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1. | to consider, pursuant to an order of the Ontario Superior Court of Justice (Commercial List) dated January 14, 2010 and, if thought advisable, to pass, with or without variation, a special resolution (the “Arrangement Resolution”), the full text of which is set forth in Appendix D to the accompanying management proxy circular (the “Circular”), approving an arrangement (the “Arrangement”) pursuant to Section 192 of theCanada Business Corporations Act, as amended (the “CBCA”), all as more particularly described in the Circular, which resolution, to be effective, must be passed by an affirmative vote of the following: |
(a) | at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) IRC Shareholders voting as a single class, and (ii) IRC Shareholders and IRC Optionholders voting together as a single class, and | |
(b) | a simple majority (“Minority Approval”) of the votes cast at the Meeting in person or by proxy by all IRC Shareholders excluding votes attaching to IRC Common Shares held by (i) any “interested party” to the Arrangement within the meaning of Multilateral Instrument61-101 —Protection of Minority Security Holders in Special Transactions of the Ontario Securities Commission and l’Autorité des marchés financiers (Québec) (“MI61-101”), (ii) any “related party” of an interested party within the meaning of MI61-101 (subject to exceptions set out therein), and (iii) any person that is a joint actor with any of the foregoing for the purposes of MI61-101; and |
2. | to act upon such other matters, including amendments to the foregoing, as may properly come before the Meeting or any adjournment(s) or postponement(s) thereof. |
(1) | IRC has fixed January 14, 2010 as the record date for determining those IRC Shareholders and IRC Optionholders entitled to receive notice of and to vote at the Meeting. | |
(2) | Pursuant to an order of the Ontario Superior Court of Justice (Commercial List) dated January 14, 2010, registered IRC Shareholders have been granted the right to dissent in respect of the Arrangement Resolution. If the Arrangement becomes effective, a registered IRC Shareholder who dissents in respect of the Arrangement Resolution (a “Dissenting IRC Shareholder”) is entitled to be paid the fair value of such Dissenting IRC Shareholder’s IRC Common Shares, provided that such Dissenting IRC Shareholder has delivered a written objection to the Arrangement Resolution to IRC by 4:30 p.m. (Toronto time) on February 12, 2010, being the business day preceding the Meeting (or, if the Meeting is postponed or adjourned, the business day preceding the date of the postponed or adjourned Meeting) and has otherwise complied strictly with the dissent procedures described in the Circular, including the relevant provisions of Section 190 of the CBCA. This right is described in detail in the accompanying Circular under the heading “Rights of Dissenting IRC Shareholders”. The text of Section 190 of the CBCA, which will be relevant in any dissent proceeding, is set forth in Appendix I to the Circular.Failure to comply strictly with the dissent procedures described in the Circular may result in the loss of any right of dissent. Beneficial owners of IRC Common Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that only registered owners of IRC Common Shares are entitled to dissent. The obligation of Royal Gold to complete the Arrangement is subject, among other matters, to there not having been delivered and not withdrawn notices of dissent in respect of more than 15% of the outstanding IRC Common Shares. |
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(3) | To the knowledge of the directors and officers of IRC, after reasonable inquiry, the only votes that are to be excluded in determining whether Minority Approval has been obtained are the votes in respect of 824,500 IRC Common Shares beneficially owned by Douglas B. Silver, Chairman and Chief Executive Officer of IRC. | |
(4) | IRC Shareholders and IRC Optionholders who are unable to be personally present at the Meeting are requested to date, complete, sign and return the form of proxy (printed on blue paper) in the prepaid envelope provided. | |
(5) | To be effective, proxies must be received before 4:30 p.m. (Toronto time) on February 12, 2010 (or on the last day (other than a Saturday, Sunday or any other holiday in Toronto, Ontario) preceding any adjournment or postponement of the Meeting). |
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Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2009 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||
High | 0.9422 | 0.9716 | 1.0289 | 1.0905 | 0.9099 | |||||||||||||||
Low | 0.7692 | 0.7692 | 0.7711 | 0.8437 | 0.8528 | |||||||||||||||
Rate at end of period | 0.9327 | 0.9555 | 0.8166 | 1.0120 | 0.8581 | |||||||||||||||
Average rate per period | 0.8546 | 0.8757 | 0.9381 | 0.9304 | 0.8817 |
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ABOUT THE
MEETING AND THE ARRANGEMENT
Q: | Does the IRC Board support the Arrangement? | |
A: | Yes. The IRC Board has unanimously determined (i) that the Arrangement is fair to IRC Shareholders and in the best interests of IRC, (ii) that IRC should enter the Arrangement Agreement, and (iii) to recommend to IRC Shareholders to vote FOR the Arrangement Resolution. | |
Prior to entering into the Arrangement Agreement, the IRC Board established the Special Committee, comprised of four independent directors (Mr. Gordon Bogden, Mr. Gord Fretwell, Mr. Rene Carrier and Mr. Doug Hurst) and Mr. Douglas Silver, to oversee and supervise the process carried out by IRC in negotiating and entering into the Arrangement Agreement and to advise the IRC Board with respect to any recommendation that the IRC Board should make to IRC Securityholders. The Special Committee retained Scotia Capital as its financial advisor. | ||
The Special Committee determined that the proposed Arrangement with Royal Gold was fair to IRC Shareholders, in the best interests of IRC and superior to the consideration being offered under the Franco-Nevada Offer. The Special Committee then recommended that the IRC Board approve the proposed Arrangement Agreement. | ||
In making its recommendation, the IRC Board considered a number of factors as described in the Circular under the heading “The Arrangement — Recommendation of the IRC Board”, including an opinion of Scotia Capital which determined that the consideration offered to IRC Shareholders pursuant to the Arrangement is fair, from a financial point of view, to IRC Shareholders other than Royal Gold and its affiliates. | ||
See “The Arrangement — Background to the Arrangement”. | ||
Q: | What should I do with respect to the Franco-Nevada Offer? | |
A: | The IRC Board unanimously recommends that youREJECT the Franco-Nevada Offer andNOT TENDER your IRC Common Shares. The IRC Board believes that the Arrangement is superior to the Franco-Nevada Offer and more attractive to IRC Shareholders. In addition, IRC has been advised by the directors and officers of IRC that they, together with their respective associates, intend toREJECT the Franco-Nevada Offer andNOT TENDER their respective IRC Common Shares. For more information with respect to the IRC Board’s recommendation to reject the Franco-Nevada Offer, including information regarding how to withdraw your IRC Common Shares from the Franco-Nevada Offer if you have tendered them, please refer to the IRC Directors’ Circular dated December 29, 2009 issued by IRC which is available on SEDAR at www.sedar.com under IRC’s profile. | |
Q: | When will the Arrangement become effective? | |
A: | Subject to obtaining Court and other approvals as well as the satisfaction of all other conditions precedent, if IRC Securityholders approve the Arrangement Resolution, it is anticipated that the Arrangement will be completed in late February 2010. | |
Q: | What will I receive for my IRC Common Shares under the Arrangement? | |
A: | If the Arrangement is completed, each IRC Shareholder may elect to receive either C$7.45 in cash or 0.1385 Royal Gold Shares or Exchangeable Shares, or a combination thereof, subject to a maximum of US$350 million in cash and a maximum of 7.75 million Royal Gold Shares and Exchangeable Shares. An IRC Shareholder’s consideration election will be subject to pro-ration if the aggregate number of Royal Gold Shares and Exchangeable Shares, or the aggregate amount of cash, as the case may be, elected by all IRC Shareholders exceeds either such maximum. | |
If IRC Shareholders elect to receive more than approximately US$314 million in cash, the number of Royal Gold Shares and Exchangeable Shares issued pursuant to the Arrangement will be adjusted downward on a pro-rated basis until such cash election reaches a maximum of US$350 million. Assuming the maximum share election, the consideration under the Arrangement will consist, on average, of 0.0771 Royal Gold Shares or Exchangeable Shares |
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plus US$3.12 in cash for each IRC Common Share, implying 56% share consideration. Assuming the maximum cash election, the consideration under the Arrangement will consist, on average, of 0.0700 Royal Gold Shares or Exchangeable Shares plus US$3.48 in cash for each IRC Common Share, implying 51% share consideration. All of the foregoing is subject to a further adjustment in the event that both the maximum cash consideration and the maximum share consideration would be exceeded as a result of elections by IRC Shareholders. This description of the pro-ration provisions of the Arrangement is subject to the detailed provisions of the Arrangement itself. See “The Arrangement — Election Procedure and Pro-ration”. The actual consideration received by an IRC Shareholder will depend upon such IRC Shareholder’s consideration election and the effect of pro-ration (including the effects of the U.S. dollar – Canadian dollar exchange rate), if any. | ||
See “The Arrangement — Description of the Arrangement”. | ||
Q: | How do I elect to receive my consideration under the Arrangement? | |
A: | Each registered holder of IRC Common Shares prior to the Election Deadline, being 4:30 p.m. (Toronto time) on February 12, 2010 (being the business day immediately prior to the date of the Meeting or, if the Meeting is adjourned or postponed, such time on the business day immediately prior to the date of such adjourned or postponed Meeting) will have the right to elect in the Letter of Transmittal and Election Form delivered to the Depositary to receive the consideration set out below depending on whether the IRC Shareholder is an Eligible Holder. An “Eligible Holder” is an IRC Shareholder who is (i) a person who is a resident of Canada for purposes of the ITA or, in the case of a partnership, a partnership that is a “Canadian partnership” for purposes of the ITA, and (ii) not exempt from tax under Part I of the ITA or, in the case of a partnership, a partnership none of the partners of which is exempt from tax under Part I of the ITA. | |
Non-Eligible Holders | ||
Each IRC Shareholder who is not an Eligible Holder, may elect in respect of each IRC Common Share held by such person, 0.1385 Royal Gold Shares, the Cash Consideration or a combination thereof, subject to pro-ration as described below. | ||
Eligible Holders | ||
Each IRC Shareholder who is an Eligible Holder may elect (i) in respect of each Exchangeable Elected Share, 0.1385 Exchangeable Shares (and the Ancillary Rights), or a combination of Cash Consideration and Exchangeable Shares (and the Ancillary Rights), subject to pro-ration, and (ii) in respect of each IRC Common Share that is not an Exchangeable Elected Share, if any, 0.1385 Royal Gold Shares, the Cash Consideration or a combination thereof, subject to pro-ration as described below. | ||
IRC Shareholders who are Eligible Holders wishing to obtain a full or partial tax deferral in respect of the transfer of their IRC Common Shares must elect to receive consideration that includes or is exclusively Exchangeable Shares as all or part of the consideration. | ||
Q: | What will happen to my IRC Options under the Arrangement? | |
A: | Under the terms of the Arrangement, IRC Options that are not exercised prior to the Effective Time will be cancelled for no consideration. | |
Q: | What are the Canadian federal income tax consequences of the elections that I make with respect to the Arrangement? | |
A: | IRC Shareholders who are residents of Canada for purposes of the ITA (other than Eligible Holders discussed below) will realize a taxable disposition of their IRC Common Shares under the Arrangement regardless of whether they elect, or are deemed to elect, to receive cash and/or Royal Gold Shares. | |
IRC Shareholders who are Eligible Holders may elect to receive consideration that includes Exchangeable Shares (and the Ancillary Rights). The exchangeable share structure is designed to provide an opportunity for such Eligible Holders who make a valid tax election with Canco to defer all or part of the Canadian income tax on any capital gain that would otherwise arise on an exchange of their IRC Common Shares for Royal Gold Shares under the Arrangement. | ||
IRC Shareholders who are not residents of Canada for purposes of the ITA, and do not hold their IRC Common Shares as “taxable Canadian property” will not be subject to tax under the ITA on the disposition of their IRC Common Shares under the Arrangement regardless of whether they elect, or are deemed to elect, to receive cash and/or Royal Gold Shares. | ||
See “Certain Canadian Federal Income Tax Considerations”. |
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Q: | What are the United States federal income tax consequences of the Arrangement? | |
A: | IRC Shareholders who are U.S. Holders will recognize a taxable disposition of their IRC Common Shares under the Arrangement regardless of whether they elect, or are deemed to elect, to receive cash and/or Royal Gold Shares. | |
IRC Shareholders who are not U.S. Holders generally will not be subject to U.S. federal income tax on the disposition of their IRC Common Shares under the Arrangement regardless of whether they elect, or are deemed to elect to receive cash, Exchangeable Shares and/or Royal Gold Shares unless (i) the gain realized is effectively connected with the conduct by the Non-U.S. Holder of a trade or business, or, if required by an applicable tax treaty, attributable to a permanent establishment maintained by the Non-U.S. Holder, in the United States or (ii) the Non-U.S. Holder is an individual who is present in the United States for 183 days or more in the taxable year of disposition and certain other conditions are met, unless an applicable income tax treaty provides otherwise. | ||
See “Certain United States Federal Income Tax Considerations” for the definition of U.S. Holder and a general summary of certain U.S. federal income tax consequences relating to the Arrangement. | ||
Q: | What will happen to IRC if the Arrangement is completed? | |
A: | If the Arrangement is completed, Canco will acquire all of the IRC Common Shares and IRC will become an indirect, wholly-owned subsidiary of Royal Gold. Canco and IRC intend to have the IRC Common Shares de-listed from the TSX and AMEX, IRC will apply to cease to be a reporting issuer (or the equivalent) in all jurisdictions in which it is a reporting issuer (or the equivalent) in Canada and will suspend its reporting obligations in the United States under Sections 13(a) and 15(d) of the Securities Exchange Act. See “Effect of the Arrangement on Markets and Listings”. | |
Q: | Will the Royal Gold Shares and Exchangeable Shares be listed on a stock exchange? | |
A: | Yes. Royal Gold will apply to list the Royal Gold Shares issuable by Royal Gold under the Arrangement (including upon the exchange of the Exchangeable Shares for Royal Gold Shares) on NASDAQ and the TSX. Royal Gold will also apply to list the Exchangeable Shares issuable by Canco under the Arrangement on the TSX (which listing is subject to Canco fulfilling all of the requirements of the TSX, including distribution of the Exchangeable Shares to a minimum number of public shareholders). It is also a condition of closing that Royal Gold shall have obtained approval for listing of the Royal Gold Shares issuable to IRC Shareholders pursuant to the Arrangement on the NASDAQ and conditional approval for listing of the Royal Gold Shares and Exchangeable Shares issuable to IRC Shareholders pursuant to the Arrangement on the TSX. | |
Q: | What approvals are required by IRC Securityholders at the Meeting? | |
A: | To be effective, the Arrangement Resolution must be approved, with or without variation, by the affirmative vote of (A) at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) IRC Shareholders voting as a single class, and (ii) IRC Shareholders and IRC Optionholders voting together as a single class; and (B) a simple majority of the votes cast on the Arrangement Resolution in person or by proxy at the Meeting by Minority Shareholders. See “The Arrangement — IRC Securityholder Approval”. | |
Royal Gold and Canco entered into voting agreements (the “Voting Agreements”) with each of the directors and officers of IRC and with certain other IRC Shareholders (collectively, the “Voting Shareholders”), pursuant to which the Voting Shareholders have agreed, subject to the terms and conditions thereof, to vote their IRC Common Shares and IRC Options in favour of the Arrangement Resolution. The Voting Shareholders collectively beneficially own or exercise control or direction over an aggregate of 29,686,446 IRC Common Shares and 4,422,000 IRC Options representing approximately 34% of the IRC Common Shares on a fully-diluted basis. | ||
Q: | Are IRC Shareholders entitled to dissent rights? | |
A: | Yes. Under the Interim Order, IRC Shareholders are entitled to dissent rights only if they follow the procedures specified in the CBCA, as modified by the Interim Order. If you wish to exercise dissent rights, you should review the requirements summarized in the Circular carefully and consult with legal counsel. See “Rights of Dissenting IRC Shareholders”. | |
Q: | What will happen if the Arrangement Resolution is not approved or the Arrangement is not completed for any reason? | |
A: | If the Arrangement Resolution is not approved or the Arrangement is not completed for any reason, the Arrangement Agreement may be terminated. If this occurs, IRC will continue to carry on its business operations in the normal and usual course. See “Risk Factors Relating to the Arrangement”. In certain circumstances, IRC will be required to pay to Royal Gold a termination fee or reimburse Royal Gold for certain of its expenses. See “The Arrangement Agreement — Termination Fee and Reimbursement of Expenses”. |
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Q: | What do I need to do now? | |
A: | You should carefully read and consider the information contained in this Circular. IRC Securityholders should then complete, sign and date the enclosed form of proxy (printed on blue paper) and return it in the enclosed return envelope or by facsimile as indicated in the Notice of Meeting as soon as possible so that your IRC Common Shares and IRC Options may be represented at the Meeting. To be eligible for voting at the Meeting, the form of proxy must be returned by mail or by facsimile to the Depositary not later than 4:30 p.m. (Toronto time) on February 12, 2010, or if the Meeting is adjourned or postponed, prior to 4:30 p.m. (Toronto time) on the day (other than a Saturday, Sunday or any other holiday in Toronto, Ontario) preceding the date to which the Meeting is adjourned or postponed. See “General Information Concerning the Meeting and Voting — Appointment of Proxyholder”. | |
Q: | If my IRC Common Shares are held in street name by my broker, will my broker vote my IRC Common Shares for me? | |
A: | A broker will vote the IRC Common Shares held by youonly if you provide instructions to your broker on how to vote. Without instructions, those IRC Common Shares will not be voted. IRC Shareholders should instruct their brokers to vote their IRC Common Shares by following the directions provided to them by their brokers. Unless your broker gives you its proxy to vote the IRC Common Shares at the Meeting, you cannot vote those IRC Common Shares owned by you at the Meeting. See “General Information Concerning the Meeting and Voting — Explanation of Voting Rights for Beneficial Owners of IRC Common Shares”. | |
Q: | Should I send in my Letter of Transmittal and Election Form and IRC Common Share certificates now? | |
A: | Yes. It is recommended that you complete, sign and return the Letter of Transmittal and Election Form with accompanying IRC Common Share certificate(s) to the Depositary as soon as possible. To make a valid election as to the consideration that you wish to receive under the Arrangement (subject to pro-ration), you must sign and return the Letter of Transmittal and Election Form and make a proper election thereunder and return it with accompanying IRC Common Share certificate(s) to the Depositary prior to the Election Deadline, being 4:30 p.m. (Toronto time) on February 12, 2010, being the business day immediately prior to the date of the Meeting or, if the Meeting is adjourned or postponed, such time on the business day immediately prior to the date of such adjourned or postponed Meeting.If you fail to make a proper election by the Election Deadline, you will be deemed to have elected to receive cash consideration in respect of each IRC Common Share as to 44.372823% (or US$3.12 in cash) and Royal Gold Share Consideration in respect of each IRC Common Share as to 55.627177% (or 0.0771 Royal Gold Shares), subject to pro-ration. Please be sure to use the Letter of Transmittal and Election Form (printed on yellow paper) and not the Letter of Transmittal in respect of the Franco-Nevada Offer. | |
See “The Arrangement — Election Procedure and Pro-ration”. | ||
Q: | Should I send in my proxy now? | |
A: | Yes. To ensure the Arrangement Resolution is passed, you need to complete and submit the enclosed form of proxy (printed on blue paper) or, if applicable, provide your broker with voting instructions. See “General Information Concerning the Meeting and Voting — Appointment of Proxyholder; — Explanation of Voting Rights for Beneficial Owners of IRC Common Shares”. | |
Q: | When will I receive the consideration payable to me under the Arrangement for my IRC Common Shares? | |
A: | You will receive the consideration due to you under the Arrangement promptly after the Arrangement Resolution is approved, Court and other approvals have been obtained, the Arrangement becomes effective and your Letter of Transmittal and Election Form and IRC Common Share certificate(s) and all other required documents are received by the Depositary. See “The Arrangement — Procedure for Arrangement to Become Effective”. | |
Q: | What happens if I send in my IRC Common Share certificates and the Arrangement Resolution is not approved or the Arrangement is not completed? | |
A: | If the Arrangement Resolution is not approved or if the Arrangement is not otherwise completed, your IRC Common Share certificates will be returned promptly to you by the Depositary. | |
Q: | Can I change my vote after I have voted by proxy? | |
A: | Yes. An IRC Securityholder executing the enclosed form of proxy has the right to revoke it under subsection 148(4) of the CBCA. An IRC Securityholder may revoke a proxy by depositing an instrument in writing executed by him or her, or by his or her attorney authorized in writing, at the registered office of IRC at any time up to and including the last day (other than a Saturday, Sunday or other holiday in Toronto, Ontario) preceding the day of the Meeting, or any adjournment thereof, at which the proxy is to be used, or with the Chairman of the Meeting on the day of the Meeting prior to the Meeting, or any adjournment thereof, or in any other manner permitted by law. |
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Q: | Who can help answer my questions? | |
A: | IRC Securityholders who would like additional copies, without charge, of this Circular or have additional questions about the Arrangement, including the procedures for voting IRC Common Shares and IRC Options, should contact their broker or Georgeson Shareholder Communications Canada Inc. toll free at one of the numbers below. In addition, Georgeson is available to answer any questions you might have in respect of the information contained in the Circular. | |
North American Toll-Free Number 1-866-725-6575 | ||
Banks, Brokers and Collect Calls: 1-212-806-6859 |
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1. | the IRC Rights Plan shall be deemed to have been terminated (and all rights issued thereunder shall expire) and shall be of no further force or effect; | |
2. | each outstanding IRC Option shall be cancelled and the holder thereof shall have no further rights or benefits in respect of such IRC Option; | |
3. | each IRC Common Share (other than an Exchangeable Elected Share or an IRC Common Share held by Royal Gold or an affiliate thereof or a Dissenting IRC Shareholder) shall be transferred to Canco in consideration for the Royal Gold Share Consideration, the Cash Consideration, or a combination of the foregoing (as described below); | |
4. | each IRC Common Share that is an Exchangeable Elected Share (other than an IRC Common Share held by Royal Gold or an affiliate thereof or a Dissenting IRC Shareholder) shall be transferred to Canco in consideration for the Exchangeable Share Consideration or a combination of Cash Consideration and Exchangeable Share Consideration (as described below); and |
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5. | Royal Gold, Canco and Callco shall execute the Support Agreement and Royal Gold, Canco and the Transfer Agent shall execute the Voting and Exchange Trust Agreement and Royal Gold shall issue to and deposit with the Transfer Agent the Special Voting Share in consideration of the payment to Royal Gold by IRC on behalf of the IRC Shareholders of one United States dollar (US$1.00), to be thereafter held on record by the Transfer Agent as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement. |
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1. | The Arrangement values IRC at approximately C$749 million (based on the closing price of Royal Gold Shares on NASDAQ of US$50.79 and the currency exchange rate on December 14, 2009). This represents a premium of approximately 70% over IRC’s20-day volume-weighted average trading price on the TSX through December 4, 2009, the last trading day prior to the public announcement by Franco-Nevada of its intention to make the Franco-Nevada Offer. | |
2. | The Arrangement arose out of a competitive auction process conducted by IRC in which interested parties were asked to provide written proposals for the acquisition of all of the IRC Common Shares and given multiple opportunities to enhance their proposals. The Arrangement was the most attractive proposal to arise out of the auction process conducted by IRC. | |
3. | The Scotia Capital Fairness Opinion, which concluded that the consideration offered to IRC Shareholders pursuant to the Arrangement is fair, from a financial point of view, to IRC Shareholders other than Royal Gold and affiliates. See “The Arrangement — Scotia Capital Fairness Opinion” and Appendix H “Scotia Capital Inc. Fairness Opinion”. | |
4. | IRC Securityholders holding an aggregate of approximately 34% of the IRC Common Shares on a fully-diluted basis, including the three largest IRC Shareholders and each director and officer of IRC, have signed Voting Agreements pursuant to which, and subject to the terms thereof, they have agreed to vote their IRC Common Shares and IRC Options in favour of the Arrangement Resolution. See “Voting Agreements”. | |
5. | IRC Shareholders who receive Royal Gold Shares or Exchangeable Shares under the Arrangement may benefit from the greater trading liquidity of Royal Gold Shares as compared to IRC Common Shares. In that regard, the average daily trading value of the Royal Gold Shares on the NASDAQ and the TSX over the twelve-month period ended December 4, 2009 (the last trading day prior to the public announcement by Franco-Nevada of its intention to make the Franco-Nevada Offer) was approximately US$35 million compared to the average daily trading value of the IRC Common Shares on the TSX and AMEX of approximately US$1 million during the same twelve-month period. | |
6. | IRC Shareholders who receive Royal Gold Shares or Exchangeable Shares under the Arrangement will be provided with increased exposure to revenues and cash flows from gold royalties and the opportunity to participate in the future performance of Royal Gold Shares. | |
7. | IRC Shareholders who are Eligible Holders will have the opportunity to elect to receive consideration that includes Exchangeable Shares (and the Ancillary Rights) and to make a valid tax election with Canco to defer all or part of the Canadian income tax on any capital gain that would otherwise arise on an exchange of their IRC Common Shares for Royal Gold Shares. See “The Arrangement — Election Procedure and Pro-ration” and “Certain Canadian Federal Income Tax Considerations”. | |
8. | Industry, economic and market conditions and trends. | |
9. | Historical market prices and trading information with respect to the IRC Common Shares and the Royal Gold Shares. | |
10. | Information regarding the business, operations, property, assets, financial performance and condition, operating results and prospects of IRC and Royal Gold. | |
11. | The likelihood that the Arrangement will be completed, given the conditions and other approvals necessary to complete the Arrangement. |
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12. | The terms of the Arrangement Agreement, which permit the IRC Board to consider and respond to a Superior Proposal subject to the payment of the Termination Fee to Royal Gold in certain circumstances. | |
13. | The requirement that the Arrangement Resolution be passed by (A) at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) IRC Shareholders voting as a single class, and (ii) IRC Shareholders and IRC Optionholders voting together as a single class; and (B) Minority Approval. | |
14. | The procedures by which the Arrangement is to be approved, including the requirement for approval by the Court after a hearing at which fairness will be considered. | |
15. | The availability of rights of dissent to the registered IRC Shareholders with respect to the Arrangement. |
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(a) | the maximum aggregate amount of Cash Consideration to be paid to the IRC Shareholders shall be the Canadian Dollar Equivalent as of the Effective Date of US$350 million (the “Maximum Aggregate Cash Consideration”), and | |
(b) | the maximum aggregate number of Royal Gold Shares and Exchangeable Shares that may be issued to the IRC Shareholders is the lesser of (i) 7,750,000, and (ii) in the event the maximum aggregate amount of Cash Consideration to be paid to the IRC Shareholders is greater than the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761, the greater of (A) 7,040,919 and (B) 7,750,000 less one for every Canadian Dollar Equivalent as of the Effective Date of US$50.79 of incremental cash election in the aggregate above the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761 (the “Maximum Aggregate Number of Shares”). |
(i) | if the cash election is above US$350,000,000 but the share election is below 7,750,000, pro-ration first is applied using US$350,000,000 as the Maximum Aggregate Cash Consideration, and thus the Maximum Aggregate Number of Shares is 7,040,919; | |
(ii) | if the share election is above 7,750,000 but the cash election is below US$350,000,000, pro-ration first is applied using 7,750,000 as the Maximum Aggregate Number of Shares, and thus the Maximum Aggregate Cash Consideration is US$313,985,761; and | |
(iii) | if the cash election is above US$350,000,000 and the share election is above 7,750,000, then, notwithstanding the definitions of Maximum Aggregate Cash Consideration in (a) above and Maximum Aggregate Number of Shares in (b) above, the Maximum Number of Shares will be the mid-point between 7,750,000 and 7,040,919, which is 7,395,459, and the corresponding Maximum Aggregate Cash Consideration will thus be US$331,992,888. |
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1. | The Arrangement values IRC at approximately C$749 million (based on the closing price of Royal Gold Shares on NASDAQ of US$50.79 and the currency exchange rate on December 14, 2009). This represents a premium of approximately 70% over IRC’s20-day volume-weighted average trading price on the TSX through December 4, 2009, the last trading day prior to the public announcement by Franco-Nevada of its intention to make the Franco-Nevada Offer. | |
2. | The Arrangement arose out of a competitive auction process conducted by IRC in which interested parties were asked to provide written proposals for the acquisition of all of the IRC Common Shares and given multiple opportunities to enhance their proposals. The Arrangement was the most attractive proposal to arise out of the auction process conducted by IRC. | |
3. | The Scotia Capital Fairness Opinion, which concluded that the consideration offered to IRC Shareholders pursuant to the Arrangement is fair, from a financial point of view, to IRC Shareholders other than Royal Gold and affiliates. See “The Arrangement — Scotia Capital Fairness Opinion” and Appendix H — “Scotia Capital Inc. Fairness Opinion”. | |
4. | IRC Securityholders holding an aggregate of approximately 34% of the IRC Common Shares on a fully-diluted basis, including the three largest IRC Shareholders and each director and officer of IRC, have signed Voting Agreements pursuant to which, and subject to the terms thereof, they have agreed to vote their IRC Common Shares and IRC Options in favour of the Arrangement Resolution. See “Voting Agreements”. | |
5. | IRC Shareholders who receive Royal Gold Shares or Exchangeable Shares under the Arrangement may benefit from the greater trading liquidity of Royal Gold Shares as compared to IRC Common Shares. In that regard, the average daily trading value of the Royal Gold Shares on the NASDAQ and the TSX over the twelve-month period ended December 4, 2009 (the last trading day prior to the public announcement by Franco-Nevada of its intention to make the Franco-Nevada Offer) was approximately US$35 million, compared to the average daily trading value of the IRC Common Shares on the TSX and AMEX of approximately US$1 million during the same twelve-month period. | |
6. | IRC Shareholders who receive Royal Gold Shares or Exchangeable Shares under the Arrangement will be provided with increased exposure to revenues and cash flows from gold royalties and the opportunity to participate in the future performance of Royal Gold Shares. |
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7. | IRC Shareholders who are Eligible Holders will have the opportunity to elect to receive consideration that includes Exchangeable Shares (and the Ancillary Rights) and to make a valid tax election with Canco to defer all or part of the Canadian income tax on any capital gain that would otherwise arise on an exchange of their IRC Common Shares for Royal Gold Shares. See “The Arrangement — Election Procedure and Pro-ration” and “Certain Canadian Federal Income Tax Considerations”. | |
8. | Industry, economic and market conditions and trends. | |
9. | Historical market prices and trading information with respect to the IRC Common Shares and the Royal Gold Shares. | |
10. | Information regarding the business, operations, property, assets, financial performance and condition, operating results and prospects of IRC and Royal Gold. | |
11. | The likelihood that the Arrangement will be completed, given the conditions and other approvals necessary to complete the Arrangement. | |
12. | The terms of the Arrangement Agreement, which permit the IRC Board to consider and respond to a Superior Proposal subject to the payment of the Termination Fee to Royal Gold in certain circumstances. | |
13. | The requirement that the Arrangement Resolution be passed by (A) at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) IRC Shareholders voting as a single class, and (ii) IRC Shareholders and IRC Optionholders voting together as a single class; and (B) Minority Approval. | |
14. | The procedures by which the Arrangement is to be approved, including the requirement for approval by the Court after a hearing at which fairness will be considered. | |
15. | The availability of rights of dissent to the registered IRC Shareholders with respect to the Arrangement. |
1. | the IRC Rights Plan shall be deemed to have been terminated (and all rights issued thereunder shall expire) and shall be of no further force or effect; | |
2. | each outstanding IRC Option shall be cancelled and the holder thereof shall have no further rights or benefits in respect of such IRC Option; | |
3. | each IRC Common Share (other than an Exchangeable Elected Share or an IRC Common Share held by Royal Gold or an affiliate thereof or a Dissenting IRC Shareholder) shall be transferred to Canco in consideration for the Royal Gold Share Consideration, the Cash Consideration, or a combination of the foregoing (as described below); | |
4. | each IRC Common Share that is an Exchangeable Elected Share (other than an IRC Common Share held by Royal Gold or an affiliate thereof or a Dissenting IRC Shareholder) shall be transferred to Canco in consideration for the Exchangeable Share Consideration or a combination of Cash Consideration and Exchangeable Share Consideration (as described below); and |
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5. | Royal Gold, Canco and Callco shall execute the Support Agreement and Royal Gold, Canco and the Transfer Agent shall execute the Voting and Exchange Trust Agreement and Royal Gold shall issue to and deposit with the Transfer Agent the Special Voting Share in consideration of the payment to Royal Gold by IRC on behalf of the IRC Shareholders of one United States dollar (US$1.00), to be thereafter held on record by the Transfer Agent as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement. |
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(a) | the maximum aggregate amount of Cash Consideration to be paid to the IRC Shareholders shall be the Canadian Dollar Equivalent as of the Effective Date of US$350 million (the “Maximum Aggregate Cash Consideration”), and | |
(b) | the maximum aggregate number of Royal Gold Shares and Exchangeable Shares that may be issued to the IRC Shareholders is the lesser of (i) 7,750,000, and (ii) in the event the maximum aggregate amount of Cash Consideration to be paid to the IRC Shareholders is greater than the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761, the greater of (A) 7,040,919 and (B) 7,750,000 less one for every Canadian Dollar Equivalent as of the Effective Date of US$50.79 of incremental cash election in the aggregate above the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761 (the “Maximum Aggregate Number of Shares”). |
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(a) | the Court must grant the Final Order approving the Arrangement; | |
(b) | all conditions precedent to the Arrangement further described in the Arrangement Agreement must be satisfied or waived by the appropriate party; and | |
(c) | the Articles of Arrangement in the form prescribed by the CBCA must be filed with the Director under the CBCA. |
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(a) | in case of a cash dividend declared on the Royal Gold Shares, a cash dividend on the Exchangeable Shares in an amount for each Exchangeable Share equal to the cash dividend declared on each Royal Gold Share on the RG Dividend Declaration Date; | |
(b) | in the case of a stock dividend declared on the Royal Gold Shares to be paid in Royal Gold Shares, a stock dividend of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of Royal Gold Shares to be paid on each Royal Gold Share unless in lieu of such stock dividend Canco elects to effect a corresponding and contemporaneous and economically equivalent (as determined by the board of directors of Canco) subdivision of the outstanding Exchangeable Shares; or | |
(c) | in the case of a dividend declared on the Royal Gold Shares in property other than cash or Royal Gold Shares, a dividend in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (as determined by the board of directors of Canco) to the type and amount of property declared as a dividend on each Royal Gold Share. |
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(a) | pay any dividends on the common shares of Canco or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in common shares of Canco or any such other shares ranking junior to the Exchangeable Shares, as the case may be; | |
(b) | redeem or purchase or make any capital distribution in respect of common shares of Canco or any other shares ranking junior to the Exchangeable Shares; | |
(c) | redeem or purchase any other shares of Canco ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution orwinding-up of Canco, whether voluntary or involuntary, or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs; | |
(d) | issue any Exchangeable Shares or any other shares of Canco ranking equally with the Exchangeable Shares other than by way of stock dividend to the holders of such Exchangeable Shares; or | |
(e) | issue any shares of Canco ranking superior to the Exchangeable Shares. |
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(a) | there are fewer than 750,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by Royal Gold or its affiliates and subject to necessary adjustments to such number of shares to reflect permitted changes to Exchangeable Shares), in which case the board of directors of Canco may accelerate such redemption date as it may determine, upon at least 60 days prior written notice to the holders of the Exchangeable Shares and the Voting and Exchange Trustee; | |
(b) | any merger, amalgamation, arrangement, take-over bid or tender offer, material sale of shares or rights or interest therein or thereto or similar transactions involving Royal Gold, or any proposal to do so occurs, in which case, provided that the board of directors of Canco determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in |
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connection with such transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such transaction in accordance with its terms, the board of directors of Canco may accelerate the Redemption Date to such date as it may determine, upon such number of days’ prior written notice to the holders of the Exchangeable Shares and the Voting and Exchange Trustee as the board of directors of Canco may determine to be reasonably practicable in such circumstances; |
(c) | an Exchangeable Share Voting Event (as defined below) that is not an Exempt Exchangeable Share Voting Event (as defined below) is proposed and (i) the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event or the holders of the Exchangeable Shares do take the necessary action but in connection therewith, more than 2% of the holders of Exchangeable Shares exercise rights of dissent under the CBCA, and (ii) the board of directors of Canco determines in good faith that it is not reasonably practicable to accomplish the business purpose (which business purpose must bebona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action, or the board of directors of Canco makes its determination, as applicable; or | |
(d) | an Exempt Exchangeable Share Voting Event (as defined below) is proposed and holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action. |
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(a) | Royal Gold will not without prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with the terms of the Exchangeable Shares: |
(i) | issue or distribute Royal Gold Shares (or securities exchangeable for or convertible into or carrying rights to acquire Royal Gold Shares) to the holders of all or substantially all of the then outstanding Royal Gold Shares by way of stock dividend or other distribution, other than an issue of Royal Gold |
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Shares (or securities exchangeable for or convertible into or carrying rights to acquire Royal Gold Shares) to holders of Royal Gold Shares (A) who exercise an option to receive dividends in Royal Gold Shares (or securities exchangeable for or convertible into or carrying rights to acquire Royal Gold Shares) in lieu of receiving cash dividends, or (B) pursuant to any dividend reinvestment plan or similar arrangement; or |
(ii) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding Royal Gold Shares entitling them to subscribe for or to purchase Royal Gold Shares (or securities exchangeable for or convertible into or carrying rights to acquire Royal Gold Shares); or | |
(iii) | issue or distribute to the holders of all or substantially all of the then outstanding Royal Gold Shares (A) shares or securities (including evidences of indebtedness) of Royal Gold of any class (other than Royal Gold Shares or securities convertible into or exchangeable for or carrying rights to acquire Royal Gold Shares), or (B) rights, options, warrants or other assets other than those referred to in clause (a)(ii) above, |
(b) | Royal Gold will not without the prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with the terms of the Exchangeable Shares: |
(i) | subdivide, redivide or change the then outstanding Royal Gold Shares into a greater number of Royal Gold Shares; or | |
(ii) | reduce, combine, consolidate or change the then outstanding Royal Gold Shares into a lesser number of Royal Gold Shares; or | |
(iii) | reclassify or otherwise change Royal Gold Shares or effect an amalgamation, merger, arrangement, reorganization or other transaction affecting Royal Gold Shares; |
(c) | Royal Gold will ensure that the record date for any event referred to in paragraphs (a) or (b) above, or (if no record date is applicable for such event) the effective date for any such event, is not less than five business days after the date on which such event is declared or announced by Royal Gold (with contemporaneous notification thereof by Royal Gold to Canco). | |
(d) | The board of directors of Canco will be entitled to determine, acting in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in paragraphs (a) or (b) above and each such determination will be conclusive and binding on Royal Gold. | |
(e) | Canco agrees that, to the extent required, upon due notice from Royal Gold, Canco will use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Canco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the Royal Gold Shares and Exchangeable Shares. |
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(a) | approval of the Arrangement by IRC Securityholders, with or without amendment, at the Meeting in accordance with the Interim Order; | |
(b) | the Interim Order and the Final Order each having been obtained on terms consistent with the Arrangement Agreement, and not having been set aside or modified in a manner unacceptable to IRC and Royal Gold, acting reasonably, on appeal or otherwise; | |
(c) | approval for listing of the Royal Gold Shares issuable to the IRC Shareholders pursuant to the Arrangement on the NASDAQ, subject to official notice of issuance, and conditional approval for listing of the Royal Gold Shares and Exchangeable Shares issuable to the IRC Shareholders pursuant to the Arrangement on the TSX; | |
(d) | no applicable Law having been enacted, which continues to be in effect through the Outside Date, that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins IRC or Royal Gold from consummating the Arrangement; | |
(e) | the Arrangement Agreement not having been terminated in accordance with its terms; and | |
(f) | the availability of exemptions from the prospectus and registration requirements of applicable Law in connection with the distribution and first trade of the Royal Gold Shares and the Exchangeable Shares pursuant to the Arrangement. |
(a) | performance by each of Royal Gold and Canco of all of the obligations to be performed by it under the Arrangement Agreement on or prior to the Effective Time, except where failure to perform is not Materially Adverse to Royal Gold and its subsidiaries, taken as a whole; |
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(b) | receipt of all waivers, consents, permits, orders and approvals of any Agency, and the expiry of any waiting periods (whether regulatory or contractual), the failure of which to obtain or receive, or the non-expiry of which, would or would reasonably be expected to be Materially Adverse to IRC or Royal Gold and their respective subsidiaries, in each case taken as a whole; | |
(c) | the truth and correctness of all representations and warranties of Royal Gold and Canco contained in the Arrangement Agreement, except where the failure of such representations and warranties to be true and correct would not reasonably be expected to be Materially Adverse to Royal Gold and its subsidiaries, taken as a whole (provided that the representations and warranties of Royal Gold and Canco in relation to their financing commitments and the availability to Royal Gold of sufficient financing to complete the Arrangement must in any event be true and correct in all respects); | |
(d) | there not having occurred, since the date of the Arrangement Agreement, any event, change, effect or development that individually or in the aggregate, has had a Materially Adverse effect on Royal Gold and its subsidiaries, taken as a whole; and | |
(e) | Canco being a “taxable Canadian corporation” and not a “mutual fund corporation”, each within the meaning of the ITA, at the Effective Time. |
(a) | performance by IRC of all of the obligations to be performed by it under the Arrangement Agreement on or prior to the Effective Date, except where failure to perform is not Materially Adverse to IRC and its subsidiaries, taken as a whole; | |
(b) | the truth and correctness of all representations and warranties of IRC under the Arrangement Agreement, except where the failure of such representations and warranties to be true and correct would not reasonably be expected to be Materially Adverse to IRC and its subsidiaries, taken as a whole; | |
(c) | there not having been delivered and not withdrawn notices of dissent with respect to the Arrangement in respect of more than 15% of the IRC Common Shares; | |
(d) | there not having occurred, since the date of the Arrangement Agreement, any event, change, effect or development that individually or in the aggregate, has had a Materially Adverse effect on IRC and its subsidiaries, taken as a whole; | |
(e) | receipt of all waivers, consents, permits, orders and approvals of any governmental agency, and the expiry of any waiting periods (whether regulatory or contractual), the failure of which to obtain or receive, or the non-expiry of which, would or would reasonably be expected to be Materially Adverse to IRC or Royal Gold and their respective subsidiaries, in each case taken as a whole; and | |
(f) | approval of the Arrangement by holders of IRC Secured Debentures and there not having occurred under the IRC Indenture prior to, or be occurring as of, the Effective Time any event of default. |
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(a) | solicit, initiate, knowingly encourage, or facilitate (including by way of furnishing non-public information) any inquiries or the making by any third party of any proposals regarding an Alternative Transaction; | |
(b) | participate in any discussions or negotiations regarding any Alternative Transaction; | |
(c) | approve or recommend any Alternative Transaction; or | |
(d) | accept or enter into any agreement, arrangement or understanding related to any Alternative Transaction. |
(a) | immediately cease and cause to be terminated any existing discussions or negotiations, directly or indirectly, with any person with respect to any Alternative Transaction; and | |
(b) | not, directly or indirectly, waive or vary any terms or conditions of any confidentiality or standstill agreement that it has entered into with any person considering any Alternative Transaction and to promptly request the return (or the deletion from retrieval systems and data bases or the destruction) of all information, in each case subject to the terms and conditions of each such agreement. |
(a) | complying with the obligations of the IRC Board under applicable securities Law to prepare and deliver a directors’ circular in response to a take-over bid; | |
(b) | participating in any proceeding in respect of the IRC Rights Plan in accordance and consistent with IRC’s obligations under the Arrangement Agreement; and | |
(c) | considering, participating in discussions or negotiations and entering into confidentiality agreements and providing information, in each case pursuant to the provisions of Section 6 of the Arrangement Agreement, regarding abona fide written Acquisition Proposal that (i) did not result from a breach of the provisions of the Arrangement Agreement described under the heading “The Arrangement Agreement — Alternative Transactions” prior thereto, and (ii) the IRC Board has determined by formal resolution, in good faith and after consultation with its financial advisors and outside legal counsel, is or is reasonably likely to result in a Superior Proposal, but only to the extent that the IRC Board also has determined by formal resolution, in good faith after consultation with its outside counsel, that the failure to take such action would be inconsistent with its fiduciary duties. |
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(a) | requires any such person, if such person is not already a party to a confidentiality agreement with IRC, to execute a confidentiality agreement containing a commercially reasonable standstill provision (which, for greater certainty, shall in no event prevent or restrict such person, IRC, its subsidiaries or its or their Representatives, or the IRC Board from engaging in any of the activities described above in subparagraph (c) under the heading “The Arrangement Agreement — Alternative Transactions — Permitted Actions”), terms at least as favourable to IRC as those contained in the Confidentiality Agreement, and a prohibition on such person’s use of any information regarding IRC or its subsidiaries for any reason other than for purposes of evaluating and consummating the transaction that is the subject of the Acquisition Proposal; and | |
(b) | sends a copy of any such confidentiality agreement to Royal Gold promptly upon its execution, provides Royal Gold (to the extent it has not already done so) with copies of the information (other than any Proprietary Information) provided to such person and promptly provides Royal Gold with access to all information to which such person is provided access (other than any Proprietary Information). |
(a) | IRC has complied with its obligations under the Arrangement Agreement with respect to the Superior Proposal, including by providing Royal Gold with all documentation required to be delivered to it under the Arrangement Agreement and a copy of the Superior Proposal (including any draft agreement to be entered into by IRC which governs the Superior Proposal); | |
(b) | a period expiring at 5:00 p.m. (Toronto time) on the fifth business day (the “Response Period”) after the later of (i) the date on which Royal Gold received written notice from the IRC Board that it has resolved to accept, or enter into a definitive agreement, undertaking or arrangement in respect of, a Superior Proposal, and (ii) the date Royal Gold received a copy of the Superior Proposal as contemplated above, has elapsed; and | |
(c) | the IRC Board has considered any amendment to the terms of the Arrangement Agreement proposed in writing by Royal Gold (or on its behalf) before the end of the Response Period and determined in good faith, after consultation with its financial advisors and outside legal counsel, that the Superior Proposal remains a Superior Proposal (as assessed against the Arrangement Agreement, together with the written amendments, if any, proposed by Royal Gold before the end of the Response Period) and that it would be inconsistent with its fiduciary duties not to enter into a binding agreement in respect of such Superior Proposal. |
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(a) | by mutual agreement in writing executed by IRC and Royal Gold (for itself and on behalf of Canco); | |
(b) | by IRC: |
(i) | after the Outside Date, subject to compliance with certain notice and cure provisions set forth in the Arrangement Agreement, if the mutual conditions precedent or the conditions precedent in favour of IRC have not been satisfied or waived by IRC on or before the Outside Date, provided that IRC’s failure to fulfill any of its obligations under the Arrangement Agreement or its breach of any of its representations and warranties under the Arrangement Agreement has not been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; | |
(ii) | if any applicable Law is enacted or made that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins IRC, Canco or Royal Gold from consummating the Arrangement and such applicable Law or enjoinment has become final and non-appealable; | |
(iii) | if the IRC Board authorizes IRC to enter into a definitive agreement, undertaking or arrangement in respect of a Superior Proposal in the circumstances described above under the heading “The Arrangement — Alternative Transactions — Implementation of Superior Proposal”; | |
(iv) | following the Meeting, if IRC Securityholders do not cast (or do not cause to be cast) sufficient votes at the Meeting to permit completion of the Arrangement; or | |
(v) | at any time, subject to compliance with certain notice and cure provisions set forth in the Arrangement Agreement, if Royal Gold or Canco has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Arrangement Agreement, which breach or failure is, or would reasonably be expected to be, Materially Adverse to Royal Gold and its subsidiaries as a whole; and |
