Exhibit
99.3
MOUNTAIN
PROVINCE DIAMONDS INC.
▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Dated
March 5, 2018
DELIVERED
BY EMAIL
▇▇▇▇▇▇▇
Diamonds Inc.
▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Attention:
▇▇▇▇ ▇▇▇▇▇, President and CEO
Re:
Amendment to Arrangement Agreement
Dear
Sirs:
We
refer to the arrangement agreement between Mountain Province Diamonds Inc. ("Mountain Province") and ▇▇▇▇▇▇▇
Diamonds Inc. ("Kennady") dated January 28, 2018 (the "Arrangement Agreement"), a copy of which
is attached to this letter as Schedule "A".
Kennady
and Mountain Province hereby agree to amend the Arrangement Agreement as follows:
| 1. |
to delete, in the definition of "Mailing
Deadline" (Article 1), the reference to "March 7, 2018" and replace
it with "March 20, 2018". |
| |
|
| 2. |
to delete,
in the definition of "Meeting Deadline" (Article 1),
the reference to "April 6, 2018" and replace it with "April 10, 2018". |
| 3. | to
delete, in section 7.4(a)(iii), the second last word of the clause ("Mountain")
and replace it with "Kennady". |
Subject
to the foregoing, all other provisions of the Arrangement Agreement shall continue in full force and effect. This amending agreement
shall be governed by and construed in accordance with the laws of the Province of Ontario and the federal laws of Canada applicable
therein, and shall be deemed to be incorporated within the Arrangement Agreement. This amending agreement may be executed in several
counterparts (by original, facsimile, pdf or other electronic signature), each of which when so executed shall be deemed to be
an original and each of such counterparts, if executed by each of Kennady and Mountain Province, shall constitute a valid and
enforceable agreement among the parties.
If
you agree with the foregoing, please countersign this letter as indicated below.
Yours
truly,
| Per: |
(signed)
"▇▇▇▇▇ ▇▇▇▇▇▇▇" |
|
| |
▇▇▇▇▇
▇▇▇▇▇▇▇ |
|
| |
Interim
President and CEO |
|
Acknowledged
and agreed to by ▇▇▇▇▇▇▇ Diamonds Inc. effective as of the 5th day of March,
2018.
| Per: |
(signed)
"▇▇▇▇ ▇▇▇▇▇" |
|
| |
▇▇▇▇ ▇▇▇▇▇ |
|
| |
President and CEO |
|
Schedule
"A"
Arrangement
Agreement
See attached.
MOUNTAIN
PROVINCE DIAMONDS INC.
AND
▇▇▇▇▇▇▇
DIAMONDS INC.
DATED
JANUARY 28, 2018
TABLE
OF CONTENTS
| Article 1 INTERPRETATION |
5 |
| 1.1 |
Definitions |
5 |
| 1.2 |
Interpretation Not Affected by Headings |
21 |
| 1.3 |
Number and Gender |
21 |
| 1.4 |
Date for Any Action |
21 |
| 1.5 |
Accounting Matters |
21 |
| 1.6 |
Currency |
21 |
| 1.7 |
Knowledge |
22 |
| 1.8 |
Schedules |
22 |
| Article 2 THE KENNADY ARRANGEMENT |
22 |
| 2.1 |
Kennady Arrangement |
22 |
| 2.2 |
Kennady Interim Order |
22 |
| 2.3 |
Kennady Meeting |
23 |
| 2.4 |
Mountain Meeting |
25 |
| 2.5 |
Joint Circular |
25 |
| 2.6 |
Preparation of Filings |
27 |
| 2.7 |
Kennady Final Order. |
27 |
| 2.8 |
Court Proceedings |
28 |
| 2.9 |
Kennady Articles of Arrangement and Effective Date |
28 |
| 2.10 |
Payment of Consideration |
29 |
| 2.11 |
Announcement and Shareholder Communications |
29 |
| 2.12 |
Withholding Taxes |
29 |
| 2.13 |
U.S. Securities Law Matters |
30 |
| Article 3 REPRESENTATIONS AND WARRANTIES OF KENNADY. |
31 |
| 3.1 |
Representations and Warranties |
31 |
| 3.2 |
Survival of Representations and Warranties |
43 |
| Article 4 REPRESENTATIONS AND WARRANTIES OF MOUNTAIN |
43 |
| 4.1 |
Representations and Warranties |
43 |
| 4.2 |
Survival of Representations and Warranties |
56 |
| Article 5 COVENANTS |
57 |
| 5.1 |
Covenants of Kennady Regarding the Conduct of Business |
57 |
| 5.2 |
Covenants of Kennady Relating to the Arrangement |
61 |
| 5.3 |
Covenants of Mountain Regarding the Conduct of Business |
62 |
| 5.4 |
Covenants of Mountain Relating to the Arrangements |
65 |
| 5.5 |
Employee and Severance Matters |
65 |
| 5.6 |
Mutual Covenants |
65 |
| 5.7 |
Privacy |
66 |
| Article 6 CONDITIONS |
67 |
| 6.1 |
Mutual Conditions Precedent |
67 |
| 6.2 |
Additional Conditions Precedent to the Obligations of Mountain |
68 |
| 6.3 |
Additional Conditions Precedent to the Obligations of Kennady |
69 |
| 6.4 |
Satisfaction of Conditions |
70 |
| Article 7 ADDITIONAL AGREEMENTS |
70 |
| 7.1 |
Mutual Covenants Regarding Non-Solicitation |
70 |
| 7.2 |
Notification of Acquisition Proposals |
72 |
| 7.3 |
Responding to Acquisition Proposal and Superior Proposals by Kennady |
72 |
| 7.4 |
Responding to Acquisition Proposal and Superior Proposals by Mountain |
73 |
| 7.5 |
Right to Match |
74 |
| 7.6 |
Access to Information; Confidentiality |
76 |
| 7.7 |
Notices of Certain Events |
76 |
| 7.8 |
Insurance and Indemnification |
77 |
| Article 8 TERM, TERMINATION, AMENDMENT AND WAIVER |
77 |
| 8.1 |
Term |
77 |
| 8.2 |
Termination |
77 |
| 8.3 |
Expenses and Termination Fees. |
80 |
| 8.4 |
Amendment |
83 |
| 8.5 |
Waiver |
83 |
| Article 9 GENERAL PROVISIONS |
83 |
| 9.1 |
Notices |
83 |
| 9.2 |
Governing Law; Waiver of Jury Trial |
84 |
| 9.3 |
Injunctive Relief |
84 |
| 9.4 |
Further Assurances |
85 |
| 9.5 |
Time of Essence |
85 |
| 9.6 |
Entire Agreement, Binding Effect and Assignment |
85 |
| 9.7 |
No Liability |
85 |
| 9.8 |
Severability |
85 |
| 9.9 |
Counterparts,
Execution |
85 |
|
|
|
| SCHEDULE A KENNADY PLAN OF ARRANGEMENT |
1 |
| SCHEDULE B KENNADY ARRANGEMENT RESOLUTION |
1 |
| SCHEDULE C MOUNTAIN SHAREHOLDER RESOLUTION |
1 |
ARRANGEMENT
AGREEMENT
THIS
ARRANGEMENT AGREEMENT dated January 28, 2018
BETWEEN:
MOUNTAIN
PROVINCE DIAMONDS INC., a corporation continued under the laws of the Province of Ontario (“Mountain”)
-
and -
▇▇▇▇▇▇▇
DIAMONDS INC., a corporation existing under the laws of the Province of Ontario (“Kennady”)
RECITALS:
| A. | Mountain
desires to acquire all of the Kennady Shares. |
| B. | The
Parties intend to carry out the transactions contemplated in this Agreement by way of
arrangement under the provisions of the OBCA. |
| C. | The
Kennady Board has unanimously determined, after receiving financial and legal advice
and the Kennady Fairness Opinion, that the Kennady Arrangement is fair to the Kennady
Shareholders and it is in the best interests of Kennady to enter into this Agreement,
on the terms and subject to the conditions contained in this Agreement, pursuant to which
Kennady would become a wholly-owned Subsidiary of Mountain, and the independent members
of the Kennady Board unanimously approved this Arrangement Agreement, and the Kennady
Board has resolved to recommend that the Kennady Arrangement Resolution be approved by
the Kennady Shareholders, on the terms and subject to the conditions of this Agreement. |
| D. | The
Mountain Board has unanimously determined, after receiving financial and legal advice
and receipt of the Mountain Fairness Opinion, that the Kennady Arrangement is fair to
the Mountain Shareholders and it is in the best interests of Mountain to enter into this
Agreement, on the terms and subject to the conditions contained in this Agreement, pursuant
to which Kennady would become a wholly-owned Subsidiary of Mountain, and the independent
members of the Mountain Board unanimously approved this Arrangement Agreement, and the
Mountain Board has resolved to recommend that the Mountain Shareholder Resolution be
approved by the Mountain Shareholders, on the terms and subject to the conditions of
this Agreement. |
| E. | Mountain
has entered into the Kennady Voting Agreements with the Kennady Locked-Up Shareholders,
pursuant to which, among other things, the Kennady Locked-Up Shareholders have agreed,
subject to the terms and conditions thereof, to vote the Kennady Shares held by them
in favour of the Kennady Arrangement Resolution. |
| ▇. | ▇▇▇▇▇▇▇
has entered into the Mountain Voting Agreements with the Mountain Locked-Up Shareholders,
pursuant to which, among other things, the Mountain Locked-Up Shareholders have agreed,
subject to the terms and conditions thereof, to vote the Mountain Shares held by them
in favour of the Mountain Shareholder Resolution. |
THIS
AGREEMENT WITNESSES THAT in consideration of the covenants and agreements herein contained and other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged), the Parties hereto covenant and agree as follows:
Article
1
INTERPRETATION
In
this Agreement (including the recitals hereto), unless the context otherwise requires:
“2435386”
means 2435386 Ontario Inc., a company incorporated under the laws of Ontario;
“2435572”
means 2435572 Ontario Inc., a company incorporated under the laws of Ontario;
“Acquisition
Proposal” relating to a Party means, other than the transactions contemplated by this Agreement and other than any transaction
involving only a Party and/or one or more of its wholly-owned Subsidiaries, any written offer, proposal or inquiry from any Person
or group of Persons (other than from the other Party or any of its Subsidiaries), whether or not delivered to the shareholders
of that Party, after the date hereof relating to: (a) any direct or indirect acquisition or sale (or other arrangement having
the same economic effect), whether in a single transaction or a series or related transactions, of: (i) the assets of that Party
and/or one or more of its Subsidiaries that, individually or in the aggregate, constitute 20% or more of the fair market value
of the consolidated assets of that Party and its Subsidiaries, taken as a whole, or which contribute 20% or more of the consolidated
revenue of that Party and its Subsidiaries, taken as a whole, or (ii) 20% or more of any voting or equity securities of that Party
or any one or more of its Subsidiaries that, individually or in the aggregate, contribute 20% or more of the consolidated revenues
or constitute 20% or more of the consolidated assets of that Party and its Subsidiaries, taken as a whole; (b) any direct or indirect
take-over bid, tender offer, exchange offer or other transaction that, if consummated, would result in such Person or group of
Persons beneficially owning 20% or more of any class of voting or equity securities of that Party and/or any of its Subsidiaries;
(c) a plan of arrangement, merger, amalgamation, consolidation, share exchange, business combination, reorganization, recapitalization,
liquidation, dissolution or other similar transaction involving that Party and/or any of its Subsidiaries whose assets or revenues,
individually or in the aggregate, constitute 20% or more of the consolidated assets or revenues, as applicable, of that Party
and its Subsidiaries, taken as a whole; or (d) any other similar transactions involving such Party or its Subsidiaries;
“affiliate”
has the meaning ascribed thereto in National Instrument 45-106 - Prospectus Exemptions;
“Agreement”
means this arrangement agreement, including all schedules annexed hereto, the Kennady Disclosure Letter and the Mountain Disclosure
Letter, as the same may be amended, supplemented or otherwise modified from time to time in accordance with the terms hereof;
“Authorization”
means any authorization, order, permit, approval, grant, licence, registration, consent, right, notification, condition, franchise,
privilege, certificate, judgment, writ, injunction, award, determination, direction, decision, decree, by-law, rule or regulation,
whether or not having the force of Law, and includes any Environmental Permit;
“Business
Day” means any day, other than a Saturday, a Sunday or a statutory or civic holiday in Toronto, Ontario or Vancouver,
British Columbia;
“CEE”
means “Canadian exploration expense” as such term is defined in Section 66.1(6) of the Tax Act;
“Claim”
means any demand, action, cause of action, investigation, inquiry, suit, proceeding, claim, complaint, arbitration, charge,
prosecution, assessment or reassessment, including any appeal or application for review, judgment, arbitration, award, grievance,
settlement or compromise;
“Code”
means the U.S. Internal Revenue Code of 1986, as amended;
“Confirmation
of Assignment Agreement” means the letter agreement dated October 3, 2014 from Mountain and 2435386 to De Beers, confirming,
amongst other things, the assignment of Mountain’s Participating Interest to 2435386, as acknowledged and agreed by De Beers
on October 10, 2014;
“Confidentiality
Agreement” means the confidentiality agreement dated January 3, 2018 entered into between Mountain and Kennady;
“Consideration”
means the consideration to be received by the Kennady Shareholders (other than a Dissenting Shareholder) pursuant to the Kennady
Plan of Arrangement as consideration for their Kennady Shares, consisting of 0.975 Consideration Shares for each one (1) issued
and outstanding Kennady Share;
“Consideration
Shares” means the Mountain Shares to be issued pursuant to the Kennady Arrangement;
“Contract”
means any contract, agreement, license, franchise, lease, arrangement, commitment, understanding, joint venture, partnership or
other right or obligation (written or oral) to which a Party is a party or by which it is bound or affected or to which any of
its properties or assets is subject;
“Court”
means the Ontario Superior Court of Justice (Commercial List) or other court with jurisdiction to consider and issue the Kennady
Interim Order and the Kennady Final Order;
“De
Beers” means De Beers Canada Inc., a corporation incorporated under the laws of Canada;
“Depositary”
means any trust company, bank or other financial institution agreed to in writing by Kennady and Mountain for the purpose of,
among other things, exchanging certificates representing Kennady Shares for the Consideration in connection with the Kennady Arrangement;
“Development
Plan” has the meaning ascribed to it in the Senior Secured Facility;
“Director”
means the Director appointed pursuant to Section 278 of the OBCA;
“Disclosing
Party” has the meaning ascribed thereto in the definition of Transferred Information;
“Dissent
Rights” means the rights of dissent exercisable by the Kennady Shareholders in respect of the Kennady Arrangement described
in Article 4 of the Kennady Plan of Arrangement;
“Dissenting
Shareholder” means a registered Kennady Shareholder who duly exercises its Dissent Rights pursuant to Article 4 of the
Kennady Plan of Arrangement and the Kennady Interim Order and has not withdrawn or been deemed to have withdrawn such exercise
of Dissent Rights;
“Effective
Date” means the date upon which the Kennady Arrangement is effective as set out in the Kennady Plan of Arrangement;
“Effective
Time” has the meaning ascribed to such term in the Kennady Plan of Arrangement;
“Environmental
Laws” means all Laws, imposing obligations, responsibilities, liabilities or standards of conduct for or relating to:
(a) the regulation or control of pollution, contamination, activities, materials, substances or wastes in connection with or for
the protection of human health or safety, the environment or natural resources (including climate, air, surface water, groundwater,
wetlands, land surface, subsurface strata, wildlife, aquatic species and vegetation); or (b) the use, generation, disposal, treatment,
processing, recycling, handling, transport, distribution, destruction, transfer, import, export or sale of Hazardous Substances;
“Environmental
Permits” means all Permits or program participation requirements with or from any Governmental Entity under any Environmental
Laws;
“Governmental
Entity” means any applicable: (a) multinational, federal, provincial, territorial, state, regional, municipal, local
or other government, governmental or public department, central bank, court, tribunal, arbitral body, commission, board, bureau,
agency or entity, domestic or foreign; (b) stock exchange, including Nasdaq, the TSX and TSXV; (c) subdivision, agent, commission,
board or authority of any of the foregoing; or (d) quasi-governmental or private body, including any tribunal, commission, regulatory
agency or self-regulatory organization, exercising any regulatory, expropriation or taxing authority under or for the account
of any of the foregoing;
“Hazardous
Substance” means any pollutant, contaminant, waste or chemical or any toxic, radioactive, ignitable, corrosive, reactive
or otherwise hazardous or deleterious substance, waste or material, including hydrogen sulphide, arsenic, cadmium, copper, lead,
mercury, petroleum, polychlorinated biphenyls, asbestos and urea-formaldehyde insulation, and any other material, substance, pollutant
or contaminant regulated or defined pursuant to, or that could result in liability under, any Environmental Law;
“IFRS”
means International Financial Reporting Standards;
“including”
means including without limitation, and “include” and “includes” have a corresponding meaning;
“Intent
Letter” means the binding confirmation of intent letter from Mountain, 2435572, and 2435386 to, and countersigned by,
De Beers in its capacity as Operator and JV Participant dated on or about December 2, 2014;
“Joint
Circular” means the notice of the Kennady Meeting and the notice of the Mountain Meeting, to be sent to the Kennady
Shareholders in connection with the Kennady Meeting and to be sent to the Mountain Shareholders in connection with the Mountain
Meeting, respectively, and the accompanying management information circular, including all schedules, appendices and exhibits
thereto and enclosures therewith and information incorporated by reference therein, as such may be amended, supplemented or otherwise
modified from time to time;
“Joint
Venture” means the unincorporated joint venture established under the Joint Venture Agreement in order to develop and
operate the Project;
“Joint
Venture Agreement” means the amended and restated joint venture agreement between Mountain, Camphor Ventures Inc. and
De Beers, dated on or about July 3, 2009 as amended;
“Joint
Venture Property” has the meaning given to it in the Joint Venture Agreement;
“JV
Management Committee” means the ‘Management Committee’ as defined in the Joint Venture Agreement;
“JV
Participants” means the ‘Participants’ as defined in the Joint Venture Agreement;
“Kennady
Annual Financial Statements” means the audited financial statements of Kennady as at and for the fiscal years ended
December 31, 2016 and 2015 together with the notes thereto;
“Kennady
Arrangement” means the arrangement under the provisions of Section 182 of the OBCA on the terms and subject to
the conditions set out in the Kennady Plan of Arrangement, subject to any amendments or variations thereto made in accordance
with Section 8.4 hereof or the Kennady Plan of Arrangement or made at the direction of the Court in the Kennady Final Order
(provided that any such amendment or variation is acceptable to both Kennady and Mountain, each acting reasonably);
“Kennady
Arrangement Resolution” means the special resolution of the Kennady Shareholders approving the Kennady Plan of Arrangement
which is to be considered at the Kennady Meeting as provided for in Subsection 2.2(c), substantially in the form and content
of Schedule “B” hereto;
“Kennady
Articles of Arrangement” means the articles of arrangement of Kennady in respect of the Kennady Arrangement required
under Section 183(1) of the OBCA to be filed with the Director giving effect to the Kennady Arrangement;
“Kennady
Benefit Plans” means any pension or retirement income plans or other employee compensation, other than equity or security-based
compensation arrangements, or benefit plans, agreements, policies, programs, arrangements or practices, whether written or oral,
which are maintained by or binding upon Kennady or for which Kennady could have any liability;
“Kennady
Board” means the board of directors of Kennady as the same is constituted from time to time;
“Kennady
Board Recommendation” means the unanimous determination of the Kennady Board, after consultation with its legal and
financial advisors, that the Arrangement is in the best interest of Kennady and is fair to Kennady Shareholders and the unanimous
recommendation of the Kennady Board to Kennady Shareholders that they vote in favour of the Kennady Arrangement Resolution, provided
that members of the Kennady Board who are related parties of the Significant Shareholder shall abstain from voting on any matters
or making any recommendations in respect of the transaction contemplated hereunder;
“Kennady
Change in Recommendation” has the meaning ascribed thereto in Subsection 8.2(c)(i);
“Kennady
Disclosure Letter” means the disclosure letter executed by Kennady and delivered to Mountain prior to the execution
of this Agreement;
“Kennady
DSUs” means deferred share unit awards of Kennady issued or issuable pursuant to the Kennady Plan;
“Kennady
Fairness Opinion” means the opinion of ▇▇▇▇▇▇▇ Securities Inc.;
“Kennady
Final Order” means the final order of the Court pursuant to 182(5) of the OBCA, in a form acceptable to Kennady and
Mountain, each acting reasonably, approving the Kennady Arrangement, as such order may be amended by the Court (with the consent
of both Kennady and Mountain, each acting reasonably) at any time prior to the Effective Date or, if appealed, then, unless such
appeal is withdrawn or denied, as affirmed or as amended (provided that any such amendment is acceptable to both Kennady and Mountain,
each acting reasonably) on appeal;
“Kennady
Financial Statements” means, collectively, the Kennady Annual Financial Statements and the Kennady Interim Financial
Statements;
“Kennady
Interim Financial Statements” means the unaudited interim condensed financial statements of Kennady as at and for the
period ended September 30, 2017, together with the notes thereto;
“Kennady
Interim Order” means the interim order made by the Court contemplated by Section 2.2 of this Agreement, in a form
acceptable to Kennady and Mountain, each acting reasonably, providing for, among other things, the calling and holding of the
Kennady Meeting, as the same may be amended, supplemented or varied by the Court (with the consent of Kennady and Mountain, each
acting reasonably);
“Kennady
Locked-up Shareholders” means the Significant Shareholder, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, who collectively hold 14,560,342 Kennady Shares, 141,666 Kennady RSUs and 935,000 Kennady
Options;
“Kennady
Material Adverse Effect” any change, development, effect, event, circumstance, fact or occurrence that individually
or in the aggregate with other such changes, developments, effects, events, circumstances, facts or occurrences, (x) is or would
reasonably be expected to be, material and adverse to the business, condition (financial or otherwise), properties, assets (tangible
or intangible), liabilities (including any contingent liabilities), operations or results of operations of Kennady and its subsidiaries,
taken as a whole, or (y) prevents or materially adversely affects, or would reasonably be expected to prevent or materially adversely
affect, the ability of Kennady to timely perform its obligations under this Agreement, except, any change, development, effect,
event, circumstance, fact or occurrence resulting from or relating to: (a) a change in the market price of the Kennady Shares
following and reasonably attributable to the public announcement of the execution of this Agreement and the transactions contemplated
hereby; (b) any changes affecting the global diamond mining industry generally; (c) any change in the market price of diamonds;
(d) general economic, political, financial, currency exchange, securities or commodity market conditions in Canada or the United
States; (e) any change in IFRS occurring after the date hereof; (f) any change in applicable Laws or in the interpretation thereof
by any Governmental Entity occurring after the date hereof; (g) the commencement, occurrence or continuation of any war, armed
hostilities or acts of terrorism; (h) any natural disaster; (i) any decrease in the trading price or any decline in trading volume
of the Kennady Shares (it being understood that the cause underlying such change in trading price or trading volume (other than
those in items (a) to (h) above) may be taken into account in determining whether a Kennady Material Adverse Effect has occurred);
(j) any action taken by Kennady that is required pursuant to this Agreement (excluding any obligation to act in the ordinary course);
or (k) any matters disclosed in the Kennady Disclosure Letter; provided, however, that with respect to clauses (b) to (h), such
changes do not relate primarily to Kennady or do not have a disproportionate effect on Kennady compared to other companies of
similar size operating in the diamond mining industry; and references in this Agreement to dollar amounts are not intended to
be and shall not be deemed to be illustrative or interpretative for purposes of determining whether a “Kennady Material
Adverse Effect” has occurred;
“Kennady
Meeting” means the special meeting of Kennady Shareholders including any adjournment or postponement thereof, to be
called and held in accordance with the Kennady Interim Order to consider the Kennady Arrangement Resolution;
“Kennady
Mineral Properties” means all Contracts, Permits, Environmental Permits, claims, licences, leases and other rights to,
or interests in, mineral properties held by Kennady, as more particularly set forth in Schedule 3.1(l) of the Kennady Disclosure
Letter.
“Kennady
Minerals Rights” has the meaning ascribed thereto in Section 3.1(l).
“Kennady
Optionholders” means the holders of Kennady Options;
“Kennady
Options” means the outstanding options to purchase Kennady Shares granted under the Kennady Plan;
“Kennady
Plan” means the 2017 long term equity incentive plan of Kennady, approved by Kennady Shareholders on June 20, 2017;
“Kennady
Plan of Arrangement” means the plan of arrangement of Kennady, substantially in the form and on the terms set out in
Schedule “A” hereto, and any amendments or variations thereto made in accordance with Section 8.4 hereof, the
Kennady Plan of Arrangement or upon the direction of the Court in the Kennady Final Order with the consent of Kennady and Mountain,
each acting reasonably;
“Kennady
Public Documents” means all documents and information filed by Kennady under applicable Securities Laws on the System
for Electronic Document Analysis Retrieval (SEDAR), during the two years prior to the date hereof which are available as of the
date hereof;
“Kennady
RSU Holders” means the holders of the outstanding Kennady RSUs;
“Kennady
RSUs” means the restricted share unit awards of Kennady issued or issuable pursuant to the Kennady Plan;
“Kennady
SARs” mean stock appreciation rights of Kennady issued or issuable pursuant to the Kennady Plan;
“Kennady
Shareholder Approval” has the meaning ascribed thereto in Section 2.2(c);
“Kennady
Shareholders” means the holders of Kennady Shares;
“Kennady
Shares” means the issued and outstanding common shares of Kennady;
“Kennady
TSXV Approval” means the conditional approval of the TSXV in respect of the Kennady Arrangement;
“Kennady
Voting Agreements” means the voting agreements (including all amendments thereto) between Mountain and the Kennady Locked-up
Shareholders setting forth the terms and conditions upon which they have agreed, among other things, to vote their Kennady Shares
in favour of the Kennady Arrangement Resolution.
“Law”
or “Laws” means all laws (including common law), by-laws, statutes, rules, regulations, principles of law and
equity, orders, rulings, ordinances, judgements, injunctions, determinations, awards, decrees or other requirements, whether domestic
or foreign, and the terms and conditions of any Permit of or from any Governmental Entity having the force of law (including Nasdaq,
the TSX and TSXV), and the term “applicable” with respect to such Laws and in a context that refers to a Party,
means such Laws as are applicable to such Party or its business, undertaking, property or securities and emanate from a Person
having jurisdiction over the Party or its business, undertaking, property or securities;
“Letter
of Credit Agreement” has the meaning given to it in Senior Secured Facility;
“Liens”
means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests, encumbrances and adverse rights or claims,
other third party interest or encumbrance of any kind, whether contingent or absolute, and any agreement, option, right or privilege
(whether by Law, contract or otherwise) capable of becoming any of the foregoing;
“Losses”
means any and all loss, liability, damage, cost, expense, charge, fine, penalty or assessment, interest charges, punitive damages,
fines, penalties and reasonable professional fees and disbursements, including in connection with any Claim;
“Mailing
Deadline” means the later of (a) March 7, 2018; and (b) the date that is three Business Days following receipt by (i)
Kennady from Mountain of all of Mountain’s information required to be included in the Joint Circular, and (ii) Mountain
from Kennady of all Mountain’s information required to be included in the Joint Circular;
“Material
Contract” means any Contract to which a Party or any of its Subsidiaries is a party or bound or to which any of their
respective assets are subject: (i) which, if terminated or if it ceased to be in effect, would have a Mountain Material Adverse
Effect or a Kennady Material Adverse Effect, as applicable, on such Party; (ii) under which such Party or any of its subsidiaries
has directly or indirectly guaranteed any liabilities or obligations of a third party (other than ordinary course endorsements
for collection) in excess of $1,000,000 in the aggregate in respect of Kennady and $4,000,000 in the aggregate in respect of Mountain;
(iii) relating to indebtedness for borrowed money, whether incurred, assumed, guaranteed or secured by any asset, with an outstanding
principal amount in excess of $250,000 in respect of Kennady and $1,000,000 in respect of Mountain; (iv) under which such Party
or any of its subsidiaries is obligated to make or expects to receive payments in excess of $250,000 over the remaining term of
the Contract in respect of Kennady and $1,000,000 over the remaining term of the Contract in respect of Mountain, except for (A)
sales orders and purchase orders entered into in the ordinary course of business, (B) Contracts related to the forecasted capital
expenditures disclosed in the capital plan forecast for the year 2018 as provided in the Kennady Disclosure Letter or Mountain
Disclosure Letter, as the case may be and (C) any Contract which is terminable on 90 days or less notice without penalty or continuing
obligation; (v) that limits or restricts such Party or any of its subsidiaries from engaging in any line of business or any geographic
area in any material respect or that limits or restricts in any material respect the ability of such Party or any of its subsidiaries
to solicit any customers or clients of other parties thereto; (vi) which relates to any material partnership, limited liability
company agreement, joint venture, alliance agreement or similar agreement or arrangement; (vii) which relate to the Kennady Mineral
Properties, the Project or the Mountain Mineral Properties in any material respect, as the case may be; (viii) with any Governmental
Entity; or (ix) between a Party or any of its subsidiaries, on the one hand, and any of their respective officers, directors or
shareholders, on the other hand, excluding pursuant to employment agreement or fees payable in the ordinary course to members
of the Kennady Board or the Mountain Board, as the case may be;
“material
fact” and “material change” have the meanings ascribed thereto in the Securities Act;
“Meeting
Deadline” means April 6, 2018;
“MI
61-101” means Multilateral Instrument 61-101 - Protection of Minority Security Holders in Special Transactions;
“Mineral
Reserves” means the mineral reserves that have been estimated for the Project in accordance with the Canadian National
Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the guidelines set out in
the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resource and Mineral
Reserves, adopted by the CIM Council on November 14, 2004 and November 27, 2010;
“Mineral
Resources” means the mineral resources that have been estimated for the Project in accordance with NI 43-101 and the
guidelines set out in the CIM.
“Mining
Licences” means the following mining licences granted by the Minister of the Department of Indian Affairs and Northern
Development to the Operator in respect of the Project:
(a)
licence number 4199 dated 15 July 2002;
(b)
licence number 4200 dated 15 July 2002;
(c)
licence number 4201 dated 15 July 2002; and
(d)
licence number 4341 dated 17 July 2002.
“Mining
Rights” means all interests in the surface of any lands, the minerals in (or that may be extracted from) any lands,
all royalty agreements, water rights, patented and unpatented mining claims, fee interest, minerals licences, mining licences
(including the Mining Licences) profits-a-prendre, joint ventures and other leases, rights-of-way, inurements, licences and other
rights and interests used by or necessary to the Operator (or ▇▇▇▇▇▇▇, as applicable) to construct, develop and operate the Project;
“misrepresentation”
has the meaning ascribed thereto in the Securities Act;
“Mountain”
means Mountain Province Diamonds Inc., including its Subsidiaries as applicable;
“Mountain
Annual Financial Statements” means the audited financial statements of Mountain as at and for the fiscal years ended
December 31, 2016 and 2015 together with the notes thereto;
“Mountain
Awards” means, collectively, Mountain Options, Mountain RSUs, Mountain DSUs and Mountain SARs;
“Mountain
Benefit Plans” means any pension or retirement income plans or other employee compensation, other than equity or security-based
compensation arrangements, or benefit plans, agreements, policies, programs, arrangements or practices, whether written or oral,
which are maintained by or binding upon Mountain or for which Mountain could have any liability;
“Mountain
Board” means the board of directors of Mountain as the same is constituted from time to time;
“Mountain
Board Recommendation” means the unanimous determination of the Mountain Board, after consultation with its legal and
financial advisors, that the ▇▇▇▇▇▇▇ Arrangement is in the best interests of Mountain and is fair to Mountain Shareholders and
the unanimous recommendation of the Mountain Board to Mountain Shareholders that they vote in favour of the Mountain Shareholder
Resolution, provided that members of the Mountain Board who are related parties of the Significant Shareholder shall abstain from
voting on any matters or making any recommendations in respect of the transaction contemplated hereunder;
“Mountain
Change in Recommendation” has the meaning ascribed thereto in Subsection 8.2(d)(i);
“Mountain
Disclosure Letter” means the disclosure letter executed by Mountain and delivered to ▇▇▇▇▇▇▇ prior to the execution
of this Agreement;
“Mountain
DSUs” means deferred share unit awards of Mountain issued or issuable pursuant to the Mountain Plan;
“Mountain
Fairness Opinion” means the opinion of RBC Capital Markets, the financial advisor to the Mountain Board;
“Mountain
Financial Statements” means, collectively, the Mountain Annual Financial Statements and the Mountain Interim Financial
Statements;
“Mountain
Interim Financial Statements” means the unaudited interim condensed financial statements of Mountain as at and for the
period ended September 30, 2017, together with the notes thereto;
“Mountain
Locked-up Shareholders” means the Significant Shareholder, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ Ing, and ▇▇▇▇ ▇▇▇▇▇▇, who collectively hold 39,006,333 Mountain Shares;
“Mountain
Material Adverse Effect” means any change, development, effect, event, circumstance, fact or occurrence that individually
or in the aggregate with other such changes, developments, effects, events, circumstances, facts or occurrences, (x) is or would
reasonably be expected to be, material and adverse to the business, condition (financial or otherwise), properties, assets (tangible
or intangible), liabilities (including any contingent liabilities), operations or results of operations of Mountain and its subsidiaries,
taken as a whole, or (y) prevents or materially adversely affects, or would reasonably be expected to prevent or materially adversely
affect, the ability of Mountain to timely perform its obligations under this Agreement, except, any change, development, effect,
event, circumstance, fact or occurrence resulting from or relating to: (a) a change in the market price of the Mountain Shares
following and reasonably attributable to the public announcement of the execution of this Agreement and the transactions contemplated
hereby; (b) any changes affecting the global diamond mining industry generally; (c) any change in the market price of diamonds;
(d) general economic, political, financial, currency exchange, securities or commodity market conditions in Canada or the United
States; (e) any change in IFRS occurring after the date hereof; (f) any change in applicable Laws or in the interpretation thereof
by any Governmental Entity occurring after the date hereof; (g) the commencement, occurrence or continuation of any war, armed
hostilities or acts of terrorism; or (h) any natural disaster; (i) any decrease in the trading price or any decline in trading
volume of the Mountain Shares (it being understood that the cause underlying such change in trading price or trading volume (other
than those in items (a) to (h) above) may be taken into account in determining whether a Mountain Material Adverse Effect has
occurred); (j) any action taken by Mountain or any of its Subsidiaries that is required pursuant to this Agreement (excluding
any obligation to act in the ordinary course); or (k) any matters disclosed in the Mountain Disclosure Letter; provided, however,
that with respect to clauses (b) to (h), such changes do not relate primarily to Mountain or do not have a disproportionate effect
on Mountain compared to other companies of similar size operating in the diamond mining industry; and references in this Agreement
to dollar amounts are not intended to be and shall not be deemed to be illustrative or interpretative for purposes of determining
whether a “Mountain Material Adverse Effect” has occurred;
“Mountain
Meeting” means the special meeting of Mountain Shareholders including any adjournment or postponement thereof, to approve
the Mountain Shareholder Resolution and such other ancillary matters as may properly come before the meeting;
“Mountain
Mineral Properties” means all Contracts, Permits, Environmental Permits, claims, licences, leases and other rights to,
and interests in, mineral properties held by Mountain, as more particularly set forth in Schedule 4.1(l) of the Mountain Disclosure
Letter;
“Mountain
Minerals Rights” has the meaning ascribed thereto in Subsection 4.1(l);
“Mountain
Nasdaq Approval” means the conditional approval of Nasdaq of the issuance and listing on Nasdaq of the Consideration
Shares, subject only to satisfaction of the customary listing conditions of Nasdaq;
“Mountain
Options” means the outstanding options to purchase Mountain Shares granted under the Mountain Plan;
“Mountain
Plan” means the 2016 long term equity incentive plan of Mountain, approved by Mountain Shareholders on June 21, 2016;
“Mountain
Public Documents” means all documents and information filed by Mountain under applicable Securities Laws on the System
for Electronic Document Analysis Retrieval (SEDAR), during the two years prior to the date hereof which are available as of the
date hereof;
“Mountain
RSUs” means the restricted share unit awards of Mountain issued or issuable pursuant to the Mountain Plan;
“Mountain
SARs” mean stock appreciation rights of Mountain issued or issuable pursuant to the Mountain Plan;
“Mountain
Shareholder Approval” means the requisite approval of the Mountain Shareholder Resolution by: (a) majority of the votes
attached to the Mountain Shares present in person or by proxy at the Mountain Meeting; (b) a majority of the votes attached to
the Mountain Shares held by Mountain Shareholders present in person or by proxy at the Mountain Meeting excluding for this purpose
votes attached to any Mountain Shares held by the Significant Shareholder and any other Persons whose votes are required to be
excluded in accordance with the policies of the TSX; and (c) a majority of the votes attached to the Mountain Shares held by Mountain
Shareholders present in person or by proxy at the Mountain Meeting excluding for this purpose votes attached to any Mountain Shares
held by the Significant Shareholder and any other Persons whose votes are required to be excluded in accordance with MI 61-101;
“Mountain
Shareholder Resolution” means the resolution of the Mountain Shareholders approving the transactions contemplated hereby
which is to be considered at the Mountain Meeting, substantially in the form and content of Schedule ‘C’ hereto;
“Mountain
Shareholders” means the holders of Mountain Shares;
“Mountain
Shares” means the issued and outstanding common shares of Mountain;
“Mountain
TSX Approval” means the conditional approval of the TSX of the listing and posting for trading on the TSX of the Consideration
Shares, subject only to satisfaction of the customary listing conditions of the TSX;
“Mountain
Voting Agreements” means the voting agreements (including all amendments thereto) between ▇▇▇▇▇▇▇ and the Mountain Locked-up
Shareholders setting forth the terms and conditions upon which they have agreed, among other things, to vote their Mountain Shares
in favour of the Mountain Shareholder Resolution.
