laws of another
jurisdiction).
IN WITNESS WHEREOF this Indemnity Agreement has been executed by
the Parent Company and the Appointee.
REGALITO COPPER CORP.
___________________________________
By:
___________________________________
APPOINTEE
G-3