(c) | by Royal Gold: |
(i) | after the Outside Date, subject to compliance with certain notice and cure provisions set forth in the Arrangement Agreement, if the mutual conditions precedent or the conditions precedent in favour of Royal Gold and Canco have not been satisfied or waived by Royal Gold on or before the Outside Date, provided that a failure by either Royal Gold or Canco to fulfill any of its obligations under the Arrangement Agreement or a breach by either of any of its representations and warranties under the Arrangement Agreement has not been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; | |
(ii) | if any applicable Law is enacted that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins IRC, Canco or Royal Gold from consummating the Arrangement and such applicable Law or enjoinment has become final and non-appealable; |
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(iii) | if the IRC Board, or IRC, as applicable: |
(A) | (1) withdraws or modifies in a manner adverse to Royal Gold its recommendation that IRC Shareholders vote in favour of the Arrangement, or (2) refuses to affirm such recommendation within certain specified periods following the public announcement of abona fide Acquisition Proposal; | |
(B) | does not recommend against IRC Shareholders voting in favour of an Alternative Transaction within certain specified periods following the public announcement of abona fide Acquisition Proposal; | |
(C) | approves, recommends, accepts or enters into any agreement, undertaking or arrangement in respect of an Alternative Transaction (other than a confidentiality agreement permitted by the terms of the Arrangement Agreement); or | |
(D) | breaches or fails to perform (or, in certain cases, materially breaches or fails to perform in all material respects) certain covenants and agreements set forth in the Arrangement Agreement in respect of non-solicitation, Acquisition Proposals and Superior Proposals; |
(iv) | if the Meeting is cancelled, adjourned or delayed by IRC except as expressly permitted or contemplated by the Arrangement Agreement or agreed to by Royal Gold in writing or requested by Royal Gold; | |
(v) | following the Meeting, if IRC Securityholders do not cast (or do not cause to be cast) sufficient votes at the Meeting to permit completion of the Arrangement; and | |
(vi) | at any time, subject to compliance with certain notice and cure provisions set forth in the Arrangement Agreement, if IRC has breached or failed to perform any of its representations, warranties, covenants or agreements set forth in the Arrangement Agreement, which breach or failure is, or would reasonably be expected to be, Materially Adverse to IRC and its subsidiaries as a whole. |
(a) | IRC enters into a definitive agreement, undertaking or arrangement in respect of a Superior Proposal; or | |
(b) | Royal Gold terminates the Arrangement Agreement as a result of: |
(i) | the IRC Board (a) withdrawing or modifying in a manner adverse to Royal Gold its recommendation that IRC Shareholders vote in favour of the Arrangement, or (b) refusing to affirm such recommendation within certain specified periods following the public announcement of abona fide Acquisition Proposal; | |
(ii) | the IRC Board not recommending against IRC Shareholders voting in favour of an Alternative Transaction within certain specified periods following the public announcement of abona fide Acquisition Proposal; | |
(iii) | the IRC Board approving, recommending, accepting or entering into any agreement, undertaking or arrangement in respect of an Alternative Transaction (other than a confidentiality agreement permitted by the terms of the Arrangement Agreement); or | |
(iv) | the Meeting being cancelled, adjourned or delayed by IRC except as expressly permitted or contemplated by the Arrangement Agreement or agreed to by Royal Gold in writing or requested by Royal Gold. |
(X) | prior to the time of the Meeting, abona fide written Acquisition Proposal was publicly announced and was not withdrawn; and |
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(Y) | at any time within the six months after the date of termination of the Arrangement Agreement by either IRC or Royal Gold for the reasons described in the preceding paragraph, IRC approves, recommends, accepts, enters into any agreement, undertaking or arrangement in respect of, or consummates such an Acquisition Proposal; |
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(a) | be less than the sum of (i) any Cash Consideration (including cash received in lieu of fractional shares) received on the exchange of the Exchangeable Elected Shares and (ii) the fair market value at the Exchange Time of the Ancillary Rights acquired on the exchange; | |
(b) | be less than the lesser of (i) the adjusted cost base to the holder of the holder’s Exchangeable Elected Shares at the Exchange Time, and (ii) the fair market value of the Exchangeable Elected Shares at that time; and | |
(c) | exceed the fair market value of the Exchangeable Elected Shares at the Exchange Time. |
(a) | the Eligible Holder will be deemed to have disposed of the Exchangeable Elected Shares for proceeds of disposition equal to the Elected Amount; | |
(b) | the Eligible Holder will not realize a capital gain (or a capital loss), provided that the Elected Amount is equal to the sum of (i) the aggregate adjusted cost base to the Eligible Holder of its Exchangeable Elected Shares immediately before the Exchange Time and (ii) any reasonable costs of disposition; | |
(c) | the Eligible Holder will realize a capital gain (or a capital loss) to the extent that the Elected Amount exceeds (or is less than) the sum of (i) the aggregate adjusted cost base to the Eligible Holder of its Exchangeable Elected Shares immediately before the Exchange Time and (ii) any reasonable costs of disposition. For a description of the tax treatment of capital gains and losses, see “Certain Canadian Federal Income Tax Considerations — IRC Shareholders Resident in Canada — Taxation of Capital Gains or Capital Losses” below; | |
(d) | the cost to the Eligible Holder of the Ancillary Rights received on the exchange will be equal to the fair market value thereof at the Exchange Time; and | |
(e) | the cost to the Eligible Holder of the Exchangeable Shares received on the exchange will be equal to the amount by which the Elected Amount exceeds the aggregate of (i) the amount of any Cash Consideration (including any cash received in lieu of fractional shares) received on the exchange of the Exchangeable Elected Shares and (ii) the fair market value at the Exchange Time of the Ancillary Rights received on the exchange. |
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(i) | on a redemption (including pursuant to a Retraction Request) of such Exchangeable Shares by Canco and | |
(ii) | on an acquisition of such Exchangeable Shares by Royal Gold or Callco. |
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Aggregate Number | ||||||||||||||
Date of | Description of | of IRC Common | Price Per IRC | Aggregate | ||||||||||
Distribution | Transaction | Shares Issued | Common Share | Proceeds | ||||||||||
February 22, 2005 | Initial Public Offering | 37,790,698 | $ | 4.30 | $162,500,001 | |||||||||
February 22, 2005 | Private Placement | 1,395,360 | $ | 4.30 | $6,000,048 | |||||||||
February 22, 2005 | Archean Purchase | 7,395,349 | $ | 4.30 | $31,800,001 | (1) | ||||||||
February 22, 2005 | Other Purchases (BHP, Hecla, Hunter, Fawcett) | 1,719,569 | $ | 4.30 | $7,394,147 | (1) | ||||||||
February 22, 2005 | Conversion of Prior Financing | 2,860,249 | $ | 4.30 | $12,299,071 | |||||||||
August 2005 — March 2007 | Exercise of Warrants | 444,048 | $ | 0.80 | $355,239 | |||||||||
August 2005 — March 2007 | Exercise of Warrants | 1,496,520 | $ | 3.00 | $4,489,560 | |||||||||
June 1, 2007 | Exercise of Options | 40,000 | $ | 4.30 | $172,000 | |||||||||
February 11, 2007 | Exercise of Options | 3,500 | $ | 4.30 | $15,050 | |||||||||
February 12, 2007 | Unit Offering | 8,334,000 | $ | 5.40 | $45,003,600 | |||||||||
April 2007 — June 2007 | Exercise of Warrants from Unit Offering | 688,000 | $ | 6.50 | $4,472,000 | |||||||||
July 2007 — September 2007 | Exercise of Warrants from Unit Offering | 63,630 | $ | 6.50 | $413,595 | |||||||||
November 5, 2007 | Prospectus Offering | 10,400,000 | $ | 6.30 | $65,520,000 | |||||||||
July 15, 2009 | Prospectus Offering | 14,100,000 | $ | 3.55 | $50,055,000 | |||||||||
July 24, 2009 | Over-Allotment to Prospectus Offering | 2,115,000 | $ | 3.55 | $7,508,250 | |||||||||
November 30, 2009 | Exercise of Options | 6,666 | $ | 1.50 | $9,999 |
(1) | IRC Common Shares issued in satisfaction of purchase price in this amount. |
1. | the consolidated annual financial statements of IRC as at and for the years ended December 31, 2008 and 2007, together with the notes thereto and the auditors’ report thereon; and | |
2. | the unaudited consolidated financial statements of IRC for the three and nine-month period ended September 30, 2009, together with the notes thereto. |
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IRC COMMON SHARES AND ROYAL GOLD SHARES
TSX | ||||||||||||
Price Range (C$) | ||||||||||||
High | Low | Volume | ||||||||||
2009 | ||||||||||||
January | 2.18 | 1.65 | 2,609,975 | |||||||||
February | 2.37 | 1.75 | 2,619,858 | |||||||||
March | 2.74 | 1.91 | 4,862,107 | |||||||||
April | 2.97 | 2.42 | 2,378,137 | |||||||||
May | 4.20 | 2.81 | 5,441,660 | |||||||||
June | 4.35 | 3.58 | 7,834,557 | |||||||||
July | 3.99 | 3.18 | 4,026,963 | |||||||||
August | 4.19 | 3.56 | 1,666,901 | |||||||||
September | 4.85 | 3.86 | 2,596,454 | |||||||||
October | 4.68 | 3.97 | 1,632,154 | |||||||||
November | 4.60 | 3.99 | 2,381,169 | |||||||||
December(1) | 7.79 | 4.28 | 63,894,936 | |||||||||
2010 | ||||||||||||
January (up to January 15) | 7.58 | 7.36 | 10,188,074 |
(1) | Franco-Nevada announced its intention to make the Franco-Nevada Offer on December 4, 2009. The closing price of IRC Common Shares on the TSX on December 3, 2009, the day prior to the announcement of the Franco-Nevada Offer was C$4.80. IRC announced the execution of the Arrangement Agreement prior to the opening of trading on December 18, 2009. The closing price of IRC Common Shares on the TSX on December 17, 2009, the day prior to the announcement of the execution of the Arrangement Agreement was C$7.32. |
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AMEX | ||||||||||||
Price Range (US$) | ||||||||||||
High | Low | Volume | ||||||||||
2009 | ||||||||||||
January | 1.92 | 1.31 | 3,087,480 | |||||||||
February | 1.90 | 1.41 | 2,354,667 | |||||||||
March | 2.22 | 1.53 | 4,298,772 | |||||||||
April | 2.47 | 1.90 | 5,210,819 | |||||||||
May | 3.80 | 2.38 | 7,636,629 | |||||||||
June | 3.93 | 3.05 | 5,732,341 | |||||||||
July | 3.71 | 2.71 | 4,277,725 | |||||||||
August | 3.91 | 3.25 | 3,594,074 | |||||||||
September | 4.50 | 3.50 | 6,423,818 | |||||||||
October | 4.46 | 3.69 | 3,961,429 | |||||||||
November | 4.30 | 3.75 | 3,370,972 | |||||||||
December(1) | 7.36 | 4.05 | 17,372,679 | |||||||||
2010 | ||||||||||||
January (up to January 15) | 7.38 | 7.03 | 3,359,497 |
(1) | Franco-Nevada announced its intention to make theFranco-Nevada Offer on December 4, 2009. The closing price of IRC Common Shares on the AMEX on December 3, 2009, the day prior to the announcement of the Franco-Nevada Offer was US$4.53. IRC announced the execution of the Arrangement Agreement prior to the opening of trading on December 18, 2009. The closing price of IRC Common Shares on the AMEX on December 17, 2009, the day prior to the announcement of the execution of the Arrangement Agreement was US$6.83. |
TSX | ||||||||||||
Price Range (C$) | ||||||||||||
High | Low | Volume | ||||||||||
2009 | ||||||||||||
January | 61.18 | 49.27 | 96,240 | |||||||||
February | 59.24 | 49.10 | 137,550 | |||||||||
March | 59.21 | 45.94 | 119,015 | |||||||||
April | 60.83 | 41.71 | 183,860 | |||||||||
May | 52.00 | 42.70 | 123,810 | |||||||||
June | 53.15 | 46.66 | 97,840 | |||||||||
July | 48.37 | 42.43 | 51,902 | |||||||||
August | 46.22 | 41.71 | 60,261 | |||||||||
September | 53.00 | 42.84 | 91,198 | |||||||||
October | 52.17 | 46.40 | 48,280 | |||||||||
November | 57.88 | 47.00 | 56,735 | |||||||||
December | 58.35 | 48.80 | 61,499 | |||||||||
2010 | ||||||||||||
January (up to January 15) | 52.51 | 48.27 | 43,339 |
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NASDAQ | ||||||||||||
Price Range (US$) | ||||||||||||
High | Low | Volume | ||||||||||
2009 | ||||||||||||
January | 49.81 | 39.51 | 16,442,452 | |||||||||
February | 48.37 | 39.24 | 14,927,788 | |||||||||
March | 46.99 | 35.76 | 15,634,589 | |||||||||
April | 48.69 | 34.16 | 31,975,233 | |||||||||
May | 47.48 | 35.73 | 17,252,456 | |||||||||
June | 47.93 | 40.70 | 19,413,183 | |||||||||
July | 43.00 | 37.35 | 13,757,532 | |||||||||
August | 43.09 | 38.04 | 10,519,873 | |||||||||
September | 49.35 | 38.57 | 19,296,451 | |||||||||
October | 49.71 | 42.90 | 16,690,518 | |||||||||
November | 55.55 | 43.23 | 15,704,075 | |||||||||
December | 55.96 | 46.12 | 13,896,361 | |||||||||
2010 | ||||||||||||
January (up to January 15) | 50.98 | 46.75 | 3,984,263 |
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(a) | the Dissenting IRC Shareholder withdraws the demand for payment before IRC makes an offer to the Dissenting IRC Shareholder pursuant to the CBCA, | |
(b) | IRC fails to make an offer as hereinafter described and the Dissenting IRC Shareholder withdraws the demand for payment, or | |
(c) | the proposal contemplated in the Arrangement Resolution does not proceed, |
(a) | ultimately are determined to be entitled to be paid fair value for their IRC Common Shares, which fair value, notwithstanding anything to the contrary contained in Section 190 of the CBCA, shall be determined as of the Exchange Time, shall be deemed to have transferred those IRC Common Shares as of the Exchange Time at the fair value of the IRC Common Shares determined as of the Exchange Time, without any further act or formality and free and clear of all liens and claims, to Canco; or |
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(b) | ultimately are determined not to be entitled, for any reason, to be paid fair value for their IRC Common Shares, shall be deemed to have participated in the Arrangement on the same basis as a holder of IRC Common Shares who has not exercised dissent rights and shall be deemed to have elected to receive, and shall receive, the consideration provided in Section 2.3(d) of the Plan of Arrangement, |
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Securities of IRC Beneficially Owned, Directly or Indirectly | ||||||||||||||||||
or over which Control or Direction is Exercised(1) | ||||||||||||||||||
% IRC | ||||||||||||||||||
IRC Common | Common Shares | % IRC Options | ||||||||||||||||
Name | Position with IRC | Shares | Outstanding(2) | IRC Options | Outstanding | |||||||||||||
Douglas B. Silver | Chairman and Chief | 824,500 | * | 1,478,600 | 25.22 | |||||||||||||
Executive Officer and Director | ||||||||||||||||||
Ray W. Jenner | Chief Financial | — | — | 396,200 | 6.76 | |||||||||||||
Officer and Secretary | ||||||||||||||||||
Paul H. Zink | President and Director | 43,000 | (3) | * | 171,200 | 2.92 | ||||||||||||
James A. Lydic | Vice President, | 3,500 | * | 160,000 | 2.73 | |||||||||||||
Business Development | ||||||||||||||||||
David R. Hammond | Vice President, | 103,000 | * | 278,000 | 4.74 | |||||||||||||
Strategic Planning | ||||||||||||||||||
Douglas J. Hurst | Director | 397,101 | * | 828,000 | 14.12 | |||||||||||||
Robert W. Schafer | Director | 149,316 | * | 250,000 | 4.26 | |||||||||||||
Gordon J. Fretwell | Director | 380,000 | * | 250,000 | 4.26 | |||||||||||||
Rene G. Carrier | Director | 200,000 | * | 250,000 | 4.26 | |||||||||||||
Christopher Daly | Director | 8,000 | * | 360,000 | 6.14 | |||||||||||||
Gordon J. Bogden | Director | 15,000 | * | — | — | |||||||||||||
Christopher L. Verbiski(4) | Director | 11,436,549 | (5) | 12.08 | — | — |
(1) | The information as to securities of IRC beneficially owned or over which control or direction is exercised, not being within the knowledge of IRC, has been furnished by the respective directors and officers. |
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(2) | “*” indicates that the number of IRC Common Shares indicated in the column represents less than 1% of the issued and outstanding IRC Common Shares. |
(3) | Mr. Zink’s spouse beneficially owns 3,000 IRC Common Shares, representing less than 1% of the issued and outstanding IRC Common Shares, which are not subject to the Voting Agreements. |
(4) | Mr. Verbiski’s spouse beneficially owns 4,651 IRC Common Shares, representing less than 1% of the issued and outstanding IRC Common Shares. |
(5) | Includes 3,111,200 IRC Common Shares beneficially owned by Coordinates Capital Corporation, a corporation controlled by Mr. Verbiski. |
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(a) | in the name of an intermediary with whom the non-registered IRC Shareholder deals with respect to his or her shares, such as a bank, trust corporation, stockbroker, or trustee or manager of a registered retirement savings plan, registered retirement savings fund, registered education savings plan or similar self-administered plan; or | |
(b) | in the name of a clearing agency (such as CDS Clearing and Depository Services), of which the intermediary is a member. |
(a) | be provided with a proxy form that has already been signed by the intermediary (typically, the form is sent by fax with the intermediary’s signature stamped on it), which only pertains to the number of IRC Common Shares beneficially held by the non-registered IRC Shareholder, who must fill in the blank sections therein. This proxy form is not required to be signed by the non-registered IRC Shareholder. In such a case, the non-registered IRC Shareholder who wishes to submit a proxy form should fill it out properly and file it with CIBC Mellon at 320 Bay Street, Banking Hall Level, Toronto, Ontario, M5H 4A6; or | |
(b) | more typically, be provided with a voting instruction form that they are required to fill out and sign in accordance with the instructions contained therein (such a voting instruction form may, in some cases, be completed by telephone). |
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(a) | the Foreign Currency Amount; by | |
(b) | the noon spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such exchange rate is not available, such spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as may be mutually agreed upon by Royal Gold and IRC to be appropriate for such purpose. |
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(a) | there are fewer than 750,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by Royal Gold and its affiliates, and as such number of shares may be adjusted as deemed appropriate by the board of directors of Canco to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or |
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rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the board of directors of Canco may accelerate such redemption date to such date prior to the seventh anniversary of the date on which Exchangeable Shares first are issued as they may determine, upon at least 60 days’ prior written notice to the holders of the Exchangeable Shares and the Trustee; |
(b) | a Royal Gold Control Transaction occurs, in which case, provided that the board of directors of Canco determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such Royal Gold Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such Royal Gold Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to the seventh anniversary of the date on which Exchangeable Shares first are issued as it may determine, upon such number of days’ prior written notice to the holders of the Exchangeable Shares and the Trustee as the board of directors of Canco may determine to be reasonably practicable in such circumstances; | |
(c) | an Exchangeable Share Voting Event that is not an Exempt Exchangeable Share Voting Event is proposed and (i) the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event or the holders of the Exchangeable Shares do take the necessary action but, in connection therewith, the holders of more than 2% of the outstanding Exchangeable Shares (other than those held by Royal Gold and its affiliates) exercise rights of dissent under the CBCA, and (ii) the board of directors of Canco determines in good faith that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the later of the events described in (i) and (ii) above occur; or | |
(d) | an Exempt Exchangeable Share Voting Event is proposed and holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action, |
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COMPARISON OF RIGHTS OF IRC SHAREHOLDERS AND ROYAL GOLD STOCKHOLDERS
IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
Authorized Share Capital | IRC is authorized by its articles to issue an unlimited number of shares of one class designated as common shares without par value. | Royal Gold is authorized by its certificate of incorporation to issue 110 million shares of stock, consisting of (i) 100 million shares of common stock, each share having a par value of US$0.01 and (ii) 10 million shares of preferred stock, each share having a par value of US$0.01. | ||
Voting Rights | Unless a ballot is directed by the chair of a meeting of the shareholders or demanded by a shareholder with the right to vote, motions are voted on by a show of hands with each person having one vote (regardless of the number of shares such person is entitled to vote). If voting is conducted by ballot, each person is entitled to one vote (or such other number as may be provided in the articles) for each share such person is entitled to vote. | Each common stockholder of record is entitled to one vote for each share of common stock such stockholder is entitled to vote, except that in the election of directors such stockholder shall have the right to vote such number of shares for as many persons as there are directors to be elected. Stockholders are not entitled to pre-emptive rights or to cumulative voting. | ||
Shareholder Approval of Business Combinations; Fundamental Changes | Certain fundamental changes such as amendments to articles, certain by-law amendments, certain amalgamations (other than with certain affiliated corporations), continuances to another jurisdiction and sales, leases or exchanges of all or substantially all of the property of a corporation (other than in the ordinary course of business) and other extraordinary corporate actions such as liquidations, dissolutions and arrangements (if ordered by a court) are required to be approved by special | Under the DGCL, a merger, consolidation, sale, lease, exchange or other disposition of all or substantially all of the property of a corporation not in the usual and regular course of the corporation’s business, or a dissolution of the corporation, is generally required to be approved by the holders of a majority of the shares entitled to vote on the matter, unless the certificate of incorporation provides otherwise. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
resolution. A special resolution is a resolution (i) passed by not less than two-thirds of the votes cast by the shareholders who voted in respect of the resolution at a meeting duly called and held for that purpose or (ii) signed by all shareholders entitled to vote on the resolution. In certain cases, a special resolution to approve an extraordinary corporate action is also required to be approved separately by the holders of a class or series of shares, including in certain cases a class or series of shares not otherwise carrying voting rights (unless in certain cases the share provisions with respect to such class or series of shares provides otherwise). | may be completed without the vote of the second corporation’s board of directors or stockholders. In certain situations, the approval of a business combination may require approval by a certain number of the holders of a class or series of shares. The DGCL does not contain a procedure comparable to a plan of arrangement under the CBCA. | |||
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
required by the court order. Finally, the articles of arrangement are filed with Industry Canada, which after such filing issues a certificate of arrangement. The arrangement becomes effective on the date shown in the certificate of arrangement. | ||||
Special Vote Required for Combinations with Interested Shareholders | The CBCA does not contain a provision comparable to Section 203 of the DGCL with respect to business combinations. However, MI 61-101 contains detailed requirements in connection with “related party transactions.” A related party transaction means, generally, any transaction by which an issuer, directly or indirectly, consummates one or more specified transactions with a related party, including purchasing or disposing of an asset, issuing securities or assuming liabilities. “Related party” as defined in MI 61-101 includes (i) directors and senior officers of the issuer, (ii) holders of voting securities of the issuer carrying more than 10% of the voting rights attached to all the issuer’s outstanding voting securities, and (iii) holders of a sufficient number of any securities of the issuer to materially affect control of the issuer. | Section 203 of the DGCL provides (in general) that a corporation may not engage in a business combination with an interested stockholder for a period of three years after the time of the transaction in which the person became an interested stockholder. The prohibition on business combinations with interested stockholders does not apply in some cases, including if: (i) the board of directors of the corporation, prior to the time of the transaction in which the person became an interested stockholder, approves (a) the business combination or (b) the transaction in which the stockholder becomes an interested stockholder; (ii) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced; or (iii) the board of directors and the holders of at least two-thirds of the outstanding voting stock not owned by the interested stockholder approve the business combination on or after the time of the transaction in which the person became an interested stockholder. | ||
Appraisal Rights; Rights to Dissent; Compulsory Acquisition | The CBCA provides that shareholders of a corporation are entitled to exercise dissent rights in respect of certain matters and to be paid the fair value of their shares in | Under the DGCL, a stockholder of a corporation does not have appraisal rights in connection with a merger or consolidation, if, among other things: (i) |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
connection therewith. Such matters include: (i) an amalgamation with another corporation (other than with certain affiliated corporations); (ii) an amendment to the corporation’s articles to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares of the class in respect of which a shareholder is dissenting; (iii) an amendment to the corporation’s articles to add, change or remove any restriction on the business or businesses that the corporation may carry on; (iv) a continuance under the laws of another jurisdiction; (v) a sale, lease or exchange of all or substantially all of the property of the corporation other than in the ordinary course of business; (vi) a court order permitting a shareholder to dissent in connection with an application to the court for an order approving an arrangement proposed by the corporation; (vii) the carrying out of a going-private transaction or a squeeze-out transaction; and (viii) certain amendments to the articles of a corporation which require a separate class or series vote by a holder of shares of any class or series entitled to vote on such matters, including in certain cases a class or series of shares not otherwise carrying voting rights; provided that a shareholder is not entitled to dissent if any amendment to the articles is effected by a court order (a) approving a reorganization or (b) made in connection with an action for an oppression remedy. | the corporation’s shares are listed on a national securities exchange or held of record by more than 2,000 stockholders; or (ii) the corporation will be the surviving corporation of the merger and no vote of its stockholders is required to approve the merger. The DGCL grants appraisal rights only in the case of mergers or consolidations and not in the case of a sale or transfer of assets or a purchase of assets for stock. | |||
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
Shareholder Consent to Action Without a Meeting | Under the CBCA, shareholder action without a meeting may be taken by written resolution signed by all shareholders who would be entitled to vote on the relevant issue at a meeting (other than where a written statement is submitted by a director or auditor giving reasons for resigning or for opposing any proposed action or resolution, in accordance with the CBCA). | Under the DGCL, unless otherwise provided in the certificate of incorporation, any action that can be taken at a meeting of the stockholders may be taken without a meeting and without prior notice if written consent to the action is signed by the holders of outstanding stock having the minimum number of votes necessary to authorize or take the action at a meeting of the stockholders. | ||
Special Meetings of Shareholders | Under the CBCA, the holders of not less than 5% of the issued shares of a corporation that carry the right to vote at the special meeting sought to be held may require that the directors call a meeting of shareholders. Upon meeting the technical requirements set out in the CBCA for making such a request, the directors of the corporation must call a meeting of shareholders. If they do not call such meeting within 21 days after receiving the request, any shareholder who signed the request may call the special meeting. | Under the DGCL, a special meeting of stockholders may be called only by the board of directors or by persons authorized in the certificate of incorporation or the by-laws. | ||
Distributions and Dividends; Repurchases and Redemptions | Under the CBCA, a corporation may pay a dividend by issuing fully paid shares of the corporation. A corporation may also pay a dividend in money or property unless there are reasonable grounds for believing that: (i) the corporation is, or would after the payment be, unable to pay its liabilities as they become due; or (ii) the realizable value of the corporation’s assets would | Under the DGCL, a corporation may, subject to any restrictions in its certificate of incorporation, pay dividends out of capital surplus and, if there is no surplus, out of net profits for the current and/or the preceding fiscal year, unless the net assets of the corporation are less than the capital represented by issued and outstanding shares having a preference on asset |
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thereby be less than the aggregate of its liabilities and stated capital of all classes. IRC’s by-laws provide that dividends or other distributions payable in cash may be paid to some shareholders in Canadian currency and to other shareholders in equivalent amounts of other currency or currencies, in the discretion of the board of directors. | distributions. Surplus is defined in the DGCL as the excess of the net assets over capital, as such capital may be adjusted by the board. | |||
Number of Directors; Vacancies on the Board of Directors | The CBCA provides that a corporation shall have one or more directors, but a corporation whose shares are publicly traded shall have not fewer than three directors, at least two of whom are not officers or employees of the corporation or its affiliates. IRC’s articles provide that it may have a minimum of three and a maximum of eleven directors and that the directors may appoint one or more directors to hold office until the close of the next annual meeting of shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders. IRC’s by-laws provide that the number of directors shall be the total number of directors most recently elected by the shareholders, plus, if applicable, the number of additional directors appointed by the board of directors following such election. | The DGCL provides that the board of directors of a corporation shall consist of one or more members. Royal Gold’s by-laws provide that the board of directors shall consist of such number of directors as may be determined from time to time by the board of directors, but such number shall be not less than three nor more than twelve. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
when the vacancy results from an increase in the number or minimum or maximum number of directors or from a failure to elect the number or minimum number of directors required by the articles. | majority of the directors then in office, including those who have so resigned, shall have the power to fill such vacancy or vacancies, and each director so chosen shall hold office until the next election of directors of the class of which he or she is a part, and until his or her successor is duly elected and qualified, unless sooner displaced. | |||
Constitution and Residency of Directors | The CBCA provides that at least 25% of the directors (or if a corporation has less than four directors, at least one director) must be resident Canadians. Except as permitted by the CBCA, no business may be transacted by the board of directors except at a meeting of directors at which a quorum is present and at least 25% of the directors present are resident Canadians or, if the corporation has less than four directors, at least one director present is a resident Canadian. There is no residency requirement with respect to board committees. | The DGCL does not have residency requirements comparable to those of the CBCA, but a corporation can prescribe qualifications for directors under its certificate of incorporation or by-laws. Neither Royal Gold’s certificate of incorporation nor its by- laws provide for any such qualifications for directors. | ||
Removal of Directors; Terms of Directors | Under the CBCA, provided that the articles of a corporation do not provide for cumulative voting, shareholders of the corporation may, by ordinary resolution passed at a special meeting, remove any director or directors from office. IRC’s articles do not provide for cumulative voting. If holders of a class or series of shares have the exclusive right to elect one or more directors, a director elected by them may only be removed by an ordinary resolution at a meeting of the shareholders of that class or series. | Under the DGCL, except in the case of a corporation with a classified board of directors or with cumulative voting, any director or the entire board of directors may be removed, with or without cause, by the holders of a majority of the shares entitled to vote at an election of directors. In the case of a corporation with a classified board of directors, stockholders may remove a director only for cause. Royal Gold has a classified board (as described in the paragraph below), and its by-laws provide that directors may be removed as provided in the DGCL. | ||
Indemnification of Directors and Officers | Under the CBCA, a corporation may indemnify a director or officer, a former director or officer or a person who acts or acted at the corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity (an “indemnifiable person”) against all costs, charges and expenses, including an amount | Under the DGCL, a corporation is generally permitted to indemnify its directors and officers against expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred in connection with a third-party action, other than a derivative action, and against expenses actually and reasonably incurred | ||
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
paid to settle an action or satisfy a judgment, reasonably incurred by him or her in respect of any civil, criminal, administrative, investigative or other proceeding in which he or she is involved because of that association with the corporation or other entity, if: (i) the individual acted honestly and in good faith with a view to the best interests of such corporation or the other entity, as the case may be; and (ii) in the case of a criminal or administrative action or proceeding that is enforced by a monetary penalty, the individual had reasonable grounds for believing that the individual’s conduct was lawful. An indemnifiable person may require the corporation to indemnify the individual in respect of all costs, charges and expenses reasonably incurred by the individual in connection with the defense of any civil, criminal, administrative, investigative or other proceeding to which the individual is subject because of the individual’s association with the corporation or other entity, as the case may be, if the individual was not judged by the court or other competent authority to have committed any fault or omitted to do anything that the individual ought to have done and the individual fulfills the conditions set out in (i) and (ii) above. A corporation may, with the approval of a court, also indemnify an indemnifiable person against all costs, charges and expenses in respect of an action by or on behalf of the corporation or other entity to procure a judgment in its favour, to which such person is made a party by reason of being or having been a director or an officer of the corporation or other entity, if he or she fulfills the conditions set forth in (i) and (ii) above. | in the defense or settlement of a derivative action, provided that there is a determination that the individual acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. That determination must be made by: (i) a majority of the disinterested directors, even though less than a quorum; (ii) a committee of disinterested directors designated by a majority vote of disinterested directors, even though less than a quorum; (iii) independent legal counsel, regardless of whether a quorum of disinterested directors exists; or (iv) a majority vote of the stockholders at a meeting at which a quorum is present. Without court approval, however, no indemnification may be made in respect of any derivative action in which an individual is adjudged liable to the corporation. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
incurred (including amounts paid to settle an action or satisfy a judgment) in respect of any civil, criminal, administrative, investigative or other proceeding in which such individual is involved because of his or her association with IRC or such other entity. | (including attorneys’ fees), judgment, fine, amount paid in settlement and actually and reasonably incurred by such person. However, the corporation shall not be required to indemnify a person on account of any action, claim or proceeding initiated by such person against the corporation unless such action, claim or proceeding (i) relates to such person’s right to indemnification under any indemnification agreement entered into by such person and the corporation, (ii) was authorized in the specific case by action of the board of directors, or (iii) as otherwise required under the DGCL. | |||
Limited Liability of Directors | The CBCA does not permit any limitation of a director’s liability other than in connection with the adoption of a unanimous shareholder agreement which restricts certain powers of the directors. If such a unanimous shareholder agreement | The DGCL permits the adoption of a provision in a corporation’s certificate of incorporation limiting or eliminating the monetary liability of a director to a corporation or its stockholders by reason of a director’s breach of the fiduciary duty | ||
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
were adopted, the parties who are given the power to manage or supervise the management of the business and affairs of the corporation under such agreement assume all of the liabilities of a director under the CBCA. | of care. The DGCL does not permit any limitation of the liability of a director for: (i) breaching the duty of loyalty to the corporation or its stockholders; (ii) failing to act in good faith; (iii) engaging in intentional misconduct or a known violation of law; (iv) obtaining an improper personal benefit from the corporation; or (v) paying a dividend or approving a stock repurchase that was illegal under applicable law. Royal Gold’s certificate of incorporation eliminates the monetary liability of directors to the corporation and its stockholders as permitted by the DGCL. | |||
Derivative Actions | An IRC shareholder may apply to the court for leave to bring an action in the name of and on behalf of IRC or any subsidiary, or to intervene in an existing action to which IRC or a subsidiary is a party, for the purpose of prosecuting, defending or discontinuing the action on behalf of IRC or its subsidiary. Under the CBCA, no action may be brought and no intervention in an action may be made unless a court is satisfied that: (i) the shareholder has given the requisite notice to the directors of the corporation or its subsidiary of the shareholder’s intention to apply to the court if the directors do not bring, diligently prosecute or defend | Under the DGCL, a stockholder bringing a derivative suit must have been a stockholder at the time of the wrong complained of or the stockholder must have received stock in the corporation by operation of law from a person who was such a stockholder at the time of the wrong complained of. In addition, the stockholder must remain a stockholder throughout the litigation. There is no requirement under the DGCL to advance the expenses of a lawsuit to a stockholder bringing a derivative suit. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
or discontinue the action; (ii) the shareholder is acting in good faith; and (iii) it appears to be in the interests of the corporation or its subsidiary that the action be brought, prosecuted, defended or discontinued. | ||||
Advance Notification Requirements for Proposals of Shareholders | Under the CBCA, proposals with respect to the nomination of candidates for election to the board of directors may be made by certain registered or beneficial holders of shares entitled to be voted at an annual meeting of shareholders. To be eligible to submit such a proposal, a shareholder must be the registered or beneficial holder of, or have the support of the registered or beneficial holders of, (i) at least 1% of the total number of outstanding voting shares of the corporation; or (ii) voting shares whose fair market value is at least C$2,000, and such registered or beneficial holder(s) must have held such shares for at least six months immediately prior to the day upon which the shareholder submits the proposal. In order for a proposal to include nominations of directors, it must be signed by one or more holders of shares representing not less than 5% of the shares (or shares of a class) entitled to vote at the meeting. A proposal under the CBCA must include the name and address of the person submitting the proposal, the names and addresses of the person’s supporters (if applicable), the number of shares of the corporation owned by such person(s) and the date upon which such shares were acquired. | Under Royal Gold’s by-laws, a stockholder may propose business to be considered at a stockholders meeting, including nominations of persons for election to the board of directors at the annual stockholders meeting, if the stockholder making such proposal is a stockholder of record at the time he or she gives notice (as described below) of the proposal and is entitled to vote at the stockholders meeting. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
proposal meets other specified requirements, then the corporation shall either set out the proposal in the proxy circular of the corporation or attach the proposal thereto. In addition, if so requested by the person submitting the proposal, the corporation shall include in or attach to the proxy circular a statement in support of the proposal by the person and the name and address of such person. | (ii) a description of all derivative interests (as defined in Royal Gold’s by-laws) in the securities of the corporation held by or on behalf of the proposed nominee, and any affiliates or associates thereof, as of the date of the notice, and (iii) a description of all compensation and other business arrangements during the past three years, and any other material relationships, between the stockholder making the nomination, or his or her affiliates and associates, and each proposed nominee, or any affiliates or associates thereof; (B) as to any other business proposed to be brought before a meeting, (i) a brief description of the business (including the text of the proposed business) and the reasons for conducting such business at the meeting, (ii) any material interest in such business of the stockholder proposing the business, or any affiliate or associate thereof, (iii) a description of all arrangements between the stockholder proposing the business, or any affiliate or associate thereof, and any other person(s) regarding the proposal, and (iv) all other information that would be required to be disclosed in filings with the SEC in the solicitation of proxies by the stockholder pursuant to Section 14 of the Exchange Act; and (C) as to the stockholder giving the notice, and any affiliate or associate thereof on whose behalf the nomination or proposal is made, (i) such person’s name and address as they appear on the corporation’s books, (ii) the class and number of shares of the corporation which are owned beneficially and of record by such person, (iii) any proxy, contract, arrangement, or relationship pursuant to which such person has a right to vote any security of the corporation, (iv) a description of all derivative interests (as defined in Royal Gold’s by-laws) held by such person as of the date of the notice, and (v) any other information relating to such person that would be required to be disclosed in a proxy statement or other filings required to be made in connection therewith for, as applicable, the proposal and/or for the election of directors pursuant to Section 14 of the Exchange Act. |
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IRC Shareholder Rights | Royal Gold Stockholder Rights | |||
Shareholder Rights Plans | On November 21, 2008, the IRC Board adopted the IRC Rights Plan, which was approved by the shareholders on May 13, 2009, in order to ensure that IRC’s shareholders are treated fairly in connection with any take-over bid and that the board of directors is provided with sufficient time to evaluate unsolicited take-over bids and to explore and develop alternatives to maximize shareholder value. The rights under the IRC Rights Plan are comparable to those contemplated under rights plans adopted by other major Canadian corporations. For a complete copy of the IRC Rights Plan, see IRC’s profile on www.sedar.com. | On September 10, 2007, Royal Gold adopted a First Amended and Restated Rights Agreement (“Royal Gold Rights Agreement”) intended to deter coercive or abusive tender offers and market accumulations and to encourage a potential acquirer to negotiate with the board of directors. Under the Royal Gold Rights Agreement, each stockholder of the corporation holds one right for each share of the corporation’s common stock held. The rights generally become exercisable only in the event that an acquiring party accumulates 15% or more of the corporation’s outstanding common stock. If this occurs, subject to certain exceptions, each right (except for rights held by the acquiring party) allows its holder to purchase one one-thousandth of a newly issued share of Series A junior participating preferred stock, or common stock, of Royal Gold with a value equal to twice the exercise price of the right, initially set at US$175 under the Royal Gold Rights Agreement. The rights are set to expire on September 10, 2017. | ||
Inspection of Books and Records | Under the CBCA, shareholders, creditors and their representatives, after giving the required notice, may examine certain of the records of a corporation during usual business hours and take copies of extracts free of charge. | Under the DGCL, any stockholder may inspect the corporation’s books and records for a proper purpose. | ||
Amendment of Governing Documents | Under the CBCA, any amendment to a corporation’s articles generally requires shareholder approval by special resolution. | Under the DGCL, a corporation’s certificate of incorporation may be amended if: (i) the board of directors sets forth the proposed amendment in a resolution, declares the advisability of the amendment and directs that it be submitted to a vote at a meeting of stockholders; and (ii) the holders of a majority of shares of stock entitled to vote on the matter approve the amendment, unless the certificate of incorporation requires the vote of a greater number of shares. Royal Gold’s certificate of incorporation reserves the right to amend or repeal any provision of the certificate of incorporation by the affirmative vote of the stockholders representing a majority of the stock entitled to vote. |
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the directors of a corporation do not submit a by-law, an amendment or a repeal to the shareholders at the next meeting of shareholders, then such by-law, amendment or repeal will cease to be effective and no subsequent resolution of the directors to make, amend or repeal a by-law having substantially the same purpose or effect is effective until it is confirmed or confirmed as amended by the shareholders. | In addition, under the DGCL, class voting rights exist with respect to amendments to the certificate of incorporation that adversely affect the terms of the shares of a class. Class voting rights do not exist as to other extraordinary matters, unless the certificate of incorporation provides otherwise. Royal Gold’s certificate of incorporation does not have alternate provisions regarding class voting rights. | |||
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• | Focus on Gold and Precious Metals through Royalty Ownership. Royal Gold has established its business model based on the premise that an attractive means to gain exposure to gold and precious metals prices is to acquire and hold royalty interests in gold and precious metal properties, rather than to engage directly in mining operations. By holding royalties, Royal Gold benefits from (i) increases in commodity prices, (ii) production increases from properties subject to Royal Gold’s royalty interests, and (iii) reserve increases on properties subject to Royal Gold royalty interests, potentially extending Royal Gold’s revenue stream from such properties. Royal Gold is not required to contribute to capital costs, exploration costs, environmental costs or other operating costs on the properties on which it holds royalties, and, as a result, Royal Gold has been able to achieve historically high margins and low overhead. Royal Gold believes its exposure to operating risks are further reduced because its portfolio is comprised of royalties on properties operated by experienced and well regarded operators throughout the world, including Barrick Gold Corporation (“Barrick”), Newmont Mining Corporation (“Newmont”), AngloGold Ashanti Limited (“Anglogold”), Goldcorp Inc. (“Goldcorp”), Kinross Gold Corporation, Teck Resources Limited (“Teck”) and Xstrata Plc. | |
• | Industry Experience and Relationships. Royal Gold relies on its experienced management team to identify opportunities and to structure creative approaches to acquire royalty interests, as well as to manage royalty streams once acquired. Royal Gold’s management team includes senior executives with many years of industry experience in geology, mine operations, mining law and mine financing. The management team maintains personal relationships throughout the industry, from major mining companies to exploration companies, landowners and prospectors, giving Royal Gold an excellent platform from which to identify, target and obtain or create royalty interests. |
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• | Acquisition of Royalties on Producing Mines or Development Projects. Royal Gold actively seeks to acquire royalties on both producing mines and development projects and has successfully executed an acquisition strategy that has more than doubled the reserves subject to its royalty interests from fiscal 2006 through fiscal 2009. Producing royalties generate revenue, while development stage properties represent an important part of Royal Gold’s growth strategy. Development stage properties not only provide a pipeline of reserves subject to Royal Gold’s royalty interests, but also provide potential future revenue should they begin production over the next several years as expected by the operators of Royal Gold’s principal development projects. Royal Gold also considers evaluation and exploration stage properties to be an important component in maintaining a balanced royalty portfolio with potential for future growth. Royal Gold has acquired portfolios of royalties that include royalties on exploration and evaluation stage properties that Royal Gold believes have potential. |
¡ | On April 3, 2009, Royal Gold entered into a definitive agreement that was subsequently amended and restated on January 12, 2010 with a Chilean subsidiary of Teck, Compañía Minera Teck Carmen de Andacollo (“CDA”), to acquire an interest in the gold produced from the sulfide portion of the Andacollo project in Chile (the “Andacollo Production Interest”), for a purchase price of US$217.9 million in cash and 1,204,136 Royal Gold common shares (the “Teck Transaction”). The closing of the Teck Transaction is contingent on certain closing conditions, including a mutual closing condition that CDA’s material governmental approvals are not withdrawn or challenged (or such action threatened). CDA will be precluded from relying on this condition regarding governmental approvals if Royal Gold waives the condition and its rights to indemnification from CDA with respect to such governmental approvals. Subject to the foregoing, either party may terminate the definitive agreement if the closing conditions are not met or waived by January 29, 2010. There is no assurance that the Teck Transaction will be completed. | |
¡ | The Andacollo Production Interest will equal 75% of the gold produced from the sulfide portion of the Andacollo project until 910,000 payable ounces of gold have been sold, and 50% of the gold produced in excess of 910,000 payable ounces of gold having been sold. The mine, located about 34 miles southeast of the city of La Serena, Chile, produces copper from the oxide portion of the project and Teck is currently beginning commissioning of facilities to produce both copper and gold from the sulfide portion of the project. The Andacollo Production Interest will not cover copper production. | |
¡ | Once the mine is in full production, CDA expects the mill to have a capacity of 55,000 tonnes per day. Gold will be produced as a by-product of copper production, with a gold recovery rate estimated by CDA to be approximately 61%. CDA estimates that the mine will produce on average approximately 53,000 ounces of gold and 76,000 tonnes of copper in concentrate annually for the first 10 years of commercial production, with an estimated mine life of 20 years. Due to challenges to previously granted permits relating to CDA’s water supply, the operator has indicated thatstart-up will be delayed until the first quarter of calendar 2010. |
¡ | On October 1, 2008, Royal Gold acquired a portfolio of 72 royalties from Barrick, including the remaining 70% of a royalty on the Mulatos gold mine located in Mexico of which Royal Gold previously owned 30%, as well as royalties on the Canadian Malartic gold project, the Holloway-Holt mining project in Ontario, Canada and the Siguiri gold mine in the Republic of Guinea. | |
¡ | In fiscal 2008, Royal Gold acquired royalties on the Marigold gold project located in Nevada and the El Chanate mine located in Mexico and 13 royalties as part of Royal Gold’s acquisition of Battle Mountain Gold Exploration Corp. (“Battle Mountain”), including two royalties on the Dolores mine in Mexico. | |
¡ | In fiscal 2007, Royal Gold acquired royalties on the Peñasquito mine located in Mexico and the Pascua-Lama project located in Chile. | |
¡ | In fiscal 2006, Royal Gold acquired a royalty on the Robinson mine located in Nevada, 30% of a royalty on the Mulatos mine (the remaining 70% of which was acquired in October 2008 as described above) and four royalties on the Taparko mine located in Burkina Faso through a financing arrangement with High River Gold Mines Ltd. (“High River”). |
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• | Utilize Flexible Acquisition Approaches. Royal Gold has pursued a growth strategy using a variety of acquisition structures to grow its royalty portfolio, including the following: (i) the acquisition of existing royalties or portfolios of existing royalties, (ii) the creation of new royalties by providing financing or capital, including for exploration activities, in exchange for royalties, and (iii) the acquisition of companies holding royalty assets. Royal Gold’s ability to utilize various acquisition structures allows it to adapt to changing market conditions and to capitalize on the changing needs of mining companies. Royal Gold takes a flexible approach to each royalty acquisition it examines, with consideration given to industry conditions as well as the various goals and capabilities of each operator or potential business partner. | |