“Nasdaq”
means the Nasdaq Stock Market;
“NI
43-101” means National Instrument 43-101 - Standards of Disclosure for Mineral Projects of the Canadian Securities
Administrators;
“OBCA”
means the Business Corporations Act (Ontario) and the regulations made thereunder, as now in effect and as they may be
promulgated or amended from time to time;
“Operator”
means De Beers in its capacity as the operator appointed under the Joint Venture Agreement and any replacement operator appointed
under the Joint Venture Agreement from time to time;
“ordinary
course of business”, “ordinary course of business consistent with past practice”, or any similar
reference, means, with respect to an action taken by a Person, that such action is consistent with the past practices of such
Person and is taken in the ordinary course of the normal day-to-day business and operations of such Person; provided that in any
event such action is not unreasonable or unusual;
“Outside
Date” means April 30, 2018, or such later date as may be agreed to in writing by the Parties;
“Participating
Interest” has the meaning given to it in the Joint Venture Agreement;
“Parties”
means ▇▇▇▇▇▇▇ and Mountain and “Party” means any of them;
“Permit”
means any license, permit, certificate, consent, order, grant, approval, agreement, classification, restriction, registration
or other Authorization of, from or required by any Governmental Entity;
“Permitted
Encumbrance” means, collectively, (a) Liens for Taxes or governmental charges or claims that are not yet delinquent
or that are being contested in good faith by appropriate proceedings promptly instituted and diligently concluded, provided that
any reserve or other appropriate provision as is required in conformity with IFRS has been made therefor; (b) Liens under all
security documents under the Senior Secured Facility and Mountain’s 8.0% senior secured second lien notes as disclosed in
the Mountain Public Documents; (c) Liens imposed by law such as builders, workers, carriers, warehousemen, suppliers, landlords
and mechanics Liens, in each case incurred in the ordinary course of business for sums not yet due or being contested in good
faith by appropriate proceedings; (d) leases or subleases of real estate, survey exceptions, easements or reservations of, or
rights of others for, licenses rights-of-way, sewers, electric lines, telegraph and telephone lines and other similar purposes,
or zoning or other restrictions as to the use of real property that do not individually or in the aggregate materially adversely
affect the value of said properties or materially impair their use in the operation of the business of such Person; (e) Liens
on insurance policies and proceeds thereof or other deposits to secure insurance premium financings; (f) filing of Uniform Commercial
Code or PPSA financing statements as precautionary measure in connection with operating leases and operating leases of personal
property entered into in the ordinary course of business and having term including renewals of greater than one year that are
deemed to be Liens under applicable Law; (g) bankers’ Liens, rights of setoff, Liens arising out of judgments or awards
and notices of lis pendens and associated rights related to litigation being contested in good faith by appropriate proceedings
and for which adequate reserves have been made; (h) Liens on specific items of inventory or other goods and the proceeds thereof
of any Person securing such Persons obligations in respect of bankers acceptances issued or created in the ordinary course of
business for the account of such Person to facilitate the purchase shipment or storage of such inventory or other goods; (i) grants
of software and other technology licenses in the ordinary course of business; (j) Liens arising out of conditional sale title
retention consignment or similar arrangements for the sale of goods entered into in the ordinary course of business; (k) Liens
in connection with escrow deposits made in connection with any acquisition of assets; (l) Liens arising in the ordinary course
of business in favor of customs and revenue authorities arising as matter of law to secure payment of customs duties in connection
with the importation of goods, provided that any reserve or other appropriate provision as is required in conformity with IFRS
has been made therefor; (m) any extension renewal or replacement in whole or in part of any Lien described in the foregoing (a)
through (e), provided that any such extension renewal or replacement shall be no more restrictive in any material respect than
the Lien extended renewed or replaced and shall not extend to any other property other than such item of property originally covered
by such Lien or by improvement thereof or additions or accessions thereto; (n) leases, licenses, subleases and sublicenses of
assets, including, without limitation, real property and intellectual property rights that do not materially interfere with the
ordinary conduct of the business of a Party or any of its subsidiaries; (o) covenants, conditions, restrictions, agreements, easements
and other matters of record affecting title to the real property provided that they have been complied with and do not individually
or in the aggregate materially and adversely impair the current use and operation thereof assuming its continued use in the manner
in which it is currently used; (p) any unregistered easements, rights-of-way or other unregistered interests or claims not disclosed
by the records of the land registry or land titles division in which the real property is located but which are granted by or
prescribed by law have been complied with or which do not individually or in the aggregate materially and adversely impair the
current use and operation of the real property; (q) such defects, imperfections or irregularities of title or Liens including,
by way of example, encroachments and other matters which would be revealed by an up-to-date survey as do not individually or in
the aggregate materially and adversely impair the current use and operation of the real property; (r) agreements with any municipal,
provincial or federal governments or authorities and any public utilities or private parties pertaining to the use development,
redevelopment and/or operation of the real property and any security granted in connection therewith; (s) standard statutory limitations
conditions and exceptions to title and any rights reserved or vested in any Person by any original patent or grant or any statutory
provision provided that they have been complied with and do not individually or in the aggregate materially and adversely impair
the current use and operation thereof assuming its continued use in the manner in which it is currently used; and (t) general
native land claims in respect of aboriginal title to crown lands in Northwest Territories that do not relate specifically to any
Mountain Mineral Properties, any ▇▇▇▇▇▇▇ Mineral Properties or any Permit of a Party or its subsidiaries;
“Person”
includes an individual, partnership, association, body corporate, trustee, executor, administrator, legal representative, government
(including any Governmental Entity) or any other entity, whether or not having legal status;
“PPSA”
means the Personal Property Security Act (Ontario) and to the extent applicable based on the location of the personal property
and the application of applicable conflicts rules any other applicable federal, provincial or territorial statute pertaining to
the granting perfecting priority or ranking of security interests liens or hypothecs on personal property including the Civil
Code Quebec and any successor statutes together with any regulations thereunder in each case as in effect from time to time;
“Project”
means collectively, all properties, assets or other rights, whether real or personal, tangible or intangible, now owned or leased
or hereafter acquired by or for the benefit of the Joint Venture which assets are used or intended for use in or forming part
of the project for the construction and development of the Gahcho Kué diamond mine project located in the ▇▇▇▇▇▇▇ Lake
region of the Northwest Territories of Canada which, for the avoidance of doubt, shall include:
(a)
the Mineral Resources and Mineral Reserves referred to in the Mining Licences;
(b)
the area covered by the Mining Licences and applicable Authorisations;
(c)
all associated beneficiation facilities, together with all plant sites, waste dumps, ore dumps, crushing circuits, abandoned heaps,
power supply systems, infrastructure and other ancillary facilities and plant and equipment; and
(d)
goodwill and relationships with suppliers and all other matters required to make the project viable.
“Project
Assets” means all assets of whatever nature required for the purposes of, or in connection with, the Project (including
Joint Venture Property and other land, plant, machinery, buildings and intellectual property rights) wherever they are situated
and whether or not they are owned by 2435572 or 2435386;
“Project
Documents” has the meaning given to it in the Senior Secured Facility;
“Recipient”
has the meaning ascribed thereto in the definition of Transferred Information;
“Regulatory
Approvals” means those sanctions, rulings, consents, orders, exemptions, permits and other approvals (including the
waiver or lapse, without objection, of a prescribed time under a statute or regulation that states that a transaction may be implemented
if a prescribed time lapses following the giving of notice without an objection being made) of Governmental Entities;
“Release”
means any release, spill, emission, leaking, pumping, pouring, emitting, emptying, escape, injection, deposit, disposal, discharge,
dispersal, dumping, leaching or migration of any Hazardous Substance in the indoor or outdoor environment, including the movement
of Hazardous Substance through or in the air, soil, surface water, ground water or property;
“Representatives”
means, collectively, in respect of a Person, (a) its directors, officers, employees, agents, representatives and any financial
advisor, law firm, accounting firm or other professional firm retained to assist the Person in connection with the transactions
contemplated in this Agreement, and (b) the Person’s subsidiaries and the directors, officers, employees, agents and representatives
and advisors thereof;
“Securities
Act” means the Securities Act (Ontario) and the rules, regulations and published policies made thereunder, as
now in effect and as they may be promulgated or amended from time to time;
“Securities
Laws” means the Securities Act, together with all other applicable state, federal and provincial securities Laws, rules
and regulations and published policies thereunder, as now in effect and as they may be promulgated or amended from time to time;
“SEDAR”
means the System for Electronic Document Analysis and Retrieval;
“Senior
Secured Facility” means the senior Secured Revolving Credit Facility Agreement dated December 11, 2017 entered into
among 2435572, Mountain, ▇▇▇▇▇▇▇, the Bank of Nova Scotia, as administrative agent, Nedbank Limited, London Branch and the Financial
Institutions named therein as lenders;
“Significant
Shareholder” means, collectively, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Bottin (International) Investments Ltd. and their respective affiliates
that hold Mountain Shares and ▇▇▇▇▇▇▇ Shares;
“Subsidiary”
has the meaning ascribed thereto in the National Instrument 45-106 - Prospectus Exemptions;
“Superior
Proposal” means a bona fide unsolicited, written Acquisition Proposal made after the date of this Agreement that: (a)
in respect of an Acquisition Proposal made to ▇▇▇▇▇▇▇ or the ▇▇▇▇▇▇▇ Shareholders, did not result from or otherwise involve a
breach of Section 7.1, Section 7.2, Section 7.3 or Section 7.5 by ▇▇▇▇▇▇▇ or its Representatives; (b) in respect of an Acquisition
Proposal made to Mountain or the Mountain Shareholders, did not result from or otherwise involve a breach of Section 7.1, Section
7.2, Section 7.4 or Section 7.5 by Mountain or its Representatives; (c) relates to the acquisition of 100% of a Party’s
outstanding common shares or all or substantially all of the consolidated assets of a Party and its Subsidiaries; (d) is reasonably
capable of being completed without undue delay, taking into account the financial, legal, regulatory and other aspects of such
Acquisition Proposal and the Person making such Acquisition Proposal; (e) that is not subject to a financing condition and in
respect of which it has been demonstrated to the satisfaction of the board of directors of such Party, acting in good faith (and
after receipt of advice from its financial advisors and its outside legal counsel) that adequate arrangements have been made in
respect of any financing required to complete such Acquisition Proposal; (f) if it relates to the acquisition of a Party’s
outstanding common shares, is made available to all holders of such Party’s common shares on the same terms and conditions,
provided that such holders of such Party’s common shares who are also employees of that Party may be permitted to enter
into new employment arrangements or hold securities of the Person making the Acquisition Proposal, conditional on such acquisition;
(g) that is not subject to any due diligence and/or access condition; (h) in respect of which a Party’s board of directors
and such Party’s committee of independent directors determine, in their good faith judgment, after consultation with outside
legal counsel and after receiving advice from their financial advisors that: (A) the failure by the board of directors to recommend
that the Party enter into a definitive agreement with respect to such Superior Proposal would be inconsistent with its fiduciary
duties under applicable Law; and (B) having regard to all of its terms and conditions, such Acquisition Proposal, would, if consummated
in accordance with its terms (but not assuming away any risk of non-completion), result in a transaction more favourable to the
holders of such Party’s common shares from a financial point of view than the Arrangement (after taking into account any
change to the Arrangement proposed by a Party pursuant to Section 7.5(b)); and (i) in respect of an Acquisition Proposal made
to Mountain or the Mountain Shareholders, such Acquisition Proposal is conditional on the ▇▇▇▇▇▇▇ Arrangement not being completed.
“Tax
Act” means the Income Tax Act (Canada) and the regulations promulgated thereunder, as amended;
“Tax
Returns” means all returns, reports, declarations, elections, notices, filings, forms, information returns, statements
and other documents (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements,
appendices and exhibits thereto, required to be made, prepared or filed with any Governmental Entity in respect of Taxes;
“Taxes”
means all taxes, duties, fees, premiums, assessments, imposts, levies, fees and other charges of any kind whatsoever imposed,
assessed, reassessed or collected by any Governmental Entity, including all interest, penalties, fines, instalments, additions
to tax or other additional amounts imposed, assessed, reassessed or collected by any Governmental Entity in respect thereof, and
including those levied on, or measured by, or referred to as, income, gross receipts, gross income, net income, profits, windfall,
royalty, capital, capital gains, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, premium,
alternative, real property, excise, stamp, withholding, business, franchise, property, development, occupancy, employer health,
payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import
and export taxes, countervail and anti-dumping, all licence, franchise and registration fees and all employment insurance, health
insurance and Canada, Québec and other pension plan premiums or contributions imposed by any Governmental Entity, all withholdings
on amounts paid to or by the relevant Person and any liability as a transferee, successor, guarantor or by contract or by operation
of applicable Laws in respect of any of the foregoing;
“Termination
Fee” means $6,000,000.
“Transferred
Information” means the personal information (namely, information about an identifiable individual other than their business
contact information when used or disclosed for the purpose of contacting such individual in that individual’s capacity as
an employee or an official of an organization and for no other purpose) that is in the control of one Party that is to be disclosed
or conveyed to one Party or any of its representatives or agents (a “Recipient”) by or on behalf of another
Party (a “Disclosing Party”) as a result of or in conjunction with the transactions contemplated herein, and
includes all such personal information disclosed to the Recipient prior to the execution of this Agreement;
“TSX”
means the Toronto Stock Exchange;
“TSXV”
means the TSX Venture Exchange;
“United
States” means the United States of America, its territories and possessions, any State of the United States and the
District of Columbia; and
“U.S.
Securities Act” means the United States Securities Act of 1933, as amended and the rules and regulations promulgated
thereunder.
| 1.2 | Interpretation
Not Affected by Headings |
The
division of this Agreement into Articles, Sections, subsections and paragraphs and the insertion of headings are for convenience
of reference only and shall not affect in any way the meaning or interpretation of this Agreement. Unless the contrary intention
appears, references in this Agreement to an Article, Section, subsection, paragraph or Schedule by number or letter or both refer
to the Article, Section, subsection, paragraph or Schedule, respectively, bearing that designation in this Agreement.
In
this Agreement, unless the contrary intention appears, words importing the singular include the plural and vice versa, and words
importing gender include all genders.
If
the date on which any action is required to be taken hereunder by a Party is not a business day, such action shall be required
to be taken on the next succeeding day which is a business day.
Unless
otherwise stated, all accounting terms used in this Agreement shall have the meanings attributable thereto under IFRS and all
determinations of an accounting nature required to be made shall be made in a manner consistent with IFRS consistently applied.
Unless
otherwise stated, all references in this Agreement to sums of money are expressed in lawful money of Canada and “$”
refers to Canadian dollars.
| (a) | In
this Agreement, references to “the knowledge of ▇▇▇▇▇▇▇” means the actual
collective knowledge of ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇, in each case, after making due
enquiries regarding the relevant matter. |
| (b) | In
this Agreement, references to “the knowledge of Mountain” means the actual
collective knowledge of ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Perry Ing, in each case, after making due enquiries
regarding the relevant matter. |
The
following Schedules are annexed to this Agreement and are incorporated by reference into this Agreement and form a part hereof:
Schedule
A - ▇▇▇▇▇▇▇ Plan of Arrangement
Schedule
B - ▇▇▇▇▇▇▇ Arrangement Resolution
Schedule C - Mountain Shareholder Resolution
Article
2
THE ▇▇▇▇▇▇▇ ARRANGEMENT
▇▇▇▇▇▇▇
and Mountain agree that the ▇▇▇▇▇▇▇ Arrangement will be implemented in accordance with and subject to the terms and conditions
contained in this Agreement and the ▇▇▇▇▇▇▇ Plan of Arrangement.
As
soon as reasonably practicable following the execution of this Agreement, but in any event no later than March 1, 2018, ▇▇▇▇▇▇▇
shall apply to the Court in a manner acceptable to Mountain, acting reasonably, pursuant to Section 182(5) of the OBCA and
prepare, file and diligently pursue an application for the ▇▇▇▇▇▇▇ Interim Order, which shall provide, among other things:
| (a) | for
the class of Persons to whom notice is to be provided in respect of the ▇▇▇▇▇▇▇ Arrangement
and the ▇▇▇▇▇▇▇ Meeting and for the manner in which such notice is to be provided; |
| (b) | for
confirmation of the record date for the ▇▇▇▇▇▇▇ Meeting referred to in Section 2.3(a); |
| (c) | that
the requisite approval for the ▇▇▇▇▇▇▇ Arrangement Resolution shall be 662/3%
of the votes cast on the ▇▇▇▇▇▇▇ Arrangement Resolution by the ▇▇▇▇▇▇▇ Shareholders,
present in Person or by proxy at the ▇▇▇▇▇▇▇ Meeting, together with, if required by MI
61-101, minority approval in accordance with Section 8.1 of MI 61-101 (the “▇▇▇▇▇▇▇
Shareholder Approval”); |
| (d) | that,
in all other respects, the terms, conditions and restrictions of the ▇▇▇▇▇▇▇ constating
documents, including quorum requirements and other matters, shall apply in respect of
the ▇▇▇▇▇▇▇ Meeting; |
| (e) | for
the grant of Dissent Rights as contemplated in the ▇▇▇▇▇▇▇ Plan of Arrangement; |
| (f) | for
the notice requirements with respect to the presentation of the application to the Court
for the ▇▇▇▇▇▇▇ Final Order; |
| (g) | that
the ▇▇▇▇▇▇▇ Meeting may be adjourned or postponed from time to time by ▇▇▇▇▇▇▇, subject
to the terms of this Agreement, without the need for additional approval of the Court; |
| (h) | that
the record date for the ▇▇▇▇▇▇▇ Meeting will not change in respect of any adjournment(s)
or postponement(s) thereof |
| (i) | that
it is the Parties’ intention to rely upon the exemption from registration provided
by Section 3(a)(10) of the U.S. Securities Act with respect to the issuance of the Consideration
Shares to be issued to the ▇▇▇▇▇▇▇ Shareholders pursuant to the ▇▇▇▇▇▇▇ Arrangement,
based on the Court’s approval of the ▇▇▇▇▇▇▇ Arrangement; and |
| (j) | for
such other matters as Mountain may reasonably require, subject to obtaining the prior
consent of ▇▇▇▇▇▇▇, such consent not to be unreasonably withheld or delayed. |
Subject
to the terms of this Agreement:
| (a) | ▇▇▇▇▇▇▇
agrees to convene and conduct the ▇▇▇▇▇▇▇ Meeting in accordance with the ▇▇▇▇▇▇▇ Interim
Order, ▇▇▇▇▇▇▇’▇ constating documents and applicable Law as soon as reasonably
practicable, and in any event on or before the Meeting Deadline. ▇▇▇▇▇▇▇ agrees that
it shall, in consultation with Mountain, fix and publish a record date for the purposes
of determining the ▇▇▇▇▇▇▇ Shareholders entitled to receive notice of and vote at the
▇▇▇▇▇▇▇ Meeting in accordance with the ▇▇▇▇▇▇▇ Interim Order. |
| (b) | Subject
to Article 7.5, except as required for quorum purposes or otherwise permitted under this
Agreement, ▇▇▇▇▇▇▇ shall not adjourn (or propose or permit the adjournment, postponement
or cancellation of) (except as required by Law or by valid ▇▇▇▇▇▇▇ Shareholder action),
postpone or cancel (except as required by Law or by valid ▇▇▇▇▇▇▇ Shareholder action)
the ▇▇▇▇▇▇▇ Meeting without Mountain’s prior written consent. |
| (c) | ▇▇▇▇▇▇▇
will advise Mountain as Mountain may reasonably request, and at least on a daily basis
on each of the last ten Business Days prior to the date of the ▇▇▇▇▇▇▇ Meeting, as to
the aggregate tally of the proxies received by ▇▇▇▇▇▇▇ in respect of the ▇▇▇▇▇▇▇ Arrangement
Resolution. |
| (d) | Except
for non-substantive communications from any ▇▇▇▇▇▇▇ Shareholder that purports to hold
less than 200,000 ▇▇▇▇▇▇▇ Shares (provided that communications from such ▇▇▇▇▇▇▇ Shareholder
are not substantive in the aggregate), ▇▇▇▇▇▇▇ will promptly advise Mountain of any communication
(written or oral) from any ▇▇▇▇▇▇▇ Shareholder in opposition to the ▇▇▇▇▇▇▇ Arrangement,
written notice of dissent or purported exercise by any ▇▇▇▇▇▇▇ Shareholder of Dissent
Rights received by ▇▇▇▇▇▇▇ in relation to the ▇▇▇▇▇▇▇ Arrangement Resolution and any
withdrawal of Dissent Rights received by ▇▇▇▇▇▇▇, and any written communications sent
by or on behalf of ▇▇▇▇▇▇▇ to any ▇▇▇▇▇▇▇ Shareholder exercising or purporting to exercise
Dissent Rights in relation to the ▇▇▇▇▇▇▇ Arrangement Resolution. |
| (e) | ▇▇▇▇▇▇▇
will not make any payment or settlement offer, or agree to any payment or settlement
with respect to Dissent Rights without the prior written consent of Mountain. |
| (f) | In
the event that ▇▇▇▇▇▇▇ provides a notice to Mountain regarding a possible Acquisition
Proposal pursuant to Article 7 prior to the mailing of the Joint Circular, then unless
the Parties agree otherwise, the Mailing Deadline will be extended until the date that
is seven days following the earlier of either (i) written notification from ▇▇▇▇▇▇▇ to
Mountain that the ▇▇▇▇▇▇▇ Board has determined that the Acquisition Proposal is not a
Superior Proposal, or (ii) the date on which ▇▇▇▇▇▇▇ and Mountain enter into an amended
agreement pursuant to Section 7.5 which results in the Acquisition Proposal in question
not being a Superior Proposal. In the event that the Mailing Deadline is so extended,
the Meeting Deadline and the Outside Date shall be extended by the same number of days
as the Mailing Deadline has been extended. |
| (g) | Subject
to Article 7, ▇▇▇▇▇▇▇ shall (i) solicit proxies in favour of the ▇▇▇▇▇▇▇ Arrangement
Resolution, against any resolution submitted by any other ▇▇▇▇▇▇▇ Shareholder, including,
if so requested by Mountain, using the services of dealers and proxy solicitation services
and permitting Mountain to otherwise assist ▇▇▇▇▇▇▇ in such solicitation, and, notwithstanding
any other provision in this Agreement, the cost and expenses associated with any such
proxy solicitation requested by Mountain shall be borne by Mountain, and take all other
actions that are reasonably necessary or desirable to seek the approval of the ▇▇▇▇▇▇▇
Arrangement by ▇▇▇▇▇▇▇ Shareholders, (ii) unanimously recommend to holders of ▇▇▇▇▇▇▇
Shares that they vote in favour of the ▇▇▇▇▇▇▇ Arrangement Resolution, (iii) not make
a ▇▇▇▇▇▇▇ Change in Recommendation, except in accordance with Article 7 and (iv) include
in the Joint Circular a statement that each director and executive officer of ▇▇▇▇▇▇▇
intends to vote all of such Person’s ▇▇▇▇▇▇▇ Shares (including any ▇▇▇▇▇▇▇ Shares
issued upon the exercise of any ▇▇▇▇▇▇▇ Options or ▇▇▇▇▇▇▇ RSUs) in favour of the ▇▇▇▇▇▇▇
Arrangement Resolution, subject to the other terms of this Agreement and the ▇▇▇▇▇▇▇
Voting Agreements. |
| (h) | ▇▇▇▇▇▇▇,
at the request of Mountain from time to time, will provide Mountain with a list (in written
and / or electronic form) of (i) the ▇▇▇▇▇▇▇ Shareholders, together with their addresses
and respective holdings of ▇▇▇▇▇▇▇ Shares, (ii) the names, addresses and holdings of
all Persons having rights issued by ▇▇▇▇▇▇▇ to acquire ▇▇▇▇▇▇▇ Shares (including holders
of ▇▇▇▇▇▇▇ Options and ▇▇▇▇▇▇▇ RSUs), and (iii) participants and book-based nominee registrants
such as CDS & Co., CEDE & Co. and DTC, and non-objecting beneficial owners of
▇▇▇▇▇▇▇ Shares together with their addresses and respective holdings of ▇▇▇▇▇▇▇ Shares.
▇▇▇▇▇▇▇ shall from time to time require that its registrar and transfer agent furnish
Mountain with such additional information, including updated or additional lists of ▇▇▇▇▇▇▇
Shareholders, and lists of securities positions and other assistance as Mountain may
reasonably request in order to be able to communicate with respect to the ▇▇▇▇▇▇▇ Arrangement
with the ▇▇▇▇▇▇▇ Shareholders and with such other Persons as are entitled to vote on
the ▇▇▇▇▇▇▇ Arrangement Resolution. |
Subject
to the terms of this Agreement:
| (a) | Mountain
agrees to convene and conduct the Mountain Meeting in accordance with Mountain’s
constating documents and applicable Law as soon as reasonably practicable, and in any
event on or before the Meeting Deadline. Mountain agrees that it shall, in consultation
with ▇▇▇▇▇▇▇, fix and publish a record date for the purposes of determining the Mountain
Shareholders entitled to receive notice of and vote at the Mountain Meeting. |
| (b) | Subject
to Article 7.5, except as required for quorum purposes or otherwise permitted under this
Agreement, Mountain shall not adjourn (or propose or permit the adjournment, postponement
or cancellation of) (except as required by Law or by valid Mountain Shareholder action),
postpone or cancel (except as required by Law or by valid Mountain Shareholder action)
the Mountain Meeting without ▇▇▇▇▇▇▇’▇ prior written consent. |
| (c) | Mountain
will advise ▇▇▇▇▇▇▇ as ▇▇▇▇▇▇▇ may reasonably request, and at least on a daily basis
on each of the last ten business days prior to the date of the Mountain Meeting, as to
the aggregate tally of the proxies received by Mountain in respect of the Mountain Shareholder
Resolution. |
| (d) | Subject
to Article 7, Mountain shall (i) solicit proxies in favour of the Mountain Shareholder
Resolution, against any resolution submitted by any other Mountain Shareholder, including,
if so requested by ▇▇▇▇▇▇▇, using the services of dealers and proxy solicitation services
and permitting ▇▇▇▇▇▇▇ to otherwise assist Mountain in such solicitation, and, notwithstanding
any other provision in this Agreement, the cost and expenses associated with any such
proxy solicitation requested by ▇▇▇▇▇▇▇ shall be borne by Mountain, and take all other
actions that are reasonably necessary or desirable to seek the approval of the Mountain
Shareholder Resolution by Mountain Shareholders, (ii) unanimously recommend to holders
of Mountain Shares that they vote in favour of the Mountain Shareholder Resolution, (iii)
not make a Mountain Change in Recommendation, except in accordance with Article 7 and
(iv) include in the Joint Circular a statement that each director and executive officer
of Mountain intends to vote all of such Person’s Mountain Shares, if applicable,
in favour of the Mountain Shareholder Resolution, subject to the other terms of this
Agreement and the Mountain Voting Agreements. |
| (e) | Except
for non-substantive communications from any Mountain Shareholder that purports to hold
less than 200,000 Mountain Shares (provided that communications from such Mountain Shareholders
are not substantive in the aggregate), Mountain will promptly advise ▇▇▇▇▇▇▇ of any communication
(written or oral) from any Mountain Shareholder in opposition to the Arrangement. |
| (a) | As
promptly as reasonably practicable following execution of this Agreement and in any event
prior to the close of business on the Mailing Deadline, each Party shall (i) cooperate
in preparing the Joint Circular together with any other documents required by applicable
Laws in connection with the ▇▇▇▇▇▇▇ Meeting and the Mountain Meeting, (ii) file the Joint
Circular in all jurisdictions where the same is required to be filed, and (iii) cause
the Joint Circular and such other documents to be sent to each ▇▇▇▇▇▇▇ Shareholder, Mountain
Shareholder and any other person as required under applicable Laws or the ▇▇▇▇▇▇▇ Interim
Order. |
| (b) | Each
Party shall ensure that the Joint Circular complies in all material respects with the
▇▇▇▇▇▇▇ Interim Order and applicable Laws, and, without limiting the generality of the
foregoing, that the Joint Circular does not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the circumstances in which
they are made (other than in each case with respect to any information relating to and
provided by the other Party) and shall provide ▇▇▇▇▇▇▇ Shareholders and Mountain Shareholder
with information in sufficient detail to permit them to form a reasoned judgement concerning
the matters to be placed before them at the ▇▇▇▇▇▇▇ Meeting and the Mountain Meeting,
respectively. Without limiting the generality of the foregoing, the Joint Circular will
include: (i) a copy of the ▇▇▇▇▇▇▇ Fairness Opinion; (ii) a copy of the Mountain Fairness
Opinion; (iii) a statement that the special committee of the ▇▇▇▇▇▇▇ Board has received
the ▇▇▇▇▇▇▇ Fairness Opinion and that the special committee of the ▇▇▇▇▇▇▇ Board has
unanimously, after receiving legal and financial advice, recommended that the ▇▇▇▇▇▇▇
Board approve the Arrangement Agreement; (iv) the ▇▇▇▇▇▇▇ Board Recommendation; (v) a
statement that the special committee of the Mountain Board has received the Mountain
Fairness Opinion and that the special committee of the Mountain Board has unanimously,
after receiving legal and financial advice, recommended that the Mountain Board approve
the Arrangement Agreement; (vi) the Mountain Board Recommendation; and (vii) a statement
that each of the ▇▇▇▇▇▇▇ Locked Up Shareholders and the Mountain Locked-Up Shareholders
intends to vote all of such Person’s ▇▇▇▇▇▇▇ Shares or Mountain Shares, as applicable
(including any ▇▇▇▇▇▇▇ Shares issued upon the exercise of any ▇▇▇▇▇▇▇ Options or ▇▇▇▇▇▇▇
RSUs and any Mountain Shares issued upon the exercise of any Mountain Options) in favour
of the ▇▇▇▇▇▇▇ Arrangement Resolution and/or the Mountain Shareholder Resolution, as
applicable, subject to the other terms of this Agreement and the ▇▇▇▇▇▇▇ Voting Agreements
or the Mountain Voting Agreements, as applicable. |
| (c) | Each
Party will furnish to the other Party all such information regarding such Party and its
affiliates as may be required by Law to be included in the Joint Circular and other documents
related thereto, including the information about such Party which is required under Item
14.2 of Form 51-102F5 of National Instrument 51-102 - Continuous Disclosure Obligations.
Each Party shall ensure that no such information will include any untrue statement of
a material fact or omit to state a material fact required to be stated in the Joint Circular
in order to make any information so furnished or any information concerning such Party
and its subsidiaries not misleading in light of the circumstances in which it is disclosed
(a “Misrepresentation”). Each Party hereby agrees to indemnify and
save harmless the other Party and its Representatives from and against any and all liabilities,
claims, demands, losses, costs, damages and reasonable expenses to which that other Party
or any of its Representatives may be subject or may suffer as a result of, or arising
from, any Misrepresentation or alleged Misrepresentation contained in any information
included in the Joint Circular that was provided by that first mentioned Party or its
Representatives specifically for inclusion therein, including as a result of any order
made, or any inquiry, investigation or proceeding instituted by any Governmental Entity
based on such a Misrepresentation or alleged Misrepresentation. |
| (d) | Each
Party and its respective legal counsel shall be given a reasonable opportunity to review
and comment on the Joint Circular and related documents prior to the Joint Circular being
printed and mailed to ▇▇▇▇▇▇▇ Shareholders and Mountain Shareholders and filed with any
Governmental Entity, and reasonable consideration shall be given to any comments made
by each Party and its respective legal counsel, provided that all information relating
solely to ▇▇▇▇▇▇▇, its affiliates and the ▇▇▇▇▇▇▇ Shares included in the Joint Circular
shall be in form and content satisfactory to ▇▇▇▇▇▇▇, acting reasonably and further provided
that all information relating solely to Mountain, its affiliates and the Mountain Shares
included in the Joint Circular shall be in form and content satisfactory to Mountain,
acting reasonably. |
| (e) | ▇▇▇▇▇▇▇
and Mountain shall each promptly notify each other if at any time before the Effective
Date either becomes aware (in the case of ▇▇▇▇▇▇▇ only with respect to ▇▇▇▇▇▇▇ and in
the case of Mountain only with respect to Mountain) that the Joint Circular contains
a Misrepresentation, or that otherwise requires an amendment or supplement to the Joint
Circular and the Parties shall co-operate in the preparation of any amendment or supplement
to the Joint Circular as required or appropriate, and (i) ▇▇▇▇▇▇▇ shall promptly mail
or otherwise publicly disseminate any amendment or supplement to the Joint Circular to
▇▇▇▇▇▇▇ Shareholders and, if required by the Court or applicable Laws, file the same
with any Governmental Entity and as otherwise required; and (ii) Mountain shall promptly
mail or otherwise publicly disseminate any amendment or supplement to the Joint Circular
to Mountain Shareholders and, if required by the Court or applicable Laws, file the same
with any Governmental Entity and as otherwise required. |
| 2.6 | Preparation
of Filings |
Mountain
and ▇▇▇▇▇▇▇ shall co-operate and use their commercially reasonable efforts to take, or cause to be taken, all reasonable actions,
including the preparation of any applications for Regulatory Approvals and other orders, registrations, consents, filings, rulings,
exemptions, no-action letters, circulars and approvals required in connection with this Agreement and the ▇▇▇▇▇▇▇ Arrangement
and the preparation of any required documents, in each case as reasonably necessary to discharge their respective obligations
under this Agreement, the ▇▇▇▇▇▇▇ Arrangement and the ▇▇▇▇▇▇▇ Plan of Arrangement, and to complete any of the transactions contemplated
by this Agreement, including their obligations under applicable Laws. It is acknowledged and agreed that, unless required to ensure
that the Consideration Shares are freely tradeable in Canada and that the Consideration Shares will not be “restricted securities”
within the meaning of Rule 144 under the U.S. Securities Act upon their issuance, Mountain shall not be required to file a prospectus
or similar document or otherwise become subject to the securities Laws of any jurisdiction (other than a Province of Canada) in
order to complete the ▇▇▇▇▇▇▇ Arrangement. Mountain may elect, at its sole discretion, to make such securities and other regulatory
filings in the United States or other jurisdictions as may be necessary or desirable in connection with the completion of the
▇▇▇▇▇▇▇ Arrangement. ▇▇▇▇▇▇▇ shall provide to Mountain all information regarding ▇▇▇▇▇▇▇ and its affiliates as required by applicable
Securities Laws in connection with such filings. ▇▇▇▇▇▇▇ shall also use commercially reasonable efforts to obtain any necessary
consents from any of its auditors and any other advisors to the use of any financial, technical or other expert information required
to be included in such filings and to the identification in such filings of each such advisor.
If
(a) the ▇▇▇▇▇▇▇ Interim Order is obtained; (b) the ▇▇▇▇▇▇▇ Arrangement Resolution is passed at the ▇▇▇▇▇▇▇ Meeting by the ▇▇▇▇▇▇▇
Shareholders as provided for in the ▇▇▇▇▇▇▇ Interim Order and as required by applicable Law; and (c) the Mountain Shareholder
Resolution is passed at the Mountain meeting by the Mountain Shareholders as required by applicable Law, subject to the terms
of this Agreement, ▇▇▇▇▇▇▇ shall diligently pursue and take all steps necessary or desirable to have the hearing before the Court
of the application for the ▇▇▇▇▇▇▇ Final Order pursuant to Section 182(5) of the OBCA held as soon as reasonably practicable
and, in any event, within three Business Days following the approval of the ▇▇▇▇▇▇▇ Arrangement Resolution at the ▇▇▇▇▇▇▇ Meeting.
Subject
to the terms of this Agreement, Mountain will cooperate with and assist ▇▇▇▇▇▇▇ in seeking the ▇▇▇▇▇▇▇ Interim Order and the ▇▇▇▇▇▇▇
Final Order, including by providing ▇▇▇▇▇▇▇ on a timely basis any information reasonably required to be supplied by Mountain in
connection therewith. ▇▇▇▇▇▇▇ will provide legal counsel to Mountain with a reasonable opportunity to review and comment upon
drafts of all material to be filed with the Court in connection with the ▇▇▇▇▇▇▇ Arrangement, and will give reasonable consideration
to all such comments. Subject to applicable Law, ▇▇▇▇▇▇▇ will not file any material with the Court in connection with the ▇▇▇▇▇▇▇
Arrangement or serve any such material, and will not agree to modify or amend materials so filed or served, except as contemplated
by this Section 2.8 or with Mountain’s prior written consent, such consent not to be unreasonably withheld, conditioned
or delayed; provided, that, nothing herein shall require Mountain to agree or consent to any increase in Consideration or other
modification or amendment to such filed or served materials that expands or increases Mountain’s obligations or diminishes
Mountain’s rights set forth in any such filed or served materials or under this Agreement or the ▇▇▇▇▇▇▇ Arrangement. ▇▇▇▇▇▇▇
shall also provide to Mountain’s legal counsel on a timely basis copies of any notice of appearance or other Court documents
served on ▇▇▇▇▇▇▇ in respect of the application for the ▇▇▇▇▇▇▇ Interim Order or the ▇▇▇▇▇▇▇ Final Order or any appeal therefrom
and of any notice, whether written or oral, received by ▇▇▇▇▇▇▇ indicating any intention to oppose the granting of the ▇▇▇▇▇▇▇
Interim Order or the ▇▇▇▇▇▇▇ Final Order or to appeal the ▇▇▇▇▇▇▇ Interim Order or the ▇▇▇▇▇▇▇ Final Order. ▇▇▇▇▇▇▇ will ensure
that all materials filed with the Court in connection with the ▇▇▇▇▇▇▇ Arrangement are consistent in all material respects with
the terms of this Agreement and the ▇▇▇▇▇▇▇ Plan of Arrangement. In addition, ▇▇▇▇▇▇▇ will not object to legal counsel to Mountain
making such submissions on the hearing of the motion for the ▇▇▇▇▇▇▇ Interim Order and the application for the ▇▇▇▇▇▇▇ Final Order
as such counsel considers appropriate, provided that ▇▇▇▇▇▇▇ is advised of the nature of any submissions prior to the hearing
and such submissions are consistent with this Agreement and the ▇▇▇▇▇▇▇ Plan of Arrangement. ▇▇▇▇▇▇▇ will also oppose any proposal
from any party that the ▇▇▇▇▇▇▇ Final Order contain any provision inconsistent with this Agreement, and, if at any time after
the issuance of the ▇▇▇▇▇▇▇ Final Order and prior to the Effective Date, ▇▇▇▇▇▇▇ is required by the terms of the ▇▇▇▇▇▇▇ Final
Order or by Law to return to Court with respect to the ▇▇▇▇▇▇▇ Final Order, it shall do so after notice to, and in consultation
and cooperation with, Mountain.
| 2.9 | ▇▇▇▇▇▇▇
Articles of Arrangement and Effective Date |
The
▇▇▇▇▇▇▇ Articles of Arrangement shall implement the ▇▇▇▇▇▇▇ Plan of Arrangement. Subject to obtaining the ▇▇▇▇▇▇▇ Final Order,
as soon as practicable and in any event no later than the fifth Business Day after the satisfaction or, where not prohibited,
the waiver of the conditions (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject
to the satisfaction or, where not prohibited, the waiver of those conditions as of the Effective Date) set forth in Article 6,
unless another time or date is agreed to in writing by the Parties, the ▇▇▇▇▇▇▇ Articles of Arrangement shall be filed by ▇▇▇▇▇▇▇,
provided that the ▇▇▇▇▇▇▇ Articles of Arrangement shall not be sent for filing, except as contemplated hereby or with Mountain’s
prior written consent, such consent not to be unreasonably withheld, conditioned or delayed. From and after the Effective Time,
the ▇▇▇▇▇▇▇ Plan of Arrangement will have all of the effects provided by applicable Law, including the OBCA. ▇▇▇▇▇▇▇ agrees to
amend the ▇▇▇▇▇▇▇ Plan of Arrangement at any time prior to the Effective Time in accordance with Section 8.4 of this Agreement
to include such other terms determined to be necessary or desirable by Mountain, provided that the ▇▇▇▇▇▇▇ Plan of Arrangement
shall not be amended: (a) in any manner which has the effect of reducing the Consideration or which is otherwise prejudicial to
the ▇▇▇▇▇▇▇ Shareholders or other parties to be bound by the ▇▇▇▇▇▇▇ Plan of Arrangement; (b) is not inconsistent with the provisions
of this Agreement, the ▇▇▇▇▇▇▇ Interim Order or the ▇▇▇▇▇▇▇ Final Order; or (c) creates a reasonable risk of delaying, impairing
or impeding in any material respect the satisfaction of any conditions set forth in Article 6.
The
closing of the ▇▇▇▇▇▇▇ Arrangement will take place at the offices of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ LLP in Vancouver, BC at 10:00 a.m. PST on
the Effective Date, or at such other time and place as may be agreed to by the Parties.
| 2.10 | Payment
of Consideration |
Mountain
will, following receipt by ▇▇▇▇▇▇▇ of the ▇▇▇▇▇▇▇ Final Order and prior to the filing by ▇▇▇▇▇▇▇ of the ▇▇▇▇▇▇▇ Articles of Arrangement,
deposit in escrow with the Depositary sufficient number of Mountain Shares to issue the aggregate Consideration Shares as the
Consideration pursuant to the ▇▇▇▇▇▇▇ Arrangement (other than to ▇▇▇▇▇▇▇ Shareholders exercising Dissent Rights and who have not
withdrawn their notice of objection).
| 2.11 | Announcement
and Shareholder Communications |
Mountain
and ▇▇▇▇▇▇▇ shall each publicly announce the transactions contemplated hereby promptly following the execution of this Agreement
by Mountain and ▇▇▇▇▇▇▇, the text and timing of each Party’s announcement to be approved by the other Party in advance,
acting reasonably. Mountain and ▇▇▇▇▇▇▇ agree to co-operate in the preparation of presentations, if any, to ▇▇▇▇▇▇▇ Shareholders
or Mountain Shareholders regarding the transactions contemplated by this Agreement, and no Party shall (i) issue any news release
or otherwise make public announcements with respect to this Agreement or the ▇▇▇▇▇▇▇ Plan of Arrangement without the consent of
the other Party (which consent shall not be unreasonably withheld, conditioned or delayed) or (ii) make any filing with any Governmental
Entity with respect thereto without prior consultation with the other Party; provided, however, that the foregoing shall be subject
to each Party’s overriding obligation to make any disclosure or filing required under applicable Laws or stock exchange
rules, and the Party making such disclosure shall use all commercially reasonable efforts to give prior written notice to the
other Party and a reasonable opportunity to review or comment on the disclosure or filing, and if such prior notice is not possible,
to give such notice immediately following the making of such disclosure or filing.
| (a) | Mountain,
▇▇▇▇▇▇▇ and the Depositary shall be entitled to deduct and withhold from any consideration
payable or otherwise deliverable to any Person, including Dissenting Shareholders, pursuant
to the ▇▇▇▇▇▇▇ Arrangement and from all dividends, other distributions or other amount
otherwise payable to any former ▇▇▇▇▇▇▇ Shareholders, such Taxes or other amounts as
Mountain, ▇▇▇▇▇▇▇ or the Depositary is required, entitled or permitted to deduct and
withhold with respect to such payment under the Tax Act, the Code, or any other provisions
of any applicable Laws, in each case, as amended. To the extent that Taxes or other amounts
are so deducted and withheld, such deducted and withheld Taxes or other amounts shall
be treated for all purposes as having been paid to the Person in respect of which such
deduction and withholding was made, provided that such deducted or withheld Taxes or
other amounts are actually remitted to the appropriate taxing authority. |
| (b) | Mountain,
▇▇▇▇▇▇▇ and the Depository shall be authorized to sell or otherwise dispose of, on behalf
of a ▇▇▇▇▇▇▇ Shareholder, such portion of the Consideration Shares issuable to such ▇▇▇▇▇▇▇
Shareholder (if any) as is necessary to provide sufficient funds to enable it to comply
with its deducting or withholding requirements and such party shall notify the applicable
▇▇▇▇▇▇▇ Shareholder of the details of such disposition, including the gross proceeds
and any adjustments to the proceeds, and remit any unapplied balance of the net proceeds
of such sale to such ▇▇▇▇▇▇▇ Shareholder. For the avoidance of doubt, the reporting for
Tax purposes (and the payment of any Taxes arising from) any sale or disposition of Consideration
Shares on behalf of a ▇▇▇▇▇▇▇ Shareholder in accordance with this Section 2.12(b) shall
be the responsibility of such ▇▇▇▇▇▇▇ Shareholder. |
| 2.13 | U.S.
Securities Law Matters |
The
Parties agree that the ▇▇▇▇▇▇▇ Arrangement will be carried out with the intention that the Consideration Shares delivered in the
course of and on completion of the ▇▇▇▇▇▇▇ Arrangement to ▇▇▇▇▇▇▇ Shareholders will be issued by Mountain in reliance on the exemption
from the registration requirements of the U.S. Securities Act provided by Section 3(a)(10) thereof. In order to ensure the availability
of the exemption under Section 3(a)(10) of the U.S. Securities Act, the Parties agree that the Arrangement will be carried out
on the following basis:
| (i) | the
▇▇▇▇▇▇▇ Arrangement will be subject to the approval of the Court and the Court will hold
a hearing approving the substantive and procedural fairness of the terms and conditions
of the ▇▇▇▇▇▇▇ Arrangement; |
| (ii) | prior
to the hearing required to approve the ▇▇▇▇▇▇▇ Arrangement, the Court will be advised
as to the intention of the Parties to rely on the exemption under Section 3(a)(10) of
the U.S. Securities Act; |
| (iii) | the
Court will be required to satisfy itself as to the substantive and procedural fairness
of the terms and conditions of the Arrangement to the ▇▇▇▇▇▇▇ Shareholders subject to
the ▇▇▇▇▇▇▇ Arrangement; |
| (iv) | ▇▇▇▇▇▇▇
will ensure that each ▇▇▇▇▇▇▇ Shareholder entitled to receive Consideration Shares on
completion of the ▇▇▇▇▇▇▇ Arrangement will be given adequate notice advising them of
their right to attend the hearing of the Court to give approval of the ▇▇▇▇▇▇▇ Arrangement
and providing them with sufficient information necessary for them to exercise that right; |
| (v) | the
▇▇▇▇▇▇▇ Shareholders entitled to receive Consideration Shares on completion of the ▇▇▇▇▇▇▇
Arrangement will be advised that the Consideration Shares issued in the ▇▇▇▇▇▇▇ Arrangement
have not been registered under the U.S. Securities Act and will be issued in reliance
on the exemption under Section 3(a)(10) of the U.S. Securities Act; |
| (vi) | the
▇▇▇▇▇▇▇ Final Order approving the ▇▇▇▇▇▇▇ Arrangement that is obtained from the Court
will expressly state that the terms and conditions of the ▇▇▇▇▇▇▇ Arrangement is approved
by the Court as being fair, substantively and procedurally, to the ▇▇▇▇▇▇▇ Shareholders |
| (vii) | the
hearing of the Court to give approval of the ▇▇▇▇▇▇▇ Arrangement must be open to any
Persons to whom securities will be issued under the ▇▇▇▇▇▇▇ Arrangement and there will
not be any improper impediments to the appearance by those Persons at the hearing; |
| (viii) | the
▇▇▇▇▇▇▇ Interim Order approving the ▇▇▇▇▇▇▇ Meeting will specify that each ▇▇▇▇▇▇▇ Shareholder
will have the right to appear before the Court at the hearing of the Court to give approval
of the ▇▇▇▇▇▇▇ Arrangement so long as the ▇▇▇▇▇▇▇ Shareholder enters an appearance within
the time prescribed by the ▇▇▇▇▇▇▇ Interim Order; and |
| (ix) | the
▇▇▇▇▇▇▇ Final Order shall include a statement substantially to the following effect: |
“This
Order will serve as a basis of a claim to an exemption, pursuant to Section 3(a)(10) of the United States Securities Act
of 1933, as amended, from the registration requirements otherwise imposed by that Act, regarding the issuance of Consideration
Shares of Mountain pursuant to the ▇▇▇▇▇▇▇ Plan of Arrangement.”
Article
3
REPRESENTATIONS AND WARRANTIES OF ▇▇▇▇▇▇▇
| 3.1 | Representations
and Warranties |
Except
as disclosed in the ▇▇▇▇▇▇▇ Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or
subparagraph below in respect of which such qualification is being made), ▇▇▇▇▇▇▇ hereby represents and warrants to Mountain as
follows, and acknowledges that Mountain is relying upon such representations and warranties in connection with the entering into
of this Agreement:
| (a) | Organization
and Qualification. ▇▇▇▇▇▇▇ is duly incorporated and validly existing under the Business
Corporations Act (Ontario) and has full corporate power and authority to own its
assets and conduct its business as now owned and conducted. ▇▇▇▇▇▇▇ is duly qualified
to carry on business and is in good standing in each jurisdiction in which the character
of its properties or the nature of its activities makes such qualification necessary.
True and complete copies of the constating documents of ▇▇▇▇▇▇▇ have been delivered or
made available to Mountain, and ▇▇▇▇▇▇▇ has not taken any action to amend or supersede
such documents. |
| (b) | Authority
Relative to this Agreement. ▇▇▇▇▇▇▇ 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 ▇▇▇▇▇▇▇ and the consummation by ▇▇▇▇▇▇▇ of the transactions
contemplated by this Agreement have been duly authorized by the ▇▇▇▇▇▇▇ Board and no
other corporate proceedings on the part of ▇▇▇▇▇▇▇ are necessary to authorize this Agreement
other than ▇▇▇▇▇▇▇ Shareholder Approval. This Agreement has been duly executed and delivered
by ▇▇▇▇▇▇▇ and constitutes a valid and binding obligation of ▇▇▇▇▇▇▇, enforceable by
Mountain against ▇▇▇▇▇▇▇ in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement
of creditors’ rights generally and subject to the qualification that equitable
remedies may be granted only in the discretion of a court of competent jurisdiction. |
| (c) | No
Conflict; Required Filings and Consent. The execution and delivery by ▇▇▇▇▇▇▇ of
this Agreement and the performance by it of its obligations hereunder and the completion
of the ▇▇▇▇▇▇▇ Arrangement will not violate, conflict with or result in a breach of any
provision of the constating documents of ▇▇▇▇▇▇▇ and, except as would not, individually
or in the aggregate, have or reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse
Effect, will not: (a) violate, conflict with or result in a breach of: (i) any agreement,
contract, indenture, deed of trust, mortgage, bond, instrument, Authorization, licence
or permit to which ▇▇▇▇▇▇▇ is a party or by which ▇▇▇▇▇▇▇ is bound; or (ii) to the knowledge
of ▇▇▇▇▇▇▇, any Law to which ▇▇▇▇▇▇▇ is subject; (b) give rise to any right of termination,
or the acceleration of any indebtedness, under any such agreement, contract, indenture,
Authorization, deed of trust, mortgage, bond, instrument, licence or permit; or (c) give
rise to any rights of first refusal or rights of first offer, trigger any change in control
or influence provisions or any restriction or limitation under any such agreement, contract,
indenture, Authorization, deed of trust, mortgage, bond, instrument, licence or permit,
or result in the imposition of any encumbrance, charge or Lien upon any of ▇▇▇▇▇▇▇’▇
assets. Other than the ▇▇▇▇▇▇▇ TSXV Approval, the ▇▇▇▇▇▇▇ Interim Order, the ▇▇▇▇▇▇▇
Final Order and the filing of the ▇▇▇▇▇▇▇ Articles of Arrangement, no Authorization,
consent or approval of, or filing with, any Governmental Entity or any court or other
authority is necessary on the part of ▇▇▇▇▇▇▇ for the consummation by ▇▇▇▇▇▇▇ of its
obligations in connection with the ▇▇▇▇▇▇▇ Arrangement under this Agreement or for the
completion of the ▇▇▇▇▇▇▇ Arrangement not to cause or result in any loss of any rights
or assets or any interest therein held by ▇▇▇▇▇▇▇ in any material properties, except
for such Authorizations, consents, approvals and filings as to which the failure to obtain
or make would not, individually or in the aggregate, prevent or materially delay consummation
of the ▇▇▇▇▇▇▇ Arrangement. |
| (d) | Subsidiaries.
▇▇▇▇▇▇▇ does not have Subsidiaries or any material interests in any Person. |
| (i) | The
operations of ▇▇▇▇▇▇▇ have been and are now conducted in material compliance with all
Laws of each jurisdiction where ▇▇▇▇▇▇▇ conducted its business, the Laws of which have
been and are now applicable to the operations of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ has not received
any notice of any alleged violation of any such Laws, other than non-compliance or violations
which, individually or in the aggregate, would not have a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (ii) | ▇▇▇▇▇▇▇
is not in conflict with, or in default (including cross defaults) under or in violation
of: (a) its articles or by-laws or equivalent organizational documents; or (b) any agreement
or understanding to which it or by which any of its properties or assets is bound or
affected, except for failures which, individually or in the aggregate, would not have
a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (f) | ▇▇▇▇▇▇▇
Authorizations. ▇▇▇▇▇▇▇ has obtained all Authorizations necessary for the ownership,
operation, development, maintenance, or use of the material assets of ▇▇▇▇▇▇▇ or otherwise
in connection with the material business or operations of ▇▇▇▇▇▇▇ and such Authorizations
are in full force and effect. To the knowledge of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ has fully complied
with and is in compliance with all Authorizations, except, in each case, for such non-compliance
which, individually or in the aggregate, would not have a ▇▇▇▇▇▇▇ Material Adverse Effect.
There is no action, investigation or proceeding pending or, to the knowledge of ▇▇▇▇▇▇▇,
threatened regarding any of the Authorizations. ▇▇▇▇▇▇▇ has not received any notice,
whether written or oral, of revocation or non-renewal of any such Authorizations, or
of any intention of any Person to revoke or refuse to renew any of such Authorizations,
except in each case, for revocations or non-renewals which, individually or in the aggregate,
would not have a ▇▇▇▇▇▇▇ Material Adverse Effect and, to the knowledge of ▇▇▇▇▇▇▇, all
such Authorizations continue to be effective in order for ▇▇▇▇▇▇▇ to continue to conduct
its business as it is currently being conducted. No Person other than ▇▇▇▇▇▇▇ owns or
has any proprietary, financial or other interest (direct or indirect) in any of the Authorizations. |
| (g) | Capitalization
and Listing. |
| (i) | The
authorized share capital of ▇▇▇▇▇▇▇ consists of an unlimited number of ▇▇▇▇▇▇▇ Shares.
As at the date of this Agreement there are: (A) 50,912,599 ▇▇▇▇▇▇▇ Shares validly issued
and outstanding as fully-paid and non-assessable shares of ▇▇▇▇▇▇▇; (B) outstanding ▇▇▇▇▇▇▇
Options providing for the issuance of 1,010,000 ▇▇▇▇▇▇▇ Shares upon the exercise thereof;
152,666 outstanding ▇▇▇▇▇▇▇ RSUs; and no outstanding ▇▇▇▇▇▇▇ DSUs or ▇▇▇▇▇▇▇ SARs. The
terms of the ▇▇▇▇▇▇▇ Options (including exercise price) and ▇▇▇▇▇▇▇ RSUs are disclosed
in Schedule 3.1(g)to the ▇▇▇▇▇▇▇ Disclosure Letter. Except as disclosed in Schedule 3.1(g)
to the ▇▇▇▇▇▇▇ Disclosure Letter (x) there are no options, warrants, conversion privileges,
calls or other rights, shareholder rights plans, agreements, arrangements, commitments,
or obligations of ▇▇▇▇▇▇▇ to issue or sell any shares of ▇▇▇▇▇▇▇ or securities or obligations
of any kind convertible into, exchangeable for or otherwise carrying the right or obligation
to acquire any shares of ▇▇▇▇▇▇▇, and (y) no Person is entitled to any pre-emptive or
other similar right granted by ▇▇▇▇▇▇▇. The ▇▇▇▇▇▇▇ Shares are listed on the TSXV, and
are not listed or quoted on any market other than the TSXV. |
| (ii) | Schedule
3.1(g) to the ▇▇▇▇▇▇▇ Disclosure Letter sets forth, as of the date hereof, the holders
of all outstanding ▇▇▇▇▇▇▇ Options and the number, exercise prices and expiration dates
of each grant to such holders. All ▇▇▇▇▇▇▇ Shares that may be issued pursuant to the
exercise of outstanding ▇▇▇▇▇▇▇ Options will, when issued in accordance with its ▇▇▇▇▇▇▇
Options, be duly authorized, validly issued, fully-paid and non-assessable and are not
and will not be subject to or issued in violation of, any pre-emptive rights. |
| (iii) | Schedule
3.1(g) to the ▇▇▇▇▇▇▇ Disclosure Letter sets forth, as of the date hereof, the holders
of all outstanding ▇▇▇▇▇▇▇ RSUs and the number and expiration dates of each grant to
such holders. All ▇▇▇▇▇▇▇ Shares that may be issued pursuant to the exercise of outstanding
▇▇▇▇▇▇▇ RSUs will, if issued in accordance with its ▇▇▇▇▇▇▇ RSUs, be duly authorized,
validly issued, fully-paid and non-assessable and are not and will not be subject to
or issued in violation of, any pre-emptive rights. |
| (iv) | There
are no outstanding contractual obligations of ▇▇▇▇▇▇▇ to repurchase, redeem or otherwise
acquire any ▇▇▇▇▇▇▇ Shares. |
| (v) | There
are no outstanding ▇▇▇▇▇▇▇ DSUs or SARs. |
| (vi) | No
order ceasing or suspending trading in securities of ▇▇▇▇▇▇▇ nor prohibiting the sale
of such securities has been issued and is outstanding against ▇▇▇▇▇▇▇ or its directors,
officers or promoters. |
| (h) | Shareholder
and Similar Agreements. ▇▇▇▇▇▇▇ is not party to any shareholder, pooling, voting
trust or other similar agreement relating to the issued and outstanding shares in the
capital of ▇▇▇▇▇▇▇. |
| (i) | Reports.
▇▇▇▇▇▇▇ has filed with all applicable Governmental Entities true and complete copies
of the ▇▇▇▇▇▇▇ Public Documents that ▇▇▇▇▇▇▇ is required to file therewith. ▇▇▇▇▇▇▇ Public
Documents at the time filed: (a) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, and (b) complied in all material respects with the requirements of applicable
Securities Laws. ▇▇▇▇▇▇▇ has not filed any confidential material change report with any
Governmental Entity which at the date hereof remains confidential. |
| (i) | The
▇▇▇▇▇▇▇ Financial Statements have been, and all financial statements of ▇▇▇▇▇▇▇ which
are publicly disseminated by ▇▇▇▇▇▇▇ in respect of any subsequent periods prior to the
Effective Date will be, prepared in accordance with IFRS applied on a basis consistent
with prior periods and all applicable Laws and present fairly, in all material respects,
the assets, liabilities (whether accrued, absolute, contingent or otherwise), financial
position and results of operations of ▇▇▇▇▇▇▇ as of the respective dates thereof and
its results of operations and cash flows for the respective periods covered thereby (except
as may be indicated expressly in the notes thereto). There are no outstanding loans made
by ▇▇▇▇▇▇▇ to any executive officer or director of ▇▇▇▇▇▇▇. |
| (ii) | Neither
▇▇▇▇▇▇▇ nor, to ▇▇▇▇▇▇▇’▇ knowledge, any director, officer, employee, auditor,
accountant or representative of ▇▇▇▇▇▇▇ has received or otherwise had or obtained knowledge
of any complaint, allegation, assertion, or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of ▇▇▇▇▇▇▇
or its internal accounting controls, including any complaint, allegation, assertion,
or claim that ▇▇▇▇▇▇▇ has engaged in questionable accounting or auditing practices, which
has not been resolved to the satisfaction of the audit committee of the Board, or has
not been disclosed to Mountain. |
| (k) | Undisclosed
Liabilities. Other than as disclosed in Schedule 3.1(l) of the ▇▇▇▇▇▇▇ Disclosure
Letter, ▇▇▇▇▇▇▇ does not have any liabilities or obligations of any nature, whether or
not accrued, contingent or otherwise, except for: (a) liabilities and obligations that
are specifically presented on the ▇▇▇▇▇▇▇ Annual Financial Statements; or (b) liabilities
and obligations incurred in the ordinary course of business consistent with past practice
that are not and would not, individually or in the aggregate with all other liabilities
and obligations of ▇▇▇▇▇▇▇ (other than those disclosed on the ▇▇▇▇▇▇▇ Annual Financial
Statements), have or reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect,
or have a ▇▇▇▇▇▇▇ Material Adverse Effect or, as a consequence of the consummation of
the ▇▇▇▇▇▇▇ Arrangement, have or reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse
Effect. Without limiting the foregoing, the ▇▇▇▇▇▇▇ Annual Financial Statements reflect
reasonable reserves in accordance with IFRS for contingent liabilities of ▇▇▇▇▇▇▇. |
| (l) | Interest
in Mineral Rights. |
| (i) | All
of ▇▇▇▇▇▇▇’▇ mineral interests and rights with respect to the ▇▇▇▇▇▇▇ Mineral Properties,
including any material mining claims, concessions, exploration licences, exploitation
licences, prospecting permits, mining leases and mining rights, in each case, either
existing under contract, by operation of Law, are set out in Schedule 3.1(l)of the ▇▇▇▇▇▇▇
Disclosure Letter (the “▇▇▇▇▇▇▇ Mineral Rights”). Other than the ▇▇▇▇▇▇▇
Mineral Rights set out in Schedule 3.1(l) of the ▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇ does
not own or have any interest in any material mineral interests. |
| (ii) | Other
than as set out in Schedule 3.1(l) of the ▇▇▇▇▇▇▇ Disclosure Letter: |
| (A) | ▇▇▇▇▇▇▇
is the legal and beneficial owner of all right, title and interest in and to the ▇▇▇▇▇▇▇
Mineral Rights, free and clear of any Liens other than the Permitted Encumbrances. |
| (B) | All
of the ▇▇▇▇▇▇▇ Mineral Rights have been properly located and recorded in compliance with
applicable Law and are comprised of valid and subsisting mineral claims or mining leases. |
| (C) | The
▇▇▇▇▇▇▇ Mineral Rights are in good standing under applicable Law and, to the knowledge
of ▇▇▇▇▇▇▇, all work required to be performed and filed in respect thereof has been performed
and filed, all Taxes, rentals, fees, expenditures and other payments in respect thereof
have been paid or incurred and all filings in respect thereof have been made. |
| (D) | To
the knowledge of ▇▇▇▇▇▇▇, there is no material adverse claim against or challenge to
the title to or ownership of the ▇▇▇▇▇▇▇ Mineral Rights. |
| (E) | No
Person other than ▇▇▇▇▇▇▇ has any interest in the ▇▇▇▇▇▇▇ Mineral Rights or the production
or profits therefrom or any royalty in respect thereof or any right to acquire any such
interest. |
| (F) | There
are no back-in rights, earn-in rights, rights of first refusal or similar provisions
or rights which would affect ▇▇▇▇▇▇▇’▇ interest in the ▇▇▇▇▇▇▇ Mineral Rights. |
| (G) | There
are no material restrictions on the ability of ▇▇▇▇▇▇▇ to use, transfer or exploit the
▇▇▇▇▇▇▇ Mineral Rights, except pursuant to applicable Law. |
| (H) | ▇▇▇▇▇▇▇
has all surface rights, including fee simple estates, leases, easements, rights of way
and permits or licences operations from landowners or Governmental Entities permitting
the use of land by ▇▇▇▇▇▇▇, and mineral interests that are required to explore the ▇▇▇▇▇▇▇
Mineral Rights as contemplated in ▇▇▇▇▇▇▇ Public Documents filed (and available on SEDAR)
on or before the date hereof and no third party or group holds any such rights that would
be required by ▇▇▇▇▇▇▇ to explore any of the ▇▇▇▇▇▇▇ Mineral Rights as contemplated in
▇▇▇▇▇▇▇ Public Documents filed (and available on SEDAR) on or before the date hereof. |
| (I) | ▇▇▇▇▇▇▇
has not received any notice, whether written or oral, from any Governmental Entity of
any revocation or intention to revoke any interest of ▇▇▇▇▇▇▇ in any of the ▇▇▇▇▇▇▇ Mineral
Rights. |
| (m) | Operational
Matters. Except as would not, individually or in the aggregate, be reasonably expected
to result in a ▇▇▇▇▇▇▇ Material Adverse Effect: |
| (i) | all
rentals, royalties, overriding royalty interests, production payments, net profits, interest
burdens, payments and obligations due and payable, or performable, as the case may be,
on or prior to the date hereof under, with respect to, or on account of, any direct or
indirect assets of ▇▇▇▇▇▇▇ and its material joint ventures, have been: (A) duly paid;
(B) duly performed; or (C) provided for prior to the date hereof; and |
| (ii) | all
costs, expenses, and liabilities payable on or prior to the date hereof under the terms
of any contracts and agreements to which ▇▇▇▇▇▇▇ or material joint ventures is directly
or indirectly bound have been properly and timely paid, except for such expenses that
are being currently paid prior to delinquency in the ordinary course of business. |
| (i) | Other
than as disclosed in Schedule 3.1(n) of the ▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇ has not
entered into any written or oral agreement or understanding providing for severance,
vacation pay or termination payments to any director, officer or employee in connection
with the termination of their position or their employment as a direct result of a change
in control of ▇▇▇▇▇▇▇. |
| (ii) | ▇▇▇▇▇▇▇
is not (i) a party to any collective bargaining agreement, or (ii) subject to any application
for certification or, to the knowledge of ▇▇▇▇▇▇▇, threatened or apparent union-organizing
campaigns for employees not covered under a collective bargaining agreement. To the knowledge
of ▇▇▇▇▇▇▇, no fact or event exists that is likely to give rise to a change in the representation
in this Subsection 3.1(n) on or before the Effective Date. |
| (iii) | ▇▇▇▇▇▇▇
is not subject to any claim for wrongful dismissal, constructive dismissal or any other
tort claim, actual or, to the knowledge of ▇▇▇▇▇▇▇, threatened, or any litigation actual,
or to the knowledge of ▇▇▇▇▇▇▇, threatened, relating to employment or termination of
employment of employees or independent contractors, except for such claims or litigation
which individually or in the aggregate would not be reasonably expected to have a ▇▇▇▇▇▇▇
Material Adverse Effect. To the knowledge of ▇▇▇▇▇▇▇, no labour strike, lock-out, slowdown
or work stoppage is pending or threatened against or directly affecting ▇▇▇▇▇▇▇, except
as would not be reasonably expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (iv) | ▇▇▇▇▇▇▇
has operated in accordance with all applicable Laws with respect to employment and labour,
including employment and labour standards, occupational health and safety, employment
equity, pay equity, workers’ compensation, human rights, labour relations and privacy
and there are no current, pending, or to the knowledge of ▇▇▇▇▇▇▇, threatened proceedings
before any board or tribunal with respect to any of the areas listed herein, except where
the failure to so operate would not have a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (o) | Absence
of Certain Changes or Events. Since September 30, 2017: |
| (i) | ▇▇▇▇▇▇▇
has conducted its business only in the ordinary course of business and consistent with
past practice; |
| (ii) | no
liability or obligation of any nature (whether absolute, accrued, contingent or otherwise)
which has had or is reasonably likely to have a ▇▇▇▇▇▇▇ Material Adverse Effect has been
incurred; |
| (iii) | to
the knowledge of ▇▇▇▇▇▇▇, there has not been any event, circumstance or occurrence which
has had or is reasonably likely to give rise to a ▇▇▇▇▇▇▇ Material Adverse Effect; |
| (iv) | there
has not been any change in the accounting practices used by ▇▇▇▇▇▇▇, except as disclosed
in the ▇▇▇▇▇▇▇ Public Documents; |
| (v) | except
as disclosed in the ▇▇▇▇▇▇▇ Public Documents and except for ordinary course adjustments
to non-executive employees, there has not been any increase in the salary, bonus, or
other remuneration payable to any non-executive employees of ▇▇▇▇▇▇▇; |
| (vi) | there
has not been any redemption, repurchase or other acquisition of ▇▇▇▇▇▇▇ Shares by ▇▇▇▇▇▇▇,
or any declaration, setting aside or payment of any dividend or other distribution (whether
in cash, shares or property) with respect to the ▇▇▇▇▇▇▇ Shares; |
| (vii) | there
has not been any entering into, or an amendment of, any Material Contract other than
in the ordinary course of business consistent with past practice; |
| (viii) | there
has not been any satisfaction or settlement of any material claims or material liabilities
that were not reflected in the ▇▇▇▇▇▇▇ Financial Statements, other than the settlement
of claims or liabilities incurred in the ordinary course of business consistent with
past practice; and |
| (ix) | except
as disclosed in the ▇▇▇▇▇▇▇ Public Documents and except for ordinary course adjustments,
there has not been any increase in the salary, bonus, or other remuneration payable to
any officers or senior or executive officers of ▇▇▇▇▇▇▇. |
| (p) | Litigation.