• | Royalty Evaluation Criteria. Royal Gold believes there are substantial benefits to holding royalties on properties with significant reserves that represent long-lived assets. Royal Gold utilizes a series of technical, business and legal criteria by which it evaluates potential royalty acquisitions. Among the factors considered are: (i) the quality of the asset, (ii) the reputation of the operator, (iii) country risks, (iv) environmental risks, (v) timing of anticipated production, (vi) potential for reserve growth, (vii) overall size and likely duration of the project, and (viii) strategic, financial and operating impact of the acquisition on Royal Gold. Royal Gold relies both on its own management expertise, and on that of consultants, to evaluate mining properties and reserves in order to evaluate royalties for acquisition. Royal Gold believes its systematic evaluation of royalties combined with its experience provides it a competitive advantage in acquiring royalties. | |
• | Organic Growth through Reserve Replacement. In addition to acquiring royalties with existing or anticipated near-term production, Royal Gold seeks to acquire and manage royalties with substantial potential for further reserve growth. This provides cost-free upside from the exploration efforts of the operator because additional reserves, if mined, extend Royal Gold’s revenue stream from the property with no additional cost to Royal Gold. For example, in May 2009, Royal Gold reported significant reserve growth on royalties owned by Royal Gold including an additional 2.4 million ounces of gold reserves announced by Barrick at the Crossroads deposit at the Cortez Pipeline Mining Complex (“Cortez”), which more than doubled the reserves subject to Royal Gold’s royalty interest at Cortez, and reserve increases at Goldcorp’s Peñasquito mine of 34% and 21% in gold and silver, respectively, both of which are subject to Royal Gold’s royalty interest. |
• | four royalty interests on Cortez located in Nevada and operated by subsidiaries of Barrick; | |
• | one royalty interest on the Robinson mine located in eastern Nevada and operated by a subsidiary of Quadra Mining Ltd.; | |
• | one royalty interest on the Leeville mine located in Nevada and operated by a subsidiary of Newmont; | |
• | one royalty interest on the Goldstrike mine located in Nevada and operated by a subsidiary of Barrick; | |
• | one royalty interest on the Peñasquito mine, covering both the oxide portion of the deposit and the sulfide portion of the deposit located in Zacatecas, Mexico and operated by a subsidiary of Goldcorp; | |
• | one royalty interest on the Mulatos mine located in Sonora, Mexico and operated by a subsidiary of Alamos Gold, Inc.; |
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• | two royalty interests that are currently in effect, and two royalty interests that are not yet in effect, on the Taparko mine located in Burkina Faso and operated by a subsidiary of High River; | |
• | one royalty interest on the Siguiri mine located in the Republic of Guinea and operated by AngloGold; and | |
• | two royalty interests on the Dolores mine located in Chihuahua, Mexico and operated by a subsidiary of Minefinders Corporation, Ltd. |
• | two royalty interests on the Pascua-Lama project located in Chile and operated by a subsidiary of Barrick; | |
• | one royalty interest on the Holt portion of the Holloway-Holt project located in Ontario, Canada and owned by St. Andrew Goldfields Ltd.; | |
• | one royalty interest on the Canadian Malartic project located in Quebec, Canada and operated by Osisko Mining Corporation; and | |
• | the Andacollo Production Interest, which will equal 75% of the gold produced from the sulfide portion of the Andacollo project until 910,000 payable ounces of gold have been sold, and 50% of the gold produced in excess of 910,000 payable ounces of gold having been sold. See “Royal Gold Business Model and Growth Strategy — Acquisition of Royalties on Producing Mines or Development Projects” above. |
• | up to 7,750,000 shares of common stock issuable to IRC Shareholders pursuant to the Arrangement; | |
• | 1,204,136 shares of common stock issuable to CDA pursuant to the Teck Transaction; | |
• | 521,390 shares of common stock issuable upon exercise of outstanding options at a weighted average exercise price of US$23.77 per share, of which 447,556 shares of common stock are subject to options that are vested and immediately exercisable; | |
• | 101,250 performance shares that vest upon achieving certain performance goals; | |
• | 50,500 shares of common stock issuable upon exercise of outstanding stock-settled stock appreciation rights (“SSARs”), of which zero shares are vested and immediately exercisable; and | |
• | 263,150 shares of common stock reserved for future issuance under Royal Gold’s equity compensation plans. |
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For the Three Months | For the Fiscal Years | |||||||||||||||||||||||
Ended September 30, | Ended June 30, | |||||||||||||||||||||||
2009 | 2008 | 2009 | 2008 | 2007 | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||||||
(US$ in thousands, except share and per share data) | ||||||||||||||||||||||||
Statements of Operations Data: | ||||||||||||||||||||||||
Royalty revenues | $ | 26,113 | $ | 16,079 | $ | 73,771 | $ | 66,297 | $ | 48,357 | ||||||||||||||
Costs and expenses | ||||||||||||||||||||||||
Costs of operations | 1,201 | 847 | 3,551 | 3,664 | 3,265 | |||||||||||||||||||
General and administrative | 2,195 | 1,671 | 7,352 | 7,208 | 5,824 | |||||||||||||||||||
Exploration and business development | 885 | 674 | 2,998 | 4,079 | 2,493 | |||||||||||||||||||
Depreciation, depletion and amortization | 11,078 | 4,423 | 32,578 | 18,364 | 8,269 | |||||||||||||||||||
Total costs and expenses | 15,359 | 7,615 | 46,479 | 33,315 | 19,851 | |||||||||||||||||||
Operating income | 10,754 | 8,464 | 27,292 | 32,982 | 28,506 | |||||||||||||||||||
Gain on royalty restructuring | — | — | 33,714 | — | — | |||||||||||||||||||
Interest and other income | 1,753 | 939 | 3,192 | 6,742 | 4,258 | |||||||||||||||||||
Interest and other expense | (355 | ) | (288 | ) | (984 | ) | (1,729 | ) | (1,973 | ) | ||||||||||||||
Income before income taxes | 12,152 | 9,115 | 63,214 | 37,995 | 30,791 | |||||||||||||||||||
Income tax expense | (3,030 | ) | (3,129 | ) | (21,857 | ) | (12,050 | ) | (9,549 | ) | ||||||||||||||
Loss from equity investment | — | — | — | (550 | ) | — | ||||||||||||||||||
Net Income | 9,122 | 5,986 | 41,357 | 25,395 | 21,242 | |||||||||||||||||||
Less: Net income attributable to non-controlling interests | (1,996 | ) | (237 | ) | (3,009 | ) | (1,352 | ) | (1,522 | ) | ||||||||||||||
Net income attributable to Royal Gold stockholders | $ | 7,126 | $ | 5,749 | $ | 38,348 | $ | 24,043 | $ | 19,720 | ||||||||||||||
Net income available to Royal Gold common stockholders | $ | 7,126 | $ | 5,749 | $ | 38,348 | $ | 19,255 | $ | 19,720 | ||||||||||||||
Net income per share attributable to Royal Gold stockholders: | ||||||||||||||||||||||||
Basic | $ | 0.18 | $ | 0.17 | $ | 1.09 | $ | 0.62 | $ | 0.79 | ||||||||||||||
Diluted | $ | 0.17 | $ | 0.17 | $ | 1.07 | $ | 0.61 | $ | 0.79 | ||||||||||||||
Weighted average number of common shares outstanding Basic | 40,502,139 | 33,926,495 | 35,337,133 | 31,054,725 | 24,827,319 | |||||||||||||||||||
Diluted | 40,861,713 | 34,278,980 | 37,789,076 | 31,390,293 | 25,075,086 |
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Year | High | Low | ||||||
2000 | 312 | 263 | ||||||
2001 | 293 | 256 | ||||||
2002 | 349 | 278 | ||||||
2003 | 416 | 320 | ||||||
2004 | 454 | 375 | ||||||
2005 | 537 | 411 | ||||||
2006 | 725 | 525 | ||||||
2007 | 841 | 608 | ||||||
2008 | 1,011 | 713 | ||||||
2009 | 1,212 | 810 | ||||||
2010 (through January 12, 2010) | 1,153 | 1,122 |
Ounce (US$)
Year | High | Low | ||||||
2000 | 5.45 | 4.57 | ||||||
2001 | 4.82 | 4.07 | ||||||
2002 | 5.10 | 4.24 | ||||||
2003 | 5.97 | 4.37 | ||||||
2004 | 8.29 | 5.50 | ||||||
2005 | 9.23 | 6.39 | ||||||
2006 | 14.94 | 8.83 | ||||||
2007 | 15.82 | 11.67 | ||||||
2008 | 20.92 | 8.88 | ||||||
2009 | 19.18 | 10.51 | ||||||
2010 (through January 12, 2010) | 18.84 | 17.17 |
Year | High | Low | ||||||
2000 | 0.89 | 0.76 | ||||||
2001 | 0.81 | 0.62 | ||||||
2002 | 0.75 | 0.67 | ||||||
2003 | 1.00 | 0.72 | ||||||
2004 | 1.43 | 1.10 | ||||||
2005 | 2.08 | 1.44 | ||||||
2006 | 3.65 | 2.15 | ||||||
2007 | 3.77 | 2.37 | ||||||
2008 | 4.08 | 1.26 | ||||||
2009 | 3.33 | 1.38 | ||||||
2010 (through January 12, 2010) | 3.49 | 3.37 |
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• | insufficient ore reserves; | |
• | fluctuations in production costs incurred by the operators or third parties that may make mining of ore uneconomical or impact the amount of reserves; | |
• | declines in the price of gold and other metals; | |
• | mine operating and ore processing facility problems; | |
• | economic downturns and operators’ insufficient financing; | |
• | significant changes to environmental and other regulatory permitting requirements and restrictions; | |
• | challenges by non-mining interests to existing permits and mining rights, and to applications for permits and mining rights; | |
• | community unrest and labour disputes; | |
• | geological problems; | |
• | pit wall or tailings dam failures or any underground stability issues; | |
• | natural catastrophes such as floods or earthquakes; and | |
• | the risk of injury to persons, property or the environment. |
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• | the market price of gold and other metals; | |
• | interest rates; | |
• | expectations regarding inflation; | |
• | the ability of operators to produce precious metals and develop new reserves; | |
• | currency values; | |
• | credit market conditions; | |
• | general stock market conditions; and | |
• | global and regional political and economic conditions. |
C-11
Table of Contents
C-12
Table of Contents
C-13
Table of Contents
As of September 30, 2009
Assumes Maximum Cash Purchase Consideration
(US$ in thousands)
International | ||||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Pro Forma | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Combined Total | |||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and equivalents | $ | 307,497 | $ | 51,344 | $ | (350,000 | ) | (1) | $ | 257,407 | $ | (217,900 | ) | (8) | $ | 39,507 | ||||||||||||
23,566 | (2) | |||||||||||||||||||||||||||
225,000 | (3) | |||||||||||||||||||||||||||
Restricted cash | — | 418 | — | 418 | — | 418 | ||||||||||||||||||||||
Royalty receivables | 25,314 | 5,630 | — | 30,944 | — | 30,944 | ||||||||||||||||||||||
Deferred tax assets | 185 | — | (185 | ) | (10) | — | — | — | ||||||||||||||||||||
Prepaid expenses and other | 680 | 265 | — | 945 | — | 945 | ||||||||||||||||||||||
Total current assets | 333,676 | 57,657 | (101,619 | ) | 289,714 | (217,900 | ) | 71,814 | ||||||||||||||||||||
Royalty interests in mineral properties, net | 445,298 | 349,516 | 536,953 | (1) | 1,331,767 | 276,228 | (8) | 1,607,995 | ||||||||||||||||||||
Investments | — | 6,234 | — | 6,234 | — | 6,234 | ||||||||||||||||||||||
Furniture and equipment, net | — | 111 | — | 111 | — | 111 | ||||||||||||||||||||||
Inventory — restricted | 9,629 | — | — | 9,629 | — | 9,629 | ||||||||||||||||||||||
Foreign currency contract | — | 2,948 | — | 2,948 | — | 2,948 | ||||||||||||||||||||||
Other assets | 4,900 | 2,278 | — | 7,178 | — | 7,178 | ||||||||||||||||||||||
Goodwill | — | — | 28,185 | (1) | 28,185 | — | 28,185 | |||||||||||||||||||||
Total assets | $ | 793,503 | $ | 418,744 | $ | 463,519 | $ | 1,675,766 | $ | 58,328 | $ | 1,734,094 | ||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable | $ | 1,194 | $ | 1,328 | $ | — | $ | 2,522 | $ | — | $ | 2,522 | ||||||||||||||||
Accrued compensation and expense | — | — | 12,000 | (4) | 12,000 | — | 12,000 | |||||||||||||||||||||
Accrued purchase transaction costs | — | — | 12,500 | (6) | 12,500 | — | 12,500 | |||||||||||||||||||||
Income tax payable | 151 | 2,075 | — | 2,226 | — | 2,226 | ||||||||||||||||||||||
Net deferred tax liabilities, current | — | 508 | (185 | ) | (10) | 323 | — | 323 | ||||||||||||||||||||
Dividends payable | 3,262 | — | — | 3,262 | — | 3,262 | ||||||||||||||||||||||
Revolving credit facility, current | — | — | 40,000 | (3) | 40,000 | — | 40,000 | |||||||||||||||||||||
Other | 758 | 149 | — | 907 | — | 907 | ||||||||||||||||||||||
Total current liabilities | 5,365 | 4,060 | 64,315 | 73,740 | — | 73,740 | ||||||||||||||||||||||
Net deferred tax liabilities, long-term | 22,444 | 46,808 | 219,190 | (1) | 288,442 | — | 288,442 | |||||||||||||||||||||
Revolving credit facility | — | — | 185,000 | (3) | 185,000 | — | 185,000 | |||||||||||||||||||||
Senior secured debentures | — | 25,666 | — | 25,666 | — | 25,666 | ||||||||||||||||||||||
Other long-term liabilities | 840 | 3,725 | — | 4,565 | — | 4,565 | ||||||||||||||||||||||
Total liabilities | 28,649 | 80,259 | 468,505 | 577,413 | — | 577,413 | ||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||
Common stock | 405 | 324,925 | (348,491 | ) | (5) | 475 | 12 | (8) | 487 | |||||||||||||||||||
23,566 | (2) | |||||||||||||||||||||||||||
70 | (1) | |||||||||||||||||||||||||||
Additional paid-in capital | 703,837 | 10,464 | (10,464 | ) | (5) | 1,044,766 | 58,316 | (8) | 1,103,082 | |||||||||||||||||||
340,929 | (1) | |||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income | (27 | ) | 17 | (17 | ) | (5) | (27 | ) | — | (27 | ) | |||||||||||||||||
Accumulated earnings | 50,572 | 3,079 | 13,921 | (5) | 43,072 | 43,072 | ||||||||||||||||||||||
(12,000 | ) | (4) | ||||||||||||||||||||||||||
(12,500 | ) | (6) | ||||||||||||||||||||||||||
Total controlling interest stockholders’ equity | 754,787 | 338,485 | (4,986 | ) | 1,088,286 | 58,328 | 1,146,614 | |||||||||||||||||||||
Non-controlling interests | 10,067 | — | — | 10,067 | — | 10,067 | ||||||||||||||||||||||
Total stockholders’ equity | 764,854 | 338,485 | (4,986 | ) | 1,098,353 | 58,328 | 1,156,681 | |||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 793,503 | $ | 418,744 | $ | 463,519 | $ | 1,675,766 | $ | 58,328 | $ | 1,734,094 | ||||||||||||||||
C-14
Table of Contents
For the Year Ended June 30, 2009
Assumes Maximum Cash Purchase Consideration
(US$ in thousands except share and per share amounts)
International | ||||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Pro Forma | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Combined Total | |||||||||||||||||||||
Royalty revenues | $ | 73,771 | $ | 36,023 | $ | — | $ | 109,794 | $ | — | $ | 109,794 | ||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||
Costs of operations | 3,551 | — | 6,289 | (10) | 9,840 | — | 9,840 | |||||||||||||||||||||
General and administrative | 7,352 | 6,009 | — | 13,361 | — | 13,361 | ||||||||||||||||||||||
Asset impairments | — | 8,581 | — | 8,581 | — | 8,581 | ||||||||||||||||||||||
Exploration and business development | 2,998 | 1,461 | — | 4,459 | — | 4,459 | ||||||||||||||||||||||
Royalty taxes | — | 6,289 | (6,289 | ) | (10) | — | — | — | ||||||||||||||||||||
Depreciation, depletion and amortization | 32,578 | 16,265 | 14,063 | (7) | 62,906 | — | 62,906 | |||||||||||||||||||||
Total costs and expenses | 46,479 | 38,605 | 14,063 | 99,147 | — | 99,147 | ||||||||||||||||||||||
Operating income (loss) | 27,292 | (2,582 | ) | (14,063 | ) | 10,647 | — | 10,647 | ||||||||||||||||||||
— | — | |||||||||||||||||||||||||||
Gain on royalty restructuring | 33,714 | — | — | 33,714 | — | 33,714 | ||||||||||||||||||||||
Foreign currency gain (loss) | — | 3,153 | — | 3,153 | — | 3,153 | ||||||||||||||||||||||
Unrealized gain on fair market value of foreign currency contract | — | 833 | — | 833 | — | 833 | ||||||||||||||||||||||
Purchase transaction costs | — | (6,708 | ) | — | (6,708 | ) | (6,708 | ) | ||||||||||||||||||||
Interest and other income | 3,192 | 121 | — | 3,313 | — | 3,313 | ||||||||||||||||||||||
Interest and other expense | (984 | ) | (3,243 | ) | (6,158 | ) | (3) | (10,385 | ) | — | (10,385 | ) | ||||||||||||||||
Income (loss) before income taxes | 63,214 | (8,426 | ) | (20,221 | ) | 34,567 | — | 34,567 | ||||||||||||||||||||
Income tax (expense) benefit | (21,857 | ) | 3,621 | 7,077 | (9) | (11,159 | ) | — | (11,159 | ) | ||||||||||||||||||
Net income (loss) | 41,357 | (4,805 | ) | (13,144 | ) | 23,408 | — | 23,408 | ||||||||||||||||||||
Less : Net income attributable to non-controlling interests | (3,009 | ) | — | — | (3,009 | ) | — | (3,009 | ) | |||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | 38,348 | $ | (4,805 | ) | $ | (13,144 | ) | $ | 20,399 | $ | — | $ | 20,399 | ||||||||||||||
Net income (loss) | $ | 41,357 | $ | (4,805 | ) | $ | (13,144 | ) | $ | 23,408 | $ | — | $ | 23,408 | ||||||||||||||
Adjustments to comprehensive income (loss), net of tax Unrealized change in market value of available for sale securities | (145 | ) | (173 | ) | — | (318 | ) | — | (318 | ) | ||||||||||||||||||
Comprehensive income (loss) | $ | 41,212 | $ | (4,978 | ) | $ | (13,144 | ) | $ | 23,090 | $ | — | $ | 23,090 | ||||||||||||||
Comprehensive income attributable to non-controlling interest | (3,009 | ) | — | — | (3,009 | ) | — | (3,009 | ) | |||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | 38,203 | $ | (4,978 | ) | $ | (13,144 | ) | $ | 20,081 | $ | — | $ | 20,081 | ||||||||||||||
Net income (loss) per share attributable to controlling interest: | ||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 1.09 | $ | (0.06 | ) | $ | 0.48 | $ | 0.47 | |||||||||||||||||||
Basic weighted average shares outstanding | 35,337,133 | 78,480,356 | 7,039,610 | (1) | 42,376,743 | 1,204,136 | (8) | 43,580,879 | ||||||||||||||||||||
Diluted earnings (loss) per share | $ | 1.07 | $ | (0.06 | ) | $ | 0.48 | $ | 0.46 | |||||||||||||||||||
Diluted weighted average shares outstanding | 35,789,076 | 78,480,356 | 7,039,610 | (1) | 42,828,686 | 1,204,136 | (8) | 44,032,822 | ||||||||||||||||||||
C-15
Table of Contents
For the Three Months Ended September 30, 2009
Assumes Maximum Cash Purchase Consideration
(US$ in thousands except share and per share amounts)
International | ||||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Pro Forma | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Combined Total | |||||||||||||||||||||
Royalty revenues | $ | 26,113 | $ | 6,593 | $ | — | $ | 32,706 | $ | — | $ | 32,706 | ||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||
Costs of operations | 1,201 | — | 1,000 | (10) | 2,201 | — | 2,201 | |||||||||||||||||||||
General and administrative | 2,195 | 1,296 | — | 3,491 | — | 3,491 | ||||||||||||||||||||||
Exploration and business development | 885 | 381 | — | 1,266 | — | 1,266 | ||||||||||||||||||||||
Royalty taxes | — | 1,000 | (1,000 | ) | (10) | — | — | — | ||||||||||||||||||||
Depreciation, depletion and amortization | 11,078 | 2,591 | 1,880 | (7) | 15,549 | — | 15,549 | |||||||||||||||||||||
Total costs and expenses | 15,359 | 5,268 | 1,880 | 22,507 | — | 22,507 | ||||||||||||||||||||||
Operating income (loss) | 10,754 | 1,325 | (1,880 | ) | 10,199 | — | 10,199 | |||||||||||||||||||||
Foreign currency gain (loss) | — | (3,041 | ) | — | (3,041 | ) | — | (3,041 | ) | |||||||||||||||||||
Unrealized gain on fair market value of foreign currency contract | — | 2,114 | — | 2,114 | — | 2,114 | ||||||||||||||||||||||
Purchase transaction costs | — | (55 | ) | — | (55 | ) | — | (55 | ) | |||||||||||||||||||
Interest and other income | 1,753 | 24 | — | 1,777 | — | 1,777 | ||||||||||||||||||||||
Interest and other expense | (355 | ) | (942 | ) | (1,540 | ) | (3) | (2,837 | ) | — | (2,837 | ) | ||||||||||||||||
Income (loss) before income taxes | 12,152 | (575 | ) | (3,420 | ) | 8,157 | — | 8,157 | ||||||||||||||||||||
Income tax (expense) benefit | (3,030 | ) | (199 | ) | 1,197 | (9) | (2,032 | ) | — | (2,032 | ) | |||||||||||||||||
Net income (loss) | 9,122 | (774 | ) | (2,223 | ) | 6,125 | — | 6,125 | ||||||||||||||||||||
Less: Net income attributable to non-controlling interests | (1,996 | ) | — | — | (1,996 | ) | — | (1,996 | ) | |||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | 7,126 | $ | (774 | ) | $ | (2,223 | ) | $ | 4,129 | $ | — | $ | 4,129 | ||||||||||||||
Net income (loss) | $ | 9,122 | $ | (774 | ) | $ | (2,223 | ) | $ | 6,125 | $ | — | $ | 6,125 | ||||||||||||||
Adjustments to comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||
Unrealized change in market value of available for sale securities | 53 | — | — | 53 | — | 53 | ||||||||||||||||||||||
Comprehensive income (loss) | $ | 9,175 | $ | (774 | ) | $ | (2,223 | ) | $ | 6,178 | $ | — | $ | 6,178 | ||||||||||||||
Comprehensive income attributable to non-controlling interest | (1,996 | ) | — | — | (1,996 | ) | — | (1,996 | ) | |||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | 7,179 | $ | (774 | ) | $ | (2,223 | ) | $ | 4,182 | $ | — | $ | 4,182 | ||||||||||||||
Net income (loss) per share attributable to controlling interest: | ||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.18 | $ | (0.01 | ) | $ | 0.09 | $ | 0.08 | |||||||||||||||||||
Basic weighted average shares outstanding | 40,502,139 | 91,844,704 | 7,039,610 | (1) | 47,541,749 | 1,204,136 | (8) | 48,745,885 | ||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.17 | $ | (0.01 | ) | $ | 0.09 | $ | 0.08 | |||||||||||||||||||
Diluted weighted average shares outstanding | 40,861,713 | 91,844,704 | 7,039,610 | (1) | 47,901,323 | 1,204,136 | (8) | 49,105,459 | ||||||||||||||||||||
C-16
Table of Contents
(1) | To record the issuance of 7,039,610 shares of Royal Gold common stock and US$350 million of cash as purchase consideration for the arrangement based on an assumed September 30, 2009 closing. The preliminary allocation of the purchase price based on the estimated fair value of assets acquired and liabilities assumed was as follows: |
Calculation of purchase price (US$000’s): | ||||
Cash consideration | $ | 350,000 | ||
Stock consideration (a) | 340,999 | |||
Total purchase price | $ | 690,999 | ||
(a) | The value of Royal Gold common stock used (US$48.44) is the closing price of Royal Gold common stock on January 12, 2010. The value of Royal Gold common stock will not be known until the Effective Date and may differ materially based on changes in share price through the Effective Date. A US$5 change to the price of Royal Gold common stock would impact the value of stock consideration by approximately US$35.2 million. |
Preliminary allocation of purchase price (US$000’s): | ||||
Current assets | $ | 81,223 | ||
Royalty interests in mineral properties | 886,469 | |||
Long-term assets | 11,571 | |||
Liabilities assumed (b) | (50,451 | ) | ||
Deferred and other tax liabilities | (265,998 | ) | ||
Goodwill and other intangible assets (c) & (d) | 28,185 | |||
Total purchase price | $ | 690,999 | ||
(b) | Liabilities assumed have been recorded at their carrying values, which approximate fair value. |
(c) | Certain intangibles may be acquired in the final Arrangement but they have not been valued yet for the preliminary allocation of the purchase price. If intangibles are acquired, they will be valued and identified upon the final allocation of the purchase price. No amortization of other intangible assets has been recorded in the Pro Forma Statements. |
(d) | Goodwill represents the premium paid for the assets acquired and represents the scarcity value of the royalties acquired and possible optionality related to the royalty contracts acquired. The allocation of the purchase price is preliminary and subject to change based upon full valuation of the acquired assets and liabilities. |
(2) | To record expected proceeds from the exercise of outstanding IRC stock options prior to closing of the Arrangement as the holders of these instruments are economically compelled to exercise prior to the closing due to thein-the-money nature of the options. Each outstanding IRC stock option shall be cancelled and the holder thereof shall have no further rights or benefits in respect of such option upon the Effective Time as defined in the Circular. As this is expected to occur prior to closing, the proceeds from the exercise of US$23,566 have been included in current assets of US$81,223 in Note (1). |
(3) | To record US$125 million of floating-rate borrowings under Royal Gold’s current credit facility and US$100 million of floating-rate borrowings to be made available under a new term loan (US$40 million in current liabilities), including the related interest expense at LIBOR (0.25% as of December 30, 2009) plus 2.25%. The interest expense includes the amortization of the estimated related debt issuance costs. If the floating-rates on this debt changed by 1/8%, the annual effect to interest expense would be approximately US$281 thousand. |
(4) | To record a payable to the existing officers and certain employees of IRC as a result of the Arrangement under change of control provisions of existing employment contracts. |
(5) | To eliminate IRC historical equity balances, including eliminating the stockholders’ equity effects of the Arrangement discussed in Note 2 and one-time transaction costs for IRC discussed in Note 6. |
(6) | The Pro Forma Statement of Operations and Comprehensive Income does not include the estimated one-time transaction costs totaling US$12.5 million. The US$12.5 million is comprised of Royal Gold estimated one-time transaction costs of US$7.5 million and IRC estimated one-time transaction costs of US$5 million. The transaction costs will be recorded once the expenses have been incurred. |
(7) | To record additional depreciation, depletion and amortization on acquired royalty interests, resulting from thestep-up of carrying value of the royalty interests to fair value in purchase accounting times the production during the respective periods. The additional depreciation, depletion and amortization was calculated by comparing depreciation, depletion and amortization using rates based on thestepped-up carrying values under theunits-of-production method to actual depreciation, depletion and amortization for the same periods using historical rates. The impact to depreciation, depletion and amortization expense for a US$10 million change in the carrying values of the acquired royalty interests, relating to those in production, would be approximately US$799 thousand and US$118 thousand for the year ended June 30, 2009 and the three months ended September 30, 2009, respectively. |
(8) | To give effect to the planned issuance of 1,204,136 shares of Royal Gold common stock to acquire certain assets from Andacollo in January 2010, as well US$217.9 million in cash. The value of Royal Gold common stock used (US$48.44) is the closing price of Royal Gold common stock on January 12, 2010. The value of Royal Gold common stock will not be known until the closing date and may differ materially based on changes in share price through the closing date. |
(9) | To record the tax benefits for the increased expenses discussed in Notes 3, 6 and 7 using the statutory tax rate of 35%. |
(10) | To reclassify certain historical amounts to conform to the Royal Gold presentation. |
C-17
Table of Contents
C-18
Table of Contents
As of September 30, 2009
Assumes Maximum Stock Purchase Consideration
(US$ in thousands)
International | Pro Forma | |||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Combined | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Total | |||||||||||||||||||||
Current assets | ||||||||||||||||||||||||||||
Cash and equivalents | $ | 307,497 | $ | 51,344 | $ | (313,765 | ) | (1) | $ | 293,642 | $ | (217,900 | ) | (8) | $ | 75,742 | ||||||||||||
23,566 | (2) | |||||||||||||||||||||||||||
225,000 | (3) | |||||||||||||||||||||||||||
Restricted cash | — | 418 | — | 418 | — | 418 | ||||||||||||||||||||||
Royalty receivables | 25,314 | 5,630 | — | 30,944 | — | 30,944 | ||||||||||||||||||||||
Deferred tax assets | 185 | — | (185 | ) | (10) | — | — | — | ||||||||||||||||||||
Prepaid expenses and other | 680 | 265 | — | 945 | — | 945 | ||||||||||||||||||||||
Total current assets | 333,676 | 57,657 | (65,384 | ) | 325,949 | (217,900 | ) | 108,049 | ||||||||||||||||||||
Royalty interests in mineral properties, net | 445,298 | 349,516 | 536,953 | (1) | 1,331,767 | 276,228 | (8) | 1,607,995 | ||||||||||||||||||||
Investments | — | 6,234 | — | 6,234 | — | 6,234 | ||||||||||||||||||||||
Furniture and equipment, net | — | 111 | — | 111 | — | 111 | ||||||||||||||||||||||
Inventory — restricted | 9,629 | — | — | 9,629 | — | 9,629 | ||||||||||||||||||||||
Foreign currency contract | — | 2,948 | — | 2,948 | — | 2,948 | ||||||||||||||||||||||
Other assets | 4,900 | 2,278 | — | 7,178 | — | 7,178 | ||||||||||||||||||||||
Goodwill | — | — | 26,361 | (1) | 26,361 | — | 26,361 | |||||||||||||||||||||
Total assets | $ | 793,503 | $ | 418,744 | $ | 497,930 | $ | 1,710,177 | $ | 58,328 | $ | 1,768,505 | ||||||||||||||||
Current liabilities | ||||||||||||||||||||||||||||
Accounts payable | $ | 1,194 | $ | 1,328 | $ | — | $ | 2,522 | $ | — | $ | 2,522 | ||||||||||||||||
Accrued compensation and expense | — | — | 12,000 | (4) | 12,000 | — | 12,000 | |||||||||||||||||||||
Accrued purchase transaction costs | — | — | 12,500 | (6) | 12,500 | — | 12,500 | |||||||||||||||||||||
Income tax payable | 151 | 2,075 | — | 2,226 | — | 2,226 | ||||||||||||||||||||||
Net deferred tax liabilities, current | — | 508 | (185 | ) | (10) | 323 | — | 323 | ||||||||||||||||||||
Dividends payable | 3,262 | — | — | 3,262 | — | 3,262 | ||||||||||||||||||||||
Revolving credit facility, current | — | — | 40,000 | (3) | 40,000 | — | 40,000 | |||||||||||||||||||||
Other | 758 | 149 | — | 907 | — | 907 | ||||||||||||||||||||||
Total current liabilities | 5,365 | 4,060 | 64,315 | 73,740 | — | 73,740 | ||||||||||||||||||||||
Net deferred tax liabilities, long-term | 22,444 | 46,808 | 219,190 | (1) | 288,442 | — | 288,442 | |||||||||||||||||||||
Revolving credit facility | — | — | 185,000 | (3) | 185,000 | — | 185,000 | |||||||||||||||||||||
Senior secured debentures | — | 25,666 | — | 25,666 | — | 25,666 | ||||||||||||||||||||||
Other long-term liabilities | 840 | 3,725 | — | 4,565 | — | 4,565 | ||||||||||||||||||||||
Total liabilities | 28,649 | 80,259 | 468,505 | 577,413 | — | 577,413 | ||||||||||||||||||||||
Commitments and contingencies | ||||||||||||||||||||||||||||
Stockholders’ equity | ||||||||||||||||||||||||||||
Common stock | 405 | 324,925 | (348,491 | ) | (5) | 483 | 12 | (8) | 495 | |||||||||||||||||||
23,566 | (2) | |||||||||||||||||||||||||||
78 | (1) | |||||||||||||||||||||||||||
Additional paid-in capital | 703,837 | 10,464 | (10,464 | ) | (5) | 1,079,169 | 58,316 | (8) | 1,137,485 | |||||||||||||||||||
375,332 | (1) | |||||||||||||||||||||||||||
Accumulated other comprehensive (loss) income | (27 | ) | 17 | (17 | ) | (5) | (27 | ) | — | (27 | ) | |||||||||||||||||
Accumulated earnings | 50,572 | 3,079 | 13,921 | (5) | 43,072 | — | 43,072 | |||||||||||||||||||||
(12,000 | ) | (4) | ||||||||||||||||||||||||||
(12,500 | ) | (6) | ||||||||||||||||||||||||||
Total controlling interest stockholders’ equity | 754,787 | 338,485 | 29,425 | 1,122,697 | 58,328 | 1,181,025 | ||||||||||||||||||||||
Non-controlling interests | 10,067 | — | — | 10,067 | — | 10,067 | ||||||||||||||||||||||
Total stockholders’ equity | 764,854 | 338,485 | 29,425 | 1,132,764 | 58,328 | 1,191,092 | ||||||||||||||||||||||
Total liabilities and stockholders’ equity | $ | 793,503 | $ | 418,744 | $ | 497,930 | $ | 1,710,177 | $ | 58,328 | $ | 1,768,505 | ||||||||||||||||
C-19
Table of Contents
For the Year Ended June 30, 2009
Assumes Maximum Stock Purchase Consideration
(US$ in thousands except share and per share amounts)
International | Pro Forma | |||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Combined | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Total | |||||||||||||||||||||
Royalty revenues | $ | 73,771 | $ | 36,023 | $ | — | $ | 109,794 | $ | — | $ | 109,794 | ||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||
Costs of operations | 3,551 | — | 6,289 | (10) | 9,840 | — | 9,840 | |||||||||||||||||||||
General and administrative | 7,352 | 6,009 | — | 13,361 | — | 13,361 | ||||||||||||||||||||||
Asset impairments | — | 8,581 | — | 8,581 | — | 8,581 | ||||||||||||||||||||||
Exploration and business development | 2,998 | 1,461 | — | 4,459 | — | 4,459 | ||||||||||||||||||||||
Royalty taxes | — | 6,289 | (6,289 | ) | (10) | — | — | — | ||||||||||||||||||||
Depreciation, depletion and amortization | 32,578 | 16,265 | 14,063 | (7) | 62,906 | — | 62,906 | |||||||||||||||||||||
Total costs and expenses | 46,479 | 38,605 | 14,063 | 99,147 | — | 99,147 | ||||||||||||||||||||||
Operating income (loss) | 27,292 | (2,582 | ) | (14,063 | ) | 10,647 | — | 10,647 | ||||||||||||||||||||
Gain on royalty restructuring | 33,714 | — | — | 33,714 | — | 33,714 | ||||||||||||||||||||||
Foreign currency gain (loss) | — | 3,153 | — | 3,153 | — | 3,153 | ||||||||||||||||||||||
Unrealized gain on fair market value of foreign currency contract | — | 833 | — | 833 | — | 833 | ||||||||||||||||||||||
Purchase transaction costs | — | (6,708 | ) | — | (6,708 | ) | — | (6,708 | ) | |||||||||||||||||||
Interest and other income | 3,192 | 121 | — | 3,313 | — | 3,313 | ||||||||||||||||||||||
Interest and other expense | (984 | ) | (3,243 | ) | (6,158 | ) | (3) | (10,385 | ) | — | (10,385 | ) | ||||||||||||||||
Income (loss) before income taxes | 63,214 | (8,426 | ) | (20,221 | ) | 34,567 | — | 34,567 | ||||||||||||||||||||
Income tax (expense) benefit | (21,857 | ) | 3,621 | 7,077 | (9) | (11,159 | ) | — | (11,159 | ) | ||||||||||||||||||
Net income (loss) | 41,357 | (4,805 | ) | (13,144 | ) | 23,408 | — | 23,408 | ||||||||||||||||||||
Less: Net income attributable to non-controlling interests | (3,009 | ) | — | — | (3,009 | ) | — | (3,009 | ) | |||||||||||||||||||
�� | ||||||||||||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | 38,348 | $ | (4,805 | ) | $ | (13,144 | ) | $ | 20,399 | $ | — | $ | 20,399 | ||||||||||||||
Net income (loss) | $ | 41,357 | $ | (4,805 | ) | $ | (13,144 | ) | $ | 23,408 | $ | — | $ | 23,408 | ||||||||||||||
Adjustments to comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||
Unrealized change in market value of available for sale securities | (145 | ) | (173 | ) | — | (318 | ) | — | (318 | ) | ||||||||||||||||||
Comprehensive income (loss) | $ | 41,212 | $ | (4,978 | ) | $ | (13,144 | ) | $ | 23,090 | $ | — | $ | 23,090 | ||||||||||||||
Comprehensive income attributable to non-controlling interest | (3,009 | ) | — | — | (3,009 | ) | — | (3,009 | ) | |||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | 38,203 | $ | (4,978 | ) | $ | (13,144 | ) | $ | 20,081 | $ | — | $ | 20,081 | ||||||||||||||
Net income (loss) per share attributable to controlling interest: | ||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 1.09 | $ | (0.06 | ) | $ | 0.47 | $ | 0.46 | |||||||||||||||||||
Basic weighted average shares outstanding | 35,337,133 | 78,480,356 | 7,750,000 | (1) | 43,087,133 | 1,204,136 | (8) | 44,291,269 | ||||||||||||||||||||
Diluted earnings (loss) per share | $ | 1.07 | $ | (0.06 | ) | $ | 0.47 | $ | 0.46 | |||||||||||||||||||
Diluted weighted average shares outstanding | 35,789,076 | 78,480,356 | 7,750,000 | (1) | 43,539,076 | 1,204,136 | (8) | 44,743,212 | ||||||||||||||||||||
C-20
Table of Contents
For the Three Months Ended September 30, 2009
Assumes Maximum Stock Purchase Consideration
(US$ in thousands except share and per share amounts)
International | Pro Forma | |||||||||||||||||||||||||||
Royal Gold | Royalty | Pro Forma | Note | Pro Forma | Andacollo | Note | Combined | |||||||||||||||||||||
Historical | Historical | Adjustments | Reference | Subtotal | Adjustments | Reference | Total | |||||||||||||||||||||
Royalty revenues | $ | 26,113 | $ | 6,593 | $ | — | $ | 32,706 | $ | — | $ | 32,706 | ||||||||||||||||
Costs and expenses | ||||||||||||||||||||||||||||
Costs of operations | 1,201 | — | 1,000 | (10) | 2,201 | — | 2,201 | |||||||||||||||||||||
General and administrative | 2,195 | 1,296 | — | 3,491 | — | 3,491 | ||||||||||||||||||||||
Exploration and business development | 885 | 381 | — | 1,266 | — | 1,266 | ||||||||||||||||||||||
Royalty taxes | — | 1,000 | (1,000 | ) | (10) | — | — | — | ||||||||||||||||||||
Depreciation, depletion and amortization | 11,078 | 2,591 | 1,880 | (7) | 15,549 | — | 15,549 | |||||||||||||||||||||
Total costs and expenses | 15,359 | 5,268 | 1,880 | 22,507 | — | 22,507 | ||||||||||||||||||||||
Operating income (loss) | 10,754 | 1,325 | (1,880 | ) | 10,199 | — | 10,199 | |||||||||||||||||||||
Foreign currency gain (loss) | — | (3,041 | ) | — | (3,041 | ) | — | (3,041 | ) | |||||||||||||||||||
Unrealized gain on fair market value of foreign currency contract | — | 2,114 | — | 2,114 | — | 2,114 | ||||||||||||||||||||||
Purchase transaction costs | — | (55 | ) | — | (55 | ) | — | (55 | ) | |||||||||||||||||||
Interest and other income | 1,753 | 24 | — | 1,777 | — | 1,777 | ||||||||||||||||||||||
Interest and other expense | (355 | ) | (942 | ) | (1,540 | ) | (3) | (2,837 | ) | — | (2,837 | ) | ||||||||||||||||
Income (loss) before income taxes | 12,152 | (575 | ) | (3,420 | ) | 8,157 | — | 8,157 | ||||||||||||||||||||
Income tax (expense) benefit | (3,030 | ) | (199 | ) | 1,197 | (9) | (2,032 | ) | — | (2,032 | ) | |||||||||||||||||
Net income (loss) | 9,122 | (774 | ) | (2,223 | ) | 6,125 | — | 6,125 | ||||||||||||||||||||
Less: Net income attributable to non-controlling interests | (1,996 | ) | — | — | (1,996 | ) | — | (1,996 | ) | |||||||||||||||||||
Net income (loss) attributable to controlling interest | $ | 7,126 | $ | (774 | ) | $ | (2,223 | ) | $ | 4,129 | $ | — | $ | 4,129 | ||||||||||||||
Net income (loss) | $ | 9,122 | $ | (774 | ) | $ | (2,223 | ) | $ | 6,125 | $ | — | $ | 6,125 | ||||||||||||||
Adjustments to comprehensive income (loss), net of tax | ||||||||||||||||||||||||||||
Unrealized change in market value of available for sale securities | 53 | — | — | 53 | — | 53 | ||||||||||||||||||||||
Comprehensive income (loss) | $ | 9,175 | $ | (774 | ) | $ | (2,223 | ) | $ | 6,178 | $ | — | $ | 6,178 | ||||||||||||||
Comprehensive income attributable to non-controlling interest | (1,996 | ) | — | — | (1,996 | ) | — | (1,996 | ) | |||||||||||||||||||
Comprehensive income (loss) attributable to controlling interest | $ | 7,179 | $ | (774 | ) | $ | (2,223 | ) | $ | 4,182 | $ | — | $ | 4,182 | ||||||||||||||
Net income (loss) per share attributable to controlling interest: | ||||||||||||||||||||||||||||
Basic earnings (loss) per share | $ | 0.18 | $ | (0.01 | ) | $ | 0.09 | $ | 0.08 | |||||||||||||||||||
Basic weighted average shares outstanding | 40,502,139 | 91,844,704 | 7,750,000 | (1) | 48,252,139 | 1,204,136 | (8) | 49,456,275 | ||||||||||||||||||||
Diluted earnings (loss) per share | $ | 0.17 | $ | (0.01 | ) | $ | 0.08 | $ | 0.08 | |||||||||||||||||||
Diluted weighted average shares outstanding | 40,861,713 | 91,844,704 | 7,750,000 | (1) | 48,611,713 | 1,204,136 | (8) | 49,815,849 | ||||||||||||||||||||
C-21
Table of Contents
(1) | To record the issuance of 7,750,000 shares of Royal Gold common stock and US$313.8 million of cash as purchase consideration for the arrangement based on an assumed September 30, 2009 closing. The preliminary allocation of the purchase price based on the estimated fair value of assets acquired and liabilities assumed was as follows: |
Cash consideration | $ | 313,765 | ||
Stock consideration (a) | 375,410 | |||
Total purchase price | $ | 689,175 | ||
(a) | The value of Royal Gold common stock used (US$48.44) is the closing price of Royal Gold common stock on January 12, 2010. The value of Royal Gold common stock will not be known until the Effective Date and may differ materially based on changes in share price through the Effective Date. A US$5 change to the price of Royal Gold common stock would impact the value of stock consideration by approximately US$38.8 million. |
Current assets | $ | 81,223 | ||
Royalty interests in mineral properties | 886,469 | |||
Long-term assets | 11,571 | |||
Liabilities assumed (b) | (50,451 | ) | ||
Deferred and other tax liabilities | (265,998 | ) | ||
Goodwill and other intangible assets (c) & (d) | 26,361 | |||
Total purchase price | $ | 689,175 | ||
(b) | Liabilities assumed have been recorded at their carrying values, which approximates fair value. | |
(c) | Certain intangibles may be acquired in the final Arrangement but they have not been valued yet for the preliminary allocation of the purchase price. If intangibles are acquired, they will be valued and identified upon the final allocation of the purchase price. No amortization of other intangible assets has been recorded in the Pro Forma Statements. | |
(d) | Goodwill represents the premium paid for the assets acquired and represents the scarcity value of the royalties acquired and possible optionality related to the royalty contracts acquired. The allocation of the purchase price is preliminary and subject to change based upon full valuation of the acquired assets and liabilities. | |
(2) | To record expected proceeds from the exercise of outstanding IRC stock options prior to closing of the Arrangement as the holders of these instruments are economically compelled to exercise prior to the closing due to thein-the-money nature of the options. Any unexercised stock options will be forfeited or expire upon closing. As this is expected to occur prior to closing, the proceeds from the exercise of US$23,566 have been included in current assets of US$81,223 in Note (1). | |
(3) | To record US$125 million of floating-rate borrowings under Royal Gold’s current credit facility and US$100 million of floating-rate borrowings to be made available under a new term loan (US$40 million in current liabilities), including the related interest expense at LIBOR (0.25% as of December 30, 2009) plus 2.25%. The interest expense includes the amortization of the estimated related debt issuance costs. If the floating-rates on this debt changed by 1/8%, the annual effect to interest expense would be approximately US$281 thousand. | |
(4) | To record a payable to the existing officers and certain employees of IRC as a result of the Arrangement under change of control provisions of existing employment contracts. | |
(5) | To eliminate IRC historical equity balances, including eliminating the stockholders’ equity effects of the Arrangement discussed in Note 2 and one-time transaction costs for IRC discussed in Note 6. | |
(6) | The Pro Forma Statement of Operations and Comprehensive Income does not include the estimated one-time transaction costs totaling US$12.5 million. The US$12.5 million is comprised of Royal Gold estimated one-time transaction costs of US$7.5 million and IRC estimated one-time transaction costs of US$5 million. The transaction costs will be recorded once the expenses have been incurred. | |
(7) | To record additional depreciation, depletion and amortization on acquired royalty interests, resulting from thestep-up of carrying value of the royalty interests to fair value in purchase accounting times the production during the respective periods. The additional depreciation, depletion and amortization was calculated by comparing depreciation, depletion and amortization using rates based on thestepped-up carrying values under theunits-of-production method to actual depreciation, depletion and amortization for the same periods using historical rates. The impact to depreciation, depletion and amortization expense of a US$10 million change in the carrying values of the acquired royalty interests, relating to those in production, would be approximately US$799 thousand and US$118 thousand for the year ended June 30, 2009 and the three months ended September 30, 2009, respectively. | |
(8) | To give effect to the planned issuance of 1,204,136 shares of Royal Gold common stock to acquire certain assets from Andacollo in January 2010, as well US$217.9 million in cash. The value of Royal Gold common stock used (US$48.44) is the closing price of Royal Gold common stock on January 12, 2010. The value of Royal Gold common stock will not be known until the closing date and may differ materially based on changes in share price through the closing date. | |
(9) | To record the tax benefits for the increased expenses discussed in Notes 3, 6 and 7 using the statutory tax rate of 35%. | |
(10) | To reclassify certain IRC historical items to conform to the Royal Gold presentation. |
C-22
Table of Contents
• | Royal Gold’s Annual Report onForm 10-K for the fiscal year ended June 30, 2009, filed on August 21, 2009; | |
• | Royal Gold’s Annual Report onForm 10-K/A (Amendment No. 2) for the fiscal year ended June 30, 2008, filed on November 6, 2008; | |
• | Royal Gold’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2009, filed November 6, 2009; | |
• | Royal Gold’s Quarterly Report onForm 10-Q for the quarter ended September 30, 2008, filed November 10, 2008; and | |
• | Royal Gold’s Current Reports onForm 8-K as filed July 28, 2009, August 24, 2009, August 27, 2009, September 28, 2009, October 19, 2009, November 18, 2009, November 20, 2009, November 23, 2009, December 18, 2009, December 21, 2009, December 23, 2009 and January 15, 2010. |
C-23
Table of Contents
REPORT OF INDEPENDENT AUDITORS
C-24
Table of Contents
BALANCE SHEET
As at December 14, 2009
(C$)
Assets | ||||
Current assets | ||||
Receivable from parent company | $ | 1 | ||
Total assets | $ | 1 | ||
Shareholder’s Equity | ||||
Common stock, no par | $ | 1 | ||
Total shareholder’s equity | $ | 1 | ||
(Signed)Tony Jensen | (Signed)Stanley Dempsey | |
Director | Director |
C-25
Table of Contents
NOTES TO FINANCIAL STATEMENT
1. | INCORPORATION AND FINANCIAL PRESENTATION |
2. | SHAREHOLDER’S EQUITY |
Number of | ||||||||
Shares | Share Capital | |||||||
Common shares | ||||||||
Issued on initial organization on December 14, 2009 | 1 | C$ | 1 |
3. | SUBSEQUENT EVENT |
C-26
Table of Contents
1. | The arrangement (the “Arrangement”) under Section 192 of theCanada Business Corporations Act (the “CBCA”) involving International Royalty Corporation (the “Corporation”), pursuant to the amended and restated arrangement agreement (the “Arrangement Agreement”) between the Corporation, Royal Gold, Inc. (“Royal Gold”) and RG Exchangeco Inc., effective as of December 17, 2009, all as more particularly described and set forth in the management proxy circular (the “Circular”) of the Corporation dated January 15, 2009, accompanying the notice of this meeting (as the Arrangement may be, or may have been, modified or amended), is approved. | |
2. | The plan of arrangement (the “Plan of Arrangement”) involving the Corporation and implementing the Arrangement, the full text of which is set out in Schedule B of the Arrangement Agreement (as the Plan of Arrangement may be, or may have been, modified or amended), is approved. | |
3. | Notwithstanding that this resolution has been passed (and the Arrangement adopted) by the securityholders of the Corporation, or that the Arrangement has been approved by the Court (as defined in the Circular), the directors of the Corporation are authorized without further notice to, or approval of, the securityholders of the Corporation (i) to amend the Arrangement Agreement or the Plan of Arrangement to the extent permitted by the Arrangement Agreement or the Plan of Arrangement, or (ii) not to proceed with the Arrangement. | |
4. | Any officer or director of the Corporation is authorized to execute articles of arrangement and such other documents as are necessary or desirable and deliver same to the Director under the CBCA in accordance with the Arrangement Agreement for filing. | |
5. | Any officer or director of the Corporation is authorized to execute and deliver all other documents and do all acts or things as may be necessary or desirable to give effect to this resolution. |
D-1
Table of Contents
E-1
Table of Contents
Page | ||||||||
1. | THE ARRANGEMENT AND ITS ANNOUNCEMENT | E-4 | ||||||
A. | Process Regarding Target | E-4 | ||||||
B. | Circular | E-5 | ||||||
C. | Public Announcement | E-6 | ||||||
2. | CONDITIONS TO THE ARRANGEMENT | E-6 | ||||||
A. | Mutual Conditions | E-6 | ||||||
B. | Conditions in Favour of Target | E-6 | ||||||
C. | Conditions in Favour of Acquireco and Canco | E-6 | ||||||
D. | Satisfaction, Waiver and Release of Conditions | E-6 | ||||||
3. | REPRESENTATIONS AND WARRANTIES | E-6 | ||||||
A. | Representations and Warranties of Target | E-6 | ||||||
B. | Representations and Warranties of Acquireco and Canco | E-6 | ||||||
C. | Survival of Representations, Warranties and Covenants | E-6 | ||||||
4. | IMPLEMENTATION | E-6 | ||||||
A. | General | E-6 | ||||||
B. | Options | E-7 | ||||||
C. | Defence of Proceedings | E-8 | ||||||
D. | Waiver of Shareholder Rights Plan | E-8 | ||||||
E. | Securities Law Compliance and Related Covenants | E-8 | ||||||
F. | Registrar and Transfer Agent | E-9 | ||||||
G. | Access to Information; Confidentiality | E-9 | ||||||
H. | Duty to Inform | E-9 | ||||||
I. | Board Recommendation | E-9 | ||||||
J. | Target Trust Indenture | E-9 | ||||||
K. | Dividends | E-9 | ||||||
L. | Withholding Rights | E-10 | ||||||
M. | Pre-Closing Reorganization | E-10 | ||||||
5. | CONDUCT OF BUSINESS | E-11 | ||||||
A. | Conduct of Business by Target | E-11 | ||||||
B. | Conduct of Business by Acquireco | E-12 | ||||||
C. | Financing Commitments | E-13 | ||||||
6. | ALTERNATIVE TRANSACTIONS | E-14 | ||||||
A. | Non-Solicitation; Adverse Acts | E-14 | ||||||
B. | Permitted Actions | E-14 | ||||||
C. | Notification of Acquisition Proposal | E-14 | ||||||
D. | Access to Information | E-15 | ||||||
E. | Implementation of Superior Proposal | E-15 | ||||||
F. | Response by Acquireco | E-15 | ||||||
G. | General | E-16 | ||||||
7. | TERMINATION AND AMENDMENT OF AGREEMENT | E-16 | ||||||
A. | Termination | E-16 | ||||||
B. | Amendment | E-18 | ||||||
C. | Approval of Amendments | E-18 | ||||||
8. | TERMINATION PAYMENTS | E-18 | ||||||
A. | Payment to Acquireco | E-18 | ||||||
B. | Damages | E-19 | ||||||
9. | ACQUIRECO COVENANTS | E-19 | ||||||
A. | Indemnities | E-19 | ||||||
B. | Directors and Officers Insurance and Other Indemnification Matters | E-19 | ||||||
C. | Employment Agreements | E-20 | ||||||
D. | Third Party Beneficiaries | E-20 | ||||||
E. | Guarantee | E-20 |
E-2
Page | ||||||||
10. | CONFIDENTIALITY AND PUBLIC DISCLOSURE | E-20 | ||||||
11. | GENERAL | E-20 | ||||||
A. | Definitions | E-20 | ||||||
B. | Assignment | E-20 | ||||||
C. | Binding Effect | E-21 | ||||||
D. | Representatives | E-21 | ||||||
E. | Responsibility for Expenses | E-21 | ||||||
F. | Time | E-21 | ||||||
G. | Notices | E-21 | ||||||
H. | Governing Law | E-23 | ||||||
I. | Injunctive Relief | E-23 | ||||||
J. | Currency | E-23 | ||||||
K. | Accounting Matters | E-23 | ||||||
L. | Knowledge | E-23 | ||||||
M. | Entire Agreement | E-24 | ||||||
N. | Further Assurances | E-24 | ||||||
O. | Waivers and Modifications | E-24 | ||||||
P. | Privacy Issues | E-24 | ||||||
Q. | Liability | E-25 | ||||||
R. | Schedules | E-26 | ||||||
S. | Counterparts | E-26 | ||||||
T. | Date For Any Action | E-26 | ||||||
U. | Interpretation | E-26 | ||||||
V. | Severability | E-26 | ||||||
W. | Effectiveness | E-26 |
SCHEDULE A | DEFINITIONS | E-28 | ||||
SCHEDULE B | PLAN OF ARRANGEMENT, INCLUDING PROVISIONS ATTACHING TO THE EXCHANGEABLE SHARES | E-33 | ||||
SCHEDULE C | MUTUAL CONDITIONS | E-73 | ||||
SCHEDULE D | CONDITIONS IN FAVOUR OF TARGET | E-74 | ||||
SCHEDULE E | CONDITIONS IN FAVOUR OF ACQUIRECO AND CANCO | E-75 | ||||
SCHEDULE F | REPRESENTATIONS AND WARRANTIES OF TARGET | E-76 | ||||
SCHEDULE G | REPRESENTATIONS AND WARRANTIES OF ACQUIRECO AND CANCO | E-87 | ||||
SCHEDULE H | REGULATORY APPROVALS | E-94 | ||||
SCHEDULE I | SUPPORT AGREEMENT | E-95 | ||||
SCHEDULE J | VOTING AND EXCHANGE TRUST AGREEMENT | E-105 |
E-3
Table of Contents
A. | Target, Acquireco and Canco were parties to an arrangement agreement dated December 17, 2009 and have agreed to amend and restate such agreement on January 15, 2010, as if such amendment and restatement had occurred and was effected for all purposes herein as of December 17, 2009; |
B. | The authorized capital of Target consists of an unlimited number of common shares, of which 94,702,022 Target Shares were issued and outstanding as of the close of business on December 16, 2009, as fully paid and non-assessable; |
C. | There are no options, warrants or other securities outstanding that require the issue or sale of any securities of Target, other than the Target Options to acquire an aggregate of 5,863,834 Target Shares outstanding as of the close of business on December 16, 2009; |
D. | Canco proposes to acquire all of the Target Shares pursuant to the Arrangement as provided for in this agreement for the consideration contemplated herein; and |
E. | The board of directors of Target, after receiving the Fairness Opinion and legal advice and after considering other factors, has unanimously determined that it is in the best interests of Target to enter into this agreement, to support and implement the Transactions and for the board of directors of Target to recommend that Target Shareholders vote in favour of the Arrangement. |
1. | The Arrangement and its Announcement |
A. | Process Regarding Target. |
(a) | subject to compliance by Acquireco with its agreements and covenants in Section 1.B, as soon as practicable after the execution of this agreement, and in any event before January 15, 2010, Target shall, in a manner acceptable to Acquireco, acting reasonably, apply to the Court pursuant to Section 192 of the Act for the Interim Order; |
E-4
Table of Contents
(b) | provided the Interim Order has been obtained, Target shall, in a manner acceptable to Acquireco, acting reasonably, and subject to Acquireco’s agreements and covenants in Section 1.B, hold the Target Special Meeting as soon as reasonably practicable after the Interim Order has been obtained, and in any event before February 16, 2010, and, in connection with the Target Special Meeting, ensure that the Target Circular contains all information necessary to permit Target Securityholders to make an informed judgement about the Arrangement; | |
(c) | after having called the Target Special Meeting, Target shall not, without the prior written consent of Acquireco, adjourn, postpone or cancel the Target Special Meeting, except as may be required by Law or the rules of the TSX or AMEX or except as otherwise contemplated in this agreement; | |
(d) | Target shall, subject to the prior review and written approval of Acquireco, and subject to Acquireco’s agreements and covenants in Section 1.B, prepare, file and distribute the Target Circular and such other documents (including documents required by the TSX, AMEX and the Securities Commissions or applicable Law) as may be necessary or desirable to permit Target Securityholders to vote on the Arrangement; | |
(e) | provided the Arrangement is approved at the Target Special Meeting as set out in the Interim Order, as soon as reasonably practicable thereafter at a time determined with Acquireco, Target shall forthwith, in a manner acceptable to Acquireco, acting reasonably, take the necessary steps to submit the Arrangement to the Court and apply for the Final Order in such manner as the Court may direct; | |
(f) | provided the Final Order is obtained and the conditions set out in Section 2 have been satisfied or waived, Target shall send to the Director, for endorsement and filing by the Director, articles of arrangement and such other documents as may be required under the CBCA to give effect to the Arrangement; and | |
(g) | provided the Final Order is obtained and the conditions set out in Section 2 have been satisfied or waived, the Support Agreement and the Voting and Exchange Trust Agreement shall be executed. |
B. | Circular. |
(a) | ensure that all information provided by it or on its behalf that is contained in the Target Circular does not contain any misrepresentation or any untrue statement of a material fact or omit to state a material fact required to be stated in the Target Circular that is necessary to make any statement that it contains not misleading in light of the circumstances in which it is made; and | |
(b) | promptly notify the other if, at any time before the Effective Time, it becomes aware that the Target Circular, any document delivered to the Court in connection with the application for the Interim Order or Final Order or delivered to Target Securityholders in connection with the Target Special Meeting or any other document contemplated by Section 1.A contains a misrepresentation, an untrue statement of material fact, omits to state a material fact required to be stated in those documents that is necessary to make any statement it contains not misleading in light of the circumstances in which it is made or that otherwise requires an amendment or a supplement to those documents. |
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C. | Public Announcement. |
2. | Conditions to the Arrangement |
A. | Mutual Conditions. |
B. | Conditions in Favour of Target. |
C. | Conditions in Favour of Acquireco and Canco. |
D. | Satisfaction, Waiver and Release of Conditions. |
3. | Representations and Warranties |
A. | Representations and Warranties of Target. |
B. | Representations and Warranties of Acquireco and Canco. |
C. | Survival of Representations, Warranties and Covenants. |
4. | Implementation |
A. | General. |
(a) | each issued and outstanding Target Share (other than Exchangeable Elected Shares) held by a Target Shareholder (and other than Target Shares held by Acquireco or an affiliate or Dissenting Shareholders) shall be exchanged with Canco for: |
(i) | Cash Consideration; |
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(ii) | Acquireco Share Consideration; or | |
(iii) | a combination thereof; |
(b) | each issued and outstanding Exchangeable Elected Share (other than Target Shares held by Acquireco or an affiliate or Dissenting Shareholders) shall be exchanged with Canco for: |
(i) | Exchangeable Share Consideration; or | |
(ii) | a combination of Exchangeable Share Consideration and Cash Consideration; |
A1. | Subject to the provisions of the Plan of Arrangement, Canco shall execute joint elections under subsection 85(1) or 85(2) of the ITA or any equivalent provincial legislation with Target Shareholders who are Eligible Holders (as defined in the Plan of Arrangement) and who are entitled to receive Exchangeable Shares under the Arrangement, subject to and in accordance with the Plan of Arrangement. In addition, each of Target, Acquireco and Canco shall (and shall cause its Subsidiaries to) use all commercially reasonable efforts to satisfy each of the conditions precedent to be satisfied by it, as soon as practical and in any event before the Effective Date, and to take, or cause to be taken, all other action and to do, or cause to be done, all other things necessary, proper or advisable to permit the completion of the Transactions in accordance with the Arrangement, this agreement, the agreements that it contemplates and applicable Law, and to cooperate with each other in connection therewith (provided, however, that, with respect to Canadian provincial or territorial qualifications, neither Acquireco nor Canco shall be required to register or qualify as a foreign corporation or to take any action that would subject it to service of process in any jurisdiction where it is not now so subject, except as to matters and transactions arising solely from the issuance of the Exchangeable Shares and the Acquireco Shares), including using all commercially reasonable efforts to: |
(a) | provide notice to, and obtain all waivers, consents, permits, licenses, authorizations, orders, approvals and releases necessary or desirable to complete the Transactions from, Agencies and other persons, including parties to agreements, understandings or other documents to which each of Target and Acquireco (and its respective Subsidiaries) is a party or by which it or its properties are bound or affected (including loan agreements, shareholder agreements, leases, pledges, guarantees and security), the failure of which to provide or obtain would prevent the completion of the Arrangement or which, individually or in the aggregate, would reasonably be expected to be Materially Adverse to either Target or Acquireco and their respective Subsidiaries, in each case taken as a whole; | |
(b) | obtain the Interim Order and the approval of Target Securityholders at the Target Special Meeting at the earliest practicable date, as specified in the Interim Order and the Final Order; | |
(c) | effect or cause to be effected all registrations and filings and submissions of information necessary or desirable to complete the Transactions or requested of it by Agencies, the failure of which to obtain would reasonably be expected to prevent the completion of the Transactions or would reasonably be expected to be Materially Adverse to either Target or Acquireco and their respective Subsidiaries, in each case taken as a whole; and | |
(d) | keep the other reasonably informed as to the status of the proceedings related to obtaining the Regulatory Approvals, including providing the other with copies of all related applications and notifications. |
B. | Options. |
(a) | Prior to the Effective Time, Target’s board of directors shall accelerate the vesting of otherwise unvested Target Options and provide for the exercise of Target Options conditional on all conditions precedent to the Arrangement being satisfied or waived such that, immediately prior to the Effective Time, such Target Options that have been so conditionally exercised shall be deemed to have been exercised and the Target Shares issuable on exercise of such Target Options shall be deemed to be issued and outstanding. Target shall not permit or take any action to facilitate the exercise of any Target Options on a cashless basis; provided that holders of Target Options may arrange for financial assistance from third parties (other than the Target or any of its Subsidiaries) to fund the exercise of the Target Options. |
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(b) | Prior to the Effective Time and pursuant toRule 16b-3(d) of theSecurities Exchange Act, the board of directors of Acquireco will adopt a resolution approving the issuance pursuant to the Plan of Arrangement of Acquireco Shares to any parties that will become executive officers or directors of Acquireco and their affiliates so that such issuances are exempt from application of Section 16b of the Securities Exchange Act. |
C. | Defence of Proceedings. |
D. | Waiver of Shareholder Rights Plan. |
E. | Securities Law Compliance and Related Covenants. |
(a) | to obtain all orders required from the applicable Securities Commissions to permit the first resale of: |
(i) | the Exchangeable Shares issued pursuant to the Arrangement; and | |
(ii) | the Acquireco Shares issued from time to time upon exchange of the Exchangeable Shares, in each case without qualification with or approval of or the filing of any prospectus, or the taking of any proceeding with, or the obtaining of any further order, ruling or consent from, any Securities Commission in any of the provinces or territories of Canada (other than, with respect to such first resales, any restrictions on transfer by reason of a holder being a “control person” of Acquireco or Canco or Callco (as defined in the provisions attaching to the Exchangeable Shares) for purposes of Canadian provincial or territorial securities Laws. |
(b) | to cause the Exchangeable Shares to be listed and posted for trading on the TSX by the Exchange Time and to take reasonable steps to maintain such listing for so long as there are Exchangeable Shares outstanding (other than those securities held by Acquireco or any of its affiliates); | |
(c) | to cause the listing and admission to trading on the TSX and NASDAQ of the Acquireco Shares to be issued at the Exchange Time and from time to time upon exchange of the Exchangeable Shares; | |
(d) | to ensure that Canco is, at the Effective Time and for so long as there are Exchangeable Shares outstanding (other than those Exchangeable Shares held by Acquireco or any of its affiliates), a “taxable Canadian corporation” and not a “mutual fund corporation,” each within the meaning of the ITA (as of the Effective Time and any modifications to such definitions which are consistent with the principles thereof); and | |
(e) | to file a registration statement onForm S-3 in order to register under the Securities Act the Acquireco Shares issued upon exchange of the Exchangeable Shares from time to time after the Effective Time, and use its commercially reasonable efforts to cause such registration statement to become effective at or prior to the |
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Effective Time and to maintain the effectiveness of such registration for the period that such Exchangeable Shares remain outstanding. |
F. | Registrar and Transfer Agent. |
G. | Access to Information; Confidentiality. |
(a) | Other than in respect of Proprietary Information and subject to compliance with applicable Law, Target shall, and shall cause its Subsidiaries to, afford to Acquireco and to its Representatives, reasonable access during normal business hours during the period prior to the Effective Time to all of the properties, books, contracts, commitments, personnel and records of Target and its Subsidiaries and, during such period, Target shall, and shall cause each of its Subsidiaries to, furnish promptly to Acquireco (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal, provincial or state securities Laws and (ii) all other information concerning its business, properties and personnel as Acquireco may reasonably request, including any information with respect to Target Securityholder Approval at the Target Special Meeting and the status of the efforts to obtain such approval. Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. | |
(b) | During the period prior to the Effective Time, and subject to compliance with applicable Law, Acquireco shall, and shall cause its Subsidiaries to, furnish promptly to Target information concerning its business and properties as Target may reasonably request. Such information shall be held in confidence to the extent required by, and in accordance with, the provisions of the Confidentiality Agreement. |
H. | Duty to Inform. |
(a) | promptly notifying the other of, and, if in writing, promptly furnish the other with copies of, any communications from or with any Agency with respect to the Transactions; | |
(b) | permitting the other party to review in advance, and considering in good faith the view of one another in connection with, any proposed communication with any Agency in connection with proceedings under or relating to any applicable Law relating to the Transactions; and | |
(c) | not agreeing to participate in any meeting or discussion with any Agency in connection with proceedings under or relating to any applicable Law relating to the Transactions unless it consults with the other party in advance, and, to the extent permitted by such Agency, gives the other party the opportunity to attend and participate for such portions of such meeting or discussion at which matters relating to the Transactions are to be discussed. |
I. | Board Recommendation. |
J. | Target Trust Indenture. |
K. | Dividends |
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L. | Withholding Rights. |
M. | Pre-Closing Reorganization. |
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5. | Conduct of Business |
A. | Conduct of Business by Target. |
(a) | not do, permit any of its Subsidiaries to do or permit to occur any of the following (directly or indirectly), |
(i) | issue, grant, sell, transfer, pledge, lease, dispose of, encumber or agree to issue, grant, sell, pledge, lease, dispose of or encumber, |
(A) | any Target Shares or other securities entitling the holder to rights in respect of the securities or assets of Target or its Subsidiaries, other than pursuant to rights to acquire such securities existing at the date of this agreement as disclosed in the Target Disclosure Statement, or | |
(B) | any property or assets of Target or any of its Subsidiaries, except in the ordinary course of business consistent with past practice, |
(ii) | amend or propose to amend the constitutional documents (including articles or other organizational documents or by-laws) of it or any of its Subsidiaries, | |
(iii) | redeem, purchase or offer to purchase any securities of its capital stock, or enter into any agreement, understanding or arrangement with respect to the voting, registration or repurchase of its capital stock, | |
(iv) | adjust, split, combine or reclassify its capital stock or merge, consolidate or enter into a joint venture with any person, | |
(v) | acquire or agree to acquire (by purchase, amalgamation, merger or otherwise) any person or assets that individually or in the aggregate exceeds $1 million, | |
(vi) | make, or commit to make, any capital expenditures that individually or in the aggregate exceeds $0.25 million, | |
(vii) | except as otherwise provided in this agreement or required by any Agency, amend, waive or modify, or propose to amend, waive or modify, the Target Rights Plan, as amended as of the date hereof, | |
(viii) | incur, create, assume, commit to incur, act or fail to act in any manner that would reasonably be expected to accelerate any obligations in respect of, guarantee or otherwise become liable or responsible for, indebtedness for borrowed money, other than advances from Subsidiaries of Target made in the ordinary course of business consistent with past practice, | |
(ix) | prepay any amount owing in respect of indebtedness for borrowed money, | |
(x) | settle or compromise any suit, claim, action, proceeding, hearing, notice of violation, demand letter or investigation, |
(xi) | enter into, adopt or amend any Employee Benefit Plan or Employment Agreement, except as may be required by applicable Law, | |
(xii) | modify, amend or terminate, or waive, release or assign any material rights or claims with respect to any confidentiality or standstill agreement to which Target is a party, | |
(xiii) | other than as a result of the Transactions, take any action that would give rise to a right to severance benefits pursuant to any employment, severance, termination, change in control or similar agreements or arrangements, |
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(xiv) | adopt or amend, or increase or accelerate the timing, payment or vesting of benefits under or funding of, any bonus, profit sharing compensation, stock option (other than Target Options), pension, retirement, deferred compensation, employment or other employee benefit plan, agreement, trust, fund or arrangement for the benefit or welfare of any current or former employee, director or consultant, | |
(xv) | amend the Target Option Plan or otherwise amend the terms of any Target Options, except that, for avoidance of doubt, Target’s board of directors shall be entitled to accelerate the vesting of otherwise unvested Target Options, | |
(xvi) | enter into any confidentiality agreements or arrangements other than in the ordinary course of business consistent with past practice, except as otherwise permitted in this agreement, | |
(xvii) | except as otherwise required by Law, make any material Tax election, settle or compromise any material Tax claim or assessment, file any Tax Return (other than any Tax Return due before the Effective Time and then only in a manner consistent with past practice), change any method of Tax accounting or consent to any extension or waiver of the limitation period applicable to any claim or assessment in respect of Taxes, | |
(xviii) | except as required by Law or GAAP or as determined in the good faith judgement of Target’s board of directors, make any changes to existing accounting practices, or write up, write down or write off the book value of any assets in amount that, in aggregate, exceeds $2 million, except for depreciation and amortization in accordance with GAAP, or | |
(xix) | enter into or modify any employment, severance, collective bargaining or similar agreements or arrangements with, or take any action with respect to or grant any salary increases, bonuses, benefits, severance or termination pay to, any current or former officers, directors or other employees or consultants; |
(b) | use its commercially reasonable efforts to cause the current insurance (or re- insurance) policies of it and its Subsidiaries not to be cancelled or terminated or any other coverage under those policies to lapse, unless simultaneously with such termination, cancellation or lapse, replacement policies underwritten by insurance and reinsurance companies of nationally recognized standing reasonably acceptable to Acquireco 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; |
(c) | not do or permit any action that would, or would reasonably be expected to, render any representation or warranty made by it in this agreement untrue or inaccurate in a manner that would, or would reasonably be expected to, be Materially Adverse to Target and its Subsidiaries, taken as a whole; | |
(d) | promptly notify Acquireco orally and in writing of any change in the ordinary course of the business, operations or properties of Target or its Subsidiaries and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is or in the aggregate are, or would reasonably be expected to be, Materially Adverse to Target and its Subsidiaries, taken as a whole; | |
(e) | not implement any other change in the business, affairs, capitalization or dividend policy of Target or its Subsidiaries that is, or in the aggregate are, or would reasonably be expected to be, Materially Adverse to Target and its Subsidiaries, taken as a whole; and | |
(f) | not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 5.A. |
B. | Conduct of Business by Acquireco. |
(a) | Prior to the Effective Time, unless Target otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement, Acquireco shall, and shall cause each of its Subsidiaries to, (i) conduct its business and maintain its facilities in the ordinary course of business consistent with past practice, (ii) maintain and preserve its business organization and its material rights and franchises, (iii) retain the services of its officers and key employees, (iv) maintain relationships with customers, suppliers, lessees, joint venture partners, licensees, lessors, licensors and other third parties, and (v) maintain all of its operational assets in their current condition (normal wear and tear excepted) to the end that the goodwill and ongoing business of Acquireco and its Subsidiaries shall not be impaired in any material respect. Without limiting the generality of |
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the foregoing, Acquireco shall (unless Target otherwise agrees in writing or as otherwise expressly contemplated or permitted by this agreement): |
(i) | not do or permit any action that would, or would reasonably be expected to, render any representation or warranty made by it in this agreement untrue or inaccurate in a manner that would, or would reasonably be expected to be, Materially Adverse to Acquireco and its Subsidiaries, taken as a whole; | |
(ii) | promptly notify Target orally and in writing of any change in the ordinary course of the business, operations or properties of Acquireco or its Subsidiaries and of any material complaints, investigations or hearings (or communications indicating that the same may be contemplated) that, individually is or in the aggregate are, or would reasonably be expected to be, Materially Adverse to Acquireco and its Subsidiaries, taken as a whole; | |
(iii) | not enter into or modify any contract, agreement, commitment or arrangement with respect to any of the matters set forth in this Section 5.B; and | |
(iv) | not implement any other change in the business, affairs, capitalization or dividend policy of Acquireco or its Subsidiaries that is, or in the aggregate are, or would reasonably be expected to be, Materially Adverse to Acquireco and its Subsidiaries, taken as a whole. |
(b) | In addition, Acquireco shall not (unless Acquireco first consults with Target or as otherwise expressly contemplated or permitted by this agreement) do, permit any of its Subsidiaries to grant, sell, transfer, pledge, lease, dispose of, encumber or agree to grant, sell, pledge, lease, dispose of or encumber any property or assets of Acquireco or any of its Subsidiaries, except in the ordinary course of business consistent with past practice or as otherwise required to comply with the terms of any credit agreement contemplated by the Commitment Letter. |
C. | Financing Commitments. |
(a) | Concurrently with the execution and delivery hereof, Acquireco has delivered to Target a true copy of an executed commitment letter addressed to Acquireco (the “Commitment Letter”) from HSBC Bank U.S.A., N.A. (the “Financier”) pursuant to which the Financier has committed to provide Acquireco and Canco with financing in an aggregate amount of $100 million (the “Debt Financing”). The Commitment Letter is in full force and effect and is a legal, valid and binding obligation of Acquireco, and to the knowledge of Acquireco, the other parties thereto. No event has occurred which, with or without notice, lapse of time or both, would constitute a default on the part of Acquireco under the Commitment Letter. Acquireco has no reason to believe that it will be unable to satisfy on a timely basis any term or condition of closing to be satisfied by it contained in the Commitment Letter. Subject to its terms and conditions, the Debt Financing, when funded in accordance with the Commitment Letter, together with cash on hand at Acquireco and Target, will provide Acquireco and Canco with cash proceeds at the Effective Time sufficient to consummate the Arrangement upon the terms contemplated by this agreement. | |
(b) | Acquireco shall use its commercially reasonable efforts to complete definitive documentation with respect to the Debt Financing or alternative financing in the aggregate amount of $100 million on or before January 18, 2010. In the event that Acquireco is unable to complete definitive documentation with respect to either the Debt Financing or alternative financing by January 18, 2010 in accordance with the immediately preceding sentence, Acquireco shall use its commercially reasonable efforts to arrange the Debt Financing or obtain alternative financing in the aggregate amount of $100 million as promptly as practicable and in any event prior to the Outside Date, which Debt Financing or alternative financing shall be on terms acceptable to Acquireco and Target, acting reasonably. Acquireco shall give Target prompt notice of any breach or alleged breach by any party of the Commitment Letter or any termination of the Commitment Letter. Acquireco shall keep Target informed on a reasonably current basis in reasonable detail of the status of its efforts to arrange the Debt Financing or alternative financing. For the avoidance of doubt, if the Debt Financing or any alternative financing has not been obtained, Acquireco and Canco shall continue to be obligated to consummate the Arrangement on the terms contemplated by this agreement and the failure to obtain the Debt Financing or any alternative financing shall not be a condition to the obligations of Acquireco or Canco to perform its obligations hereunder or to complete the Arrangement. | |
(c) | Acquireco shall at all times maintain in good standing and in full force and effect its senior secured revolving credit facility existing under that Third Amended and Restated Credit Agreement dated as of October 30, 2008 |
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by and among Acquireco, the Financier and The Bank of Nova Scotia, among others, and shall not draw any amounts thereunder except to finance the cash portion of the consideration payable under the Arrangement. |
6. | Alternative Transactions |
A. | Non-Solicitation; Adverse Acts. |
(a) | solicit, initiate, knowingly encourage, or facilitate (including by way of furnishing non-public information) any inquiries or the making by any third party of any proposals regarding an Alternative Transaction; | |
(b) | participate in any discussions or negotiations regarding any Alternative Transaction; | |
(c) | approve or recommend any Alternative Transaction; or | |
(d) | accept or enter any agreement, arrangement or understanding related to any Alternative Transaction. |
(e) | immediately cease and cause to be terminated any existing discussions or negotiations, directly or indirectly, with any person with respect to any Alternative Transaction; and | |
(f) | not, directly or indirectly, waive or vary any terms or conditions of any confidentiality or standstill agreement that it has entered into with any person considering any Alternative Transaction and shall promptly request the return (or the deletion from retrieval systems and data bases or the destruction) of all information, in each case subject to the terms and conditions of each such agreement. |
B. | Permitted Actions. |
(a) | complying with the obligations of the board of directors of Target under applicable securities Law to prepare and deliver a directors’ circular in response to a take-over bid; | |
(b) | participating in any proceeding in respect of the Target Rights Plan in accordance and consistent with Target’s obligations hereunder; and | |
(c) | considering, participating in discussions or negotiations and entering into confidentiality agreements and providing information, in each case pursuant to Section 6, regarding abona fide written Acquisition Proposal that (i) did not result from a breach of Section 6 prior thereto, and (ii) the board of directors of Target has determined by formal resolution, in good faith and after consultation with its financial advisors and outside legal counsel, is or is reasonably likely to result in a Superior Proposal, but only to the extent that the board of directors of Target also has determined by formal resolution, in good faith after consultation with its outside counsel, that the failure to take such action would be inconsistent with its fiduciary duties. |
C. | Notification of Acquisition Proposal. |
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D. | Access to Information. |
E. | Implementation of Superior Proposal. |
(a) | Target has complied with its obligations under this Section 6 with respect to the Superior Proposal, including by providing Acquireco with all documentation required to be delivered under Section 6.C and a copy of the Superior Proposal (including any draft agreement to be entered into by Target which governs the Superior Proposal); | |
(b) | a period expiring at 5:00 p.m. (Toronto time) on the fifth business day (the “Response Period”) after the later of (i) the date on which Acquireco received written notice from the board of directors of Target that it has resolved, subject only to compliance with this Section 6.E, to accept, or enter into a definitive agreement, undertaking or arrangement in respect of, a Superior Proposal, and (ii) the date Acquireco received a copy of the Superior Proposal as provided in Section 6.E(a); and | |
(c) | the board of directors of Target has considered any amendment to the terms of this agreement proposed in writing by Acquireco (or on its behalf) before the end of the Response Period as contemplated in Section 6.F and determined in good faith, after consultation with its financial advisors and outside legal counsel, that the Superior Proposal remains a Superior Proposal (as assessed against this agreement, together with the written amendments, if any, proposed by Acquireco before the end of the Response Period) and that it would be inconsistent with its fiduciary duties not to enter into a binding agreement in respect of the Superior Proposal. |
F. | Response by Acquireco. |
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G. | General. |
7. | Termination and Amendment of Agreement |
A. | Termination. |
(a) | by mutual agreement in writing executed by Target and Acquireco (for itself and on behalf of Canco) (for greater certainty, without further action on the part of Target Securityholders if termination occurs after the holding of the Target Special Meeting); | |
(b) | by Target, |
(i) | after the Outside Date, if the conditions provided in Section 2.A and B have not been satisfied or waived by Target on or before the Outside Date, provided however that the right to terminate in this Section 7.A(b)(i) shall not be available to Target if its failure to fulfill any of its obligations under this agreement or if its 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 such Outside Date; or | |
(ii) | if there shall be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins Target, Canco or Acquireco from consummating the Arrangement and such applicable Law (if applicable) or enjoinment shall have become final and non-appealable; or | |
(iii) | at any time if the board of directors of Target authorizes Target to enter into a definitive agreement, undertaking or arrangement in respect of a Superior Proposal in the circumstances contemplated by Section 6.E; or | |
(iv) | at any time following the Target Special Meeting, if Target Securityholders do not cast (or do not cause to be cast) sufficient votes at the Target Special Meeting to permit completion of the Arrangement; or | |
(v) | at any time if Acquireco or Canco shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this agreement, which breach or failure is, or would reasonably be expected to be, Materially Adverse to Acquireco and its Subsidiaries as a whole; and |
(c) | by Acquireco, |
(i) | after the Outside Date, if the conditions provided in Section 2.A and C have not been satisfied or waived by Acquireco on or before the Outside Date, provided however that the right to terminate in this Section 7.A(c)(i) shall not be available to Acquireco if its or Canco’s failure to fulfill any of its or Canco’s obligations under this agreement or if its or Canco’s breach of any of its or Canco’s representations and warranties under this agreement has been the cause of, or resulted in, the failure of the Effective Time to occur by such Outside Date; or |
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(ii) | if there shall be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibits or enjoins Target, Acquireco or Canco from consummating the Arrangement and such applicable Law (if applicable) or enjoinment shall have become final and non-appealable; or | |
(iii) | at any time if the board of directors of Target, or the Target, as applicable, |
(A) | does not recommend in the Target Circular, or withdraws or modifies in a manner adverse to Acquireco or refuses to affirm (following the public announcement of anybona fide Acquisition Proposal within the later of (i) 5 days after a written request from Acquireco, and (ii) one calendar day following the expiry of any applicable Response Periods) its recommendation that Target Shareholders vote in favour of the Arrangement (it being acknowledged and agreed that a recommendation that Target Shareholders vote in favour of the Arrangement made by the board of directors of Target after the date hereof (including in the Target Circular) other than on a unanimous basis shall not constitute a withdrawal, adverse modification or failure to reaffirm the recommendation of the board of directors of Target that Target Shareholders vote in favour of the Arrangement); or | |
(B) | does not recommend against (following the public announcement of anybona fide Acquisition Proposal within the later of (i) 5 days after a written request from Acquireco, and (ii) one calendar day following the expiry of any applicable Response Periods) the Target Shareholders voting in favour of an Alternative Transaction; or | |
(C) | approves, recommends, accepts or enters into any agreement, undertaking or arrangement in respect of an Alternative Transaction (other than a confidentiality agreement as contemplated in Section 6) but excluding the resolutions referred to in Section 6.B(c) and Section 6.E; or | |
(D) | breaches or fails to perform any of the covenants or agreements set forth in Section 6 (other than those covenants and agreements set forth in Sections 6.C and 6.D), or materially breaches or fails to perform in all material respects any of the covenants or agreements set forth in Sections 6.C or 6.D; or |
(iv) | at any time if the Target Special Meeting is cancelled, adjourned or delayed except as expressly permitted or contemplated by this agreement or agreed to by Acquireco in writing or requested by Acquireco; | |
(v) | at any time following the Target Special Meeting, if Target Securityholders do not cast (or do not cause to be cast) sufficient votes at the Target Special Meeting to permit completion of the Arrangement; and | |
(vi) | at any time if Target shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this agreement, which breach or failure is, or would reasonably be expected to be, Materially Adverse to the Target and its Subsidiaries as a whole. |
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B. | Amendment. |
(a) | change the time for performance of any of the obligations or acts of the parties; | |
(b) | waive any inaccuracies in or modify any representation contained in this agreement or any document to be delivered pursuant to this agreement; | |
(c) | waive compliance with or modify any of the covenants contained in this agreement or waive or modify performance of any of the obligations of the parties; and/or | |
(d) | waive compliance with or modify any condition precedent contained in this agreement. |
C. | Approval of Amendments. |
8. | Termination Payments |
A. | Payment to Acquireco. |
(a) | If Target is required to pay Acquireco the Termination Fee in accordance with Sections 6.E and 6.F, Target shall immediately pay (or cause to be paid) the Termination Fee to Acquireco in immediately available funds to an account designated by Acquireco. | |
(b) | If Acquireco exercises its right of termination pursuant to Section 7.A(c)(iii)(A), (B) or (C) or Section 7.A(c)(iv), Target shall immediately pay (or cause to be paid) the Termination Fee to Acquireco in immediately available funds to an account designated by Acquireco. | |
(c) | If Acquireco exercises its right of termination pursuant to Section 7.A(c)(v) or Target exercises its right of termination pursuant to Section 7.A(b)(iv), Target (i) shall immediately pay (or cause to be paid) to Acquireco in immediately available funds to an account designated by Acquireco, Acquireco’s reasonable and documentedout-of-pocket expenses incurred in connection with this agreement up to a maximum of $5 million (but, for greater certainty, excluding any fees of any financial advisors) (such amount so paid, the “Expenses”), and (ii) if, prior to the time of the Target Special Meeting, abona fide written Acquisition Proposal has been publicly announced and has not been withdrawn and at any time within the six months after the date of such termination, Target approves, recommends, accepts, enters into any agreement, undertaking or |
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arrangement in respect of, or consummates an Acquisition Proposal, Target shall immediately pay (or cause to be paid) to Acquireco an additional cash amount equal to the difference between the Termination Fee and the Expenses in immediately available funds to an account designated by Acquireco. |
B. | Damages. |
9. | Acquireco Covenants. |
A. | Indemnities. |
B. | Directors and Officers Insurance and Other Indemnification Matters. |
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C. | Employment Agreements. |
D. | Third Party Beneficiaries. |
E. | Guarantee. |
10. | Confidentiality and Public Disclosure |
11. | General |
A. | Definitions. |
B. | Assignment. |
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C. | Binding Effect. |
D. | Representatives. |
E. | Responsibility for Expenses. |
F. | Time. |
G. | Notices. |
(a) | Each party shall give prompt notice to the other of: |
(i) | the occurrence or failure to occur of any event that causes, or would reasonably be expected to cause, any representation or warranty on its part contained in this agreement to be untrue or inaccurate or, in the case of Target, that is or would reasonably be expected to be, Materially Adverse to any of Target and its Subsidiaries; and | |
(ii) | any material breach of its obligations under this agreement, provided that no such notification shall affect the representations, warranties, covenants or agreements of the parties or the conditions to the obligations of the parties under this agreement. |
(b) | Each of Target and Acquireco shall give prompt notice to the other of any previously undisclosed fact of which it becomes aware after the date of this agreement that is, or would reasonably be expected to be, in the case of Target, Materially Adverse to Target or its Subsidiaries, taken as a whole or, in the case of Acquireco, is or would reasonably be expected to be Materially Adverse to the ability of Acquireco or Canco to perform its obligations under this agreement. | |
(c) | Any notice or other communications required or permitted to be given under this agreement shall be sufficiently given if delivered in person, by overnight courier, or if sent by facsimile transmission (provided such transmission is recorded as being transmitted successfully): |
(i) | in the case of Target, to the following address: |
Attn: Mr. Douglas B. Silver, Chairman and Chief Executive Officer
10 Inverness Drive East Suite 104
Englewood, Colorado 80112
Fax:(303) 799-9017
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Attn: Mr. Michael Bourassa
66 Wellington Street West
Suite 4200
Toronto-Dominion Bank Tower
Toronto, Ontario M5K 1N6
Fax: (416)364-7813
Attn: Mr. Sonny Allison
1899 Wynkoop Street, Suite 700
Denver, Colorado 80202
Fax: (303)291-2400
(ii) | in the case of Acquireco or Canco, to the following address: |
Attn: Mr. Bruce Kirchhoff, Vice President and General Counsel
1660 Wynkoop Street
Suite 1000
Denver, Colorado80202-1132
Tel:(303) 573-1660
Fax: (303)573-9385
Attn: Mr. Graham Gow
66 Wellington Street West
Suite 5300
Toronto-Dominion Bank Tower
Toronto, Ontario M5K 1E6
Fax: (416)868-0673
Attn: Mr. Paul Hilton
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Fax:(303) 899-7333
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H. | Governing Law. |
I. | Injunctive Relief. |
J. | Currency. |
K. | Accounting Matters. |
L. | Knowledge. |
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M. | Entire Agreement. |
N. | Further Assurances. |
O. | Waivers and Modifications. |
P. | Privacy Issues. |
(a) | For the purposes of this Section 11.P, the following definitions shall apply: |
(i) | “applicable law” means, in relation to any person, transaction or event, all applicable Law by which such person is bound or having application to the transaction or event in question, including applicable privacy laws; | |
(ii) | “applicable privacy laws” means any and all applicable Law relating to privacy and the collection, use and disclosure of Personal Information in all applicable jurisdictions, including but not limited to the Personal Information Protection and Electronic Documents Act (Canada) and/or any comparable provincial law; | |
(iii) | “authorized authority” means, in relation to any person, transaction or event, any: (A) federal, provincial, municipal or local governmental body (whether administrative, legislative, executive or otherwise), both domestic and foreign; (B) agency, authority, commission, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government; (C) court, arbitrator, commission or body exercising judicial, quasi-judicial, administrative or similar functions; and (D) other body or entity created under the authority of or otherwise subject to the jurisdiction of any of the foregoing, including any stock or other securities exchange, in each case having jurisdiction over such person, transaction or event; and | |
(iv) | “Personal Information” means information (other than 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) about an identifiable individual disclosed or transferred to Acquireco by Target in accordance with this agreement and/or as a condition of the Arrangement. |
(b) | The parties hereto acknowledge that they are responsible for compliance at all times with applicable privacy laws which govern the collection, use or disclosure of Personal Information disclosed to either party pursuant to or in connection with this agreement (the “Disclosed Personal Information”). | |
(c) | Prior to the completion of the Arrangement, neither party shall use or disclose the Disclosed Personal Information for any purposes other than those related to the performance of this agreement and the completion of the Arrangement. After the completion of the transactions contemplated herein, a party may only collect, |
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use and disclose the Disclosed Personal Information for the purposes for which the Disclosed Personal Information was initially collected from or in respect of the individual to which such Disclosed Personal Information relates or for the completion of the transactions contemplated herein, unless: (i) either party shall have first notified such individual of such additional purpose, and where required by applicable law, obtained the consent of such individual to such additional purpose; or (ii) such use or disclosure is permitted or authorized by applicable law, without notice to, or consent from, such individual. Target shall notify Acquireco of the purposes for which the Disclosed Personal Information was initially collected prior to the Effective Date. |
(d) | Each party acknowledges and confirms that the disclosure of the Disclosed Personal Information is necessary for the purposes of determining if the parties shall proceed with the Arrangement, and that the Disclosed Personal Information relates solely to the carrying on of the business or the completion of the Arrangement. | |
(e) | Each party acknowledges and confirms that it has taken and shall continue to take reasonable steps to, in accordance with applicable law, prevent accidental loss or corruption of the Disclosed Personal Information, unauthorized input or access to the Disclosed Personal Information, or unauthorized or unlawful collection, storage, disclosure, recording, copying, alteration, removal, deletion, use or other processing of such Disclosed Personal Information. | |
(f) | Subject to the following provisions, each party shall at all times keep strictly confidential all Disclosed Personal Information provided to it, and shall instruct those employees or advisors responsible for processing such Disclosed Personal Information to protect the confidentiality of such information in a manner consistent with the parties’ obligations hereunder. Prior to the completion of the Arrangement, each party shall take reasonable steps to ensure that access to the Disclosed Personal Information shall be restricted to those employees or advisors of the respective party who have abona fide need to access such information in order to complete the Arrangement. | |
(g) | Where authorized by applicable law, each party shall promptly notify the other party to this agreement of all inquiries, complaints, requests for access, variations or withdrawals of consent and claims of which the party is made aware in connection with the Disclosed Personal Information. To the extent permitted by applicable Law, the parties shall fully co-operate with one another, with the persons to whom the Personal Information relates, and any authorized authority charged with enforcement of applicable privacy laws, in responding to such inquiries, complaints, requests for access, variations or withdrawals of consent and claims. | |
(h) | Upon the expiry or termination of this agreement, or otherwise upon the reasonable request of either party, the other party shall forthwith cease all use of the Disclosed Personal Information acquired by it in connection with this agreement and will return to the requesting party or, at the requesting party’s request, destroy in a secure manner, the Disclosed Personal Information (and any copies thereof) in its possession. |
Q. | Liability. |
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R. | Schedules. |
Schedule A | — | Definitions | ||||
Schedule B | — | Plan of Arrangement, including Provisions Attaching to the Exchangeable Shares | ||||
Schedule C | — | Mutual Conditions | ||||
Schedule D | — | Conditions in Favour of Target | ||||
Schedule E | — | Conditions in Favour of Acquireco and Canco | ||||
Schedule F | — | Representations and Warranties of Target | ||||
Schedule G | — | Representations and Warranties of Acquireco | ||||
Schedule H | — | Regulatory Approvals | ||||
Schedule I | — | Support Agreement | ||||
Schedule J | — | Voting and Exchange Trust Agreement |
S. | Counterparts. |
T. | Date For Any Action. |
U. | Interpretation. |
V. | Severability. |
W. | Effectiveness. |
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By: | /s/ Douglas Silver |
By: | /s/ Tony Jensen |
By: | /s/ Tony Jensen |
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PLAN OF ARRANGEMENT
(a) | the Foreign Currency Amount; by | |
(b) | the noon spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as may be mutually agreed upon by RG and IRC to be appropriate for such purpose. |
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(a) | the IRC Rights Plan shall be deemed to have been terminated (and all IRC Rights issued thereunder shall expire) and shall be of no further force or effect; | |
(b) | each issued and outstanding IRC Stock Option shall be cancelled and the holders thereof shall have no further rights or benefits in respect of such IRC Stock Option; |
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(c) | each issued and outstanding IRC Share (other than Exchangeable Elected Shares and other than IRC Shares held by RG or an affiliate thereof or Dissenting Shareholders) held by an IRC Shareholder shall be exchanged with Canco for: |
(i) | Cash Consideration; | |
(ii) | RG Share Consideration; or | |
(iii) | a combination thereof; |
(d) | each Exchangeable Elected Share shall be exchanged with Canco for: |
(i) | Exchangeable Share Consideration; or | |
(ii) | a combination of Exchangeable Share Consideration and Cash Consideration; |
(e) | RG, Canco and Callco shall execute the Support Agreement and RG, Canco and the Transfer Agent shall execute the Voting and Exchange Trust Agreement and RG shall issue to and deposit with the Transfer Agent the Special Voting Share in consideration of the payment to RG by IRC on behalf of the IRC Shareholders of one dollar ($1.00), to be thereafter held of record by the Transfer Agent as trustee for and on behalf of, and for the use and benefit of, the holders of the Exchangeable Shares in accordance with the Voting and Exchange Trust Agreement. All rights of holders of Exchangeable Shares under the Voting and Exchange Trust Agreement shall be received by them as part of the property receivable by them under Section 2.2(d) in exchange for the Exchangeable Elected Shares for which they were exchanged. |
(a) | IRC Shareholders other than Eligible Holders may elect to receive, in respect of each IRC Share exchanged, the Cash Consideration, the RG Share Consideration or a combination thereof, subject to Section 2.4; | |
(b) | IRC Shareholders who are Eligible Holders may elect to (i) receive in respect of any or all of their IRC Shares, the Exchangeable Share Consideration or a combination of the Exchangeable Share Consideration and the Cash Consideration, subject to Section 2.4 and (ii) receive in respect of the balance of their IRC Shares, if any, the Cash Consideration, the RG Share Consideration or a combination thereof, subject to Section 2.4; | |
(c) | such elections as provided for in Sections 2.3(a) and 2.3(b) shall be made by depositing with the Depositary, prior to the Election Deadline, a duly completed Letter of Transmittal and Election Form indicating such IRC Shareholder’s election, together with any certificates representing such holder’s IRC Shares; and | |
(d) | any IRC Shareholder who does not deposit with the Depositary a duly completed Letter of Transmittal and Election Form prior to the Election Deadline, or otherwise fails to comply with the requirements of Section 2.3(c) and the Letter of Transmittal and Election Form in respect of any such IRC Shareholder’s IRC Shares, shall be deemed to have elected to receive Cash Consideration as to 44.372823% in respect of each such IRC Share, and RG Share Consideration as to 55.627177% in respect of each such IRC Share, subject to proration. |
(a) | the maximum aggregate amount of Cash Consideration to be paid to IRC Shareholders pursuant to Sections 2.2(b) and 2.2(c) is the Canadian Dollar Equivalent as of the Effective Date of US$350,000,000 (the “Maximum Aggregate Cash Consideration”); and |
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(b) | the maximum aggregate number of RG Shares and Exchangeable Shares that may be issued to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) is the lesser of (i) 7,750,000, and (ii) in the event that the maximum aggregate amount of Cash Consideration to be paid to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) is greater than the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761, the greater of (A)7,040,919, and (B) 7,750,000 less one for every Canadian Dollar Equivalent as of the Effective Date of US$50.79 of incremental cash election in the aggregate above the Canadian Dollar Equivalent as of the Effective Date of US$313,985,761 (the “Maximum Aggregate Number of Shares”); |
(c) | the aggregate amount of Cash Consideration elected or deemed to be elected by IRC Shareholders pursuant to Section 2.3 exceeds the Maximum Aggregate Cash Consideration, but the aggregate number of RG Shares and Exchangeable Shares elected or deemed to be elected pursuant to Section 2.3 does not exceed 7,750,000, in each case prior to giving effect to this Section 2.4(c), then (i) the Elected Percentage of the Cash Consideration in respect of an IRC Share held by an IRC Shareholder shall be determined by multiplying the Elected Percentage of the Cash Consideration otherwise determined in respect of such IRC Share by a fraction, rounded to ten decimal places, the numerator of which is the Maximum Aggregate Cash Consideration and the denominator of which is the aggregate amount of the Cash Consideration otherwise payable to all IRC Shareholders (the “Deemed Cash Consideration Elected Percentage”), (ii) the holder of such IRC Share, other than an IRC Shareholder who has elected to receive a percentage of RG Share Consideration or Exchangeable Share Consideration, as the case may be, in respect of such holder’s IRC Shares equal to 100% (for the purpose of this Section 2.4(c) only, an “All Share Electing IRC Shareholder”), shall be deemed to have elected to receive (A) if such IRC Share is not an Exchangeable Elected Share, a percentage of RG Share Consideration in respect of such IRC Share equal to 100% less the Deemed Cash Consideration Elected Percentage, and (B) if such IRC Share is an Exchangeable Elected Share, a percentage of Exchangeable Share Consideration equal to 100% less the Deemed Cash Consideration Elected Percentage, and (iii) each All Share Electing IRC Shareholder shall be deemed to have elected to receive (A) a percentage of RG Share Consideration, in respect of such holder’s IRC Shares that are not Exchangeable Elected Shares, equal to 100%, and (B) a percentage of Exchangeable Share Consideration, in respect of such holder’s IRC Shares that are Exchangeable Shares, equal to 100%; provided, however, that in the event that the aggregate number of RG Shares and Exchangeable Shares that would be issuable to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) exceeds the Maximum Aggregate Number of Shares after giving effect to the foregoing proration provisions of this Section 2.4(c), (x) the Deemed Cash Consideration Elected Percentage in respect of each IRC Share shall equal the percentage calculated in accordance with Section 2.4(c)(i) above, (y) the holder of such IRC Share, other than an All Share Electing IRC Shareholder, shall be deemed to have elected to receive a percentage of RG Share Consideration or Exchangeable Share Consideration, as the case may be, in respect of such IRC Share determined by multiplying (A) 100% less the Deemed Cash Consideration Elected Percentage, by (B) a fraction, rounded to ten decimal places, the numerator of which is the Maximum Aggregate Number of Shares less the aggregate number of RG Shares and Exchangeable Shares elected by all All Share Electing IRC Shareholders, and the denominator of which is the aggregate number of RG Shares and Exchangeable Shares that would be issuable to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) as a result of applying the calculation described in Section 2.4(c)(ii) above, less the aggregate number of RG Shares and Exchangeable Shares elected by all All Share Electing IRC Shareholders, and (z) each All Share Electing IRC Shareholder shall be deemed to have elected to receive a percentage of RG Share Consideration (in respect of such holder’s IRC Shares which are not Exchangeable Elected Shares) or Exchangeable Share Consideration (in respect of such holder’s IRC Shares which are Exchangeable Elected Shares), as the case may be, equal to 100%; | |
(d) | the aggregate number of RG Shares and Exchangeable Shares elected or deemed to be elected by IRC Shareholders pursuant to Section 2.3 exceeds 7,750,000, but the aggregate amount of Cash Consideration elected or deemed to be elected pursuant to Section 2.3 does not exceed the Maximum Aggregate Cash Consideration, in each case prior to giving effect to this Section 2.4(d), then (i) the Elected Percentage of the RG Share Consideration or Exchangeable Share Consideration, as the case may be, in respect of an IRC Share held by an IRC Shareholder shall be determined by multiplying the Elected Percentage of the RG Share Consideration or Exchangeable Share Consideration, as the case may be, otherwise determined in respect of |
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such IRC Share by a fraction, rounded to ten decimal places, the numerator of which is the Maximum Aggregate Number of Shares and the denominator of which is the aggregate number of RG Shares and Exchangeable Shares otherwise issuable to all IRC Shareholders as RG Share Consideration or Exchangeable Share Consideration (the “Deemed Share Consideration Elected Percentage”), and (ii) the holder of such IRC Share, other than an IRC Shareholder who has elected to receive a percentage of Cash Consideration in respect of such holder’s IRC Shares equal to 100% (for the purpose of this Section 2.4(d) only, an “All Cash Electing IRC Shareholder”), shall be deemed to have elected to receive a percentage of Cash Consideration in respect of such IRC Share equal to 100% less the Deemed Share Consideration Elected Percentage, and (iii) each All Cash Electing IRC Shareholder shall be deemed to have elected to receive a percentage of Cash Consideration in respect of such holder’s IRC Shares equal to 100%; provided, however, that in the event that the aggregate amount of Cash Consideration that would be payable to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) exceeds US$313,985,761 after giving effect to the foregoing proration provisions of this Section 2.4(d), the aggregate amount of Cash Consideration, notwithstanding the provisions of Section 2.4(b), shall be US$313,985,761, and (x) the Deemed Share Consideration Elected Percentage of the RG Share Consideration or Exchangeable Share Consideration, as the case may be, in respect of an IRC Share held by an IRC Shareholder shall equal the percentage thereof calculated in accordance with Section 2.4(d)(i) above, (y) the holder of such IRC Share, other than an All Cash Electing IRC Shareholder, shall be deemed to have elected to receive a percentage of Cash Consideration in respect of such IRC Share determined by multiplying (A) 100% less the Deemed Share Consideration Elected Percentage, by (B) a fraction, rounded to ten decimal places, the numerator of which is US$313,985,761 less the aggregate Cash Consideration elected by all All Cash Electing IRC Shareholders, and the denominator of which is the aggregate amount of Cash Consideration that would be payable to IRC Shareholders pursuant to Sections 2.2(c) and 2.2(d) as a result of applying the calculation described in Section 2.4(d)(ii) above, less the aggregate Cash Consideration elected by all All Cash Electing IRC Shareholders, and (z) each All Cash Electing IRC Shareholder shall be deemed to have elected to receive a percentage of Cash Consideration in respect of such holder’s IRC Shares equal to 100%; or |
(e) | the aggregate number of RG Shares and Exchangeable Shares elected or deemed to be elected by IRC Shareholders pursuant to Section 2.3 exceeds 7,750,000, and the aggregate amount of Cash Consideration elected or deemed to be elected by IRC Shareholders pursuant to Section 2.3 exceeds the Maximum Aggregate Cash Consideration, then, notwithstanding the definitions of Maximum Aggregate Cash Consideration and Maximum Aggregate Number of Shares in Sections 2.4(a) and (b) above, respectively, the Maximum Aggregate Cash Consideration shall be the Canadian Dollar Equivalent as of the Effective Date of US$331,992,888 and the Maximum Aggregate Number of Shares shall be 7,395,459; and the Deemed Cash Consideration Elected Percentage in respect of an IRC Share held by an IRC Shareholder shall be determined by multiplying the Elected Percentage of the Cash Consideration otherwise determined in respect of such IRC Share by a fraction, rounded to ten decimal places, the numerator of which is the Maximum Aggregate Cash Consideration pursuant to this Section 2.4(e), and the denominator of which is the aggregate amount of Cash Consideration otherwise payable to all IRC Shareholders; and the Deemed Share Consideration Elected Percentage of the RG Share Consideration or Exchangeable Share Consideration, as the case may be, in respect of an IRC Share held by an IRC Shareholder shall be determined by multiplying the Elected Percentage of the RG Share Consideration or Exchangeable Share Consideration, as the case may be, otherwise determined in respect of such IRC Share by a fraction, rounded to ten decimal places, the numerator of which is the Maximum Aggregate Number of Shares pursuant to this Section 2.4(e), and the denominator of which is the aggregate number of RG Shares and Exchangeable Shares otherwise issuable to all IRC Shareholders as RG Share Consideration or Exchangeable Share Consideration. |
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(a) | ultimately are determined to be entitled to be paid fair value for their IRC Shares, which fair value, notwithstanding anything to the contrary contained in Section 190 of the CBCA, shall be determined as of the Exchange Time, shall be deemed to have transferred those IRC Shares as of the Exchange Time at the fair value of the IRC Shares determined as of the Exchange Time, without any further act or formality and free and clear of all liens and claims, to Canco; or | |
(b) | ultimately are determined not to be entitled, for any reason, to be paid fair value for their IRC Shares, shall be deemed to have participated in the Arrangement on the same basis as a holder of IRC Shares who has not exercised Dissent Rights and shall be deemed to have elected to receive, and shall receive, the consideration provided in Section 2.3(d), |
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(a) | Callco shall have the overriding right (the “Liquidation Call Right”), in the event of and notwithstanding the proposed liquidation, dissolution orwinding-up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, pursuant to Section 5 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is RG or an affiliate of RG) on the Liquidation Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco of an amount per share (the “Liquidation Call Purchase Price”) equal to the Current Market Price of RG Shares on the last business day prior to the Liquidation Date plus the Dividend Amount, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one RG Share plus any Dividend Amount. In the event of the exercise of the Liquidation Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Liquidation Date on payment by Callco to the holder of the Liquidation Call Purchase Price for each such share, and Canco shall have no obligation to pay any Liquidation Amount or Dividend Amount to the holders of such shares so purchased by Callco. | |