There is no claim, action, proceeding or investigation pending or, to the knowledge of
▇▇▇▇▇▇▇, threatened against or relating to ▇▇▇▇▇▇▇, the business of ▇▇▇▇▇▇▇ or affecting
any of its properties, assets, before or by any Governmental Entity which, if adversely
determined, would have, or reasonably could be expected to have, a ▇▇▇▇▇▇▇ Material Adverse
Effect or prevent or materially delay the consummation of the Arrangement, nor to knowledge
of ▇▇▇▇▇▇▇ are there any events or circumstances which could reasonably be expected to
give rise to any such claim, action, proceeding or investigation (provided that the representation
in this Subsection 3.1(p) shall not apply to claims, actions, proceedings, or investigations
which may arise after the date of this Agreement which do not have a reasonable prospect
of succeeding or, if successful, would not give rise to, nor reasonably be expected to
give rise to, a ▇▇▇▇▇▇▇ Material Adverse Effect). ▇▇▇▇▇▇▇ is not subject to any outstanding
order, writ, injunction or decree which has had or is reasonably likely to have a ▇▇▇▇▇▇▇
Material Adverse Effect or which would prevent or materially delay consummation of the
transactions contemplated by this Agreement. |
| (i) | ▇▇▇▇▇▇▇
has duly and in a timely manner filed all Tax Returns required to be filed by it prior
to the date hereof with the appropriate Governmental Entity. Such Tax Returns are complete
and correct in all material respects. ▇▇▇▇▇▇▇ has paid all Taxes, including instalments
on account of Taxes for the current year required by applicable Law, which are due and
payable by it in accordance with applicable Laws whether or not assessed by the appropriate
Governmental Entity, other than Taxes which are being contested in good faith through
appropriate proceedings and for which adequate provisions or reserves have been recorded
on the balance sheet included in ▇▇▇▇▇▇▇ Financial Statements. |
| (ii) | ▇▇▇▇▇▇▇
has made adequate provisions or reserves in accordance with IFRS in the ▇▇▇▇▇▇▇ Financial
Statements for any Taxes of ▇▇▇▇▇▇▇ for the period covered by such the ▇▇▇▇▇▇▇ Financial
Statements that have not been paid whether or not shown as being due on any Tax Returns.
Since such publication date, no liability in respect of Taxes not reflected in such statements
or otherwise provided for has been assessed, reassessed, proposed to be assessed or reassessed,
incurred or accrued, other than in the ordinary course of business. |
| (iii) | ▇▇▇▇▇▇▇
has duly and timely withheld or deducted all Taxes and other amounts required by applicable
Law to be withheld or deducted by it (including Taxes and other amounts required to be
withheld or deducted by it in respect of any amount paid or credited or deemed to be
paid or credited by it to or for the benefit of any Person including any former or current
employees, directors, officers and non-resident Person) and has duly and timely remitted
to the appropriate Governmental Entity within the time prescribed under any applicable
Law all such Taxes or other amounts. |
| (iv) | ▇▇▇▇▇▇▇
has duly and timely collected all amounts on account of any sales, use or transfer Taxes,
including goods and services, harmonized sales, provincial and territorial taxes and
state and local taxes, required by applicable Laws to be collected by it and has duly
remitted to the appropriate Governmental Entity within the time prescribed under any
applicable Law all such amounts required to be remitted and has duly and timely paid
any and all sales, use or transfer Taxes required to be paid or self-assessed by it pursuant
to applicable Laws and has claimed eligible exemptions, refunds and input Tax credits
in respect thereof in accordance with applicable Laws. |
| (v) | ▇▇▇▇▇▇▇
has not made, prepared and/or filed any notice of objection, elections, designations
or any other similar filings relating to Taxes or entered into any agreement or other
arrangement in respect of Taxes or Tax Returns that has effect for any period ending
after the Effective Date. ▇▇▇▇▇▇▇ has not entered into any agreement with any taxing
authorities or consent to any extension or waiver of any limitation period with respect
to Taxes nor is there any outstanding request for any such agreement, consent or waiver; |
| (vi) | There
are no proceedings, investigations, audits or Claims now pending or, to the knowledge
of ▇▇▇▇▇▇▇, threatened or proposed by any Governmental Entity against ▇▇▇▇▇▇▇ in respect
of any Taxes and there are no matters under discussion, audit or appeal with any Governmental
Entity relating to Taxes. |
| (vii) | ▇▇▇▇▇▇▇
has not acquired property or services from a non-arm’s length Person, within the
meaning of the Tax Act: (i) for consideration the fair market value of which is less
than the fair market value of the property; or (ii) as a contribution of capital for
which no shares were issued by the acquirer of the property. |
| (viii) | ▇▇▇▇▇▇▇
has prepared proper documentation in accordance with Section 247(4) of the Tax Act
(or any provincial or territorial equivalent) in respect of any transaction entered into
with a non-resident Person not dealing at arm’s length with ▇▇▇▇▇▇▇ for purposes
of the Tax Act. Any such transaction has not and should not give rise to a transfer pricing
adjustment under Section 247(2) of the Tax Act (or any provincial or territorial
equivalent). |
| (ix) | ▇▇▇▇▇▇▇
has not filed any Tax Returns in any jurisdiction other than Canada or paid taxes in
any jurisdiction other than Canada and no jurisdiction other than Canada has ever asserted
that filing of any Tax Returns or payment of any Taxes is required under any applicable
Laws. |
| (x) | ▇▇▇▇▇▇▇
has made available to Mountain copies of all federal, provincial and territorial Tax
Returns for the taxation years ended December 31, 2016, 2015 and 2014, and all assessments
or reassessments, correspondence related to any assessment or reassessment, requests
for Tax rulings, Tax rulings issued by any Governmental Entity, and correspondence related
to any audit or proposed audit of ▇▇▇▇▇▇▇, to the extent relating to periods or events
in respect of which any Governmental Entity may in accordance with applicable Law assess,
reassess or otherwise impose any Taxes on ▇▇▇▇▇▇▇. |
| (xi) | For
the purposes of the Tax Act and any other relevant Tax purposes, ▇▇▇▇▇▇▇ is resident
in Canada. |
| (xii) | There
are no Liens for Taxes upon any properties or assets of ▇▇▇▇▇▇▇ (other than Liens relating
to Taxes not yet due and payable or for Taxes which are being contested in good faith
through appropriate proceedings and for which adequate provisions or reserves have been
recorded in the ▇▇▇▇▇▇▇ Financial Statements). |
| (xiii) | Other
than as disclosed in Schedule 3.1(q) the ▇▇▇▇▇▇▇ Disclosure Letter, ▇▇▇▇▇▇▇ has fulfilled
all of its obligations to incur and renounce “CEE” and “Canadian development
expense” (as defined in the Tax Act) in the full amounts of any subscription funds
received pursuant to any “flow-through share” (as defined in the Tax Act)
subscription agreement all in accordance with the Tax Act. |
| (xiv) | There
are no circumstances which could result in the application of section 17, section 78
or sections 80 to 80.04 of the Tax Act, or any equivalent provision under provincial
or territorial law, to ▇▇▇▇▇▇▇. Other than in the ordinary course of business, ▇▇▇▇▇▇▇
has not claimed nor will it claim any reserve under any provisions of the Tax Act or
any equivalent provincial or territorial provision, if any amount could be included in
the income of ▇▇▇▇▇▇▇ for any period ending after Effective Time. |
| (xv) | ▇▇▇▇▇▇▇
has complied in all respects with all registration, reporting, payment, collection and
remittance requirements in respect of the goods and services tax or harmonized sales
tax imposed under the Excise Tax Act (Canada) and the regulations thereunder,
as amended, provincial sales taxes any other sales and use Taxes. |
| (r) | Books
and Records. The corporate records and minute books of ▇▇▇▇▇▇▇ have been maintained
in accordance with all applicable Laws, and the minute books of ▇▇▇▇▇▇▇ as provided to
Mountain are complete and accurate in all material respects. The corporate minute books
for ▇▇▇▇▇▇▇ contain minutes of all meetings and resolutions of the directors and securityholders
held. The financial books and records and accounts of ▇▇▇▇▇▇▇ in all material respects:
(a) have been maintained in accordance with good business practices and in accordance
with IFRS and with the accounting principles generally accepted in Canada, on a basis
consistent with prior years; and (b) are stated in reasonable detail and accurately and
fairly reflect the transactions and dispositions of assets of ▇▇▇▇▇▇▇. |
| (i) | Schedule 3.1(s)
of the ▇▇▇▇▇▇▇ Disclosure Letter sets out a true and complete list of ▇▇▇▇▇▇▇’▇
policies of insurance. ▇▇▇▇▇▇▇ has in place reasonable and prudent insurance policies
appropriate for its size, nature and stage of development. All premiums payable prior
to the date hereof under such policies of insurance have been paid and ▇▇▇▇▇▇▇ has not
failed to make a claim thereunder on a timely basis. |
| (ii) | Each
of such policies and other forms of insurance is in full force and effect on the date
hereof and ▇▇▇▇▇▇▇ will use reasonable commercial efforts to keep them in full force
and effect or renew them as appropriate through the Effective Date. No written (or to
the knowledge of ▇▇▇▇▇▇▇ other) notice of cancellation or termination has been received
by ▇▇▇▇▇▇▇ with respect to any such policy. |
| (t) | Non-Arm’s
Length Transactions. Except for employment, consulting or employment compensation
agreements entered into in the ordinary course of business, there are no current contracts,
commitments, agreements, arrangements or other transactions (including relating to indebtedness
by ▇▇▇▇▇▇▇) between ▇▇▇▇▇▇▇ on the one hand, and any (a) officer or director of ▇▇▇▇▇▇▇,
(b) any holder of record or, to the knowledge of ▇▇▇▇▇▇▇, beneficial owner of five percent
or more of the voting securities of ▇▇▇▇▇▇▇, or (c) any affiliate or associate of any
officer, director or beneficial owner, on the other hand. |
| (i) | Schedule
3.1(u) of the ▇▇▇▇▇▇▇ Disclosure Letter contains a true and complete list of all ▇▇▇▇▇▇▇
Benefit Plans. Complete copies of all material ▇▇▇▇▇▇▇ Benefit Plans including, but not
limited to, any material trust instruments, insurance contracts and all amendments thereto
have been provided to Mountain. |
| (ii) | ▇▇▇▇▇▇▇
has no material liability for life, health, medical or other welfare benefits to former
employees or beneficiaries or dependents thereof, and there has been no communication
to employees by ▇▇▇▇▇▇▇ which could reasonably be interpreted to promise or guarantee
such employees retiree health or life insurance or other retiree death benefits on a
permanent basis. |
| (iii) | No
▇▇▇▇▇▇▇ Benefit Plan is a “registered pension plan” as such term is defined
in the Tax Act. |
| (iv) | Each
▇▇▇▇▇▇▇ Benefit Plan has been operated in accordance with its terms and any contributions
required to be made under each ▇▇▇▇▇▇▇ Benefit Plan, as of the date hereof, have been
timely made and all obligations in respect of each ▇▇▇▇▇▇▇ Benefit Plan have been properly
accrued and reflected in the ▇▇▇▇▇▇▇ Financial Statements. |
| (v) | There
has been no amendment to, announcement by ▇▇▇▇▇▇▇ relating to, or change in employee
participation or coverage under, any ▇▇▇▇▇▇▇ Benefit Plan which would increase materially
the expense of maintaining such plan above the level of the expense incurred therefor
for the most recent fiscal year. Except as disclosed in Schedule 3.1(u) of the ▇▇▇▇▇▇▇
Disclosure Letter, neither the execution of this Agreement, nor the consummation of the
▇▇▇▇▇▇▇ Arrangement will (i) entitle any employees of ▇▇▇▇▇▇▇ to ▇▇▇▇▇▇▇▇▇ pay or any
increase in severance pay upon any termination of employment after the date hereof, (ii)
accelerate the time of payment or vesting or result in any payment or funding (through
a grantor trust or otherwise) of compensation or benefits under, increase the amount
payable or result in any other material obligation pursuant to, any of the ▇▇▇▇▇▇▇ Benefit
Plans, or (iii) limit or restrict the right of ▇▇▇▇▇▇▇ or, after the consummation of
the ▇▇▇▇▇▇▇ Arrangement, Mountain to merge, amend or terminate any of the ▇▇▇▇▇▇▇ Benefit
Plans. |
| (v) | Environmental.
Except for any matters that, individually or in the aggregate, would not have or would
not reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect: |
| (i) | all
facilities and operations of ▇▇▇▇▇▇▇ have been conducted, and are now, in material compliance
with all Environmental Laws; |
| (ii) | ▇▇▇▇▇▇▇
is in possession of, and in compliance with, all Environmental Permits that are required
to conduct its business as it is now being conducted; |
| (iii) | no
environmental, reclamation or closure obligation, demand, notice, work order or other
liabilities presently exist with respect to any portion of any currently or formerly
owned, leased, used or otherwise controlled property, interests and rights or relating
to the operations and business of ▇▇▇▇▇▇▇ and, to the knowledge of ▇▇▇▇▇▇▇, there is
no basis for any such obligations, demands, notices, work orders or liabilities to arise
in the future as a result of any activity in respect of such property, interests, rights,
operations and business; |
| (iv) | ▇▇▇▇▇▇▇
is not subject to any proceeding, application, order or directive which relates to environmental,
health or safety matters, and which may require any material work, repairs, construction
or expenditures; |
| (v) | to
the knowledge of ▇▇▇▇▇▇▇, there are no changes in the status, terms or conditions of
any Environmental Permits held by ▇▇▇▇▇▇▇ or any renewal, modification, revocation, reassurance,
alteration, transfer or amendment of any such environmental approvals, consents, waivers,
permits, orders and exemptions, or any review by, or approval of, any Governmental Entity
of such environmental approvals, consents, waivers, permits, orders and exemptions that
are required in connection with the execution or delivery of this Agreement, the consummation
of the transactions contemplated herein or the continuation of the business of ▇▇▇▇▇▇▇
following the Effective Date; |
| (vi) | ▇▇▇▇▇▇▇
has made available to Mountain all material audits, assessments, investigation reports,
studies, plans, regulatory correspondence and similar information with respect to environmental
matters; and |
| (vii) | to
the knowledge of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ is not subject to any past or present fact, condition
or circumstance that could reasonably be expected to result in liability under any Environmental
Laws that would individually or in the aggregate, constitute a ▇▇▇▇▇▇▇ Material Adverse
Effect. |
| (w) | Restrictions
on Business Activities. There is no agreement, judgement, injunction, order or decree
binding upon ▇▇▇▇▇▇▇ that has or could reasonably be expected to have the effect of prohibiting,
restricting or materially impairing any business practice of ▇▇▇▇▇▇▇, any acquisition
of property by ▇▇▇▇▇▇▇ or the conduct of business by ▇▇▇▇▇▇▇ as currently conducted (including
following the transaction contemplated by this Agreement) other than such agreements,
judgements, injunctions, orders or decrees which would not, individually or in the aggregate,
reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (x) | Material
Contracts. ▇▇▇▇▇▇▇ has performed in all material respects all respective obligations
required to be performed by it to date under any Material Contracts. ▇▇▇▇▇▇▇ is not in
breach or default under any Material Contract to which it is a party or bound, nor does
▇▇▇▇▇▇▇ have knowledge of any condition that with the passage of time or the giving of
notice or both would result in such a breach or default, except in each case where any
such breaches or defaults would not, individually or in the aggregate, reasonably be
expected to result in, or result in, a ▇▇▇▇▇▇▇ Material Adverse Effect. ▇▇▇▇▇▇▇ does
not know of, or has not received written notice of, any breach or default under (nor,
to the knowledge of ▇▇▇▇▇▇▇, does there exist any condition which with the passage of
time or the giving of notice or both would result in such a breach or default under)
any such Material Contract by any other party thereto except where any such violation
or default would not, individually or in the aggregate, reasonably be expected to result
in, or result in, a ▇▇▇▇▇▇▇ Material Adverse Effect. Prior to the date hereof, ▇▇▇▇▇▇▇
has made available to Mountain true and complete copies of all of the Material Contracts
of ▇▇▇▇▇▇▇. All contracts that are material to ▇▇▇▇▇▇▇ are with ▇▇▇▇▇▇▇. All Material
Contracts are legal, valid, binding and in full force and effect and are enforceable
by ▇▇▇▇▇▇▇ in accordance with their respective terms (subject to bankruptcy, insolvency
and other applicable Laws affecting creditors’ rights generally, and to general
principles of equity) and are the product of fair and arms’ length negotiations
between the parties thereto. |
| (y) | Relationships
with Customers, Suppliers, Distributors and Sales Representatives. ▇▇▇▇▇▇▇ has not
received any written (or to the knowledge of ▇▇▇▇▇▇▇) notice that any customer, supplier,
distributor or sales representative intends to cancel, terminate or otherwise modify
or not renew its relationship with ▇▇▇▇▇▇▇, and, to the knowledge of ▇▇▇▇▇▇▇, no such
action has been threatened, which, in either case, individually or in the aggregate,
would reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse Effect. |
| (z) | Brokers.
Other than as disclosed in Schedule 3.1(z) of the ▇▇▇▇▇▇▇ Disclosure Letter, none
of ▇▇▇▇▇▇▇ or any of its respective officers, directors or employees has employed any
broker or finder or incurred any liability for any brokerage fees, commissions or finder’s
fees in connection with the transactions contemplated by this Agreement. |
| (aa) | Reporting
Issuer Status. As of the date hereof, ▇▇▇▇▇▇▇ is a reporting issuer not in default
(or the equivalent) under the Securities Laws of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, New Brunswick, Nova Scotia, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Newfoundland. |
| (bb) | Stock
Exchange Compliance. ▇▇▇▇▇▇▇ is in compliance in all material respects with the applicable
listing and rules and regulations of the TSXV. |
| (cc) | No
Expropriation. No property or asset of ▇▇▇▇▇▇▇ has been taken or expropriated by
any Governmental Entity nor has any notice or proceeding in respect thereof been given
or commenced nor, to the knowledge of ▇▇▇▇▇▇▇, is there any intent or proposal to give
any such notice or to commence any such proceeding. |
| (dd) | Corrupt
Practices Legislation. Neither ▇▇▇▇▇▇▇, nor, to the knowledge of ▇▇▇▇▇▇▇, any of
its officers, directors or employees acting on behalf of ▇▇▇▇▇▇▇ or affiliates has taken,
committed to take or been alleged to have taken any action which would cause ▇▇▇▇▇▇▇
or any of its affiliates to be in violation of the United States’ Foreign Corrupt
Practices Act (and the regulations promulgated thereunder), the Corruption of
Foreign Public Officials Act (Canada) (and the regulations promulgated thereunder)
or any applicable Law, and to the knowledge of ▇▇▇▇▇▇▇ no such action has been taken
by any of its agents, representatives or other Persons acting on behalf of ▇▇▇▇▇▇▇ or
any of its affiliates. |
| 3.2 | Survival
of Representations and Warranties |
The
representations and warranties of ▇▇▇▇▇▇▇ contained in this Agreement shall not survive the completion of the ▇▇▇▇▇▇▇ Arrangement
and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in
accordance with its terms.
Article
4
REPRESENTATIONS AND WARRANTIES OF MOUNTAIN
| 4.1 | Representations
and Warranties |
Except
as disclosed in the Mountain Disclosure Letter (which shall make reference to the applicable section, subsection, paragraph or
subparagraph below in respect of which such qualification is being made) Mountain hereby represents and warrants to ▇▇▇▇▇▇▇ as
follows, and acknowledges that ▇▇▇▇▇▇▇ is relying upon such representations and warranties in connection with the entering into
of this Agreement:
| (a) | Organization
and Qualification. Mountain and each of 2435386 and 2435572 are duly incorporated
and validly existing under the OBCA and have full corporate power and authority to own
their respective assets and conduct their business as now owned and conducted. Mountain,
2435386 and 2435572 are duly qualified to carry on business and are in good standing
in each jurisdiction in which the character of their respective properties or the nature
of their respective activities makes such qualification necessary. True and complete
copies of the constating documents of each Mountain, 2435386 and 2435572 have been delivered
or made available to ▇▇▇▇▇▇▇, and Mountain, 2435386 and 2435572 have not taken any action
to amend or supersede such documents. |
| (b) | Authority
Relative to this Agreement. Mountain 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 Mountain and the consummation by Mountain of the transactions
contemplated by this Agreement have been duly authorized by the Mountain Board and no
other corporate proceedings on the part of Mountain are necessary to authorize this Agreement
other than the Mountain Shareholder Approval. This Agreement has been duly executed and
delivered by Mountain and constitutes a valid and binding obligation of Mountain, enforceable
by ▇▇▇▇▇▇▇ against Mountain in accordance with its terms, except as the enforcement thereof
may be limited by bankruptcy, insolvency and other applicable Laws affecting the enforcement
of creditors’ rights generally and subject to the qualification that equitable
remedies may be granted only in the discretion of a court of competent jurisdiction. |
| (c) | No
Conflict; Required Filings and Consent. The execution and delivery by Mountain of
this Agreement and the performance by it of its obligations hereunder and the completion
of the ▇▇▇▇▇▇▇ Arrangement will not violate, conflict with or result in a breach of any
provision of the constating documents of Mountain, and except as would not, individually
or in the aggregate, have or reasonably be expected to have a Mountain Material Adverse
Effect, will not: (a) violate, conflict with or result in a breach of: (i) any agreement,
contract, indenture, deed of trust, mortgage, bond, instrument, Authorization, licence
or permit to which Mountain is party or by Mountain which is bound; or (ii) any Law to
which Mountain or any is subject or by which Mountain is bound; (b) give rise to any
right of termination, or the acceleration of any indebtedness, under any such agreement,
contract, indenture, Authorization, deed of trust, mortgage, bond, instrument, licence
or permit; or (c) give rise to any rights of first refusal or rights of first offer,
trigger any change in control or influence provisions or any restriction or limitation
under any such agreement, contract, indenture, Authorization, deed of trust, mortgage,
bond, instrument, licence or permit, or result in the imposition of any encumbrance,
charge or Lien upon any of Mountain’s assets. Other than the Mountain TSX Approval,
the Mountain Nasdaq Approval and ▇▇▇▇▇▇▇ TSXV Approval, no Authorization, consent or
approval of, or filing with, any Governmental Entity or any court or other authority
is necessary on the part of Mountain for the consummation by Mountain of its obligations
in connection with the ▇▇▇▇▇▇▇ Arrangement under this Agreement or for the completion
of the ▇▇▇▇▇▇▇ Arrangement not to cause or result in any loss of any rights or assets
or any interest therein held by Mountain in any material properties, except for such
Authorizations, consents, approvals and filings as to which the failure to obtain or
make would not, individually or in the aggregate, prevent or materially delay consummation
of the transactions contemplated by this Agreement. |
| (d) | Subsidiaries.
Mountain owns 100% of the outstanding securities of 2435572, which owns 100% of the outstanding
securities of 2435386. Other than the foregoing, Mountain does not have Subsidiaries
or any material interests in any Person. |
| (i) | The
operations of Mountain have been and are now conducted in compliance with all Laws of
each jurisdiction, the Laws of which have been and are now applicable to the operations
of Mountain and Mountain has not received any notice of any alleged violation of any
such Laws, other than non-compliance or violations which, individually or in the aggregate,
would not have a Mountain Material Adverse Effect. |
| (ii) | Mountain
is not in conflict with, or in default (including cross defaults) under or in violation
of: (a) its articles or by-laws or equivalent organizational documents; or (b) any agreement
or understanding to which it or by which any of its properties or assets is bound or
affected, except for failures which, individually or in the aggregate, would not have
a Mountain Material Adverse Effect. |
| (f) | Mountain
Authorizations. Mountain has obtained all Authorizations necessary for the ownership,
operation, development, maintenance, or use of the material assets of Mountain or otherwise
in connection with the material business or operations of Mountain and such Authorizations
are in full force and effect. Mountain has fully complied with and is in compliance with
all Authorizations, except, in each case, for such non-compliance which, individually
or in the aggregate, would not have a Mountain Material Adverse Effect. There is no action,
investigation or proceeding pending or, to the knowledge of Mountain, threatened regarding
any of the Authorizations. Mountain has not received any notice, whether written or oral,
of revocation or non-renewal of any such Authorizations, or of any intention of any Person
to revoke or refuse to renew any of such Authorizations, except in each case, for revocations
or non-renewals which, individually or in the aggregate, would not have a Mountain Material
Adverse Effect and, to the knowledge of Mountain, all such Authorizations continue to
be effective in order for Mountain to continue to conduct its business as it is currently
being conducted. No Person other than Mountain owns or has any proprietary, financial
or other interest (direct or indirect) in any of the Authorizations. To the knowledge
of Mountain, the Operator (a) owns, possesses or has obtained all material Authorizations
that are required by Law (including, for greater certainty, Environmental Laws) in connection
with the operation of the Project as presently conducted or in connection with the current
ownership, operation or use of the Project Assets and (b) has complied, in all material
respects, with all such Authorizations. To the knowledge of Mountain, each such Authorization
is valid and in full force and effect, and is renewable by its terms or in the ordinary
course. To the knowledge of Mountain, no action, investigation or proceeding is pending
or threatened against the Operator or the Project Assets in respect of or regarding any
such Authorization that could reasonably be expected to result in the suspension, loss
or revocation of any such Authorization. To the knowledge of Mountain, all work required
to be performed and filed by the Operator in respect of such Authorizations has been
performed and filed, in all material respects, and all Taxes, rentals, fees, expenditures
and other payments or security deposits required to be made in respect thereof by the
Operator have been paid, incurred or deposited, in all material respects, and all filings
in respect thereof required by the Operator have been made, in all material respects. |
| (g) | Capitalization
and Listing. |
| (i) | The
authorized share capital of Mountain consists of an unlimited number of Mountain Shares.
As at the date of this Agreement there are: (A) 160,253,501 Mountain Shares validly issued
and outstanding as fully-paid and non-assessable shares of Mountain; and (B) 3,640,000
outstanding options providing for the issuance of 3,640,000 Mountain Shares upon the
exercise thereof; (C) nil outstanding warrants providing for the issuance of nil Mountain
Shares upon the exercise thereof and (d) 488,665 Mountain RSUs outstanding. Except for
the securities referred to in this Section 4.1(g)(i), (x) there are no options,
warrants, conversion privileges, calls or other rights, shareholder rights plans, agreements,
arrangements, commitments, or obligations of Mountain to issue or sell any shares of
Mountain or securities or obligations of any kind convertible into, exchangeable for
or otherwise carrying the right or obligation to acquire any shares of Mountain and (y)
no Person is entitled to any pre-emptive or other similar right granted by Mountain.
Mountain Shares are listed on the TSX and Nasdaq, and are not listed or quoted on any
market other than the TSX and Nasdaq. Mountain has not, in the twelve (12) months preceding
the date hereof, received notice from Nasdaq to the effect that Mountain is not in compliance
with the listing or maintenance requirements of Nasdaq. Mountain qualifies as a “foreign
private issuer” as defined under the U.S. Exchange Act and in the last twelve (12)
months has filed or furnished all reports or other information required to be filed or
furnished by Mountain under the U.S. Exchange Act. |
| (ii) | There
are no outstanding contractual obligations of Mountain to repurchase, redeem or otherwise
acquire any Mountain Shares. |
| (iii) | No
order ceasing or suspending trading in securities of Mountain nor prohibiting the sale
of such securities has been issued and is outstanding against Mountain or, its directors,
officers or promoters. |
| (iv) | All
Consideration Shares, when issued in accordance with the terms of the ▇▇▇▇▇▇▇ Arrangement
will, as the case may be, be duly authorized, validly issued, fully-paid and non-assessable
Mountain Shares. |
| (h) | Shareholder
and Similar Agreements. Mountain is not party to any shareholder, pooling, voting
trust or other similar agreement relating to the issued and outstanding shares in the
capital of Mountain. |
| (i) | Reports.
Mountain has filed with all applicable Governmental Entities true and complete copies
of Mountain Public Documents that Mountain is required to file therewith. Mountain Public
Documents at the time filed: (i) did not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were made, not
misleading, and (i) complied in all material respects with the requirements of applicable
Securities Laws. Mountain has not filed any confidential material change report with
any Governmental Entity which at the date hereof remains confidential. |
| (i) | The
Mountain Financial Statements have been, and all financial statements of Mountain which
are publicly disseminated by Mountain in respect of any subsequent periods prior to the
Effective Date will be, prepared in accordance with IFRS applied on a basis consistent
with prior periods and all applicable Laws and present fairly, in all material respects,
the assets, liabilities (whether accrued, absolute, contingent or otherwise), financial
position and results of operations of Mountain as of the respective dates thereof and
its results of operations and cash flows for the respective periods covered thereby (except
as may be indicated expressly in the notes thereto). There are no outstanding loans made
by Mountain to any executive officer or director of Mountain. |
| (ii) | Neither
Mountain nor, to Mountain’s knowledge, any director, officer, employee, auditor,
accountant or representative of Mountain has received or otherwise had or obtained knowledge
of any complaint, allegation, assertion, or claim, whether written or oral, regarding
the accounting or auditing practices, procedures, methodologies or methods of Mountain
or its internal accounting controls, including any complaint, allegation, assertion,
or claim that Mountain has engaged in questionable accounting or auditing practices,
which has not been resolved to the satisfaction of the audit committee of the Mountain
Board, or has not been disclosed to ▇▇▇▇▇▇▇. |
| (k) | Undisclosed
Liabilities. Other than has disclosed in Schedule 4.1(k) of the Mountain Disclosure
Letter, Mountain does not have any liabilities or obligations of any nature, whether
or not accrued, contingent or otherwise, except for: (a) liabilities and obligations
that are specifically presented on the Mountain Financial Statements; or (b) liabilities
and obligations incurred in the ordinary course of business consistent with past practice
that are not and would not, individually or in the aggregate with all other liabilities
and obligations of Mountain (other than those disclosed on the Mountain Annual Financial
Statements), reasonably be expected to have a Mountain Material Adverse Effect, or have
a Mountain Material Adverse Effect, or, as a consequence of the consummation of the ▇▇▇▇▇▇▇
Arrangement, have or reasonably be expected to have a Mountain Material Adverse Effect.
Without limiting the foregoing, the Mountain Financial Statements reflect reasonable
reserves in accordance with IFRS for contingent liabilities of Mountain. |
| (l) | Interest
in Mineral Rights. |
| (i) | All
of Mountain’s mineral interests and rights with respect to the Mountain Mineral
Properties, including any material mining claims, concessions, exploration licences,
exploitation licences, prospecting permits, mining leases and mining rights, in each
case, either existing under contract, by operation of Law, are set out in Schedule 4.1(l)
of the Mountain Disclosure Letter (the “Mountain Mineral Rights”).
Other than the Mountain Mineral Rights set out in Schedule 4.1(l) of the Mountain Disclosure
Letter, Mountain does not own or have any interest in material mineral interests. |
| (ii) | Other
than as set out in Schedule 4.1(l) of the Mountain Disclosure Letter: |
| (A) | Mountain
is the legal and beneficial owner of all right, title and interest in and to the Mountain
Mineral Rights, free and clear of any Liens other than Permitted Encumbrances. |
| (B) | All
of the Mountain Mineral Rights have been properly located and recorded in compliance
with applicable Law and are comprised of valid and subsisting mineral claims or mining
leases. |
| (C) | The
Mountain Mineral Rights are in good standing under applicable Law and, to the knowledge
of Mountain, all work required to be performed and filed in respect thereof has been
performed and filed, all Taxes, rentals, fees, expenditures and other payments in respect
thereof have been paid or incurred and all filings in respect thereof have been made. |
| (D) | There
is no material adverse claim against or challenge to the title to or ownership of the
Mountain Mineral Rights. |
| (E) | No
Person other than Mountain has any interest in the Mountain Mineral Rights or the production
or profits therefrom or any royalty in respect thereof or any right to acquire any such
interest. |
| (F) | There
are no back-in rights, earn-in rights, rights of first refusal or similar provisions
or rights which would affect Mountain’s interest in the Mountain Mineral Rights. |
| (G) | There
are no material restrictions on the ability of Mountain to use, transfer or exploit the
Mountain Mineral Rights, except pursuant to applicable Law. |
| (H) | Mountain
has all surface rights, including fee simple estates, leases, easements, rights of way
and permits or licences operations from landowners or Governmental Entities permitting
the use of land by Mountain, and mineral interests that are required to explore the Mountain
Mineral Rights as contemplated in Mountain Public Documents filed (and available on SEDAR)
on or before the date hereof and no third party or group holds any such rights that would
be required by Mountain to explore any of the Mountain Mineral Rights as contemplated
in Mountain Public Documents filed (and available on SEDAR) on or before the date hereof. |
| (iii) | Mountain
has not received any notice, whether written or oral, from any Governmental Entity of
any revocation or intention to revoke any interest of Mountain in any of the Mountain
Mineral Rights. |
| (m) | Operational
Matters. Except as would not, individually or in the aggregate, be reasonably expected
to result in a Mountain Material Adverse Effect: |
| (i) | all
rentals, royalties, overriding royalty interests, production payments, net profits, interest
burdens, payments and obligations due and payable, or performable, as the case may be,
on or prior to the date hereof under, with respect to, or on account of, any direct or
indirect assets of Mountain and its material joint ventures, have been: (A) duly paid;
(B) duly performed; or (C) provided for prior to the date hereof; and |
| (ii) | all
costs, expenses, and liabilities payable on or prior to the date hereof under the terms
of any contracts and agreements to which Mountain or material joint ventures is directly
or indirectly bound have been properly and timely paid, except for such expenses that
are being currently paid prior to delinquency in the ordinary course of business. |
| (i) | Mountain
is not (i) a party to any collective bargaining agreement, or (ii) subject to any application
for certification or, to the knowledge of Mountain, threatened or apparent union-organizing
campaigns for employees not covered under a collective bargaining agreement. To the knowledge
of Mountain, no fact or event exists that is likely to give rise to a change in the representation
in this Subsection 4.1(n) on or before the Effective Date. |
| (ii) | Mountain
is not subject to any claim for wrongful dismissal, constructive dismissal or any other
tort claim, actual or, to the knowledge of Mountain, threatened, or any litigation actual,
or to the knowledge of Mountain, threatened, relating to employment or termination of
employment of employees or independent contractors, except for such claims or litigation
which individually or in the aggregate would not be reasonably expected to have a Mountain
Material Adverse Effect. To the knowledge of Mountain, no labour strike, lock-out, slowdown
or work stoppage is pending or threatened against or directly affecting Mountain or the
Operator, except as would not be reasonably expected to have a Mountain Material Adverse
Effect. |
| (iii) | Mountain
has operated in accordance with all applicable Laws with respect to employment and labour,
including employment and labour standards, occupational health and safety, employment
equity, pay equity, workers’ compensation, human rights, labour relations and privacy
and there are no current, pending, or to the knowledge of Mountain, threatened proceedings
before any board or tribunal with respect to any of the areas listed herein, except where
the failure to so operate would not have a Mountain Material Adverse Effect. |
| (o) | Absence
of Certain Changes or Events. Except as disclosed in the Mountain Disclosure Letter,
since September 30, 2017: |
| (i) | Mountain
has conducted its business only in the ordinary course of business and consistent with
past practice; |
| (ii) | no
liability or obligation of any nature (whether absolute, accrued, contingent or otherwise)
which has had or is reasonably likely to have a Mountain Material Adverse Effect has
been incurred; |
| (iii) | there
has not been any event, circumstance or occurrence which has had or is reasonably likely
to give rise to a Mountain Material Adverse Effect; |
| (iv) | there
has not been any change in the accounting practices used by Mountain, except as disclosed
in the Mountain Public Documents; |
| (v) | except
for ordinary course adjustments to non-executive employees, there has not been any increase
in the salary, bonus, or other remuneration payable to any non-executive employees of
Mountain. |
| (vi) | there
has not been any redemption, repurchase or other acquisition of Mountain Shares by Mountain,
or any declaration, setting aside or payment of any dividend or other distribution (whether
in cash, shares or property) with respect to the Mountain Shares; |
| (vii) | there
has not been any entering into, or an amendment of, any Material Contract other than
in the ordinary course of business consistent with past practice; |
| (viii) | there
has not been any satisfaction or settlement of any material claims or material liabilities
that were not reflected in Mountain Financial Statements, other than the settlement of
claims or liabilities incurred in the ordinary course of business consistent with past
practice; and |
| (ix) | except
for ordinary course adjustments, there has not been any increase in the salary, bonus,
or other remuneration payable to any officers or senior or executive officers of Mountain. |
| (p) | Litigation.