(b) | To exercise the Liquidation Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Canco of Callco’s intention to exercise such right at least 45 days before the Liquidation Date in the case of a voluntary liquidation, dissolution orwinding-up of Canco or any other voluntary distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, |
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and at least five business days before the Liquidation Date in the case of an involuntary liquidation, dissolution orwinding-up of Canco or any other involuntary distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs. The Transfer Agent will notify the holders of Exchangeable Shares as to whether or not Callco has exercised the Liquidation Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Liquidation Call Right, then on the Liquidation Date, Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Liquidation Call Purchase Price. |
(c) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Liquidation Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Liquidation Date, the aggregate number of RG Shares which Callco shall deliver or cause to be delivered pursuant to Section 5.1(a) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the total Liquidation Call Purchase Price, in each case less any amounts withheld pursuant to Section 4.6. Provided that Callco has complied with the immediately preceding sentence, on and after the Liquidation Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Liquidation Call Purchase Price without interest, unless payment of the aggregate Liquidation Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this Section 5.1(c), in which case the rights of the holders shall remain unaffected until the aggregate Liquidation Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of Canco and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the RG Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder written evidence of the book entry issuance in uncertificated form of the RG Shares to which the holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such RG Shares with a record date after the Liquidation Date and before the date of the transfer of such RG Shares to such holder, less any amounts withheld pursuant to Section 4.6. If Callco does not exercise the Liquidation Call Right in the manner described above, on the Liquidation Date, the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the Liquidation Amount otherwise payable by Canco in connection with the liquidation, dissolution orwinding-up of Canco or any distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs pursuant to Section 5 of the Exchangeable Share Provisions. |
(a) | Callco shall have the overriding right (the “Redemption Call Right”), notwithstanding the proposed redemption of the Exchangeable Shares by Canco pursuant to Section 7 of the Exchangeable Share Provisions, to purchase from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is RG or an affiliate of RG) on the Redemption Date all but not less than all of the Exchangeable Shares held by each such holder on payment by Callco to each holder of an amount per Exchangeable Share (the “Redemption Call Purchase Price”) equal to the Current Market Price of a RG Share on the last business day prior to the Redemption Date plus the Dividend Amount, which shall be satisfied in full by Callco delivering or causing to be delivered to such holder one RG Share plus any Dividend Amount. In the event of the exercise of the Redemption Call Right by Callco, each holder shall be obligated to sell all the Exchangeable Shares held by the holder to Callco on the Redemption Date on payment by Callco to the holder of the Redemption Call Purchase Price for each such share, and Canco shall have no obligation to redeem, or to pay any Dividend Amount in respect of, such shares so purchased by Callco. |
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(b) | To exercise the Redemption Call Right, Callco must notify the Transfer Agent, as agent for the holders of Exchangeable Shares, and Canco of Callco’s intention to exercise such right at least 60 days before the Redemption Date, except in the case of a redemption occurring as a result of a RG Control Transaction (as defined in the Exchangeable Share Provisions), an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, in which case Callco shall so notify the Transfer Agent and Canco on or before the Redemption Date. The Transfer Agent will notify the holders of the Exchangeable Shares as to whether or not Callco has exercised the Redemption Call Right forthwith after the expiry of the period during which the same may be exercised by Callco. If Callco exercises the Redemption Call Right, on the Redemption Date Callco will purchase and the holders will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Redemption Call Purchase Price. | |
(c) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the Redemption Call Right, Callco shall deposit or cause to be deposited with the Transfer Agent, on or before the Redemption Date, the aggregate number of RG Shares which Callco shall deliver or cause to be delivered pursuant to Section 5.2(a) and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the aggregate Dividend Amount, if any, in payment of the aggregate Redemption Call Purchase Price, in each case less any amounts withheld pursuant to Section 4.6. Provided that Callco has complied with the immediately preceding sentence, on and after the Redemption Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the aggregate Redemption Call Purchase Price without interest, unless payment of the aggregate Redemption Call Purchase Price for the Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the following provisions of this Section 5.2(c), in which case the rights of the holders shall remain unaffected until the aggregate Redemption Call Purchase Price has been paid in the manner herein provided. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of Canco and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of Callco shall transfer to such holder, the RG Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder of the RG Shares to which the holder is entitled and a cheque or cheques of Callco payable at par at any branch of the bankers of Callco representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such RG Shares with a record date after the Redemption Date and before the date of the transfer of such RG Shares to such holder, less any amounts withheld pursuant to Section 4.6. If Callco does not exercise the Redemption Call Right in the manner described above, on the Redemption Date the holders of the Exchangeable Shares will be entitled to receive in exchange therefor the redemption price otherwise payable by Canco in connection with the redemption of the Exchangeable Shares pursuant to Article 7 of the Exchangeable Share Provisions. |
(a) | RG shall have the overriding right (the “Change of Law Call Right”), in the event of a Change of Law, to purchase (or to cause Callco to purchase) from all but not less than all of the holders of Exchangeable Shares (other than any holder of Exchangeable Shares which is an affiliate of RG) all but not less than all of the Exchangeable Shares held by each such holder upon payment by RG or Callco, as the case may be, of an amount per share (the “Change of Law Call Purchase Price”) equal to the Current Market Price of RG Shares on the last business day prior to the Change of Law Call Date plus the Dividend Amount, which shall be satisfied in full by RG or Callco, as the case may be, delivering or causing to be delivered to such holder one RG Share plus any Dividend Amount. In the event of the exercise of the Change of Law Call Right by RG or Callco, each holder of Exchangeable Shares shall be obligated to sell all the Exchangeable Shares held by such holder to RG or Callco, as the case may be, on the Change of Law Call Date upon payment by RG or Callco, as the case may be, to such holder of the Change of Law Call Purchase Price for each such Exchangeable Share. | |
(b) | To exercise the Change of Law Call Right, RG or Callco must notify the Transfer Agent of its intention to exercise such right at least 45 days before the date on which RG or Callco intends to acquire the Exchangeable |
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Shares (the “Change of Law Call Date”). If RG or Callco exercises the Change of Law Call Right, then, on the Change of Law Call Date, RG or Callco, as the case may be, will purchase and the holders of Exchangeable Shares will sell all of the Exchangeable Shares then outstanding for a price per share equal to the Change of Law Call Purchase Price. |
(c) | For the purposes of completing the purchase of the Exchangeable Shares pursuant to the exercise of the Change of Law Call Right, RG or Callco, as the case may be, shall deposit or cause to be deposited with the Transfer Agent, on or before the Change of Law Call Date, the aggregate number of RG Shares which RG or Callco, as the case may be, shall deliver or cause to be delivered pursuant to Section 5.3(a) and a cheque or cheques of RG or Callco, as the case may be, payable at par at any branch of the bankers of RG or Callco representing the aggregate Dividend Amount, if any, in payment of the aggregate Redemption Call Purchase Price, in each case less any amounts withheld pursuant to Section 4.6. Provided that RG or Callco has complied with the immediately preceding sentence, on and after the Change of Law Call Date the holders of the Exchangeable Shares shall cease to be holders of the Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive their proportionate part of the total Change of Law Purchase Price payable by RG or Callco, as the case may be, without interest, upon presentation and surrender by the holder of certificates representing the Exchangeable Shares held by such holder and the holder shall on and after the Change of Law Call Date be considered and deemed for all purposes to be the holder of RG Shares to which such holder is entitled. Upon surrender to the Transfer Agent of a certificate or certificates representing Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and articles of Canco and such additional documents, instruments and payments as the Transfer Agent may reasonably require, the holder of such surrendered certificate or certificates shall be entitled to receive in exchange therefor, and the Transfer Agent on behalf of RG or Callco, as the case may be, shall transfer to such holder, the RG Shares to which such holder is entitled and as soon as reasonably practicable thereafter the Transfer Agent shall deliver to such holder written evidence of the book entry issuance in uncertificated form of the RG Shares to which the holder is entitled and a cheque or cheques of RG or Callco, as the case may be, payable at par at any branch of the bankers of RG or Callco, as the case may be, representing the Dividend Amount, if any, and when received by the Transfer Agent, all dividends and other distributions with respect to such RG Shares with a record date after the Redemption Date and before the date of the transfer of such RG Shares to such holder, less any amounts withheld pursuant to Section 4.6. |
(a) | IRC may amend, modify and/or supplement this Plan of Arrangement at any time and from time to time (with the prior written consent of RG), provided that any such amendment, modification and/or supplement must be contained in a written document that is filed with the Court and, if made after the Special Meeting, approved by the Court and communicated to IRC Shareholders and IRC Optionholders if and as required by the Court. | |
(b) | Any amendment, modification or supplement to this Plan of Arrangement may be proposed by IRC (with the prior written consent of RG) at any time before or at the Special Meeting with or without any other prior notice or communication and, if so proposed and accepted by the persons voting at the Special Meeting in the manner required under the Interim Order, shall become part of this Plan of Arrangement for all purposes. | |
(c) | Any amendment, modification or supplement to this Plan of Arrangement that is approved or directed by the Court following the Special Meeting shall be effective only if (i) it is consented to in writing by IRC and RG and, (ii) if required by the Court, it is consented to by IRC Shareholders voting in the manner directed by the Court. | |
(d) | Any amendment, modification or supplement to this Plan of Arrangement may be made prior to the Effective Date unilaterally by RG, provided that it concerns a matter which, in the reasonable opinion of RG, is of an administrative nature required to better give effect to the implementation of this Plan of Arrangement and is not adverse to the financial or economic interests of any IRC Shareholder. |
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(a) | if post offices in Canada are not open for the deposit of mail, any notice which RG or the Depositary may give or cause to be given under the Arrangement will be deemed to have been properly given and to have been received by IRC Shareholders and IRC Optionholders if (i) it is given to the TSX for dissemination or (ii) it is published once in the national edition ofThe Globe and Mail and in the daily newspapers of general circulation in each of the French and English languages in the City of Montreal, provided that if the national edition ofThe Globe and Mail is not being generally circulated, publication thereof will be made inThe National Post or any other daily newspaper of general circulation published in the City of Toronto; and | |
(b) | if post offices in the United States are not open for the deposit of mail, any notice which RG or the Depositary may give or cause to be given under the Arrangement will be deemed to have been properly given and to have been received by IRC Shareholders and IRC Optionholders if (i) it is given to the NYSE Amex for dissemination or (ii) it is published once in the national edition of the Wall Street Journal, provided that if the national edition of the Wall Street Journal is not being generally circulated, publication thereof will be made in the New York Times or any other daily newspaper of general circulation published in New York City. |
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1. | Interpretation |
(1) | For the purposes of these share provisions: |
“affiliate” has the meaning corresponding to “affiliated companies” in theSecurities Act (Ontario), as amended. | |
“Agency” means any domestic or foreign court, tribunal, federal, state, provincial or local government or governmental agency, department or authority or other regulatory authority (including the TSX, AMEX and NASDAQ) or administrative agency or commission (including the Securities Commissions and the SEC) or any elected or appointed public official. | |
“Agent” means any chartered bank or trust company in Canada selected by Canco for the purposes of holding some or all of the Liquidation Amount or Redemption Price in accordance with Section 5 or Section 7, respectively. | |
“Arrangement” means an arrangement under Section 192 of the CBCA on the terms and subject to the conditions set out in the Plan of Arrangement, to which plan these share provisions are attached as Appendix I. | |
“Arrangement Agreement” means the arrangement agreement made as of December 17, 2009 between IRC, Canco and RG, as amended, supplemented and/or restated in accordance with its terms, providing for, among other things, the Arrangement. | |
“Board of Directors” means the board of directors of Canco. | |
“business day” means any day other than a Saturday, Sunday, a public holiday or a day on which commercial banks are not open for business in Toronto, Ontario or Denver, Colorado under applicable law. | |
“Callco” means (i) an indirect subsidiary of RG existing under the laws of Canada or such other jurisdiction as RG may determine prior to the Effective Date, or (ii) any other direct or indirect wholly-owned subsidiary of RG designated by RG from time to time in replacement thereof. | |
“Callco Call Notice” has the meaning ascribed thereto in Section 6(3) of these share provisions. | |
“Canadian Dollar Equivalent” means in respect of an amount expressed in a currency other than Canadian dollars (the “Foreign Currency Amount”) at any date the product obtained by multiplying: |
(a) | the Foreign Currency Amount; by | |
(b) | the noon spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as reported by the Bank of Canada or, in the event such spot exchange rate is not available, such spot exchange rate on the business day immediately preceding such date for such foreign currency expressed in Canadian dollars as may be mutually agreed upon by RG and IRC to be appropriate for such purpose, which determination shall be conclusive and binding. |
“Canco” means the corporation incorporated under the laws of Canada that issues the Exchangeable Shares pursuant to the Arrangement. | |
“CBCA” means theCanada Business Corporations Act, as amended. | |
“Common Shares” means the common shares in the capital of Canco. | |
“Current Market Price” means, in respect of a RG Share on any date, the quotient obtained by dividing (a) the aggregate of the Daily Value of Trades for each day during the period of 20 consecutive trading days ending three trading days before such date; by (b) the aggregate volume of RG Shares used to calculate such Daily Value of Trades. | |
“Daily Value of Trades” means, in respect of the RG Shares on any trading day, the product of (a) the volume weighted average price of RG Shares on the TSX (or, if the RG Shares are not listed on the TSX, the Canadian Dollar Equivalent of the volume weighted average price of RG Shares on such other stock exchange or automated quotation system on which the RG Shares are listed or quoted, as the case may be, as may be selected by the board of directors of RG for such purpose) on such date, as determined by Bloomberg L.P. or other reputable, third party information |
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source selected by the board of directors of RG in good faith; and (b) the aggregate volume of RG Shares traded on such day on the TSX or such other stock exchange or automated quotation system and used to calculate such volume weighted average price; provided that any such selections by the board of directors of RG shall be conclusive and binding. |
“Director” means the Director appointed pursuant to Section 260 of the CBCA. | |
“Dividend Amount” means an amount equal to all declared and unpaid dividends on an Exchangeable Share held by a holder on any dividend record date which occurred prior to the date of purchase, redemption or other acquisition of such share by Callco or RG from such holder pursuant to Section 5(1), Section 6(1) or Section 7(1). | |
“Effective Date” means the date on or before the Outside Date on which the Arrangement becomes effective in accordance with the CBCA and the Final Order. | |
“Exchangeable Shares” means the non-voting, exchangeable shares in the capital of Canco, having the rights, privileges, restrictions and conditions set forth herein. | |
“Exchangeable Share Voting Event” means any matter in respect of which holders of Exchangeable Shares are entitled to vote as shareholders of Canco and in respect of which the Board of Directors determines in good faith that after giving effect to such matter the economic equivalence of the Exchangeable Shares and the RG Shares is maintained for the holders of Exchangeable Shares (other than RG and its affiliates). | |
“Exempt Exchangeable Share Voting Event” means an Exchangeable Share Voting Event in order to approve or disapprove, as applicable, any change to, or in the rights of the holders of, the Exchangeable Shares, where the approval or disapproval, as applicable, of such change would be required to maintain the economic equivalence of the Exchangeable Shares and the RG Shares. | |
“holder” means, when used with reference to the Exchangeable Shares, a holder of Exchangeable Shares shown from time to time in the register maintained by or on behalf of Canco in respect of the Exchangeable Shares. | |
“including” means “including without limitation” and “includes” means “includes without limitation”. | |
“IRC” means International Royalty Corporation, a corporation continued under the laws of Canada. | |
“Liquidation Amount” has the meaning ascribed thereto in Section 5(1) of these share provisions. | |
“Liquidation Call Right” has the meaning ascribed thereto in the Plan of Arrangement. | |
“Liquidation Date” has the meaning ascribed thereto in Section 5(1) of these share provisions. | |
“person” includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, limited liability company, unlimited liability company, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate, corporation, unincorporated association or organization, Agency, syndicate or other entity, whether or not having legal status. | |
“Plan of Arrangement” means the plan of arrangement substantially in the form and content of Schedule B annexed to the Arrangement Agreement, and any amendments or variations thereto made in accordance with Section 7.B of the Arrangement Agreement or Article 6 of the Plan of Arrangement or made at the direction of the Court. | |
“Purchase Price” has the meaning ascribed thereto in Section 6(3) of these share provisions. | |
“Redemption Call Purchase Price” has the meaning ascribed thereto in the Plan of Arrangement. | |
“Redemption Call Right” has the meaning ascribed thereto in the Plan of Arrangement. | |
“Redemption Date” means the date, if any, established by the Board of Directors for the redemption by Canco of all but not less than all of the outstanding Exchangeable Shares pursuant to Section 7 of these share provisions, which date shall be no earlier than the seventh anniversary of the date on which Exchangeable Shares first are issued, unless: |
(a) | there are fewer than 750,000 Exchangeable Shares outstanding (other than Exchangeable Shares held by RG and its affiliates, and as such number of shares may be adjusted as deemed appropriate by the Board of Directors to give effect to any subdivision or consolidation of or stock dividend on the Exchangeable Shares, any issue or distribution of rights to acquire Exchangeable Shares or securities exchangeable for or convertible into Exchangeable Shares, any issue or distribution of other securities or rights or evidences of indebtedness or assets, or any other capital reorganization or other transaction affecting the Exchangeable Shares), in which case the Board of Directors may accelerate such redemption date to such date prior to the seventh anniversary |
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of the date on which Exchangeable Shares first are issued as they may determine, upon at least 60 days’ prior written notice to the holders of the Exchangeable Shares and the Trustee; |
(b) | an RG Control Transaction occurs, in which case, provided that the Board of Directors determines, in good faith and in its sole discretion, that it is not reasonably practicable to substantially replicate the terms and conditions of the Exchangeable Shares in connection with such RG Control Transaction and that the redemption of all but not less than all of the outstanding Exchangeable Shares is necessary to enable the completion of such RG Control Transaction in accordance with its terms, the Board of Directors may accelerate such redemption date to such date prior to the seventh anniversary of the date on which Exchangeable Shares first are issued as it may determine, upon such number of days’ prior written notice to the holders of the Exchangeable Shares and the Trustee as the Board of Directors may determine to be reasonably practicable in such circumstances; | |
(c) | an Exchangeable Share Voting Event that is not an Exempt Exchangeable Share Voting Event is proposed and (i) the holders of the Exchangeable Shares fail to take the necessary action, at a meeting or other vote of holders of Exchangeable Shares, to approve or disapprove, as applicable, the Exchangeable Share Voting Event or the holders of the Exchangeable Shares do take the necessary action but, in connection therewith, the holders of more than 2% of the outstanding Exchangeable Shares (other than those held by RG and its affiliates) exercise rights of dissent under the CBCA, and (ii) the Board of Directors determines in good faith that it is not reasonably practicable to accomplish the business purpose (which business purpose must be bona fide and not for the primary purpose of causing the occurrence of the Redemption Date) intended by the Exchangeable Share Voting Event in a commercially reasonable manner that does not result in an Exchangeable Share Voting Event, in which case the Redemption Date shall be the business day following the day on which the later of the events described in (i) and (ii) above occur; or | |
(d) | an Exempt Exchangeable Share Voting Event is proposed and holders of the Exchangeable Shares fail to take the necessary action at a meeting or other vote of holders of Exchangeable Shares to approve or disapprove, as applicable, the Exempt Exchangeable Share Voting Event in which case the Redemption Date shall be the business day following the day on which the holders of the Exchangeable Shares failed to take such action. |
provided, however, that the accidental failure or omission to give any notice of redemption under clauses (a), (b), (c) or (d) above to any of the holders of Exchangeable Shares shall not affect the validity of any such redemption. | |
“Redemption Price” has the meaning ascribed thereto in Section 7(1) of these share provisions. | |
“Retracted Shares” has the meaning ascribed thereto in Section 6(1)(a) of these share provisions. | |
“Retraction Call Right” has the meaning ascribed thereto in Section 6(1)(c) of these share provisions. | |
“Retraction Date” has the meaning ascribed thereto in Section 6(1)(b) of these share provisions. | |
“Retraction Price” has the meaning ascribed thereto in Section 6(1) of these share provisions. | |
“Retraction Request” has the meaning ascribed thereto in Section 6(1) of these share provisions. | |
“RG” means Royal Gold, Inc., a corporation existing under the laws of Delaware. | |
“RG Control Transaction” means any merger, amalgamation, arrangement, take-over bid or tender offer, material sale of shares or rights or interests therein or thereto or similar transactions involving RG, or any proposal to do so. | |
“RG Dividend Declaration Date” means the date on which the board of directors of RG declares any dividend or other distribution on the RG Shares that would require a corresponding payment to be made in respect of the Exchangeable Shares. | |
“RG Shares” means the common stock, par value U.S.$0.01 per share, in the capital of RG. | |
“SEC” means the U.S. Securities and Exchange Commission. | |
“Securities Act” means theSecurities Act (Ontario) and the rules, regulations and policies made thereunder, as amended. | |
“Support Agreement” means the agreement made between RG, Callco and Canco substantially in the form and content of Schedule I to the Arrangement Agreement. | |
“Transfer Agent” means Computershare Trust Company of Canada or such other person as may from time to time be appointed by Canco as the registrar and transfer agent for the Exchangeable Shares. |
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“Trustee” means the trustee chosen by RG to act as trustee under the Voting and Exchange Trust Agreement, being a corporation organized and existing under the laws of Canada or any Province thereof and authorized to carry on the business of a trust company in all the provinces of Canada, and any successor trustee appointed under the Voting and Exchange Trust Agreement. | |
“TSX” means The Toronto Stock Exchange or its successor. | |
“Voting and Exchange Trust Agreement” means an agreement to be made among RG, Canco and the Trustee in connection with the Plan of Arrangement substantially in the form of Schedule J to the Arrangement Agreement. |
2. | Ranking of Exchangeable Shares |
3. | Dividends |
(1) | A holder of an Exchangeable Share shall be entitled to receive and the Board of Directors shall, subject to applicable law, on each RG Dividend Declaration Date, declare a dividend on each Exchangeable Share: |
(a) | in the case of a cash dividend declared on the RG Shares, in an amount in cash for each Exchangeable Share equal to the cash dividend declared on each RG Share on the RG Dividend Declaration Date; | |
(b) | in the case of a stock dividend declared on the RG Shares to be paid in RG Shares, by the issue or transfer by Canco of such number of Exchangeable Shares for each Exchangeable Share as is equal to the number of RG Shares to be paid on each RG Share unless in lieu of such stock dividend Canco elects to effect a corresponding and contemporaneous and economically equivalent (as determined by the Board of Directors in accordance with Section 3(5) hereof) subdivision of the outstanding Exchangeable Shares; or | |
(c) | in the case of a dividend declared on the RG Shares in property other than cash or RG Shares, in such type and amount of property for each Exchangeable Share as is the same as or economically equivalent (to be determined by the Board of Directors as contemplated by Section 3(5) hereof) to the type and amount of property declared as a dividend on each RG Share. |
(2) | Cheques of Canco payable at par at any branch of the bankers of Canco shall be issued in respect of any cash dividends contemplated by Section 3(1)(a) hereof and the sending of such cheque to each holder of an Exchangeable Share shall satisfy the cash dividend represented thereby unless the cheque is not paid on presentation. Written evidence of the book entry issuance or transfer to the registered holder of Exchangeable Shares shall be delivered in respect of any stock dividends contemplated by Section 3(1)(b) hereof and the sending of such written evidence to each holder of an Exchangeable Share shall satisfy the stock dividend represented thereby. Such other type and amount of property in respect of any dividends contemplated by Section 3(1)(c) hereof shall be issued, distributed or transferred by Canco in such manner as it shall determine and the issuance, distribution or transfer thereof by Canco to each holder of an Exchangeable Share shall satisfy the dividend represented thereby. No holder of an Exchangeable Share shall be entitled to recover by action or other legal process against Canco any dividend that is represented by a cheque that has not been duly presented to Canco’s bankers for payment or that otherwise remains unclaimed for a period of six years from the date on which such dividend was payable. |
(3) | The record date for the determination of the holders of Exchangeable Shares entitled to receive payment of, and the payment date for, any dividend declared on the Exchangeable Shares under Section 3(1) hereof shall be the same dates as the record date and payment date, respectively, for the corresponding dividend declared on the RG Shares. The record date for the determination of the holders of Exchangeable Shares entitled to receive Exchangeable Shares in connection with any subdivision, redivision or change of the Exchangeable Shares under Section 3(1)(b) hereof and the effective date of such subdivision shall be the same dates as the record and payment date, respectively, for the corresponding stock dividend declared on the RG Shares. |
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(4) | If on any payment date for any dividends declared on the Exchangeable Shares under Section 3(1) hereof the dividends are not paid in full on all of the Exchangeable Shares then outstanding, any such dividends that remain unpaid shall be paid on a subsequent date or dates determined by the Board of Directors on which Canco shall have sufficient moneys, assets or property properly applicable to the payment of such dividends. |
(5) | The Board of Directors shall determine, in good faith and in its sole discretion, economic equivalence for the purposes of these share provisions, including Section 3(1) hereof, and each such determination shall be conclusive and binding on Canco and its shareholders. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors to be relevant, be considered by the Board of Directors: |
(a) | in the case of any stock dividend or other distribution payable in RG Shares, the number of such shares issued in proportion to the number of RG Shares previously outstanding; | |
(b) | in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price; | |
(c) | in the case of the issuance or distribution of any other form of property (including any shares or securities of RG of any class other than RG Shares, any rights, options or warrants other than those referred to in Section 3(5)(b) hereof, any evidences of indebtedness of RG or any assets of RG), the relationship between the fair market value (as determined by the Board of Directors in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding RG Share and the Current Market Price of a RG Share; and | |
(d) | in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of RG Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). |
4. | Certain Restrictions |
(a) | pay any dividends on the Common Shares or any other shares ranking junior to the Exchangeable Shares, other than stock dividends payable in Common Shares or any such other shares ranking junior to the Exchangeable Shares, as the case may be; | |
(b) | redeem or purchase or make any capital distribution in respect of Common Shares or any other shares ranking junior to the Exchangeable Shares; | |
(c) | redeem or purchase any other shares of Canco ranking equally with the Exchangeable Shares with respect to the payment of dividends or the distribution of assets in the event of the liquidation, dissolution orwinding-up of Canco, whether voluntary or involuntary, or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs; or | |
(d) | issue any Exchangeable Shares or any other shares of Canco ranking equally with the Exchangeable Shares other than by way of stock dividends to the holders of such Exchangeable Shares; and | |
(e) | issue any shares of Canco ranking superior to the Exchangeable Shares. |
5. | Distribution on Liquidation |
(1) | In the event of the liquidation, dissolution orwinding-up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, subject to the exercise by Callco of the Liquidation Call Right, a holder of Exchangeable Shares shall be entitled, subject to applicable law, to receive from the assets of Canco in respect of each Exchangeable Share held by such holder on the effective date (the “Liquidation Date”) of such liquidation, dissolution,winding-up or other distribution, before any distribution of any part of the assets of |
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Canco among the holders of the Common Shares or any other shares ranking junior to the Exchangeable Shares, an amount per share (the “Liquidation Amount”) equal to the Current Market Price of an RG Share on the last business day prior to the Liquidation Date plus the Dividend Amount, which shall be satisfied in full by Canco delivering or causing to be delivered to such holder one RG Share, plus an amount equal to the Dividend Amount. |
(2) | On or promptly after the Liquidation Date, and provided the Liquidation Call Right has not been exercised by Callco, Canco shall pay or cause to be paid to the holders of the Exchangeable Shares the Liquidation Amount for each such Exchangeable Share upon presentation and surrender of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Canco and such additional documents, instruments and payments as the Transfer Agent and Canco may reasonably require, at the registered office of Canco or at any office of the Transfer Agent as may be specified by Canco by notice to the holders of the Exchangeable Shares. Payment of the Liquidation Amount for such Exchangeable Shares shall be made by transferring or causing to be transferred to each holder the RG Shares to which such holder is entitled and by delivering to such holder, on behalf of Canco, RG Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance) and a cheque of Canco payable at par at any branch of the bankers of Canco in respect of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Liquidation Date, the holders of the Exchangeable Shares shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Liquidation Amount without interest, unless payment of the total Liquidation Amount for such Exchangeable Shares shall not be made upon presentation and surrender of share certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Liquidation Amount has been paid in the manner hereinbefore provided. Canco shall have the right at any time after the Liquidation Date to transfer or cause to be issued or transferred to, and deposited with, the Agent the Liquidation Amount in respect of the Exchangeable Shares represented by certificates that have not at the Liquidation Date been surrendered by the holders thereof, such Liquidation Amount to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon such deposit being made, the rights of a holder of Exchangeable Shares after such deposit shall be limited to receiving its proportionate part of the Liquidation Amount for such Exchangeable Shares so deposited, without interest, and when received by the Agent, all dividends and other distributions with respect to the RG Shares to which such holder is entitled with a record date after the date of such deposit and before the date of transfer of such RG Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom) against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. |
(3) | After Canco has satisfied its obligations to pay the holders of the Exchangeable Shares the Liquidation Amount per Exchangeable Share pursuant to Section 5(1) of these share provisions, such holders shall not be entitled to share in any further distribution of the assets of Canco. |
6. | Retraction of Exchangeable Shares by Holder |
(1) | A holder of Exchangeable Shares shall be entitled at any time, subject to the exercise by Callco of the Retraction Call Right and otherwise upon compliance with, and subject to, the provisions of this Section 6, to require Canco to redeem any or all of the Exchangeable Shares registered in the name of such holder for an amount per share equal to the Current Market Price of a RG Share on the last business day prior to the Retraction Date plus the Dividend Amount (the “Retraction Price”), which shall be satisfied in full by Canco delivering or causing to be delivered to such holder one RG Share (which on issue will be admitted to listing and trading by the TSX and the NASDAQ Global Market (subject to official notice of issuance)) for each Exchangeable Share presented and surrendered by the holder together with, on the designated payment date therefor, the Dividend Amount. To effect such redemption, the holder shall present and surrender at the registered office of Canco or at any office of the Transfer Agent as may be specified by Canco by notice to the holders of Exchangeable Shares the certificate or certificates representing the Exchangeable Shares which the holder desires to have Canco redeem, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Canco and such additional documents, instruments and payments as the Transfer Agent and Canco may reasonably |
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require, and together with a duly executed statement (the “Retraction Request”) in the form of Schedule A hereto or in such other form as may be acceptable to Canco: |
(a) | specifying that the holder desires to have all or any number specified therein of the Exchangeable Shares represented by such certificate or certificates (the “Retracted Shares”) redeemed by Canco; | |
(b) | stating the business day on which the holder desires to have Canco redeem the Retracted Shares (the “Retraction Date”), provided that the Retraction Date shall be not less than 10 business days nor more than 15 business days after the date on which the Retraction Request is received by Canco and further provided that, in the event that no such business day is specified by the holder in the Retraction Request, the Retraction Date shall be deemed to be the 15th business day after the date on which the Retraction Request is received by Canco and subject also to Section 6(8); and | |
(c) | acknowledging the overriding right (the “Retraction Call Right”) of Callco to purchase all but not less than all the Retracted Shares directly from the holder and that the Retraction Request shall be deemed to be a revocable offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right on the terms and conditions set out in Section 6(3) hereof. |
(2) | Provided that Callco has not exercised the Retraction Call Right, upon receipt by Canco or the Transfer Agent in the manner specified in Section 6(1) of a certificate or certificates representing the number of Retracted Shares, together with a Retraction Request, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), Canco shall redeem the Retracted Shares effective at the close of business on the Retraction Date and shall transfer or cause to be issued or transferred to such holder the RG Shares to which such holder is entitled and shall comply with Section 6(4) hereof. If only a part of the Exchangeable Shares represented by any certificate is redeemed (or purchased by Callco pursuant to the Retraction Call Right), a new certificate for the balance of such Exchangeable Shares shall be issued to the holder at the expense of Canco. |
(3) | Subject to the provisions of this Section 6, upon receipt by Canco of a Retraction Request, Canco shall immediately notify Callco thereof and shall provide to Callco a copy of the Retraction Request. In order to exercise the Retraction Call Right, Callco must notify Canco of its determination to do so (the “Callco Call Notice”) within five business days of notification to Callco by Canco of the receipt by Canco of the Retraction Request. If Callco does not so notify Canco within such five business day period, Canco will notify the holder as soon as possible thereafter that Callco will not exercise the Retraction Call Right. If Callco delivers the Callco Call Notice within such five business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), the Retraction Request shall thereupon be considered only to be an offer by the holder to sell the Retracted Shares to Callco in accordance with the Retraction Call Right. In such event, Canco shall not redeem the Retracted Shares and Callco shall purchase from such holder and such holder shall sell to Callco on the Retraction Date the Retracted Shares for a purchase price (the “Purchase Price”) per share equal to the Retraction Price per share. To the extent that Callco pays the Dividend Amount in respect of the Retracted Shares, Canco shall no longer be obligated to pay any declared and unpaid dividends on such Retracted Shares. For the purpose of completing a purchase pursuant to the Retraction Call Right, on the Retraction Date, Callco shall transfer or cause to be issued or transferred to the holder of the Retracted Shares the RG Shares to which such holder is entitled. Provided that Callco has complied with the immediately preceding sentence and Section 6(4) hereof, the closing of the purchase and sale of the Retracted Shares pursuant to the Retraction Call Right shall be deemed to have occurred as at the close of business on the Retraction Date and, for greater certainty, no redemption by Canco of such Retracted Shares shall take place on the Retraction Date. In the event that Callco does not deliver a Callco Call Notice within such five business day period, and provided that the Retraction Request is not revoked by the holder in the manner specified in Section 6(7), Canco shall redeem the Retracted Shares on the Retraction Date and in the manner otherwise contemplated in this Section 6. |
(4) | Canco or Callco, as the case may be, shall deliver or cause the Transfer Agent to deliver to the relevant holder written evidence of the book entry issuance in uncertificated form of RG Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance and which on issue will be admitted to listing and trading by the TSX and the NASDAQ Global Market (subject to official notice of issuance)), and, if applicable and on or before the payment date therefor, a cheque payable at par at any branch of the bankers of Canco or Callco, as applicable, representing the aggregate Dividend Amount, in payment of the Retraction Price or the Purchase Price, as the case may be, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom, and such delivery of such RG Shares and cheques on behalf of Canco or by Callco, as the case may be, or by the Transfer Agent shall be deemed to be payment of and shall satisfy and discharge all liability for the Retraction Price or Purchase Price, as the case may be, to the extent |
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that the same is represented by such share certificates and cheques (plus any tax deducted and withheld therefrom and remitted to the proper tax authority). |
(5) | On and after the close of business on the Retraction Date, the holder of the Retracted Shares shall cease to be a holder of such Retracted Shares and shall not be entitled to exercise any of the rights of a holder in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Retraction Price or Purchase Price, as the case may be, without interest, unless upon presentation and surrender of certificates in accordance with the foregoing provisions, payment of the Retraction Price or the Purchase Price, as the case may be, shall not be made as provided in Section 6(4) hereof, in which case the rights of such holder shall remain unaffected until the Retraction Price or the Purchase Price, as the case may be, has been paid in the manner hereinbefore provided. On and after the close of business on the Retraction Date, provided that presentation and surrender of certificates and payment of the Retraction Price or the Purchase Price, as the case may be, has been made in accordance with the foregoing provisions, the holder of the Retracted Shares so redeemed by Canco or purchased by Callco shall thereafter be a holder of the RG Shares delivered to it. |
(6) | Notwithstanding any other provision of this Section 6, Canco shall not be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent that such redemption of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law. If Canco believes that on any Retraction Date it would not be permitted by any of such provisions to redeem the Retracted Shares tendered for redemption on such date, and provided that Callco shall not have exercised the Retraction Call Right with respect to the Retracted Shares, Canco shall only be obligated to redeem Retracted Shares specified by a holder in a Retraction Request to the extent of the maximum number that may be so redeemed (rounded down to a whole number of shares) as would not be contrary to such provisions and shall notify the holder and the Trustee at least two business days prior to the Retraction Date as to the number of Retracted Shares which will not be redeemed by Canco. In any case in which the redemption by Canco of Retracted Shares would be contrary to solvency requirements or other provisions of applicable law, Canco shall redeem Retracted Shares in accordance with Section 6(2) of these share provisions on a pro rata basis and shall issue to each holder of Retracted Shares a new certificate, at the expense of Canco, representing the Retracted Shares not redeemed by Canco pursuant to Section 6(2) hereof. If Canco would otherwise be obligated to redeem the Retracted Shares pursuant to Section 6(2) of these share provisions but is not obligated to do so as a result of solvency requirements or other provisions of applicable law, the holder of any such Retracted Shares not redeemed by Canco pursuant to this Article 6 as a result of solvency requirements or other provisions of applicable law shall be deemed by giving the Retraction Request to have instructed the Transfer Agent to require RG to purchase such Retracted Shares from such holder on the Retraction Date or as soon as practicable thereafter on payment by RG to such holder of the Purchase Price for each such Retracted Share, all as more specifically provided for in the Voting and Exchange Trust Agreement. |
(7) | A holder of Retracted Shares may, by notice in writing given by the holder to Canco before the close of business on the business day immediately preceding the Retraction Date, withdraw its Retraction Request, in which event such Retraction Request shall be null and void and, for greater certainty, the revocable offer constituted by the Retraction Request to sell the Retracted Shares to Callco shall be deemed to have been revoked. |
(8) | Notwithstanding any other provision of this Section 6, if: |
(a) | exercise of the rights of the holders of the Exchangeable Shares, or any of them, to require Canco to redeem any Exchangeable Shares pursuant to this Section 6 on any Retraction Date would require listing particulars or any similar document to be issued in order to obtain the approval of the TSX or the NASDAQ Global Market to the listing and trading (subject to official notice of issuance) of, the RG Shares that would be required to be delivered to such holders of Exchangeable Shares in connection with the exercise of such rights; and | |
(b) | as a result of (a) above, it would not be practicable (notwithstanding the reasonable endeavours of RG) to obtain such approvals in time to enable all or any of such RG Shares to be admitted to listing and trading by the TSX and the NASDAQ Global Market (subject to official notice of issuance) when so delivered, |
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7. | Redemption of Exchangeable Shares by Canco |
(1) | Subject to applicable law, and provided Callco has not exercised the Redemption Call Right, Canco shall on the Redemption Date redeem all but not less than all of the then outstanding Exchangeable Shares for an amount per share (the “Redemption Price”) equal to the Current Market Price of a RG Share on the last business day prior to the Redemption Date plus the Dividend Amount, which shall be satisfied in full by Canco causing to be delivered to each holder of Exchangeable Shares one RG Share for each Exchangeable Share held by such holder, together with an amount equal to the Dividend Amount. |
(2) | In any case of a redemption of Exchangeable Shares under this Section 7, Canco shall, at least 60 days before the Redemption Date (other than a Redemption Date established in connection with a RG Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event), send or cause to be sent to each holder of Exchangeable Shares a notice in writing of the redemption by Canco or the purchase by Callco under the Redemption Call Right, as the case may be, of the Exchangeable Shares held by such holder. In the case of a Redemption Date established in connection with a RG Control Transaction, an Exchangeable Share Voting Event or an Exempt Exchangeable Share Voting Event, the written notice of the redemption by Canco or the purchase by Callco under the Redemption Call Right will be sent on or before the Redemption Date, on as many days prior written notice as may be determined by the Board of Directors to be reasonably practicable in the circumstances. In any such case, such notice shall set out the formula for determining the Redemption Price or the Redemption Call Purchase Price, as the case may be, the Redemption Date and, if applicable, particulars of the Redemption Call Right. |
(3) | On or after the Redemption Date and provided that the Redemption Call Right has not been exercised by Callco, Canco shall pay or cause to be paid to the holders of the Exchangeable Shares to be redeemed the Redemption Price for each such Exchangeable Share, upon presentation and surrender at the registered office of Canco or at any office of the Transfer Agent as may be specified by Canco in such notice of the certificates representing such Exchangeable Shares, together with such other documents and instruments as may be required to effect a transfer of Exchangeable Shares under the CBCA and the Articles of Canco and such additional documents, instruments and payments as the Transfer Agent and Canco may reasonably require. Payment of the Redemption Price for such Exchangeable Shares shall be made by transferring or causing to be issued or transferred to each holder the RG Shares to which such holder is entitled and by delivering to such holder, on behalf of Canco, written evidence of the book entry issuance in uncertificated form of RG Shares (which shares shall be fully paid and shall be free and clear of any lien, claim or encumbrance), and, if applicable, a cheque of Canco payable at par at any branch of the bankers of Canco in payment of the Dividend Amount, in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom. On and after the Redemption Date, the holders of the Exchangeable Shares called for redemption shall cease to be holders of such Exchangeable Shares and shall not be entitled to exercise any of the rights of holders in respect thereof (including any rights under the Voting and Exchange Trust Agreement), other than the right to receive the Redemption Price without interest, unless payment of the Redemption Price for such Exchangeable Shares shall not be made upon presentation and surrender of certificates in accordance with the foregoing provisions, in which case the rights of the holders shall remain unaffected until the Redemption Price has been paid in the manner hereinbefore provided. Canco shall have the right at any time after the sending of notice of its intention to redeem the Exchangeable Shares as aforesaid to transfer or cause to be issued or transferred to, and deposited with, the Agent named in such notice the Redemption Price for the Exchangeable Shares so called for redemption, or of such of the said Exchangeable Shares represented by certificates that have not at the date of such deposit been surrendered by the holders thereof in connection with such redemption, less any amounts withheld on account of tax required to be deducted and withheld therefrom, such aggregate Redemption Price to be held by the Agent as trustee for and on behalf of, and for the use and benefit of, such holders. Upon the later of such deposit being made and the Redemption Date, the Exchangeable Shares in respect whereof such deposit shall have been made shall be redeemed and the rights of the holders thereof after such deposit or Redemption Date, as the case may be, shall be limited to receiving their proportionate part of the aggregate Redemption Price for such Exchangeable Shares, without interest, and when received by the Agent, all dividends and other distributions with respect to the RG Shares to which such holder is entitled with a record date after the later of the date of such deposit and the Redemption Date and before the date of transfer of such RG Shares to such holder (in each case less any amounts withheld on account of tax required to be deducted and withheld therefrom), against presentation and surrender of the certificates for the Exchangeable Shares held by them in accordance with the foregoing provisions. |
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8. | Purchase for Cancellation |
9. | Voting Rights |
10. | Specified Amount |
11. | Election under Subsection 191.2(1) |
12. | Amendment and Approval |
(1) | The rights, privileges, restrictions and conditions attaching to the Exchangeable Shares may be added to, changed or removed only with the approval of the holders of the Exchangeable Shares given as hereinafter specified. |
(2) | Any approval given by the holders of the Exchangeable Shares to add to, change or remove any right, privilege, restriction or condition attaching to the Exchangeable Shares or any other matter requiring the approval or consent of the holders of the Exchangeable Shares in accordance with applicable law shall be deemed to have been sufficiently given if it shall have been given in accordance with applicable law, subject to a minimum requirement that such approval be evidenced by resolution passed by not less than two-thirds of the votes cast on such resolution at a meeting of holders of Exchangeable Shares duly called and held at which the holders of at least 10% of the outstanding Exchangeable Shares at that time are present or represented by proxy; provided that if at any such meeting the holders of at least 10% of the outstanding Exchangeable Shares at that time are not present or represented by proxy within one-half hour after the time appointed for such meeting, then the meeting shall be adjourned to such date not less than five days thereafter and to such time and place as may be designated by the Chairman of such meeting. At such adjourned meeting the holders of Exchangeable Shares present or represented by proxy thereat may transact the business for which the meeting was originally called and a resolution passed thereat by the affirmative vote of not less than two-thirds of the votes cast on such resolution at such meeting shall constitute the approval or consent of the holders of the Exchangeable Shares. |
13. | Reciprocal Changes, etc. in Respect of RG Shares |
(1) | Each holder of an Exchangeable Share acknowledges that the Support Agreement provides, in part, that so long as any Exchangeable Shares not owned by RG or its affiliates are outstanding, RG will not without the prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions: |
(a) | issue or distribute RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) to the holders of all or substantially all of the then outstanding RG Shares by way of stock dividend or other distribution, other than an issue of RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) to holders of RG Shares (i) who exercise an option to receive dividends in RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or similar arrangement; | |
(b) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding RG Shares entitling them to subscribe for or to purchase RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares); or |
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(c) | issue or distribute to the holders of all or substantially all of the then outstanding RG Shares: |
(i) | shares or securities of RG of any class (other than RG Shares or securities convertible into or exchangeable for or carrying rights to acquire RG Shares); | |
(ii) | rights, options or warrants other than those referred to in Section 13(1)(b) above; | |
(iii) | evidence of indebtedness of RG; or | |
(iv) | assets of RG, |
(2) | Each holder of an Exchangeable Share acknowledges that the Support Agreement further provides, in part, that so long as any Exchangeable Shares not owned by RG or its affiliates are outstanding, RG will not without the prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions: |
(a) | subdivide, redivide or change the then outstanding RG Shares into a greater number of RG Shares; | |
(b) | reduce, combine, consolidate or change the then outstanding RG Shares into a lesser number of RG Shares; or | |
(c) | reclassify or otherwise change the RG Shares or effect an amalgamation, merger, reorganization or other transaction affecting the RG Shares, |
(3) | Notwithstanding the foregoing provisions of this Section 13, in the event of an RG Control Transaction: |
(a) | in which RG merges or amalgamates with, or in which all or substantially all of the then outstanding RG Shares are acquired by one or more other corporations to which RG is, immediately before such merger, amalgamation or acquisition, related within the meaning of theIncome Tax Act (Canada) (otherwise than virtue of a right referred to in paragraph 251(5)(b) thereof); | |
(b) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of the definition of such term in Section 1(1) of the share provisions; and | |
(c) | in which all or substantially all of the then outstanding RG Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) of another corporation (the “Other Corporation”) that, immediately after such RG Control Transaction, owns or controls, directly or indirectly, RG; |
14. | Actions by Canco under Support Agreement |
(1) | Canco will take all such actions and do all such things as shall be necessary to perform and comply with and to ensure performance and compliance by RG, Callco and Canco with all provisions of the Support Agreement applicable to |
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RG, Callco and Canco, respectively, in accordance with the terms thereof including taking all such actions and doing all such things as shall be necessary to enforce for the direct benefit of Canco all rights and benefits in favour of Canco under or pursuant to such agreement. |
(2) | Canco shall not propose, agree to or otherwise give effect to any amendment to, or waiver or forgiveness of its rights or obligations under, the Support Agreement without the approval of the holders of the Exchangeable Shares given in accordance with Section 12(2) of these share provisions other than such amendments, waivers and/or forgiveness as may be necessary or advisable for the purposes of: |
(a) | adding to the covenants of the other parties to such agreement for the protection of Canco or the holders of the Exchangeable Shares thereunder; | |
(b) | making such amendments or modifications not inconsistent with such agreement as may be necessary or desirable with respect to matters or questions arising thereunder which, in the good faith opinion of the Board of Directors, it may be expedient to make, provided that the Board of Directors shall be of the good faith opinion, after consultation with counsel, that such amendments and modifications will not be prejudicial to the interests of the holders of the Exchangeable Shares; or | |
(c) | making such changes in or corrections to such agreement which, on the advice of counsel to Canco, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error contained therein, provided that the Board of Directors shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. |
15. | Legend; Call Rights; Withholding Rights |
(1) | The certificates evidencing the Exchangeable Shares shall contain or have affixed thereto a legend in form and on terms approved by the Board of Directors, with respect to the Support Agreement, the provisions of the Plan of Arrangement relating to the Liquidation Call Right, the Redemption Call Right and the Change of Law Call Right, the Voting and Exchange Trust Agreement (including the provisions with respect to the voting rights and automatic exchange thereunder) and the Retraction Call Right. |
(2) | Each holder of an Exchangeable Share, whether of record or beneficial, by virtue of becoming and being such a holder shall be deemed to acknowledge each of the Liquidation Call Right, the Retraction Call Right and the Redemption Call Right, in each case, in favour of Callco, and the Change of Law Call Right in favour of RG and Callco, and the overriding nature thereof in connection with the liquidation, dissolution orwinding-up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, or the retraction or redemption of Exchangeable Shares, as the case may be, and to be bound thereby in favour of Callco as therein provided. |
(3) | Canco, Callco, RG and the Transfer Agent shall be entitled to deduct and withhold from any dividend, distribution or consideration otherwise payable to any holder of Exchangeable Shares such amounts as Canco, Callco, RG or the Transfer Agent is required to deduct and withhold with respect to such payment under theIncome Tax Act (Canada) or United States tax laws or any provision of provincial, territorial, state, local or foreign tax law, in each case, as amended. To the extent that amounts are so withheld, such withheld amounts shall be treated for all purposes hereof as having been paid to the holder of the Exchangeable Shares in respect of which such deduction and withholding was made, provided that such withheld amounts are actually remitted to the appropriate taxing Agency. To the extent that the amount so required to be deducted or withheld from any payment to a holder exceeds the cash portion of the consideration otherwise payable to the holder, Canco, Callco, RG and the Transfer Agent are hereby authorized to sell or otherwise dispose of such portion of the consideration as is necessary to provide sufficient funds to Canco, Callco, RG or the Transfer Agent, as the case may be, to enable it to comply with such deduction or withholding requirement and Canco, Callco, RG or the Transfer Agent shall notify the holder thereof and remit any unapplied balance of the net proceeds of such sale. |
16. | Notices |
(1) | Any notice, request or other communication to be given to Canco by a holder of Exchangeable Shares shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by telecopy or by delivery to the registered office of Canco and addressed to the attention of the Secretary of Canco. Any such notice, request or |
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other communication, if given by mail, telecopy or delivery, shall only be deemed to have been given and received upon actual receipt thereof by Canco. |
(2) | Any presentation and surrender by a holder of Exchangeable Shares to Canco or the Transfer Agent of certificates representing Exchangeable Shares in connection with the liquidation, dissolution orwinding-up of Canco or the retraction or redemption of Exchangeable Shares shall be made by first class mail (postage prepaid) or by delivery to the registered office of Canco or to such office of the Transfer Agent as may be specified by Canco, in each case, addressed to the attention of the Secretary of Canco. Any such presentation and surrender of certificates shall only be deemed to have been made and to be effective upon actual receipt thereof by Canco or the Transfer Agent, as the case may be. Any such presentation and surrender of certificates made by first class mail (postage prepaid) shall be at the sole risk of the holder mailing the same. |
(3) | Any notice, request or other communication to be given to a holder of Exchangeable Shares by or on behalf of Canco shall be in writing and shall be valid and effective if given by first class mail (postage prepaid) or by delivery to the address of the holder recorded in the register of shareholders of Canco or, in the event of the address of any such holder not being so recorded, then at the last known address of such holder. Any such notice, request or other communication, if given by mail, shall be deemed to have been given and received on the third business day following the date of mailing and, if given by delivery, shall be deemed to have been given and received on the date of delivery. Accidental failure or omission to give any notice, request or other communication to one or more holders of Exchangeable Shares shall not invalidate or otherwise alter or affect any action or proceeding to be taken by Canco pursuant thereto. |
(4) | In the event of any interruption of mail service immediately prior to a scheduled mailing or in the period following a mailing during which delivery normally would be expected to occur, Canco shall make reasonable efforts to disseminate any notice by other means, such as publication. Except as otherwise required or permitted by law, if post offices in Canada are not open for the deposit of mail, any notice which Canco or the Transfer Agent may give or cause to be given hereunder will be deemed to have been properly given and to have been received by holders of Exchangeable Shares if (i) it is given to the TSX for dissemination or (ii) it is published once in the national edition ofThe Globe and Mail and in the daily newspapers of general circulation in each of the French and English languages in the City of Montreal, provided that if the national edition ofThe Globe and Mail is not being generally circulated, publication thereof will be made in theNational Post or any other daily newspaper of general circulation published in the City of Toronto. |
17. | Disclosure of Interests in Exchangeable Shares |
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TO APPENDIX I
RETRACTION REQUEST
[TO BE PRINTED ON EXCHANGEABLE SHARE CERTIFICATES]
NOTE: | The Retraction Date must be a business day and must not be less than 10 business days nor more than 15 business days after the date upon which this notice is received by Canco. If no such business day is specified above, the Retraction Date shall be deemed to be the 15th business day after the date on which this notice is received by Canco. |
(Date) | (Signature of Shareholder) | (Guarantee of Signature) |
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NOTE: | This panel must be completed and this certificate, together with such additional documents and payments (including, without limitation, any applicable Stamp Taxes) as the Transfer Agent may require, must be deposited with the Transfer Agent. The securities and any cheque(s) resulting from the retraction or purchase of the Retracted Shares will be issued and registered in, and made payable to, respectively, the name of the shareholder as it appears on the register of Canco and the certificates for RG Shares and any cheque(s) resulting from such retraction or purchase will be delivered to such shareholder as indicated above, unless the form appearing immediately below is duly completed. |
Date: |
Are to be Registered, Issued or Delivered (please print):
Street Address or P.O. Box: |
Signature of Shareholder: |
City, Province and Postal Code: |
Signature Guaranteed by: |
NOTE: | If this Retraction Request is for less than all of the shares represented by this certificate, a certificate representing the remaining share(s) of Canco represented by this certificate will be issued and registered in the name of the shareholder as it appears on the register of Canco, unless the Share Transfer Power on the share certificate is duly completed in respect of such share(s). |
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Hypothetical Shareholder | Illustrative Foreign Exchange | |||||
Example | Elections Result in | Environment as of the Effective Date | ||||
1 | Maximum Aggregate Cash Consideration exceeded | |||||
2 | Maximum Aggregate Number of Shares exceeded | C$ / US$ exchange rate of 1.0588 (the exchange rate on December 14, 2009) | ||||
3 | Neither Maximum Aggregate Cash Consideration nor Maximum Aggregate Number of Shares are exceeded | |||||
4 5 | Maximum Aggregate Cash Consideration exceeded Maximum Aggregate Number of Shares exceeded | C$ / US$ exchange rate of 1.03 (hypothetical strengthening of the Canadian dollar relative to the US dollar) | ||||
6 7 | Maximum Aggregate Cash Consideration exceeded Maximum Aggregate Number of Shares exceeded | C$ / US$ exchange rate of 1.10 (hypothetical weakening of the Canadian dollar relative to the US dollar) | ||||
8 | Both Maximum Aggregate Cash Consideration and Maximum Aggregate Number of Shares are exceeded | C$ / US$ exchange rate of 0.90 (hypothetical strengthening of the Canadian dollar relative to the US dollar) |
(i) | if the cash election is above US$350,000,000 but the share election is below 7,750,000, pro ration first is applied using US$350,000,000 as the Maximum Aggregate Cash Consideration, and thus the Maximum Aggregate Number of Shares is 7,040,919; | |
(ii) | if the share election is above 7,750,000 but the cash election is below US$350,000,000, pro ration first is applied using 7,750,000 as the Maximum Aggregate Number of Shares, and thus the Maximum Aggregate Cash Consideration is US$313,985,761; | |
(iii) | if the cash election is above US$350,000,000 and the share election is above 7,750,000, the Maximum Number of Shares shall be the mid-point between 7,750,000 and 7,040,919, which is 7,395,459, and the corresponding Maximum Aggregate Cash Consideration shall thus be US$331,992,888 (calculated as shown below): |
% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 45,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 25,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
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Total IRC Shares | ||||||||||||||||
Under Cash Election: | 67,565,856 | x | C$7.45 | = | C$503,365,627 | = | US$475,411,435 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 33,000,000 | times | 0.1385 x | = | 4,570,500 Shares | |||||||||||
Total | 100,565,856 |
US$ | 350,000,000 | |||||||||
US$ | 475,411,435 | = | 0.7362044208 | or | 73.6% |
Deemed Election | ||||||||||||||||
(Per Proration) | Aggregate Elections After Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 73.6 | % | 26.4 | % | US$ | 236,037,113 | 1,664,780 | |||||||||
Group B | 58.9 | % | 41.1 | % | US$ | 103,602,624 | 1,423,214 | |||||||||
Group C | 29.4 | % | 70.6 | % | US$ | 10,360,262 | 488,571 | |||||||||
Group D | 0.0 | % | 100.0 | % | $0 | 3,462,500 | ||||||||||
Total | US$ | 350,000,000 | 7,039,065 | |||||||||||||
Per Share | US$ | 3.48 | 0.0700 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 548.47 | 3.65 | |||||
Group B | C$ | 438.78 | 5.69 | |||||
Group C | C$ | 219.39 | 9.77 | |||||
Group D | C$ | 0.00 | 13.85 |
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% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 20,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 50,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 42,565,856 | x | C$7.45 | = | C$317,115,627 | = | US$299,504,748 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 58,000,000 | times | 0.1385 x | = | 8,033,000 Shares | |||||||||||
Total | 100,565,856 |
7,750,000 | ||||||||||
8,033,000 | = | 0.9647703224 | or | 96.5% |
Deemed Election | ||||||||||||||||
(Per Proration) | Aggregate Elections After Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 100.0 | % | 0.0 | % | US$ | 144,706,864 | — | |||||||||
Group B | 80.7 | % | 19.3 | % | US$ | 141,964,777 | 668,103 | |||||||||
Group C | 42.1 | % | 57.9 | % | US$ | 14,816,191 | 400,862 | |||||||||
Group D | 3.5 | % | 96.5 | % | US$ | 12,394,272 | 6,681,034 | |||||||||
Total | US$ | 313,882,103 | 7,750,000 | |||||||||||||
Per Share | US$ | 3.12 | 0.0771 x |
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Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 745.00 | — | |||||
Group B | C$ | 601.25 | 2.67 | |||||
Group C | C$ | 313.75 | 8.02 | |||||
Group D | C$ | 26.25 | 13.36 |
% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 26,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 44,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 48,565,856 | x | C$7.45 | = | C$361,815,627 | = | US$341,722,353 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 52,000,000 | times | 0.1385 x | = | 7,202,000 Shares | |||||||||||
Total | 100,565,856 |
Deemed Election | ||||||||||||||||
(Per Proration) | Aggregate Elections After Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 100.0 | % | 0.0 | % | US$ | 186,924,468 | — | |||||||||
Group B | 80.0 | % | 20.0 | % | US$ | 140,725,349 | 692,500 | |||||||||
Group C | 40.0 | % | 60.0 | % | US$ | 14,072,535 | 415,500 | |||||||||
Group D | 0.0 | % | 100.0 | % | US$ | 0 | 6,094,000 | |||||||||
Total | US$ | 341,722,353 | 7,202,000 | |||||||||||||
Per Share | US$ | 3.40 | 0.0716 x |
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Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 745.00 | — | |||||
Group B | C$ | 596.00 | 2.77 | |||||
Group C | C$ | 298.00 | 8.31 | |||||
Group D | C$ | 0.00 | 13.85 |
% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 45,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 25,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 67,565,856 | x | C$7.45 | = | C$503,365,627 | = | US$488,704,492 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 33,000,000 | times | 0.1385 x | = | 4,570,500 Shares | |||||||||||
Total | 100,565,856 |
US$ | 350,000,000 | |||||||||
US$ | 488,704,492 | = | 0.7161792155 | or | 71.6% |
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Deemed Election | Aggregate Elections | |||||||||||||||
(Per Proration) | After First Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 71.6 | % | 28.4 | % | US$ | 236,037,113 | 1,791,156 | |||||||||
Group B | 57.3 | % | 42.7 | % | US$ | 103,602,624 | 1,478,684 | |||||||||
Group C | 28.6 | % | 71.4 | % | US$ | 10,360,262 | 494,118 | |||||||||
Group D | 0 | % | 100 | % | $0 | 3,462,500 | ||||||||||
Total | US$ | 350,000,000 | 7,226,459 |
Aggregate Elections After Proration | ||||||||
Cash | Shares | |||||||
Group A | US$ | 236,037,113 | 1,702,864 | |||||
Group B | US$ | 103,602,624 | 1,405,794 | |||||
Group C | US$ | 10,360,262 | 469,761 | |||||
Group D | $0 | 3,462,500 | ||||||
Total | US$ | 350,000,000 | 7,040,919 | |||||
Per Share | US$ | 3.48 | 0.0700 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 533.55 | 3.74 | |||||
Group B | C$ | 426.84 | 5.62 | |||||
Group C | C$ | 213.42 | 9.40 | |||||
Group D | C$ | 0.00 | 13.85 |
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% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 20,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 50,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 42,565,856 | x | C$7.45 | = | C$317,115,627 | = | US$307,879,250 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 58,000,000 | times | 0.1385 x | = | 8,033,000 Shares | |||||||||||
Total | 100,565,856 |
7,750,000 | ||||||||||
8,033,000 | = | 0.9647703224 | or | 96.5% |
Deemed Election | Aggregate Elections | |||||||||||||||
(Per Proration) | After First Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 100.0 | % | 0.0 | % | US$ | 148,753,036 | — | |||||||||
Group B | 80.7 | % | 19.3 | % | US$ | 145,934,277 | 668,103 | |||||||||
Group C | 42.1 | % | 57.9 | % | US$ | 15,230,469 | 400,862 | |||||||||
Group D | 3.5 | % | 96.5 | % | US$ | 12,740,830 | 6,681,034 | |||||||||
Total | US$ | 322,658,613 | 7,750,000 |
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Aggregate Elections After Proration | ||||||||
Cash | Shares | |||||||
Group A | US$ | 148,753,036 | — | |||||
Group B | US$ | 138,656,383 | 668,103 | |||||
Group C | US$ | 14,470,910 | 400,862 | |||||
Group D | US$ | 12,105,432 | 6,681,034 | |||||
Total | US$ | 313,985,761 | 7,750,000 | |||||
Per Share | US$ | 3.12 | 0.0771 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 745.00 | — | |||||
Group B | C$ | 571.26 | 2.67 | |||||
Group C | C$ | 298.10 | 8.02 | |||||
Group D | C$ | 24.94 | 13.36 |
% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 45,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 25,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 67,565,856 | x | C$7.45 | = | C$503,365,627 | = | US$457,605,116 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 33,000,000 | times | 0.1385 x | = | 4,570,500 Shares | |||||||||||
Total | 100,565,856 |
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US$ | 350,000,000 | |||||||||
US$ | 457,605,116 | = | 0.7648515894 | or | 76.5% |
Deemed Election | ||||||||||||||||
(Per Proration) | Aggregate Elections After Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 76.5 | % | 23.5 | % | US$ | 236,037,113 | 1,483,991 | |||||||||
Group B | 61.2 | % | 38.8 | % | US$ | 103,602,624 | 1,343,861 | |||||||||
Group C | 30.6 | % | 69.4 | % | US$ | 10,360,262 | 480,636 | |||||||||
Group D | 0.0 | % | 100.0 | % | $0 | 3,462,500 | ||||||||||
Total | US$ | 350,000,000 | 6,770,989 | |||||||||||||
Per Share | US$ | 3.48 | 0.0673 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 569.81 | 3.26 | |||||
Group B | C$ | 455.85 | 5.38 | |||||
Group C | C$ | 227.93 | 9.61 | |||||
Group D | C$ | 0.00 | 13.85 |
% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 20,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 50,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
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Total IRC Shares | ||||||||||||||||
Under Cash Election: | 42,565,856 | x | C$7.45 | = | C$317,115,627 | = | US$288,286,934 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 58,000,000 | times | 0.1385 x | = | 8,033,000 Shares | |||||||||||
Total | 100,565,856 |
7,750,000 | ||||||||||
8,033,000 | = | 0.9647703224 | or | 96.5% |
Deemed Election | ||||||||||||||||
(Per Proration) | Aggregate Elections After Proration | |||||||||||||||
% Cash | % Shares | Cash | Shares | |||||||||||||
Group A | 100.0 | % | 0.0 | % | US$ | 139,286,934 | — | |||||||||
Group B | 80.7 | % | 19.3 | % | US$ | 136,647,550 | 668,103 | |||||||||
Group C | 42.1 | % | 57.9 | % | US$ | 14,261,258 | 400,862 | |||||||||
Group D | 3.5 | % | 96.5 | % | US$ | 11,930,050 | 6,681,034 | |||||||||
Total | US$ | 302,125,792 | 7,750,000 | |||||||||||||
Per Share | US$ | 3.00 | 0.0771 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 745.00 | — | |||||
Group B | C$ | 601.25 | 2.67 | |||||
Group C | C$ | 313.75 | 8.02 | |||||
Group D | C$ | 26.25 | 13.36 |
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% Cash | % Shares | Shares in Group | ||||||||||
Group A | 100 | % | 0 | % | 20,565,856 | |||||||
Group B | 80 | % | 20 | % | 25,000,000 | |||||||
Group C | 40 | % | 60 | % | 5,000,000 | |||||||
Group D | 0 | % | 100 | % | 50,000,000 | |||||||
Total — Diluted Shares | 100,565,856 |
Total IRC Shares | ||||||||||||||||
Under Cash Election: | 42,565,856 | x | C$7.45 | = | C$317,115,627 | = | US$352,350,697 | |||||||||
Total IRC Shares | ||||||||||||||||
Under Stock Election: | 58,000,000 | times | 0.1385 x | = | 8,033,000 Shares | |||||||||||
Total | 100,565,856 |
Aggregate Elections After Proration | ||||||||
Cash | Shares | |||||||
Group A | US$ | 160,403,633 | — | |||||
Group B | US$ | 155,990,232 | 637,540 | |||||
Group C | US$ | 15,599,023 | 382,524 | |||||
Group D | $0 | 6,375,396 | ||||||
Total | US$ | 331,992,888 | 7,395,459 | |||||
Per Share | US$ | 3.30 | 0.0735 x |
Per 100 IRC Shares | ||||||||
Cash | Shares | |||||||
Group A | C$ | 701.96 | — | |||||
Group B | C$ | 561.56 | 2.55 | |||||
Group C | C$ | 280.78 | 7.65 | |||||
Group D | C$ | 0.00 | 12.75 |
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(a) | the Arrangement, with or without amendment, shall have been approved at the Target Special Meeting in accordance with the Interim Order; | |
(b) | 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 Target and Acquireco, acting reasonably, on appeal or otherwise; | |
(c) | the Acquireco Shares and Exchangeable Shares, issuable to the Target Shareholders pursuant to the Arrangement, shall have been approved for listing on the NASDAQ, subject to official notice of issuance, and conditionally approved for listing on the TSX, respectively; | |
(d) | there shall not be enacted or made any applicable Law that makes consummation of the Arrangement illegal or otherwise prohibited or enjoins Target or Acquireco from consummating the Arrangement and such applicable Law (if applicable) continues to be in effect through the Outside Date; | |
(e) | this agreement shall not have been terminated in accordance with its terms; and | |
(f) | the distribution of the Acquireco Shares and the Exchangeable Shares pursuant to the Arrangement and the first trade thereof shall be exempt from the prospectus and registration requirements of applicable Law either by virtue of exemptive relief from the applicable securities regulatory authorities or by virtue of applicable exemptions under applicable Law and shall not be subject to resale restrictions under applicable Law. |
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(a) | neither Acquireco nor Canco shall have failed to perform any of the obligations to be performed by it under this agreement on or prior to the Effective Time or, in the event of any failure, such failure is not Materially Adverse to Acquireco and its Subsidiaries, taken as a whole; | |
(b) | all waivers, consents, permits, orders and approvals of any Agency (including the Regulatory Approvals), and the expiry of any waiting periods (whether regulatory or contractual), the failure of which to obtain or receive, or the non-expiry of which, would or would reasonably be expected to be Materially Adverse to Target or Acquireco and their respective Subsidiaries, in each case taken as a whole, shall have been obtained, or received or shall have expired, as the case may be, and such waivers, consents, permits, orders and approvals shall be on terms that are not Materially Adverse to Target or Acquireco and their respective Subsidiaries, in each case taken as a whole; | |
(c) | the representations and warranties of Acquireco and Canco under this agreement shall be true and correct in all respects except where the failure of such representations and warranties to be true and correct would not reasonably be expected to be Materially Adverse to Acquireco and its Subsidiaries, taken as a whole, (provided that the representations and warranties of Acquireco and Canco in Section 5.C and paragraph (u) of Schedule G shall be true and correct in all respects) and Target shall have received a certificate of each of Acquireco and Canco addressed to Target and dated the Effective Date, signed on behalf of Acquireco by a senior officer of Acquireco (on Acquireco’s behalf and without personal liability), and signed on behalf of Canco by a senior officer of Canco (on Canco’s behalf and without personal liability) confirming the same as at the Effective Date; | |
(d) | there shall not have occurred, since the date of this agreement, any event, change, effect or development that individually or in the aggregate, has had a Materially Adverse effect on Acquireco and its Subsidiaries, taken as a whole; and | |
(e) | at the Effective Time Canco is a “taxable Canadian corporation” and not a “mutual fund corporation,” each within the meaning of the ITA. |
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(a) | Target shall not have failed to perform any of the obligations to be performed by it under this agreement on or prior to the Effective Date or, in the event of any failure, such failure is not Materially Adverse to Target and its Subsidiaries, taken as a whole; | |
(b) | the representations and warranties of Target under this agreement shall be true and correct in all respects except where the failure of such representations and warranties to be true and correct would not reasonably be expected to be Materially Adverse to Target and its Subsidiaries, taken as a whole, and Acquireco and Canco shall have received a certificate of Target addressed to Acquireco and Canco and dated the Effective Date, signed on behalf of Target by a senior officer of Target (on Target’s behalf and without personal liability) confirming the same as at the Effective Date; | |
(c) | there shall not have been delivered and not withdrawn notices of dissent with respect to the Arrangement in respect of more than 15% of the Target Shares; | |
(d) | there shall not have occurred, since the date of this agreement, any event, change, effect or development that individually or in the aggregate, has had a Materially Adverse effect on Target and its Subsidiaries, taken as a whole; | |
(e) | all waivers, consents, permits, orders and approvals of any Agency (including the Regulatory Approvals), and the expiry of any waiting periods (whether regulatory or contractual), the failure of which to obtain or receive, or the non-expiry of which, would or would reasonably be expected to be Materially Adverse to Target or Acquireco and their respective Subsidiaries, in each case taken as a whole, shall have been obtained, or received or shall have expired, as the case may be, and such waivers, consents, permits, orders and approvals shall be on terms that are not Materially Adverse to Target or Acquireco and their respective Subsidiaries, in each case taken as a whole; and | |
(f) | the Debentureholders shall have provided approval under the Target Trust Indenture to the consummation of the Arrangement and no event of default shall have occurred under the Target Trust Indenture prior to, or be occurring as of, the Effective Time. |
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(a) | Organization, Standing and Corporate Power. Each of Target and each of its Subsidiaries is a corporation, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite power and authority to own its assets and conduct its business as currently owned and conducted. Each of Target and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary. Target has made available for review by Acquireco complete and correct copies of its Articles of Continuance and By-Laws and the certificates of incorporation and bylaws or comparable organization documents of the Subsidiaries of Target, in each case as amended to the date of this agreement. Target is not in violation of any provision of its Articles of Continuance or By-Laws, and no Subsidiary of Target is in violation of any provisions of its certificate of incorporation, by-laws or comparable organizational documents. | |
(b) | Target Subsidiaries. Section (b) of the Target Disclosure Statement lists each Subsidiary of Target and the ownership or interest therein of Target. All the outstanding shares of capital stock of each such Subsidiary have been validly issued and are fully paid and non-assessable and, except as set forth in Section (b) of the Target Disclosure Statement, are owned by Target, by another Subsidiary of Target or by Target and another Subsidiary of Target, free and clear of all pledges, claims, liens, charges, mortgages, deeds of trust, net profit interests, net smelter returns, royalties, overriding royalty interests, other payments out of production, other burdens, security interests and other encumbrances of any kind or nature whatsoever held by third parties (collectively, “Liens”). Except for the capital stock of the Subsidiaries of Target and except for the ownership interests set forth in Section (b) of the Target Disclosure Statement, Target does not own, directly or indirectly, any capital stock or other ownership interest. | |
(c) | Capitalization. The authorized capital (the “Authorized Capital”) and issued capital of Target is as set out in the recitals to this agreement. Except as set forth above, there are no shares of capital stock or other voting securities of Target issued, reserved for issuance or outstanding. Except as set forth in Section (c) of the Target Disclosure Statement, there are not any bonds, debentures, notes or other indebtedness of Target having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Target must vote. Except as set forth above and except as set forth in Section (c) of the Target Disclosure Statement, as of the date of this agreement, there are not any options, warrants, puts, calls, rights, commitments, agreements, arrangements or undertakings of any kind (collectively, “Options”) to which Target or any of its Subsidiaries is a party or by which any of them is bound relating to the issued or unissued capital stock of Target or any of its Subsidiaries, or obligating Target or any of its Subsidiaries to issue, transfer, grant, sell or pay for or repurchase any shares of capital stock or other equity interests in, or securities convertible or exchangeable for any capital stock or other equity interests in, Target or any of its Subsidiaries or obligating Target or any of its Subsidiaries to issue, grant, extend or enter into any such Options. All shares of Target’s capital stock that are subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. The issuance and sale of all of the shares of capital stock described in this Section (c) of Schedule F have been in compliance with all Laws. Target has previously provided Acquireco with a schedule setting forth the names of, and the number of shares of each class (including the number of shares issuable upon exercise of Target Options and the exercise price and vesting schedule with respect thereto) and the number of options held by, all holders of Target Options. Section (c) of the Target Disclosure Statement sets forth the average exercise price for outstanding Target Options. Except as set forth in Section (c) of the Target Disclosure Statement, Target has not agreed to register any securities under any securities Laws or granted registration rights to any person or entity; copies of all such agreements have previously been made available to Acquireco. Except as set forth above and in Section (c) of the Target Disclosure Statement, as of the date of this agreement, there are not any outstanding contractual obligations or other requirements of Target or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Target or any of its Subsidiaries, or provide funds to or make any investment (in the form of a |
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loan, capital contribution or otherwise) in, any Subsidiary of Target or any other person. Without limiting the generality of the foregoing, there are no stock appreciation rights, phantom equity or similar rights, agreements, arrangements or commitments based upon the book value, income or any other attribute of Target or any of its Subsidiaries. |
(d) | Authority; Non-Contravention. |
(i) | Target has all requisite corporate power and corporate authority to enter into this agreement and, subject to the Target Securityholder Approval, to consummate the Transactions and to perform its obligations under this agreement. On December 16, 2009, the board of directors of Target unanimously approved this agreement and the Transactions and resolved to recommend to Target Shareholders that Target Shareholders give the Target Securityholder Approval. The execution and delivery of this agreement by Target and the consummation by Target of the Transactions have been duly authorized by all necessary corporate action on the part of Target, subject to the Target Securityholder Approval. No other corporate proceedings on the part of Target or any of its Subsidiaries are necessary to authorize this agreement, the performance by Target of its obligations under this agreement and, subject to the Target Securityholder Approval, the Transactions. This agreement has been duly executed and delivered by Target and constitutes a valid and binding obligation of Target, enforceable by Acquireco against Target and each of its Subsidiaries in accordance with its terms, subject to the availability of equitable remedies and the enforcement of creditors’ rights generally. The execution and delivery of this agreement does not, and the consummation of the Transactions and compliance with the provisions of this agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of first refusal, consent, termination, buyback, purchase, cancellation or acceleration of any obligation or to loss of any property, rights or benefits under, or result in the imposition of any additional obligation under, or result in the creation of any Lien upon any of the properties or assets of Target or any of its Subsidiaries under, (i) the Articles of Continuance or By-Laws of Target or the comparable organization documents of any of its Subsidiaries; (ii) any contract, royalty, instrument, permit, concession, franchise, license, loan or credit agreement, note, bond, mortgage, indenture, lease or other property agreement, partnership or joint venture agreement or other legally binding agreement, arrangement or understanding whether oral or written (a “Contract”), to which Target or any of its Subsidiaries is a party or by which any of them or their respective properties or assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law applicable to Target or any of its Subsidiaries or their respective properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any Agency, is required by or with respect to Target or any of its Subsidiaries in connection with the execution and delivery of this agreement by Target or the consummation by Target of the Transactions, except for (i) the filing with the applicable securities regulatory Agencies of the Target Circular, (ii) any approvals required by the Interim Order and the Final Order, (iii) filings with the Director under the CBCA and (iv) such other consents, approvals, orders, authorizations, registrations, declarations and filings as are set forth in Section (d) of the Target Disclosure Statement. | |
(ii) | Each of Target and its Subsidiaries possesses all certificates, franchises, licenses, permits, grants, easements, covenants, certificates, orders, authorizations and approvals issued to or granted by Agencies or other third parties (collectively, “Permits”) necessary to conduct its business as such business is currently conducted or is expected to be conducted following completion of the Transaction, except where the failure to possess such Permits would not be Materially Adverse to the Target and its Subsidiaries. Except as set forth in Section (d) of the Target Disclosure Statement, (i) all such Permits are validly held by Target or its Subsidiaries, and Target and its Subsidiaries have complied in all respects with all terms and conditions thereof, (ii) none of such Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this agreement or the consummation of the Transactions, and (iii) since December 31, 2008, neither Target nor any of its Subsidiaries has received any written notice, notice of violation or probable violation, notice of revocation, or other written communication from or on behalf of any Agency, alleging (A) any violation of such Permit, or (B) that Target or any of its Subsidiaries requires any Permit required for its business as such business is currently conducted, that is not currently held by it. |
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(e) | Publicly Filed Documents; Undisclosed Liabilities. Target has filed all required reports, schedules, forms, statements and other documents (including documents incorporated by reference) with the applicable security regulatory Agencies since January 1, 2006 (the “Target Public Disclosure Documents”). As of its date, each Target Public Disclosure Document complied in all material respects with the requirements of all applicable securities Law. None of the Target Public Disclosure Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the extent that such statements have been modified or superseded by a later-filed Target Public Disclosure Document. The consolidated financial statements of Target included in the Target Public Disclosure Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the applicable securities regulatory Agencies with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Target as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except (i) as and to the extent disclosed, reflected or reserved against on the balance sheet or the notes thereto of Target as of December 31, 2008 included in the Filed Target Public Disclosure Documents, as incurred after the date thereof in the ordinary course of business consistent with past practice and prohibited by this agreement or (ii) as set forth in Section (e) of the Target Disclosure Statement, Target does not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have had or would reasonably be expected to have a Materially Adverse effect on Target and its Subsidiaries, taken as a whole. Except as set forth in Section (e) of the Target Disclosure Statement, none of Target or its Subsidiaries is subject to the informational reporting requirements of, or required to file any form or other document with, any securities regulatory Agency (including any stock exchange). | |
(f) | Information Supplied. None of the information supplied or to be supplied by Target or its Subsidiaries for inclusion or incorporation by reference in the Target Circular or any other filings relating to the Transactions will, at the date the Target Circular is first mailed to Target Securityholders, or at the time of the Target Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading. The Target Circular will comply as to form in all material respects with the requirements of applicable securities Law, except that no representation or warranty is made by Target with respect to statements made or incorporated by reference therein based on information supplied by Acquireco for inclusion or incorporation by reference in the Target Circular. | |
(g) | Absence of Certain Changes or Events. Except as disclosed in the Target Public Disclosure Documents filed and publicly available prior to the date of this agreement (the “Filed Target Public Disclosure Documents”), since January 1, 2009, Target has conducted, and caused each of its Subsidiaries to conduct, its business only in the ordinary course and: |
(i) | there has not been any event, change, effect or development (including any decision to implement such a change made by the board of directors of Target or any of its Subsidiaries in respect of which senior management believes that confirmation of the board of directors is probable), which, individually or in the aggregate, has had, or would reasonably be expected to have, a Materially Adverse effect on Target and its Subsidiaries, taken as a whole; | |
(ii) | there has not been, except for regular annual dividends not in excess of $0.04 per Target Share, with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Target Shares; | |
(iii) | there has not been any split, combination or reclassification of any Authorized Capital of Target or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for shares of Authorized Capital of Target; | |
(iv) | there has not been, except as disclosed in Section (g) of the Target Disclosure Statement, (A) any granting by Target or any of its Subsidiaries to any officer of Target or any of its Subsidiaries of any increase in or acceleration of compensation, (B) any granting by Target or any of its Subsidiaries to any |
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such officer of any increase in severance or termination pay, or (C) any entry by Target or any of its Subsidiaries into any employment, severance or termination agreement with any such officer; |
(v) | there has not been any change in accounting methods, principles or practices by Target or any of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP or as set forth in Section (g) of the Target Disclosure Statement; | |
(vi) | neither Target nor any of its Subsidiaries has engaged in any action which, if done after the date of this agreement, would violate Section 5(a) of this agreement, except as set forth in Section (g) of the Target Disclosure Statement; and | |
(vii) | no liability or obligation of any nature (whether absolute, accrued, contingent or otherwise) that is Materially Adverse to Target and its Subsidiaries, taken as a whole, has been incurred other than in the ordinary course of business consistent with past practice, except as set forth in Section (g) of the Target Disclosure Statement. |
(h) | Disclosure. Target has not failed to disclose to Acquireco in writing any information known to Target regarding any event, circumstance or action taken or failed to be taken that is Materially Adverse to Target and its Subsidiaries, taken as a whole. Without limiting the generality of the foregoing, except as has been disclosed in Section (h) of the Target Disclosure Statement: |
(i) | there are no severance and employment agreements with respect to current or former employees of Target or any of its Subsidiaries or any bonus or incentive arrangements with respect to such employees that may require payments as a result of the Transactions; | |
(ii) | Target and its Subsidiaries do not have liabilities or obligations in excess of the liabilities or obligations reflected or reserved against in the financial statements contained in the Filed Target Public Disclosure Documents that, either individually or in the aggregate, are Materially Adverse to Target and its Subsidiaries, taken as a whole; | |
(iii) | none of Target or any of its Subsidiaries or any of their properties is subject to a judgement, order or decree that is Materially Adverse to Target and its Subsidiaries, taken as a whole; and | |
(iv) | the data or information made available to Acquireco in respect of Target and its Subsidiaries (including any information disclosed in writing), was materially complete and, to the knowledge of Target, correct in all material respects and, did not, at the time it was made available and for the period of and matter to which it relates, and to the knowledge of Target, contain any untrue statement of material fact. |
(i) | Compliance. Except for any conflicts, defaults or violations that would not, individually or in the aggregate (taking into account the impact of any cross-defaults), reasonably be expected to result in a Materially Adverse effect on Target and its Subsidiaries, taken as a whole, each of Target and its Subsidiaries has complied with, and is not in conflict with, or in default (including cross defaults) under or in violation of: |
(i) | its articles or other organizational documents or by-laws; | |
(ii) | any Law or Permit applicable to it, its business or operations or by which any of its properties or assets is bound or affected; or | |
(iii) | any agreement, arrangement or understanding to which it, its business or operations or by which any of its properties or assets is bound or affected. |
(j) | Restrictions on Business Activities. There is no agreement, judgement, injunction, order or decree binding upon Target or any of its Subsidiaries that has, or would reasonably be expected to have, the effect of prohibiting, restricting or impairing any business practice of Target or any of its Subsidiaries, any acquisition of property or royalties by Target or any of its Subsidiaries or the conduct of business by any of them as currently conducted (including following the Arrangement) other than such agreements, judgements, injunctions, orders or decrees which are not, individually or in the aggregate, Materially Adverse to Target and its Subsidiaries, taken as a whole. | |
(k) | Contracts. Section (k) of the Target Disclosure Statement lists all material Contracts to which Target or any of its Subsidiaries is a party including those Contracts which fall within any of the following categories: |
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(a) Contracts not entered into in the ordinary course of Target’s business; (b) royalty, joint venture, partnership and similar agreements; (c) Contracts containing covenants purporting to limit the freedom of Target or any of its Subsidiaries to compete in any line of business in any geographic area, to hire any individual or group of individuals or to acquire any business, entity or the assets thereof; (d) Contracts which after the Effective Time of the Transactions would have the effect of limiting the freedom of Acquireco or its Subsidiaries (other than Target and its Subsidiaries) to compete in any line of business in any geographic area, to hire any individual or group of individuals or to acquire any business, entity or the assets thereof; (e) Contracts which contain minimum purchase conditions or requirements or other terms that restrict or limit the purchasing relationships of Target or any of its Subsidiaries other than in the ordinary course of business; (f) Contracts involving annual revenues or expenditures to the business of Target or any of its Subsidiaries in excess of $100,000; (g) Contracts containing any rights on the part of any party, including joint venture partners or other entities, to acquire royalty, mining or other property rights from Target or any of the Subsidiaries; and (i) Contracts that require Target or any of its Subsidiaries to provide indemnification to any other person. All Contracts are valid and binding obligations of Target or any of its Subsidiaries and, to the knowledge of Target, the valid and binding obligation of each other party thereto and are enforceable by Target or its applicable Subsidiary in accordance with their respective terms, and the Target or its applicable Subsidiary is entitled to all rights and benefits thereunder, except for such Contracts which if not so valid and binding would not, individually or in the aggregate, have a Materially Adverse effect on Target and its Subsidiaries, taken as a whole. Neither Target nor, to the knowledge of Target, any other party thereto is in violation of or in default in respect of, nor has there occurred an event or condition which with the passage of time or giving of notice (or both) would constitute a default under or entitle any party to terminate, accelerate, modify or call a default under, or trigger any pre-emptive rights or rights of first refusal under, any such Contract except such violations or defaults under such Contracts, which, individually or in the aggregate, would not have a Materially Adverse effect on Target and its Subsidiaries, taken as a whole. |
(l) | Tax Matters. |
(i) | Target and each of its Subsidiaries have timely filed, or caused to be timely filed with the appropriate Agency, all Tax Returns required to be filed by them, and have timely paid, or caused to be timely paid, all material amounts of Taxes due and payable by them, including all instalments on account of any Taxes, except for any such failure to file or failure to pay which would not individually or in the aggregate, have a Materially Adverse effect on Target. All such Tax Returns are true, correct and complete in all material respects and have been completed in accordance with applicable Laws. To the best of Target’s knowledge, no such Tax Return contains any misstatement or omits any statement that should have been included therein. No Tax Return has been amended. | |
(ii) | Reserves and provisions for Taxes accrued but not yet due on or before the Effective Date as reflected in Target’s financial statements contained in the Filed Target Public Disclosure Documents are adequate as of the date of such financial statements, in accordance with GAAP. No deficiencies for Taxes have been proposed, asserted or assessed against Target that are not adequately reserved against. | |
(iii) | Neither Target nor any of its Subsidiaries has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by the CRA, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns filed or required to be filed, which would, individually or in the aggregate, have a Materially Adverse effect on Target. | |
(iv) | No unresolved assessments, reassessments, audits, claims, actions, suits, proceedings, or investigations exist or have been initiated with regard to any Taxes or Tax Returns of Target or its Subsidiaries. To the knowledge of Target, no assessment, reassessment, audit or investigation by any Agency is underway, threatened or imminent with respect to Taxes for which Target or any of its Subsidiaries may be liable, in whole or in part. | |
(v) | No election, consent for extension, nor any waiver that extends any applicable statute of limitations relating to the determination of a Tax liability of Target or any of its Subsidiaries has been filed or entered into and is still effective. | |
(vi) | Target and each of its Subsidiaries have duly and timely collected all amounts on account of any goods, services, sales, value added, transfer or other Taxes required to have been collected by it and have duly |
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set aside in trust or timely remitted to the appropriate Agency any and all such amounts required to be remitted by it. |
(vii) | Target has made available to Acquireco or its legal counsel or accountants true and complete copies of all Tax Returns for (and non privileged studies and opinions related thereto) Target and each of its Subsidiaries for each such entity’s last three taxable years. | |
(viii) | Target and each of its Subsidiaries is, and at all times has filed its Tax Returns on the basis that it is, resident for Tax purposes in its country of incorporation or formation and has not at any time been treated by any Agency as resident in any other country for any Tax purpose (including any treaty, convention or arrangement for the avoidance of double taxation). None of Target or any of its Subsidiaries has filed any Tax Return on the basis that it is subject to Tax in any jurisdiction other than its country of incorporation or formation (and political subdivisions thereof) or received written notification from any Agency that it may be required to file on such basis. | |
(ix) | Target and each of its Subsidiaries have properly withheld and remitted all amounts required to be withheld and/or remitted (including income tax, non-resident withholding tax, Canada Pension Plan contributions, Employment Insurance and Worker’s Compensation premiums) and have paid such amounts due to the appropriate authority on a timely basis and in the form required under the appropriate legislation. | |
(x) | There are no Tax liens on any assets of Target or any of its Subsidiaries except for Taxes not yet currently due and those which would not reasonably be expected to have a Materially Adverse effect on Target and its Subsidiaries considered as a whole. | |
(xi) | None of sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the ITA, or any equivalent provision of the tax legislation of any province or any other jurisdiction, have applied or will apply to Target or any of its Subsidiaries at any time up to and including the Effective Time. | |
(xii) | “Tax” and “Taxes” means, with respect to any person, all income taxes (including any tax on or based upon net income, gross income, income as specially defined, earnings profits or selected items of income, earnings or profits) and all capital taxes, gross receipts taxes, environmental taxes, sales taxes, use taxes, ad valorem taxes, value added taxes, transfer taxes, franchise taxes, license taxes, withholding taxes or other withholding obligations, payroll taxes, employment taxes, Canada or Quebec Pension Plan premiums, excise, severance, social security premiums, workers’ compensation premiums, unemployment insurance or compensation premiums, stamp taxes, occupation taxes, premium taxes, property taxes, windfall profits taxes, alternative or add-on minimum taxes, goods and services tax, customs duties or other taxes of any kind whatsoever, and any interest and any penalties or additional amounts imposed by any taxing authority (domestic or foreign) on such person or for which such person is responsible, and any interest, penalties, additional taxes, additions to tax or other amounts imposed with respect to the foregoing, and includes any items described above attributable to another person in respect of which the first person or any Subsidiary of such first person is liable to pay by Law, Contract or otherwise, whether or not disputed. “Tax Returns” means returns, reports and forms (including schedules thereto) required to be filed with any Agency of Canada or the United States or any provincial, state or local Agency therein or any other jurisdiction responsible for the imposition or collection of Taxes. | |
(xiii) | For purposes of this Section (l), the term “material amount of Taxes” shall mean an amount of Taxes that is material to Target and its Subsidiaries taken as a whole. |
(m) | Real Property. Neither Target nor any of its Subsidiaries holds any interests in any real property. | |
(n) | Intellectual Property. Except as otherwise provided in Section (n) of the Target Disclosure Statement, Target and its Subsidiaries own all right, title and interest in, or possesses the lawful right to use or has a currently pending application for all patents, patent applications, registered and common law trademarks (including applications therefor), service marks, trade names, copyright applications, copyrights, trade secrets, know-how, computer software, production technology, proprietary technology and other intellectual property and proprietary rights used in or necessary to conduct the business. Additionally: |
(i) | Target is not aware of any infringement of any such intellectual property by any third party; and |
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(ii) | the conduct of the business of Target and its Subsidiaries has not, and will not, cause Target or any of its Subsidiaries to infringe or violate any of the patents, trademarks, service marks, trade names, copyrights, trade secrets, proprietary rights, computer software rights or licences or other intellectual property of any other person and neither Target nor any of its Subsidiaries has received any written or oral claim or notice of infringement or potential infringement of the intellectual property of any other person arising out of the conduct of Target and its Subsidiaries and, in particular Target or the applicable Subsidiary has complied with any licence respecting intellectual property held by Target and its Subsidiaries. |