There is no claim, action, proceeding or investigation pending or, to the knowledge of
Mountain, threatened against or relating to Mountain, the business of Mountain or affecting
any of its properties, assets, before or by any Governmental Entity which, if adversely
determined, would have, or reasonably could be expected to have, a Mountain Material
Adverse Effect or prevent or materially delay the consummation of the ▇▇▇▇▇▇▇ Arrangement,
nor to knowledge of Mountain are there any events or circumstances which could reasonably
be expected to give rise to any such claim, action, proceeding or investigation (provided
that the representation in this Subsection 4.1(p) shall not apply to claims, actions,
proceedings, or investigations which may arise after the date of this Agreement which
do not have a reasonable prospect of succeeding or, if successful, would not give rise
to, nor reasonably be expected to give rise to, a Mountain Material Adverse Effect).
Mountain is not subject to any outstanding order, writ, injunction or decree which has
had or is reasonably likely to have a Mountain Material Adverse Effect or which would
prevent or materially delay consummation of the transactions contemplated by this Agreement. |
| (q) | Taxes.
Other than as set forth in Schedule 4.1(q) of the Mountain Disclosure Letter: |
| (i) | Mountain
has duly and in a timely manner filed all Tax Returns required to be filed by it prior to the date hereof with the appropriate
Governmental Entity. Such Tax Returns are complete and correct in all material respects. Mountain has paid all Taxes, including
instalments on account of Taxes for the current year required by applicable Law, which are due and payable by it in accordance
with applicable Laws whether or not assessed by the appropriate Governmental Entity, other than Taxes which are being contested
in good faith through appropriate proceedings and for which adequate provisions or reserves have been recorded on the balance
sheet included in Mountain Financial Statements. |
| | | |
| | (ii) | Mountain
has made adequate provisions or reserves in accordance with IFRS in the Mountain Financial Statements of Mountain for any Taxes
of Mountain for the period covered by such the Mountain Financial Statements that have not been paid whether or not shown as being
due on any Tax Returns. Since such publication date, no liability in respect of Taxes not reflected in such statements or otherwise
provided for has been assessed, reassessed, proposed to be assessed or reassessed, incurred or accrued, other than in the ordinary
course of business. |
| | | |
| | (iii) | Mountain
has duly and timely withheld or deducted all Taxes and other amounts required by applicable Law to be withheld or deducted by
it (including Taxes and other amounts required to be withheld or deducted by it in respect of any amount paid or credited or deemed
to be paid or credited by it to or for the benefit of any Person including any former or current employees, directors, officers
and non-resident Person) and has duly and timely remitted to the appropriate Governmental Entity within the time prescribed under
any applicable Law all such Taxes or other amounts. |
| | | |
| | (iv) | Mountain
has duly and timely collected all amounts on account of any sales, use or transfer Taxes, including goods and services, harmonized
sales, provincial and territorial taxes and state and local taxes, required by applicable Laws to be collected by it and has duly
remitted to the appropriate Governmental Entity within the time prescribed under any applicable Law all such amounts required
to be remitted and has duly and timely paid any and all sales, use or transfer Taxes required to be paid or self-assessed by it
pursuant to applicable Laws and has claimed eligible exemptions, refunds and input Tax credits in respect thereof in accordance
with applicable Laws. |
| | (v) | Mountain
has not made, prepared and/or filed any notice of objection, elections, designations or any other similar filings relating to
Taxes or entered into any agreement or other arrangement in respect of Taxes or Tax Returns that has effect for any period ending
after the Effective Date. Mountain has not entered into any agreement with any taxing authorities or consent to any extension
or waiver of any limitation period with respect to Taxes nor is there any outstanding request for any such agreement, consent
or waiver. |
| | | |
| | (vi) | There
are no proceedings, investigations, audits or Claims now pending or, to the knowledge of Mountain, threatened or proposed by any
Governmental Entity against Mountain in respect of any Taxes and there are no matters under discussion, audit or appeal with any
Governmental Entity relating to Taxes. |
| | | |
| | (vii) | Mountain
has not acquired property or services from a non-arm’s length Person, within the meaning of the Tax Act: (i) for consideration
the fair market value of which is less than the fair market value of the property; or (ii) as a contribution of capital for which
no shares were issued by the acquirer of the property. |
| | | |
| | (viii) | Mountain
has made available to ▇▇▇▇▇▇▇ copies of all federal, provincial and territorial Tax Returns for the taxation years ended December
31, 2016, 2015 and 2014, and all assessments or reassessments, correspondence related to any assessment or reassessment, requests
for Tax rulings, Tax rulings issued by any Governmental Entity, and correspondence related to any audit or proposed audit of Mountain,
to the extent relating to periods or events in respect of which any Governmental Entity may in accordance with applicable Law
assess, reassess or otherwise impose any Taxes on Mountain.
|
| | | |
| | (ix) | For
the purposes of the Tax Act and any other relevant Tax purposes, Mountain is resident in Canada. |
| | | |
| | (x) | There
are no Liens for Taxes upon any properties or assets of Mountain (other than Liens relating to Taxes not yet due and payable or
for Taxes which are being contested in good faith through appropriate proceedings and for which adequate provisions or reserves
have been recorded in the Mountain Financial Statements). |
| | | |
| | (xi) | There
are no circumstances which could result in the application of section 17, section 78 or sections 80 to 80.04 of the Tax Act, or
any equivalent provision under provincial or territorial law, to Mountain. Other than in the ordinary course of business, Mountain
has not claimed nor will it claim any reserve under any provisions of the Tax Act or any equivalent provincial or territorial
provision, if any amount could be included in the income Mountain for any period ending after Effective Time. |
| | | |
| | (xii) | Mountain
has complied in all respects with all registration, reporting, payment, collection and remittance requirements in respect of the
goods and services tax or harmonized sales tax imposed under the Excise Tax Act (Canada) and the regulations thereunder, as amended,
provincial sales taxes any other sales and use Taxes. |
| (r) | Books
and Records. The corporate records and minute books of Mountain have been maintained
in accordance with all applicable Laws, and the minute books of Mountain as provided
to ▇▇▇▇▇▇▇ are complete and accurate in all material respects. The corporate minute books
for Mountain contain minutes of all meetings and resolutions of the directors and securityholders
held. The financial books and records and accounts of Mountain in all material respects:
(a) have been maintained in accordance with good business practices and in accordance
with IFRS and with the accounting principles generally accepted in the country of domicile
of each such entity, on a basis consistent with prior years; and (b) are stated in reasonable
detail and accurately and fairly reflect the transactions and dispositions of assets
of Mountain. |
| (i) | Mountain
has in place reasonable and prudent insurance policies appropriate for its size, nature
and stage of development. All premiums payable prior to the date hereof under such policies
of insurance have been paid and Mountain has not failed to make a claim thereunder on
a timely basis. |
| (ii) | Each
of such policies and other forms of insurance is in full force and effect on the date
hereof and Mountain will use reasonable commercial efforts to keep them in full force
and effect or renew them as appropriate through the Effective Date. No written (or to
the knowledge of Mountain) notice of cancellation or termination has been received by
Mountain with respect to any such policy. |
| (t) | Non-Arm’s
Length Transactions. Except for employment or employment compensation agreements
entered into in the ordinary course of business and as set out in the Mountain Public
Documents, there are no current contracts, commitments, agreements, arrangements or other
transactions (including relating to indebtedness by Mountain) between Mountain on the
one hand, and any (i) officer or director of Mountain, (ii) any holder of record or,
to the knowledge of Mountain, beneficial owner of five percent or more of the voting
securities of Mountain, or (iii) any affiliate or associate of any officer, director
or beneficial owner, on the other hand. |
| (u) | Environmental.
Except for any matters that, individually or in the aggregate, would not have or would
not reasonably be expected to have a Mountain Material Adverse Effect: |
| (i) | all
facilities and operations of Mountain have been conducted, and are now, in material compliance
with all Environmental Laws; |
| (ii) | Mountain
is in possession of, and in compliance with, all Environmental Permits that are required
to conduct its business as it is now being conducted; |
| (iii) | no
environmental, reclamation or closure obligation, demand, notice, work order or other
liabilities presently exist with respect to any portion of any currently or formerly
owned, leased, used or otherwise controlled property, interests and rights or relating
to the operations and business of Mountain and, to the knowledge of Mountain, there is
no basis for any such obligations, demands, notices, work orders or liabilities to arise
in the future as a result of any activity in respect of such property, interests, rights,
operations and business; |
| (iv) | Mountain
is not subject to any proceeding, application, order or directive which relates to environmental,
health or safety matters, and which may require any material work, repairs, construction
or expenditures; |
| (v) | to
the knowledge of Mountain, there are no changes in the status, terms or conditions of
any Environmental Permits held by Mountain or any renewal, modification, revocation,
reassurance, alteration, transfer or amendment of any such environmental approvals, consents,
waivers, permits, orders and exemptions, or any review by, or approval of, any Governmental
Entity of such environmental approvals, consents, waivers, permits, orders and exemptions
that are required in connection with the execution or delivery of this Agreement, the
consummation of the transactions contemplated herein or the continuation of the business
of Mountain following the Effective Date; |
| (vi) | Mountain
has made available to ▇▇▇▇▇▇▇ all material audits, assessments, investigation reports,
studies, plans, regulatory correspondence and similar information with respect to environmental
matters; |
| (vii) | to
the knowledge of Mountain, Mountain is not subject to any past or present fact, condition
or circumstance that could reasonably be expected to result in liability under any Environmental
Laws that would individually or in the aggregate, constitute a Mountain Material Adverse
Effect; and |
| (viii) | to
the knowledge of Mountain, the mining operations at the Project, have been, conducted
in compliance in all material respects with applicable Laws and Environmental Laws. To
the knowledge of Mountain, the Operator is not under any investigation with respect to,
has not been charged or threatened to be charged with, and has not received notice of,
any material violation or potential material violation of any Law. |
| (v) | Restrictions
on Business Activities. There is no agreement, judgement, injunction, order or decree
binding upon Mountain that has or could reasonably be expected to have the effect of
prohibiting, restricting or materially impairing any business practice of Mountain, any
acquisition of property by Mountain or the conduct of business by Mountain as currently
conducted (including following the transaction contemplated by this Agreement) other
than such agreements, judgements, injunctions, orders or decrees which would not, individually
or in the aggregate, reasonably be expected to have a Mountain Material Adverse Effect. |
| (w) | Material
Contracts. Mountain has performed in all material respects all respective obligations
required to be performed by it to date under any Material Contracts. Mountain is not
in breach or default under any Material Contract to which it is a party or bound, nor
does Mountain have knowledge of any condition that with the passage of time or the giving
of notice or both would result in such a breach or default, except in each case where
any such breaches or defaults would not, individually or in the aggregate, reasonably
be expected to result in, or result in, a Mountain Material Adverse Effect. Mountain
does not know of, or has received written notice of, any breach or default under (nor,
to the knowledge of Mountain, does there exist any condition which with the passage of
time or the giving of notice or both would result in such a breach or default under)
any such Material Contract by any other party thereto except where any such violation
or default would not, individually or in the aggregate, reasonably be expected to result
in, or result in, a Mountain Material Adverse Effect. Prior to the date hereof, Mountain
has made available to ▇▇▇▇▇▇▇ true and complete copies of all of the Material Contracts
of Mountain. All Material Contracts are legal, valid, binding and in full force and effect
and are enforceable by Mountain in accordance with their respective terms (subject to
bankruptcy, insolvency and other applicable Laws affecting creditors’ rights generally,
and to general principles of equity) and are the product of fair and arms’ length
negotiations between the parties thereto. |
| (x) | Relationships
with Customers, Suppliers, Distributors and Sales Representatives. Mountain has not
received any written (or to the knowledge of Mountain) notice that any customer, supplier,
distributor or sales representative intends to cancel, terminate or otherwise modify
or not renew its relationship with Mountain, and, to the knowledge of Mountain, no such
action has been threatened, which, in either case, individually or in the aggregate,
would reasonably be expected to have a Mountain Material Adverse Effect. |
| (y) | Brokers.
None of Mountain or, to the knowledge of any of its officers, directors or employees
of Mountain has employed any broker or finder or incurred any liability for any brokerage
fees, commissions or finder’s fees in connection with the transactions contemplated
by this Agreement. |
| (z) | Reporting
Issuer Status. As of the date hereof, Mountain is a reporting issuer not in default
(or the equivalent) under the Securities Laws of British Columbia, Alberta, Saskatchewan,
Manitoba, Ontario, New Brunswick, Nova Scotia, ▇▇▇▇▇▇ ▇▇▇▇▇▇ Island and Newfoundland. |
| (aa) | Stock
Exchange Compliance. Mountain is in compliance in all material respects with the
applicable listing and corporate governance rules and regulations of the TSX and Nasdaq. |
| (bb) | No
Expropriation. No property or asset of Mountain has been taken or expropriated by
any Governmental Entity nor has any notice or proceeding in respect thereof been given
or commenced nor, to the knowledge of Mountain, is there any intent or proposal to give
any such notice or to commence any such proceeding. |
| (cc) | Corrupt
Practices Legislation. Neither Mountain and its affiliates, nor, to the knowledge
of Mountain, any of their respective officers, directors or employees acting on behalf
of Mountain or its affiliates has taken, committed to take or been alleged to have taken
any action which would cause Mountain or its affiliates to be in violation of the United
States’ Foreign Corrupt Practices Act (and the regulations promulgated thereunder),
the Corruption of Foreign Public Officials Act (Canada) (and the regulations promulgated
thereunder) or any applicable Law of similar effect of another jurisdiction, and to the
knowledge of Mountain, no such action has been taken by any of its agents, representatives
or other Persons acting on behalf of Mountain or its affiliates. |
| (dd) | Disclosure
of Project Terms. Mountain has not entered into any arrangement or agreement with
De Beers other than (i) the Joint Venture Agreement, (ii) the Intent Letter, (iii) the
Confirmation of Assignment Agreement, and (iv) the Letter of Credit Agreements. To the
knowledge of Mountain, there is no JV Management Committee decision which might be material
to the Project which has been made which has not been disclosed in writing to ▇▇▇▇▇▇▇. |
| (ee) | Project
Document. Each Project Document (i) to which either of Mountain or 2435386 is a party,
is in full force and effect, and (ii) to which the Operator (but not Mountain or ▇▇▇▇▇▇▇)
is a party is, to the knowledge of Mountain, in full force and effect, except to the
extent to that such Project Document has been discharged in accordance with its terms
and provided that no rights, obligations or liabilities (contingent or otherwise) of
any party to it remain outstanding. Other than any disputes set out in the Mountain Disclosure
Letter (i) there is no dispute in connection with any Project Document to which Mountain
or 2435386 is a party; and (ii) to the knowledge of Mountain, there is no dispute in
connection with any Project Document to which De Beers is a party. To the knowledge of
Mountain, the Operator is not in breach of any of its material obligations under Project
Documents to which it is a party and no party to any Project Document in breach of the
material terms of any Project Document to which it is a party. |
| (ff) | The
Joint Venture and Project Assets. |
| (i) | 2435386
is a party to the Joint Venture Agreement and has legal and beneficial ownership of its
Participating Interests in the Joint Venture, which Participating Interest is forty nine
per cent (49%) on the date of this Agreement. |
| (ii) | No
MPV Default (as such term is defined in the Joint Venture Agreement) has occurred at
any time, other than as disclosed in the Mountain Disclosure Letter. |
| (iii) | To
the knowledge of Mountain, each of ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ and the Operator, as applicable,
has acquired or has acquired the use of (or will acquire or acquire the use of by the
date they are required in relation to the Project) all Project Assets and all Mining
Rights, and has obtained (or will obtain by the date they are required in relation to
the Project) such other surface and other rights as are necessary for access rights,
water rights, plant sites, tailings disposal, waste dumps, ore dumps, abandoned heaps
and ancillary facilities which are or will be required in connection with the development
of the Project. |
| (iv) | To
the knowledge of Mountain, each of each of 2435572 and 2435386, has valid and marketable
title to all of the assets it owns or purports to own and necessary to carry on its business
as presently conducted (including, in the case of 2435386, its Participating Interests
in the Joint Venture), free and clear of all Liens except Permitted Encumbrances. |
| (v) | To
the knowledge of Mountain, the Operator has good, valid and marketable title to all of
the Joint Venture Property it owns or purports to own and any other assets necessary
to carry on its business as presently conducted, free and clear of all Liens (including
infringement claims with respect to patents, trademarks, copyrights and similar intellectual
property rights) except Permitted Encumbrances. |
| (vi) | To
the knowledge of Mountain, neither the 2435572 nor 2435386 owns any assets or properties
other than those used in connection with the Project and those incidental to the operation
of the Project (and, in the case of the 2435572, the shares in 2435386). |
| (vii) | To
the knowledge of Mountain, the Operator has complied in all material respects with all
contractual obligations relating to any Project Asset leased, operated, licensed or used
by it and all instruments pursuant to which it is entitled to lease, operate, license
or use any such Project Assets are in full force and effect. |
| (viii) | To
the knowledge of Mountain, the Operator has or will have at the time they are required
for the Project, good, valid and marketable title to, or valid leases or licenses of,
and all appropriate Authorizations to use, the assets necessary to carry on its business
as presently conducted. |
| (ix) | The
Operator is the registered holder of the Mineral Licenses. |
| (x) | To
the knowledge of Mountain, the Mining Licenses and the Mining Rights are in full force
and effect in accordance with their respective terms and the Operator has complied in
all material respects with the terms and provisions of the Mining Licenses and Mining
Rights. |
| (xi) | To
the knowledge of Mountain, the Operator has not received any notification of any material
unresolved violation or noncompliance with the terms of the Mining Licenses and the Mining
Rights. |
| (xii) | To
the knowledge of Mountain, the Operator has conducted such work, has made all filings
and paid all Taxes and fees with the appropriate Governmental Entities necessary to keep
the Mining Licenses and the Mining Rights in full force and effect under Law. |
| (xiii) | To
the knowledge of Mountain, the Operator has all surface rights, including fee simple
estates, leases, easements, rights of way and permits or licences, from landowners or
Governmental Entities that are required to conduct the operations Project as currently
being conducted. |
| (xiv) | All
Permits, Environmental Permits and Authorizations necessary or material to the conduct
of the business of the Joint Venture have been issued or granted, as applicable, and
no notice has been received of proceedings relating to the revocation or modification
thereof that, if determined adversely to Mountain, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or the Operator as
operator of the Project and owner of the Joint Venture Property in trust for the parties
to the Joint Venture Agreement, would individually or in the aggregate have a Mountain
Material Adverse Effect. |
| (xv) | To
the knowledge of Mountain, there are no pending actions, suits or proceedings (including
any inquiries or investigations by any court or Governmental Entity) against or affecting
the Operator in respect of the Project or affecting the Project Assets that, if determined
adversely to the Mountain, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ or the Operator in respect of the Project,
would individually or in the aggregate have a Mountain Material Adverse Effect, or would
materially and adversely affect the ability of Mountain to perform its obligations under
this Agreement. |
| (xvi) | To
the knowledge of Mountain, all facilities and operations of the Operator have been conducted,
and are now, in material compliance with all Environmental Laws. |
| 4.2 | Survival
of Representations and Warranties |
The
representations and warranties of Mountain contained in this Agreement shall not survive the completion of the ▇▇▇▇▇▇▇ Arrangement
and shall expire and be terminated on the earlier of the Effective Time and the date on which this Agreement is terminated in
accordance with its terms.
Article
5
COVENANTS
| 5.1 | Covenants
of ▇▇▇▇▇▇▇ Regarding the Conduct of Business |
▇▇▇▇▇▇▇
covenants and agrees that during the period from the date of this Agreement until the earlier of the Effective Time and the time
that this Agreement is terminated in accordance with its terms, unless Mountain shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by this Agreement or as set out in the ▇▇▇▇▇▇▇ Disclosure Letter or otherwise required by
Law or a Governmental Entity:
| (a) | ▇▇▇▇▇▇▇
shall conduct its business only in, not take any action except in, and maintain its facilities,
in the ordinary course of business consistent with past practice and to use commercially
reasonable efforts to preserve intact its present business organization, assets and goodwill,
to preserve intact ▇▇▇▇▇▇▇, the ▇▇▇▇▇▇▇ Mineral Rights, to keep available the services
of its officers and employees as a group and to maintain satisfactory relationships consistent
with past practice with suppliers, distributors, employees, Governmental Entities and
others having business relationships with them; |
| (b) | other
than as expressly permitted or required by this Agreement or as set out in the ▇▇▇▇▇▇▇
Disclosure Letter or otherwise required by Law or a Governmental Entity, without limiting
the generality of Subsection 5.1(a), ▇▇▇▇▇▇▇ shall not, directly or indirectly: |
| (i) | issue,
sell, grant, award, pledge, dispose of, encumber or agree to issue, sell, grant, award,
pledge, dispose of or encumber any ▇▇▇▇▇▇▇ Shares, any ▇▇▇▇▇▇▇ Options, any ▇▇▇▇▇▇▇ RSUs,
any ▇▇▇▇▇▇▇ DSUs, any ▇▇▇▇▇▇▇ SARs or any warrants, calls, conversion privileges or rights
of any kind to acquire any ▇▇▇▇▇▇▇ Shares or other securities, other than pursuant to
the exercise of existing ▇▇▇▇▇▇▇ Options; |
| (ii) | sell,
pledge, lease, sell and lease back, dispose of, mortgage, licence, encumber or agree
to sell, pledge, dispose of, mortgage, licence, encumber or otherwise transfer any assets
of ▇▇▇▇▇▇▇ or any interest in any assets of ▇▇▇▇▇▇▇ having a value greater than $1,000,000
in the aggregate; |
| (iii) | amend
or propose to amend the articles, by-laws or other constating documents or the terms
of any securities of ▇▇▇▇▇▇▇; |
| (iv) | split,
combine or reclassify any outstanding ▇▇▇▇▇▇▇ Shares; |
| (v) | redeem,
purchase or offer to purchase or redeem any ▇▇▇▇▇▇▇ Shares or other securities of ▇▇▇▇▇▇▇; |
| (vi) | without
the prior written consent of Mountain, declare, set aside or pay any dividend or other
distribution (whether in cash, securities or property or any combination thereof) in
respect of any ▇▇▇▇▇▇▇ Shares; |
| (vii) | reorganize,
amalgamate or merge ▇▇▇▇▇▇▇ with any other Person; |
| (viii) | reduce
the stated capital of the shares of ▇▇▇▇▇▇▇; |
| (ix) | acquire
or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise)
directly or indirectly any Person, or make any investment either by purchase of shares
or securities, contributions of capital property transfer or purchase of any property,
interests, business or assets of any other Person that has a value greater than $1,000,000
in the aggregate; |
| (x) | prepay
any long-term indebtedness before its scheduled maturity; |
| (xi) | without
the prior written consent of Mountain, such consent not to be unreasonably withheld or
delayed, incur, create, assume or otherwise become liable for any indebtedness for borrowed
money or any other liability or obligation or issue any debt securities, or guarantee,
endorse or otherwise as an accommodation become responsible for, the obligations of any
other Person or make any loans or advances in amounts exceeding $250,000 individually
and $1,000,000 in the aggregate, except in the ordinary course of business consistent
with past practice; |
| (xii) | adopt
a plan of liquidation or resolutions providing for the liquidation or dissolution of
▇▇▇▇▇▇▇; |
| (xiii) | without
the prior written consent of Mountain, such consent not to be unreasonably withheld or
delayed, pay, discharge, settle, satisfy, compromise, waive, assign or release any claims,
liabilities or obligations except in the ordinary course of business consistent with
past practice in amounts exceeding $250,000 individually and $1,000,000 in the aggregate,
except for expenses incurred in connection with the ▇▇▇▇▇▇▇ Arrangement, provided that
▇▇▇▇▇▇▇ shall promptly provide Mountain with a summary of such expenses upon request; |
| (xiv) | authorize,
recommend or propose any release or relinquishment of any contractual right, except in
the ordinary course of business consistent with past practice; |
| (xv) | waive,
release, grant, transfer, exercise, modify or amend in any material respect, other than
in the ordinary course of the business consistent with past practice, (i) any existing
contractual rights in respect of any ▇▇▇▇▇▇▇ Mineral Rights, (ii) any material Authorization,
lease, concession, contract or other document, or (iii) any other material legal rights
or claims; |
| (xvi) | waive,
release, grant or transfer any rights of value or modify or change in any material respect
any existing licence, lease, contract or other document, other than in the ordinary course
of business consistent with past practice; |
| (xvii) | take
any action or fail to take any action which action or failure to act would result in
the material loss, expiration or surrender of, or the loss of any material benefit under,
or reasonably be expected to cause any Governmental Entities to institute proceedings
for the suspension, revocation or limitation of rights under, any material Permits necessary
to conduct its business as now conducted; or fail to prosecute with commercially reasonable
due diligence any pending applications to any Governmental Entities; |
| (xviii) | without
the prior written consent of Mountain, such consent not to be unreasonably withheld or
delayed, incur business expenses other than in the ordinary course and consistent with
past practice in amounts exceeding $250,000 individually and $1,000,000 in the aggregate,
except for expenses incurred in connection with the ▇▇▇▇▇▇▇ Arrangement, provided that
▇▇▇▇▇▇▇ shall promptly provide Mountain with a summary of such expenses upon request; |
| (xix) | take
any action or fail to take any action that is intended to, or would reasonably be expected
to, individually or in the aggregate, prevent, materially delay or materially impede
the ability of ▇▇▇▇▇▇▇ to consummate the ▇▇▇▇▇▇▇ Arrangement or the other transactions
contemplated by this Agreement; |
| (xx) | increase
the benefits payable or to become payable to its directors or officers, enter into or
modify any employment, severance, or similar agreements or arrangements with, or grant
any bonuses, salary increases, severance or termination pay to, any officer of ▇▇▇▇▇▇▇
or member of the ▇▇▇▇▇▇▇ Board, except in the ordinary course of business consistent
with past practice; |
| (xxi) | make
any loan to any employee, consultant, director or officer of ▇▇▇▇▇▇▇; |
| (xxii) | settle,
pay, discharge, satisfy, compromise, waive, assign or release (i) any action, claim or
proceeding brought against ▇▇▇▇▇▇▇ and/or any of its subsidiaries in excess of $1,000,000
(except where the action, claim or proceeding is insured and ▇▇▇▇▇▇▇’▇ contribution
does not exceed its deductible); or (ii) any action, claim or proceeding brought by any
present, former or purported holder of its securities in connection with the transactions
contemplated by this Agreement or the ▇▇▇▇▇▇▇ Plan of Arrangement; or |
| (xxiii) | in
the case of employees who are not officers of ▇▇▇▇▇▇▇ or members of the ▇▇▇▇▇▇▇ Board,
take any action with respect to the grant of any bonuses, salary increases, severance
or termination pay or with respect to any increase of benefits payable in effect on the
date hereof, except in the ordinary course of business consistent with past practice. |
| (c) | ▇▇▇▇▇▇▇
shall not, establish, adopt, enter into, amend or waive any performance or vesting criteria
or accelerate vesting, exercisability or funding under any bonus, profit sharing, thrift,
incentive, compensation, stock option, restricted stock, pension, retirement, deferred
compensation, savings, welfare, employment, termination, severance or other employee
benefit plan, agreement, trust, fund, policy or arrangement for the benefit or welfare
of any directors, officers, current or former employees of ▇▇▇▇▇▇▇ except as expressly
contemplated or permitted by this Agreement; |
| (d) | ▇▇▇▇▇▇▇
shall use commercially reasonable efforts to cause its current insurance (or re-insurance)
policies not to be cancelled or terminated or any of the 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) | ▇▇▇▇▇▇▇
shall use its commercially reasonable best efforts to maintain and preserve all of its
rights under each of its ▇▇▇▇▇▇▇ Mineral Rights and under each of its Authorizations; |
| (i) | not
take any action, which would render, or which reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in any material respect; |
| (ii) | provide
Mountain with prompt written notice of: (A) any change (or any condition, event, circumstance
or development involving a prospective change) in the business, assets, operations, capitalization,
condition (financial or otherwise), prospects, share or debt ownership, results of operations,
cash flows, properties (including the ▇▇▇▇▇▇▇ Mineral Rights), articles, by-laws, licenses,
permits (including Authorizations), rights, or privileges, whether contractual or otherwise,
or liabilities (including any contingent liabilities that may arise through outstanding,
pending or threatened litigation or otherwise), of ▇▇▇▇▇▇▇ which, when considered either
individually or in the aggregate, has resulted in or would reasonably be expected to
result in a ▇▇▇▇▇▇▇ Material Adverse Effect; (B) the occurrence, or failure to occur,
of any event or state of facts which occurrence or failure would or would be likely to
(x) cause any of the representations of ▇▇▇▇▇▇▇ contained herein to be untrue or inaccurate
(without giving effect to, applying or taking into consideration any materiality or ▇▇▇▇▇▇▇
Material Adverse Effect qualification already contained within such representation or
warranty) in any material respect; or (y) result in the failure in any material respect
of ▇▇▇▇▇▇▇ to comply with or satisfy any covenant, condition or agreement (without giving
effect to, applying or taking into consideration any qualification already contained
in such covenant, condition or agreement) to be complied with or satisfied prior to the
Effective Time; |
| (iii) | not
enter into or renew any agreement, contract, lease, licence or other binding obligation
of ▇▇▇▇▇▇▇ (A) containing (1) any limitation or restriction on the ability of ▇▇▇▇▇▇▇
or, following completion of the transactions contemplated hereby, the ability of Mountain,
to engage in any type of activity or business, (2) any limitation or restriction on the
manner in which, or the localities in which, all or any portion of the business of ▇▇▇▇▇▇▇
or, following consummation of the transactions contemplated hereby, all or any portion
of the business of Mountain, is or would be conducted, or (3) any limit or restriction
on the ability of ▇▇▇▇▇▇▇ or, following completion of the transactions contemplated hereby,
the ability of Mountain, to solicit customers or employees, or (B) that would reasonably
be expected to materially delay or prevent the consummation of the transactions contemplated
by this Agreement; and |
| (iv) | not
enter into or renew any agreement, Contract, lease, licence or other binding obligation
of ▇▇▇▇▇▇▇ that is not terminable within 30 days of the Effective Date without payment
by ▇▇▇▇▇▇▇. |
| (i) | duly
and timely file all Tax Returns required to be filed by it under applicable Laws on or
after the date hereof and all such Tax Returns will be true, complete and correct in
all material respects; |
| (ii) | duly
and timely deduct, withhold, collect, remit and pay all Taxes which are to be deducted,
withheld, collected, remitted or paid by it under applicable Law to the extent due and
payable; |
| (iii) | not
make or rescind any express or deemed election or designation relating to Taxes, its
annual tax accounting period or method of tax accounting; |
| (iv) | not
make a request for a Tax ruling, or file a notice of objection, or enter into any agreement
with any taxing authorities or consent to any extension or waiver of any limitation period
with respect to Taxes; |
| (v) | not
settle or compromise any Claim, action, suit, litigation, proceeding, arbitration, investigation,
audit or controversy relating to Taxes; and |
| (vi) | not
amend any Tax Return or change any of its methods of reporting income, deductions or
accounting for income Tax purposes from those employed in the preparation of its income
Tax Return for the taxation year ended December 31, 2016, except as may be required by
applicable Laws; |
| (h) | ▇▇▇▇▇▇▇
shall not authorize or propose, or enter into or modify any contract, agreement, commitment
or arrangement, to do any of the matters prohibited by the other Subsections of this
Section 5.1. |
| 5.2 | Covenants
of ▇▇▇▇▇▇▇ Relating to the Arrangement |
▇▇▇▇▇▇▇
shall perform all obligations required to be performed by ▇▇▇▇▇▇▇ under this Agreement, co-operate with Mountain in connection
therewith, and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as
soon as reasonably practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing
or the obligations in Section 2.6 of this Agreement, ▇▇▇▇▇▇▇ shall:
| (a) | use
its commercially reasonable efforts to complete the ▇▇▇▇▇▇▇ Plan of Arrangement; |
| (b) | use
its commercially reasonable efforts to obtain and assist Mountain in obtaining all required
Regulatory Approvals; |
| (c) | use
its commercially reasonable efforts to obtain as soon as practicable following execution
of this Agreement all third party consents, approvals and notices required under any
of the Material Contracts; |
| (d) | use
its commercially reasonable efforts to obtain the ▇▇▇▇▇▇▇ TSXV Approval; |
| (e) | defend
all lawsuits or other legal, regulatory or other proceedings against ▇▇▇▇▇▇▇ challenging
or affecting this Agreement or the consummation of the transactions contemplated hereby; |
| (f) | subject
to applicable Law, make available and cause to be made available to Mountain, and its
agents and advisors, information reasonably requested by Mountain for the purposes of
preparing, considering and implementing integration and strategic plans for the combined
businesses of Mountain and ▇▇▇▇▇▇▇ following completion of the ▇▇▇▇▇▇▇ Arrangement and
confirming the representations and warranties of ▇▇▇▇▇▇▇ set out in Section 3.1
of this Agreement; |
| (g) | use
commercially reasonable efforts to satisfy all conditions precedent in this Agreement
to the extent the same are within its control and take all steps set forth in the ▇▇▇▇▇▇▇
Interim Order; |
| (h) | use
commercially reasonable efforts to assist in effecting the resignations of ▇▇▇▇▇▇▇ directors
(subject to customary releases) and cause them to be replaced as of the Effective Date
by persons nominated by Mountain; and |
| (i) | if
requested by Mountain, elect under Section 256(9) of the Tax Act for ▇▇▇▇▇▇▇’▇
taxation year-end to be deemed to occur immediately before Mountain’s acquisition
of the ▇▇▇▇▇▇▇ Shares pursuant to the ▇▇▇▇▇▇▇ Plan of Arrangement. |
| 5.3 | Covenants
of Mountain Regarding the Conduct of Business |
Mountain
covenants and agrees that during the period from the date of this Agreement until the earlier of the Effective Time and the time
that this Agreement is terminated in accordance with its terms, unless ▇▇▇▇▇▇▇ shall otherwise agree in writing or as otherwise
expressly contemplated or permitted by this Agreement or as set out on the Mountain Disclosure Letter or otherwise required by
Law or a Governmental Entity:
| (a) | Mountain
shall conduct its business only in, not take any action except in, and maintain its facilities,
in the ordinary course of business consistent with past practice and to use commercially
reasonable efforts to preserve intact its present business organization, assets and goodwill,
to preserve intact Mountain, the Mountain Mineral Rights, to keep available the services
of its officers and employees as a group and to maintain satisfactory relationships consistent
with past practice with suppliers, distributors, employees, Governmental Entities and
others having business relationships with it; |
| (b) | other
than as contemplated in this Agreement or as set out in the Mountain Disclosure Letter
or otherwise required by Law or a Governmental Entity, without limiting the generality
of Section 5.3(a), Mountain shall not, directly or indirectly: |
| | (i) | issue,
sell, grant, award, pledge, dispose of, encumber or agree to issue, sell, grant, award, pledge,
dispose of or encumber any Mountain Shares, any Mountain Awards or any warrants, calls, conversion
privileges or rights of any kind to acquire any Mountain Shares, other than pursuant to the exercise
of existing Mountain Awards and warrants; |
| | | |
| (ii) | sell,
pledge, lease, sell and lease back, dispose of, mortgage, licence, encumber or agree
to sell, pledge, dispose of, mortgage, licence, encumber or otherwise transfer any assets
of Mountain or any interest in any assets of Mountain having a value greater than $4,000,000
in the aggregate; |
| | | |
| | (iii) | amend
or propose to amend the articles, by-law or other constating documents or the terms of any securities of Mountain; |
| | | |
| | (iv) | split,
combine or reclassify any outstanding Mountain Shares; |
| | (v) | redeem,
purchase or offer to purchase any or redeem Mountain Shares or other securities of Mountain;
|
| | | |
| | (vi) | without
the prior written consent of ▇▇▇▇▇▇▇, declare, set aside or pay any dividend or other distribution (whether in cash, securities
or property or any combination thereof) in respect of any Mountain Shares; |
| | | |
| | (vii) | reorganize,
amalgamate or merge Mountain with any other Person; |
| | | |
| | (viii) | acquire
or agree to acquire (by merger, amalgamation, acquisition of shares or assets or otherwise) directly or indirectly any Person,
or make any investment either by purchase of shares or securities, contributions of capital property transfer or purchase of any
property, interests, business or assets of any other Person that has a value greater than $4,000,000 in the aggregate; |
| | | |
| | (ix) | reduce
the stated capital of the shares of Mountain; |
| | | |
| | (x) | adopt
a plan of liquidation or resolutions providing for the liquidation or dissolution of Mountain; |
| | | |
| | (xii) | waive, release, grant, transfer, exercise, modify or amend in any material respect, other than in the ordinary course of the business consistent with past practice,
(i) any existing contractual rights in respect of any Mountain Mineral Rights,
(ii) any material Authorization, lease, concession, contract or other document, or
(iii) any other material legal rights or claims; |
| | | |
| | (xiii) | waive,
release, grant or transfer any rights of value or modify or change in any material respect any existing licence, lease, contract
or other document, other than in the ordinary course of business consistent with past practice; |
| | | |
| | (xiv) | take
any action or fail to take any action which action or failure to act would result in the material loss, expiration or surrender
of, or the loss of any material benefit under, or reasonably be expected to cause any Governmental Entities to institute proceedings
for the suspension, revocation or limitation of rights under, any material Permits necessary to conduct its business as now conducted;
or fail to prosecute with commercially reasonable due diligence any pending applications to any Governmental Entities; or |
| | | |
| | (xv) | take
any action or fail to take any action that is intended to, or would reasonably be expected to, individually or in the aggregate,
prevent, materially delay or materially impede the ability of Mountain to consummate the ▇▇▇▇▇▇▇ Arrangement or the other transactions
contemplated by this Agreement; |
| (c) | Mountain
shall use commercially reasonable efforts to cause its current insurance (or re-insurance)
policies not to be cancelled or terminated or any of the 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; |
| (d) | Mountain
shall use its commercially reasonable best efforts to maintain and preserve all of its
rights under each of its Mountain Mineral Rights and under each of its Authorizations; |
| | (i) | not
take any action which would render, or which reasonably may be expected to render, any representation or warranty made by it in
this Agreement untrue in any material respect; |
| | | |
| | (ii) | provide
▇▇▇▇▇▇▇ with prompt written notice of: (A) any change (or any condition, event, circumstance or development involving a prospective
change) in the business, assets, operations, capitalization, condition (financial or otherwise), prospects, share or debt ownership,
results of operations, cash flows, properties (including the Mountain Mineral Rights), articles, by-laws, licenses, permits (including
Authorizations), rights, or privileges, whether contractual or otherwise, or liabilities (including any contingent liabilities
that may arise through outstanding, pending or threatened litigation or otherwise), of Mountain which, when considered either
individually or in the aggregate, has resulted in or would reasonably be expected to result in a Mountain Material Adverse Effect;
(B) the occurrence, or failure to occur, of any event or state of facts which occurrence or failure would or would be likely to
(x) cause any of the representations of Mountain contained herein to be untrue or inaccurate (without giving effect to, applying
or taking into consideration any materiality or Mountain Material Adverse Effect qualification already contained within such representation
or warranty) in any material respect; or (y) result in the failure in any material respect of Mountain to comply with or satisfy
any covenant, condition or agreement (without giving effect to, applying or taking into consideration any qualification already
contained in such covenant, condition or agreement) to be complied with or satisfied prior to the Effective Time; and |
| | | |
| | (iii) | not
enter into or renew any agreement, contract, lease, licence or other binding obligation of Mountain (A) containing (1) any limitation
or restriction on the ability of Mountain or, following completion of the transactions contemplated hereby, the ability of Mountain,
to engage in any type of activity or business, (2) any limitation or restriction on the manner in which, or the localities in
which, all or any portion of the business of Mountain or, following consummation of the transactions contemplated hereby, all
or any portion of the business of, is or would be conducted, or (3) any limit or restriction on the ability of Mountain or, following
completion of the transactions contemplated hereby, the ability of Mountain, to solicit customers or employees, or (B) that would
reasonably be expected to materially delay or prevent the consummation of the transactions contemplated by this Agreement; and |
| (f) | Mountain
shall not authorize or propose, or enter into or modify any contract, agreement, commitment
or arrangement, to do any of the matters prohibited by the other Subsections of this
Section 5.3. |
| 5.4 | Covenants
of Mountain Relating to the Arrangements |
Mountain
shall perform all obligations required to be performed by under this Agreement, co-operate with ▇▇▇▇▇▇▇ in connection therewith,
and do all such other acts and things as may be necessary or desirable in order to consummate and make effective, as soon as reasonably
practicable, the transactions contemplated in this Agreement and, without limiting the generality of the foregoing or the obligations
in Section 2.6 of this Agreement, Mountain shall:
| (a) | use
its commercially reasonable efforts to obtain and assist ▇▇▇▇▇▇▇ in obtaining all required
Regulatory Approvals; |
| (b) | use
its commercially reasonable efforts to obtain as soon as practicable following execution
of this Agreement all third party consents, approvals and notices required under any
of the Material Contracts; |
| (c) | defend
all lawsuits or other legal, regulatory or other proceedings against Mountain challenging
or affecting this Agreement or the consummation of the transactions contemplated hereby; |
| (d) | apply
for and use commercially reasonable efforts to obtain the Mountain TSX Approval; |
| (e) | apply
for and use commercially reasonable efforts to obtain the Mountain Nasdaq Approval; |
| (f) | subject
to applicable Law, make available and cause to be made available to ▇▇▇▇▇▇▇, and its
agents and advisors, information reasonably requested by ▇▇▇▇▇▇▇ for the purposes of
confirming the representations and warranties of Mountain set out in Section 4.1
of this Agreement; and |
| (g) | use
commercially reasonable efforts to satisfy all conditions precedent in this Agreement
to the extent the same are within its control. |
| 5.5 | Employee
and Severance Matters |
After
the Effective Time, ▇▇▇▇▇▇▇ shall terminate the employment of the employees set forth in Schedule 3.1(n) of the ▇▇▇▇▇▇▇ Disclosure
Letter, and Mountain agrees that it shall pay, or shall cause ▇▇▇▇▇▇▇ to pay, the severance, any vacation pay and change of control
payment due to such employee upon such termination, the amount of which is disclosed in Section 3.1(n) of the ▇▇▇▇▇▇▇ Disclosure
Letter, which payment shall be made on the Effective Date.
Each
of the Parties covenants and agrees that, except as expressly contemplated in this Agreement, during the period from the date
of this Agreement until the earlier of the Effective Time and the time that this Agreement is terminated in accordance with its
terms:
| (a) | it
shall, and shall cause its Subsidiaries to, use commercially reasonable efforts to satisfy
(or cause the satisfaction of) the conditions precedent to its obligations hereunder
as set forth in Article 6 to the extent the same is within its control and to take, or
cause to be taken, all other actions and to do, or cause to be done, all other things
necessary, proper or advisable under all applicable Laws to complete the ▇▇▇▇▇▇▇ Plan
of Arrangement, including using commercially reasonable efforts to co-operate with the
other Party in connection with the performance by it and its subsidiaries of their obligations
hereunder; |
| (b) | it
shall not take any action, refrain from taking any commercially reasonable action, or
permit any action to be taken or not taken, which is inconsistent with this Agreement
or which would reasonably be expected to, individually or in the aggregate, materially
delay or materially impede the making or completion of the ▇▇▇▇▇▇▇ Plan of Arrangement; |
| (c) | the
Parties will cooperate and use commercially reasonable efforts to ensure that all Consideration
Shares issued under the ▇▇▇▇▇▇▇ Arrangement to the ▇▇▇▇▇▇▇ Shareholders will be issued
in reliance upon the exemption from registration provided by Section 3(a)(10) of the
U.S. Securities Act; |
| (d) | it
shall, as promptly as practicable after the execution of this Agreement (i) make, or
cause to be made, all filings and submissions applicable to it under all Laws applicable
to complete the Plan of Arrangement in accordance with the terms of this Agreement, and
(ii) use its commercially reasonable efforts to take, or cause to be taken, all other
actions necessary, proper or advisable in order for it to fulfil its obligations under
this Agreement; and |
| (e) | the
Parties will coordinate and cooperate in exchanging information and supplying assistance
that is reasonably requested in connection with any orders, registrations, consents,
filings, rulings, exemptions and approvals and the preparation of any documents reasonably
deemed by either of them to be necessary to discharge their respective obligations or
otherwise advisable under applicable Laws in connection with this Agreement or the Plan
of Arrangement, including providing each other with advance copies and a reasonable opportunity
to comment on all notices and information supplied to or filed with any Governmental
Entity. Each Party will promptly notify the other Party of any substantive communications
from or with any Governmental Entity with respect to the transactions contemplated hereby
and will use its commercially reasonable efforts to ensure to the extent permitted by
Law that the other Party, or their external counsel where appropriate, is involved in
any substantive communications and invited to attend meetings with, or other appearances
before, any Governmental Entity with respect to the transactions contemplated hereby.
To the extent that any information or documentation is deemed to be competitively sensitive
by a Party, acting reasonably, such information may be provided on a confidential and
privileged basis to external counsel only, provided that nothing in this Agreement requires
a Party to share with the other Party or its external counsel any information that relates
to the valuation of the transactions contemplated by this Agreement. |
| (a) | Each
Disclosing Party acknowledges and confirms that the disclosure of Transferred Information
is necessary for the purposes of determining if the Parties shall proceed with the transactions
contemplated herein, and that the disclosure of Transferred Information relates solely
to the carrying on of the business of the Disclosing Party and the completion of the
transactions contemplated herein. |
| (b) | Each
Disclosing Party covenants and agrees to, upon request, use reasonable efforts to advise
the Recipient of all documented purposes for which the Transferred Information was initially
collected from or in respect of the individual to which such Transferred Information
relates and all additional documented purposes where the Disclosing Party has notified
the individual of such additional purpose, and where required by law, obtained the consent
of such individual to such use or disclosure. |
| (c) | In
addition to its other obligations hereunder, Recipient covenants and agrees to: (i) prior
to the completion of the transactions contemplated herein, collect, use and disclose
the Transferred Information solely for the purpose of reviewing and completing the transactions
contemplated herein, including for the purpose of determining to complete such transactions;
(ii) after the completion of the transactions contemplated herein, collect, use and disclose
the Transferred Information only for those purposes for which the Transferred Information
was initially collected from or in respect of the individual to which such Transferred
Information relates or for the completion of the transactions contemplated herein, unless
(A) the Disclosing Party or Recipient have first notified such individual of such additional
purpose, and where required by Laws, obtained the consent of such individual to such
additional purpose, or (B) such use or disclosure is permitted or authorized by law,
without notice to, or consent from, such individual; (iii) where required by law, promptly
notify the individuals to whom the Transferred Information relates that the transactions
contemplated herein have taken place and that the Transferred Information has been disclosed
to Recipient; (iv) return or destroy the Transferred Information, at the option of the
Disclosing Party, should the transactions contemplated herein not be completed; and (v)
notwithstanding any other provision herein, where the disclosure or transfer of Transferred
Information to Recipient requires the consent of, or the provision of notice to, the
individual to which such Transferred Information relates, to not require or accept the
disclosure or transfer of such Transferred Information until the Disclosing Party has
first notified such individual of such disclosure or transfer and the purpose for same,
and where required by Laws, obtained the individual’s consent to same and to only
collect, use and disclose such information to the extent necessary to complete the transactions
contemplated herein and as authorized or permitted by Laws. |
| (d) | Recipient
shall at all times keep strictly confidential all Transferred Information provided to
it, and shall instruct those employees or advisors responsible for processing such Transferred
Information to protect the confidentiality of such information in a manner consistent
with the Recipient’s obligations hereunder and according to applicable Laws. |
| (e) | Recipient
shall ensure that access to the Transferred Information shall be restricted to those
employees or advisors of the respective Recipient who have a bona fide need to access
such information in order to complete the transactions contemplated herein. |
Article
6
CONDITIONS
| 6.1 | Mutual
Conditions Precedent |
The
obligations of the Parties to complete the ▇▇▇▇▇▇▇ Arrangement and the transactions contemplated by this Agreement are subject
to the fulfillment of each of the following conditions precedent on or before the Effective Time, each of which may only be waived
with the mutual consent of the Parties:
| (a) | the
▇▇▇▇▇▇▇ Arrangement Resolution shall have been approved and adopted by the ▇▇▇▇▇▇▇ Shareholders
at the ▇▇▇▇▇▇▇ Meeting by not less than the vote required by the ▇▇▇▇▇▇▇ Shareholder
Approval in accordance with the ▇▇▇▇▇▇▇ Interim Order and applicable Laws; |
| (b) | the
Mountain Shareholder Resolution shall have been approved and adopted by the Mountain
Shareholders at the Mountain Meeting by not less than the vote required by the Mountain
Shareholder Approval in accordance with applicable Laws; |
| (c) | the
▇▇▇▇▇▇▇ Interim Order and the ▇▇▇▇▇▇▇ Final Order shall each have been obtained on terms
consistent with this Agreement, and shall not have been set aside or modified in a manner
unacceptable to ▇▇▇▇▇▇▇ and Mountain, acting reasonably, on appeal or otherwise; |
| (d) | no
Governmental Entity shall have enacted, issued, promulgated, enforced or entered any
Law, judgment, decision, order or decree which is then in effect and has the effect of
making the ▇▇▇▇▇▇▇ Arrangement illegal or otherwise preventing or prohibiting consummation
of the ▇▇▇▇▇▇▇ Arrangement; |
| (e) | all
Regulatory Approvals shall have been obtained on terms and conditions satisfactory to
each of ▇▇▇▇▇▇▇ and Mountain, acting reasonably; |
| (f) | ▇▇▇▇▇▇▇
TSXV Approval shall have been obtained; |
| (g) | Mountain
TSX Approval shall have been obtained; |
| (h) | Mountain
Nasdaq Approval shall have been obtained; |
| (i) | the
Consideration Shares to be issued under the ▇▇▇▇▇▇▇ Arrangement shall be exempt from
the registration requirements of the U.S. Securities Act pursuant to Section 3(a)(10)
thereof; |
| (j) | the
distribution of the securities pursuant to the ▇▇▇▇▇▇▇ Arrangement shall be exempt from
the prospectus requirements of applicable Securities Laws either by virtue of exemptive
relief from the securities regulatory authorities of each of the provinces of Canada
or by virtue of applicable exemptions under Securities Laws and shall not be subject
to resale restrictions under applicable Securities Laws (other than as applicable to
control Persons or pursuant to Section 2.6 of the National Instrument 45-102 - Resale
of Securities); |
| (k) | this
Agreement shall not have been terminated. |
| 6.2 | Additional
Conditions Precedent to the Obligations of Mountain |
The
obligation of Mountain to complete the ▇▇▇▇▇▇▇ Arrangement and the transactions contemplated by this Agreement is subject to the
fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive
benefit of Mountain and may be waived in whole or in part by Mountain):
| (a) | all
covenants of ▇▇▇▇▇▇▇ under this Agreement to be performed on or before the Effective
Time which have not been waived by Mountain shall have been duly performed by ▇▇▇▇▇▇▇
in all material respects and Mountain shall have received a certificate of ▇▇▇▇▇▇▇ addressed
to Mountain and dated the Effective Date, signed on behalf of ▇▇▇▇▇▇▇ by two senior executive
officers of ▇▇▇▇▇▇▇ (on ▇▇▇▇▇▇▇’▇ behalf and without personal liability), confirming
the same as at the Effective Time; |
| (b) | the
representations and warranties of ▇▇▇▇▇▇▇ set forth in this Agreement shall be true and
correct in all respects, without regard to any materiality or ▇▇▇▇▇▇▇ Material Adverse
Effect qualifications contained in them as of the Effective Time, as though made on and
as of the Effective Time (except for representations and warranties made as of a specified
date, the accuracy of which shall be determined as of that specified date), except where
the failure or failures of all such representations and warranties to be so true and
correct in all respects would not reasonably be expected to have a ▇▇▇▇▇▇▇ Material Adverse
Effect, provided that the representations and warranties of ▇▇▇▇▇▇▇ set forth in Subsections 3.1(l)
and 3.1(dd) shall be true and correct in all material respects as of the Effective Time,
and Mountain shall have received a certificate of ▇▇▇▇▇▇▇ addressed to Mountain and dated
the Effective Date, signed on behalf of ▇▇▇▇▇▇▇ by two senior executive officers of ▇▇▇▇▇▇▇
(on ▇▇▇▇▇▇▇’▇ behalf and without personal liability), confirming the same as at
the Effective Date; |
| (c) | there
shall not be pending or threatened in writing any suit, action or proceeding by any Governmental
Entity or any other Person but excluding any action or proceeding initiated by a ▇▇▇▇▇▇▇
Shareholder (in its capacity as a ▇▇▇▇▇▇▇ Shareholder) in respect of the ▇▇▇▇▇▇▇ Arrangement,
that is reasonably likely to result in a: |
| (i) | prohibition
or restriction on the acquisition by Mountain of any ▇▇▇▇▇▇▇ Shares, restriction or prohibition
of the consummation of the ▇▇▇▇▇▇▇ Arrangement or a Person obtaining from ▇▇▇▇▇▇▇ or
Mountain any material damages directly or indirectly in connection with the ▇▇▇▇▇▇▇ Arrangement; |
| (ii) | prohibition
or material limit on the ownership by Mountain of ▇▇▇▇▇▇▇ or any material portion of
its business; or |
| (iii) | imposition
of limitations on the ability of Mountain to acquire or hold, or exercise full rights
of ownership of, any ▇▇▇▇▇▇▇ Shares, including the right to vote the ▇▇▇▇▇▇▇ Shares to
be acquired by it on all matters properly presented to the ▇▇▇▇▇▇▇ Shareholders; |
| (d) | since
the date of this Agreement, there shall not have occurred a ▇▇▇▇▇▇▇ Material Adverse
Effect, and Mountain shall have received a certificate signed on behalf of ▇▇▇▇▇▇▇ by
the chief executive officer and the chief financial officer of ▇▇▇▇▇▇▇ (on ▇▇▇▇▇▇▇’▇
behalf and without personal liability) to such effect; and |
| (e) | holders
of no more than 5% of the ▇▇▇▇▇▇▇ Shares shall have exercised Dissent Rights. |
The
foregoing conditions will be for the sole benefit of Mountain and may be waived by it in whole or in part at any time.
| 6.3 | Additional
Conditions Precedent to the Obligations of ▇▇▇▇▇▇▇ |
The
obligation of ▇▇▇▇▇▇▇ to complete the ▇▇▇▇▇▇▇ Arrangement and the transactions contemplated by this Agreement is subject to the
fulfillment of each of the following conditions precedent on or before the Effective Time (each of which is for the exclusive
benefit of ▇▇▇▇▇▇▇ and may be waived in whole or in part by ▇▇▇▇▇▇▇):
| (a) | all
covenants of Mountain under this Agreement to be performed on or before the Effective
Time which have not been waived by ▇▇▇▇▇▇▇ shall have been duly performed by Mountain
in all material respects and ▇▇▇▇▇▇▇ shall have received a certificate of Mountain, addressed
to ▇▇▇▇▇▇▇ and dated the Effective Date, signed on behalf of Mountain by two senior executive
officers of Mountain (on Mountain’s behalf and without personal liability), confirming
the same as of the Effective Time; |
| (b) | the
representations and warranties of Mountain set forth in this Agreement shall be true
and correct in all respects, without regard to any materiality or Mountain Material Adverse
Effect qualifications contained in them as of the Effective Time, as though made on and
as of the Effective Time (except for representations and warranties made as of a specified
date, the accuracy of which shall be determined as of that specified date), except where
the failure or failures of all such representations and warranties to be so true and
correct in all respects would not reasonably be expected to have a Mountain Material
Adverse Effect, provided that the representations and warranties of Mountain set forth
Sections 4.1(l) and 4.1(cc) shall be true and correct in all material respects as
of the Effective Time, and ▇▇▇▇▇▇▇ shall have received a certificate of Mountain addressed
to ▇▇▇▇▇▇▇ and dated the Effective Date, signed on behalf of Mountain by two senior executive
officers of Mountain (on Mountain’s behalf and without personal liability), confirming
the same as at the Effective Time; |
| (c) | Mountain
shall have complied with its obligations under Section 2.10 and the Depositary shall
have confirmed receipt of the Consideration; and |
| (d) | since
the date of this Agreement, there shall not have occurred a Mountain Material Adverse
Effect and ▇▇▇▇▇▇▇ shall have received a certificate signed on behalf of Mountain by
the chief executive officer and chief financial officer of Mountain (on Mountain’s
behalf and without personal liability) to such effect. |
The
foregoing conditions will be for the sole benefit of ▇▇▇▇▇▇▇ and may be waived by it in whole or in part at any time.
| 6.4 | Satisfaction
of Conditions |
The
conditions precedent set out in Section 6.1, Section 6.2 and Section 6.3 shall be conclusively deemed to have been
satisfied, waived or released when, with the agreement of the Parties, the ▇▇▇▇▇▇▇ Articles of Arrangement are filed under the
OBCA to give effect to the ▇▇▇▇▇▇▇ Arrangement.
Article
7
ADDITIONAL AGREEMENTS
| 7.1 | Mutual
Covenants Regarding Non-Solicitation |
| (a) | Except
as expressly provided in this Article 7, neither Party shall, directly or indirectly,
through any of its Representatives or subsidiaries, or otherwise, and shall not permit
or authorize any such Person to do so on its behalf: |
| | (i) | solicit,
assist, initiate, encourage or otherwise facilitate (including by way of furnishing or providing copies of, access to, or disclosure
of, any confidential information, properties, facilities, books or records of a Party or any subsidiary or entering into any form
of agreement, arrangement or understanding) any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute
or lead to, an Acquisition Proposal; |
| | (ii) | enter
into or otherwise engage or participate in any discussions or negotiations with any Person (other than the other Party hereto)
regarding any inquiry, proposal or offer that constitutes or may reasonably be expected to constitute or lead to, an Acquisition
Proposal; |
| | | |
| | (iii) | in
the case of ▇▇▇▇▇▇▇, make a ▇▇▇▇▇▇▇ Change in Recommendation other than following the occurrence of any Mountain Material Adverse
Effect, and in the case of Mountain, make a Mountain Change in Recommendation, other than following the occurrence of any ▇▇▇▇▇▇▇
Material Adverse Effect; |
| | | |
| | (iv) | accept,
approve, endorse or recommend, or publicly propose to accept, approve, endorse or recommend, or take no position or remain neutral
with respect to, any Acquisition Proposal (it being understood that publicly taking no position or a neutral position with respect
to a publicly announced, or otherwise publicly disclosed, Acquisition Proposal for a period of no more than five Business Days
will not be considered to be in violation of this Section 7.1 provided the ▇▇▇▇▇▇▇ Board or the Mountain Board, as the case may
be, has rejected such Acquisition Proposal and affirmed the ▇▇▇▇▇▇▇ Board Recommendation or the Mountain Board Recommendation,
as the case may be, before the end of such five Business Day period (or in the event that the ▇▇▇▇▇▇▇ Meeting or Mountain Meeting,
as the case may be, is scheduled to occur within such five Business Day period, prior to the third Business Day prior to the date
of the ▇▇▇▇▇▇▇ Meeting or Mountain Meeting, as the case may be); or |
| | | |
| | (v) | accept
or enter into or publicly propose to accept or enter into any agreement, understanding or arrangements in respect of an Acquisition
Proposal. |
| (b) | Each
Party shall, and shall cause its Subsidiaries and its Representatives to, immediately
cease and terminate, and cause to be terminated, any solicitation, encouragement, discussion,
negotiation, or other activities commenced prior to the date of this Agreement with any
Person (other than the other Party hereto) with respect to any inquiry, proposal or offer
that constitutes, or may reasonably be expected to constitute or lead to, an Acquisition
Proposal, and in connection therewith, each Party will: |
| | (i) | immediately
discontinue access to and disclosure of all information, including any data room and any confidential information, properties,
facilities, books and records of such Party or of any of its subsidiaries; and |
| | | |
| | (ii) | within
two Business Days, request, and exercise all rights it has to require (i) the return or destruction of all copies of any non-public
confidential information regarding such Party or any of its subsidiaries provided to any Person, and (ii) the destruction of all
material including or incorporating or otherwise reflecting such confidential information regarding such Party or any of its subsidiaries,
using its commercially reasonable efforts to ensure that such requests are fully complied with in accordance with the terms of
such rights or entitlements. |
| (c) | Neither
Party has, in the year prior to the date of this Agreement, waived any confidentiality,
standstill or similar agreement or restriction to which such Party or any of its subsidiaries
is a party, and each Party further covenants and agrees (i) that, except in respect of
an unsolicited Acquisition Proposal made on a nonpublic basis to such Party as contemplated
by Sections 7.3, 7.4 or 7.5, such Party shall take all necessary action to enforce each
confidentiality, standstill, nondisclosure, non-solicitation, use, business purpose or
similar agreement, restriction or covenant to which such Party or any of its subsidiaries
is a party, and (ii) that neither it, nor any of its subsidiaries or any of their respective
Representatives have or will, without the prior written consent of the other Party (which
may be withheld or delayed in the other Party’s sole and absolute discretion),
release any Person from, or waive, amend, suspend or otherwise modify such Person’s
obligations respecting such Party, or any of its subsidiaries, under any confidentiality,
standstill, non-disclosure, non-solicitation, use, business purpose or similar agreement,
restriction or covenant to which such Party or any of its subsidiaries is a party; provided,
however, that the Parties acknowledge and agree that the automatic termination or release
of any such agreement, restriction or covenant in accordance with their terms shall not
be a violation of this Section 7.1(c). |
| (d) | Each
Party shall advise its Representatives of the prohibitions set out in this Article 7
and any violation of the restrictions set forth in this Article 7 by a Party’s
Representatives is deemed to be a breach of this Article 7 by such Party. |
| 7.2 | Notification
of Acquisition Proposals |
If
a Party or any of its subsidiaries or any of their respective Representatives, receives an Acquisition Proposal after the date
of this Agreement, or any request for copies of, access to, or disclosure of, confidential information relating to such Party
or any subsidiary in connection with such an Acquisition Proposal, such Party shall as soon as practicable and in any event within
24 hours of the receipt thereof notify the other Party (at first orally and then in writing) of such Acquisition Proposal or request.
Such notice shall include a description of its material terms and conditions of such Acquisition Proposal or request and the identity
of all Persons making the Acquisition Proposal or request and shall provide the other Party with copies of all written documents,
correspondence or other material received in respect of, from or on behalf of any such Person. The Party receiving the Acquisition
Proposal shall keep the other Party fully informed on a current basis of the status of material or substantive developments and
(to the extent such Party is permitted by Section 7.3 or 7.4 to enter into discussions or negotiations), the status of discussions
and negotiations with respect to any such Acquisition Proposal and shall provide the other Party with copies of all material or
substantive correspondence if in writing or electronic form, and if not in writing or electronic form, a description of the material
terms of such correspondence sent or communicated to such Party by or on behalf of any Person making any such Acquisition Proposal.
| 7.3 | Responding
to Acquisition Proposal and Superior Proposals by ▇▇▇▇▇▇▇ |
| (a) | Notwithstanding
Section 7.1, if at any time prior to obtaining the ▇▇▇▇▇▇▇ Shareholder Approval of the
▇▇▇▇▇▇▇ Arrangement Resolution, ▇▇▇▇▇▇▇ receives a bona fide written Acquisition Proposal
(that was not solicited after the date hereof in contravention of Section 7.1), ▇▇▇▇▇▇▇
may engage in or participate in discussions or negotiations regarding such Acquisition
Proposal, and may provide copies of, access to or disclosure of information, properties,
facilities, books or records of ▇▇▇▇▇▇▇ or its subsidiaries to the Person making such
Acquisition Proposal, if and only if |
| |
(i) |
the
▇▇▇▇▇▇▇ Board first determines in good faith, after consultation with its financial advisors and its outside legal counsel, that
such Acquisition Proposal (disregarding any due diligence or access condition) constitutes or could reasonably be expected to
constitute or lead to a Superior Proposal; |
| |
(ii) |
▇▇▇▇▇▇▇
has been, and continues to be, in compliance with its obligations under this Article 7; |
| |
(iii) |
prior
to providing any such copies, access, or disclosure, ▇▇▇▇▇▇▇ enters into a confidentiality and standstill agreement with such
Person substantially in the same form as the Confidentiality Agreement and any such copies, access or disclosure provided to such
Person shall have already been (or will simultaneously be) provided to Mountain; and |
| |
(iv) |
▇▇▇▇▇▇▇
promptly provides Mountain with: |
| (A) | written
notice stating ▇▇▇▇▇▇▇’▇ intention to participate in such discussions or negotiations
and to provide such copies, access or disclosure; and |
| (B) | prior
to providing any such copies, access or disclosure, a true, complete and final executed
copy of the confidentiality and standstill agreement referred to in Section 7.3(a)(iii). |
| (b) | Nothing
contained in this Agreement shall prevent the ▇▇▇▇▇▇▇ Board from complying with a court
order or Section 2.17 of Multilateral Instrument 62-104 - Takeover Bids and Issuer Bids
and similar provisions under Securities Laws relating to the provision of a directors’
circular in respect of an Acquisition Proposal. |
| 7.4 | Responding
to Acquisition Proposal and Superior Proposals by Mountain |
| (a) | Notwithstanding
Section 7.1, if at any time prior to obtaining the Mountain Shareholder Approval of the
Mountain Shareholder Resolution, Mountain receives a bona fide written Acquisition Proposal
(that was not solicited after the date hereof in contravention of Section 7.1), Mountain
may engage in or participate in discussions or negotiations regarding such Acquisition
Proposal, and may provide copies of, access to or disclosure of information, properties,
facilities, books or records of Mountain or its subsidiaries to the Person making such
Acquisition Proposal, if and only if: |
| (i) | the
Mountain Board first determines in good faith, after consultation with its financial
advisors and its outside legal counsel, that such Acquisition Proposal (disregarding
any due diligence or access condition) constitutes or could reasonably be expected to
constitute or lead to a Superior Proposal; |
| (ii) | Mountain
has been, and continues to be, in compliance with its obligations under this Article
7; |
| (iii) | prior
to providing any such copies, access, or disclosure, Mountain enters into a confidentiality
and standstill agreement with such Person substantially in the same form as the Confidentiality
Agreement and any such copies, access or disclosure provided to such Person shall have
already been (or will simultaneously be) provided to Mountain; and |
| (iv) | Mountain
promptly provides ▇▇▇▇▇▇▇ with: |
| (A) | written
notice stating Mountain’s intention to participate in such discussions or negotiations
and to provide such copies, access or disclosure; and |
| (B) | prior
to providing any such copies, access or disclosure, a true, complete and final executed
copy of the confidentiality and standstill agreement referred to in Section 7.4(a)(iii). |
| (b) | Nothing
contained in this Agreement shall prevent the Mountain Board from complying with a court
order or Section 2.17 of Multilateral Instrument 62-104 - Takeover Bids and Issuer Bids
and similar provisions under Securities Laws relating to the provision of a directors’
circular in respect of an Acquisition Proposal, |
| (a) | If
a Party (the “Receiving Party”) receives an Acquisition Proposal that
constitutes a Superior Proposal prior to, in the case of ▇▇▇▇▇▇▇ being the Receiving
Party, the approval of the ▇▇▇▇▇▇▇ Arrangement Resolution by the ▇▇▇▇▇▇▇ Shareholders,
and in the case of Mountain being the Receiving Party, the approval of the Mountain Shareholder
Resolution by the Mountain Shareholders, the Receiving Party may, subject to compliance
with Article 8, enter into a definitive agreement with respect to such Superior Proposal,
if and only if: |
| (i) | the
Receiving Party that has received the Acquisition Proposal that constitutes a Superior Proposal has been, and continues to be,
in compliance with its obligations under this Article 7; |
| | | |
| | (ii) | the
Receiving Party has delivered to the other Party a written notice of the determination of the Receiving Party’s board of
directors that such Acquisition Proposal constitutes a Superior Proposal and of the intention of the Receiving Party’s board
of directors to enter into a definitive agreement with respect to such Superior Proposal, together with a written notice from
the Receiving Party’s board of directors regarding the value and financial terms that the board of directors, in consultation
with its financial advisors, has determined should be ascribed to any non-cash consideration offered under such Acquisition Proposal
(the “Superior Proposal Notice”); |
| | | |
| | (iii) | the
Receiving Party has provided the other Party a copy of the proposed definitive agreement for the Superior Proposal and all supporting
materials, including any financing documents supplied to the Receiving Party in connection therewith; |
| | | |
| | (iv) | at
least five Business Days (the “Matching Period”) have elapsed from the date that is the later of the date on
which the other Party received the Superior Proposal Notice and the date on which such other Party received all of the materials
set forth in Section 7.5(a)(iii); |
| | | |
| | (v) | during
any Matching Period, such other Party has had the opportunity (but not the obligation), in accordance with Section 7.5(b), to
offer to amend this Agreement and the Arrangement in order for such Acquisition Proposal to cease to be a Superior Proposal; |
| | (vi) | after
the Matching Period, the Receiving Party’s board of directors has determined in good faith, after consultation with its
outside legal counsel and financial advisors, that such Acquisition Proposal continues to constitute a Superior Proposal (if applicable,
compared to the terms of the Arrangement as proposed to be amended by the other Party under Section 7.5(b)); and |
| | | |
| | (vii) | prior
to or concurrently with entering into such definitive agreement the Receiving Party terminates this Agreement pursuant to Section
8.2(c) or Section 8.2(d), as applicable, and pays the Termination Fee pursuant to Section 8.3. |
| (b) | During
the Matching Period, or such longer period as the Receiving Party may approve in writing
for such purpose: (a) the Receiving Party’s board of directors shall review any
offer made by the other Party under Section 7.5(a) to amend the terms of this Agreement
and the ▇▇▇▇▇▇▇ Arrangement in good faith in order to determine whether such proposal
would, upon acceptance, result in the Acquisition Proposal previously constituting a
Superior Proposal ceasing to be a Superior Proposal; and (b) the Receiving Party shall
negotiate in good faith with the other Party to make such amendments to the terms of
this Agreement and the ▇▇▇▇▇▇▇ Arrangement as would enable the other Party to proceed
with the transactions contemplated by this Agreement on such amended terms. If the Receiving
Party’s board of directors determines that such Acquisition Proposal would cease
to be a Superior Proposal, the Receiving Party shall promptly so advise the other Party
and the Parties shall amend this Agreement to reflect such offer made by the other Party,
and shall take and cause to be taken all such actions as are necessary to give effect
to the foregoing. |
| (c) | Each
successive amendment or modification to any Acquisition Proposal that results in an increase
in, or modification of, the consideration (or value of such consideration) to be received
by the Receiving Party’s shareholders or other material terms or conditions thereof
shall constitute a new Acquisition Proposal for the purposes of this Section 7.5, and
the other Party shall be afforded a new three Business Day Matching Period from the later
of the date on which such other Party received the Superior Proposal Notice and the date
on which such other Party received all of the materials set forth in Section 7.5(a)(iii)
with respect to the new Superior Proposal from the Receiving Party. |
| (d) | The
Receiving Party’s board of directors and committee of independent directors shall
promptly reaffirm the ▇▇▇▇▇▇▇ Board Recommendation or the Mountain Board Recommendation,
as the case may be, by press release after any Acquisition Proposal which is not determined
to be a Superior Proposal is publicly announced or the Receiving Party’s board
of directors determines that a proposed amendment to the terms of this Agreement as contemplated
under Section 7.5(b) would result in an Acquisition Proposal no longer being a Superior
Proposal. The Receiving Party shall provide the other Party and its outside legal counsel
with a reasonable opportunity to review the form and content of any such press release
and shall make all reasonable amendments to such press release as requested by the other
Party and its counsel. |
| (e) | If
the Receiving Party provides a Superior Proposal Notice to the other Party on a date
that is less than 10 Business Days before the ▇▇▇▇▇▇▇ Meeting or the Mountain Meeting,
as the case may be, the other Party will be entitled to require the Receiving Party to
adjourn or postpone such ▇▇▇▇▇▇▇ Meeting or Mountain Meeting, as the case may be, in
accordance with the terms of this Agreement to a date specified by the other Party that
is not more than 10 days after the scheduled date of the ▇▇▇▇▇▇▇ Meeting or the Mountain
Meeting, as the case may be, provided that (i) in no event shall such adjourned or postponed
meeting be held on a date that is less than five Business Days prior to the Outside Date
and (ii) the Mountain Meeting shall always be held prior to the ▇▇▇▇▇▇▇ Meeting. If a
Matching Period would not terminate before the date fixed for the ▇▇▇▇▇▇▇ Meeting or
the Mountain Meeting, as the case may be, the Receiving Party shall adjourn or postpone
the ▇▇▇▇▇▇▇ Meeting or the Mountain Meeting, as the case may be, to a date that is at
least five Business Days after the expiration of the applicable Matching Period. |
| 7.6 | Access
to Information; Confidentiality |
From
the date hereof until the earlier of the Effective Time and the termination of this Agreement pursuant to its terms, subject to
compliance with applicable Law and the terms of any existing Contracts. Each of ▇▇▇▇▇▇▇ and Mountain shall, and shall cause their
respective representatives to afford to the other Party and its representatives such access as the other Party may reasonably
require at all reasonable times, including for the purpose of facilitating integration business planning, to its officers, employees,
agents, properties, books, records and contracts, and shall furnish the requesting Party with all data and information as the
other Party may reasonably request.
| 7.7 | Notices
of Certain Events |
| (a) | Each
Party will give prompt notice to the other of the occurrence, or failure to occur, at
any time from the date hereof until the earlier to occur of the termination of this Agreement
pursuant to its terms and the Effective Time of any event or state of facts which occurrence
or failure would, or would be likely to: |
| (i) | cause
any of the representations or warranties of such Party contained herein to be untrue
or inaccurate in any material respect on the date hereof or at the Effective Time (provided
that this clause (i) shall not apply in the case of any event or state of facts resulting
from the actions or omissions of a Party which are required under this Agreement); or |
| (ii) | result
in the failure to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by such Party hereunder prior to the Effective Time, |
provided,
however, that the delivery of any notice pursuant to this Section 7.7 shall not limit or otherwise affect the remedies
available hereunder to the Party receiving that notice.
| (b) | No
Party may elect not to complete the transactions contemplated hereby pursuant to the
conditions set forth herein or any termination right arising therefrom under Subsection
8.2(c)(iii) or 8.2(d)(iii) prior to the Effective Date, unless the Party intending to
rely thereon has delivered a written notice to the other Party specifying in reasonable
detail all breaches of covenants, representations and warranties or other matters which
the Party delivering such notice is asserting as the basis for the non-fulfilment of
the applicable condition or termination right, as the case may be. If any such notice
is delivered, provided that a Party is proceeding diligently to cure such matter and
such matter is capable of being cured, no Party may terminate this Agreement until the
earlier of: (i) the Outside Date; and (ii) the expiration of a period of ten Business
Days from such notice and then only if such matter has not been cured by such date. If
such notice has been delivered prior to making of application for the ▇▇▇▇▇▇▇ Final Order
or the Mountain Meeting or the ▇▇▇▇▇▇▇ Meeting, such application and/or meetings shall
be postponed, if and to the extent necessary, until the expiry of such period. |
| 7.8 | Insurance
and Indemnification |
| (a) | Prior
to the Effective Date, ▇▇▇▇▇▇▇ shall purchase customary “tail” or “run-off”
policies of directors’ and officers’ liability insurance providing protection
no less favourable in the aggregate to the protection provided by the policies maintained
by ▇▇▇▇▇▇▇ which are in effect immediately prior to the Effective Date and providing
protection in respect of claims arising from facts or events which occurred on or prior
to the Effective Date and Mountain will, or will cause ▇▇▇▇▇▇▇ to maintain such tail
policies in effect without any reduction in scope or coverage for six years from the
Effective Date; provided, that Mountain shall not be required to pay any amounts in respect
of such coverage prior to the Effective Time and provided, further, that the cost of
such policy shall not exceed 200% of ▇▇▇▇▇▇▇’▇ current annual aggregate premium
for policies currently maintained by ▇▇▇▇▇▇▇. |
| (b) | From
and after the Effective Time, Mountain shall, or cause ▇▇▇▇▇▇▇ to, indemnify and hold
harmless, all past and present directors, officers and employees of ▇▇▇▇▇▇▇ to the greatest
extent such persons are indemnified by ▇▇▇▇▇▇▇ as of the date of this Agreement pursuant
to the articles and by-laws of ▇▇▇▇▇▇▇ and any indemnity agreements between ▇▇▇▇▇▇▇ and
such individuals in existence as of the date of this Agreement, for acts or omissions
occurring on or prior to the Effective Time. |
| (c) | The
provisions of this Section 7.8 are intended for the benefit of, and shall be enforceable
by, each insured or indemnified Person, his or her heirs and his or her legal representatives
and, for such purpose, Mountain hereby confirms that it is acting as agent on their behalf.
Furthermore, this Section 7.8 shall survive the termination of this Agreement as
a result of the occurrence of the Effective Time for a period of six years. |
Article
8
TERM, TERMINATION, AMENDMENT AND WAIVER
This
Agreement shall be effective from the date hereof until the earlier of the Effective Time and the termination of this Agreement
in accordance with its terms.
This
Agreement may be terminated at any time prior to the Effective Time (notwithstanding any approval of this Agreement, the Mountain
Shareholder Resolution or the ▇▇▇▇▇▇▇ Arrangement Resolution):
| (a) | by
mutual written agreement of ▇▇▇▇▇▇▇ and Mountain; |
| (b) | by
either ▇▇▇▇▇▇▇ or Mountain, if: |
| | (i) | the
Effective Time shall not have occurred on or before the Outside Date, except that the right to terminate this Agreement under
this Subsection 8.2(b)(i) shall not be available to any Party whose failure to fulfill any of its obligations or breach of
any of its representations and warranties under this Agreement has been the cause of, or resulted in, the failure of the Effective
Time to occur by the Outside Date; |
| | (ii) | after
the date hereof, there shall be enacted or made any applicable Law or there shall exist any injunction or court order that makes
consummation of the ▇▇▇▇▇▇▇ Arrangement illegal or otherwise prohibits or enjoins ▇▇▇▇▇▇▇ or Mountain from consummating the Arrangement
and such applicable Law, injunction or court order shall have become final and non-appealable, provided that the Party seeking
to terminate this Agreement under this Section 8.2(b)(ii) shall have used commercially reasonable efforts to, as applicable,
appeal or overturn such Law or otherwise have prevented the entry of or remove or lift such prohibition or injunction; |
| | | |
| | (iii) | the
Mountain Shareholder Approval shall not have been obtained at the Mountain Meeting; or |
| | | |
| | (iv) | the
▇▇▇▇▇▇▇ Shareholder Approval shall not have been obtained at the ▇▇▇▇▇▇▇ Meeting in accordance with the ▇▇▇▇▇▇▇ Interim Order. |
| | (i) | prior
to the Approval of the ▇▇▇▇▇▇▇ Arrangement Resolution, (A) the ▇▇▇▇▇▇▇ Board (or any committee thereof) fails to recommend or
withdraws, amends, modifies or qualifies (or proposes publicly to withdraw, amend, modify or qualify), in a manner adverse to
Mountain, the ▇▇▇▇▇▇▇ Board Recommendation, or fails to reaffirm the ▇▇▇▇▇▇▇ Board Recommendation within five Business Days (and
in any case prior to the ▇▇▇▇▇▇▇ Meeting) after having been requested in writing by Mountain (acting reasonably) to do so, including
for greater certainty in the circumstances described in Section 7.1(a)(iv) (a “▇▇▇▇▇▇▇ Change in Recommendation”);
or (B) the ▇▇▇▇▇▇▇ Board (or any committee thereof) accepts, approves, endorses or recommends, or publicly proposes to accept,
approve, endorse or recommend any Acquisition Proposal; |
| | | |
| | (ii) | prior
to obtaining Mountain Shareholder Approval, subject to Mountain having complied with the terms of this Agreement including Section
7.4 and Section 7.5, the Mountain Board authorizes Mountain to enter into an agreement (other than a confidentiality agreement
pursuant to Section 7.4(a)(iii) with respect to a Superior Proposal in accordance with Section 7.5; provided that concurrently
with such termination, Mountain pays the Termination Fee payable pursuant to Section 8.3; |
| | | |
| | (iii) | ▇▇▇▇▇▇▇
breaches any representation or warranty of ▇▇▇▇▇▇▇ set forth in this Agreement which breach would cause the condition in Section 6.2(b)
not to be satisfied or ▇▇▇▇▇▇▇ fails to perform any covenant (with the exception of the covenants contained in Sections 7.1,
7.2, 7.3 or 7.5) or material obligation made in this Agreement, in each case, in any material respect, and such breach or failure
is incapable of being cured or is not cured in accordance with the terms of Section 7.7; provided that any wilful breach
shall be deemed incapable of being cured and Mountain is not then in breach of this Agreement so as to cause any condition in
Section 6.3(a) or Section 6.3(b) not to be satisfied; |
| | | |
| | (iv) | ▇▇▇▇▇▇▇
is in breach or in default of any of its obligations or covenants set forth in Sections 7.1, 7.2, 7.3 or 7.5; |
| | | |
| | (v) | the
▇▇▇▇▇▇▇ Meeting has not occurred on or before Meeting Deadline; provided that the right to terminate this Agreement pursuant to
this Section 8.2(c)(v) shall not be available to Mountain if (A) the failure by Mountain to fulfil any obligation hereunder
is the cause of, or results in, the failure of the ▇▇▇▇▇▇▇ Meeting to occur on or before such date, or (B) the Mountain Shareholder
Resolution has not been passed at the Mountain Meeting; |
| | (vi) | ▇▇▇▇▇▇▇
provides Mountain with a Superior Proposal Notice; |
| | | |
| | (vii) | there
shall occur after the date hereof any ▇▇▇▇▇▇▇ Material Adverse Effect and the condition in Section 6.2(d) is not capable of being
satisfied by the Outside Date; or |
| | | |
| | (viii) | the
condition set forth in Section 6.2(h) (Dissent Rights) is not capable of being satisfied by the Outside Date. |
| (i) | prior
to the Approval of the Mountain Shareholder Resolution, (A) the Mountain Board (or any
committee thereof) fails to recommend or withdraws, amends, modifies or qualifies (or
proposes publicly to withdraw, amend, modify or qualify), in a manner adverse to ▇▇▇▇▇▇▇,
the Mountain Board Recommendation, or fails to reaffirm the Mountain Board Recommendation
within five Business Days (and in any case prior to the Mountain Meeting) after having
been requested in writing by ▇▇▇▇▇▇▇ (acting reasonably) to do so, including for greater
certainty in the circumstances described in Section 7.1(a)(iv) (a “Mountain
Change in Recommendation”); or (B) the Mountain Board (or any committee thereof)
accepts, approves, endorses or recommends, or publicly proposes to accept, approve, endorse
or recommend any Acquisition Proposal; |
| (ii) | prior
to obtaining ▇▇▇▇▇▇▇ Shareholder Approval, subject to ▇▇▇▇▇▇▇ having complied with the
terms of this Agreement including Sections 7.3 and 7.5, the ▇▇▇▇▇▇▇ Board authorizes
▇▇▇▇▇▇▇ to enter into an agreement (other than a confidentiality agreement pursuant to
Section 7.3(a)(iii)) with respect to a Superior Proposal in accordance with Section
7.5; provided that concurrently with such termination, ▇▇▇▇▇▇▇ pays the Termination Fee
payable pursuant to Section 8.3; |
| (iii) | Mountain
breaches any representation or warranty of Mountain set forth in this Agreement which
breach would cause the condition in Section 6.3(b) not to be satisfied or Mountain
fails to perform any covenant (with the exception of the covenants in Sections 7.1, 7.2,
7.4 or 7.5) or material obligation made in this Agreement, in each case, in any material
respect, and such breach or failure is incapable of being cured or is not cured in accordance
with the terms of Section 7.7; provided that any wilful breach shall be deemed incapable
of being cured and ▇▇▇▇▇▇▇ is not then in breach of this Agreement so as to cause any
condition in Section 6.2(a) or Section 6.2(b) not to be satisfied; |
| (iv) | the
Mountain Meeting has not occurred on or before Meeting Deadline; provided that the right
to terminate this Agreement pursuant to this Section 8.2(d)(iv) shall not be available
to ▇▇▇▇▇▇▇ if the failure by ▇▇▇▇▇▇▇ to fulfil any obligation hereunder is the cause
of, or results in, the failure of the Mountain Meeting to occur on or before such date; |
| (v) | Mountain
provides ▇▇▇▇▇▇▇ with a Superior Proposal Notice; |
| (vi) | Mountain
is in breach or in default of any of its obligations or covenants set forth in Sections 7.1,
7.2, 7.4 or 7.5; |
| (vii) | Mountain
does not comply with its obligations under Section 2.10; or |
| (viii) | there
shall occur after the date hereof any Mountain Material Adverse Effect and the condition
in Section 6.3(d) is not capable of being satisfied by the Outside Date. |
| (e) | If
this Agreement is terminated pursuant to this Section 8.2, this Agreement shall become
void and be of no further force or effect without liability of any Party (or any shareholder,
director, officer, employee, agent, consultant or representative of such Party) to any
other Party hereto, except that the provisions of this Subsection 8.2(e) and Subsections
2.5(c), 7.8, 8.3, 9.1, 9.2, 9.3, 9.4, 9.6, 9.7 and 9.9 (and all related definitions
set forth in Section 1.1) and the Confidentiality Agreement shall survive any termination
hereof pursuant to Subsection 8.2; provided further that neither the termination
of this Agreement nor anything contained in this Subsection 8.2 shall relieve a
Party from any liability arising prior to such termination and no Party shall be relieved
of any liability for any wilful breach of this Agreement. |
| 8.3 | Expenses
and Termination Fees |
| (a) | Mountain
shall be entitled to the Termination Fee upon the occurrence of any of the following
events (each an “▇▇▇▇▇▇▇ Termination Fee Event”) which shall be paid
by ▇▇▇▇▇▇▇ within the time specified in respect of each such ▇▇▇▇▇▇▇ Termination Fee
Event: |
| (i) | this
Agreement is terminated by Mountain pursuant to Section 8.2(c)(i) (▇▇▇▇▇▇▇ Change
in Recommendation) (but not including a termination by Mountain pursuant to Section 8.2(c)(i)
in circumstances where the ▇▇▇▇▇▇▇ Change in Recommendation resulted from the occurrence
of a Mountain Material Adverse Effect) or Section 8.2(c)(vi) (Superior Proposal
Notice)) in which case the Termination Fee shall be paid on the first Business Day
following such termination; |
| (ii) | this
Agreement is terminated by ▇▇▇▇▇▇▇ pursuant to Section 8.2(d)(ii) (to enter into
a Superior Proposal), in which case the Termination Fee shall be paid concurrent
with such termination; or |
| (iii) | this
Agreement is terminated by Mountain pursuant to Section 8.2(c)(iv) (Breach of Non
Solicitation) or Section 8.2(c)(v) (▇▇▇▇▇▇▇ Meeting has not occurred), or
by either Party pursuant to Section 8.2(b)(i) (Outside Date) or Section 8.2(b)(iv)
(No ▇▇▇▇▇▇▇ Shareholder Approval) or by ▇▇▇▇▇▇▇ pursuant to Section 8.2(b)(i)
(Effective Time not prior to the Outside Date) (in circumstances where Mountain
would also be entitled to terminate this Agreement pursuant to Section 8.2(c)(iv), Section
8.2(c)(v), Section 8.2(b)(i) or Section 8.2(b)(iv)), but only if, in the case of this
Section 8.3(a)(iii), prior to the termination of this Agreement, an Acquisition Proposal
shall have been made to ▇▇▇▇▇▇▇ and publicly announced, or an Acquisition Proposal with
respect to ▇▇▇▇▇▇▇ is publicly announced or any Person shall have publicly announced
the intention to make an Acquisition Proposal with respect to ▇▇▇▇▇▇▇ (other than by
Mountain), and if within nine months following the date of such termination: |
| (A) | an
Acquisition Proposal (whether or not it is the Acquisition Proposal referred to above)
is consummated by ▇▇▇▇▇▇▇; or |
| (B) | ▇▇▇▇▇▇▇
and/or one or more of its subsidiaries enters into a definitive agreement in respect
of, or the ▇▇▇▇▇▇▇ Board approves or recommends, an Acquisition Proposal and at any time
thereafter (whether or not within nine months following the date of termination of this
Agreement), such Acquisition Proposal is consummated; |
in
which case the Termination Fee shall be payable within two Business Days following the closing of the applicable transaction referred
to therein. For purposes of this Section 8.3(a)(iii), the term “Acquisition Proposal” shall have the meaning
ascribed thereto in Section 1.1, except that the references to “20%” therein shall be deemed to be references
to “50%”
| (b) | ▇▇▇▇▇▇▇
shall be entitled to the Termination Fee upon the occurrence of any of the following
events (each a “Mountain Termination Fee Event”) which shall be paid
by Mountain within the time specified in respect of each such Mountain Termination Fee
Event: |
| (i) | this
Agreement is terminated by ▇▇▇▇▇▇▇ pursuant to Section 8.2(d)(i) (Mountain Change
in Recommendation) (but not including a termination by ▇▇▇▇▇▇▇ pursuant to Section
8.2(d)(i) in circumstances where the Mountain Change in Recommendation resulted from
the occurrence of a ▇▇▇▇▇▇▇ Material Adverse Effect) or Section 8.2(d)(v) (Superior
Proposal Notice) in which case the Termination Fee shall be paid on the first Business
Day following such termination; |
| (ii) | this
Agreement is terminated by Mountain pursuant to Section 8.2(c)(ii) (to enter into
a Superior Proposal), in which case the Termination Fee shall be paid concurrent
with such termination; or |
| (iii) | this
Agreement is terminated by ▇▇▇▇▇▇▇ pursuant to Section 8.2(d)(vi) (Breach of Non Solicitation)
or Section 8.2(d)(iv) (Mountain Meeting has not occurred), or by either Party
pursuant to Section 8.2(b)(i) (Outside Date) or Section 8.2(b)(iii) (No Mountain
Shareholder Approval) or by Mountain pursuant to Section 8.2(b)(i) (Effective
Time not prior to the Outside Date) (in circumstances where ▇▇▇▇▇▇▇ would also be
entitled to terminate this Agreement pursuant to Section 8.2(d)(vi), Section 8.2(d)(v),
Section 8.2(b)(i) or Section 8.2(b)(iv)), but only if, in the case of this Section 8.3(b)(iii),
prior to the termination of this Agreement, an Acquisition Proposal shall have been made
to Mountain and publicly announced, or an Acquisition Proposal with respect to Mountain
is publicly announced or any Person shall have publicly announced the intention to make
an Acquisition Proposal with respect to Mountain (other than by ▇▇▇▇▇▇▇), and if within
nine months following the date of such termination: |
| (A) | an
Acquisition Proposal (whether or not it is the Acquisition Proposal referred to above)
is consummated by Mountain; or |
| (B) | Mountain
and/or one or more of its subsidiaries enters into a definitive agreement in respect
of, or the Mountain Board approves or recommends, an Acquisition Proposal and at any
time thereafter (whether or not within nine months following the date of termination
of this Agreement), such Acquisition Proposal is consummated; |
in
which case the Termination Fee shall be payable within two Business Days following the closing of the applicable transaction referred
to therein. For purposes of this Section 8.3(b)(iii), the term “Acquisition Proposal” shall have the meaning ascribed
thereto in Section 1.1, except that the references to “20%” therein shall be deemed to be references to “50%”.
| (c) | The
Termination Fee shall be payable by the Party required to pay such fee by wire transfer
in immediately available funds to an account specified by the Party to whom such fee
is payable. |
| (d) | Each
of the Parties acknowledges that the agreements contained in this Section 8.3 are
an integral part of the transactions contemplated in this Agreement and that, without
those agreements, the Parties would not enter into this Agreement. The Parties further
acknowledge and agree that the Termination Fee is a payment of liquidated monetary damages
which are a genuine pre-estimate of the damages which the Party entitled to receive such
fee will suffer or incur as a result of the cancellation and termination of all rights
and obligations with respect to the direct or indirect acquisition of ▇▇▇▇▇▇▇ by Mountain
in the circumstances in which the Termination Fee is payable, that such payment is not
for lost profits or a penalty, and that no Party shall take any position inconsistent
with the foregoing. Each of the Parties irrevocably waives any right it may have to raise
as a defense that any such liquidated damages are excessive or punitive. Each of the
Parties hereby acknowledges and agrees that, upon any termination of this Agreement as
permitted under Section 8.2 under circumstances where a Party is entitled to the
Termination Fee and such Termination Fee is paid in full to such Party, the Party to
whom such fee has been paid shall be precluded from any other remedy against the other
Party at law or in equity or otherwise and in any such case it shall not seek to obtain
any recovery, judgment, or damages of any kind, including consequential, indirect, or
punitive damages, against the Party who has paid such fee or any of its subsidiaries
or any of their respective directors, officers, employees, partners, managers, members,
shareholders or affiliates in connection with this Agreement or the transactions contemplated
hereby. |
| (e) | Subject
to the last sentence of Section 8.3(d), nothing in this Section 8.3 shall preclude
a Party from seeking injunctive relief to restrain any breach or threatened breach of
the covenants or agreements set forth in this Agreement or otherwise to obtain specific
performance of any such covenants or agreement, and any requirement for securing or posting
of any bond in connection with the obtaining of any such injunction or specific performance
is hereby being waived. Each of the Parties hereby acknowledges that a Party shall be
entitled to elect to be paid a Termination Fee under this Section 8.3 or pursue its remedies
contemplated in this Subsection 8.3(e) and Section 9.3. |
| (f) | Except
as otherwise provided herein, all fees, costs and expenses incurred in connection with
this Agreement and the ▇▇▇▇▇▇▇ Plan of Arrangement shall be paid by the Party incurring
such fees, costs or expenses. After the Effective Time, Mountain shall pay, or shall
cause ▇▇▇▇▇▇▇ to pay, all outstanding invoices requiring payment by ▇▇▇▇▇▇▇ for services
rendered and products purchased prior to the Effective Time, which were incurred in the
ordinary course of business consistent with past practices or in connection with the
▇▇▇▇▇▇▇ Arrangement, upon presentation of such invoices to Mountain. |
Subject
to the provisions of the ▇▇▇▇▇▇▇ Interim Order, the ▇▇▇▇▇▇▇ Plan of Arrangement and applicable Laws, this Agreement and the ▇▇▇▇▇▇▇
Plan of Arrangement may, at any time and from time to time before or after the holding of the ▇▇▇▇▇▇▇ Meeting and Mountain Meeting
but not later than the Effective Time, be amended by mutual written agreement of the Parties, without further notice to or Authorization
on the part of the Mountain Shareholders or ▇▇▇▇▇▇▇ Shareholders, and any such amendment may without limitation:
| (a) | change
the time for performance of any of the obligations or acts of the Parties; |
| (b) | waive
any inaccuracies or modify any representation or warranty contained herein or in any
document delivered pursuant hereto; |
| (c) | waive
compliance with or modify any of the covenants herein contained and waive or modify performance
of any of the obligations of the Parties; and |
| (d) | waive
compliance with or modify any mutual conditions precedent herein contained. |
Any
Party may (a) extend the time for the performance of any of the obligations or acts of the other Party, (b) waive compliance,
except as provided herein, with any of the other Party’s agreements or the fulfilment of any conditions to its own obligations
contained herein, or (c) waive inaccuracies in any of the other Party’s representations or warranties contained herein or
in any document delivered by the other Party; provided, however, that any such extension or waiver shall be valid only if set
forth in an instrument in writing signed on behalf of such Party and, unless otherwise provided in the written waiver, will be
limited to the specific breach or condition waived.
Article
9
GENERAL PROVISIONS
All
notices and other communications given or made pursuant to this Agreement shall be in writing and shall be deemed to have been
duly given and received on the day it is delivered, provided that it is delivered on a business day prior to 5:00 p.m. local time
in the place of delivery or receipt. However, if notice is delivered after 5:00 p.m. local time or if such day is not a business
day then the notice shall be deemed to have been given and received on the next business day. Notice shall be sufficiently given
if delivered (either in Person, by courier service or other personal method of delivery), or if transmitted by email to the Parties
at the following addresses (or at such other addresses as shall be specified by any Party by notice to the other given in accordance
with these provisions):
Mountain
Province Diamonds Inc.
▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇.▇.
▇▇▇ ▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
|
Attention
|
▇▇▇▇▇ ▇▇▇▇▇▇▇, Interim President and Chief Executive Officer |
| Email: |
▇.▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
with
a copy (which shall not constitute notice) to:
▇▇▇▇▇▇
▇▇▇▇▇▇▇ LLP
▇▇▇
- ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
|
Attention
|
▇▇▇▇
▇▇▇▇▇ |
| Email: |
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
▇▇▇▇▇▇▇
Diamonds Inc.
▇▇▇
- ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇ ▇▇▇
|
Attention
|
▇▇▇▇ ▇▇▇▇▇, President and Chief Executive Officer |
| Email: |
▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ |
with
a copy (which shall not constitute notice) to:
Fasken
▇▇▇▇▇▇▇▇▇ DuMoulin LLP
▇▇▇▇
- ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
, ▇▇ ▇▇▇ ▇▇▇
| Attention: |
▇▇▇▇▇
▇▇▇▇ |
| Email: |
▇▇▇▇▇@▇▇▇▇▇▇.▇▇▇ |
| 9.2 | Governing
Law; Waiver of Jury Trial |
This
Agreement shall be governed, including as to validity, interpretation and effect, by the Laws of the Province of Ontario and the
Laws of Canada applicable therein. Each of the Parties hereby irrevocably attorns to the exclusive jurisdiction of the courts
of the Province of Ontario in respect of all matters arising under and in relation to this Agreement and the ▇▇▇▇▇▇▇ Arrangement.
Subject
to Section 8.3, the Parties agree that irreparable harm would occur for which money damages would not be an adequate remedy
at Law in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or
were otherwise breached. Accordingly, the Parties agree that, in the event of any breach or threatened breach of this Agreement
by a Party, the non-breaching Party will be entitled, without the requirement of posting a bond or other security, to equitable
relief, including injunctive relief and specific performance, and the Parties shall not object to the granting of injunctive or
other equitable relief on the basis that there exists an adequate remedy at Law. Subject to Section 8.3, such remedies will
not be the exclusive remedies for any breach of this Agreement but will be in addition to all other remedies available at Law
or equity to each of the Parties.
Notwithstanding
that the transactions and events set out herein shall occur and be deemed to occur in the order set out in the ▇▇▇▇▇▇▇ Plan of
Arrangement without any further act or formality, each of the Parties to this Agreement shall make, do and execute, or cause to
be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably
be required by any of them in order to further document or evidence any of the transactions or events set out therein.
Time
shall be of the essence in this Agreement.
| 9.6 | Entire
Agreement, Binding Effect and Assignment |
This
Agreement (including the exhibits and schedules hereto and the ▇▇▇▇▇▇▇ Disclosure Letter and the Mountain Disclosure Letter) constitute
the entire agreement, and supersede all other prior agreements and understandings, both written and oral, between the Parties,
or any of them, with respect to the subject matter hereof and thereof and, except as expressly provided herein, this Agreement
is not intended to and shall not confer upon any Person other than the Parties any rights or remedies hereunder. Neither this
Agreement nor any of the rights, interests or obligations hereunder may be assigned by either of the Parties without the prior
written consent of the other Parties.
No
director or officer of Mountain shall have any personal liability whatsoever to ▇▇▇▇▇▇▇ under this Agreement, or any other document
delivered in connection with the transactions contemplated hereby on behalf of Mountain. No director or officer of ▇▇▇▇▇▇▇ shall
have any personal liability whatsoever to Mountain under this Agreement, or any other document delivered in connection with the
transactions contemplated hereby on behalf of ▇▇▇▇▇▇▇.
If
any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule or Law or public
policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any Party.
Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the Parties shall
negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible in
an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the fullest extent possible.
| 9.9 | Counterparts,
Execution |
This
Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original but all of which together
shall constitute one and the same instrument. The Parties shall be entitled to rely upon delivery of an executed facsimile or
similar executed electronic copy of this Agreement, and such facsimile or similar executed electronic copy shall be legally effective
to create a valid and binding agreement between the Parties.
[Remainder
of page intentionally left blank.]
IN
WITNESS WHEREOF Mountain and ▇▇▇▇▇▇▇ have caused this Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
MOUNTAIN
PROVINCE DIAMONDS INC.
| By: |
(signed)
"▇▇▇▇▇ ▇▇▇▇▇▇▇" |
|
| |
Name:
▇▇▇▇▇ ▇▇▇▇▇▇▇ |
|
| |
Title: Interim
President and CEO |
|
[Signature
Page to Arrangement Agreement]
▇▇▇▇▇▇▇
DIAMONDS INC.
| By: |
(signed)
"▇▇▇▇ ▇▇▇▇▇" |
|
| |
Name:
▇▇▇▇ ▇▇▇▇▇ |
|
| |
Title:
President and CEO |
|
[Signature
Page to Arrangement Agreement]
SCHEDULE
A
▇▇▇▇▇▇▇ PLAN OF ARRANGEMENT
UNDER
SECTION 182 OF THE
ONTARIO BUSINESS CORPORATIONS ACT
ARTICLE
1
INTERPRETATION
| 1.1 | Definitions.
In this plan of arrangement, unless there is something
in the subject matter or context inconsistent therewith, the following capitalized words
and terms shall have the following meanings: |
| (a) | “Arrangement
Agreement” means the arrangement agreement dated as of January 28, 2018 between
▇▇▇▇▇▇▇ and Mountain to which this ▇▇▇▇▇▇▇ Plan of Arrangement is attached as Schedule
A, as may be supplemented, amended or otherwise modified from time to time in accordance
with the terms thereof; |
| (b) | “Business
Day” means any day, other than a Saturday, a Sunday or a statutory or civic
holiday in Toronto, Ontario or Vancouver, British Columbia; |
| (c) | “Code”
means the U.S. Internal Revenue Code of 1986; |
| (d) | “Consideration
Shares” means 0.975 Mountain Shares for each one issued and outstanding ▇▇▇▇▇▇▇
Share to be issued to ▇▇▇▇▇▇▇ Shareholders pursuant to the ▇▇▇▇▇▇▇ Arrangement; |
| (e) | “Court”
means the Ontario Superior Court of Justice (Commercial List) or other court with jurisdiction
to consider and issue the ▇▇▇▇▇▇▇ Interim Order and the ▇▇▇▇▇▇▇ Final Order; |
| (f) | “Depositary”
means any trust company, bank or financial institution agreed to in writing between Mountain
and ▇▇▇▇▇▇▇ for the purpose of, among other things, exchanging the ▇▇▇▇▇▇▇ Shares for
the Consideration Shares in connection with the ▇▇▇▇▇▇▇ Arrangement; |
| (g) | “Director”
means the Director appointed pursuant to Section 278 of the OBCA; |
| (h) | “Dissent
Rights” means the rights of dissent in respect to the ▇▇▇▇▇▇▇ Arrangement under
the OBCA as described in Article 4; |
| (i) | “Dissenting
Shareholder” means a registered ▇▇▇▇▇▇▇ Shareholder who duly exercises its
Dissent Rights pursuant to Article 4 of this ▇▇▇▇▇▇▇ Plan of Arrangement and the ▇▇▇▇▇▇▇
Interim Order and who has not withdrawn or been deemed to have withdrawn such exercise
of Dissent Rights; |
| (j) | “Effective
Date” means the date the ▇▇▇▇▇▇▇ Arrangement becomes effective under the OBCA; |
| (k) | “Effective
Time” means 12:01 a.m. (Toronto time) on the Effective Date; |
| (l) | “Exchange
Ratio” means the number of Mountain Shares to be issued for each ▇▇▇▇▇▇▇ Share
pursuant to the ▇▇▇▇▇▇▇ Arrangement; |
| (m) | “Former
▇▇▇▇▇▇▇ Shareholders” means the holders of ▇▇▇▇▇▇▇ Shares immediately prior
to the Effective Time; |
| (n) | “Governmental
Entity” means: (a) any multinational, federal, provincial, territorial, state,
regional, municipal, local or other government, governmental or public department, central
bank, court, tribunal, arbitral body, commission, board, bureau, agency or entity, domestic
or foreign; (b) any stock exchange, including Nasdaq, the TSX and the TSXV; (c) any subdivision,
agent, commission, board or authority of any of the foregoing; or (d) any quasi-governmental
or private body, including any tribunal, commission, regulatory agency or self-regulatory
organization, exercising any regulatory, expropriation or taxing authority under or for
the account of any of the foregoing; |
| (o) | “including”
means including without limitation, and “include” and “includes”
have a corresponding meaning; |
| (p) | “▇▇▇▇▇▇▇”
means ▇▇▇▇▇▇▇ Diamonds Inc., a corporation incorporated under the OBCA; |
| (q) | “▇▇▇▇▇▇▇
Arrangement” means an arrangement under Section 182 of the OBCA on the terms
and conditions set forth in this ▇▇▇▇▇▇▇ Plan of Arrangement, subject to any amendments
or variations thereto made in accordance with the terms of the Arrangement Agreement,
this ▇▇▇▇▇▇▇ Plan of Arrangement, or made at the direction of the Court in the Final
Order (provided that any such amendment or variation is acceptable to both ▇▇▇▇▇▇▇ and
Mountain, each acting reasonably); |
| (r) | “▇▇▇▇▇▇▇
Arrangement Resolution” means the special resolution of the ▇▇▇▇▇▇▇ Shareholders
approving the ▇▇▇▇▇▇▇ Plan of Arrangement; |
| (s) | “▇▇▇▇▇▇▇
Articles of Arrangement” means the articles of arrangement of ▇▇▇▇▇▇▇ in respect
of the ▇▇▇▇▇▇▇ Arrangement required under 183(1) of the OBCA to be filed with the Director
giving effect to the ▇▇▇▇▇▇▇ Arrangement; |
| (t) | “▇▇▇▇▇▇▇
Final Order” means the final order of the Court pursuant to section 182(5)
of the OBCA, in form acceptable to ▇▇▇▇▇▇▇ and Mountain, each acting reasonably, approving
the ▇▇▇▇▇▇▇ Arrangement, as such order may be amended by the Court (with the consent
of both ▇▇▇▇▇▇▇ and Mountain, each acting reasonably) at any time prior to the Effective
Date or, if appealed, then, unless such appeal is withdrawn or denied, as affirmed or
as amended (provided that any such amendment is acceptable to both ▇▇▇▇▇▇▇ and Mountain,
each acting reasonably) on appeal; |
| (u) | “▇▇▇▇▇▇▇
Interim Order” means the interim order made by the Court contemplated by Section
2.2 of the Arrangement Agreement, in a form acceptable to ▇▇▇▇▇▇▇ and Mountain, each
acting reasonably, providing for, among other things, the calling and holding of the
▇▇▇▇▇▇▇ Meeting, as the same may be amended, supplemented or varied by the Court (with
the consent of ▇▇▇▇▇▇▇ and Mountain, each acting reasonably); |
| (v) | “▇▇▇▇▇▇▇
Meeting” means the special meeting of the ▇▇▇▇▇▇▇ Shareholders, including any
adjournment or postponement thereof, to be called and held in accordance with the ▇▇▇▇▇▇▇
Interim Order to consider the ▇▇▇▇▇▇▇ Arrangement Resolution; |
| (w) | “▇▇▇▇▇▇▇
Plan of Arrangement” has the meaning set forth in the Arrangement Agreement; |
| (x) | “▇▇▇▇▇▇▇
Shareholders” means holders of ▇▇▇▇▇▇▇ Shares; |
| (y) | “▇▇▇▇▇▇▇
Shares” means the common shares in the capital of ▇▇▇▇▇▇▇; |
| (z) | “Law”
or “Laws” means all laws (including common law), by-laws, statutes,
rules, regulations, principles of law and equity, orders, rulings, ordinances, judgements,
injunctions, determinations, awards, decrees or other requirements, whether domestic
or foreign, and the terms and conditions of any grant of approval, permission, authority
or license of any Governmental Entity or self-regulatory authority (including Nasdaq,
the TSX and the TSXV), and the term “applicable” with respect to such
Laws and in a context that refers to one or more Parties, means such Laws as are applicable
to such Party or its business, undertaking, property or securities and emanate from a
Person having jurisdiction over the Party or Parties or its or their business, undertaking,
property or securities; |
| (aa) | “Lien”
means any hypothecs, mortgages, pledges, assignments, liens, charges, security interests,
encumbrances and adverse rights or claims or other third person interest or encumbrance
of any kind, whether contingent or absolute, and any agreement, option, right or privilege
(whether by Law, contract or otherwise) capable of becoming any of the foregoing; |
| (cc) | “Mountain
Shares” means the common shares in the capital of Mountain; |
| (dd) | “Notice
of Dissent” means a notice given in respect of the Dissent Rights as contemplated
in the ▇▇▇▇▇▇▇ Interim Order and as described in Article 4; |
| (ee) | “OBCA”
means the Business Corporations Act (Ontario); |
| (ff) | “Parties”
means ▇▇▇▇▇▇▇ and Mountain, and “Party” means any of them; |
| (gg) | “Person”
or “person” means an individual, sole proprietorship, partnership,
unincorporated association, unincorporated syndicate, unincorporated organization, trust,
body corporate, trustee, executor, administrator or other legal representative, government
(including any Governmental Entity) or any other entity, whether or not having legal
status; |
| (hh) | “Tax
Act” has the meaning set forth in the Arrangement Agreement; |
| (ii) | “Taxes”
means all taxes, duties, fees, premiums, assessments, imposts, levies, fees and other
charges of any kind whatsoever imposed, assessed, reassessed or collected by any Governmental
Entity, including all interest, penalties, fines, instalments, additions to tax or other
additional amounts imposed, assessed, reassessed or collected by any Governmental Entity
in respect thereof, and including those levied on, or measured by, or referred to as,
income, gross receipts, gross income, net income, profits, windfall, royalty, capital,
capital gains, transfer, land transfer, sales, goods and services, harmonized sales,
use, value-added, premium, alternative, real property, excise, stamp, withholding, business,
franchise, property, development, occupancy, employer health, payroll, employment, health,
social services, education and social security taxes, all surtaxes, all customs duties
and import and export taxes, countervail and anti-dumping, all licence, franchise and
registration fees and all employment insurance, health insurance and Canada, Québec
and other pension plan premiums or contributions imposed by any Governmental Entity,
all withholdings on amounts paid to or by the relevant Person and any liability as a
transferee, successor, guarantor or by contract or by operation of applicable Laws in
respect of any of the foregoing; |
| (jj) | “TSX”
means the Toronto Stock Exchange; and |
| (kk) | “TSXV”
means the TSX Venture Exchange. |
| 1.2 | Sections
and Headings. The division of this ▇▇▇▇▇▇▇ Plan of
Arrangement into articles and sections and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation of this ▇▇▇▇▇▇▇
Plan of Arrangement. Unless reference is specifically made to some other document or
instrument, all references herein to articles and sections are to articles and sections
of this ▇▇▇▇▇▇▇ Plan of Arrangement. |
| 1.3 | Number,
Gender and Persons. In this ▇▇▇▇▇▇▇ Plan of Arrangement,
unless otherwise expressly stated or the context otherwise requires, words importing
the singular number shall include the plural and vice versa, and words importing gender
shall include all genders. |
| 1.4 | Meaning.
Words and phrases used herein and defined in the OBCA
shall have the same meaning herein as in the OBCA, unless the context otherwise requires. |
| 1.5 | Statutory
References. Any reference in this ▇▇▇▇▇▇▇ Plan of Arrangement
to a statute includes all regulations made thereunder, all amendments to such statute
or regulation in force from time to time and any statute or regulation that supplements
or supersedes such statute or regulation. |
| 1.6 | Currency.
Unless otherwise stated all references in this ▇▇▇▇▇▇▇
Plan of Arrangement to sums of money are expressed in lawful money of Canada. |
| 1.7 | Business
Day. In the event that the date on which any action
is required to be taken hereunder by any of the parties is not a Business Day in the
place where the action is required to be taken, such action shall be required to be taken
on the next succeeding day which is a Business Day in such place. |
| 1.8 | Governing
Law. This ▇▇▇▇▇▇▇ Plan of Arrangement shall be governed
by and construed in accordance with the laws of the Province of Ontario and the federal
laws of Canada applicable therein. |
| 1.9 | Binding
Effect. This ▇▇▇▇▇▇▇ Plan of Arrangement will become
effective at, and be binding at and after, the Effective Time on: (i) ▇▇▇▇▇▇▇; (ii) Mountain;
(iii) all registered and beneficial ▇▇▇▇▇▇▇ Shareholders; (iv) the Dissenting Shareholders;
(v) the registrar and transfer agent in respect of the ▇▇▇▇▇▇▇ Shares; and (vi) the
Depositary. |
ARTICLE
2
ARRANGEMENT agreement
| 2.1 | Arrangement
Agreement. This ▇▇▇▇▇▇▇ Plan of Arrangement is made
pursuant and subject to the provisions of the Arrangement Agreement. |
ARTICLE
3
the ▇▇▇▇▇▇▇ arrangement
| 3.1 | The
Arrangement. On the Effective Date, commencing at the
Effective Time, the following events or transactions shall occur and be deemed to occur
in the following chronological order without any further act or formality notwithstanding
anything contained in the provisions attaching to any of the securities of ▇▇▇▇▇▇▇ or
Mountain, but subject to the provisions of Article 4: |
| (a) | At
the Effective Time, each ▇▇▇▇▇▇▇ Share held by a Dissenting Shareholder shall, and shall
be deemed to be, transferred by the holder thereof, without any further act or formality
on its part, free and clear of all Liens, to ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ shall thereupon be obliged
to pay the amount therefor determined and payable in accordance with Article 4 hereof,
and the name of each such holder shall be removed from the securities register as a holder
of ▇▇▇▇▇▇▇ Shares. |
| (b) | All
▇▇▇▇▇▇▇ Shares shall be transferred to Mountain (other than ▇▇▇▇▇▇▇ Shares held by Mountain
or Dissenting Shareholders), free and clear of any Liens, and: |
| (i) | each
holder thereof shall receive, in exchange therefor the Consideration Shares; |
| (ii) | each
holder of the ▇▇▇▇▇▇▇ Shares shall cease to be the holder of such shares and such holder’s
name shall be removed from the securities register of ▇▇▇▇▇▇▇ with respect to such shares; |
| (iii) | Mountain
shall be entered in the securities register of ▇▇▇▇▇▇▇ as the holder thereof; and |
| (iv) | Former
▇▇▇▇▇▇▇ Shareholders (other than Dissenting Shareholders) shall be entered in the securities
register of Mountain as holders of the Consideration Shares. |
| 3.2 | No
Fractional Shares. Notwithstanding any other provision
of this ▇▇▇▇▇▇▇ Arrangement, in no event shall any Former ▇▇▇▇▇▇▇ Shareholder be entitled
to a fractional Consideration Share. Where the aggregate number of Consideration Shares
to be issued to a Former ▇▇▇▇▇▇▇ Shareholder as consideration under the ▇▇▇▇▇▇▇ Arrangement
would result in a fraction of a Consideration Share being issuable, the number of Consideration
Shares to be received by such Former ▇▇▇▇▇▇▇ Shareholder shall be: (i) rounded down to
the nearest whole Consideration Share in the event that the number of fractional Consideration
Shares is equal to or less than 0.5; and (ii) round up to the nearest whole Consideration
Share in the event that the number of fractional Consideration Shares is greater than
0.5 and less than 1.0. |
| 3.3 | Tax
Election. A Former ▇▇▇▇▇▇▇ Shareholder who exchanges
▇▇▇▇▇▇▇ Shares for Mountain Shares pursuant to this ▇▇▇▇▇▇▇ Plan of Arrangement and who
provides Mountain with a letter of representation in a form satisfactory to Mountain
acting reasonably that such Former ▇▇▇▇▇▇▇ Shareholder does not hold their ▇▇▇▇▇▇▇ Shares
as capital property for purposes of the Tax Act, shall be entitled to make an income
tax election with Mountain, pursuant to subsection 85(1) or 85(2) of the Tax Act, as
applicable (and the analogous provisions of provincial income tax law) by providing two
signed copies of the necessary election forms to Mountain within 90 days following the
Effective Date, duly completed including the details of the number of ▇▇▇▇▇▇▇ Shares
transferred and the applicable agreed amounts for the purposes of such elections. Thereafter,
subject to the election forms complying with the provisions of the Tax Act (or applicable
provincial income tax law), the forms will be signed by Mountain and returned to such
Former ▇▇▇▇▇▇▇ Shareholders within 60 days after the receipt thereof by Mountain for
filing with the Canada Revenue Agency (or the applicable provincial taxing authority).
Mountain will not be responsible for the proper completion of any election form and,
except for the obligation of Mountain to so sign and return duly completed election forms
which are received by Mountain within 90 days of the Effective Date, Mountain will not
be responsible for any taxes, interest or penalties resulting from the failure by a ▇▇▇▇▇▇▇
Shareholder to properly complete or file the election forms in the form and manner and
within the time prescribed by the Tax Act (and any applicable provincial legislation).
In its sole discretion, Mountain may choose to sign and return an election form received
by it more than 90 days following the Effective Date but has no obligation to do so. |
| 3.4 | Deemed
Fully Paid and Non-Assessable Shares. All Consideration
Shares issued pursuant hereto shall be deemed to be validly issued and outstanding as
fully paid and non-assessable shares for all purposes. |
| 3.5 | Arrangement
Effectiveness. The ▇▇▇▇▇▇▇ Arrangement shall become
final and conclusively binding on all registered and beneficial ▇▇▇▇▇▇▇ Shareholders,
each of ▇▇▇▇▇▇▇ and Mountain, the Dissenting Shareholders, the registrar and transfer
agent in respect of the ▇▇▇▇▇▇▇ Shares and the Depositary on the Effective Date. |
| 3.6 | Supplementary
Actions. Notwithstanding that the transactions and
events set out in Section 3.1 shall occur and shall be deemed to occur in the chronological
order therein set out without any act or formality, each of ▇▇▇▇▇▇▇ and Mountain shall
be required to make, do and execute or cause and procure to be made, done and executed
all such further acts, deeds, agreements, transfers, assurances, instruments or documents
as may be required to give effect to, or further document or evidence, any of the transactions
or events set out in Section 3.1, including any resolutions of directors authorizing
the issue, transfer or redemption of shares, any share transfer powers evidencing the
transfer of shares and any receipt therefor, and any necessary additions to or deletions
from share registers. |
| 3.7 | Withholding
Rights. Mountain, ▇▇▇▇▇▇▇ and the Depositary shall
be entitled to deduct and withhold from the consideration payable or otherwise deliverable
to any Person, including to Dissenting Shareholders pursuant to Article 4, and from all
dividends, other distributions or other amount otherwise payable to any Former ▇▇▇▇▇▇▇
Securityholder, such Taxes or other amounts as Mountain, ▇▇▇▇▇▇▇ or the Depositary is
required, entitled or permitted to deduct and withhold with respect to such payment under
the Tax Act, the Code or any other provisions of any applicable Laws, in each case, as
amended. To the extent that Taxes or other amounts are so deducted and withheld, such
deducted and withheld Taxes or other amounts shall be treated for all purposes of this
▇▇▇▇▇▇▇ Plan of Arrangement as having been paid to the Person in respect of which such
deduction or withholding was made, provided that such deducted or withheld Taxes or other
amounts are actually remitted to the appropriate taxing authority. Mountain, ▇▇▇▇▇▇▇
and the Depository shall be authorized to sell or otherwise dispose of, on behalf of
a ▇▇▇▇▇▇▇ Shareholder, such portion of the Consideration Shares issuable to such ▇▇▇▇▇▇▇
Shareholder (if any) as is necessary to provide sufficient funds to enable it to comply
with its deducting or withholding requirements and such party shall notify the applicable
▇▇▇▇▇▇▇ Shareholder of the details of such disposition, including the gross proceeds
and any adjustments to the proceeds, and remit any unapplied balance of the net proceeds
of such sale to such ▇▇▇▇▇▇▇ Shareholder. |
ARTICLE
4
RIghts of dissent
| 4.1 | Rights
of Dissent. The ▇▇▇▇▇▇▇ Shareholders may exercise rights
of dissent (the “Dissent Rights”)
in connection with the ▇▇▇▇▇▇▇ Arrangement pursuant to the ▇▇▇▇▇▇▇ Interim Order and
the ▇▇▇▇▇▇▇ Final Order and in the manner set forth in Section 185 of the OBCA,
provided that the written notice setting forth the objection of such registered ▇▇▇▇▇▇▇
Shareholders to the ▇▇▇▇▇▇▇ Arrangement and exercise of Dissent Rights must be received
by ▇▇▇▇▇▇▇ not later than 5:00 p.m. (Toronto Time) on the Business Day that is two Business
Days before the ▇▇▇▇▇▇▇ Meeting or any date to which the ▇▇▇▇▇▇▇ Meeting may be postponed
or adjourned and provided further that holders who exercise such rights of dissent and
who: |
| (a) | are
ultimately entitled to be paid fair value for their ▇▇▇▇▇▇▇ Shares, which fair value,
notwithstanding anything to the contrary contained in the OBCA, shall be determined immediately
prior to the approval of the ▇▇▇▇▇▇▇ Arrangement Resolution, shall be deemed to have
transferred their ▇▇▇▇▇▇▇ Shares to ▇▇▇▇▇▇▇ as of the Effective Time in consideration
for a debt claim against ▇▇▇▇▇▇▇ to be paid the fair value of such ▇▇▇▇▇▇▇ Shares and
will not be entitled to any other payment or consideration, including any payment that
would be payable under the ▇▇▇▇▇▇▇ Arrangement had such holders not exercised their Dissent
Rights; and |
| (b) | are
ultimately not entitled, for any reason, to be paid fair value for their ▇▇▇▇▇▇▇ Shares
shall be deemed to have participated in the ▇▇▇▇▇▇▇ Arrangement, as of the Effective
Time, on the same basis as a non-dissenting holder of ▇▇▇▇▇▇▇ Shares, and shall be entitled
to receive only the consideration contemplated in Section 3.1(b) hereof (less any Taxes
or other amounts deducted or withheld pursuant to Section 3.6 hereof) that such ▇▇▇▇▇▇▇
Shareholder would have received pursuant to the ▇▇▇▇▇▇▇ Arrangement if such ▇▇▇▇▇▇▇ Shareholder
had not exercised Dissent Rights. |
| 4.2 | Recognition
of Dissenting Shareholders. In no circumstances shall
▇▇▇▇▇▇▇ or any other Person be required to recognize a Person exercising Dissent Rights
unless such Person is a registered holder of those ▇▇▇▇▇▇▇ Shares in respect of which
such rights are sought to be exercised. From and after the Effective Date, neither ▇▇▇▇▇▇▇
nor any other Person shall be required to recognize a Dissenting Shareholder as a shareholder
of ▇▇▇▇▇▇▇ and the names of the Dissenting Shareholders shall be deleted from the register
of holders of ▇▇▇▇▇▇▇ Shares previously maintained or caused to be maintained by ▇▇▇▇▇▇▇. |
ARTICLE
5
Certificates and payments
| 5.1 | Mountain
Shares. Mountain shall deliver or arrange to be delivered
to the Depositary the Consideration Shares in certificated or book-entry form required
to be issued to ▇▇▇▇▇▇▇ Shareholders, which Consideration Shares shall be held by the
Depositary as agent and nominee for such ▇▇▇▇▇▇▇ Shareholders for delivery to such ▇▇▇▇▇▇▇
Shareholders in accordance with the provisions of Subsection 6.1(a) hereof. |
ARTICLE
6
Delivery of shares
| 6.1 | Delivery
of Mountain Shares. |
| (a) | Upon
surrender to the Depositary for cancellation of a certificate, or in the case of ▇▇▇▇▇▇▇
Shares in uncertificated or book-entry form, an “agent’s message” evidencing
the surrender of such shares, that immediately before the Effective Time represented
one or more outstanding ▇▇▇▇▇▇▇ Shares that were transferred in consideration for the
Consideration Shares in accordance with Section 3.1 hereof together with a duly
completed and executed letter of transmittal and such other documents and instruments
as would have been required to effect the transfer of such ▇▇▇▇▇▇▇ Shares under the OBCA
and the articles and by-laws of ▇▇▇▇▇▇▇ and such additional documents and instruments
as the Depositary may reasonably require, the holder of such surrendered ▇▇▇▇▇▇▇ Shares
shall be entitled to receive in exchange therefor, and the Depositary shall deliver on
behalf of Mountain to such holder following the Effective Time, the Consideration Shares
in certificated or book-entry form, that such holder is entitled to receive in accordance
with Section 3.1 hereof. |
| (b) | After
the Effective Time and until surrendered for cancellation as contemplated by Subsection
6.1(a) hereof, each ▇▇▇▇▇▇▇ Share shall be deemed at all times to represent only the
right to receive in exchange therefor the Consideration Shares that the holder of such
▇▇▇▇▇▇▇ Shares is entitled to receive in accordance with Section 3.1(b) hereof. |
| 6.2 | Lost
Certificates. If any certificate that immediately prior
to the Effective Time represented one or more outstanding ▇▇▇▇▇▇▇ Shares that were exchanged
for Consideration Shares in accordance with Section 3.1 hereof, shall have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the holder claiming
such certificate to be lost, stolen or destroyed, the Depositary shall deliver, in exchange
for such lost, stolen or destroyed certificate, a certificate representing the Consideration
Shares that such holder is entitled to receive in accordance with Section 3.1 hereof.
When authorizing such delivery in exchange for such lost, stolen or destroyed certificate,
the holder to whom such delivery is to be made shall, as a condition precedent to such
delivery, give a bond satisfactory to Mountain and the Depositary in such amount as Mountain
and the Depositary may direct, or otherwise indemnify Mountain and the Depositary in
a manner satisfactory to Mountain and the Depositary, against any claim that may be made
against Mountain or the Depositary with respect to the certificate alleged to have been
lost, stolen or destroyed, and shall otherwise take such actions as may be required by
the articles or by-laws of ▇▇▇▇▇▇▇. |
| 6.3 | Distributions
with Respect to Unsurrendered Certificates. No dividend
or other distribution declared or made after the Effective Time with respect to Mountain
Shares with a record date after the Effective Time shall be delivered to the holder of
any unsurrendered ▇▇▇▇▇▇▇ Shares, unless and until the holder of such ▇▇▇▇▇▇▇ Shares
shall have complied with the provisions of Section 6.1 hereof. Subject to applicable
Law and to Section 6.4 hereof, at the time of such compliance, there shall, in addition
to the delivery of the Consideration Shares to which such holder is entitled in accordance
with Section 3.1 hereof, be delivered to such holder, without interest, the amount of
the dividend or other distribution with a record date after the Effective Time theretofore
paid with respect to such Consideration Shares. |
| 6.4 | Limitation
and Proscription. To the extent that a Former ▇▇▇▇▇▇▇
Shareholder shall not have complied with the provisions of Section 6.1 or Section 6.2
hereof on or before the date that is six years after the Effective Date (the “final
proscription date”), then the Consideration Shares
that such Former ▇▇▇▇▇▇▇ Shareholder was entitled to receive shall be automatically cancelled
without any repayment of capital in respect thereof and, as of such final proscription
date, the Depositary shall deliver the certificates representing such Consideration Shares
to Mountain and Mountain shall cancel such share certificate, and the interest of the
Former ▇▇▇▇▇▇▇ Shareholder in such Consideration Shares to which it was entitled shall
be terminated. |
| 6.5 | Paramountcy.
From and after the Effective Time: (i) this ▇▇▇▇▇▇▇ Plan of Arrangement shall take precedence
and priority over any and all ▇▇▇▇▇▇▇ Shares issued prior to the Effective Time or pursuant
to this ▇▇▇▇▇▇▇ Plan of Arrangement; (ii) the rights and obligations of the registered
holders of ▇▇▇▇▇▇▇ Shares (including Dissenting Shareholders) and ▇▇▇▇▇▇▇, Mountain,
the Depository and any transfer agent or other Depository in relation thereto, shall
be solely as provided for in this ▇▇▇▇▇▇▇ Plan of Arrangement; and (iii) all actions,
causes of action, claims or proceedings (actual or contingent and whether or not previously
asserted) based on or in any way relating to any ▇▇▇▇▇▇▇ Shares shall be deemed to have
been settled, compromised, released and determined without liability except as set forth
herein. |
ARTICLE
7
AMENDMENT AND FURTHER ASSURANCES
| 7.1 | Amendments
to Plan of Arrangement |
| (a) | The
Arrangement Agreement and the ▇▇▇▇▇▇▇ Plan of Arrangement may be amended at any time
and from time to time before or after the holding of the ▇▇▇▇▇▇▇ Meeting but not later
than the Effective Time; provided that any such amendment (i) is in writing and is agreed
to in writing by the Parties; (ii) if required, is filed with the Court; and (iii) if
made following the ▇▇▇▇▇▇▇ Meeting, is approved by the Court and, if and as required
by the Court, is communicated to ▇▇▇▇▇▇▇ Shareholders and/or consented to by ▇▇▇▇▇▇▇
Shareholders. |
| (b) | Any
amendment made before the ▇▇▇▇▇▇▇ Meeting in accordance with this Section 7.1 may be
made with or without any other prior notice or communication and, if accepted by the
▇▇▇▇▇▇▇ Shareholders voting at the ▇▇▇▇▇▇▇ Meeting (other than as may be required under
the Interim Order), shall become part of the Arrangement Agreement and the ▇▇▇▇▇▇▇ Plan
of Arrangement for all purposes. |
| (c) | Any
amendment, modification or supplement to this ▇▇▇▇▇▇▇ Plan of Arrangement may be made
by the Parties without the approval of or communication to the Court or the ▇▇▇▇▇▇▇ Shareholders,
provided that it concerns a matter which, in the reasonable opinion of the Parties is
of an administrative or ministerial nature required to better give effect to the implementation
of this ▇▇▇▇▇▇▇ Plan of Arrangement and is not materially adverse to the financial or
economic interests of any of ▇▇▇▇▇▇▇ Shareholders. |
| (d) | Notwithstanding
the foregoing provisions of this Article 7, no amendment, modification or supplement
of this ▇▇▇▇▇▇▇ Plan of Arrangement may be made prior to the Effective Time except in
accordance with the terms of the Arrangement Agreement. |
| 7.2 | Further
Assurances. Notwithstanding that the transactions and
events set out herein shall occur and be deemed to occur at the time and in the manner
set out in this ▇▇▇▇▇▇▇ Plan of Arrangement without any further act or formality, ▇▇▇▇▇▇▇
and Mountain shall make, do and execute, or cause to be made, done or executed, all such
further acts, deeds, agreements, transfers, assurances, instruments or documents as may
reasonably be required by any of them in order to further document or evidence any of
the transactions or events set out herein. |
SCHEDULE
B
▇▇▇▇▇▇▇ ARRANGEMENT RESOLUTION
BE
IT RESOLVED THAT:
| 1. | The
arrangement
(the “Arrangement”)
under section
182 of the
Business Corporations Act (Ontario)
(the “OBCA”)
involving
▇▇▇▇▇▇▇ Diamonds Inc. (the “Company”),
pursuant to
the arrangement
agreement
between the Company
and Mountain Province Diamonds Inc. (“Mountain”), dated January
28>, 2018, as it may
be modified, supplemented
or amended
from time
to time
in accordance
with its terms
(the “Arrangement
Agreement”),
all as more particularly described
and set forth
in the joint management
information
circular of
the Company
and Mountain dated <@>, 2018 (the
“Circular”)
accompanying the notice of this
meeting,
and all
transactions
contemplated
thereby,
are hereby
authorized,
approved and adopted. |
| 2. | The
plan of arrangement,
as it has been
or may
be modified,
supplemented
or amended
in accordance
with the
Arrangement
Agreement
and its
terms, involving
the Company
and implementing the Arrangement (the “Plan
of Arrangement”),
the full text
of which is
set out as Appendix
<@>
to the
Circular, is hereby authorized,
approved
and adopted. |
| 3. | The
Arrangement
Agreement
and all
the transactions
contemplated
therein,
the actions
of the directors
of the
Company
in approving
the Arrangement
and the Arrangement
Agreement and the actions
of the directors
and officers of the
Company
in executing
and delivering
the Arrangement
Agreement
and any modifications,
supplements
or amendments
thereto
and causing the performance by the Company of its
obligations thereunder, are hereby
ratified
and approved. |
| 4. | Notwithstanding
that this resolution
has been passed (and
the Arrangement
adopted) by the shareholders of the Company
(the “Shareholders”) entitled
to vote thereon
or that the Arrangement
has been approved by
the Court, the
directors
of the
Company
are hereby
authorized and
empowered,
at their discretion,
without further notice
to or approval of the Shareholders: |
| a. | to
amend
or modify the
Arrangement
Agreement
or the
Plan of Arrangement
to the extent
permitted
by their
terms;
and |
| b. | subject
to the terms
of the
Arrangement
Agreement,
not to proceed
with
the Arrangement
and any
related transactions
at any time prior to the Effective Time (as defined in the Arrangement Agreement). |
| 5. | Any
officer or director of the Company is hereby
authorized and directed, for and on behalf of the Company
to execute, under the corporate seal of the Company
or otherwise, and to deliver
or cause to be delivered,
for filing under the OBCA,
all such documents
as are necessary or desirable
to give effect to
the Arrangement and
the Plan of Arrangement in accordance
with the Arrangement
Agreement,
such determination
to be conclusively evidenced by the execution
and delivery of such documents. |
| 6. | Any
officer
or director
of the Company
is hereby
authorized
and directed,
for and on behalf of the Company,
to execute
or cause to be executed
and to deliver or cause to
be delivered,
under the
corporate
seal
of the
Company or
otherwise,
all such other
documents and
instruments and
to perform
or cause to be performed
all such other
acts
and things
as, in
the opinion of such director or officer may
be necessary
or desirable
to give
full force and effect
to the foregoing
resolutions,
the Arrangement Agreement
and the completion of the Arrangement
and related transactions in accordance
with the terms
of the Arrangement Agreement
and the matters
authorized
thereby, including, without limitation: |
| a. | all
actions required to be
taken by or on behalf of the Company, and
all necessary filings and obtaining
the necessary
approvals, consents and acceptances
of the appropriate regulatory authorities;
and |
| b. | the
signing
of the certificates,
consents and other documents
or declarations required under the Arrangement
Agreement
or otherwise to be entered into
by the Company; |
such
determination,
in each case, to be conclusively
evidenced by
the execution
and delivery
of any such other document or instrument
or the doing of any
other such act or thing.
SCHEDULE
C
MOUNTAIN SHAREHOLDER RESOLUTION
“BE
IT RESOLVED THAT:
| 1. | the
arrangement agreement dated January 28, 2018 between Mountain Province Diamonds Inc.
(“Mountain”) and ▇▇▇▇▇▇▇ Diamonds Inc. (“▇▇▇▇▇▇▇”),
as it may be amended from time to time (the “Arrangement Agreement”),
and all transactions contemplated therein including the plan of arrangement (the “Plan
Arrangement”), and the actions of the directors of Mountain in approving the
Arrangement Agreement and the actions of the directors and officers of Mountain in executing
and delivering the Arrangement Agreement and causing the performance by Mountain of its
obligations thereunder and under the Plan of Arrangement, be and are hereby confirmed,
ratified, authorized and approved; |
| 2. | the
issuance of such number of Mountain common shares by Mountain to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Bottin
(International) Investments Ltd., or affiliates thereof, pursuant to the terms of the
Plan of Arrangement, be and is hereby authorized and approved; |
| 3. | the
issuance of such number of Mountain common shares as may be required to be issued pursuant
to the terms of the Plan of Arrangement, including such number of Mountain common shares
as may be required to be issued in connection with the acquisition of all of the common
shares of ▇▇▇▇▇▇▇ by Mountain pursuant to the Plan of Arrangement, be and is hereby authorized
and approved; |
| 4. | notwithstanding
that this resolution has been duly passed by the shareholders of Mountain or that the
Plan of Arrangement has been approved by the Ontario Superior Court of Justice, the directors
of Mountain be and are hereby authorized and empowered, without further notice to, or
approval of, the shareholders of Mountain (i) to amend the Arrangement Agreement or the
Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan
of Arrangement, and (ii) subject to the terms of the Arrangement Agreement, not to proceed
with the Plan of Arrangement and to revoke this resolution at any time prior to the Effective
Time (as defined in the Arrangement Agreement); and |
| 5. | any
director or officer of Mountain is hereby authorized, for and on behalf of Mountain,
to execute, with or without the corporate seal and, if appropriate, deliver any and all
other agreements, applications, forms, waivers, notices, certificates, confirmations
and other documents and instruments and to do, or cause to be done, any and all such
other acts and things as in the opinion of such director or officer may be necessary,
desirable or useful for the purpose of giving effect to these resolutions, the Arrangement
Agreement, the completion of the Plan of Arrangement and related transactions in accordance
with the Arrangement Agreement and the matters authorized hereby, including, without
limitation, (i) all actions required to be taken by or on behalf of Mountain, and all
necessary filings and obtaining the necessary approvals, consents and acceptances of
appropriate regulatory authorities and (ii) the signing of the certificates, consents
and other documents or declarations required under the Arrangement Agreement or otherwise
to be entered into by Mountain, such determination to be conclusively evidenced by the
execution and delivery of any such document, agreement or instrument, and the taking
or doing of any such action.” |