(o) | Employment Matters. |
(i) | Except as to matters otherwise specifically disclosed in Section (o) of the Target Disclosure Statement, none of Target or its Subsidiaries is a party to any agreement, obligation or understanding providing for severance or termination payments to, or any employment agreement with, any director, consultant, employee or officer, other than any common law obligations of reasonable notice of termination or pay in lieu thereof and any statutory obligations. | |
(ii) | None of Target or any of its Subsidiaries had or has any labour contracts, collective bargaining agreements or employment or consulting agreements with any persons employed by Target or any persons otherwise performing services primarily for Target or any of its Subsidiaries (the “Business Personnel”). Neither Target nor any of its Subsidiaries has engaged in any unfair labour practice with respect to the Business Personnel since January 1, 2006 and there is no unfair labour practice complaint pending or, to the knowledge of Target, threatened, against Target or any of its Subsidiaries with respect to the Business Personnel. There is no labour strike, dispute, slowdown or stoppage pending or, to the knowledge of Target, threatened against Target or any of its Subsidiaries, and neither Target nor any of its Subsidiaries has experienced any labour strike, dispute, slowdown or stoppage or other labour difficulty involving the Business Personnel since January 1, 2006. | |
(iii) | None of Target or its Subsidiaries is subject to any litigation, actual or, to the knowledge of Target, threatened, relating to employment or termination of employment of employees or independent contractors, other than those claims or litigation as would, individually or in the aggregate, not be Materially Adverse to Target and its Subsidiaries, taken as a whole. | |
(iv) | Target and each of its Subsidiaries 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 and labour relations and there are no current, pending or, to the knowledge of Target, threatened proceedings before any Agency with respect to any of the above. |
(p) | Pension and Employee Benefits. |
(i) | Section (p) of the Target Disclosure Statement includes a complete list of all employee benefit, health, welfare, supplemental unemployment benefit, bonus, pension, profit sharing, deferred compensation, stock option, stock compensation, stock purchase, retirement, hospitalization insurance, medical, dental, legal, disability and similar plans or arrangements or practices, whether written or oral, which are maintained by Target or any of its Subsidiaries, including all Employee Benefit Plans and Material Employment Agreements (collectively, the “Target Plans”). | |
(ii) | To Target’s knowledge, no step has been taken, no event has occurred and no condition or circumstance exists that has resulted, or would reasonably be expected to result, in any Target Plan being ordered or required to be terminated or wound up in whole or in part or having its registration under applicable Laws refused or revoked, or being placed under the administration of any trustee or receiver or Agency or being required to pay any material Taxes, penalties or levies under applicable Laws. To Target’s knowledge, there are no actions, suits, claims (other than routine claims for payment of benefits in the ordinary course), trials, demands, investigations, arbitrations or other proceedings which are pending or threatened in respect of any of the Target Plans or their assets which, individually or in the aggregate, are Materially Adverse to Target and its Subsidiaries, taken as a whole. | |
(iii) | All of the Target Plans are in compliance in all material respects with all applicable Laws and their terms, and all of the Target Plans are fully insured or fully funded on a projected benefit obligation basis. |
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(iv) | None of the Target Plans is a Multiemployer Plan nor has Target or any of its Subsidiaries been obligated to contribute to any Multiemployer Plan at any time within the past five years. | |
(v) | Without limiting the generality of the foregoing with respect to each Target Plan: |
(A) | Target has delivered or made available to Acquireco a true, correct and complete copy of: (i) each writing constituting a part of such Plan, including all plan documents, employee communications, benefit schedules, trust agreements, and insurance contracts and other funding vehicles; (ii) the most recent Annual Report (Form 5500 Series) and accompanying schedule, if any, (iii) the current summary plan description and any material modifications thereto, if any (in each case, whether or not required to be furnished under ERISA); (iv) the most recent annual financial report, if any; (v) the most recent actuarial report, if applicable; and (vi) the most recent determination letter from the Internal Revenue Service, if any. Target has delivered or made available to Acquireco a true, complete and correct copy of each Material Employment Agreement. Except as specifically provided in the foregoing documents delivered or made available to Acquireco, there are no amendments to any Plan or Material Employment Agreement that have been adopted or approved nor has Target or any of its Subsidiaries undertaken to make any such amendments or to adopt or approve any new Plan or Material Employment Agreement. | |
(B) | Section (p) of the Target Disclosure Statement identifies each Plan that is intended to be a “qualified plan” within the meaning of Section 401(a) of the Code (“Qualified Plans”). The Internal Revenue Service has issued a favorable determination letter with respect to each Qualified Plan and the related trust that has not been revoked, and there are no circumstances and no events have occurred that would adversely affect the qualified status of any Qualified Plan or the related trust. Section (p) of the Disclosure Statement identifies each Plan which is intended to meet the requirements of Section 501(c)(9) of the Code, and each such plan meets such requirements and provides no disqualified benefits (as such term is defined in Code Section 4976(b)). | |
(C) | Section (p) of the Target Disclosure Statement sets forth a list of all Employee Benefit Plans or Employment Agreements under which the execution and delivery of this agreement, shareholders approval of the Transactions or the consummation of the Transactions would (either alone or in conjunction with any other event) (i) result in, cause the accelerated vesting, funding or delivery of, or increase the amount of value of, any payment or benefit to any employee, consultant, officer or director of Target or any of its Subsidiaries, or would limit the right of Target or any of its Subsidiaries to amend, merge, terminate or receive a reversion of assets from any Employee Benefit Plan or related trust or any Material Employment Agreement or related trust, or (ii) result in an “excess parachute payment” within the meaning of Section 280G of the Code. | |
(D) | There are no pending or threatened claims (other than claims for benefits in the ordinary course), lawsuits or arbitrations which have been asserted or instituted, and to Target’s knowledge, no set of circumstances exists which may reasonably give rise to a claim or lawsuit, against the Plans, any fiduciaries thereof with respect to their duties to the Plans or the assets of any of the trusts under any of the Plans which would reasonably be expected to result in any material liability of Target or any of its Subsidiaries to the PBGC, the Department of Treasury, the Department of Labor, any Multiemployer Plan, any Plan or any participant in a Plan. | |
(E) | Target, its Subsidiaries and each member of their respective business enterprises has complied with theWorker Adjustment and Retraining Notification Act and all similar state, local and foreign Laws, so as not to incur any liabilities thereunder. | |
(F) | All Employee Benefit Plans subject to the Laws of any jurisdiction outside of the United States (i) have been maintained in accordance with all applicable requirements, (ii) if they are intended to qualify for special Tax treatment, meet all requirements for such treatment, and (iii) if they are intended to be funded and/or book-reserved, are fully funded and/or book-reserved on a projected obligation basis, as appropriate, based upon reasonable actuarial assumptions. | |
(G) | Each individual who renders services to Target or any of its Subsidiaries who is classified by Target or such Subsidiary, as applicable, as having the status of an independent contractor or other |
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non-employee status for any purpose (including for purposes of taxation and Tax reporting and under Employee Benefit Plans) is properly so characterized. |
(H) | On or before the date hereof, Target has caused each grantor trust providing for funding of amounts payable pursuant to any Plans and/or Employment Agreements to be amended to ensure that no amounts are required to be contributed thereto as a result of the execution and delivery of this agreement, the announcement hereof, and/or the announcement or consummation of the Transactions, and to ensure that such trusts are at all times revocable, in whole or in part, without the consent of the trustees or beneficiaries thereof or any third party. |
(q) | Books and Records. The financial books, records and accounts of Target and its Subsidiaries in all material respects, (i) have been maintained in accordance with GAAP on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Target and its Subsidiaries and (iii) accurately and fairly reflect the basis for Target consolidated financial statements. The corporate minute books of Target and its Subsidiaries contain minutes of all meetings and resolutions of the directors and shareholders held, and full access thereto has been provided to Acquireco. | |
(r) | Insurance. Target has made available to Acquireco true, correct and complete copies of all material policies of insurance to which each of Target and its Subsidiaries are a party or are a beneficiary or named insured. Target and its Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Target and its Subsidiaries. | |
(s) | Litigation. Except as specifically disclosed in Section (s) of the Target Disclosure Statement, there is no suit, action or proceeding pending or, to the knowledge of Target, threatened against Target or any of its Subsidiaries that, individually or in the aggregate, if adversely determined, would reasonably be expected to have a Materially Adverse effect on Target and its Subsidiaries, taken as a whole, and there is not any judgement, decree, injunction, rule or order of any Agency or arbitrator outstanding against Target or any of its Subsidiaries having, or which would reasonably be expected to have, any Materially Adverse effect on Target and its Subsidiaries, taken as a whole. As of the date of this agreement, except as specifically disclosed in Section (s) of the Target Disclosure Statement, there is no suit, action, proceeding pending or, to the knowledge of Target, threatened, against Target or any of its Subsidiaries that, individually or in the aggregate, if adversely determined, would reasonably be expected to prevent or delay in any material respect the consummation of the Transactions. | |
(t) | Determination by the Board and Voting Requirements. The board of directors of Target (after receiving financial advice including the Fairness Opinion, legal advice and after considering other factors), by the unanimous vote of its directors, has determined and resolved at its meeting held on December 16, 2009: |
(i) | that the entering into of this agreement, the performance by Target of its obligations hereunder and the Transactions are in the best interests of Target and its shareholders; | |
(ii) | the Arrangement is fair to Target Shareholders; | |
(iii) | to approve the Transactions and this agreement; | |
(iv) | to extend the Separation Time (as defined therein), including providing the Rights Agent (as defined in the Target Rights Agreement) with notice in writing of such extension, under the Target Rights Agreement until after the vote by the Target Shareholders on the Arrangement at the Target Special Meeting; | |
(v) | to recommend that Target Shareholders approve the Arrangement; and | |
(vi) | to recommend that Target Shareholders waive the Target Rights Agreement so that neither the entering into nor delivery of this agreement, the Arrangement or the other agreements contemplated hereby nor the consummation of all or any part of the Transactions shall constitute a Flip-in Event (as defined in the Target Rights Agreement). |
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(u) | Brokers; Schedule of Fees and Expenses. Except as set forth in Section (u) of the Target Disclosure Statement, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Target. Target has made available to Acquireco true and complete copies of all agreements that are referred to in Section (u) of the Target Disclosure Statement and all indemnification and other agreements related to the engagement of the persons so listed. | |
(v) | Opinion of Financial Advisor. Target has received the opinion of the Financial Advisor dated the date of this agreement, to the effect that, as of such date, the consideration to be received pursuant to the Transactions by Target Shareholders is fair to the Target Shareholders from a financial point of view, a copy of which opinion will be promptly delivered to Acquireco. | |
(w) | Rights Agreement. Target has taken all necessary action and executed and delivered all such documents and instruments that are required to extend the Separation Time (as defined therein), including providing the Rights Agent (as defined in the Target Rights Agreement) with notice in writing of such extension, under the Target Rights Agreement until after the vote by the Target Shareholders on the Arrangement at the Target Special Meeting. | |
(x) | Dispositions of Company Property. Except as described in Section (y) of the Target Disclosure Statement, since January 1, 2009 neither Target nor any of its Subsidiaries has sold or disposed of or ceased to hold or own any personal property, real property, any interest or rights with respect to real property (including exploration or production rights), any royalty interest or interest in a joint venture or other assets or properties of Target or any of its Subsidiaries (“Target Property”), other than any interest or rights with respect to real property having an individual fair market value of less than $1 million in the aggregate, in each case in the ordinary course of business, consistent with past practice. Except as set forth in Section (x) of the Target Disclosure Statement, no Target Property, the fair market value of which on the date of this agreement is greater than $1 million in the aggregate, is subject to any pending sale or disposition transaction. | |
(y) | Absence of Cease Trade Orders. No order ceasing or suspending trading in Target Shares (or any of them) or any other securities of Target is outstanding and no proceedings for this purpose have been instituted or, to the knowledge of Target, are pending, contemplated or threatened. | |
(z) | Absence of Environmental Liabilities. No environmental, reclamation or closure obligations or other liabilities for which Target or any of its Subsidiaries would be liable or responsible presently exist with respect to any portion of any currently or formerly owned, leased, used or otherwise controlled property, interests or rights or relating to the operations and business of the Target or its Subsidiaries and there is no basis for any such obligations or liabilities to arise in the future as a result of any activity on or in respect of such property, interests, rights, operations and business. Neither Target nor any of its Subsidiaries has received inquiry from or notice of any pending investigation from any Agency or of any administrative or judicial proceeding concerning the violation of any applicable Law or any such environmental, reclamation or closure obligations or other liabilities. | |
(aa) | Reporting Issuer Status. Target is a reporting issuer (or its equivalent) in each of the provinces of Canada. | |
(bb) | Related Party Transactions. None of Target or any of its Subsidiaries is indebted to any director, officer, employee or agent of, or consultant to, Target or any of its Subsidiaries or any of their respective affiliates or associates (except for amounts due as normal salaries and bonuses and in reimbursement of ordinary expenses). There are no loans, contracts or other transactions between Target or any of its Subsidiaries and any (i) director or officer of Target or any of its Subsidiaries, (ii) any holder of record or, to the knowledge of Target, beneficial owner of 5% or more of any class of the equity securities of Target, or (iii) any affiliate or associate of any such director, officer or beneficial owner. | |
(cc) | Disclosure Controls. Target has designed such disclosure controls and procedures, or caused them to be designed under the supervision of its Chief Executive Officer and Chief Financial Officer, to provide |
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reasonable assurance that material information relating to Target is made known to the Chief Executive Officer and Chief Financial Officer by others within Target and its Subsidiaries, particularly during the period in which the annual or interim filings are being prepared. |
(dd) | Internal Controls. Target has designed such internal controls over financial reporting, or caused them to be designed under the supervision of the Chief Executive Officer and Chief Financial Officer of Target, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with Canadian GAAP. To the knowledge of Target, prior to the date of this agreement: (i) there are no significant deficiencies in the design or operation of, or material weaknesses in, the internal controls over financial reporting of Target that are reasonably likely to adversely affect Target’s ability to record, process, summarize and report financial information, and (ii) there is and has been no fraud, whether or not material, involving management or any other employees who have a significant role in the internal control over financial reporting of Target. Since January 1, 2008, Target has received no (x) complaints from any source regarding accounting, internal accounting controls or auditing matters or (y) expressions of concern from employees of Target regarding questionable accounting or auditing matters. | |
(ee) | Competition Act. Assuming that the Effective Date is the date of this agreement, Target together with its affiliates (as defined in theCompetition Act (Canada)) do not have: (a) total assets in Canada that exceed Can$275 million, which for these purposes in respect of mineral royalties means royalties in mines in Canada; or (b) annual gross revenues from sales in, from or into Canada exceeding Can$275 million, in either case, as determined pursuant to section 109 of theCompetition Act (Canada), provided that, for the purposes of clause (b) of Schedule E, the assumption that the Closing Date is the date of this Agreement will not apply. | |
(ff) | Investment Canada Act. Target and its subsidiaries do not have any individual in Canada who is employed or self-employed in connection with any of their businesses. | |
(gg) | Listing. The Target Shares are listed and posted for trading on NYSE Amex and the TSX. |
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(a) | Organization, Standing and Corporate Power. Each of Acquireco and each of its Subsidiaries is a corporation, partnership or other legal entity duly organized, validly existing and in good standing under the laws of the jurisdiction in which it is organized and has the requisite power and authority to own its assets and conduct its business as currently owned and conducted. Each of Acquireco and each of its Subsidiaries is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary. Acquireco has made available for review to Target complete and correct copies of its Certificate of Incorporation and the certificates of incorporation or comparable organization documents of the Subsidiaries of Acquireco, in each case as amended to the date of this agreement. Acquireco is not in violation of any provision of its Certificate of Incorporation or By-Laws, and no Subsidiary of Acquireco is in violation of any provisions of its certificate of incorporation, by-laws or comparable organizational documents. | |
(b) | Acquireco Subsidiaries. All the outstanding shares of capital stock of each Subsidiary of Acquireco have been validly issued and are fully paid and non-assessable. Canco is an indirect wholly-owned Subsidiary of Acquireco. | |
(c) | Capitalization. The authorized capital of Acquireco consists of (i) 100,000,000 Acquireco Shares, of which 40,996,905 were issued and outstanding as of the close of business on December 16, 2009, and (ii) 10,000,000 shares of $0.01 par value Preferred Stock, of which none were outstanding as of the close of business on December 16, 2009. As of December 16, 2009, (i) 383,740 Acquireco Shares were reserved for issuance upon the exercise of outstanding stock options that were granted pursuant to Acquireco’s stock option plan, (ii) 102,140 Acquireco Shares were reserved for issuance upon the vesting of outstanding stock appreciation rights granted by Acquireco, and (iii) 154,250 Acquireco Shares were reserved for issuance upon the vesting of performance shares and continued service shares granted by Acquireco to management and employees. Except as set forth above, there are no shares of capital stock or other voting securities of Acquireco issued, reserved for issuance or outstanding. There are not any bonds, debentures, notes or other indebtedness of Acquireco having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Acquireco must vote. Except as set forth above and except as set forth in Section (c) of the Acquireco Disclosure Statement, as of the date of this agreement, there are not any options to which Acquireco or any of its Subsidiaries is a party or by which any of them is bound relating to the issued or unissued capital stock of Acquireco or any of its Subsidiaries, or obligating Acquireco or any of its Subsidiaries to issue, transfer, grant, sell or pay for or repurchase any shares of capital stock or other equity interests in, or securities convertible or exchangeable for any capital stock or other equity interests in, Acquireco or any of its Subsidiaries or obligating Acquireco or any of its Subsidiaries to issue, grant, extend or enter into any such options. All shares of Acquireco’s capital stock that are subject to issuance as aforesaid, upon issuance on the terms and conditions specified in the instrument pursuant to which they are issuable, will be duly authorized, validly issued, fully paid and non-assessable. The issuance and sale of all of the shares of capital stock described in this Section (c) of Schedule G have been in compliance with all Laws. Acquireco has previously provided Target with a schedule setting forth the number of Acquireco stock options (including the number of shares issuable upon exercise of Acquireco stock options and the exercise price and vesting schedule with respect thereto) held by all holders of Acquireco stock options. Section (c) of the Acquireco Disclosure Statement sets forth the average exercise price for outstanding Acquireco stock options. Except as set forth in Section (c) of the Acquireco Disclosure Statement, Acquireco has not agreed to register any securities under any securities Laws or granted registration rights to any person or entity; copies of all such agreements have previously been made available to Target. As of the date of this agreement, there are not any outstanding contractual obligations or other requirements of Acquireco or any of its Subsidiaries to repurchase, redeem or otherwise acquire any shares of capital stock of Acquireco or any of its Subsidiaries, or provide funds to or make any investment (in the form of a loan, capital contribution or otherwise) in, any Subsidiary of Acquireco or any other person. Without limiting the generality of the foregoing, and except as set forth in Section (c) of the Acquireco Disclosure Statement, there are no phantom equity or similar rights, |
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agreements, arrangements or commitments based upon the book value, income or any other attribute of Acquireco or any of its Subsidiaries. |
(d) | Authority; Non-Contravention. |
(i) | Each of Acquireco and Canco has all requisite corporate power and corporate authority to enter into this agreement and to consummate the Transactions and to perform its obligations under this agreement. The board of directors of each of Acquireco and Canco has unanimously approved this agreement and the Transactions. The execution and delivery of this agreement by each of Acquireco and Canco and the consummation by Acquireco and Canco, as applicable, of the Transactions have been duly authorized by all necessary corporate action on the part of Acquireco and Canco, as applicable. No approval of the shareholders or other securityholders of Acquireco or Canco or other corporate proceedings on the part of Acquireco or any of its Subsidiaries are necessary to authorize this agreement, the performance by Acquireco and Canco of their obligations under this agreement and the Transactions. This agreement has been duly executed and delivered by each of Acquireco and Canco and constitutes a valid and binding obligation of each of Acquireco and Canco, enforceable by Target against each of Acquireco and Canco in accordance with its terms, subject to the availability of equitable remedies and the enforcement of creditors’ rights generally. Except as set forth in Section (d) of the Acquireco Disclosure Statement, the execution and delivery of this agreement does not, and the consummation of the Transactions and compliance with the provisions of this agreement will not, conflict with, or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of consent, termination, purchase, cancellation or acceleration of any obligation or to loss of any property, rights or benefits under, or result in the imposition of any additional obligation under, or result in the creation of any Lien upon any of the properties or assets of Acquireco or any of its Subsidiaries under, (i) the Certificate of Incorporation or By-laws of Acquireco or the comparable organization documents of any of its Subsidiaries; (ii) any Contract to which Acquireco or any of its Subsidiaries is a party or by which any of them or their respective properties or assets is bound or affected, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any Law applicable to Acquireco or any of its Subsidiaries or their respective properties or assets. No consent, approval, order or authorization of, or registration, declaration or filing with, any Agency, is required by or with respect to Acquireco or any of its Subsidiaries in connection with the execution and delivery of this agreement by Acquireco or the consummation by Acquireco of the Transactions, except for (i) any approvals required by the Interim Order or the Final Order, and (ii) the approvals listed on Schedule H. | |
(ii) | Each of Acquireco and its Subsidiaries possesses all Permits necessary to conduct its business as such business is currently conducted or is expected to be conducted following completion of the Transaction, except where the failure to possess such Permits would not be Materially Adverse to the Acquireco and its Subsidiaries: (i) all such Permits are validly held by Acquireco or its Subsidiaries, and Acquireco and its Subsidiaries have complied in all respects with all terms and conditions thereof, (ii) none of such Permits will be subject to suspension, modification, revocation or non-renewal as a result of the execution and delivery of this agreement or the consummation of the Transactions, and (iii) since July 1, 2009, neither Acquireco nor any of its Subsidiaries has received any written notice, notice of violation or probable violation, notice of revocation, or other written communication from or on behalf of any Agency, alleging (A) any violation of such Permit, or (B) that Acquireco or any of its Subsidiaries requires any Permit required for its business as such business is currently conducted, that is not currently held by it. |
(e) | Publicly Filed Documents; Undisclosed Liabilities. Except as set forth in Section (e) of the Acquireco Disclosure Statement, Acquireco has filed all required reports, schedules, forms, statements and other documents (including documents incorporated by reference) with the applicable security regulatory Agencies since July 1, 2006 (the “Acquireco Public Disclosure Documents”). Except as set forth in Section (e) of the Acquireco Disclosure Statement, as of its date, each Acquireco Public Disclosure Document complied in all material respects with the requirements of theSecurities Act or theSecurities Exchange Act, as applicable, and the rules and regulations thereunder applicable to such Acquireco Public Disclosure Document. None of the Acquireco Public Disclosure Documents, as of their respective dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading, except to the |
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extent that such statements have been modified or superseded by a later-filed Acquireco Public Disclosure Document. The consolidated financial statements of Acquireco included in the Acquireco Public Disclosure Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Acquireco as of the dates thereof and the consolidated results of its operations and cash flows for the periods then ended (subject, in the case of unaudited statements, to normal year-end audit adjustments). Except as and to the extent disclosed, reflected or reserved against on the balance sheet or the notes thereto of Acquireco as of June 30, 2009 included in the Filed Acquireco Public Disclosure Documents, as incurred after the date thereof in the ordinary course of business consistent with past practice and prohibited by this agreement, Acquireco does not have any liabilities or obligations of any nature, whether known or unknown, absolute, accrued, contingent or otherwise and whether due or to become due, that, individually or in the aggregate, have had or would reasonably be expected to have a Materially Adverse effect on Acquireco and its Subsidiaries, taken as a whole. |
(f) | Information Supplied. None of the information supplied or to be supplied by Acquireco or its Subsidiaries for inclusion or incorporation by reference in the Target Circular will, at the date the Target Circular is first mailed to Target Securityholders, or at the time of the Target Special Meeting, contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein, in light of circumstances under which they are made, not misleading. | |
(g) | Absence of Certain Changes or Events. Except as disclosed in the Acquireco Public Disclosure Documents filed and publicly available prior to the date of this agreement (the “Filed Acquireco Public Disclosure Documents”), since July 1, 2009, Acquireco has conducted, and caused each of its Subsidiaries to conduct, its business only in the ordinary course, and: |
(i) | there has not been any event, change, effect or development (including any decision to implement such a change made by the board of directors of Acquireco or any of its Subsidiaries in respect of which senior management believes that confirmation of the board of directors is probable), which, individually or in the aggregate, has had or would reasonably be expected to have a Materially Adverse effect on Acquireco and its Subsidiaries, taken as a whole; | |
(ii) | there has not been, except for regular annual dividends not in excess of $0.36 per Acquireco Share, with customary record and payment dates, any declaration, setting aside or payment of any dividend or other distribution (whether in cash, stock or property) with respect to any Acquireco Shares; | |
(iii) | there has not been, except as provided for in this agreement, any split, combination or reclassification of any Acquireco Shares or any issuance or the authorization of any issuance of any other securities in exchange or in substitution for Acquireco Shares; | |
(iv) | there has not been any change in accounting methods, principles or practices by Acquireco or any of its Subsidiaries materially affecting its assets, liabilities or business, except insofar as may have been required by a change in GAAP; | |
(v) | neither Acquireco nor any of its Subsidiaries has engaged in any action which, if done after the date of this agreement, would violate Section 5.B(a) of this agreement. |
(h) | Disclosure. Acquireco has not failed to disclose to Target in writing any information known to Acquireco regarding any event, circumstance or action taken or failed to be taken that is Materially Adverse to Acquireco and its Subsidiaries, taken as a whole. Without limiting the generality of the foregoing: |
(i) | Acquireco and its Subsidiaries do not have liabilities or obligations in excess of the liabilities or obligations reflected or reserved against in the financial statements contained in the Filed Acquireco Public Disclosure Documents that, either individually or in the aggregate, are Materially Adverse to Acquireco and its Subsidiaries, taken as a whole; | |
(ii) | none of Acquireco or any of its Subsidiaries or any of their properties is subject to a judgement, order or decree that is Materially Adverse to Acquireco and its Subsidiaries, taken as a whole; and |
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(iii) | the data or information made available to Target in respect of Acquireco and its Subsidiaries, was complete and correct in all material respects and, did not, at the time it was made available and for the period of and matter to which it relates contain any untrue statement of material fact. |
(i) | Restrictions on Business Activities. There is no agreement, judgement, injunction, order or decree binding upon Acquireco or any of its Subsidiaries that has, or would reasonably be expected to have, the effect of prohibiting, restricting or impairing any business practice of Acquireco or any of its Subsidiaries, any acquisition of property by Acquireco or any of its Subsidiaries or the conduct of business by any of them as currently conducted (including following the Arrangement) other than such agreements, judgements, injunctions, orders or decrees which are not, individually or in the aggregate, Materially Adverse to Acquireco and its Subsidiaries, taken as a whole. | |
(j) | Real Property. Neither Acquireco nor any of its Subsidiaries holds any interest in real property, other than in respect of (i) certain unpatented mining claims in the State of Nevada which Acquireco, together with its Subsidiaries, owns subject to the paramount title of the United States of America, and (ii) the lease in respect of its head office in Denver, Colorado. | |
(k) | Tax Matters. |
(i) | Acquireco and each of its Subsidiaries have timely filed, or caused to be timely filed with the appropriate Agency, all Tax Returns required to be filed by them, and have timely paid, or caused to be timely paid, all material amounts of Taxes due and payable by them, including all instalments on account of any Taxes, except for any such failure to file or failure to pay which would not individually or in the aggregate, have a Materially Adverse effect on Acquireco. All such Tax Returns are true, correct and complete in all material respects and have been completed in accordance with applicable Laws. To the best of Acquireco’s knowledge, no such Tax Return contains any misstatement or omits any statement that should have been included therein. | |
(ii) | Reserves and provisions for Taxes accrued but not yet due on or before the Effective Date as reflected in Acquireco’s financial statements contained in the Filed Acquireco Public Disclosure Documents are adequate as of the date of such financial statements, in accordance with GAAP. No deficiencies for Taxes have been proposed, asserted or assessed against Acquireco that are not adequately reserved against. | |
(iii) | Neither Acquireco nor any of its Subsidiaries has received any written notification that any issues involving a material amount of Taxes have been raised (and are currently pending) by the CRA, the United States Internal Revenue Service or any other taxing authority, including, without limitation, any sales tax authority, in connection with any of the Tax Returns filed or required to be filed, which would, individually or in the aggregate, have a Materially Adverse effect on Acquireco. | |
(iv) | No unresolved assessments, reassessments, audits, claims, actions, suits, proceedings, or investigations exist or have been initiated with regard to any Taxes or Tax Returns of Acquireco or its Subsidiaries. To the knowledge of Acquireco, no assessment, reassessment, audit or investigation by any Agency is underway, threatened or imminent with respect to Taxes for which Acquireco or any of its Subsidiaries may be liable, in whole or in part. | |
(v) | No election, consent for extension, nor any waiver that extends any applicable statute of limitations relating to the determination of a Tax liability of Acquireco or any of its Subsidiaries has been filed or entered into and is still effective. | |
(vi) | Acquireco and each of its Subsidiaries have properly withheld and remitted all amounts required to be withheld and/or remitted (including income tax, non-resident withholding tax, Canada Pension Plan contributions, Employment Insurance and Worker’s Compensation premiums) and have paid such amounts due to the appropriate authority on a timely basis and in the form required under the appropriate legislation. | |
(vii) | Acquireco and each of its Subsidiaries have duly and timely collected all amounts on account of any goods, services, sales, value added, transfer or other Taxes required to have been collected by it and have duly set aside in trust or timely remitted to the appropriate Agency any and all such amounts required to be remitted by it. |
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(viii) | Acquireco and each of its Subsidiaries is, and at all times has filed its Tax Returns on the basis that it is, resident for Tax purposes in its country of incorporation or formation and has not at any time been treated by any Agency as resident in any other country for any Tax purpose (including any treaty, convention or arrangement for the avoidance of double taxation). None of Acquireco or any of its Subsidiaries has filed any Tax Return on the basis that it is subject to Tax (other than withholding Tax) in any jurisdiction other than its country of incorporation or formation (and political subdivisions thereof) or received written notification from any Agency that it may be required to file on such basis. | |
(ix) | There are no Tax liens on any assets of Acquireco or any of its Subsidiaries except for Taxes not yet currently due and those which would not reasonably be expected to have a Materially Adverse effect on Acquireco. | |
(x) | None of sections 78, 80, 80.01, 80.02, 80.03 or 80.04 of the ITA, or any equivalent provision of the tax legislation of any province or any other jurisdiction, have applied or will apply to Acquireco or any of its Subsidiaries at any time up to and including the Effective Time, except where any such application would not be Materially Adverse to Acquireco and its Subsidiaries. | |
(xi) | For purposes of this Section (k), the term “material amount of Taxes” shall mean an amount of Taxes that is material to Acquireco and its Subsidiaries taken as a whole. |
(l) | Books and Records. The financial books, records and accounts of Acquireco and its Subsidiaries in all material respects, (i) have been maintained in accordance with GAAP on a basis consistent with prior years, (ii) are stated in reasonable detail and accurately and fairly reflect the transactions and dispositions of the assets of Acquireco and its Subsidiaries and (iii) accurately and fairly reflect the basis for Acquireco consolidated financial statements. The corporate minute books of Acquireco and its Subsidiaries contain minutes of all meetings and resolutions of the directors and shareholders held, and full access thereto has been provided to Target. | |
(m) | Insurance. Acquireco and its Subsidiaries maintain insurance coverage with reputable insurers in such amounts and covering such risks as are in accordance with normal industry practice for companies engaged in businesses similar to that of Acquireco and its Subsidiaries. | |
(n) | Litigation. Except as disclosed in the Filed Acquireco Public Disclosure Documents, there is no suit, action or proceeding pending or, to the knowledge of Acquireco, threatened against Acquireco or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to have a Materially Adverse effect on Acquireco and its Subsidiaries, taken as a whole, and there is not any judgement, decree, injunction, rule or order of any Agency or arbitrator outstanding against Acquireco or any of its Subsidiaries having, or which would reasonably be expected to have, a Materially Adverse effect on Acquireco and its Subsidiaries, taken as a whole. As of the date of this agreement, except as disclosed in the Filed Acquireco Public Disclosure Documents, there is no suit, action or proceeding pending, or, to the knowledge of Acquireco, threatened, against Acquireco or any of its Subsidiaries that, individually or in the aggregate, would reasonably be expected to prevent or delay in any material respect the consummation of the Transactions. | |
(o) | Determination by the Board. The board of directors of each of Acquireco and Canco has unanimously determined and resolved at its respective meeting held on December 16, 2009: |
(i) | that the entering into of this agreement and the performance by Acquireco or Canco, as the case may be, of its obligations hereunder and the Transactions are in the best interests of Acquireco or Canco, as the case may be, and its shareholders; and | |
(ii) | to approve the Transactions and this agreement. |
(p) | Brokers. Except as set forth in Section (p) of the Acquireco Disclosure Statement, no broker, investment banker, financial advisor or other person is entitled to any broker’s, finder’s, financial advisor’s or other similar fee or commission in connection with the Transactions based upon arrangements made by or on behalf of Acquireco. | |
(q) | Compliance. Except for any conflicts, defaults or violations that would not, individually or in the aggregate (taking into account the impact of any cross-defaults), reasonably be expected to result in a Materially Adverse |
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effect on Acquireco and its Subsidiaries, taken as a whole, each of Acquireco and its Subsidiaries has complied with, and is not in conflict with, or in default (including cross defaults) under or in violation of: |
(i) | its articles or other organizational documents or by-laws; | |
(ii) | any Law or Permit applicable to it, its business or operations or by which any of its properties or assets is bound or affected; or | |
(iii) | any agreement, arrangement or understanding to which it, its business or operations or by which any of its properties or assets is bound or affected. |
(r) | Dispositions of Company Property. Except as described in the Filed Acquireco Public Disclosure Documents, since July 1, 2009 neither Acquireco nor any of its Subsidiaries has sold or disposed of or ceased to hold or own any personal property, real property, any interest or rights with respect to real property (including exploration or production rights), any royalty interest or interest in a joint venture or other assets of properties of Acquireco or any of its Subsidiaries (“Acquireco Property”), other than any Acquireco Property having an individual fair market value of less than $5 million in the aggregate, in each case in the ordinary course of business, consistent with past practice. No Acquireco Property, the fair market value of which on the date of this agreement is greater than $5 million in the aggregate, is subject to any pending sale or disposition transaction. | |
(s) | Absence of Cease Trade Orders. No order ceasing or suspending trading in Acquireco Shares (or any of them) or any other securities of Acquireco is outstanding and no proceedings for this purpose have been instituted or, to the knowledge of Acquireco, are pending, contemplated or threatened. | |
(t) | Issuance of Acquireco Shares and Exchangeable Shares. All Acquireco Shares and Exchangeable Shares issuable in connection with the Arrangement will be duly authorized and validly issued as fully paid and non-assessable and will not be subject to any pre-emptive rights and will not be subject to any hold or restricted periods. | |
(u) | Financing. Acquireco has sufficient financial means and on the Effective Date will have made arrangements to have sufficient financing available to cause Canco to effect payment of the aggregate cash consideration payable in connection with the Arrangement. | |
(v) | Multilateral Instrument61-101. To the knowledge of Acquireco, after consultation with outside legal counsel, no provincial or state take-over statute or similar statute or regulation (includingMultilateral Instrument61-101 — Protection of Minority Security Holders in Special Transactions) applies or purports to apply to this agreement or any of the Transactions. | |
(w) | Reporting Issuer Status. Acquireco is a reporting issuer (or its equivalent) in each of the provinces of Canada other than Québec. | |
(x) | Competition Act. Assuming that the Effective Date is the date of this agreement, Acquireco together with its affiliates (as defined in theCompetition Act (Canada)) do not have: (a) total assets in Canada that exceed Can$125 million, which for these purposes in respect of mineral royalties means royalties in mines in Canada; or (b) annual gross revenues from sales in, from or into Canada exceeding Can$125 million, in either case, as determined pursuant to section 109 of theCompetition Act (Canada), provided that, for the purposes of clause (c) of Schedule D, the assumption that the Effective Date is the date of this agreement will not apply. | |
(y) | Listing. The Acquireco Shares are listed and posted for trading on NASDAQ and the TSX. | |
(z) | Reservation of Shares. Acquireco has reserved sufficient Acquireco Shares to issue the Acquireco Shares contemplated under this agreement and pursuant to the Arrangement. |
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(aa) | Absence of Environmental Liabilities. No environmental, reclamation or closure obligations or other liabilities for which Acquireco or any of its Subsidiaries would be liable or responsible presently exist with respect to any portion of any currently or formerly owned, leased, used or otherwise controlled property, interests or rights or relating to the operations and business of Acquireco or its Subsidiaries and there is no basis for any such obligations or liabilities to arise in the future as a result of any activity on or in respect of such property, interests, rights, operations and business. Neither Acquireco nor any of its Subsidiaries has received inquiry from or notice of any pending investigation from any Agency or of any administrative or judicial proceeding concerning the violation of any applicable Law or any such environmental, reclamation or closure obligations or other liabilities. |
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REGULATORY APPROVALS
• | exemption orders from the Securities Commissions from the prospectus requirements with respect to the first trade in Exchangeable Shares | |
• | approval of the TSX regarding the conditional listing of the Exchangeable Shares |
• | filings required under theSecuritiesAct andSecuritiesExchangeAct, and other actions required by the SEC pursuant thereto |
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SUPPORT AGREEMENT
(a) | in connection with an arrangement agreement (the “Arrangement Agreement”) made as of December 17, 2009 between RG, Canco and International Royalty Corporation (“IRC”), the Exchangeable Shares are to be issued to certain holders of securities of IRC pursuant to the Plan of Arrangement contemplated by the Arrangement Agreement; and | |
(b) | pursuant to the Arrangement Agreement, RG, Canco and Callco are required to enter into this agreement. |
1.1 | Defined Terms |
1.2 | Interpretation Not Affected by Headings |
1.3 | Number, Gender |
1.4 | Date for any Action |
2.1 | Covenants Regarding Exchangeable Shares |
(a) | not declare or pay any dividend or make any other distribution on the RG Shares unless (i) Canco shall (A) on the same day declare or pay, as the case may be, an equivalent dividend or other distribution (as provided for in the Share Provisions) on the Exchangeable Shares (an “Equivalent Dividend”), and (B) have sufficient money or other assets or authorized but unissued securities available to enable the due declaration and the due and punctual payment, in accordance with applicable law, of any such Equivalent Dividend, or (ii) Canco shall, |
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in the case of a dividend that is a stock dividend on the RG Shares (A) subdivide the Exchangeable Shares in lieu of a stock dividend thereon (as provided for in the Share Provisions) in a similar proportion to that in respect of the RG Shares (an “Equivalent Stock Subdivision”), and (B) have sufficient authorized but unissued securities available to enable the Equivalent Stock Subdivision; |
(b) | advise Canco sufficiently in advance of the declaration by RG of any dividend or other distribution on the RG Shares and take all such other actions as are necessary or desirable, in co-operation with Canco, to ensure that (i) the respective declaration date, record date and payment date for an Equivalent Dividend on the Exchangeable Shares shall be the same as the declaration date, record date and payment date for the corresponding dividend or other distribution on the RG Shares, or (ii) the record date and effective date for an Equivalent Stock Subdivision shall be the same as the record date and payment date for the corresponding stock dividend on the RG Shares; | |
(c) | ensure that the record date for any dividend or other distribution declared on the RG Shares is not less than 7 days after the declaration date of such dividend or other distribution; | |
(d) | take all such actions and do all such things as are necessary to enable and permit Canco, in accordance with applicable law, to pay and otherwise perform its obligations with respect to the satisfaction of the Liquidation Amount, the Retraction Price or the Redemption Price in respect of each issued and outstanding Exchangeable Share (other than Exchangeable Shares owned by RG or its affiliates) upon the liquidation, dissolution orwinding-up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, the delivery of a Retraction Request by a holder of Exchangeable Shares or a redemption of Exchangeable Shares by Canco, as the case may be, including all such actions and all such things as are necessary or desirable to enable and permit Canco to cause to be delivered RG Shares to the holders of Exchangeable Shares in accordance with the provisions of Sections 5, 6 or 7, as the case may be, of the Share Provisions; | |
(e) | take all such actions and do all such things as are necessary or desirable to enable and permit Callco, in accordance with applicable law, to perform its obligations arising upon the exercise by it of the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right (as defined in the Plan of Arrangement) or the Redemption Call Right, including all such actions and all such things as are necessary or desirable to enable and permit Callco to cause to be delivered RG Shares to the holders of Exchangeable Shares in accordance with the provisions of the Liquidation Call Right, the Retraction Call Right, the Change of Law Call Right or the Redemption Call Right, as the case may be; and | |
(f) | except in connection with any event, circumstance or action which causes or could cause the occurrence of a Redemption Date, not exercise its vote as a shareholder to initiate the voluntary liquidation, dissolution or winding up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, nor take any action or omit to take any action that is designed to result in the liquidation, dissolution or winding up of Canco or any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs. |
2.2 | Segregation of Funds |
2.3 | Reservation of RG Shares |
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2.4 | Notification of Certain Events |
(a) | in the event of any determination by the Board of Directors of Canco to institute voluntary liquidation, dissolution orwinding-up proceedings with respect to Canco or to effect any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution,winding-up or other distribution; | |
(b) | promptly, upon the earlier of receipt by Canco of notice of and Canco otherwise becoming aware of any threatened or instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution orwinding-up of Canco or to effect any other distribution of the assets of Canco among its shareholders for the purpose of winding up its affairs; | |
(c) | immediately, upon receipt by Canco of a Retraction Request; | |
(d) | on the same date on which notice of redemption is given to holders of Exchangeable Shares, upon the determination of a Redemption Date in accordance with the Share Provisions; | |
(e) | as soon as practicable upon the issuance by Canco of any Exchangeable Shares or rights to acquire Exchangeable Shares (other than the issuance of Exchangeable Shares and rights to acquire Exchangeable Shares pursuant to the Arrangement); and |
(f) | promptly, upon receiving notice of a Change of Law (as defined in the Plan of Arrangement). |
2.5 | Delivery of RG Shares to Canco and Callco |
2.6 | Qualification of RG Shares |
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2.7 | Economic Equivalence |
(a) | RG shall not without prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 11(2) of the Share Provisions: |
(i) | issue or distribute RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) to the holders of all or substantially all of the then outstanding RG Shares by way of stock dividend or other distribution, other than an issue of RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) to holders of RG Shares (i) who exercise an option to receive dividends in RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares) in lieu of receiving cash dividends, or (ii) pursuant to any dividend reinvestment plan or similar arrangement; or | |
(ii) | issue or distribute rights, options or warrants to the holders of all or substantially all of the then outstanding RG Shares entitling them to subscribe for or to purchase RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares); or | |
(iii) | issue or distribute to the holders of all or substantially all of the then outstanding RG Shares (A) shares or securities (including evidence of indebtedness) of RG of any class (other than RG Shares or securities convertible into or exchangeable for or carrying rights to acquire RG Shares), or (B) rights, options, warrants or other assets other than those referred to in Section 2.7(a)(ii); |
(b) | RG shall not without the prior approval of Canco and the prior approval of the holders of the Exchangeable Shares given in accordance with Section 10(2) of the Share Provisions: |
(i) | subdivide, redivide or change the then outstanding RG Shares into a greater number of RG Shares; or | |
(ii) | reduce, combine, consolidate or change the then outstanding RG Shares into a lesser number of RG Shares; or | |
(iii) | reclassify or otherwise change RG Shares or effect an amalgamation, merger, arrangement, reorganization or other transaction affecting RG Shares; |
(c) | RG shall ensure that the record date for any event referred to in Section 2.7(a) or Section 2.7(b), or (if no record date is applicable for such event) the effective date for any such event, is not less than five business days after the date on which such event is declared or announced by RG (with contemporaneous notification thereof by RG to Canco). | |
(d) | The Board of Directors of Canco shall determine, acting in good faith and in its sole discretion, economic equivalence for the purposes of any event referred to in Section 2.7(a) or Section 2.7(b) and each such determination shall be conclusive and binding on RG. In making each such determination, the following factors shall, without excluding other factors determined by the Board of Directors of Canco to be relevant, be considered by the Board of Directors of Canco: |
(i) | in the case of any stock dividend or other distribution payable in RG Shares, the number of such shares issued in proportion to the number of RG Shares previously outstanding; |
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(ii) | in the case of the issuance or distribution of any rights, options or warrants to subscribe for or purchase RG Shares (or securities exchangeable for or convertible into or carrying rights to acquire RG Shares), the relationship between the exercise price of each such right, option or warrant and the Current Market Price of a RG Share; | |
(iii) | in the case of the issuance or distribution of any other form of property (including any shares or securities of RG of any class other than RG Shares, any rights, options or warrants other than those referred to in Section 2.7(d)(ii), any evidences of indebtedness of RG or any assets of RG), the relationship between the fair market value (as determined by the Board of Directors of Canco in the manner above contemplated) of such property to be issued or distributed with respect to each outstanding RG Share and the Current Market Price of a RG Share; | |
(iv) | in the case of any subdivision, redivision or change of the then outstanding RG Shares into a greater number of RG Shares or the reduction, combination, consolidation or change of the then outstanding RG Shares into a lesser number of RG Shares or any amalgamation, merger, arrangement, reorganization or other transaction affecting RG Shares, the effect thereof upon the then outstanding RG Shares; and | |
(v) | in all such cases, the general taxation consequences of the relevant event to holders of Exchangeable Shares to the extent that such consequences may differ from the taxation consequences to holders of RG Shares as a result of differences between taxation laws of Canada and the United States (except for any differing consequences arising as a result of differing withholding taxes and marginal taxation rates and without regard to the individual circumstances of holders of Exchangeable Shares). |
(e) | Canco agrees that, to the extent required, upon due notice from RG, Canco shall use its best efforts to take or cause to be taken such steps as may be necessary for the purposes of ensuring that appropriate dividends are paid or other distributions are made by Canco, or subdivisions, redivisions or changes are made to the Exchangeable Shares, in order to implement the required economic equivalence with respect to the RG Shares and Exchangeable Shares as provided for in this Section 2.7. |
2.8 | Tender Offers |
2.9 | Ownership of Outstanding Shares |
2.10 | RG and Affiliates Not to Vote Exchangeable Shares |
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2.11 | Ordinary Market Purchases |
2.12 | Stock Exchange Listing |
3.1 | Certain Requirements in Respect of Combination, etc. |
(a) | such other person or continuing corporation (the “RG Successor”) by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, an agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the RG Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such RG Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of RG under this agreement; and | |
(b) | such transaction shall be upon such terms and conditions as to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the other parties hereunder or the holders of the Exchangeable Shares. |
3.2 | Vesting of Powers in Successor |
3.3 | Wholly-Owned Subsidiaries |
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3.4 | Successorship Transaction |
(a) | in which RG merges or amalgamates with, or in which all or substantially all of the then outstanding RG Shares are acquired by, one or more other corporations to which RG is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the Tax Act (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof); | |
(b) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of that definition; and | |
(c) | in which all or substantially all of the then outstanding RG Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) or another corporation (the “Other Corporation”) that, immediately after such RG Control Transaction, owns or controls, directly or indirectly, RG; |
4.1 | Term |
4.2 | Changes in Capital of RG and Canco |
4.3 | Severability |
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4.4 | Amendments, Modifications |
(a) | Subject to Section 4.2, Section 4.3 and Section 4.5 this agreement may not be amended or modified except by an agreement in writing executed by Canco, Callco and RG and approved by the holders of the Exchangeable Shares in accordance with Section 11(2) of the Share Provisions. | |
(b) | No amendment or modification or waiver of any of the provisions of this agreement otherwise permitted hereunder shall be effective unless made in writing and signed by all of the parties hereto. |
4.5 | Ministerial Amendments |
(a) | adding to the covenants of any or all parties provided that the Board of Directors of each of Canco, Callco and RG shall be of the good faith opinion that such additions will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; | |
(b) | making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the Board of Directors of each of Canco, Callco and RG, it may be expedient to make, provided that each such Board of Directors shall be of the good faith opinion that such amendments or modifications will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares; or | |
(c) | making such changes or corrections which, on the advice of counsel to Canco, Callco and RG, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error, provided that the Boards of Directors of each of Canco, Callco and RG shall be of the good faith opinion that such changes or corrections will not be prejudicial to the rights or interests of the holders of the Exchangeable Shares. |
4.6 | Meeting to Consider Amendments |
4.7 | Enurement |
4.8 | Notices to Parties |
(i) | In the case of RG, Canco or Callco to the following address: |
Attn: Mr. Bruce Kirchhoff, Vice President and General Counsel
1660 Wynkoop Street
Suite 1000
Denver, Colorado80102-1132
Fax: (303) 573-9385
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Attn: Mr. Graham Gow
66 Wellington Street West
Suite 5300
Toronto-Dominion Bank Tower
Toronto, Ontario M5K 1E6
Fax: (416) 868-0673
Attn: Mr. Paul Hilton
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Fax: (303) 899-7333
4.9 | Counterparts |
4.10 | Jurisdiction |
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By: |
By: |
By: |
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A | In connection with an amended and restated arrangement agreement (as further amended, supplemented and/or restated, the “Arrangement Agreement”) made as of January 15, 2010 between RG, Canco and IRC, the Exchangeable Shares are to be issued to certain holders of securities of IRC pursuant to the Plan of Arrangement contemplated in the Arrangement Agreement; |
B | Pursuant to the Arrangement Agreement, RG and Canco are required to enter into this agreement. |
1.1 | Definitions |
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1.2 | Interpretation Not Affected by Headings, etc. |
1.3 | Number, Gender, etc. |
1.4 | Date for any Action |
2.1 | Establishment of Trust |
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3.1 | Issue and Ownership of the RG Special Voting Share |
(a) | hold the RG Special Voting Share and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and | |
(b) | except as specifically authorized by this agreement, have no power or authority to sell, transfer, vote or otherwise deal in or with the RG Special Voting Share and the RG Special Voting Share shall not be used or disposed of by the Trustee for any purpose other than the purposes for which this Trust is created pursuant to this agreement. |
3.2 | Legended Share Certificates |
3.3 | Safe Keeping of Certificate |
4.1 | Voting Rights |
(a) | the Trustee shall exercise the Voting Rights only on the basis of instructions received pursuant to this Article 4 from Beneficiaries on the record date established by RG or by applicable law for such RG Meeting or RG Consent who are entitled to instruct the Trustee as to the voting thereof; and | |
(b) | to the extent that no instructions are received from a Beneficiary with respect to the Voting Rights to which such Beneficiary is entitled, the Trustee shall not exercise or permit the exercise of such Voting Rights. |
4.2 | Number of Votes |
(1) | With respect to all meetings of shareholders of RG at which holders of RG Shares are entitled to vote (each, an “RG Meeting”) and with respect to all written consents sought from shareholders of RG, including holders of the RG Shares (each, an “RG Consent”), each Beneficiary shall be entitled to instruct the Trustee to cast and exercise for each Exchangeable Share owned of record by a Beneficiary on the record date established by RG or by applicable law for such RG Meeting or RG Consent, as the case may be (collectively, the “Beneficiary Votes”), in respect of each matter, question, proposal or proposition to be voted on at such RG Meeting or consented to in connection with such RG Consent, a pro rata number of Voting Rights determined by reference to the total number of outstanding |
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Exchangeable Shares not owned by RG and its affiliates on the record date established by RG or by applicable law for such RG Meeting or RG Consent. |
(2) | The aggregate Voting Rights on a poll at an RG Meeting shall consist of a number of votes equal to one vote per outstanding Exchangeable Share from time to time not owned by RG and its affiliates on the record date established by RG or by applicable law for such RG Meeting or RG Consent, and for which the Trustee has received voting instructions from the Beneficiary. Pursuant to the terms of the Special Voting Share, the Trustee or its proxy is entitled on a vote on a show of hands to one vote in addition to any votes which may be cast by a Beneficiary (or its nominee) on a show of hands as proxy for the Trustee. Any Beneficiary who chooses to attend an RG Meeting in person, and who is entitled to vote in accordance with Section 4.8(2), shall be entitled to one vote on a show of hands. |
4.3 | Mailings to Shareholders |
(1) | With respect to each RG Meeting, the Trustee shall use its reasonable efforts promptly to mail or cause to be mailed (or otherwise communicate in the same manner as RG utilizes in communications to holders of RG Shares subject to applicable regulatory requirements and provided that such manner of communications is reasonably available to the Trustee) to each of the Beneficiaries named in the List, such mailing or communication to commence wherever practicable on the same day as the mailing or notice (or other communication) with respect thereto is commenced by RG to its shareholders: |
(a) | a copy of such notice, together with any related materials, including any circular or information statement or listing particulars, to be provided to shareholders of RG; | |
(b) | a statement that such Beneficiary is entitled to instruct the Trustee as to the exercise of the Beneficiary Votes with respect to such RG Meeting or, pursuant to Section 4.7, to attend such RG Meeting and to exercise personally the Beneficiary Votes thereat; | |
(c) | a statement as to the manner in which such instructions may be given to the Trustee, including an express indication that instructions may be given to the Trustee to give: |
(i) | a proxy to such Beneficiary or his, her or its designee to exercise personally the Beneficiary Votes; or | |
(ii) | a proxy to a designated agent or other representative of RG to exercise such Beneficiary Votes; |
(d) | a statement that if no such instructions are received from the Beneficiary, the Beneficiary Votes to which such Beneficiary is entitled will not be exercised; | |
(e) | a form of direction whereby the Beneficiary may so direct and instruct the Trustee as contemplated herein; and | |
(f) | a statement of the time and date by which such instructions must be received by the Trustee in order to be binding upon it, which in the case of an RG Meeting shall not be earlier than the close of business on the fourth business day prior to such meeting, and of the method for revoking or amending such instructions. |
(2) | The materials referred to in this Section 4.3 shall be provided to the Trustee by RG, and the materials referred to in Section 4.3(1)(c), Section 4.3(1)(e) and Section 4.3(1)(f) shall (if reasonably practicable to do so) be subject to reasonable comment by the Trustee in a timely manner. Subject to the foregoing, RG shall ensure that the materials to be provided to the Trustee are provided in sufficient time to permit the Trustee to comment as aforesaid and to send all materials to each Beneficiary at the same time as such materials are first sent to holders of RG Shares. RG agrees not to communicate with holders of RG Shares with respect to the materials referred to in this Section 4.3 otherwise than by mail unless such method of communication is also reasonably available to the Trustee for communication with the Beneficiaries. Notwithstanding the foregoing, RG may at its option exercise the duties of the Trustee to deliver copies of all materials to all Beneficiaries as required by this Section 4.3 so long as in each case RG delivers a certificate to the Trustee stating that RG has undertaken to perform the obligations set forth in this Section 4.3. |
(3) | For the purpose of determining Beneficiary Votes to which a Beneficiary is entitled in respect of any RG Meeting, the number of Exchangeable Shares owned of record by the Beneficiary shall be determined at the close of business on the record date established by RG or by applicable law for purposes of determining shareholders entitled to vote at such RG Meeting. RG shall notify the Trustee of any decision of the board of directors of RG with respect to the calling of any RG Meeting and shall provide all necessary information and materials to the Trustee in each case promptly and in any event in sufficient time to enable the Trustee to perform its obligations contemplated by this Section 4.3. |
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4.4 | Copies of Shareholder Information |
(a) | received by the Trustee as the registered holder of the RG Special Voting Share and made available by RG generally to the holders of RG Shares; or | |
(b) | specifically directed to the Beneficiaries or to the Trustee for the benefit of the Beneficiaries by RG. |
4.5 | Other Materials |
4.6 | List of Persons Entitled to Vote |
4.7 | Entitlement to Direct Votes |
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4.8 | Voting by Trustee and Attendance of Trustee Representative at Meeting |
(1) | In connection with each RG Meeting, the Trustee shall exercise, either in person or by proxy, in accordance with the instructions received from a Beneficiary pursuant to Section 4.3, the Beneficiary Votes as to which such Beneficiary is entitled to direct the vote (or any lesser number thereof as may be set forth in the instructions) other than any Beneficiary Votes that are the subject of Section 4.8(2); provided, however, that such written instructions are received by the Trustee from the Beneficiary prior to the time and date fixed by the Trustee for receipt of such instruction in the notice given by the Trustee to the Beneficiary pursuant to Section 4.3. |
(2) | The Trustee shall cause a representative who is empowered by it to sign and deliver, on behalf of the Trustee, proxies for Voting Rights to attend each RG Meeting. Upon submission by a Beneficiary (or its designee) named in the List prepared in connection with the relevant meeting of identification satisfactory to the Trustee’s representative, and at the Beneficiary’s request, such representative shall sign and deliver to such Beneficiary (or its designee) a proxy to exercise personally the Beneficiary Votes as to which such Beneficiary is otherwise entitled hereunder to direct the vote, if such Beneficiary either (i) has not previously given the Trustee instructions pursuant to Section 4.3 in respect of such meeting or (ii) submits to such representative written revocation of any such previous instructions. At such meeting, the Beneficiary (or its designee) exercising such Beneficiary Votes in accordance with such proxy shall have the same rights in respect of such Beneficiary Votes as the Trustee to speak at the meeting in favour of any matter, question, proposal or proposition, to vote by way of ballot at the meeting in respect of any matter, question, proposal or proposition, and to vote at such meeting by way of a show of hands in respect of any matter, question or proposition. |
4.9 | Distribution of Written Materials |
(a) | a current List; and | |
(b) | upon the request of the Trustee, mailing labels to enable the Trustee to carry out its duties under this agreement. |
4.10 | Termination of Voting Rights |
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4.11 | Disclosure of Interest in Exchangeable Shares |
5.1 | Grant of Exchange Right and Automatic Exchange Right |
(1) | RG hereby grants to Trustee as trustee for and on behalf of, and for the use and benefit of, the Beneficiaries the right (the “Exchange Right”), upon the occurrence and during the continuance of an Insolvency Event, to require RG to purchase from each or any Beneficiary all or any part of the Exchangeable Shares held by such Beneficiary and the Automatic Exchange Right, all in accordance with the provisions of this agreement. RG hereby acknowledges receipt from the Trustee as trustee for and on behalf of the Beneficiaries of good and valuable consideration (and the adequacy thereof) for the grant of the Exchange Right and the Automatic Exchange Right by RG to the Trustee. |
(2) | During the term of the Trust and subject to the terms and conditions of this agreement, the Trustee shall possess and be vested with full legal ownership of the Automatic Exchange Right and the Exchange Right and shall be entitled to exercise all of the rights and powers of an owner with respect to the Automatic Exchange Right and the Exchange Right, provided that the Trustee shall: |
(a) | hold the Automatic Exchange Right and the Exchange Right and the legal title thereto as trustee solely for the use and benefit of the Beneficiaries in accordance with the provisions of this agreement; and | |
(b) | except as specifically authorized by this agreement, have no power or authority to exercise or otherwise deal in or with the Automatic Exchange Right or the Exchange Right, and the Trustee shall not exercise any such rights for any purpose other than the purposes for which the Trust is created pursuant to this agreement. |
(3) | The obligations of RG to issue RG Shares pursuant to the Automatic Exchange Right or the Exchange Right are subject to all applicable laws and regulatory or stock exchange requirements. |
5.2 | Legended Share Certificates |
(a) | their right to instruct the Trustee with respect to the exercise of the Exchange Right in respect of the Exchangeable Shares held by a Beneficiary; and | |
(b) | the Automatic Exchange Right. |
5.3 | General Exercise of Exchange Right |
5.4 | Purchase Price |
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5.5 | Exercise Instructions |
5.6 | Delivery of RG Shares; Effect of Exercise |
5.7 | Stamp or Other Transfer Taxes |
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5.8 | Notice of Insolvency Event |
5.9 | Failure to Retract |
5.10 | Listing of RG Shares |
5.11 | RG Shares |
5.12 | Automatic Exchange on Liquidation of RG |
(1) | RG shall give the Trustee written notice of each of the following events at the time set forth below: |
(a) | in the event of any determination by the board of directors of RG to institute voluntary liquidation, dissolution orwinding-up proceedings with respect to RG or to effect any other distribution of assets of RG among its shareholders for the purpose of winding up its affairs, at least 60 days prior to the proposed effective date of such liquidation, dissolution,winding-up or other distribution; and | |
(b) | as soon as practicable following the earlier of (A) receipt by RG of notice of, and (B) RG otherwise becoming aware of any instituted claim, suit, petition or other proceedings with respect to the involuntary liquidation, dissolution orwinding-up of RG or to effect any other distribution of assets of RG among its shareholders for |
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the purpose of winding up its affairs, in each case where RG has failed to contest in good faith any such proceeding commenced in respect of RG within 30 days of becoming aware thereof. |
(2) | As soon as practicable following receipt by the Trustee from RG of notice of any event (a “Liquidation Event”) contemplated by Section 5.12(1)(a) or Section 5.12(1)(b), the Trustee shall give notice thereof to the Beneficiaries. Such notice shall be provided to the Trustee by RG and shall include a brief description of the automatic exchange of Exchangeable Shares for RG Shares provided for in Section 5.12(3). |
(3) | In order that the Beneficiaries will be able to participate on a pro rata basis with the holders of RG Shares in the distribution of assets of RG in connection with a Liquidation Event, immediately prior to the effective date (the “Liquidation Event Effective Date”) of a Liquidation Event, all of the then outstanding Exchangeable Shares shall be automatically exchanged for RG Shares. To effect such automatic exchange, RG shall purchase each Exchangeable Share outstanding immediately prior to the Liquidation Event Effective Date and held by Beneficiaries, and each Beneficiary shall sell the Exchangeable Shares held by it at such time, free and clear of any lien, claim or encumbrance, for a purchase price per share equal to (i) the Current Market Price of an RG Share on the day prior to the Liquidation Event Effective Date, which shall be satisfied in full by RG issuing to the Beneficiary one RG Share, plus (ii) an additional amount equal to the full amount of all declared and unpaid dividends on each such Exchangeable Share held by such holder on any dividend record date which occurred prior to the date of the exchange. RG shall provide the Trustee with an Officer’s Certificate in connection with each automatic exchange setting forth the calculation of the purchase price for each Exchangeable Share. Upon payment by RG of such purchase price, the relevant Beneficiary shall cease to have any right to be paid by Canco any amount in respect of declared and unpaid dividends on each Exchangeable Share. |
(4) | The closing of the transaction of purchase and sale contemplated by the automatic exchange of Exchangeable Shares for RG Shares shall be deemed to have occurred immediately prior to the Liquidation Event Effective Date, and each Beneficiary shall be deemed to have transferred to RG all of the Beneficiary’s right, title and interest in and to such Beneficiary’s Exchangeable Shares free and clear of any lien, claim or encumbrance and the related interest in the Trust Estate and each such Beneficiary shall cease to be a holder of such Exchangeable Shares and RG shall issue to the Beneficiary the RG Shares issuable upon the automatic exchange of Exchangeable Shares for RG Shares and on the applicable payment date shall deliver to the Trustee for delivery to the Beneficiary a cheque for the balance, if any, of the purchase price for such Exchangeable Shares, without interest, in each case less any amounts withheld pursuant to Section 5.13. Concurrently with such Beneficiary ceasing to be a holder of Exchangeable Shares, the Beneficiary shall become the holder of the RG Shares issued pursuant to the automatic exchange of such Beneficiary’s Exchangeable Shares for RG Shares and the certificates held by the Beneficiary previously representing the Exchangeable Shares exchanged by the Beneficiary with RG pursuant to such automatic exchange shall thereafter be deemed to represent RG Shares issued to the Beneficiary by RG pursuant to such automatic exchange. Upon the request of a Beneficiary and the surrender by the Beneficiary of Exchangeable Share certificates deemed to represent RG Shares, duly endorsed in blank and accompanied by such instruments of transfer as RG may reasonably require, RG shall deliver or cause to be delivered to the Beneficiary certificates representing the RG Shares of which the Beneficiary is the holder. |
5.13 | Withholding Rights |
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6.1 | Powers and Duties of the Trustee |
(1) | The rights, powers, duties and authorities of the Trustee under this agreement, in its capacity as Trustee of the Trust, shall include: |
(a) | receipt and deposit of the RG Special Voting Share from RG as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; | |
(b) | granting proxies and distributing materials to Beneficiaries as provided in this agreement; | |
(c) | voting the Beneficiary Votes in accordance with the provisions of this agreement; | |
(d) | receiving the grant of the Automatic Exchange Right and the Exchange Right from RG as Trustee for and on behalf of the Beneficiaries in accordance with the provisions of this agreement; | |
(e) | enforcing the benefit of the Automatic Exchange Right and the Exchange Right, in each case in accordance with the provisions of this agreement, and in connection therewith receiving from Beneficiaries Exchangeable Shares and other requisite documents and distributing to such Beneficiaries RG Shares and cheques, if any, to which such Beneficiaries are entitled pursuant to the Automatic Exchange Right or the Exchange Right, as the case may be; | |
(f) | holding title to the Trust Estate; | |
(g) | investing any moneys forming, from time to time, a part of the Trust Estate as provided in this agreement; | |
(h) | taking action at the direction of a Beneficiary or Beneficiaries to enforce the obligations of RG and Canco under this agreement; and | |
(i) | taking such other actions and doing such other things as are specifically provided in this agreement to be carried out by the Trustee whether alone, jointly or in the alternative. |
(2) | In the exercise of such rights, powers, duties and authorities the Trustee shall have (and is granted) such incidental and additional rights, powers, duties and authority not in conflict with any of the provisions of this agreement as the Trustee, acting in good faith and in the reasonable exercise of its discretion, may deem necessary, appropriate or desirable to effect the purpose of the Trust. Any exercise of such discretionary rights, powers, duties and authorities by the Trustee shall be final, conclusive and binding upon all persons. |
(3) | The Trustee in exercising its rights, powers, duties and authorities hereunder shall act honestly and in good faith and with a view to the best interests of the Beneficiaries and shall exercise the care, diligence and skill that a reasonably prudent trustee would exercise in comparable circumstances. |
(4) | The Trustee shall not be bound to give notice or do or take any act, action or proceeding by virtue of the powers conferred on it hereby unless and until it shall be specifically required to do so under the terms hereof; nor shall the Trustee be required to take any notice of, or to do, or to take any act, action or proceeding as a result of any default or breach of any provision hereunder, unless and until notified in writing of such default or breach, which notices shall distinctly specify the default or breach desired to be brought to the attention of the Trustee, and in the absence of such notice the Trustee may for all purposes of this agreement conclusively assume that no default or breach has been made in the observance or performance of any of the representations, warranties, covenants, agreements or conditions contained herein. |
6.2 | No Conflict of Interest |
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6.3 | Dealings with Transfer Agents, Registrars, etc. |
(1) | Each of RG and Canco irrevocably authorizes the Trustee, from time to time, to: |
(a) | consult, communicate and otherwise deal with the respective registrars and transfer agents, and with any such subsequent registrar or transfer agent, of the Exchangeable Shares and RG Shares; and | |
(b) | requisition, from time to time, (i) from any such registrar or transfer agent any information readily available from the records maintained by it which the Trustee may reasonably require for the discharge of its duties and responsibilities under this agreement and (ii) from the transfer agent of RG Shares, and any subsequent transfer agent of such shares, the share certificates issuable upon the exercise from time to time of the Automatic Exchange Right and pursuant to the Exchange Right. |
(2) | RG and Canco shall irrevocably authorize their respective registrars and transfer agents to comply with all such requests. RG covenants that it shall supply its transfer agent with duly executed share certificates for the purpose of completing the exercise from time to time of the Automatic Exchange Right and the Exchange Right, in each case pursuant to Article 5. |
6.4 | Books and Records |
(a) | the property and funds comprising the Trust Estate as of that date; | |
(b) | the number of exercises of the Automatic Exchange Right, if any, and the aggregate number of Exchangeable Shares received by the Trustee on behalf of Beneficiaries in consideration of the issuance by RG of RG Shares in connection with the Automatic Exchange Right, during the calendar year ended on such December 31st; and | |
(c) | any action taken by the Trustee in the performance of its duties under this agreement which it had not previously reported. |
6.5 | Income Tax Returns and Reports |
6.6 | Indemnification Prior to Certain Actions by Trustee |
(1) | The Trustee shall exercise any or all of the rights, duties, powers or authorities vested in it by this agreement at the request, order or direction of any Beneficiary upon such Beneficiary furnishing to the Trustee reasonable funding, security or indemnity against the costs, expenses and liabilities which may be incurred by the Trustee therein or thereby, provided that no Beneficiary shall be obligated to furnish to the Trustee any such funding, security or indemnity in connection with the exercise by the Trustee of any of its rights, duties, powers and authorities with respect to the RG Special Voting Share pursuant to Article 4, subject to Section 6.15, and with respect to the Automatic Exchange Right and the Exchange Right pursuant to Article 5. |
(2) | None of the provisions contained in this agreement shall require the Trustee to expend or risk its own funds or otherwise incur financial liability in the exercise of any of its rights, powers, duties, or authorities unless funded, given security and indemnified as aforesaid. |
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6.7 | Action of Beneficiaries |
6.8 | Reliance Upon Declarations |
6.9 | Evidence and Authority to Trustee |
(1) | RG and/or Canco shall furnish to the Trustee evidence of compliance with the conditions provided for in this agreement relating to any action or step required or permitted to be taken by RG and/or Canco or the Trustee under this agreement or as a result of any obligation imposed under this agreement, including in respect of the Voting Rights or the Automatic Exchange Right or the Exchange Right and the taking of any other action to be taken by the Trustee at the request of or on the application of RG and/or Canco promptly if and when: |
(a) | such evidence is required by any other section of this agreement to be furnished to the Trustee in accordance with the terms of this Section 6.9; or | |
(b) | the Trustee, in the exercise of its rights, powers, duties and authorities under this agreement, gives RG and/or Canco written notice requiring it to furnish such evidence in relation to any particular action or obligation specified in such notice. |
(2) | Such evidence shall consist of an Officer’s Certificate of RG and/or Canco or a statutory declaration or a certificate made by persons entitled to sign an Officer’s Certificate stating that any such condition has been complied with in accordance with the terms of this agreement. |
(3) | Whenever such evidence relates to a matter other than the Voting Rights or the Automatic Exchange Right or the Exchange Right or the taking of any other action to be taken by the Trustee at the request or on the application of RG and/or Canco, and except as otherwise specifically provided herein, such evidence may consist of a report or opinion of any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert or any other person whose qualifications give authority to a statement made by him, provided that if such report or opinion is furnished by a director, officer or employee of RG and/or Canco it shall be in the form of an Officer’s Certificate or a statutory declaration. |
(4) | Each statutory declaration, Officer’s Certificate, opinion or report furnished to the Trustee as evidence of compliance with a condition provided for in this agreement shall include a statement by the person giving the evidence: |
(a) | declaring that he has read and understands the provisions of this agreement relating to the condition in question; | |
(b) | describing the nature and scope of the examination or investigation upon which he based the statutory declaration, certificate, statement or opinion; and | |
(c) | declaring that he has made such examination or investigation as he believes is necessary to enable him to make the statements or give the opinions contained or expressed therein. |
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6.10 | Experts, Advisers and Agents |
(a) | in relation to these presents act and rely on the opinion or advice of or information obtained from any solicitor, attorney, auditor, accountant, appraiser, valuer or other expert, whether retained by the Trustee or by RG and/or Canco or otherwise, and may retain or employ such assistants as may be necessary to the proper discharge of its powers and duties and determination of its rights hereunder and may pay proper and reasonable compensation for all such legal and other advice or assistance as aforesaid; | |
(b) | employ such agents and other assistants as it may reasonably require for the proper determination and discharge of its powers and duties hereunder; and | |
(c) | pay reasonable remuneration for all services performed for it (and shall be entitled to receive reasonable remuneration for all services performed by it) in the discharge of the trusts hereof and compensation for all reasonable disbursements, costs and expenses made or incurred by it in the discharge of its duties hereunder and in the management of the Trust. |
6.11 | Investment of Moneys Held by Trustee |
6.12 | Trustee Not Required to Give Security |
6.13 | Trustee Not Bound to Act on Request |
6.14 | Authority to Carry on Business |
6.15 | Conflicting Claims |
(1) | If conflicting claims or demands are made or asserted with respect to any interest of any Beneficiary in any Exchangeable Shares, including any disagreement between the heirs, representatives, successors or assigns succeeding to all or any part of the interest of any Beneficiary in any Exchangeable Shares, resulting in conflicting |
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claims or demands being made in connection with such interest, then the Trustee shall be entitled, in its sole discretion, to refuse to recognize or to comply with any such claims or demands. In so refusing, the Trustee may elect not to exercise any Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands and, in so doing, the Trustee shall not be or become liable to any person on account of such election or its failure or refusal to comply with any such conflicting claims or demands. The Trustee shall be entitled to continue to refrain from acting and to refuse to act until: |
(a) | the rights of all adverse claimants with respect to the Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands have been adjudicated by a final judgement of a court of competent jurisdiction; or | |
(b) | all differences with respect to the Voting Rights, Automatic Exchange Right or Exchange Right subject to such conflicting claims or demands have been conclusively settled by a valid written agreement binding on all such adverse claimants, and the Trustee shall have been furnished with an executed copy of such agreement certified to be in full force and effect. |
(2) | If the Trustee elects to recognize any claim or comply with any demand made by any such adverse claimant, it may in its discretion require such claimant to furnish such surety bond or other security satisfactory to the Trustee as it shall deem appropriate to fully indemnify it as between all conflicting claims or demands. |
6.16 | Acceptance of Trust |
6.17 | Third Party Interests |
6.18 | Privacy |
7.1 | Fees and Expenses of the Trustee |
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8.1 | Indemnification of the Trustee |
(1) | RG and Canco jointly and severally agree to indemnify and hold harmless the Trustee and each of its directors, officers, employees and agents appointed and acting in accordance with this agreement (collectively, the “Indemnified Parties”) against all claims, losses, damages, reasonable costs, penalties, fines and reasonable expenses (including reasonable expenses of the Trustee’s legal counsel) which, without fraud, gross negligence, wilful misconduct or bad faith on the part of such Indemnified Party, may be paid, incurred or suffered by the Indemnified Party by reason or as a result of the Trustee’s acceptance or administration of the Trust, its compliance with its duties set forth in this agreement, or any written or oral instruction delivered to the Trustee by RG or Canco pursuant hereto. |
(2) | In no case shall RG or Canco be liable under this indemnity for any claim against any of the Indemnified Parties unless RG and Canco shall be notified by the Trustee of the written assertion of a claim or of any action commenced against the Indemnified Parties, promptly after any of the Indemnified Parties shall have received any such written assertion of a claim or shall have been served with a summons or other first legal process giving information as to the nature and basis of the claim. Subject to (ii) below, RG and Canco shall be entitled to participate at their own expense in the defence and, if RG and Canco so elect at any time after receipt of such notice, either of them may assume the defence of any suit brought to enforce any such claim. The Trustee shall have the right to employ separate counsel in any such suit and participate in the defence thereof, but the fees and expenses of such counsel shall be at the expense of the Trustee unless: (i) the employment of such counsel has been authorized by RG or Canco; or (ii) the named parties to any such suit include both the Trustee and RG or Canco and the Trustee shall have been advised by counsel acceptable to RG or Canco that there may be one or more legal defences available to the Trustee that are different from or in addition to those available to RG or Canco and that, in the judgement of such counsel, would present a conflict of interest were a joint representation to be undertaken (in which case RG and Canco shall not have the right to assume the defence of such suit on behalf of the Trustee but shall be liable to pay the reasonable fees and expenses of counsel for the Trustee). This indemnity shall survive the termination of the Trust and the resignation or removal of the Trustee. |
8.2 | Limitation of Liability |
9.1 | Resignation |
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9.2 | Removal |
9.3 | Successor Trustee |
9.4 | Notice of Successor Trustee |
10.1 | Certain Requirements in Respect of Combination, etc. |
(a) | such other person or continuing corporation (the “RG Successor”), by operation of law, becomes, without more, bound by the terms and provisions of this agreement or, if not so bound, executes, prior to or contemporaneously with the consummation of such transaction, a trust agreement supplemental hereto and such other instruments (if any) as are necessary or advisable to evidence the assumption by the RG Successor of liability for all moneys payable and property deliverable hereunder and the covenant of such RG Successor to pay and deliver or cause to be delivered the same and its agreement to observe and perform all the covenants and obligations of RG under this agreement: and | |
(b) | such transaction shall be upon such terms and conditions as substantially to preserve and not to impair in any material respect any of the rights, duties, powers and authorities of the Trustee or of the Beneficiaries hereunder. |
10.2 | Vesting of Powers in Successor |
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10.3 | Wholly-Owned Subsidiaries |
10.4 | Successor Transactions |
(a) | in which RG merges or amalgamates with, or in which all or substantially all of the then outstanding RG Shares are acquired by, one or more other corporations to which RG is, immediately before such merger, amalgamation or acquisition, “related” within the meaning of the ITA (otherwise than by virtue of a right referred to in paragraph 251(5)(b) thereof); | |
(b) | which does not result in an acceleration of the Redemption Date in accordance with paragraph (b) of that definition; and | |
(c) | in which all or substantially all of the then outstanding RG Shares are converted into or exchanged for shares or rights to receive such shares (the “Other Shares”) of another corporation (the “Other Corporation”) that, immediately after such RG Control Transaction, owns or controls, directly or indirectly, RG, |
11.1 | Amendments, Modifications, etc. |
11.2 | Ministerial Amendments |
(a) | adding to the covenants of any or all parties hereto for the protection of the Beneficiaries hereunder provided that the board of directors of each of Canco and RG shall be of the good faith opinion and the Trustee, acting on |
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the advice of counsel, shall be of the opinion that such additions will not be prejudicial to the rights or interests of the Beneficiaries; |
(b) | making such amendments or modifications not inconsistent with this agreement as may be necessary or desirable with respect to matters or questions which, in the good faith opinion of the board of directors of each of RG and Canco and in the opinion of the Trustee, having in mind the best interests of the Beneficiaries, it may be expedient to make, provided that such boards of directors and the Trustee, acting on the advice of counsel, shall be of the opinion that such amendments and modifications will not be prejudicial to the interests of the Beneficiaries; or | |
(c) | making such changes or corrections which, on the advice of counsel to RG, Canco and the Trustee, are required for the purpose of curing or correcting any ambiguity or defect or inconsistent provision or clerical omission or mistake or manifest error. |
11.3 | Meeting to Consider Amendments |
11.4 | Changes in Capital of RG and Canco |
11.5 | Execution of Supplemental Trust Agreements |
(a) | evidencing the succession of RG Successors and the covenants of and obligations assumed by each such RG Successor in accordance with the provisions of Article 9 and the successors of the Trustee or any successor trustee in accordance with the provisions of Article 9; | |
(b) | making any additions to, deletions from or alterations of the provisions of this agreement or the Voting Rights, the Automatic Exchange Right or the Exchange Right which, in the opinion of the Trustee, will not be prejudicial to the interests of the Beneficiaries or are, in the opinion of counsel to the Trustee, necessary or advisable in order to incorporate, reflect or comply with any legislation the provisions of which apply to RG, Canco, the Trustee or this agreement; and | |
(c) | for any other purposes not inconsistent with the provisions of this agreement, including to make or evidence any amendment or modification to this agreement as contemplated hereby; provided that, in the opinion of the Trustee, the rights of the Trustee and Beneficiaries will not be prejudiced thereby. |
12.1 | Term |
(a) | no outstanding Exchangeable Shares are held by a Beneficiary; and | |
(b) | each of RG and Canco elects in writing to terminate the Trust and such termination is approved by the Beneficiaries in accordance with Section 11(2) of the Share Provisions. |
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12.2 | Survival of Agreement |
13.1 | Severability |
13.2 | Enurement |
13.3 | Notices to Parties |
Fax: (303) 573-9385
Attn: Mr. Graham Gow
66 Wellington Street West
Suite 5300
Toronto-Dominion Bank Tower
Toronto, Ontario M5K 1E6
Fax: (416) 868-0673
Attn: Mr. Paul Hilton
One Tabor Center, Suite 1500
1200 Seventeenth Street
Denver, Colorado 80202
Fax: (303) 899-7333
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Suite 600, 530 8th Ave. SW
Calgary, Alberta T2P 3S8
Attention: Manager, Corporate Trust
13.4 | Notice to Beneficiaries |
13.5 | Counterparts |
13.6 | Jurisdiction |
13.7 | Attornment |
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By: |
By: |
By: |
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(COMMERCIAL LIST)
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TO: | All Registered Holders of Common Shares and Optionholders of International Royalty Corporation |
AND TO: | Director Compliance and Policy Directorate Corporations Canada Industry Canada 9th Floor, Jean Edmonds Tower South 365 Laurier Avenue West Ottawa, ON K1A 0C8 |
AND TO: | McCarthy Tetrault LLP 5300-66 Wellington St. W. Toronto-Dominion Centre Toronto, Ontario, M5K 1E6 |
Tel: 416 601 7998
Fax: 416 868 0673
7296355 Canada Limited
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1. | THE APPLICANT, INTERNATIONAL ROYALTY CORPORATION, MAKES APPLICATION TO A JUDGE PRESIDING OVER THE COMMERCIAL LIST AT 330 UNIVERSITY AVENUE, TORONTO, ONTARIO FOR: |
(a) | an order pursuant to Section 192(3) of theCanada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the “CBCA”), approving a plan of arrangement (the “Arrangement”) proposed by International Royalty Corporation (“IRC”) and described in the Notice and Management Proxy Circular (the “Circular”) attached as Exhibit “A” to the affidavit filed in support of this Application; | |
(b) | an interim order for the advice and direction of this Court pursuant to section 192(4) of the CBCA (the “Interim Order”); and | |
(c) | such further and other relief as counsel may request and this Honourable Court may deem just. |
2. | THE GROUNDS FOR THE APPLICATION ARE: |
(a) | IRC is a corporation organized under the laws of Canada and governed by the CBCA; | |
(b) | all statutory requirements under the CBCA either have been fulfilled or will be fulfilled by the date of the return of this Application, subject to the terms of the Interim Order; | |
(c) | IRC is not insolvent within the meaning of s. 192(2) of the CBCA; | |
(d) | the matters sought to be effected by the proposed Arrangement cannot practicably be effected under any other provision of the CBCA; | |
(e) | the arrangement is fair and reasonable; | |
(f) | the shares to be issued to International Royalty Corporation Securityholders pursuant to the Arrangement will be issued in reliance upon the exemption provided by section 3(a)(10) of theUnited States Securities Act of 1933, as amended; | |
(g) | all directions set out in the Interim Order and the shareholder approvals required pursuant to the Interim Order either have been followed and obtained, or will be followed and obtained, by the date of the return of this Application; | |
(h) | Section 192 of the CBCA; | |
(i) | Rules 1.04, 14.05(2), 17.02, 37, 38 and 39 of theRules of Civil Procedure; and | |
(j) | such further and other grounds as counsel may advise and this Court may deem just. |
3. | THE FOLLOWING DOCUMENTARY EVIDENCE will be used at the hearing of the Application. |
(a) | such Interim Order as may be granted by this Honourable Court; | |
(b) | the Affidavit of Douglas Silver and the exhibits attached thereto; | |
(c) | such further affidavits of deponents on behalf of the Applicant, reporting as to the compliance with any Interim Order of this Court and as to the result of any meetings ordered by any Interim Order of this Court as may be necessary; and | |
(d) | such further or other material as counsel may advise and this Court may deem just. |
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4. | Notice of this Application will be sent to all registered holders of IRC shares and optionholders of IRC at the address of each holder as shown on the books and records of IRC on January 14, 2010, or as this Court may direct in the Interim order pursuant to rules 17.02(n) and 17.02(o) of the Rules of Civil Procedure in the case of those holders whose addresses, as they appear on the books and records of IRC, are outside Ontario. The Notice of Application will also be sent to the Director under the CBCA. |
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ONTARIO SUPERIOR COURT OF JUSTICE (Commercial List) Proceedings commenced at Toronto | |||
NOTICE OF APPLICATION | |||
FASKEN MARTINEAU DuMOULIN LLP Barristers and Solicitors Toronto Dominion Bank Tower P.O. Box 20 Toronto-Dominion Centre Toronto, ON M5K 1N6 | |||
Samuel R. Rickett LSUC #14947B Tel: 416 868 3436 Christine P. Tabbert LSUC #43594K Tel: 416 865 4465 Fax: 416 364 7813 Lawyers for the Applicant |
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Court File No. CV-10-8532-00CL |
(COMMERCIAL LIST)
THE HONOURABLE | ) | THURSDAY, THE 14TH DAY OF | ||||
JUSTICE CAMPBELL | ) | JANUARY, 2010 |
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(a) | the IRC Securityholders as of the Record Date (as defined below), or their respective proxy holders; | ||
(b) | the officers, directors, auditors and advisors of IRC and Royal Gold; | ||
(c) | the Director; and | ||
(d) | other persons who may receive the permission of the Chair of the Meeting. |
(a) | to registered IRC Securityholders as of the Record Date (defined below), by: |
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(i) | mailing by pre-paid ordinary or first class mail, not less than twenty-one (21) days before the date of the Meeting. Distribution to such persons shall be to their last known addresses as they appear on the books and records of IRC as of the Record Date, and if no address is shown therein, then the last known address of the person known to the Corporate Secretary of IRC; or | ||
(ii) | by delivery, in person or by recognized courier service or inter-office mail, not less than twenty-one (21) days before the date of the Meeting, to the address specified in (i) above. |
(b) | to non-registered Shareholders of IRC by complying with its obligations under National Instrument 54-101Communication with Beneficial Owners of Securities of a Reporting Issuerof the Canadian Securities Administrators subject to abridgement of any time periods as permitted by such National Instrument; and | ||
(c) | to the respective directors and auditors of IRC, and to the Director, by delivery in person, courier, pre-paid ordinary or first-class mail, or by facsimile or electronic transmission, not less than twenty-one (21) days before the date of the Meeting, |
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(a) | in the case of mailing, three (3) days after deposit with the Canada Post Corporation; | ||
(b) | in the case of delivery in person, upon receipt thereof by the intended addressee; | ||
(c) | in the case of delivery by courier or through inter-office mail, one (1) business day after receipt by the courier or inter-office system; | ||
(d) | in the case of facsimile transmission, upon obtaining a delivery receipt confirming the transmission thereof; | ||
(e) | in the case of email transmission, upon the sending thereof; and | ||
(f) | in all such cases leave is granted for service outside Ontario to the extent such leave is required. |
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(a) | at least two-thirds of the votes cast at the Meeting in person or by proxy by (i) IRC Shareholders voting as a single class, and (ii) IRC Shareholders and IRC Optionholders voting together as a single class, and | ||
(b) | a simple majority (“Minority Approval”) of the votes cast at the Meeting in person or by proxy by all IRC Shareholders other than (i) any “interested party” to the Arrangement within the meaning of Multilateral Instrument 61-101 – Protection of Minority Security Holders in Special Transactions of the Ontario Securities Commission and 1’Autorité des marches financiers (Québec) (“MI 61-101”), (ii) any “related party” of an interested party within the meaning of MI 61-101 (subject to exceptions set out therein), and (iii) any person that is joint actor with any of the foregoing for the purposes of MI 61-101. |
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(a) | in particular, a dissenting shareholder shall send to IRC a written objection to the Arrangement Resolution referred to in subsection 190(5) of the CBCA and that written objection must be received by IRC at 10 Inverness Drive East, Suite 104, Englewood, Colorado, United States, 80112, Attention: Corporate Secretary by no later than 4:30 p.m. (Toronto time) on the business day (as defined in the Arrangement Agreement) preceding the date of the Meeting; and | ||
(b) | any application to a court in respect of an application to fix fair value of the shares of a dissenting shareholder shall be to this Court. |
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(a) | solicitors for IRC: | ||
(b) | solicitors for Canco and Royal Gold; | ||
(c) | the Director; and | ||
(d) | any person who has filed a Notice of Appearance herein in accordance with this Interim Order. |
Barristers and Solicitors
P.O. Box 20, Toronto-Dominion Centre
Toronto, Ontario M5K 1N6
Attention : Sam Rickett and Christine Tabbert
5300-66 Wellington St. W.
Toronto-Dominion Centre
Toronto, Ontario, M5K 1E6
Attention: Paul Steep
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ONTARIO | |||
SUPERIOR COURT OF JUSTICE | |||
(Commercial List) | |||
Proceedings commenced at Toronto | |||
INTERIM ORDER | |||
FASKEN MARTINEAU DuMOULIN LLP | |||
Barristers and Solicitors | |||
Toronto Dominion Bank Tower | |||
P.O. Box 20 | |||
Toronto-Dominion Centre | |||
Toronto, ON M5K 1N6 | |||
Samuel R. Rickett LSUC #14947B | |||
Tel: 416 868 3436 | |||
Christine P. Tabbert LSUC #43594K | |||
Tel: 416 865 4465 | |||
Fax: 416 364 7813 | |||
Lawyers for the Applicant |
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(a) | the latest drafts of Arrangement Agreement dated December 17 and related schedules; | |
(b) | the debt financing commitment letter dated December 14, 2009 provided by HSBC Securities (USA) Inc. related to the Transaction; | |
(c) | annual reports of the Company for the fiscal years ended December 31, 2006, December 31, 2007 and December 31, 2008; | |
(d) | the Notice of Annual Meeting of Shareholders and the Management Information Circular of the Company for the fiscal years ended December 31, 2006, December 31, 2007 and December 31, 2008; | |
(e) | audited financial statements of the Company for the fiscal years ended December 31, 2006, December 31, 2007 and December 31, 2008; |
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(f) | annual information forms of the Company for the fiscal years ended December 31, 2006, December 31, 2007 and December 31, 2008; | |
(g) | unaudited quarterly reports of the Company for the three-month periods ended March 31, 2009, June 30, 2009 and September 30, 2009; | |
(h) | various internal Company management reports; | |
(i) | discussions with senior management of the Company; | |
(j) | discussions with the Company’s legal counsel; | |
(k) | discussions with other potentially interested parties; | |
(l) | public information relating to the business, operations, financial performance and stock trading history of the Company and other selected public companies considered by us to be relevant; | |
(m) | public information with respect to other transactions of a comparable nature considered by us to be relevant; | |
(n) | representations contained in separate certificates addressed to Scotia Capital, as of the date hereof, from senior officers of the Company as to the completeness, accuracy and fair presentation of the information upon which the Opinion is based; and | |
(o) | such other corporate, industry and financial market information, investigations and analyses as Scotia Capital considered necessary or appropriate in the circumstances. |
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(a) | amend its articles under section 173 or 174 to add, change or remove any provisions restricting or constraining the issue, transfer or ownership of shares of that class; | |
(b) | amend its articles under section 173 to add, change or remove any restriction on the business or businesses that the corporation may carry on; | |
(c) | amalgamate otherwise than under section 184; | |
(d) | be continued under section 188; | |
(e) | sell, lease or exchange all or substantially all its property under subsection 189(3); or | |
(f) | carry out a going-private transaction or a squeeze-out transaction. |
(a) | the shareholder’s name and address; | |
(b) | the number and class of shares in respect of which the shareholder dissents; and | |
(c) | a demand for payment of the fair value of such shares. |
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(a) | the shareholder withdraws that notice before the corporation makes an offer under subsection (12), | |
(b) | the corporation fails to make an offer in accordance with subsection (12) and the shareholder withdraws the notice, or | |
(c) | the directors revoke a resolution to amend the articles under subsection 173(2) or 174(5), terminate an amalgamation agreement under subsection 183(6) or an application for continuance under subsection 188(6), or abandon a sale, lease or exchange under subsection 189(9), |
(a) | a written offer to pay for their shares in an amount considered by the directors of the corporation to be the fair value, accompanied by a statement showing how the fair value was determined; or | |
(b) | if subsection (26) applies, a notification that it is unable lawfully to pay dissenting shareholders for their shares. |
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(a) | all dissenting shareholders whose shares have not been purchased by the corporation shall be joined as parties and are bound by the decision of the court; and | |
(b) | the corporation shall notify each affected dissenting shareholder of the date, place and consequences of the application and of their right to appear and be heard in person or by counsel. |
(a) | withdraw their notice of dissent, in which case the corporation is deemed to consent to the withdrawal and the shareholder is reinstated to their full rights as a shareholder; or | |
(b) | retain a status as a claimant against the corporation, to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the corporation but in priority to its shareholders. |
(a) | the corporation is or would after the payment be unable to pay its liabilities as they become due; or | |
(b) | the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities. |
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TO THE INFORMATION AGENT: