|
Nevada
|
| |
1000
|
| |
85-3475290
|
|
|
(State or other jurisdiction of
incorporation or organization) |
| |
(Primary Standard Industrial
Classification Code Number) |
| |
(I.R.S. Employer
Identification No.) |
|
|
Richard Raymer
Dorsey & Whitney LLP 161 Bay St. #4310 Toronto, ON M5J 2S1, Canada (416) 367-7370 |
| |
Michael J. Hong
Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, NY 10001-8602 (212) 735-3000 |
|
|
Large accelerated filer
☐
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| |
Accelerated filer
☐
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|
|
Non-accelerated filer
☒
|
| |
Smaller reporting company
☒
|
|
| | | |
Emerging growth company
☒
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| | | | F-1 | | | |
| | | | F-43 | | | |
| | | | A-1 | | | |
| | | | B-1 | | | |
| | | | C-1 | | | |
| | | | SA-1 | | |
| | |
Year Ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Statement of operations data: | | | | | | | | | | | | | |
Loss from operations
|
| | | $ | (1,834,524) | | | | | $ | (1,101,472) | | |
Net loss
|
| | | $ | (3,165,041) | | | | | $ | (1,114,273) | | |
Net loss per share – Basic and diluted
|
| | | $ | (0.12) | | | | | $ | (0.07) | | |
Weighted average shares outstanding – Basic and diluted
|
| | | | 25,904,749 | | | | | | 16,054,675 | | |
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 10,392,940 | | | | | $ | 146,425 | | |
Total assets
|
| | | $ | 16,676,364 | | | | | $ | 370,178 | | |
Total current liabilities
|
| | | $ | 1,071,792 | | | | | $ | 2,948,374 | | |
Total liabilities
|
| | | $ | 1,545,117 | | | | | $ | 2,948,374 | | |
Accumulated deficit
|
| | | $ | (8,542,784) | | | | | $ | (5,377,743) | | |
Total stockholder’s equity (deficit)
|
| | | $ | 15,131,247 | | | | | $ | (2,578,196) | | |
| | |
Six Months Ended
|
| |||||||||
| | |
September 30, 2021
|
| |
September 30, 2020
|
| ||||||
Statement of operations data: | | | | | | | | | | | | | |
Loss from operations
|
| | | $ | (17,094,705) | | | | | $ | (848,091) | | |
Net loss
|
| | | $ | (17,212,993) | | | | | $ | (1,119,600) | | |
Net loss per share – Basic and diluted
|
| | | $ | (0.28) | | | | | $ | (0.07) | | |
Weighted average shares outstanding – Basic and diluted
|
| | | | 62,220,794 | | | | | | 16,869,034 | | |
| | |
September 30, 2021
|
| |
March 31, 2021
|
| ||||||
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 52,220,159 | | | | | $ | 10,392,940 | | |
Total assets
|
| | | $ | 69,030,116 | | | | | $ | 16,676,364 | | |
Total current liabilities
|
| | | $ | 613,162 | | | | | $ | 1,071,792 | | |
Total liabilities
|
| | | $ | 613,162 | | | | | $ | 1,545,117 | | |
Accumulated deficit
|
| | | $ | (25,755,777) | | | | | $ | (8,542,784) | | |
Total stockholder’s equity (deficit)
|
| | | $ | 68,416,954 | | | | | $ | 15,131,247 | | |
| | |
Year Ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Statement of operations data: | | | | | | | | | | | | | |
Loss from operations
|
| | | $ | (2,092,118) | | | | | $ | (169,673) | | |
Net income (loss)
|
| | | $ | 25,520,417 | | | | | $ | (193,283) | | |
Net earnings (loss) per share – Basic and diluted
|
| | | $ | 0.81 | | | | | $ | (0.03) | | |
Weighted average shares outstanding – Basic and diluted
|
| | | | 32,110,916 | | | | | | 5,563,241 | | |
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 11,444,668 | | | | | $ | 141,768 | | |
Total assets
|
| | | $ | 70,632,103 | | | | | $ | 849,602 | | |
Total current liabilities
|
| | | $ | 1,756,390 | | | | | $ | 87,964 | | |
Total liabilities
|
| | | $ | 11,628,173 | | | | | $ | 87,964 | | |
Total stockholder’s equity
|
| | | $ | 59,003,930 | | | | | $ | 761,638 | | |
| | |
Six Months ended
|
| |||||||||
| | |
September 30, 2021
|
| |
September 30, 2021
|
| ||||||
Statement of operations data: | | | | | | | | | | | | | |
Loss from operations
|
| | | $ | (18,086,259) | | | | | $ | (527,398) | | |
Net income (loss)
|
| | | $ | (17,845,804) | | | | | $ | 34,246,313 | | |
Net earnings (loss) per share – Basic and diluted
|
| | | $ | (0.22) | | | | | $ | 1.31 | | |
Weighted average shares outstanding – Basic and diluted | | | | | 49,232,345 | | | | | | 26,199,180 | | |
| | |
September 30, 2021
|
| |
March 31, 2021
|
| ||||||
Balance sheet data: | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 52,518,680 | | | | | $ | 11,444,668 | | |
Total assets
|
| | | $ | 122,244,221 | | | | | $ | 70,632,103 | | |
Total current liabilities
|
| | | $ | 1,187,822 | | | | | $ | 1,756,390 | | |
Total liablities
|
| | | $ | 10,236,320 | | | | | $ | 11,628,173 | | |
Total stockholder’s equity
|
| | | $ | 112,007,901 | | | | | $ | 59,003,930 | | |
| | |
For the Year
Ended March 31, 2021 |
| |
For the Six
Months Ended September 30, 2021 |
| ||||||
Consulting
|
| | | | 820,354 | | | | | | 412,083 | | |
Exploration costs
|
| | | | 788,719 | | | | | | 4,058,726 | | |
Office, travel and general
|
| | | | 573,186 | | | | | | 12,325,193 | | |
Professional fees
|
| | | | 1,049,503 | | | | | | 1,290,257 | | |
General and administrative expenses
|
| | | | — | | | | | | — | | |
Loss from operations
|
| | | | (3,231,762) | | | | | | (18,086,259) | | |
Other income (expense) | | | | | | | | | |||||
Foreign exchange income
|
| | | | 79,001 | | | | | | 8,783 | | |
Interest income
|
| | | | 34,443 | | | | | | 6,334 | | |
Interest expense
|
| | | | — | | | | | | (101) | | |
Gain on derivative assets
|
| | | | — | | | | | | — | | |
| | | | | 113,444 | | | | |||||
Net income (loss) before income tax
|
| | | | (3,118,318) | | | | | | (18,195,764) | | |
Deferred tax benefit
|
| | | | 413,424 | | | | | | 349,960 | | |
Net income (loss)
|
| | | | (2,704,894) | | | | | | (17,845,804) | | |
Basic and diluted earnings
(loss) per share |
| | | | (0.05) | | | | | | (0.25) | | |
Weighted average shares outstanding | | | | ||||||||||
Basic and diluted
|
| | | | 54,240,518 | | | | | | 70,661,947 | | |
| | |
Year ended
March 31, 2021 |
| |||
Pro forma net loss
|
| | | $ | (2,704,894) | | |
Actual weighted average number of basic and diluted
common shares outstanding |
| | | | 32,110,916 | | |
Net impact of reverse stock split and additional common shares issued in connection with
the Transaction (see note 3 to the unaudited pro forma condensed consolidated combined financial information contained herein) |
| | | | 22,129,602 | | |
Pro forma weighted average number of basic and diluted common shares outstanding
|
| | | | 54,240,518 | | |
Pro forma basic and diluted loss per share
|
| | | | (0.05) | | |
| | |
Dakota
Historical |
| |||
Market value per share
|
| | | $ | 4.28 | | |
Name
|
| |
Age
|
| |
Position
|
|
Jonathan T. Awde | | |
43
|
| |
Director
|
|
Gerald M. Aberle | | |
62
|
| |
Director
|
|
Stephen T. O’Rourke | | |
66
|
| |
Director
|
|
Robert Quartermain | | |
66
|
| |
Director
|
|
Name
|
| |
Age
|
| |
Position
|
|
Jennifer Grafton | | |
45
|
| |
Director
|
|
Amy Koenig | | |
48
|
| |
Director
|
|
Alex G. Morrison | | |
58
|
| |
Director
|
|
| | |
Dakota
Territory Resource Corp. |
| |
JR Resources
Corp. |
| |
Pro Forma
Adjustments |
| |
Notes
|
| |
Pro Forma
|
| ||||||||||||
Current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | 10,392,940 | | | | | | 11,444,668 | | | | | | (10,392,940) | | | |
3(e)
|
| | | | 11,444,668 | | |
Prepaid expenses and other current assets
|
| | | | 75,608 | | | | | | 384,897 | | | | | | (75,608) | | | |
3(e)
|
| | | | 384,897 | | |
Total current assets
|
| | | | 10,468,548 | | | | | | 11,829,565 | | | | | | (10,468,548) | | | | | | | | | 11,829,565 | | |
Non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mineral properties, net
|
| | | | 5,337,072 | | | | | | 57,931,794 | | | | | | (5,337,072) | | | |
3(e)
|
| | | | 57,931,794 | | |
Property and equipment, net
|
| | | | 870,744 | | | | | | 870,744 | | | | | | (870,744) | | | |
3(e)
|
| | | | 870,744 | | |
Total assets
|
| | | | 16,676,364 | | | | | | 70,632,103 | | | | | | (16,676,364) | | | | | | | | | 70,632,103 | | |
Current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 162,024 | | | | | | 846,622 | | | | | | (162,024) | | | |
3(e)
|
| | | | 846,622 | | |
Accounts payable – related party
|
| | | | 3,000 | | | | | | 3,000 | | | | | | (3,000) | | | |
3(e)
|
| | | | 3,000 | | |
Current portion of notes payable – related party
|
| | | | 906,768 | | | | | | 906,768 | | | | | | (906,768) | | | |
3(e)
|
| | | | 906,768 | | |
Total current liabilities
|
| | | | 1,071,792 | | | | | | 1,756,390 | | | | | | (1,071,792) | | | | | | | | | 1,756,390 | | |
Non-current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Notes payable – related party, net of current portion and discount
|
| | | | 473,325 | | | | | | 473,325 | | | | | | (473,325) | | | |
3(e)
|
| | | | 473,325 | | |
Deferred tax liability
|
| | | | — | | | | | | 9,398,458 | | | | | | — | | | | | | | | | 9,398,458 | | |
Total liabilities
|
| | | | 1,545,117 | | | | | | 11,628,173 | | | | | | (1,545,117) | | | | | | | | | 11,628,173 | | |
Stockholders’ equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share capital
|
| | | | 56,197 | | | | | | 48,699 | | | | | | (56,197) | | | |
3(e)
|
| | | | 70,828 | | |
| | | | | | | | | | | | | | | | | (13,057) | | | |
3(g)
|
| | | | | | |
| | | | | | | | | | | | | | | | | 35,186 | | | |
3(g)
|
| | | | | | |
Additional paid in capital
|
| | | | 23,617,834 | | | | | | 12,092,157 | | | | | | (2,456,350) | | | |
3(e), 3(f)
|
| | | | 33,253,641 | | |
Retained earnings (deficit)
|
| | | | (8,542,784) | | | | | | 25,679,461 | | | | | | 8,542,784 | | | |
3(e)
|
| | | | 25,679,461 | | |
Equity attributable to stockholders
|
| | | | 15,131,247 | | | | | | 37,820,317 | | | | | | 6,052,366 | | | | | | | | | 59,003,930 | | |
Non-controlling interest
|
| | | | — | | | | | | 21,183,613 | | | | | | (21,183,613) | | | |
3(f)
|
| | | | — | | |
Total stockholders’ equity
|
| | |
$
|
15,131,247
|
| | | |
|
59,003,930
|
| | | |
|
(15,131,247)
|
| | | | | | | | 59,003,930 | | |
Total stockholders’ equity and liabilities
|
| | | $ | 16,676,364 | | | | | | 70,632,103 | | | | | | (16,676,364) | | | | | | | | | 70,632,103 | | |
| | |
Dakota
Territory Resource Corp. |
| |
JR Resources
Corp. |
| |
Pro Forma
Reclassification (Note 3(a)) |
| |
Pro Forma
Adjustments |
| |
Notes
|
| |
Pro Forma
|
| |||||||||||||||
Consulting
|
| | | | — | | | | | | 670,920 | | | | | | 329,941 | | | |
(180,507)
|
| | | | 3(b) | | | | | | 820,354 | | |
Exploration costs
|
| | | | 673,545 | | | | | | 271,853 | | | | | | — | | | |
(156,679)
|
| | | | 3(b) | | | | | | 788,719 | | |
Office, travel and general
|
| | | | — | | | | | | 515,104 | | | | | | 255,327 | | | |
(197,245)
|
| | | | 3(b) | | | | | | 573,186 | | |
Professional fees
|
| | | | — | | | | | | 634,241 | | | | | | 575,711 | | | |
(160,449)
|
| | | | 3(b) | | | | | | 1,049,503 | | |
General and
administrative expenses |
| | | | 1,160,979 | | | | | | — | | | | | | (1,160,979) | | | |
|
| | | | 3(b) | | | | | | — | | |
Loss from operations
|
| | | | (1,834,524) | | | | | | (2,092,118) | | | | | | | | | |
694,880
|
| | | | | | | | | | (3,231,762) | | |
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign exchange income
|
| | | | — | | | | | | 79,001 | | | | | | | | | |
—
|
| | | | | | | | | | 79,001 | | |
Interest income
|
| | | | 7,204 | | | | | | 32,443 | | | | | | | | | |
(5,204)
|
| | | | 3(b) | | | | | | 34,443 | | |
Interest expense
|
| | | | (1,337,721) | | | | | | — | | | | | | | | | |
1,337,721
|
| | | | 3(d) | | | | | | — | | |
Gain on derivatives
|
| | | | — | | | | | | 27,087,667 | | | | | | | | | |
(27,087,667)
|
| | | | 3(c) | | | | | | — | | |
| | | | | (1,330,517) | | | | | | 27,199,111 | | | | | | | | | | | | | | | | | | | | | 113,444 | | |
Net income (loss) before income tax
|
| | | $ | (3,165,041) | | | | | $ | 25,106,993 | | | | | | | | | | | | | | | | | | | | | (3,118,318) | | |
Deferred tax benefit
|
| | | | | | | | | | 413,424 | | | | | | | | | | | | | | | | | | | | | 413,424 | | |
Net income (loss)
|
| | | $ | (3,165,041) | | | | | $ | 25,520,417 | | | | | | | | | | | | | | | | | | | | | (2,704,894) | | |
Basic and diluted earnings
(loss) per share |
| | | | (0.12) | | | | | | 0.81 | | | | | | | | | | | | | | | | | | | | | (0.05) | | |
Weighted average shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 25,904,749 | | | | | | 32,110,916 | | | | | | | | | |
(3,775,147)
|
| | | | 3(g) | | | | | | 54,240,518 | | |
| | |
Common
Shares |
| |
Amount
|
| ||||||
Issued and outstanding, March 31, 2021
|
| | | | 48,698,602 | | | | | $ | 48,699 | | |
Reverse stock split
|
| | | | (13,056,935) | | | | | | (13,057) | | |
Share consideration issued in connection with the Transaction
|
| | | | 35,186,537 | | | | | | 35,186 | | |
Pro forma balance as at March 31, 2021
|
| | | | 70,828,204 | | | | | $ | 70,828 | | |
| | |
Year ended
March 31, 2021 |
| |||
Pro forma net loss
|
| | | $ | (2,704,894) | | |
Actual weighted average number of basic and diluted common shares outstanding
|
| | | | 32,110,916 | | |
Net impact of reverse stock split and additional common shares issued in connection with the Transaction (note 3)
|
| | | | 22,129,602 | | |
Pro forma weighted average number of basic and diluted common shares outstanding
|
| | | | 54,240,518 | | |
Pro forma basic and diluted loss per share
|
| | | | (0.05) | | |
| | |
Dakota
Territory Resource Corp. |
| |
JR Resources
Corp. |
| |
Pro Forma
Adjustments |
| |
Notes
|
| |
Pro Forma
|
| ||||||||||||
Current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | | 52,220,159 | | | | | | 52,518,680 | | | | | | (52,220,159) | | | |
3(c)
|
| | | | 52,518,680 | | |
Receivable
|
| | | | — | | | | | | 30,372 | | | | | | — | | | | | | | | | 30,372 | | |
Prepaid expenses and other current
assets |
| | | | 147,742 | | | | | | 438,232 | | | | | | (147,742) | | | |
3(c)
|
| | | | 438,232 | | |
Total current assets
|
| | | | 52,367,901 | | | | | | 52,987,284 | | | | | | (52,367,901) | | | | | | | | | 52,987,284 | | |
Non-current assets | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Mineral properties, net
|
| | | | 15,586,852 | | | | | | 68,181,574 | | | | | | (15,586,852) | | | |
3(c)
|
| | | | 68,181,574 | | |
Property and equipment, net
|
| | | | 1,075,363 | | | | | | 1,075,363 | | | | | | (1,075,363) | | | |
3(c)
|
| | | | 1,075,363 | | |
Total assets
|
| | | | 69,030,116 | | | | | | 122,244,221 | | | | | | (69,030,116) | | | | | | | | | 122,244,221 | | |
Current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | | 613,162 | | | | | | 1,187,822 | | | | | | (613,162) | | | |
3(c)
|
| | | | 1,187,822 | | |
Total current liabilities
|
| | | | 613,162 | | | | | | 1,187,8220 | | | | | | (613,162) | | | | | | | | | 1,187,822 | | |
Non-current liabilities | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Deferred tax liability
|
| | | | — | | | | | | 9,048,498 | | | | | | — | | | | | | | | | 9,048,498 | | |
Total liabilities
|
| | | | 613,162 | | | | | | 10,236,320 | | | | | | (613,162) | | | | | | | | | 10,236,320 | | |
Stockholders’ equity | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Share capital
|
| | | | 70,428 | | | | | | 49,399 | | | | | | (70,428) | | | |
3(c)
|
| | | | 70,828 | | |
| | | | | | | | | | | | | | | | | (13,757) | | | |
3(e)
|
| | | | | | |
| | | | | | | | | | | | | | | | | 35,186 | | | |
3(e)
|
| | | | | | |
Additional paid in capital
|
| | | | 94,102,303 | | | | | | 41,910,612 | | | | | | (38,821,864) | | | |
3(c), 3(d)
|
| | | | 97,191,051 | | |
Retained earnings (deficit)
|
| | | | (25,755,777) | | | | | | 14,746,022 | | | | | | 25,755,777 | | | |
3(c)
|
| | | | 14,746,022 | | |
Equity attributable to stockholders
|
| | | | 68,416,954 | | | | | | 56,706,033 | | | | | | (13,115,086) | | | | | | | | | 112,007,901 | | |
Non-controlling interest
|
| | | | — | | | | | | 55,301,868 | | | | | | (55,301,868) | | | |
3(d)
|
| | | | — | | |
Total stockholders’ equity
|
| | | $ | 68,416,954 | | | | | | 112,007,901 | | | | | | (68,416,954) | | | | | | | |
|
112,007,901
|
| |
Total stockholders’ equity and liabilities
|
| | | $ | 69,030,116 | | | | | | 122,244,221 | | | | | | (69,030,116) | | | | | | | | | 122,244,221 | | |
| | |
Dakota
Territory Resource Corp. |
| |
JR Resources
Corp. |
| |
Pro forma
Reclassification (Note 3(a)) |
| |
Pro forma
adjustments |
| |
Notes
|
| |
Pro Forma
|
| ||||||||||||||||||
Consulting
|
| | | | — | | | | | | 412,083 | | | | | | — | | | | | | — | | | | | | | | | | | | 412,083 | | |
Exploration costs
|
| | | | 4,058,726 | | | | | | 4,058,726 | | | | | | — | | | | | | (4,058,726) | | | | | | 3(b) | | | | | | 4,058,726 | | |
Office, travel and general
|
| | | | — | | | | | | 12,325,193 | | | | | | 12,145,479 | | | | | | (12,145,479) | | | | | | 3(b) | | | | | | 12,325,193 | | |
Professional fees
|
| | | | — | | | | | | 1,290,257 | | | | | | 911,715 | | | | | | (911,715) | | | | | | 3(b) | | | | | | 1,290,257 | | |
General and administrative expenses
|
| | | | 13,035,979 | | | | | | — | | | | | | (13,035,979) | | | | | | — | | | | | | | | | | | | — | | |
Loss from operations
|
| | | | (17,094,705) | | | | | | (18,086,259) | | | | | | 21,215 | | | | | | 17,115,920 | | | | | | | | | | | | (18,086,259) | | |
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Foreign exchange gain
|
| | | | — | | | | | | 8,783 | | | | | | 21,215 | | | | | | (21,215) | | | | | | 3(b) | | | | | | 8,783 | | |
Interest income
|
| | | | 6,334 | | | | | | 6,334 | | | | | | — | | | | | | (6,334) | | | | | | 3(b) | | | | | | 6,334 | | |
Interest expense
|
| | | | (101) | | | | | | (101) | | | | | | — | | | | | | 101 | | | | | | 3(b) | | | | | | (101) | | |
Loss on settlement of debt
|
| | | | (124,521) | | | | | | (124,521) | | | | | | — | | | | | | 124,521 | | | | | | 3(b) | | | | | | (124,521) | | |
| | | | | (118,288) | | | | | | (109,505) | | | | | | 21,215 | | | | | | 97,073 | | | | | | | | | | | | (109,505) | | |
Net income (loss before income tax
|
| | | | (17,212,993) | | | | | | (18,195,764) | | | | | | — | | | | | | 17,212,993 | | | | | | | | | | | | (18,195,764) | | |
Deferred tax benefit
|
| | | | — | | | | | | 349,960 | | | | | | — | | | | | | — | | | | | | | | | | | | 349,960 | | |
Net income (loss)
|
| | | $ | (17,212,993) | | | | | $ | (17,845,804) | | | | | | — | | | | | | 17,212,993 | | | | | | | | | | | | (17,845,804) | | |
Basic and diluted earnings (loss) per share
|
| | | | (0.28) | | | | | | (0.22) | | | | | | | | | | | | | | | | | | | | | | | | (0.25) | | |
Weighted average shares outstanding
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | | | 70,428,204 | | | | | | 49,232,345 | | | | | | | | | | | | (40,791,192) | | | | | | | | | | | | 70,661,947 | | |
| | |
Common
Shares |
| |
Amount
|
| ||||||
Issued and outstanding, September 30, 2021
|
| | | | 49,398,602 | | | | | $ | 49,399 | | |
Reverse stock split
|
| | | | (13,756,935) | | | | | | (13,756) | | |
Share consideration issued in connection with the Transaction
|
| | | | 35,186,537 | | | | | | 35,186 | | |
Pro forma balance as at September 30, 2021
|
| | | | 70,828,204 | | | | | $ | 70,828 | | |
| | |
Six-month
period ended September 30, 2021 |
| |||
Pro forma net loss
|
| | | $ | (17,845,804) | | |
Actual weighted average number of basic and diluted common shares outstanding
|
| | | | 49,232,345 | | |
Net impact of reverse stock split and additional common shares issued in connection with the Transaction (note 3)
|
| | | | 21,429,602 | | |
Pro forma weighted average number of basic and diluted common shares outstanding
|
| | | | 70,661,947 | | |
Pro forma basic and diluted loss per share
|
| | | | (0.25) | | |
| | |
Regional
and Other |
| |
Barrick
Option |
| |
Blind
Gold |
| |
Maitland
|
| |
Ragged Top
|
| |
West Corridor
|
| |
Total
|
| |||||||||||||||||||||
| | |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |
$
|
| |||||||||||||||||||||
Balance at
March 31, 2021 |
| | | | 298,476 | | | | | | — | | | | | | 218,596 | | | | | | 4,820,000 | | | | | | — | | | | | | — | | | | | | 5,337,072 | | |
Additions | | | | | — | | | | | | 6,150,000 | | | | | | — | | | | | | 986,536 | | | | | | 1,515,000 | | | | | | 1,597,243 | | | | | | 10,248,779 | | |
Balance at
September 30, 2021 |
| | | | 298,476 | | | | | | 6,150,000 | | | | | | 218,596 | | | | | | 5,806,536 | | | | | | 1,515,000 | | | | | | 1,597,243 | | | | | | 15,585,851 | | |
Name and Principal Position
|
| |
Year
|
| |
Salary
($) |
| |
Stock
Awards ($) |
| |
Non-Equity
Incentive Plan Compensation ($) |
| |
Total
($) |
| |||||||||||||||
Jonathan Awde, Chief Executive Officer
|
| | | | 2021 | | | | | | 52,500 | | | | | | — | | | | | | — | | | | | | 52,500 | | |
Gerald Aberle, Chief Operating Officer
|
| | | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Shawn Campbell, Chief Financial Officer
|
| | | | 2021 | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | |
Name and Address of Beneficial Owner(1)
|
| |
Common
Stock of Dakota Beneficially Owned |
| |
Percent of
Outstanding Shares Beneficially Owned |
| |
Percent of
Outstanding Shares of JR Beneficially Owned After the Transaction(2) |
| |||||||||
5% + Holders | | | | | | | | | | | | | | | | | | | |
JR Resources Corp.
1588 – 609 Granville Street Vancouver, BC V7Y 1H4 |
| | | | 35,641,667 | | | | | | 50.32% | | | | | | Nil | | |
Richard Bachman
PO BOX 33084, Reno, NV 89533 |
| | | | 3,527,781 | | | | | | 4.98% | | | | | | 4.98% | | |
Directors and Named Executive Officers | | | | | | | | | | | | | | | | | | | |
Jonathan Awde
|
| | | | 35,799,320(3) | | | | | | 50.54% | | | | | | 9.18% | | |
Gerald Aberle
|
| | | | 4,262,230(4) | | | | | | 6.02% | | | | | | 6.02% | | |
Shawn Campbell
|
| | | | 100,000(5) | | | | | | 0.14% | | | | | | 0.64% | | |
Alex Morrison
|
| | | | 275,313(6) | | | | | | 0.39% | | | | | | 0.39% | | |
Stephen O’Rourke
|
| | | | 966,667(7) | | | | | | 1.36% | | | | | | 1.36% | | |
Robert Quartermain
|
| | | | 516,667(8) | | | | | | 0.73% | | | | | | 11.22% | | |
Jennifer Grafton
|
| | | | 33,333(9) | | | | | | 0.05% | | | | | | 0.05% | | |
Amy Koenig
|
| | | | 33,333(9) | | | | | | 0.05% | | | | | | 0.05% | | |
All Directors and Officers as a Group (8 persons)
|
| | | | 41,986,863 | | | | | | 59.28% | | | | | | 28.91% | | |
Name and Address of Beneficial Owner(1)
|
| |
Common
Stock of JR Beneficially Owned |
| |
Percent of
Outstanding Shares Beneficially Owned |
| |
Percent of
Outstanding Shares of JR Beneficially Owned After the Transaction(2) |
| |||||||||
5% + Holders | | | | | | | | | | | | | | | | | | | |
Robert Quartermain
106 Glendale Drive, Suite A, Lead, SD 57754 |
| | | | 10,300,000(3) | | | | | | 20.85% | | | | | | 11.22% | | |
Directors and Executive Officers | | | | | | | | | | | | | | | | | | | |
Jonathan Awde
|
| | | | 8,675,000(4) | | | | | | 17.59% | | | | | | 9.18% | | |
William Gehlen
|
| | | | 100,000 | | | | | | 0.20% | | | | | | 0.29% | | |
Mac Jackson
|
| | | | 1,200,000 | | | | | | 2.43% | | | | | | 1.39% | | |
All Directors and Officers as a Group (3 persons)
|
| | | | 9,975,000 | | | | | | 20.19% | | | | | | 10.86% | | |
| | |
Number of
warrants |
| |
Exercise
price |
| |
Remaining life
(years) |
| |
Expiry date
|
| |||||||||
| | | | | 4,600,000 | | | | | $ | 1.50 | | | | | | 4.29 | | | |
October 13, 2025
|
|
| | | | | 256,275 | | | | | $ | 1.50 | | | | | | 4.63 | | | |
February 15, 2026
|
|
| | | | | 5,346,360 | | | | | $ | 1.50 | | | | | | 4.71 | | | |
March 15, 2026
|
|
| | | | | 125,000 | | | | | $ | 1.50 | | | | | | 4.85 | | | |
May 6, 2026
|
|
| | | | | 162,500 | | | | | $ | 1.50 | | | | | | 4.87 | | | |
May 15, 2026
|
|
| | | | | 62,500 | | | | | $ | 1.50 | | | | | | 4.92 | | | |
May 30, 2026
|
|
Total:
|
| | | | 10,552,635 | | | | | | | | | | | | | | | | | |
| | |
Warrants
|
| |
Weighted average
exercise price |
| ||||||
Balance, March 31, 2020
|
| | | | — | | | | | $ | — | | |
Issued
|
| | | | 10,202,635 | | | | | | 1.50 | | |
Balance, March 31, 2021
|
| | |
|
10,202,635
|
| | | |
$
|
1.50
|
| |
Issued
|
| | | | 350,000 | | | | | | 1.50 | | |
Balance, September 30, 2021
|
| | |
|
10,552,635
|
| | | |
$
|
1.50
|
| |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
Amendment of Bylaws | | |
The Dakota Bylaws provide that the bylaws may be altered, amended or repealed or new bylaws may be adopted by the affirmative vote of a majority of the directors present at any regular or special meeting of the Board at which a quorum is present; provided, however, that during the Standstill Period, the Board may not alter, amend, change, add to or repeal the bylaws of the corporation in a manner that would constitute a Material Amendment without the approval of a majority of the Company Designees.
The bylaws may be altered, amended or repealed or new bylaws may be adopted by the stockholders; provided, however, that during the standstill period, neither JR or its Affiliates shall Vote its Shares in a manner inconsistent with Section 4.1 or 4.6(a) of the bylaws.
|
| | The JR Bylaws provide that the bylaws, including any bylaws adopted or amended by the stockholders, may be amended or repealed by the board of directors. | |
Authorized Capital Stock | | | Pursuant to the Dakota Charter the authorized capital stock of Dakota consists of (a) 75,000,000 shares of Dakota Stock and (b) 10,000,000 shares of preferred stock, par value $0.001 per share, of Dakota. As of January 28, 2022, (i) 70,828,204 shares of Dakota Stock were issued | | | Pursuant to the JR Charter, the authorized capital stock of JR consists of 200,000,000 shares of JR Stock. As of January 28, 2022, (i) 49,398,602 shares of JR Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were free of | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | and outstanding, all of which were validly issued, fully paid and nonassessable and were free of preemptive rights, (ii) 3,354,583 shares of Dakota Stock were issuable upon exercise of options to purchase shares of Dakota Stock, (iii) 1,150,000 shares of Dakota common stock were issuable upon settlement of restricted share units of Dakota, and (iv) no shares of preferred stock of Dakota were issued and outstanding. | | | preemptive rights, and (ii) 10,556,135 shares of JR were issuable upon exercise of warrants to purchase shares of JR Stock. | |
Voting or Consent Rights | | |
The Dakota Bylaws provide that unless otherwise provided by the bylaws or the Articles of Incorporation, each outstanding share entitled to vote shall be entitled to one vote upon each matter submitted to a vote at a meeting of stockholders, and each fractional share shall be entitled to a corresponding fractional vote on each such matter.
Any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the affirmative vote by the holders of the majority of the shares of the corporation’s common stock, unless the act of a greater number is required by the NRS or by the Dakota Charter or the Dakota Bylaws.
|
| |
The JR Bylaws provide that, subject to the provisions of the NRS requiring a higher level of votes to take certain specified actions and to the terms of the corporation’s certificate of incorporation that set special voting requirements, the stockholders shall take action on all matters other than the election of directors by a majority of the voting power of the stock present, in person or by proxy, at the meeting and entitled to vote on the matter. The stockholders shall elect directors by a plurality of the voting power of the stock present, in person or by proxy, at the meeting and entitled to vote on the matter.
Any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting, without prior notice and without a vote by means of a unanimous stockholder written consent meeting the requirements of the NRS.
|
|
Number and Classification of the Board of Directors | | | The Dakota Bylaws provide that the business and affairs of the corporation shall be managed by a board of not less than one (1) nor more than ten (10) directors. Directors need not be stockholders of the corporation or residents of the State of Nevada and who shall be elected at the annual meeting of stockholders or some adjournment thereof. Directors shall hold office until the next succeeding annual meeting of stockholders and until | | | The JR Bylaws provide that the board of directors shall consist of such number as may be fixed from time to time by resolution of the board of directors. Notwithstanding the foregoing, (a) if the corporation is a public company, the number of directors shall be the greater of three and the most recently set of (i) the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given) and (ii) such number of directors | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | their successors shall have been elected and shall qualify. The board of directors may increase or decrease, to not less than one (1), nor more than ten (10), the number of directors by resolution. | | | that is elected annually or continued in office in the case of a retiring director, and (b) if the corporation is not a public company, the number of directors shall be the most recently set of (i) the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given), and (ii) such number of directors that is elected annually or continued in office in the case of a retiring director. Directors need not be stockholders. | |
Election of Directors | | | The Dakota Bylaws provide that subject to the rights of holders of any class or series of preferred stock then outstanding, nominations for the election of directors at an annual meeting may be made by (i) the board or a duly authorized committee thereof or (ii) any stockholder entitled to vote in the election of directors generally who complies with the procedures set forth in Section 4.16 of the Dakota Bylaws and who is a stockholder of record at the time notice is delivered to the secretary of the corporation. Any stockholder entitled to vote in the election of directors generally may nominate one or more persons for election as directors at an annual meeting only if timely notice of such stockholder’s intent to make such nomination or nominations has been given in writing to the secretary of the corporation. | | | The JR Bylaws provide that the stockholders shall elect directors by a plurality of the voting power of the stock present, in person or by proxy, at the meeting and entitled to vote on the matter. | |
Removal of Directors | | | The Dakota Bylaws provide that any director or directors of the corporation may be removed at any time, with or without cause, in the manner provided in the NRS; provided, however, that during the Standstill Period, JR and the JR Designees shall be subject to, and any vacancy shall be filled in accordance with, the provisions of Section 4.6(a) of the Dakota Bylaws. | | | n/a | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
Vacancies on the Board of Directors | | |
The Dakota Bylaws provide that during the standstill period, any vacancy occurring in the board of directors (whether created through a resignation or an increase in the number of directors) shall be filled as set forth in Section 4.1(c) and 4.6(a) of the Dakota Bylaws.
Subsequent to the standstill period, any vacancy (whether created through a resignation or an increase in the number of directors) occurring in the board of directors may be filled by the affirmative vote of a majority of the remaining directors though less than a quorum of the board of directors.
A director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, and shall hold such office until his successor is duly elected and shall qualify.
|
| | The JR Bylaws provide that any vacancy in the board of directors, including a vacancy resulting from an enlargement of the board of directors, may be filled by a vote of the majority of the remaining directors, although less than a quorum, or by a sole remaining director. If the corporation at the time has outstanding any classes or series or class or series of stock that have or has the right, alone or with one or more other classes or series or class or series, to elect one or more directors, then any vacancy in the board of directors caused by the death, resignation or removal of a director so elected shall be filled only by a vote of the majority of the remaining directors so elected, by a sole remaining director so elected or, if no director so elected remains, by the holders of those classes or series or that class or series. A director appointed by the board of directors shall hold office for the remainder of the term of the director he or she is replacing. Any act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under the bylaws is in office. The board of directors may act notwithstanding any vacancy in the board of directors, but if the corporation has fewer directors in office than the number set pursuant to the bylaws as the quorum of directors, the board of directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of stockholders for the purpose of filling any vacancies on the board of directors or, subject to the NRS, for any other purpose. | |
Annual Meetings | | | The Dakota Bylaws provide that the annual meetings of stockholders of the corporation for the election of directors, and for the transaction of such other business as may properly come before the meeting, shall be held at such time as may be | | | The JR Bylaws provide that the stockholders must hold an annual meeting of the stockholders for the election of the directors and the transaction of such other business as may be properly brought before the meeting, at least once in each | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | determined by the board of directors by resolution in conformance with Nevada law. If the election of directors shall not be held on the day designated herein for any annual meeting of the stockholders, the board of directors shall cause the election to be held at a special meeting of the stockholders as soon thereafter as may be convenient. | | |
calendar year and not more than 13 months after the last annual reference date at such time and place as may be determined by the board of directors. Business to be brought before an annual meeting of the stockholders may include, without limitation:
(a) Business relating to the conduct of or voting at the meeting;
(b) Consideration of any financial statements of the corporation presented to the meeting;
(c) Consideration of any reports of the directors or auditor;
(d) The setting or changing of the number of directors;
(e) The election or appointment of directors;
(f) The appointment of an auditor;
(g) The setting of the remuneration of an auditor;
(h) Business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution; and
(i) Any other business which, under these bylaws or the NRS, may be transacted at a meeting of stockholders without prior notice of the business being given to the stockholders.
|
|
Special Meetings | | | The Dakota Bylaws provide that special meetings of stockholders, for any purpose or purposes as the board of directors may determine, unless otherwise prescribed by statute, may be called by the board of directors. Special meetings of stockholders may not be called by any other person or persons. | | | The JR Bylaws provide that special meetings of the stockholders for any purpose or purposes may be called by the board of directors. No other person or persons may call a special meeting. The business to be transacted at any special meeting shall be limited to the purposes stated in the notice. | |
Quorum | | | The Dakota Bylaws provide that a majority of the outstanding shares of the corporation entitled to vote, | | | The JR Bylaws provide that the presence, in person or by proxy, of the holders of 331∕3 percent of the | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | represented in person or by proxy, shall constitute a quorum at any meeting of stockholders, except as otherwise provided by the NRS and the Dakota Charter. In the absence of a quorum at any such meeting, a majority of the shares so represented may adjourn the meeting, or in the absence therefrom the officer presiding over the meeting may adjourn the meeting to another place and time, without any further notice. At such adjourned meeting at which a quorum shall be represented, any business may be transacted which might have been transacted at the meeting as originally noticed. The stockholders present at a duly organized meeting may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. | | | voting power of the stock entitled to vote at a meeting shall constitute a quorum. Where a separate vote by a class or series or classes or series of stock is required at a meeting, the presence, in person or by proxy, of the holders of 331∕3 percent of the voting power of each such class or series shall also be required to constitute a quorum. In the absence of a quorum, either the chairperson of the meeting or the holders of a majority of the voting power of the stock present, in person or by proxy, and entitled to vote at the meeting may adjourn the meeting in the manner provided in Section 1.7 of the JR Bylaws until a quorum shall be present. A quorum, once established at a meeting, shall not be broken by the withdrawal of the holders of enough voting power to leave less than a quorum. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting. | |
Action by Written Consent
|
| | The Dakota Bylaws provide that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the affirmative vote by the holders of the majority of the shares corporation’s common stock, unless the act of a greater number is required by the NRS or by the Dakota Charter or the Dakota Bylaws. | | | The JR Bylaws provide that any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting, without prior notice and without a vote by means of a unanimous stockholder written consent meeting the requirements of the NRS. | |
Dividends | | | The Dakota Bylaws provide that subject to the provisions of the Dakota Charter and the NRS, the board of directors may declare dividends whenever, and in such amounts, as in the board’s opinion the condition of the affairs of the corporation shall render such advisable. | | | n/a | |
Exclusive Forum Provisions
|
| | The Dakota Bylaws provide that unless the corporation consents in writing to the selection of an | | | n/a | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | alternative forum, the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the corporation, (ii) any action asserting a claim of breach of fiduciary duty owed by any director, officer, employee or agent of the corporation to the corporation or the corporation’s stockholders, (iii) any action asserting a claim arising pursuant to any provisions of the NRS, the Dakota Charter or the Dakota Bylaws, or (iv) any action asserting a claim governed by the internal affairs doctrine, shall be a state or federal court located within the State of Nevada, in all cases subject to the court having personal jurisdiction over the indispensable parties named as defendants therein; provided that the provisions of Article 13 of the Dakota Bylaws will not apply to suits brought to enforce any liability or duty created by the Securities Exchange Act of 1934, as amended, or any other claim for which the federal courts have exclusive jurisdiction. Any person or entity purchasing or otherwise acquiring any interest in shares of capital stock of the corporation shall be deemed to have notice of and consented to these provisions. | | | | |
Indemnification of Directors and Officers | | | The Dakota Bylaws provide that the corporation must indemnify, to the maximum extent permitted by Nevada law, any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (“Proceeding”), except an action by or in the right of the corporation (which is governed by Section 12.2 of the Dakota Bylaws), by reason of the fact that he or she is or was a director or officer of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other | | | The JR Bylaws provide that the corporation shall, to the fullest extent permitted by law, indemnify every person who is or was a party or is or was threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (an “Action”), by reason of the fact that such person is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, trustee, plan administrator or plan fiduciary of another corporation, partnership, limited liability company, trust, employee benefit plan or other enterprise (an “Indemnified Person”), against all expenses (including attorneys’ fees), | |
Stockholder Right
|
| |
Dakota
|
| |
JR
|
|
| | | enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such Proceeding if he or she acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. | | | judgments, fines and amounts paid in settlement or other disposition that the Indemnified Person actually and reasonably incurs in connection with the Action and shall reimburse each such person for all legal fees and expenses reasonably incurred by such person in seeking to enforce its rights to indemnification under the JR Bylaws (by means of legal action or otherwise). | |
| Condensed Consolidated Financial Statements (unaudited) | | | | | | | |
| | | | | F-4 | | | |
| | | | | F-5 | | | |
| | | | | F-6 | | | |
| | | | | F-7 | | | |
| | | | | F-8 | | | |
| Consolidated Financial Statements (audited) | | | | | | | |
| | | | | F-21 | | | |
| | | | | F-23 | | | |
| | | | | F-24 | | | |
| | | | | F-25 | | | |
| | | | | F-26 | | | |
| | | | | F-27 | | |
| | |
Page
|
| |||
| | | | F-4 | | | |
| | | | F-5 | | | |
| | | | F-6 | | | |
| | | | F-7 | | | |
| | | | F-8 | | |
| | |
September 30,
2021 |
| |
March 31,
2021 |
| ||||||
ASSETS | | | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash
|
| | |
$
|
52,518,680
|
| | | | $ | 11,444,668 | | |
Receivable
|
| | |
|
30,372
|
| | | | | 13,317 | | |
Prepaid expenses and other current assets
|
| | |
|
438,232
|
| | | | | 371,580 | | |
Total current assets
|
| | |
|
52,987,284
|
| | | | | 11,829,565 | | |
Non-current assets | | | | | | | | | | | | | |
Mineral properties
|
| | |
|
68,181,574
|
| | | | | 57,931,794 | | |
Property and equipment, net
|
| | |
|
1,075,363
|
| | | | | 870,744 | | |
Total assets
|
| | |
|
122,244,221
|
| | | | $ | 70,632,103 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY | | | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | |
$
|
1,187,822
|
| | | | $ | 846,622 | | |
Accounts payable – related party
|
| | |
|
—
|
| | | | | 3,000 | | |
Current portion of notes payable – related party
|
| | |
|
—
|
| | | | | 906,768 | | |
Total current liabilities
|
| | |
|
1,187,822
|
| | | | | 1,756,390 | | |
Non-current liabilities | | | | | | | | | | | | | |
Non-current portion of notes payable – related party
|
| | |
|
—
|
| | | | | 473,325 | | |
Deferred tax liability
|
| | |
|
9,048,498
|
| | | | | 9,398,458 | | |
Total liabilities
|
| | |
|
10,236,320
|
| | | | | 11,628,173 | | |
Stockholders’ equity | | | | | | | | | | | | | |
Common stock, par value $0.001; 200,000,000 shares and
authorized, 49,398,602 and 48,698,602 shares issued outstanding at September 30, 2021 and March 31, 2021, respectively |
| | |
|
49,399
|
| | | | | 48,699 | | |
Additional paid-in capital
|
| | |
|
41,910,612
|
| | | | | 12,092,157 | | |
Retained earnings
|
| | |
|
14,746,022
|
| | | | | 25,679,461 | | |
Equity attributable to stockholders of the Company
|
| | |
|
56,706,033
|
| | | | | 37,820,317 | | |
Non-controlling interest
|
| | |
|
55,301,868
|
| | | | | 21,183,613 | | |
Total stockholders’ equity
|
| | |
|
112,007,901
|
| | | | | 59,003,930 | | |
Total liabilities and stockholders’ equity
|
| | |
$
|
122,244,221
|
| | | | $ | 70,632,103 | | |
| | |
For the six months ended
September 30, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Operating expenses | | | | | | | | | | | | | |
Consulting
|
| | |
$
|
412,083
|
| | | | $ | 124,471 | | |
Exploration costs
|
| | |
|
4,058,726
|
| | | | | 80,657 | | |
Office, travel and general
|
| | |
|
12,325,193
|
| | | | | 55,595 | | |
Professional fees
|
| | |
|
1,290,257
|
| | | | | 266,675 | | |
Loss from operations
|
| | |
|
(18,086,259)
|
| | | | | (527,398) | | |
Other income (expenses) | | | | | | | | | | | | | |
Foreign exchange gain (loss)
|
| | |
|
8,783
|
| | | | | 5,512 | | |
Loss on settlement of debt
|
| | |
|
(124,521)
|
| | | | | — | | |
Gain on derivative assets
|
| | |
|
—
|
| | | | | 34,763,828 | | |
Interest expense
|
| | |
|
(101)
|
| | | | | — | | |
Interest income
|
| | |
|
6,334
|
| | | | | 4,371 | | |
| | | |
|
(109,505)
|
| | | | | 34,773,711 | | |
Income (loss) before income tax
|
| | |
|
(18,195,764)
|
| | | | | 34,246,313 | | |
Deferred tax benefit
|
| | |
|
349,960
|
| | | | | — | | |
Net income (loss)
|
| | |
$
|
(17,845,804)
|
| | | | $ | 34,246,313 | | |
Net income (loss) attributable to: | | | | | | | | | | | | | |
Non-controlling interest
|
| | |
|
(6,912,365)
|
| | | | | — | | |
Stockholders of the Company
|
| | |
|
(10,933,439)
|
| | | | | 34,246,313 | | |
Net income (loss)
|
| | |
$
|
(17,845,804)
|
| | | | $ | 34,246,313 | | |
Weighted average number of basic and diluted common shares
outstanding |
| | |
|
49,232,345
|
| | | | | 26,199,180 | | |
Basic and diluted earnings (loss) per share attributable to the Company
|
| | |
$
|
(0.22)
|
| | | | $ | 1.31 | | |
| | |
For the six months ended
September 30, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows used in operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | |
$
|
(17,845,804)
|
| | | | $ | 34,246,313 | | |
Adjustments to reconcile net income (loss) to net cash used in operating activities:
|
| | | | | | | | | | | | |
Depreciation
|
| | |
|
58,261
|
| | | | | — | | |
Interest income
|
| | |
|
—
|
| | | | | (4,371) | | |
Interest expense
|
| | |
|
124,521
|
| | | | | — | | |
Stock-based compensation expense
|
| | |
|
13,314,963
|
| | | | | — | | |
Gain on derivative assets
|
| | |
|
—
|
| | | | | (34,763,828) | | |
Deferred tax benefit
|
| | |
|
(349,960)
|
| | | | | | | |
Changes in non-cash working capital items:
|
| | | | | | | | | | | | |
Receivable
|
| | |
|
(17,055)
|
| | | | | (4,472) | | |
Prepaid expenses and deposit
|
| | |
|
(66,652)
|
| | | | | — | | |
Accounts payable and accrued liabilities
|
| | |
|
341,948
|
| | | | | 153,630 | | |
Accounts payable – related party
|
| | |
|
(3,000)
|
| | | | | — | | |
Net cash used in operating activities
|
| | |
|
(4,442,778)
|
| | | | | (372,728) | | |
Cash flows used in investing activities | | | | | | | | | | | | | |
Issuance of note receivable
|
| | |
|
—
|
| | | | | (1,150,000) | | |
advance of loan receivable
|
| | |
|
—
|
| | | | | (301,737) | | |
Purchases of property and equipment
|
| | |
|
(262,880)
|
| | | | | — | | |
Purchases of mineral properties
|
| | |
|
(3,285,316)
|
| | | | | — | | |
Net cash used in investing activities
|
| | |
|
(3,548,196)
|
| | | | | (1,451,737) | | |
Cash flows used in financing activities | | | | | | | | | | | | | |
Issuance of share capital, net of issuance costs
|
| | |
|
351,075
|
| | | | | 1,708,536 | | |
Proceeds from issuance of DTRC common stock
|
| | |
|
49,515,626
|
| | | | | 13,876,281 | | |
Net proceeds from (repaid to) related parties
|
| | |
|
(801,715)
|
| | | | | — | | |
Net cash provided by financing activities
|
| | |
|
49,064,986
|
| | | | | 15,584,817 | | |
Net increase in cash
|
| | |
|
41,074,012
|
| | | | | 13,760,352 | | |
Cash, beginning of period
|
| | |
|
11,444,668
|
| | | | | 141,768 | | |
Cash, end of period
|
| | |
$
|
52,518,680
|
| | | | $ | 13,902,120 | | |
Supplemental cash flow information | | | | | | | | | | | | | |
Cash paid for interest expense
|
| | |
$
|
—
|
| | | | $ | — | | |
Cash paid for income taxes
|
| | |
$
|
—
|
| | | | $ | — | | |
Non-cash investing and financing activities | | | | | | | | | | | | | |
DTRC common stock issued for investment in mineral properties
|
| | |
$
|
6,964,464
|
| | | | $ | — | | |
DTRC common stock issued for payment of note payable
|
| | |
$
|
703,646
|
| | | | $ | — | | |
| | |
Capital Stock
|
| |
Additional
Paid-in Capital |
| |
Share
Subscriptions Receivable |
| |
Retained
earnings (Accumulated Deficit) |
| |
Non-Controlling
Interest |
| |
Total
Stockholders’ Equity |
| ||||||||||||||||||||||||
|
Number
of Shares |
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2020
|
| | | | 20,486,666 | | | | | $ | 20,487 | | | | | $ | 1,199,357 | | | | | $ | (126,753) | | | | | $ | (331,453) | | | | | $ | — | | | | | $ | 761,638 | | |
Common stock issued for cash, net of
issuance costs |
| | | | 7,806,667 | | | | | | 7,806 | | | | | | 2,108,581 | | | | | | (407,851) | | | | | | — | | | | | | — | | | | | | 1,708,536 | | |
Cash received for unissued shares
|
| | | | — | | | | | | — | | | | | | 13,876,281 | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,876,281 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 34,246,313 | | | | | | — | | | | | | 34,246,313 | | |
Balance, September 30, 2020
|
| | | | 28,293,333 | | | | | $ | 28,293 | | | | | $ | 17,184,219 | | | | | $ | (534,604) | | | | | $ | 33,914,860 | | | | | $ | — | | | | | $ | 50,592,768 | | |
Balance, March 31, 2021
|
| | | | 48,698,602 | | | | | $ | 48,699 | | | | | $ | 12,092,157 | | | | | $ | — | | | | | $ | 25,679,461 | | | | | $ | 21,183,613 | | | | | $ | 59,003,930 | | |
Common stock issued for cash, net of
issuance costs |
| | | | 700,000 | | | | | | 700 | | | | | | 350,375 | | | | | | — | | | | | | — | | | | | | — | | | | | | 351,075 | | |
DTRC common stock issued
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 49,515,626 | | | | | | 49,515,626 | | |
DTRC common stock issued for investment in mineral property
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 6,964,464 | | | | | | 6,964,464 | | |
DTRC common stock issued upon
conversion of debt |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 703,647 | | | | | | 703,647 | | |
Stock-based compensation expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 13,314,963 | | | | | | 13,314,963 | | |
Change in non-controlling interest
|
| | | | — | | | | | | — | | | | | | 29,468,080 | | | | | | — | | | | | | — | | | | | | (29,468,080) | | | | | | — | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (10,933,439) | | | | | | (6,912,365) | | | | | | (17,845,804) | | |
Balance, September 30, 2021
|
| | | | 49,398,602 | | | | | $ | 49,399 | | | | | $ | 41,910,612 | | | | | $ | — | | | | | $ | 14,746,022 | | | | | $ | 55,301,868 | | | | | $ | 112,007,901 | | |
| Consideration: | | | | | | | |
|
Conversion of promissory note
|
| | | $ | 1,450,000 | | |
|
Value of convertible feature of promissory note
|
| | | | 1,836,667 | | |
|
Cash investment
|
| | | | 9,000,000 | | |
|
Value of purchase right
|
| | | | 12,339,161 | | |
|
Transaction costs
|
| | | | 231,043 | | |
| | | | | $ | 24,856,871 | | |
| Allocated as follows: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 9,697,502 | | |
|
Prepaid expenses
|
| | | | 14,403 | | |
|
Mineral properties
|
| | | | 53,035,706 | | |
|
Property and equipment
|
| | | | 8,801 | | |
|
Accounts payable and accrued liabilities
|
| | | | (479,794) | | |
|
Accounts payable – related party
|
| | | | (1,770,234) | | |
|
Notes payable – related party
|
| | | | (392,652) | | |
|
Deferred tax liability
|
| | | | (9,811,882) | | |
|
Non-controlling interest
|
| | | | (25,444,979) | | |
| | | | | $ | 24,856,871 | | |
| | |
Estimated
Useful Life (years) |
| |
September 30, 2021
|
| |
March 31, 2021
|
| |||||||||
Land
|
| | | | | | | | |
$
|
70,000
|
| | | | $ | 70,000 | | |
Building
|
| | | | 39 | | | | |
|
559,503
|
| | | | | 503,711 | | |
Furniture and equipment
|
| | | | 3 – 5 | | | | |
|
463,814
|
| | | | | 330,125 | | |
| | | | | 5 | | | | |
|
73,399
|
| | | | | — | | |
| | | | | | | | | |
|
1,166,716
|
| | | | | 903,836 | | |
Less accumulated depreciation
|
| | | | | | | | |
|
(91,353)
|
| | | | | (33,092) | | |
Property and equipment, net
|
| | | | | | | | |
$
|
1,075,363
|
| | | | $ | 870,744 | | |
Number of warrants
|
| |
Exercise price
|
| |
Remaining life
|
| |
Expiry date
|
| ||||||
| | | | | | | | |
(years)
|
| | | | |||
4,600,000
|
| | | $ | 1.50 | | | | | | 1.04 | | | |
October 13, 2022
|
|
256,275
|
| | | $ | 1.50 | | | | | | 1.38 | | | |
February 15, 2023
|
|
5,346,360
|
| | | $ | 1.50 | | | | | | 1.45 | | | |
March 15, 2023
|
|
125,000
|
| | | $ | 1.50 | | | | | | 1.60 | | | |
May 6, 2023
|
|
162,500
|
| | | $ | 1.50 | | | | | | 1.62 | | | |
May 15, 2023
|
|
62,500
|
| | | $ | 1.50 | | | | | | 1.66 | | | |
May 30, 2023
|
|
10,552,635
|
| | | | | | | | | | | | | | | |
| | |
Warrants
|
| |
Weighted average
exercise price |
| ||||||
Balance, March 31, 2020
|
| | | | — | | | | | $ | — | | |
Issued
|
| | | | 10,202,635 | | | | | | 1.50 | | |
Balance, March 31, 2021
|
| | |
|
10,202,635
|
| | | |
$
|
1.50
|
| |
Issued
|
| | | | 350,000 | | | | | | 1.50 | | |
Balance, September 30, 2021
|
| | |
|
10,552,635
|
| | | |
$
|
1.50
|
| |
|
Balance, March 31, 2020
|
| | | $ | — | | |
|
Acquisition of DTRC
|
| | | | 25,444,979 | | |
|
Payment of cash dividend by DTRC
|
| | | | (4,357,246) | | |
|
Change in non-controlling interest
|
| | | | (1,396,034) | | |
|
DTRC common stock issued for investment in mineral property
|
| | | | 1,320,000 | | |
|
Stock-based compensation expense
|
| | | | 121,385 | | |
|
Debt discount on notes payable – related party
|
| | | | 86,026 | | |
|
DTRC common stock issued upon exercise of options
|
| | | | 455,000 | | |
|
Net loss attributable to non-controlling interest
|
| | | | (490,497) | | |
|
Balance, March 31, 2021
|
| | | $ | 21,183,613 | | |
|
DTRC common stock issued
|
| | | | 49,515,626 | | |
|
DTRC common stock issued for investment in mineral property
|
| | | | 6,964,464 | | |
|
DTRC common stock issued upon conversion of debt
|
| | | | 703,647 | | |
|
Stock-based compensation expense
|
| | | | 13,314,963 | | |
|
Change in non-controlling interest
|
| | | | (29,468,080) | | |
|
Net loss attributable to non-controlling interest
|
| | | | (6,912,365) | | |
|
Balance, September 30, 2021
|
| | | $ | 55,301,868 | | |
| | |
Page
|
| |||
| | | | F-21 | | | |
CONSOLIDATED FINANCIAL STATEMENTS: | | | | | | | |
| | | | F-23 | | | |
| | | | F-24 | | | |
| | | | F-25 | | | |
| | | | F-26 | | | |
| | | | F-27 | | |
| | |
March 31, 2021
|
| |
March 31, 2020
|
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash
|
| | | $ | 11,444,668 | | | | | $ | 141,768 | | |
Prepaid expense and other current assets
|
| | | | 384,897 | | | | | | — | | |
Loan receivable
|
| | | | — | | | | | | 407,834 | | |
Note receivable
|
| | | | — | | | | | | 300,000 | | |
Total current assets
|
| | | | 11,829,565 | | | | | | 849,602 | | |
Non-current assets | | | | | | | | | | | | | |
Mineral properties
|
| | | | 57,931,794 | | | | | | — | | |
Property and equipment, net
|
| | | | 870,744 | | | | | | — | | |
Total assets
|
| | | $ | 70,632,103 | | | | | $ | 849,602 | | |
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
| | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 846,622 | | | | | $ | 87,964 | | |
Accounts payable – related party
|
| | | | 3,000 | | | | | | — | | |
Current portion of notes payable – related party
|
| | | | 906,768 | | | | | | — | | |
Total current liabilities
|
| | | | 1,756,390 | | | | | | 87,964 | | |
Non-current liabilities | | | | | | | | | | | | | |
Non-current portion of notes payable – related party
|
| | | | 473,325 | | | | | | — | | |
Deferred tax liability
|
| | | | 9,398,458 | | | | | | — | | |
Total liabilities
|
| | | | 11,628,173 | | | | | | 87,964 | | |
Stockholders’ equity | | | | | | | | | | | | | |
Common stock, par value $0.001; 200,000,000 shares
authorized, 48,698,602 and 20,486,666 shares issued and outstanding at March 31, 2021 and 2020, respectively |
| | | | 48,699 | | | | | | 20,487 | | |
Additional paid in capital
|
| | | | 12,092,157 | | | | | | 1,199,357 | | |
Share subscriptions receivable
|
| | | | — | | | | | | (126,753) | | |
Retained earnings (deficit)
|
| | | | 25,679,461 | | | | | | (331,453) | | |
Equity attributable to stockholders of the Company
|
| | | | 37,820,317 | | | | | | 761,638 | | |
Non-controlling interest
|
| | | | 21,183,613 | | | | | | — | | |
Total stockholders’ equity
|
| | | | 59,003,930 | | | | | | 761,638 | | |
Total stockholders’ equity and liabilities
|
| | | $ | 70,632,103 | | | | | $ | 849,602 | | |
| | |
For the year ended March 31,
|
| | |||||||||||
| | |
2021
|
| |
2020
|
| | ||||||||
General and administrative expenses | | | | | | | | | | | | | | | ||
Consulting
|
| | | $ | 670,920 | | | | | $ | — | | | | ||
Exploration costs
|
| | | | 271,853 | | | | | | 47,668 | | | | ||
Office, travel and general
|
| | | | 515,104 | | | | | | 23,147 | | | | ||
Professional fees
|
| | | | 634,241 | | | | | | 85,226 | | | | ||
Write off of mineral properties
|
| | | | — | | | | | | 13,632 | | | | ||
Loss from operations
|
| | | | (2,092,118) | | | | | | (169,673) | | | | | |
Other income (expenses) | | | | | | | | | | | | | | | ||
Foreign exchange loss
|
| | | | 79,001 | | | | | | (26,974) | | | | ||
Gain on derivative assets
|
| | | | 27,087,667 | | | | | | — | | | | ||
Interest income
|
| | | | 32,443 | | | | | | 3,364 | | | | ||
| | | | | 27,199,111 | | | | | | (23,610) | | | | ||
Income (loss) before income tax
|
| | | | 25,106,993 | | | | | | (193,283) | | | | | |
Deferred tax benefit
|
| | | | 413,424 | | | | | | — | | | | ||
Net income (loss)
|
| | | | 25,520,417 | | | | | | (193,283) | | | | | |
Less: Net loss attributable to non-controlling interest
|
| | | | (490,497) | | | | | | — | | | | ||
Net income (loss) attributable to JR Resources Corp.
|
| | | $ | 26,010,914 | | | | | $ | (193,283) | | | | | |
Basic and diluted earnings (loss) per share
|
| | | $ | 0.81 | | | | | $ | (0.03) | | | | | |
Weighted average number of basic and diluted | | | | | | | | | | | | | | | ||
common shares outstanding
|
| | | | 32,110,916 | | | | | | 5,563,241 | | | | | |
| | |
For the year ended March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows used in operating activities | | | | | | | | | | | | | |
Net income (loss)
|
| | | $ | 25,520,417 | | | | | $ | (193,283) | | |
Adjustments to reconcile net income (loss) to net cash
used in operating activities: |
| | | | | | | | | | | | |
Depreciation
|
| | | | 17,306 | | | | | | — | | |
Interest income
|
| | | | — | | | | | | (3,364) | | |
Accretion of debt discount
|
| | | | 86,024 | | | | | | — | | |
Write off on mineral properties
|
| | | | — | | | | | | 13,632 | | |
Unrealized foreign exchange
|
| | | | — | | | | | | 23,989 | | |
Stock-based compensation expense
|
| | | | 121,385 | | | | | | — | | |
Gain on derivative assets
|
| | | | (27,087,667) | | | | | | — | | |
Deferred tax benefit
|
| | | | (413,424) | | | | | | — | | |
Changes in operating assets and liabilities:
|
| | | | | | | | | | | | |
Receivable
|
| | | | (13,317) | | | | | | — | | |
Prepaid expenses and deposit
|
| | | | (357,177) | | | | | | — | | |
Accounts payable and accrued liabilities
|
| | | | 278,865 | | | | | | (10,268) | | |
Accounts payable – related party
|
| | | | (319,237) | | | | | | — | | |
Net cash used in operating activities
|
| | | | (2,166,825) | | | | | | (169,294) | | |
Cash flows used in investing activities | | | | | | | | | | | | | |
Issuance of note receivable
|
| | | | (1,150,000) | | | | | | (300,000) | | |
Payments from loan receivable
|
| | | | 407,834 | | | | | | — | | |
Purchases of property and equipment
|
| | | | (879,249) | | | | | | — | | |
Impact on cash of initial consolidation
|
| | | | 9,697,502 | | | | | | — | | |
Purchases of mineral properties
|
| | | | (12,807,130) | | | | | | (428,459) | | |
Net cash used in investing activities
|
| | | | (4,731,043) | | | | | | (728,459) | | |
Cash flows from financing activities | | | | | | | | | | | | | |
Issuance of share capital, net of issuance costs
|
| | | | 22,563,570 | | | | | | 1,093,090 | | |
Proceeds from exercise of DTRC stock options and warrants
|
| | | | 455,000 | | | | | | — | | |
Payment of cash dividend to non-controlling interest
|
| | | | (4,357,246) | | | | | | — | | |
Net proceeds repaid to related parties
|
| | | | (460,556) | | | | | | (55,499) | | |
Net cash provided by financing activities
|
| | | | 18,200,768 | | | | | | 1,037,591 | | |
Net increase in cash
|
| | | | 11,302,900 | | | | | | 139,838 | | |
Cash, beginning of year
|
| | | | 141,768 | | | | | | 1,930 | | |
Cash, end of year
|
| | | $ | 11,444,668 | | | | | $ | 141,768 | | |
| | |
Capital Stock
|
| |
Additional
Paid-in Capital |
| |
Share
Subscriptions Receivable |
| |
Retained
Earnings (Deficit) |
| |
Non-
Controlling Interest |
| |
Total
Stockholders’ Equity |
| ||||||||||||||||||||||||
|
Number
of Shares |
| |
Amount
|
| ||||||||||||||||||||||||||||||||||||||
Balance, March 31, 2019
|
| | | | 100 | | | | | $ | 1 | | | | | $ | — | | | | | $ | — | | | | | $ | (138,170) | | | | | $ | — | | | | | $ | (138,169) | | |
Common stock issued
for cash, net of issuance costs |
| | | | 20,486,566 | | | | | | 20,486 | | | | | | 1,199,357 | | | | | | (126,753) | | | | | | — | | | | | | — | | | | | | 1,093,090 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (193,283) | | | | | | — | | | | | | (193,283) | | |
Balance, March 31, 2020
|
| | | | 20,486,666 | | | | | | 20,487 | | | | | | 1,199,357 | | | | | | (126,753) | | | | | | (331,453) | | | | | | — | | | | | | 761,638 | | |
Common stock issued
for cash, net of issuance costs |
| | | | 28,211,936 | | | | | | 28,212 | | | | | | 22,408,605 | | | | | | 126,753 | | | | | | — | | | | | | — | | | | | | 22,563,570 | | |
Acquisition of DTRC common shares
|
| | | | — | | | | | | — | | | | | | (12,911,839) | | | | | | — | | | | | | — | | | | | | 25,444,979 | | | | | | 12,533,140 | | |
Payment of cash dividend by DTRC
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | (4,357,246) | | | | | | (4,357,246) | | |
Change in non-controlling interest
|
| | | | — | | | | | | — | | | | | | 1,396,034 | | | | | | — | | | | | | — | | | | | | (1,396,034) | | | | | | — | | |
DTRC common stock issued for investment in mineral property
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 1,320,000 | | | | | | 1,320,000 | | |
Stock-based compensation expense
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 121,385 | | | | | | 121,385 | | |
Debt discount on notes payable – related party
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 86,026 | | | | | | 86,026 | | |
DTRC common stock
issued upon exercise of options |
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 455,000 | | | | | | 455,000 | | |
Net income
|
| | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 26,010,914 | | | | | | (490,497) | | | | | | 25,520,417 | | |
Balance, March 31, 2021
|
| | | | 48,698,602 | | | | | $ | 48,699 | | | | | $ | 12,092,157 | | | | | $ | — | | | | | $ | 25,679,461 | | | | | $ | 21,183,613 | | | | | $ | 59,003,930 | | |
| | | | | | | | |
Percentage owned
|
| |||||||||
| | |
Incorporation
|
| |
2021
|
| |
2020
|
| |||||||||
1169164 B.C. Ltd.
|
| | | | Canada | | | | | | 0% | | | | | | 100% | | |
Seahawk Exploration (US) Inc. (“Seahawk”)
|
| | | | USA | | | | | | 0% | | | | | | 100% | | |
JR (Canada) Resources Services Corp.
|
| | | | Canada | | | | | | 100% | | | | | | 0% | | |
Dakota Territory Resource Corp. (“DTRC”)
|
| | | | USA | | | | | | 63% | | | | | | 0% | | |
| Consideration: | | | | | | | |
|
Conversion of promissory note
|
| | | $ | 1,450,000 | | |
|
Value of convertible feature of promissory note
|
| | | | 1,836,667 | | |
|
Cash investment
|
| | | | 9,000,000 | | |
|
Value of purchase right
|
| | | | 12,339,161 | | |
|
Transaction costs
|
| | | | 231,043 | | |
| | | | | $ | 24,856,871 | | |
| Allocated as follows: | | | | | | | |
|
Cash and cash equivalents
|
| | | $ | 9,697,502 | | |
|
Prepaid expenses
|
| | | | 14,403 | | |
|
Mineral properties
|
| | | | 53,035,706 | | |
|
Property and equipment
|
| | | | 8,801 | | |
|
Accounts payable and accrued liabilities
|
| | | | (479,794) | | |
|
Accounts payable — related party
|
| | | | (1,770,234) | | |
|
Notes payable — related party
|
| | | | (392,652) | | |
|
Deferred tax liability
|
| | | | (9,811,882) | | |
|
Non-controlling interest
|
| | | | (25,444,979) | | |
| | | | | $ | 24,856,871 | | |
| | |
Estimated
Useful Life (Years) |
| |
2021
|
| |
2020
|
| ||||||
Land
|
| | | | | | $ | 70,000 | | | | | $ | — | | |
Building
|
| |
39
|
| | | | 503,711 | | | | | | — | | |
Furniture and equipment
|
| |
3 – 5
|
| | | | 314,339 | | | | | | — | | |
| | | | | | | | 888,050 | | | | | | — | | |
Less accumulated depreciation
|
| | | | | | | (17,306) | | | | | | — | | |
Property and equipment, net
|
| | | | | | $ | 870,744 | | | | | $ | — | | |
| | |
March 31,
2021 |
| |
March 31,
2020 |
| ||||||
Trade payables
|
| | |
$
|
524,512
|
| | | | $ | 87,964 | | |
Refundable share subscriptions paid
|
| | | | 321,362 | | | | | | — | | |
Other
|
| | | | 748 | | | | | | — | | |
| | | | $ | 846,622 | | | | | $ | 87,964 | | |
Number of warrants
|
| |
Exercise price
|
| |
Remaining life
|
| |
Expiry date
|
| ||||||
| | | | | | | | |
(years)
|
| | | | |||
4,600,000
|
| | | $ | 1.50 | | | | | | 4.54 | | | |
October 13, 2022
|
|
256,275
|
| | | $ | 1.50 | | | | | | 4.88 | | | |
February 15, 2023
|
|
5,346,360
|
| | | $ | 1.50 | | | | | | 4.96 | | | |
March 15, 2023
|
|
10,202,635
|
| | | | | | | | | | | | | | | |
| | |
Warrants
|
| |
Weighted average
exercise price |
| ||||||
Balance, March 31, 2019 and 2020
|
| | | | — | | | | | $ | — | | |
Issued
|
| | | | 10,202,635 | | | | | | 1.50 | | |
Balance, March 31, 2021
|
| | | | 10,202,635 | | | | | $ | 1.50 | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding as of October 15, 2020
|
| | | | 2,062,500 | | | | | $ | 0.32 | | | | | | 4.13 | | | | | $ | 2,146,000 | | |
Options granted
|
| | | | 750,000 | | | | | | 1.92 | | | | | | 4.96 | | | | | | — | | |
Options exercised
|
| | | | (1,987,500) | | | | | | 0.32 | | | | | | — | | | | | | — | | |
Outstanding as of March 31, 2021
|
| | | | 825,000 | | | | | | 1.77 | | | | | | 4.86 | | | | | | 285,000 | | |
Options vested or expected to vest as of March 31, 2021
|
| | | | 75,000 | | | | | | 0.32 | | | | | | 3.84 | | | | | | 135,000 | | |
Options exercisable as of March 31, 2021
|
| | | | 75,000 | | | | | $ | 0.32 | | | | | | 3.84 | | | | | $ | 135,000 | | |
|
Balance, March 31, 2020
|
| | | $ | — | | |
|
Acquisition of DTRC
|
| | | | 25,444,979 | | |
|
Payment of cash dividend by DTRC
|
| | | | (4,357,246) | | |
|
Change in non-controlling interest
|
| | | | (1,396,034) | | |
|
DTRC common stock issued for investment in mineral property
|
| | | | 1,320,000 | | |
|
Stock-based compensation expense
|
| | | | 121,385 | | |
|
Debt discount on notes payable – related party
|
| | | | 86,026 | | |
|
DTRC common stock issued upon exercise of options
|
| | | | 455,000 | | |
|
Net loss attributable to non-controlling interest
|
| | | | (490,497) | | |
|
Balance, March 31, 2021
|
| | | $ | 21,183,613 | | |
| | |
For the year ended March 31,
|
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Supplemental cash flow information
|
| | | | | | | | | | | | |
Cash paid for interest expense
|
| | | $ | — | | | | | $ | — | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
Non-cash investing and financing activities
|
| | | | | | | | | | | | |
DTRC common stock issued for investment in mineral property
|
| | | $ | 1,320,000 | | | | | $ | — | | |
Conversion of note receivable as consideration for mineral
properties |
| | | $ | 1,450,000 | | | | | $ | — | | |
Related party accounts payable and accrued interest converted
to related party note payable |
| | | $ | 1,447,997 | | | | | $ | — | | |
Conversion of derivative to consideration for mineral
properties |
| | | $ | 12,339,161 | | | | | $ | — | | |
Value of convertible feature of promissory note as
consideration for mineral properties |
| | | $ | 1,836,667 | | | | | $ | — | | |
| | |
Years ended March 31,
|
| |||||||||
|
2021
|
| |
2020
|
| ||||||||
Income tax (expense) benefit computed at federal statutory rates
|
| | | $ | (5,272,469) | | | | | $ | 40,589 | | |
Non-deductible stock based compensation
|
| | | | (25,470) | | | | | | — | | |
Non-deductible interest expense
|
| | | | (4,565) | | | | | | — | | |
Non-taxable gain on derivatives
|
| | | | 5,688,410 | | | | | | — | | |
Other non-deductible expenses
|
| | | | (62,583) | | | | | | — | | |
Unrecognized temporary differences
|
| | | | 52,374 | | | | | | — | | |
Change in valuation allowance
|
| | | | 37,727 | | | | | | (40,589) | | |
Deferred tax benefit
|
| | | $ | 413,424 | | | | | $ | — | | |
| | |
As of March 31,
|
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Deferred income tax assets: | | | | | | | | | | | | | |
Net operating losses
|
| | | $ | 1,502,021 | | | | | $ | 37,727 | | |
Net capital losses
|
| | | | 36,685 | | | | | | — | | |
Less: valuation allowance
|
| | | | — | | | | | | (37,727) | | |
Deferred income tax liability: | | | | | | | | | | | | | |
Property and equipment
|
| | | | (182,856) | | | | | | — | | |
Mineral properties
|
| | | | (10,754,308) | | | | | | — | | |
Deferred income tax liability, net
|
| | | $ | 9,398,458 | | | | | $ | — | | |
| Condensed Consolidated Financial Statements (unaudited) | | | | | | | |
| | | | | F-44 | | | |
| | | | | F-45 | | | |
| | | | | F-46 | | | |
| | | | | F-47 | | | |
| | | | | F-48 | | | |
| Financial Statements (audited) | | | | | | | |
| | | | | F-55 | | | |
| | | | | F-56 | | | |
| | | | | F-57 | | | |
| | | | | F-58 | | | |
| | | | | F-59 | | | |
| | | | | F-60 | | |
| | |
September 30,
|
| |
March 31,
|
| ||||||
| | |
2021
|
| |
2021
|
| ||||||
ASSETS
|
| | | | | | | | | | | | |
Current assets | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | |
$
|
52,220,159
|
| | | | $ | 10,392,940 | | |
Prepaid expenses and other current assets
|
| | |
|
147,742
|
| | | | | 75,608 | | |
Total current assets
|
| | |
|
52,367,901
|
| | | | | 10,468,548 | | |
Mineral properties
|
| | |
|
15,586,852
|
| | | | | 5,337,072 | | |
Property and equipment
|
| | |
|
1,075,363
|
| | | | | 870,744 | | |
Total assets
|
| | | $ | 69,030,116 | | | | |
$
|
16,676,364
|
| |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | | | | | | | | | | |
Current liabilities | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | |
$
|
613,162
|
| | | | $ | 165,024 | | |
Current portion of notes payable – related party
|
| | |
|
—
|
| | | | | 906,768 | | |
Total current liabilities
|
| | |
|
613,162
|
| | | | | 1,071,792 | | |
Notes payable – related party
|
| | |
|
—
|
| | | | | 473,325 | | |
Total liabilities
|
| | |
|
613,162
|
| | | | | 1,545,117 | | |
Commitments and contingencies | | | | | | | | | | | | | |
Shareholders’ equity | | | | | | | | | | | | | |
Common stock, par value $0.001; 75,000,000 shares authorized, 70,428,204 and 56,197,331 shares issued and outstanding as of September 30, 2021 and March 31, 2021, respectively
|
| | |
|
70,428
|
| | | | | 56,197 | | |
Additional paid-in capital
|
| | |
|
94,102,303
|
| | | | | 23,617,834 | | |
Accumulated deficit
|
| | |
|
(25,755,777)
|
| | | | | (8,542,784) | | |
Total equity
|
| | |
|
68,416,954
|
| | | | | 15,131,247 | | |
Total liabilities and shareholders’ equity
|
| | | $ | 69,030,116 | | | | |
$
|
16,676,364
|
| |
| | |
Six Months Ended
September 30, |
| |
Three Months Ended
September 30, |
| ||||||||||||||||||
| | |
2021
|
| |
2020
|
| |
2021
|
| |
2020
|
| ||||||||||||
Operating expenses | | | | | | | | | | | | | | | | | | | | | | | | | |
Exploration costs
|
| | |
$
|
4,058,726
|
| | | | $ | 482,189 | | | | |
$
|
1,875,085
|
| | | | $ | 355,728 | | |
General and administrative expenses
|
| | |
|
13,035,979
|
| | | | | 365,902 | | | | |
|
3,130,387
|
| | | | | 214,372 | | |
Total operating expenses
|
| | |
|
17,094,705
|
| | | | | 848,091 | | | | |
|
5,005,472
|
| | | | | 570,100 | | |
Loss from operations
|
| | |
|
(17,094,705)
|
| | | | | (848,091) | | | | |
|
(5,005,472)
|
| | | | | (570,100) | | |
Other income (expense) | | | | | | | | | | | | | | | | | | | | | | | | | |
Loss on debt settlement
|
| | |
|
(124,521)
|
| | | | | — | | | | |
|
(32,476)
|
| | | | | — | | |
Interest income
|
| | |
|
6,334
|
| | | | | 2,000 | | | | |
|
6,097
|
| | | | | — | | |
Interest expense
|
| | |
|
(101)
|
| | | | | (273,509) | | | | |
|
—
|
| | | | | (203,765) | | |
Total other expense
|
| | |
|
(118,288)
|
| | | | | (271,509) | | | | |
|
(26,379)
|
| | | | | (203,765) | | |
Net loss
|
| | |
$
|
(17,212,993)
|
| | | | $ | (1,119,600) | | | | |
$
|
(5,031,851)
|
| | | | $ | (773,865) | | |
Net loss per share: | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted net loss per share
|
| | |
$
|
(0.28)
|
| | | | $ | (0.07) | | | | |
$
|
(0.08)
|
| | | | $ | (0.04) | | |
Weighted average number of shares outstanding | | | | | | | | | | | | | | | | | | | | | | | | | |
Basic and diluted
|
| | |
|
62,220,794
|
| | | | | 16,869,034 | | | | |
|
63,876,326
|
| | | | | 17,322,219 | | |
| | |
Six Months Ended
September 30, |
| |||||||||
| | |
2021
|
| |
2020
|
| ||||||
Cash flows from operating activities | | | | | | | | | | | | | |
Net loss
|
| | |
$
|
(17,212,993)
|
| | | | $ | (1,119,600) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Stock-based compensation expense
|
| | |
|
13,314,963
|
| | | | | — | | |
Loss on settlement of debt
|
| | |
|
124,521
|
| | | | | — | | |
Depreciation expense
|
| | |
|
58,261
|
| | | | | 124 | | |
Amortization of debt discount
|
| | |
|
(59,905)
|
| | | | | 268,151 | | |
Changes in current assets and liabilities
|
| | | | | | | | | | | | |
Prepaid expenses and other current assets
|
| | |
|
(72,134)
|
| | | | | 1,316 | | |
Accounts payable and accrued expenses
|
| | |
|
448,886
|
| | | | | 48,861 | | |
Accounts payable – related party
|
| | |
|
—
|
| | | | | 63,151 | | |
Notes payable
|
| | |
|
59,905
|
| | | | | — | | |
Net cash used in operating activities
|
| | |
|
(3,338,496)
|
| | | | | (737,997) | | |
Cash flow from investing activities | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | |
|
(262,880)
|
| | | | | (8,925) | | |
Purchases of mineral properties
|
| | |
|
(3,286,750)
|
| | | | | (220,377) | | |
Net cash used in investing activities
|
| | |
|
(3,549,630)
|
| | | | | (229,302) | | |
Cash flow from financing activities | | | | | | | | | | | | | |
Proceeds from sale of common stock, net of share issuance costs
|
| | |
|
49,517,060
|
| | | | | 380,000 | | |
Repayment of note payable – related party
|
| | |
|
(801,715)
|
| | | | | — | | |
Proceeds from exercise of options
|
| | |
|
—
|
| | | | | 24,000 | | |
Proceeds from the issuance of note payable – related party
|
| | |
|
—
|
| | | | | (60,645) | | |
Proceeds from note payable
|
| | |
|
—
|
| | | | | 1,150,000 | | |
Repayment of line of credit, net
|
| | |
|
—
|
| | | | | (2,227) | | |
Net cash provided by financing activities
|
| | |
|
48,715,345
|
| | | | | 1,491,128 | | |
Net change in cash and cash equivalents
|
| | |
|
41,827,219
|
| | | | | 523,829 | | |
Cash and cash equivalents, beginning of period
|
| | |
|
10,392,940
|
| | | | | 146,425 | | |
Cash and cash equivalents, end of period
|
| | |
$
|
52,220,159
|
| | | | $ | 670,254 | | |
Supplemental cash flow information: | | | | | | | | | | | | | |
Interest paid
|
| | |
$
|
—
|
| | | | $ | 6,865 | | |
Taxes paid
|
| | |
$
|
—
|
| | | | $ | — | | |
Non-cash investing and financing activities: | | | | | | | | | | | | | |
Common stock issued for investments in mineral properties
|
| | |
$
|
6,964,463
|
| | | | $ | — | | |
Common stock issued for payment of notes payable
|
| | |
$
|
703,647
|
| | | | $ | — | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Deficit
|
| |
Total
|
| ||||||||||||||||||
|
Shares
|
| |
Amount
|
| ||||||||||||||||||||||||||
Balance, March 31, 2021
|
| | | | 56,197,331 | | | | | $ | 56,197 | | | | | $ | 23,617,834 | | | | | $ | (8,542,784) | | | | | $ | 15,131,247 | | |
Private placement
|
| | | | 2,311,000 | | | | | | 2,311 | | | | | | 10,397,189 | | | | | | — | | | | | | 10,399,500 | | |
Cash received for unissued shares
|
| | | | — | | | | | | — | | | | | | 6,496,034 | | | | | | — | | | | | | 6,496,034 | | |
Common stock issued for investment in mineral properties
|
| | | | 224,005 | | | | | | 224 | | | | | | 1,119,241 | | | | | | — | | | | | | 1,119,465 | | |
Common stock issued upon issued of debt
|
| | | | 45,563 | | | | | | 46 | | | | | | 223,213 | | | | | | — | | | | | | 223,259 | | |
Stock based compensation expense
|
| | | | 1,450,000 | | | | | | 1,450 | | | | | | 10,602,798 | | | | | | — | | | | | | 10,604,248 | | |
Net loss for the Period
|
| | | | — | | | | | | — | | | | | | — | | | | | | (12,181,142) | | | | | | (12,181,142) | | |
Balance, June 30, 2021
|
| | | | 60,227,899 | | | | | $ | 60,228 | | | | | $ | 52,456,309 | | | | | $ | (20,723,926) | | | | | $ | 31,792,611 | | |
Common stock issued for cash
|
| | | | 37,500 | | | | | | 37 | | | | | | 22,463 | | | | | | — | | | | | | 22,500 | | |
Cash received for unissued shares
|
| | | | — | | | | | | — | | | | | | (6,496,034) | | | | | | — | | | | | | (6,496,034) | | |
Private placement
|
| | | | 8,855,161 | | | | | | 8,855 | | | | | | 39,839,369 | | | | | | — | | | | | | 39,848,224 | | |
Common stock issued for investment in mineral properties
|
| | | | 1,208,595 | | | | | | 1,209 | | | | | | 5,843,790 | | | | | | — | | | | | | 5,844,999 | | |
Common stock issued upon issued of debt
|
| | | | 99,049 | | | | | | 99 | | | | | | 480,289 | | | | | | — | | | | | | 480,388 | | |
Share issuance costs
|
| | | | — | | | | | | — | | | | | | (754,598) | | | | | | — | | | | | | (754,598) | | |
Stock-based compensation
expense |
| | | | — | | | | | | — | | | | | | 2,710,715 | | | | | | — | | | | | | 2,710,715 | | |
Net loss for the Period
|
| | | | — | | | | | | — | | | | | | — | | | | | | (5,031,851) | | | | | | (5,031,851) | | |
Balance, September 30, 2021
|
| | | | 70,428,204 | | | | | $ | 70,428 | | | | | $ | 94,102,303 | | | | | $ | (25,755,777) | | | | | $ | 68,416,954 | | |
Balance, March 31, 2020
|
| | | | 16,354,197 | | | | | $ | 16,354 | | | | | $ | 2,783,193 | | | | | $ | (5,377,743) | | | | | $ | (2,578,196) | | |
Cashless exercise of stock options and warrants
|
| | | | 374,544 | | | | | | 375 | | | | | | (375) | | | | | | — | | | | | | — | | |
Cash received for unissued for cash
|
| | | | — | | | | | | — | | | | | | 330,000 | | | | | | — | | | | | | 330,000 | | |
Debt discount assigned to purchase option
|
| | | | — | | | | | | — | | | | | | 1,305,000 | | | | | | — | | | | | | 1,305,000 | | |
Net loss for the Period
|
| | | | — | | | | | | — | | | | | | — | | | | | | (345,735) | | | | | | (345,735) | | |
Balance, June 30, 2020
|
| | | | 16,728,741 | | | | | $ | 16,729 | | | | | $ | 4,417,818 | | | | | $ | (5,723,478) | | | | | $ | (1,288,931) | | |
Issuance of previously unissued shares
|
| | | | 275,000 | | | | | | 275 | | | | | | (275) | | | | | | — | | | | | | — | | |
Cash received for unissued shares
|
| | | | — | | | | | | — | | | | | | 50,000 | | | | | | — | | | | | | 50,000 | | |
Common stock issued upon exercise of options
|
| | | | 75,000 | | | | | | 75 | | | | | | 23,700 | | | | | | — | | | | | | 23,775 | | |
Common stock issued upon cashless exercise of warrants
|
| | | | 550,000 | | | | | | 550 | | | | | | (2,200) | | | | | | — | | | | | | (1,650) | | |
Net loss for the Period
|
| | | | — | | | | | | — | | | | | | — | | | | | | (773,865) | | | | | | (773,865) | | |
Balance, September 30, 2020
|
| | | | 17,628,741 | | | | | $ | 17,629 | | | | | $ | 4,489,043 | | | | | $ | (6,497,343) | | | | | $ | (1,990,671) | | |
| | |
Estimated
Useful Life (Years) |
| |
September 30,
2021 |
| |
March 31,
2021 |
| ||||||
Land
|
| | | | | | $ | 70,000 | | | | | $ | 70,000 | | |
Building
|
| |
39
|
| | | | 559,503 | | | | | | 503,711 | | |
Furniture and equipment
|
| |
3 – 5
|
| | | | 463,814 | | | | | | 330,125 | | |
| | |
5
|
| | | | 73,399 | | | | | | — | | |
| | | | | | | | 1,166,716 | | | | | | 903,836 | | |
Less accumulated depreciation
|
| | | | | | | (91,353) | | | | | | (33,092) | | |
Property and equipment, net
|
| | | | | | $ | 1,075,363 | | | | | $ | 870,744 | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (In Years) |
| |
Aggregate Intrinsic
Value |
| ||||||||||||
Outstanding as of March 31, 2021
|
| | | | 825,000 | | | | | $ | 1.77 | | | | | | 4.61 | | | | | $ | 2,265,000 | | |
Options granted
|
| | | | 2,271,250 | | | | | | 4.79 | | | | | | 4.66 | | | | | | (611,100) | | |
Outstanding as of September 30, 2021
|
| | | | 3,096,250 | | | | | $ | 3.99 | | | | | | 4.58 | | | | | $ | 1,653,900 | | |
Options exercisable as of September 30, 2021
|
| | | | 832,083 | | | | | $ | 4.39 | | | | | | 4.6 | | | | | | | | |
| | |
March 31,
2021 |
| |
March 31,
2020 |
| ||||||
ASSETS
|
| | | | | | | | | | | | |
CURRENT ASSETS | | | | | | | | | | | | | |
Cash and cash equivalents
|
| | | $ | 10,392,940 | | | | | $ | 146,425 | | |
Prepaid expenses and other current assets
|
| | | | 75,608 | | | | | | 7,649 | | |
Total current assets
|
| | | | 10,468,548 | | | | | | 154,074 | | |
Mineral properties, net
|
| | | | 5,337,072 | | | | | | 216,104 | | |
Property and equipment, net
|
| | | | 870,744 | | | | | | — | | |
TOTAL ASSETS
|
| | | $ | 16,676,364 | | | | | $ | 370,178 | | |
LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | | | | | | | | | | |
CURRENT LIABILITIES | | | | | | | | | | | | | |
Accounts payable and accrued liabilities
|
| | | $ | 162,024 | | | | | $ | 501,818 | | |
Accounts payable – related party
|
| | | | 3,000 | | | | | | 1,790,829 | | |
Line of credit
|
| | | | — | | | | | | 30,082 | | |
Notes payable
|
| | | | — | | | | | | 300,000 | | |
Current portion of notes payable – related party
|
| | | | 906,768 | | | | | | 325,645 | | |
Total current liabilities
|
| | | | 1,071,792 | | | | | | 2,948,374 | | |
Notes payable – related party, net of current portion and discount
|
| | | | 473,325 | | | | | | — | | |
Total liabilities
|
| | | | 1,545,117 | | | | | | 2,948,374 | | |
SHAREHOLDERS’ EQUITY (DEFICIT) | | | | | | | | | | | | | |
Preferred stock, par value $0.001; 10,000,000 shares authorized,
no shares issued and outstanding as of March 31, 2021 and March 31, 2020, respectively |
| | | | — | | | | | | — | | |
Common stock, par value $0.001; 75,000,000 shares authorized,
56,197,331 and 16,354,197 shares issued and outstanding as of March 31, 2021 and March 31, 2020, respectively |
| | | | 56,197 | | | | | | 16,354 | | |
Additional paid-in capital
|
| | | | 23,617,834 | | | | | | 2,783,193 | | |
Accumulated deficit
|
| | | | (8,542,784) | | | | | | (5,377,743) | | |
Total shareholders’ equity (deficit)
|
| | | | 15,131,247 | | | | | | (2,578,196) | | |
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
|
| | | $ | 16,676,364 | | | | | $ | 370,178 | | |
| | |
2021
|
| |
2020
|
| ||||||
OPERATING EXPENSES | | | | | | | | | | | | | |
Exploration costs
|
| | | $ | 673,545 | | | | | $ | 100,133 | | |
General and administrative expenses
|
| | | | 1,160,979 | | | | | | 1,001,339 | | |
Total operating expenses
|
| | | | 1,834,524 | | | | | | 1,101,472 | | |
LOSS FROM OPERATIONS
|
| | | | (1,834,524) | | | | | | (1,101,472) | | |
OTHER EXPENSE | | | | | | | | | | | | | |
Interest income
|
| | | | 7,204 | | | | | | — | | |
Interest expense
|
| | | | (1,337,721) | | | | | | (12,801) | | |
Total other expense
|
| | | | (1,330,517) | | | | | | (12,801) | | |
NET LOSS
|
| | | $ | (3,165,041) | | | | | $ | (1,114,273) | | |
Net loss per share:
Basic and diluted net loss per share |
| | | $ | (0.12) | | | | | $ | (0.07) | | |
Weighted average shares outstanding:
Basic and diluted |
| | | | 25,904,749 | | | | | | 16,054,675 | | |
| | |
2021
|
| |
2020
|
| ||||||
CASH FLOWS FROM OPERATING ACTIVITIES | | | | | | | | | | | | | |
Net loss
|
| | | $ | (3,165,041) | | | | | $ | (1,114,273) | | |
Adjustments to reconcile net loss to net cash used in operating activities: | | | | | | | | | | | | | |
Stock-based compensation expense
|
| | | | 124,706 | | | | | | 110,897 | | |
Common stock issued for services
|
| | | | — | | | | | | 85,000 | | |
Depreciation expense
|
| | | | 17,554 | | | | | | — | | |
Accretion of debt discount
|
| | | | 1,331,121 | | | | | | — | | |
Changes in current assets and liabilities: | | | | | | | | | | | | | |
Prepaid expenses and other assets
|
| | | | (67,959) | | | | | | 1,202 | | |
Accounts payable and accrued expenses
|
| | | | (257,626) | | | | | | 275,922 | | |
Accounts payable – related party
|
| | | | (422,000) | | | | | | 190,170 | | |
Net cash used in operating activities
|
| | | | (2,439,245) | | | | | | (451,082) | | |
CASH FLOWS FROM INVESTING ACTIVITIES | | | | | | | | | | | | | |
Purchases of property and equipment
|
| | | | (888,298) | | | | | | — | | |
Purchases of mineral properties
|
| | | | (3,800,968) | | | | | | — | | |
Net cash used in investing activities
|
| | | | (4,689,266) | | | | | | — | | |
CASH FLOWS FROM FINANCING ACTIVITIES | | | | | | | | | | | | | |
Payment of cash dividend
|
| | | | (4,357,246) | | | | | | — | | |
Proceeds from note payable
|
| | | | 1,450,000 | | | | | | 300,000 | | |
Proceeds from sale of common stock
|
| | | | 19,635,000 | | | | | | 100,000 | | |
Proceeds from exercise of common stock options and warrants
|
| | | | 1,011,000 | | | | | | 50,000 | | |
Repayment of note payable – related party
|
| | | | (333,646) | | | | | | — | | |
Repayment of line of credit, net
|
| | | | (30,082) | | | | | | (5,083) | | |
Net cash provided by financing activities
|
| | | | 17,375,026 | | | | | | 444,917 | | |
NET CHANGE IN CASH AND CASH EQUIVALENTS
|
| | | | 10,246,515 | | | | | | (6,165) | | |
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
|
| | | | 146,425 | | | | | | 152,590 | | |
CASH AND CASH EQUIVALENTS, END OF PERIOD
|
| | | $ | 10,392,940 | | | | | $ | 146,425 | | |
SUPPLEMENTAL CASH FLOW INFORMATION: | | | | | | | | | | | | | |
Cash paid for interest expense
|
| | | $ | 6,865 | | | | | $ | — | | |
Cash paid for income taxes
|
| | | $ | — | | | | | $ | — | | |
NON-CASH INVESTING AND FINANCING ACTIVITIES: | | | | | | | | | | | | | |
Common stock issued for investment in mineral property
|
| | | $ | 1,320,000 | | | | | $ | — | | |
Common stock issued upon conversion of note payable
|
| | | $ | 1,750,000 | | | | | $ | — | | |
Related party accounts payable and accrued interest converted to related party
note payable |
| | | $ | 1,447,997 | | | | | $ | — | | |
| | |
Common Stock
|
| |
Additional
Paid-in Capital |
| |
Accumulated
Deficit |
| | | | | | | |||||||||||||||
| | |
Shares
|
| |
Amount
|
| |
Total
|
| |||||||||||||||||||||
Balance March 31, 2019
|
| | | | 15,729,197 | | | | | $ | 15,729 | | | | | $ | 2,437,921 | | | | | $ | (4,263,470) | | | | | $ | (1,809,820) | | |
Common stock issued for cash
|
| | | | 250,000 | | | | | | 250 | | | | | | 99,750 | | | | | | — | | | | | | 100,000 | | |
Common stock issued for services
|
| | | | 250,000 | | | | | | 250 | | | | | | 84,750 | | | | | | — | | | | | | 85,000 | | |
Stock options issued for services
|
| | | | — | | | | | | — | | | | | | 110,897 | | | | | | — | | | | | | 110,897 | | |
Exercise of stock options
|
| | | | 125,000 | | | | | | 125 | | | | | | 49,875 | | | | | | 0 | | | | | | 50,000 | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (1,114,273) | | | | | | (1,114,273) | | |
Balance March 31, 2020
|
| | | | 16,354,197 | | | | | | 16,354 | | | | | | 2,783,193 | | | | | | (5,377,743) | | | | | | (2,578,196) | | |
Common stock issued for cash
|
| | | | 32,725,000 | | | | | | 32,725 | | | | | | 19,602,275 | | | | | | — | | | | | | 19,635,000 | | |
Common stock issued upon exercise of
options |
| | | | 2,950,000 | | | | | | 2,950 | | | | | | 1,008,050 | | | | | | — | | | | | | 1,011,000 | | |
Common stock issued for investment in
mineral properties |
| | | | 750,000 | | | | | | 750 | | | | | | 1,319,250 | | | | | | — | | | | | | 1,320,000 | | |
Debt discount assigned to purchase option
|
| | | | — | | | | | | — | | | | | | 1,305,000 | | | | | | — | | | | | | 1,305,000 | | |
Cashless exercise of stock options and warrants
|
| | | | 501,467 | | | | | | 501 | | | | | | (501) | | | | | | — | | | | | | — | | |
Common stock issued upon conversion
of debt |
| | | | 2,916,667 | | | | | | 2,917 | | | | | | 1,747,083 | | | | | | — | | | | | | 1,750,000 | | |
Stock-based compensation expense
|
| | | | — | | | | | | — | | | | | | 124,706 | | | | | | — | | | | | | 124,706 | | |
Debt discount on notes payable – related party
|
| | | | — | | | | | | — | | | | | | 86,024 | | | | | | — | | | | | | 86,024 | | |
Cash dividend
|
| | | | — | | | | | | — | | | | | | (4,357,246) | | | | | | — | | | | | | (4,357,246) | | |
Net loss
|
| | | | — | | | | | | — | | | | | | — | | | | | | (3,165,041) | | | | | | (3,165,041) | | |
Balance at March 31, 2021
|
| | | | 56,197,331 | | | | | $ | 56,197 | | | | | $ | 23,617,834 | | | | | $ | (8,542,784) | | | | | $ | 15,131,247 | | |
| | |
Estimated
Useful Life (Years) |
| |
2021
|
| |
2020
|
| |||||||||
Land
|
| | | | | | | | | $ | 70,000 | | | | | $ | — | | |
Building
|
| | | | 39 | | | | | | 503,711 | | | | | | — | | |
Furniture and equipment
|
| | | | 3–5 | | | | | | 330,125 | | | | | | 15,538 | | |
| | | | | | | | | | | 903,836 | | | | | | 15,538 | | |
Less accumulated depreciation
|
| | | | | | | | | | (33,092) | | | | | | (15,538) | | |
Property and equipment, net
|
| | | | | | | | | $ | 870,744 | | | | | $ | — | | |
| | |
2021
|
| |
2020
|
| ||||||
Income tax benefit computed at federal statutory rates
|
| | | $ | 664,659 | | | | | $ | 233,997 | | |
Non-deductible stock-based compensation
|
| | | | (26,188) | | | | | | (41,138) | | |
Non-deductible interest expense
|
| | | | (279,536) | | | | | | | | |
Change in valuation allowance
|
| | | | (358,935) | | | | | | (192,859) | | |
Tax benefit
|
| | | $ | — | | | | | $ | — | | |
| | |
2021
|
| |
2020
|
| ||||||
Deferred tax assets: | | | | | | | | | | | | | |
Net operating loss carry forward
|
| | | $ | 1,124,389 | | | | | $ | 703,077 | | |
Basis of mining properties
|
| | | | 32,235 | | | | | | 32,235 | | |
Less: valuation allowance
|
| | | | (1,094,247) | | | | | | (735,312) | | |
Total deferred tax assets
|
| | | | 62,377 | | | | | | — | | |
Basis in property and equipment
|
| | | | (62,377) | | | | | | — | | |
Net deferred tax assets
|
| | | $ | — | | | | | $ | — | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (In Years) |
| |
Aggregate
Intrinsic Value |
| ||||||||||||
Outstanding as of March 31, 2020
|
| | | | 2,662,500 | | | | | $ | 0.32 | | | | | | 4.78 | | | | | $ | 1,025,000 | | |
Options granted
|
| | | | 750,000 | | | | | | 1.92 | | | | | | 4.96 | | | | | | | | |
Options exercised
|
| | | | (2,587,500) | | | | | | 0.32 | | | | | | — | | | | | | — | | |
Outstanding as of March 31, 2021
|
| | | | 825,000 | | | | | | 1.77 | | | | | | 4.86 | | | | | | 285,000 | | |
Options vested or expected to vest as of March 31, 2021
|
| | | | 75,000 | | | | | | 0.32 | | | | | | 3.84 | | | | | | 135,000 | | |
Options exercisable as of March 31, 2021
|
| | | | 75,000 | | | | | $ | 0.32 | | | | | | 3.84 | | | | | $ | 135,000 | | |
| | |
Shares
|
| |
Weighted
Average Exercise Price |
| |
Weighted
Average Remaining Contractual Life (In Years) |
| |||||||||
Outstanding as of March 31, 2020
|
| | | | 825,000 | | | | | $ | 0.40 | | | | | | 1.99 | | |
Warrants granted
|
| | | | — | | | | | | — | | | | | | — | | |
Warrants exercised
|
| | | | 825,000 | | | | | | 0.40 | | | | | | — | | |
Outstanding as of March 31, 2021
|
| | | | — | | | | | | — | | | | | | — | | |
| | |
Page
|
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| | | | A-8 | | | |
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| | | | A-11 | | | |
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| | | | A-12 | | | |
| | | | A-12 | | | |
| | | | A-12 | | | |
| | | | A-12 | | | |
| | | | A-13 | | | |
| | | | A-14 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-15 | | | |
| | | | A-16 | | | |
| | | | A-16 | | | |
| | | | A-17 | | | |
| | | | A-17 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-18 | | | |
| | | | A-19 | | | |
| | | | A-19 | | | |
| | | | A-20 | | | |
| | | | A-20 | | | |
| | | | A-21 | | | |
| | | | A-22 | | | |
| | | | A-22 | | | |
| | | | A-22 | | | |
| | | | A-22 | | | |
| | | | A-22 | | | |
| | | | A-22 | | | |
| | | | A-22 | | |
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Page
|
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| | | | A-23 | | | |
| | | | A-23 | | | |
| | | | A-25 | | | |
| | | | A-27 | | | |
| | | | A-30 | | | |
| | | | A-30 | | | |
| | | | A-31 | | | |
| | | | A-31 | | | |
| | | | A-32 | | | |
| | | | A-32 | | | |
| | | | A-32 | | | |
| | | | A-33 | | | |
| | | | A-33 | | | |
| | | | A-33 | | | |
| | | | A-33 | | | |
| | | | A-34 | | | |
| | | | A-34 | | | |
| | | | A-34 | | | |
| | | | A-35 | | | |
| | | | A-35 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-36 | | | |
| | | | A-37 | | | |
| | | | A-37 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-38 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | | |
| | | | A-39 | | |
Definition
|
| |
Location
|
|
Acceptable Confidentiality Agreement
|
| | 6.2(c) | |
Acquisition Proposal
|
| | 1.1(a) | |
Action
|
| | 4.7 | |
Adverse Recommendation Change
|
| | 6.2(b) | |
Affiliate
|
| | 1.1(b) | |
Agreement
|
| | Preamble | |
Book Entry Securities
|
| | 1.1(c) | |
Business Day
|
| | 1.1(d) | |
Certificates
|
| | 1.1(e) | |
Closing
|
| | 2.3 | |
Closing Date
|
| | 2.3 | |
Closing Statement
|
| | 6.12 | |
Code
|
| | 1.1(f) | |
Contract
|
| | 4.4(a) | |
control
|
| | 1.1(g) | |
Dakota
|
| | Preamble | |
Dakota Board Recommendation
|
| | Recitals | |
Dakota Equity Number
|
| | 1.1(h) | |
Dakota Material Adverse Effect
|
| | 1.1(i) | |
Dakota SEC Documents
|
| | 5.5(a) | |
Dakota Stock
|
| | 1.1(j) | |
Dakota Stockholder Approval
|
| | 5.3 | |
Dakota Stockholders Meeting
|
| | 6.3(a) | |
Dissenter’s Rights Statutes
|
| | 1.1(k) | |
Dissenting Share
|
| | 3.4 | |
Dissenting Stockholder
|
| | 3.4 | |
Effective Time
|
| | 2.1(b) | |
Exchange Act
|
| | 4.4(b) | |
Exchange Agent
|
| | 3.3(a) | |
Exchange Fund
|
| | 3.3(b) | |
Excluded Dakota Stock
|
| | 3.2(b) | |
First Merger
|
| | Recitals | |
First Merger Articles of Merger
|
| | 2.1(b) | |
First Merger Effective Time
|
| | 2.1(b) | |
Form S-4
|
| | 6.3(a) | |
GAAP
|
| | 4.5 | |
Governmental Entity
|
| | 4.4(b) | |
Indebtedness
|
| | 1.1(l) | |
Intervening Event
|
| | 1.1(m) | |
Joint Proxy and Consent Solicitation Statement/Prospectus
|
| | 6.3(a) | |
JR
|
| | Preamble | |
Definition
|
| |
Location
|
|
JR Book Entry Shares
|
| | 3.3(b) | |
JR Material Adverse Effect
|
| | 1.1(n) | |
JR Share Issuance
|
| | Recitals | |
JR Stock
|
| | 1.1(o) | |
JR Subsidiary
|
| | 1.1(p) | |
JR’s Counsel
|
| | 6.11(a) | |
JR’s Dakota Stock
|
| | 3.2(c) | |
knowledge
|
| | 1.1(q) | |
Law
|
| | 4.4(a) | |
Letter of Transmittal
|
| | 3.3(c) | |
Liens
|
| | 4.2(b) | |
Maximum Premium
|
| | 6.8(b) | |
Merger Consideration
|
| |
3.2(a), 3.2(a)
|
|
Merger Sub 1
|
| | Preamble | |
Merger Sub 2
|
| | Preamble | |
Mergers
|
| | Recitals | |
Nevada Secretary of State
|
| | 2.1(b) | |
Notice Period
|
| | 6.2(d)(ii) | |
NRS
|
| | 1.1(r) | |
Outside Date
|
| | 8.1(b)(i) | |
Person
|
| | 1.1(s) | |
Purchase Agreement
|
| | 1.1(t) | |
Representative
|
| | 1.1(u) | |
SEC
|
| | 5.5(a) | |
Second Merger
|
| | Recitals | |
Second Merger Articles of Merger
|
| | 2.1(b) | |
Second Merger Effective Time
|
| | 2.1(b) | |
Securities Act
|
| | 4.4(b) | |
Subsidiary
|
| | 1.1(v) | |
Superior Proposal
|
| | 1.1(w) | |
Surviving Corporation
|
| | Recitals | |
Surviving LLC
|
| | Recitals | |
Takeover Laws
|
| | 6.6 | |
Tax Opinion
|
| | 1.1(x) | |
Tax Return
|
| | 1.1(y) | |
Taxes
|
| | 1.1(z) | |
Withholding Obligations
|
| | 3.7(a) | |
|
If to Dakota, Merger Sub 1 or Merger Sub 2, to:
Dakota Territory Resource Corp. 106 Glendale Dr., Suite A Lead, S.D. 57754 E-mail: JAberle@gold-sd.com Attention: Gerald Aberle |
| |
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, New York E-mail: michael.hong@skadden.com Attention: Michael Hong |
|
|
If if to JR, Merger Sub 1, Merger Sub 2, the Surviving Corporation or the Surviving LLC, to:
JR Resources Corp. 1588-609 Granville Street Vancouver, BC, V7Y 1H4 E-mailJAwde@gold-sd.com Attention: Jonathan Awde |
| |
With a copy (which shall not constitute notice) to:
Dorsey & Whitney LLP TD Canada Trust Tower Brookfield Place, 161 Bay Street, Suite 4310 Toronto, ON M5J 2S1 Canada E-mail: raymer.richard@dorsey.com Attention: Richard Raymer |
|
| |
Type of Security
|
| | |
Number of Securities Held
|
| |
| | | | | | | | |
| | | | | | | | |
| | | | | C-4 | | | |
| | | | | C-4 | | | |
| | | | | C-8 | | | |
| | | | | C-10 | | | |
| | | | | C-10 | | | |
| | | | | C-11 | | | |
| | | | | C-13 | | | |
| | | | | C-13 | | | |
| | | | | C-14 | | | |
| | | | | C-15 | | | |
| | | | | C-15 | | | |
| | | | | C-15 | | | |
| | | | | C-16 | | | |
| | | | | C-16 | | | |
| | | | | C-16 | | | |
| | | | | C-17 | | | |
| | | | | C-17 | | | |
| | | | | C-17 | | | |
| | | | | C-18 | | | |
| | | | | C-18 | | | |
| | | | | C-19 | | | |
| | | | | C-19 | | |
Exhibit
Number |
| |
Exhibit Description
|
|
2.1
|
| | Amended and Restated Agreement and Plan of Merger among Dakota Territory Resource Corp., DGC Merger Sub I Inc., DGC Merger Sub II LLC and JR Resources Corp., dated September 10, 2021. | |
2.2
|
| | Amendment to Agreement and Plan of Merger among Dakota Territory Resource Corp., JR Resources Corp., DGC Merger Sub I Inc. and DGC Merger Sub II LLC, dated December 17, 2021. | |
3.1
|
| | | |
3.2
|
| | | |
5.1
|
| | | |
8.1
|
| | | |
10.1
|
| | | |
10.2
|
| | | |
10.3
|
| | | |
10.4
|
| | | |
10.5
|
| | | |
10.6
|
| | Option Agreement for Purchase and Sale of Real Property dated October 14, 2021 between Homestake Mining Company of California, LAC Minerals (USA) LLC and Dakota Territory Resource Corp. | |
10.7
|
| | Option Agreement for Purchase and Sale of Real Property dated September 7, 2021 between Homestake Mining Company of California and Dakota Territory Resource Corp. | |
21.1
|
| | | |
23.1
|
| | | |
23.2
|
| | | |
23.3
|
| | | |
23.4
|
| | | |
24.1
|
| | | |
107
|
| | |
|
Name
|
| |
Title
|
| |
Date
|
|
|
/s/ Jonathan Awde
Jonathan Awde
|
| | Chief Executive Officer (Principal Executive Officer) and Director | | |
February 1, 2022
|
|
|
/s/ William Gehlen
William Gehlen
|
| | Director | | |
February 1, 2022
|
|
|
/s/ Mac Jackson
Mac Jackson
|
| | Director | | |
February 1, 2022
|
|
Exhibit 2.1
AMENDED AND RESTATED
AGREEMENT AND PLAN OF MERGER
among
DAKOTA TERRITORY RESOURCE CORP.,
DGC MERGER SUB I CORP.,
DGC MERGER SUB II LLC,
and
JR RESOURCES CORP.
Dated as of September 10, 2021
This document is intended solely to facilitate discussions among the parties identified herein. It is not intended to create, and shall not be deemed to create, a legally binding or enforceable offer or agreement of any type or nature prior to the duly authorized and approved execution of this document by all such parties and the delivery of an executed copy hereof by all such parties to all other parties.
TABLE OF CONTENTS
| Page | |
ARTICLE I DEFINITIONS | 1 | |
Section 1.1 | Certain Definitions | 1 |
ARTICLE II THE MERGERS | 5 | |
Section 2.1 | The First Merger | 5 |
Section 2.2 | The Second Merger | 5 |
Section 2.3 | Closing | 6 |
ARTICLE III EFFECT OF THE MERGERS; EXCHANGE OF CERTIFICATES | 6 | |
Section 3.1 | Conversion of Securities in the First Merger | 6 |
Section 3.2 | Conversion of Securities in the Second Merger | 6 |
Section 3.3 | Exchange of JR Stock and Dakota Stock | 7 |
Section 3.4 | Dissenting Shares | 9 |
Section 3.5 | Convertible Securities | 9 |
Section 3.6 | Fractional Shares | 9 |
Section 3.7 | Withholding | 9 |
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF JR | 9 | |
Section 4.1 | Organization, Standing and Power | 9 |
Section 4.2 | Merger Subs | 10 |
Section 4.3 | Capital Stock | 10 |
Section 4.4 | Authority | 11 |
Section 4.5 | No Conflict; Consents and Approvals | 11 |
Section 4.6 | No Undisclosed Liabilities | 12 |
Section 4.7 | Certain Information | 12 |
Section 4.8 | Litigation | 12 |
Section 4.9 | Affiliate Transactions | 12 |
Section 4.10 | Brokers | 12 |
Section 4.11 | No Other Representations or Warranties | 12 |
ARTICLE V REPRESENTATIONS AND WARRANTIES OF DAKOTA | 13 | |
Section 5.1 | Organization, Standing and Power | 13 |
Section 5.2 | Capital Stock | 13 |
Section 5.3 | Authority | 14 |
Section 5.4 | No Conflict; Consents and Approvals | 14 |
Section 5.5 | SEC Reports; Financial Statements | 15 |
Section 5.6 | No Undisclosed Liabilities | 15 |
Section 5.7 | Certain Information | 16 |
Section 5.8 | Absence of Certain Changes or Events | 16 |
Section 5.9 | Litigation | 16 |
Section 5.10 | Compliance with Laws | 16 |
Section 5.11 | Affiliate Transactions | 16 |
Section 5.12 | Brokers; Transaction Expenses | 16 |
Section 5.13 | No Other Representations or Warranties | 16 |
(i)
Page | ||
ARTICLE VI COVENANTS | 17 | |
Section 6.1 | Conduct of Business | 17 |
Section 6.2 | No Solicitation; Recommendation of the Merger | 19 |
Section 6.3 | Preparation of Documents; Dakota Stockholders’ Meeting | 22 |
Section 6.4 | Access to Information; Confidentiality | 24 |
Section 6.5 | Reasonable Best Efforts | 24 |
Section 6.6 | Takeover Laws | 25 |
Section 6.7 | Notification of Certain Matters; Transaction Litigation | 25 |
Section 6.8 | Indemnification, Exculpation and Insurance | 26 |
Section 6.9 | Public Announcements | 26 |
Section 6.10 | Section 16 Matters | 26 |
Section 6.11 | Certain Tax Matters | 27 |
Section 6.12 | Closing Statement | 27 |
ARTICLE VII CONDITIONS PRECEDENT | 27 | |
Section 7.1 | Conditions to Each Party’s Obligation to Effect the Mergers | 27 |
Section 7.2 | Conditions to the Obligations of Dakota | 28 |
Section 7.3 | Conditions to the Obligations of JR | 28 |
Section 7.4 | Frustration of Closing Conditions | 28 |
ARTICLE VIII TERMINATION, AMENDMENT AND WAIVER | 29 | |
Section 8.1 | Termination | 29 |
Section 8.2 | Effect of Termination | 30 |
Section 8.3 | Fees and Expenses | 30 |
Section 8.4 | Amendment or Supplement | 30 |
Section 8.5 | Extension of Time; Waiver | 30 |
ARTICLE IX GENERAL PROVISIONS | 30 | |
Section 9.1 | Nonsurvival of Representations and Warranties | 30 |
Section 9.2 | Notices | 31 |
Section 9.3 | Interpretation | 36 |
Section 9.4 | Entire Agreement | 32 |
Section 9.5 | No Third Party Beneficiaries | 32 |
Section 9.6 | Governing Law | 32 |
Section 9.7 | Submission to Jurisdiction | 32 |
Section 9.8 | Assignment; Successors | 32 |
Section 9.9 | Specific Performance | 33 |
Section 9.10 | Currency | 33 |
Section 9.11 | Severability | 33 |
Section 9.12 | Waiver of Jury Trial | 33 |
Section 9.13 | Counterparts | 33 |
Section 9.14 | Facsimile or .pdf Signature | 33 |
Section 9.15 | No Presumption Against Drafting Party | 33 |
Section 9.16 | Non-Recourse | 33 |
(ii)
INDEX OF DEFINED TERMS
Definition | Location | |
Acceptable Confidentiality Agreement | 6.2(c) | |
Acquisition Proposal | 1.1(a) | |
Action | 4.7 | |
Adverse Recommendation Change | 6.2(b) | |
Affiliate | 1.1(b) | |
Agreement | Preamble | |
Book Entry Securities | 1.1(c) | |
Business Day | 1.1(d) | |
Certificates | 1.1(e) | |
Closing | 2.3 | |
Closing Date | 2.3 | |
Closing Statement | 6.12 | |
Code | 1.1(f) | |
Contract | 4.4(a) | |
control | 1.1(g) | |
Dakota | Preamble | |
Dakota Board Recommendation | Recitals | |
Dakota Equity Number | 1.1(h) | |
Dakota Material Adverse Effect | 1.1(i) | |
Dakota SEC Documents | 5.5(a) | |
Dakota Stock | 1.1(j) | |
Dakota Stockholder Approval | 5.3 | |
Dakota Stockholders Meeting | 6.3(a) | |
Dissenter’s Rights Statutes | 1.1(k) | |
Dissenting Share | 3.4 | |
Dissenting Stockholder | 3.4 | |
Effective Time | 2.1(b) | |
Exchange Act | 4.4(b) | |
Exchange Agent | 3.3(a) | |
Exchange Fund | 3.3(b) | |
Excluded Dakota Stock | 3.2(b) | |
First Merger | Recitals | |
First Merger Articles of Merger | 2.1(b) | |
First Merger Effective Time | 2.1(b) | |
Form S-4 | 6.3(a) | |
GAAP | 4.5 | |
Governmental Entity | 4.4(b) | |
Indebtedness | 1.1(l) | |
Intervening Event | 1.1(m) | |
Joint Proxy and Consent Solicitation Statement/Prospectus | 6.3(a) | |
JR | Preamble |
(iii)
INDEX OF DEFINED TERMS
Definition | Location | |
JR Book Entry Shares | 3.3(b) | |
JR Material Adverse Effect | 1.1(n) | |
JR Share Issuance | Recitals | |
JR Stock | 1.1(o) | |
JR Subsidiary | 1.1(p) | |
JR’s Counsel | 6.11(a) | |
JR’s Dakota Stock | 3.2(c) | |
knowledge | 1.1(q) | |
Law | 4.4(a) | |
Letter of Transmittal | 3.3(c) | |
Liens | 4.2(b) | |
Maximum Premium | 6.8(b) | |
Merger Consideration | 3.2(a), 3.2(a) | |
Merger Sub 1 | Preamble | |
Merger Sub 2 | Preamble | |
Mergers | Recitals | |
Nevada Secretary of State | 2.1(b) | |
Notice Period | 6.2(d)(ii) | |
NRS | 1.1(r) | |
Outside Date | 8.1(b)(i) | |
Person | 1.1(s) | |
Purchase Agreement | 1.1(t) | |
Representative | 1.1(u) | |
SEC | 5.5(a) | |
Second Merger | Recitals | |
Second Merger Articles of Merger | 2.1(b) | |
Second Merger Effective Time | 2.1(b) | |
Securities Act | 4.4(b) | |
Subsidiary | 1.1(v) | |
Superior Proposal | 1.1(w) | |
Surviving Corporation | Recitals | |
Surviving LLC | Recitals | |
Takeover Laws | 6.6 | |
Tax Opinion | 1.1(x) | |
Tax Return | 1.1(y) | |
Taxes | 1.1(z) | |
Withholding Obligations | 3.7(a) |
(iv)
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER
AMENDED AND RESTATED AGREEMENT AND PLAN OF MERGER (this “Agreement”), dated as of September 10, 2021, by and among DAKOTA TERRITORY RESOURCE CORP., a Nevada corporation (“Dakota”), JR RESOURCES CORP., a Nevada corporation (“JR”), DGC Merger Sub I Corp., a Nevada corporation and a direct, wholly-owned Subsidiary of JR (“Merger Sub 1”), and DGC Merger Sub II LLC, a Nevada limited liability company and a direct, wholly-owned Subsidiary of JR (“Merger Sub 2”). Dakota, JR, Merger Sub 1 and Merger Sub 2 are each sometimes referred to herein as a “Party” and, collectively, as the “Parties”.
WHEREAS, Dakota and JR, among others, made and entered into an Agreement and Plan of Merger on May 13, 2021, (the “Original Agreement”) and desire to amend and restate the Original Agreement in its entirety;
WHEREAS, JR and Dakota wish to effect a strategic business combination by means of (a) a merger of Merger Sub 1 with and into Dakota (the “First Merger”), with Dakota being the surviving corporation in the First Merger (the “Surviving Corporation”), and (b) a merger of Surviving Corporation (as defined below) with and into Merger Sub 2 (the “Second Merger” and, together with the First Merger, the “Mergers”), with Merger Sub 2 being the surviving entity in the Second Merger and a wholly-owned subsidiary of JR (the “Surviving LLC”);
WHEREAS, the Board of Directors of JR has unanimously (i) determined that this Agreement and the transactions contemplated hereby (including the Mergers and the issuance of shares of JR pursuant to the First Merger (the “JR Share Issuance”)) are fair to and in the best interests of JR and its stockholders, (ii) approved, adopted and declared advisable this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance), and (iii) recommended that JR’s stockholders approve this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance);
WHEREAS, the Board of Directors of Dakota has unanimously (i) determined that this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) are fair to and in the best interests of Dakota and its stockholders, (ii) approved, adopted and declared advisable this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance), (iii) directed that this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) be submitted to a vote at a meeting of Dakota’s stockholders, and (iv) recommended the approval of this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) by Dakota’s stockholders (such recommendation, the “Dakota Board Recommendation”);
WHEREAS, (i) the Board of Directors of Merger Sub 1 has unanimously approved, adopted and declared advisable this Agreement and the transactions contemplated hereby (including the First Merger), and (ii) JR, in its capacity as the sole stockholder of Merger Sub 1 and the sole member of Merger Sub 2, has approved and adopted this Agreement and each of the Mergers, as applicable;
WHEREAS, for U.S. federal income tax purposes, it is intended that the First Merger and the Second Merger, taken together, constitute a single integrated transaction that qualifies as a “reorganization” under Section 368(a) of the Internal Revenue Code of 1986, as amended (the “Code”) and the Treasury Regulations thereunder, to which each of JR and Dakota are to be parties under Section 368(b) of the Code, and this Agreement is intended to constitute a “plan of reorganization” for purposes of Sections 354, 361 and 368 of the Code and within the meaning of Treasury Regulations Section 1.368-2(g);
WHEREAS, the parties desire to make certain representations, warranties, covenants and agreements in connection with the Mergers and also to prescribe certain conditions to the Mergers as specified herein.
NOW, THEREFORE, in consideration of the premises, and of the representations, warranties, covenants and agreements contained herein, and intending to be legally bound hereby, and, in accordance with Section 8.4 of the Original Agreement, the parties hereby amend and restate the Original Agreement and agree as follows:
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ARTICLE I
DEFINITIONS
Section 1.1 Certain Definitions. For purposes of this Agreement:
(a) “Acquisition Proposal” means any proposal, offer, or inquiry from any Person or group of Persons relating to any direct or indirect acquisition or purchase, in one transaction or a series of transactions, including any merger, reorganization, share exchange, consolidation, tender offer, exchange offer, stock acquisition, asset acquisition, business combination, liquidation, dissolution, joint venture or similar transaction, (A) of or for assets or businesses of Dakota and its Subsidiaries that generate 20% or more of the net revenues or net income or that represent 20% or more of the consolidated total assets (based on fair market value) of Dakota and its Subsidiaries taken as a whole, immediately prior to such transaction or (B) of or for 20% or more of any class of capital stock, other equity security or voting power of Dakota, in each case other than the transactions contemplated by this Agreement;
(b) “Affiliate” of any Person means any other Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first Person;
(c) “Book-Entry Securities” means Dakota Stock held in book-entry or other uncertificated form;
(d) “Business Day” means any day other than a Saturday, a Sunday or a day on which banks in Reno, Nevada, Lead, South Dakota, or New York, New York are authorized or required by applicable Law to be closed;
(e) “Certificates” means, as applicable, certificates representing Dakota Stock;
(f) “Code” has the meaning specified in the Recitals hereto;
(g) “control” (including the terms “controlled,” “controlled by” and “under common control with”) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise;
(h) “Dakota Equity Number” means the number of shares of Dakota Stock outstanding immediately prior to the First Merger Effective Time, but excluding shares of Dakota Stock issuable in respect of Dakota’s outstanding options, any Excluded Dakota Stock and JR’s Dakota Stock;
(i) “Dakota Material Adverse Effect” means any event, change, occurrence or effect that, individually or in the aggregate with other events, changes, occurrences or effects, has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, properties, financial condition or results of operations of Dakota and its Subsidiaries, taken as a whole, other than any change, effect, event or occurrence arising out of, attributable to or resulting from, alone or in combination, (1) changes in general economic, financial market, business conditions or capital markets, (2) general changes or developments in any of the industries or geographies in which Dakota or its Subsidiaries operate, (3) any actions required under this Agreement to obtain any approval or authorization under applicable antitrust or competition Laws for the consummation of the Mergers or any of the other transactions contemplated hereby, (4) changes in any applicable Laws or applicable accounting regulations or principles or interpretations thereof first proposed after the date hereof, (5) any change in the price or trading volume of Dakota’s stock, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such change that are not otherwise excluded from the definition of “Dakota Material Adverse Effect” may be taken into account in determining whether there has been a Dakota Material Adverse Effect), (6) any failure by Dakota to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “Dakota Material Adverse Effect” may be taken into account in determining whether there has been a Dakota Material Adverse Effect), (7) any acts of God, natural disasters, terrorism, armed hostilities, sabotage, war or any escalation or worsening of acts of war, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or worsening of such matters threatened or existing as of the date hereof, (8) the announcement of this Agreement and the transactions contemplated hereby, including the initiation of litigation by any Person with respect to this Agreement, (9) any action taken by Dakota, or which Dakota causes to be taken by any of its Subsidiaries, in each case which is required or permitted by or resulting from or arising in connection with this Agreement or (10) any actions taken at the written request of JR; except in the case of clauses (1), (2), (4) and (7), Dakota and its Subsidiaries are affected in a materially disproportionate manner as compared to other companies that operate in the industry in which Dakota and its Subsidiaries operate;
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(j) “Dakota Stock” means the common stock, par value $0.001 per share, of Dakota;
(k) “Dissenter’s Rights Statutes” means NRS 92A.300 through 92A.500, inclusive;
(l) “Indebtedness” means, with respect to any Person, (i) all obligations of such Person for borrowed money, or with respect to unearned advances of any kind to such Person, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, (iii) all capitalized lease obligations of such Person, (iv) all obligations of such Person under installment sale contracts, (v) all obligations of such Person under securitization instruments or factoring arrangements, (vi) all liabilities for the deferred purchase price of property or services already delivered (other than trade debt and trade payables incurred in the ordinary course of business and not overdue), including any “earn-out” or similar payments (contingent or otherwise) for past acquisitions, (vii) all guarantees and arrangements having the economic effect of a guarantee of such Person of any Indebtedness of any other Person, and (viii) all obligations or undertakings of such Person to maintain or cause to be maintained the financial position of others or to purchase the obligations of others;
(m) “Intervening Event” means a material event, change, circumstance, occurrence, effect or state of facts that does not relate to JR, Merger Sub 1 or Merger Sub 2 and was not known to the Board of Directors of Dakota prior to the execution of this Agreement (or, if known, the consequences of which were not known nor reasonably foreseeable), which event, change, circumstance, occurrence, effect or state of facts, or any consequence thereof, becomes known to the Board of Directors of Dakota after the date hereof, provided, that in no event shall the receipt, existence or terms of an Acquisition Proposal or any matter relating thereto constitute an Intervening Event;
(n) “JR Material Adverse Effect” means any event, change, occurrence or effect that, individually or in the aggregate with other events, changes, occurrences or effects, has had or would reasonably be expected to have a material adverse effect on the business, assets, liabilities, properties, financial condition or results of operations of JR and the JR Subsidiary, taken as a whole, other than any change, effect, event or occurrence arising out of, attributable to or resulting from, alone or in combination, (1) changes in general economic, financial market, business conditions or capital markets, (2) general changes or developments in any of the industries or geographies in which JR or the JR Subsidiary operate, (3) any actions required under this Agreement to obtain any approval or authorization under applicable antitrust or competition Laws for the consummation of the Mergers or any of the other transactions contemplated hereby, (4) changes in any applicable Laws or applicable accounting regulations or principles or interpretations thereof first proposed after the date hereof, (5) any failure by JR to meet internal or published projections, forecasts or revenue or earnings predictions, in and of itself (provided, that the facts or occurrences giving rise to or contributing to such failure that are not otherwise excluded from the definition of “JR Material Adverse Effect” may be taken into account in determining whether there has been a JR Material Adverse Effect), (6) any acts of God, natural disasters, terrorism, armed hostilities, sabotage, war or any escalation or worsening of acts of war, epidemic, pandemic or disease outbreak (including the COVID-19 virus) or worsening of such matters threatened or existing as of the date hereof, (7) the announcement of this Agreement and the transactions contemplated hereby, including the initiation of litigation by any Person with respect to this Agreement, or (8) any actions taken (or omitted to be taken) at the written request of Dakota; except in the case of clauses (1), (2), (4) and (6), JR and the JR Subsidiary are affected in a materially disproportionate manner as compared to other companies that operate in the industry in which JR and the JR Subsidiary operate;
(o) “JR Stock” means the common stock, par value $0.001 per share, of JR;
(p) “JR Subsidiary” means JR (Canada) Resources Services Corp., a company incorporated in British Columbia with one common share outstanding, wholly owned by JR;
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(q) “knowledge” means (i) with respect to JR, the actual knowledge, after reasonable inquiry, of Jonathan Awde and (ii) with respect to Dakota, the actual knowledge, after reasonable inquiry, of Gerald Aberle;
(r) “NRS” means the Nevada Revised Statutes, as amended;
(s) “Person” means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including any Governmental Entity;
(t) “Purchase Agreement” means that certain agreement, dated as of May 26, 2020, by and between JR and Dakota, as amended from time to time.
(u) “Representatives” means, with respect to any Person, such Person’s directors, officers, employees, advisors (including attorneys, accountants, consultants, investment bankers, and financial advisors), agents and other representatives;
(v) “Subsidiary” means, with respect to any Person, (i) any other Person of which stock or other equity interests having ordinary voting power to elect more than 50% of the board of directors or other governing body are owned, directly or indirectly, by such first Person; or (ii) that is consolidated with such first Person for financial reporting purposes under GAAP;
(w) “Superior Proposal” means any bona fide unsolicited Acquisition Proposal that did not result from a breach of Section 6.2(a) (with all percentages included in the definition of “Acquisition Proposal” increased to 60%) that the Board of Directors of Dakota has determined in good faith (after consultation with its financial advisor of nationally recognized standing and outside legal counsel) that is reasonably likely to be consummated if accepted and if consummated, would be more favorable to the stockholders of Dakota, from a financial point of view than the First Merger and the other transactions contemplated by this Agreement (including any adjustment to the terms and conditions thereof proposed in writing by JR in response to any such Acquisition Proposal);
(x) “Tax Opinion” means the written opinion of Skadden, Arps, Slate, Meagher and Flom LLP (or other nationally recognized legal counsel reasonably acceptable to Dakota), dated as of the Closing Date and at a comfort level of at least “should”, to the effect that, for U.S. federal income tax purposes, the First Merger and the Second Merger, taken together, constitute a single integrated transaction that qualifies as a “reorganization” under Section 368(a) of the Code and the Treasury Regulations thereunder;
(y) “Tax Return” means any return, declaration, report, certificate, bill, election, claim for refund, information return, statement or other written information and any other document filed with or supplied to, or required to be filed with or supplied to, any Governmental Entity with respect to Taxes, including any schedule, attachment or supplement thereto, and including any amendment thereof; and
(z) “Taxes” means (i) all federal, state, local, foreign and other net income, gross income, gross receipts, sales, use, stock, ad valorem, transfer, transaction, franchise, profits, gains, registration, license, wages, lease, service, service use, employee and other withholding, social security, unemployment, welfare, disability, payroll, employment, excise, severance, stamp, environmental, occupation, workers’ compensation, premium, real property, personal property, escheat or unclaimed property, windfall profits, net worth, capital, value-added, alternative or add-on minimum, customs duties, estimated and other taxes, fees, assessments, charges or levies of any kind whatsoever (whether imposed directly or through withholding and including taxes of any third party in respect of which a Person may have a duty to collect or withhold and remit and any amounts resulting from the failure to file any Tax Return), whether disputed or not, together with any interest and any penalties, additions to tax or additional amounts with respect thereto; (ii) any liability for payment of amounts described in clause (i) whether as a result of transferee liability, of being a member of an affiliated, consolidated, combined or unitary group for any period or otherwise through operation of Law; and (iii) any liability for the payment of amounts described in clauses (i) or (ii) as a result of any tax sharing, tax indemnity or tax allocation agreement or any other express or implied agreement to indemnify any other Person.
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ARTICLE
II
THE MERGERS
Section 2.1 The First Merger.
(a) Effect of First Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the NRS, at the First Merger Effective Time, Merger Sub 1 shall be merged with and into Dakota. Following the First Merger, the separate corporate existence of Merger Sub 1 shall cease, and Dakota shall continue as the Surviving Corporation in the First Merger and a wholly-owned Subsidiary of JR. From and after the First Merger Effective Time, all the property, rights, powers, privileges and franchises of Dakota and Merger Sub 1 shall be vested in the Surviving Corporation and all of the debts, obligations, liabilities, restrictions and duties of Dakota and Merger Sub 1 shall become the debts, obligations, liabilities and duties of the Surviving Corporation, all as provided under the NRS.
(b) First Merger Effective Time. Upon the terms and subject to the provisions of this Agreement, as soon as practicable on the Closing Date, the parties shall file articles of merger (the “First Merger Articles of Merger”) with the Secretary of State of the State of Nevada (the “Nevada Secretary of State”), executed in accordance with NRS 92A.230, and shall make all other filings required under the NRS in connection with effecting the First Merger. The First Merger shall become effective at the time when the First Merger Articles of Merger has been accepted for filing by the Nevada Secretary of State or at such other post-filing date and time as JR and Dakota shall agree in writing and shall specify in the First Merger Articles of Merger in accordance with the NRS (the time the First Merger becomes effective being the “First Merger Effective Time”).
(c) Organizational Documents. As of the First Merger Effective Time, by virtue of the First Merger and without any further action on the part of Dakota, Merger Sub 1 or any other Person, the articles of incorporation and bylaws of Dakota shall be the articles of incorporation and bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.
(d) Directors and Officers of the Surviving Corporation. Immediately following the First Merger Effective Time, (i) the directors of Dakota serving immediately prior to the First Merger Effective Time shall be the directors of the Surviving Corporation until the earlier of their death, resignation or removal or the time at which their respective successors are duly elected or appointed and qualified, and (ii) the officers of Dakota serving immediately prior to the First Merger Effective Time shall be the officers of the Surviving Corporation until the earlier of their death, resignation or removal or the time at which their respective successors are duly elected or appointed and qualified.
Section 2.2 The Second Merger.
(a) Effect of Second Merger. Upon the terms and subject to the conditions set forth in this Agreement and in accordance with the NRS, at the Second Merger Effective Time, the Surviving Corporation shall be merged with and into Merger Sub 2. Following the Second Merger, the separate corporate existence of the Surviving Corporation shall cease, and Merger Sub 2 shall continue as the Surviving LLC in the Second Merger and as a direct wholly-owned Subsidiary of JR. From and after the Second Merger Effective Time, all the property, rights, powers, privileges and franchises of Merger Sub 2 and the Surviving Corporation shall be vested in the Surviving LLC and all of the debts, obligations, liabilities, restrictions and duties of Merger Sub 2 and the Surviving Corporation shall become the debts, obligations, liabilities and duties of the Surviving LLC, all as provided under the NRS.
(b) Second Merger Effective Time. Upon the terms and subject to the provisions of this Agreement, as soon as practicable following the First Merger Effective Time, the parties shall file articles of merger (the “Second Merger Articles of Merger”) with the Nevada Secretary of State, executed in accordance with NRS 92A.230, and shall make all other filings required under the NRS in connection with effecting the Second Merger. The Second Merger shall become effective at the time when the Second Merger Articles of Merger has been accepted for filing by the Nevada Secretary of State, or at such later time as may be agreed by JR and Dakota in writing and specified in the Second Merger Articles of Merger (the “Second Merger Effective Time”). The time at which both of the First Merger Effective Time and the Second Merger Effective Time has occurred is referred to in this Agreement as the “Effective Time.”
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(c) Organizational Documents. As of the Second Merger Effective Time, by virtue of the Second Merger and without any further action on the part of the Surviving Corporation, Merger Sub 2 or any other Person, the articles of organization and limited liability company agreement of Merger Sub 2 shall be the articles of organization and limited liability company agreement of the Second Surviving Corporation until thereafter changed or amended as provided therein or by applicable Law.
(d) Managers and Officers of the Surviving LLC. Immediately following the Second Merger Effective Time, (i) the officers of Merger Sub 2 serving immediately prior to the Second Merger Effective Time shall be the officers of the Surviving LLC until the earlier of their death, resignation or removal or the time at which their respective successors are duly elected or appointed and qualified and (ii) the Surviving LLC shall be member-managed, as provided in the limited liability company agreement of the Surviving LLC.
Section 2.3 Closing. The closing of the Mergers (the “Closing”) shall take place at 5:00 p.m., Eastern Daylight Time, on the third (3rd) Business Day following the satisfaction or, to the extent permitted by applicable Law, waiver of the conditions set forth in Article V (other than those conditions that by their terms are to be satisfied at the Closing, but subject to the satisfaction or, to the extent permitted by applicable Law, waiver of those conditions), by the electronic exchange of documents, or on such other time, date and/or location as may be agreed to in writing by Dakota and JR. The date on which the Closing occurs is referred to in this Agreement as the “Closing Date.”
ARTICLE
III
EFFECT OF THE MERGERS; EXCHANGE OF CERTIFICATES
Section 3.1 Conversion of Securities in the First Merger. At the First Merger Effective Time, by virtue of the First Merger and without any action on the part of Dakota, Merger Sub 1, or the holders of any shares of capital stock or other equity interests of Dakota or any other Person:
(a) Each share of Dakota Stock issued and outstanding immediately prior to the First Merger Effective Time (other than any Excluded Dakota Stock, JR’s Dakota Stock and any Dissenting Shares), and all rights in respect thereof, shall be cancelled and converted into the right to receive a validly issued, fully paid and nonassessable share of JR Stock (the “Merger Consideration”). As of the First Merger Effective Time, the shares of Dakota Stock issued and outstanding immediately prior to the First Merger Effective Time (other than any Excluded Dakota Stock, JR’s Dakota Stock and any Dissenting Shares) shall no longer be outstanding and shall automatically be cancelled and shall cease to exist, and each holder of such Dakota Stock shall cease to have any rights with respect thereto except for the right to receive their allocated portion of the Merger Consideration in respect of each of such holder’s shares of Dakota Stock.
(b) Each share of Dakota Stock owned, directly or indirectly, by Dakota or any of its Subsidiaries or that is held in the treasury of Dakota immediately prior to the First Merger Effective Time (collectively, “Excluded Dakota Stock”) shall automatically be cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor. Each share of Dakota Stock owned, directly or indirectly, by JR or the JR Subsidiary immediately prior to the First Merger Effective Time (collectively, “JR’s Dakota Stock”) shall be unaffected by the First Merger and shall automatically be cancelled and converted into one validly issued, fully paid and non-assessable share of capital stock of the Surviving Corporation.
(c) Each of the shares of capital stock of Merger Sub 1 issued and outstanding immediately prior to the First Merger Effective Time shall be converted into one validly issued, fully paid and non-assessable share of capital stock of the Surviving Corporation.
Section 3.2 Conversion of Securities in the Second Merger. At the Second Merger Effective Time, by virtue of the Second Merger and without any action on the part of the Surviving Corporation or Merger Sub 2:
(a) each share of capital stock of the Surviving Corporation issued and outstanding immediately prior to the Second Merger Effective Time shall be automatically cancelled and shall cease to exist, and no consideration shall be delivered in exchange therefor; and
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(b) each limited liability company interest of Merger Sub 2 outstanding immediately prior to the Second Effective Time shall be converted into and become one membership interest of the Surviving LLC, which shall constitute the only outstanding equity of the Surviving LLC. From and after the Second Merger Effective Time, the limited liability company interests of Merger Sub 2 shall be deemed for all purposes to represent the number of membership interests into which they were converted in accordance with the immediately preceding sentence.
Section 3.3 Exchange of JR Stock and Dakota Stock.
(a) Appointment of Exchange Agent. Prior to the First Merger Effective Time, JR shall select and appoint a bank or trust company reasonably acceptable to Dakota to act as transfer agent with respect to the shares of JR Stock and as exchange agent (the “Exchange Agent”) to accomplish the deliveries and other actions contemplated by this Section 3.3. JR shall enter into an agreement with the Exchange Agent in a form reasonably acceptable to Dakota and JR.
(b) Deposit with Exchange Agent. On or before the Effective Time, JR shall deposit or cause to be deposited with the Exchange Agent, for the benefit of and in the name of the holders of shares of Dakota Stock outstanding immediately prior to the Effective Time, for exchange in accordance with this Article III, non-certificated book entries representing the shares of JR Stock to be issued pursuant to this Article III in respect of shares of Dakota Stock outstanding immediately prior to the Effective Time (such non-certificated book-entry shares, the “JR Book Entry Shares”). The JR Book Entry Shares deposited with the Exchange Agent pursuant to this Section 3.3(b) are referred to collectively as the “Exchange Fund.”
(c) Promptly after the Closing Date, JR shall cause the Exchange Agent to mail to each holder of record of shares of Dakota Stock outstanding immediately prior to the Effective Time a letter of transmittal in a form prepared by JR and reasonably acceptable to Dakota (a “Letter of Transmittal”) (which shall specify that the delivery shall be effected only upon proper delivery of the Certificates (or affidavits of loss in lieu thereof) or transfer of the Book-Entry Securities to the Exchange Agent and which shall otherwise be in customary form and shall include customary provisions with respect to delivery of an “agent’s message” regarding the book-entry transfer of Book-Entry Securities) and instructions for use in effecting the surrender of Certificates (or affidavits of loss in lieu thereof) or Book-Entry Securities in exchange for the Merger Consideration.
(d) Each holder of shares of Dakota Stock that have been converted into the right to receive the Merger Consideration shall be entitled to receive, upon (i) surrender to the Exchange Agent of a Certificate (or affidavit of loss in lieu thereof), together with a properly completed Letter of Transmittal, or (ii) receipt of an “agent’s message” by the Exchange Agent (or such other evidence, if any, of transfer as the Exchange Agent may reasonably request) in the case of transfer of Book-Entry Securities, the Merger Consideration in respect of the shares of Dakota Stock represented by a Certificate (or affidavit of loss in lieu thereof) or Book-Entry Security. The shares of JR Stock constituting the Merger Consideration shall be in uncertificated book-entry form. The Exchange Agent shall accept such Certificates (or affidavits of loss in lieu thereof) or Book-Entry Securities upon compliance with such reasonable terms and conditions as the Exchange Agent may impose to effect an orderly exchange thereof in accordance with normal exchange practices. If any Merger Consideration is to be issued to a Person other than the Person in whose name the Dakota Stock surrendered in exchange therefor is registered, it shall be a condition to such exchange that (i) either such Certificate shall be properly endorsed or such Certificate (or affidavit of loss in lieu thereof) shall otherwise be in proper form for the transfer or such Book-Entry Security shall be properly transferred, and (ii) the Person requesting such exchange shall pay to JR any transfer Taxes or other Taxes required by reason of the payment of such consideration to a Person other than the registered holder of the Certificate (or the shares specified in an affidavit of loss in lieu thereof) and/or Book-Entry Security so surrendered, or such Person shall establish to the reasonable satisfaction of JR that such Tax has been paid or is not applicable.
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(e) From and after the Effective Time, until surrendered as contemplated by this Section 3.3, each Certificate and/or Book-Entry Security shall be deemed to represent only the right to receive upon such surrender, in each case together with a duly executed and properly completed Letter of Transmittal, evidence of shares in book-entry form representing the shares of JR Stock that the holder of such Certificate and/or Book-Entry Security is entitled to receive pursuant to this Article III. No interest will be paid or will accrue on any Merger Consideration. The issuance of the Merger Consideration in accordance with the terms of this Agreement shall be deemed issued in full satisfaction of all rights pertaining to such Dakota Stock (other than the right to receive dividends or other distributions, if any, in accordance with Section 3.3(g)).
(f) After the Effective Time, there shall be no further transfer on the records of Dakota of shares of Dakota Stock which have been converted, pursuant to this Agreement, into the right to receive the Merger Consideration set forth herein, and if any Certificates (or affidavits of loss in lieu thereof) and/or Book-Entry Securities, together with a duly executed and properly completed Letter of Transmittal, are presented to the Exchange Agent, JR or the Surviving Corporation or Surviving LLC for transfer, they shall be cancelled and exchanged, without interest, for the Merger Consideration.
(g) No dividends or other distributions with respect to JR Stock with a record date after the Effective Time shall be paid to the holder of any not-yet-surrendered Dakota Stock with respect to the shares of JR Stock issuable hereunder, and all such dividends and other distributions shall be paid by JR to the Exchange Agent and shall be included in the Exchange Fund, in each case until the surrender of such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Security in accordance with this Agreement. Subject to applicable Laws, following surrender of any such Certificate (or affidavit of loss in lieu thereof) or Book-Entry Security there shall be paid to the holder thereof, without interest, (i) the amount of dividends or other distributions with a record date after the Effective Time theretofore paid with respect to such shares of JR Stock to which such holder is entitled pursuant to this Agreement and (ii) at the appropriate payment date, the amount of dividends or other distributions with a record date after the Effective Time but prior to such surrender and with a payment date subsequent to such surrender payable with respect to such shares of JR Stock.
(h) None of JR, Dakota, Merger Sub 1 or Merger Sub 2 shall be liable to any Person in respect of any shares of JR Stock (or dividends or distributions with respect thereto) for any amount required to be delivered to a public official pursuant to any applicable abandoned property, escheat or similar Laws.
(i) If any Certificate shall have been lost, stolen or destroyed, upon such Person’s (i) making of an affidavit of that fact claiming such certificate to be lost, stolen or destroyed, (ii) delivery to JR of a bond of indemnity in an amount and upon terms reasonably satisfactory to JR, and (iii) execution and delivery of a Letter of Transmittal, JR will pay, in exchange for such lost, stolen or destroyed certificate, the amount and type of consideration to be paid in respect of each share of Dakota Stock represented by such Certificate in accordance with the terms of this Agreement.
(j) Any portion of the Exchange Fund that remains unclaimed by the holders of Dakota Stock twelve months after the Closing Date shall be returned to JR, upon demand, and any such holder who has not exchanged shares of Dakota Stock for the Merger Consideration in accordance with this Section 3.3 prior to that time shall thereafter look only to JR for payment of the Merger Consideration, and any dividends and distributions with respect thereto pursuant to Section 3.3(g), in respect of such shares without any interest thereon.
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Section 3.4 Dissenting Shares. Notwithstanding anything in this Agreement to the contrary and to the extent available under the Dissenter’s Rights Statutes, any share of Dakota Stock that is issued and outstanding immediately prior to the Effective Time and that is held by a stockholder of Dakota, who did not consent to or vote (by a valid and enforceable proxy or otherwise) in favor of the approval of this Agreement, which stockholder of Dakota complies with all of the provisions of the NRS relevant to the exercise and perfection of dissenters’ rights, including all applicable prerequisites, requirements, qualifications, and procedures to perfect and maintain such rights under the Dissenter’s Rights Statutes in accordance therewith and have not withdrawn or otherwise forfeited their rights thereunder, (such share being a “Dissenting Share,” and such stockholder being a “Dissenting Stockholder”), shall be cancelled at the Effective Time but shall not be converted into the right to receive the consideration to which the holder of such share would be entitled pursuant to the terms hereof but rather shall be converted into the right to receive such consideration as may be determined to be due with respect to such Dissenting Share pursuant to the Dissenter’s Rights Statutes. If any Dissenting Stockholder fails to perfect dissenters’ rights under the Dissenter’s Rights Statutes or effectively withdraws or otherwise loses such rights with respect to any Dissenting Shares, such Dissenting Shares shall thereupon automatically be converted into the right to receive the Merger Consideration pursuant to the terms of this Article III. Each party shall give the other prompt notice of any demands received by the first party for appraisal or payment under the Dissenter’s Rights Statutes with respect to any Dakota Stock withdrawals of such demands and any other instruments served pursuant to the Dissenter’s Rights Statutes and shall give the other party the opportunity to participate in all negotiations and proceedings with respect thereto. No party shall, without the prior written consent of the other parties, make any payment with respect to, or settle or offer to settle, any such demands.
Section 3.5 Convertible Securities.
(a) At the First Merger Effective Time, each option to acquire Dakota Stock that is outstanding immediately prior to the First Merger Effective Time shall cease to represent a right to acquire shares of Dakota Stock and shall be converted into a right to acquire the same number of shares of JR Stock as such option was exercisable for in Dakota Stock, all on substantially the same terms as were in effect immediately prior to the First Merger Effective Time.
(b) Following the Effective Time, the parties shall take all lawful action to effect the provisions of this Section 3.5, including causing the amendment or restatement of any convertible instruments to the extent necessary.
Section 3.6 Fractional Shares. Notwithstanding anything in this Agreement to the contrary, no fractional shares of JR Stock shall be issued in the First Merger. All fractional shares of JR Stock that a holder of shares of Dakota Stock would otherwise be entitled to receive as a result of the First Merger shall be aggregated and, if a fractional share results from such aggregation, the number of shares of JR Stock that such holder shall be entitled to receive shall be rounded down to the nearest full share.
Section 3.7 Withholding. Notwithstanding any other provision of this Agreement, the parties, the Exchange Agent and any other applicable withholding agent shall be entitled to deduct and withhold from any amount payable (including any amount payable in shares of JR Stock) in connection with any transactions referred to in this Agreement amounts as such withholding agent determines, acting reasonably, are required to be deducted and withheld from such payment in accordance with the Code or any provision of any other applicable Law (the “Withholding Obligations”). To the extent that amounts are so deducted or withheld, such deducted or withheld amounts shall be remitted by the applicable withholding agent to the appropriate taxing authority on a timely basis and shall be treated for all purposes hereof as having been paid to the Person in respect of which such deduction and withholding was made (provided that such deducted or withheld amounts are actually remitted to the appropriate taxing authority). The parties shall cause the Exchange Agent to provide prior written notice of any intention to deduct or withhold under applicable Withholding Obligations from any distributions or payments otherwise payable to any Affected Person so as to give each such Affected Person the reasonable opportunity to provide the Exchange Agent with any information or documentation sufficient to reduce or eliminate such Withholding Obligations.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF JR
JR represents and warrants to Dakota as follows:
Section 4.1 Organization, Standing and Power; Assets. Each of JR and the JR Subsidiary (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except, with respect to clauses (ii) and (iii), for any such failures to have such power and authority or to be so qualified or licensed or in good standing as would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect. JR is not in violation of any provision of JR’s articles of incorporation or JR’s bylaws in any material respect. JR does not, and will not as of the Effective Time, directly or indirectly own any material assets other than (i) equity interests of Dakota and the JR Subsidiary and (ii) cash or cash equivalents. JR Subsidiary is the only direct or indirect Subsidiary of JR (other than Dakota and its Subsidiaries and each of Merger Sub 1 and Merger Sub 2) and neither JR nor the JR Subsidiary has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet (or the notes thereto) of JR and its Subsidiaries (excluding Dakota and its Subsidiaries), except any such liabilities that are immaterial to JR and the JR Subsidiary.
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Section 4.2 Merger Subs. Each of Merger Sub 1 and Merger Sub 2 is a direct, wholly-owned subsidiary of JR. Each of Merger Sub 1 and Merger Sub 2 was formed solely for the purpose of effecting the transactions contemplated by this Agreement and has not engaged in any business activities or conducted any operations other than in connection with the transactions contemplated hereby and has no, and at all times prior to the Effective Time, except as expressly contemplated by this Agreement, any Ancillary Agreement and the other documents and transactions contemplated hereby and thereby, will have no, assets, liabilities or obligations of any kind or nature whatsoever other than those incident to its formation. Merger Sub 2 is (and has been since its formation) disregarded as an entity separate from JR for U.S. federal (and applicable state and local) income Tax purposes within the meaning of Treasury Regulations section 301.7701-3.
Section 4.3 Capital Stock.
(a) The authorized capital stock of JR consists of 200,000,000 shares of JR Stock. As of September 10, 2021, (i) 49,398,602 shares of JR Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were free of preemptive rights, and (ii) 10,556,135 shares of JR were issuable upon exercise of warrants to purchase shares of JR Stock. Except as set forth above, (A) there are not outstanding any (1) shares of capital stock or other voting securities of JR, (2) securities issued by JR or the JR Subsidiary convertible into or exchangeable for shares of capital stock or voting securities of JR or (3) options or other rights to acquire from JR or the JR Subsidiary, and no obligation of JR or the JR Subsidiary to issue, any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of JR, (B) there are no outstanding obligations of JR or the JR Subsidiary to repurchase, redeem or otherwise acquire any shares of capital stock, voting securities or securities convertible into or exchangeable for shares of capital stock or voting securities of JR, (C) there are no performance units, interests in or rights to the ownership or earnings of JR or other equity equivalent or equity-based awards or rights with respect to JR and (D) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued shares of capital stock or voting securities of JR to which JR or the JR Subsidiary is a party.
(b) The outstanding equity or ownership interests of the JR Subsidiary is duly authorized and validly issued and the equity or ownership interests are owned by JR and are owned free and clear of all security interests, liens, claims, pledges, agreements, limitations in voting rights, charges or other encumbrances (including any limitation on voting, sale, transfer or other disposition or exercise of any other attribute of ownership) (collectively, “Liens”) of any nature whatsoever, except where any such failure to own any such shares free and clear would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect. Except as owned or held by JR or the JR Subsidiary, (A) there are no securities issued by JR or the JR Subsidiary convertible into or exchangeable for equity interests or voting securities of the JR Subsidiary or options or other rights to acquire from JR or the JR Subsidiary, and no obligation of JR or the JR Subsidiary to issue, any equity interests, voting securities or securities convertible into or exchangeable for equity interests or voting securities of the JR Subsidiary, (B) there are no performance units, interests in or rights to the ownership or earnings of the JR Subsidiary or other equity equivalent or equity-based awards or rights with respect to the JR Subsidiary and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued equity interests or voting securities of the JR Subsidiary to which JR or the JR Subsidiary is a party. Except for the equity or voting interests the JR Subsidiary, JR does not own, directly or indirectly, any equity, membership interest, partnership interest, joint venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable for any of the foregoing, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution, guarantee, credit enhancement or other investment in, or assume any liability or obligation of, any Person.
(c) Upon issuance, the shares of JR Stock issuable pursuant to the First Merger will be duly authorized, fully paid, non-assessable and free and clear of any Liens other Liens imposed by applicable securities Laws.
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Section 4.4 Authority. JR has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution, delivery and performance of this Agreement by JR and the consummation by JR of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of JR and no other corporate proceedings on the part of JR are necessary to approve this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly executed and delivered by JR, and, assuming the due authorization, execution and delivery by Dakota, Merger Sub 1 and Merger Sub 2, constitutes a valid and binding obligation of JR, enforceable against JR in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). The Board of Directors of JR has unanimously (i) determined that this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) are fair to and in the best interests of JR and its stockholders, (ii) approved, adopted and declared advisable this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance), and (iii) recommended that the holders of JR Stock approve this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance). There is no vote or consent of the holders of any class or series of capital stock of JR necessary to approve this Agreement or the transactions contemplated hereby (including the Mergers and the JR Share Issuance).
Section 4.5 No Conflict; Consents and Approvals.
(a) The execution, delivery and performance of this Agreement by JR and the consummation by JR of the transactions contemplated hereby, do not and will not (i) conflict with or violate JR’s articles of incorporation or JR’s bylaws, (ii) conflict with or violate the equivalent organizational documents of the JR Subsidiary, (iii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (iv) of subsection (b) below have been obtained and all filings described in such clauses have been made, conflict with or violate any law, rule, regulation, order, judgment or decree (collectively, “Law”) applicable to JR or the JR Subsidiary or by which any of their respective properties are bound or (iv) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default), or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any note, bond, mortgage, indenture, contract, agreement, lease, license, permit or other instrument or obligation (each, a “Contract”) to which JR or the JR Subsidiary is a party or by which JR or the JR Subsidiary or any of their respective properties are bound, except, in the case of clauses (ii), (iii) and (iv), for any such conflict, breach, violation, default, loss, right or other occurrence that would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by JR and the consummation by JR of the transactions contemplated hereby, do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any governmental or regulatory (including stock exchange) authority, agency, court commission, or other governmental body (each, a “Governmental Entity”), except for (i) such filings as may be required under applicable requirements of the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and the rules and regulations promulgated thereunder, and under state securities, takeover and “blue sky” laws, (ii) the filing with the Nevada Secretary of State of the First Merger Articles of Merger or the Second Merger Articles of Merger, each as required by the NRS, (iii) such filings and approvals as may be necessary to comply with the applicable requirements of the applicable national securities exchanges and (iv) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect.
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Section 4.6 No Undisclosed Liabilities. Neither JR nor the JR Subsidiary has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by United States generally accepted accounting principles (“GAAP”) to be reflected on a consolidated balance sheet (or the notes thereto) of JR and the JR Subsidiary, except for liabilities and obligations (a) reflected or reserved against in JR’s most recent consolidated balance sheet, (b) incurred in the ordinary course of business since the date of such balance sheet, (c) which have been discharged or paid in full prior to the date of this Agreement, (d) incurred pursuant to the transactions contemplated by this Agreement and (e) that would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect.
Section 4.7 Certain Information. None of the information supplied or to be supplied by JR expressly for inclusion or incorporation by reference in the Form S-4 or the Joint Disclosure Statement/Prospectus will, at the date the Form S-4 is declared effective by the SEC, the date the Joint Disclosure Statement/Prospectus is first mailed to the stockholders of Dakota and stockholders of JR and at the time of the Dakota Stockholders 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 the light of the circumstances under which they are made, not misleading. The Form S-4 will comply as to form in all material respects with the requirements of the Securities Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, JR makes no representation or warranty with respect to any information supplied by Dakota or any of its Representatives for inclusion or incorporation by reference in the Form S-4 or the Joint Disclosure Statement/Prospectus.
Section 4.8 Litigation. Except as would not, individually or in the aggregate, reasonably be expected to have a JR Material Adverse Effect, (a) there is no suit, claim, action, litigation, proceeding, arbitration, mediation or investigation (each, an “Action”) pending or, to the knowledge of JR, threatened against JR or the JR Subsidiary or any of their respective properties by or before any Governmental Entity and (b) neither JR nor the JR Subsidiary nor any of their respective properties is or are subject to any judgment, order, injunction, rule or decree of any Governmental Entity.
Section 4.9 Affiliate Transactions. As of the date hereof, no executive officer or director of JR or holder of JR Stock or any of their respective Affiliates is a party to any Contract with or binding upon JR or the JR Subsidiary or any of their respective properties or assets or has any interest in any material property owned by JR or the JR Subsidiary or has engaged in any material transaction with any of the foregoing within the last twelve months, in each case except for Contracts or transactions entered into on arms’ length terms.
Section 4.10 Brokers. Neither JR nor the JR Subsidiary has employed any broker or finder or incurred any liability for any brokerage fees, commissions or finders’ fees in connection with the Mergers or the other transactions contemplated in this Agreement.
Section 4.11 No Other Representations or Warranties. Except for the representations and warranties contained in this Article III, Dakota acknowledges that neither JR nor any other Person on behalf of JR makes any other express or implied representation or warranty with respect to JR or the JR Subsidiary with respect to any other information provided to Dakota in connection with the transactions contemplated by this Agreement. Neither JR nor any other Person will have or be subject to any liability to Dakota or any other Person resulting from the distribution to Dakota or Dakota’s use of, any such information, including any information, documents, projections, forecasts or other material made available to Dakota in certain “data rooms” or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES OF DAKOTA
Except as disclosed or reflected in Dakota SEC Documents filed after January 1, 2020 and prior to the date of this Agreement (excluding any risk factor disclosures contained in such documents under the heading “Risk Factors” and any disclosure of risks or other matters included in any “forward-looking statements” disclaimer or other statements that are cautionary, predictive or forward-looking in nature), Dakota represents and warrants to JR as follows:
Section 5.1 Organization, Standing and Power. Each of Dakota and its Subsidiaries (i) is an entity duly organized, validly existing and in good standing (with respect to jurisdictions that recognize such concept) under the Laws of the jurisdiction of its organization, (ii) has all requisite corporate or similar power and authority to own, lease and operate its properties and to carry on its business as now being conducted and (iii) is duly qualified or licensed to do business and is in good standing (with respect to jurisdictions that recognize such concept) in each jurisdiction in which the nature of its business or the ownership, leasing or operation of its properties makes such qualification or licensing necessary, except, with respect to clauses (ii) and (iii), for any such failures to have such power and authority or to be so qualified or licensed or in good standing as would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect. Dakota is not in violation of any provision of Dakota’s articles of incorporation or Dakota’s bylaws in any material respect.
Section 5.2 Capital Stock.
(a) The authorized capital stock of Dakota consists of (a) 75,000,000 shares of Dakota Stock and (b) 10,000,000 shares of preferred stock, par value $0.001 per share, of Dakota. As of September 10, 2021, (i) 70,428,204 shares of Dakota Stock were issued and outstanding, all of which were validly issued, fully paid and nonassessable and were free of preemptive rights, (ii) 2,896,250 shares of Dakota Stock were issuable upon exercise of options to purchase shares of Dakota Stock, (iii) 1,050,000 shares of restricted stock of Dakota were issued and outstanding, and (iv) no shares of preferred stock of Dakota were issued and outstanding. Except as set forth above, as of the date of this Agreement, (A) there are not outstanding any (1) shares of capital stock or other voting securities of Dakota, (2) securities convertible into or exchangeable for shares of capital stock or voting securities of Dakota or (3) options or other rights to acquire from Dakota or any of its Subsidiaries, and no obligation of Dakota or any of its Subsidiaries to issue, any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Dakota, (B) there are no outstanding obligations of Dakota or any of its Subsidiaries to repurchase, redeem or otherwise acquire any capital stock, voting securities or securities convertible into or exchangeable for capital stock or voting securities of Dakota, (C) there are no performance units, interests in or rights to the ownership or earnings of Dakota or other equity equivalent or equity-based awards or rights and (D) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued capital stock of Dakota to which Dakota or any of its Subsidiaries is a party.
(b) Each of the outstanding shares of capital stock of each of Dakota’s Subsidiaries is duly authorized, validly issued, fully paid and nonassessable and all such shares are owned by Dakota or another wholly-owned Subsidiary of Dakota and are owned free and clear of all Liens of any nature whatsoever, except where any such failure to own any such shares free and clear would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect. Except as owned or held by Dakota or any of its wholly owned Subsidiaries, (A) there are no securities issued by Dakota or any of its Subsidiaries convertible into or exchangeable for equity interests or voting securities of any Subsidiary of Dakota or options or other rights to acquire from Dakota or any of its Subsidiaries, and no obligation of Dakota or any of its Subsidiaries to issue, any equity interests, voting securities or securities convertible into or exchangeable for equity interests or voting securities of any Subsidiary of Dakota, (B) there are no performance units, interests in or rights to the ownership or earnings of any Subsidiary of Dakota or other equity equivalent or equity-based awards or rights with respect to any Subsidiary of Dakota and (C) there are no other options, calls, warrants or other rights, agreements, arrangements or commitments of any character relating to the issued or unissued equity interests or voting securities of any Subsidiary of Dakota to which Dakota or any of its Subsidiaries is a party. Except for the equity or voting interests in its Subsidiaries, Dakota does not own, directly or indirectly, any equity, membership interest, partnership interest, joint venture interest, or other equity or voting interest in, or any interest convertible into, exercisable or exchangeable for any of the foregoing, nor is it under any current or prospective obligation to form or participate in, provide funds to, make any loan, capital contribution, guarantee, credit enhancement or other investment in, or assume any liability or obligation of, any Person.
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Section 5.3 Authority. Dakota has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder to consummate the transactions contemplated hereby, except that the consummation of the First Merger is subject to obtaining the Dakota Stockholder Approval. The execution, delivery and performance of this Agreement by Dakota and the consummation by Dakota of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Dakota and no other corporate proceedings on the part of Dakota are necessary to approve this Agreement or to consummate the transactions contemplated hereby, except that the consummation of the First Merger is subject to obtaining the Dakota Stockholder Approval. This Agreement has been duly executed and delivered by Dakota and, assuming the due authorization, execution and delivery by JR, Merger Sub 1 and Merger Sub 2, constitutes a valid and binding obligation of Dakota, enforceable against Dakota in accordance with its terms (except to the extent that enforceability may be limited by applicable bankruptcy, insolvency, moratorium, reorganization or similar Laws affecting the enforcement of creditors’ rights generally or by general principles of equity). The Board of Directors of Dakota (i) determined that this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) are fair to and in the best interests of Dakota and its stockholders, (ii) approved, adopted and declared advisable this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance), (iii) directed that this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) be submitted to a vote at a meeting of Dakota’s stockholders, and (iv) recommended the approval of this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance) by Dakota’s stockholders. The affirmative votes of the holders of (a) a majority of the outstanding shares of Dakota Stock and (b) a majority of the outstanding shares of Dakota Stock belonging to disinterested holders of Dakota Stock are the only votes of the holders of any class or series of Dakota’s capital stock necessary to approve this Agreement, the First Merger and the other transactions contemplated hereby (including the JR Share Issuance) (the “Dakota Stockholder Approval”).
Section 5.4 No Conflict; Consents and Approvals.
(a) The execution, delivery and performance of this Agreement by Dakota, and the consummation by Dakota of the transactions contemplated hereby, do not and will not (i) conflict with or violate Dakota’s articles of incorporation or Dakota’s bylaws, (ii) conflict with or violate the equivalent organizational documents of any of Dakota’s Subsidiaries, (iii) assuming that all consents, approvals and authorizations contemplated by clauses (i) through (v) of subsection (b) below and the Dakota Stockholder Approval have been obtained and all filings described in such clauses have been made, conflict with or violate any Law applicable to Dakota or any of its Subsidiaries or by which any of their respective properties are bound or (iv) result in any breach or violation of, or constitute a default (or an event which with notice or lapse of time or both would become a default), or result in the loss of a benefit under, or give rise to any right of termination, cancellation, amendment or acceleration of, any Contract to which Dakota or any of its Subsidiaries is a party or by which Dakota or any of its Subsidiaries or any of their respective properties are bound, except, in the case of clauses (ii), (iii) and (iv), for any such conflict, breach, violation, default, loss, right or other occurrence that would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect.
(b) The execution, delivery and performance of this Agreement by Dakota, and the consummation by Dakota of the transactions contemplated hereby, do not and will not require any consent, approval, authorization or permit of, action by, filing with or notification to, any Governmental Entity, except for (i) such filings as may be required under applicable requirements of the Securities Act and the Exchange Act and the rules and regulations promulgated thereunder, and under state securities, takeover and “blue sky” laws, (ii) such filings as necessary to comply with the applicable requirements of the NYSE American, (iii) the filing with the Nevada Secretary of State of the First Merger Articles of Merger or the Second Merger Articles of Merger, each as required by the NRS, and (iv) any such consent, approval, authorization, permit, action, filing or notification the failure of which to make or obtain would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect.
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Section 5.5 SEC Reports; Financial Statements.
(a) Dakota has filed or otherwise transmitted, on a timely basis, all forms, reports, statements, certifications and other documents (including all exhibits, amendments and supplements thereto) required to be filed or furnished by it with or to the Securities and Exchange Commission (the “SEC”) since January 1, 2020 (all such forms, reports, statements, certificates and other documents filed since January 1, 2020 and prior to the date hereof, collectively, the “Dakota SEC Documents”). As of their respective dates, or, if amended prior to the date hereof, as of the date of the last such amendment, each of the Dakota SEC Documents complied as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, and the applicable rules and regulations promulgated thereunder, as the case may be, each as in effect on the date so filed. As of their respective dates or filing or furnishing (or, if amended or superseded by a subsequent filing or furnished document prior to the date hereof, as of the date of such amendment or superseding filing or furnished document), none of the Dakota SEC Documents contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(b) As of the date of this Agreement, there are no outstanding or unresolved comments in comment letters received from the staff of the SEC with respect to any of the Dakota SEC Reports, and, to the knowledge of Dakota, none of the Dakota SEC Reports is subject to ongoing SEC review. The audited consolidated financial statements of Dakota (including any related notes thereto) included in Dakota’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021 filed with the SEC complied in all material respects with the 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 throughout the periods involved (except as may be indicated in the notes thereto) and fairly present in all material respects the consolidated financial position of Dakota and its Subsidiaries at the respective dates thereof and the results of their operations and cash flows for the periods indicated. The unaudited consolidated financial statements of Dakota (including any related notes thereto) included in Dakota’s Quarterly Reports on Form 10-Q filed with the SEC since March 31, 2021 complied in all material respects with the 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 throughout the periods involved (except as may be indicated in the notes thereto or may be permitted by the SEC under the Exchange Act) and fairly present in all material respects the consolidated financial position of Dakota and its Subsidiaries as of the respective dates thereof and the results of their operations and cash flows for the periods indicated (subject to normal period-end adjustments that would not, individually or in the aggregate, be material).
(c) Dakota maintains disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) designed to ensure that material information relating to Dakota, including its Subsidiaries, is made known to the chief executive officer and the chief financial officer of Dakota by others within those entities. Dakota maintains internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with GAAP. Based on its most recent evaluation of internal controls over financial reporting prior to the date hereof, management of Dakota has disclosed to Dakota’s auditors and the audit committee of the Board of Directors of Dakota (i) any significant deficiencies or material weaknesses in the design or operation of Dakota’s internal controls over financial reporting or (ii) any fraud, whether or not material, that involves management or other employees who have a significant role in Dakota’s internal control over financial reporting. Dakota has made available to JR, prior to the date of this Agreement, either materials relating to or a summary of any disclosure of matters described in clauses (i) or (ii) in the immediately preceding sentence made by management of Dakota to Dakota’s auditors or the audit committee of the Board of Directors of Dakota.
Section 5.6 No Undisclosed Liabilities. Neither Dakota nor any of its Subsidiaries has any liabilities or obligations of any nature, whether or not accrued, contingent or otherwise, that would be required by GAAP to be reflected on a consolidated balance sheet (or the notes thereto) of Dakota and its Subsidiaries, except for liabilities and obligations (a) reflected or reserved against in Dakota’s consolidated balance sheet as of December 31, 2020 (or the notes thereto) included in Dakota SEC Documents, (b) incurred in the ordinary course of business since January 1, 2020, (c) which have been discharged or paid in full prior to the date of this Agreement, (d) incurred pursuant to the transactions contemplated by this Agreement or (e) that would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect.
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Section 5.7 Certain Information. None of the information supplied or to be supplied by Dakota expressly for inclusion or incorporation by reference in the Form S-4 or the Joint Disclosure Statement/Prospectus will, at the date the Form S-4 is declared effective SEC, the date the Joint Proxy and Consent Solicitation Statement/Prospectus is first mailed to the stockholders of Dakota and stockholders of JR and at the time of the Dakota Stockholders 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 the light of the circumstances under which they are made, not misleading. The Joint Disclosure Statement/Prospectus will comply as to form in all material respects with the requirements of the Exchange Act and the rules and regulations promulgated thereunder. Notwithstanding the foregoing, Dakota makes no representation or warranty with respect to any information supplied by JR or any of its Representatives for inclusion or incorporation by reference in the Form S-4 or the Joint Disclosure Statement/Prospectus.
Section 5.8 Absence of Certain Changes or Events. Since December 31, 2020 through the date of this Agreement, except as otherwise contemplated or permitted by this Agreement, (a) except to the extent set forth in the Dakota SEC Documents, the businesses of Dakota and its Subsidiaries have been conducted in the ordinary course of business consistent with past practice, and (b) there has not been any event, development or state of circumstances that, individually or in the aggregate, has had a Dakota Material Adverse Effect.
Section 5.9 Litigation. There is no Action pending or, to the knowledge of Dakota, threatened against Dakota or any of its Subsidiaries or any of their respective properties by or before any Governmental Entity and neither Dakota nor any of its Subsidiaries nor any of their respective properties is or are subject to any judgment, order, injunction, rule or decree of any Governmental Entity.
Section 5.10 Compliance with Laws. Dakota and each of its Subsidiaries are in compliance with all Laws applicable to them or by which any of their respective properties are bound, except where any non-compliance would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect. Dakota and its Subsidiaries have in effect all permits necessary for them to own, lease or operate their properties and to carry on their businesses as now conducted, except for any permits the absence of which would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect. All permits are in full force and effect and are not subject to any pending or, to the knowledge of Dakota, threatened administrative or judicial proceeding to revoke, cancel, suspend or declare such permit invalid in any material respect, except as would not, individually or in the aggregate, reasonably be expected to have a Dakota Material Adverse Effect.
Section 5.11 Affiliate Transactions. Except for directors’ and employment-related Contracts filed or incorporated by reference as an exhibit to a Dakota SEC Document filed by Dakota prior to the date hereof, or as disclosed in the Dakota SEC Documents, and for any intercompany agreements, as of the date hereof, no executive officer or director of Dakota is a party to any Contract with or binding upon Dakota or any of its Subsidiaries or any of their respective properties or assets or has any material interest in any material property owned by Dakota or any of its Subsidiaries or has engaged in any material transaction with any of the foregoing within the last twelve months.
Section 5.12 Brokers; Transaction Expenses. 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 contemplated by this Agreement based upon arrangements made by or on behalf of Dakota or any of its Subsidiaries.
Section 5.13 No Other Representations or Warranties. Except for the representations and warranties contained in this Article IV, JR acknowledges that neither Dakota or any other Person on behalf of Dakota makes any other express or implied representation or warranty with respect to Dakota or any of Dakota’s Subsidiaries with respect to any other information provided to JR in connection with the transactions contemplated by this Agreement. Neither Dakota or any other Person will have or be subject to any liability to JR or any other Person resulting from the distribution to JR or its use of, any such information, including any information, documents, projections, forecasts or other material made available to JR in certain “data rooms” or management presentations in expectation of, or in connection with, the transactions contemplated by this Agreement.
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ARTICLE VI
COVENANTS
Section 6.1 Conduct of Business.
(a) Conduct of Business by JR. During the period from the date of this Agreement to the earlier of the First Merger Effective Time and the date of any termination of this Agreement pursuant to Section 8.1, except as consented to in writing in advance by Dakota or as otherwise specifically required by this Agreement, JR shall, and JR shall cause the JR Subsidiary to, use commercially reasonable efforts to carry on its business in the ordinary course consistent with past practice and use reasonable best efforts to preserve intact its business organization, preserve its assets, rights and properties in good repair and condition, keep available the services of its current officers, employees and consultants and preserve its goodwill and its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with it.
(b) Conduct of Business by Dakota. During the period from the date of this Agreement to the earlier of the Second Merger Effective Time and the date of any termination of this Agreement pursuant to Section 8.1, except as consented to in writing in advance by JR or as otherwise specifically required by this Agreement, Dakota shall, and shall cause each of its Subsidiaries to, carry on its business in the ordinary course consistent with past practice and use reasonable best efforts to preserve intact its business organization, preserve its assets, rights and properties in good repair and condition, keep available the services of its current officers, employees and consultants and preserve its goodwill and its relationships with customers, suppliers, licensors, licensees, distributors and others having business dealings with it, in each case, subject to the restrictions set forth in the next sentence.
(c) General Conduct of Business. During the period from the date of this Agreement to the earlier of the Second Merger Effective Time and the date of any termination of this Agreement pursuant to Section 8.1, except as specifically required by this Agreement, Dakota shall not, and shall not permit any of its Subsidiaries to, without JR’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed) and JR shall not, and shall not permit any of its Subsidiaries (other than Dakota and its Subsidiaries) to, without Dakota’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed):
(i) amend or otherwise change its articles of incorporation or bylaws or any similar governing instruments;
(ii) issue, deliver, sell, pledge, dispose of or encumber any shares of capital stock, options, restricted stock, warrants, convertible securities or other rights exercisable therefor or convertible thereinto, or grant to any Person any other right to acquire any shares of its capital stock;
(iii) declare, set aside, make or pay any dividend or other distribution, payable in cash, stock, property or otherwise, with respect to any of its capital stock (except for any dividend or distribution by a wholly-owned Subsidiary of Dakota to Dakota or to its other wholly-owned Subsidiaries);
(iv) adjust, split, combine, redeem, repurchase or otherwise acquire any shares of capital stock, options, restricted stock, warrants, convertible securities or other rights exercisable therefor or convertible thereinto, or reclassify, combine, split, subdivide or otherwise amend the terms of its capital stock, options, restricted stock, warrants, convertible securities or other rights exercisable therefor or convertible thereinto, other than a reverse stock split of JR Stock to be effected prior to the Closing;
(v) (A) acquire (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets other than purchases of inventory and other assets in the ordinary course of business; or (B) sell or otherwise dispose of (whether by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or any assets, other than sales or dispositions of inventory and other assets in the ordinary course of business;
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(vi) other than in the ordinary course of business consistent with past practice, enter into, materially amend or terminate any material Contract (other than terminations at the expiration of their respective terms);
(vii) make or receive any payment to or from, or enter into any transaction or contract with, any of its Affiliates (other than wholly-owned Subsidiaries), or change, modify or amend any Contract or transaction with any of its Affiliates (other than wholly-owned Subsidiaries);
(viii) incur any operating expenditures or capital expenditures or any obligations or liabilities in respect thereof, except, with respect to Dakota, in accordance with Dakota’s existing operating budget and capital expenditure budget;
(ix) adopt a plan or agreement of complete or partial liquidation, dissolution, merger, consolidation, restructuring, recapitalization or other reorganization;
(x) fail to maintain in full force and effect in all material respects, or fail to use commercially reasonable efforts to replace, extend or renew, material insurance policies existing as of the date hereof;
(xi) release, compromise or cancel any debts owed to such Person and its Subsidiaries, other than settlement of accounts with customers and suppliers in the ordinary course of business
(xii) (A) incur, assume or suffer to exist any Indebtedness for borrowed money (including any long-term or short-term debt) or issue any debt securities, except for loans or advances by Dakota or direct or indirect wholly owned Subsidiaries of Dakota to Dakota or direct or indirect wholly owned Subsidiaries of Dakota; (B) assume, guarantee, endorse or otherwise become liable or responsible (whether directly, contingently or otherwise) for the obligations of any other Person, except with respect to obligations of Dakota or direct or indirect wholly owned Subsidiaries of Dakota; and (C) make any loans, advances or capital contributions to, or investments in, any other Person, except to or in Dakota or any of its wholly-owned Subsidiaries;
(xiii) except to the extent required by applicable Law (including Section 409A of the Code) or the terms of any benefit plan in effect as of the date hereof, (A) grant or increase the rate, terms, or level of compensation, compensation opportunities, severance, retention, incentive, termination, change in control pay, or any other benefits of any director, officer, employee or independent contractor, (B) terminate, modify, amend or adopt any compensation or benefit plan, policy, program, practice, including any pension, retirement, profit-sharing, bonus or other employee benefit or welfare benefit plan with or for the benefit or its employees, officers, directors or independent contractors, (C) accelerate or agree to accelerate the vesting of, or the lapsing of restrictions with respect to any compensation or benefit under any benefit plan or any other Contract (whether written or unwritten), (D) grant any severance, change in control or termination pay to any current or former director, officer, employee or independent contractor, (E) grant, issue, or amend, or promise to grant, issue, or amend, any cash- or equity-based incentive award (including in respect of stock options, stock appreciation rights, performance units, restricted stock or other equity or equity-based awards), (F) enter into, adopt, or engage in negotiations regarding any collective bargaining agreement, works council or health and safety committee agreement, or any similar collective labor agreement or arrangement, (G) hire or engage any individual or terminate any employee or other individual service provider (other than a termination for cause), or (H) terminate employees in such numbers as would trigger any liability under the Workers Adjustment Retraining and Notification Act of 1988, as amended, or any similar foreign, state or local Law;
(xiv) sell, assign, lease, transfer, license, mortgage, pledge, abandon or otherwise dispose of any of its material assets (including intellectual property), other than sales of inventory or equipment, sub-leases and licenses and other transactions in the ordinary course of business;
(xv) implement or adopt any material change in its methods of accounting (including any cash management, billing, payment or collection practices with respect to accounts payable, accounts receivable, accrued liabilities, other liabilities or obligations, or otherwise), except as may be appropriate to conform to changes in statutory or regulatory accounting rules or GAAP or regulatory requirements with respect thereto;
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(xvi) compromise, settle or agree to settle any Action (including any Action relating to this Agreement or the transactions contemplated hereby), or consent to the same;
(xvii) make, change or revoke any material Tax election, settle, compromise or consent to any extension or waiver of the limitation period applicable to any audit, assessment or claim for material Taxes, amend any material Tax Return, enter into any closing agreement with any Governmental Entity regarding material Taxes or surrender any claim for a refund of material Taxes; or
(xviii) agree to take any of the actions described in Section 6.1(c)(i) through Section 6.1(c)(xvii).
(d) Nothing contained in this Agreement shall give (i) JR, directly or indirectly, the right to control or direct Dakota or the operations of any of its Subsidiaries prior to the Effective Time, or (ii) Dakota, directly or indirectly, the right to control or direct JR or the operations of any of the JR Subsidiary prior to the Effective Time. Prior to the Effective Time, Dakota shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and its Subsidiaries’ respective operations and prior to the Effective Time, JR shall exercise, consistent with the terms and conditions of this Agreement, complete control and supervision over its and the JR Subsidiary’s respective operations.
Section 6.2 No Solicitation; Recommendation of the Merger.
(a) Subject to the terms of Section 6.2(c), until the earlier to occur of the termination of this Agreement pursuant to Article VIII and the Second Merger Effective Time, Dakota shall not, and shall cause each of its Subsidiaries not to, and shall instruct and use its reasonable best efforts to cause its Representatives not to, directly or indirectly, (i) solicit, initiate or knowingly encourage or facilitate (including by way of furnishing or disclosing information) any inquiry, proposal or offer with respect to, or the announcement, making or completion of, any Acquisition Proposal, or any inquiry, proposal or offer that is reasonably likely to lead to any Acquisition Proposal, (ii) enter into, continue or otherwise participate in any discussions or negotiations regarding, or furnish to any Person (other than JR or its Representatives) any non-public information or data in furtherance of, any Acquisition Proposal or any inquiry, proposal or offer that is reasonably likely to lead to any Acquisition Proposal, (iii) enter into any agreement in principle, memorandum of understanding, letter of intent, term sheet, acquisition agreement, merger agreement, share exchange agreement, consolidation agreement, option agreement, joint venture agreement or partnership agreement relating to any Acquisition Proposal (other than an Acceptable Confidentiality Agreement pursuant to Section 6.2(c)), (iv) grant any waiver, amendment or release under or fail to enforce any standstill or confidentiality agreement (other than to the extent the Board of Directors of Dakota determines in good faith (after consultation with outside counsel) that failure to take any of such actions under clause (iv) would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law) or (v) propose publicly to do any of the foregoing. Dakota shall, and shall cause its Subsidiaries to, and shall use its reasonable best efforts to cause its and their Representatives to, (A) terminate all existing negotiations with any Person and its Representatives (other than JR or its Representatives) with respect to any Acquisition Proposal or that could lead to an Acquisition Proposal, (B) enforce any confidentiality or standstill agreement or provisions of similar effect (subject to the parenthetical in clause (iv) of this Section 6.2(a)) to which Dakota or any of its Subsidiaries is a party or of which Dakota or any of its Subsidiaries is a beneficiary with regard to any Acquisition Proposal, (C) cease providing any Person or its Representatives (other than JR or its Representatives) with any further information respect to Dakota, its Subsidiaries or any Acquisition Proposal, (D) request the prompt return or destruction, to the extent permitted by any confidentiality agreement, of all non-public information or data furnished prior to the date hereof to any such Person and its Representatives with respect to any Acquisition Proposal and (E) immediately terminate all physical and electronic data room access granted prior to the date hereof to any such Person, its Subsidiaries or any of their respective Representatives with respect to any Acquisition Proposal. It is understood that any violation of the restrictions on Dakota set forth in this Section 6.2(a) by any Subsidiary of Dakota or any of the Representatives of Dakota or any of its Subsidiaries shall be deemed a breach of this Section 6.2(a) by Dakota.
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(b) Except as otherwise required pursuant to NRS 92A.120(10) or as provided in Section 6.2(d) and Section 6.2(e), the Board of Directors of Dakota shall not (i) fail to make or withdraw (or modify or qualify in any manner adverse to JR or publicly propose to withdraw, modify or qualify in any manner adverse to JR) the Dakota Board Recommendation or the approval, adoption or declaration of the advisability this Agreement and the transactions contemplated hereby (including the Mergers and the JR Share Issuance), (ii) adopt, approve, or publicly recommend, endorse or otherwise declare advisable, or propose publicly to adopt, approve, recommend, endorse or otherwise declare advisable, any Acquisition Proposal, (iii) fail to include the Dakota Board Recommendation in whole or in part in the Joint Disclosure Statement/Prospectus or any filing or amendment or supplement relating thereto, (iv) fail to recommend against any then-pending tender or exchange offer that constitutes an Acquisition Proposal within ten (10) Business Days after it is announced or (v) fail, within ten (10) Business Days of a request by JR following the public announcement of an Acquisition Proposal, to reaffirm the Dakota Board Recommendation (each such action set forth in this Section 6.2(b) being referred to herein as an “Adverse Recommendation Change”).
(c) Notwithstanding Section 6.2(a), at any time prior to obtaining the Dakota Stockholder Approval, Dakota may, in response to an unsolicited bona fide written Acquisition Proposal which was made after the date of this Agreement that did not result from a breach of Section 6.2(a) and that the Board of Directors of Dakota determines in good faith based on the information then available and after consultation with a financial advisor of nationally recognized reputation and outside legal counsel, constitutes or is reasonably likely to lead to a Superior Proposal and that failing to take such action would be inconsistent with its fiduciary duties under applicable Law, furnish non-public information or data with respect to itself and its Subsidiaries to the Person making such Acquisition Proposal (and its Representatives) pursuant to a confidentiality agreement on terms that, taken as a whole, are consistent with industry best practices (an “Acceptable Confidentiality Agreement”); provided, that (A) any non-public information or data provided to any such Person given such access shall have previously been provided to JR or shall be provided (to the extent permitted by applicable Law) to JR prior to or substantially concurrently with the time it is provided to such Person and (B) no non-public information or data with respect to JR or the JR Subsidiary shall be provided to any such Person. Dakota shall notify JR in writing promptly (but in no event later than 24 hours) after receipt by Dakota, its Subsidiaries or any of their respective Representatives of any Acquisition Proposal, any indication that a Person intends to make an Acquisition Proposal or any request for information relating to Dakota and its Subsidiaries or for access to the business, books or records of Dakota or any of its Subsidiaries, in each case by any Person that intends to make or is considering making an Acquisition Proposal. Dakota shall identify to JR such Person making, and provide JR with the terms and conditions of, any such Acquisition Proposal, indication or request (including any material changes thereto). Dakota shall keep JR reasonably informed on a current basis of any material developments, discussions or negotiations regarding any such Acquisition Proposal, indication or request (including any changes thereto), and shall promptly (but in no event later than 24 hours after receipt) provide to JR copies of all correspondence and written materials sent or provided to Dakota or any of its Subsidiaries that describes any terms or conditions of any Acquisition Proposal (as well as written summaries of any material oral communications addressing such matters).
(d) At any time prior to obtaining the Dakota Stockholder Approval and following compliance with this Section 6.2(c), the Board of Directors of Dakota may make an Adverse Recommendation Change or terminate this Agreement pursuant to Section 8.1(c)(ii) to enter into a definitive written acquisition agreement with respect to a Superior Proposal, if and only if:
(i) if the Board of Directors of Dakota shall have determined in good faith (after consultation with a financial advisor of nationally recognized reputation and outside legal counsel) that the failure to do so would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law;
(ii) Dakota shall have notified JR in writing, at least five (5) Business Days prior to taking such action (the “Notice Period”), of its intention to do so (which notice shall specify in reasonable detail the basis for the Adverse Recommendation Change or termination of this Agreement and, if such circumstance is based upon receipt of a Superior Proposal, shall include the material terms and conditions of such Superior Proposal and the identity of the Person making such Superior Proposal and include copies of the current drafts of all material agreements between Dakota and the party making such Superior Proposal and any other material documents or agreements that relate to such Superior Proposal (it being understood and agreed that such notice or the public disclosure by Dakota of such notice shall not in and of itself constitute an Adverse Recommendation Change));
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(iii) during the Notice Period, Dakota shall have negotiated with JR in good faith (to the extent JR wishes to negotiate) to make such adjustments to the terms and conditions of this Agreement such that, if a Superior Proposal has been made, such Superior Proposal no longer constitutes a Superior Proposal or, in connection with an Adverse Recommendation Change, failure to make an Adverse Recommendation Change would no longer reasonably be expected to be inconsistent with the fiduciary duties of the Board of Directors of Dakota; and
(iv) the Board of Directors of Dakota shall have determined, after the close of business on the last day of the Notice Period, in good faith (after consultation with a financial advisor of nationally recognized reputation and outside legal counsel and after giving effect to any adjustments proposed by JR in writing during the Notice Period) that failure to so terminate this Agreement in accordance with Section 8.1(c)(ii) or make an Adverse Recommendation Change, as applicable, would reasonably be expected to be inconsistent with the fiduciary duties of the Board of Directors of Dakota under applicable Law; provided, that in the event of any material change to the material terms of such Superior Proposal, Dakota shall, in each case, have delivered to JR an additional notice consistent with that described in Section 6.2(d)(ii) above and the Notice Period shall have recommenced (in which case such Notice Period shall be for two (2) Business Days instead of five (5) Business Days).
(e) Nothing contained in this Agreement shall prohibit Dakota or the Board of Directors of Dakota from (i) issuing a “stop, look and listen” communication pursuant to Rule 14d-9(f) under the Exchange Act or taking and disclosing a position contemplated by Rule 14e-2(a), 14d-9 or Item 1012(a) of Regulation M-A under the Exchange Act, or (ii) making any disclosure to the stockholders of Dakota if, in the good faith judgment of the Board of Directors of Dakota (after consultation with outside counsel), failure to so disclose would reasonably be expected to be inconsistent with its fiduciary duties under applicable Law. Any disclosure referred to in clauses (i) and (ii) shall not be deemed to be an Adverse Recommendation Change so long as (A) any such disclosure includes the Dakota Board Recommendation without any modification or qualification thereof or continues the prior recommendation of the Board of Directors of Dakota and (B) does not contain an express Adverse Recommendation Change.
(f) Notwithstanding anything to the contrary set forth in this Agreement, upon the occurrence of any Intervening Event, the Board of Directors of Dakota may, at any time prior to the time the Dakota Stockholder Approval is obtained, make an Adverse Recommendation Change if (i) Dakota shall have (A) provided JR five (5) Business Days’ prior written notice, which shall (I) set forth in reasonable detail information describing the Intervening Event and (II) state expressly that the Board of Directors of Dakota has determined to make an Adverse Recommendation Change and (B) prior to making such an Adverse Recommendation Change, engaged in good faith with JR (to the extent JR wishes to engage) during such five (5) Business Day period to consider any adjustments proposed by JR to the terms and conditions of this Agreement such that the failure of the Board of Directors of Dakota to make an Adverse Recommendation Change in response to the Intervening Event would no longer reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Law and (ii) the Board of Directors of Dakota shall have determined in good faith, after consultation with its outside legal counsel, that in light of such Intervening Event and taking into account any revised terms proposed by JR, the failure to make an Adverse Recommendation Change would reasonably be expected to be inconsistent with the directors’ fiduciary duties under applicable Law.
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Section 6.3 Preparation of Documents; Dakota Stockholders’ Meeting.
(a) As promptly as practicable after the date of this Agreement, (i) JR shall prepare, with assistance and input from Dakota, and JR shall file with the SEC a Registration Statement on Form S-4 (together with all amendments thereto, the “Form S-4”) (in which the Joint Disclosure Statement/Prospectus will be included) relating to the registration of the shares of JR Stock to be issued to stockholders of Dakota pursuant to the First Merger; and (ii) Dakota and JR shall jointly prepare and Dakota shall file with the SEC a joint proxy and consent solicitation/information statement/prospectus (as amended or supplemented from time to time, the “Joint Disclosure Statement/Prospectus”) to be sent to stockholders of Dakota relating to the special meeting of stockholders of Dakota (the “Dakota Stockholders Meeting”) to be held to obtain the Dakota Stockholder Approval, the advisory vote required by Rule 14a-21(c) under the Exchange Act in connection therewith, if requested by JR, a vote to approve an equity plan for JR and a vote to approve the adjournment of the Dakota Stockholders Meeting, if necessary or appropriate, to solicit additional proxies and votes if there are insufficient votes at the time of the Dakota Stockholders Meeting to obtain the Dakota Stockholder Approval (it being agreed that such special meeting may be a virtual special meeting). The Joint Disclosure Statement/Prospectus and Form S-4 shall comply as to form in all material respects with the applicable provisions of the Securities Act and the Exchange Act and the rules and regulations thereunder, the NRS (including the Dissenter’s Rights Statutes) and other applicable Law.
(b) Each of JR and Dakota shall use its reasonable best efforts to have the Joint Disclosure Statement/Prospectus cleared by the SEC and the Form S-4 declared effective under the Securities Act as promptly as practicable after such filing and keep the Form S-4 effective for so long as necessary to consummate the Mergers. Each of JR and Dakota shall, as promptly as practicable after the receipt thereof, provide the other party with copies of any written comments and advise the other party of any oral comments with respect to the Joint Disclosure Statement/Prospectus and the Form S-4 received by such party from the SEC or its staff, including any request from the SEC or its staff for amendments or supplements to the Joint Disclosure Statement/Prospectus and the Form S-4, and shall provide the other with copies of all correspondence between it and its Representatives, on the one hand, and the SEC and its staff, on the other hand. Notwithstanding the foregoing, prior to filing the Form S-4 (including any amendments and supplements thereto) or mailing the Joint Disclosure Statement/Prospectus or responding to any comments of the SEC with respect thereto, each of JR and Dakota (i) shall provide the other with a reasonable opportunity to review and comment on such document or response (including the proposed final version of such document or response) and (ii) shall give due consideration to including in such document or response any comments reasonably proposed by the other. Each of JR and Dakota shall advise the others, promptly after receipt of notice thereof, of the time of effectiveness of the Form S-4, the issuance of any stop order relating thereto or the suspension of the qualification of shares of JR Stock for offering or sale in any jurisdiction, and each of JR and Dakota shall use its reasonable best efforts to have any such stop order or suspension lifted, reversed or otherwise terminated. The parties shall use reasonable best efforts to take any other action required to be taken under the Securities Act, the Exchange Act, the NRS and the listing rules of the NYSE American in connection with the filing and distribution of the Joint Disclosure Statement/Prospectus and the Form S-4, and the solicitation of proxies from stockholders of Dakota and the solicitation of consents from stockholders of JR.
(c) Each of JR and Dakota shall use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, necessary, proper or advisable under applicable Laws and rules and policies of the NYSE American and the SEC to cause the listing of the JR Stock on the NYSE American to be approved no later than the First Merger Effective Time, subject to official notice of issuance. Each of JR and Dakota shall also use its reasonable best efforts to obtain all necessary state securities Law or “Blue Sky” permits and approvals required to carry out the transactions contemplated by this Agreement (provided, that in no event shall JR, Dakota, Merger Sub 1 or Merger Sub 2 be required to qualify to do business in any jurisdiction in which it is not now so qualified or file a general consent to service of process).
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(d) Each of JR and Dakota shall, upon request, furnish to the other all information concerning itself, its Subsidiaries, directors, officers and (to the extent reasonably available to the applicable party) equityholders and such other matters as may be reasonably necessary or advisable in connection with any statement, filing, notice or application made by or on behalf of JR, Dakota or any of their respective Subsidiaries to the NYSE American, or any Governmental Entity (including the Form S-4 and the Joint Disclosure Statement/Prospectus) in connection with the Mergers and the other transactions contemplated by this Agreement. In addition, as soon as reasonably practical after the date hereof, JR shall prepare and deliver to Dakota (i) the consolidated balance sheet of JR and the JR Subsidiary as at March 31, 2021, and the related audited consolidated statements of operations, cash flows and members’ equity of JR and the JR Subsidiary, together with all related notes and schedules thereto, accompanied by the reports thereon of JR’s independent auditors and (ii) unaudited pro forma financial statements for the Surviving Corporation including footnotes and management discussion and analysis sections, in the case of each of clauses (i) and (ii), that are compliant with applicable Laws for inclusion in the Joint Disclosure Statement/Prospectus and the Form S-4. As soon as reasonably practical after the date hereof, Dakota shall (i) prepare and deliver to JR interim financial statements of Dakota and its Subsidiaries (including footnotes) that are required by the Exchange Act or the Securities Act, as applicable, to be included in the Joint Disclosure Statement/Prospectus and the Form S-4 that have been reviewed by Dakota’s independent registered public accounting firm, (ii) provide to JR management’s discussion and analysis of interim and annual consolidated financial statements, (iii) cause Dakota’s independent registered public accounting firm to consent to the inclusion or incorporation by reference of the audit reports on the annual audited consolidated financial statements of Dakota included in the Form S-4, (iv) provide JR with information necessary to prepare selected financial data with respect to Dakota as required by Regulation S-K of the Securities Act, and (v) provide JR with information concerning Dakota necessary to enable JR and Dakota to prepare required pro forma financial statements and related footnotes, in each case, to the extent reasonably necessary to permit the parties to prepare the Form S-4.
(e) If at any time any information relating to Dakota or JR, or any of their respective Affiliates, officers or directors, should be discovered by Dakota or JR that should be set forth in an amendment or supplement to the Joint Disclosure Statement/Prospectus or Form S-4 so that any of such documents would not contain any misstatement of a material fact or omit to state any material fact necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the party that discovers such information shall promptly notify the other parties hereto and an appropriate amendment or supplement describing such information shall promptly be filed with the SEC and, to the extent required under applicable Law, disseminated to stockholder of Dakota or the stockholders of JR; provided, that the delivery of such notice and the filing of any such amendment or supplement shall not affect or be deemed to modify any representation or warranty made by any party hereunder or otherwise affect the remedies available hereunder to any party.
(f) In consultation with JR, Dakota will set preliminary record dates for the Dakota Stockholders Meeting and commence broker searches pursuant to Section 14a-13 of the Exchange Act in connection therewith. As promptly as practicable after the effectiveness of the Form S-4, Dakota shall cause a copy of the Joint Disclosure Statement/Prospectus to be delivered to each stockholder of Dakota who was a stockholder of Dakota as of the record date for the Dakota Stockholders Meeting. Except as otherwise required pursuant to NRS 92A.120(10), as promptly as practicable after the effectiveness of the Form S-4, Dakota shall duly call, give notice of, convene and hold the Dakota Stockholders Meeting solely for the purpose of obtaining the Dakota Stockholder Approval, the advisory vote required by Rule 14a-21(c) under the Exchange Act in connection therewith, if requested by JR, a vote to approve an equity plan for JR and a vote to approve the adjournment of the Dakota Stockholders Meeting, if necessary or appropriate, to solicit additional proxies and votes if there are insufficient votes at the time of the Dakota Stockholders Meeting to obtain the Dakota Stockholder Approval. Except as otherwise required pursuant to NRS 92A.120(10) and subject to Section 6.2(c), Dakota shall use its reasonable best efforts to take, or cause to be taken, all actions, and do or cause to be done all things, necessary, proper or advisable on its part to cause each of the Dakota Stockholder Approval, the advisory vote required by Rule 14a-21(c) under the Exchange Act in connection therewith and, if requested by JR, a vote to approve an equity plan for JR to be received at the Dakota Stockholders Meeting or any adjournment or postponement thereof. Except as otherwise required pursuant to NRS 92A.120(10) or unless this Agreement has been terminated pursuant to Section 7.1, Dakota’s obligation to call, give notice of, convene and hold the Dakota Stockholders Meeting in accordance with the foregoing sentence of this Section 6.3(f) shall apply notwithstanding the commencement, disclosure, announcement or submission of any Acquisition Proposal to Dakota, the Board of Directors of Dakota, its Representatives or the stockholders of Dakota, or any Adverse Recommendation Change, and Dakota shall not submit to the vote of its stockholders any Acquisition Proposal other than this Agreement the Second Merger and the transactions contemplated hereby.
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(g) Dakota may postpone or adjourn the Dakota Stockholders Meeting (i) with the consent of JR, (ii) if, on a date for which the Dakota Stockholders Meeting is scheduled, Dakota has not received proxies representing a number of shares of the Dakota Stock sufficient to obtain the Dakota Stockholder Approval, solely for the purpose of soliciting additional proxies and votes in favor of the Dakota Stockholder Approval (which postponements or adjournments shall be for the minimum time, in the reasonable judgment of Dakota, as is necessary to obtain such additional proxies and votes required to obtain the Dakota Stockholder Approval), or (iii) if the failure to adjourn or postpone the Dakota Stockholders Meeting would, in the good faith opinion of the Board of Directors of Dakota, after consultation with outside counsel, reasonably be expected to be a violation of applicable Law, or be required for the distribution of any required supplement or amendment to the Joint Disclosure Statement/Prospectus which failure to supplement or amend would be inconsistent with its fiduciary duties under applicable Law, and then only for the minimum time that the Board of Directors of Dakota has determined in good faith after consultation with outside counsel is reasonably necessary to comply with applicable Law or give the stockholders of Dakota the required time to evaluate any applicable information or disclosure.
Section 6.4 Access to Information; Confidentiality.
(a) Upon reasonable advance notice in writing, and except as may otherwise be required by applicable Law, JR shall, and shall cause the JR Subsidiary to, afford to Dakota and its Representatives reasonable access during normal business hours, during the period prior to the First Merger Effective Time or the termination of this Agreement in accordance with its terms, to such information, properties and personnel regarding JR and the JR Subsidiary as shall be reasonably requested by such parties.
(b) Upon reasonable advance notice in writing, and except as may otherwise be required by applicable Law, Dakota shall, and shall cause each of its Subsidiaries to, afford to JR and its Representatives reasonable access during normal business hours, during the period prior to the First Merger Effective Time or the termination of this Agreement in accordance with its terms, to such information, properties and personnel regarding Dakota and its Subsidiaries as shall be reasonably requested by JR.
(c) All such information shall be held as confidential by Dakota and JR and their Affiliates and Representatives.
Section 6.5 Reasonable Best Efforts.
(a) Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use reasonable best efforts to take, or cause to be taken, all actions that are necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Mergers and the other transactions contemplated by this Agreement, including using reasonable best efforts to accomplish the following: (i) obtain all required consents, approvals or waivers from, or participation in other discussions or negotiations with, third parties, including as required under any material Contract, (ii) obtain all necessary actions or nonactions, waivers, consents, approvals, orders and authorizations from Governmental Entities, make all necessary registrations, declarations and filings and make all commercially reasonable efforts to obtain an approval or waiver from, or to avoid any Action by, any Governmental Entity, and (iii) execute and deliver any additional instruments necessary to consummate the transactions contemplated hereby and fully to carry out the purposes of this Agreement; provided, that neither Dakota nor any of its Subsidiaries shall commit to the payment of any fee, penalty or other consideration or make any other concession, waiver or amendment under any Contract in connection with obtaining any consent without the prior written consent of JR. Subject to applicable Law relating to the exchange of information, Dakota and JR shall each have the right to review in advance, and to the extent practicable each shall consult with the other in connection with, all of the information relating to Dakota or JR, as the case may be, and any of their respective Subsidiaries, that appears in any filing made with, or written materials submitted to, any third party and/or any Governmental Entity in connection with the Merger and the other transactions contemplated by this Agreement. In exercising the foregoing rights, each of Dakota and JR shall act reasonably and as promptly as practicable. Subject to applicable Law and the instructions of any Governmental Entity, Dakota and JR shall keep each other reasonably apprised of the status of matters relating to the completion of the transactions contemplated hereby, including promptly furnishing the other with copies of notices or other written communications received by Dakota or JR, as the case may be, or any of their respective Subsidiaries, from any Governmental Entity and/or third party with respect to such transactions, and, to the extent practicable under the circumstances, shall provide the other party and its counsel with the opportunity to participate in any meeting with any Governmental Entity in respect of any filing, investigation or other inquiry in connection with the transactions contemplated hereby.
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(b) Notwithstanding anything to the contrary in this Agreement, in connection with obtaining any approval or consent from any Person (other than any Governmental Entity) with respect to the Merger and the other transactions contemplated by this Agreement, neither Dakota nor JR nor any of their respective Representatives, shall be obligated to pay or commit to pay to such Person whose approval or consent is being solicited any cash or other consideration, make any accommodation or commitment or incur any liability or other obligation to such Person. Subject to the immediately foregoing sentence, the parties shall cooperate with respect to reasonable accommodations that may be requested or appropriate to obtain such consents.
Section 6.6 Takeover Laws. JR, Dakota, Merger Sub 1 and Merger Sub 2 shall use their respective best efforts to (a) take no action to cause any “fair price,” “moratorium,” “control share acquisition” or similar antitakeover Law (collectively, “Takeover Laws”) to become applicable to this Agreement, the Mergers or any of the other transactions contemplated hereby and (b) if any Takeover Law is or becomes applicable to this Agreement, the Mergers or any of the other transactions contemplated hereby, take all action necessary to ensure that the Mergers and the other transactions contemplated hereby may be consummated as promptly as practicable on the terms contemplated by this Agreement and otherwise to minimize the effect of such Takeover Law with respect to this Agreement, the Mergers and the other transactions contemplated hereby.
Section 6.7 Notification of Certain Matters; Transaction Litigation.
(a) JR and Dakota shall promptly notify each other of (a) any notice or other communication received by such party from any Governmental Entity in connection with the Merger or the other transactions contemplated hereby or from any Person alleging that the consent of such Person is or may be required in connection with the transactions contemplated hereby, (b) any other notice or substantive communication from any Governmental Entity in connection with the transactions contemplated hereby, (c) any Action commenced or, to such party’s knowledge, threatened against, relating to or involving or otherwise affecting such party or any of its Subsidiaries which relate to the transactions contemplated hereby or (d) any change, condition or event (i) that renders or would reasonably be expected to render any representation or warranty of such party set forth in this Agreement (disregarding any materiality qualification contained therein) to be untrue or inaccurate such that the applicable closing conditions would not be satisfied if the Closing were to be held on the date such representation or warranty became untrue or inaccurate or (ii) that results or would reasonably be expected to result in any failure of such party to comply with or satisfy in any material respect any covenant, condition or agreement (including any condition set forth in Article VII) to be complied with or satisfied hereunder; provided, that no such notification shall affect any of the representations, warranties, covenants, rights or remedies, or the conditions to the obligations of, the parties hereunder.
(b) JR and its Representatives shall give prompt (but no later than one Business Day) notice to Dakota, and Dakota and its Representatives shall give prompt (but no later than one Business Day) notice to JR, of any Action commenced or, to such party’s knowledge, threatened against, relating to or involving such party or any of their Subsidiaries, respectively, or any of their respective directors or officers that relates to this Agreement, the Mergers or the other transactions contemplated by this Agreement. Dakota and its Representatives shall give JR the opportunity to participate in (but not control) the defense and settlement of any Action against Dakota and/or its Representatives relating to this Agreement, the Mergers and the other transactions contemplated by this Agreement, and no such settlement shall be agreed to without JR’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). JR and its Representatives shall give Dakota the opportunity to participate in (but not control) the defense and settlement of any Action against JR and/or its Representatives relating to this Agreement, the Mergers and the other transactions contemplated by this Agreement, and no such settlement shall be agreed to without Dakota’s prior written consent (which consent shall not be unreasonably withheld, conditioned or delayed). JR and Dakota agree to cooperate with each other with respect to the defense and settlement of any Action relating to this Agreement, the Mergers and the other transactions contemplated by this Agreement.
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Section 6.8 Indemnification, Exculpation and Insurance.
(a) JR agrees that all rights to indemnification existing in favor of the current or former directors and officers of Dakota as provided in the articles of incorporation and bylaws of Dakota as in effect on the date of this Agreement, for acts or omissions occurring prior to the First Merger Effective Time, shall be assumed and performed by the Surviving Corporation and the Surviving LLC, respectively, and shall continue in full force and effect until the expiration of the applicable statute of limitations with respect to any claims against such directors or officers arising out of such acts or omissions, except as otherwise required by applicable Law.
(b) Prior to the First Merger Effective Time, Dakota may, at such party’s option and expense, purchase (and pay in full the aggregate premium for) a “tail” directors’ and officers’ liability insurance policy with coverage and amounts containing terms and conditions that are substantially equivalent to and in any event not less favorable to the current and former officers and directors of Dakota, in the aggregate, with respect to claims arising out of or relating to events that occurred before or at the First Merger Effective Time and the Second Merger Effective Time (including in connection with the negotiation and execution of this Agreement and the transactions contemplated by this Agreement), than the current policies of directors’ and officers’ liability insurance maintained by Dakota, to the extent that such a policy can be obtained at a cost that does not exceed 300% of the last annual premium paid by Dakota for the current policies of directors’ and officers’ liability insurance maintained by Dakota as of the date of this Agreement provided, that if Dakota, is unable to so acquire such a “tail” policy then JR shall cause the Surviving LLC to maintain in effect for at least six years after the Effective Time the current policies of directors’ and officers’ liability insurance maintained by Dakota, as the case may be, or policies with coverage and amounts containing terms and conditions that are no less advantageous to the insured Persons with respect to claims arising out of or relating to events that occurred before or at the First Merger Effective Time or the Second Merger Effective Time, as the case may be (including in connection with the negotiation and execution of this Agreement and the transactions contemplated by this Agreement), so long as JR or the Surviving LLC, as applicable, are not required to pay an aggregate premium in excess of 300% of the last annual premium paid for such insurance before the date of this Agreement (such 300% amount being the “Maximum Premium”). If Dakota is unable to obtain the “tail” policy and JR or the Surviving LLC, as the case may be, is unable to obtain the insurance described in the prior sentence for an amount less than or equal to the applicable Maximum Premium, then JR shall cause the Surviving LLC to instead obtain as much comparable insurance as possible for an annual premium equal to the applicable Maximum Premium.
(c) The provisions of this Section 6.8 shall survive consummation of the Mergers and are intended to be for the benefit of, and will be enforceable by, each indemnified party, his or her heirs and his or her legal representatives.
Section 6.9 Public Announcements. Each of Dakota, on the one hand, and JR, on the other hand, shall consult with each other before issuing, and give each other a reasonable opportunity to review and comment upon, any press release or other public statements with respect to this Agreement, the Mergers and the other transactions contemplated hereby and shall not issue any such press release or make any public announcement without the prior written consent of the other, except as may be required by applicable Law, court process or by obligations pursuant to any listing agreement with any national securities exchange or national securities quotation system. The initial press release of the parties announcing the execution of this Agreement shall be a joint press release of Dakota and JR in a form that is mutually agreed.
Section 6.10 Section 16 Matters. Prior to the Effective Time, each of Dakota and JR shall take all such steps as may be necessary or appropriate to cause the transactions contemplated by this Agreement, including any dispositions of Dakota Stock or acquisitions of JR Stock resulting from the transactions contemplated by this Agreement by each individual who is or will become subject to such reporting requirements to be exempt under Rule 16b-3 promulgated under the Exchange Act.
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Section 6.11 Certain Tax Matters.
(a) Each of Dakota and JR shall provide customary representations (signed by an officer of Dakota or JR, as applicable) to Skadden, Arps, Slate, Meagher and Flom LLP, counsel to Dakota (“Dakota’s Counsel”), and Dorsey & Whitney LLP, counsel to JR (“JR’s Counsel”), dated as of the Closing Date (and, if requested, dated as of the date the Form S-4 shall have been declared effective by the SEC), reasonably requested by (i) Dakota’s Counsel in order to deliver the Tax Opinion and any tax opinions required in connection with the Form S-4 and (ii) JR’s Counsel in order to deliver any tax opinions required in connection with the Form S-4.
(b) Each of Dakota and JR shall use its reasonable best efforts (i) to obtain from its respective counsel the Tax Opinion or any tax opinions required in connection with the Form S-4, as the case may be, (ii) to cause the Mergers, taken together, to qualify as a “reorganization” within the meaning of Section 368(a) of the Code with respect to which Dakota and JR will each be a “party to the reorganization” within the meaning of Section 368(b) of the Code and (iii) not to, and not permit or cause any of its respective Subsidiaries or Affiliates to, (A) take or cause to be taken any action reasonably likely to cause the Mergers, taken together, to fail to qualify as a “reorganization” under Section 368(a) of the Code or prevent delivery of the tax opinions described under Section 6.11(a) or (B) enter into any contract, agreement, commitment or arrangement to take or fail to take any such action described in the foregoing clause (A).
(c) Each of Dakota and JR shall (and shall cause their respective Subsidiaries and Affiliates to) report the Mergers, taken together, as a single integrated transaction that qualifies as a reorganization under Section 368(a) of the Code and shall not take (or cause or permit any of their respective Subsidiaries or Affiliates to take) any inconsistent position on any Tax Return, in any audit or administrative or court proceeding related to Taxes, or otherwise with respect to Taxes, in each case, unless required pursuant to a “determination” within the meaning of Section 1313(a) of the Code. Notwithstanding any provision in this Agreement to the contrary, none of JR, Dakota or any of their respective Subsidiaries or Affiliates shall have any liability or obligation to any holder of Dakota Stock should the Mergers, taken together, fail to qualify as a “reorganization” within the meaning of Section 368(a) of the Code.
(d) Dakota shall use its reasonable best efforts to cause shares of Dakota Stock to be treated as “regularly traded” as described under Treasury Regulations Section 1.897-9T(d) during the calendar quarter in which the Closing occurs.
Section 6.12 Closing Statement. Dakota will cause to be prepared and delivered to JR, at least three (3) Business Days before the Closing Date, a statement (the “Closing Statement”), in a form reasonably acceptable to JR, dated and setting forth as of the Closing Date, the Dakota Equity Number and the components of the calculation thereof.
ARTICLE VII
CONDITIONS PRECEDENT
Section 7.1 Conditions to Each Party’s Obligation to Effect the Mergers. The obligation of each party to effect the Mergers is subject to the satisfaction at or prior to the Effective Time of the following conditions:
(a) Stockholder Approval. Dakota shall have obtained the Dakota Stockholder Approval.
(b) No Injunctions or Legal Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other judgment, order or decree issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect, and no Law shall have been enacted, entered, promulgated, enforced or deemed applicable by any Governmental Entity that, in any such case, prohibits or makes illegal the consummation of the First Merger or the Second Merger.
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(c) Registration Statement Effective. The Form S-4 shall have become effective under the Securities Act and no stop order suspending the effectiveness of the Form S-4 shall have been issued and remain in effect.
(d) Dakota Stock Regularly Traded. Shares of Dakota Stock are “regularly traded” as described under Treasury Regulations Section 1.897-9T(d) during the calendar quarter in which the Closing occurs.
Section 7.2 Conditions to the Obligations of Dakota. The obligation of Dakota to effect the Mergers is also subject to the satisfaction, or waiver by Dakota, at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and warranties of JR set forth in Section 4.3(a) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for de minimis inaccuracies; and (ii) the representations and warranties of JR set forth in Article IV of this Agreement (other than those set forth in Section 4.3(a)) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date).
(b) Performance of Obligations of JR. JR shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Effective Time.
(c) No JR MAE. Since the date of this Agreement there shall not have been a JR Material Adverse Effect.
(d) Officers’ Certificate. Dakota shall have received a certificate signed by an executive officer of JR certifying as to the matters set forth in Section 7.2(a), Section 7.2(b) and Section 7.2(c).
(e) Tax Opinion. The Tax Opinion shall have been received by Dakota.
Section 7.3 Conditions to the Obligations of JR. The obligation of JR to effect the Mergers is also subject to the satisfaction, or waiver by JR, at or prior to the Effective Time of the following conditions:
(a) Representations and Warranties. (i) The representations and warranties of Dakota set forth in Section 5.2(a) shall be true and correct in all respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date), except for de minimis inaccuracies; and (ii) the representations and warranties of Dakota set forth in Article V of this Agreement (other than those set forth in Section 5.2(a)) shall be true and correct in all material respects as of the date of this Agreement and as of the Closing Date as though made as of the Closing Date (except to the extent such representations and warranties expressly relate to an earlier date, in which case as of such earlier date).
(b) Performance of Obligations of Dakota. Dakota shall have performed in all material respects all obligations required to be performed by them under this Agreement at or prior to the Effective Time.
(c) No Dakota MAE. Since the date of this Agreement there shall not have been a Dakota Material Adverse Effect.
(d) Officers’ Certificate. JR shall have received a certificate signed by an executive officer of Dakota certifying as to the matters set forth in Section 7.3(a), Section 7.3(b) and Section 7.3(c).
Section 7.4 Frustration of Closing Conditions. No party may rely on the failure of any condition set forth in this Article VII to be satisfied if such failure was caused by such party’s breach of this Agreement.
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ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
Section 8.1 Termination. This Agreement may be terminated and the Mergers may be abandoned at any time prior to the Effective Time, whether before or after the Dakota Stockholder Approval has been obtained:
(a) by mutual written consent of Dakota and JR;
(b) by either Dakota or JR:
(i) if the Mergers shall not have been consummated on or before December 31, 2021 (the “Outside Date”); provided, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any party whose failure to fulfill in any material respect any of its obligations under this Agreement has been the primary cause of, or the primary factor that resulted in, the failure of the Mergers to be consummated by the Outside Date;
(ii) if any court of competent jurisdiction or other Governmental Entity shall have issued a judgment, order, injunction, rule or decree, or taken any other action restraining, enjoining or otherwise prohibiting any of the transactions contemplated by this Agreement and such judgment, order, injunction, rule, decree or other action shall have become final and nonappealable; provided, that the party seeking to terminate this Agreement pursuant to this Section 8.1(b)(ii) shall have complied with Section 6.5 with respect to such judgment, order, injunction, rule, decree, ruling or other action; or
(iii) if the Dakota Stockholder Approval shall not have been obtained at the Dakota Stockholders Meeting duly convened therefor or at any adjournment or postponement thereof;
(c) by Dakota,
(i) if JR shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty of JR shall have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the Effective Time (i) would result in the failure of any of the conditions set forth in Section 7.1 or Section 7.2 and (ii) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) thirty (30) days after the giving of written notice to JR of such breach or failure; provided, that Dakota shall not have the right to terminate this Agreement pursuant to this Section 8.1(c)(i) if Dakota is then in material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement such that the conditions set forth in Section 7.3(a) or Section 7.3(b) would not be satisfied; or
(ii) if, prior to the Dakota Stockholder Approval, the Board of Directors of Dakota determines to enter into a definitive written agreement with respect to a Superior Proposal;
(d) by JR:
(i) if Dakota shall have breached or failed to perform any of its representations, warranties, covenants or agreements set forth in this Agreement, or if any representation or warranty of Dakota shall have become untrue, which breach or failure to perform or to be true, either individually or in the aggregate, if occurring or continuing at the Effective Time (A) would result in the failure of any of the conditions set forth in Section 7.1 or Section 7.3 and (B) cannot be or has not been cured by the earlier of (1) the Outside Date and (2) thirty (30) days after the giving of written notice to Dakota of such breach or failure; provided, that JR shall not have the right to terminate this Agreement pursuant to this Section 8.1(d)(i) if JR is then in material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement such that the conditions set forth in Section 7.2(a) or Section 6.2(b) would not be satisfied; or
(ii) if the Board of Directors of Dakota shall have effected an Adverse Recommendation Change.
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The party desiring to terminate this Agreement pursuant to this Section 8.1 (other than pursuant to Section 8.1(a)) shall give written notice of such termination to the other party.
Section 8.2 Effect of Termination. In the event of termination of this Agreement, this Agreement shall immediately become void and have no effect, without any liability or obligation on the part of Dakota, JR, Merger Sub 1 or Merger Sub 2; provided, that:
(a) Section 6.9 (Announcements), this Section 7.2, Section 7.3 (Fees and Expenses), Section 8.4 (Amendment or Supplement), Section 8.5 (Extension of Time; Waiver) and Article IX shall survive the termination hereof;
(b) Dakota and JR may have liability as provided in Section 7.3; and
(c) no such termination shall relieve any party from any liability or damages resulting from a willful and material breach of any of its representations, warranties, covenants or agreements set forth in this Agreement or fraud, in which case the non-breaching party shall be entitled to all rights and remedies available at Law or in equity.
Section 8.3 Fees and Expenses. All fees and expenses incurred in connection with this Agreement, the Mergers and the other transactions contemplated hereby shall be paid by the party incurring such fees or expenses, whether or not the Mergers are consummated.
Section 8.4 Amendment or Supplement. Subject to the limitations set forth in NRS 92A.120(9), this Agreement may be amended, modified or supplemented by the parties by action taken or authorized by the Board of Directors of Dakota and the Board of Directors of JR at any time prior to the First Merger Effective Time; provided, that after the Dakota Stockholder Approval has been obtained, no amendment shall be made that pursuant to applicable Law requires further approval or adoption by the stockholders of Dakota without such further approval or adoption. This Agreement may not be amended, modified or supplemented in any manner, whether by course of conduct or otherwise, except by an instrument in writing specifically designated as an amendment hereto, signed on behalf of each of the parties in interest at the time of the amendment. The Parties agree that upon execution and delivery of this Agreement, all provisions of the Original Agreement are hereby waived, released and superseded in their entirety and shall have no further force or effect
Section 8.5 Extension of Time; Waiver. At any time prior to the First Merger Effective Time, the parties may, by action taken or authorized by the Board of Directors of Dakota and the Board of Directors of JR, to the extent permitted by applicable Law, (a) extend the time for the performance of any of the obligations or acts of the other parties, (b) waive any inaccuracies in the representations and warranties of the other parties set forth in this Agreement or any document delivered pursuant hereto or (c) subject to applicable Law, waive compliance with any of the agreements or conditions of the other parties contained herein; provided, that after Dakota Stockholder Approval has been obtained, no waiver may be made that pursuant to applicable Law requires further approval or adoption by the stockholders of Dakota without such further approval or adoption. Any agreement on the part of a party to any such waiver shall be valid only if set forth in a written instrument executed and delivered by a duly authorized officer on behalf of such party. No failure or delay of any party in exercising any right or remedy hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any abandonment or discontinuance of steps to enforce such right or power, or any course of conduct, preclude any other or further exercise thereof or the exercise of any other right or power. The rights and remedies of the parties hereunder are cumulative and are not exclusive of any rights or remedies which they would otherwise have hereunder.
ARTICLE IX
GENERAL PROVISIONS
Section 9.1 Nonsurvival of Representations and Warranties. None of the representations, warranties, covenants, obligations or agreements in this Agreement or in any certificate or instrument delivered pursuant to this Agreement, including any rights arising out of any breach of such representations, warranties, covenants, obligations or agreements shall survive the Effective Time, other than those covenants or agreements of the parties which by their terms apply, or are to be performed in whole or in part, after the Effective Time.
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Section 9.2 Notices. All notices and other communications hereunder shall be in writing and shall be deemed duly given (a) on the date of delivery if delivered personally, or if by e-mail transmitted prior to 5:00 pm ET, upon non-automatic written confirmation of receipt by e-mail or otherwise (and, if transmitted after 5:00 pm ET, on the following Business Day), (b) on the first Business Day following the date of dispatch if delivered utilizing a next-day service by a recognized next-day courier or (c) on the earlier of confirmed receipt or the fifth (5th) Business Day following the date of mailing if delivered by registered or certified mail, return receipt requested, postage prepaid. All notices hereunder shall be delivered to the addresses set forth below, or pursuant to such other instructions as may be designated in writing by the party to receive such notice:
If to Dakota, Merger Sub 1 or Merger Sub 2, to:
Dakota Territory Resource Corp. 106 Glendale Dr., Suite A Lead, S.D. 57754 E-mail: JAberle@gold-sd.com Attention: Gerald Aberle |
With a copy (which shall not constitute notice) to:
Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, New York E-mail: michael.hong@skadden.com Attention: Michael Hong |
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If if to JR, Merger Sub 1, Merger Sub 2, the Surviving Corporation or the Surviving LLC, to:
JR Resources Corp. 1588-609 Granville Street Vancouver, BC, V7Y 1H4 E-mailJAwde@gold-sd.com Attention: Jonathan Awde |
With a copy (which shall not constitute notice) to:
Dorsey & Whitney LLP TD Canada Trust Tower Brookfield Place, 161 Bay Street, Suite 4310 Toronto, ON M5J 2S1 Canada E-mail: raymer.richard@dorsey.com Attention: Richard Raymer |
Section 9.3 Interpretation. When a reference is made in this Agreement to a Section, Article, Exhibit or Schedule such reference shall be to a Section, Article, Exhibit or Schedule of this Agreement unless otherwise indicated. The table of contents and headings contained in this Agreement or in any Exhibit or Schedule are for convenience of reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. All words used in this Agreement will be construed to be of such gender or number as the circumstances require. Any capitalized terms used in any Exhibit or Schedule but not otherwise defined therein shall have the meaning as defined in this Agreement. Where a word is defined herein, references to the singular shall include references to the plural and vice versa. All Exhibits and Schedules annexed hereto or referred to herein are hereby incorporated in and made a part of this Agreement as if set forth herein. The word “including” and words of similar import when used in this Agreement will mean “including, without limitation,” unless otherwise specified. The words “hereof,” “herein” and “hereunder” and words of similar import when used in this Agreement shall refer to the Agreement as a whole and not to any particular provision in this Agreement. The term “or” is not exclusive. The word “will” shall be construed to have the same meaning and effect as the word “shall.” References to days mean calendar days unless otherwise specified. A reference to any party to this Agreement or any other agreement or document shall include such party’s successors and permitted assigns. The phrase “to the extent” shall mean the degree to which a subject or other matter extends, and such phrase shall not simply mean “if.” When calculating the period of time before which, within which or following which any act is to be done or step taken pursuant to this Agreement, the date that is the reference date in calculating such period shall be excluded and if the last day of such period is not a Business Day, the period shall end on the next succeeding Business Day. Each reference to any contract shall be to such contract as amended, supplemented, waived or otherwise modified from time to time. Each reference to a Law, statute, regulation or other government rule is to it as amended from time to time and, as applicable, is to corresponding provisions of successor Laws, statutes, regulations or other government rules. No summary of this Agreement prepared by a party, in a document filed with or furnished to the SEC or otherwise, shall affect the meaning or interpretation of this Agreement.
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Section 9.4 Entire Agreement. This Agreement (including the Exhibits hereto) and the other agreements and instruments referenced herein constitute the entire agreement, and supersede all prior written agreements, arrangements, communications and understandings and all prior and contemporaneous oral agreements, arrangements, communications and understandings among the parties with respect to the subject matter hereof and thereof, provided that, the parties agree and acknowledge that the obligations of Dakota and JR pursuant to the Purchase Agreement shall remain in full force and effect until terminated in accordance with the terms thereunder.
Section 9.5 No Third Party Beneficiaries.
(a) Nothing in this Agreement, express or implied, is intended to or shall confer upon any Person other than the parties and their respective successors and permitted assigns any legal or equitable right, benefit or remedy of any nature under or by reason of this Agreement, except as provided in Section 6.8.
(b) The representations and warranties in this Agreement are the product of negotiations among the parties hereto and are for the sole benefit of the parties hereto. Any inaccuracies in such representations and warranties are subject to waiver by the parties hereto in accordance with Section 8.5 without notice or liability to any other Person. In some instances, the representations and warranties in this Agreement may represent an allocation among the parties hereto of risks associated with particular matters regardless of the knowledge of any of the parties hereto. Consequently, Persons other than the parties hereto may not rely upon the representations and warranties in this Agreement as characterizations of actual facts or circumstances as of the date of this Agreement or as of any other date.
Section 9.6 Governing Law. This Agreement and all disputes or controversies arising out of or relating to this Agreement or the transactions contemplated hereby shall be governed by, and construed in accordance with, the internal laws of the State of Nevada, without regard to the laws of any other jurisdiction that might be applied because of the conflicts of laws principles of the State of Nevada.
Section 9.7 Submission to Jurisdiction. Each of the parties irrevocably agrees that any legal action or proceeding arising out of or relating to this Agreement brought by any party or its Affiliates against any other party or its Affiliates shall be brought and determined in the state courts in the city of Deadwood, County of Lawrence, South Dakota, and in federal courts in the city of Rapid City, County of Pennington, South Dakota. Each of the parties hereby irrevocably submits to the jurisdiction of the aforesaid courts for itself and with respect to its property, generally and unconditionally, with regard to any such action or proceeding arising out of or relating to this Agreement and the transactions contemplated hereby. Each of the parties agrees not to commence any action, suit or proceeding relating thereto except in the courts described above, other than actions in any court of competent jurisdiction to enforce any judgment, decree or award rendered by any such court as described herein. Each of the parties further agrees that notice as provided herein shall constitute sufficient service of process and the parties further waive any argument that such service is insufficient. Each of the parties hereby irrevocably and unconditionally waives, and agrees not to assert, by way of motion or as a defense, counterclaim or otherwise, in any action or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (a) any claim that it is not personally subject to the jurisdiction of the courts as described herein for any reason, (b) that it or its property is exempt or immune from jurisdiction of any such court or from any legal process commenced in such courts (whether through service of notice, attachment prior to judgment, attachment in aid of execution of judgment, execution of judgment or otherwise) and (c) that (i) the suit, action or proceeding in any such court is brought in an inconvenient forum, (ii) the venue of such suit, action or proceeding is improper or (iii) this Agreement, or the subject matter hereof, may not be enforced in or by such courts.
Section 9.8 Assignment; Successors. Neither this Agreement nor any of the rights, interests or obligations under this Agreement may be assigned or delegated, in whole or in part, by operation of Law or otherwise, by any party without the prior written consent of the other parties, and any such assignment without such prior written consent shall be null and void. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.
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Section 9.9 Specific Performance. The parties agree that irreparable damage would occur in the event that the parties hereto do not perform the provisions of this Agreement in accordance with its terms or otherwise breach such provisions. Accordingly, prior to any termination of this Agreement pursuant to Section 7.1, the parties acknowledge and agree that each party shall be entitled to an injunction, specific performance and other equitable relief to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in the state courts in the city of Deadwood, County of Lawrence, South Dakota, and in federal courts in the city of Rapid City, County of Pennington, South Dakota, this being in addition to any other remedy to which such party is entitled at Law or in equity. Each of the parties hereby further waives (a) any defense in any action for specific performance that a remedy at Law would be adequate and (b) any requirement under any Law to post security as a prerequisite to obtaining equitable relief.
Section 9.10 Currency. All references to “$” in this Agreement refer to United States dollars, which is the currency used for all purposes in this Agreement.
Section 9.11 Severability. Whenever possible, each provision or portion of any provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable Law, but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable Law or rule in any jurisdiction, such invalidity, illegality or unenforceability shall not affect any other provision or portion of any provision in such jurisdiction, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.
Section 9.12 Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 9.13 Counterparts. This Agreement may be executed in two or more counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party.
Section 9.14 Facsimile or .pdf Signature. This Agreement may be executed by facsimile or .pdf signature and a facsimile or .pdf signature shall constitute an original for all purposes.
Section 9.15 No Presumption Against Drafting Party. Each of Dakota, Merger Sub 1, Merger Sub 2 and JR acknowledges that each party to this Agreement has been represented by counsel in connection with this Agreement and the transactions contemplated by this Agreement. Accordingly, any rule of Law or any legal decision that would require interpretation of any claimed ambiguities in this Agreement against the drafting party has no application and is expressly waived.
Section 9.16 Non-Recourse. Except to the extent otherwise set forth in any document, certificate or instrument delivered in connection with this Agreement or the transactions contemplated hereunder (such document, certificate or instrument, an “Ancillary Agreement”), all claims, obligations, liabilities, or causes of action (whether in contract or in tort, in Law or in equity, or granted by statute) that may be based upon, in respect of, arise under, out or by reason of, be connected with, or relate in any manner to (a) this Agreement or any Ancillary Agreement, (b) the negotiation, execution or performance of this Agreement or any Ancillary Agreement (including any representation or warranty made in, in connection with, or as an inducement to this Agreement or any Ancillary Agreement), (c) any breach or violation of this Agreement or any Ancillary Agreement and (d) the failure of the transactions contemplated hereunder to be consummated, in each case, may be made by the parties hereto only against (and such representations and warranties are those solely of) the Persons that are expressly identified as parties hereto or thereto, as applicable (the “Contracting Parties”). No Person who is not a Contracting Party, including any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any Contracting Party, or any current, former or future director, officer, employee, incorporator, member, partner, manager, stockholder, Affiliate, or assignee of any of the foregoing (collectively, the “Nonparty Affiliates”), shall have any Liability (whether in contract or in tort, in Law or in equity, or granted by statute) for any claims, causes of action, obligations, or liabilities arising under, out of, in connection with, or related in any manner to the items in the immediately preceding clauses (a) through (d), and, to the maximum extent permitted by Law, each Contracting Party hereby waives and releases all such liabilities, claims, causes of action, and obligations against any such Nonparty Affiliates of another Contracting Party. Without limiting the foregoing, to the maximum extent permitted by Law (other than as set forth in any applicable Ancillary Agreement), (i) each Contracting Party hereby waives and releases any and all rights, claims, demands, or causes of action that may otherwise be available at Law or in equity, or granted by statute, to avoid or disregard the entity form of a Contracting Party or otherwise impose liability of a Contracting Party on any other Contracting Party’s Nonparty Affiliate in respect of this Agreement or any Ancillary Agreement, whether granted by statute or based on theories of equity, agency, control, instrumentality, alter ego, domination, sham, single business enterprise, piercing the veil, unfairness, undercapitalization, or otherwise; and (ii) each Contracting Party disclaims any reliance upon any other Contracting Party’s Nonparty Affiliates with respect to the performance of this Agreement or any Ancillary Agreement or any representation or warranty made in, in connection with, or as an inducement to this Agreement or any Ancillary Agreement.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
DAKOTA TERRITORY RESOURCE CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Chief Executive Officer | ||
DGC MERGER SUB I CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Authorized Signatory | ||
DGC MERGER SUB II LLC | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Authorized Signatory | ||
JR RESOURCES CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Chief Executive Officer |
[Signature Page to Amended and Restated Agreement and Plan of Merger]
Exhibit 2.2
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
This agreement (the “Agreement”) is made as of December 17, 2021, by and between Dakota Territory Resource Corp, a Nevada corporation (“Dakota”), JR Resources Corp., a Nevada corporation (“JR”), DGC Merger Sub I Corp., a Nevada corporation and a direct, wholly-owned Subsidiary of JR (“Merger Sub 1”), and DGC Merger Sub II LLC, a Nevada limited liability company and a direct, wholly-owned Subsidiary of JR (“Merger Sub 2”).
WHEREAS, Dakota and JR, among others, made and entered into an Agreement and Plan of Merger on May 13, 2021 and Dakota, JR, Merger Sub 1 and Merger Sub 2 entered into an Amended and Restated Agreement and Plan of Merger on September 10, 2021 (the “Merger Agreement”); and
WHEREAS, Dakota and JR desire to change the Outside Date (as such term is defined in the Merger Agreement) from December 31, 2021 to June 30, 2022;
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged and agreed is beneficial for both parties, the Parties agree as follows:
Section 1 Amendment to Merger Agreement. The Merger Agreement is hereby amended, to be effective as of the date hereof, such that Subparagraph 8.1(b)(i) is amended and restated in its entirety as follows:
(i) if the Mergers shall not have been consummated on or before June 30, 2022 (the “Outside Date”); provided, that the right to terminate this Agreement pursuant to this Section 8.1(b)(i) shall not be available to any party whose failure to fulfill in any material respect any of its obligations under this Agreement has been the primary cause of, or the primary factor that resulted in, the failure of the Mergers to be consummated by the Outside Date.
Section 2 Reference to and Effect on the Merger Agreement.
(a) Except as expressly set forth herein, this Agreement shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any party under the Merger Agreement, and shall not alter, modify or amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Merger Agreement. Capitalized terms used herein without definition have the same meanings as in the Merger Agreement.
(b) This Agreement is incorporated by reference in, and forms an integral part of, the Merger Agreement. Upon execution of this Agreement, each reference in the Merger Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Merger Agreement and hereby, and each reference to the Merger Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Merger Agreement shall mean and be a reference to the Merger Agreement as amended hereby.
(c) The Merger Agreement shall remain in full force and effect, other than those provisions amended pursuant to Section 1 of this Agreement.
Section 3 Miscellaneous.
(a) Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
(b) Further Assurances. From and after the date of this Agreement, upon the reasonable request of either JR or Dakota, the respective parties shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
(c) Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement.
(d) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the provisions set forth in the Merger Agreement.
(e) Severability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be effected thereby.
(f) Entire Agreement. This Agreement and the Merger Agreement constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.
DAKOTA TERRITORY RESOURCE CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Chief Executive Officer | ||
DGC MERGER SUB I CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Authorized Signatory | ||
DGC MERGER SUB II LLC | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Authorized Signatory | ||
JR RESOURCES CORP. | ||
By: | “Jonathan Awde” | |
Jonathan Awde | ||
Chief Executive Officer |
[Signature Page to Amendment]
Exhibit 3.1
STATE OF NEVADA | ||
BARBARA K. CEGAVSKE Secretary of State
|
Commercial
Recordings Division
North Las Vegas City Hall 2250 Las Vegas Blvd North, Suite 400 |
|
KIMBERLEY PERONDI | North Las Vegas, NV 89030 | |
Deputy Secretary for | OFFICE OF THE | Telephone (702) 486-2880 |
Commercial Recordings | SECRETARY OF STATE | Fax (702) 486-2888 |
Business Entity - Filing Acknowledgement
05/26/2020 | |
Work Order Item Number: | W2020052601373-592256 |
Filing Number: | 20200683231 |
Filing Type: | Articles of Incorporation-For-Profit |
Filing Date/Time: | 5/26/2020 12:54:00 PM |
Filing Page(s): | 2 |
Indexed Entity Information: |
Entity ID: E6832322020-3 | Entity Name: JR RESOURCES CORP. |
Entity Status: Active | Expiration Date: None |
Commercial Registered Agent |
C T CORPORATION SYSTEM |
701 S CARSON ST STE 200, Carson City, NV 89701, USA |
The attached document(s) were filed with the Nevada Secretary of State, Commercial Recording Division. The filing date and time have been affixed to each document, indicating the date and time of filing. A filing number is also affixed and can be used to reference this document in the future. |
Respectfully, | |
/s/ BARBARA K. CEGAVSKE | |
BARBARA K. CEGAVSKE | |
Secretary of State |
Page 1 of 1
Commercial Recording Division
202 N. Carson Street
DOMESTIC CORPORATION (78) CHARTER
I, BARBARA K. CEGAVSKE, the duly qualified and elected Nevada Secretary of State, do hereby certify that JR RESOURCES CORP. did, on 05/26/2020, file in this office the original ARTICLES OF INCORPORATION-FOR-PROFIT that said document is now on file and of record in the office of the Secretary of State of the State of Nevada, and further, that said document contains all the provisions required by the law of the State of Nevada.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of State, at my office on 05/26/2020. | |
/s/ BARBARA K. CEGAVSKE | |
Certificate Number: B20200526813269 | BARBARA K. CEGAVSKE |
You may verify this certificate | Secretary of State |
online at http://www.nvsos.gov |
Exhibit 3.2
JR RESOURCES CORP.
BYLAWS
AMENDED AND RESTATED
SEPTEMBER 28, 2021
Table of Contents
Page
Preamble | 1 |
Article 1. Stockholders’ Meetings | 1 |
1.1 | Place of Meetings | 1 | |
1.2 | Annual Meeting | 1 | |
1.3 | Special Meetings | 2 | |
1.4 | Remote Communications | 2 | |
1.5 | Notice of Meetings | 2 | |
1.6 | Quorum | 2 | |
1.7 | Adjournment of Meetings | 3 | |
1.8 | Voting List | 3 | |
1.9 | Vote Required | 3 | |
1.10 | Chairperson; Secretary | 3 | |
1.11 | Rules of Conduct | 4 | |
1.12 | Inspectors of Elections | 4 | |
1.13 | Record Date | 4 | |
1.14 | Written Consent | 4 | |
1.15 | Representative of a Stockholder | 4 | |
1.16 | Appointment of proxy holders | 5 | |
1.17 | Alternate proxy holders | 5 | |
1.18 | When Proxy Holder Need Not Be A Stockholder | 5 | |
1.19 | Form of proxy | 5 | |
1.20 | Provision of proxies | 5 | |
1.21 | Revocation of proxies | 6 | |
1.22 | Revocation of proxies must be signed | 6 | |
1.23 | Validity of proxy votes | 6 |
Article 2. Directors | 6 |
2.1 | Number and Qualifications | 6 | |
2.2 | Term of Office | 6 | |
2.3 | Resignation | 6 | |
2.4 | Vacancies | 7 | |
2.5 | Regular Meetings | 7 | |
2.6 | Special Meetings | 7 | |
2.7 | Notice | 7 | |
2.8 | Quorum | 8 | |
2.9 | Vote Required | 8 | |
2.10 | Chairperson; Secretary | 8 | |
2.11 | Use of Communications Equipment | 8 | |
2.12 | Action Without a Meeting | 8 | |
2.13 | Compensation of Directors | 8 | |
2.14 | Committees | 9 | |
2.15 | Chairperson of the Board | 9 |
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Article 3. Officers | 9 |
3.1 | Offices Created; Qualifications; Election | 9 | |
3.2 | Term of Office | 9 | |
3.3 | Removal of Officers | 9 | |
3.4 | Resignation | 9 | |
3.5 | Vacancies | 9 | |
3.6 | Compensation | 9 | |
3.7 | Powers | 10 | |
3.8 | Chief Executive Officer | 10 | |
3.9 | President | 10 | |
3.10 | Vice Presidents | 10 | |
3.11 | Chief Financial Officer | 10 | |
3.12 | Chief Operating Officer | 10 | |
3.13 | Treasurer | 10 | |
3.14 | Assistant Treasurers | 11 | |
3.15 | Controller | 11 | |
3.16 | Secretary | 11 | |
3.17 | Assistant Secretaries | 11 |
Article 4. Capital Stock | 11 |
4.1 | Stock Certificates | 11 | |
4.2 | Registration; Registered Owners | 12 | |
4.3 | Stockholder Addresses | 12 | |
4.4 | Transfer of Shares | 12 | |
4.5 | Lost, Stolen, Destroyed or Mutilated Certificates | 12 | |
4.6 | Personal Representative Recognized on Death | 13 | |
4.7 | Death or Bankruptcy | 13 | |
4.8 | Persons in Representative Capacity | 13 |
Article 5. General Provisions | 13 |
5.1 | Waiver of Notice | 13 | |
5.2 | Electronic Transmissions | 13 | |
5.3 | Fiscal Year | 13 | |
5.4 | Voting Stock of Other Organizations | 13 | |
5.5 | Corporate Seal | 14 | |
5.6 | Amendment of Bylaws | 14 |
Article 6. Indemnification | 14 |
6.1 | Indemnification | 14 | |
6.2 | Advancement of Expenses | 14 | |
6.3 | Non-Exclusivity | 14 | |
6.4 | Heirs and Beneficiaries | 14 | |
6.5 | Effect of Amendment | 14 |
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AMENDED AND RESTATED
BYLAWS
OF
JR RESOURCES CORP.
Adopted by the Board of Directors on September 28, 2021
Article 1. Stockholders’ Meetings
1.1 Place of Meetings. Meetings of the stockholders shall be held at such place, either within or without the State of Nevada, as the board of directors shall determine. Rather than holding a meeting at any designated place, the board of directors may determine that a meeting shall be held solely by means of remote communications, which means shall meet the requirements of the Nevada Revised Statutes (“NRS”). The board of directors may determine when exigent circumstances exist, which shall include, without limitation, during any nuclear or atomic disaster, or during the existence of any catastrophe, or other similar emergency condition, including, but not limited to, an epidemic or pandemic, and a declaration of a national emergency by the United States government.
1.2 Annual Meeting. The stockholders must hold an annual meeting of the stockholders for the election of the directors and the transaction of such other business as may be properly brought before the meeting, at least once in each calendar year and not more than 13 months after the last annual reference date at such time and place as may be determined by the board of directors. Business to be brought before an annual meeting of the stockholders may include, without limitation:
(a) | Business relating to the conduct of or voting at the meeting; |
(b) | Consideration of any financial statements of the corporation presented to the meeting; |
(c) | Consideration of any reports of the directors or auditor; |
(d) | The setting or changing of the number of directors; |
(e) | The election or appointment of directors; |
(f) | The appointment of an auditor; |
(g) | The setting of the remuneration of an auditor; |
(h) Business arising out of a report of the directors not requiring the passing of a special resolution or an exceptional resolution; and
(i) Any other business which, under these bylaws or the NRS, may be transacted at a meeting of stockholders without prior notice of the business being given to the stockholders.
1.3 Special Meetings. Special meetings of the stockholders for any purpose or purposes may be called by the board of directors. No other person or persons may call a special meeting. The business to be transacted at any special meeting shall be limited to the purposes stated in the notice.
1.4 Remote Communications. The board of directors may permit the stockholders and their proxy holders to participate in meetings of the stockholders (whether such meetings are held at a designated place or solely by means of remote communication) using one or more methods of remote communication that satisfy the requirements of the NRS. The board of directors may adopt such guidelines and procedures applicable to participation in stockholders’ meetings by means of remote communication as it deems appropriate. Participation in a stockholders’ meeting by means of a method of remote communication permitted by the board of directors shall constitute presence in person at the meeting. Nothing in this Section 1.4 shall obligate the corporation to make any action or provide any facility to permit or facilitate the use of any communications medium at a meeting of stockholders.
1.5 Notice of Meetings. Notice of the place, if any, date and hour of any stockholders’ meeting shall be given to each stockholder entitled to vote. The notice shall state the means of remote communications, if any, by which stockholders and proxy holders may be deemed present in person and vote at the meeting. If the voting list for the meeting is to be made available by means of an electronic network or if the meeting is to be held solely by remote communication, the notice shall include the information required to access the reasonably accessible electronic network on which the corporation will make its voting list available either prior to the meeting or, in the case of a meeting held solely by remote communication, during the meeting. Notice of a special meeting shall also state the purpose or purposes for which the meeting has been called. Unless otherwise provided in the NRS, for so long as the corporation is a public company, notice shall be given at least 21 days (or 10 days to the extent the corporation is not a public company) but not more than 60 days before the date of the meeting. Without limiting the manner by which notice may otherwise be given, notice may be given by a form of electronic transmission that satisfies the requirements of the NRS and has been consented to by the stockholder to whom notice is given. If mailed, notice shall be deemed given when deposited in the U.S. mail, postage prepaid, directed to the stockholder’s address as it appears in the corporation’s records. If given by a form of electronic transmission consented to by the stockholder to whom notice is given, notice shall be deemed given at the times specified with respect to the giving of notice by electronic transmission in the NRS. An affidavit of the corporation’s secretary, an assistant secretary or an agent of the corporation that notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated in the affidavit.
1.6 Quorum. The presence, in person or by proxy, of the holders of 33 1/3 percent of the voting power of the stock entitled to vote at a meeting shall constitute a quorum. Where a separate vote by a class or series or classes or series of stock is required at a meeting, the presence, in person or by proxy, of the holders of 33 1/3 percent of the voting power of each such class or series shall also be required to constitute a quorum. In the absence of a quorum, either the chairperson of the meeting or the holders of a majority of the voting power of the stock present, in person or by proxy, and entitled to vote at the meeting may adjourn the meeting in the manner provided in Section 1.7 until a quorum shall be present. A quorum, once established at a meeting, shall not be broken by the withdrawal of the holders of enough voting power to leave less than a quorum. If a quorum is present at an original meeting, a quorum need not be present at an adjourned session of that meeting.
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1.7 Adjournment of Meetings. Either the chairperson of the meeting or the holders of a majority of the voting power of the stock present, in person or by proxy, and entitled to vote at the meeting may adjourn any meeting of stockholders from time to time. At any adjourned meeting the stockholders may transact any business that they might have transacted at the original meeting. Notice of an adjourned meeting need not be given if the time and place, if any, or the means of remote communications to be used rather than holding the meeting at any place are announced at the meeting so adjourned, except that notice of the adjourned meeting shall be required if the adjournment is for more than 30 days or if after the adjournment a new record date is fixed for the adjourned meeting.
1.8 Voting List. At least 10 days before every meeting of the stockholders, the secretary of the corporation shall prepare a complete alphabetical list of the stockholders entitled to vote at the meeting showing each stockholder’s address and number of shares. This voting list need not include electronic mail addresses or other electronic contact information for any stockholder nor need it contain any information with respect to beneficial owners of the shares of stock owned although it may do so. For a period of at least 10 days before the meeting, the voting list shall be open to the examination of any stockholder for any purpose germane to the meeting either on a reasonably accessible electronic network (provided that the information required to gain access to the list is provided with the notice of the meeting) or during ordinary business hours at the corporation’s principal place of business. If the list is made available on an electronic network, the corporation may take reasonable steps to ensure that it is available only to stockholders. If the stockholders’ meeting is held at a place, the voting list shall be produced and kept at that place for the entire duration of the meeting. If the stockholders’ meeting is held solely by means of remote communications, the voting list shall be made available for inspection on a reasonably accessible electronic network for the entire duration of the meeting. In either case, any stockholder may inspect the voting list at any time during the meeting.
1.9 Vote Required. Subject to the provisions of NRS requiring a higher level of votes to take certain specified actions and to the terms of the corporation’s certificate of incorporation that set special voting requirements, the stockholders shall take action on all matters other than the election of directors by a majority of the voting power of the stock present, in person or by proxy, at the meeting and entitled to vote on the matter. The stockholders shall elect directors by a plurality of the voting power of the stock present, in person or by proxy, at the meeting and entitled to vote on the matter.
1.10 Chairperson; Secretary. The following people shall preside over any meeting of the stockholders: the chairperson of the board of directors, if any, or, in the chairperson’s absence, the president, or, in the absence of all of the foregoing persons, a chairperson designated by the board of directors, or, in the absence of a chairperson designated by the board of directors, a chairperson chosen by the stockholders at the meeting. In the absence of the secretary and any assistant secretary, the chairperson of the meeting may appoint any person to act as secretary of the meeting.
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1.11 Rules of Conduct. The board of directors or the chairperson may adopt such rules, regulations and procedures for the conduct of any meeting of the stockholders as it deems appropriate including, without limitation, rules, regulations and procedures regarding participation in the meeting by means of remote communication. Except to the extent inconsistent with any applicable rules, regulations or procedures adopted by the board of directors, the chairperson of any meeting may adopt such rules, regulations and procedures for the meeting, and take such actions with respect to the conduct of the meeting, as the chairperson of the meeting deems appropriate. The rules, regulations and procedures adopted may include, without limitation, rules that (i) establish an agenda or order of business, (ii) are intended to maintain order and safety at the meeting, (iii) restrict entry to the meeting after the time fixed for its commencement, and (iv) limit the time allotted to stockholder questions or comments. Unless otherwise determined by the board of directors or the chairperson of the meeting, meetings of the stockholders need not be held in accordance with the rules of parliamentary procedure.
1.12 Inspectors of Elections. The board of directors or the chairperson of a stockholders’ meeting may appoint one or more inspectors of election and any substitute inspectors to act at the meeting or any adjournment thereof. Inspectors may be officers, employees or agents of the corporation. Each inspector, before entering on the discharge of the inspector’s duties, shall take and sign an oath faithfully to execute the duties of inspector with strict impartiality and according to the best of the inspector’s ability. Inspectors shall have the duties prescribed by the Nevada Revised Statutes. At the request of the chairperson of the meeting, the inspector or inspectors shall prepare a written report of the results of the votes taken and of any other question or matter determined by the inspector or inspectors.
1.13 Record Date. If the corporation proposes to take any action for which the NRS would permit it to set a record date, the board of directors may set such a record date as provided under the NRS.
1.14 Written Consent. Any action required or allowed to be taken at a meeting of the stockholders may be taken without a meeting, without prior notice and without a vote, provided that a consent in writing which describes the action so taken shall be signed by a majority of the stockholders entitled to vote with respect to the subject matter of the consent, except that: (a) if any greater proportion of voting power is required for such action at a meeting, then the greater proportion of written consents is required; and (b) this provision for action by written consent does not supersede any specific provision for action by written consent contained in the Nevada statutes.
1.15 Representative of a Stockholder. If a corporation that is not a subsidiary of the corporation is a stockholder, that corporation may appoint a person to act as its representative at any meeting of stockholders of the corporation, and:
(a) | for that purpose, the instrument appointing a representative must: |
(1) be received at the principal office of the corporation or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least 2 business days before the day set for the holding of the meeting, or
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(2) | be provided, at the meeting, to the chair of the meeting, and |
(b) | if a representative is appointed under this Section: |
(1) the representative is entitled to exercise in respect of and at that meeting the same rights on behalf of the corporation that the representative represents as that corporation could exercise if it were a stockholder who is an individual, including, without limitation, the right to appoint a proxy holder, and
(2) the representative, if present at the meeting, is to be counted for the purpose of forming a quorum and is deemed to be a stockholder present in person at the meeting.
1.16 Appointment of proxy holders. Every stockholder of the corporation, including a corporation that is a stockholder but not a subsidiary of the corporation, entitled to vote at a meeting of stockholders of the corporation may, by proxy, appoint one or more (but not more than three) proxy holders to attend and act at the meeting in the manner, to the extent and with the powers conferred by the proxy.
1.17 Alternate proxy holders. A stockholder may appoint one or more alternate proxy holders to act in the place of an absent proxy holder.
1.18 When Proxy Holder Need Not Be A Stockholder. A person who is appointed as a proxy holder need not be a stockholder of the corporation.
1.19 Form of proxy. A proxy, whether for a specified meeting or otherwise, must be either in the following form or in any other form approved by the directors or the chair of the meeting:
(Name of Company)
The undersigned, being a stockholder of the above-named corporation, hereby appoints or, failing that person, , as proxy holder for the undersigned to attend, act and vote for and on behalf of the undersigned at the meeting of stockholders to be held on the day of and at any adjournment of that meeting.
Signed this day of ,
Signature of stockholder |
1.20 | Provision of proxies. A proxy for a meeting of stockholders must: |
(a) be received at the registered office of the corporation or at any other place specified, in the notice calling the meeting, for the receipt of proxies, at least the number of business days specified in the notice, or if no number of days is specified, 2 business days, before the day set for the holding of the meeting, or;
(b) unless the notice provides otherwise, be provided at the meeting to the chair of the meeting.
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1.21 Revocation of proxies. Subject to Section 1.22, every proxy may be revoked by an instrument, in writing, that is:
(a) received at the registered office of the corporation at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used, or
(b) | provided at the meeting to the chair of the meeting. |
1.22 Revocation of proxies must be signed. An instrument referred to in Section 1.21 must be signed as follows:
(a) if the stockholder for whom the proxy holder is appointed is an individual, the instrument must be signed by the stockholder or his or her trustee;
(b) if the stockholder for whom the proxy holder is appointed is a corporation, the instrument must be signed by the corporation or by a representative appointed for the corporation under Section 1.15.
1.23 Validity of proxy votes. A vote given in accordance with the terms of a proxy is valid despite the death or incapacity of the stockholder giving the proxy and despite the revocation of the proxy or the revocation of the authority under which the proxy is given, unless notice in writing of that death, incapacity or revocation is received:
(a) at the principal office of the corporation, at any time up to and including the last business day before the day set for the holding of the meeting at which the proxy is to be used, or
(b) by the chair of the meeting, before the vote is taken.
Article 2. Directors
2.1 Number and Qualifications. The board of directors shall consist of such number as may be fixed from time to time by resolution of the board of directors. Notwithstanding the foregoing, (a) if the corporation is a public company, the number of directors shall be the greater of three and the most recently set of (i) the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given) and (ii) such number of directors that is elected annually or continued in office in the case of a retiring director, and (b) if the corporation is not a public company, the number of directors shall be the most recently set of (i) the number of directors set by ordinary resolution (whether or not previous notice of the resolution was given), and (ii) such number of directors that is elected annually or continued in office in the case of a retiring director. Directors need not be stockholders.
2.2 Term of Office. Each director shall hold office until his or her successor is elected or until his or her earlier death, resignation or removal.
2.3 Resignation. A director may resign, as a director or as a committee member or both, at any time by giving notice in writing or by electronic transmission to the corporation addressed to the board of directors, the chairperson of the board of directors, the president or the secretary. A resignation will be effective upon its receipt by the corporation unless the resignation specifies, and the remaining directors agree, that it is to be effective at some later time or upon the occurrence of some specified later event.
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2.4 Vacancies. Any vacancy in the board of directors, including a vacancy resulting from an enlargement of the board of directors, may be filled by a vote of the majority of the remaining directors, although less than a quorum, or by a sole remaining director. If the corporation at the time has outstanding any classes or series or class or series of stock that have or has the right, alone or with one or more other classes or series or class or series, to elect one or more directors, then any vacancy in the board of directors caused by the death, resignation or removal of a director so elected shall be filled only by a vote of the majority of the remaining directors so elected, by a sole remaining director so elected or, if no director so elected remains, by the holders of those classes or series or that class or series. A director appointed by the board of directors shall hold office for the remainder of the term of the director he or she is replacing. Any act or proceeding of the directors is not invalid merely because fewer than the number of directors set or otherwise required under these bylaws is in office. The board of directors may act notwithstanding any vacancy in the board of directors, but if the corporation has fewer directors in office than the number set pursuant to these bylaws as the quorum of directors, the board of directors may only act for the purpose of appointing directors up to that number or of summoning a meeting of stockholders for the purpose of filling any vacancies on the board of directors or, subject to the NRS, for any other purpose.
2.5 Regular Meetings. The board of directors may hold regular meetings without notice at such times and places as it may from time to time determine, provided that notice of any such determination shall be given to any director who is absent when such a determination is made and provided that subject to exigent circumstances, all meetings shall be held within the United States of America. A regular meeting of the board of directors may be held without notice immediately after and at the same place as the annual meeting of the stockholders.
2.6 Special Meetings. Special meetings of the board of directors may be called by the chairperson of the board of directors, the president or by any director. Notice of any special meeting shall be given to each director and shall state the time and place for the special meeting, provided that subject to exigent circumstances, all meetings shall be held within the United States of America.
2.7 Notice. Any time it is necessary to give notice of a board of directors’ meeting, notice shall be given (i) in person or by telephone to the director at least 24 hours in advance of the meeting, (ii) by personally delivering written notice to the director’s last known business or home address at least 48 hours in advance of the meeting, (iii) by delivering an electronic transmission (including, without limitation, via telefacsimile or electronic mail) to the director’s last known number or address for receiving electronic transmissions of that type at least 48 hours in advance of the meeting, (iv) by depositing written notice with a reputable delivery service or overnight carrier addressed to the director’s last known business or home address for delivery to that address no later than the business day preceding the date of the meeting, or (v) by depositing written notice in the U.S. mail, postage prepaid, addressed to the director’s last known business or home address no later than the third business day preceding the date of the meeting. Notice of a meeting need not be given to any director who attends a meeting without objecting prior to the meeting or at its commencement to the lack of notice to that director. A notice of meeting need not specify the purposes of the meeting.
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2.8 Quorum. A majority of the directors in office at the time shall constitute a quorum. Thereafter, a quorum shall be deemed present for purposes of conducting business and determining the vote required to take action for so long as at least a third of the total number of directors is present. In the absence of a quorum, the directors present may adjourn the meeting without notice until a quorum shall be present, at which point the meeting may be held.
2.9 Vote Required. The board of directors shall act by the vote of a majority of the directors present at a meeting at which a quorum is present.
2.10 Chairperson; Secretary. If the chairperson and the president are not present at any meeting of the board of directors, or if no such officers have been elected, then the board of directors shall choose a director who is present at the meeting to preside over it. In the absence of the secretary and any assistant secretary, the chairperson may appoint any person to act as secretary of the meeting.
2.11 Use of Communications Equipment. Directors may participate in meetings of the board of directors or any committee of the board of directors by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other. Participation in a meeting in this manner shall constitute presence in person at the meeting.
2.12 Action Without a Meeting. Any action required or permitted to be taken at any meeting of the board of directors may be taken without a meeting if all of the directors consent to the action in writing or by electronic transmission. The writing or writings or electronic transmission or transmissions shall be filed with the minutes of the proceedings of the board of directors or of the relevant committee.
2.13 Compensation of Directors. The board of directors shall from time to time determine the amount and type of compensation to be paid to directors for their service on the board of directors and its committees, or if the directors shall decide, such compensation shall be determined by the stockholders. Such compensation may be in addition to any salary or other compensation paid to any officer or employee of the corporation as such who is also a director. The directors shall be repaid such reasonable travelling, hotel and other expenses as they incur in and about the business of the corporation and if any director shall perform any professional or other service for the corporation that in the opinion of the directors is outside the ordinary duties of a director or shall otherwise be specially occupied in or about the corporation’s business, he may be paid a compensation to be fixed by the board of directors, or, at the option of such director, by the stockholders, and such compensation may be either in addition to, or in substitution for any other compensation that he may be entitled to receive. The directors on behalf of the corporation, unless otherwise determined by the board of directors, may pay a gratuity or pension or allowance on retirement to any director who has held any salaried office or place of profit with the corporation or to his spouse or dependents and may make contributions to any fund and pay premiums for the purchase or provision of any such gratuity, pension or allowance.
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2.14 Committees. The board of directors may designate one or more committees, including without limitation, an executive committee, each of which shall consist of one or more directors. The board of directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of a member of a committee, the member or members present at any meeting and not disqualified from voting, whether or not such member or members constitute a quorum, may unanimously appoint another member of the board of directors to act at the meeting in place of any such absent or disqualified member. Any committee shall, to the extent provided in a resolution of the board of directors and subject to the limitations contained in the NRS, have and may exercise all the powers and authority of the board of directors in the management of the business and affairs of the corporation. Each committee shall keep such records and report to the board of directors in such manner as the board of directors may from time to time determine. Except as the board of directors may otherwise determine, any committee may make rules for the conduct of its business. Unless otherwise provided in a resolution of the board of directors or in rules adopted by the committee, each committee shall conduct its business as nearly as possible in the same manner as is provided in these bylaws for the board of directors.
2.15 Chairperson of the Board. The board of directors may elect from its members a chairperson of the board. If a chairperson has been elected and is present, the chairperson shall preside at all meetings of the board of directors and the stockholders. The chairperson shall have such other powers and perform such other duties as the board of directors may designate.
Article 3. Officers
3.1 Offices Created; Qualifications; Election. The corporation shall have a president and secretary and such other officers, if any, as the board of directors from time to time may appoint. Any officer may be, but need not be, a director or stockholder. The same person may hold any two or more offices. The board of directors may elect officers at any time.
3.2 Term of Office. Each officer shall hold office until his or her successor has been elected, unless a different term is specified in the resolution electing the officer, or until his or her earlier death, resignation or removal.
3.3 Removal of Officers. Any officer may be removed from office at any time, with or without cause, by the board of directors.
3.4 Resignation. An officer may resign at any time by giving notice in writing or by electronic transmission to the corporation addressed to the board of directors, the chairperson of the board of directors, the president or the secretary. A resignation will be effective upon its receipt by the corporation unless the resignation specifies, and the board agrees, that it is to be effective at some later time or upon the occurrence of some specified later event.
3.5 | Vacancies. A vacancy in any office may be filled by the board of directors. |
3.6 Compensation. Officers shall receive such amounts and types of compensation for their services as shall be fixed by the board of directors.
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3.7 Powers. Unless otherwise specified by the board of directors, each officer shall have those powers and shall perform those duties that are (i) set forth in these bylaws (if any are so set forth), (ii) set forth in the resolution of the board of directors electing that officer or any subsequent resolution of the board of directors with respect to that officer’s duties, or
(iii) commonly incident to the office held.
3.8 Chief Executive Officer. The chief executive officer shall, subject to the direction and control of the board of directors, have general control and management of the business, affairs and policies of the corporation and over its officers and shall see that all orders and resolutions of the board of directors are carried into effect. The chief executive officer shall have the power to sign all certificates, contracts and other instruments on behalf of the corporation.
3.9 President. The president shall be subject to the direction and control of the chief executive officer and the board of directors and shall have general active management of the business, affairs and policies of the corporation. The president shall have the power to sign all certificates, contracts and other instruments on behalf of the corporation. If the board of directors has not elected a chief executive officer, the president shall be the chief executive officer. If the board of directors has elected a chief executive officer and that officer is absent, disqualified from acting, unable to act or refuses to act, then the president shall have the powers of, and shall perform the duties of, the chief executive officer.
3.10 Vice Presidents. The vice presidents, if any, shall be subject to the direction and control of the board of directors, the chief executive officer and the president and shall have such powers and duties as the board of directors, the chief executive officer or the president may assign to them. If the board of directors elects more than one vice president, then it shall determine their respective titles, seniority and duties. If the president is absent, disqualified from acting, unable to act or refuses to act, the most senior in rank of the vice presidents (as determined by the board of directors), shall have the powers of, and shall perform the duties of, the president.
3.11 Chief Financial Officer. The chief financial officer, if any, shall be subject to the direction and control of the board of directors and the chief executive officer, shall have primary responsibility for the financial affairs of the corporation and shall perform such other duties as the chief executive officer may assign.
3.12 Chief Operating Officer. The chief operating officer, if any, shall be subject to the direction and control of the board of directors and the chief executive officer, shall have primary responsibility for the management and supervision of the day-to-day operations of the corporation and shall perform such other duties as the chief executive officer may assign.
3.13 Treasurer. The treasurer shall have charge and custody of and be responsible for all funds, securities and valuable papers of the corporation. The treasurer shall deposit all funds in the depositories or invest them in the investments designated or approved by the board of directors or any officer or officers authorized by board of directors to make such determinations. The treasurer shall disburse funds under the direction of the board of directors or any officer or officers authorized by the board of directors to make such determinations. The treasurer shall keep full and accurate accounts of all funds received and paid on account of the corporation and shall render a statement of these accounts whenever the board of directors or the chief executive officer shall so request. If the board of directors has not elected a chief financial officer, the treasurer shall be the chief financial officer. If the board of directors has not elected a controller, the treasurer shall be the controller.
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3.14 Assistant Treasurers. The assistant treasurers, if any, shall have such powers and duties as the board of directors, the chief executive officer, the president or the treasurer may assign to them. If the board of directors elects more than one assistant treasurers, then it shall determine their respective titles, seniority and duties. If the treasurer is absent, disqualified from acting, unable to act or refuses to act, the most senior in rank of the assistant treasurers (as determined by the board of directors) shall have the powers of, and shall perform the duties of, the treasurer.
3.15 Controller. The controller, if any, shall be the chief accounting officer of the corporation and shall be in charge of its books of account, accounting records and accounting procedures.
3.16 Secretary. The secretary shall, to the extent practicable, attend all meetings of the stockholders and the board of directors. The secretary shall record the proceedings of the stockholders and the board of directors, including all actions by written consent, in a book or series of books to be kept for that purpose. The secretary shall perform like duties for any committee of the board of directors if the committee so requests. The secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the board of directors. Unless the corporation has appointed a transfer agent, the secretary shall keep or cause to be kept the stock and transfer records of the corporation. The secretary shall have such other powers and duties as the board of directors, the chief executive officer or the president may determine.
3.17 Assistant Secretaries. The assistant secretaries, if any, shall have such powers and duties as the board of directors, the chief executive officer, the president or the secretary may assign to them. If the board of directors elects more than one assistant secretary, then it shall determine their respective titles, seniority and duties. If the secretary is absent, disqualified from acting, unable to act or refuses to act, the most senior in rank of the assistant secretaries (as determined by the board of directors) shall have the powers of, and shall perform the duties of, the secretary.
Article 4. Capital Stock
4.1 Stock Certificates. The corporation’s shares of stock shall be represented by certificates, provided that the board of directors may, subject to the limits imposed by law, provide by resolution or resolutions that some or all of any or all classes or series shall be uncertificated shares. Shares of stock represented by certificates shall be in such form as shall be approved by the board of directors. Stock certificates shall be numbered in the order of their issue and shall be signed by or in the name of the corporation by (i) the chairperson or vice chairperson, if any, of the board of directors, the president or a vice president and (ii) the treasurer, an assistant treasurer, the secretary or an assistant secretary. Any or all of the signatures on a certificate may be a facsimile. In case any officer, transfer agent or registrar who signed or whose facsimile signature has been placed upon a certificate shall have ceased to be an officer, transfer agent or registrar before such certificate is issued, it may be issued by the corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue. Each certificate that is subject to any restriction on transfer shall have conspicuously noted on its face or back either the full text of the restriction or a statement of the existence of the restriction. Each certificate shall have on its face or back a statement that the corporation will furnish without charge to each stockholder who so requests the powers, designations, preferences and relative, participating, optional or other special rights of each class of stock or series thereof and the qualifications, limitations or restrictions of such preferences or rights.
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4.2 Registration; Registered Owners. The name of each person owning a share of the corporation’s capital stock shall be entered on the books of the corporation together with the number of shares owned, the date or dates of issue and the number or numbers of the certificate or certificates, if any, covering such shares. The corporation shall be entitled to treat the record holder of stock as shown on its books as the owner of such stock for all purposes regardless of any transfer, pledge or other disposition of such stock until the shares have been properly transferred on the books of the corporation. Except as required by law or statute or these bylaws, no person shall be recognized by the corporation as holding any share upon any trust and the corporation shall not be bound by or compelled in any way to recognize (even when having notice thereof) any equitable, contingent, future or partial interest in any share or (except only as by law or statute or these bylaws provided or as ordered by a court of competent jurisdiction) any other rights in respect of any share except an absolute right to the entirety thereof in its registered owner.
4.3 Stockholder Addresses. It shall be the duty of each stockholder to notify the corporation of its address.
4.4 Transfer of Shares. Registration of transfer of shares of the corporation’s stock shall be made only on the books of the corporation at the request of the registered holder or of the registered holder’s duly authorized attorney (as evidenced by a duly executed power of attorney provided to the corporation) and upon surrender of the certificate or certificates representing those shares, if in certificated form, properly endorsed or accompanied by a duly executed stock power. The board of directors may make further rules and regulations concerning the transfer and registration of shares of stock and the certificates representing them and may appoint a transfer agent or registrar or both and may require all stock certificates to bear the signature of either or both.
4.5 Lost, Stolen, Destroyed or Mutilated Certificates. The corporation may issue a new stock certificate of stock in the place of any certificate theretofore issued by it alleged to have been lost, stolen, destroyed or mutilated. The board of directors may require the owner of the allegedly lost, stolen or destroyed certificate, or the owner’s legal representatives, to give the corporation such bond or such surety or sureties as the board of directors, in its sole discretion, deems sufficient to indemnify the corporation against any claim that may be made against it on account of the alleged loss, theft or destruction or the issuance of such new certificate and, in the case of a certificate alleged to have been mutilated, to surrender the mutilated certificate.
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4.6 Personal Representative Recognized on Death. In the case of the death of a stockholder, the survivor or survivors where the deceased was a joint registered holder, and the legal personal representative of the deceased where he was the sole holder, shall be the only persons recognized by the corporation as having any title to his interest in the shares. Before recognizing any legal personal representative the board of directors may require him to deliver to the corporation the original or a court-certified copy of a grant of probate or such other evidence and documents as the board of directors consider appropriate in order to establish the right of the personal representative to such title to the interest in the shares of the deceased stockholder.
4.7 Death or Bankruptcy. Upon the death or bankruptcy of a stockholder, his personal representative or trustee in bankruptcy, although not a stockholder, shall have the same rights, privileges and obligations that attach to the shares formerly held by the deceased or bankrupt stockholder if the documents required by the NRS shall have been deposited with the corporation. This Section does not apply on the death of a stockholder with respect to shares registered in his name and the name of another person in joint tenancy.
4.8 Persons in Representative Capacity. Any person becoming entitled to a share in consequence of the death or bankruptcy of a stockholder shall, upon such documents and evidence being produced to the corporation as the NRS requires or who becomes entitled to a share as a result of an order of a Court of competent jurisdiction or a statute, have the right either to be registered as a stockholder in his representative capacity in respect of such share, or, if he is a personal representative, instead of being registered himself, to make such transfer of the share as the deceased or bankrupt person could have made; but the board of directors shall, as regards a transfer by a personal representative or trustee in bankruptcy, have the same right, if any, to decline or suspend registration of a transferee as they would have in the case of a transfer of a share by the deceased or bankrupt person before the death or bankruptcy.
Article 5. General Provisions
5.1 Waiver of Notice. Any stockholder or director may execute a written waiver or give a waiver by electronic transmission of notice of the meeting, either before or after such meeting. Any such waiver shall be filed with the records of the corporation. If any stockholder or director shall be present at any meeting it shall constitute a waiver of notice of the meeting, except when that stockholder or director attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. A waiver of notice of meeting need not specify the purposes of the meeting.
5.2 Electronic Transmissions. For purposes of these bylaws, “electronic transmission” shall mean a form of communication not directly involving the physical transmission of paper that satisfies the requirements with respect to such communications contained in the NRS.
5.3 Fiscal Year. The fiscal year of the corporation shall be fixed by resolution of the board of directors.
5.4 Voting Stock of Other Organizations. Except as the board of directors may otherwise designate, each of the chief executive officer and the treasurer may waive notice of, and act as, or appoint any person or persons to act as, proxy or attorney-in-fact for the corporation (with power of substitution) at any meeting of the stockholders, members or other owners of any other corporation or organization the securities or ownership interests of which are owned by the corporation.
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5.5 | Corporate Seal. The Corporation shall have no seal. |
5.6 Amendment of Bylaws. These bylaws, including any bylaws adopted or amended by the stockholders, may be amended or repealed by the board of directors.
Article 6. Indemnification
6.1 Indemnification. The corporation shall, to the fullest extent permitted by law, indemnify every person who is or was a party or is or was threatened to be made a party to any action, suit or proceeding, whether civil, criminal, administrative or investigative (an “Action”), by reason of the fact that such person is or was a director or officer of the corporation or is or was serving at the request of the corporation as a director, officer, trustee, plan administrator or plan fiduciary of another corporation, partnership, limited liability company, trust, employee benefit plan or other enterprise (an “Indemnified Person”), against all expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement or other disposition that the Indemnified Person actually and reasonably incurs in connection with the Action and shall reimburse each such person for all legal fees and expenses reasonably incurred by such person in seeking to enforce its rights to indemnification under this Article (by means of legal action or otherwise).
6.2 Advancement of Expenses. Upon written request from an Indemnified Person, the corporation shall pay the expenses (including attorneys’ fees) incurred by such Indemnified Person in connection with any Action in advance of the final disposition of such Action. The corporation’s obligation to pay expenses pursuant to this Section shall be contingent upon the Indemnified Person providing the undertaking required by the NRS.
6.3 Non-Exclusivity. The rights of indemnification and advancement of expenses contained in this Article shall not be exclusive of any other rights to indemnification or similar protection to which any Indemnified Person may be entitled under any agreement, vote of stockholders or disinterested directors, insurance policy or otherwise.
6.4 Heirs and Beneficiaries. The rights created by this Article shall inure to the benefit of each Indemnified Person and each heir, executor and administrator of such Indemnified Person.
6.5 Effect of Amendment. Neither the amendment, modification or repeal of this Article nor the adoption of any provision in these bylaws inconsistent with this Article shall adversely affect any right or protection of an Indemnified Person with respect to any act or omission that occurred prior to the time of such amendment, modification, repeal or adoption.
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Exhibit 5.1
ERWIN THOMPSON FAILLERS | ||
241 RIDGE STREET, SUITE 210 | OFFICE (775) 786-9494 | |
RENO, NEVADA 89501 | DIRECT (775) 825-4300 | |
THOMAS P. ERWIN | FAX (775) 786-1180 | |
FRANK W. THOMPSON | jfaillers@renolaw.com | |
JEFF N. FAILLERS | renolaw.com | |
February 1, 2022 | ||
JR Resources Corp. | ||
1588-609 Granville Street | ||
Vancouver, BC V7Y 1G5 |
Re: Registration Statement on Form S-4
Dear Ladies and Gentlemen:
We have acted as special counsel to JR Resources Corp., a Nevada corporation (the “Company”), in connection with the registration statement on Form S-4 filed by the Company with the Securities and Exchange Commission (the “Commission”) (as the same may be amended from time to time, the “Registration Statement”, to which this opinion is an exhibit) under the Securities Act of 1933, as amended (the “Securities Act”), relating to the proposed issuance of up to 75,199,454 shares of the Company’s common stock, par value $0.001 per share (the “Shares”), and up to 7,616,374 shares of the Company’s common stock underlying warrants (together with the Shares, the “Securities”) in connection with the mergers contemplated by the Amended and Restated Agreement and Plan of Merger, dated September 10, 2021, as amended (the “Merger Agreement”), by and among Dakota Territory Resource Corp., a Nevada corporation, the Company, DGC Merger Sub I Corp., a Nevada corporation, and DGC Merger Sub II LLC, a Nevada limited liability company.
We have examined such documents and have reviewed such questions of law as we have considered necessary or appropriate for the purposes of our opinions set forth below. In rendering our opinions set forth below, we have assumed the authenticity of all documents submitted to us as originals, the genuineness of all signatures and the conformity to authentic originals of all documents submitted to us as copies. We have also assumed the legal capacity for all purposes relevant hereto of all natural persons. As to questions of fact material to our opinions, we have relied upon certificates or comparable documents of officers and other representatives of the Company and of public officials.
Based on the foregoing, we are of the opinion that the Securities, when issued, delivered and paid for pursuant to the terms of the Merger Agreement, as contemplated by the Registration Statement, will be validly issued, fully paid and non-assessable.
Our opinions expressed above are limited to the laws of the State of Nevada.
[Remainder of page intentionally left blank.]
JR Resources Corp.
Registration Statement on Form S-4
February 1, 2022
Page 2
We hereby consent to the filing of this opinion as an exhibit to the Registration Statement, and to the reference to our firm under the heading “Legal Matters” in the prospectus constituting part of the Registration Statement. In giving this consent, we do not admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations of the Commission thereunder.
Very truly yours, | |
/s/ Jeff N. Faillers | |
Jeff N. Faillers |
Exhibit 8.1
December 20, 2021
Dakota Territory Resource Corp.
106 Glendale Dr., Suite A
Lead, S.D. 57754
Ladies and Gentlemen:
We have acted as special U.S. tax counsel to Dakota Territory Resource Corp., a Nevada corporation (the “Company”), in connection with the Agreement and Plan of Merger (the “Merger Agreement”), dated as of September 10, 2021, by and among the Company, JR Resources Corp., a Nevada corporation (“JR”), DGC Merger Sub I Corp., a Nevada corporation and a direct, wholly-owned subsidiary of JR (“Merger Sub 1”), and DGC Merger Sub II LLC, a Nevada limited liability company and a direct, wholly-owned subsidiary of JR (“Merger Sub 2”), pursuant to which (i) Merger Sub 1 will merge with and into the Company, with the Company surviving as a wholly-owned subsidiary of JR (the “First Merger”), and (ii) as soon as practicable following the effective time of the First Merger, the Company will merge with and into Merger Sub 2, with Merger Sub 2 surviving as a wholly-owned subsidiary of JR (the “Second Merger,” and together with the First Merger, the “Mergers”). In connection with the registration statement on Form S-4 filed by JR with the Securities and Exchange Commission (the “SEC”) on October 25, 2021 (as amended or supplemented through the date hereof, the “Registration Statement”), we are rendering our opinion (the “Opinion”) concerning certain U.S. federal income tax consequences of the Mergers.
In preparing our Opinion, we have examined and relied on originals or copies, certified or otherwise identified to our satisfaction of (i) the Registration Statement, (ii) the Merger Agreement and (iii) such other documents and information as we have deemed necessary or appropriate to render our Opinion. In addition, we have relied upon the accuracy and completeness of certain statements and representations made by JR and the Company, including those set forth in letters dated as of the date hereof from an officer of each of JR and the Company (the “Officer’s Certificates”). For purposes of rendering our Opinion, we have assumed that such statements and representations are and will continue to be accurate and complete without regard to any qualification as to knowledge, belief, intent or otherwise. Our Opinion assumes and is expressly conditioned on, among other things, the initial and continuing accuracy and completeness of the facts, information, covenants and representations set forth in the documents referred to above and the statements and representations made by JR and the Company, including those set forth in the Officer’s Certificates. For purposes of our Opinion, we have not independently verified all of the facts, representations and covenants set forth in the Officer’s Certificates, the Registration Statement, or in any other document. We have also assumed that the Mergers will be consummated in the manner contemplated by the Registration Statement and the Merger Agreement, and that none of the terms or conditions contained therein will be waived or modified.
Dakota Territory Resource Corp.
December 20, 2021
Page 2
For purposes of our Opinion, we have assumed the genuineness of all signatures, the legal capacity of all natural persons, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, electronic or photostatic copies and the authenticity of the originals of such copies. In making our examination of documents executed, or to be executed, we have assumed that the parties thereto had, or will have, the power, corporate or other, to enter into and to perform all obligations thereunder.
In rendering our Opinion, we have considered applicable provisions of the Internal Revenue Code of 1986, as amended (the “Code”), Treasury regulations promulgated thereunder, pertinent judicial authorities, published opinions and administrative pronouncements of the Internal Revenue Service (the “IRS”), and such other authorities as we have considered relevant, all as they exist on the date hereof and all of which are subject to change or differing interpretations, possibly on a retroactive basis. A change in any of the authorities upon which our Opinion is based or any material change in the documents referred to above could affect our conclusion herein. There can be no assurance, moreover, that our Opinion will be accepted by the IRS or, if challenged, by a court.
Based upon and subject to the foregoing and the limitations, qualifications, exceptions and assumptions set forth herein and in the Registration Statement under the heading “U.S. Federal Income Tax Consequences of the Mergers for Dakota Stockholders,” we are of the opinion that, under current law, the Mergers, taken together, will be treated as a transaction that qualifies as a “reorganization” within the meaning of Section 368(a) of the Code.
Dakota Territory Resource Corp.
December 20, 2021
Page 3
Except as set forth above, we express no opinion to any party as to any tax consequences, whether U.S. federal, state, local or foreign, of the transactions described in the Registration Statement or any transaction related thereto. Our Opinion has been prepared in connection with the Mergers and the Registration Statement and may not be relied upon for any other purpose without our prior written consent. Our Opinion is being delivered prior to the consummation of Dakota Territory Resource Corp. the proposed transactions and therefore is prospective and dependent on future events. Our Opinion is expressed as of the date hereof, and we disclaim any obligation to supplement or revise our Opinion to reflect any legal developments or factual matters arising subsequent to the date hereof or the impact of any information, document, certificate, statement, representation or assumption relied upon herein that becomes inaccurate.
We consent to the use of our name in the Registration Statement and to the filing of our Opinion with the SEC as an exhibit to the Registration Statement. In giving this consent, we do not hereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the SEC promulgated thereunder.
Very truly yours, | |
/s/ Skadden, Arps, Slate, Meagher & Flom LLP |
Exhibit 10.1
AGREEMENT
This Agreement (the “Agreement”) is made as of the 26th day of May, 2020, by and between Dakota Territory Resource Corp., a Nevada corporation (the “Company”), and JR Resources Corp., a Nevada corporation (“JR”).
WHEREAS, concurrently upon execution of this Agreement, JR has agreed to lend and will fund the Company an additional amount of $1,150,000 pursuant to the Amended Note (as defined below).
WHEREAS, subject to the terms and conditions set forth in this Agreement, the Company desires to grant a subscription right to JR to purchase from the Company a certain amount of Shares (as defined below) on or prior to the Termination Date (as defined below), pursuant to the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the $1,150,000 loan provided by JR to the Company, the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged, the Company and JR agree as follows:
ARTICLE I.
DEFINITIONS
1.1 Definitions and U.S. Dollars. In addition to the terms defined elsewhere in this Agreement, for all purposes of this Agreement, the following terms shall have the meanings indicated in this Section 1.1. All dollar amounts and per Share prices are expressed in United States Dollars.
“Action” means any action, suit, written inquiry, written notice of violation, proceeding (including any partial proceeding such as a deposition) or investigation pending or threatened in writing against or affecting the Company or any of its properties before or by any court, arbitrator, governmental or administrative agency, regulatory authority (federal, state, county, local or foreign), stock market, stock exchange or trading facility.
“Affiliate” means any Person that, directly or indirectly through one or more intermediaries, controls or is controlled by or is under common control with a Person, as such terms are used in and construed under Rule 144.
“Amended Bylaws” means the amended and restated bylaws to be adopted pursuant to Section 2.2(a)(ii)(I), incorporating the relevant provisions of Section 6.1 of this Agreement and consistent with bylaws of publicly traded companies incorporated in Nevada.
“Amended Note” shall mean the amended and restated promissory note dated the date hereof in the principal amount of $1,450,000 attached hereto as Exhibit A, of which $1,150,000 is being funded by JR upon execution of this Agreement ($300,000 of which was previously advanced) as set forth in Section 2.1 hereof.
“Anti-Money Laundering Laws” has the meaning set forth in Section 3.1(o).
“Approved Business Combination” has the meaning set forth in Section 6.1(d)(iii).
“Approved Trading Market” means whichever of the New York Stock Exchange, the NYSE American, the NASDAQ Global Select Market, the NASDAQ Global Market, or the NASDAQ Capital Market.
“Articles” means the articles of incorporation of the Company.
“Bad Actor” shall have the meaning set forth in Rule 506(d) of Regulation D promulgated under the Securities Act.
“Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Change of Control Closing” means a Closing that results in JR acquiring Shares, when aggregated with shares of Common Stock previously acquired or beneficially owned, that exceed 49.9% of the actually issued and outstanding shares of Common Stock, by satisfaction of the conditions set forth in Article II and Article V.
“Change of Control Closing Date” means the particular date of the Change of Control Closing that is the Business Day immediately following the date on which all of the conditions and agreements set forth in Article II and Article V hereof are satisfied, or such other date as the parties may agree, provided that such Change of Control Closing occurs on or prior to the Termination Date.
“Closing” means the decision by JR to exercise all or part of its right to purchase the Shares, in one or more closings, by satisfaction of the conditions set forth in Article II and Article V; reference to “Closing” includes “Change of Control Closing.”
“Closing Date” means the particular date of each Closing (if there is more than one) that is the Business Day immediately following the date on which all of the conditions and agreements set forth in Article II and Article V hereof are satisfied, or such other date as the parties may agree, provided that such Closing shall occur on or prior to the Termination Date; references to “Closing Date” also includes references to “Change of Control Closing Date”.
“Common Stock” means the Company common stock, par value $0.001 per share.
“Company Board” means the board of directors of the Company.
“Company Deliverables” has the meaning set forth in Section 2.2(a).
“Company Designee(s)” means two of the current Company directors, provided that none is a Bad Actor.
“Disclosure Materials” has the meaning set forth in Section 3.1(h).
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“Effective Time” means the earlier of (i) 14 Business Days after the Change of Control Closing Date and (ii) 10 days after the Schedule 14f-1 is filed with the SEC and mailed to Company Shareholders as contemplated in Section 6.1(a) of this Agreement.
“Election Notice” means Schedule 1 to this Agreement that sets forth the notice JR shall deliver to the Company on or prior to a Closing stating its decision to purchase an amount of Shares for the Investment Amount.
“Environmental Law” means laws applicable in respect of the protection of the natural environment or any species or organisms that make use of it.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FCPA” means Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.
“FINRA” means the Financial Industry Regulatory Authority.
“Foreign Bank” has the meaning set forth in Section 3.2(n)(iv).
“GAAP” means U.S. generally accepted accounting principals.
“Investment Amount” means an amount up to $21,385,000, less the dollar conversion amount of the Amended Note, as stated in the Election Notice; provided that such Investment Amount shall be increased, if any New Equity is issued, by the product of 1.8 times the dollar amount raised by the issuance of New Equity.
“JR Deliverables” has the meaning set forth in Section 2.2(b).
“JR Designee(s)” means three director nominees designated by JR, provided that none of the designees is a Bad Actor.
“Material Adverse Effect” means any of (i) a material and adverse effect on the legality, validity or enforceability of any Transaction Document, (ii) a material and adverse effect on the results of operations, assets, prospects, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) an adverse impairment to the Company’s ability to perform on a timely basis its obligations under any Transaction Document.
“Material Amendment” means an amendment that amends or seeks to amend the Articles or Amended Bylaws in any manner that would (i) adversely affect the voting or other rights, interests or economic value of the Common Stock held by any Company stockholder, (ii) affect the voting or other rights, interests or economic value of the Common Stock held by any Company stockholder disproportionately as compared to JR, (iii) seek to effect a reverse stock split, recapitalization, reclassification of the Common Stock of the Company, or (iv) amends articles of the Amended Bylaws addressing director matters and amendments.
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“New Equity” shall mean Common Stock financings subsequent to the date of this Agreement and prior to the Termination Date, excluding (i) any shares of Common Stock issued upon, and any proceeds received from, the exercise of Company derivative securities that are issued and outstanding on the date of this Agreement, (ii) Common Stock issued upon conversion of the Amended Note and (iii) any equity funding provided by JR pursuant to this Agreement or otherwise.
“OFAC” means the Office of Foreign Assets Control of the U.S. Treasury Department.
“OFAC Programs” has the meaning set forth in Section 3.2(n)(i).
“Per Share Purchase Price” means $0.15.
“Person” means an individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision thereof) or other entity of any kind.
“Principal Market” means the OTC:QB tier of the OTC Market Group in which the Common Stock of the Company is traded.
“Proceeding” means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened.
“Rule 144” means Rule 144 promulgated by the SEC pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the SEC having substantially the same effect as such Rule.
“Sale of the Company” means any merger, consolidation, business combination, tender offer or exchange offer, pursuant to which all the issued and outstanding capital stock of the Company is sold in a single transaction in which all stockholders of the Company are offered the same consideration.
“Sanctions” has the meaning set forth in Section 3.1(n).
“SEC” means the Securities and Exchange Commission.
“SEC Reports” has the meaning set forth in Section 3.1(h).
“Securities” means collectively the Shares and Amended Note.
“Securities Act” means the Securities Act of 1933, as amended.
“Shares” means the shares of Common Stock purchased by JR pursuant to the Election Notice in an amount up to 142,566,667 shares of Common Stock, less the shares of Common Stock issued upon conversion of the Amended Note, provided that the amount of Shares shall be increased, if any New Equity is issued, by the product of 1.8 times the number of shares of Common Stock issued in the New Equity.
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“South Dakota Courts” means the state courts in the city of Deadwood, County of Lawrence, South Dakota, and in federal courts in the city of Rapid City, County of Pennington, South Dakota.
“Standstill Period” means the period ending on the earlier of (i) 18 months from the Change of Control Closing Date and (ii) the uplisting of the Common Stock (or the common stock of a successor-in-interest to the Company) to an Approved Trading Market (including an uplisting by a successor company in an Approved Business Combination).
“Subsidiary” means any “significant subsidiary” as defined in Rule 1-02(w) of the Regulation S-X promulgated by the SEC under the Exchange Act.
“Technical Committee” means a committee of four members, two appointed by the Company and two appointed by JR.
“Termination Date” shall mean 5:00 p.m. Vancouver time on October 15, 2020, unless terminated prior thereto by (i) mutual agreement of JR and the Company or (ii) the purchase by JR of the maximum number of Shares as provided for in this Agreement.
“Third Party Purchaser” means any Person who is not JR, an Affiliate of JR, nor any Person acting at its discretion or on its behalf.
“Trading Day” means (i) a day on which the Common Stock is traded on an approved Trading Market (other than the Principal Market), or (ii) if the Common Stock is not listed on an approved Trading Market, a day on which the Common Stock is traded in the over-the-counter market; provided, that in the event that the Common Stock is not listed or quoted as set forth in (i) or (ii) hereof, then Trading Day shall mean a Business Day.
“Transaction Documents” means this Agreement and the exhibits (including schedules thereto) attached to this Agreement.
“Vote its Shares” means, with respect to JR, to vote or cause to be voted any shares of Common Stock beneficially owned by JR or its Affiliates at any annual or special meeting of Company stockholders.
ARTICLE II.
DEBT FINANCING AND GRANT OF PURCHASE RIGHT
2.1 | Closing of Debt Financing and Exercise of Purchase Right. |
(a) Concurrently upon execution of this Agreement, JR and the Company shall execute the Amended Note and JR shall immediately wire transfer to the Company $1.15 million. JR’s failure to fund (or provide to the Company notice of next day wire confirmation) the $1.15 million loan to the Company within two Business Days of the date of this Agreement will nullify and result in the termination of this Agreement and all subscription rights set forth in Section 2.1(b) below.
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(b) Subject to the terms and conditions set forth in this Agreement (including negotiation of deliverables to be mutually agreed upon as set forth in Section 2.2 and the satisfaction of the conditions set forth in Article V), which right expires on the Termination Date, JR shall have the right, at its sole option and discretion, to purchase from the Company the Shares as set forth in the Election Notice, for an Investment Amount (based on the Per Share Purchase Price as may be adjusted pursuant to Section 7.8 of this Agreement herein) as set forth in the Election Notice. Such Closing of the purchase of the Shares shall take place at the offices of the Company on the Closing Date or at such other location or time as the parties may agree.
2.2 | Closing Deliveries. |
(a) The Company shall deliver or cause to be delivered to JR the following (the “Company Deliverables”) at
(i) | a Closing that is not a Change of Control Closing: |
(A) a certificate evidencing a number of Shares equal to the Investment Amount divided by the Per Share Purchase Price as set forth in the Election Notice, registered in the name of JR;
(B) a certificate of the Company’s chief executive officer, dated the Closing Date, certifying as to the satisfaction of the conditions contained in Section 5.1(a)-(d);
(C) a certificate of the Company’s chief executive officer, dated the Closing Date, certifying the truth and correctness of the following documents, a copy of each of which shall be attached to such certificate (1) the Company’s Articles, (2) the Company’s bylaws, and (3) resolutions of the Company Board authorizing the execution, delivery and performance of this Agreement, the issuance and sale of the Shares to JR, and other Company Deliverables at a Closing requiring Company Board approval; and
(D) a use of proceeds schedule to be mutually agreed upon by JR and the Company, each in their respective sole discretion.
(ii) | a Change of Control Closing: |
(A) a certificate evidencing a number of Shares equal to the Investment Amount divided by the Per Share Purchase Price as set forth in the Election Notice, registered in the name of JR;
(B) a resolution(s) adopted by the Company Board, effective on the Change of Control Closing or the Effective Time, as applicable, whereby (i) one of the current Company directors resigns and the two remaining Company directors appoint the JR Designees, (ii) the Amended Bylaws are adopted and approved, and (iii) other Company Deliverables requiring Company Board approval at a Change of Control Closing are adopted and delivered;
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(C) a form of Schedule 14f-1 in a form acceptable to JR to be filed with the SEC and mailed to the Company shareholders and a form of the Form 8-K acceptable to JR to be filed with the SEC;
(D) a certificate of the Company’s chief executive officer, dated the Change of Control Closing Date, certifying as to the satisfaction of the conditions contained in Section 5.1(a)-(d);
(E) a certificate of the Company’s chief executive officer, dated the Change of Control Closing Date, certifying the truth and correctness of the following documents, a copy of each of which shall be attached to such certificate: (A) the Company’s Articles, (B) the Company’s bylaws, and (C) resolutions of the Company Board authorizing the execution, delivery and performance of this Agreement, the issuance and sale of the Shares to JR, and other Company Deliverables at a Change of Control Closing requiring Company Board approval;
(F) executed employment agreements for executive officers of the Company, to be mutually agreed to by JR and the Company, each in their respective sole discretion, consistent with employment agreements adopted by similar situated publicly traded companies;
(G) acknowledgment of a use of proceeds schedule to be mutually agreed upon by JR and the Company, each in their respective sole discretion;
(H) executed equity grants pursuant to the compensation plan as contemplated in Section 4.7 of the Agreement to be mutually agreed to by JR and the Company, each in their respective sole discretion, consistent with plans and equity grants adopted by similar situated publicly traded companies; and
(I) executed Amended Bylaws to be mutually agreed to by JR and the Company, each in their respective sole discretion.
(b) JR shall deliver or cause to be delivered to the Company the following (the “JR Deliverables”) at
(i) | a Closing that is not a Change of Control Closing: |
(A) the completed and executed Election Notice along with the Investment Amount, in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose;
(B) a certificate of JR’s chief executive officer, dated the Closing Date, certifying as to the satisfaction of the conditions contained in Section 5.2(a)-(d); and
(C) acknowledgment of, and agreement to be bound by, the use of proceeds schedule referred to in Section 2.2(a)(i)(D) to be mutually agreed upon by JR and the Company.
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(ii) | a Change of Control Closing: |
(A) the completed and executed Election Notice along with the Investment Amount, in immediately available funds, by wire transfer to an account designated in writing by the Company for such purpose;
(B) | identification of the JR Designees; |
(C) | approval of the Schedule 14f-1 and Form 8-K to be filed with the SEC; |
(D) acknowledgment and agreement by JR, in a form reasonably acceptable to the Company, to be bound by and to implement the resolutions adopted by the Company Board as set forth in Section 2.2(a)(ii)(B);
(E) a certificate of JR’s chief executive officer, dated the Change of Control Closing Date, certifying as to the satisfaction of the conditions contained in Section 5.2(a)-(d);
(F) executed employment agreements, referred to in Section 2.2(a)(ii)(F) to be mutually agreed upon by JR and the Company;
(G) acknowledgment of, and agreement to be bound by, the use of proceeds schedule referred to in Section 2.2(a)(ii)(G) to be mutually agreed upon by JR and the Company;
(H) acknowledgment of the Amended Bylaws referred to in Section 2.2(a)(ii)(I) to be mutually agreed upon by JR and the Company; and
(I) acknowledgment of the equity grants pursuant to the compensation plan referred to in Section 2.2(a)(ii)(H) to be mutually agreed upon by JR and the Company.
ARTICLE III.
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company. The Company hereby makes the following representations and warranties to JR:
(a) Subsidiaries. The Company has no direct or indirect Subsidiaries, except as set forth in the SEC Reports.
(b) Organization and Qualification. The Company is duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted and proposed to be conducted. The Company is not in violation of any of the provisions of its Articles or bylaws. The Company is duly qualified to conduct its business and is in good standing as a foreign corporation in South Dakota.
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(c) Authorization; Enforcement. The Company has the requisite corporate power and authority to enter into and to consummate on the date of this Agreement or at Closing, respectively, the transactions contemplated by each of the Transaction Documents and otherwise to carry out its obligations thereunder. The execution and delivery of each of the Transaction Documents by the Company as contemplated by this Agreement and the consummation by it of the transactions contemplated thereby (on the date of this Agreement or at Closing, respectively) have been duly authorized by all necessary action on the part of the Company and no further action is required by the Company in connection therewith. Each Transaction Document has been (or upon delivery will have been) duly executed by the Company and, when delivered in accordance with the terms hereof, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.
(d) No Conflicts. The execution, delivery and performance of the Transaction Documents by the Company as contemplated by this Agreement and the consummation by the Company of the transactions contemplated thereby do not and will not (i) conflict with or violate any provision of the Company’s Articles or bylaws, or (ii) conflict with, or constitute a default (or an event that with notice or lapse of time or both would become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation (with or without notice, lapse of time or both) of, any agreement, credit facility, debt or other instrument (evidencing a Company debt or otherwise) or other understanding to which the Company is a party or by which any property or asset of the Company is bound or affected, or (iii) result in a violation of any law, rule, regulation, order, judgment, injunction, decree or other restriction of any court or governmental authority to which the Company is subject (including federal and state securities laws), or by which any property or asset of the Company is bound or affected; except in the case of each of clauses (ii) and (iii), such as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
(e) Filings, Consents and Approvals. The Company is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other Person in connection with the execution, delivery and performance by the Company of the Transaction Documents as contemplated by this Agreement, other than (i) filings required by state securities laws, if applicable, (ii) the filing of a Notice of Sale of Securities on Form D with the SEC under Regulation D of the Securities Act, if deemed required, (iii) the filings required in accordance with Section 4.2, and (iv) those that have been made or obtained prior to the date of this Agreement.
(f) Issuance of the Amended Note and Shares. The issuance of each of the Amended Note and the Shares have been duly authorized and, when issued and paid for in accordance with the Transaction Documents, will be duly and validly issued, fully paid and nonassessable, free and clear of all liens. Assuming the accuracy of the representations and warranties of JR made herein, the issuance by the Company of the Securities is exempt from registration under the Securities Act and all applicable state securities laws.
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(g) Capitalization. As of the date of this Agreement and not giving effect to the sale of the Securities, the authorized capital stock of the Company is (i) 300,000,000 shares of Common Stock, of which 65,416,787 shares of Common Stock are issued and outstanding and derivative securities are issued and outstanding to purchase an aggregate of 13,950,000 shares of Common Stock, and (ii) 10,000,000 shares of blank check preferred stock, of which no shares of blank check preferred stock are issued and outstanding. All outstanding shares of capital stock are validly issued, fully paid and nonassessable. To the knowledge of the officers of the Company, no holder of any shares of the Company’s capital stock has any right of rescission, by law or contract, with respect to any of such shares. No security holders of the Company are entitled to preemptive or similar rights, and no Person has any right of first refusal, preemptive right, right of participation, or any similar right to participate in any issuance of capital stock of the Company, including the transactions contemplated by the Transaction Documents. Except as specified in the SEC Reports or set forth in this Agreement, there are no outstanding options, warrants, rights to subscribe to, calls or commitments of any character whatsoever relating to, or securities, rights or obligations convertible into or exchangeable for, or agreements or understandings giving any Person any right to acquire, any shares of Common Stock, or contracts, commitments, understandings or arrangements by which the Company is or may become bound to issue additional shares of Common Stock, or securities or rights convertible or exchangeable into shares of Common Stock.
(h) SEC Reports; Financial Statements. The Company has filed all reports required to be filed by it under the Securities Act and the Exchange Act, including pursuant to Section 13(a) or 15(d) thereof, for the twenty-four months preceding the date hereof (the foregoing materials, as amended, filed within the twenty-four months preceding the date hereof being collectively referred to herein as the “SEC Reports” and, together with the exhibits and schedules to this Agreement, the “Disclosure Materials”). The SEC Reports complied in all material respects with the requirements of the Securities Act and the Exchange Act and the rules and regulations of the SEC promulgated thereunder, and none of the SEC Reports, when filed, 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. The financial statements of the Company included in the SEC Reports comply in all material respects with applicable accounting requirements and the rules and regulations of the SEC with respect thereto as in effect at the time of filing. Such financial statements have been prepared in accordance with GAAP applied on a consistent basis during the periods involved, except as may be otherwise specified in such financial statements or the notes thereto, and fairly present in all material respects the financial position of the Company as of and for the dates thereof and the results of operations and cash flows for the periods then ended, subject, in the case of unaudited statements, to normal, immaterial, year-end audit adjustments. The Company engaged on March 6, 2020 Ham, Langston & Brezina, L.L.P., to audit the fiscal years ended March 31, 2020 and 2019 to replace its previous auditors LBB & Associates, Ltd., LLP, and in connection therewith, there may be audit adjustments to such fiscal year financial statements.
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(i) Press Releases. The press releases disseminated by the Company during the twenty-four months preceding the date of this Agreement taken as a whole do not contain any untrue statement of a material fact or omit 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 and when made, not misleading.
(j) Material Changes. Since the date of the latest unaudited financial statements included within the SEC Reports, except as specifically disclosed in the SEC Reports, subsequently disclosed in a filing with the SEC or a press release or as contemplated by, or set out in, this Agreement, (i) there has been no event, occurrence or development that has had or that would reasonably be expected to result in a Material Adverse Effect, (ii) the Company has not incurred any liabilities (contingent or otherwise) other than (A) trade payables, accrued expenses and other liabilities incurred in the ordinary course of business consistent with past practice or with respect to the transactions contemplated by this Agreement, (B) liabilities disclosed in filings made with the SEC or in a press release, or not required to be so reflected or disclosed, and (C) liabilities that would not have a Material Adverse Effect, (iii) the Company has not altered its method of accounting, (iv) the Company has not declared or made any dividend or distribution of cash or other property to its stockholders or purchased, redeemed or made any agreements to purchase or redeem any shares of its capital stock, (v) the Company has not issued any equity securities to any officer, director or Affiliate (other than certain derivative securities referenced in Section 3.1(g)), and (vi) the Company has not sold, exchanged or otherwise disposed of any of its assets or rights, other than in the ordinary course of business.
(k) Litigation. Except as disclosed in the SEC Reports, there is no Action which (i) adversely affects or challenges the legality, validity or enforceability of any of the Transaction Documents or the issuance of the Securities or (ii) would, if there were an unfavorable decision, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect. Neither the Company nor any director or officer thereof (in his or her capacity as such with respect to the Company), is or has been during the past twenty-four months the subject of any Action involving a claim of violation of or liability under federal or state securities laws or a claim of breach of fiduciary duty, except as specifically disclosed in the SEC Reports. There has not been during the past twenty-four months a written formal or informal inquiry involving the Company by the SEC, and to the knowledge of the Company, there is not pending any investigation by the SEC involving the Company or any current or former director or officer of the Company (in his or her capacity as such). The SEC has not issued any stop order or other order suspending the effectiveness of any registration statement filed by the Company under the Exchange Act or the Securities Act.
(l) Compliance. The Company (i) is not in default under or in violation of (and no event has occurred that has not been waived that, with notice or lapse of time or both, would result in a default by the Company under), nor has the Company received notice of a claim that it is in default under or that it is in violation of, any agreement or instrument to which it is a party or by which it or any of its properties is bound (except to the extent such default or violation has been waived), (ii) is not in violation of any order of any court, arbitrator or governmental body, and (iii) is not and has not been in violation of any statute, rule or regulation of any governmental authority, including without limitation all foreign, federal, state and local laws relating to taxes, employment and labor matters, except in each case as would not, individually or in the aggregate, have or reasonably be expected to result in a Material Adverse Effect.
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(m) Foreign Corrupt Practices. Neither the Company nor, to the knowledge of the officers of the Company, any Affiliate, agent or other Person associated with or acting on behalf of the Company, has (i) directly or indirectly, used any funds for unlawful contributions, gifts, entertainment or other unlawful expenses related to foreign or domestic political activity or to influence any action, (ii) made any direct or indirect unlawful payment to foreign or domestic government officials or employees or to any foreign or domestic political parties or campaigns from corporate funds, (iii) failed to disclose fully any contribution made by the Company (or made by any Person acting on its behalf of which the Company is aware) which is in violation of law, (iv) made any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (v) violated or is in violation of any provision of the FCPA.
(n) OFAC. Neither the Company nor, to the knowledge of the officers of the Company, any Affiliate of the Company is currently subject to any U.S. sanctions administered by OFAC (“Sanctions”); and the Company will not (and did not in connection with any prior offering or sale of its securities during the past two years), directly or indirectly, use the proceeds of any Company securities, or lend, contribute or otherwise make available such proceeds to any other Person for the purpose of financing the activities of any Person, or in any country or territory, that is currently or was or will be at the time of such funding, subject to any Sanctions administered by OFAC, or in any other manner that will result in a violation of any Sanctions by any Person.
(o) Anti-Money Laundering Laws. The operations and activities of the Company during the last twenty-four months have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines issued, administered or enforced by any governmental agency (collectively, the “Anti-Money Laundering Laws”); and no action, suit or proceeding by or before any court or governmental agency, authority or body or any arbitrator involving the Company or any of its Affiliates with respect to the Anti-Money Laundering Laws is pending or, to the knowledge of the Company’s officers, threatened.
(p) Insurance. The Company is insured by insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the business in which the Company is engaged as of the date hereof.
(q) Transactions With Affiliates and Employees. Except as set forth in the SEC Reports, none of the officers or directors of the Company, or any of their respective Affiliates or family members, is presently a party to any material transaction with the Company (other than for services as officers and directors to the Company) that is required to be disclosed in the SEC Reports and is not so disclosed.
(r) Tax Status. The Company (i) has made or filed all federal and state income and all other tax returns, reports and declarations required by any jurisdiction to which it is subject, (ii) has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due on such returns, reports and declarations, except those being contested in good faith or for which an extension has been filed and (iii) has set aside on its books provision reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and no officer of the Company knows of any basis for any such claim.
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(s) Certain Fees. No brokerage or finder’s fees or commissions are or will be payable by the Company to any broker, financial advisor or consultant, finder, placement agent, investment banker, bank or other Person with respect to the transactions contemplated by this Agreement.
(t) Certain Registration Matters. Assuming the accuracy of JR’s representations and warranties set forth in Section 3.2, no registration under the Securities Act is required for the offer and sale of the Securities by the Company to JR under the Transaction Documents. The Company has not granted or agreed to grant to any Person any rights (including “piggy-back” registration rights) to have any securities of the Company registered with the SEC.
(u) No Stockholder Approval Required. The offering, issuance and sale of the Securities pursuant to this Agreement, taking into account all other offerings of securities of the Company with which the same may be required to be integrated, do not require the approval of the Company’s stockholders under the Nevada Revised Statutes or the Articles.
(v) Listing and Maintenance Requirements. The Company has not, in the twenty-four months preceding the date hereof, received notice from the Principal Market to the effect that the Company is not in compliance with the listing or maintenance requirements thereof, including the requirements for causing the Common Stock to remain an OTC-Eligible Security within the meaning of FINRA Rule 6530. The Company is, and has no reason to believe that it will not in the foreseeable future continue to be, in compliance with the requirements for continued listing or trading of the Common Stock on the Principal Market, including the requirements of FINRA Rule 6530. The issuance and sale of the Securities under the Transaction Documents does not contravene the rules and regulations of the Principal Market.
(w) Title to Property and Assets. The Company owns and leases its properties. With respect to the property owned by the Company, such property is free and clear of all mortgages, deeds of trust, liens, encumbrances and security interests except (i) liens, encumbrances and security interests which arise in the ordinary course of business and do not have a Material Adverse Effect, and (ii) liens, encumbrances and security interests owned by JR. With respect to the property leased by the Company, it is in material compliance with each such lease.
(x) Investment Company. The Company is not, and is not an Affiliate of, and immediately following the Closing will not have become, an “investment company” within the meaning of the Investment Company Act of 1940, as amended.
(y) Environmental Matters. The Company (i) is and, in the previous three years has been, in compliance with all Environmental Laws in all material respects, and (ii) in the previous three years, the Company has not received any written notice, and no such notice has been threatened, from any governmental authority of any actual material non-compliance with any Environmental Law which would give rise to a material undischarged liability with respect to any of its properties.
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(z) No Additional Agreements. The Company does not have any agreement or understanding with JR with respect to the transactions contemplated by the Transaction Documents other than as specified in the Transaction Documents.
3.2 Representations and Warranties of JR. JR hereby represents and warrants to the Company as follows:
(a) Organization; Authority. JR is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization with the requisite corporate power and authority to enter into and to consummate the transactions contemplated by the applicable Transaction Documents and otherwise to carry out its obligations thereunder. The execution, delivery and performance by JR of the transactions contemplated by this Agreement have been duly authorized by all necessary corporate action. Each of the Transaction Documents has been duly executed by JR, and when delivered by JR in accordance with the terms hereof or thereof, will constitute the valid and legally binding obligation of JR, enforceable against it in accordance with its terms, except as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, liquidation or similar laws relating to, or affecting generally the enforcement of, creditors’ rights and remedies or by other equitable principles of general application.
(b) Investment Intent. JR is acquiring the Securities as principal for its own account for investment purposes only and not with a view to or for distributing or reselling such Securities or any part thereof. Subject to the immediately preceding sentence, nothing contained herein shall be deemed a covenant or agreement by JR to hold the Securities for any period of time. JR is acquiring the Securities hereunder in the ordinary course of its business. JR does not have any agreement or understanding, directly or indirectly, with any Person to distribute any of the Securities.
(c) JR Status. JR is an “accredited investor” as defined in Rule 501(a) under the Securities Act. Neither JR nor any of its officers, directors or 5% or greater shareholders are a registered broker-dealer under Section 15 of the Exchange Act. Neither JR nor any of its Affiliates are a Bad Actor.
(d) General Solicitation. JR is not purchasing the Securities as a result of any general solicitation or general advertising by the Company or its representatives, including but not limited to any advertisement, article, notice or other communication regarding the Securities published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar.
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(e) Access to Information. JR acknowledges that it has reviewed the Disclosure Materials and has been afforded (i) the opportunity to ask such questions as it has deemed necessary of, and to receive answers from, representatives of the Company concerning the terms and conditions of the offering of the Securities and the merits and risks of investing in the Securities, (ii) access to information about the Company and its respective financial condition, results of operations, business, properties, management and prospects sufficient to enable it to evaluate its investment, and (iii) the opportunity to obtain such additional information that the Company possesses or can acquire without unreasonable effort or expense that is necessary to make an informed investment decision with respect to the investment. JR is not relying on any Person, other than the Company and its officers, in making its investment decision. Neither such inquiries nor any other investigation conducted by or on behalf of JR or its representatives or counsel shall modify, amend or affect JR’s right to rely on the truth, accuracy and completeness of the Disclosure Materials and the Company’s representations and warranties contained in the Transaction Documents.
(f) Certain Trading Activities. JR has not directly or indirectly, nor has any Person acting on behalf of or pursuant to any understanding with JR, engaged in any transactions in the Common Stock of the Company (including, without limitation, any short sales involving the Company’s Common Stock) within the 6-month period preceding the date of this Agreement. JR covenants that neither it, nor any person acting on its behalf or pursuant to any understanding with it, will engage in any transactions in the securities of the Company (including short sales)
(a) prior to the time that the transactions contemplated by this Agreement are publicly disclosed, or (b) in violation of any laws or any rules or regulations of the SEC.
(g) Independent Investment Decision. JR has independently evaluated the merits and risks of its decision to purchase Securities pursuant to the Transaction Documents, the officers of JR have such knowledge, sophistication and experience in business and financial matters so as to be capable of evaluating the merits and risks of an investment in the Securities, and have so evaluated the merits and risks of such investment. JR is able to bear the economic risk of an investment in the Securities and, at the present time, is able to afford a complete loss of such investment.
(h) Consents and Approvals. JR need not give any notice to, make any filing with, or obtain any authorization, consent, or approval (i) of any person under any instrument, contract or agreement to which JR or any of its Affiliates is a party or (ii) of any government or governmental agency in order to execute and deliver the Transaction Documents, consummate the transactions contemplated hereby and thereby and perform its obligations hereunder and thereunder, other than those that have been or will be by the Closing Date given, made or obtained.
(i) Non-Contravention. Neither the execution nor the delivery of the Transaction Documents by JR, nor the consummation of the transactions contemplated hereby and thereby and the performance by JR of its obligations hereunder or thereunder will violate any constitution, statute, regulation, rule, injunction, judgment, order, decree, ruling, charge, or other restriction of any government, governmental agency or court to which JR is subject or any instrument, contract, or agreement to which JR or any of its Affiliates is a party.
(j) Finder. The Company will not be obligated to pay any broker’s commission, finder’s fee or success fee in connection with the transactions contemplated by the Transaction Documents as a result of any agreement or arrangement entered into by JR.
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(k) Restricted Securities. JR understands that the Securities have not been registered under the Securities Act, by reason of a specific exemption from the registration provisions of the Securities Act which depends upon, among other things, the bona fide nature of the investment intent and the accuracy of JR’s representations as expressed herein. JR understands that the Securities are “restricted securities” under applicable U.S. federal and state securities laws and that, pursuant to these laws, JR must hold the Securities indefinitely unless they are registered with the SEC and qualified by state authorities, or an exemption from such registration and qualification requirements is available. JR acknowledges that the Company has no obligation to register or qualify the Securities for resale under federal or state securities laws. JR acknowledges that if an exemption from registration or qualification is available, it may be conditioned on various requirements including, but not limited to, the time and manner of sale, the holding period for the Securities, and on requirements relating to the Company which are outside of JR’s control, and which the Company is under no obligation and may not be able to satisfy.
(l) Limited or No Public Market. JR understands that there is a limited, volatile and sporadic market for the Common Stock. JR further understands that there can be no assurance that an active market for the Common Stock will develop and that, if one should develop, there is no assurance that it will be active or sustained. JR understands that it may have to bear the economic risk of an investment in the Securities for an indefinite period of time.
(m) Legend. JR understands that if represented by a certificate, the Securities and any securities issued in respect of or exchange for the Securities, may bear the following legend:
“THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH TRANSFER MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE SECURITIES ACT OF 1933.”
(n) OFAC. JR should check the OFAC website at <http://www.treas.gov/ofac> before making the following representations.
(A) JR represents that the amounts invested by it in the Company were not and are not directly or indirectly derived from activities that contravene federal, state or international laws and regulations, including Anti-Money Laundering Laws. Federal regulations and executive orders administered by OFAC prohibit, among other things, the engagement in transactions with, and the provision of services to, certain foreign countries, territories, entities and individuals. The lists of OFAC prohibited countries, territories, persons and entities can be found on the OFAC website referred to above. In addition, the programs administered by OFAC (the “OFAC Programs”) prohibit dealing with individuals or entities in certain countries regardless of whether such individuals or entities appear on the OFAC lists. These individuals include specially designated nationals, specially designated narcotics traffickers and other parties subject to OFAC sanctions and embargo programs.
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(B) None of (1) JR, (2) any Person controlling or controlled by JR, (3) any Person having a 5% or greater beneficial interest in JR, or (4) any Person for whom a 5% or greater shareholder of JR is acting as agent or nominee in connection with this investment, is a country, territory, individual or entity named on an OFAC list, or a person or entity prohibited under the OFAC Programs. JR agrees to promptly notify the Company should it become aware of any change in the information set forth in this paragraph and in Section 3.2(n)(ii).
(C) None of (1) JR, (2) any Person controlling or controlled by JR, (3) any Person having a 5% or greater beneficial interest in JR, or (4) any Person for whom a 5% or greater shareholder of JR is acting as agent or nominee in connection with this investment, is a senior foreign political figure, or any immediate family member or close associate of a senior foreign political figure. For purposes of this paragraph, a “senior foreign political figure” means a senior official in the executive, legislative, administrative, military or judicial branches of a foreign government (whether elected or not), a senior official of a major foreign political party, or a senior executive of a foreign government-owned corporation, or any corporation, business or other entity that has been formed by, or for the benefit of, such a senior foreign political figure; “immediate family” of a senior foreign political figure typically includes the figure’s parents, siblings, spouse, children and in-laws; and a “close associate” of a senior foreign political figure means a person who is widely and publicly known to maintain an unusually close relationship with the senior foreign political figure, and includes a person who is in a position to conduct substantial domestic and international financial transactions on behalf of the senior foreign political figure.
(D) If JR is affiliated with a non-U.S. banking institution (a “Foreign Bank”), or if JR receives deposits from, makes payments on behalf of, or handles other financial transactions related to a Foreign Bank, JR represents and warrants to the Company that (1) the Foreign Bank has a fixed address, other than solely an electronic address, in a country in which the Foreign Bank is authorized to conduct banking activities, (2) the Foreign Bank maintains operating records related to its banking activities, (3) the Foreign Bank is subject to inspection by the banking authority that licensed the Foreign Bank to conduct banking activities, and (4) the Foreign Bank does not provide banking services to any other Foreign Bank that does not have a physical presence in any country and that is not a regulated affiliate.
(o) Non-U.S. Person. If JR (as well as any 5% or greater shareholder in JR) is not a United States person (as defined by Section 7701(a)(30) of the Code), JR represents that it has satisfied itself as to the full observance of the laws of its jurisdiction in connection with JR’s investment in the Securities (as well as JR’s own capital raising activities and issuance of securities thereunder during the 12-month period prior to Closing), including (i) the legal requirements within its jurisdiction for the purchase of the Securities (as well as JR’s own capital raising activities and issuance of securities thereunder during the 12-month period prior to Closing), (ii) any foreign exchange restrictions applicable to the purchase of such Securities, (iii) any governmental or other consents that may need to be obtained, and (iv) tax consequences, if any, that may be relevant to the purchase, holding, redemption, sale, or transfer of the Securities by JR and JR shareholders. Such investment by JR and payment for and continued beneficial ownership of the Securities will not violate any applicable securities or other laws of JR’s jurisdiction. If JR is not a U.S. Person, JR further represents and warrants to the Company that it is familiar with, understands and will comply with Regulation S, if applicable.
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(p) Acknowledgment. The confidentiality and non-disclosure agreement dated November 4, 2019 by and between JR and Dakota (“Confidentiality Agreement”) is valid, binding and enforceable, (ii) JR has not breached the terms of the Confidentiality Agreement, (iii) there has not been and will be no discussions by JR with respect to the acquisition of any South Dakota mineral resource introduced to JR by the Company by any party other than the Company, and (iv) any negotiations leading up to the entry into, as well as the entry into, any purchase agreement for any South Dakota mineral resource introduced to JR by the Company must be approved by each of JR and the Company.
ARTICLE IV.
PRE-CLOSING COVENANTS
4.1 | Access and Information; Confidentiality. |
(a) The Company shall afford JR and its authorized representatives reasonable access during normal business hours through the Termination Date to all of its books, records, properties and personnel.
(b) All information provided to JR and its representatives pursuant to Section 4.1(a) prior to the Termination Date shall be held by JR as Information Material (as defined in the Confidentiality Agreement) and shall be subject to the Confidentiality Agreement, the terms of which are incorporated herein by reference.
(c) The Securities may only be disposed of by JR in compliance with state and federal securities laws. In connection with any transfer of the Securities other than pursuant to an effective registration statement, to the Company, or to an Affiliate of JR, the Company may require the transferor thereof to provide to the Company an opinion of counsel selected by the transferor, the form and substance of which opinion shall be reasonably satisfactory to the Company, to the effect that such transfer does not require registration of such transferred Securities under the Securities Act.
4.2 Public Announcements. Until the Termination Date, except for any required filings with the SEC, filings or communications contemplated by this Agreement (including any notices required to be mailed to Company shareholders), or required by applicable law resulting from the transactions contemplated by this Agreement, no party to this Agreement will issue any press release or otherwise make any public statement, make any public filing or respond to any press inquiry in each case with respect to this Agreement or the transactions contemplated hereby without the prior approval of the other party (which approval will not to be unreasonably withheld).
4.3 Reasonable Best Efforts. Each party shall use its reasonable best efforts timely to negotiate and mutually agree upon the agreements and arrangements to be negotiated in Article II, as well as to satisfy the conditions and covenants set forth in Articles II and Article V of this Agreement.
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4.4 Technical Committee. JR and the Company agree to set up a Technical Committee. The Technical Committee will collaborate to identify and pursue attractive acquisition opportunities, plan and conduct field programs, develop framework and platform for the Company’s database, conduct data research, compile and assemble data, organize work programs to evaluate potential mineral inventories and develop long term exploration and mining strategies including capital and operating budgets.
4.5 Conduct of Business Prior to Closing. From the date hereof until the Termination Date, the Company shall conduct its business in the ordinary course consistent with past practice in order to preserve intact its business organization, goodwill and relationships with third parties, and to maintain its current rights and interests. In addition, without the prior consent of JR (pursuant to JR Deliverables or otherwise), the Company shall not:
(a) | adopt or propose any amendment to its Articles or bylaws; |
(b) effect any equity financings in excess of $250,000, exclusive of (i) any Common Stock issued upon, and any proceeds received from, the exercise of derivative securities issued and outstanding on the date of this Agreement, (ii) Common Stock issued upon conversion of the Amended Note and (iii) any equity funding provided by JR pursuant to this Agreement or otherwise;
(c) incur any additional debt or issue any debt securities other than in the ordinary course of business or as provided by JR;
(d) make any material loans or advances to any Person or assume or guarantee any obligations of any Person, except for existing financing arrangements or otherwise in the ordinary course of business;
(e) sell, transfer, assign, relinquish or dispose of any material asset or property;
(f) other than in the ordinary course of business, modify or amend in any material respect or terminate any material contract; and
(g) agree or commit to do any of the foregoing.
4.6 Use of Proceeds. The Company agrees to use proceeds from the Amended Note to acquire up to $350,000 of mineral interests or properties, up to $500,000 to conduct a survey, and the balance for general corporate and working capital purposes.
4.7 Strategic Planning. The respective chief executive officers of JR and the Company, in conjunction with the Technical Committee if applicable, shall develop a strategic plan to negotiate the Company Deliverables and JR Deliverables requiring agreement prior to Closing as set forth in Section 2.2(a)(i)(D), Sections 2.2(a)(ii)(F) through (I), Section 2.2(b)(i)(C) and Sections 2.2(b)(ii)(F) through (I). The parties shall use their best efforts to agree upon and have the Company Board adopt a new or an amended and restated equity compensation plan and reserve up to 15 million shares of Common Stock to be issued thereunder (and obtain shareholder approval if determined necessary). In connection with the adoption of such equity compensation plan, it is expected that up to 10 million shares will be reserved for grants/options to be granted upon the Change of Control Closing, with approximately 64.24% to be granted to JR personnel to become associated with the Company after the Change of Control Closing and approximately 35.76% to be granted to Company personnel currently associated with the Company. Further, the parties agree to address liquidity issues with respect to the resale of Shares acquired by JR.
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4.8 Uplist to OTC:QX. The Company shall use its best efforts to uplist the Common Stock from its Principal Market to the OTC:QX within 90 days from the date of this Agreement, and JR agrees to split the cost with the Company.
ARTICLE V.
CONDITIONS PRECEDENT TO CLOSING
5.1 Conditions Precedent to the Obligations of JR to Purchase Shares. The option and right of JR to acquire the Shares at a Closing is subject to the satisfaction or waiver by JR, at or before such Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of the Company contained herein shall be true and correct in all material respects (except that any representation or warranty that is qualified by reference to “Material Adverse Effect” or similar language shall be true and correct in all respects) as of the date when made and as of the Closing as though made on and as of such date (to be supplemented to reflect updates);
(b) Performance. The Company shall have performed, satisfied and complied with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by it at or prior to the Closing;
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents; and
(d) Company Deliverables. The Company shall have delivered all of the Company Deliverables to JR in accordance with Section 2.2(a)(i) or (ii), as is applicable.
5.2 Conditions Precedent to the Obligations of the Company to Sell Shares. The obligation of the Company to sell Shares at a Closing is subject to the satisfaction or waiver by the Company, at or before such Closing, of each of the following conditions:
(a) Representations and Warranties. The representations and warranties of JR contained herein shall be true and correct in all material respects (except that any representation or warranty that is qualified by reference to “Material Adverse Effect” or similar language shall be true and correct in all respects) as of the date when made and as of the Closing Date as though made on and as of such date (to be supplemented to reflect updates);
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(b) Performance. JR shall have performed, satisfied and complied with all covenants, agreements and conditions required by the Transaction Documents to be performed, satisfied or complied with by JR at or prior to the Closing;
(c) No Injunction. No statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed by any court or governmental authority of competent jurisdiction that prohibits the consummation of any of the transactions contemplated by the Transaction Documents;
(d) JR Deliverables. JR shall have delivered all of the JR Deliverables to the Company in accordance with Section 2.2(b)(i) or (ii), as is applicable; and
(e) Timing. Such final Closing shall have occurred no later than 5:00 p.m. Vancouver time on October 15, 2020.
ARTICLE VI.
POST- CLOSING COVENANTS
6.1 | Post-Closing Governance Matters. |
(a) The Company shall cause an appropriate Form 8-K to be filed with the SEC subsequent to each Closing Date and a Schedule 14f-1 to be filed with the SEC subsequent to the Change of Control Closing Date, and will use its best efforts to have the Schedule 14f-1 mailed to the Company shareholders subsequent to the Change of Control Closing Date, all within four Business Days of such Closing, with the appointment of the JR Designees and adoption of the Amended Bylaws to occur subsequent to the Change of Control Closing and on the Effective Time.
(b) The Amended Bylaws shall provide for, among other things, the following board composition mechanisms during the Standstill Period:
(i) the Company Board shall consist of the JR Designees and the Company Designees, it being understood that the number of Company directors shall not exceed five (5), and that the number of JR Designees at any given time shall be one (1) more than the number of Company Designees; and
(ii) in the event of any vacancy in the office of any JR Designee, a majority of the remaining JR Designees shall have the right to designate a replacement, and in the event of any vacancy in the office of any Company Designee, a majority of the remaining Company Designees shall have the right to designate a replacement, in each case to fill such vacancy.
(c) On or prior to the Change of Control Closing Date, the Company Board shall adopt the resolutions set forth in Sections 2.2(a)(ii)(B), effective upon the Change of Control Closing and the Effective Time, respectively. JR covenants that it will not take any action (directly or through the JR Designees) to interfere with, amend, prevent implementation or preclude the effectiveness of such resolutions.
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(d) | During the Standstill Period: |
(i) JR shall not Vote its Shares to (A) remove or seek to remove any Company Designee without the consent of a majority of the Company Designees or (B) approve or seek to approve a Material Amendment to the Articles or the Amended Bylaws unless such Material Amendment has been approved and recommended by a majority of the Company Designees; provided, however, that nothing in this Section 6.1(d)(i) shall be deemed to prevent JR from Voting its Shares in favor of the Sale of the Company to a Third Party Purchaser;
(ii) JR shall Vote its Shares as directed or recommended by a majority of the Company Designees with respect to the election of Company Designees (or successors nominated by the Company Designees) as directors; and
(iii) Any transaction between JR or any of its Affiliates, on the one hand, and the Company, on the other hand (including, without limitation, (A) the issuance of Company capital stock or derivative securities to JR or any of its Affiliates and (B) a business combination by and between JR, the Company and any of their respective Affiliates), shall be subject to approval by the Company Designees and the JR Designees shall recuse themselves from voting on the approval of such transactions; provided however, that the approval of the majority of the Company Board is required for a proposed business combination whereby JR becomes a wholly-owned subsidiary of, or merges into, the Company or the Company becomes a wholly-owned subsidiary of, or merges into, JR (or its subsidiary), in either case if the following conditions are met: (A) the voting and covenant obligations of JR contained in this Section 6.1 are assumed and agreed to by current or former shareholders of JR owning at least 5% of the capital stock in the surviving and trading entity upon the closing of such business combination; (B) the relative voting, economic value and percentage interest of Company shareholders pre- business combination are not affected post-business combination; (C) the business combination is a transaction qualifying as a reorganization under Section 368(a)(1) of the Internal Revenue Code that is non-taxable to the shareholders that are U.S. residents with respect to the stock of the successor or parent company received by the shareholders; (D) if the Company doesn’t survive or is a wholly-owned subsidiary of JR as a result of the business combination, the shares of capital stock of the successor or parent company comprising the merger consideration to be issued to Company shareholders shall be listed on an Approved Trading Market; and (E) compliance with applicable corporate and securities laws (an “Approved Business Combination”).
(e) During the Standstill Period, except in connection with a Sale of the Company to a Third Party Purchaser or an Approved Business Combination, JR agrees that, without the prior written consent of a majority of the Company Designees, neither JR nor any of its Affiliates nor any Person acting at JR’s direction or on JR’s behalf, will, directly or indirectly:
(i) with respect to the Company or the Common Stock, make, engage or in any way participate in, directly or indirectly, any “solicitation” (as such term is used in the proxy rules of the SEC) of proxies or consents (whether or not relating to the election or removal of directors); seek to advise, encourage or influence any Person with respect to the voting of any Common Stock; initiate, propose or otherwise “solicit” (as such term is used in the proxy rules of the SEC) stockholders of the Company for the approval of stockholder proposals whether made pursuant to Rule 14a-8 or Rule 14a-4 under the Exchange Act, or otherwise, or cause or encourage or attempt to cause or encourage any other Person to initiate any such stockholder proposal; otherwise communicate with the Company stockholders or others pursuant to Rule 14a-1(l)(2)(iv) under the Exchange Act;
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(ii) seek, propose, or make any statement (except for (i) the JR Designees acting solely in their capacity as directors of the Company, (ii) by offers or proposals to the Board which do not require or result in public disclosure, or (iii) communications to existing and prospective investors which do not require or result in public disclosure or an amendment to a Schedule 13D or any other filings of JR pursuant to the Exchange Act regarding JR’s beneficial ownership in the Company, in each case in connection with the Sale of the Company to a Third Party Purchaser or an Approved Business Combination) with respect to any merger, consolidation, business combination, tender or exchange offer, sale or purchase of assets, sale or purchase of securities, dissolution, liquidation, restructuring, recapitalization or similar transactions of or involving the Company or any of its Affiliates;
(iii) acquire, offer or propose to acquire, or agree to acquire (except by way of stock dividends, stock splits or other distributions or offerings made available to holders of any shares of Common Stock generally), directly or indirectly, whether by purchase, tender or exchange offer, through the acquisition of control of another Person, by joining a partnership, limited partnership, syndicate or other “group” (within the meaning of section 13(d)(3) of the Exchange Act) or otherwise, any shares of Common Stock, or assets of the Company or any of its Subsidiaries, or rights or options to acquire interests in Common Stock or assets of the Company or any of its Subsidiaries;
(iv) act alone or in concert with others to control or seek to control, or influence or seek to influence, the management of the Company, or the Company Board;
(v) seek, alone or in concert with others, election or appointment to or representation on, or nominate or propose the nomination of any candidate to, the Company Board, or seek the removal of any member of the Company Board, in a manner inconsistent with this Section 6.1 of this Agreement;
(vi) have any discussions or communications, or enter into any arrangements, understanding or agreements (whether written or oral) with, or instigate, advise, finance, assist or encourage, any other Person in connection with any of the foregoing, or make any investment in or enter into any arrangement with any other Person that engages, or offers or proposes to engage, in any of the foregoing; and
(vii) otherwise take, or solicit, cause or encourage others to take, any action inconsistent with any of the foregoing.
The provisions of this Section 6.1 are intended to be for the benefit of the Company and will be enforceable by the Company Designees against JR, the JR Designees, and the Company during the Standstill Period. For the avoidance of doubt, the provisions of this Section 6.1 shall not prevent the Company Board nor JR, nor any of its Affiliates nor any Person acting at their direction or on their behalf from hiring financial advisers, soliciting indications of interest, providing information, or engaging in or entering into discussions, communications, arrangements, understandings or agreements with, or instigating, advising, financing, assisting, or encouraging a Third Party Purchaser solely in connection with a potential Sale of the Company to a Third Party Purchaser or an Approved Business Combination.
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6.2 | Director and Officer Indemnification and Insurance. |
(a) All rights to indemnification, advancement of expenses and exculpation by the Company now or hereafter existing in favor of each Person who is now, or has been at any time prior to the date hereof or who becomes prior to the Change of Control Closing Date, an officer or director of the Company, as provided in the Articles, by-laws or pursuant to the Nevada Revised Statutes, in each case as in effect on the Change of Control Closing Date, shall survive the Change of Control Closing Date and shall continue in full force and effect in accordance with their respective terms. The Company agrees that at or prior to the Effective Time it shall enter into an indemnification agreement with each of the JR Designees and Company Designees, in an identical form for each designee.
(b) The obligations of the Parties under this Section 6.2 shall not be terminated or modified in such a manner as to adversely affect any director or officer to whom this Section 6.2 applies without the consent of such affected director or officer (it being expressly agreed that the directors and officers to whom this Section 6.2 applies shall be third-party beneficiaries of this Section 6.2, each of whom may enforce the provisions of this Section 6.2).
ARTICLE VII.
MISCELLANEOUS
7.1 Survival. The representations, warranties, and covenants of the Company and JR contained in or made pursuant to this Agreement shall survive for 18 months from the final Closing hereunder.
7.2 Successors and Assigns. JR shall not be entitled to assign any of its rights to this Agreement.
7.3 Third Parties. Nothing in this Agreement, express or implied, is intended to confer upon any person, other than the parties to this Agreement and their respective successors and assigns, any rights, remedies, obligations, or liabilities under or by reason of this Agreement, except as expressly provided in this Agreement which include, without limitation, the rights provided for the Company and granted to the Company Designees to enforce in Article VI hereof.
7.4 Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes.
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7.5 Notices. All notices, requests, consents, and other communications under this Agreement shall be in writing and shall be deemed effectively given and made (a) when delivered if personally delivered to the party for whom it is intended, (b) when delivered, if sent by electronic mail during normal business hours of the recipient, and if not sent during normal business hours, then on the recipient’s next business day, (c) three (3) days after having been sent by certified or registered mail, return-receipt requested and postage prepaid, or (d) one (1) business day after deposit with a nationally recognized overnight courier, freight prepaid, specifying next business day delivery, with written verification of receipt.
If to the Company, Gerald M. Aberle, CEO, P.O. Box 568, Lead, SD 57754 (email: gaberle1@yahoo.com), or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 7.5.
If to JR, Jonathan T. Awde, 1785 Fulton Avenue, West Vancouver, BC V7V 1S8, Canada (email: Johnawde@gmail.com), or to such e-mail address, facsimile number or address as subsequently modified by written notice given in accordance with this Section 7.5.
7.6 Amendments and Waivers. Any term of this Agreement may be amended, terminated or waived only with the written consent of the Company and JR prior to a Change of Control Closing or as otherwise provided in this Agreement.
7.7 Further Assurances. From and after the date of this Agreement, upon the reasonable request of either JR, a JR Designee, the Company or a Company Designee, the respective parties shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement.
7.8 Adjustments for Stock Splits, Etc. Wherever in this Agreement there is a reference to a specific number of shares of Common Stock of the Company, or a price per share of such stock, then, upon the occurrence of any subdivision, combination, or stock dividend of such class or series of stock, the specific number of shares or the price so referenced in this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such class or series of stock by such subdivision, combination, or stock dividend.
7.9 Expenses. Except as otherwise provided in Article VI hereof, each party hereto shall bear the respective legal, accounting and other costs and expenses of any nature (“Expenses”), relating to or in connection with the consummation of the transactions contemplated by this Agreement, incurred by any of them, whether or not this Agreement is consummated or terminated. For the avoidance of doubt, in the event that any of Section 6.1 or 6.2 is sought to be enforced by the Company Designees or a former officer or director of the Company, the Expenses of such party shall be promptly paid by the Company.
7.10 Entire Agreement. The Transaction Documents contain the entire understanding of the parties with respect to the subject matter hereof and supersede all prior agreements, understandings, discussions and representations, oral or written, with respect to such matters, which the parties acknowledge have been merged into such documents, exhibits and schedules.
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7.11 Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement or any of the Transaction Documents.
7.12 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the internal laws of the State of Nevada, without regard to the principles of conflicts of law thereof. Each party agrees that all Proceedings concerning the interpretations, enforcement and defense of the transactions contemplated by this Agreement and any other Transaction Documents (whether brought against a party hereto or its respective Affiliates, employees or agents) shall be commenced exclusively in the South Dakota Courts. Each party hereto hereby irrevocably submits to the exclusive jurisdiction of the South Dakota Courts for the adjudication of any dispute hereunder or in connection herewith or with any transaction contemplated hereby or discussed herein (including with respect to the enforcement of the any of the Transaction Documents), and hereby irrevocably waives, and agrees not to assert in any Proceeding, any claim that it is not personally subject to the jurisdiction of any such South Dakota Court, or that such Proceeding has been commenced in an improper or inconvenient forum. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys’ fees and other costs and expenses incurred in connection with the investigation, preparation and prosecution of such Proceeding.
7.13 Severability. If any provision of this Agreement is held to be invalid or unenforceable in any respect, the validity and enforceability of the remaining terms and provisions of this Agreement shall not in any way be affected or impaired thereby and the parties will attempt to agree upon a valid and enforceable provision that is a reasonable substitute therefor, and upon so agreeing, shall incorporate such substitute provision in this Agreement.
7.14 Remedies. In addition to being entitled to exercise all rights provided in this Agreement or granted by law, including recovery of damages, each of JR, the Company and Company Designees will be entitled to specific performance under the Transaction Documents. The parties agree that monetary damages may not be adequate compensation for any loss incurred by reason of any breach of obligations described in the foregoing sentence and hereby agrees to waive in any action for specific performance of any such obligation the defense that a remedy at law would be adequate.
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7.15 Termination. This Agreement, and all rights and obligations hereunder, shall terminate at 5:00 Vancouver time on October 15, 2020, and thereafter, this Agreement shall terminate, become null and void and be of no further force or effect.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.
SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
DAKOTA TERRITORY RESOURCE CORP. | ||
By: | /s/ Gerald M. Aberle | |
Gerald M. Aberle, Chief Executive Officer |
JR RESOURCES CORP: | |||
By: | /s/ Jonathan T. Awde | ||
Jonathan T. Awde, Chief Executive Officer |
SIGNATURE PAGE TO AGREEMENT
SCHEDULE 1
NOTICE OF EXERCISE OF SUBSCRIPTION RIGHT IN PART OR IN FULL
To Dakota Territory Resource Corp:
The undersigned hereby irrevocably elects to exercise its subscription right and to purchase ___________________ shares of Dakota Territory Resource Corp common stock for an Investment Amount of $_________, pursuant to satisfaction of the terms and conditions of the Agreement.
The undersigned requests that certificates for such shares be issued in the name of:
JR Resources, Inc.
(Please print address and social security or federal
employer
identification number (if applicable))
_________________________________________
_________________________________________
JR Resources, Inc. | ||
By: | ||
Jonathan T. Awde, Chief Executive Officer | ||
Dated: _______________, 2020 |
EXHIBIT A
Amended Note
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), OR ANY STATE SECURITIES OR “BLUE SKY LAWS,” AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED ABSENT AN EFFECTIVE REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL, REASONABLY SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED.
AMENDED AND RESTATED
PROMISSORY NOTE
(Unsecured)
US $1,450,000 | May 26, 2020 |
JR Resources Corp (“Payee”) agrees to lend to Dakota Territory Resource Corp (“Maker”), on an unsecured basis, One Million, Four Hundred Fifty Thousand dollars (U.S.$1,450,000) in lawful money of the United States of America. The Payee has/will fund the US$1,450,000 loan in two installments, with the initial installment of US$300,000 funded February 5, 2020, and a second installment of US$1,150,000 to be funded via wire transfer on the date hereof (“Loan”). This amended and restated promissory note (“Note”) amends, restates and replaces in its entirety the note dated February 5, 2020 by and between Payee and Maker, which February 5, 2020 note is null and void and of no further force or effect.
Maker hereby unconditionally promises to pay to the order of Payee the principal sum of the Loan actually advanced, documented by this Note, in lawful money of the United States of America, together with simple interest at the annual rate of 0.25%, compounded annually, from the date of this Note, payable on December 31, 2021 (“Maturity Date”). On the Maturity Date, the principal amount of the Loan, together with any accrued but unpaid interest, will be due and payable in cash, provided that, if and to the extent that the Maker does not pay any portion of the principal amount of and accrued interest on the Loan in cash by 5:00 pm (Pacific time) on the Maturity Date, then the Payee will be required to exercise, and will in fact be deemed to have exercised without any further action by either Maker or Payee, its right to convert such unpaid portion of the principal amount of the Loan together with accrued but unpaid interest (the “Issuance Amount”) into shares of Maker common stock (the “Issuance Shares”) at the Issuance Price (as defined in the sentence below). The Issuance Price shall mean US$0.15 per share from the date of this Note through December 31, 2020 and, commencing on January 1, 2021, the Issuance Price shall be the lesser of (i) US$0.15 per share of Maker common stock and (ii) the average VWAP (as defined in the paragraph below) of Maker’s common stock for the five consecutive trading days immediately preceding the date of such conversion, but in no event shall such average VWAP price be less than, and there shall be a floor of, US$0.10 per share. Notwithstanding anything to the contrary herein, upon a closing of a Change of Control (as defined in this Note) transaction with Payee (or its affiliates), the Payee will be required to exercise, and will in fact be deemed to have exercised without any further action by either Maker or Payee, its right to convert such unpaid principal amount of the Loan together with accrued interest thereunder at such closing, at the Issuance Price of $0.15 per share of Maker common stock.
A-1
“VWAP” means, for any date, if the Maker common stock is then quoted for trading on the OTC:QX or OTC:QB, the volume weighted average price of the Maker common stock for such date (or the nearest preceding date) on the OTC:QB or OTC:QX, as applicable, or if the Maker common stock is not then listed or quoted for trading on OTCQB or OTCQX and if prices for the common stock are then reported in the “Pink Sheets” published by OTC Markets, Inc. (or a similar organization or agency succeeding to its functions of reporting prices), the most recent bid price per share of the common stock so reported.
If the Maker, at any time while this Note is outstanding (i) pays a stock dividend or otherwise makes a distribution or distributions payable in shares of common stock on outstanding shares of common stock, (ii) subdivides outstanding shares of common stock into a larger number of shares, (iii) combines (including by way of a reverse stock split) outstanding shares of common stock into a smaller number of shares, or (iv) issues, in the event of a reclassification of shares of common stock, any shares of capital stock of the Maker, then the Issuance Price and the number of Issuance Shares shall be adjusted accordingly. Whenever the Issuance Price is adjusted pursuant to the above sentence, the Maker shall promptly deliver to Payee a notice setting forth the Issuance Price and Issuance Shares after such adjustment and setting forth a brief statement of the facts requiring such adjustment.
If any payment hereunder would otherwise become due and payable on a day on which banks are closed or permitted to be closed in Deadwood, South Dakota, such payment shall become due and payable on the next succeeding day on which banks are open and not permitted to be closed in Deadwood, South Dakota.
An event of default shall occur upon (i) the failure of Maker to pay the principal sum of and accrued interest on the Loan in full on the Maturity Date, (ii) an assignment for the benefit of creditors of Maker, (iii) upon Maker’s insolvency, the appointment of a receiver of all or any part of Maker’s property, or the commencement of any proceeding under any bankruptcy, insolvency or debtor relief laws by or against Maker provided that such assignment for the benefit of creditors, appointment of a receiver or proceeding under bankruptcy, insolvency or debtor relief laws is not dismissed within sixty (60) days, or (iv) the closing of a transaction involving a Change of Control (as defined below). A Change of Control shall occur if (i) the Maker (A) shall not be the surviving entity in any merger, consolidation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Maker) or (B) is to be dissolved and liquidated, and as a result of or in connection with such transaction, the persons who were directors of the Maker before such transaction shall cease to constitute a majority of the board of directors, or (ii) any person or entity, including a “group” as contemplated by Section 13(d)(3) of the Securities Exchange Act of 1934, as amended, acquires or gains ownership or control (including, without limitation, power to vote) of 50% or more of the outstanding shares of the Maker’s voting stock (based upon voting power) either directly from the Maker or from shareholders of the Maker, or (iii) the Maker sells all or substantially all of the assets of the Maker to any other person or entity (other than a wholly-owned subsidiary of the Maker) in a transaction that requires shareholder approval pursuant to applicable corporate law. In addition to and notwithstanding any of the foregoing, upon an event of default under the Loan, deemed to occur upon notice being provided by Payee to Maker of such event of default, the Payee will be required to exercise, and will be deemed to have exercised without any further action by either Maker or Payee, its right to convert the unpaid principal amount of and accrued interest on the Loan into the Issuance Shares at the Issuance Price after the fifth business day following an event of default if not paid prior thereto in cash by Maker (with respect to the payment of the principal and accrued interest due upon Maturity Date, if Maker does not pay such amount in cash by 5:00 p.m. Pacific time on the Maturity Date, Payee will have been deemed to have exercised its required right to convert such unpaid principal amount of and accrued interest on the Note as of such time and date). If this Note is given to an attorney for collection, or if suit is brought for collection, or if it is collected through bankruptcy, or other judicial proceedings, then Maker shall be obligated to pay Payee its costs of collection, including reasonable attorney’s fees and court costs.
A-2
Where such conversion right is deemed to have been exercised by the Payee (pursuant to its required exercise right and obligation as set forth in this Note), the Payee shall submit a conversion notice (“Conversion Notice”) to Maker indicating the Issuance Amount and the number of Issuance Shares (failure to deliver such Conversion Notice will not affect the deemed conversion) and Maker shall immediately send the requisite Issuance Shares to Payee as payment in full of this Note. In the event Payee fails to deliver the Conversion Notice to Maker upon its deemed exercise of the conversion right and obligation, Maker shall calculate the Issuance Amount and number of Issuance Shares and deliver the Issuance Shares to Payee as payment in full of this Note.
No failure or delay by the Payee to insist upon the strict performance of any term, condition, covenant, or agreement of this Note, or to exercise any right, power, or its sole remedy upon a breach thereof, shall constitute a waiver of any such term, condition, covenant, or agreement or of any such breach, or preclude the Payee from exercising any such right, power, or its sole remedy at a later time or times. By accepting payment after the due date of any amount payable under the terms of this Note, the Payee shall not be deemed to waive the right either to require prompt payment when due of all other amounts payable under the terms of this Note or to declare an event of default for the failure to effect such prompt payment of any such other amount. No course of dealing or conduct shall be effective to amend, modify, waive, release, or change any provisions of this Note.
The Maker waives presentment, protest and notice of protest and nonpayment, notice of acceleration or other notice of default.
This Note can be prepaid in all or part by Maker in cash at any time without penalty.
Payee acknowledges that this Note is unsecured.
In the event any provision of this Note (or any part of any provision) is held by a court of competent jurisdiction to be invalid, illegal, or unenforceable in any respect, such invalidity, illegality, or unenforceability shall not affect any other provision (or remaining part of the affected provision) of this Note; but this Note shall be construed as if such invalid, illegal, or unenforceable provision (or part thereof) had not been contained in this Note, but only to the extent it is invalid, illegal, or unenforceable.
A-3
This Note contains the entire agreement of the parties with respect to the Loan by Payee to Maker and supersedes all oral or other understandings with respect to this subject matter, including the promissory note dated February 5, 2020. In connection with, and in consideration for, entering into this Note, Maker and Payee concurrently have entered into the termination agreement attached hereto as Schedule 1 of this Note.
All notices, demands and other communications required or permitted to be given to the Maker or Payee hereunder shall be in writing and shall be sent via email or mailed by registered or certified mail, postage prepaid, or prepaid air courier, or otherwise delivered by hand or by messenger, addressed to the Maker or Payee as set forth below:
Maker:
Dakota Territory Resource Corp
#115 – 208, 10580 N. McCarran Blvd.
Reno, NV 89503
Attention: Gerald Aberle
Phone: (605) 584-2834
Email: gaberle1@yahoo.com
Payee:
JR Resources Corp.
1785 Fulton Avenue
West Vancouver, BC V7V 1S8
Attention: Jonathan Awde
Phone: (604) 761 - 5251
Email: johnawde@gmail.com
or such other address with respect to a party shall notify each other party in writing as above provided. Any notice sent in accordance with this paragraph shall be effective (i) if mailed, five (5) business days after mailing, (ii) if by air courier, two (2) business days after deliver to the courier service, (iii) if sent by messenger, upon delivery, and (iv) if sent via email, upon transmission and electronic confirmation of receipt or (if transmitted and received on a non- business day) on the first business day following transmission and electronic confirmation of receipt (provided, however, that any notice of change of address shall only be valid upon receipt).
This Note is being executed and delivered, and is intended to be performed, in the State of South Dakota. Except to the extent that the laws of the United States may apply to the terms hereof, the substantive laws of the State of South Dakota shall govern the validity, construction, enforcement and interpretation of this Note.
A-4
IN WITNESS WHEREOF, the Maker and Payee have executed this Note as of the date set forth above. This Note may be executed in one or more counterparts and delivered by email, each of which so signed and delivered shall be deemed an original but all together will constitute one and the same instrument.
DAKOTA TERRITORY RESOURCE CORP | ||
By: | /s/ Gerald M. Aberle | |
Name: Gerald M. Aberle | ||
Title: President CEO & COO | ||
I have authority to bind the Maker. | ||
JR Resources Corp. | ||
By: | /s/ Jonathan T. Awde | |
Name: Jonathan T. Awde | ||
Title: President CEO | ||
I have authority to bind the Payee. |
A-5
Schedule 1 to the Amended Note
TERMINATION AGREEMENT
This Termination Agreement is made and entered into this the 26th day of May, 2020 by and between JR Resources Corp. (“JR”) and Dakota Territory Resource Corp., a Nevada corporation (“Company”). JR and the Company are collectively referred to herein as the “Parties.”
RECITALS
WHEREAS, the Parties hereto entered into that certain proposal letter, with exhibits, dated on February 5, 2020 (“Proposal Letter”);
WHEREAS, the Parties hereto entered into that certain security agreement dated on or about February 5, 2020 (“Security Agreement”);
WHEREAS, the Parties hereto entered into that certain mortgage, assignment and production and financing statement dated on February 5, 2020 (“Mortgage Agreement”);
WHEREAS, the Parties hereto entered into that certain subscription agreement dated on February 5, 2020 (“Subscription Agreement”); and
WHEREAS, the Parties wish to terminate the Proposal Letter, Security Agreement and Mortgage Agreement and rescind the Subscription Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants of the Parties hereto and other good and valuable consideration paid and received by each of the Parties to this Termination Agreement, including the entry into an amended and restated promissory note in favor of JR dated the date hereof that amends and restates the promissory note dated February 5, 2020 (“Amended Note”), the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows:
1. | Termination and Rescission. As a result of entering into the Amended Note in favor of JR, JR and Company (i) agree to cancel and terminate the Proposal Letter, Security Agreement, and Mortgage Agreement, which agreements are hereby null and void and of no further force and effect, and (ii) acknowledge that the 250,000 shares of Company common stock were not, and will not be, issued pursuant to the Subscription Agreement and agree to rescind such issuance and terminate the terms of the Subscription Agreement including the issuance of the shares thereunder, which agreement is hereby null and void and of no further force and effect. |
2. | Entire Agreement. This Termination Agreement constitutes the entire agreement among the Parties and supercedes any prior understandings, agreements or representations by or among the Parties, written or oral, that may have related in any way to the subject matter hereof. |
3. | Governing Law. This Termination Agreement shall be governed by and construed in accordance with the internal laws (and not the laws of conflicts) of the State of South Dakota. |
(Remainder of this page intentionally left blank)
A-6
IN WITNESS WHEREOF, the parties hereto have executed this Termination Agreement as of the date first above written.
DAKOTA TERRITORY RESOURCE CORP. | JR RESOURCES CORP. | |||
By: | /s/ Gerald M. Aberle | By: | /s/ Jonathan T. Awde | |
Name: Gerald M. Aberle | Name: Jonathan T. Awde | |||
Title: President, CEO and COO | Title: President and CEO |
A-7
Exhibit 10.2
AMENDING AGREEMENT
This Amending Agreement (the “Agreement”) is made as of the 15th day of October, 2020, by and between Dakota Territory Resource Corp, a Nevada corporation (the “Company”), and JR Resources Corp., a Nevada corporation (“JR”).
WHEREAS, on May 26, 2020 the Company and JR entered into an agreement (the “Original Agreement”), pursuant to which the Company granted a subscription right to JR to purchase from the Company a certain amount of Shares on or prior to 5:00 p.m. Vancouver time on October 15, 2020.
WHEREAS, concurrently upon execution of this Agreement, JR intends to exercise in part its right to purchase Shares pursuant to the Original Agreement for an Investment Amount of $10,450,000, payable $9,000,000 in cash and $1,450,000 through the conversion of the Amended Note being collectively the Investment Amount, and the Company shall issue to JR 69,666,667 Shares on Closing, being the number of Shares derived by dividing the Investment Amount by the Per Share Purchase Price in accordance with section 2.2(a)(i)(A) of the Original Agreement, all as set out in the Notice of Exercise attached hereto.
WHEREAS, the parties contemplate that the cash proceeds of such Closing shall be used as specified in the mutually agreed use of proceeds schedule referred to in section 2.2(a)(i)(D) of the Original Agreement, which is required to be delivered by the Company as a Company Deliverable on Closing.
WHEREAS, concurrently upon execution of this Agreement, the Company intends to appoint up to two of the JR Designees (to join the three existing Company directors), such that immediately following the execution of this Agreement, the Company Board will consist of up to five directors, up to two of whom will be JR Designees.
WHEREAS, the Company is contemplating the purchase of additional surface and mineral rights located in the State of South Dakota.
WHEREAS, because the COVID-19 pandemic has delayed the accomplishment of certain of the milestones set out in the Original Agreement, the Parties acknowledge that it is in their respective best interests to extend the Termination Date to February 15, 2021.
WHEREAS, section 7.6 of the Original Agreement provides that any term of the Original Agreement may be amended, terminated or waived only with the written consent of the Company and JR prior to a Change of Control Closing or as otherwise provided in the Original Agreement.
NOW, THEREFORE, in consideration of JR exercising its right to purchase Shares pursuant to the Original Agreement in the Investment Amount specified herein, the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged and agreed is beneficial for both parties, the Company and JR agree as follows:
Section 1 Amendment to Original Agreement.
The Original Agreement is hereby amended as follows, to be effective as of the date hereof:
(1) | in section 1.1, the definition of “Termination Date” is amended and restated in its entirety as follows: |
“Termination Date” shall mean 5:00 p.m. Vancouver time on February 15, 2021, being the date the right to purchase Shares under this Agreement expires, unless such right to purchase Shares is terminated prior thereto by (i) mutual agreement of JR and the Company or (ii) the purchase by JR of the maximum number of Shares as provided for in this Agreement.
(2) | in section 1.1, the definition of “Shares” is amended and restated in its entirety as follows: |
“Shares” means the shares of Common Stock purchased by JR pursuant to the Election Notice in an amount up to 142,566,667 shares of Common Stock, less (i) the shares of Common Stock issued upon conversion of the Amended Note (9,666,667 shares), and (ii) Shares previously acquired by JR from the Company pursuant to this Agreement; provided that the amount of Shares shall be increased, if any New Equity is issued, by the product of 1.8 times the number of shares of Common Stock issued in the New Equity.
(3) | in section 1.1, the definition of “Standstill Period” is amended and restated in its entirety as follows: |
“Standstill Period” means the period commencing on the Closing Date of the first Closing to occur under this Agreement and ending on the earlier of (i) 18 months from such Closing Date or (ii) the uplisting of the Common Stock (or the common stock of a successor-in-interest to the Company) to an Approved Trading Market (including an uplisting by a successor company in an Approved Business Combination).
(4) | in section 1.1, the definition of “Investment Amount” is amended and restated in its entirety as follows: |
“Investment Amount” means an amount up to $21,385,000 as stated in the Election Notices, less (i) the conversion amount of the Amended Note ($1,450,000), and (ii) the aggregate per share Purchase Price of the Shares previously acquired by JR from the Company pursuant to this Agreement; provided that such Investment Amount shall be increased, if any New Equity is issued, by the product of 1.8 times the dollar amount raised by the issuance of New Equity.
(5) | in section 1.1, the definition of “New Equity” is amended and restated in its entirety as follows: |
“New Equity” shall mean Common Stock financings subsequent to the date of this Agreement and prior to the Termination Date, excluding (i) any shares of Common Stock issued upon, and any proceeds received from, the exercise of Company derivative securities that are issued and outstanding on the date of this Agreement, (ii) Common Stock issued upon conversion of the Amended Note, (iii) any equity funding provided by JR pursuant to this Agreement or otherwise, and (iv) up to 3,000,000 shares of Common Stock issued by the Company in connection with the purchase of additional surface and mineral rights located in the State of South Dakota.
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(6) | section 2.2(a)(ii)(B) is amended and restated in its entirety as follows: |
a resolution(s) adopted by the Company Board, effective on the Change of Control Closing or the Effective Time, as applicable, whereby (i) one of the Company directors who is not a JR Designee resigns and the second and/or third JR Designee is appointed (or, if the first Closing under this Agreement is a Change of Control Closing, one of the Company directors who is not a JR Designee resigns and three JR Designees are appointed), such that upon the adoption of such resolution(s), the Company Board shall consist of the three JR Designees and the two Company Designees, (ii) the Amended Bylaws are adopted and approved, and (iii) other Company Deliverables requiring Company Board approval at a Change of Control Closing are adopted and delivered;
(7) | a new section 2.2(a)(iii) is added, reading as follows: |
on the first Closing to occur under this Agreement (provided such Closing is not a Change of Control Closing, which event is addressed in Section 2.2(a)(ii)(B) above), a resolution adopted by the Company Board, effective on the Closing Date, whereby two vacancies are created and up to two of the JR Designees are appointed. For the avoidance of doubt, upon the adoption of such resolution, the Company Board shall consist of up to two JR Designees and three directors who are not JR Designees.
(8) | section 4.5(b) is amended and restated in its entirety as follows: |
effect any equity financings in excess of $250,000, exclusive of (i) any Common Stock issued upon, and any proceeds received from, the exercise of derivative securities issued and outstanding on the date of this Agreement, (ii) Common Stock issued upon conversion of the Amended Note, (iii) any equity funding provided by JR pursuant to this Agreement or otherwise, and (iv) up to 3,000,000 shares of Common Stock issued by the Company in connection with the purchase of additional surface and mineral rights located in the State of South Dakota.
(8) | section 5.2(e) is amended by replacing “October 15, 2020” with “Termination Date”; and |
(9) | section 7.15 is amended and restated in its entirety as follows: |
The right to purchase Shares under this Agreement shall terminate at 5:00 Vancouver time on February 15, 2021, with all other rights and obligations of the parties set forth in this Agreement remaining in full force and effect.
Section 2 Reference to and Effect on the Original Agreement.
(1) | Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any party under the Original Agreement, and shall not alter, modify or amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Original Agreement or the Transaction Documents. Capitalized terms used herein without definition have the same meanings as in the Original Agreement. |
3
(2) | This Agreement is incorporated by reference in, and forms an integral part of, the Original Agreement. Upon execution of this Agreement, each reference in the Original Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Original Agreement as amended hereby, and each reference to the Original Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Original Agreement shall mean and be a reference to the Original Agreement as amended hereby. |
(3) | The Original Agreement (as amended hereby) and the Transaction Documents (other than the Amended Note which has been converted in full and cancelled as of the date hereof) shall remain in full force and effect, other than those provisions amended pursuant to Section 1 of this Agreement. |
Section 3 Miscellaneous
(1) | Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. |
(2) | Further Assurances. From and after the date of this Agreement, upon the reasonable request of either JR or the Company, the respective parties shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. |
(3) | Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. |
(4) | Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the provisions set forth in the Original Agreement. |
(5) | Severability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be effected thereby. |
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(6) | Entire Agreement. This Agreement and the Original Agreement (including Closing Deliverables delivered) constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof. |
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BLANK.
SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
DAKOTA TERRITORY RESOURCE corp. | ||
By: | /s/ Gerald M. Aberle | |
Gerald M. Aberle, Chief Executive Officer |
JR ResourCes Corp. | ||
By: | /s/ Jonathan T. Awde | |
Jonathan T. Awde, Chief Executive Officer |
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NOTICE OF EXERCISE OF SUBSCRIPTION RIGHT IN PART OR IN FULL
To Dakota Territory Resource Corp.:
The undersigned hereby irrevocably elects to exercise its subscription right and to purchase 60,000,000 shares of Dakota Territory Resource Corp. (the “Company”) common stock for an Investment Amount of $9,000,000, pursuant to satisfaction of the terms and conditions of the Agreement.
It is intended that the first Closing of the subscription right be October 15, 2020.
The undersigned requests that certificates for such shares be issued in the name of:
JR Resources Corp.
(Please print address and social security or federal employer
identification number (if applicable or not previously provided))
_________________________________________
_________________________________________
JR Resources Corp. | ||
By: | /s/ Jonathan T. Awde | |
Jonathan T. Awde, Chief Executive Officer | ||
Dated: October 15, 2020 |
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Exhibit 10.3
AMENDING AGREEMENT #2
This Amending Agreement #2 (the “Agreement”) is made as of the 15th day of February, 2021, by and between Dakota Territory Resource Corp, a Nevada corporation (the “Company”), and JR Resources Corp., a Nevada corporation (“JR”).
WHEREAS, on May 26, 2020 the Company and JR entered into an agreement (the “Original Agreement”), pursuant to which the Company granted a subscription right to JR to purchase from the Company a certain amount of Shares.
WHEREAS, on October 15, 2020 the Company and JR entered into an amending agreement (the “Amending Agreement”) pursuant to which JR exercised in part its right to purchase Shares pursuant to the Original Agreement for an Investment Amount of $10,450,000, and the parties agreed to extend the term of the Original Agreement until February 15, 2021.
WHEREAS, the Company and JR desire to extend the term of the Original Agreement until March 17, 2021.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged and agreed is beneficial for both parties, the Company and JR agree as follows:
Section 1 Amendment to Original Agreement.
The Original Agreement is hereby amended as follows, to be effective as of the date hereof:
(1) | The definition of “Termination Date” in Section 1.1. is amended and restated in its entirety as follows: |
“Termination Date” shall mean 5:00 p.m. Vancouver time on March 17, 2021, being the date the right to purchase Shares under this Agreement expires, unless such right to purchase Shares is terminated prior thereto by (i) mutual agreement of JR and the Company or (ii) the purchase by JR of the maximum number of Shares as provided for in this Agreement.
(2) | Section 7.15 is amended and restated in its entirety as follows: |
Termination. This Agreement, and all rights and obligations hereunder, shall terminate at 5:00 Vancouver time on March 17, 2021, and thereafter, this Agreement shall terminate, become null and void and be of no further force or effect.
Section 2 Reference to and Effect on the Original Agreement.
(1) | Except as expressly set forth herein, this Agreement shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any party under the Original Agreement, and shall not alter, modify or amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Original Agreement, the Amending Agreement or the Transaction Documents. Capitalized terms used herein without definition have the same meanings as in the Original Agreement (as may have been modified in the Amending Agreement). |
(2) | This Agreement is incorporated by reference in, and forms an integral part of, the Original Agreement and Amending Agreement. Upon execution of this Agreement, each reference in the Original Agreement and Amending Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Original Agreement as amended by the Amending Agreement and hereby, and each reference to the Original Agreement and Amending Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Original Agreement and Amending Agreement shall mean and be a reference to the Original Agreement and Amending Agreement as amended hereby. |
(3) | The Original Agreement and Amending Agreement (each as amended hereby) and the Transaction Documents shall remain in full force and effect, other than those provisions amended pursuant to Section 1 of this Agreement. |
Section 3 Miscellaneous
(1) | Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. |
(2) | Further Assurances. From and after the date of this Agreement, upon the reasonable request of either JR or the Company, the respective parties shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. |
(3) | Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. |
(4) | Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the provisions set forth in the Original Agreement and Amending Agreement. |
(5) | Severability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be effected thereby. |
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(6) | Entire Agreement. This Agreement, the Original Agreement and Amending Agreement constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof. |
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SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
DAKOTA TERRITORY RESOURCE corp.
|
||
By: | “Gerald M. Aberle” | |
Gerald M. Aberle, Chief Executive Officer |
JR ResourCes Corp.
|
||
By: | “Jonathan T. Awde” | |
Jonathan T. Awde, Chief Executive Officer |
SIGNATURE PAGE FOR AMENDING AGREEMENT #2
Exhibit 10.4
AMENDING AGREEMENT #3
This Amending Agreement #3 (the “Agreement”) is made as of the 12th day of March, 2021, by and between Dakota Territory Resource Corp, a Nevada corporation (the “Company”), and JR Resources Corp., a Nevada corporation (“JR”).
WHEREAS, on May 26, 2020 the Company and JR entered into an agreement (the “Original Agreement”), pursuant to which the Company granted a subscription right to JR to purchase from the Company a certain amount of Shares.
WHEREAS, on October 15, 2020 and February 15, 2021 the Company and JR entered into an amending agreement (the “Amending Agreement”) pursuant to which JR exercised in part its right to purchase Shares pursuant to the Original Agreement for an Investment Amount of $10,450,000 and the exercise of the balance of the right was extended to March 17, 2021.
WHEREAS, section 7.6 of the Original Agreement provides that any term of the Original Agreement may be amended, terminated or waived only with the written consent of the Company and JR prior to a Change of Control Closing or as otherwise provided in the Original Agreement.
WHEREAS, to be effective immediately prior to the Change of Control Closing, the Company and JR desire to enter into this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants contained in this Agreement, and for other good and valuable consideration the receipt and sufficiency of which are hereby acknowledged and agreed is beneficial for both parties, the Company and JR agree as follows:
Section 1 Amendment to Original Agreement.
The Original Agreement is hereby amended as follows, to be effective as of the date hereof:
(1) | Section 6.1(b) is amended and restated in its entirety as follows: |
(b) The Amended Bylaws shall provide for, among other things, the following board composition mechanisms during the Standstill Period:
(i) the Company Board shall consist of the JR Designees and the Company Designees, it being understood that the number of JR Designees at any given time shall be one (1) more than the number of Company Designees; and
(ii) in the event of any vacancy in the office of any JR Designee, a majority of the remaining JR Designees shall have the right to designate a replacement; in the event of any vacancy in the office of any Company Designee, a majority of the remaining Company Designees shall have the right to designate a replacement, in each case to fill such vacancy; and in the event of a vacancy resulting from an increase in the number of directors, the majority of each of the JR Designees and Company Designees shall agree upon such candidate and then have the right to fill such vacancy with this candidate, as well as any subsequent vacancy resulting from this appointed directorship.
(2) | The third sentence of Section 4.7 is amended and restated in its entirety as follows: |
“In connection with the adoption of such equity compensation plan, within 30 days from the Change of Control Closing, it is expected that the Board will agree to award up to 10 million shares of Company Common Stock as grants/options, with approximately 64.28% to be granted to JR personnel to become associated with the Company after the Change of Control Closing, and approximately 35.72% to be granted to Company personnel currently associated with the Company.”
Section 2 Reference to and Effect on the Original Agreement.
(1) | Except as expressly set forth herein, this Agreement shall not, by implication or otherwise, limit, impair, constitute a waiver of or otherwise affect the rights and remedies of any party under the Original Agreement, and shall not alter, modify or amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Original Agreement, the Amending Agreement or the Transaction Documents. Capitalized terms used herein without definition have the same meanings as in the Original Agreement (as may have been modified in the Amending Agreement). |
(2) | This Agreement is incorporated by reference in, and forms an integral part of, the Original Agreement and Amending Agreement. Upon execution of this Agreement, each reference in the Original Agreement and Amending Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or words of like import shall mean and be a reference to the Original Agreement as amended by the Amending Agreement and hereby, and each reference to the Original Agreement and Amending Agreement in any other document, instrument or agreement executed and/or delivered in connection with the Original Agreement and Amending Agreement shall mean and be a reference to the Original Agreement and Amending Agreement as amended hereby. |
(3) | The Original Agreement and Amending Agreement (each as amended hereby) and the Transaction Documents shall remain in full force and effect, other than those provisions amended pursuant to Section 1 of this Agreement. |
Section 3 Miscellaneous
(1) | Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. Counterparts may be delivered via facsimile, electronic mail (including pdf) or other transmission method and any counterpart so delivered shall be deemed to have been duly and validly delivered and be valid and effective for all purposes. |
(2) | Further Assurances. From and after the date of this Agreement, upon the reasonable request of either JR or the Company, the respective parties shall execute and deliver such instruments, documents, or other writings as may be reasonably necessary or desirable to confirm and carry out and to effectuate fully the intent and purposes of this Agreement. |
(3) | Construction. The headings herein are for convenience only, do not constitute a part of this Agreement and shall not be deemed to limit or affect any of the provisions hereof. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rules of strict construction will be applied against any party. This Agreement shall be construed as if drafted jointly by the parties, and no presumption or burden of proof shall arise favoring or disfavoring any party by virtue of the authorship of any provisions of this Agreement. |
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(4) | Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by the provisions set forth in the Original Agreement and Amending Agreement. |
(5) | Severability. Should any one or more of the provisions of this Agreement be determined to be illegal or unenforceable, all other provisions of this Agreement shall be given effect separately from the provision or provisions determined to be illegal or unenforceable and shall not be effected thereby. |
(6) | Entire Agreement. This Agreement, the Original Agreement and Amending Agreement constitute the full and entire understanding and agreement between the parties with respect to the subject matter hereof. |
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SIGNATURE PAGES FOLLOW.]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized signatories as of the date first indicated above.
DAKOTA TERRITORY RESOURCE corp. | ||
By: | “Gerald M. Aberle” | |
Gerald M. Aberle, Chief Executive Officer |
JR ResourCes Corp. | ||
By: | “Jonathan T. Awde” | |
Jonathan T. Awde, Chief Executive Officer |
SIGNATURE PAGE FOR AMENDING AGREEMENT #3
Exhibit 10.5
JR RESOURCES CORP.
(FOR NON-U.S. AND U.S. SUBSCRIBERS)
HAVE YOU COMPLETED THIS SUBSCRIPTION AGREEMENT PROPERLY?
The following items in this Subscription Agreement (as defined herein) must be completed. Please initial each box.
All Subscribers
All Subscribers (as defined herein) must complete the information in the boxes on pages 2 and 3. |
All Subscribers must sign the execution page of this Subscription Agreement on page 2. |
All Subscribers must wire the appropriate funds to the wire transfer instructions contained in Schedule “F” |
Non-U.S. Subscribers
Subscribers relying on the “Accredited Investor” exemption under Section 2.3 of NI 45-106 (as defined herein) (except those that are not resident in a province of Canada and not otherwise subject to Canadian Securities Laws (as defined herein)) must complete the Canadian Accredited Investor Status Certificate in Schedule “B”, indicating which category is applicable and sign on page B-5. |
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· | Subscribers relying on categories (j), (k) or (l) of the “Accredited Investor” exemption (and that do not meet the higher financial asset threshold set out in category (j.1) of Schedule “B”) must complete Exhibit “I” to Schedule “B” and sign on page B-7. | ||
Subscribers resident outside of Canada and the United States (as defined herein) must complete Schedule “C”. |
U.S. Subscribers
Subscribers who are in the United States, a U.S. Person (as defined herein) or purchasing securities for the account or benefit of a person or persons that is/are in the United States or U.S. Persons must complete the U.S. Accredited Investor Certificate in Schedule “D”. |
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Return this executed Subscription Agreement and all applicable Schedules to:
Return by:
June 16, 2020 |
Return
to:
241 Ridge Street, Suite 210
Reno, Nevada 89501
|
JR RESOURCES CORP.
241 Ridge Street, Suite 210
Reno, Nevada 89501
together with payment as described herein in the aggregate Subscription Amount set out on the following page, or in such other manner as may be provided for by the Corporation (as defined herein).
JR RESOURCES CORP.
NON-BROKERED SUBSCRIPTION AGREEMENT FOR SUBSCRIPTION RECEIPTS
TO: JR RESOURCES CORP. (THE “CORPORATION”), A NEVADA CORPORATION
The undersigned, on its own behalf and, if applicable, on behalf of a Disclosed Principal (as defined herein) for whom it is acting hereunder (the “Subscriber”), hereby irrevocably subscribes for and agrees to purchase that number of subscription receipts of the Corporation (each a “Subscription Receipt”) set out below at a price of US$1.00 per Subscription Receipt (the “Subscription Price”). The Subscriber agrees to be bound by the terms and conditions set forth in the attached “Terms and Conditions of Subscription for Subscription Receipts”, including, without limitation, the terms, representations, warranties, covenants, certifications and acknowledgements set forth in the applicable Schedules attached thereto. The Subscriber further agrees, without limitation, that the Corporation may rely upon the Subscriber’s representations, warranties, covenants, certifications and acknowledgments contained in such documents.
SUBSCRIPTION AND SUBSCRIBER INFORMATION
Please print all information (other than signatures), as applicable, in the space provided below
Subscriber Information and Signature | |||
(Name of Subscriber) | |||
By: | |||
Authorized Signature | |||
(Official Capacity or Title – if the Subscriber is not an individual) | |||
(Name of individual whose signature appears above if different than the name of the Subscriber printed above.) | |||
(Subscriber’s Residential Address, including Municipality and Province/State) | |||
(Subscriber’s Telephone Number) | |||
(Email Address) | |||
Number of Subscription Receipts: | |||
= | |||
Aggregate Subscription Price: US$ | |||
(the “Subscription Amount”) | |||
For Canadian Subscribers Only: | ||
If the Subscriber is signing as agent or trustee for a principal (a “Disclosed Principal”) and is not purchasing as trustee or agent for accounts fully managed by it, so as to be deemed to be purchasing as principal pursuant to NI 45-106 complete the following: | ||
(Name of Disclosed Principal) | ||
(Residential Address of Disclosed Principal) | ||
(Telephone Number of Disclosed Principal) | ||
(Account Reference, if applicable) | ||
It is anticipated that the securities purchased
hereunder will be issued through physical certificates.
The Subscriber hereby provides the following registration and delivery instructions in connection with the physical settlement of the
Subscription Receipts being purchased hereunder.
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Account Registration Information: | |
(Name) | |
(Account Reference, if applicable) | |
(Address, including Postal / Zip Code) | |
Delivery Instructions: | |
(Name) | |
(Account Reference, if applicable) | |
(Address, including Postal / Zip Code) | |
(Telephone Number) | |
(Contact Name) | |
Number and kind of securities of the Corporation held, directly or indirectly, or over which control or direction is exercised by the Subscriber, if any: | |
For Canadian Subscribers Only: | |
State whether Subscriber is an Insider of the Corporation (as such term is defined in the Securities Act (Ontario)):
Yes ¨ No ¨ |
|
State whether Subscriber is a Registrant (as such term is defined in the Securities Act (Ontario)):
Yes ¨ No ¨
|
|
Execution by the Subscriber above shall constitute an irrevocable offer and agreement by the Subscriber to subscribe for the securities described herein on the terms and conditions herein set out. The Corporation shall be entitled to rely on the delivery of a PDF or facsimile copy of this subscription or a copy delivered by other electronic means, and acceptance by the Corporation of such PDF, facsimile or copy delivered by other electronic means shall be legally effective to create a valid and binding agreement between the Subscriber and the Corporation in accordance with the terms and conditions hereof.
THE CORPORATION IS NOT A REPORTING ISSUER IN ANY JURISDICTION AND THE SUBSCRIPTION RECEIPTS WILL BE SUBJECT TO AN INDEFINITE HOLD PERIOD.
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TERMS AND CONDITIONS OF SUBSCRIPTION FOR SUBSCRIPTION RECEIPTS
ARTICLE 1 - INTERPRETATION
1.1 | Definitions |
Whenever used in this Subscription Agreement, unless there is something in the subject matter or context inconsistent therewith, the following words and phrases shall have the respective meanings ascribed to them as follows:
“affiliate” and “distribution” have the respective meanings ascribed to them in the Securities Act (Ontario).
“Business Day” means any day except Saturday, Sunday and any day on which banking institutions in the State of New York are authorized or required by law or other governmental action to close.
“Canadian Accredited Investor Status Certificate” has the meaning ascribed to such term in Section 4.2(b)(i).
“Canadian Securities Laws” means, collectively, all Securities Laws of each of the provinces of Canada.
“Change of Control Closing” means the decision by the Corporation to exercise all or part of its right to purchase the Dakota Shares, in one or more closings that results in the Corporation acquiring Dakota Shares, when aggregated with the Dakota Shares previously acquired or beneficially owned, that exceed 49.9% of the actually issued and outstanding Dakota Shares, by satisfaction of the conditions set forth in the Dakota Agreement.
“Change of Control Closing Date” means the particular date of the Change of Control Closing that is the Business Day immediately following the date on which all of the conditions and agreements set forth in the Dakota Agreement are satisfied, or such other date as the parties thereto may agree, provided that such Change of Control Closing occurs on or prior to the 5:00 p.m. Vancouver time on October 15, 2020, unless terminated prior thereto by (i) mutual agreement of the Corporation and Dakota or (ii) the purchase by the Corporation of the maximum number of Dakota Shares as provided for in the Dakota Agreement.
“Closing” has the meaning ascribed to such term in Section 4.1.
“Closing Date” has the meaning ascribed to such term in Section 4.1.
“Closing Time” has the meaning ascribed to such term in Section 4.1.
“Control Person” means any person that holds or is one of a combination of persons that holds (i) a sufficient number of any of the securities of an Corporation so as to affect materially the control of the Corporation, or (ii) more than 20% of the outstanding voting securities of an Corporation except where there is evidence showing that the holding of those securities does not affect materially the control of the Corporation.
“Corporation” means JR Resources Corp., a Nevada corporation, and includes any successor corporation to or of the Corporation.
“Dakota” means Dakota Territory Resource Corp., a Nevada corporation.
“Dakota Agreement” means the agreement between the Corporation and Dakota dated May 26, 2020.
“Dakota Shares” means shares of Dakota’s common stock.
“Disclosed Principal” has the meaning ascribed to such term on page 2 of this Subscription Agreement.
“Escrow Release Condition” means that the Change of Control Closing has been effected.
“Escrow Release Date” has the meaning ascribed to such term in Section 3.3 hereof.
“Escrow Release Deadline” has the meaning ascribed to such term in Section 3.3 hereof.
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“Escrowed Funds” has the meaning ascribed to such term in Section 3.3 hereof.
“Governmental Authority” means any government, parliament, legislature, or any regulatory authority, agency, commission or board of any government, parliament or legislature, or any court or (without limitation to the foregoing) any other law, regulation or rule-making entity (including, without limitation, any stock exchange, securities regulatory authority, central bank, fiscal or monetary authority or authority regulating banks), having jurisdiction in the relevant circumstances.
“including” means including without limitation.
“NI 45-106” means National Instrument 45-106 – Prospectus Exemptions of the Canadian Securities Administrators.
“Offering” has the meaning ascribed to such term in Section 3.3.
“Person” includes any individual (whether acting as an executor, trustee administrator, legal representative or otherwise), corporation, firm, partnership, sole proprietorship, syndicate, joint venture, trustee, trust, unincorporated organization or association, and pronouns have a similar extended meaning.
“Personal Information” means any information about a Person (whether an individual or otherwise) and, with respect to the Subscriber, includes information contained in this Subscription Agreement and the Schedules incorporated by reference herein.
“Registrant” means a dealer, adviser, investment fund manager, an ultimate designated person or chief compliance officer as those terms are used pursuant to Canadian Securities Laws, or a person registered or otherwise required to be registered under Canadian Securities Laws.
“Regulation D” means Regulation D under the U.S. Securities Act.
“Regulation S” means Regulation S under the U.S. Securities Act.
“Securities Laws” means, as applicable, the securities laws, regulations, rules, rulings and orders in each of the Selling Jurisdictions, the applicable policy statements, notices, blanket rulings, orders and all other regulatory instruments of the securities regulators in each of the Selling Jurisdictions.
“Selling Jurisdictions” means all provinces of Canada, pursuant to prospectus exemptions under NI 45-106 and pursuant to the exclusion from the registration requirements of the U.S. Securities Act afforded by Rule 903 of Regulation S; the United States pursuant to Rule 506(b) of Regulation D to U.S. Accredited Investors; and outside of Canada and the United States pursuant to the exclusion from the registration requirements of the U.S. Securities Act afforded by Rule 903 of Regulation S on a private placement or equivalent basis in accordance with applicable laws and provided that any such laws permit offers and sales of the Subscription Receipts without any obligation on the part of the Corporation to prepare or file any registration statement, prospectus or other disclosure document and without triggering any disclosure obligations or submission to the jurisdiction on the part of the Corporation, or as mutually agreed upon by the Corporation.
“Subscriber” means the subscriber for the Subscription Receipts as set out on page 2 of this Subscription Agreement and includes, as applicable, each Disclosed Principal for whom it is acting.
“Subscription Agreement” means this subscription agreement (including any Schedules hereto) and any instrument amending this Subscription Agreement; “hereof”, “hereto”, “hereunder”, “herein” and similar expressions mean and refer to this Subscription Agreement and not to a particular Article or Section; and the expression “Article” or “Section” followed by a number means and refers to the specified Article or Section of this Subscription Agreement.
“Subscription Amount” has the meaning ascribed to such term on page 2 of this Subscription Agreement.
“Subscription Price” has the meaning ascribed to such term on page 2 of this Subscription Agreement.
“Subscription Receipts” has the meaning ascribed to such term on page 2 of this Subscription Agreement.
“Subscription Receipt Certificate” means a subscription receipt certificate to be executed on the Closing Date by the Corporation representing the Subscription Receipts subscribed for hereunder.
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“Term Sheet” means the term sheet delivered to potential purchasers of Subscription Receipts, a copy of which is attached hereto as Schedule “A”.
“Underlying Securities” means, collectively, the Underlying Shares and Warrants issuable on conversion of the Subscription Receipts, and the Warrant Shares issuable upon the due exercise of the Warrants.
“Underlying Shares” has the meaning ascribed to such term in Section 3.1 hereof.
“United States” means the United States of America, its territories and possessions, any State of the United States and the District of Columbia.
“U.S. Accredited Investor” means an “accredited investor” as defined in Rule 501(a) of Regulation D.
“U.S. Person” means a “U.S. person” as such term is defined in Rule 902(k) of Regulation S.
“U.S. Securities Act” means the United States Securities Act of 1933, as amended.
“U.S. Subscriber” means a Subscriber of Subscription Receipts who was, at the time of purchase (a) a U.S. Person, (b) any person purchasing the Subscription Receipts on behalf of, or for the account or benefit of, any U.S. Person or any person in the United States, (c) any person who receives or received an offer to acquire such Subscription Receipts while in the United States, or (d) any person who was in the United States at the time such person’s buy order was made or the Subscription Agreement pursuant to which such Subscription Receipts were acquired was executed or delivered.
“Warrant” has the meaning ascribed to such term in Section 3.1 hereof.
“Warrant Indenture” means the warrant indenture to be entered into between the Corporation and the warrant agent named therein pursuant to which the Warrants will be issued and providing for the definitive terms of the Warrants.
“Warrant Share” has the meaning ascribed to such term in Section 3.1 hereof.
1.2 | Gender and Number |
Words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine gender and words importing persons shall include firms and corporations and vice versa.
1.3 | Currency |
Unless otherwise specified, all dollar amounts in this Subscription Agreement and the Schedules, including the symbol “US$”, are expressed in United States dollars.
1.4 | Subdivisions and Headings |
The division of this Subscription Agreement into Articles, Sections, Schedules and other subdivisions and the inclusion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Subscription Agreement. The headings in this Subscription Agreement are not intended to be full or precise descriptions of the text to which they refer. Unless something in the subject matter or context is inconsistent therewith, references herein to an Article, Section, Subsection, paragraph, clause or Schedule are to the applicable article, section, subsection, paragraph, clause or schedule of this Subscription Agreement.
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ARTICLE 2 - SCHEDULES
2.1 | Description of Schedules |
The following are the Schedules attached to and incorporated in this Subscription Agreement by reference and deemed to be a part hereof:
Schedule “A” | - | Term Sheet | |
Schedule “B” | - | Canadian Accredited Investor Status Certificate | |
Schedule “C” | - | International Jurisdiction Certificate | |
Schedule “D” | - | U.S. Accredited Investor Certificate | |
Schedule “E” | - | Contact Information for Canadian Securities Commissions | |
Schedule “F” | - | Funds Transfer Instructions |
ARTICLE 3- SUBSCRIPTION AND DESCRIPTION OF SUBSCRIPTION RECEIPTS
3.1 | Subscription for the Subscription Receipts |
The Subscriber hereby confirms its irrevocable subscription for and offer to purchase from the Corporation that number of Subscription Receipts indicated on page 2 of this Subscription Agreement, on and subject to the terms and conditions set out in this Subscription Agreement, for the Subscription Amount which is payable as described in Article 4 hereto. Each Subscription Receipt shall entitle the holder thereof to receive, upon automatic exchange in accordance with the terms of the Subscription Receipt Certificates, which are summarized in the Term Sheet, without payment of additional consideration or further action on the part of the holder thereof, one common share in the capital of the Corporation (each, an “Underlying Share”) and one half (1/2) of one common share purchase warrant of the Corporation (each, a “Warrant”) upon the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Condition at or prior to the Escrow Release Deadline, as more fully described in the Subscription Receipt Certificate. Each Warrant entitles the holder thereof to acquire one common share in the capital of the Corporation (each, a “Warrant Share”) for an exercise price of US$1.50 per Warrant Share for a period of five (5) years following the Escrow Release Date, subject to adjustment in certain events, as will be more fully described in the Warrant Indenture. A summary of material terms of the Subscription Receipts, Underlying Shares and Warrants are set forth in the Term Sheet, reproduced in Schedule “A”; however, reference should be made to the Subscription Receipt Certificate and the Warrant Indenture for the definitive terms of the Subscription Receipts and the Warrants. In the event of a conflict or inconsistency between the provisions hereof, including the Term Sheet, and the Subscription Receipt Certificate or the Warrant Indenture, as applicable, the Subscription Receipt Certificate or the Warrant Indenture, as applicable, shall be paramount and govern.
THE SUBSCRIBER ACKNOWLEDGES THAT ALL SUBSCRIPTION RECEIPTS WILL BEAR THE FOLLOWING U.S. RESTRICTIVE LEGEND:
“THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT.”
3.2 | Acceptance and Rejection of Subscription by the Corporation |
The Subscriber acknowledges and agrees that the Corporation reserves the right, in its absolute discretion, to reject this subscription for Subscription Receipts, in whole or in part, at any time prior to the Closing Time. The Corporation will be deemed to have accepted this offer upon the Corporation’s execution of the acceptance form of this Subscription Agreement and the delivery (or deposit) of the Subscription Receipts purchased hereunder (if any) in accordance with the provisions of this Subscription Agreement. If this subscription is rejected in whole, any payment delivered by the Subscriber to the Corporation representing the Subscription Amount pursuant to this Subscription Agreement, will be promptly returned to the Subscriber without interest or deduction. If this subscription is accepted only in part, a cheque representing any refund of the Subscription Amount for that portion of the subscription for the Subscription Receipts which is not accepted will be promptly returned to the Subscriber by the Corporation without interest or deduction.
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3.3 | Offering |
The Subscriber, on its own behalf and, if applicable, on behalf of a Disclosed Principal for whom it is acting hereunder, hereby acknowledges that the Subscription Receipts subscribed to hereunder form part of an offering of up to 14,000,000 Subscription Receipts for aggregate gross proceeds of up to approximately US$14,000,000 directly by the Corporation, to be issued and sold by the Corporation pursuant to the Subscription Agreement and the Subscription Receipt Certificates (the “Offering”).;
On the Closing Date, the gross proceeds raised in connection with the Offering (collectively, the “Subscription Proceeds”) will be delivered to and held in escrow on behalf of the subscribers of Subscription Receipts (including the Subscriber) by the Corporation in a segregated account and invested in an interest bearing account, short-term obligations of, or guaranteed by, the Government of Canada or any other investments that may be approved by the Corporation (the Subscription Proceeds, together with all interest and other income earned thereon, the “Escrowed Funds”), pending the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Condition at or prior to the Escrow Release Deadline, in accordance with the provisions of the Subscription Receipt Certificates.
The Escrowed Funds will be released to the Corporation upon the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Condition at or before the Escrow Release Deadline, at which time each Subscription Receipt shall automatically be exchanged for one Underlying Share and one half (1/2) of one Warrant (such date hereinafter referred to as the “Escrow Release Date”). Unless the consent of holders of not less than 66 2/3% of the then outstanding Subscription Receipts is obtained pursuant to the terms of the Subscription Receipt Certificates, in the event that the Escrow Release Condition is not satisfied at or before 5:00 p.m. (Vancouver time) on October 15, 2020 (as the same may be extended in accordance with the terms of the Subscription Receipt Certificates) (the “Escrow Release Deadline”), the Corporation will return to each holder of Subscription Receipts, an amount equal to the aggregate Subscription Price for the Subscription Receipts held by such holder plus a pro rata share of any interest or other income earned on the Subscription Proceeds, less applicable withholding tax, if any. The Corporation shall use its commercially reasonable efforts to meet the Escrow Release Deadline prior to October 15, 2020. To the extent that the Escrowed Funds are insufficient to pay such amounts to the holders of the Subscription Receipts, the Corporation will be liable for and will be required to contribute such amounts as are necessary to satisfy any shortfall.
The description of the Subscription Receipts, the Underlying Shares and the Warrants contained in the Term Sheet and this Agreement is a summary only and is subject to the provisions of the Subscription Receipt Certificates and the Warrant Indenture.
3.4 | Subscription Receipts |
The Subscription Receipts will be created and issued pursuant to the Subscription Receipt Certificates. The specific attributes of the Subscription Receipts will be set forth in Subscription Receipt Certificates, which provide, among other things, that following the Escrow Release Condition having been satisfied or, if capable of waiver and permitted to be waived, waived by the necessary parties at or prior to the Escrow Release Deadline, each Subscription Receipt will be automatically exchanged, without payment of any additional consideration or any further action by the holder thereof, for one Underlying Share and one Warrant.
The Subscription Receipt Certificates will provide that, at Closing, the Subscription Proceeds will be held in escrow in a segregated account by the Corporation pursuant to the terms of the Subscription Receipt Certificates and the Corporation shall issue the Subscription Receipts to the subscribers of Subscription Receipts (including the Subscriber) at the Closing. The Subscription Proceeds will be held in escrow in a segregated account by the Corporation on behalf of the subscribers of Subscription Receipts (including the Subscriber) and invested in an interest bearing account, short-term obligations of, or guaranteed by, the Government of Canada or any other investments that may be approved by the Corporation pending the Escrow Release Condition being satisfied or waived (to the extent such waiver is permitted).
The Escrowed Funds will be released to the Corporation promptly following the date that the Escrow Release Condition has been satisfied or waived (to the extent such waiver is permitted) by the necessary parties at or before the Escrow Release Deadline, at which time each Subscription Receipt shall automatically be exchanged for one Underlying Share and one half (1/2) of one Warrant. The Warrants shall be governed by the Warrant Indenture and issued in accordance with the terms and conditions contained therein. In the event the Escrow Release Condition is not satisfied or waived (to the extent permitted) at or before the Escrow Release Deadline (as the same may be extended in accordance with the terms of the Subscription Receipt Certificates), the Corporation will return to the holders of the Subscription Receipts an amount equal to the aggregate Subscription Price for the Subscription Receipts held by such holder plus a pro rata share of any interest or other income earned on the Subscription Proceeds, less applicable withholding tax, if any.
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The Subscriber, on its own behalf and on behalf of each beneficial purchaser, if any, for whom it is contracting under this Subscription Agreement, acknowledges and agrees that the rights of the holders of the Subscription Receipts may be modified under the Subscription Receipt Certificates, pursuant to an ordinary resolution approved either: (i) by holders of Subscription Receipts at a meeting of at which there are present in person or by proxy holders holding in the aggregate more than 25% of the total number of Subscription Receipts then outstanding by the affirmative vote of holders voting as a single class who hold in the aggregate not less than 50% of the total number of Subscription Receipts represented in person and by proxy at the meeting and voted on the resolution; or (ii) by written consent of holders of Subscription Receipts representing at least 50% of the outstanding Subscription Receipts.
The foregoing description of the Subscription Receipts is a summary only and is subject to the detailed provisions of the Subscription Receipt Certificates pursuant to which the Subscription Receipts will be issued. In the event of any inconsistency between the provisions hereof and the provisions of a Subscription Receipt Certificate, the provisions of the Subscription Receipt Certificate will prevail and take precedence.
ARTICLE 4 - CLOSING
4.1 | Closing |
Delivery and sale of the Subscription Receipts and payment of the aggregate Subscription Amount will be completed (the “Closing”) at the offices of the Corporation’s Canadian counsel, Stikeman Elliott LLP, in Toronto, Ontario, Canada at 9:00 a.m. (Toronto time) (the “Closing Time”) on or about June 30, 2020, or such other place or date or time as the Corporation may permit (the “Closing Date”) and for greater clarity, there may be more than one closing date. If on or prior to the Closing Time, the terms and conditions contained in this Subscription Agreement have been complied with to the satisfaction of the Corporation or waived by the Corporation, the Subscriber shall deliver to the Corporation a completed Subscription Agreement and payment of the aggregate Subscription Amount for the Subscription Receipts purchased, against physical delivery by the Corporation of certificates representing the Subscription Receipts or delivery by the Corporation of such other evidence of issue of the Subscription Receipts as the Corporation may permit in accordance with the Subscription Receipt Certificates, and such other documentation as may be required pursuant to this Subscription Agreement or the Subscription Receipt Certificates. The Subscriber will take up, purchase and pay for the Subscription Receipts purchased hereunder at the Closing upon acceptance of this offer by the Corporation.
If, prior to the Closing Time, the terms and conditions contained in this Subscription Agreement (other than the physical delivery by the Corporation of Subscription Receipt Certificates or the delivery by the Corporation of such other evidence of issue of the Subscription Receipts as the Corporation may permit in accordance with the Subscription Receipt Certificates) have not been complied with to the satisfaction of the Corporation, or waived by the relevant party, the Corporation and the Subscriber will have no further obligations under this Subscription Agreement.
It is anticipated that the securities purchased hereunder will be issued through physical certificates or through book entry or such other electronic means as the Corporation may in its discretion determine on the Closing Date.
4.2 | Conditions of Closing |
The Subscriber acknowledges and agrees that the Corporation is relying on the truth of the representations and warranties of the Subscriber contained in this Subscription Agreement as of the date of this Subscription Agreement, and as of the Closing Time as if made at and as of the Closing Time, and the fulfillment of the following additional conditions prior to the Closing Time:
(a) | on or about June 23, 2020, |
(i) | the Subscriber having delivered a properly completed and signed Subscription Agreement (including all applicable Schedules hereto) to the Corporation at the address below, and having made payment arrangements for the Subscription Amount in a manner acceptable to the Corporation: |
JR RESOURCES CORP.
241 Ridge Street, Suite 210
Reno, Nevada 89501
Attention: Richard Silas
Email: richard@jrresourcescorp.com
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(ii) | if the Subscriber is resident of Canada or otherwise subject to Canadian Securities Laws, the Subscriber having properly completed, signed and delivered (A) Schedule “B” (the Canadian Accredited Investor Status Certificate) attached hereto, and (B) Exhibit “I” to Schedule “B” if subscribing under categories (j), (k) or (l) of the Canadian Accredited Investor Status Certificate; |
(iii) | if the Subscriber is resident outside of Canada and the United States, the Subscriber having properly completed, signed and delivered Schedule “C” (the International Jurisdiction Certificate) attached hereto; and |
(iv) | if the Subscriber is a U.S. Subscriber, the Subscriber having property completed, signed and delivered Schedule “D” (the U.S. Accredited Investor Certificate) attached hereto; |
(b) | the Subscriber having executed and returned to the Corporation, at the Corporation’s request, all other documents as may be required by the Securities Laws for delivery by the Corporation on behalf of the Subscriber; |
(c) | the Corporation having obtained all necessary approvals and consents in respect of the Offering; and |
(d) | the issue and sale of the Subscription Receipts being exempt from the requirement to file a prospectus and the requirement to deliver an offering memorandum or similar disclosure document under applicable securities legislation relating to the sale of the Subscription Receipts, or the Corporation having received such orders, consents or approvals as may be required to permit such sale without the requirement to file a prospectus or registration statement or deliver an offering memorandum. |
ARTICLE 5 – REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE CORPORATION
5.1 | Representations, Warranties and Covenants of the Corporation |
The Corporation represents and warrants to Subscriber as follows:
(a) | The Corporation is a corporation duly organized, validly existing, and in good standing under the laws of the State of Nevada, has all requisite power and authority to execute and deliver this Subscription Agreement, to issue and sell the Subscription Receipts, to carry out the provisions of the Subscription Agreement, and to conduct its business and activities as they are now being conducted. |
(b) | This Subscription Agreement is a legal, valid, and binding obligation of the Corporation, enforceable against the Corporation in accordance with its terms, except as enforceability may be limited by bankruptcy, insolvency, or other similar laws of general application or by general principles of equity. |
(c) | The Subscription Receipts that are being purchased by Subscriber when issued, sold and delivered in accordance with the terms of this Subscription Agreement and the Subscription Receipt Certificate, upon the Corporation’s receipt of the Subscription Amount, will be duly and validly issued, and will be free of restrictions on transfer other than restrictions on transfer under this Subscription Agreement and applicable Canadian and United States state and federal securities laws. |
(d) | To the Corporation’s knowledge, the operations of the Issuer are and have been conducted at all times in compliance with applicable financial recordkeeping and reporting requirements of money laundering statutes, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any government or Governmental Authority (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court or Governmental Authority or any arbitrator involving the Issuer or any Subsidiary with respect to the Money Laundering Laws is pending, or to the knowledge of the Issuer is threatened. |
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(e) | The Corporation has conducted and is conducting its business in compliance in all material respects with all applicable laws and regulations of each jurisdiction in which it carries on business or holds assets (including all applicable federal, state, municipal and local environmental anti-pollution and licensing laws, regulations and other lawful requirements of any governmental or regulatory body, including all Governmental Authorities), holds all permits, licenses and like authorizations necessary for it to carry on its business in each jurisdiction where such business is carried on that are material to the conduct of the business of the Corporation. |
(f) | There is no claim, action, suit, proceeding, arbitration, complaint, charge or investigation pending or, to the Corporation’s knowledge, currently threatened against the Corporation. The Corporation is not a party or is named as subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. |
ARTICLE 6 - ACKNOWLEDGEMENTS, REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE SUBSCRIBER
6.1 | Acknowledgements, Representations, Warranties and Covenants of the Subscriber |
The Subscriber, on its own behalf and, if applicable, on behalf of a Disclosed Principal for whom it is acting hereunder, hereby acknowledges, represents and warrants to, and covenants with, the Corporation as follows and acknowledges that the Corporation is relying on such acknowledgements, representations, warranties and covenants in connection with the transactions contemplated herein:
(a) | The Subscriber confirms that it: |
(i) | has such knowledge in financial and business affairs as to be capable of evaluating the merits and risks of its investment in the Subscription Receipts, including the potential loss of its entire investment; |
(ii) | is aware of the characteristics of the Subscription Receipts and understands the risks relating to an investment therein; and |
(iii) | is able to bear the economic risk of loss of its investment in the Subscription Receipts. |
(b) | The Subscriber is resident, or if not an individual has its head office, in the jurisdiction set out on page 2 of this Subscription Agreement and intends that the Securities Laws of that jurisdiction govern the Subscriber’s subscription. Such address was not created and is not used solely for the purpose of acquiring the Subscription Receipts and the Subscriber was solicited to purchase in only such jurisdiction. |
(c) | If the Subscriber is not a Person resident in Canada, the subscription for the Subscription Receipts by the Subscriber is being made pursuant to exemptions under, and does not contravene any of the applicable Securities Laws in the jurisdiction in which the Subscriber resides and does not give rise to any obligation of the Corporation to prepare and file a prospectus or similar document or to register the Subscription Receipts or the Underlying Securities, or to be registered with or to file any report or notice with any governmental or regulatory authority or to comply with any continuous disclosure obligations, in each case, under the applicable Securities Laws of the jurisdiction in which the Subscriber resides. |
(d) | As applicable, the Subscriber has properly completed, signed and delivered to the Corporation this Subscription Agreement, Schedule “B” (Canadian Accredited Investor Status Certificate) and, if applicable, Exhibit “I” to Schedule “B” attached hereto, Schedule “C” (International Jurisdiction Certificate), and Schedule “D” (U.S. Accredited Investor Certificate) attached hereto, and the acknowledgements, representations, warranties, covenants and information contained herein and therein are true and correct as of the date hereof and will be true and correct as of the Closing Time and if less than a complete copy of this Subscription Agreement is delivered to the Corporation, the Corporation and its respective advisors are entitled to assume that the Subscriber accepts and agrees to all the terms and conditions of the pages not delivered, unaltered. |
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(e) | The Subscriber is aware that the Subscription Receipts (and the Underlying Securities) have not been and will not be registered under the U.S. Securities Act or the Securities Laws of any state of the United States and that the Subscription Receipts (and the Underlying Securities) may not be offered or sold, directly or indirectly, in the United States without registration under the U.S. Securities Act and applicable state Securities Laws or compliance with the requirements of an exemption from registration therefrom and it acknowledges that the Corporation has no present intention of filing a registration statement under the U.S. Securities Act or applicable state Securities Laws in respect of any such securities; accordingly, the Subscription Receipts (and the Underlying Securities) are (or will be when issued) “restricted securities” within the meaning of Rule 144(a)(3) of the U.S. Securities Act. |
(f) | Unless the Subscriber has properly completed, signed and delivered Schedule “D” attached hereto (in which case the Subscriber makes the representations and warranties therein), the Subscriber, or beneficial purchaser, if any, for whom it is acting as trustee or agent: |
(i) | is not a U.S. Person and is not acquiring the Subscription Receipts for the account or benefit of a U.S. Person or a Person in the United States; |
(ii) | acknowledges an agrees that the Subscription Receipts have not been offered to the Subscriber in the United States, and the individuals making the order to purchase the Subscription Receipts and executing and delivering this Subscription Agreement on behalf of the Subscriber were not in the United States when the order was placed and this Subscription Agreement was executed and delivered; |
(iii) | acknowledges and agrees that offers and sales of any of the Subscription Receipts or the Underlying Securities prior to the expiration of a period of one year after the date of the issuance of such securities (such one year period hereinafter referred to as the “Distribution Compliance Period”) shall only be made in compliance with the safe harbor provisions set forth in Regulation S, pursuant to the registration provisions of the U.S. Securities Act or an exemption therefrom, and all offers and sales after the Distribution Compliance Period shall be made only in compliance with the registration provisions of the U.S. Securities Act or an exemption therefrom and in each case only in compliance with applicable state securities laws, and the Subscriber and any transferee of the such securities agree not to engage in hedging transactions involving such securities unless such transactions are in compliance with the provisions of the U.S. Securities Act and in each case only in compliance with applicable state securities laws; |
(iv) | understands that the Corporation is the seller of the Subscription Receipts and the Underlying Securities and that, for purposes of Regulation S, a “distributor” is any underwriter, dealer or other person who participates, pursuant to a contractual arrangement, in the distribution of the securities sold in reliance on Regulation S and that an “affiliate” is any partner, officer, director or any person directly or indirectly controlling, controlled by or under common control with any person in question; the Subscriber agrees that it will not, during the Distribution Compliance Period described in Regulation S, act as a distributor, either directly or through any affiliate, or offer, sell, transfer, or otherwise dispose of the Subscription Receipts or the Underlying Securities other than (i) to or for the account or benefit of a person outside the United States or a non-U.S. Person and in compliance with Regulation S, (ii) pursuant to an effective registration statement under the U.S. Securities Act and in compliance with all applicable state securities laws, or (iii) pursuant to an available exemption from registration under the U.S. Securities Act and all applicable state securities laws, and in each case, the Corporation has consented to such sale, transfer or other disposition; the Subscriber understands that the Corporation will refuse to transfer the Subscription Receipts or the Underlying Securities absent compliance with the foregoing; |
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(v) | acknowledges and understands that in the event the Subscription Receipts or the Underlying Securities are offered, sold or otherwise transferred by the Subscriber prior to the expiration of the Distribution Compliance Period specified in Regulation S, the purchaser or transferee must agree not to resell such securities except in compliance with the provisions of Regulation S, pursuant to registration under the U.S. Securities Act, or pursuant to an available exemption from registration, and in each case, in compliance with all applicable state securities laws; and must further agree not to engage in hedging transactions with regard to such securities unless in compliance with the U.S. Securities Act; and |
(vi) | acknowledges and agrees that the Subscription Receipts and the Underlying Securities will be “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act and will remain “restricted securities” notwithstanding any resale within or outside the United States unless the sale is completed pursuant to an effective registration statement under the U.S. Securities Act or pursuant to an exemption therefrom, including in accordance with Rule 144 under the U.S. Securities Act (“Rule 144”), if available; the Subscriber acknowledges that the Subscription Receipts or the Underlying Securities will be subject to a minimum hold period of at least one year under Rule 144 from the date of issuance; the Subscriber acknowledges that it has been advised to obtain independent legal and professional advice on the requirements of Rule 144, and that the Subscriber has been advised that resales of the Subscription Receipts or the Underlying Securities may be made only under certain circumstances; the Subscriber understands that to the extent that Rule 144 is not available, the Subscriber may be unable to sell any of the Subscription Receipts or the Underlying Securities without either registration under the U.S. Securities Act or the availability of another exemption or exclusion from such registration requirements, and in all cases pursuant to exemptions from applicable securities laws of any applicable state of the United States. |
(g) | The Subscriber undertakes and agrees that it will not offer or sell any of the Subscription Receipts (or the Underlying Securities) in the United States or to, or for the account or benefit of U.S. Persons, unless such securities are registered under the U.S. Securities Act and the Securities Laws of all applicable states of the United States, or an exemption from such registration requirement is available, and further that the Subscriber will not resell or transfer the Subscription Receipts (or the Underlying Securities) subscribed for hereunder except in accordance with the provisions of the Corporation’s constating documents, applicable securities legislation, regulations, rules, policies and orders and stock exchange rules. |
(h) | The Subscriber confirms that the current structure of this transaction and all transactions and activities contemplated hereunder is not a scheme to avoid the registration requirements of the U.S. Securities Act. |
(i) | The Subscriber is not purchasing the Subscription Receipts and the Underlying Securities as the result of any “directed selling efforts” (as defined in Rule 902(c) of Regulation S). |
(j) | The Subscriber acknowledges and agrees that the Warrants may not be exercised by, or for the account or benefit of, a U.S. Person or a person in the United States unless an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws is available to the holder and the holder has furnished an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect or, at the Corporation’s option, as applicable, other evidence of exemption satisfactory to the Corporation; provided, however, that the original Subscriber that purchased the Subscription Receipts in the Offering for its own account or for the account or benefit of a Disclosed Principal, and properly completed either Schedule “B” (Canadian Accredited Investor Status Certificate) and, if applicable, Exhibit “I” attached thereto, or Schedule “C” (International Jurisdiction Certificate), or Schedule “D” (U.S. Accredited Investor Certificate) of the Subscription Agreement, will not be required to deliver an opinion of counsel in connection with its exercise of the Warrant on its own behalf or on behalf of such Disclosed Principal, provided that it, and such Disclosed Principal, provides a representation to the Corporation as of the date of exercise of the Warrants that all the representations, warranties and covenants made by it herein, including all applicable Schedules hereto, remain true as of the date of the exercise. |
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(k) | The execution and delivery of this Subscription Agreement, the performance and compliance with the terms hereof, the subscription for the Subscription Receipts and the completion of the transactions described herein by the Subscriber will not result in any material breach of, or be in conflict with or constitute a material default under, or create a state of facts which, after notice or lapse of time, or both, would constitute a material default under any term or provision of the constating documents, by-laws or resolutions of the Subscriber, if applicable, the Securities Laws or any other laws applicable to the Subscriber, any agreement to which the Subscriber is a party, or any judgment, decree, order, statute, rule or regulation applicable to the Subscriber. |
(l) | The Subscriber is subscribing for the Subscription Receipts as principal for its own account and not for the benefit of any other Person (within the meaning of applicable Securities Laws) or if it is not subscribing as principal it is acting as agent for a Disclosed Principal (whose identity is disclosed on page 2 of this Subscription Agreement) who is purchasing as principal for its own account and not for the benefit of any other Person. |
(m) | If the Subscriber is contracting hereunder as trustee or agent for a fully managed account (including for greater certainty, a portfolio manager or comparable advisor) or as trustee or agent for a Disclosed Principal, the Subscriber is duly authorized to execute and deliver this Subscription Agreement and all other necessary documentation in connection with such subscription and if the Subscriber is acting as trustee or agent for a Disclosed Principal, who is subscribing as principal for its own account and not for the benefit of any other Person, this Subscription Agreement has been duly authorized, executed and delivered by or on behalf of and constitutes a legal, valid and binding agreement of such Disclosed Principal and the Subscriber acknowledges that the Corporation may be required by applicable laws to disclose to certain regulatory authorities the identity of such Disclosed Principal for whom it is acting. |
(n) | In the case of a subscription for the Subscription Receipts by the Subscriber acting as principal, this Subscription Agreement has been duly authorized, executed and delivered by, and constitutes a legal, valid and binding agreement of the Subscriber. This Subscription Agreement is enforceable in accordance with its terms against the Subscriber. |
(o) | If the Subscriber is: |
(i) | a corporation, the Subscriber is duly incorporated and is validly subsisting under the laws of its jurisdiction of incorporation and has all requisite legal and corporate power and authority to execute and deliver this Subscription Agreement, to subscribe for the Subscription Receipts as contemplated herein and to carry out and perform its covenants and obligations under the terms of this Subscription Agreement and has obtained all necessary approvals in respect thereof, and the individual signing this Subscription Agreement has been duly authorized to execute and deliver this Subscription Agreement; |
(ii) | a partnership, syndicate or other form of unincorporated organization, the Subscriber has the necessary legal capacity and authority to execute and deliver this Subscription Agreement, to subscribe for the Subscription Receipts as contemplated herein and to observe and perform its covenants and obligations hereunder and has obtained all necessary approvals in respect thereof and the individual signing this Subscription Agreement has been duly authorized to execute and deliver this Subscription Agreement; or |
(iii) | an individual, the Subscriber is of the full age of majority in his or her jurisdiction of residence and is legally competent to execute, deliver and be bound by the terms of this Subscription Agreement, to subscribe for the Subscription Receipts contemplated herein and to observe and perform his or her covenants and obligations hereunder. |
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If the Subscriber, or any Disclosed Principal, is a corporation or a partnership, syndicate, trust association, or any other form of unincorporated organization or organized group of persons, the Subscriber or such Disclosed Principal was not created or being used solely to permit purchases of or to hold securities without a prospectus in reliance on a prospectus exemption. |
(p) | There is no Person acting or purporting to act in connection with the transactions contemplated herein who is entitled to any brokerage or finder’s fee. |
(q) | The Subscriber is not acting jointly or in concert with any other subscriber in connection with the Offering for the purpose of the acquisition of the Subscription Receipts. |
(r) | If required by applicable Securities Laws, the Subscriber will execute, deliver and file or assist the Corporation in filing such reports, undertakings and other documents with respect to the issue of the Subscription Receipts as may be required by any securities commission, stock exchange or other regulatory authority. |
(s) | The Subscriber has been advised to consult its own legal advisors with respect to the execution, delivery and performance by it of this Subscription Agreement and the transactions contemplated herein, including trading in the Subscription Receipts and Underlying Securities, and with respect to the hold periods imposed by the Securities Laws of the Selling Jurisdiction in which the Subscriber resides and other applicable Securities Laws, and acknowledges that no representation has been made by the Corporation respecting the applicable hold periods imposed by the Securities Laws or other resale restrictions applicable to such securities which restrict the ability of the Subscriber (or others for whom it is contracting hereunder) to resell such securities, that the Subscriber (or others for whom it is contracting hereunder) is solely responsible to find out what these restrictions are, that the Subscriber is solely responsible (and the Corporation is in any way responsible) for compliance with applicable resale restrictions and that the Subscriber (or others for whom it is contracting hereunder) is aware that it may not resell such securities except in accordance with limited exemptions under the Securities Laws and other applicable Securities Laws and in accordance with the Corporation’s constating documents. |
(t) | The Subscriber has not received or been provided with a prospectus, offering memorandum (within the meaning of the Securities Laws) or any sales or advertising literature or media in connection with the Offering or any document purporting to describe the business and affairs of the Corporation which has been prepared for review by prospective purchasers to assist in making an investment decision in respect of the Subscription Receipts and the Subscriber’s decision to subscribe for the Subscription Receipts was not based upon, and the Subscriber has not relied upon, any oral or written representations as to facts made by or on behalf of the Corporation, or any employee, agent or affiliate thereof or any other person associated therewith, except as set forth herein. The Subscriber’s decision to subscribe for the Subscription Receipts was based solely upon this Subscription Agreement (including the Term Sheet) and any information about the Corporation which is publicly available (any such information having been obtained by the Subscriber without independent investigation or verification by the Corporation). |
(u) | Neither the Corporation nor any of its directors, employees, officers, affiliates or agents have made any written or oral representations: |
(i) | that any Person will resell or repurchase the Subscription Receipts or the Underlying Securities; |
(ii) | that any Person will refund all or any part of the Subscription Amount; |
(iii) | as to the future price or value of the Subscription Receipts or the Underlying Securities; or |
(iv) | that the Corporation is or will become a reporting issuer in any jurisdiction. |
(v) | The Subscriber acknowledges and agrees that the Corporation is not a reporting issuer in any jurisdiction and the Corporation cannot and is not representing that the Subscription Receipts (or the Underlying Securities) are or will be listed on the Canadian Securities Exchange, the TSX Venture Exchange, the Toronto Stock Exchange or any other exchange and no market exists for the securities of the Corporation. |
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(w) | The Subscriber is not purchasing the Subscription Receipts with knowledge of any material information concerning the Corporation that has not been generally disclosed. |
(x) | The subscription for the Subscription Receipts has not been made through or as a result of, and the distribution of the Subscription Receipts is not being accompanied by any form of “general solicitation” or “general advertising” (as those terms are used in Regulation D), including without limitation in printed public media, radio, television or telecommunications, including electronic display, or as part of a general solicitation. |
(y) | The funds representing the Subscription Amount which will be advanced by the Subscriber to the Corporation hereunder will not represent proceeds of crime for the purposes of the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (Canada) (the “PCMLTFA”), the United Kingdom’s Proceeds of Crime Act 2002 (the “POCA”) or the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (the “PATRIOT Act”), and the Subscriber acknowledges that the Corporation may in the future be required by law to disclose the Subscriber’s name and other information relating to this Subscription Agreement and the Subscriber’s subscription hereunder, on a confidential basis, pursuant to the PCMLTFA, POCA or the PATRIOT Act. To the best of its knowledge (a) none of the subscription funds to be provided by the Subscriber (i) have been or will be derived from or related to any activity that is deemed criminal under the laws of Canada, the United States, or any other jurisdiction, or (ii) are being tendered on behalf of a Person or entity who has not been identified to the Subscriber, and (b) the Subscriber shall promptly notify the Corporation if the Subscriber discovers that any of such representations ceases to be true, and to provide the Corporation with appropriate information in connection therewith. |
6.2 | Acknowledgments and Covenants of the Subscriber |
The Subscriber acknowledges, covenants and agrees as follows:
(a) | It (i) has received and reviewed a copy of each of the Term Sheet and (ii) has had the opportunity to ask and have answered any and all questions which the Subscriber wished to have answered with respect to the subscription for the Subscription Receipts made hereunder and all such questions have been answered to Subscriber’s full satisfaction, or Subscriber elected to waive such opportunity. |
(b) | It is not relying upon the Corporation to conduct any due diligence investigation on behalf of the Subscriber concerning the Offering, the Subscription Receipts, the Underlying Securities or the Corporation’s business, management, financial position or condition. |
(c) | The offer of the Subscription Receipts does not constitute a recommendation to purchase the Subscription Receipts or financial product advice and the Subscriber acknowledges that the Corporation has not had regard to the Subscriber’s particular objectives, financial situation or needs. |
(d) | There are risks associated with the purchase of the Subscription Receipts and no securities commission, agency, governmental authority, regulatory body, stock exchange or similar regulatory authority has reviewed or passed on the merits of Subscription Receipts nor have any such agencies or authorities made any recommendations or endorsement with respect to the Subscription Receipts. |
(e) | The Subscription Receipts (and the Underlying Securities) may be subject to indefinite statutory resale restrictions under the Securities Laws of the Selling Jurisdiction in which the Subscriber resides and under other applicable Securities Laws, and the Subscriber covenants that it will not resell the Subscription Receipts (or the Underlying Securities) except in compliance with such applicable Securities Laws and the Corporation’s constating documents and the Subscriber acknowledges that it is solely responsible (and the Corporation is in any way responsible) for such compliance. |
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(f) | The Subscriber’s ability to transfer the Subscription Receipts (and the Underlying Securities) is limited by, among other things, applicable Securities Laws. |
(g) | The Subscription Receipts and the Underlying Securities shall have attached to them, whether on certificates that may be issued or otherwise, a legend setting out resale restrictions under applicable Securities Laws substantially in the following form (and with the necessary information inserted): |
THE SECURITIES REPRESENTED HEREBY [for Subscription Receipts, insert: AND THE SECURITIES ISSUABLE UPON CONVERSION HEREOF] [for Warrants, insert: AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF] HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”), OR UNDER ANY OTHER APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY NOT BE TRANSFERRED, SOLD, ASSIGNED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED EXCEPT (A) PURSUANT TO A REGISTRATION STATEMENT EFFECTIVE UNDER THE U.S. SECURITIES ACT AND APPLICABLE STATE SECURITIES LAWS, OR (B) PURSUANT TO AN EXEMPTION FROM REGISTRATION THEREUNDER. HEDGING TRANSACTIONS INVOLVING SUCH SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE U.S. SECURITIES ACT. |
[For Warrants, insert: “THIS WARRANT MAY NOT BE EXERCISED IN THE UNITED STATES OR BY OR FOR THE ACCOUNT OR BENEFIT OF A U.S. PERSON OR A PERSON IN THE UNITED STATES UNLESS THESE SECURITIES AND THE UNDERLYING SECURITIES HAVE BEEN REGISTERED UNDER THE U.S. SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS OR UNLESS AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS IS AVAILABLE. “UNITED STATES” AND “U.S. PERSON” ARE AS DEFINED BY REGULATION S UNDER THE U.S. SECURITIES ACT.”] |
[For Canadian Subscribers only, insert additional legend for Subscription Receipts and Warrants: “UNLESS PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE THE DATE THAT IS 4 MONTHS AND A DAY AFTER THE LATER OF (I) [CLOSING DATE], AND (II) THE DATE THE ISSUER BECAME A REPORTING ISSUER IN ANY PROVINCE OR TERRITORY.”] |
(h) | The Corporation is relying on an exemption from the requirement to provide the Subscriber with a prospectus under the Securities Laws and, as a consequence of acquiring the Subscription Receipts pursuant to such exemption: |
(i) | certain protections, rights and remedies provided by the Securities Laws, including statutory rights of rescission, or damages and certain statutory remedies against an issuer, underwriters, auditors, directors and officers that are available to investors who acquire securities offered by a prospectus, will not be available to the Subscriber, |
(ii) | the common law may not provide investors with an adequate remedy in the event that they suffer investment losses in connection with securities acquired in a private placement, |
(iii) | the Subscriber may not receive information that would otherwise be required to be given under the Securities Laws, and |
(iv) | the Corporation is relieved from certain obligations that would otherwise apply under the Securities Laws. |
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(i) | In purchasing the Subscription Receipts, the Subscriber has relied solely upon this Subscription Agreement (including, for greater certainty, the Term Sheet), and not upon: (i) any videos or other materials purporting to describe the business and affairs of the Corporation; and (ii) any verbal or written representation as to any fact or otherwise made by or on behalf of the Corporation or any of its respective directors, officers, employees, agents or representatives. |
(j) | The offer, issuance, sale and delivery of the Subscription Receipts is conditional upon such sale being exempt from the prospectus filing or registration requirements and the requirement to deliver an offering memorandum in connection with the distribution of the Subscription Receipts under the Securities Laws of the Selling Jurisdictions or upon the issuance of such orders, consents or approvals as may be required to permit such sale without the requirement of filing a prospectus. |
(k) | The Corporation may complete additional financings in the future in order to develop the business of the Corporation and fund its ongoing development, and such future financings may have a dilutive effect on current shareholders or securityholders of the Corporation, including the Subscriber. However there is no assurance that any future financings will be available, on reasonable terms or at all, and if not so available, could have a material adverse effect on the Corporation’s business, financial condition, performance or prospects. |
(l) | The Subscriber is responsible for obtaining such legal and tax advice as it considers appropriate in connection with the execution, delivery and performance of this Subscription Agreement and the transactions contemplated under this Subscription Agreement and is not relying on the Corporation’s counsel in this regard. |
(m) | This offer to subscribe is made for valuable consideration and may not be withdrawn, cancelled, terminated or revoked by the Subscriber without the consent of the Corporation. |
(n) | There is no government or other insurance covering the Subscription Receipts. |
(o) | The Subscriber is aware that there is no minimum gross proceeds amount under the Offering, the Corporation may close on any amount and the Subscriber may be the only purchaser under the Offering and the funds available under the Offering may not be sufficient for the Corporation to accomplish its proposed objectives. While the Corporation is seeking to raise up to $14,000,000 pursuant to the Offering there is no guarantee that the Corporation will successfully raise such amount pursuant to the Offering. Further, raising such amount pursuant to the Offering may take longer to close than expected. The Subscriber acknowledges that the failure of the Corporation to raise up to $14,000,000 pursuant to the Offering, or unexpected delays in closing the Offering for up to $14,000,000 could materially adversely affect the Corporation’s performance and prospects, including in particular its capacity to complete its business objectives. The Subscriber further acknowledges that the Corporation may increase the size of the Offering and/or offer or sell additional securities concurrently with the Offering without notice to the Subscriber, which may have a dilutive effect on current shareholders or securityholders of the Corporation, including the Subscriber. |
(p) | The Subscriber is aware that the Corporation is a non-reporting issuer and for whose securities there is no market whatsoever. |
(q) | Legal counsel retained by the Corporation is acting as counsel to the Corporation and not as counsel to the Subscriber. |
(r) | The Subscriber acknowledges that any financial projections, assumptions or estimates delivered or communicated to Subscriber are not statements of fact and that no representation or warranties are made, by the Corporation or any officer, director, shareholder, employee or agent thereof, with respect to the accuracy of such projections, assumptions or estimates or with respect to the future operations or the amount of any future income or loss of the Corporation. |
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(s) | The Subscriber understands and acknowledges that the Corporation is not obligated to file, and has no present intention of filing with the United States Securities and Exchange Commission or with any state securities regulatory authority any registration statement in respect of resales of the Securities. |
(t) | The Subscriber consents to the Corporation making a notation on its records or giving instruction to the registrar and transfer agent of the Corporation in order to implement the restrictions on transfer and exercise with respect to the Securities set forth and described in this Subscription Agreement. |
6.3 | Further Acknowledgements of the Subscriber |
The Subscriber acknowledges that this Subscription Agreement and the Schedules hereto require the Subscriber to provide certain personal information to the Corporation. Such information is being collected by the Corporation for the purposes of completing the Offering and complying with the Corporation’s U.S. and Canadian regulatory requirements, which includes, without limitation, determining the Subscriber’s eligibility to purchase the Subscription Receipts under the Securities Laws, other applicable securities laws and completing filings that may be required by any stock exchange or securities regulatory authority or by any U.S. state, local or municipal regulatory authority. The Subscriber hereby acknowledges, agrees and consents to: (a) the disclosure of Personal Information to each of the Corporation, a stock exchange, securities regulatory authorities, the Canada Revenue Agency or other taxing authorities, and any of the other parties involved in the Offering, including legal counsel to the Corporation, and that Personal Information may be included in record books in connection with the Offering; and (b) the collection, use and disclosure of Personal Information by the Corporation for corporate finance and shareholder communication purposes or such other purposes as are necessary to the Corporation’s business, including, without limitation, determining the Subscriber’s eligibility to purchase the Subscription Receipts under the Securities Laws and other applicable Securities Laws and completing filings required by any stock exchange or securities regulatory authority. The Subscriber also consents to the filing of copies or originals of any of the Subscriber’s documents described herein as may be required to be filed with any stock exchange or securities regulatory authority in connection with the transactions contemplated hereby. The Subscriber represents and warrants that it has the authority to provide the consents and acknowledgements set out in this section on behalf of each Disclosed Principal, as applicable.
The Subscriber hereby acknowledges and consents to the collection, use, and disclosure of Personal Information by the applicable provincial securities commission, including the publishing or otherwise making available to the public Personal Information including, for individuals, their name, number and type of securities purchased, the purchase price therefor, and their insider or registrant status, if applicable, and for non-individual Subscribers, the above information and their address, contact person name and telephone number and the exemption relied upon. The Subscriber acknowledges and agrees that the Subscriber has been notified by the Corporation, (i) of the delivery to securities regulatory authorities of Personal Information pertaining to the Subscriber included in Schedule 1 and 2 (if any) of Form 45-106F1, including, without limitation, the full name, residential address and telephone number of the Subscriber, the number and type of securities purchased and the total purchase price paid in respect of the Subscription Receipts, (ii) that this information is being collected indirectly by securities regulatory authorities under the authority granted to it in applicable securities legislation, (iii) that this information is being collected for the purposes of the administration and enforcement of such securities legislation, (iv) that the title, business address and business telephone number of the public official in each of the provinces of Canada who can answer questions about the applicable securities regulatory authorities’ indirect collection of the information is as listed in Schedule “E” hereto. The Subscriber and any beneficial subscriber consent to such disclosure of its Personal Information.
6.4 | Reliance on Representations, Warranties, Covenants and Acknowledgements |
The Subscriber acknowledges and agrees that the representations, warranties, covenants and acknowledgements made by the Subscriber in this Subscription Agreement are made with the intention that they may be relied upon by the Corporation and its legal counsel in determining the Subscriber’s eligibility (and if applicable, the eligibility of the Disclosed Principal) to purchase the Subscription Receipts. The Subscriber further agrees that by accepting the Subscription Receipts, the Subscriber shall be representing and warranting that such representations, warranties, covenants and acknowledgements are true as at the Closing Time with the same force and effect as if they had been made by the Subscriber at the Closing Time. The Subscriber undertakes to immediately notify the Corporation of any change in any statement or other information relating to the Subscriber set forth herein (including in any applicable Schedule attached hereto) which takes place prior to the Closing Time.
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ARTICLE 7- SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS
7.1 | Survival of Representations, Warranties and Covenants of the Corporation |
The representations, warranties and covenants of the Corporation contained in this Subscription Agreement shall survive the Closing and continue in full force and effect for the benefit of the Subscriber for a period of two (2) years after the Closing Date, in each case notwithstanding such Closing or any investigation made by or on behalf of the Subscriber with respect thereto.
7.2 | Survival of Representations, Warranties and Covenants of the Subscriber |
The representations, warranties and covenants of the Subscriber contained in this Subscription Agreement shall survive the Closing and continue in full force and effect for the benefit of the Corporation for a period of two (2) years after the Closing Date, in each case notwithstanding such Closing or any investigation made by or on behalf of the Corporation with respect thereto and notwithstanding any subsequent disposition by the Subscriber of any of the Subscription Receipts.
ARTICLE 8 - MISCELLANEOUS
8.1 | Further Assurances |
Each of the parties hereto upon the request of each of the other parties hereto, whether before or after the Closing Time, shall do, execute, acknowledge and deliver or cause to be done, executed, acknowledged and delivered all such further acts, deeds, documents, assignments, transfers, conveyances, powers of attorney and assurances as may reasonably be necessary or desirable to complete the transactions contemplated herein.
8.2 | Notices |
(a) | Any notice, direction or other instrument required or permitted to be given to any party hereto shall be in writing and shall be sufficiently given if delivered personally, or transmitted electronically tested prior to transmission to such party, as follows: |
(i) | in the case of the Corporation, to: |
JR RESOURCES CORP.
241 Ridge Street, Suite 210
Reno, Nevada 89501
Attention: | Richard Silas |
Email: | richard@jrresourcescorp.com |
(ii) | in the case of the Subscriber, at the address specified on the face page hereof. |
(b) | Any such notice, direction or other instrument, if delivered personally, shall be deemed to have been given and received on the day on which it was delivered, provided that if such day is not a Business Day then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following such day and if transmitted electronically, shall be deemed to have been given and received on the day of its transmission, provided that if such day is not a Business Day or if it is transmitted or received after the end of normal business hours then the notice, direction or other instrument shall be deemed to have been given and received on the first Business Day next following the day of such transmission. |
(c) | Any party hereto may change its address for service from time to time by notice given to each of the other parties hereto in accordance with the foregoing provisions. |
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8.3 | Time of the Essence |
Time shall be of the essence of this Subscription Agreement and every part hereof.
8.4 | Costs and Expenses |
All costs and expenses (including, without limitation, the fees and disbursements of legal counsel) incurred in connection with this Subscription Agreement and the transactions herein contemplated shall be paid and borne by the party incurring such costs and expenses.
8.5 | Applicable Law |
This Subscription Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of Nevada. Any and all disputes arising under this Subscription Agreement, whether as to interpretation, performance or otherwise, shall be subject to the non-exclusive jurisdiction of the courts of Nevada and each of the parties hereto hereby irrevocably attorns to the jurisdiction of the courts of Nevada.
8.6 | Entire Agreement |
This Subscription Agreement, including the Schedules hereto, constitutes the entire agreement between the parties with respect to the transactions contemplated herein and cancels and supersedes any prior understandings, agreements, negotiations and discussions between the parties. There are no representations, warranties, terms, conditions, undertakings or collateral agreements or understandings, express or implied, between the parties hereto other than those expressly set forth in this Subscription Agreement or in any such agreement, certificate, affidavit, statutory declaration or other document as aforesaid. This Subscription Agreement may not be amended or modified in any respect except by written instrument executed by each of the parties hereto.
8.7 | Counterparts |
This Subscription Agreement may be executed in two or more counterparts, each of which shall be deemed to be an original and all of which together shall constitute one and the same Subscription Agreement. Counterparts may be delivered either in original, PDF or faxed form and the parties adopt any signatures received by PDF or a receiving fax machine as original signatures of the parties. If less than a complete copy of this Subscription Agreement is delivered to the Corporation, the Corporation and its respective advisors are entitled to assume that the Subscriber accepts and agrees to all the terms and conditions of the pages not delivered, unaltered.
8.8 | Indemnity |
The Subscriber agrees to indemnify and hold harmless the Corporation and its directors, officers, employees, agents, advisers, shareholders and affiliates from and against any and all loss, liability, claim, damage and expense whatsoever (including, but not limited to, any and all fees, costs and expenses whatsoever reasonably incurred in investigating, preparing or defending against any claim, lawsuit, administrative proceeding or investigation whether commenced or threatened) arising out of or based upon any representation or warranty of the Subscriber contained herein or in any document furnished by the Subscriber to the Corporation in connection herewith being untrue in any material respect or any breach or failure by the Subscriber to comply with any covenant or agreement made by the Subscriber herein or in any document furnished by the Subscriber to the Corporation in connection herewith.
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8.9 | Assignment |
This Subscription Agreement may not be assigned by either party except with the prior written consent of the other party hereto.
8.10 | Enurement |
This Subscription Agreement shall enure to the benefit of and be binding upon the parties hereto and their respective heirs, executors, successors (including any successor by reason of the amalgamation or merger of any party), administrators and permitted assigns.
8.11 | Language |
The parties have specifically requested that this Subscription Agreement and all of the documents relating to the subscription and notices hereunder be drafted in the English language. Les parties ont explicitement requis que cette convention de souscription et tous les documents reliés à cette souscription et les avis reliés soient rédigés en anglais.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK
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The Corporation hereby accepts the subscription for Subscription Receipts as set forth on page 2 of this Subscription Agreement on the terms and conditions contained in this Subscription Agreement (including all applicable Schedules) this ____ day of ______________, 2020.
JR RESOURCES CORP. | ||
Per: | ||
Authorized Signing Officer |
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SCHEDULE “A”
Term Sheet
Issuer: | JR Resources Corp. (the “Corporation”). |
Type of Transaction: | Private placement (the “Offering”) of subscription receipts (the “Subscription Receipts”). |
Size of Offering: | Up to US$14,000,000 (the “Subscription Proceeds”). |
Subscription Price: | US$1.00 per Subscription Receipt (the “Subscription Price”). |
Subscription Receipts: |
Each Subscription Receipt will entitle the holder thereof to receive, without payment of additional consideration or further action on the part of the holder thereof, one common share in the capital of the Corporation (each, an “Underlying Share”) and one half (1/2) of one common share purchase warrant of the Corporation (each whole warrant, a “Warrant”) upon the satisfaction or waiver (to the extent such waiver is permitted) of the Escrow Release Condition at or prior to the Escrow Release Deadline.
Each Warrant shall entitle the holder thereof to acquire one common share in the capital of the Corporation (each, a “Warrant Share”) for an exercise price of US$1.50 per Warrant Share for a period of five (5) years following the Escrow Release Date, subject to adjustment in certain events, as will be more fully described in the Warrant Indenture.
The Subscription Receipts will be represented by a subscription receipt certificate (the “Subscription Receipt Certificate”) issued by the Corporation. |
Escrow of Funds: |
The aggregate Subscription Proceeds in respect of the Subscription Receipts (the “Escrowed Funds”) will be held in escrow in a segregated account by the Corporation pursuant to the Subscription Receipt Certificates pending the satisfaction of the Escrow Release Condition.
Upon satisfaction of the Escrow Release Condition on or prior to the Escrow Release Deadline (as defined below), the Escrowed Funds will be released to the Corporation.
Unless the consent of holders of not less than 66 2/3% of the then outstanding Subscription Receipts is obtained pursuant to the terms of the Subscription Receipt Certificates, in the event that the Escrow Release Condition is not satisfied at or before 5:00 p.m. (Vancouver time) on October 15, 2020 (as the same may be extended in accordance with the terms of the Subscription Receipt Certificates) (the “Escrow Release Deadline”), the Corporation will return to each holder of Subscription Receipts, an amount equal to the aggregate Subscription Price for the Subscription Receipts held by such holder plus a pro rata share of any interest or other income earned on the Subscription Proceeds, less applicable withholding tax, if any. The Corporation shall use its commercially reasonable efforts to meet the Escrow Release Deadline prior to October 15, 2020. To the extent that the Escrowed Funds are insufficient to pay such amounts to the holders of the Subscription Receipts, the Corporation will be liable for and will be required to contribute such amounts as are necessary to satisfy any shortfall. |
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A-2
SCHEDULE “B”
Canadian Accredited Investor Status CERTIFICATE
TO BE COMPLETED BY CANADIAN SUBSCRIBERS.
The categories listed herein contain certain specifically defined terms. If you are unsure as to the meanings of those terms, or are unsure as to the applicability of any category below, please contact your broker and/or legal advisor before completing this certificate.
TO: | JR RESOURCES CORP. (the “Corporation”) |
In connection with the purchase by the undersigned Subscriber of the Subscription Receipts, the Subscriber, on its own behalf or on behalf of each Disclosed Principal for whom the Subscriber is acting (collectively, the “Subscriber”), hereby represents, warrants, covenants and certifies to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that:
(a) | the Subscriber is resident in or otherwise subject to the securities laws of one of the Provinces of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, New Brunswick, Nova Scotia, Prince Edward Island or Newfoundland and Labrador; |
(b) | the Subscriber is purchasing the Subscription Receipts as principal for its own account and not for the benefit of any other person or is deemed to be purchasing as principal pursuant to NI 45-106; |
(c) | the Subscriber is an “accredited investor” within the meaning of NI 45-106 or Section 73.3 of the Securities Act (Ontario) on the basis that the Subscriber fits within one of the categories of an “accredited investor” reproduced below beside which the Subscriber has indicated the undersigned belongs to such category; |
(d) | the Subscriber was not created or used solely to purchase or hold securities as an accredited investor as described in paragraph (m) below; |
(e) | if the Subscriber is purchasing under category (j), (k) or (l) below, it has completed and signed Exhibit “I” attached hereto; and |
(f) | upon execution of this Schedule “B” by the Subscriber (and if applicable, Exhibit “I” to Schedule “B”), this Schedule “B” (and if applicable, Exhibit “I” to Schedule “B”) shall be incorporated into and form a part of the Subscription Agreement to which this Schedule “B” is attached. |
(PLEASE CHECK THE BOX OF THE APPLICABLE CATEGORY OF ACCREDITED INVESTOR)
¨ | (a) | (i) except in Ontario, a Canadian financial institution, or a Schedule III bank; or |
(ii) in Ontario, a financial institution that is (A) a bank listed in Schedule I, II or III of the Bank Act (Canada); (B) an association to which the Cooperative Credit Associations Act (Canada) applies or a central cooperative credit society for which an order has been made under subsection 473(1) of that Act; or (C) a loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative or credit union league or federation that is authorized by a statute of Canada or Ontario to carry on business in Canada or Ontario, as the case may be; |
¨ | (b) | the Business Development Bank of Canada incorporated under the Business Development Bank of Canada Act (Canada); |
¨ | (c) | a subsidiary of any person or company referred to in paragraphs (a) or (b), if the person or company owns all of the voting securities of the subsidiary, except the voting securities required by law to be owned by directors of that subsidiary; |
B-1
¨ | (d) | a person or company registered under the securities legislation of a jurisdiction (province or territory) of Canada as an adviser or dealer (or in Ontario, except as otherwise prescribed by the regulations under the Securities Act (Ontario)); |
¨ | (e) | an individual registered under the securities legislation of a jurisdiction of Canada as a representative of a person referred to in paragraph (d); |
¨ | (e.1) | an individual formerly registered under the securities legislation of a jurisdiction of Canada, other than an individual formerly registered solely as a representative of a limited market dealer under one or both of the Securities Act (Ontario) or the Securities Act (Newfoundland and Labrador); |
¨ | (f) | the Government of Canada or a jurisdiction (province or territory) of Canada, or any crown corporation, agency or wholly owned entity of the Government of Canada or a jurisdiction of Canada; |
¨ | (g) | a municipality, public board or commission in Canada and a metropolitan community, school board, the Comité de gestion de la taxe scolaire de l’île de Montréal or an intermunicipal management board in Québec; |
¨ | (h) | any national, federal, state, provincial, territorial or municipal government of or in any foreign jurisdiction, or any agency of that government; |
¨ | (i) | a pension fund that is regulated by either the Office of the Superintendent of Financial Institutions (Canada), a pension commission or similar regulatory authority of a jurisdiction (province or territory) of Canada; |
¨ | (j) | an individual who, either alone or with a spouse, beneficially owns financial assets having an aggregate realizable value that, before taxes, but net of any related liabilities, exceeds C$1,000,000 (completion of Exhibit “I” is also required); |
¨ | (j.1) | an individual who beneficially owns financial assets having an aggregate realizable value that, before taxes but net of any related liabilities, exceeds C$5,000,000; |
¨ | (k) | an individual whose net income before taxes exceeded $200,000 in each of the two most recent calendar years or whose net income before taxes combined with that of a spouse exceeded C$300,000 in each of the two most recent calendar years and who, in either case, reasonably expects to exceed that net income level in the current calendar year (completion of Exhibit “I” is also required); |
¨ | (l) | an individual who, either alone or with a spouse, has net assets of at least C$5,000,000 (completion of Exhibit “I” is also required); |
¨ | (m) | a person, other than an individual or investment fund, that has net assets of at least C$5,000,000 as shown on its most recently prepared financial statements; |
¨ | (n) | an investment fund that distributes or has distributed its securities only to (i) a person that is or was an accredited investor at the time of the distribution, (ii) a person that acquires or acquired securities in the circumstances referred to in sections 2.10 [Minimum amount investment] or 2.19 [Additional investment in investment funds] of NI 45-106, or (iii) a person described in sub-paragraph (i) or (ii) that acquires or acquired securities under section 2.18 [Investment fund reinvestment] of NI 45-106; |
¨ | (o) | an investment fund that distributes or has distributed securities under a prospectus in a jurisdiction of Canada for which the regulator or, in Québec, the securities regulatory authority, has issued a receipt; |
B-2
¨ | (p) | a trust company or trust corporation registered or authorized to carry on business under the Trust and Loan Companies Act (Canada) or under comparable legislation in a jurisdiction of Canada or a foreign jurisdiction, acting on behalf of a fully managed account managed by the trust company or trust corporation, as the case may be; |
¨ | (q) | a person acting on behalf of a fully managed account managed by that person, if that person is registered or authorized to carry on business as an adviser or the equivalent under the securities legislation of a jurisdiction of Canada or a foreign jurisdiction; |
¨ | (r) | a registered charity under the Income Tax Act (Canada) that, in regard to the trade, has obtained advice from an eligibility adviser or an adviser registered under the securities legislation of the jurisdiction of the registered charity to give advice on the securities being traded; |
¨ | (s) | an entity organized in a foreign jurisdiction that is analogous to any of the entities referred to in paragraphs (a) to (d) or paragraph (i) in form and function; |
¨ | (t) | a person in respect of which all of the owners of interests, direct, indirect or beneficial, except the voting securities required by law to be owned by directors, are persons that are accredited investors; |
¨ | (u) | an investment fund that is advised by a person registered as an adviser or a person that is exempt from registration as an adviser; |
¨ | (v) | a person that is recognized or designated by the securities regulatory authority or, except in Ontario or Québec, the regulator as an accredited investor; |
¨ | (w) | a trust established by an accredited investor for the benefit of the accredited investor’s family members of which a majority of the trustees are accredited investors and all of the beneficiaries are the accredited investor’s spouse, a former spouse of the accredited investor or a parent, grandparent, brother, sister, child or grandchild of that accredited investor, of that accredited investor’s spouse or of that accredited investor’s former spouse; or |
¨ | (x) | in Ontario, such other persons or companies as may be prescribed by the regulations under the Securities Act (Ontario). |
***If checking this category (x), please provide a description of how this requirement is met. |
For the purposes hereof, the following definitions are included for convenience:
(a) | “bank” means a bank named in Schedule I or II of the Bank Act (Canada); |
(b) | “Canadian financial institution” means (i) an association governed by the Cooperative Credit Associations Act (Canada) or a central cooperative credit society for which an order has been made under section 473(1) of that Act, or (ii) a bank, loan corporation, trust company, trust corporation, insurance company, treasury branch, credit union, caisse populaire, financial services cooperative, or league that, in each case, is authorized by an enactment of Canada or a jurisdiction of Canada to carry on business in Canada or a jurisdiction of Canada; |
(c) | “company” means any corporation, incorporated association, incorporated syndicate or other incorporated organization; |
(d) | “eligibility adviser” means: |
(i) | a person that is registered as an investment dealer and authorized to give advice with respect to the type of security being distributed, and |
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(ii) | in Saskatchewan or Manitoba, also means a lawyer who is a practicing member in good standing with a law society of a jurisdiction of Canada or a public accountant who is a member in good standing of an institute or association of chartered accountants, certified general accountants or certified management accountants in a jurisdiction of Canada provided that the lawyer or public accountant must not |
(A) | have a professional, business or personal relationship with the issuer, or any of its directors, executive officer, founders, or control persons, and |
(B) | have acted for or been retained personally or otherwise as an employee, executive officer, director, associate or partner of a person that has acted for or been retained by the issuer or any of its directors, executive officers, founders or control persons within the previous 12 months; |
(e) | “executive officer” means, for an issuer, an individual who is: (i) a chair, vice-chair or president, (ii) a vice-president in charge of a principal business unit, division or function including sales, finance or production, or (iii) performing a policy-making function in respect of the issuer; |
(f) | “financial assets” means (i) cash, (ii) securities, or (iii) a contract of insurance, a deposit or an evidence of a deposit that is not a security for the purposes of securities legislation; |
(g) | “fully managed account” means an account of a client for which a person makes the investment decisions if that person has full discretion to trade in securities for the account without requiring the client’s express consent to a transaction; |
(h) | “investment fund” has the same meaning as in National Instrument 81-106 Investment Fund Continuous Disclosure; |
(i) | “person” includes: (i) an individual, (ii) a corporation, (iii) a partnership, trust, fund and an association, syndicate, organization or other organized group of persons whether incorporated or not, and (iv) an individual or other person in that person’s capacity as a trustee, executor, administrator or personal or other legal representative. |
(j) | “related liabilities” means (i) liabilities incurred or assumed for the purpose of financing the acquisition or ownership of financial assets, or (ii) liabilities that are secured by financial assets; |
(k) | “Schedule III bank” means an authorized foreign bank named in Schedule III of the Bank Act (Canada); |
(l) | “spouse” means, an individual who, (i) is married to another individual and is not living separate and apart within the meaning of the Divorce Act (Canada), from the other individual, (ii) is living with another individual in a marriage-like relationship, including a marriage-like relationship between individuals of the same gender, or (iii) in Alberta, is an individual referred to in paragraph (i) or (ii), or is an adult interdependent partner within the meaning of the Adult Interdependent Relationships Act (Alberta); and |
(m) | “subsidiary” means an issuer that is controlled directly or indirectly by another issuer and includes a subsidiary of that subsidiary. |
In NI 45-106 a person or company is an affiliate of another person or company if one of them is a subsidiary of the other, or if each of them is controlled by the same person.
In NI 45-106 and except in Part 2 Division 4 (Employee, Executive Officer, Director and Consultant Exemption) of NI 45-106, a person (first person) is considered to control another person (second person) if (a) the first person, beneficially owns or directly or indirectly exercises control or direction over securities of the second person carrying votes which, if exercised, would entitle the first person to elect a majority of the directors of the second person, unless that first person holds the voting securities only to secure an obligation, (b) the second person is a partnership, other than a limited partnership, and the first person holds more than 50% of the interests of the partnership, or (c) the second person is a limited partnership and the general partner of the limited partnership is the first person.
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The foregoing representations contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time (as defined in the Subscription Agreement to which this Schedule “B” is attached) and the Subscriber acknowledges that this Canadian Accredited Investor Status Certificate is incorporated into and forms a part of the Subscription Agreement to which it is attached. If any such representations shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Corporation prior to the Closing Time.
Dated: | Signed: | ||||
Witness (If Subscriber is an Individual) | Print the name of Subscriber | ||||
Print Name of Witness |
If Subscriber is a corporation,
print name and title of Authorized Signing Officer |
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EXHIBIT “I” TO SCHEDULE “B”
FORM FOR INDIVIDUAL ACCREDITED INVESTORS
THIS “EXHIBIT A” TO SCHEDULE “B” IS TO BE COMPLETED BY ACCREDITED INVESTORS WHO ARE INDIVIDUALS SUBSCRIBING UNDER CATEGORIES (J), (K) OR (L) IN SCHEDULE “B” TO WHICH THIS EXHIBIT “I” IS ATTACHED.
WARNING!
This investment is risky. Don’t invest unless you can afford to lose all the money you pay for this investment.
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SECTION 1 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | |
1. About your investment | |
Type of securities: Subscription Receipts | Issuer: JR RESOURCES CORP. |
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4. Your name and signature | ||
By signing this form, you confirm that you have read this form and you understand the risks of making this investment as identified in this form. | ||
First and last name (please print): | ||
Signature: | Date: | |
SECTION 5 TO BE COMPLETED BY THE SALESPERSON | ||
5. Salesperson information | ||
[Instruction: The salesperson is the person who meets with, or provides information to, the purchaser with respect to making this investment. That could include a representative of the issuer or selling security holder, a registrant or a person who is exempt from the registration requirement.] | ||
First and last name of salesperson (please print): | ||
Telephone: | Email: | |
Name of firm (if registered): | ||
SECTION 6 TO BE COMPLETED BY THE ISSUER OR SELLING SECURITY HOLDER | ||
6. For more information about this investment | ||
JR RESOURCES CORP.
Reno, Nevada 89501
Attention: Richard Silas
For more information about prospectus
exemptions, contact your local securities regulator. You can find
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Form instructions:
1. | This form does not mandate the use of a specific font size or style but the font must be legible. |
2. | The information in sections 1, 5 and 6 must be completed before the purchaser completes and signs the form. |
3. | The purchaser must sign this form. Each of the purchaser and the issuer or selling security holder must receive a copy of this form signed by the purchaser. The issuer or selling security holder is required to keep a copy of this form for 8 years after the distribution. |
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SCHEDULE “C”
INTERNATIONAL JURISDICTION CERTIFICATE
TO BE COMPLETED BY SUBSCRIBERS WHO ARE RESIDENT OUTSIDE OF CANADA AND THE UNITED STATES
Terms not otherwise defined herein will have the definition ascribed thereto in the Subscription Agreement to which this Schedule “C” is attached.
TO: JR RESOURCES CORP. (the “Corporation”)
In connection with the purchase by the undersigned Subscriber of the Subscription Receipts, the Subscriber, on its own behalf or on behalf of each Disclosed Principal for whom the Subscriber is acting (collectively, the “Subscriber”), hereby represents, warrants, covenants and certifies to the Corporation (and acknowledges that the Corporation and its counsel are relying thereon) that:
(a) | the Subscriber is knowledgeable of, or has been independently advised as to, the applicable Securities Laws of the securities regulators having application in the jurisdiction in which the Subscriber is resident which would apply to the acquisition of the Subscription Receipts (the “International Jurisdiction”); |
(b) | the Subscriber is purchasing the Subscription Receipts pursuant to exemptions from prospectus or equivalent requirements under applicable Securities Laws or, if such is not applicable, the Subscriber is permitted to purchase the Subscription Receipts under the applicable Securities Laws of the securities regulators in the International Jurisdiction without the need to rely on any exemptions; |
(c) | the applicable Securities Laws of the authorities in the International Jurisdiction do not require the Corporation to make any filings or seek any approvals of any kind whatsoever from any securities regulator of any kind whatsoever in the International Jurisdiction in connection with the issue and sale or resale of the Subscription Receipts (or Underlying Securities); |
(d) | the purchase of the Subscription Receipts by the Subscriber does not trigger: |
(i) | any obligation of the Corporation to prepare and file a prospectus, registration statement, offering memorandum or similar document, or any other report or notice with respect to such purchase in the International Jurisdiction; |
(ii) | any continuous disclosure reporting obligation of the Corporation in the International Jurisdiction; or |
(iii) | any registration or other similar obligation on the part of the Corporation in the International Jurisdiction; |
(e) | the distribution of the Subscription Receipts (and the Underlying Securities) to the Subscriber by the Corporation complies with the laws of the International Jurisdiction; |
(f) | the Subscriber will, if requested by the Corporation, deliver to the Corporation a certificate or opinion of local counsel from the International Jurisdiction which will confirm the matters referred to in paragraphs (b), (c), (d) and (e) above to the satisfaction of the Corporation, acting reasonably; and |
(g) | the Subscriber will not sell, transfer or dispose of the Subscription Receipts (or the Underlying Securities) except in accordance with all applicable Securities Laws of the securities regulators in the International Jurisdiction and the Subscriber acknowledges that the Corporation shall have no obligation to register any purported sale, transfer or disposition. |
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The foregoing representations, warranties, covenants and certifications contained in this certificate are true and accurate as of the date of this certificate and will be true and accurate as of the Closing Time (as defined in the Subscription Agreement to which this Schedule “C” is attached) and the Subscriber acknowledges that this international jurisdiction certificate is incorporated into and forms a part of the Subscription Agreement to which it is attached. If any such representations, warranties and certifications shall not be true and accurate prior to the Closing Time, the undersigned shall give immediate written notice of such fact to the Corporation prior to the Closing Time.
Dated: | Signed: | |||
Witness (if Subscriber is an Individual) | Print the name of Subscriber | |||
Print Name of Witness |
If Subscriber is a corporation,
print name and title of Authorized Signatory |
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SCHEDULE “D”
U.S. ACCREDITED INVESTOR CERTIFICATE
Subscribers that are U.S. Accredited Investors must review and complete the following U.S. Accredited Investor Certificate.
Terms not otherwise defined herein will have the definition ascribed thereto in the Subscription Agreement to which this Schedule “D” is attached.
TO: JR RESOURCES CORP. (the “Corporation”)
The undersigned (the “Subscriber”), on behalf of itself and any Disclosed Principal, represents, warrants and covenants (which representations, warranties and covenants shall survive the Closing) to and with the Corporation and acknowledges that the Corporation is relying thereon that:
(a) | it (and any Disclosed Principal), alone or with the assistance of its professional advisors, has such knowledge and experience in financial and business matters as to be capable of evaluating the merits and risks of its investment in the Subscription Receipts and is able, without impairing its financial condition, to hold the Subscription Receipts or the Underlying Securities for an indefinite period of time and to bear the economic risks, and withstand a complete loss, of such investment; |
(b) | it (and any Disclosed Principal) acknowledges that the Subscription Receipts and the Underlying Securities have not been and will not be registered under the U.S. Securities Act or the securities laws of any state of the United States, and will, therefore, be “restricted securities”, as such term is defined under Rule 144(a)(3) under the U.S. Securities Act, and that the offer and sale of the Subscription Receipts to it will be made in reliance upon an exemption from registration available to the Corporation pursuant to Rule 506(b) of Regulation D under the U.S. Securities Act; |
(c) | it is purchasing the Subscription Receipts for its own account, or for the account of another U.S. Accredited Investor over which it exercises sole investment discretion, for investment purposes only and not with a view to resale or distribution and, in particular, it has no intention to distribute either directly or indirectly any of the Subscription Receipts or the Underlying Securities in the United States or to, or for the account or benefit of, U.S. Persons; provided, however, that this paragraph shall not restrict the Subscriber (and any Disclosed Principal) from selling or otherwise disposing of any of the Subscription Receipts or the Underlying Securities pursuant to a registration statement effective under the U.S. Securities Act and any applicable state securities laws or under an exemption from such registration requirements; |
(d) | it (and any Disclosed Principal) is a U.S. Accredited Investor that satisfies one or more of the categories of U.S. Accredited Investor indicated below (the Subscriber must mark “S” for the Subscriber and “DP” for the Disclosed Principal on the appropriate line(s)): |
Category 1. | _____ | A bank, as defined in section 3(a)(2) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or | |
Category 2. | _____ | A savings and loan association or other institution as defined in section 3(a)(5)(A) of the U.S. Securities Act, whether acting in its individual or fiduciary capacity; or | |
Category 3. | _____ | A broker or dealer registered pursuant to section 15 of the United States Securities Exchange Act of 1934, as amended; or | |
Category 4. | _____ | An insurance company as defined in section 2(a)(13) of the U.S. Securities Act; or | |
Category 5. | _____ | An investment company registered under the United States Investment Company Act of 1940, as amended; or |
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(i) | person’s primary residence shall not be included as an asset; | |||
(ii) | indebtedness that is secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time of the sale of securities, shall not be included as a liability (except that if the amount of such indebtedness outstanding at the time of the sale of securities exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess shall be included as a liability); and | |||
(ii) | indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the primary residence at the time of the sale of securities shall be included as a liability; or |
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Category 14. | _____ | A natural person who had an individual income in excess of U.S.$200,000 in each of the two most recent years or joint income with that person’s spouse in excess of U.S.$300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or | |
Category 15. | _____ | A trust, with total assets in excess of U.S.$5,000,000, not formed for the specific purpose of acquiring the securities offered, whose purchase is directed by a sophisticated person as described in Rule 506(b)(2)(ii) under the U.S. Securities Act; or | |
Category 16. | _____ | Any entity in which all of the equity owners meet the requirements of at least one of the above categories; |
(e) | it (and any Disclosed Principal) has not purchased the Subscription Receipts as a result of any form of “general solicitation” or “general advertising” (as used in Rule 502(c) of Regulation D), including, without limitation, any advertisements, articles, notices or other communications published in any newspaper, magazine or similar media or broadcast over radio, television or internet or any seminar or meeting whose attendees have been invited by “general solicitation” or “general advertising”; |
(f) | it (and any Disclosed Principal) agrees that if it decides to offer, sell, pledge or otherwise transfer any of the Subscription Receipts or the Underlying Securities, it will not offer, sell, pledge or otherwise transfer any of such securities, directly or indirectly, unless the transfer is: |
(i) | pursuant to a registration statement effective under the U.S. Securities Act and applicable state securities laws; or |
(ii) | pursuant to an exemption from registration under the U.S. Securities Act; |
and, in either case, it has furnished to the Corporation an opinion of counsel of recognized standing in form and substance reasonably satisfactory to the Corporation to such effect;
(g) | the Subscription Receipts purchased hereunder and the Underlying Securities issuable upon conversion of the Subscription Receipts will be represented by physical certificates and it understands and acknowledges that upon the original issuance thereof, and until such time as the same is no longer required under applicable requirements of the U.S. Securities Act or applicable state securities laws, certificates representing such securities and all certificates issued in exchange therefore or in substitution thereof, will bear the legends set forth in the Subscription Agreement; |
(h) | it (and any Disclosed Principal) has had the opportunity to ask questions of and receive answers from the Corporation regarding the investment, and has received all the information regarding the Corporation that it has requested; |
(i) | it (and any Disclosed Principal) has had access to such information concerning the Corporation as it has considered necessary or appropriate in connection with its investment decision to acquire the Subscription Receipts; |
(j) | it (and any Disclosed Principal) is aware that (i) purchasing, holding and disposing of the Subscription Receipts or the Underlying Securities may have tax consequences under the laws of the United States, (ii) the tax consequences for prospective investors who are resident in, or citizens of, the United States are not described in this Subscription Agreement, and (iii) it is solely responsible for determining the tax consequences applicable to its particular circumstances and should consult its own tax advisors concerning investment in the Subscription Receipts; and |
(k) | it (and any Disclosed Principal) acknowledges that the representations, warranties and covenants contained in this Schedule “D” are made by it with the intent that they may be relied upon by the Corporation in determining its eligibility to purchase the Subscription Receipts. It (and any Disclosed Principal) agrees that by accepting the Subscription Receipts, it shall be representing and warranting that the representations and warranties above are true as at the Closing and as at the date of conversion of Subscription Receipts for the Underlying Securities with the same force and effect as if they had been made by it at the Closing and that they shall survive the purchase by it of the Subscription Receipts and shall continue in full force and effect notwithstanding any subsequent disposition by it of the Subscription Receipts. |
D-3
The Subscriber undertakes to notify the Corporation immediately of any change in any representation, warranty or other information relating to the Subscriber (and any Disclosed Principal) set forth herein which takes place prior to the Closing.
If a Corporation, Partnership or Other Entity: | If an Individual: | |
Name of Entity | Signature | |
Type of Entity | Print or Type Name | |
Signature of Person Signing | ||
Print or Type Name and Title of Person Signing |
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SCHEDULE “E”
CONTACT INFORMATION FOR CANADIAN SECURITIES COMMISSIONS
Alberta Securities Commission Suite 600, 250 – 5th Street SW Calgary, Alberta T2P 0R4 Telephone: (403) 297-6454 Toll free in Canada: 1-877-355-0585 Facsimile: (403) 297-2082 Public official contact regarding indirect collection of information: FOIP Coordinator
British Columbia Securities Commission P.O. Box 10142, Pacific Centre 701 West Georgia Street Vancouver, British Columbia V7Y 1L2 Inquiries: (604) 899-6854 Toll free in Canada: 1-800-373-6393 Facsimile: (604) 899-6581 Email: inquiries@bcsc.bc.ca Email (regarding indirect collection of information): FOI-privacy@bcsc.bc.ca Public official contact regarding indirect collection of information: FOI Inquiries
The Manitoba Securities Commission 500 – 400 St. Mary Avenue Winnipeg, Manitoba R3C 4K5 Telephone: (204) 945-2548 Toll free in Manitoba 1-800-655-5244
Facsimile: (204) 945-0330
Financial and Consumer Services Commission (New Brunswick) 85 Charlotte Street, Suite 300 Saint John, New Brunswick E2L 2J2 Telephone: (506) 658-3060 Toll free in Canada: 1-866-933-2222 Facsimile: (506) 658-3059 Email: info@fcnb.ca Public official contact regarding indirect collection of information: Chief Executive Officer and Privacy Officer
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Government of Nunavut Department of Justice Legal Registries Division P.O. Box 1000, Station 570 1st Floor, Brown Building Iqaluit, Nunavut X0A 0H0 Telephone: (867) 975-6590 Facsimile: (867) 975-6594
Ontario Securities Commission 20 Queen Street West, 22nd Floor Toronto, Ontario M5H 3S8 Telephone: (416) 593- 8314 Toll free in Canada: 1-877-785-1555 Facsimile: (416) 593-8122 Email: exemptmarketfilings@osc.gov.on.ca Public official contact regarding indirect collection of information: Inquiries Officer
Prince Edward Island Securities Office 95 Rochford Street, 4th Floor Shaw Building P.O. Box 2000 Charlottetown, Prince Edward Island C1A 7N8 Telephone: (902) 368-4569 Facsimile: (902) 368-5283 Public official contact regarding indirect collection of information: Superintendent of Securities
Autorité des marchés financiers 800, Square Victoria, 22e étage C.P. 246, Tour de la Bourse Montréal, Québec H4Z 1G3 Telephone: (514) 395-0337 or 1-877-525-0337 Facsimile: (514) 873-6155 (For filing purposes only) Facsimile: (514) 864-6381 (For privacy requests only)
Email: financementdessocietes@lautorite.qc.ca (For corporate finance
issuers);
Public official contact regarding indirect collection of information: Secrétaire générale
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Attention: Director of Securities Telephone: (709) 729-4189 Facsimile: (709) 729-6187 Public official contact regarding indirect collection of information: Superintendent of Securities
Government of the Northwest Territories Office of the Superintendent of Securities P.O. Box 1320 Yellowknife, Northwest Territories X1A 2L9 Attention: Deputy Superintendent, Legal & Enforcement Telephone: (867) 920-8984 Facsimile: (867) 873-0243
Nova Scotia Securities Commission Suite 400, 5251 Duke Street Duke Tower P.O. Box 458 Halifax, Nova Scotia B3J 2P8 Telephone: (902) 424-7768 Facsimile: (902) 424-4625 Public official contact regarding indirect collection of information: Executive Director |
Government of Yukon Department of Community Services Law Centre, 3rd Floor 2130 Second Avenue Whitehorse, Yukon Y1A 5H6 Telephone: (867) 667-5314 Facsimile: (867) 393-6251 |
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SCHEDULE “F”
ACCOUNT INFORMATION FOR FUNDS
Beneficiary Name, Address and Account Number:
JR Resources Corp.
610 – 815 Hastings St W
Vancouver, BC V6C 1B4
Account Number: 04-08816
Beneficiary Bank:
Canadian Imperial Bank of Commerce
400 Burrard Street,
Vancouver, B.C. V6C 3A6
Canada
Institution #010
Swift Address: CIBCCATT
Transit #00010
F-1
Exhibit 10.6
OPTION AGREEMENT
FOR PURCHASE AND SALE OF REAL PROPERTY
This Option Agreement for Purchase and Sale of Real Property (“Contract”) is made and entered into as of October 14, 2021 (the “Effective Date”), by and among Homestake Mining Company of California, a California corporation (“Homestake”) and LAC Minerals (USA) LLC, a Delaware limited liability company (“LAC Minerals” and together with Homestake, the “Owners”), and Dakota Territory Resource Corp., a Nevada corporation (“Option Holder”). Homestake shall act as the “Administrative Agent” for Owners under this Agreement. Homestake, LAC Minerals and Option Holder sometimes may be referred to in this Contract individually as a “Party”, and collectively as the “Parties”.
RECITALS
WHEREAS, Owners are the owners of the fee lands and patented mining claims situated in Lawrence County, South Dakota, which are more particularly described in Exhibit B attached hereto and made a part hereof, together with any buildings and other improvements thereon related to Mining Operations and any and all appurtenances thereto (collectively, the “Property”);
AND WHEREAS, Owners wish to grant to Option Holder, and Option Holder wishes to obtain from Owners, the Option (as defined below) from the Effective Date until the Option Exercise Expiration Date (as defined herein), in exchange for the Option Consideration (as defined below);
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the foregoing and of the mutual promises and covenants contained in this Contract, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties, hereby covenant and agree as to the following:
TERMS AND CONDITIONS
1. Definitions. The following terms when used in this Contract shall have the following meanings:
1.1 Additional Option Cash Consideration. The meaning set forth in Section 2.2.2.
1.2 Additional Option Cash Consideration Payment Date. The meaning set forth in Section 2.2.2.
1.3 Administrative Agent. The meaning set forth in the Preamble, having an address for notices at 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America) with copies to Owner's Attorney.
1.4 Affiliate. With respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” (and its derivatives) means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
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1.5 Attorneys’ Fees. All reasonable fees and expenses charged or incurred by an attorney for services and the services of any paralegals, legal assistants or law clerks, including, but not limited to, reasonable fees and expenses charged for representation at the trial level and in all appeals, and the reasonable fees and expenses of experts.
1.6 Business Day. Any day that the banks in New York City, New York and Toronto, Ontario, Canada are open for business, excluding Saturdays and Sundays.
1.7 Closing. The delivery of the Closing Documents, which shall occur at a mutually agreed time and place on the Closing Date. The term “Close” shall have a correlative meaning.
1.8 Closing Date. The date of the Closing as mutually agreed by the Parties; provided that it shall be no later than thirty (30) days after the date of execution of the Purchase Agreement.
1.9 Closing Documents. The Quitclaim Deed and the Bill of Sale, each in the form attached to the Purchase Agreement, and the other Closing Documents (as defined in the Purchase Agreement).
1.10 Confidentiality Parties. The meaning set forth in Section 10.14.1
1.11 Contract. The meaning set forth in the Preamble.
1.12 Contract Matters. The meaning set forth in Section 10.14.1.
1.13 Dakota Shares. Shares of common stock, par value $0.001 per share, of Option Holder.
1.14 Data. All data, documentation and information which Owners possess relating to the Property, including, by way of illustration and not by limitation: (a) all geological, geochemical and geophysical maps, reports, surveys and tests; (b) deeds, mortgages, ALTA or boundary surveys, licenses, title insurance reports and policies, or equivalent documentation, if any; (c) all drill hole maps, drill logs, drill core, drill cuttings, chip trays, and other samples taken from the Property; (d) all engineering and metallurgical reports, studies and tests; (e) all sample and assay logs, maps, reports and tests; (f) all mineral resource and ore reserve calculations, estimates, reports, studies and tests; (g) all anthropological, biological, cultural, hydrologic, environmental, meteorological, and other like reports, studies, surveys and tests; and (h) all other data relating to the Property, including any such data, documentation or information in digital, electronic, magnetic, optical and written format, all of which is unverified, but, in each case, excluding Privileged Documents.
1.15 Effective Date. The meaning set forth in the Preamble.
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1.16 Encumbrance. Any lien, pledge, mortgage, indenture, option, royalty, deed of trust, rights granted under a streaming agreement or other alternative financing agreement, security interest, charge, claim, reservation, easement, right-of-way, restriction, servitude, surface use agreement, imperfection of title, right of first offer or first refusal or similar right, encroachment or other similar encumbrance or obligation created in favor of a third party.
1.17 Environmental Laws. All applicable Governmental Requirements relating to the protection of human health and safety, the environmental or hazardous or toxic substances or wastes, pollutants or contaminants.
1.18 Exploration. Any activities, including physically invasive activities, seismic monitoring, mapping, conducting base line or foundation studies, site engineering, surveys or survey updates, appraisals, environmental assessments or other testing, or other surface-related geophysical work, directed toward ascertaining the existence, location, quantity, quality or commercial value of mineral deposits, including drilling required after discovery of potentially commercial mineralization, all in accordance with Mining Industry Best Practices, but excluding Mining Operations.
1.19 Exploration Plan. The meaning set forth in Section 4.1.1.
1.20 Financial Statements. The consolidated audited annual financial statements of Option Holder and the unaudited quarterly financial statements of Option Holder, prepared in accordance with GAAP.
1.21 GAAP. Generally accepted accounting principles in the United States, consistently applied.
1.22 Governmental Authority. Any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency or any instrumentality of any of them.
1.23 Governmental Requirement. Any law, enactment, statute, code, ordinance, rule, regulation, formal interpretation, judgment, decree, writ, injunction, franchise, Permit, certificate, license, authorization, agreement, or other direction or requirement of any Governmental Authority now existing or hereafter enacted, adopted, promulgated, entered, or issued applicable to Owners, the Property or the Data.
1.24 Homestake. The meaning set forth in the Preamble, having an address for notices at 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America) with copies to Owner's Attorney.
1.25 Knowledge of Owner. For each Owner, the actual knowledge of Jeff Burich, Patrick Malone and Michael McCarthy, without further investigation.
1.26 LAC Minerals. The meaning set forth in the Preamble, having an address for notices at 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America) with copies to Owner's Attorney.
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1.27 Material Adverse Event. The meaning set forth in Section 8.1.7.
1.28 Memorandum of Option. The Memorandum of Option in the form attached hereto as Exhibit C.
1.29 Mining Industry Best Practices. The best practices; methods; specifications; licensing requirements; standards of care, skill, diligence, safety and performance; environmental health and safety standards (including the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles, or such other established industry standards as may be agreed in writing by the Parties from time to time); and acts generally engaged in or observed by recognized and experienced international mining companies, as in effect from time to time for Mining Operations, which are consistent with good judgment, reliability, and safety, all in compliance with applicable Governmental Requirements (including Environmental Laws).
1.30 Mining Operations. Any mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; any preparation for the removal and recovery of minerals, in-fill drilling, pre-production stripping, stripping and the construction or installation of any mill, leach facilities, or any other improvements to be used for the mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; actions performed during or after the foregoing to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Property or other compliance with Environmental Laws; and the attendant reclamation and remediation and closure upon completion of the foregoing, including obligations or responsibilities that are reasonably expected to or actually continue or arise, such as, without limitation, future monitoring, management, treatment or stabilization.
1.31 Option. The meaning set forth in Section 2.1.
1.32 Option Cash Consideration. The meaning set forth in Section 2.2.1.
1.33 Option Consideration. The meaning set forth in Section 2.2.
1.34 Option Exercise Notice. The written notice from Option Holder received by the Administrative Agent during the Option Period confirming Option Holder’s exercise of the Option granted under this Contract.
1.35 Option Exercise Expiration Date. The date that the Option shall terminate and expire, which such date shall occur at the end of the Option Period unless Option Holder has previously delivered the Option Exercise Notice.
1.36 Option Holder. The meaning set forth in the Preamble, having an address for notices hereunder at c/o Dakota Territory Resource Corp., 106 Glendale Drive, Suite A, Lead, South Dakota 57754, Attention: Jonathan Awde, Email: JAwde@gold-sd.com with copies to Option Holder's Attorney.
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1.37 Option Holder’s Attorney. Erwin Thompson Faillers, having an address for notices hereunder at: 241 Ridge Street, Suite 210, Reno, Nevada 89501, Attention: Jeff Faillers, Email: jfaillers@renolaw.com.
1.38 Option Period. The period that begins on the Effective Date and ends on the earlier of (a) September 7, 2024, and (b) the date the Option Holder delivers to the Administrative Agent the Option Exercise Notice.
1.39 Option Shares. The meaning set forth in Section 2.2.1.
1.40 Owners. The meaning set forth in the Preamble, having an address for notices at 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America) with copies to Owner's Attorney.
1.41 Owner’s Attorney. Parsons Behle & Latimer, having an address for notices hereunder at: 201 South Main Street, Suite 1800, Salt Lake City, Utah 84111, Attention: Jacob Santini, Email: jsantini@parsonsbehle.com, with a copy to Barrick Gold of North America Inc., 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America), Email: USLegalNotices@barrick.com, mmccarthy@barrick.com.
1.42 “Parties” and “Party”. The meaning set forth in the Preamble.
1.43 Permit. Any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration obtained from, or issued by, any Governmental Authority.
1.44 Permitted Encumbrances. Any: (a) Encumbrances for Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith and diligently by appropriate proceedings; (b) Encumbrances of mechanics, carriers, workers, repairers, warehousemen and similar Persons arising or incurred in the ordinary course of business in respect of liabilities that are not yet due or if due and payable, but are unpaid, are being contested in good faith, and in respect of which adequate resources are maintained; (c) matters of public record; (d) any conditions that reasonably would be expected to be shown by a current land survey or search or examination of publicly available information or documents; (e) Environmental Laws; (f) Encumbrances that arise due to zoning, subdivision, entitlement, and other Governmental Requirements related to land use; (g) royalty interests of public record; (h) the paramount title of the United States; (i) pledges made with respect to Owner Permits; (j) orders of any Governmental Authority; and (k) any Encumbrances set forth in this Contract, the Purchase Agreement, the Memorandum of Option or the Related Agreements.
1.45 Person. Any natural or artificial legal entity whatsoever, including, but not limited to, any individual, general partnership, limited partnership, unincorporated association, sole proprietorship, corporation, limited liability company, trust, business trust, real estate investment trust, joint venture, or Government Authority.
1.46 Privilege. The meaning set forth in Section 4.2.4.
1.47 Privileged Documents. The meaning set forth in Section 4.2.4.
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1.48 Proceeding. The meaning set forth in Section 6.1.6.
1.49 Property. The meaning set forth in the Recitals.
1.50 Purchase Agreement. The Asset Purchase Agreement attached hereto in the form of Exhibit A.
1.51 Purchase Shares. The meaning set forth in Section 3.2.2.
1.52 Related Agreements. The (a) Memorandum of Option, (b) the Purchase Agreement, and (c) Closing Documents.
1.53 Representative. With respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
1.54 Restricted Areas. The pit impoundment and backfilled areas; leach pads; water management infrastructure, including French drains, ponds and embankments; and the South Gulch drainage area.
1.55 SEC. The United States Securities and Exchange Commission.
1.56 Securities Act. The Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.57 Securities Filings. The meaning set forth in Section 7.1.6(b).
1.58 Tax. All federal, state, local, foreign and other income, gross receipts, sales, use, severance, depletion, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges in the nature of a tax of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
1.59 Termination Event. The meaning set forth in Section 8.1.
1.60 Transfer. To, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
2. Option.
2.1 Grant of Purchase Option. Each Owner, severally and not jointly, hereby grants to Option Holder the sole and exclusive right and option during the Option Period to elect to purchase all of such Owner’s right, title, and interest in and to the Property and the Data (the “Option”), which Option must be exercised in whole, but not in part, by Option Holder (if at all) in accordance with the terms and conditions of this Contract.
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2.2 Payment of Purchase Option Consideration. In consideration for the granting of the Option, Option Holder shall pay to the Administrative Agent, for the benefit of the Owners, the following (the “Option Consideration”):
2.2.1 On the Effective Date, Option Holder shall (a) pay to the Administrative Agent, on behalf of Owners, an amount in cash equal to $100,000, by wire transfer of immediately available funds to one or more bank accounts designated by Owner on or before the Effective Date (the “Option Cash Consideration”); and (b) issue to Owners or their designee, as determined by the Administrative Agent, 400,000 Dakota Shares (the “Option Shares”), which Option Shares shall be (i) registered in the name of Owners or their designee in book-entry form by the Option Holder’s transfer agent and (ii) bear a customary restrictive legend reflecting the issuance of the Option Shares in a transaction exempt from registration under the Securities Act. The Administrative Agent, on behalf of Owners, shall promptly provide to Option Holder and its transfer agent such documentation reasonably requested by them in connection with the delivery of the Option Shares to Owners or their designee, as determined by the Administrative Agent.
2.2.2 In addition to the Option Cash Consideration and the Option Shares, Option Holder shall pay to the Administrative Agent, on behalf of the Owners, additional cash consideration of $200,000 (the “Additional Option Cash Consideration”), $100,000 of which shall be paid on the first anniversary of the Effective Date, and the remaining $100,000 of which shall be paid on the second anniversary of the Effective Date (each, an “Additional Option Cash Consideration Payment Date”); provided, if an Additional Option Cash Consideration Payment Date falls on a day other than a Business Day, then the Additional Option Cash Consideration will be paid on the immediately succeeding Business Day. Payments of Additional Option Cash Consideration shall be made by wire transfer of immediately available funds to one or more bank accounts designated by the Administrative Agent on or before the applicable Additional Option Cash Consideration Payment Date. If the Closing occurs before an Additional Option Cash Consideration Payment Date, then Option Holder shall not be required to pay the Additional Option Cash Consideration payable on such Additional Option Cash Consideration Payment Date and, if applicable, any subsequent Additional Option Cash Consideration payments. If Option Holder terminates this Contract before an Additional Option Cash Consideration Payment Date, then Option Holder shall not be required to pay the Additional Option Cash Consideration payable on such Additional Option Cash Consideration Payment Date and, if applicable, any subsequent Additional Option Cash Consideration payments.
2.3 Memorandum of Option. On the Effective Date, provided that the Administrative Agent shall have received from Option Holder the Option Cash Consideration and the Option Shares, Option Holder, at its cost and expense, shall have the right to record the Memorandum of Option in Lawrence County, South Dakota. The Memorandum of Option shall not limit, increase or in any manner affect any of the terms of this Contract or any rights, interests or obligations of the Parties hereunder.
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2.4 No Partnership. Nothing contained in this Contract shall be deemed to constitute any Party the partner of any of the other Party, or to constitute any Party the agent or legal representative of the other Party or to create any fiduciary relationship between them. The Parties do not intend to create, nor shall this Contract be construed to create, any mining, commercial or other partnership. No Party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Party, except as otherwise expressly provided herein.
2.5 Administrative Agent. Owners hereby appoint Homestake as the Administrative Agent of Owners under this Contract, and each Owner hereby authorizes Homestake to act on behalf of it as its Administrative Agent in accordance with the terms of this Contract. Homestake hereby agrees to act as the Administrative Agent of Owners as set forth in this Contract. Option Holder hereby acknowledges and agrees that Homestake is acting as the Administrative Agent of Owners under this Contract.
2.6 Governmental Authorities. During the Option Period, Option Holder shall provide the Administrative Agent with at least five days’ prior notice of any meetings scheduled by Option Holder or its Affiliates or its and their respective Representatives with Governmental Authorities, related to the Property, including any Exploration or Mining Operations on the Property, and the Administrative Agent shall have the opportunity to participate in any such meetings.
2.7 Financial Statements. Beginning on the Effective Date and continuing through the Option Period, Option Holder shall deliver the Financial Statements to the Administrative Agent within 30 days after completion of each such Financial Statement. Option Holder may satisfy the delivery requirements of this Section 2.6 by timely filing any such financial statements with the SEC.
2.8 Other Activities. Except as expressly provided in this Contract, each of the Parties may be engaged on its own behalf and on behalf of Persons other than the Parties in the general mining business and each of the Parties hereby consents to such involvement by the other without consulting the other Party or inviting or allowing the other Party to participate. Except as expressly provided in this Contract, the legal doctrine of “corporate opportunity” sometimes applied to persons occupying a fiduciary status shall not apply in the case of any endeavor of any Party.
3. Exercise of Option.
3.1 Notice of Exercise. If Option Holder elects to exercise the Option:
3.1.1 Option Holder shall deliver to the Administrative Agent the Option Exercise Notice any time during the Option Period; and
3.1.2 Owners and Option Holder shall execute the Purchase Agreement within ten (10) days after the date of delivery of the Option Exercise Notice; provided that Owners’ failure to timely execute the Purchase Agreement shall not vitiate Option Holder’s exercise of the Option by delivering the Option Exercise Notice in accordance with Section 3.1.1.
3.2 Closing. The Closing shall occur on the Closing Date. At the Closing:
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3.2.1 Each of the Parties will execute and deliver the Closing Documents to which it is a party, together with any other documents or instruments required for the Closing; and
3.2.2 Option Holder shall issue to Owners or their designee, as determined by the Administrative Agent, 400,000 Dakota Shares (the “Purchase Shares”), which Purchase Shares shall be (a) registered in the name of Owners or their designee, as determined by the Administrative Agent, in book-entry form by the Option Holder’s transfer agent and (b) bear a customary restrictive legend reflecting the issuance of the Purchase Shares in a transaction exempt from registration under the Securities Act. The Administrative Agent shall promptly provide to Option Holder and its transfer agent such documentation reasonably requested by them in connection with the delivery of the Purchase Shares to the Administrative Agent.
4. Option Holder’s Access Rights to Property and Data During Option Period. 4.1 Option Holder’s Access Rights to Property.
4.1.1 Access to the Property. Subject to Section 4.1.2, Option Holder, at its cost, may access the Property during the Option Period in order to conduct Exploration; provided that Option Holder shall not conduct any Exploration within the Restricted Areas without the express written consent of the Administrative Agent, such consent not to be withheld unreasonably. Any Exploration shall be conducted pursuant to an exploration plan approved by the Administrative Agent, acting reasonably (the “Exploration Plan”), and in accordance with all applicable Environmental Laws. Option Holder, at its cost, shall be responsible to obtain all Permits and third-party consents, including consents from third parties who or which hold rights in property other than the Property, required to conduct Exploration. Option Holder shall be responsible for all reclamation and remediation associated with Exploration. The Administrative Agent and its Affiliates, and its and their respective Representatives, shall have the right, but not the obligation, to review the Exploration undertaken by Option Holder, to verify that such Exploration is being conducted according to the Exploration Plan and applicable Environmental Laws, and that no Exploration is conducted in the Restricted Areas. Option Holder shall be responsible and liable for all Exploration. In addition, Option Holder shall have the right, but not the obligation, to conduct reviews of zoning, building code and other applicable ordinances to determine whether the Property is in compliance.
4.1.2 Limitations. Neither Option Holder nor its Affiliates shall conduct any Mining Operations on the Property.
4.1.3 Indemnification of Owner. Option Holder shall indemnify, defend and save harmless the Administrative Agent, each Owner and its Affiliates and its and their respective Representatives, with counsel of their choosing, from and against any and all claims, debts, demands, suits, actions and causes of action whatsoever which may be brought or made against one or more of them by any Person and all loss, cost, damages, expenses and liabilities (including Attorneys’ Fees) which may be suffered or incurred by them arising out of or in connection with or in any way referable to, whether directly or indirectly, any access to the Property by Option Holder and its Affiliates and its and their respective Representatives, including, without limitation, bodily injuries or death at any time resulting therefrom or damage to Property.
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4.1.4 Compliance with Laws and Policies. In exercising its rights under Sections 4.1.1 and 4.1.2, Option Holder shall comply with all applicable Governmental Requirements and shall carry out its activities in accordance with Mining Industry Best Practices and the environmental, health and safety policies of each Owner. Option Holder, at its cost and expense, shall be responsible for obtaining all Permits and bonding required to conduct its activities pursuant to Sections 4.1.1 and 4.1.2. Each Owner shall reasonably cooperate with Option Holder, at the expense of Option Holder, in obtaining any Permits or other permissions that are required for Option Holder to conduct its activities on the Property pursuant to Sections 4.1.1 and 4.1.2.
4.2 Option Holder Rights to Data.
4.2.1 Access to Data. During the Option Period, the Administrative Agent shall provide to Option Holder reasonable access to all of the Data that either Owner owns or controls for Option Holder’s review. Any such review shall be during normal operating hours of the Owners and upon not less than two (2) Business Days’ prior notice, which may be given by email. If Option Holder exercises the Option, then on the Closing Date, each Owner shall Transfer, at Option Holder’s cost and expense, all of its rights, title and interest in and to the Data to Option Holder, subject to Sections 4.2.4 and 4.2.5.
4.2.2 Access to Todd Duex. During the Option Period, each Owner hereby waives any confidentiality obligations between such Owner and Mr. Todd Duex, to the extent Option Holder desires to obtain information from Mr. Duex regarding the Property; provided that neither Owner shall be responsible or liable for any information provided to Option Holder by Mr. Duex, or any actions taken by Option Holder or its Affiliates based on information provided by Mr. Duex.
4.2.3 Access to Jeff Burich. During the Option Period, the Administrative Agent will make Jeff Burich reasonably available to Option Holder during normal operating hours in order to discuss factual matters regarding the Property; provided that (a) such discussions will not unreasonably interfere with the normal business activities of Mr. Burich for or on behalf of each Owner and its Affiliates, (b) neither Owner shall be responsible or liable for any actions taken by Option Holder or its Affiliates based on information provided by Mr. Burich; (c) Option Holder hereby releases Mr. Burich from any liability with respect to any information provided by Mr. Burich to Option Holder or its Affiliates or its or their respective Representatives related to the Property; and (d) any information provided by Mr. Burich to Option Holder or its Affiliates or its or their respective Representatives in no way shall be attributed to Knowledge of Owner.
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4.2.4 Privilege. All communications and other documents exchanged between the Administrative Agent, Owners or its or their Affiliates and legal counsel (including, as applicable, internal legal counsel) providing legal advice to the Administrative Agent, Owners and its and their Affiliates, including documents and communications relating to the this Contract, the Related Agreements and the Property, and files maintained by legal counsel as a result of providing legal advice to the Administrative Agent, Owners or its or their Affiliates (the “Privileged Documents”), that are subject to attorney-client privilege, any similar privilege, or that constitute attorney work product (as applicable, a “Privilege”), specifically are excluded from the Data and shall be and remain the property of the Administrative Agent, Owners and its and their Affiliates, as applicable. Neither the Administrative Agent or Owners, nor its and their Affiliates, intend to waive any applicable Privilege, and any disclosure of any Privileged Documents, whether in the Data or otherwise, shall be deemed to be inadvertent. Accordingly, Option Holder, on its behalf and on behalf of its Affiliates and its and their respective Representatives acknowledges and agrees that a disclosure of any Privileged Documents will not constitute a waiver of such Privilege, and the Person receiving any such Privileged Documents shall, promptly upon request or becoming aware that such documents are Privileged Documents, return to Owner, or with the consent of the Administrative Agent, destroy, such Privileged Documents.
4.2.5 Disclaimer of Warranties of Data. All Data provided to, or made available to Option Holder under this Contract or prior to the Effective Date, is provided without representation or warranty and is at the sole risk of Option Holder. Such information is provided “AS IS, WHERE IS” AND WITH ALL FAULTS, AND THE ADMINISTRATIVE AGENT, OWNERS AND ITS AND THEIR AFFILIATES EXPRESSLY DISCLAIM THE ACCURACY OR COMPLETENESS OF ALL DATA, AND ALL EXPRESS OR IMPLIED WARRANTIES CONCERNING THE SAME, AND EXPRESSLY EXCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
5. Maintenance of Property; Title.
5.1 Maintenance of the Property. Owners shall make all payments of Taxes, royalties, land-holding costs, claim maintenance and similar fees, lease payments and other payments that become due during the Option Period and that are required for Owners to maintain its interest in the Property.
5.2 No Encumbrances. During the Option Period, Owners shall not lease, pledge as collateral or security, mortgage or encumber or cause or allow any Encumbrance created by, through or under Owners to be placed against the Property, or grant any other right in or to the Property, except as expressly provided in this Contract, except for Permitted Encumbrances.
6. Owner’s Representations.
6.1 Representations and Warranties. Each Owner, severally but not jointly, hereby represents and warrants to Option Holder as of each of the Effective Date and the Option Exercise Date as follows:
6.1.1 Incorporation and Qualification. It is a corporation or limited liability company, as applicable, incorporated or formed and in good standing under the laws of the jurisdiction of this organization and has the corporate or limited liability power to enter into and perform its obligations under this Contract, the Purchase Agreement and the Related Agreements to which it is a party;
6.1.2 Corporate Authority. The execution and delivery of and performance by it of this Contract, the Purchase Agreement and the Related Agreements to which it is a party and the Transfer of the Property by it to the Option Holder have been authorized by all necessary corporate or limited liability action on its part;
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6.1.3 No Violation or Breach. The execution and delivery of and performance by it of this Contract, the Purchase Agreement and the Related Agreements to which it is a party:
(a) does not conflict with its organizational documents;
(b) does not violate in any material respect any law applicable to it or the Property; and
(c) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments directly related to the Property to which it is a party;
6.1.4 Execution and Binding Obligation. This Contract and, when executed, the Purchase Agreement and each of the Related Agreements to which it is a party has been duly executed and delivered by it and constitutes a legal, valid and binding agreement enforceable against it in accordance with its terms, subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies;
6.1.5 Filings, Consents and Approvals. To the Knowledge of Owner, it is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other Person in connection with the execution, delivery and performance by it of this Contract or any of the Related Agreements to which it is a party, other than (a) filings required by state or federal securities laws (including the Securities Act), if applicable, (b) those that have been made or obtained prior to the date of this Contract, (c) the recording of the Memorandum of Option and the Quitclaim Deed; and (d) approvals for the Transfer of any Permits.
6.1.6 Title to Property. It (a) owns or has valid rights to the Property, free and clear of any and all Encumbrances, except for Permitted Encumbrances; (b) other than the rights of Option Holder pursuant to this Contract, there are no outstanding options, rights of first offer or first negotiation or rights of first refusal in favor of any other party to acquire an interest in the Property; and (c) has not received written notice of, and to the Knowledge of Owner, there is no, pending or threatened condemnation proceeding or proposed action or agreement for taking in lieu of condemnation with respect to any portion of the Property.
6.1.7 No Action. It has not received notice of any, and to the Knowledge of Owner, there are no pending or threatened actions, claims, counterclaims, suits, governmental investigations or inquiries, or other proceedings (each, a “Proceeding”), which would prevent the consummation of the transactions contemplated by this Contract, nor any Proceeding or Claim (as defined in the Purchase Agreement) related to, or that would otherwise materially adversely affect, the Property, including, without limitation, the title or environmental status of the Property.
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6.1.8 Option Shares. It is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and it is acquiring the Option Shares for its own account and not with a view to the distribution thereof. Owner understands that the Option Shares have not been and will not be registered under the Securities Act, will bear a restrictive legend, and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available. It further represents and warrants that it will not Transfer any Option Shares or any interest therein except in a transaction exempt from or not subject to the registration requirements of the Securities Act. It represents that (i) it has such knowledge, sophistication and experience in business and financial matters that it is capable of evaluating the merits and risks of the acquisition of the Dakota Shares and (ii) it has been granted the opportunity to ask questions of, and receive satisfactory answers from, representatives of Option Holder concerning the business affairs and financial condition of Option Holder and its subsidiaries, and has had the opportunity to obtain and has obtained any additional information which it deems necessary regarding such purchase, and that Option Holder is not required to register the Option Shares.
6.2 Disclaimer.
6.2.1 Option Holder hereby acknowledges and agrees that the transactions contemplated by this Contract and the Related Agreements are being completed on an “as is, where is” and “with all faults” basis. Except as expressly set forth herein, neither the Administrative Agent or Owner or its and their Affiliates nor its or their respective or Representatives, or any other Person, has made or makes any other express or implied representation or warranty, either written or oral, on behalf of the Administrative Agent or Owners, including any representation or warranty as to the accuracy or completeness of any Data or other information furnished or made available to any other Option Holder and its Affiliates and its and their respective Representatives (including any projections, information, documents or material made available in the Data, management presentations or other communications with management, or in any other form in expectation of the transactions contemplated in this Contract or the Related Agreements), the sufficiency, merchantability or fitness for any particular purpose of the Property or any Permits held by Owners related to the Property, compliance with applicable Governmental Requirements, or as to the future revenue, profitability or success arising from the transactions contemplated in this Contract or the Related Agreements, or any representation or warranty arising from statute or otherwise at law or in equity, all of which are hereby expressly disclaimed.
6.2.2 WITHOUT LIMITING THE FOREGOING, OWNER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE EXISTENCE OR STATUS OF ANY MINES OR WORKINGS WITHIN THE AREA COVERED BY THE PROPERTY, INCLUDING THE EXISTENCE AND STATUS OF ANY ABANDONED MINES OR WORKINGS, THE STATUS OF ANY ROYALTIES OR THE EXISTENCE OR STATUS OF ANY UNRECORDED RIGHTS TO ANY ROYALTIES, THE EXISTENCE, NATURE, LOCATION, AMOUNT OR VALUE OF ANY MINERALIZATION, MINERAL RESERVES OR RESOURCES, THE ABILITY TO EXTRACT, PROCESS, OR SELL MINERALS BY ANY MEANS, WHETHER ANY NECESSARY PERMITS CAN BE OBTAINED IN A TIMELY MANNER OR AT ALL, WHETHER ANY MINING CAN BE DONE ECONOMICALLY OR AT ALL, OR THAT THERE WILL BE NO THIRD PARTY CHALLENGE TO THE ISSUANCE OF ANY REQUIRED PERMIT OR ENVIRONMENTAL IMPACT STATEMENT REQUIRED FOR OPERATIONS WITH RESPECT TO THE PROPERTIES, OR THAT THERE ARE NO RIGHTS (INCLUDING ROYALTIES, ACCESS RIGHTS, INFORMATION RIGHTS, RECONVEYANCE RIGHTS, REVERSIONARY RIGHTS OR OTHER RIGHTS OF PREDECESSORS IN INTEREST) RFELATED TO THE PROPERTY.
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7. Option Holder’s Representations.
7.1 Representations and Warranties. Option Holder hereby represents and warrants to the Administrative Agent and each Owner as of the each of Effective Date and the Option Exercise Date as follows:
7.1.1 Incorporation and Qualification. Option Holder is a corporation incorporated and in good standing under the laws of the State of Nevada and has the corporate power to enter into and perform its obligations under this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party.
7.1.2 Corporate Authority. The execution and delivery of and performance by Option Holder of this Contract, the Purchase Agreement and each of the Related Agreements to which Option Holder is a party, the Transfer of the Property from Owner to Option Holder have been authorized by all necessary corporate action on the part of Option Holder.
7.1.3 No Violation or Breach. The execution and delivery of and performance by Option Holder of this Contract, the Purchase Agreement and the Related Agreements to which it is a party:
(a) does not conflict with the articles of incorporation or bylaws of Option Holder;
(b) does not violate in any material respect any law applicable to Option Holder; and
(c) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments to which Option Holder is a party.
7.1.4 Execution and Binding Obligation. This Contract, the Purchase Agreement and each of the Related Agreements to which Option Holder is a party has been duly executed and delivered by Option Holder and constitutes a legal, valid and binding agreement of Option Holder enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
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7.1.5 Capitalization.
(a) The authorized capital of Option Holder consists of 75,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which 70,428,204 shares of common stock no shares of preferred stock, and derivative securities to purchase up to 4,146,250 shares of common stock are issued and outstanding as of October 4, 2021; and
(b) On a fully diluted basis, Option Holder has a sufficient number of authorized shares of common stock to issue the Dakota Shares without exceeding the number of shares authorized under Option Holder’s articles of incorporation.
7.1.6 Filings, Consents and Approvals.
(a) Option Holder is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other Person in connection with the execution, delivery and performance by Option Holder of this Contract, the Purchase Agreement or any of the Related Agreements to which it is a party, other than (i) filings required by state or federal securities laws (including the Securities Act), if applicable, and (ii) those that have been made or obtained prior to the date of this Contract; and
(b) During the last 12 months, Option Holder has filed in a timely manner all disclosures, reports and other filings required to be filed by it under applicable securities laws (the “Securities Filings”) in all jurisdictions in which such Securities Filings are required to be filed and with all securities exchanges where the Purchaser’s securities are traded, and all such Securities Filings are true and accurate in all material respects.
7.1.7 Issuance of the Option Shares. The issuance of the Option Shares has been duly authorized and, when issued, the Option Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances.
7.1.8 Independent Review.
(a) Option Holder and its direct and indirect Affiliates, and its and their respective Representatives, have had sufficient access to and opportunity to review the Property and Data and to ask questions of the Administrative Agent and the management representatives and professional advisors of Owners, as necessary for Option Holder to investigate, analyze, and evaluate the Property and Data and to make its and their independent decision to acquire the Property and to consummate the transactions contemplated by this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party.
(b) In making the decision to enter into this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party, and to consummate the transactions contemplated herein and therein, Option Holder has conducted its own independent investigation, analysis, and evaluation of the Property and Data (including Option Holder’s own estimate and appraisal of the extent, location and value of mineralization, mineral resources and reserves, undeveloped properties, and environmental obligations), and the financial condition of, operations, and prospects for, the Property.
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8. Termination and Effect of Termination.
8.1 Termination Events. This Contract may be terminated upon the occurrence of any one or more of the following events (each, a “Termination Event”):
8.1.1 By Option Holder upon giving thirty (30) days written notice to the Administrative Agent;
8.1.2 By mutual written agreement of the Administrative Agent and Option Holder;
8.1.3 In the event that Option Holder fails to exercise the Option by delivery of an Option Exercise Note during the Option Period;
8.1.4 In the event that Option Holder fails to execute the Purchase Agreement in accordance with Section 3.1.2;
8.1.5 By Owners, acting through the Administrative Agent, upon the failure of Option Holder to make any Additional Option Cash Payment on or before the applicable Additional Option Cash Payment Date to the extent required by Section 2.2.2 and such failure is not cured within five (5) Business Days after Option Holder’s receipt of notice of such failure;
8.1.6 By Owners, acting through the Administrative Agent, in the event Option Holder conducts Exploration in violation of the Exploration Plan or conducts Exploration in the Restricted Areas without the consent of the Administrative Agent;
8.1.7 By Owners, acting through the Administrative Agent, in the event Option Holder files for bankruptcy, becomes insolvent or undergoes material restructuring event, including a change in the majority of the board of directors of Option Holder or a change in the majority of the executive management of Option Holder that would require a filing by Option Holder of a Form 8-K with the SEC (each, a “Material Adverse Event”), and Owners, acting through the Administrative Agent, determine, acting reasonably, that Option Holder is unable to exercise the Option and conduct Mining Operations on the Property as a result of such Material Adverse Event;
8.1.8 Except as allowed in Section 4.1.1, Option Holder conducts or has conducted on its behalf Mining Operations on the Property without the written consent of Owners, acting through the Administrative Agent, and any other Person who or which has rights to the Property or the minerals appurtenant to the Property;
8.1.9 In the event Owners, acting through the Administrative Agent, consent to the conduct of Mining Operations on the Property, Option Holder materially fails to conduct, or have conducted, such Mining Operations in accordance with Mining Industry Best Practices; or
8.1.10 In the event the Purchase Agreement is not executed in accordance with Section 3.1.2, or the Purchase Agreement is terminated by either Party in accordance with the terms thereof.
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8.2 Effect of Termination. Upon a Termination Event:
8.2.1 this Contract automatically shall terminate;
8.2.2 Upon Owners request, acting through the Administrative Agent, Option Holder shall deliver to Owner all information and data developed by or on behalf of Option Holder related to the Property; and
8.2.3 Owner, acting through the Administrative Agent, shall have the right to release the Memorandum of Option, and Option Holder shall cooperate with the Administrative Agent in the preparation and recordation of any document or instrument releasing the Memorandum of Option.
8.3 Survival. Upon the expiration or termination of this Contract, the provisions of this Contract that, by their terms are intended to survive the expiration or termination of this Contract shall so survive including, without limitation, Sections 1, 2.4, 4.1.3, 4.2.2, 4.2.3, 4.2.4, 4.2.5, 6.2, 7.1.8, 8.2 and 10.
9. Notices. Any notice, request, demand, instruction or other communication to be given to either Party hereunder, except where required to be delivered at the Closing, shall be in writing and shall either be (a) hand-delivered, (b) sent by Federal Express or a comparable overnight mail service, or (c) mailed by U.S. registered or certified mail, return receipt requested, postage prepaid, or (d) sent by electronic mail or other electronic means, to Option Holder, the Administrative Agent on behalf of Owners, Option Holder’s Attorney and Owner’s Attorney, at their respective addresses set forth in Section 1 of this Contract. Notice shall be deemed to have been given upon receipt or refusal of delivery of said notice. The addressees and addresses for the purpose of this paragraph may be changed by giving notice. Unless and until such written notice is received, the last addressee and address stated herein shall be deemed to continue in effect for all purposes hereunder.
10. | Miscellaneous. |
10.1 Section and Paragraph Headings. The section and paragraph headings herein contained are for the purposes of identification only and shall not be considered in construing this Contract.
10.2 Amendment. No modification or amendment of this Contract shall be of any force or effect unless in writing executed by each of Owners and Option Holder.
10.3 Attorneys’ Fees. If any Party obtains a judgment against any other Party by reason of breach of this Contract, Attorneys’ Fees and costs shall be included in such judgment.
10.4 Governing Law.
10.4.1 This Contract and all the documents delivered in connection with this Contract shall be construed and enforced in accordance with the laws of the State of South Dakota, without regard to any conflicts of law provisions that may otherwise require the application of the law of any other jurisdiction.
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10.4.2 Any Proceeding arising out of or based upon this Contract or the interpretation thereof may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Proceeding. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any Proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Proceeding brought in any such court has been brought in an inconvenient forum.
10.5 Entire Contract. This Contract sets forth the entire agreement between Owners and Option Holder relating to the Property and all subject matter herein and supersedes all prior and contemporaneous negotiations, understandings and agreements, written or oral, between the Parties.
10.6 Time of the Essence. Time is of the essence in the performance of all obligations by Option Holder and Owners under this Contract.
10.7 Computation of Time. Any reference herein to time periods of less than six (6) days shall exclude Saturdays, Sundays and legal holidays in the computation thereof. Any time period provided for in this Contract which ends on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. on the next full Business Day.
10.8 Successors and Assigns; Assignment. This Contract shall inure to the benefit of and be binding upon the permitted successors and assigns of the Parties. Option Holder may only assign this Contract upon Owners’ written consent, acting through the Administrative Agent, which Owners, acting through the Administrative Agent, shall exercise in their sole discretion; provided, however, that Option Holder shall have the right to assign this Contract, upon notice to, but without the written consent of, Owners, to an Affiliate of Option Holder. If Option Holder assigns this Contract to such an Affiliate or with Owner’s consent, any assignee of Option Holder shall be able and obligated to Close under this Contract in the same manner as Option Holder and the originally named Option Holder shall not be released from any of the obligations of “Option Holder” under this Contract. In the event Option Holder assigns this Contract to an Affiliate of Option Holder or with the consent of Owners, acting through the Administrative Agent, a duly executed assignment of this Contract shall be delivered to Owner at or prior to the Closing Date, as well as entity documentation as may be reasonably requested by Owners, acting through the Administrative Agent.
10.9 Construction of Contract. All of the Parties to this Contract have participated freely in the negotiation and preparation hereof; accordingly, this Contract shall not be more strictly construed against any one of the Parties.
10.10 Gender. As used in this Contract, the masculine shall include the feminine and neuter, the singular shall include the plural and the plural shall include the singular as the context may require.
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10.11 Counterparts; Electronic Execution. This Contract may be executed in any number of counterparts and delivered via electronic mail or otherwise, each of which when executed and delivered shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.12 Further Assurances. The Parties each agree to do such other and further acts and things, and to execute and deliver such instruments and documents (not creating any obligations additional to those otherwise imposed by this Contract) as either may reasonably request from time to time, whether at or after the Closing, in furtherance of the purposes of this Contract. In addition, in the event either Owner becomes aware that any representation, warranty or covenant of such Owner set forth in this Contract will not be true and correct in any material respect on the Closing Date, then such Owner, acting through the Administrative Agent shall give prompt written notice thereof to Purchaser, which notice shall include all appropriate information related thereto that is in the possession or control of such Owner.
10.13 Closing Documents/Deliverables. To the extent any of the Closing Documents are not attached hereto or to the Purchase Agreement at the time of this Contract, Option Holder and Owner shall negotiate in good faith with respect to the form and content of such Closing Documents prior to Closing.
10.14 Brokers. Each Party hereto represents and warrants to the other that that it has not had, and shall not have, any dealings with (and it has not engaged and will not engage) any third party to whom the payment of any broker’s fee, finder’s fee, commission or other similar compensation shall or may become due or payable in connection with the transactions contemplated hereby. It is agreed that if any claims for brokerage commissions or fees are ever made against either Owner or Option Holder, all such claims shall be handled and paid by the Party whose actions or alleged commitments form the basis of such claim. Each Party shall indemnify, defend and hold the other Party harmless from any and all claims for commissions or fees by brokers made against the other Party, and resulting loss, cost (including reasonable Attorneys’ Fees) and damages, which claim shall have arisen out of any written document or alleged oral agreement entered or purported to have been entered into by the indemnifying Party and the person claiming such commission, with respect to the transaction contemplated by this Contract.
10.15 Confidentiality.
10.15.1 Except for such information as is contained in the Memorandum of Option and related transfer Tax returns, neither Party shall use (other than in the performance of its obligations under this Contract) or disclose (and each Party shall cause its Affiliates, and its and their respective Representatives (the “Confidentiality Parties”) not to so use or disclose) and each Party shall (and shall cause the Confidentiality Parties to) instruct each Party’s (and the Confidentiality Parties’) Representatives with knowledge of this transaction not to so use or disclose any term or condition, of this Contract or any other identifying details with respect to the provisions of this Contract (“Contract Matters”); however the Confidentiality Parties can confirm (i) that each Owner has granted Option Holder an option to purchase the Property, (ii) such details as are set forth in the Memorandum of Option and (iii) whether or not Option Holder has exercised the option to purchase the Property as set forth in this Contract.
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10.15.2 The above notwithstanding, nothing contained herein shall restrict either Party’s ability to disclose (or restrict the Confidentiality Parties to disclose) Contract Matters (i) to (A) either Party’s lenders or investors (or potential lenders or investors) or their respective successors and assigns, (B) any rating agencies, (C) any potential purchasers of Option Holder's interest in this Contract, (D) securities regulators in accordance with applicable securities laws or (E) any attorneys, accountants and other professionals of the Persons listed in (A) through (D) above with a need to know such information to perform their duties that either Party retains such professionals for, provided that such recipients are advised of the confidentiality of such information, (ii) in connection with any arbitration or potential litigation between the Parties under this Contract, or (iii) that are or become known to the general public under circumstances involving no breach by such Party or others of the terms of this Section 10.14. Further, either Party may disclose Contract Matters as required by any Governmental Requirement or by a court of competent jurisdiction or any other Governmental Authority issuing a subpoena to such Party; provided that such Party (A) gives the other Party prior written notice sufficient to allow the other Party to seek a protective order or other appropriate remedy and (B) discloses only such information as is required by any Governmental Authority.
10.15.3 Notwithstanding anything to the contrary in this Section 10.14, Owners, acting through the Administrative Agent, and Option Holder shall jointly issue the first press release regarding the purchase of the Property by Option Holder (or its designee) on the Closing Date. Following such press release pursuant to the foregoing sentence, Owners may not issue a subsequent press release or other public communication regarding this Contract without first obtaining Option Holder’s consent, which consent shall not be unreasonably withheld or delayed. With respect to this Contract, any mention of Option Holder other than merely identifying such Party as the Option Holder of the Property after the Closing Date in any press release or public communication by Owner shall require Option Holder's prior written consent.
10.16 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY AND INTENTIONALLY FOREVER WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING AT LAW, AT EQUITY, IN TORT OR CONTRACT) BROUGHT BY ANY PARTY AGAINST SUCH PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS CONTRACT. THE PROVISIONS OF THIS SECTION 10.15 SHALL SURVIVE THE TERMINATION HEREOF.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Parties have executed this Contract as of the Effective Date.
OWNERS | |
HOMESTAKE MINING COMPANY OF CALIFORNIA, a California corporation, as Owner and Administrative Agent |
By: | “Patrick Malone” | |
Name: Patrick Malone | ||
Title: President |
LAC MINERALS (USA) LLC, a Delaware limited liability company |
By: | “Patrick Malone” | |
Name: Patrick Malone | ||
Title: President |
OPTION HOLDER | |
DAKOTA TERRITORY RESOURCE CORP., a Nevada corporation |
By: | “Jonathan Awde” | |
Name: Jonathan Awde | ||
Title: President and Chief Executive Officer |
EXHIBIT A
PURCHASE AGREEMENT
Attached
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with any schedules or exhibits attached hereto, the “Agreement”) is made and entered into as of this ____ day of _________ 20__ (the “Effective Date”), by and among Homestake Mining Company of California, a California corporation (the “Homestake”) and LAC Minerals (USA) LLC, a Delaware limited liability company (“LAC Minerals and together with Homestake, the “Sellers”), and Dakota Territory Resource Corp., a Nevada corporation (the “Purchaser”). Homestake shall act as the
“Administrative Agent” for the Sellers under this Agreement. Homestake, LAC Minerals and the Purchaser sometimes may be referred to in this Agreement individually as a “Party,” and collectively as the “Parties.”
RECITALS
A. Each Seller owns or has rights to certain mining claims set forth in Exhibit A attached to this Agreement (the “Mining Property”) and certain Data related to the Mining Property (collectively, the “Purchased Assets”).
B. The Parties entered into an Option Agreement for Purchase and Sale of Real Property dated October 14, 2021 (the “Option Agreement”), pursuant to which each Sellers granted to the Purchaser the exclusive option to purchase the Purchased Assets and assume the Assumed Liabilities.
C. On _______, the Purchaser exercised its Option (as defined in the Option Agreement) pursuant to the Option Agreement for the purchase of the Purchased Assets and the assumption of the Assumed Liabilities.
D. As a result of the exercise of the Option, the Purchaser wishes to purchase the Purchased Assets and to assume and discharge the Assumed Liabilities from each Seller, and each Seller is willing to sell the Purchased Assets and Transfer the Assumed Liabilities to the Purchaser, all in accordance with the provisions of this Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
1. Definitions and Rules of Construction.
(a) Certain Defined Terms. The following terms when used in this Agreement shall have the following meanings:
“Administrative Agent” has the meaning set forth in the Preamble.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
“Agreement” has the meaning set forth in the Preamble.
“Assignment and Assumption” means the Assignment and Assumption in the form of Exhibit B.
“Assumed Liabilities” means all of the known and unknown damages, costs, expenses, responsibilities, Losses, Claims and other liabilities of any nature whatsoever now existing or hereafter arising out of, relating to, or resulting from, in any manner, the ownership, legal or beneficial right to, operation, maintenance, preservation, use, exploration or exploitation (including extraction), reclamation and closure of the Purchased Assets, whether arising before, on or after the Effective Date.
“Bill of Sale” means the Bill of Sale in the form of Exhibit C.
“Business Day” means any day that the banks in New York City, New York and Toronto, Ontario, Canada are open for business, excluding Saturdays and Sundays.
“Claim” means any action, arbitration, cause of action, claim, counterclaim, demand, dispute, hearing, grievance, mediation, injunction, investigation, obligation, stay, suit or other Proceeding.
“Closing” has the meaning set forth in Section 4.
“Closing Date” has the meaning set forth in Section 4.
“Consideration” has the meaning set forth in Section 3.
“Consideration Shares” has the meaning set forth in Section 3(a).
“Dakota Shares” means shares of common stock, par value $0.001 per share, of the Purchaser.
“Data” means all data, documentation and information which each Sellers possesses relating to the Mining Property, including, by way of illustration and not by limitation: (a) all geological, geochemical and geophysical maps, reports, surveys and tests; (b) deeds, mortgages, ALTA or boundary surveys, licenses, title insurance reports and policies, or equivalent documentation, if any; (c) all drill hole maps, drill logs, drill core, drill cuttings, chip trays, and other samples taken from the Mining Property; (d) all engineering and metallurgical reports, studies and tests; (e) all sample and assay logs, maps, reports and tests; (f) all mineral resource and ore reserve calculations, estimates, reports, studies and tests; (g) all anthropological, biological, cultural, hydrologic, environmental, meteorological, and other like reports, studies, surveys and tests; and (h) all other data relating to the Mining Property, including any such data, documentation or information in digital, electronic, magnetic, optical and written format, all of which is unverified, but, in each case, excluding Privileged Documents.
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“Deductible” has the meaning set forth in Section 8(d)(ii).
“Defaulting Party” has the meaning set forth in Section 11.
“De Minimis Amount” has the meaning set forth in Section 8(d)(i).
“Designee” has the meaning set forth in Section 3(a).
“Effective Date” has the meaning set forth in the Preamble.
“Encumbrance” means any lien, pledge, mortgage, indenture, option, royalty, deed of trust, rights granted under a streaming agreement or other alternative financing agreement, security interest, charge, claim, reservation, easement, right-of-way, restriction, servitude, surface use agreement, imperfection of title, right of first offer or first refusal or similar right, encroachment or other similar encumbrance or obligation created in favor of a third party.
“Environmental Laws” means all applicable Laws relating to the protection of human health and safety, the environmental or hazardous or toxic substances or wastes, pollutants or contaminants.
“Governmental Authority” means any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency or any instrumentality of any of them.
“Homestake” has the meaning set forth in the Preamble.
“Indemnitee” has the meaning set forth in Section 8(g).
“Indemnitor” has the meaning set forth in Section 8(g).
“Knowledge of Seller” means the actual knowledge of Jeff Burich, Patrick Malone and Michael McCarthy, without inquiry.
“LAC Minerals” has the meaning set forth in the Preamble.
“Law” means any law, enactment, statute, code, ordinance, rule, regulation, formal interpretation, judgment, decree, writ, injunction, franchise, Permit, certificate, license, authorization, agreement, or other direction or requirement of any Governmental Authority now existing or hereafter enacted, adopted, promulgated, entered, or issued applicable to Parties, the Mining Property or the Data.
“Loss” means, in respect of any matter, all Claims, demands, Proceedings, losses, damages, liabilities, deficiencies, fines, costs and expenses (including reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement (but excluding punitive, exemplary, aggravated damages, lost opportunity damages and loss of profits), injuries and judgments arising directly or indirectly as a consequence of such matter.
“Mining Property” has the meaning set forth in Recital A.
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“Non-Defaulting Party” has the meaning set forth in Section 11.
“NSR” has the meaning set forth in Section 3(b).
“OFAC” means the United States Department of the Treasury, Office of Foreign Assets Control
“Option Agreement” has the meaning set forth in Recital B.
“Organizational Documents” means: (a) as to a corporation, the articles or certificate of incorporation and the bylaws of the corporation; and (b) as to a limited liability company, the articles or certificate of formation and the operating agreement or limited liability company agreement of the limited liability company, together with any amendment or supplement to any of the foregoing.
“Parties” has the meaning set forth in the Preamble.
“Party” has the meaning set forth in the Preamble.
“PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56.
“Permit” means any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration by or with any Governmental Authority.
“Permitted Encumbrance” means: (a) Encumbrances for Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith and diligently by appropriate proceedings; (b) Encumbrances of mechanics, carriers, workers, repairers, warehousemen and similar Persons arising or incurred in the ordinary course of business in respect of liabilities that are not yet due or if due and payable, but are unpaid, are being contested in good faith, and in respect of which adequate resources are maintained; (c) matters of public record; (d) any conditions that reasonably would be expected to be shown by a current land survey or search or examination of publicly available information or documents; (e) Environmental Laws; (f) Encumbrances that arise due to zoning, subdivision, entitlement, and other Laws related to land use; (g) royalty interests of public record; (h) the paramount title of the United States; (i) pledges made with respect to Seller Permits; (j) orders of any Governmental Authority; and (k) any Encumbrances set forth in this Agreement or the Related Agreements.
“Person” means any natural or artificial legal entity whatsoever, including any individual, general partnership, limited partnership, unincorporated association, sole proprietorship, corporation, limited liability company, trust, business trust, real estate investment trust, joint venture, or Government Authority.
“Privilege” has the meaning set forth in Section 2(c)(i).
“Privileged Documents” has the meaning set forth in Section 2(c)(i).
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“Proceeding” means any action, Claim, counterclaim, suit, governmental investigation or inquiry, or other proceeding.
“Purchased Assets” has the meaning set forth in Recital A.
“Purchaser” has the meaning set forth in the Preamble.
“Purchaser Indemnitees” has the meaning set forth in Section 8(c).
“Quitclaim Deed” means the Quitclaim Deed in the form of Exhibit D.
“Related Agreements” means the Assignment and Assumption, the Bill of Sale, the Quitclaim Deed and the Royalty Deed.
“Representative” means, with respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Royalty Deed” means the Royalty Deed for the NSR in the form of Exhibit E.
“Sanctions” means sanctions administered or enforced by OFAC, or other relevant sanctions authority.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Sellers” has the meaning set forth in the Preamble.
“Seller Indemnitees” has the meaning set forth in Section 8(a).
“Seller Permits” means the Permits held by a Seller or its Affiliates related to the Mining Property.
“Tax” means all federal, state, local, foreign and other income, gross receipts, sales, use, severance, depletion, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges in the nature of a tax of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Transfer” means to, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
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(b) Interpretation. In this Agreement:
(i) unless the context otherwise clearly requires, (A) references to the plural include the singular, and references to the singular include the plural, (B) references to one gender include the other gender, (C) the words “include,” “includes,” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation,” (D) the terms “hereof,” “herein,” “hereunder,” “hereto,” and similar terms refer to this entire Agreement and not to any particular provision of this Agreement, unless the provision otherwise provides, (E) “or” is used in the inclusive sense of “and/or,” (F) if a word or phrase is defined, then its other grammatical or derivative forms have a corresponding meaning; (G) a reference to Law or a statute, code, act, legislation, or to a provision thereof includes a modification, amendment, or substitution thereof or any successor Law, the rules and regulations promulgated thereunder, and the formal interpretations issued in accordance therewith; and
(H) unless otherwise specified, the terms “day” and “days” mean and refer to calendar day(s);
(ii) unless otherwise specified, any reference to any document, instrument or agreement (including a reference to this Agreement) (A) includes and incorporates all exhibits, schedules, and other attachments thereto, (B) includes and incorporates all documents, instruments, deeds, or agreements issued or executed in connection therewith or in replacement thereof, and (C) means such document, instrument, deed, or agreement, or replacement or predecessor thereto, as amended, modified, or supplemented from time to time in accordance with its terms and in effect at the relevant time (except to the extent prohibited by this Agreement or such other agreement or document);
(iii) unless otherwise specified, all references to articles, sections, schedules and exhibits are to the Articles, Sections, and Exhibits of this Agreement;
(iv) the headings of this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; and
(v) the Parties acknowledge that they and their respective legal counsel have reviewed and participated in negotiating and settling the terms of this Agreement, including the Related Agreements, and agree that no inference shall be drawn in favor of or against any Party by virtue of the fact that they or their respective legal counsel were or were not principally responsible for drafting this Agreement and the Related Agreements.
2. Purchase and Sale; Assignment and Assumption.
(a) Purchased Assets. Subject to the terms and conditions of this Agreement and the Related Agreements, at the Closing each Seller, severally and not jointly shall sell and Transfer and the Purchaser shall purchase and acquire, the Purchased Assets as of the Closing Date free and clear of any Encumbrances arising by, through or under the applicable the Sellers, except for Permitted Encumbrances.
(b) Assumed Liabilities. Subject to the terms and conditions of this Agreement and the Related Agreements, at the Closing, each Seller, severally and not jointly, shall assign to the Purchaser, and the Purchaser shall assume the Assumed Liabilities.
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(c) Limitations.
(i) Privilege. All communications and other documents exchanged between the Administrative Agent, the Sellers or its or their Affiliates and legal counsel (including, as applicable, internal legal counsel) providing legal advice to the Administrative Agent, the Sellers and its and their Affiliates, including documents and communications relating to the this Agreement, the Related Agreements and the Mining Property, and files maintained by legal counsel as a result of providing legal advice to the Administrative Agent, the Sellers or its or their Affiliates (the “Privileged Documents”), that are subject to attorney-client privilege, any similar privilege, or that constitute attorney work product (as applicable, a “Privilege”), specifically are excluded from the Data and shall be and remain the property of the Administrative Agent, the Sellers and its and their Affiliates, as applicable. Neither the Administrative Agent or the Sellers nor its and their Affiliates intend to waive any applicable Privilege, and any disclosure of any Privileged Documents, whether in the Data or otherwise, shall be deemed to be inadvertent. Accordingly, the Purchaser, on its behalf and on behalf of its Affiliates and its and their respective Representatives acknowledges and agrees that a disclosure of any Privileged Documents will not constitute a waiver of such Privilege, and the Person receiving any such Privileged Documents promptly shall return to the Administrative, or with the consent of the Administrative Agent, destroy, such Privileged Documents.
(ii) Data. All Data provided to, or made available to the Purchaser under this Agreement or prior to the Effective Date, is provided without representation or warranty and is at the sole risk of the Purchaser. Such information is provided “AS IS, WHERE IS” AND WITH ALL FAULTS, AND THE ADMINISTRATIVE AGENT, THE SELLERS AND ITS AND THEIR AFFILIATES EXPRESSLY DISCLAIM THE ACCURACY OR COMPLETENESS OF ALL DATA, AND ALL EXPRESS OR IMPLIED WARRANTIES CONCERNING THE SAME, AND EXPRESSLY EXCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
(iii) Permits. The Purchaser, at its cost and expense, shall have the sole responsibility to, and shall, Transfer the Seller Permits to the Purchaser as of the Closing Date. In the event the Purchaser desires to amend, modify or revise any Seller Permits, or obtain additional Permits: (A) such amendments, modifications or revisions, or any action to obtain additional Permits, shall only be made following Closing; and (ii) the Purchaser shall be solely responsible for such amendments, modifications or revisions, or any action to obtain additional Permits, and shall be solely liable for and shall pay all related fees and other costs, including the cost of posting any bonds or other financial assurances related to any such amendments, modifications or revisions, or any action to obtain additional Permits. Any actions by the Purchaser or any Affiliate of the Purchaser, to which the Seller Permits may be Transferred, to amend, modify or revise any Seller Permits, or to obtain additional Permits, is subject to the rights of the Seller under the Quitclaim Deed.
(iv) Trade Name. The Purchaser shall not use the term “Homestake”, “LAC” or any confusingly similar term in any trademark, trade name, service mark, trade dress, logo, copyright, domain name, or corporate, company or business name; provided that Purchaser may use the term “Homestake” when referring to the Mining Property or the mining operations conducted on the Mining Property.
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(d) Administrative Agent. Each of Homestake and LAC Minerals hereby appoints Homestake as its Administrative Agent under this Agreement and the Related Agreements, to the extent that the Sellers are party thereto, and each of Homestake and LAC Minerals hereby authorizes Homestake to act on behalf of it as its Administrative Agent in accordance with the terms of this Agreement and the Related Agreements to the extent that it is a party thereto. Homestake hereby agrees to act as the Administrative Agent of Homestake and LAC Minerals as set forth in this Agreement and Related Agreements to which the Sellers are party. Buyer hereby acknowledges and agrees that Homestake is acting as the Administrative Agent of Homestake and LAC Minerals under this Agreement and the Related Agreements to which Homestake and LAC Minerals are party.
3. Consideration.
In consideration of the purchase of the Purchased Assets and the assumption of the Assumed Liabilities, at the Closing the Purchaser shall deliver to the Administrative Agent, for the benefit of the Sellers, the following (the “Consideration”):
(a) Dakota Shares. 400,000 Dakota Shares (the “Consideration Shares”) to be issued to the Sellers or a direct or indirect Affiliate of the Sellers identified by the Administrative Agent to the Purchaser in writing not less than two days prior to the anticipated Closing Date (the “Designee”), which Consideration Shares shall be (i) registered in the name of the Designee in book-entry form by the Purchaser’s transfer agent and (ii) bear a customary restrictive legend reflecting the issuance of the Consideration Shares in a transaction exempt from registration under the Securities Act;
(b) NSR. A 1.0% net smelter returns royalty (the “NSR”) on the production of minerals from the properties set forth in the Royalty Deed, dated as of the Closing Date; and
(c) Operating Indemnity. The indemnity included in the Quitclaim Deed, dated as of the Closing Date.
4. Closing.
Closing shall take place at a location mutually agreed by the Parties, and at a date and time mutually agreed by the Parties (the “Closing”), but in any event not later than thirty (30) days after the Effective Date (the “Closing Date”).
(a) Sellers Closing Deliverables. At Closing, the Administrative Agent, on behalf of the Sellers, shall deliver or cause to be delivered to the Purchaser the following:
(i) The Quitclaim Deed for the Mining Property, duly executed by each Seller;
(ii) The Bill of Sale for the Data, duly executed by each Seller;
(iii) The Assignment and Assumption for the Assumed Liabilities, duly executed by each Seller;
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(iv) The Royalty Deed for the NSR, duly executed by each Seller;
(v) A certificate of each Seller repeating its representations and warranties, except as noted thereon, in the form of Exhibit F;
(vi) A completed form W-9; and
(vii) all such other assurances, consents, agreements, documents and instruments as reasonably may be required by the Purchaser to consummate the transactions contemplated in this Agreement and the Related Agreements.
(b) Purchaser Closing Deliverables. At Closing, the Purchaser shall deliver or cause to be delivered to the Administrative Agent, on behalf of the Sellers, the following:
(i) A stock certificate or a Direct Registration Statement from the Purchaser’s transfer agent, representing the Consideration Shares, issued in the name of the Designee;
(ii) The Bill of Sale for the Data, duly executed by the Purchaser;
(iii) The Assignment and Assumption for the Assumed Liabilities, duly executed by the Purchaser;
(iv) The Royalty Deed for the NSR, duly executed by the Purchaser;
(v) The Quitclaim Deed for the Mining Property, duly executed by the Purchaser and JR Resources Corp., a Nevada corporation, and in proper form for recording;
(vi) Certificates of such resolutions evidencing the Purchaser’s existence, power and authority to enter into and execute this Agreement and to consummate the transactions herein contemplated;
(vii) A certificate of the Purchaser repeating its representations and warranties, except as noted thereon, in the form of Exhibit G;
(viii) all such other assurances, consents, agreements, documents and instruments as reasonably may be required by the Purchaser or the Purchaser’s title company to consummate the transactions contemplated in this Agreement and the Related Agreements.
(c) Simultaneous Transactions. The transactions and all deliveries contemplated in this Agreement shall be deemed to occur simultaneously on the Closing Date, and none shall be deemed completed until all are completed.
(d) Taxes and Fees. Except for federal income Tax obligations related to the transactions set forth in this Agreement for which the Seller is responsible, the Purchaser shall be solely liable for and shall pay all applicable sales, transfer, use, stamp, conveyance, value-added, real property transfer, recording, and other similar Taxes, if any, together with all recording or filing fees, notarial fees and other similar costs of Closing, that may be imposed upon, or payable, collectible or incurred in connection with the transactions contemplated in this Agreement.
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(e) Recordation. The Purchaser shall be solely responsible for recording the Quitclaim Deed with the appropriate Governmental Authorities, and shall be solely liable for and shall pay all related recording fees and other costs, fees and expenses. The Sellers shall be solely responsible for recording the Royalty Deed with the appropriate Governmental Authorities.
(f) Unpaid Taxes. The Purchaser shall be responsible for and shall pay to the applicable Governmental Authorities all unpaid Taxes of any nature with respect to the Mining Property.
(g) Possession. The Purchaser shall be granted full and exclusive possession of the Mining Property at Closing.
5. Seller’s Representations and Warranties.
Each Seller, severally and not jointly, represents and warrants to the Purchaser as of the Effective Date and as of the Closing Date as follows:
(a) Organization and Qualification. It is a corporation or limited liability company, as applicable, incorporated or formed, as applicable, and in good standing under the Laws of jurisdiction of its incorporation or formation, as applicable, and has the company power to enter into and perform its obligations under this Agreement and the Related Agreements to which such Seller is a party.
(b) Corporate Authority. The execution and delivery of and performance by it of this Agreement and the Related Agreements to which it is a party, the Transfer of the Purchased Assets by it to the Purchaser, and the assignment of the Assumed Liabilities from it to the Purchaser have been authorized by all necessary company action on its part.
(c) No Violation or Breach. The execution and delivery of and performance by it of this Agreement and the Related Agreements to which it is a party:
(i) does not conflict with its Organizational Documents;
(ii) does not violate in any material respect any Law applicable to it or the Purchased Assets; and
(iii) to the Knowledge of Seller, does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other Person to exercise any rights under any contracts or instruments directly related to the Purchased Assets to which it is a party.
(d) Execution and Binding Obligation. This Agreement and each of the Related Agreements to which it is a party has been duly executed and delivered by it and constitutes a legal, valid and binding agreement of it enforceable against such Seller in accordance with its terms, subject only to any limitation under applicable Laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other Laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
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(e) Filings, Consents and Approvals. To the Knowledge of Seller, it is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other Person in connection with the execution, delivery and performance by it of this Agreement or any of the Related Agreements to which it is a party, other than (i) filings required by state or federal securities laws (including the Securities Act and the Securities Exchange Act), if applicable, (ii) those that have been made or obtained prior to the date of this Agreement, (iii) the recording of the Memorandum of Option and the Quitclaim Deed; and (iv) approvals for the Transfer of any Permits.
(f) Title to the Purchased Assets. It (i) owns its Purchased Assets free and clear of any Encumbrances arising by, through or under it, except for Permitted Encumbrances; and (ii) except for Permitted Encumbrances, to the Knowledge of Seller, there are no outstanding options, rights of first offer or first negotiation or rights of first refusal in favor of any other party to acquire an interest in its Mining Property, and it has not granted any currently exercisable option or other right to acquire an interest in the other Purchased Assets it owns or to which it has rights; provided that it has not reviewed the Data and makes no representation or warranty as to the accuracy or completeness of any of the Data or that the Data delivered to the Purchaser constitutes all of the documents related to its Mining Property; and (iii) has not received written notice of any, and to the Knowledge of Seller, there are no pending or threatened condemnation proceedings or proposed actions or agreements for taking in lieu of condemnation with respect to any portion of its Mining Property.
(g) No Action. It has not received written notice of any, and to the Knowledge of Seller, there are no Proceedings which would prevent the consummation of the transactions contemplated by this Agreement or the Related Agreements to which it is a party, nor is there any Proceeding or Claim related to its Mining Property, including, without limitation, the title or environmental status of its Mining Property.
(h) OFAC. It is not listed on the list maintained by OFAC (commonly known as the OFAC List) or otherwise qualify as a terrorist, specially designated national and blocked person or a person with whom business by a United States citizen or resident is prohibited. It is not in violation of any anti-money laundering or anti-terrorism statute, including the PATRIOT Act, and the related regulations issued thereunder, including temporary regulations, and Executive Orders (including Executive Order 13224) issued in connection therewith, all as amended from time to time. Neither it nor any of its Affiliates or, to its knowledge, any of its directors, officers, employees, agents or representatives, is a Person currently the subject of any Sanctions. It has not knowingly engaged in, and is not now knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that is the subject of Sanctions.
(i) Consideration Shares. It, on its behalf and on behalf of its Designee, if any, represents and warrants that it is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and it is acquiring the Consideration Shares for its own account and not with a view to the distribution thereof. Seller, on its behalf and on behalf of its Designee, if any, understands that the Consideration Shares have not been and will not be registered under the Securities Act, will bear a restrictive legend, and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available. It, on its behalf and on behalf of its Designee, if any, further represents and warrants that it will not Transfer any Consideration Shares or any interest therein except in a transaction exempt from or not subject to the registration requirements of the Securities Act. It, on its behalf and on behalf of its Designee, if any, represents that (i) it has such knowledge, sophistication and experience in business and financial matters that it is capable of evaluating the merits and risks of the acquisition of the Consideration Shares and (ii) it has been granted the opportunity to ask questions of, and receive satisfactory answers from, representatives of Purchaser concerning the business affairs and financial condition of the Purchaser and its Affiliates, and has had the opportunity to obtain and has obtained any additional information which it deems necessary regarding such purchase, and that the Purchaser is not required to register the Consideration Shares.
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(j) Disclaimer. Except as specifically set forth in this Section 5:
(i) Except as expressly set forth herein, it makes no representations or warranties of any kind or nature, express or implied, at Law or in equity, and there are no implied conditions in respect of it, or any of its assets, liabilities or operations, or with respect to the Purchased Assets or the Assumed Liabilities, including without limitation, any warranties express or implied with respect to the sufficiency, merchantability or fitness for any particular purpose of any of the Purchased Assets or the Assumed Liabilities, or compliance with applicable Laws, including Environmental Laws, and all such representations, warranties or conditions hereby are expressly disclaimed.
(ii) The Purchaser hereby acknowledges and agrees that the Purchaser is purchasing the Purchased Assets and the Assumed Liabilities on an “as-is, where-is” basis, with all faults.
(iii) WITHOUT LIMITING THE FOREGOING, IT MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE EXISTENCE OR STATUS OF ANY MINES OR WORKINGS WITHIN THE AREA COVERED BY ITS MINING PROPERTY, INCLUDING THE EXISTENCE AND STATUS OF ANY ABANDONED MINES OR WORKINGS, THE STATUS OF ANY ROYALTIES OR THE EXISTENCE OR STATUS OF ANY UNRECORDED RIGHTS TO ANY ROYALTIES, THE EXISTENCE, NATURE, LOCATION, AMOUNT OR VALUE OF ANY MINERALIZATION, MINERAL RESERVES OR RESOURCES, THE ABILITY TO EXTRACT, PROCESS, OR SELL MINERALS BY ANY MEANS, WHETHER ANY NECESSARY PERMITS CAN BE OBTAINED IN A TIMELY MANNER OR AT ALL, WHETHER ANY MINING CAN BE DONE ECONOMICALLY OR AT ALL, OR THAT THERE WILL BE NO THIRD PARTY CHALLENGE TO THE ISSUANCE OF ANY REQUIRED PERMIT OR ENVIRONMENTAL IMPACT STATEMENT REQUIRED FOR OPERATIONS WITH RESPECT TO THE MINING PROPERTIES, OR THAT THERE ARE NO RIGHTS (INCLUDING ROYALTIES, ACCESS RIGHTS, INFORMATION RIGHTS, RECONVEYANCE RIGHTS, REVERSIONARY RIGHTS OR OTHER RIGHTS OF PREDECESSORS IN INTEREST) RFELATED TO ITS MINING PROPERTY.
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6. Purchaser’s Representations and Warranties.
The Purchaser represents and warrants to the Administrative Agent and each Seller as of the Effective Date and as of the Closing Date as follows:
(a) Incorporation and Qualification. The Purchaser is a corporation incorporated and in good standing under the Laws of the State of Nevada and has the corporate power to enter into and perform its obligations under this Agreement and the Related Agreements to which the Purchaser is a party;
(b) Corporate Authority. The execution and delivery of and performance by the Purchaser of this Agreement and each of the Related Agreements to which the Purchaser is a party, the transfer of the Purchased Assets from the Seller to the Purchaser, and the assumption of the Assumed Liabilities by the Purchaser, have been authorized by all necessary corporate action on the part of the Purchaser;
(c) No Violation or Breach. The execution and delivery of and performance by the Purchaser of this Agreement and the Related Agreements to which it is a party:
(i) does not conflict with the Organizational Documents of the Purchaser;
(ii) does not violate in any material respect any Law applicable to the Purchaser; and
(iii) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments to which the Purchaser is a party.
(d) Execution and Binding Obligation. This Agreement and each of the Related Agreements to which the Purchaser is a party has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding agreement of the Purchaser enforceable against it in accordance with its terms subject only to any limitation under applicable Laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other Laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
(e) Capitalization.
(i) The authorized capital of the Purchaser consists of 75,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which [●] Dakota Shares, no shares of preferred stock, and derivative securities to purchase up to [●] shares of common stock are issued and outstanding as of [●], 20[__]; and
(ii) On a fully diluted basis, the Purchaser has a sufficient number of authorized Dakota Shares to issue the Consideration Shares without exceeding the number of shares authorized under Purchaser’s articles of incorporation.
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(f) Filings, Consents and Approvals.
(i) The Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other person or entity in connection with the execution, delivery and performance by the Purchaser of this Agreement or any of the Related Agreements to which it is a party, other than (A) filings required by applicable securities Laws (including the Securities Act and the Securities Exchange Act), and (B) those that have been made or obtained prior to the date of this Agreement; and
(ii) During the last 12 months, the Purchaser has filed in a timely manner all disclosures, reports and other filings required to be filed by it under applicable securities Laws, including the Securities Act and the Securities and Exchange Act (the “Securities Filings”) in all jurisdictions in which such Securities Filings are required to be filed and with all securities exchanges where the Purchaser’s securities are traded, and all such Securities Filings are true and accurate in all material respects.
(g) Financial Capability.
(i) From the Effective Date, and thereafter through the Closing, the Purchaser shall maintain sufficient financial resources and capabilities to pay the Consideration; and
(ii) Payment of the Consideration will not leave the Purchaser insolvent, thinly capitalized (as determined by generally acceptable accounting principles applied on a consistent basis), or unable to meet its commitments, financial or otherwise, as they become due.
(h) Issuance of the Consideration Shares. The issuance of the Consideration Shares has been duly authorized and, when issued, the Consideration Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances.
(i) The Purchaser is not listed on the list maintained by OFAC (commonly known as the OFAC List) or otherwise qualify as a terrorist, specially designated national and blocked person or a person with whom business by a United States citizen or resident is prohibited. The Purchaser is not in violation of any anti-money laundering or anti-terrorism statute, including the PATRIOT Act, and the related regulations issued thereunder, including temporary regulations, and Executive Orders (including Executive Order 13224) issued in connection therewith, all as amended from time to time. Neither the Purchaser nor any of its Affiliates or, to its knowledge, any director, officer, employee, agent or representative of the Seller, is a Person currently the subject of any Sanctions. The Purchaser has not knowingly engaged in, and is not now knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that is the subject of Sanctions.
(j) Independent Review.
(i) The Purchaser and its Affiliates, and its and their respective Representatives, have had sufficient access to and opportunity to review the Purchased Assets and the Assumed Liabilities and to ask questions of the management representatives and professional advisors of the Seller, as necessary for the Purchaser to investigate, analyze, and evaluate the Purchased Assets and the Assumed Liabilities and to make its and their independent decision to acquire the acquire the Purchased Assets and assume the Assumed Liabilities and to consummate the transactions contemplated by this Agreement and the Related Agreements to which the Purchaser is a party.
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(ii) In making the decision to enter into this Agreement and the Related Agreements to which the Purchaser is a party, and to consummate the transactions contemplated herein and therein, the Purchaser has conducted its own independent investigation, analysis, and evaluation of the Purchased Assets and the Assumed Liabilities (including the Purchaser’s own estimate and appraisal of the extent, location and value of mineralization, mineral resources and reserves, undeveloped properties, and environmental obligations), and the financial condition of, operations, and prospects for, the Mining Property.
7. Data.
Without any obligation to investigate or review, to the extent that the Administrative Agent locates or receives any documents and/or information that constitute Data after the Closing Date, it will deliver those documents and/or information to the Purchaser as soon as reasonably practicable.
8. Indemnity.
(a) Purchaser Indemnification. Subject to the Quitclaim Deed, the Purchaser shall indemnify, defend and hold harmless the Administrative Agent, each Seller and its and their respective Affiliates and its and their respective Representatives (collectively, the “Seller Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
(i) any material inaccuracy in or material breach of any of the representations or warranties of the Purchaser contained in this Agreement as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); provided that the materiality requirement in this Section 8(a)(i) shall not apply to representations or warranties that, in accordance with their provisions, are subject to a materiality standard; or
(ii) any material breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Purchaser pursuant to this Agreement.
(b) Limitations to Purchaser Indemnification. Subject to the Quitclaim Deed, the aggregate liability of the Purchaser to the Seller Indemnitees for indemnification pursuant to Section 8(a) in no event shall exceed the value of the Consideration Shares as determined as of the Closing Date.
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(c) Seller Indemnification. Each Seller, severally and not jointly, shall indemnify, defend and hold harmless the Purchaser and its Affiliates and its and their respective Representatives (collectively, the “Purchaser Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Purchaser Indemnitees based upon, arising out of, with respect to or by reason of:
(i) any material inaccuracy in or material breach of any of the representations or warranties of a Seller contained in this Agreement as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); provided that the materiality requirement in this Section 8(c)(i) shall not apply to representations or warranties that, in accordance with their provisions, are subject to a materiality standard; or
(ii) any material breach or non-fulfillment of any covenant, agreement or obligation to be performed by a Seller pursuant to this Agreement.
(d) Limitations to Seller Indemnification. The indemnification provided by a Seller to the Purchaser Indemnitees pursuant to Section 8(c) shall be subject to the following limits, as determined for the Sellers in the aggregate:
(i) the amount finally agreed or adjudicated of any such individual Loss of a Purchaser Indemnitee subject to indemnification by the Sellers under this Agreement must exceed $10,000 (the “De Minimis Amount”);
(ii) the aggregate amount of Losses of the Purchaser Indemnitees subject to indemnification by the Sellers under this Agreement must exceed $70,000 (the “Deductible”), provided that (A) any individual amount used to calculate the Deductible shall be no less than the De Minimis Amount, and (B) once the Deductible has been exceeded, the Purchaser shall only be entitled to require payment on such indemnities on the portion of Losses that exceeds the Deductible;
(iii) any Claims of the Purchaser Indemnitees arising out of similar facts, matters or circumstances will not be treated as separate Claims; and
(iv) notwithstanding any provision in this Agreement to the contrary, but subject to the Quitclaim Deed the aggregate amount of all Claims of the Purchaser Indemnitees subject to indemnification by the Sellers under this Agreement shall not exceed 10% of the total value of the Consideration Shares as of the Closing.
(e) Damages Limitations. In no event shall the Purchaser be liable to any Seller Indemnitee, and in no event shall the Sellers be liable to any Purchaser Indemnitee, as applicable, for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type.
(f) Survival. Subject to the provisions in the Quitclaim Deed governing the survival period of the indemnification obligations therein, the indemnification obligations of the Purchaser to the Seller Indemnitees, and the indemnification obligations of the Sellers to the Purchaser Indemnitees, as applicable, under this Section 8 shall terminate in all respects two hundred and seventy (270) calendar days following the earlier of the termination this Agreement and the Closing Date, after which such indemnification obligation automatically shall cease. For purposes of clarity, the survival period for the indemnification obligations in the Quitclaim Deed shall be governed by the Quitclaim Deed.
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(g) Procedure. Promptly after receipt by a Party entitled to indemnification hereunder (the “Indemnitee”) of written notice of the assertion or the commencement of any Claim subject to indemnification under this Section 8, the Indemnitee shall give written notice thereof to the Purchaser the Sellers, as applicable (the “Indemnitor”), and thereafter shall keep the Indemnitor reasonably informed with respect thereto; provided, however, that failure of the Indemnitee to give the Indemnitor notice as provided in this Section shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor is prejudiced thereby. If any third person commences any Proceeding against any Indemnitee, the Indemnitor shall be entitled to participate in such Proceeding and, at its option, assume the defense thereof with counsel reasonably satisfactory to the Indemnitee, at the Indemnitor’s sole expense; provided, however, that the Indemnitor shall not have the right to assume the defense of any Proceeding if (i) the Indemnitee shall have one or more legal or equitable defenses available to it which are different from or in addition to those available to the Indemnitor, and, in the reasonable opinion of the Indemnitee, counsel for the Indemnitor could not adequately represent the interests of the Indemnitee because such interests could be in conflict with those of the Indemnitor, (ii) such Proceeding is reasonably likely to have a material adverse effect on any other matter beyond the scope or limits of the indemnification obligation of the Indemnitor, or (iii) the Indemnitor shall not have assumed the defense of the Proceeding in a timely fashion (but in any event within 30 days of written notice of such Proceeding). If the Indemnitor shall assume the defense of any Claim, the Indemnitee shall be entitled to participate in any Proceeding at its expense, and the Indemnitor shall not settle such Proceeding unless the settlement shall include as an unconditional term thereof the giving by the claimant or the plaintiff of a full and unconditional release of the Indemnitee from all liability with respect to the matters that are subject to such Proceeding and to which Indemnitee is entitled to indemnification hereunder, or otherwise shall have been approved reasonably by the Indemnitee. For purposes of this Section 8(g), all notices to be sent to a Seller shall be sent to the Administrative Agent.
(h) Sole Remedy. Subject to the Quitclaim Deed, the rights to indemnification provided for in this Section 8 shall be the sole and exclusive remedy of the Purchaser Indemnitees and the Seller Indemnitees, as the case may be, for any Claims or Losses of any nature under this Agreement.
9. Conditions of Closing.
(a) Conditions for the Benefit of the Purchaser. The transactions contemplated in this Agreement and the Related Agreements are subject to the following conditions to be fulfilled or performed, on or before the Closing Date, which conditions are for the exclusive benefit of the Purchaser and may be waived, in whole or in part, by the Purchaser in its sole discretion:
(i) The covenants, representations and warranties of a Seller contained in this Agreement shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such covenants, representations and warranties had been made on and as of such date; provided that the materiality requirement in this Section 8(a)(i) shall not apply to covenants, representations and warranties that, in accordance with their provisions, are subject to a materiality standard; and
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(ii) All other consents, approvals and waivers required by a Seller to Transfer the Purchased Assets to the Purchaser shall have been obtained on terms acceptable to the Purchaser, acting reasonably.
(b) Conditions for the Benefit of the Sellers. The purchase and sale of the Purchased Assets is subject to the following conditions to be fulfilled or performed, on or before the Closing Date, which conditions are for the exclusive benefit of the Sellers and may be waived, in whole or in part, by the Sellers, acting through the Administrative Agent, in their sole discretion:
(i) The covenants, representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such covenants, representations and warranties had been made on and as of such date; provided that the materiality requirement in this Section 9(b)(i) shall not apply to covenants, representations and warranties that, in accordance with their provisions, are subject to a materiality standard;
(ii) The Purchaser shall deliver to the Administrative Agent a copy of the resolution of the directors of the Purchaser approving the transactions contemplated in this Agreement and the Related Agreements; and
(iii) All consents, approvals and waivers required by the Purchaser to acquire the Purchased Assets and assume the Assumed Liabilities shall have been obtained on terms acceptable to the Administrative Agent, acting reasonably.
10. Casualty; Condemnation.
Each Seller shall bear the risk of any loss or damage to its Mining Property resulting from condemnation, fire or other casualty at all times prior to Closing. In the event of any such loss or damage, there will be no adjustment in the Consideration on account of such loss or damage but all insurance proceeds and condemnation awards payable as a result of the occurrence of the event resulting in such loss or damage shall be delivered by the applicable Seller to Purchaser, or the rights to such proceeds shall be assigned by the applicable Seller to the Purchaser if not yet paid over to the Seller, in each case contingent upon the occurrence of Closing.
11. The Purchaser’s Remedies for a Seller’s Default.
In the event that any Party (as applicable, the “Defaulting Party”) shall default in performance of its obligations under this Agreement, or if the Defaulting Party’s representations and warranties contained in this Agreement shall fail to be true in any material and adverse respect when made, or as of the Closing, which default continues for ten (10) Business Days following written notice thereof from the other Party (as applicable, the “Non-Defaulting Party”) then, at the Non-Defaulting Party’s option, the Non-Defaulting Party shall have the right to elect any of the following remedies hereunder: (a) the Non-Defaulting Party may terminate this Agreement and thereafter, except as otherwise specifically set forth in this Agreement (including in Section 8), neither the Non-Defaulting Party nor the Defaulting Party shall have any further obligations under this Agreement; (b) the Non-Defaulting Party may seek all remedies at equity, including, without limitation, specific performance of this Agreement; or (c) the Non-Defaulting Party may seek applicable rights to indemnification from the Defaulting Party in accordance with Section 8.
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12. Termination.
This Agreement may, by notice in writing given at or prior to the Closing Date, be terminated by mutual consent of the Sellers and the Purchaser.
13. Brokers.
Each Party represents and warrants to the other that that it has not had, and shall not have, any dealings with (and it has not engaged and will not engage) any third party to whom the payment of any broker’s fee, finder’s fee, commission or other similar compensation shall or may become due or payable in connection with the transactions contemplated hereby. It is agreed that if any claims for brokerage commissions or fees are ever made against the Seller or the Purchaser, all such claims shall be handled and paid by the party whose actions or alleged commitments form the basis of such claim. Each Party shall indemnify, defend and hold the other Party harmless from any and all claims for commissions or fees by brokers made against another Party, and resulting loss, cost (including reasonable attorneys’ fees) and damages, which claim shall have arisen out of any written document or alleged oral agreement entered or purported to have been entered into by the indemnifying Party and the Person claiming such commission, with respect to the transaction contemplated by this Agreement.
14. Maintenance of Property; Title.
(a) Maintenance of the Property. Each Seller shall make all payments of Taxes, royalties, land-holding costs, claim maintenance and similar fees, lease payments and other payments that are due as of the Effective Date or become due from and after the Effective Date until the Closing Date and that are required for such Seller to maintain the interest in its Mining Property, except to the extent such payments are being contested pursuant to a good faith dispute.
(b) No Encumbrances. From and after the Effective Date until the Closing Date, each Seller shall not create or allow any Encumbrances arising by, through or under such Seller on its Mining Property, except for Permitted Encumbrances.
15. Enurement.
This Agreement becomes effective on the Effective Date. After the Effective Date, this Agreement will be binding upon and enure to the benefit of the Parties and their respective successors, legal representatives and permitted assigns. Except as otherwise set forth in this Agreement or the Related Agreements, neither this Agreement nor the Related Agreements nor any of the rights or obligations under this Agreement or the Related Agreements, including any right to payment, may be assigned or transferred, in whole or in part, by either Party without the prior written consent of the other Party.
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16. Entire Agreement.
This Agreement, together with the Related Agreements, constitutes the entire agreement between the Parties with respect to the transactions contemplated in this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties with respect to such transactions. Except as specifically set forth in this Agreement, the Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
17. Waiver.
No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the
Party to be bound by the waiver. A Party’s failure or delay in exercising any right under this
Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right it may have.
18. Further Assurances.
Each of the Parties covenants and agrees to take reasonable commercial efforts to do such things and to execute such further conveyances, transfers, documents and assurances as may be deemed necessary or advisable from time to time in order to effectively transfer the Purchased Assets to the Purchaser and carry out the terms and conditions of this Agreement in accordance with their true intent.
19. Severability.
If any provision of this Agreement is determined to be illegal, invalid or unenforceable, by an arbitrator or any court of competent jurisdiction from which no appeal exists or is taken, that provision will be severed from this Agreement and the remaining provisions will remain in full force and effect.
20. Governing Law; Jurisdiction.
(a) This Agreement is governed by, and will be interpreted and construed in accordance with, the Laws of the State of Utah without reference to Utah principles of conflicts of Law; provided that the Quitclaim Deed and the Royalty Deed shall be governed by the laws of the State of South Dakota without reference to South Dakota principles of conflicts of Law.
(b) For all purposes of this Agreement, and for all purposes of any Claim arising out of or relating to the transactions contemplated hereby or for recognition or enforcement of any judgment, the Parties hereby submit to the exclusive jurisdiction of the United States District Court in the State of Utah located in Salt Lake City, Utah, or if that court does not have or will not accept jurisdiction, then the competent state courts of the State of Utah located in Salt Lake City, Utah, and hereby irrevocably and unconditionally agree that all matters with respect to any such Claim may be heard and determined in such court. The Parties agree that a final judgment in any such Claim shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Law. Each of the Parties hereby irrevocably and unconditionally waives, to the fullest extent they may legally and effectively do so, and further agrees not to assert as a defense in any such Proceeding, any Proceeding that such Party is not personally subject to the jurisdiction of such court, that the venue of the Proceeding is brought in an inconvenient forum or that this Agreement or the subject matter hereof may not be enforced in or by such court.
20
(c) Each Party hereby irrevocably waives all rights to a jury trial in any Proceeding of any kind directly or indirectly arising out of or in any way relating this this Agreement. This jury trial waiver is intended to apply, to the fullest extent permitted by Law, to any and all disputes and controversies that arise out of or in any way relate to any or all of the matters described in the preceding sentence, including without limitation contract Claims, tort Claims, and all other common Law and statutory Claims of any kind or character. This Agreement may be filed in any court of competent jurisdiction as a Party’s written consent to such Party’s waiver of a jury trial.
21. Counterparts.
This Agreement may be executed in any number of counterparts, each of which is deemed to be an original, and such counterparts together constitute one and the same instrument. Transmission of an executed signature page by facsimile, email or other electronic means is as effective as a manually executed counterpart of this Agreement.
22. Disclosure.
The Purchaser and the Sellers each acknowledge and agree that the other may be required to disclose the terms of this Agreement, as well as a copy of this Agreement, in order to comply with federal securities Laws and hereby consent to such filing(s) as may be required by federal securities Laws.
[REMAINDER OF PAGE LEFT BLANK]
21
The Parties have executed this Agreement as of the Effective Date.
SELLERS: | ||
HOMESTAKE MINING COMPANY OF CALIFORNIA | ||
By: | ||
Name: | ||
Title: | ||
LAC MINERALS (USA) LLC | ||
By: | ||
Name: | ||
Title: | ||
PURCHASER: | ||
DAKOTA TERRITORY RESOURCE CORP. | ||
By: | ||
Name: | ||
Title: |
EXHIBIT A
MINING PROPERTY
LEGAL DESCRIPTION
Properties, Property Agreements and Royalties
(All Properties are located within T5N, R2E, B.H.M., Lawrence County, South Dakota)
Mineral Properties
Owned by LAC Minerals:
Enterprise patented lode mining claim, M.S. 407, located in Sections 10 and 15
Surprise patented lode mining claim, M.S. 408, located in Sections 10 and 15
Carbonate patented lode mining claim, M.S. 417, located in Section 15
Jay Gould patented lode mining claim, M.S. 425, located in Section 10
Garfield patented lode mining claim, M.S. 426, located in Section 10
Far West patented lode mining claim, M.S. 428, located in Sections 10 and 15
Katie patented lode mining claim, M.S. 437, located in Section 10
Arthur patented lode mining claim, M.S. 438, located in Section 10
Hartshorn patented lode mining claim, M.S. 440, located in Sections 10 and 15
Minnie patented lode mining claim, M.S. 441, located in Section 15
Ultimo patented lode mining claim, M.S. 442A, located in Section 15
Tidiout patented lode mining claim, M.S. 443, located in Section 15
Utica patented lode mining claim, M.S. 447A, located in Section 15
Antietam patented lode mining claim, M.S. 448A, located in Section 15
Blue Bird patented lode mining claim, M.S. 449, located in Section 15
Carbonate Fraction #1 patented lode mining claim, M.S. 450, located in Section 15
Carbonate Fraction #2 patented lode mining claim, M.S. 451, located in Section 15
Mutual patented lode mining claim, M.S. 465, located in Section 15
Washington patented lode mining claim, M.S. 466, located in Section 15
A-1
May Queen patented lode mining claim, M.S. 473, located in Section 15
Hercules patented lode mining claim, M.S. 474, located in Section 15
Adelphi patented lode mining claim, M.S. 489, located in Section 15
Spanish patented lode mining claim, M.S. 679, located in Section 15
Richmond patented lode mining claim, M.S. 680, located in Section 15
Brooklyn patented lode mining claim, M.S. 874, located in Section 15
J.M., Todd, Earle, Minnie C, Lyda B, Sister, Arthur L, Cass, Newell, Calvin P, Emma, Virginia, Juliett, Donald W, Helen, Atwood, Little Bonanze, Ella, Ralph K patented lode mining claims, M.S. 977, located in Sections 22, 23, 26 and 27
Cloride Fr., Calkins, Logan, Anis patented lode mining claim, M.S. 1022, located in Section 15
Rattler and Gilroy patented lode mining claim, M.S. 1043, located in Sections 10 and 15
Nankipoo, Delaunay patented lode mining claim, M.S. 1278, located in Section 15
Aliance, Sucker, Little Ellen, Black Bird, Golden Eagle No. 2, Rubicon, Rubicon No. 2, Rubicon No. 4, Dakota, Darboy, Havana No. 1, Havana No. 3, Porto Rico No. 2 patented lode mining claims, M.S. 1376, located in Sections 10, 11, 14 and 15
Independent, Independent No. 1, Republick patented lode mining claims, M.S. 1398, located in Section 15
Joplin No. 1, Joplin No. 2, Joplin No. 3, Julia-Etta, Magnetic patented lode mining claims, M.S. 1436, located in Sections 15 and 22
Crest, Samoa, Co-moa, Sylvanite No. 1, Sylvanite No. 2, Grove, Volt, Seven-B, Storm King, Vigor patented lode mining claims, M.S. 1440, located in Sections 15, 16, 21 and 22
Cashier, LaPlata patented lode mining claims, M.S. 1469, located in Section 15
Maryland, Baltimore, Maverick, Badger, North Side Fraction patented lode mining claims, M.S. 1529, located in Sections 15 and 16
Lola patented lode mining claim, M.S. 1569, located in Section 15
St. Cloud No. 5, Zelpha Mable, Josephine, St. Cloud No. 1, St. Cloud No. 3, Comstock, Victor Fraction #3, Grand Deposit No. 2, Tartar, Red Cloud, Red Cloud Frac., Valley Frac. patented lode mining claims, M.S. 1655, located in Sections 15 and 22
Edmonia patented lode mining claim, M.S. 1769, located in Section 14
A-2
Mars No. 1 patented lode mining claim, M.S. 1851, located in Section 15
Legal Tender, Diamond Point, Joe Craig, Gremmel No. 1, Cotton Tail Frac. patented lode mining claims, M.S. 1872, located in Section 22
Dante, Creston, Morning Glory, Vindicator patented lode mining claims, M.S. 1910, located in Section 23
Bison, Trent patented lode mining claims, M.S. 2033, located in Sections 10 and 15
Govt. Lots 3, 9, 10, 12, 13, located in Section 15
Tracts 0102-A, 0102-B, 0103-B, located in Section 15
Govt. Lot 1, 2, 4 and 5 located in Section 22
Govt. Lots 9 and 10, located in Section 23
Tract 0103-A, located in Section 23
Owned by Homestake:
Yankee Boy, Yankee Boy No. 3, Yankee Boy No. 4, Alliance No. 2, Little Bonanza No. 2, Magna Charta and General Joe Hooker patented lode mining claims, M.S. 1406, located in Section 14
Tract 1 of M.S. 1829, as shown on Plat Document Number 2014-1022, located in Sections 22 and 23
Los Angeles No. 1, Los Angeles No. 2 and Los Angeles No. 3 patented lode mining claims, M.S. 1617, located in Section 23
Stella No. 3, Stella No. 5, Margarite No. 6 and Margarite No. 7, patented lode mining claims, M.S. 1862, located in Sections 23 and 26
Govt. Lot 10, located in Section 11
Govt. Lot 12, located in Section 13
Govt. Lots 2, 3, 4, 7, 8, 9 and 10, located in Section 14
Govt. Lots 1, 2, 3, 4, 5, 6, 7 and 8, located in Section 23
Govt. Lots 12, 13 and 14, located in Section 24
A-3
Owned by Homestake – Minerals Only:
Old Reliable patented lode mining claim, M.S. 348, located in Section 14
Dakota, Granite, Columbia and Union patented lode mining claims, M.S. 1092, located in Sections 13, 14 and 23
White House, Congress, China Fraction, Japan Fraction patented lode mining claims, M.S. 1247, Sections 13 and 14
Arthur No. 1, Little Hill, Little Hill No. 2 patented lode mining claims, M.S. 1406, located in Section 14
Bessie, Cross No. 1, Dixie, Geneva, Hattie, Tan patented lode mining claims, M.S. 1822, located in Section 14
Owned by LAC Minerals – Unpatented Lode Mining Claims:
L&O No. 11 BLM serial No. MMC 74914 Located in Section 15
NJB 72 BLM serial No. MMC 165019 Located in Section 15
Leased Mineral Rights
Rubicon, Cleveland, Lizzie Johnson, Standard and Grayback patented lode mining claims, M.S. 1382, located in Section 23, which claims are leased by LAC pursuant to a Lease Agreement dated November 15, 1984 between James E. Peterson and Arlene Peterson, husband and wife, as lessors, and St. Joe American Corporation, as lessee, a short form of which is recorded in Lawrence County, South Dakota as document number 84-3814 (the “Peterson Lease”).
Property Agreements
1. The Peterson Lease.
Material Contracts
1. | Restated Joint Venture Agreement dated December 2, 1988 between Viable Resources, Inc. and Bond Gold Richmond Hill Inc., and all judicial orders, decisions and opinions relating thereto, including without limitation Order Following Court Trial in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); Judgment in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); and opinion in Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012). |
2. | Easement Agreement dated February 22, 1998 between Timothy Morton and Shirley Morton as grantors and LAC Minerals (USA) Inc. as grantee. |
3. | Settlement Agreement dated June 15, 2000 among Scott L. Prentice and Jeanne L. Prentice, LAC Minerals (USA) Inc. and Todd Duex, and Order related thereto in the matter of Scott L. Prentice et al. v. LAC Minerals (USA) Inc., Civ. No. 99-5083-KES (D. S.D. June 15, 2000). |
1 | This claim is currently listed in BLM records as owned by St. Joe Richmond Hill. | |
2 | This claim is currently listed in BLM records as owned by Bond Gold Richmond. |
A-4
4. | Deed, Grant of Easements and Right of First Refusal dated April 18, 2003 from Homestake Mining Company of California to Donald F. Hander and Karen Hander, as modified by Relinquishment and Release of First Right to Purchase dated November 2, 2007 from Maitland Partners, L.L.C. to Homestake Mining Company of California. |
5. | All instruments and documents relating to the Properties, or any of them, contained in the records of the Lawrence County Register of Deeds Office or in the files of the United States Bureau of Land Management or in the files of the South Dakota Department of Environment & Natural Resources, or in any other public records, to which LAC or Homestake is a party or the successor to a party. |
6. | Pursuant to the Exploration Lease and Purchase Option Agreement dated June 18, 2019 (the “Exploration and Option Agreement”), among Wharf Resources (U.S.A.) Inc. (“Coeur”), Coeur Mining Inc., Homestake and LAC Minerals, which Exploration and Option Agreement terminated on September 17, 2021, Coeur has certain access rights to the Mining Property in order to perform Coeur Reclamation Obligations, including Post-Termination Reclamation Obligations (each as defined in the Exploration and Option Agreement). |
Documents creating Royalties
1. | The Peterson Lease. |
2. | Mining Deed dated May 24, 1968 from Fillmore and Company, W. O. Fillmore and Lillian |
G. Fillmore, as grantors, to Congo Uranium Company, as grantee, recorded in Lawrence County, South Dakota as document number 84-1176.
3. | Warranty Deed dated June 2, 1976 from Iwalana L. Gali (fka Iwalana L. Aye), as grantor, to Homestake Mining Company, as grantee, recorded in Lawrence County, South Dakota as document number 82-5846. |
4. | Grant, Bargain and Sale Deed dated April 11, 2014 from Sharlene J. Hoffman, trustee, Earl D. Bohlen and Helen L. Bohlen, as grantors, to Homestake Mining Company of California, as grantee, recorded in Lawrence County, South Dakota as document number 2014-01773. |
[End]
A-5
EXHIBIT B
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (Real Property Leases, Agreements, Rights of Way and Easements) (Lawrence County) (this “Assignment”), effective as of [____], 20[__] (“Effective Date”), is from [Homestake Mining Company of California, a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company] (“Assignor”) whose address is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101, to Dakota Territory Resource Corp., a Nevada corporation whose address is 106 Glendale Drive, Suite A, Lead, South Dakota 57754 (“Assignee”).
Recitals
1. Assignor and Assignee are parties to that certain Asset Purchase Agreement dated [___] (the “Agreement”).
2. Pursuant to the Agreement, Assignor agreed, among other things, to assign to Assignee all of Assignor’s right, title and interest in, to and under certain assets described in the Agreement (collectively, the “Assigned Assets”), which form part of the Purchased Assets.
3. Pursuant to the Agreement, the parties to the Agreement agreed, among other things, to cause Assignee to assume all Assumed Liabilities in, under or related to the Assigned Assets.
4. Assignor and Assignee execute this Assignment with respect to the Assigned Assets in order to fulfill, in part, their obligations under the Agreement.
Assignment and Assumption
For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, and subject to the terms and conditions set forth in the Agreement, Assignor sells, assigns and transfers to Assignee, its successors and assigns forever, all of Assignor’s right, title and interest in, to and under the Assigned Assets, free and clear of all encumbrances other than Permitted Encumbrances, to have and to hold forever.
As of the Effective Date, Assignees accept the assignment, and assume and agree to perform and satisfy all Assumed Liabilities in, under or related to the Assigned Assets.
Notwithstanding the foregoing, to the extent that the sale, assignment and transfer of any Assigned Asset pursuant to this Assignment requires prior consent or approval of any person or governmental authority, and such consent or approval has not been obtained prior to or on the Effective Date, then the sale, assignment and transfer of any such Assigned Asset pursuant to this Assignment shall not be effective until such consent or approval shall have been obtained. Upon obtaining such consent or approval, the sale, assignment and transfer of any such Assigned Asset pursuant to this Assignment shall become effective automatically without any further action on the part of the parties hereto. To the greatest extent permitted by law, all Assumed Liabilities in, under or related to any such asset shall be, and shall for all purposes be deemed to be, assumed by Assignee as of the Effective Date and Assignee shall thereafter be fully responsible and liable therefor.
This Assignment incorporates by reference the representations and warranties, and associated limitations and disclaimers, made in the Agreement with respect to the Assigned Asset. This Assignment and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns.
This Assignment, being further documentation of the transactions contemplated by the Agreement, is subject in all respects to the terms and conditions of the Agreement. In the event of a conflict between any provision of this Assignment and any provision of the Agreement, the provisions of the Agreement shall control. Capitalized terms used but not defined in this Assignment shall have the meanings ascribed to them in the Agreement.
This Assignment shall be governed by the laws of the South Dakota.
This Assignment may be executed in counterparts, each of which when so executed will be deemed to be an original and when taken together shall constitute the entire and same agreement.
[Signature Page Follows]
B-2
Executed by Assignor and Assignees to be effective as of the Effective Date.
Assignor:
[Homestake Mining Company of California, a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company]
By: |
Name: |
Title: |
Assignee:
Dakota Territory Resource Corp., a Nevada corporation
By: |
Name: |
Title: |
B-3
EXHIBIT C
BILL OF SALE
BILL OF SALE
This Bill of Sale (the “Bill of Sale”), executed to be effective as of [___] (the “Effective Date”), is made by [Homestake Mining Company of California, a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company], the address of which is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101 (“Seller”), in favor of Dakota Territory Resource Corp, a Nevada corporation, the address of which is 106 Glendale Drive, Suite A, Lead South Dakota 57754 (“Purchaser”).
Recitals
1. Seller and Purchaser, are parties to that certain Asset Purchase Agreement dated [____] (the “Agreement”). Capitalized terms used and not otherwise defined in this Bill of Sale shall have the meanings ascribed to them in the Agreement.
2. Pursuant to the Agreement, Seller agreed, among other things, to sell and transfer to Purchaser all of Seller’s right, title and interest in, to and under the Data that form a part of the Purchased Assets (the “Sale Assets”).
3. Seller executes this Bill of Sale with respect to the Sale Assets in order to fulfill, in part, its obligations under the Agreement.
Sale
For good and valuable consideration, the receipt and sufficiency of which are acknowledged, subject to the terms and conditions set forth in the Agreement, Seller hereby sells, assigns and transfers to Purchaser all of Seller’s right, title and interest in and to the Sale Assets, free and clear of encumbrances arising by, through or under Seller.
This Bill of Sale incorporates by reference the representations and warranties, and associated limitations and disclaimers, made in the Agreement with respect to the Sale Assets and no others. This Bill of Sale, being further documentation of the transactions contemplated by the Agreement, is subject in all respects to the terms and conditions of the Agreement. In the event of a conflict between any provision of this Bill of Sale and any provision of the Agreement, the provisions of the Agreement shall control.
This Bill of Sale and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns. This Bill of Sale may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. This Bill of Sale may be executed by facsimile, e-mail, .pdf or similar means, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Bill of Sale for all purposes.
This Bill of Sale is governed by the laws of South Dakota.
C-1
Executed by Assignor to be effective as of the date first written above.
Seller:
[Homestake Mining Company of California,a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company] |
By: |
Name: |
Title: |
Acknowledged and accepted:
Purchaser:
Dakota Territory Resource Corp., a Nevada corporation
By: |
Name: |
Title: |
C-2
EXHIBIT D
QUITCLAIM DEED
(See Attached)
D-1
Prepared by:
Parsons Behle & Latimer
201 South Main Street
Salt Lake City, Utah
84111
(801) 532-1234
Grantee Address:
Dakota Territory Resource Corp
106 Glendale Drive, Suite A
Lead, SD 57754
Pursuant to South Dakota Codified Laws 43-28-24 thru 43-28-28 inclusive: this Deed does not contain any individual’s personally identifiable information.
QUITCLAIM DEED
This QUITCLAIM DEED (the “Deed”) is effective the [__] day of [__], 20[__] (the “Effective Date”), by and among Homestake Mining Company of California, a California corporation (“Homestake”) and LAC Minerals (USA) LLC, a Delaware limited liability company (“LAC Minerals” and together with Homestake, “Grantors”), Dakota Territory Resource Corp., a Nevada corporation (“Grantee”), and JR Resources Corp., a Nevada Corporation (the “Guarantor”).
RECITALS
1. Grantors and Grantee are parties to that certain Asset Purchase Agreement executed by Grantor and Grantee on [DATE], 2021 (the “Agreement”).
2. Pursuant to the Agreement, Grantors agreed, among other things, to convey to Grantee all of Grantors’ right, title and interest in and to the real property described in Exhibit A to this Deed (the “Mining Property”). The Mining Property is located in Lawrence County, South Dakota.
3. As partial consideration for the conveyance of the Mining Property from Grantors to Grantee, Grantee hereby agrees to conduct mining operations on the Mining Property in accordance with certain operating parameters, and to indemnify Grantors for any failure by Grantee to conduct such mining operations in accordance with such operating parameters, all as described in Exhibit B to this Deed (the “Operating Parameters and Indemnity”).
4. Each Grantor and Grantee executes this Deed with respect to the Mining Property and the Operating Parameters and Indemnity in order to fulfill, in part, its respective obligations under the Agreement.
1
CONVEYANCE
For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, each Grantor quitclaims to Grantee all of such Grantor’s right, title and interest, if any, in and to the Mining Property and all and singular the tenements, hereditaments, appurtenances, fixtures, buildings, and other improvements thereon or thereunto belonging to or in anywise appertaining, the reversion and reversions, remainder and remainders, rents, issues, and profits thereof and including, with respect to all patented mining claims included in the Mining Property all of the lodes, ledges, veins and mineral-bearing rock, both known and unknown, intraliminal and extralateral, lying within or extending beyond the boundaries of such mining claims, and all dips, spurs and angles, and all the ores, mineral bearing-quartz, rock and earth or other mineral deposits therein or thereon, to have and to hold unto Grantee, its successors and assigns forever, subject to the Operating Parameters and Indemnity.
Grantee hereby agrees to conduct mining operations on the Mining Property in accordance with the Operating Parameters and Indemnity.
This Deed and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns.
This Deed shall be governed by the laws of the State of South Dakota.
[Signature Page follows]
2
IN WITNESS WHEREOF, each Grantor has executed this Deed on the date set forth above.
HOMESTAKE MINING COMPANY OF CALIFORNIA |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF_____________________________________________ )
) ss.
COUNTY OF____________________________________________ )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as __________________ of Homestake Mining Company of California, a California corporation.
(Signature of notarial officer) |
[Affix seal/stamp as close to signature as possible] |
My commission expires: |
3
LAC MINERALS (USA) LLC |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF_____________________________________________ )
) ss.
COUNTY OF____________________________________________ )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as __________________ of LAC Minerals (USA) LLC, a Delaware limited liability company.
(Signature of notarial officer) |
[Affix seal/stamp as close to signature as possible] |
My commission expires: |
4
DAKOTA TERRITORY RESOURCE CORP. |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF_____________________________________________ )
) ss.
COUNTY OF____________________________________________ )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as ___________ of Dakota Territory Resource Corp, a Nevada corporation.
(Signature of notarial officer) |
[Affix seal/stamp as close to signature as possible] |
My commission expires: |
5
JR RESOURCES CORP. |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF_____________________________________________ )
) ss.
COUNTY OF__________________________________________ )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as ___________ of JR Resources Corp, a Nevada corporation.
(Signature of notarial officer) |
[Affix seal/stamp as close to signature as possible] |
My commission expires: |
6
EXHIBIT A
TO
DEED
MINING PROPERTY (LAWRENCE COUNTY, SOUTH DAKOTA)
Properties, Property Agreements and Royalties
(All Properties are located within T5N, R2E, B.H.M., Lawrence County, South Dakota)
Mineral Properties
Owned by LAC Minerals:
Enterprise patented lode mining claim, M.S. 407, located in Sections 10 and 15
Surprise patented lode mining claim, M.S. 408, located in Sections 10 and 15
Carbonate patented lode mining claim, M.S. 417, located in Section 15
Jay Gould patented lode mining claim, M.S. 425, located in Section 10
Garfield patented lode mining claim, M.S. 426, located in Section 10
Far West patented lode mining claim, M.S. 428, located in Sections 10 and 15
Katie patented lode mining claim, M.S. 437, located in Section 10
Arthur patented lode mining claim, M.S. 438, located in Section 10
Hartshorn patented lode mining claim, M.S. 440, located in Sections 10 and 15
Minnie patented lode mining claim, M.S. 441, located in Section 15
Ultimo patented lode mining claim, M.S. 442A, located in Section 15
Tidiout patented lode mining claim, M.S. 443, located in Section 15
Utica patented lode mining claim, M.S. 447A, located in Section 15
Antietam patented lode mining claim, M.S. 448A, located in Section 15
Blue Bird patented lode mining claim, M.S. 449, located in Section 15
Carbonate Fraction #1 patented lode mining claim, M.S. 450, located in Section 15
Carbonate Fraction #2 patented lode mining claim, M.S. 451, located in Section 15
A-1
Mutual patented lode mining claim, M.S. 465, located in Section 15
Washington patented lode mining claim, M.S. 466, located in Section 15
May Queen patented lode mining claim, M.S. 473, located in Section 15
Hercules patented lode mining claim, M.S. 474, located in Section 15
Adelphi patented lode mining claim, M.S. 489, located in Section 15
Spanish patented lode mining claim, M.S. 679, located in Section 15
Richmond patented lode mining claim, M.S. 680, located in Section 15
Brooklyn patented lode mining claim, M.S. 874, located in Section 15
J.M., Todd, Earle, Minnie C, Lyda B, Sister, Arthur L, Cass, Newell, Calvin P, Emma, Virginia, Juliett, Donald W, Helen, Atwood, Little Bonanze, Ella, Ralph K patented lode mining claims, M.S. 977, located in Sections 22, 23, 26 and 27
Cloride Fr., Calkins, Logan, Anis patented lode mining claim, M.S. 1022, located in Section 15
Rattler and Gilroy patented lode mining claim, M.S. 1043, located in Sections 10 and 15
Nankipoo, Delaunay patented lode mining claim, M.S. 1278, located in Section 15
Aliance, Sucker, Little Ellen, Black Bird, Golden Eagle No. 2, Rubicon, Rubicon No. 2, Rubicon No. 4, Dakota, Darboy, Havana No. 1, Havana No. 3, Porto Rico No. 2 patented lode mining claims, M.S. 1376, located in Sections 10, 11, 14 and 15
Independent, Independent No. 1, Republick patented lode mining claims, M.S. 1398, located in Section 15
Joplin No. 1, Joplin No. 2, Joplin No. 3, Julia-Etta, Magnetic patented lode mining claims, M.S. 1436, located in Sections 15 and 22
Crest, Samoa, Co-moa, Sylvanite No. 1, Sylvanite No. 2, Grove, Volt, Seven-B, Storm King, Vigor patented lode mining claims, M.S. 1440, located in Sections 15, 16, 21 and 22
Cashier, LaPlata patented lode mining claims, M.S. 1469, located in Section 15
Maryland, Baltimore, Maverick, Badger, North Side Fraction patented lode mining claims, M.S. 1529, located in Sections 15 and 16
Lola patented lode mining claim, M.S. 1569, located in Section 15
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St. Cloud No. 5, Zelpha Mable, Josephine, St. Cloud No. 1, St. Cloud No. 3, Comstock, Victor Fraction #3, Grand Deposit No. 2, Tartar, Red Cloud, Red Cloud Frac., Valley Frac. patented lode mining claims, M.S. 1655, located in Sections 15 and 22
Edmonia patented lode mining claim, M.S. 1769, located in Section 14
Mars No. 1 patented lode mining claim, M.S. 1851, located in Section 15
Legal Tender, Diamond Point, Joe Craig, Gremmel No. 1, Cotton Tail Frac. patented lode mining claims, M.S. 1872, located in Section 22
Dante, Creston, Morning Glory, Vindicator patented lode mining claims, M.S. 1910, located in Section 23
Bison, Trent patented lode mining claims, M.S. 2033, located in Sections 10 and 15
Govt. Lots 3, 9, 10, 12, 13, located in Section 15
Tracts 0102-A, 0102-B, 0103-B, located in Section 15
Govt. Lot 1, 2, 4 and 5 located in Section 22
Govt. Lots 9 and 10, located in Section 23
Tract 0103-A, located in Section 23
Owned by Homestake:
Yankee Boy, Yankee Boy No. 3, Yankee Boy No. 4, Alliance No. 2, Little Bonanza No. 2, Magna Charta and General Joe Hooker patented lode mining claims, M.S. 1406, located in Section 14
Tract 1 of M.S. 1829, as shown on Plat Document Number 2014-1022, located in Sections 22 and 23
Los Angeles No. 1, Los Angeles No. 2 and Los Angeles No. 3 patented lode mining claims, M.S. 1617, located in Section 23
Stella No. 3, Stella No. 5, Margarite No. 6 and Margarite No. 7, patented lode mining claims, M.S. 1862, located in Sections 23 and 26
Govt. Lot 10, located in Section 11
Govt. Lot 12, located in Section 13
Govt. Lots 2, 3, 4, 7, 8, 9 and 10, located in Section 14
Govt. Lots 1, 2, 3, 4, 5, 6, 7 and 8, located in Section 23
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Govt. Lots 12, 13 and 14, located in Section 24
Owned by Homestake – Minerals Only:
Old Reliable patented lode mining claim, M.S. 348, located in Section 14
Dakota, Granite, Columbia and Union patented lode mining claims, M.S. 1092, located in Sections 13, 14 and 23
White House, Congress, China Fraction, Japan Fraction patented lode mining claims, M.S. 1247, Sections 13 and 14
Arthur No. 1, Little Hill, Little Hill No. 2 patented lode mining claims, M.S. 1406, located in Section 14
Bessie, Cross No. 1, Dixie, Geneva, Hattie, Tan patented lode mining claims, M.S. 1822, located in Section 14
Owned by LAC Minerals – Unpatented Lode Mining Claims:
L&O No. 11 BLM serial No. MMC 74914 Located in Section 15
NJB 72 BLM serial No. MMC 165019 Located in Section 15
Leased Mineral Rights
Rubicon, Cleveland, Lizzie Johnson, Standard and Grayback patented lode mining claims, M.S. 1382, located in Section 23, which claims are leased by LAC pursuant to a Lease Agreement dated November 15, 1984 between James E. Peterson and Arlene Peterson, husband and wife, as lessors, and St. Joe American Corporation, as lessee, a short form of which is recorded in Lawrence County, South Dakota as document number 84-3814 (the “Peterson Lease”).
Property Agreements
1. The Peterson Lease.
Material Contracts
1. | Restated Joint Venture Agreement dated December 2, 1988 between Viable Resources, Inc. and Bond Gold Richmond Hill Inc., and all judicial orders, decisions and opinions relating thereto, including without limitation Order Following Court Trial in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); Judgment in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); and opinion in Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012). |
1 | This claim is currently listed in BLM records as owned by St. Joe Richmond Hill. |
2 | This claim is currently listed in BLM records as owned by Bond Gold Richmond. |
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2. | Easement Agreement dated February 22, 1998 between Timothy Morton and Shirley Morton as grantors and LAC Minerals (USA) Inc. as grantee. |
3. | Settlement Agreement dated June 15, 2000 among Scott L. Prentice and Jeanne L. Prentice, LAC Minerals (USA) Inc. and Todd Duex, and Order related thereto in the matter of Scott L. Prentice et al. v. LAC Minerals (USA) Inc., Civ. No. 99-5083-KES (D. S.D. June 15, 2000). |
4. | Deed, Grant of Easements and Right of First Refusal dated April 18, 2003 from Homestake Mining Company of California to Donald F. Hander and Karen Hander, as modified by Relinquishment and Release of First Right to Purchase dated November 2, 2007 from Maitland Partners, L.L.C. to Homestake Mining Company of California. |
5. | All instruments and documents relating to the Properties, or any of them, contained in the records of the Lawrence County Register of Deeds Office or in the files of the United States Bureau of Land Management or in the files of the South Dakota Department of Environment & Natural Resources, or in any other public records, to which LAC or Homestake is a party or the successor to a party. |
6. | Pursuant to the Exploration Lease and Purchase Option Agreement dated June 18, 2019 (the “Exploration and Option Agreement”), among Wharf Resources (U.S.A.) Inc. (“Coeur”), Coeur Mining Inc., Homestake and LAC Minerals, which Exploration and Option Agreement terminated on September 17, 2021, Coeur has certain access rights to the Mining Property in order to perform Coeur Reclamation Obligations, including Post-Termination Reclamation Obligations (each as defined in the Exploration and Option Agreement). |
Documents creating Royalties
1. | The Peterson Lease. |
2. | Mining Deed dated May 24, 1968 from Fillmore and Company, W. O. Fillmore and Lillian G. Fillmore, as grantors, to Congo Uranium Company, as grantee, recorded in Lawrence County, South Dakota as document number 84-1176. |
3. | Warranty Deed dated June 2, 1976 from Iwalana L. Gali (fka Iwalana L. Aye), as grantor, to Homestake Mining Company, as grantee, recorded in Lawrence County, South Dakota as document number 82-5846. |
4. | Grant, Bargain and Sale Deed dated April 11, 2014 from Sharlene J. Hoffman, trustee, Earl D. Bohlen and Helen L. Bohlen, as grantors, to Homestake Mining Company of California, as grantee, recorded in Lawrence County, South Dakota as document number 2014-01773. |
[End]
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EXHIBIT B
TO
DEED
OPERATING PARAMETERS AND INDEMNITY
ARTICLE I.
DEFINITIONS
1.1 Certain Defined Terms. For purposes of these Operating Parameters and Indemnity, except where the context otherwise requires, the following capitalized terms have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Vancouver, British Columbia, Toronto, Ontario or Reno, Nevada are closed for business.
“Claim” means any action, arbitration, cause of action, claim, counterclaim, demand, dispute, grievance, mediation, injunction, investigation, notice of violation, obligation, order, stay, suit or other proceeding.
“Corporate Reorganization” has the meaning set forth in Section 3.1.
“Cure Notice” has the meaning set forth in Section 2.5(a).
“Cure Notice Period” has the meaning set forth in Section 2.5(a).
“Cure Period” has the meaning set forth in Section 2.5(a).
“Declaration of Environmental Deed Restrictions” means the Declaration of Environmental Deed Restrictions dated February 2, 2018, recorded with the Lawrence County, South Dakota Register of Deeds at Doc. # 2018-00714, a copy of which is attached to these Operating Parameters and Indemnity as Schedule III.
“Default Cure Plan” has the meaning set forth in Section 2.5(a).
“Default Notice” has the meaning set forth in Section 2.5(a).
“Environmental Law” means all applicable Laws relating to the protection of human health and safety, the environmental, or to hazardous or toxic substances or wastes, pollutants or contaminants (including Hazardous Materials).
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“Event of Default” has the meaning set forth in Section 2.5.
“Governmental Authority” means: (a) any domestic or foreign government, whether national, federal, provincial, state, territorial, municipal or local (whether administrative, legislative, executive or otherwise); (b) any agency, authority, ministry, department, regulatory body, court, central bank, bureau, board or other instrumentality having legislative, judicial, taxing, regulatory, prosecutorial or administrative powers or functions of, or pertaining to, government; (c) any court, commission, individual arbitrator, arbitration panel or other body having adjudicative, regulatory, judicial, quasi-judicial, administrative or similar functions; or (d) any 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 or professional association.
“Governmental Filings” has the meaning set forth in Section 2.1(c).
“Grantee Administrative Agent” means the Grantee.
“Grantor Administrator Agent” means Homestake.
“Grantor Regulatory Rights” has the meaning set forth in Section 2.4(b).
“Hazardous Material” means any pollutant, contaminant, constituent, chemical, mixture, raw material, intermediate product, finished product or by-product, hydrocarbon or any fraction thereof, or industrial, solid, toxic, radioactive, infectious, disease-causing or hazardous substance, material, waste or agent, including all substances, materials, or wastes, the presence and amount of which is regulated by any Governmental Authority under any Environmental Law, or which may threaten life, health or property or adversely affect the environment.
“Indemnifiable Claim” means a Claim arising pursuant to an Indemnification Obligation.
“Indemnification Obligations” has the meaning set forth in Section 4.1(a).
“Indemnified Parties” means the Grantor Administrative Agent, each Grantor and its and their respective Affiliates, and its and their respective Representatives, and “Indemnified Party” means any one of them.
“Indemnitors” the Grantee and the Guarantor.
“Indemnitor Parties” means, collectively, each of the Indemnitors and their respective Affiliates and its and their respective Representatives and “Indemnitor Party” means any one of them.
“Inspection Right” has the meaning set forth in Section 2.4(a).
“Laws” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, formal interpretation, or other requirement or rule of law of any Governmental Authority.
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“Loss” means, in respect of any matter, all claims, demands, proceedings, losses, damages, liabilities, deficiencies, fines, costs and expenses (including reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement but excluding punitive, exemplary, aggravated damages, lost opportunity damages and loss of profits), injuries and judgments arising directly or indirectly as a consequence of such matter.
“Mine” means the area within the circumambient boundaries of the Mining Property, commonly known as the Richmond Hill mine, as depicted on the Mine Map.
“Mine Map” means the map as of the Effective Date, attached as Schedule I, and includes the descriptions of the Mining Property.
“Mining Industry Best Practices” means the best practices; methods; specifications; licensing requirements; standards of care, skill, diligence, safety and performance; environmental health and safety standards (including the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles, or such other established industry standards as may be agreed in writing by the Parties from time to time); and acts generally engaged in or observed by recognized and experienced international mining companies, as in effect from time to time for Mining Operations, which are consistent with good judgment, reliability, and safety, all in compliance with applicable Permits (including the Operating Permits) and applicable Laws (including Environmental Laws).
“Mining Operations” means any mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; activities directed toward ascertaining the existence, location, quantity, quality or commercial value of mineral deposits, including drilling required after discovery of potentially commercial mineralization; any preparation for the removal and recovery of minerals, in-fill drilling, preparation of order of magnitude studies, pre-feasibility studies, feasibility studies, pre-production stripping, stripping and the construction or installation of any mill, leach facilities, or any other improvements to be used for the mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; actions performed during or after the foregoing to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Mining Property or other compliance with Environmental Laws; and the attendant reclamation and remediation and closure upon completion of the foregoing, including obligations or responsibilities that are reasonably expected to or actually continue or arise, such as, without limitation, future monitoring, management, treatment or stabilization.
“Notice of Claim” has the meaning set forth in Section 4.2(b)(i).
“Operating Parameters” has the meaning set forth in Section 2.2(b).
“Operating Parameters and Indemnity” means the Operating Parameters and Indemnity set forth in this Exhibit B, and any exhibits, schedules and addenda referenced herein or attached hereto, as the same may be amended or modified from time to time as set forth herein.
“Operating Permits” means the Permits to conduct Mining Operations at the Mine, including those set forth in Schedule II.
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“Operating Records” has the meaning set forth in Section 2.1(b).
“Operational Default” has the meaning set forth in Section 2.5(a).
“Parties” means any combination of the Grantor Administrative Agent, Homestake, LAC Minerals, the Grantee Administrative Agent, the Grantee and the Guarantor.
“Party” means any one of the Grantor Administrative Agent, Homestake, LAC Minerals, the Grantee Administrative Agent, the Grantee or the Guarantor.
“Permit Modification Notice” has the meaning set forth in Section 2.3.
“Permit Modifications” has the meaning set forth in Section 2.3.
“Permits” means any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration by or with a Governmental Authority or other third parties.
“Person” means any individual, corporation or company with or without share capital, partnership, joint venture, association, trust, unincorporated organization, trustee, executor, administrator or other legal personal representative, Governmental Authority or entity however designated or constituted.
“Release” means any spill, discharge, leak, emission, injection, escape, dumping, leaching, dispersal, disposal, emanation, migration or release of any Hazardous Materials into the environment, including abandonment or discard of barrels, containers, tanks or other receptacles containing or previously containing any Hazardous Materials, or the recycling of Hazardous Materials.
“Release Obligations” has the meaning set forth in Section 4.1(a).
“Representatives” means, with respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Transfer” means to, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
“Uncured Operational Default” has the meaning set forth in Section 4.5.
1.2 | Rules of Construction. |
(a) | In these Operating Parameters and Indemnity: |
(i) unless the context otherwise clearly requires, (A) references to the plural include the singular, and references to the singular include the plural, (B) references to one gender include the other gender, (C) the words “include,” “includes,” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation,” (D) the terms “hereof,” “herein,” “hereunder,” “hereto,” and similar terms refer to this entire Operating Parameters and Indemnity and not to any particular provision of this Operating Parameters and Indemnity, unless the provision otherwise provides, (E) “or” is used in the inclusive sense of “and/or,” (F) if a word or phrase is defined, then its other grammatical or derivative forms have a corresponding meaning; (G) a reference to Law or a statute, code, act, legislation, or to a provision thereof includes a modification, amendment, or substitution thereof or any successor Law, the rules and regulations promulgated thereunder, and the formal interpretations issued in accordance therewith; and (H) unless otherwise specified, the terms “day” and “days” mean and refer to calendar day(s);
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(ii) unless otherwise specified, any reference to any document, instrument or agreement (including a reference to these Operating Parameters and Indemnity) (A) includes and incorporates all exhibits, schedules, and other attachments thereto, (B) includes and incorporates all documents, instruments, deeds, or agreements issued or executed in connection therewith or in replacement thereof, and (C) means such document, instrument, deed, or agreement, or replacement or predecessor thereto, as amended, modified, or supplemented from time to time in accordance with its terms and in effect at any given time (except to the extent prohibited by these Operating Parameters and Indemnity or such other agreement or document);
(iii) unless otherwise specified, all references to articles, sections, schedules and exhibits are to the Articles, Sections, Schedules, and Exhibits of these Operating Parameters and Indemnity; and
(iv) the headings of these Operating Parameters and Indemnity are for reference purposes only and shall not affect in any way the meaning or interpretation of these Operating Parameters and Indemnity.
(b) The Parties acknowledge that they and their respective legal counsel have reviewed and participated in negotiating and settling the terms of these Operating Parameters and Indemnity and agree that no inference shall be drawn in favor of or against any Party by virtue of the fact that they or their respective legal counsel were or were not principally responsible for drafting these Operating Parameters and Indemnity.
(c) The following Schedules are attached to, and form an integral part of, these Operating Parameters and Indemnity:
Schedule I | - | Mine Map | |
Schedule II | - | Operating Permits | |
Schedule III | - | Declaration of Environmental Deed Restrictions |
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ARTICLE II.
MINING OPERATIONS
2.1 Indemnitor Responsibilities.
(a) The Indemnitor Parties are solely responsible and liable for all Mining Operations at the Mine, and an Indemnitor Party shall at all times be the operator under applicable Laws. No Indemnified Party is, or shall be considered to be, an operator under applicable Laws or otherwise involved in any Mining Operations at the Mine. The Indemnitors shall not, and shall cause the Indemnitor Parties not to, bring any Claim against any one or more of the Indemnified Parties alleging that any one or more of such Indemnified Parties is an operator of the Mine based on any activities undertaken by one or more of the Indemnified Parties pursuant to these Operating Parameters and Indemnity, or under applicable Laws.
(b) The Indemnitor Parties shall maintain complete and accurate records of Mining Operations at the Mine in accordance with Mining Industry Best Practices (the “Operating Records”).
(c) The Indemnitors, acting through the Grantee Administrative Agent, shall provide to the Grantor Administrative Agent promptly, and in any event within five Business Days of the triggering event referred to below: (i) copies of material filings with, or correspondence from, all Governmental Authorities, related directly or indirectly to the Permits (including Operating Permits) for Mining Operations at the Mine; and (ii) written notice of (A) any Release, or threatened Release; (B) any contamination or threat to the environment, or human health and safety at the Mine that requires a notice or filing with a Governmental Authority, together with a copy of any such filing; and (C) copies of any filings or correspondence directly or indirectly related to any Claims or potential Claims alleged by a Governmental Authority or Losses imposed by a Governmental Authority (“Governmental Filings”).
2.2 Operating Parameters.
(a) The Indemnitor Parties shall conduct Mining Operations at the Mine, or cause Mining Operations at the Mine to be conducted, in accordance with Mining Industry Best Practices.
(b) In addition to conducting Mining Operations in compliance with Mining Industry Best Practices, the Indemnitor Parties shall conduct Mining Operations, or cause Mining Operations to be conducted, at the Mine in compliance with the following (the “Operating Parameters”):
(i) The Indemnitor Parties shall comply with Mining Industry Best Practices with regard to environmental health and safety (such as the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles);
(ii) The Indemnitor Parties shall comply with applicable Environmental Laws;
(iii) The Indemnitor Parties shall exercise due care consistent with Mining Industry Best Practices in the handling, management, acquisition, disposal, generation, recycling, use and sale of Hazardous Materials; and
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(iv) The Indemnitor Parties shall comply with the restrictions set forth in the Declaration of Environmental Deed Restrictions, which Declaration of Environmental Deed Restrictions form an integral part of these Operating Parameters and Indemnity; provided that, notwithstanding the permissive provisions of the Declaration of Environmental Deed Restrictions, the Indemnitor Parties shall not conduct Mining Operations or conduct any excavation or subsurface construction, and shall not seek to conduct Mining Operations or to conduct any excavation or subsurface construction, within the Pit Impoundment (as described in the Declaration of Environmental Deed Restrictions) located on Govt. Lot 4, Govt. Lot 5, Little Bonanza, Ella, Atwood, Helen, Donald W., Juliette, Virginia, Emma and Calvin P. lodes, M.S. 977, being located in the E/2, Section 22, T5N, R2E, BHM, as generally shown on Exhibit C to the Declaration of Environmental Deed Restrictions, without the Administrative Agent’s written consent, which may be withheld in its sole and absolute discretion..
2.3 Modification of Operating Parameters. Subject to Section 2.2(b)(iv), and to the Grantor Regulatory Rights and the Indemnitor Parties’ compliance with their obligations relating to the Permit Modification Notice and the Inspection Rights, the Indemnitor Party conducting Mining Operations at the Mine may apply for additional Permits, or seek approval to modify or amend the Operating Permits, from Government Authorities having jurisdiction over the Mining Operations at the Mine (the “Permit Modifications”); provided that the Grantee Administrative Agent shall provide the Grantor Administrative Agent not less than 30 days’ written notice (the “Permit Modification Notice”) prior to the submission of any request for Permit Modifications, which Permit Modification Notice shall include a copy of the proposed submission(s) to the relevant Governmental Authorities requesting approval of the Permit Modifications.
2.4 | Grantor Rights. |
(a) Any one or more of the Indemnified Parties shall have the right, but not the obligation, to access the Operating Records in order to verify that Mining Operations at the Mine comply with Mining Industry Best Practices and the Operating Parameters, and to exercise their respective Grantor Regulatory Rights (the “Inspection Right”). The Indemnitor Parties shall ensure that the Indemnified Parties are able to exercise the Inspection Right during normal operating hours on working days at the expense of the Indemnified Parties and in a manner that does not unreasonable hinder, delay, or interfere with the Indemnitor Parties’ operations, provided that the Indemnified Parties shall deliver five days’ prior written notice to the Grantee Administrative Agent before exercising the Inspection Right. In addition, any Inspection Right related to the Mining Operations at the Mine and the Operating Parameters will be conducted in accordance with applicable health and safety standards for the Mine.
(b) To the extent that the Grantor Administrative Agent determines, in its sole and absolute discretion, that any proposed Permit Modification or any proposed modification to the Operating Parameters represents a material risk to an Indemnified Party, any one or more of the Indemnified Parties shall have the unfettered right to make submissions to the relevant Governmental Authorities in respect of each application for additional Permits and each request for a Permit Modification, and exercise any other rights available to such Indemnified Parties under applicable Law (including injunctive rights), as applicable, in their sole and absolute discretion (the “Grantor Regulatory Rights”). The Indemnitors shall not assert, and shall cause the Indemnitor Parties (including the Grantee Administrative Agent) not to assert, that any Indemnified Party owes any duty to the Indemnitors, any of the Indemnitor Parties or any other Person, or otherwise is restricted or prohibited in any way from exercising the Grantor Regulatory Rights or otherwise acting in the best interests of any such Indemnified Party in connection with the exercise of any of the Grantor Regulatory Rights.
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(c) The Indemnified Parties may use any non-public information obtained pursuant to the Inspection Rights to confirm compliance by the Indemnitor Parties under these Operating Parameters and Indemnity and in furtherance of the exercise of the Grantor Regulatory Rights, and shall not use such non-public information for any other purpose.
2.5 Default. The occurrence of any one or more of the following events shall constitute a default under these Operating Parameters and Indemnity (as applicable, an “Event of Default”):
(a) the Indemnitor Parties fail to conduct, or fail to have conducted, Mining Operations at the Mine in accordance with Mining Industry Best Practices and the Operating Parameters in all material respects (an “Operational Default”) and such failure continues for a period of 45 days (the “Cure Period”) after receipt of written notice of such failure from the Grantor Administrative Agent to the Grantee Administrative Agent (a “Default Notice”); provided that, (i) the Grantee Administrative Agent shall inform the Grantor Administrative Agent in writing (the “Cure Notice”) within 48 hours of receipt off a Default Notice (the “Cure Notice Period”) of the intent of the Indemnitor Parties to cure the Operational Default within the Cure Period, and (ii) if the Indemnitor Parties, using diligent efforts, cannot cure any such Operational Default within the Cure Period, then the Indemnitor Parties shall take meaningful steps beginning on the date of the Default Notice to cure such Operational Default as quickly as possible and provide to the Grantor Administrative Agent with the Cure Notice a detailed written plan as to the steps the Indemnitor Parties will take to cure such Operational Default and the time period in which such Operational Default will be cured (the “Default Cure Plan”), which Default Cure Plan is acceptable to the Grantor Administrative Agent, acting reasonably;
(b) the Indemnitor Parties fail to cure an Operational Default in accordance with the applicable Default Cure Plan;
(c) any of the Indemnitor Parties seeks to prohibit any of the Indemnified Parties from exercising its Inspection Right or Grantor Regulatory Rights;
(d) any of the Indemnitor Parties refuses any of the Indemnified Parties access to the Operating Records in contravention of Section 2.4(a);
(e) the Indemnitors undertake, or attempt to undertake, a Corporate Reorganization in contravention of Section 3.1;
(f) the Indemnitors, or either of them, transfers all or any portion of the Mining Property in contravention of Section 3.2;
(g) the Indemnitors, or either of them, abandons, or takes action to abandon, any Mining Property in contravention of Section 3.3;
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(h) the Grantor Administrative Agent, acting reasonably, determines that the Indemnitor Parties are unable or unwilling to perform any one or more of their Indemnification Obligations; or
(i) (A) any one or more of the Indemnitor Parties seeks voluntary relief under any applicable federal or state debtor relief laws; (B) an involuntary case is commenced against any one or more of the Indemnitor Parties under any applicable federal or state debtor relief laws and such case is not dismissed with prejudice within 60 days after its filing; (C) any one or more of the Indemnitor Parties is declared insolvent or unable to pay its debts as the same become due; (D) any one or more of the Indemnitor Parties commences dissolution or liquidation proceedings; or (E) a receiver, liquidator, judicial manager, sequestrator, trustee, custodian or other officer having similar powers is appointed with respect to such Indemnitor Party or its assets.
Upon the occurrence and during the continuance of an Event of Default, the Grantors, in addition to any rights set forth herein, may seek any and all remedies available to it at law or in equity.
2.6 Relationship of the Parties. Nothing in these Operating Parameters and Indemnity shall create or be deemed to create a relationship of employer and employee, joint venture or partnership between the Indemnified Parties or the Indemnitor Parties for any purpose whatsoever. Nothing in these Operating Parameters and Indemnity shall create a relationship of principal and agent between the Indemnified Parties or the Indemnitor Parties. Nothing in these Operating Parameters and Indemnity shall be construed to allege that any Indemnified Party is an operator of the Mine under applicable Laws. No Party shall have the authority to bind or obligate the other Parties in any manner as a result of the relationship created hereby.
ARTICLE III.
TRANSFER AND ABANDONMENT
3.1 Preservation of Corporate Structure. Subject to Section 3.2, the Indemnitors shall not consolidate, amalgamate with, or merge with or into, or Transfer all or substantially all of its assets to, or reorganize, reincorporate or reconstitute into or as another entity (each a “Corporate Reorganization”) without the prior written consent of the Grantor Administrative Agent unless at the time of such Corporate Reorganization, the resulting, surviving or transferee entity: (i) assumes in favor of the Indemnified Parties all the obligations of the Indemnitors under these Operating Parameters and Indemnity in an instrument in writing satisfactory to the Grantor Administrative Agent, acting reasonably; and (ii) has the financial capability to satisfy the obligations of the Indemnitors pursuant to these Operating Parameters and Indemnity, as determined to the satisfaction of the Grantor Administrative Agent, acting reasonably.
3.2 Limitations on Transfer. The Indemnitor Parties shall not Transfer, in whole or in part, the Mining Property without the prior written consent of the Grantor Administrative Agent, unless the Person to whom or to which such Mining Property are Transferred: (a) agrees to conduct Mining Operations at the Mine pursuant to Mining Industry Best Practices and in accordance with the Operating Parameters; (b) assumes in favor of the Indemnified Parties all or its proportionate share thereof based on its relative interest in the Mining Property of the obligations of the Indemnitors under these Operating Parameters and Indemnity in instruments in writing satisfactory to the Grantor Administrative Agent, acting reasonably; (c) has the financial capability to conduct Mining Operations at the Mine pursuant to Mining Industry Best Practices and in accordance with the Operating Parameters and to satisfy its obligations under these Operating Parameters and Indemnity, as determined to the reasonable satisfaction of the Grantor Administrative Agent; and (d) the ultimate parent company of such transferee assumes in favor of the Indemnified Parties all or its proportionate share of the obligations of the Indemnitor Parties under these Operating Parameters and Indemnity based on its relative interest in the Mining Property. Any Transfer of all or any portion of the Mining Property in contravention of this Section 3.2 shall be void ab initio.
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3.3 Abandonment. Subject to Section 6.1, the Indemnitor Parties may abandon any Mining Property that no longer are deemed beneficial for Mining Operations at the Mine upon not less than 30 days’ prior written notice to the Grantor Administrative Agent.
ARTICLE IV.
RELEASE AND INDEMNITY
4.1 Release.
(a) Each Indemnitor, jointly and severally, on its behalf and on behalf of the Indemnitor Parties hereby unconditionally and irrevocably forever RELEASES, DISCHARGES AND ACQUITS the Indemnified Parties from and against all Claims and Losses of whatsoever kind or nature, under any Law or otherwise, whether accrued or unaccrued, whether known or unknown, whether now existing or that might arise hereafter, present or future, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, contingent or fixed, liquidated or unliquidated, including without limitation any Claims for contribution and/or indemnity, and for all Losses of any kind or nature, Claims for prejudgment interest, lost profits, consequential damages, exemplary damages, and other expenses or damages, incurred or to be incurred for, upon, or by reason of any matter, cause or thing arising prior to, on or following the Effective Date arising out of, in connection with, or in any way related to Mining Operations at the Mine (collectively, the “Release Obligations”), regardless of when or how any of the Claims and Losses related to the Release Obligation arose and notwithstanding their foreseeability or predictability.
(b) Each Indemnitor, jointly and severally, on its behalf and on behalf of the Indemnitor Parties, hereby unconditionally and irrevocably agrees to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and Losses of whatsoever kind or nature (including prejudgment interest, lost profits, consequential damages, exemplary damages) directly or indirectly arising from Claims of any Person (including any Governmental Authority) relating to any Release Obligations.
(c) Any Indemnified Party that is named in a Claim that is related to the Release Obligations or pursuant to which indemnification is available under Section 4.1(b) shall have control over the management, prosecution and settlement of such Claim, all at the expense of the Indemnitors.
4.2 Indemnity.
(a) Each Indemnitor, jointly and severally, on its behalf and on behalf of the Indemnitor Parties, hereby unconditionally and irrevocably agrees to indemnify, defend, and hold harmless the Indemnified Parties from and against any and all Claims and Losses (including prejudgment interest, lost profits, consequential damages, exemplary damages) directly or indirectly arising from Claims of any Person (including any Governmental Authority), whenever arising, relating to any one or more of (i) Mining Operations at the Mine (including any failure or alleged failure to conduct Mining Operations at the Mine in accordance with Mining Industry Best Practices or the Operating Parameters) and (ii) allegations that any one or more of the Indemnified Parties is or was an operator of the Mine under applicable Law (collectively, the “Indemnification Obligations”).
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(b) The obligation of the Indemnitor Parties to indemnify, defend and hold harmless the Indemnified Parties for Indemnification Obligations is subject to the following notice requirements:
(i) An Indemnified Party seeking indemnification pursuant to an Indemnifiable Claim shall give written notification through the Grantor Administrative Agent to the Grantee Administrative Agent of such Indemnifiable Claim (a “Notice of Claim”) promptly upon becoming aware of the Claim or Loss. The Notice of Claim shall specify with reasonable particularity, to the extent that the information is available, the factual basis for the Indemnifiable Claim and the amount of the Indemnifiable Claim.
(ii) If the Grantor Administrative Agent fails to provide the Grantee Administrative Agent with a Notice of Claim promptly as required by Section 4.2(b)(i), then the Indemnitor Parties shall be relieved of the obligation to pay damages to the extent they can show that they were materially prejudiced in the defense of the Indemnifiable Claim or in proceeding against a third party who or which would have been liable to them but for the fact of the delay, but the failure to provide such Notice of Claim promptly shall not otherwise release the Indemnitor Parties from their obligations under this Section 4.2(b)(ii).
4.3 Indemnification Procedure.
(a) Subject to Section 4.3(d), upon receiving a Notice of Claim, the Indemnitors, acting through the Grantee Administrative Agent, may participate in the investigation and defense of the Indemnifiable Claim, and may also elect to assume the investigation and defense of the Indemnifiable Claim with counsel reasonably satisfactory to the Indemnified Party, acting through the Grantor Administrative Agent; provided that the Indemnitors shall not have the right to assume such investigation and defense, and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party, if the Indemnifiable Claim involves a Claim that, in the good faith judgment of the Indemnified Party, acting through the Grantor Administrative Agent, the Grantee Administrative Agent failed or is failing to vigorously prosecute or defend. The Indemnified Party shall have the right, at its own cost and expense, to participate in the defense of any Indemnifiable Claim with counsel selected by it subject to the Indemnitor’s right to control the defense thereof (except in the circumstances described above).
(b) In order to assume the investigation and defense of an Indemnifiable Claim, the Grantee Administrative Agent must give the Grantor Administrative Agent written notice of its election within 20 days of receipt by the Grantee Administrative Agent of the Notice of Claim.
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(c) Subject to Section 4.3(d), if the Indemnitors assume the investigation and defense of an Indemnifiable Claim:
(i) the Indemnitor Parties will pay for all reasonable costs and expenses of the investigation and defense of the Indemnifiable Claim except that the Indemnitor Parties will not, so long as the Grantee Administrative Agent diligently conducts such defense, be liable to the applicable Indemnified Party for any fees of other counsel or any other expenses with respect to the defense of the Indemnifiable Claim, incurred by the Indemnified Party after the date the Indemnitor validly exercised its right to assume the investigation and defense of the Indemnifiable Claim;
(ii) the Indemnitor Parties will reimburse the Indemnified Parties for all reasonable costs and expenses incurred by the Indemnified Parties in connection with the investigation and defense of the Indemnifiable Claim prior to the date the Indemnitors, through the Grantee Administrative Agent, validly exercised its right to assume the investigation and defense of the Indemnifiable Claim; and
(iii) if the Indemnitors, acting through the Grantee Administrative Agent, thereafter fail to defend the Indemnifiable Claim within a reasonable time, the Indemnified
Parties shall be entitled to assume such defense at the Indemnitor Parties’ cost and expense and the Indemnitors shall be bound by the results obtained by the Indemnified Party with respect to the Indemnifiable Claim.
(d) Where the named parties to any Indemnifiable Claim include an Indemnified Party as well as any Indemnitor Party and the Indemnified Party determines in good faith, based on advice from legal counsel, that joint representation would be inappropriate due to the actual or potential differing interests between them or there may be one or more legal defenses available to the Indemnified Party which are different from or in addition to those available to the Indemnitor Parties, and such Indemnified Party, acting through the Grantor Administrative Agent, notifies the Grantee Administrative Agent in writing that it elects to retain separate counsel, the Indemnitors shall not have the right to assume the defense of such Indemnifiable Claim on behalf of the Indemnified Party but shall be liable to pay the reasonable fees and expenses of counsel of the Indemnified Party. In no event, however, shall the Indemnitor Parties be liable hereunder to pay the fees and disbursements of more than one counsel in any one jurisdiction acting as counsel on behalf of all Indemnified Parties. Throughout the course of any legal proceeding, to the extent there are not actual or potential conflicts between the Indemnitor Parties and any Indemnified Parties, the Indemnified Parties and the Indemnitor Parties shall reasonably cooperate with each other in connection with the conduct of the settlement or defense thereof.
(e) If an Indemnified Party undertakes the defense of the Indemnifiable Claim, then the Indemnitor Parties will not be bound by any compromise or settlement of the Indemnifiable Claim effected without the consent of the Indemnitor Parties (which consent may not be unreasonably withheld, conditioned or delayed).
(f) None of the Indemnitor Parties will be permitted to compromise and settle or to cause a compromise and settlement of a Indemnifiable Claim without the prior written consent of the applicable Indemnified Party, acting through the Grantee Administrative Agent, which consent may not be unreasonably withheld, conditioned or delayed; provided, however, that no such consent shall be required if:
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(i) the terms of the compromise and settlement require only the payment of money for which the Indemnified Party is entitled to full indemnification under these Operating Parameters and Indemnity and the Indemnitor Parties agree to timely pay such amount in full; and
(ii) the Indemnified Party is not required to admit any wrongdoing, take or refrain from taking any action, acknowledge any rights of the Person making the Indemnifiable Claim or waive any rights that the Indemnified Party may have against the Person making the Indemnifiable Claim.
(g) No Party shall be liable to pay any amount in discharge of a Claim under these Operating Parameters and Indemnity unless and until the liability in respect of which the Claim is made has become due and payable.
4.4 Nature of Release and Indemnity.
(a) The Release Obligations and the Indemnification Obligations given hereunder are freely and voluntarily given and the Parties acknowledge and represent that they have fully reviewed the terms contained herein, that they are fully informed with respect to the legal effect of the Release Obligations and the Indemnification Obligations, and that they have voluntarily chosen to accept the terms and conditions.
(b) The Release Obligations and the Indemnification Obligations shall be read liberally to give the Indemnified Parties the broadest possible protection.
4.5 Injunction. Each of Grantee and Guarantor, on its behalf and on behalf of its Affiliates and its and their respective Representatives, hereby absolutely, unconditionally and irrevocably stipulate (a) that each Grantor will suffer irreparable injury in the event that (i) the Indemnitor Parties fail to cure an Operational Default within the Cure Period, (ii) the Indemnitor Parties fail to perform under the approved Default Cure Plan, or (iii) the Grantee Administrative Agent fails to provide a Cure Notice with a Default Cure Plan within the Cure Notice Period in which case the Cure Period shall not apply (each, an “Uncured Operational Default”), as determined by the Grantor Administrative Agent in its sole and absolute discretion, acting in good faith; and (b) that, as a result of such failure, (i) each Grantor will succeed on the merits of any claim based on such Uncured Operational Default, (ii) the balance of equities between the Parties support a claim by each Grantor, and (iii) a claim initiated by each Grantor is in the public interest. Based on the foregoing, for a period of 10 years after the commencement of Mining Operations at the Mine, in the event of an Uncured Operational Default, each Grantor, acting through the Administrative Agent, upon five days’ prior written notice to the Grantee Administrative Agent, shall have the unrestricted right to file, or have filed on its behalf, an injunction requiring Grantee to cease, or the cause the cessation of, Mining Operations at the Mine. Each of Grantee and Guarantor, on its behalf and on behalf of its and their Affiliates and its and their respective Representatives, hereby absolutely, unconditionally, and irrevocably agree not to oppose such injunction filed by or on behalf of Grantee. Notwithstanding the foregoing, Grantee and Guarantor reserve the right to contest the continued existence of an Uncured Operational Default on the merits.
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ARTICLE V.
REPRESENTATIONS
Each of the Indemnitors, severally and not jointly, hereby represents to the Grantor, and the Grantor represents to the Indemnitors, as of the Effective Date that:
5.1 Existence. It is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing in the jurisdiction of its organization and has the power and authority to carry on its business as currently conducted and as contemplated to be conducted under these Operating Parameters and Indemnity, to the extent a party thereto.
5.2 Authority. It has full right, power and authority to enter into and be bound by the terms and conditions of these Operating Parameters and Indemnity, to the extent a party thereto, and to carry out their respective obligations under these Operating Parameters and Indemnity, to the extent a party thereto, without the approval or consent of any other individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or instrumentality thereof.
5.3 Enforceability. It has duly authorized these Operating Parameters and Indemnity, to the extent a party thereto, by all requisite company action. To the extent a party thereto, these Operating Parameters and Indemnity have been duly executed and delivered and constitute a the legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
5.4 Validity. The entering into these Operating Parameters and Indemnity, to the extent a party thereto, and the carrying out of their respective obligations hereunder and thereunder are not prohibited, restricted or otherwise limited by any contract, agreement or understanding entered into by them, or by which any of them is bound, with any other Person.
5.5 No Conflict. The execution, delivery and performance of these Operating Parameters and Indemnity, to the extent a party thereto, do not: (i) conflict with or result in a violation or breach of any provision of its constating documents; or (ii) violate in any material respect any Law applicable to it.
5.6 Governmental Actions. There is no Claim pending or currently threatened against it which, if adversely determined, would restrict or limit its right to enter into these Operating Parameters and Indemnity, to the extent a party thereto, or carry out its obligations under these Operating Parameters and Indemnity, to the extent a party thereto.
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ARTICLE VI.
MISCELLANEOUS
6.1 Real Property Interest. The Parties intend that the obligations of the Indemnitor Parties to conduct Mining Operations at the Mine in accordance with Mining Industry Best Practices and the Operating Parameters constitute a valuable right, shall continue during the conduct of Mining Operations at the Mine by the Indemnitor Parties, and shall constitute a presently vested interest in and a covenant running with the Mining Property which shall inure to the benefit of and be binding upon the Indemnitor Parties and each Grantor and their respective, successors and assigns. The obligations of the Indemnitor Parties to conduct Mining Operations at the Mine in accordance with Mining Industry Best Practices and the Operating Parameters shall attach to any amendments, relocations or conversions of any Mining Property, or to any renewals or extensions thereof. If the Indemnitor Parties or any successor or assignee of the Indemnitor Parties surrenders, allows to lapse or otherwise relinquishes or terminates its interest in any of the Mining Property, and reacquires a direct or indirect interest in the land or minerals covered by the former Mining Property, then from and after the date of such reacquisition such reacquired properties shall be included in the Mining Property and the obligations of the Indemnitor Parties to conduct Mining Operations at the Mine in accordance with Mining Industry Best Practices and the Operating Parameters shall apply to such interest so acquired. Indemnitor shall give written notice to the Grantor Administrative Agent within 30 days of any acquisition or reacquisition of an interest in the Mining Property. The Parties do not intend that there be any violation of the rule against perpetuities. Accordingly, any right that is subject to such rule shall be exercised within the maximum time periods permitted under applicable Law.
6.2 Registration. To the extent the Grantors are able to do so under applicable Law, the Grantors shall be entitled from time to time and at its sole cost and expense to register or record notice of its and their interest in these Operating Parameters and Indemnity against title to the Mining Property or elsewhere, and the Indemnitor Parties shall cooperate with the Grantors to effect such reasonable registrations and recordings and provide their written consent, acting reasonably, to any documents in connection therewith and do such other things, at the cost and expense of the Grantors, as soon as reasonably practicable, as are reasonably necessary to effect any such registrations or recordings.
6.3 Expenses. Except as otherwise set forth in these Operating Parameters and Indemnity, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with these Operating Parameters and Indemnity shall be paid by the Party incurring such costs and expenses.
6.4 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) when received by the addressee if mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.4):
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If to Grantors: | c/o Grantor Administrative Agent | ||
301 S. Main Street, Suite 1150 | |||
Salt Lake City, Utah 84101 | |||
Attention: General Counsel (North America) | |||
email: | USLegalNotices@barrick.com | ||
mmccarthy@barrick.com |
With a copies to: | Barrick Gold of North America Inc. | ||
310 S. Main Street, Suite 1150 | |||
Salt Lake City, Utah 84101 | |||
Attention: Michael McCarthy | |||
General Counsel (North America) | |||
email: | USLegalNotices@barrick.com | ||
mmccarthy@barrick.com | |||
If to Indemnitors: | c/o Grantee Administrative Agent | ||
Dakota Territory Resource Corporation | |||
106 Glendale Drive, Suite A | |||
Lead, South Dakota 57754 | |||
Attention: Jonathan Awde, CEO | |||
email: jawde@gold-sd.com |
6.5 Severability. If any provision of these Operating Parameters and Indemnity is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, all other provisions of these Operating Parameters and Indemnity shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a manner materially adverse to a Party.
6.6 Entire Agreement. These Operating Parameters and Indemnity are an essential element of the transactions contemplated in the Purchase Agreement; these Operating Parameters and Indemnity constitutes valuable consideration under the Purchase Agreement; and the Grantors will realize benefits and economic advantages from these Operating Parameters and Indemnity. Subject to the foregoing, these Operating Parameters and Indemnity constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein and supersedes all prior and contemporaneous representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter.
6.7 Waiver. No waiver of any provision of these Operating Parameters and Indemnity shall be of any force or effect unless such waiver is in writing, expressly stating to be a waiver of a specified provision of these Operating Parameters and Indemnity, and is signed by the Party to be bound thereby. A Party’s waiver of any breach of these Operating Parameters and Indemnity or failure to enforce any of the provisions of these Operating Parameters and Indemnity, at any time, shall not in any way limit or waive that Party’s right thereafter to enforce or compel strict compliance with these Operating Parameters and Indemnity or any portion or provision or right under these Operating Parameters and Indemnity.
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6.8 Successors and Assigns. These Operating Parameters and Indemnity shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided in Section 3.2, no Party may assign its rights or obligations hereunder without the prior written consent of the other Parties.
6.9 Beneficiaries. These Operating Parameters and Indemnity include rights and benefits for the Indemnitor Parties and the Indemnified Parties, and the Parties will exercise their respective rights and obligations under these Operating Parameters and Indemnity with due consideration for the rights and benefits of the Indemnitor Parties and the Indemnified Parties. Subject to the foregoing, these Operating Parameters and Indemnity are for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of these Operating Parameters and Indemnity.
6.10 Amendment and Modification; Waiver. These Operating Parameters and Indemnity may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto or, in the case of the Indemnitors, by the Grantee Administrative Agent. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving or, in the case of the Indemnitors, by the Grantee Administrative Agent. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from these Operating Parameters and Indemnity shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
6.11 | Governing Law; Submission to Jurisdiction. |
(a) These Operating Parameters and Indemnity shall be governed by and construed in accordance with the internal laws of the State of South Dakota without giving effect to any choice or conflict of law provision or rule (whether of the State of South Dakota or any other jurisdiction).
(b) Any Claim arising out of or based upon these Operating Parameters and Indemnity or the interpretation thereof may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Claim. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any Claim brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Claim in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Claim brought in any such court has been brought in an inconvenient forum.
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(c) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THESE OPERATING PARAMETERS AND INDEMNITY. THE JURY TRIAL WAIVER CONTAINED IN THESE OPERATING PARAMETERS AND INDEMNITY IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THESE OPERATING PARAMETERS AND INDEMNITY MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS A PARTY’S WRITTEN CONSENT TO SUCH PARTY’S WAIVER OF A JURY TRIAL.
6.12 Specific Performance. The Parties hereby agree that irreparable damage would occur in the event that any provision of these Operating Parameters and Indemnity are not performed in accordance with its specific terms or is otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the Parties acknowledge and hereby agree that in the event of any breach or threatened breach by any Party of any of its covenants or obligations set forth in these Operating Parameters and Indemnity, the other Parties shall be entitled to injunctive relief to prevent or restrain breaches or threatened breaches of these Operating Parameters and Indemnity by the other, and to specifically enforce the terms and provisions of these Operating Parameters and Indemnity to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under these Operating Parameters and Indemnity. Each of the Parties hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of these Operating Parameters and Indemnity by it, and to specifically enforce the terms and provisions of these Operating Parameters and Indemnity to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other parties under these Operating Parameters and Indemnity.
6.13 Further Assurances. The Parties shall each do, or cause to be done, any such further acts, or execute and deliver, or cause to be executed and delivered, such further documents as may be reasonably necessary for their respective performance under these Operating Parameters and Indemnity.
6.14 | Administrative Agent. |
(a) The Indemnitors hereby appoint Grantee as the Grantee Administrative Agent of the Indemnitors under these Operating Parameters and Indemnity, and each Indemnitor hereby authorizes the Grantee to act on behalf of each such Indemnitor as its Grantee Administrative Agent in accordance with the terms of these Operating Parameters and Indemnity. The Grantee hereby agrees to act as the Grantee Administrative Agent of the Indemnitors as set forth in these Operating Parameters and Indemnity. The Grantor Parties hereby acknowledge and agree that the Grantee is acting as the Grantee Administrative Agent of the Indemnitors under these Operating Parameters and Indemnity. The Indemnitors may replace the Grantee Administrative Agent upon written notice to the Grantor.
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(b) Each of Homestake and LAC Minerals hereby appoints Homestake as Grantor Administrative Agent under these Operating Parameters and Indemnity, and each of Homestake and LAC Minerals hereby authorizes Homestake to act on behalf of it as the Grantor Administrative Agent in accordance with the terms of these Operating Parameters and Indemnity. Homestake hereby agrees to act as the Grantor Administrative Agent of Homestake and LAC Minerals as set forth in these Operating Parameters and Indemnity. Each of Grantee and Guarantor hereby acknowledges and agrees that Homestake is acting as the Grantor Administrative Agent of Homestake and LAC Minerals under these Operating Parameters and Indemnity.
6.15. Benefits of Guarantor. Guarantor will realize benefits and economic advantages arising from the conduct of Mining Operations at the Mine.
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SCHEDULE I
MINE MAP
II-1
SCHEDULE III
DECLARATION OF ENVIRONMETAL DEED RESTRICTIONS
(See Attached)
III-1
EXHIBIT E
ROYALTY DEED
(See Attached)
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APN #: N/A (mineral royalty interest)
Prepared by:
Parsons Behle & Latimer
201 South Main Street
Salt Lake
City, Utah
84111
(801) 532-1234
Mail Tax Statement to: N/A
(mineral royalty interest)
Space above for County Recorder’s Use |
Pursuant to South Dakota Codified Laws 43-28-24 thru 43-28-28 inclusive: this Deed does not contain any individual’s personally identifiable information.
NET SMELTER RETURNS ROYALTY DEED
This Net Smelter Returns Royalty Deed (this “Deed”), executed to be effective as of [DATE], 2021(“Effective Date”) is from Dakota Territory Resource Corp, a Nevada corporation, the address of which is 106 Glendale Drive, Suite A, Lead, South Dakota 57754 (“Grantor”), to Homestake Mining Company of California, California corporation, the address of which is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101 (“Homestake”) and LAC Minerals (USA) LLC, a Delaware limited liability company, the address of which is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101 (“LAC Minerals” and together with Homestake the “Grantees”). Homestake shall act as the “Administrative Agent” for Homestake and LAC Minerals under this Deed. Grantor, Homestake and LAC Minerals sometimes are referred to in this Deed individually as a “Party” and collectively as the “Parties.”
RECITALS
A. Grantor owns fee property and mining claims (collectively, the “Mining Property”) located in Lawrence County, South Dakota. The Mining Property is more particularly described in Exhibit A to this Deed.
B. Pursuant to that certain Asset Purchase Agreement (the “Agreement”) made and entered into as of the Effective Date, by and among Grantor and Grantees, Grantor is required to execute, acknowledge and deliver to the Administrative Agent for the benefit of Grantees an instrument granting to Grantees a Net Smelter Returns Royalty on all gold and other minerals of any type produced from the tailings facility located on the Mining Property and from dumps, waste rock, tailings, residues or stockpiles located on the Mining Property (collectively referred to as the “Royalty Property”), from and after the Effective Date.
C. Grantor executes and delivers this Deed to the Administrative Agent for the benefit of Grantees pursuant to the terms of the Agreement.
CONVEYANCE
1. Grant of Royalty.
(a) Royalty Percentage. For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, Grantor grants, assigns, conveys and agrees to pay to the Administrative Agent for the benefit of Grantees, and their respective successors and assigns, forever, a Royalty equal to 1.0% of Net Smelter Returns (the “Royalty Percentage”), as hereinafter defined and computed, for all gold and other minerals of any type produced from the Royalty Property, from and after the Effective Date (the “Royalty”), subject to Section 1(b).
(b) No Buy Down. Grantor will not have the right to buy down all or any portion of the Royalty.
2. Representations and Warranties.
(a) Full Authority. Grantor represents and warrants that as of the date hereof it has all authority necessary for it to execute and deliver this Deed.
(b) No Encumbrances. Grantor represents and warrants that it has not taken any action by which the Royalty Property, will be subject to a lien or other encumbrance that will in any way be a lien or other encumbrance on the Royalty.
(c) Grantees’ Acceptance. Each Grantee acknowledges and agrees that this Deed is accepted by such Grantee in satisfaction of Grantor’s obligation to deliver this Deed pursuant to the Agreement.
3. Definition of Net Smelter Returns.
(a) For Gold Bullion. “Net Smelter Returns,” for gold produced from the Royalty Property, and refined by or for Grantor to a form that meets good delivery standards in the London Bullion Market or comparable terminal market (“Gold Bullion”), will be determined by multiplying (i) the gross number of troy ounces of Gold Bullion produced from the Royalty Property, and returned to or credited to Grantor or purchased and paid for by a smelter, refiner, processor, purchaser or other recipient of such bullion during a calendar quarter, by (ii) the arithmetic average of the London Bullion Market Association P.M. Fixing Price (in United States dollars) reported on its website for Gold Bullion for the calendar quarter (or should such quotation cease, another similar quotation acceptable to the Administrative Agent, acting reasonably) calculated by summing the quoted prices reported for each day of the calendar quarter and dividing the sum by the number of days for which such prices were reported, and (iii) by deducting from the product of (i) times (ii), the Allowable Deductions permitted in Section 4(a) below.
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(b) For Other Products. For gold and other minerals of any type produced from the Royalty Property, and sold in a crude or intermediate form other than as Gold Bullion (“Other Products”), Net Smelter Returns will be equal to (i) the actual sales price for the minerals contained in such Other Products received by Grantor from a smelter, refiner, processor, purchaser or other recipient of such products during a calendar quarter, less (ii) the Allowable Deductions permitted in Section 4(b) below.
(c) Affiliate Transactions. If Other Products are delivered in kind or sold to an entity which, under the broadest definition, directly or indirectly controls, is controlled by, or is under common control with Grantor (an “Affiliate”), and are sold by such Affiliate with or without further processing, Net Smelter Returns will be calculated based on the value of Gold Bullion sold by or credited or returned to the Affiliate (calculated pursuant to Section 3(a)), or the proceeds actually received by such Affiliate in an arm's length transaction for sale of Other Products, less Allowable Deductions actually incurred by the Affiliate, and the Gold Bullion or Other Products will be deemed to have been sold by Grantor, the proceeds will be deemed to have been received by Grantor and the Allowable Deductions will be deemed to have been made by Grantor for purposes of calculating Net Smelter Returns, in each case as if Grantor had sold (or received or was credited with) such Gold Bullion or Other Products in an arm’s-length transaction.
(d) Insurance Proceeds. In the event Grantor receives insurance proceeds for gold in Gold Bullion or for gold or other minerals in Other Products lost or damaged, Net Smelter Returns will equal any such insurance proceeds that are received by Grantor for such loss.
4. Allowable Deductions.
(a) For Gold Bullion. For gold produced and sold as Gold Bullion, “Allowable Deductions” means, to the extent actually incurred:
(i) charges imposed by a smelter or refinery for refining Gold Bullion from doré or concentrates produced in Grantor’s, or a third party’s, mill or other processing plant; however, charges incurred by Grantor for processing raw or crushed ore or other preliminary products in Grantor’s mill or other processing plant shall not be subtracted in determining Net Smelter Returns;
(ii) penalty substance, assaying, and sampling charges imposed on or incurred by Grantor for refining Gold Bullion contained in such production;
(iii) charges and costs, if any, for transportation and insurance of doré or concentrates produced in Grantor’s mill or other processing plant to places where such doré or concentrates are smelted, refined and/or sold or otherwise disposed of; and
(iv) all taxes paid on production of Gold Bullion, except income tax, including but not limited to, production, severance, sales and privilege taxes and all local, state and federal taxes that are based on the production of Gold Bullion.
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(b) For Other Products. For gold and other minerals of any type produced and sold in Other Products, “Allowable Deductions” means, to the extent actually incurred:
(i) charges imposed by the smelter, refiner or other processor for smelting, refining or processing gold and other minerals of any type contained in Other Products, but excluding any and all charges and costs related to Grantor’s, or a third party’s, mill or other processing plant constructed for the purpose of milling or processing Other Products;
(ii) penalty substance, assaying, and sampling charges imposed by a smelter, refiner or other processor for smelting, refining, or processing gold and other minerals of any type contained in Other Products, but excluding any and all charges and costs of or related to Grantor’s mill or other processing plant constructed for the purpose of milling or processing Other Products;
(iii) charges and costs, if any, for transportation and insurance of the gold and other minerals of any type contained in Other Products and the beneficiated products thereof from Grantor’s mill or other processing plant to places where such Other Products or the beneficiated products thereof are smelted, refined and/or sold or otherwise disposed of; and
(iv) all taxes paid on production of the gold and other minerals of any type contained in Other Products, except income tax, including but not limited to, production, severance, sales and privilege taxes and all local, state and federal taxes that are based on the production of gold contained in Other Products.
(c) Custom Facilities. In the event Grantor carries out smelting, refining or other processing operations to produce Gold Bullion or gold and other minerals of any type contained in Other Products in facilities owned or controlled, in whole or in part, by Grantor, which facilities were not constructed for the sole purpose of smelting, refining or processing crude or intermediate products produced from the Royalty Property, then charges, costs and penalties for such smelting, refining or processing shall mean the amount Grantor would have incurred as “Allowable Deductions” under Section 4(a)(i) or Section 4(b)(i) above if such smelting, refining or other processing operations were carried out at facilities not owned or controlled by Grantor, but in no event will such Allowable Deductions be greater than actual costs incurred by Grantor with respect to such smelting, refining or other processing.
5. Calculating and Paying Royalty; Reporting.
(a) Calculation. The dollar amount of the Royalties due to Grantees for a calendar quarter will be the product of the sum of the Net Smelter Returns for Gold Bullion plus the Net Smelter Returns for the gold and other minerals of any type contained in Other Products for such quarter multiplied by the Royalty Percentage.
(b) Payment. Payment of Royalties for a calendar quarter will be due by the last day of the month following the end of each calendar quarter in which Gold Bullion or Other Products containing gold and other minerals of any type are sold or returned or credited to Grantor (the “Payment Date”). If, for any reason, all information necessary to calculate and make a payment on the Payment Date is not available, Grantor will make a provisional payment on the Payment Date based on the available information and provide a final reconciliation for such payment promptly after all needed information becomes available to Grantor. In the event Grantees have been underpaid in any provisional payment, Grantor will promptly pay the difference to the Administrative Agent for the benefit of Grantees in cash or other readily available funds and if Grantees have been overpaid in any provisional payment, the Administrative Agent on behalf of Grantees will promptly pay to Grantor the difference in cash or other readily available funds. All payments of the Royalties will be made by Grantor to the Administrative Agent for the benefit of Grantees, and will be paid free of any and all withholding taxes. The Administrative Agent shall be responsible for the allocation of Royalty payments between Grantees.
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(c) Detailed Statement. All payments of Royalty will be accompanied by a detailed statement explaining the calculation thereof together with any available settlement sheets received by Grantor from the smelter, refiner or other purchaser of Gold Bullion or gold and other minerals of any type contained in Other Products.
6. Other Provisions Related to Payment.
(a) Hedging Transactions. All profits and losses resulting from Grantor’s engaging in any commodity futures trading, option trading, or metals trading, or any combination thereof, and any other hedging transactions including trading transactions designed to avoid losses and obtain possible gains due to metal price fluctuations are specifically excluded from calculation of Net Smelter Returns and will be solely for Grantor’s account.
(b) Commingling. Grantor will have the right to commingle, either underground, at the surface, in stockpiles or at a mill, autoclave, roaster or other processing facility used by Grantor, ore or concentrates, minerals and other material mined and removed from the Royalty Property with ore, concentrates, minerals and other material mined and removed from other property. Before commingling, the average grade of the commingled materials and other measures as are appropriate will first be calculated by Grantor from representative samples, and the weight of such materials will be determined before commingling using practices which will be as good as or better than prevailing industry practices. In obtaining representative samples, calculating the average grade of the ore and average recovery percentages, the procedures used will be as good as or better than prevailing industry practices. Representative samples of the materials to be commingled will be retained by Grantor and assays (including moisture and penalty substances) and other appropriate analyses of these samples shall be retained for a reasonable amount of time, but not less than 18 months, after receipt by the Administrative Agent of the applicable royalty payment.
(c) No Obligation to Mine or Process. Subject to the Agreement, Grantor will have sole discretion to determine the extent of its operations on or for the benefit of the Royalty Property and the time or the times for development, mining, stockpiling, processing and selling products produced from the Royalty Property and the suspension or resumption of any operation with respect thereto. Grantor will have no obligation to Grantees (in its capacity as the holder of this royalty) or otherwise to mine, explore or to conduct any other operation on any of the Royalty Property.
(d) Lesser Interest. The Royalty will only be paid on the basis of Grantor’s proportionate share of production of gold and other minerals of any type from the Royalty Property as the Royalty Property exists as of the Effective Date of this Deed. By way of illustration, if a portion of the Royalty Property, as of the Effective Date, entitle Grantor to only an undivided 75% interest in the gold and other minerals of any type produced from such portion of the Royalty Property, then the Royalty will be paid based only on 75% of the production of gold and other minerals of any type from such portion of the Royalty Property.
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7. Books, Records, Inspections and Confidentiality.
(a) Inspection of Books and Records. The Administrative Agent will have the right, upon reasonable notice to Grantor, to inspect and copy all books, records, technical data, information and materials (the “Data”) pertaining to calculation of Royalty payments, including those with respect to commingling; provided that such inspections will not unreasonably interfere with Grantor’s operations. Grantor makes no representations or warranties to the Administrative Agent or Grantees concerning any of the Data except that the Data will be prepared in good faith and the Administrative Agent and Grantees agree that if it elects to rely on any such Data or any other information made available by Grantor, it does so at its sole risk, except in the event of bad faith or fraud.
(b) Audit. The Administrative Agent will have the right to audit the books and records pertaining to production from the Royalty Property and the calculation of the Royalty and to contest payments of Royalty for a period of 24 months following receipt by the Administrative Agent for the benefit of Grantees of each Royalty payment. Each Royalty payment will be deemed conclusively correct unless the Administrative Agent objects to it in writing within 24 months after receipt of such payment, setting forth in detail the basis for the Administrative Agent’s objection. If it is finally determined, through agreement by the Parties or following completion of the dispute as set out in Section 7(c) below, that Grantees have been underpaid in any such payment, then Grantor will promptly pay to the Administrative Agent for the benefit of Grantees the underpaid amount. In addition, if it is finally determined, through agreement by the Parties or following completion of the dispute as set out in Section 7(c) below, that Royalty payments for any calendar year are underpaid by more than 5%, then Grantor will reimburse the Administrative Agent for its reasonable costs incurred in auditing the books and records of Grantor.
(c) Dispute Resolution.
(i) If the Administrative Agent objects to a Royalty payment in a timely manner as set out in Section 7(b) above, then the Parties will meet within 30 days of Grantor’s receipt of the Administrative Agent’s objection and, acting in good faith, seek to resolve the dispute. If the Parties fail to resolve the dispute within 30 days of the initial meeting, the dispute will be referred to the respective chief executive officers (or persons holding analogous positions) of the Administrative Agent and Grantor who will, in good faith, attempt to resolve the dispute within 21 days of such referral. If the chief executive officers of the Administrative Agent and Grantor are unable to resolve the matter within such 21-day period, then either the Administrative Agent or Grantor may submit the dispute to a court as provided in Section (c)(iii) below.
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(ii) If the Administrative Agent objects to the performance by Grantor of any obligation arising under this Deed or of its interpretation, then the Administrative Agent and Grantor will meet within 30 days of the receipt by the other the Administrative Agent or Grantor, as applicable, of the objecting Party’s objection and, acting in good faith, seek to resolve the dispute. If the Administrative Agent and Grantor fail to resolve the dispute within 30 days of the initial meeting, the dispute will be referred to the respective chief executive officers (or persons holding analogous positions) of the Administrative Agent and Grantor who will, in good faith, attempt to resolve the dispute within 21 days of such referral. If the chief executive officers of the Administrative Agent and Grantor are unable to resolve the matter within such 21-day period, then either Party may submit the dispute to a court as provided in Section (c)(iii) below
(iii) Any dispute arising out of or based upon this Deed or a Royalty payment or may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts. Service of process, summons, notice or other document delivered by mail to such Party’s address set forth herein shall be effective service of process for dispute brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any dispute in such courts and irrevocably waive and agree not to plead or claim in any such court that any such dispute brought in any such court has been brought in an inconvenient forum.
(iv) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT. THE JURY TRIAL WAIVER CONTAINED IN THIS DEED IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THIS DEED MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS A PARTY’S WRITTEN CONSENT TO SUCH PARTY’S WAIVER OF A JURY TRIAL.
(v) Except as otherwise specified herein, in the event of a dispute arising under this Deed is submitted to court, the prevailing Party will be entitled to payment of its reasonable attorneys’ fees and costs in litigating the dispute.
(d) Inspection of Facilities. The Administrative Agent will have the right, upon reasonable notice, to inspect the facilities associated with the Royalty Property to the extent necessary to confirm Grantor’s proper performance of its obligations in this Deed. Such inspection will be at the sole risk of the Administrative Agent, and the Administrative Agent will indemnify Grantor from any liability caused by the Administrative Agent's exercise of inspection rights, unless such liability is caused by the gross negligence or intentional acts of Grantor or its employees or agents.
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(e) Confidentiality.
(i) No Party shall, without the express written consent of the other Parties, which consent may be withheld for any purpose, disclose any non-public information generated or received under this Deed relating to the calculation of Net Smelter Returns or Grantor’s operations on the Royalty Property or other property (“Confidential Information”), other than to employees, agents or consultants of the receiving Party in respect of the administration or enforcement of its rights hereunder and who agree to be bound by the confidentiality provisions of this Deed (the breach of which shall be deemed to be a breach by the Party).
(ii) Any Party may disclose Confidential Information received from another Party (A) to a prospective lender to whom or to which the Party may, in good faith, grant a security interest in its interest in the Royalty Property, or (B) to a prospective purchaser of all or part of a Party’s interest in the Royalty or the Royalty Property, but only, in each case, if the prospective recipient of Confidential Information has executed a confidentiality agreement that includes confidentiality provisions substantially similar to this subsection.
(iii) Confidential Information may also be disclosed if such disclosure is required for compliance with applicable laws, rules, regulations or orders of any governmental agency or stock exchange having jurisdiction over a Party, provided, however, that the notice shall have been given to the non-disclosing Party or Parties of such disclosure as far in advance of such disclosure as is reasonably practicable and the disclosing Party or Parties ensures that only such information as is necessary to comply with the obligations is disclosed.
8. | General Provisions. |
(a) | Transfers. |
(i) Grantor may freely transfer all or any portion of its interest in the Royalty Property so long as such transfer is expressly made subject to the Royalty. If Grantor transfers all or any portion of its interest in the Royalty Property, Grantor will obtain from the transferee a written acknowledgement and assumption of the obligations of Grantor under this Deed with respect to the interest so transferred, and promptly provide evidence of such acknowledgement and assumption to the Administrative Agent. Upon obtaining and delivering such acknowledgment and assumption to the Administrative Agent, Grantor will thereupon be relieved of all liability for payment of the Royalty with respect to the Royalty Property transferred for any Royalty that may thereafter arise with respect to such transferred interest, except with respect to any Royalty payments made prior to the date of transfer, which will continue to be governed by this Deed.
(ii) In the event Grantor desires to mortgage, pledge, encumber or otherwise create a security interest in all or any portion of the products produced from the Royalty Property, Grantor will cause each agreement, indenture, bond, deed of trust, filing, application or other instrument that creates or purports to create a lien, mortgage, security interest or other charge secured by any interest in any of the Royalty Property or such products to include an express agreement and acknowledgement by the parties to such instrument, in form and substance reasonably satisfactory to the Administrative Agent, that the Royalty is (A) senior in right of payment and collection from Revenues to any and all obligations created thereby in respect of any of the Royalty Property or such products, and (B) that the Royalty is an independent interest in the Royalty Property and is not subject to foreclosure pursuant to such mortgage, encumbrance or other form of security interest.
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(iii) Each Grantee may freely transfer, mortgage, pledge, encumber or otherwise create a security interest in all or any portion of the Royalty, provided that Grantor will have no obligation to make payments of the Royalty to a transferee until receipt of written notice of the transfer and a copy of the transferring document. Grantor shall have no right of first offer, right of first refusal, or other similar right in respect of any transfer by a Grantee of its interest in this Deed or the Royalty created hereunder.
(b) No Partnership or Special Relationship. The relationship of Grantor and each Grantee with respect to the Royalty will not be construed to create, expressly or by implication, a joint venture, mining partnership, commercial partnership, or other partnership relationship.
(c) Certain Definitions. As used in the Deed, the term “Grantee” and “Grantees” will include all of the successors-in-interest to such Grantee or the Grantees, and the term “Grantor” will include all of Grantor’s successors-in-interest.
(d) Tailings and Other Waste Material. All tailings, residues, waste rock, spoiled leach materials, and other materials resulting from Grantor’s operations and activities with respect to the Royalty Property shall be the sole property of Grantor but if Grantor processes such materials in the future, all gold and other minerals produced from such materials will be subject to the Royalty and the terms of this Deed.
(e) Property Interest. This Deed shall constitute a security agreement for purposes of the Uniform Commercial Code. In addition, Grantor and Grantees intend that the Royalty will be perpetual and will constitute a presently vested interest in and a covenant running with the Royalty Property which will inure to the benefit of and be binding upon the Parties and their respective successors and assigns so long as Grantor or any successor or assign of Grantor holds any rights or interests in the Royalty Property. The Royalty shall attach to any amendments, relocations or conversions of any mining claim, license, or lease, concession, permit, patent or other tenure comprising the Royalty Property or the Mining Property on which the Royalty Property is located, or to any renewals or extensions thereof. If Grantor or any affiliate or successor or assignee of Grantor surrenders, allows to lapse or otherwise relinquishes or terminates its interest in any of the Royalty Property or the Mining Property on which the Royalty Property is located, and reacquires a direct or indirect interest in the land or minerals covered by the former Royalty Property or Mining Property on which the Royalty Property is located, then from and after the date of such reacquisition the Royalty will apply to the Royalty Property so affected. Grantor will give written Notice to the Administrative Agent within 30 days of any such acquisition or reacquisition. The Parties do not intend that there be any violation of the rule against perpetuities. Accordingly, any right that is subject to such rule shall be exercised within the maximum time periods permitted under applicable law.
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(f) Administrative Agent. Each of Homestake and LAC Minerals hereby appoints Homestake as its Administrative Agent under this Deed, and each of Homestake and LAC Minerals hereby authorizes Homestake to act on behalf of it as its Administrative Agent in accordance with the terms of this Deed. Homestake hereby agrees to act as the Administrative Agent of Homestake and LAC Minerals as set forth in this Deed. Buyer hereby acknowledges and agrees that Homestake is acting as the Administrative Agent of Homestake and LAC Minerals under this Deed.
(g) Notices. Any notice, demand or other communication under this Deed (“Notice”) required or permitted to be given or made under this Deed will be in writing and shall be given to a Party at the address below (i) by courier or recognized overnight delivery service, or (ii) by registered or certified mail, return receipt requested. All Notices shall be effective and will be deemed delivered (A) if by courier or recognized overnight delivery service on the date of delivery, (B) if solely by mail on the day delivered as shown on the actual receipt. A Party may change its address for purposes of Notices from time-to-time by Notice to the other Party.
If to Grantor:
Dakota Territory Resource Corporation
106 Glendale Drive, Suite A
Lead, South Dakota 57754
If to Grantees:
c/o Administrative Agent
301 S. Main Street, Suite 1150
Salt Lake City, Utah 84101
Attn: Michael McCarthy, General Counsel (North America)
email: USLegalNotices@barrick.com
mmccarthy@barrick.com
With a copy to:
Barrick Gold of North America Inc.
310 S. Main Street, Suite 1150
Salt Lake City, Utah 84101
Attn: Michael McCarthy, General Counsel (North America)
email: USLegalNotices@barrick.com
mmccarthy@barrick.com
(h) Section Headings. The section headings contained in this Deed are inserted for convenience only and do not affect in any way the meaning or interpretation of this Deed.
(i) Amendment. No amendment of any provision of this Deed will be valid with respect to any Party unless the same shall be in writing and signed by each Party. No waiver by any Party of any default or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default or covenant or affect in any way any rights arising by virtue of any prior or subsequent occurrence.
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(j) Invalidity. If any term or provision of this Deed is invalid or unenforceable in any situation in any jurisdiction it will not affect the validity or enforceability of the remaining terms and provisions.
(k) Governing Law. This Deed will be governed by and construed in accordance with the laws of the State of South Dakota without giving effect to any choice or conflicts of law provision or rule (whether of the State of South Dakota or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of South Dakota.
(l) Interpretation. The Parties have participated jointly in the negotiation and drafting of this Deed. In the event an ambiguity or question of intent or interpretation arises, this Deed will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring either Party by virtue of the authorship of any of the provisions of this Deed.
(m) Counting. If the final day of any period or any date of performance under this Deed falls on a Saturday, Sunday or legal holiday in South Dakota, then the final day of the period or the date of performance will be extended to the next day that is not a Saturday, Sunday or legal holiday in South Dakota. For purposes of computing the time for performance of any obligation hereunder, however, Saturday, Sundays and legal holidays will be included.
[Signature Page Follows]
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Exempt from Transfer Fee, Mineral Royalty Interest only.
Executed by Grantor and Grantees to be effective as of the Effective Date.
GRANTOR: | |
Dakota Territory Resource Corp, a Nevada corporation | |
By: |
Name: | |
Title: |
GRANTEES: | |
Homestake Mining Company of California, a California corporation |
By: | ||
Name: | ||
Title: |
LAC Minerals (USA) LLC, a Delaware limited liability company |
By: | ||
Name: | ||
Title: |
State of ) |
) ss. |
County of ) |
This instrument was acknowledged before me on __________ ___, 20[__], by [____________] as [________________] of Dakota Territory Resource Corp
Notary Public in and for the State of |
Residing at: |
Commission Expires: |
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State of ) |
) ss. |
County of ) |
This instrument was acknowledged before me on __________ ___, 20[__], by [________________] as [____________] of Homestake Mining Company of California.
Notary Public in and for the State of Utah |
Residing at: |
Commission Expires: |
State of ) |
) ss. |
County of ) |
This instrument was acknowledged before me on __________ ___, 20[__], by [________________] as [____________] of LAC Minerals (USA) LLC.
Notary Public in and for the State of Utah |
Residing at: |
Commission Expires: |
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EXHIBIT A
To
Net Smelter Returns Royalty Deed
Properties, Property Agreements and Royalties
(All Properties are located within T5N, R2E, B.H.M., Lawrence County, South Dakota)
Mineral Properties
Owned by LAC Minerals:
Enterprise patented lode mining claim, M.S. 407, located in Sections 10 and 15
Surprise patented lode mining claim, M.S. 408, located in Sections 10 and 15
Carbonate patented lode mining claim, M.S. 417, located in Section 15
Jay Gould patented lode mining claim, M.S. 425, located in Section 10
Garfield patented lode mining claim, M.S. 426, located in Section 10
Far West patented lode mining claim, M.S. 428, located in Sections 10 and 15
Katie patented lode mining claim, M.S. 437, located in Section 10
Arthur patented lode mining claim, M.S. 438, located in Section 10
Hartshorn patented lode mining claim, M.S. 440, located in Sections 10 and 15
Minnie patented lode mining claim, M.S. 441, located in Section 15
Ultimo patented lode mining claim, M.S. 442A, located in Section 15
Tidiout patented lode mining claim, M.S. 443, located in Section 15
Utica patented lode mining claim, M.S. 447A, located in Section 15
Antietam patented lode mining claim, M.S. 448A, located in Section 15
Blue Bird patented lode mining claim, M.S. 449, located in Section 15
Carbonate Fraction #1 patented lode mining claim, M.S. 450, located in Section 15
Carbonate Fraction #2 patented lode mining claim, M.S. 451, located in Section 15
Mutual patented lode mining claim, M.S. 465, located in Section 15
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Washington patented lode mining claim, M.S. 466, located in Section 15
May Queen patented lode mining claim, M.S. 473, located in Section 15
Hercules patented lode mining claim, M.S. 474, located in Section 15
Adelphi patented lode mining claim, M.S. 489, located in Section 15
Spanish patented lode mining claim, M.S. 679, located in Section 15
Richmond patented lode mining claim, M.S. 680, located in Section 15
Brooklyn patented lode mining claim, M.S. 874, located in Section 15
J.M., Todd, Earle, Minnie C, Lyda B, Sister, Arthur L, Cass, Newell, Calvin P, Emma, Virginia, Juliett, Donald W, Helen, Atwood, Little Bonanze, Ella, Ralph K patented lode mining claims, M.S. 977, located in Sections 22, 23, 26 and 27
Cloride Fr., Calkins, Logan, Anis patented lode mining claim, M.S. 1022, located in Section 15
Rattler and Gilroy patented lode mining claim, M.S. 1043, located in Sections 10 and 15
Nankipoo, Delaunay patented lode mining claim, M.S. 1278, located in Section 15
Aliance, Sucker, Little Ellen, Black Bird, Golden Eagle No. 2, Rubicon, Rubicon No. 2, Rubicon No. 4, Dakota, Darboy, Havana No. 1, Havana No. 3, Porto Rico No. 2 patented lode mining claims, M.S. 1376, located in Sections 10, 11, 14 and 15
Independent, Independent No. 1, Republick patented lode mining claims, M.S. 1398, located in Section 15
Joplin No. 1, Joplin No. 2, Joplin No. 3, Julia-Etta, Magnetic patented lode mining claims, M.S. 1436, located in Sections 15 and 22
Crest, Samoa, Co-moa, Sylvanite No. 1, Sylvanite No. 2, Grove, Volt, Seven-B, Storm King, Vigor patented lode mining claims, M.S. 1440, located in Sections 15, 16, 21 and 22
Cashier, LaPlata patented lode mining claims, M.S. 1469, located in Section 15
Maryland, Baltimore, Maverick, Badger, North Side Fraction patented lode mining claims, M.S. 1529, located in Sections 15 and 16
Lola patented lode mining claim, M.S. 1569, located in Section 15
St. Cloud No. 5, Zelpha Mable, Josephine, St. Cloud No. 1, St. Cloud No. 3, Comstock, Victor Fraction #3, Grand Deposit No. 2, Tartar, Red Cloud, Red Cloud Frac., Valley Frac. patented lode mining claims, M.S. 1655, located in Sections 15 and 22
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Edmonia patented lode mining claim, M.S. 1769, located in Section 14
Mars No. 1 patented lode mining claim, M.S. 1851, located in Section 15
Legal Tender, Diamond Point, Joe Craig, Gremmel No. 1, Cotton Tail Frac. patented lode mining claims, M.S. 1872, located in Section 22
Dante, Creston, Morning Glory, Vindicator patented lode mining claims, M.S. 1910, located in Section 23
Bison, Trent patented lode mining claims, M.S. 2033, located in Sections 10 and 15
Govt. Lots 3, 9, 10, 12, 13, located in Section 15
Tracts 0102-A, 0102-B, 0103-B, located in Section 15
Govt. Lot 1, 2, 4 and 5 located in Section 22
Govt. Lots 9 and 10, located in Section 23
Tract 0103-A, located in Section 23
Owned by Homestake:
Yankee Boy, Yankee Boy No. 3, Yankee Boy No. 4, Alliance No. 2, Little Bonanza No. 2, Magna Charta and General Joe Hooker patented lode mining claims, M.S. 1406, located in Section 14
Tract 1 of M.S. 1829, as shown on Plat Document Number 2014-1022, located in Sections 22 and 23
Los Angeles No. 1, Los Angeles No. 2 and Los Angeles No. 3 patented lode mining claims, M.S. 1617, located in Section 23
Stella No. 3, Stella No. 5, Margarite No. 6 and Margarite No. 7, patented lode mining claims, M.S. 1862, located in Sections 23 and 26
Govt. Lot 10, located in Section 11
Govt. Lot 12, located in Section 13
Govt. Lots 2, 3, 4, 7, 8, 9 and 10, located in Section 14
Govt. Lots 1, 2, 3, 4, 5, 6, 7 and 8, located in Section 23
Govt. Lots 12, 13 and 14, located in Section 24
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Owned by Homestake – Minerals Only:
Old Reliable patented lode mining claim, M.S. 348, located in Section 14
Dakota, Granite, Columbia and Union patented lode mining claims, M.S. 1092, located in Sections 13, 14 and 23
White House, Congress, China Fraction, Japan Fraction patented lode mining claims, M.S. 1247, Sections 13 and 14
Arthur No. 1, Little Hill, Little Hill No. 2 patented lode mining claims, M.S. 1406, located in Section 14
Bessie, Cross No. 1, Dixie, Geneva, Hattie, Tan patented lode mining claims, M.S. 1822, located in Section 14
Owned by LAC Minerals – Unpatented Lode Mining Claims:
L&O No. 11 BLM serial No. MMC 74914 Located in Section 15
NJB 72 BLM serial No. MMC 165019 Located in Section 15
Leased Mineral Rights
Rubicon, Cleveland, Lizzie Johnson, Standard and Grayback patented lode mining claims, M.S. 1382, located in Section 23, which claims are leased by LAC pursuant to a Lease Agreement dated November 15, 1984 between James E. Peterson and Arlene Peterson, husband and wife, as lessors, and St. Joe American Corporation, as lessee, a short form of which is recorded in Lawrence County, South Dakota as document number 84-3814 (the “Peterson Lease”).
Property Agreements
1. The Peterson Lease.
Material Contracts
1. | Restated Joint Venture Agreement dated December 2, 1988 between Viable Resources, Inc. and Bond Gold Richmond Hill Inc., and all judicial orders, decisions and opinions relating thereto, including without limitation Order Following Court Trial in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); Judgment in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); and opinion in Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012). |
2. | Easement Agreement dated February 22, 1998 between Timothy Morton and Shirley |
1 This claim is currently listed in BLM records as owned by St. Joe Richmond Hill.
2 This claim is currently listed in BLM records as owned by Bond Gold Richmond.
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Morton as grantors and LAC Minerals (USA) Inc. as grantee.
3. | Settlement Agreement dated June 15, 2000 among Scott L. Prentice and Jeanne L. Prentice, LAC Minerals (USA) Inc. and Todd Duex, and Order related thereto in the matter of Scott L. Prentice et al. v. LAC Minerals (USA) Inc., Civ. No. 99-5083-KES (D. S.D. June 15, 2000). |
4. | Deed, Grant of Easements and Right of First Refusal dated April 18, 2003 from Homestake Mining Company of California to Donald F. Hander and Karen Hander, as modified by Relinquishment and Release of First Right to Purchase dated November 2, 2007 from Maitland Partners, L.L.C. to Homestake Mining Company of California. |
5. | All instruments and documents relating to the Properties, or any of them, contained in the records of the Lawrence County Register of Deeds Office or in the files of the United States Bureau of Land Management or in the files of the South Dakota Department of Environment & Natural Resources, or in any other public records, to which LAC or Homestake is a party or the successor to a party. |
6. | Pursuant to the Exploration Lease and Purchase Option Agreement dated June 18, 2019 (the “Exploration and Option Agreement”), among Wharf Resources (U.S.A.) Inc, (“Coeur”), Coeur Mining Inc., Homestake and LAC Minerals, which Exploration and Option Agreement terminated on September 17, 2021, Coeur has certain access rights to the Mining Property in order to perform Coeur Reclamation Obligations, including Post-Termination Reclamation Obligations (each as defined in the Exploration and Option Agreement. |
Documents creating Royalties
1. | The Peterson Lease. |
2. | Mining Deed dated May 24, 1968 from Fillmore and Company, W. O. Fillmore and Lillian G. Fillmore, as grantors, to Congo Uranium Company, as grantee, recorded in Lawrence County, South Dakota as document number 84-1176. |
3. | Warranty Deed dated June 2, 1976 from Iwalana L. Gali (fka Iwalana L. Aye), as grantor, to Homestake Mining Company, as grantee, recorded in Lawrence County, South Dakota as document number 82-5846. |
4. | Grant, Bargain and Sale Deed dated April 11, 2014 from Sharlene J. Hoffman, trustee, Earl D. Bohlen and Helen L. Bohlen, as grantors, to Homestake Mining Company of California, as grantee, recorded in Lawrence County, South Dakota as document number 2014-01773. |
[End]
A-5
EXHIBIT F
SELLER CLOSING CERTIFICATE
HOMESTAKE MINING COMPANY OF CALIFORNIA
SELLER’S CLOSING CERTIFICATE
The undersigned, a duly authorized officer of [Homestake Mining Company of California a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company] (“Seller”), does hereby certify pursuant to Section 4(a)(v) of that certain Asset Purchase Agreement (the “Agreement”) dated [__________], 20__ by and among Seller and the individuals whose names are listed on the signature page thereto that:
1. Each of the Seller's representations and warranties set forth in Section 5 of the Agreement are true and correct in all material respects at and as of the Closing Date (as defined in the Agreement).
2. The Seller has performed and complied, in all material respects, with all of its covenants set forth in the Agreement through the Closing (as defined in the Agreement).
3. No action, suit, or proceeding is pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by the Agreement, (B) cause any of the transactions contemplated by the Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge is in effect), or (C) adversely affect the right of the Seller to own or dispose of the property as contemplated by this Agreement and the other agreements contemplated thereby.
Dated this [__] day of [_________], 20[__]
[Homestake Mining Company of California, a California corporation][LAC Minerals (USA) LLC, a Delaware limited liability company]
By: | ||
Name: | ||
Title: |
F-1
EXHIBIT G
PURCHASER CLOSING CERTIFICATE
DAKOTA TERRITORY RESOURCE CORPORATION
BUYER’S CLOSING CERTIFICATE
The undersigned, a duly authorized officer of Dakota Territory Resource Corporation (“Buyer”), does hereby certify pursuant to Section 4(b)(vii) of that certain Asset Purchase Agreement (the “Agreement”) dated [__________], 20[__] by and among Buyer and the individuals whose names are listed on the signature page thereto that:
1. Each of the Buyer’s representations and warranties set forth in Section 6 of the
Agreement are true and correct in all material respects at and as of the Closing Date (as defined in the Agreement).
2. The Buyer has performed and complied, in all material respects, with all of its covenants set forth in the Agreement through the Closing (as defined in the Agreement).
3. No action, suit, or proceeding is pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by the Agreement, (B) cause any of the transactions contemplated by the Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge is in effect), or (C) adversely affect the right of the Buyer to purchase the property as contemplated by this Agreement and the other agreements contemplated thereby.
Dated this [__] day of [___________], 20[__]
Dakota Territory Resource Corporation, a Nevada corporation
By: | ||
Name: | ||
Title: |
G-1
EXHIBIT B
LEGAL DESCRIPTION
Properties, Property Agreements and Royalties
(All Properties are located within T5N, R2E, B.H.M., Lawrence County, South Dakota)
Mineral Properties
Owned by LAC Minerals:
Enterprise patented lode mining claim, M.S. 407, located in Sections 10 and 15
Surprise patented lode mining claim, M.S. 408, located in Sections 10 and 15
Carbonate patented lode mining claim, M.S. 417, located in Section 15
Jay Gould patented lode mining claim, M.S. 425, located in Section 10
Garfield patented lode mining claim, M.S. 426, located in Section 10
Far West patented lode mining claim, M.S. 428, located in Sections 10 and 15
Katie patented lode mining claim, M.S. 437, located in Section 10
Arthur patented lode mining claim, M.S. 438, located in Section 10
Hartshorn patented lode mining claim, M.S. 440, located in Sections 10 and 15
Minnie patented lode mining claim, M.S. 441, located in Section 15
Ultimo patented lode mining claim, M.S. 442A, located in Section 15
Tidiout patented lode mining claim, M.S. 443, located in Section 15
Utica patented lode mining claim, M.S. 447A, located in Section 15
Antietam patented lode mining claim, M.S. 448A, located in Section 15
Blue Bird patented lode mining claim, M.S. 449, located in Section 15
Carbonate Fraction #1 patented lode mining claim, M.S. 450, located in Section 15
Carbonate Fraction #2 patented lode mining claim, M.S. 451, located in Section 15
Mutual patented lode mining claim, M.S. 465, located in Section 15
Washington patented lode mining claim, M.S. 466, located in Section 15
May Queen patented lode mining claim, M.S. 473, located in Section 15
Hercules patented lode mining claim, M.S. 474, located in Section 15
Adelphi patented lode mining claim, M.S. 489, located in Section 15
Spanish patented lode mining claim, M.S. 679, located in Section 15
Richmond patented lode mining claim, M.S. 680, located in Section 15
Brooklyn patented lode mining claim, M.S. 874, located in Section 15
J.M., Todd, Earle, Minnie C, Lyda B, Sister, Arthur L, Cass, Newell, Calvin P, Emma, Virginia, Juliett, Donald W, Helen, Atwood, Little Bonanze, Ella, Ralph K patented lode mining claims, M.S. 977, located in Sections 22, 23, 26 and 27
Cloride Fr., Calkins, Logan, Anis patented lode mining claim, M.S. 1022, located in Section 15
Rattler and Gilroy patented lode mining claim, M.S. 1043, located in Sections 10 and 15
Nankipoo, Delaunay patented lode mining claim, M.S. 1278, located in Section 15
Aliance, Sucker, Little Ellen, Black Bird, Golden Eagle No. 2, Rubicon, Rubicon No. 2, Rubicon No. 4, Dakota, Darboy, Havana No. 1, Havana No. 3, Porto Rico No. 2 patented lode mining claims, M.S. 1376, located in Sections 10, 11, 14 and 15
Independent, Independent No. 1, Republick patented lode mining claims, M.S. 1398, located in Section 15
Joplin No. 1, Joplin No. 2, Joplin No. 3, Julia-Etta, Magnetic patented lode mining claims, M.S. 1436, located in Sections 15 and 22
Crest, Samoa, Co-moa, Sylvanite No. 1, Sylvanite No. 2, Grove, Volt, Seven-B, Storm King, Vigor patented lode mining claims, M.S. 1440, located in Sections 15, 16, 21 and 22
Cashier, LaPlata patented lode mining claims, M.S. 1469, located in Section 15
Maryland, Baltimore, Maverick, Badger, North Side Fraction patented lode mining claims, M.S. 1529, located in Sections 15 and 16
Lola patented lode mining claim, M.S. 1569, located in Section 15
St. Cloud No. 5, Zelpha Mable, Josephine, St. Cloud No. 1, St. Cloud No. 3, Comstock, Victor Fraction #3, Grand Deposit No. 2, Tartar, Red Cloud, Red Cloud Frac., Valley Frac. patented lode mining claims, M.S. 1655, located in Sections 15 and 22
Edmonia patented lode mining claim, M.S. 1769, located in Section 14
Mars No. 1 patented lode mining claim, M.S. 1851, located in Section 15
Legal Tender, Diamond Point, Joe Craig, Gremmel No. 1, Cotton Tail Frac. patented lode mining claims, M.S. 1872, located in Section 22
Dante, Creston, Morning Glory, Vindicator patented lode mining claims, M.S. 1910, located in Section 23
Bison, Trent patented lode mining claims, M.S. 2033, located in Sections 10 and 15
Govt. Lots 3, 9, 10, 12, 13, located in Section 15
Tracts 0102-A, 0102-B, 0103-B, located in Section 15
Govt. Lot 1, 2, 4 and 5 located in Section 22
Govt. Lots 9 and 10, located in Section 23
Tract 0103-A, located in Section 23
Owned by Homestake:
Yankee Boy, Yankee Boy No. 3, Yankee Boy No. 4, Alliance No. 2, Little Bonanza No. 2, Magna Charta and General Joe Hooker patented lode mining claims, M.S. 1406, located in Section 14
Tract 1 of M.S. 1829, as shown on Plat Document Number 2014-1022, located in Sections 22 and 23
Los Angeles No. 1, Los Angeles No. 2 and Los Angeles No. 3 patented lode mining claims, M.S. 1617, located in Section 23
Stella No. 3, Stella No. 5, Margarite No. 6 and Margarite No. 7, patented lode mining claims, M.S. 1862, located in Sections 23 and 26
Govt. Lot 10, located in Section 11
Govt. Lot 12, located in Section 13
Govt. Lots 2, 3, 4, 7, 8, 9 and 10, located in Section 14
Govt. Lots 1, 2, 3, 4, 5, 6, 7 and 8, located in Section 23
Govt. Lots 12, 13 and 14, located in Section 24
Owned by Homestake – Minerals Only:
Old Reliable patented lode mining claim, M.S. 348, located in Section 14
Dakota, Granite, Columbia and Union patented lode mining claims, M.S. 1092, located in Sections 13, 14 and 23
White House, Congress, China Fraction, Japan Fraction patented lode mining claims, M.S. 1247, Sections 13 and 14
Arthur No. 1, Little Hill, Little Hill No. 2 patented lode mining claims, M.S. 1406, located in Section 14
Bessie, Cross No. 1, Dixie, Geneva, Hattie, Tan patented lode mining claims, M.S. 1822, located in Section 14
Owned by LAC Minerals – Unpatented Lode Mining Claims:
L&O No. 11 BLM serial No. MMC 74914 Located in Section 15
NJB 72 BLM serial No. MMC 165019 Located in Section 15
Leased Mineral Rights
Rubicon, Cleveland, Lizzie Johnson, Standard and Grayback patented lode mining claims, M.S. 1382, located in Section 23, which claims are leased by LAC pursuant to a Lease Agreement dated November 15, 1984 between James E. Peterson and Arlene Peterson, husband and wife, as lessors, and St. Joe American Corporation, as lessee, a short form of which is recorded in Lawrence County, South Dakota as document number 84-3814 (the “Peterson Lease”).
Property Agreements
1. The Peterson Lease.
Material Contracts
1. | Restated Joint Venture Agreement dated December 2, 1988 between Viable Resources, Inc. and Bond Gold Richmond Hill Inc., and all judicial orders, decisions and opinions relating thereto, including without limitation Order Following Court Trial in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); Judgment in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); and opinion in Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012). |
2. | Easement Agreement dated February 22, 1998 between Timothy Morton and Shirley Morton as grantors and LAC Minerals (USA) Inc. as grantee. |
1 This claim is currently listed in BLM records as owned by St. Joe Richmond Hill.
2 This claim is currently listed in BLM records as owned by Bond Gold Richmond.
3. | Settlement Agreement dated June 15, 2000 among Scott L. Prentice and Jeanne L. Prentice, LAC Minerals (USA) Inc. and Todd Duex, and Order related thereto in the matter of Scott L. Prentice et al. v. LAC Minerals (USA) Inc., Civ. No. 99-5083-KES (D. S.D. June 15, 2000). |
4. | Deed, Grant of Easements and Right of First Refusal dated April 18, 2003 from Homestake Mining Company of California to Donald F. Hander and Karen Hander, as modified by Relinquishment and Release of First Right to Purchase dated November 2, 2007 from Maitland Partners, L.L.C. to Homestake Mining Company of California. |
5. | All instruments and documents relating to the Properties, or any of them, contained in the records of the Lawrence County Register of Deeds Office or in the files of the United States Bureau of Land Management or in the files of the South Dakota Department of Environment & Natural Resources, or in any other public records, to which LAC or Homestake is a party or the successor to a party. |
6. | Pursuant to the Exploration Lease and Purchase Option Agreement dated June 18, 2019 (the “Exploration and Option Agreement”), among Wharf Resources (U.S.A.) Inc. (“Coeur”), Coeur Mining Inc., Homestake and LAC Minerals, which Exploration and Option Agreement terminated on September 17, 2021, Coeur has certain access rights to the Property in order to perform Coeur Reclamation Obligations, including Post-Termination Reclamation Obligations (each as defined in the Exploration and Option Agreement). |
Documents creating Royalties
1. | The Peterson Lease. |
2. | Mining Deed dated May 24, 1968 from Fillmore and Company, W. O. Fillmore and Lillian G. Fillmore, as grantors, to Congo Uranium Company, as grantee, recorded in Lawrence County, South Dakota as document number 84-1176. |
3. | Warranty Deed dated June 2, 1976 from Iwalana L. Gali (fka Iwalana L. Aye), as grantor, to Homestake Mining Company, as grantee, recorded in Lawrence County, South Dakota as document number 82-5846. |
4. | Grant, Bargain and Sale Deed dated April 11, 2014 from Sharlene J. Hoffman, trustee, Earl D. Bohlen and Helen L. Bohlen, as grantors, to Homestake Mining Company of California, as grantee, recorded in Lawrence County, South Dakota as document number 2014-01773. |
[End]
EXHIBIT C
MEMORANDUM OF OPTION
Attached.
HOMESTAKE MINING COMPANY OF CALIFORNIA
and
LAC MINERALS (USA) LLC
Optionors
and
DAKOTA TERRITORY RESOURCE CORP.
Optionee
MEMORANDUM OF OPTION
Dated as of October ___, 2021
The properties affected by the within instrument are located in Lawrence County, South Dakota
Prepared By and Record and Return to: Erwin Thompson Faillers
241 Ridge Street, Suite 210
Reno, Nevada 89501
Attention: Jeff Faillers
Telephone: (775) 7825-4300
Memorandum of Option
THIS MEMORANDUM OF OPTION AGREEMENT ("Memorandum") dated as of the ___ day of October 2021, by and among HOMESTAKE MINING COMPANY OF CALIFORNIA, a California corporation and LAC MINERALS (USA) LLC ("Optionors"), and Dakota Territory Resource Corp., a Nevada corporation ("Optionee").
Optionors and Optionee hereby acknowledge the following:
1. Option to Purchase. For valuable consideration described in that certain Option Agreement for Purchase and Sale of Real Property, dated as of October ___, 2021 (the "Option Agreement"), Optionors have granted to Optionee the exclusive and irrevocable option (the "Option") to purchase the fee lands and patented mining claims situated in Lawrence County, South Dakota, which are more particularly described in Exhibit A attached hereto and made a part hereof, together with any buildings and other improvements thereon and any and all rights, privileges, easements, accessions, appurtenances, hereditaments, claims, permits and licenses therein or relating thereto (collectively, the “Property”).
2. Term. Optionee may exercise the Option anytime during the period commencing on October ___, 2021 and ending on September 7, 2024. Optionee shall have an additional one hundred and twenty (120) days after Optionee's exercise of the Option to close on the purchase of the Property (the "Term").
3. Conflicts. This Memorandum is intended only for recording purposes to provide notice of certain terms and conditions contained in the Option Agreement and is not to be construed as a complete summary of the terms and conditions thereof. This Memorandum is subject to the Option Agreement and any amendments, modifications, alterations, renewals, and extensions of the Option Agreement. The terms and provisions of the Option Agreement are incorporated in this Memorandum by reference. If there is any conflict between this Memorandum and the Option Agreement, the provisions of the Option Agreement shall control.
4. Counterparts. This Memorandum may be executed in multiple counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same document.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum as of the date first above written.
OPTIONORS: | ||
HOMESTAKE MINING COMPANY OF CALIFORNIA, | ||
a California corporation | ||
By: | ||
Name: | ||
Title: | ||
LAC MINERALS (USA) LLC, | ||
a Delaware limited liability company | ||
OPTIONEE: | ||
DAKOTA TERRITORY RESOURCE | ||
CORP., a Nevada corporation | ||
By: | ||
Name: | ||
Title: |
Optionors Acknowledgment
STATE OF ______________________________ )
) ss.:
COUNTY OF ____________________________ )
On the __ day of ____________, 2021 before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
Notary Public |
STATE OF ______________________________ )
) ss.:
COUNTY OF ____________________________ )
On the __ day of ____________, 2021 before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
Notary Public |
Optionee Acknowledgment
STATE OF ______________________________ )
) ss.:
COUNTY OF ____________________________ )
On the __ day of ____________, 2021 before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
Notary Public |
EXHIBIT A
LEGAL DESCRIPTION
Properties, Property Agreements and Royalties
(All Properties are located within T5N, R2E, B.H.M., Lawrence County, South Dakota)
Mineral Properties
Owned by LAC Minerals:
Enterprise patented lode mining claim, M.S. 407, located in Sections 10 and 15
Surprise patented lode mining claim, M.S. 408, located in Sections 10 and 15
Carbonate patented lode mining claim, M.S. 417, located in Section 15
Jay Gould patented lode mining claim, M.S. 425, located in Section 10
Garfield patented lode mining claim, M.S. 426, located in Section 10
Far West patented lode mining claim, M.S. 428, located in Sections 10 and 15
Katie patented lode mining claim, M.S. 437, located in Section 10
Arthur patented lode mining claim, M.S. 438, located in Section 10
Hartshorn patented lode mining claim, M.S. 440, located in Sections 10 and 15
Minnie patented lode mining claim, M.S. 441, located in Section 15
Ultimo patented lode mining claim, M.S. 442A, located in Section 15
Tidiout patented lode mining claim, M.S. 443, located in Section 15
Utica patented lode mining claim, M.S. 447A, located in Section 15
Antietam patented lode mining claim, M.S. 448A, located in Section 15
Blue Bird patented lode mining claim, M.S. 449, located in Section 15
Carbonate Fraction #1 patented lode mining claim, M.S. 450, located in Section 15
Carbonate Fraction #2 patented lode mining claim, M.S. 451, located in Section 15
Mutual patented lode mining claim, M.S. 465, located in Section 15
Washington patented lode mining claim, M.S. 466, located in Section 15
May Queen patented lode mining claim, M.S. 473, located in Section 15
Hercules patented lode mining claim, M.S. 474, located in Section 15
Adelphi patented lode mining claim, M.S. 489, located in Section 15
Spanish patented lode mining claim, M.S. 679, located in Section 15
Richmond patented lode mining claim, M.S. 680, located in Section 15
Brooklyn patented lode mining claim, M.S. 874, located in Section 15
J.M., Todd, Earle, Minnie C, Lyda B, Sister, Arthur L, Cass, Newell, Calvin P, Emma, Virginia, Juliett, Donald W, Helen, Atwood, Little Bonanze, Ella, Ralph K patented lode mining claims, M.S. 977, located in Sections 22, 23, 26 and 27
Cloride Fr., Calkins, Logan, Anis patented lode mining claim, M.S. 1022, located in Section 15
Rattler and Gilroy patented lode mining claim, M.S. 1043, located in Sections 10 and 15
Nankipoo, Delaunay patented lode mining claim, M.S. 1278, located in Section 15
Aliance, Sucker, Little Ellen, Black Bird, Golden Eagle No. 2, Rubicon, Rubicon No. 2, Rubicon No. 4, Dakota, Darboy, Havana No. 1, Havana No. 3, Porto Rico No. 2 patented lode mining claims, M.S. 1376, located in Sections 10, 11, 14 and 15
Independent, Independent No. 1, Republick patented lode mining claims, M.S. 1398, located in Section 15
Joplin No. 1, Joplin No. 2, Joplin No. 3, Julia-Etta, Magnetic patented lode mining claims, M.S. 1436, located in Sections 15 and 22
Crest, Samoa, Co-moa, Sylvanite No. 1, Sylvanite No. 2, Grove, Volt, Seven-B, Storm King, Vigor patented lode mining claims, M.S. 1440, located in Sections 15, 16, 21 and 22
Cashier, LaPlata patented lode mining claims, M.S. 1469, located in Section 15
Maryland, Baltimore, Maverick, Badger, North Side Fraction patented lode mining claims, M.S. 1529, located in Sections 15 and 16
Lola patented lode mining claim, M.S. 1569, located in Section 15
St. Cloud No. 5, Zelpha Mable, Josephine, St. Cloud No. 1, St. Cloud No. 3, Comstock, Victor Fraction #3, Grand Deposit No. 2, Tartar, Red Cloud, Red Cloud Frac., Valley Frac. patented lode mining claims, M.S. 1655, located in Sections 15 and 22
Edmonia patented lode mining claim, M.S. 1769, located in Section 14
Mars No. 1 patented lode mining claim, M.S. 1851, located in Section 15
Legal Tender, Diamond Point, Joe Craig, Gremmel No. 1, Cotton Tail Frac. patented lode mining claims, M.S. 1872, located in Section 22
Dante, Creston, Morning Glory, Vindicator patented lode mining claims, M.S. 1910, located in Section 23
Bison, Trent patented lode mining claims, M.S. 2033, located in Sections 10 and 15
Govt. Lots 3, 9, 10, 12, 13, located in Section 15
Tracts 0102-A, 0102-B, 0103-B, located in Section 15
Govt. Lot 1, 2, 4 and 5 located in Section 22
Govt. Lots 9 and 10, located in Section 23
Tract 0103-A, located in Section 23
Owned by Homestake:
Yankee Boy, Yankee Boy No. 3, Yankee Boy No. 4, Alliance No. 2, Little Bonanza No. 2, Magna Charta and General Joe Hooker patented lode mining claims, M.S. 1406, located in Section 14
Tract 1 of M.S. 1829, as shown on Plat Document Number 2014-1022, located in Sections 22 and 23
Los Angeles No. 1, Los Angeles No. 2 and Los Angeles No. 3 patented lode mining claims, M.S. 1617, located in Section 23
Stella No. 3, Stella No. 5, Margarite No. 6 and Margarite No. 7, patented lode mining claims, M.S. 1862, located in Sections 23 and 26
Govt. Lot 10, located in Section 11
Govt. Lot 12, located in Section 13
Govt. Lots 2, 3, 4, 7, 8, 9 and 10, located in Section 14
Govt. Lots 1, 2, 3, 4, 5, 6, 7 and 8, located in Section 23
Govt. Lots 12, 13 and 14, located in Section 24
Owned by Homestake – Minerals Only:
Old Reliable patented lode mining claim, M.S. 348, located in Section 14
Dakota, Granite, Columbia and Union patented lode mining claims, M.S. 1092, located in Sections 13, 14 and 23
White House, Congress, China Fraction, Japan Fraction patented lode mining claims, M.S. 1247, Sections 13 and 14
Arthur No. 1, Little Hill, Little Hill No. 2 patented lode mining claims, M.S. 1406, located in Section 14
Bessie, Cross No. 1, Dixie, Geneva, Hattie, Tan patented lode mining claims, M.S. 1822, located in Section 14
Owned by LAC Minerals – Unpatented Lode Mining Claims:
L&O No. 13 BLM serial No. MMC 74914 Located in Section 15
NJB 74 BLM serial No. MMC 165019 Located in Section 15
Leased Mineral Rights
Rubicon, Cleveland, Lizzie Johnson, Standard and Grayback patented lode mining claims, M.S. 1382, located in Section 23, which claims are leased by LAC pursuant to a Lease Agreement dated November 15, 1984 between James E. Peterson and Arlene Peterson, husband and wife, as lessors, and St. Joe American Corporation, as lessee, a short form of which is recorded in Lawrence County, South Dakota as document number 84-3814 (the “Peterson Lease”).
Property Agreements
1. | The Peterson Lease. |
Material Contracts
1. | Restated Joint Venture Agreement dated December 2, 1988 between Viable Resources, Inc. and Bond Gold Richmond Hill Inc., and all judicial orders, decisions and opinions relating thereto, including without limitation Order Following Court Trial in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); Judgment in Fowler v. LAC Minerals (USA), LLC, Civ. No. 08-5043-JLV (D. S.D. August 10, 2011); and opinion in Fowler v. LAC Minerals (USA), LLC, 694 F.3d 930 (8th Cir. 2012). |
2. | Easement Agreement dated February 22, 1998 between Timothy Morton and Shirley Morton as grantors and LAC Minerals (USA) Inc. as grantee. |
3 | This claim is currently listed in BLM records as owned by St. Joe Richmond Hill. |
4 | This claim is currently listed in BLM records as owned by Bond Gold Richmond. |
3. | Settlement Agreement dated June 15, 2000 among Scott L. Prentice and Jeanne L. Prentice, LAC Minerals (USA) Inc. and Todd Duex, and Order related thereto in the matter of Scott L. Prentice et al. v. LAC Minerals (USA) Inc., Civ. No. 99-5083-KES (D. S.D. June 15, 2000). |
4. | Deed, Grant of Easements and Right of First Refusal dated April 18, 2003 from Homestake Mining Company of California to Donald F. Hander and Karen Hander, as modified by Relinquishment and Release of First Right to Purchase dated November 2, 2007 from Maitland Partners, L.L.C. to Homestake Mining Company of California. |
5. | All instruments and documents relating to the Properties, or any of them, contained in the records of the Lawrence County Register of Deeds Office or in the files of the United States Bureau of Land Management or in the files of the South Dakota Department of Environment & Natural Resources, or in any other public records, to which LAC or Homestake is a party or the successor to a party. |
6. | Pursuant to the Exploration Lease and Purchase Option Agreement dated June 18, 2019 (the “Exploration and Option Agreement”), among Wharf Resources (U.S.A.) Inc. (“Coeur”), Coeur Mining Inc., Homestake and LAC Minerals, which Exploration and Option Agreement terminated on September 17, 2021, Coeur has certain access rights to the Property in order to perform Coeur Reclamation Obligations, including Post-Termination Reclamation Obligations (each as defined in the Exploration and Option Agreement). |
Documents creating Royalties
1. | The Peterson Lease. |
2. | Mining Deed dated May 24, 1968 from Fillmore and Company, W. O. Fillmore and Lillian G. Fillmore, as grantors, to Congo Uranium Company, as grantee, recorded in Lawrence County, South Dakota as document number 84-1176. |
3. | Warranty Deed dated June 2, 1976 from Iwalana L. Gali (fka Iwalana L. Aye), as grantor, to Homestake Mining Company, as grantee, recorded in Lawrence County, South Dakota as document number 82-5846. |
4. | Grant, Bargain and Sale Deed dated April 11, 2014 from Sharlene J. Hoffman, trustee, Earl D. Bohlen and Helen L. Bohlen, as grantors, to Homestake Mining Company of California, as grantee, recorded in Lawrence County, South Dakota as document number 2014-01773. |
[End]
Exhibit 10.7
Execution Version
OPTION AGREEMENT
FOR PURCHASE AND SALE OF REAL PROPERTY
This Option Agreement for Purchase and Sale of Real Property (“Contract”) is made and entered into as of September 7, 2021 (the “Effective Date”), by and between Homestake Mining Company of California, a California corporation (“Owner”), and Dakota Territory Resource Corp., a Nevada corporation (“Option Holder”). Owner and Option Holder sometimes may be referred to in this Contract individually as a “Party”, and collectively as the “Parties”.
RECITALS
WHEREAS, Owner is the owner of the fee lands and patented mining claims situated in Lawrence County, South Dakota, which are more particularly described in Exhibit B attached hereto and made a part hereof, together with any buildings and other improvements thereon related to Mining Operations and any and all appurtenances thereto (collectively, the “Property”);
AND WHEREAS, Owner wishes to grant to Option Holder, and Option Holder wishes to obtain from Owner, the Option (as defined below) from the Effective Date until the Option Exercise Expiration Date (as defined herein), in exchange for the Option Consideration (as defined below);
NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the foregoing and of the mutual promises and covenants contained in this Contract, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the Parties, hereby covenant and agree as to the following:
TERMS AND CONDITIONS
1. Definitions. The following terms when used in this Contract shall have the following meanings:
1.1 Additional Option Cash Consideration. The meaning set forth in Section 2.2.2.
1.2 Additional Option Cash Consideration Payment Date. The meaning set forth in Section 2.2.2.
1.3 Affiliate. With respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
1.4 Attorneys’ Fees. All reasonable fees and expenses charged or incurred by an attorney for services and the services of any paralegals, legal assistants or law clerks, including, but not limited to, reasonable fees and expenses charged for representation at the trial level and in all appeals, and the reasonable fees and expenses of experts.
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1.5 Business Day. Any day that the banks in New York City, New York and Toronto, Ontario, Canada are open for business, excluding Saturdays and Sundays.
1.6 Closing. The delivery of the Closing Documents, which shall occur at a mutually agreed time and place on the Closing Date. The term “Close” shall have a correlative meaning.
1.7 Closing Date. The date of the Closing as mutually agreed by the Parties; provided that it shall be no later than thirty (30) days after the date of execution of the Purchase Agreement.
1.8 Closing Documents. The Quitclaim Deed and the Bill of Sale, each in the form attached to the Purchase Agreement, and the other Closing Documents (as defined in the Purchase Agreement).
1.9 Confidentiality Parties. The meaning set forth in Section 10.14.1
1.10 Contract. The meaning set forth in the Preamble.
1.11 Contract Matters. The meaning set forth in Section 10.14.1.
1.12 Dakota Shares. Shares of common stock, par value $0.001 per share, of Option Holder.
1.13 Data. All data, documentation and information which Owner possesses relating to the Property and the Donation Assets, including, by way of illustration and not by limitation: (a) all geological, geochemical and geophysical maps, reports, surveys and tests; (b) deeds, mortgages, ALTA or boundary surveys, licenses, title insurance reports and policies, or equivalent documentation, if any; (c) all drill hole maps, drill logs, drill core, drill cuttings, chip trays, and other samples taken from the Property and the Donation Assets; (d) all engineering and metallurgical reports, studies and tests; (e) all sample and assay logs, maps, reports and tests; (f) all mineral resource and ore reserve calculations, estimates, reports, studies and tests; (g) all anthropological, biological, cultural, hydrologic, environmental, meteorological, and other like reports, studies, surveys and tests; and (h) all other data relating to the Property and the Donation Assets, in each case, including any such data, documentation or information in digital, electronic, magnetic, optical and written format, all of which is unverified, but, in each case, excluding Privileged Documents.
1.14 Donation Agreement. The Property Donation Agreement dated April 14, 2006, among Owner, The State of South Dakota and The South Dakota Science and Technology Authority.
1.15 Donation Assets. “Assets,” as defined in the Donation Agreement.
1.16 Effective Date. The meaning set forth in the Preamble.
1.17 Encumbrance. Any lien, pledge, mortgage, indenture, option, royalty, deed of trust, rights granted under a streaming agreement or other alternative financing agreement, security interest, charge, claim, reservation, easement, right-of-way, restriction, servitude, surface use agreement, imperfection of title, right of first offer or first refusal or similar right, encroachment or other similar encumbrance or obligation created in favor of a third party.
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1.18 Environmental Laws. All applicable Governmental Requirements relating to the protection of human health and safety, the environmental or hazardous or toxic substances or wastes, pollutants or contaminants.
1.19 Exploration. Any activities, including physically invasive activities, seismic monitoring, mapping, conducting base line or foundation studies, site engineering, surveys or survey updates, appraisals, environmental assessments or other testing, or other surface-related geophysical work, directed toward ascertaining the existence, location, quantity, quality or commercial value of mineral deposits, including drilling required after discovery of potentially commercial mineralization, all in accordance with Mining Industry Best Practices, but excluding Mining Operations.
1.20 Exploration Plan. The meaning set forth in Section 4.1.1.
1.21 Financial Statements. The consolidated audited annual financial statements of Option Holder and the unaudited quarterly financial statements of Option Holder, prepared in accordance with GAAP.
1.22 GAAP. Generally accepted accounting principles in the United States, consistently applied.
1.23 Governmental Authority. Any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency or any instrumentality of any of them.
1.24 Governmental Requirement. Any law, enactment, statute, code, ordinance, rule, regulation, formal interpretation, judgment, decree, writ, injunction, franchise, Permit, certificate, license, authorization, agreement, or other direction or requirement of any Governmental Authority now existing or hereafter enacted, adopted, promulgated, entered, or issued applicable to Owner, the Property, the Donation Assets, the Donation Agreement or the Data.
1.25 Knowledge of Owner. The actual knowledge of Jeff Burich, Patrick Malone and Michael McCarthy, without further investigation.
1.26 Material Adverse Event. The meaning set forth in Section 8.1.7.
1.27 Memorandum of Option. The Memorandum of Option in the form attached hereto as Exhibit C.
1.28 Mining Industry Best Practices. The best practices; methods; specifications; licensing requirements; standards of care, skill, diligence, safety and performance; environmental health and safety standards (including the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles, or such other established industry standards as may be agreed in writing by the Parties from time to time); and acts generally engaged in or observed by recognized and experienced international mining companies, as in effect from time to time for Mining Operations, which are consistent with good judgment, reliability, and safety, all in compliance with applicable Governmental Requirements (including Environmental Laws).
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1.29 Mining Operations. Any mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; any preparation for the removal and recovery of minerals, in-fill drilling, pre-production stripping, stripping and the construction or installation of any mill, leach facilities, or any other improvements to be used for the mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; actions performed during or after the foregoing to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Property or other compliance with Environmental Laws; and the attendant reclamation and remediation and closure upon completion of the foregoing, including obligations or responsibilities that are reasonably expected to or actually continue or arise, such as, without limitation, future monitoring, management, treatment or stabilization.
1.30 Option. The meaning set forth in Section 2.1.
1.31 Option Cash Consideration. The meaning set forth in Section 2.2.1.
1.32 Option Consideration. The meaning set forth in Section 2.2.
1.33 Option Exercise Notice. The written notice from Option Holder received by Owner during the Option Period confirming Option Holder’s exercise of the Option granted under this Contract.
1.34 Option Exercise Expiration Date. The date that the Option shall terminate and expire, which such date shall occur at the end of the Option Period unless Option Holder has previously delivered the Option Exercise Notice.
1.35 Option Holder. The meaning set forth in the Preamble, having an address for notices hereunder at c/o Dakota Territory Resource Corp., 106 Glendale Drive, Suite A, Lead, South Dakota 57754, Attention: Jonathan Awde, Email: JAwde@gold-sd.com with copies to Option Holder's Attorney.
1.36 Option Holder’s Attorney. Skadden, Arps, Slate, Meagher & Flom LLP, having an address for notices hereunder at: One Manhattan West, New York, NY 10001, Attention: Michael J. Hong, Esq., Email: Michael.Hong@skadden.com.
1.37 Option Period. The period that begins on the Effective Date and ends on the earlier of (a) the date that is thirty-six (36) consecutive months after the Effective Date, and (b) the date the Option Holder delivers to Owner the Option Exercise Notice.
1.38 Option Shares. The meaning set forth in Section 2.2.1.
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1.39 Owner. The meaning set forth in the Preamble, having an address for notices at c/o Barrick Gold Corp., 161 Bay Street, Suite 3700, Toronto, Ontario, M5J 2S1 Attn: General Counsel with copies to Owner's Attorney.
1.40 Owner’s Attorney. Parsons Behle & Latimer, having an address for notices hereunder at: 201 South Main Street, Suite 1800, Salt Lake City, Utah 84111, Attention: Jacob Santini, Email: jsantini@parsonsbehle.com, with a copy to Barrick Gold of North America Inc., 301 South Main Street, Suite 1150, Salt Lake City, Utah 84101, Attention: General Counsel (North America), Email: USLegalNotices@barrick.com, mmccarthy@barrick.com.
1.41 “Parties” and “Party”. The meaning set forth in the Preamble.
1.42 Permit. Any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration obtained from, or issued by, any Governmental Authority.
1.43 Permitted Encumbrances. Any: (a) Encumbrances for Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith and diligently by appropriate proceedings; (b) Encumbrances of mechanics, carriers, workers, repairers, warehousemen and similar Persons arising or incurred in the ordinary course of business in respect of liabilities that are not yet due or if due and payable, but are unpaid, are being contested in good faith, and in respect of which adequate resources are maintained; (c) matters of public record; (d) any conditions that reasonably would be expected to be shown by a current land survey or search or examination of publicly available information or documents; (e) Environmental Laws; (f) Encumbrances that arise due to zoning, subdivision, entitlement, and other Governmental Requirements related to land use; (g) royalty interests of public record; (h) the paramount title of the United States; (i) pledges made with respect to Owner Permits; (j) orders of any Governmental Authority; and (k) any Encumbrances set forth in this Contract, the Purchase Agreement, the Memorandum of Option, the Related Agreements or the Donation Agreement.
1.44 Person. Any natural or artificial legal entity whatsoever, including, but not limited to, any individual, general partnership, limited partnership, unincorporated association, sole proprietorship, corporation, limited liability company, trust, business trust, real estate investment trust, joint venture, or Government Authority.
1.45 Privilege. The meaning set forth in Section 4.2.4.
1.46 Privileged Documents. The meaning set forth in Section 4.2.4.
1.47 Proceeding. The meaning set forth in Section 6.1.6.
1.48 Property. The meaning set forth in the Recitals.
1.49 Purchase Agreement. The Asset Purchase Agreement attached hereto in the form of Exhibit A.
1.50 Purchase Shares. The meaning set forth in Section 3.2.2.
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1.51 Related Agreements. The (a) Memorandum of Option, (b) the Purchase Agreement, and (c) Closing Documents.
1.52 Representative. With respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
1.53 Restricted Areas. The (a) Grizzly Gulch Tailings Storage Facility, including any associated dams, embankments, or other improvements or facilities related thereto, (b) the East, Yates and Sawpit Waste Rock Dumps, and (c) the WASP Rubble Site, in each case located on the Property.
1.54 SEC. The United States Securities and Exchange Commission.
1.55 Securities Act. The Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
1.56 Securities Filings. The meaning set forth in Section 7.1.6(b).
1.57 Tax. All federal, state, local, foreign and other income, gross receipts, sales, use, severance, depletion, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges in the nature of a tax of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
1.58 Termination Event. The meaning set forth in Section 8.1.
1.59 Transfer. To, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
2. Option.
2.1 Grant of Purchase Option. Owner hereby grants to Option Holder the sole and exclusive right and option during the Option Period to elect to purchase (i) all of Owner’s right, title, and interest in and to the Property and the Data and (ii) subject to applicable Governmental Requirements, all of Owner’s rights, title and interest under the Donation Agreement (including, but not limited to, the condition under Section 6.4 therein regarding the continued ownership, use and occupancy of the Assets by the Authority (as defined therein)) in consideration for the Assumption, upon the terms and conditions set forth herein (the “Option”), which Option must be exercised in whole, but not in part, by Option Holder (if at all) in accordance with the terms and conditions of this Contract.
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2.2 Payment of Purchase Option Price. In consideration for the granting of the Option, Option Holder shall pay to Owner the following (the “ Option Consideration”):
2.2.1 On the Effective Date, Option Holder shall (a) pay to Owner an amount in cash equal to $1,300,000, by wire transfer of immediately available funds to one or more bank accounts designated by Owner on or before the Effective Date (the “Option Cash Consideration”); and (b) issue to Owner or its designee 1,000,000 Dakota Shares (the “Option Shares”), which Option Shares shall be (i) registered in the name of Owner or its designee in book-entry form by the Option Holder’s transfer agent and (ii) bear a customary restrictive legend reflecting the issuance of the Option Shares in a transaction exempt from registration under the Securities Act. Owner shall promptly provide to Option Holder and its transfer agent such documentation reasonably requested by them in connection with the delivery of the Option Shares to Owner.
2.2.2 In addition to the Option Cash Consideration and the Option Shares, Option Holder shall pay to Owner additional cash consideration of $600,000 (the “ Additional Option Cash Consideration”), $300,000 of which shall be paid on the first anniversary of the Effective Date, and the remaining $300,000 of which shall be paid on the second anniversary of the Effective Date (each, an “Additional Option Cash Consideration Payment Date”); provided, if an Additional Option Cash Consideration Payment Date falls on a day other than a Business Day, then the Additional Option Cash Consideration will be paid on the immediately succeeding Business Day. Payments of Additional Option Cash Consideration shall be made by wire transfer of immediately available funds to one or more bank accounts designated by Owner on or before the applicable Additional Option Cash Consideration Payment Date. If the Closing occurs before an Additional Option Cash Consideration Payment Date, then Option Holder shall not be required to pay the Additional Option Cash Consideration payable on such Additional Option Cash Consideration Payment Date and, if applicable, any subsequent Additional Option Cash Consideration payments. If Option Holder terminates this Contract before an Additional Option Cash Consideration Payment Date, then Option Holder shall not be required to pay the Additional Option Cash Consideration payable on such Additional Option Cash Consideration Payment Date and, if applicable, any subsequent Additional Option Cash Consideration payments.
2.3 Memorandum of Option. On the Effective Date, provided that Owner shall have received from Option Holder the Option Cash Consideration and the Option Shares, Option Holder, at its cost and expense, shall have the right to record the Memorandum of Option in Lawrence County, South Dakota. The Memorandum of Option shall not limit, increase or in any manner affect any of the terms of this Contract or any rights, interests or obligations of the Parties hereunder.
2.4 No Partnership. Nothing contained in this Contract shall be deemed to constitute any Party the partner of any of the other Party, or to constitute any Party the agent or legal representative of the other Party or to create any fiduciary relationship between them. The Parties do not intend to create, nor shall this Contract be construed to create, any mining, commercial or other partnership. No Party shall have any authority to act for or to assume any obligation or responsibility on behalf of the other Party, except as otherwise expressly provided herein.
2.5 Governmental Authorities. During the Option Period, Option Holder and its Affiliates and its or their respective Representatives shall not engage in any formal discussions with Governmental Authorities regarding the Transfer of the Donation Agreement or Exploration or Mining Operations on the Donation Assets without providing at least two (2) Business Days’ prior written notice to Owner, which notice may be given by email. Owner, its Affiliates and its and their respective Representatives, shall have the right, but not the obligation, to participate in any such discussions. Option Holder may engage in informal discussions with Governmental Authorities and may receive unplanned inbound telephone calls from Governmental Authorities without prior notice to Owner. Option Holder shall keep Owner reasonably informed of any formal or informal discussions between Option Holder and Governmental Authorities relating to the Donation Agreement and the Donation Assets in which Owner, its Affiliates and its and their respective Representatives do not participate.
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2.6 Financial Statements. Beginning on the Effective Date and continuing through the Option Period, Option Holder shall deliver the Financial Statements to Owner within 30 days after completion of each such Financial Statement. Option Holder may satisfy the delivery requirements of this Section 2.6 by timely filing any such financial statements with the SEC.
2.7 Other Activities. Except as expressly provided in this Contract, each of the Parties may be engaged on its own behalf and on behalf of Persons other than the Parties in the general mining business and each of the Parties hereby consents to such involvement by the other without consulting the other Party or inviting or allowing the other Party to participate. Except as expressly provided in this Contract, the legal doctrine of “corporate opportunity” sometimes applied to persons occupying a fiduciary status shall not apply in the case of any endeavor of any Party.
3. Exercise of Option.
3.1 Notice of Exercise. If Option Holder elects to exercise the Option:
3.1.1 Option Holder shall deliver to Owner the Option Exercise Notice any time during the Option Period; and
3.1.2 Owner and Option Holder shall execute the Purchase Agreement within ten (10) days after the date of delivery of the Option Exercise Notice; provided that Owner’s failure to timely execute the Purchase Agreement shall not vitiate Option Holder’s exercise of the Option by delivering the Option Exercise Notice in accordance with Section 3.1.1.
3.2 Closing. The Closing shall occur on the Closing Date. At the Closing:
3.2.1 Each of the Parties will execute and deliver the Closing Documents to which it is a party, together with any other documents or instruments required for the Closing; and
3.2.2 Option Holder shall issue to Owner or its designee 3,000,000 Dakota Shares (the “Purchase Shares”), which Purchase Shares shall be (a) registered in the name of Owner or its designee in book-entry form by the Option Holder’s transfer agent and (b) bear a customary restrictive legend reflecting the issuance of the Purchase Shares in a transaction exempt from registration under the Securities Act. Owner shall promptly provide to Option Holder and its transfer agent such documentation reasonably requested by them in connection with the delivery of the Purchase Shares to Owner.
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4. Option Holder’s Access Rights to Property and Data During Option Period.
4.1 Option Holder’s Access Rights to Property.
4.1.1 Access to the Property. Subject to Section 4.1.2, Option Holder, at its cost, may access the Property during the Option Period in order to conduct Exploration; provided that Option Holder shall not conduct any Exploration within the Restricted Areas without the express written consent of Owner, such consent not to be withheld unreasonably. Any Exploration shall be conducted pursuant to an exploration plan approved by Owner, acting reasonably (the “Exploration Plan”), and in accordance with all applicable Environmental Laws. Option Holder, at its cost, shall be responsible to obtain all Permits and third-party consents, including consents from third parties who or which hold rights in property other than the Property, required to conduct Exploration, including the owner of the Donation Assets. Option Holder shall be responsible for all reclamation and remediation associated with Exploration. Owner and its Affiliates, and its and their respective Representatives, shall have the right, but not the obligation, to review the Exploration undertaken by Option Holder, to verify that such Exploration is being conducted according to the Exploration Plan and applicable Environmental Laws, and that no Exploration is conducted in the Restricted Areas. Option Holder shall be responsible and liable for all Exploration. In addition, Option Holder shall have the right, but not the obligation, to conduct reviews of zoning, building code and other applicable ordinances to determine whether the Property is in compliance.
4.1.2 Limitations. Neither Option Holder nor its Affiliates shall conduct any Mining Operations on the Property or the Donation Assets.
4.1.3 Indemnification of Owner. Option Holder shall indemnify, defend and save harmless Owner and its Affiliates and its and their respective Representatives, with counsel of their choosing, from and against any and all claims, debts, demands, suits, actions and causes of action whatsoever which may be brought or made against one or more of them by any Person and all loss, cost, damages, expenses and liabilities (including Attorneys’ Fees) which may be suffered or incurred by them arising out of or in connection with or in any way referable to, whether directly or indirectly, any access to the Property by Option Holder and its Affiliates and its and their respective Representatives, including, without limitation, bodily injuries or death at any time resulting therefrom or damage to Property.
4.1.4 Compliance with Laws and Policies. In exercising its rights under Sections 4.1.1 and 4.1.2, Option Holder shall comply with all applicable Governmental Requirements and shall carry out its activities in accordance with Mining Industry Best Practices and the environmental, health and safety policies of Owner. Option Holder, at its cost and expense, shall be responsible for obtaining all Permits and bonding required to conduct its activities pursuant to Sections 4.1.1 and 4.1.2. Owner shall reasonably cooperate with Option Holder, at the expense of Option Holder, in obtaining any Permits or other permissions that are required for Option Holder to conduct its activities on the Property pursuant to Sections 4.1.1 and 4.1.2.
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4.2 Option Holder Rights to Data.
4.2.1 Access to Data. During the Option Period, Owner shall provide to Option Holder reasonable access to all of the Data that Owner owns or controls for Option Holder’s review. Any such review shall be during normal operating hours of Owner and upon not less than two (2) Business Days’ prior notice, which may be given by email. If Option Holder exercises the Option, then on the Closing Date, Owner shall Transfer, at Option Holder’s cost and expense, all of its rights, title and interest in and to the Data to Option Holder, subject to Sections 4.2.4 and 4.2.5.
4.2.2 Access to Todd Duex. During the Option Period, Owner hereby waives any confidentiality obligations between Owner and Mr. Todd Duex, to the extent Option Holder desires to obtain information from Mr. Duex regarding the Property; provided that Owner shall not be responsible or liable for any information provided to Option Holder by Mr. Duex, or any actions taken by Option Holder or its Affiliates based on information provided by Mr. Duex.
4.2.3 Access to Jeff Burich. During the Option Period, Owner will make Jeff Burich reasonably available to Option Holder during normal operating hours in order to discuss factual matters regarding the Property; provided that (a) such discussions will not unreasonably interfere with the normal business activities of Mr. Burich for or on behalf of Owner and its Affiliates, (b) Owner shall not be responsible or liable for any actions taken by Option Holder or its Affiliates based on information provided by Mr. Burich; (c) Option Holder hereby releases Mr. Burich from any liability with respect to any information provided by Mr. Burich to Option Holder or its Affiliates or its or their respective Representatives related to the Property; and (d) any information provided by Mr. Burich to Option Holder or its Affiliates or its or their respective Representatives in no way shall be attributed to Knowledge of Owner.
4.2.4 Privilege. All communications and other documents exchanged between Owner or its Affiliates and legal counsel (including, as applicable, internal legal counsel) providing legal advice to Owner and its Affiliates, including documents and communications relating to the this Contract, the Related Agreements and the Property, and files maintained by legal counsel as a result of providing legal advice to Owner or its Affiliates (the “Privileged Documents”), that are subject to attorney-client privilege, any similar privilege, or that constitute attorney work product (as applicable, a “Privilege”), specifically are excluded from the Data and shall be and remain the property of Owner its Affiliates, as applicable. Neither Owner nor its Affiliates intend to waive any applicable Privilege, and any disclosure of any Privileged Documents, whether in the Data or otherwise, shall be deemed to be inadvertent. Accordingly, Option Holder, on its behalf and on behalf of its Affiliates and its and their respective Representatives acknowledges and agrees that a disclosure of any Privileged Documents will not constitute a waiver of such Privilege, and the Person receiving any such Privileged Documents shall, promptly upon request or becoming aware that such documents are Privileged Documents, return to Owner, or with the consent of Owner, destroy, such Privileged Documents.
4.2.5 Disclaimer of Warranties of Data. All Data provided to, or made available to Option Holder under this Contract or prior to the Effective Date, is provided without representation or warranty and is at the sole risk of Option Holder. Such information is provided “AS IS, WHERE IS” AND WITH ALL FAULTS, AND OWNER AND ITS AFFILIATES EXPRESSLY DISCLAIM THE ACCURACY OR COMPLETENESS OF ALL DATA, AND ALL EXPRESS OR IMPLIED WARRANTIES CONCERNING THE SAME, AND EXPRESSLY EXCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
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5. Maintenance of Property; Title.
5.1 Maintenance of the Property. Owner shall make all payments of Taxes, royalties, land-holding costs, claim maintenance and similar fees, lease payments and other payments that become due during the Option Period and that are required for Owner to maintain its interest in the Property.
5.2 No Encumbrances. During the Option Period, Owner shall not lease, pledge as collateral or security, mortgage or encumber or cause or allow any Encumbrance created by, through or under Owner to be placed against the Property, or grant any other right in or to the Property, except as expressly provided in this Contract, except for Permitted Encumbrances.
6. Owner’s Representations.
6.1 Representations and Warranties. Owner hereby represents and warrants to Option Holder as of each of the Effective Date and the Option Exercise Date as follows:
6.1.1 Incorporation and Qualification. Owner is a corporation incorporated and in good standing under the laws of California and has the corporate power to enter into and perform its obligations under this Contract, the Purchase Agreement and the Related Agreements to which Owner is a party;
6.1.2 Corporate Authority. The execution and delivery of and performance by Owner of this Contract, the Purchase Agreement and the Related Agreements to which Owner is a party and the Transfer of the Property by Owner to the Option Holder have been authorized by all necessary corporate action on the part of Owner;
6.1.3 No Violation or Breach. The execution and delivery of and performance by Owner of this Contract, the Purchase Agreement and the Related Agreements to which it is a party:
(a) does not conflict with the articles of incorporation or bylaws of Owner;
(b) does not violate in any material respect any law applicable to Owner or the Property; and
(c) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments directly related to the Property to which Owner is a party;
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6.1.4 Execution and Binding Obligation. This Contract and, when executed, the Purchase Agreement and each of the Related Agreements to which Owner is a party has been duly executed and delivered by Owner and constitutes a legal, valid and binding agreement of Owner enforceable against Owner in accordance with its terms, subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies;
6.1.5 Filings, Consents and Approvals. To the Knowledge of Owner, Owner is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other Person in connection with the execution, delivery and performance by Owner of this Contract or any of the Related Agreements to which it is a party, other than (a) filings required by state or federal securities laws (including the Securities Act), if applicable, (b) those that have been made or obtained prior to the date of this Contract, (c) approvals for the assignment of the Donation Agreement, (d) the recording of the Memorandum of Option and the Quitclaim Deed; and (e) approvals for the Transfer of any Permits.
6.1.6 Title to Property. Owner (a) owns or has valid rights to the Property, free and clear of any and all Encumbrances, except for Permitted Encumbrances; (b) other than the rights of Option Holder pursuant to this Contract, there are no outstanding options, rights of first offer or first negotiation or rights of first refusal in favor of any other party to acquire an interest in the Property; and (c) has not received written notice of, and to the Knowledge of Owner, there is no, pending or threatened condemnation proceeding or proposed action or agreement for taking in lieu of condemnation with respect to any portion of the Property.
6.1.7 No Action. Owner has not received notice of any, and to the Knowledge of Owner, there are no pending or threatened actions, claims, counterclaims, suits, governmental investigations or inquiries, or other proceedings (each, a “Proceeding”), which would prevent the consummation of the transactions contemplated by this Contract, nor any Proceeding or Claim (as defined in the Purchase Agreement) related to, or that would otherwise materially adversely affect, the Property, including, without limitation, the title or environmental status of the Property.
6.1.8 Option Shares. Owner is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and it is acquiring the Option Shares for its own account and not with a view to the distribution thereof. Owner understands that the Option Shares have not been and will not be registered under the Securities Act, will bear a restrictive legend, and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available. Owner further represents and warrants that it will not Transfer any Option Shares or any interest therein except in a transaction exempt from or not subject to the registration requirements of the Securities Act. Owner represents that (i) it has such knowledge, sophistication and experience in business and financial matters that it is capable of evaluating the merits and risks of the acquisition of the Dakota Shares and (ii) it has been granted the opportunity to ask questions of, and receive satisfactory answers from, representatives of Option Holder concerning the business affairs and financial condition of Option Holder and its subsidiaries, and has had the opportunity to obtain and has obtained any additional information which it deems necessary regarding such purchase, and that Option Holder is not required to register the Option Shares.
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6.2 Disclaimer.
6.2.1 Option Holder hereby acknowledges and agrees that the transactions contemplated by this Contract and the Related Agreements are being completed on an “as is, where is” and “with all faults” basis. Except as expressly set forth herein, neither Owner or its Affiliates nor its or their respective or Representatives, or any other Person, has made or makes any other express or implied representation or warranty, either written or oral, on behalf of Owner, including any representation or warranty as to the accuracy or completeness of any Data or other information furnished or made available to any other Option Holder and its Affiliates and its and their respective Representatives (including any projections, information, documents or material made available in the Data, management presentations or other communications with management, or in any other form in expectation of the transactions contemplated in this Contract or the Related Agreements), the sufficiency, merchantability or fitness for any particular purpose of the Property or any Permits held by Owner related to the Property, compliance with applicable Governmental Requirements, or as to the future revenue, profitability or success arising from the transactions contemplated in this Contract or the Related Agreements, or any representation or warranty arising from statute or otherwise at law or in equity, all of which are hereby expressly disclaimed.
6.2.2 WITHOUT LIMITING THE FOREGOING, OWNER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE EXISTENCE OR STATUS OF ANY MINES OR WORKINGS WITHIN THE AREA COVERED BY THE PROPERTY, INCLUDING THE EXISTENCE AND STATUS OF ANY ABANDONED MINES OR WORKINGS, THE STATUS OF ANY ROYALTIES OR THE EXISTENCE OR STATUS OF ANY UNRECORDED RIGHTS TO ANY ROYALTIES, THE EXISTENCE, NATURE, LOCATION, AMOUNT OR VALUE OF ANY MINERALIZATION, MINERAL RESERVES OR RESOURCES, THE ABILITY TO EXTRACT, PROCESS, OR SELL MINERALS BY ANY MEANS, WHETHER ANY NECESSARY PERMITS CAN BE OBTAINED IN A TIMELY MANNER OR AT ALL, WHETHER ANY MINING CAN BE DONE ECONOMICALLY OR AT ALL, OR THAT THERE WILL BE NO THIRD PARTY CHALLENGE TO THE ISSUANCE OF ANY REQUIRED PERMIT OR ENVIRONMENTAL IMPACT STATEMENT REQUIRED FOR OPERATIONS WITH RESPECT TO THE PROPERTIES, OR THAT THERE ARE NO RIGHTS (INCLUDING ROYALTIES, ACCESS RIGHTS, INFORMATION RIGHTS, RECONVEYANCE RIGHTS, REVERSIONARY RIGHTS OR OTHER RIGHTS OF PREDECESSORS IN INTEREST) RFELATED TO THE PROPERTY.
7. Option Holder’s Representations.
7.1 Representations and Warranties. Option Holder hereby represents and warrants to Owner as of the each of Effective Date and the Option Exercise Date as follows:
7.1.1 Incorporation and Qualification. Option Holder is a corporation incorporated and in good standing under the laws of the State of Nevada and has the corporate power to enter into and perform its obligations under this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party.
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7.1.2 Corporate Authority. The execution and delivery of and performance by Option Holder of this Contract, the Purchase Agreement and each of the Related Agreements to which Option Holder is a party, the Transfer of the Property from Owner to Option Holder have been authorized by all necessary corporate action on the part of Option Holder.
7.1.3 No Violation or Breach. The execution and delivery of and performance by Option Holder of this Contract, the Purchase Agreement and the Related Agreements to which it is a party:
(a) does not conflict with the articles of incorporation or bylaws of Option Holder;
(b) does not violate in any material respect any law applicable to Option Holder; and
(c) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments to which Option Holder is a party.
7.1.4 Execution and Binding Obligation. This Contract, the Purchase Agreement and each of the Related Agreements to which Option Holder is a party has been duly executed and delivered by Option Holder and constitutes a legal, valid and binding agreement of Option Holder enforceable against it in accordance with its terms subject only to any limitation under applicable laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
7.1.5 Capitalization.
(a) The authorized capital of Option Holder consists of 75,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which 69,428,204 shares of common stock no shares of preferred stock, and derivative securities to purchase up to 3,946,250 shares of common stock are issued and outstanding as of August 31, 2021; and
(b) On a fully diluted basis, Option Holder has a sufficient number of authorized shares of common stock to issue the Dakota Shares without exceeding the number of shares authorized under Option Holder’s articles of incorporation.
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7.1.6 Filings, Consents and Approvals.
(a) Option Holder is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other Person in connection with the execution, delivery and performance by Option Holder of this Contract, the Purchase Agreement or any of the Related Agreements to which it is a party, other than (i) filings required by state or federal securities laws (including the Securities Act), if applicable, and (ii) those that have been made or obtained prior to the date of this Contract; and
(b) During the last 12 months, Option Holder has filed in a timely manner all disclosures, reports and other filings required to be filed by it under applicable securities laws (the “Securities Filings”) in all jurisdictions in which such Securities Filings are required to be filed and with all securities exchanges where the Purchaser’s securities are traded, and all such Securities Filings are true and accurate in all material respects.
7.1.7 Issuance of the Option Shares. The issuance of the Option Shares has been duly authorized and, when issued, the Option Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances.
7.1.8 Independent Review.
(a) Option Holder and its direct and indirect Affiliates, and its and their respective Representatives, have had sufficient access to and opportunity to review the Property and Data and to ask questions of the management representatives and professional advisors of Owner, as necessary for Option Holder to investigate, analyze, and evaluate the Property and Data and to make its and their independent decision to acquire the Property and to consummate the transactions contemplated by this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party.
(b) In making the decision to enter into this Contract, the Purchase Agreement and the Related Agreements to which Option Holder is a party, and to consummate the transactions contemplated herein and therein, Option Holder has conducted its own independent investigation, analysis, and evaluation of the Property and Data (including Option Holder’s own estimate and appraisal of the extent, location and value of mineralization, mineral resources and reserves, undeveloped properties, and environmental obligations), and the financial condition of, operations, and prospects for, the Property.
8. Termination and Effect of Termination.
8.1 Termination Events. This Contract may be terminated upon the occurrence of any one or more of the following events (each, a “Termination Event”):
8.1.1 By Option Holder upon giving thirty (30) days written notice to Owner;
8.1.2 By mutual written agreement of Owner and Option Holder;
8.1.3 In the event that Option Holder fails to exercise the Option by delivery of an Option Exercise Note during the Option Period;
8.1.4 In the event that Option Holder fails to execute the Purchase Agreement in accordance with Section 3.1.2;
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8.1.5 By Owner upon the failure of Option Holder to make any Additional Option Cash Payment on or before the applicable Additional Option Cash Payment Date to the extent required by Section 2.2.2 and such failure is not cured within five (5) Business Days after Option Holder’s receipt of notice of such failure;
8.1.6 By Owner in the event Option Holder conducts Exploration in violation of the Exploration Plan or conducts Exploration in the Restricted Areas without the consent of Owner;
8.1.7 By Owner, in the event Option Holder files for bankruptcy, becomes insolvent or undergoes material restructuring event, including a change in the majority of the board of directors of Option Holder or a change in the majority of the executive management of Option Holder that would require a filing by Option Holder of a Form 8-K with the SEC (each, a “Material Adverse Event”), and Owner determines, acting reasonably, that Option Holder is unable to exercise the Option and conduct Mining Operations on the Property as a result of such Material Adverse Event;
8.1.8 Except as allowed in Section 4.1.1, Option Holder conducts or has conducted on its behalf Mining Operations on the Property without the written consent of Owner and any other Person who or which has rights to the Property or the minerals appurtenant to the Property (including, without limitation, any rights with regard to the Donation Assets or under the Donation Agreement);
8.1.9 In the event Owner consents to the conduct of Mining Operations on the Property, Option Holder materially fails to conduct, or have conducted, such Mining Operations in accordance with Mining Industry Best Practices; or
8.1.10 In the event the Purchase Agreement is not executed in accordance with Section 3.1.2, or the Purchase Agreement is terminated by either Party in accordance with the terms thereof.
8.2 Effect of Termination. Upon a Termination Event:
8.2.1 this Contract automatically shall terminate;
8.2.2 Upon Owner’s request, Option Holder shall deliver to Owner all information and data developed by or on behalf of Option Holder related to the Property;
8.2.3 Owner shall have the right to release the Memorandum of Option, and Option Holder shall cooperate with Owner in the preparation and recordation of any document or instrument releasing the Memorandum of Option; and
8.2.4 Option Holder shall not contact any Governmental Authorities regarding the Donation Agreement or the Donation Assets.
8.3 Survival. Upon the expiration or termination of this Contract, the provisions of this Contract that, by their terms are intended to survive the expiration or termination of this Contract shall so survive including, without limitation, Sections 1, 2.4, 4.1.3, 4.2.2, 4.2.3, 4.2.4, 4.2.5, 6.2, 7.1.8, 8.2 and 10.
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9. Notices. Any notice, request, demand, instruction or other communication to be given to either Party hereunder, except where required to be delivered at the Closing, shall be in writing and shall either be (a) hand-delivered, (b) sent by Federal Express or a comparable overnight mail service, or (c) mailed by U.S. registered or certified mail, return receipt requested, postage prepaid, or (d) sent by electronic mail or other electronic means, to Option Holder, Owner, Option Holder’s Attorney and Owner’s Attorney, at their respective addresses set forth in Section 1 of this Contract. Notice shall be deemed to have been given upon receipt or refusal of delivery of said notice. The addressees and addresses for the purpose of this paragraph may be changed by giving notice. Unless and until such written notice is received, the last addressee and address stated herein shall be deemed to continue in effect for all purposes hereunder.
10. Miscellaneous.
10.1 Section and Paragraph Headings. The section and paragraph headings herein contained are for the purposes of identification only and shall not be considered in construing this Contract.
10.2 Amendment. No modification or amendment of this Contract shall be of any force or effect unless in writing executed by both Owner and Option Holder.
10.3 Attorneys’ Fees. If any Party obtains a judgment against any other Party by reason of breach of this Contract, Attorneys’ Fees and costs shall be included in such judgment.
10.4 Governing Law.
10.4.1 This Contract and all the documents delivered in connection with this Contract shall be construed and enforced in accordance with the laws of the State of South Dakota, without regard to any conflicts of law provisions that may otherwise require the application of the law of any other jurisdiction.
10.4.2 Any Proceeding arising out of or based upon this Contract or the interpretation thereof may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Proceeding. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any Proceeding brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Proceeding in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Proceeding brought in any such court has been brought in an inconvenient forum.
10.5 Entire Contract. This Contract sets forth the entire agreement between Owner and Option Holder relating to the Property and all subject matter herein and supersedes all prior and contemporaneous negotiations, understandings and agreements, written or oral, between the Parties.
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10.6 Time of the Essence. Time is of the essence in the performance of all obligations by Option Holder and Owner under this Contract.
10.7 Computation of Time. Any reference herein to time periods of less than six (6) days shall exclude Saturdays, Sundays and legal holidays in the computation thereof. Any time period provided for in this Contract which ends on a Saturday, Sunday or legal holiday shall extend to 5:00 p.m. on the next full Business Day.
10.8 Successors and Assigns; Assignment. This Contract shall inure to the benefit of and be binding upon the permitted successors and assigns of the Parties. Option Holder may only assign this Contract upon Owner’s written consent, which Owner shall exercise in its sole discretion; provided, however, that Option Holder shall have the right to assign this Contract, upon notice to, but without the written consent of, Owner, to an Affiliate of Owner. If Option Holder assigns this Contract to such an Affiliate or with Owner’s consent, any assignee of Option Holder shall be able and obligated to Close under this Contract in the same manner as Option Holder and the originally named Option Holder shall not be released from any of the obligations of “Option Holder” under this Contract. In the event Option Holder assigns this Contract to an Affiliate of Option Holder or with the consent of Owner, a duly executed assignment of this Contract shall be delivered to Owner at or prior to the Closing Date, as well as entity documentation as may be reasonably requested by Owner.
10.9 Construction of Contract. All of the Parties to this Contract have participated freely in the negotiation and preparation hereof; accordingly, this Contract shall not be more strictly construed against any one of the Parties.
10.10 Gender. As used in this Contract, the masculine shall include the feminine and neuter, the singular shall include the plural and the plural shall include the singular as the context may require.
10.11 Counterparts; Electronic Execution. This Contract may be executed in any number of counterparts and delivered via electronic mail or otherwise, each of which when executed and delivered shall be deemed an original, but all of which together shall constitute one and the same instrument.
10.12 Further Assurances. The Parties each agree to do such other and further acts and things, and to execute and deliver such instruments and documents (not creating any obligations additional to those otherwise imposed by this Contract) as either may reasonably request from time to time, whether at or after the Closing, in furtherance of the purposes of this Contract. In addition, in the event Owner becomes aware that any representation, warranty or covenant of Owner set forth in this Contract will not be true and correct in any material respect on the Closing Date, then Owner shall give prompt written notice thereof to Purchaser, which notice shall include all appropriate information related thereto that is in Owner’s possession or control.
10.13 Closing Documents/Deliverables. To the extent any of the Closing Documents are not attached hereto or to the Purchase Agreement at the time of this Contract, Option Holder and Owner shall negotiate in good faith with respect to the form and content of such Closing Documents prior to Closing.
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10.14 Brokers. Each Party hereto represents and warrants to the other that that it has not had, and shall not have, any dealings with (and it has not engaged and will not engage) any third party to whom the payment of any broker’s fee, finder’s fee, commission or other similar compensation shall or may become due or payable in connection with the transactions contemplated hereby. It is agreed that if any claims for brokerage commissions or fees are ever made against Owner or Option Holder, all such claims shall be handled and paid by the Party whose actions or alleged commitments form the basis of such claim. Each Party shall indemnify, defend and hold the other Party harmless from any and all claims for commissions or fees by brokers made against the other Party, and resulting loss, cost (including reasonable Attorneys’ Fees) and damages, which claim shall have arisen out of any written document or alleged oral agreement entered or purported to have been entered into by the indemnifying Party and the person claiming such commission, with respect to the transaction contemplated by this Contract.
10.15 Confidentiality.
10.15.1 Except for such information as is contained in the Memorandum of Option and related transfer Tax returns, neither Party shall use (other than in the performance of its obligations under this Contract) or disclose (and each Party shall cause its Affiliates, and its and their respective Representatives (the “Confidentiality Parties”) not to so use or disclose) and each Party shall (and shall cause the Confidentiality Parties to) instruct each Party’s (and the Confidentiality Parties’) Representatives with knowledge of this transaction not to so use or disclose any term or condition, of this Contract or any other identifying details with respect to the provisions of this Contract (“Contract Matters”); however the Confidentiality Parties can confirm (i) that Owner has granted Option Holder an option to purchase the Property, (ii) such details as are set forth in the Memorandum of Option and (iii) whether or not Option Holder has exercised the option to purchase the Property as set forth in this Contract.
10.15.2 The above notwithstanding, nothing contained herein shall restrict either Party’s ability to disclose (or restrict the Confidentiality Parties to disclose) Contract Matters (i) to (A) either Party’s lenders or investors (or potential lenders or investors) or their respective successors and assigns, (B) any rating agencies, (C) any potential purchasers of Option Holder's interest in this Contract, (D) securities regulators in accordance with applicable securities laws or (E) any attorneys, accountants and other professionals of the Persons listed in (A) through (D) above with a need to know such information to perform their duties that either Party retains such professionals for, provided that such recipients are advised of the confidentiality of such information, (ii) in connection with any arbitration or potential litigation between the Parties under this Contract, or (iii) that are or become known to the general public under circumstances involving no breach by such Party or others of the terms of this Section 10.14. Further, either Party may disclose Contract Matters as required by any Governmental Requirement or by a court of competent jurisdiction or any other Governmental Authority issuing a subpoena to such Party; provided that such Party (A) gives the other Party prior written notice sufficient to allow the other Party to seek a protective order or other appropriate remedy and (B) discloses only such information as is required by any Governmental Authority.
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10.15.3 Notwithstanding anything to the contrary in this Section 10.14, Owner and Option Holder shall jointly issue the first press release regarding the purchase of the Property by Option Holder (or its designee) on the Closing Date. Following such press release pursuant to the foregoing sentence, Owner may not issue a subsequent press release or other public communication regarding this Contract without first obtaining Option Holder’s consent, which consent shall not be unreasonably withheld or delayed. With respect to this Contract, any mention of Option Holder other than merely identifying such Party as the Option Holder of the Property after the Closing Date in any press release or public communication by Owner shall require Option Holder's prior written consent.
10.16 Waiver of Jury Trial. EACH PARTY HEREBY KNOWINGLY, VOLUNTARILY, UNCONDITIONALLY AND INTENTIONALLY FOREVER WAIVES THE RIGHT TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER ARISING AT LAW, AT EQUITY, IN TORT OR CONTRACT) BROUGHT BY ANY PARTY AGAINST SUCH PARTY ON ANY MATTER ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS CONTRACT. THE PROVISIONS OF THIS SECTION 10.15 SHALL SURVIVE THE TERMINATION HEREOF.
[SIGNATURE PAGE TO FOLLOW]
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IN WITNESS WHEREOF, the Parties have executed this Contract as of the Effective Date.
OWNER | ||
HOMESTAKE MINING COMPANY OF CALIFORNIA, a California corporation | ||
By: | “Patrick Malone” |
Name: | Patrick Malone | |
Title: | President |
OPTION HOLDER | ||
DAKOTA TERRITORY RESOURCE CORP., a Nevada corporation | ||
By: | “Jonathan Awde” |
Name: | Jonathan Awde | |
Title: | President and Chief Executive Officer |
EXHIBIT A
PURCHASE AGREEMENT
Attached
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (together with any schedules or exhibits attached hereto, the “Agreement”) is made and entered into as of this ____ day of _________ 20__ (the “Effective Date”), by and between Homestake Mining Company of California, a California corporation (the “Seller”), and Dakota Territory Resource Corp., a Nevada corporation (the “Purchaser”). The Seller and the Purchaser sometimes may be referred to in this Agreement individually as a “Party,” and collectively as the “Parties.”
RECITALS
A. The Seller owns or has rights to certain patented mining claims set forth in Exhibit A attached to this Agreement (the “Mining Property”) and certain Data related to the Mining Property, the Property Donation Agreement and the Donation Assets (collectively, the “Purchased Assets”).
B. The State of South Dakota and The South Dakota Science and Technology Authority (collectively, the “South Dakota Governmental Authorities”) and the Seller entered into the Property Donation Agreement (defined below).
C. The Parties entered into an Option Agreement for Purchase and Sale of Real Property dated September 7, 2021 (the “Option Agreement”), the Seller granted to the Purchaser the exclusive option to purchase the Purchased Assets and assume the Assumed Liabilities.
D. On _______, the Purchaser exercised its Option (as defined in the Option Agreement) pursuant to the Option Agreement for the purchase of the Purchased Assets and the assumption of the Assumed Liabilities.
E. As a result of the exercise of the Option, the Purchaser wishes to purchase the Purchased Assets and to assume the Assumed Liabilities from the Seller, and the Seller is willing to sell the Purchased Assets and Transfer the Assumed Liabilities to the Purchaser, all in accordance with the provisions of this Agreement.
D. The Seller wishes to sell, and the Purchaser wishes to purchase, the Purchased Assets, and the Seller wishes to assign, and the Purchaser wishes to assume, the rights and obligations of the Seller under the Property Donation Agreement, subject to the consent of the South Dakota Governmental Authorities.
E. On the terms and subject to the conditions set forth in this Agreement, the Seller desires to sell and transfer to the Purchaser, and the Purchaser desires to purchase from the Seller, the Purchased Assets, and to assume and discharge the Assumed Liabilities.
AGREEMENT
NOW, THEREFORE, in consideration of the above and for other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, and intending to be legally bound hereby, the Parties agree as follows:
1. Definitions and Rules of Construction.
(a) Certain Defined Terms. The following terms when used in this Agreement shall have the following meanings:
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
“Agreement” has the meaning set forth in the Preamble.
“Assignment and Assumption” means the Assignment and Assumption in the form of
Exhibit B.
“Assumed Liabilities” means all of the known and unknown damages, costs, expenses, responsibilities, Losses, Claims and other liabilities of any nature whatsoever now existing or hereafter arising out of, relating to, or resulting from, in any manner, the ownership, legal or beneficial right to, operation, maintenance, preservation, use, exploration or exploitation (including extraction), reclamation and closure of the Purchased Assets, the Property Donation Agreement and the Donation Assets, whether arising before, on or after the Effective Date.
“Bill of Sale” means the Bill of Sale in the form of Exhibit C.
“Board of Directors” means the board of directors of Purchaser.
“Business Day” means any day that the banks in New York City, New York and Toronto, Ontario, Canada are open for business, excluding Saturdays and Sundays.
“Claim” means any action, arbitration, cause of action, claim, counterclaim, demand, dispute, hearing, grievance, mediation, injunction, investigation, obligation, stay, suit or other Proceeding.
“Closing” has the meaning set forth in Section 4.
“Closing Date” has the meaning set forth in Section 4.
“Consideration” has the meaning set forth in Section 3.
“Consideration Shares” has the meaning set forth in Section 3(a).
“Dakota Shares” means shares of common stock, par value $0.001 per share, of the Purchaser.
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“Data” means all data, documentation and information which Seller possesses relating to the Mining Property, the Property Donation Agreement and the Donation Assets, including, by way of illustration and not by limitation: (a) all geological, geochemical and geophysical maps, reports, surveys and tests; (b) deeds, mortgages, ALTA or boundary surveys, licenses, title insurance reports and policies, or equivalent documentation, if any; (c) all drill hole maps, drill logs, drill core, drill cuttings, chip trays, and other samples taken from the Property and the Donation Assets; (d) all engineering and metallurgical reports, studies and tests; (e) all sample and assay logs, maps, reports and tests; (f) all mineral resource and ore reserve calculations, estimates, reports, studies and tests; (g) all anthropological, biological, cultural, hydrologic, environmental, meteorological, and other like reports, studies, surveys and tests; and (h) all other data relating to the Property and the Donation Assets, in each case, including any such data, documentation or information in digital, electronic, magnetic, optical and written format, all of which is unverified, but, in each case, excluding Privileged Documents.
“Deductible” has the meaning set forth in Section 8(d)(ii).
“Defaulting Party” has the meaning set forth in Section 11.
“De Minimis Amount” has the meaning set forth in Section 8(d)(i).
“Designee” has the meaning set forth in Section 3(a).
“Donation Assets” means “Assets,” as defined in the Property Donation Agreement.
“Effective Date” has the meaning set forth in the Preamble.
“Encumbrance” means any lien, pledge, mortgage, indenture, option, royalty, deed of trust, rights granted under a streaming agreement or other alternative financing agreement, security interest, charge, claim, reservation, easement, right-of-way, restriction, servitude, surface use agreement, imperfection of title, right of first offer or first refusal or similar right, encroachment or other similar encumbrance or obligation created in favor of a third party.
“Environmental Laws” means all applicable Laws relating to the protection of human health and safety, the environmental or hazardous or toxic substances or wastes, pollutants or contaminants.
“Governmental Authority” means any federal, state, county, municipal or other governmental department, entity, authority, commission, board, bureau, court, agency or any instrumentality of any of them.
“Indemnitee” has the meaning set forth in Section 8(g).
“Indemnitor” has the meaning set forth in Section 8(g).
“Knowledge of Seller” means the actual knowledge of Jeff Burich, Patrick Malone and Michael McCarthy, without inquiry.
“Law” means any law, enactment, statute, code, ordinance, rule, regulation, formal interpretation, judgment, decree, writ, injunction, franchise, Permit, certificate, license, authorization, agreement, or other direction or requirement of any Governmental Authority now existing or hereafter enacted, adopted, promulgated, entered, or issued applicable to Parties, the Mining Property, the Donation Assets, the Property Donation Agreement or the Data.
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“Loss” means, in respect of any matter, all Claims, demands, Proceedings, losses, damages, liabilities, deficiencies, fines, costs and expenses (including reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement (but excluding punitive, exemplary, aggravated damages, lost opportunity damages and loss of profits), injuries and judgments arising directly or indirectly as a consequence of such matter.
“Mining Property” has the meaning set forth in Recital A.
“Non-Defaulting Party” has the meaning set forth in Section 11.
“NSR” has the meaning set forth in Section 3(b).
“OFAC” means the United States Department of the Treasury, Office of Foreign Assets Control
“Option Agreement” has the meaning set forth in Recital C.
“Parties” has the meaning set forth in the Preamble.
“Party” has the meaning set forth in the Preamble.
“PATRIOT Act” means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, U.S. Public Law 107-56.
“Permit” means any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration by or with any Governmental Authority.
“Permitted Encumbrance” means: (a) Encumbrances for Taxes, assessments or other governmental charges not yet delinquent or the amount or validity of which is being contested in good faith and diligently by appropriate proceedings; (b) Encumbrances of mechanics, carriers, workers, repairers, warehousemen and similar Persons arising or incurred in the ordinary course of business in respect of liabilities that are not yet due or if due and payable, but are unpaid, are being contested in good faith, and in respect of which adequate resources are maintained; (c) matters of public record; (d) any conditions that reasonably would be expected to be shown by a current land survey or search or examination of publicly available information or documents; (e) Environmental Laws; (f) Encumbrances that arise due to zoning, subdivision, entitlement, and other Laws related to land use; (g) royalty interests of public record; (h) the paramount title of the United States; (i) pledges made with respect to Seller Permits; (j) orders of any Governmental Authority; and (k) any Encumbrances set forth in this Agreement, the Property Donation Agreement or the Related Agreements.
“Person” means any natural or artificial legal entity whatsoever, including any individual, general partnership, limited partnership, unincorporated association, sole proprietorship, corporation, limited liability company, trust, business trust, real estate investment trust, joint venture, or Government Authority.
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“Privilege” has the meaning set forth in Section 2(c)(i).
“Privileged Documents” has the meaning set forth in Section 2(c)(i).
“Proceeding” means any action, Claim, counterclaim, suit, governmental investigation or inquiry, or other proceeding.
“Property Donation Agreement” means the Property Donation Agreement dated April 14, 2006, among the Seller and the South Dakota Governmental Authorities.
“Purchased Assets” has the meaning set forth in Recital A.
“Purchaser” has the meaning set forth in the Preamble.
“Purchaser Indemnitees” has the meaning set forth in Section 8(c).
“Quitclaim Deed” means the Quitclaim Deed in the form of Exhibit D.
“Related Agreements” means the Assignment and Assumption, the Bill of Sale, the Quitclaim Deed and the Royalty Deed.
“Representative” means, with respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Royalty Deed” means the Royalty Deed for the NSR in the form of Exhibit E.
“Sanctions” means sanctions administered or enforced by OFAC, or other relevant sanctions authority.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“Securities Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“Seller” has the meaning set forth in the Preamble.
“Seller Director” has the meaning set forth in Section 2(d).
“Seller Indemnitees” has the meaning set forth in Section 8(a).
“Seller Permits” means the Permits held by the Seller or its Affiliates related to the Mining Property.
“South Dakota Governmental Authorities” has the meaning set forth in Recital B.
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“Tax” means all federal, state, local, foreign and other income, gross receipts, sales, use, severance, depletion, production, ad valorem, transfer, franchise, registration, profits, license, lease, service, service use, withholding, payroll, employment, unemployment, estimated, excise, severance, environmental, stamp, occupation, premium, property (real or personal), real property gains, windfall profits, customs, duties or other taxes, fees, assessments or charges in the nature of a tax of any kind whatsoever, together with any interest, additions or penalties with respect thereto and any interest in respect of such additions or penalties.
“Transfer” means to, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
(b) Interpretation. In this Agreement:
(i) unless the context otherwise clearly requires, (A) references to the plural include the singular, and references to the singular include the plural, (B) references to one gender include the other gender, (C) the words “include,” “includes,” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation,” (D) the terms “hereof,” “herein,” “hereunder,” “hereto,” and similar terms refer to this entire Agreement and not to any particular provision of this Agreement, unless the provision otherwise provides, (E) “or” is used in the inclusive sense of “and/or,” (F) if a word or phrase is defined, then its other grammatical or derivative forms have a corresponding meaning; (G) a reference to Law or a statute, code, act, legislation, or to a provision thereof includes a modification, amendment, or substitution thereof or any successor Law, the rules and regulations promulgated thereunder, and the formal interpretations issued in accordance therewith; and (H) unless otherwise specified, the terms “day” and “days” mean and refer to calendar day(s);
(ii) unless otherwise specified, any reference to any document, instrument or agreement (including a reference to this Agreement) (A) includes and incorporates all exhibits, schedules, and other attachments thereto, (B) includes and incorporates all documents, instruments, deeds, or agreements issued or executed in connection therewith or in replacement thereof, and (C) means such document, instrument, deed, or agreement, or replacement or predecessor thereto, as amended, modified, or supplemented from time to time in accordance with its terms and in effect at the relevant time (except to the extent prohibited by this Agreement or such other agreement or document);
(iii) unless otherwise specified, all references to articles, sections, schedules and exhibits are to the Articles, Sections, and Exhibits of this Agreement;
(iv) the headings of this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; and
(v) the Parties acknowledge that they and their respective legal counsel have reviewed and participated in negotiating and settling the terms of this Agreement, including the Related Agreements, and agree that no inference shall be drawn in favor of or against any Party by virtue of the fact that they or their respective legal counsel were or were not principally responsible for drafting this Agreement and the Related Agreements.
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2. Purchase and Sale; Assignment and Assumption.
(a) Purchased Assets. Subject to the terms and conditions of this Agreement and the Related Agreements, at the Closing the Seller shall sell and Transfer and the Purchaser shall purchase and acquire, the Purchased Assets as of the Closing Date free and clear of any Encumbrances arising by, through or under Seller, except for Permitted Encumbrances.
(b) Assumed Liabilities. Subject to the terms and conditions of this Agreement and the Related Agreements, at the Closing, the Seller shall assign to the Purchaser, and the Purchaser shall assume the Assumed Liabilities.
(c) Limitations.
(i) Privilege. All communications and other documents exchanged between the Seller or its Affiliates and legal counsel (including, as applicable, internal legal counsel) providing legal advice to the Seller and its Affiliates, including documents and communications relating to the this Agreement, the Property Donation Agreement, the Related Agreements, the Mining Property and the Donation Assets, and files maintained by legal counsel as a result of providing legal advice to the Seller or its Affiliates (the “Privileged Documents”), that are subject to attorney-client privilege, any similar privilege, or that constitute attorney work product (as applicable, a “Privilege”), specifically are excluded from the Data and shall be and remain the property of the Seller its Affiliates, as applicable. Neither the Seller nor its Affiliates intend to waive any applicable Privilege, and any disclosure of any Privileged Documents, whether in the Data or otherwise, shall be deemed to be inadvertent. Accordingly, the Purchaser, on its behalf and on behalf of its Affiliates and its and their respective Representatives acknowledges and agrees that a disclosure of any Privileged Documents will not constitute a waiver of such Privilege, and the Person receiving any such Privileged Documents promptly shall return to the Seller, or with the consent of the Seller, destroy, such Privileged Documents.
(ii) Data. All Data provided to, or made available to the Purchaser under this Agreement or prior to the Effective Date, is provided without representation or warranty and is at the sole risk of the Purchaser. Such information is provided “AS IS, WHERE IS” AND WITH ALL FAULTS, AND THE SELLER AND ITS AFFILIATES EXPRESSLY DISCLAIM THE ACCURACY OR COMPLETENESS OF ALL DATA, AND ALL EXPRESS OR IMPLIED WARRANTIES CONCERNING THE SAME, AND EXPRESSLY EXCLUDING ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE.
(iii) Permits. Purchaser, at its cost and expense, shall have the sole responsibility to, and shall, Transfer the Seller Permits to the Purchaser as of the Closing Date. In the event the Purchaser desires to amend, modify or revise any Seller Permits, or obtain additional Permits: (A) such amendments, modifications or revisions, or any action to obtain additional Permits, shall only be made following Closing; and (ii) the Purchaser shall be solely responsible for such amendments, modifications or revisions, or any action to obtain additional Permits, and shall be solely liable for and shall pay all related fees and other costs, including the cost of posting any bonds or other financial assurances related to any such amendments, modifications or revisions, or any action to obtain additional Permits. Any actions by the Purchaser or any Affiliate of the Purchaser, to which the Seller Permits may be Transferred, to amend, modify or revise any Seller Permits, or to obtain additional Permits, is subject to the rights of the Seller under the Quitclaim Deed.
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(iv) Trade Name. Purchaser shall not use the term “Homestake” or any confusingly similar term in any trademark, trade name, service mark, trade dress, logo, copyright, domain name, or corporate, company or business name; provided that Purchaser may use the term “Homestake” when referring to the Mining Property or the mining operations conducted on the Mining Property.
(d) Nomination of Seller Director. Purchaser hereby grants to Seller the right to nominate a director to the Board of Directors (the “Seller Director”). Seller shall inform Purchaser in writing not less than two (2) Business Days prior to the Closing Date whether Seller will exercise its right to nominate Seller Director, together with the name of the Seller Director.
3. Consideration.
In consideration of the purchase of the Purchased Assets and the assumption of the Assumed Liabilities, at the Closing Purchaser shall deliver to the Seller the following (the “Consideration”):
(a) Dakota Shares. 3,000,000 Dakota Shares (the “Consideration Shares”) to be issued to the Seller or a direct or indirect affiliate of the Seller identified by the Seller to the Purchaser in writing not less than two days prior to the anticipated Closing Date (the “Designee”), which Consideration Shares shall be (i) registered in the name of the Designee in book-entry form by the Purchaser’s transfer agent and (ii) bear a customary restrictive legend reflecting the issuance of the Consideration Shares in a transaction exempt from registration under the Securities Act;
(b) NSR. A 2.5% net smelter returns royalty (the “NSR”) on the production of minerals from the properties set forth in the Royalty Deed, dated as of the Closing Date; and
(c) Operating Indemnity. The indemnity included in the Quitclaim Deed, dated as of the Closing Date.
4. Closing.
Closing shall take place at a location mutually agreed by the Parties, and at a date and time mutually agreed by the Parties (the “Closing”), but in any event not later than thirty (30) days after the Effective Date (the “Closing Date”).
(a) Seller Closing Deliverables. At Closing, the Seller shall deliver or cause to be delivered to the Purchaser the following:
(i) The Quitclaim Deed for the Mining Property, duly executed by the Seller;
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(ii) | The Bill of Sale for the Data, duly executed by the Seller; |
(iii) | The Assignment and Assumption for the Assumed Liabilities, duly executed by the Seller; |
(iv) | The Royalty Deed for the NSR, duly executed by the Seller; |
(v) | A certificate of the Seller repeating its representations and warranties, except as noted thereon, in the form of Exhibit F; |
(vi) | A completed form W-9 and |
(vii) all such other assurances, consents, agreements, documents and instruments as reasonably may be required by the Purchaser to consummate the transactions contemplated in this Agreement and the Related Agreements.
(b) Purchaser Closing Deliverables. At Closing, the Purchaser shall deliver or cause to be delivered to the Seller the following:
(i) A stock certificate or a Direct Registration Statement from the Purchaser’s transfer agent, representing the Consideration Shares, issued in the name of the Seller or the Designee, as applicable;
(ii) | The Bill of Sale for the Data, duly executed by the Purchaser; |
(iii) | The Assignment and Assumption for the Assumed Liabilities, duly executed by the Purchaser; |
(iv) | The Royalty Deed for the NSR, duly executed by the Purchaser; |
(v) The Quitclaim Deed for the Mining Property, duly executed by the Purchaser and JR Resources Corp., a Nevada corporation, and in proper form for recording;
(vi) Certificates of such resolutions evidencing the Purchaser’s existence, power and authority to enter into and execute this Agreement and to consummate the transactions herein contemplated;
(vii) A certificate of the Purchaser repeating its representations and warranties, except as noted thereon, in the form of Exhibit G;
(viii) all such other assurances, consents, agreements, documents and instruments as reasonably may be required by the Purchaser or the Purchaser’s title company to consummate the transactions contemplated in this Agreement and the Related Agreements.
(c) Election of Seller Director. In the event that Seller exercises its right to nominate the Seller Director pursuant to Section 2(d), on and as of the Closing Date, Purchaser shall cause the Seller Director to be elected to the Board of Directors.
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(d) Simultaneous Transactions. The transactions and all deliveries contemplated in this Agreement shall be deemed to occur simultaneously on the Closing Date, and none shall be deemed completed until all are completed.
(e) Taxes and Fees. Except for federal income Tax obligations related to the transactions set forth in this Agreement for which the Seller is responsible, the Purchaser shall be solely liable for and shall pay all applicable sales, transfer, use, stamp, conveyance, value-added, real property transfer, recording, and other similar Taxes, if any, together with all recording or filing fees, notarial fees and other similar costs of Closing, that may be imposed upon, or payable, collectible or incurred in connection with the transactions contemplated in this Agreement.
(f) Recordation. The Purchaser shall be solely responsible for recording the Quitclaim Deed with the appropriate Governmental Authorities, and shall be solely liable for and shall pay all related recording fees and other costs, fees and expenses. The Seller shall be solely responsible for recording the Royalty Deed with the appropriate Governmental Authorities.
(g) Unpaid Taxes. The Purchaser shall be responsible for and shall pay to the applicable Governmental Authorities all unpaid Taxes of any nature with respect to the Mining Property.
(h) Possession. The Purchaser shall be granted full and exclusive possession of the Mining Property at Closing.
5. Seller’s Representations and Warranties.
The Seller represents and warrants to the Purchaser as of the Effective Date and as of the Closing Date as follows:
(a) Incorporation and Qualification. The Seller is a corporation incorporated and in good standing under the Laws of California and has the corporate power to enter into and perform its obligations under this Agreement and the Related Agreements to which the Seller is a party.
(b) Corporate Authority. The execution and delivery of and performance by the Seller of this Agreement and the Related Agreements to which the Seller is a party, the transfer of the Purchased Assets by the Seller to the Purchaser, and the assignment of the Assumed Liabilities from the Seller to the Purchaser have been authorized by all necessary corporate action on the part of the Seller.
(c) No Violation or Breach. The execution and delivery of and performance by the Seller of this Agreement and the Related Agreements to which it is a party:
(i) does not conflict with the articles of incorporation or bylaws of the Seller;
(ii) does not violate in any material respect any Law applicable to the Seller or the Purchased Assets; and
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(iii) to the Knowledge of Seller, does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments directly related to the Purchased Assets to which the Seller is a party.
(d) Execution and Binding Obligation. This Agreement and each of the Related Agreements to which the Seller is a party has been duly executed and delivered by the Seller and constitutes a legal, valid and binding agreement of the Seller enforceable against the Seller in accordance with its terms, subject only to any limitation under applicable Laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other Laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
(e) Filings, Consents and Approvals. To the Knowledge of Seller, the Seller is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other person or entity in connection with the execution, delivery and performance by the Seller of this Agreement or any of the Related Agreements to which it is a party, other than (i) filings required by state or federal securities laws (including the Securities Act and the Securities Exchange Act), if applicable, (ii) those that have been made or obtained prior to the date of this Agreement, (iii) approvals for the assignment of the Donation Agreement, (iv) the recording of the Memorandum of Option and the Quitclaim Deed; and (v) approvals for the Transfer of any Permits.
(f) Title to the Purchased Assets. The Seller (i) owns the Purchased Assets free and clear of any Encumbrances arising by, through or under the Seller, except for Permitted Encumbrances; and (ii) except for Permitted Encumbrances, to the Knowledge of Seller, there are no outstanding options, rights of first offer or first negotiation or rights of first refusal in favor of any other party to acquire an interest in the Mining Property, and the Seller has not granted any currently exercisable option or other right to acquire an interest in the other Purchased Assets or the Property Donation Agreement; provided that the Seller has not reviewed the Data and makes no representation or warranty as to the accuracy or completeness of any of the Data or that the Data delivered to the Purchaser constitutes all of the documents related to the Mining Property, the Property Donation Agreement or the Donation Assets; and (iii) has not received written notice of any, and to the Knowledge of Seller, there are no pending or threatened condemnation proceedings or proposed actions or agreements for taking in lieu of condemnation with respect to any portion of the Mining Property.
(g) No Action. Owner has not received written notice of any, and to the Knowledge of Seller, there are no Proceedings which would prevent the consummation of the transactions contemplated by this Agreement or the Related Agreements to which Seller is a party, nor is there any Proceeding or Claim related to the Mining Property, including, without limitation, the title or environmental status of the Mining Property.
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(h) OFAC. The Seller is not listed on the list maintained by OFAC (commonly known as the OFAC List) or otherwise qualify as a terrorist, specially designated national and blocked person or a person with whom business by a United States citizen or resident is prohibited. The Seller is not in violation of any anti-money laundering or anti-terrorism statute, including the PATRIOT Act, and the related regulations issued thereunder, including temporary regulations, and Executive Orders (including Executive Order 13224) issued in connection therewith, all as amended from time to time. Neither the Seller nor any of its Affiliates or, to its knowledge, any director, officer, employee, agent or representative of the Seller, is a Person currently the subject of any Sanctions. The Seller has not knowingly engaged in, and is not now knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that is the subject of Sanctions.
(i) Consideration Shares. The Seller, on its behalf and on behalf of its Designee, if any, represents and warrants that it is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act and it is acquiring the Consideration Shares for its own account and not with a view to the distribution thereof. Seller, on its behalf and on behalf of its Designee, if any, understands that the Consideration Shares have not been and will not be registered under the Securities Act, will bear a restrictive legend, and may be resold only if registered pursuant to the provisions of the Securities Act or if an exemption from registration is available. The Seller, on its behalf and on behalf of its Designee, if any, further represents and warrants that it will not Transfer any Consideration Shares or any interest therein except in a transaction exempt from or not subject to the registration requirements of the Securities Act. The Seller, on its behalf and on behalf of its Designee, if any, represents that (i) it has such knowledge, sophistication and experience in business and financial matters that it is capable of evaluating the merits and risks of the acquisition of the Consideration Shares and (ii) it has been granted the opportunity to ask questions of, and receive satisfactory answers from, representatives of Purchaser concerning the business affairs and financial condition of the Purchaser and its Affiliates, and has had the opportunity to obtain and has obtained any additional information which it deems necessary regarding such purchase, and that the Purchaser is not required to register the Consideration Shares.
(j) Disclaimer. Except as specifically set forth in this Section 5:
(i) Except as expressly set forth herein, the Seller makes no representations or warranties of any kind or nature, express or implied, at Law or in equity, and there are no implied conditions in respect of the Seller, or any of its assets, liabilities or operations, or with respect to the Purchased Assets or the Assumed Liabilities, including without limitation, any warranties express or implied with respect to the sufficiency, merchantability or fitness for any particular purpose of any of the Purchased Assets or the Assumed Liabilities, or compliance with applicable Laws, including Environmental Laws, and all such representations, warranties or conditions hereby are expressly disclaimed.
(ii) The Purchaser hereby acknowledges and agrees that the Purchaser is purchasing the Purchased Assets and the Assumed Liabilities on an “as-is, where-is” basis, with all faults.
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(iii) WITHOUT LIMITING THE FOREGOING, SELLER MAKES NO REPRESENTATIONS OR WARRANTIES WHATSOEVER CONCERNING THE EXISTENCE OR STATUS OF ANY MINES OR WORKINGS WITHIN THE AREA COVERED BY THE MINING PROPERTY OR THE PROPERTIES COVERED BY THE PROPERTY DONATION AGREEMENT, INCLUDING THE EXISTENCE AND STATUS OF ANY ABANDONED MINES OR WORKINGS, THE STATUS OF ANY ROYALTIES OR THE EXISTENCE OR STATUS OF ANY UNRECORDED RIGHTS TO ANY ROYALTIES, THE EXISTENCE, NATURE, LOCATION, AMOUNT OR VALUE OF ANY MINERALIZATION, MINERAL RESERVES OR RESOURCES, THE ABILITY TO EXTRACT, PROCESS, OR SELL MINERALS BY ANY MEANS, WHETHER ANY NECESSARY PERMITS CAN BE OBTAINED IN A TIMELY MANNER OR AT ALL, WHETHER ANY MINING CAN BE DONE ECONOMICALLY OR AT ALL, OR THAT THERE WILL BE NO THIRD PARTY CHALLENGE TO THE ISSUANCE OF ANY REQUIRED PERMIT OR ENVIRONMENTAL IMPACT STATEMENT REQUIRED FOR OPERATIONS WITH RESPECT TO THE MINING PROPERTIES OR THE PROPERTIES COVERED BY THE PROPERTY DONATION AGREEMENT, OR THAT THERE ARE NO RIGHTS (INCLUDING ROYALTIES, ACCESS RIGHTS, INFORMATION RIGHTS, RECONVEYANCE RIGHTS, REVERSIONARY RIGHTS OR OTHER RIGHTS OF PREDECESSORS IN INTEREST) RFELATED TO THE MINING PROPERTY OR THE PROPERTIES COVERED BY THE PROPERTY DONATION AGREEMENT.
6. Purchaser’s Representations and Warranties.
The Purchaser represents and warrants to the Seller as of the Effective Date and as of the Closing Date as follows:
(a) Incorporation and Qualification. The Purchaser is a corporation incorporated and in good standing under the Laws of the State of Nevada and has the corporate power to enter into and perform its obligations under this Agreement and the Related Agreements to which the Purchaser is a party;
(b) Corporate Authority. The execution and delivery of and performance by the Purchaser of this Agreement and each of the Related Agreements to which the Purchaser is a party, the transfer of the Purchased Assets from the Seller to the Purchaser, and the assumption of the Assumed Liabilities by the Purchaser, have been authorized by all necessary corporate action on the part of the Purchaser;
(c) No Violation or Breach. The execution and delivery of and performance by the Purchaser of this Agreement and the Related Agreements to which it is a party:
(i) does not conflict with the articles of incorporation or bylaws of the Purchaser;
(ii) does not violate in any material respect any Law applicable to the Purchaser; and
(iii) does not (or would not with the giving of notice or the lapse of time) result in a material breach or material violation of or a conflict in any material way with, or allow any other person or entity to exercise any rights under any contracts or instruments to which the Purchaser is a party.
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(d) Execution and Binding Obligation. This Agreement and each of the Related Agreements to which the Purchaser is a party has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding agreement of the Purchaser enforceable against it in accordance with its terms subject only to any limitation under applicable Laws relating to (i) bankruptcy, winding-up, insolvency, arrangement and other Laws of general application affecting the enforcement of creditors’ rights, and (ii) the discretion that a court may exercise in the granting of equitable remedies.
(e) Capitalization.
(i) The authorized capital of the Purchaser consists of 75,000,000 shares of common stock and 10,000,000 shares of preferred stock, of which [●] Dakota Shares, no shares of preferred stock, and derivative securities to purchase up to [●] shares of common stock are issued and outstanding as of [●], 20[__]; and
(ii) On a fully diluted basis, the Purchaser has a sufficient number of authorized Dakota Shares to issue the Consideration Shares without exceeding the number of shares authorized under Purchaser’s articles of incorporation.
(f) Filings, Consents and Approvals.
(i) The Purchaser is not required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other Governmental Authority or other person or entity in connection with the execution, delivery and performance by the Purchaser of this Agreement or any of the Related Agreements to which it is a party, other than (A) filings required by applicable securities Laws (including the Securities Act and the Securities Exchange Act), and (B) those that have been made or obtained prior to the date of this Agreement; and
(ii) During the last 12 months, the Purchaser has filed in a timely manner all disclosures, reports and other filings required to be filed by it under applicable securities Laws, including the Securities Act and the Securities and Exchange Act (the “Securities Filings”) in all jurisdictions in which such Securities Filings are required to be filed and with all securities exchanges where the Purchaser’s securities are traded, and all such Securities Filings are true and accurate in all material respects.
(g) Financial Capability.
(i) From the Effective Date, and thereafter through the Closing, the Purchaser shall maintain sufficient financial resources and capabilities to pay the Consideration; and
(ii) Payment of the Consideration will not leave the Purchaser insolvent, thinly capitalized (as determined by generally acceptable accounting principles applied on a consistent basis), or unable to meet its commitments, financial or otherwise, as they become due.
(h) Issuance of the Consideration Shares. The issuance of the Consideration Shares has been duly authorized and, when issued, the Consideration Shares will be duly and validly issued, fully paid and nonassessable, free and clear of all Encumbrances.
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(i) The Purchaser is not listed on the list maintained by OFAC (commonly known as the OFAC List) or otherwise qualify as a terrorist, specially designated national and blocked person or a person with whom business by a United States citizen or resident is prohibited. The Purchaser is not in violation of any anti-money laundering or anti-terrorism statute, including the PATRIOT Act, and the related regulations issued thereunder, including temporary regulations, and Executive Orders (including Executive Order 13224) issued in connection therewith, all as amended from time to time. Neither the Purchaser nor any of its Affiliates or, to its knowledge, any director, officer, employee, agent or representative of the Seller, is a Person currently the subject of any Sanctions. The Purchaser has not knowingly engaged in, and is not now knowingly engaged in, any dealings or transactions with any Person, or in any country or territory, that is the subject of Sanctions.
(j) Independent Review.
(i) The Purchaser and its Affiliates, and its and their respective Representatives, have had sufficient access to and opportunity to review the Purchased Assets and the Assumed Liabilities and to ask questions of the management representatives and professional advisors of the Seller, as necessary for the Purchaser to investigate, analyze, and evaluate the Purchased Assets and the Assumed Liabilities and to make its and their independent decision to acquire the acquire the Purchased Assets and assume the Assumed Liabilities and to consummate the transactions contemplated by this Agreement and the Related Agreements to which the Purchaser is a party.
(ii) In making the decision to enter into this Agreement and the Related Agreements to which the Purchaser is a party, and to consummate the transactions contemplated herein and therein, the Purchaser has conducted its own independent investigation, analysis, and evaluation of the Purchased Assets and the Assumed Liabilities (including the Purchaser’s own estimate and appraisal of the extent, location and value of mineralization, mineral resources and reserves, undeveloped properties, and environmental obligations), and the f inancial condition of, operations, and prospects for, the Mining Property and the properties included in the Donation Assets.
7. Data.
Without any obligation to investigate or review, to the extent that the Seller locates or receives any documents and/or information that constitute Data after the Closing Date, it will deliver those documents and/or information to the Purchaser as soon as reasonably practicable.
8. Indemnity.
(a) Purchaser Indemnification. Subject to the Quitclaim Deed, the Purchaser shall indemnify, defend and hold harmless the Seller and its Affiliates and its and their respective Representatives (collectively, the “Seller Indemnitees") against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Seller Indemnitees based upon, arising out of, with respect to or by reason of:
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(i) any material inaccuracy in or material breach of any of the representations or warranties of the Purchaser contained in this Agreement as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); provided that the materiality requirement in this Section 8(a)(i) shall not apply to representations or warranties that, in accordance with their provisions, are subject to a materiality standard or
(ii) any material breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Purchaser pursuant to this Agreement.
(b) Limitations to Purchaser Indemnification. Subject to the Quitclaim Deed, the aggregate liability of the Purchaser to the Seller Indemnitees for indemnification pursuant to Section 8(a) in no event shall exceed the value of the Consideration Shares as determined as of the Closing Date.
(c) Seller Indemnification. The Seller shall indemnify, defend and hold harmless the Purchaser and its Affiliates and its and their respective Representatives (collectively, the “Purchaser Indemnitees”) against, and shall hold each of them harmless from and against, and shall pay and reimburse each of them for, any and all Losses incurred or sustained by, or imposed upon, the Purchaser Indemnitees based upon, arising out of, with respect to or by reason of:
(i) any material inaccuracy in or material breach of any of the representations or warranties of the Seller contained in this Agreement as of the Closing Date (except for representations and warranties that expressly relate to a specified date, the inaccuracy in or breach of which will be determined with reference to such specified date); provided that the materiality requirement in this Section 8(c)(i) shall not apply to representations or warranties that, in accordance with their provisions, are subject to a materiality standard; or
(ii) any material breach or non-fulfillment of any covenant, agreement or obligation to be performed by the Seller pursuant to this Agreement.
(d) Limitations to Seller Indemnification. The indemnification provided by the Seller to the Purchaser Indemnitees pursuant to Section 8(c) shall be subject to the following limits:
(i) the amount finally agreed or adjudicated of any such individual Loss of a Purchaser Indemnitee subject to indemnification by the Seller under this Agreement must exceed $10,000 (the “De Minimis Amount”);
(ii) the aggregate amount of Losses of the Purchaser Indemnitees subject to indemnification by the Seller under this Agreement must exceed $70,000 (the “Deductible”), provided that (A) any individual amount used to calculate the Deductible shall be no less than the De Minimis Amount, and (B) once the Deductible has been exceeded, the Purchaser shall only be entitled to require payment on such indemnities on the portion of Losses that exceeds the Deductible;
(iii) any Claims of the Purchaser Indemnitees arising out of similar facts, matters or circumstances will not be treated as separate Claims; and
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(iv) notwithstanding any provision in this Agreement to the contrary, but subject to the Quitclaim Deed the aggregate amount of all Claims of the Purchaser Indemnitees subject to indemnification by the Seller under this Agreement shall not exceed 10% of the total value of the Consideration Shares as of the Closing.
(e) Damages Limitations. In no event shall the Purchaser be liable to any Seller Indemnitee, and in no event shall the Seller be liable to any Purchaser Indemnitee, as applicable, for any punitive, incidental, consequential, special or indirect damages, including loss of future revenue or income, loss of business reputation or opportunity relating to the breach or alleged breach of this Agreement, or diminution of value or any damages based on any type.
(f) Survival. Subject to the provisions in the Quitclaim Deed governing the survival period of the indemnification obligations therein, the indemnification obligations of the Purchaser to the Seller Indemnitees, and the indemnification obligations of the Seller to the Purchaser Indemnitees, as applicable, under this Section 8 shall terminate in all respects two hundred and seventy (270) calendar days following the earlier of the termination this Agreement and the Closing Date, after which such indemnification obligation automatically shall cease. For purposes of clarity, the survival period for the indemnification obligations in the Quitclaim Deed shall be governed by the Quitclaim Deed.
(g) Procedure. Promptly after receipt by a Party entitled to indemnification hereunder (the “Indemnitee”) of written notice of the assertion or the commencement of any Claim subject to indemnification under this Section 8, the Indemnitee shall give written notice thereof to the Purchaser or the Seller, as applicable (the “Indemnitor”), and thereafter shall keep the Indemnitor reasonably informed with respect thereto; provided, however, that failure of the Indemnitee to give the Indemnitor notice as provided in this Section shall not relieve the Indemnitor of its obligations hereunder except to the extent that the Indemnitor is prejudiced thereby. If any third person commences any Proceeding against any Indemnitee, the Indemnitor shall be entitled to participate in such Proceeding and, at its option, assume the defense thereof with counsel reasonably satisfactory to the Indemnitee, at the Indemnitor’s sole expense; provided, however, that the Indemnitor shall not have the right to assume the defense of any Proceeding if (i) the Indemnitee shall have one or more legal or equitable defenses available to it which are different from or in addition to those available to the Indemnitor, and, in the reasonable opinion of the Indemnitee, counsel for the Indemnitor could not adequately represent the interests of the Indemnitee because such interests could be in conflict with those of the Indemnitor, ( ii) such Proceeding is reasonably likely to have a material adverse effect on any other matter beyond the scope or limits of the indemnification obligation of the Indemnitor, or (iii) the Indemnitor shall not have assumed the defense of the Proceeding in a timely fashion (but in any event within 30 days of written notice of such Proceeding). If the Indemnitor shall assume the defense of any Claim, the Indemnitee shall be entitled to participate in any Proceeding at its expense, and the Indemnitor shall not settle such Proceeding unless the settlement shall include as an unconditional term thereof the giving by the claimant or the plaintiff of a full and unconditional release of the Indemnitee from all liability with respect to the matters that are subject to such Proceeding and to which Indemnitee is entitled to indemnification hereunder, or otherwise shall have been approved reasonably by the Indemnitee.
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(h) Sole Remedy. Subject to the Quitclaim Deed, the rights to indemnification provided for in this Section 8 shall be the sole and exclusive remedy of the Purchaser Indemnitees and the Seller Indemnitees, as the case may be, for any Claims or Losses of any nature under this Agreement.
9. Conditions of Closing.
(a) Conditions for the Benefit of the Purchaser. The transactions contemplated in this Agreement and the Related Agreements are subject to the following conditions to be fulfilled or performed, on or before the Closing Date, which conditions are for the exclusive benefit of the Purchaser and may be waived, in whole or in part, by the Purchaser in its sole discretion:
(i) The covenants, representations and warranties of the Seller contained in this Agreement shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such covenants, representations and warranties had been made on and as of such date; provided that the materiality requirement in this Section 8(a)(i) shall not apply to covenants, representations and warranties that, in accordance with their provisions, are subject to a materiality standard;
(ii) The Seller shall have obtained the consent of the South Dakota Governmental Authorities for the assignment of the Property Donation Agreement to the Purchaser; and
(iii) All other consents, approvals and waivers required to Transfer the Purchased Assets to the Purchaser shall have been obtained on terms acceptable to the Purchaser, acting reasonably.
(b) Conditions for the Benefit of the Seller. The purchase and sale of the Purchased Assets is subject to the following conditions to be fulfilled or performed, on or before the Closing Date, which conditions are for the exclusive benefit of the Seller and may be waived, in whole or in part, by the Seller in its sole discretion:
(i) The covenants, representations and warranties of the Purchaser contained in this Agreement shall be true and correct in all material respects as of the Closing Date with the same force and effect as if such covenants, representations and warranties had been made on and as of such date; provided that the materiality requirement in this Section 9(b)(i) shall not apply to covenants, representations and warranties that, in accordance with their provisions, are subject to a materiality standard;
(ii) The Purchaser shall deliver to the Seller a copy of the resolution of the directors of the Purchaser approving the transactions contemplated in this Agreement and the Related Agreements; and
(iii) All consents, approvals and waivers required to acquire the Purchased Assets and assume the Assumed Liabilities from the Seller shall have been obtained on terms acceptable to the Seller, acting reasonably.
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10. Casualty; Condemnation.
Seller shall bear the risk of any loss or damage to the Mining Property resulting from condemnation, fire or other casualty at all times prior to Closing. In the event of any such loss or damage, there will be no adjustment in the Consideration on account of such loss or damage but all insurance proceeds and condemnation awards payable as a result of the occurrence of the event resulting in such loss or damage shall be delivered by Seller to Purchaser, or the rights to such proceeds shall be assigned by Seller to Purchaser if not yet paid over to Seller, in each case contingent upon the occurrence of Closing.
11. The Purchaser’s Remedies for the Seller’s Default.
In the event that either Party (, as applicable, the “Defaulting Party”) shall default in performance of its obligations under this Agreement, or if the Defaulting Party’s representations and warranties contained in this Agreement shall fail to be true in any material and adverse respect when made, or as of the Closing, which default continues for ten (10) Business Days following written notice thereof from the other Party (as applicable, the “Non-Defaulting Party”) then, at the Non-Defaulting Party’s option, the Non-Defaulting Party shall have the right to elect any of the following remedies hereunder: (a) the Non-Defaulting Party may terminate this Agreement and thereafter, except as otherwise specifically set forth in this Agreement (including in Section 8), neither the Non-Defaulting Party nor the Defaulting Party shall have any further obligations under this Agreement; (b) the Non-Defaulting Party may seek all remedies at equity, including, without limitation, specific performance of this Agreement; or (c) the Non-Defaulting Party may seek applicable rights to indemnification from the Defaulting Party in accordance with Section 8.
12. Termination.
This Agreement may, by notice in writing given at or prior to the Closing Date, be terminated by mutual consent of the Seller and the Purchaser.
13. Brokers.
Each Party represents and warrants to the other that that it has not had, and shall not have, any dealings with (and it has not engaged and will not engage) any third party to whom the payment of any broker’s fee, finder’s fee, commission or other similar compensation shall or may become due or payable in connection with the transactions contemplated hereby. It is agreed that if any claims for brokerage commissions or fees are ever made against the Seller or the Purchaser, all such claims shall be handled and paid by the party whose actions or alleged commitments form the basis of such claim. Each Party shall indemnify, defend and hold the other Party harmless from any and all claims for commissions or fees by brokers made against the other party, and resulting loss, cost (including reasonable attorneys’ fees) and damages, which claim shall have arisen out of any written document or alleged oral agreement entered or purported to have been entered into by the indemnifying Party and the person claiming such commission, with respect to the transaction contemplated by this Agreement.
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14. Maintenance of Property; Title.
(a) Maintenance of the Property. The Seller shall make all payments of Taxes, royalties, land-holding costs, claim maintenance and similar fees, lease payments and other payments that are due as of the Effective Date or become due from and after the Effective Date until the Closing Date and that are required for the Seller to maintain its interest in the Mining Property, except to the extent such payments are being contested pursuant to a good faith dispute.
(b) No Encumbrances. From and after the Effective Date until the Closing Date, the Seller shall not create or allow any Encumbrances arising by, through or under Seller on the Mining Property, except for Permitted Encumbrances.
15. Enurement.
This Agreement becomes effective on the Effective Date. After the Effective Date, this Agreement will be binding upon and enure to the benefit of the Parties and their respective successors, legal representatives and permitted assigns. Except as otherwise set forth in this Agreement or the Related Agreements, neither this Agreement nor the Related Agreements nor any of the rights or obligations under this Agreement or the Related Agreements, including any right to payment, may be assigned or transferred, in whole or in part, by either Party without the prior written consent of the other Party.
16. Entire Agreement.
This Agreement, together with the Related Agreements, constitutes the entire agreement between the Parties with respect to the transactions contemplated in this Agreement and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, of the Parties with respect to such transactions. Except as specifically set forth in this Agreement, the Parties have not relied and are not relying on any other information, discussion or understanding in entering into and completing the transactions contemplated by this Agreement.
17. Waiver.
No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the Party to be bound by the waiver. A Party’s failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right it may have.
18. Further Assurances.
Each of the Parties covenants and agrees to take reasonable commercial efforts to do such things and to execute such further conveyances, transfers, documents and assurances as may be deemed necessary or advisable from time to time in order to effectively transfer the Purchased Assets to the Purchaser and carry out the terms and conditions of this Agreement in accordance with their true intent.
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19. Severability.
If any provision of this Agreement is determined to be illegal, invalid or unenforceable, by an arbitrator or any court of competent jurisdiction from which no appeal exists or is taken, that provision will be severed from this Agreement and the remaining provisions will remain in full force and effect.
20. Governing Law; Jurisdiction.
(a) This Agreement is governed by, and will be interpreted and construed in accordance with, the Laws of the State of Utah without reference to Utah principles of conflicts of Law; provided that the Quitclaim Deed and the Royalty Deed shall be governed by the laws of the State of South Dakota without reference to South Dakota principles of conflicts of Law.
(b) For all purposes of this Agreement, and for all purposes of any Claim arising out of or relating to the transactions contemplated hereby or for recognition or enforcement of any judgment, the Parties hereby submit to the exclusive jurisdiction of the United States District Court in the State of Utah located in Salt Lake City, Utah, or if that court does not have or will not accept jurisdiction, then the competent state courts of the State of Utah located in Salt Lake City, Utah, and hereby irrevocably and unconditionally agree that all matters with respect to any such Claim may be heard and determined in such court. The Parties agree that a final judgment in any such Claim shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by Law. Each of the Parties hereby irrevocably and unconditionally waives, to the fullest extent they may legally and effectively do so , and further agrees not to assert as a defense in any such Proceeding, any Proceeding that such Party is not personally subject to the jurisdiction of such court, that the venue of the Proceeding is brought in an inconvenient forum or that this Agreement or the subject matter hereof may not be enforced in or by such court.
(c) Each Party hereby irrevocably waives all rights to a jury trial in any Proceeding of any kind directly or indirectly arising out of or in any way relating this this Agreement. This jury trial waiver is intended to apply, to the fullest extent permitted by Law, to any and all disputes and controversies that arise out of or in any way relate to any or all of the matters described in the preceding sentence, including without limitation contract Claims, tort Claims, and all other common Law and statutory Claims of any kind or character. This Agreement may be filed in any court of competent jurisdiction as a Party’s written consent to such Party’s waiver of a jury trial.
21. Counterparts.
This Agreement may be executed in any number of counterparts, each of which is deemed to be an original, and such counterparts together constitute one and the same instrument. Transmission of an executed signature page by facsimile, email or other electronic means is as effective as a manually executed counterpart of this Agreement.
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22. Disclosure.
The Purchaser and the Seller each acknowledge and agree that the other may be required to disclose the terms of this Agreement, as well as a copy of this Agreement, in order to comply with federal securities Laws and hereby consent to such filing(s) as may be required by federal securities Laws.
[REMAINDER OF PAGE LEFT BLANK]
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The Parties have executed this Agreement as of the Effective Date.
SELLER: | ||
HOMESTAKE MINING COMPANY OF CALIFORNIA | ||
By: | ||
Name: | ||
Title: | ||
PURCHASER: | ||
DAKOTA TERRITORY RESOURCE CORP. | ||
By: | ||
Name: | ||
Title: |
EXHIBIT A
MINING PROPERTY
LEGAL DESCRIPTION
The following described real property located in Lawrence County, South Dakota:
Surface
Lot 3 of Grizzly Gulch Tract (excluding Ryan Tract Revised as shown on Plat Document 2012-4206 and excluding Keller Tract as shown on Plat Document 2019 -4247), including the Morton Lode, M.S. 208, located in Sections 2, 3, 4, 9, 10, 11, 14 and 15, T4N, R3E and Section 34, T5N, R3E, B.H.M., as shown on Plat Document Number 2010 -1746 and comprising 2,025.26 acres, more or less and identified as 26030-00000-030-00;
Open Cut Tract, including the Highland Chief, M.S. 50, located in Sections 27, 28, 29, 32, 33 and 34, T5N, R3E, B.H.M. as shown on Plat Document Number 2006-6682 and comprising 817.40 acres, more or less and identified as APN 26055-00000-000-00;
Sawpit Tract (excluding Sign Lot as shown on Plat Document 2008 -4655 and a portion of Lot B-1A2 as shown on Plat Document 2010-4631, and Lot D of the Sawpit Tract as shown on Plat Document 2016-1775), including the Hidden Treasure, M.S. 49, located in Sections 19, 20, 29 and 30, T5N, R3E, B.H.M., as shown on Plat Document Number 2006-7130 and comprising 480.67 acres, more or less and identified as APN 26070 -00000-000-00;
Tract 1 of the Sawpit Addition to the Town of Central City (excluding Lots 1A, 1B, 2 and 3 of Tract 1 of Sawpit Addition as shown on Plat Document 2008-3880, 2009-1926 & 1025-1396), as shown on Plat Document Number 2007-677 and comprising 26.63 acres, more or less and identified as APN 27900-00100-000-00;
Lot 3, located in Section 28, T5N, R3E, B.H.M., comprising 0.68 acres, more or less and identified as APN-17000-00503-280-00;
General Jackson and Cowboy #1, M.S. 1583, located in Section 28, T5N, R3E, B.H.M., comprising 16.67 acres, more or less and identified as APN 26680-01583-000-00;
Tract G, Tract H, Tract J and Tract K, located in a portion of Placer 252 in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2011-5451 and aggregating 0.40 acres more or less and identified as APN 26280-00252-030-00, 26280-00252-0040-00, 26280-00252-0060-00, 26280-00252-070-00;
Lot 2, Lot 3 and Lot 4, of M.S. 1557, located in the SW/4 Section 3, the SE/4 Section 4, E/2 Section 9 & NW/4 Section 10, T4N, R3E, B.H.M., as shown on Plat Document Number 2005-1092 and aggregating 193.33 acres, more or less and identified as APN 26620-01557-020-00, 26620-01557-030-00, 26620-01557-040-00;
Tract A, Centennial Addition to the Town of Central City, a portion of M.S. 892, as shown on Plat
A-1
Document Number 2006-494 and comprising 24.14 acres, more or less and identified as APN 26020-00000-000-00, 27200-00000-000-00;
Tract D of the Yates Subdivision, (excluding Lot-D1 of Tract D the Yates Subdivision and a portion of Lot 3 of the Grizzly Gulch Tract as shown on Plat Document 2019-4246); and Tract E of the Yates Subdivision, City of Lead, (excluding Lot E-1 of Tract E of the Yates Subdivision as shown on Plat Document 2017-1960), including the Evanston, M.S. 235, as shown on Plat Document 2005-8217 and aggregating 117.19 acres, more or less and identified as APN 26090-00400-000-00, 26090-00500-000-00, 31910-00400-000-00, 31910-00500-000-00;
Tract A, Block 16, Billings Addition to the City of Lead, as shown on Plat Document Number 2007-1490, excluding Lot 1 of Tract 16, Billings Addition to the City of Lead as shown on Plat Document 2020-909, and comprising 24.22 acres, more or less and identified as APN 31210-01600-010-00;
Tract 1, Terraville Addition to the City of Lead, as shown on Plat Document 2009 -3218, comprising 60.12 acres, more or less and identified as APN 31820-00000-000-00;
Lot A of Lot 1, Tract 4, Homestake Addition to the City of Lead, as shown on Plat Document Number 96-1826, comprising 0.443 acres, more or less and identified as APN 31440-00400-001-00;
Lots 1, 2 and 18, Block 1, Washington Addition to the City of Lead, and McCloud Extension, as shown on the Cricks Map of the City of Lead, and identified as APN 31870-00100-200-00, 31870-00100-020-00;
Remainder of Lot 1, Tract 1, of the Homestake Addition to the City of Lead, as shown on Plat Document Number 94-5906 and 2000-3708, comprising 7.25 acres, more or less and identified as APN 31440-00100-001-00;
Tract 2 of the Homestake Addition to the City of Lead including a portion of Lot AB1 and excluding Dog Run Park plat, as shown on Plat Document Number 94 -5906, comprising 39.18 acres, more or less and identified as APN 31440-00200-000-00;
Remainder of Tract 8 of the Homestake Addition to the City of Lead (excluding Tract 1, Terraville Addition to City of Lead as shown on Plat Document 2009 -3218), as shown on Plat Document Number 2007-996 and comprising 41.37 acres, more or less and identified as APN 31440-00800-000-00;
Tract 9 of the Homestake Addition to the City of Lead and vacated portion of Spring Street (excluding Dog Run Park of Tract 9 as shown on Plat Document Number 2009-5880), as shown on Plat Document Number 2007-5814 and comprising 34.39 acres, more or less and identified as APN 31440-00900-000-00;
Remainder of Lot 9, Block 3, Washington Addition to the City of Lead (excluding Lot 9A, Block 3 as shown on Plat Document Number 2007-6394), as described in Book 314 Page 25 and identified as APN 31870-00300-090-10;
A-2
Lot 9A, Block 3, Washington Addition to the City of Lead, as shown on Plat Document Number 2007-6394, comprising 0.19 acres, more or less and identified as APN 31870-00300-090-20;
School Lots, 31 and 32, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M. comprising 12.32 acres, more or less and identified as APN 30075-00031-000-00;
Tract D, McGovern Hill Addition to the City of Deadwood, (excluding Lot D-1 of the McGovern Hill Addition to the City of Deadwood as shown on Plat Document 2019-338) as shown on Plat Document No. 2003-4122 and comprising 3.01 acres, more or less and identified as APN 30610-00000-040-00;
Tract 1, Tract 2 and Lot 6, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 11.54 acres, more or less and identified as APN 30890-00503-270-20;
Remainder of St. James patented lode mining claim, M.S. 754, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 3.25 acres, more or less and identified as APN 30900-00754-000-14;
Remainder of Hunter Lode patented lode mining claim, M.S. 1295, inside City of Deadwood, excluding Lot 1R-A, Lots 1 and 2, located in Section 27, T5N, R3E, B.H.M., comprising 4.32 acres, more or less and identified as APN 30900 -01295-000-80;
Brownie patented lode mining claims, M.S. 1324 and School Lot 22, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 67.76 acres, more or less and identified as APN 30900-01324-000-10 ;
Remainder of Alida #1 and Alida#2 patented lode mining claims, M.S. 1463, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 6.35 acres, more or less and identified as APN 30900-01463-000-00;
Lot 15, Golden Gate, located in Section 29, T5N, R3E, B.H.M., as shown on Plat Document Number 99-1127, comprising .08 acres, more or less and identified as APN 27300-00049-000-00;
Lot 6, located in Section 11, T4N, R3E, B.H.M., comprising .08 acres, more or less and identified as APN 13000-00403-110-03;
Gold Run Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 7.94 acres, more or less and identified as APN 31400-00000-010-00;
Park Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 11.11 acres, more or less and identified as APN 31400 -00000-020-00;
Tract C-3A of P.C. 51, 62, 64, 108, 252 and 255, and of M.S. 1971, 1441, 1363 and 1608, located in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2005-1326, comprising 11.95 acres, more or less and identified as APN 26200-00051-000-50.
A-3
Mineral – 100%
General Grant, M.S. 675, located in Section 1, T4N, R2E, B.H.M.; Boss lode, M.S. 839, located in Section 6, T4N, R3E, B.H.M.;
Big Sam, Francis, Marseillase, Minnie, Ruby Hill and Glenwood lodes, M.S. 930, located in Section 7, T4N, R3E, B.H.M.;
South Lyon lode, M.S. 935, located in Section 6, T4N, R3E, B.H.M.;
Argenta, Glyn, Lemans, Oro and Oro Fraction lodes, M.S. 1109, located in Sections 12 and 13, T4N, R2E, BH.M.;
West Wedge Fraction, West End, Jackson, Moonlight, Sunrise, Sunset Fraction, Lizzie lodes, M.S. 1114, located in Section 12, T4N, R2E, and Section 7, T4N, R3E, B.H.M.;
Camden, Ford and Georgia lodes, M.S. 1141, located in Sections 34 and 35, T5N, R2E, B.H.M.; Blue and Rocky Lynn lodes, M.S. 1168, located in Section 34, T5N, R2E, B.H.M.;
Buffalo, Deadwood, Link Fraction, May lodes, M.S. 1283, located in Section 33, T5N, R2E, B.H.M.;
Cardinal and Longpoint Fraction lodes, M.S. 1288, located in Section 25, T5N, R2E, B.H.M.;
Ames, Ames Fraction, Cloud, Dick, Ester, Lightning, Thunder lodes, M.S. 1289, located in Sections 27 and 28, T5N, R2E, B.H.M.;
James G. Blaine, M.S. 1349, located in Section 34, T5N, R2E, B.H.M.; Loyd lode, M.S. 1468, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Genessee, Grenada, Peerless, Trenton lodes, M.S. 1616, located in Section 4, T4N, R2E, B.H.M.; Snorter and Snorter Fraction lodes, M.S. 1643, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Maid of Erin, Telegram, Gannon, B&M Fraction lodes, M.S. 1659, located in Sections 33 and 34, T5N, R2E, and Section 3, T4N, R2E, B.H.M.;
Belligerent, Belligerent Fraction, Belligerent No. 3, Belligerent No. 4, Bull Hill Fraction lodes, M.S. 1673, located in Sections 27 and 34, T5N, R2E, B.H.M.;
Marconi lode, M.S. 1792, located in Section 31, T5N, R3E, B.H.M.;
A-4
EXHIBIT B
ASSIGNMENT AND ASSUMPTION
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (Real Property Leases, Agreements, Rights of Way and Easements) (Lawrence County) (this “Assignment”), effective as of [____], 20[__] (“Effective Date”), is from the Homestake Mining Company of California, a California corporation (“Assignor”) whose address is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101, to Dakota Territory Resource Corp., a Nevada corporation whose address is 106 Glendale Drive, Suite A, Lead, South Dakota 57754 (“Assignee”).
Recitals
1. Assignor and Assignee are parties to that certain Asset Purchase Agreement dated [___] (the “Agreement”).
2. Pursuant to the Agreement, Assignor agreed, among other things, to assign to Assignee all of Assignor’s right, title and interest in, to and under certain assets described in the Agreement (collectively, the “Assigned Assets”), which form part of the Purchased Assets.
3. Pursuant to the Agreement, the parties to the Agreement agreed, among other things, to cause Assignee to assume all Assumed Liabilities in, under or related to the Assigned Assets.
4. Assignor and Assignee execute this Assignment with respect to the Assigned Assets in order to fulfill, in part, their obligations under the Agreement.
Assignment and Assumption
For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, and subject to the terms and conditions set forth in the Agreement, Assignor sells, assigns and transfers to Assignee, its successors and assigns forever, all of Assignor’s right, title and interest in, to and under the Assigned Assets, free and clear of all encumbrances other than Permitted Encumbrances, to have and to hold forever.
As of the Effective Date, Assignees accept the assignment, and assume and agree to perform and satisfy all Assumed Liabilities in, under or related to the Assigned Assets.
Notwithstanding the foregoing, to the extent that the sale, assignment and transfer of any Assigned Asset pursuant to this Assignment requires prior consent or approval of any person or governmental authority, and such consent or approval has not been obtained prior to or on the Effective Date, then the sale, assignment and transfer of any such Assigned Asset pursuant to this Assignment shall not be effective until such consent or approval shall have been obtained. Upon obtaining such consent or approval, the sale, assignment and transfer of any such Assigned Asset pursuant to this Assignment shall become effective automatically without any further action on the part of the parties hereto. To the greatest extent permitted by law, all Assumed Liabilities in, under or related to any such asset shall be, and shall for all purposes be deemed to be, assumed by Assignee as of the Effective Date and Assignee shall thereafter be fully responsible and liable therefor.
This Assignment incorporates by reference the representations and warranties, and associated limitations and disclaimers, made in the Agreement with respect to the Assigned Asset. This Assignment and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns.
This Assignment, being further documentation of the transactions contemplated by the Agreement, is subject in all respects to the terms and conditions of the Agreement. In the event of a conflict between any provision of this Assignment and any provision of the Agreement, the provisions of the Agreement shall control. Capitalized terms used but not defined in this Assignment shall have the meanings ascribed to them in the Agreement.
This Assignment shall be governed by the laws of the South Dakota.
This Assignment may be executed in counterparts, each of which when so executed will be deemed to be an original and when taken together shall constitute the entire and same agreement.
[Signature Page Follows]
B-2
Executed by Assignor and Assignees to be effective as of the Effective Date.
Assignor: | Assignee: |
Homestake Mining Company of California, a California corporation | Dakota Territory Resource Corp., a Nevada corporation |
By: | By: | ||
Name: | Name: | ||
Title: | Title: |
B-3
EXHIBIT C
BILL OF SALE
BILL OF SALE
This Bill of Sale (the “Bill of Sale”), executed to be effective as of [___] (the “Effective Date”), is made by Homestake Mining Company of California, a California corporation, the address of which is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101 (“Seller”), in favor of Dakota Territory Resource Corp, a Nevada corporation, the address of which is 106 Glendale Drive, Suite A, Lead South Dakota 57754 (“Purchaser”).
Recitals
1. Seller and Purchaser, are parties to that certain Asset Purchase Agreement dated [____] (the “Agreement”). Capitalized terms used and not otherwise defined in this Bill of Sale shall have the meanings ascribed to them in the Agreement.
2. Pursuant to the Agreement, Seller agreed, among other things, to sell and transfer to Purchaser all of Seller’s right, title and interest in, to and under the Data that form a part of the Purchased Assets (the “Sale Assets”).
3. Seller executes this Bill of Sale with respect to the Sale Assets in order to fulfill, in part, its obligations under the Agreement.
Sale
For good and valuable consideration, the receipt and sufficiency of which are acknowledged, subject to the terms and conditions set forth in the Agreement, Seller hereby sells, assigns and transfers to Purchaser all of Seller’s right, title and interest in and to the Sale Assets, free and clear of encumbrances arising by, through or under Seller.
This Bill of Sale incorporates by reference the representations and warranties, and associated limitations and disclaimers, made in the Agreement with respect to the Sale Assets and no others. This Bill of Sale, being further documentation of the transactions contemplated by the Agreement, is subject in all respects to the terms and conditions of the Agreement. In the event of a conflict between any provision of this Bill of Sale and any provision of the Agreement, the provisions of the Agreement shall control.
This Bill of Sale and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns. This Bill of Sale may be executed in counterparts, each of which shall be deemed an original, but all of which together shall be deemed to be one and the same agreement. This Bill of Sale may be executed by facsimile, e-mail, .pdf or similar means, which shall be deemed to have the same legal effect as delivery of an original signed copy of this Bill of Sale for all purposes.
This Bill of Sale is governed by the laws of South Dakota.
C-1
Executed by Assignor to be effective as of the date first written above.
Seller: | |
Homestake Mining Company of California, a California corporation |
By: | ||
Name: | ||
Title: |
Acknowledged and accepted:
Purchaser: |
|
Dakota Territory Resource Corp., a Nevada corporation |
By: | ||
Name: | ||
Title: |
C-2
EXHIBIT D
QUITCLAIM DEED
(See Attached)
D-1
Prepared by:
Parsons Behle & Latimer
201 South Main Street
Salt Lake
City, Utah
84111
(801) 532-1234
Grantee Address:
Dakota Territory Resource Corp
106 Glendale Drive, Suite A
Lead, SD 57754
Pursuant to South Dakota Codified Laws 43-28-24 thru 43-28-28 inclusive: this Deed does not contain any individual’s personally identifiable information.
QUITCLAIM DEED
This QUITCLAIM DEED (the “Deed”) is effective the [__] day of [__], 20[__] (the “Effective Date”), by and between Homestake Mining Company of California, a California corporation (“Grantor”), Dakota Territory Resource Corp., a Nevada corporation (“Grantee”), and JR Resources Corp., a Nevada Corporation (the “Guarantor”).
RECITALS
1. Grantor and Grantee are parties to that certain Asset Purchase Agreement executed by Grantor and Grantee on [DATE], 2021 (the “Agreement”).
2. Pursuant to the Agreement, Grantor agreed, among other things, to convey to Grantee all of Grantor’s right, title and interest in and to the real property described in Exhibit A to this Deed (the “Mining Property”). The Mining Property is located in Lawrence County, South Dakota.
3. As partial consideration for the conveyance of the Mining Property from Grantor to Grantee, Grantee hereby agrees to conduct mining operations on the Mining Property in accordance with certain operating parameters, and to indemnify Grantor for any failure by Grantee to conduct such mining operations in accordance with such operating parameters, all as described
in Exhibit B to this Deed (the “Operating Parameters and Indemnity”).
4. Each of Grantor and Grantee executes this Deed with respect to the Mining Property and the Operating Parameters and Indemnity in order to fulfill, in part, its respective obligations under the Agreement.
1
CONVEYANCE
For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the parties, Grantor quitclaims to Grantee all of Grantor’s right, title and interest, if any, in and to the Mining Property and all and singular the tenements, hereditaments, appurtenances, fixtures, buildings, and other improvements thereon or thereunto belonging to or in anywise appertaining, the reversion and reversions, remainder and remainders, rents, issues, and profits thereof and including, with respect to all patented mining claims included in the Mining Property all of the lodes, ledges, veins and mineral-bearing rock, both known and unknown, intraliminal and extralateral, lying within or extending beyond the boundaries of such mining claims, and all dips, spurs and angles, and all the ores, mineral bearing-quartz, rock and earth or other mineral deposits therein or thereon, to have and to hold unto Grantee, its successors and assigns forever, subject to the Operating Parameters and Indemnity.
Grantee hereby agrees to conduct mining operations on the Mining Property in accordance with the Operating Parameters and Indemnity.
This Deed and the covenants contained herein shall extend to and be binding upon and every benefit hereof shall inure to the parties hereto, their respective successors and assigns.
This Deed shall be governed by the laws of the State of South Dakota.
[Signature Page follows]
2
IN WITNESS WHEREOF, Grantor has executed this Deed on the date set forth above.
HOMESTAKE MINING COMPANY OF CALIFORNIA |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE
OF )
)
ss.
COUNTY
OF )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as __________________ of Homestake Mining Company of California, a California corporation.
(Signature of notarial officer) | |
[Affix seal/stamp as close to signature as possible] |
My commission expires: | |
3
DAKOTA TERRITORY RESOURCE CORP. |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF )
) ss.
COUNTY OF )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as ___________ of Dakota Territory Resource Corp, a Nevada corporation.
(Signature of notarial officer) | |
[Affix seal/stamp as close to signature as possible] |
My commission expires: | |
4
JR RESOURCES CORP. |
By: | ||
Name: | ||
Title: |
ACKNOWLEDGEMENT
STATE OF )
) ss.
COUNTY OF )
This record was acknowledged before me on the ____ day of ______________, 20[__], by ____________________ as ___________ of JR Resources Corp, a Nevada corporation.
(Signature of notarial officer) | |
[Affix seal/stamp as close to signature as possible] |
My commission expires: | |
5
EXHIBIT A
TO
DEED
MINING PROPERTY (LAWRENCE COUNTY, SOUTH DAKOTA)
The following described real property located in Lawrence County, South Dakota:
(surface)
Lot 3 of Grizzly Gulch Tract (excluding Ryan Tract Revised as shown on Plat Document 2012-4206 and excluding Keller Tract as shown on Plat Document 2019-4247), including the Morton Lode, M.S. 208, located in Sections 2, 3, 4, 9, 10, 11, 14 and 15, T4N, R3E and Section 34, T5N, R3E, B.H.M., as shown on Plat Document Number 2010 -1746 and comprising 2,025.26 acres, more or less and identified as 26030-00000-030-00;
Open Cut Tract, including the Highland Chief, M.S. 50, located in Sections 27, 28, 29, 32, 33 and 34, T5N, R3E, B.H.M. as shown on Plat Document Number 2006 -6682 and comprising 817.40 acres, more or less and identified as APN 26055 -00000-000-00;
Sawpit Tract (excluding Sign Lot as shown on Plat Document 2008-4655 and a portion of Lot B-1A2 as shown on Plat Document 2010 -4631, and Lot D of the Sawpit Tract as shown on Plat Document 2016-1775), including the Hidden Treasure, M.S. 49, located in Sections 19, 20, 29 and 30, T5N, R3E, B.H.M., as shown on Plat Document Number 2006-7130 and comprising 480.67 acres, more or less and identified as APN 26070 -00000-000-00;
Tract 1 of the Sawpit Addition to the Town of Central City (excluding Lots 1A, 1B, 2 and 3 of Tract 1 of Sawpit Addition as shown on Plat Document 2008-3880, 2009-1926 & 1025-1396), as shown on Plat Document Number 2007-677 and comprising 26.63 acres, more or less and identified as APN 27900-00100-000-00;
Lot 3, located in Section 28, T5N, R3E, B.H.M., comprising 0.68 acres, more or less and identified as APN-17000-00503-280-00;
General Jackson and Cowboy #1, M.S. 1583, located in Section 28, T5N, R3E, B.H.M., comprising 16.67 acres, more or less and identified as APN 26680-01583-000-00;
Tract G, Tract H, Tract J and Tract K, located in a portion of Placer 252 in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2011 -5451 and aggregating 0.40 acres more or less and identified as APN 26280-00252-030-00, 26280-00252-0040-00, 26280-00252-0060-00, 26280-00252-070-00;
Lot 2, Lot 3 and Lot 4, of M.S. 1557, located in the SW/4 Section 3, the SE/4 Section 4, E/2 Section 9 & NW/4 Section 10, T4N, R3E, B.H.M., as shown on Plat Document Number 2005 -1092 and aggregating 193.33 acres, more or less and identified as APN 26620 -01557-020-00, 26620-01557-030-00, 26620-01557-040-00;
A-1
Tract A, Centennial Addition to the Town of Central City, a portion of M.S. 892, as shown on Plat Document Number 2006-494 and comprising 24.14 acres, more or less and identified as APN 26020-00000-000-00, 27200-00000-000-00;
Tract D of the Yates Subdivision, (excluding Lot-D1 of Tract D the Yates Subdivision and a portion of Lot 3 of the Grizzly Gulch Tract as shown on Plat Document 2019-4246); and Tract E of the Yates Subdivision, City of Lead, (excluding Lot E-1 of Tract E of the Yates Subdivision as shown on Plat Document 2017-1960), including the Evanston, M.S. 235, as shown on Plat Document 2005-8217 and aggregating 117.19 acres, more or less and identified as APN 26090-00400-000-00, 26090-00500-000-00, 31910-00400-000-00, 31910-00500-000-00;
Tract A, Block 16, Billings Addition to the City of Lead, as shown on Plat Document Number 2007-1490, excluding Lot 1 of Tract 16, Billings Addition to the City of Lead as shown on Plat Document 2020-909, and comprising 24.22 acres, more or less and identified as APN 31210-01600-010-00;
Tract 1, Terraville Addition to the City of Lead, as shown on Plat Document 2009 -3218, comprising 60.12 acres, more or less and identified as APN 31820-00000-000-00;
Lot A of Lot 1, Tract 4, Homestake Addition to the City of Lead, as shown on Plat Document Number 96-1826, comprising 0.443 acres, more or less and identified as APN 31440 -00400-001-00;
Lots 1, 2 and 18, Block 1, Washington Addition to the City of Lead, and McCloud Extension, as shown on the Cricks Map of the City of Lead, and identified as APN 31870 -00100-200-00, 31870-00100-020-00;
Remainder of Lot 1, Tract 1, of the Homestake Addition to the City of Lead, as shown on Plat Document Number 94-5906 and 2000-3708, comprising 7.25 acres, more or less and identified as APN 31440-00100-001-00;
Tract 2 of the Homestake Addition to the City of Lead including a portion of Lot AB1 and excluding Dog Run Park plat, as shown on Plat Document Number 94 -5906, comprising 39.18 acres, more or less and identified as APN 31440 -00200-000-00;
Remainder of Tract 8 of the Homestake Addition to the City of Lead (excluding Tract 1, Terraville Addition to City of Lead as shown on Plat Document 2009 -3218), as shown on Plat Document Number 2007-996 and comprising 41.37 acres, more or less and identified as APN 31440 -00800-000-00;
Tract 9 of the Homestake Addition to the City of Lead and vacated portion of Spring Street (excluding Dog Run Park of Tract 9 as shown on Plat Document Number 200 9-5880), as shown on Plat Document Number 2007-5814 and comprising 34.39 acres, more or less and identified as APN 31440-00900-000-00;
A-2
Remainder of Lot 9, Block 3, Washington Addition to the City of Lead (excluding Lot 9A, Block 3 as shown on Plat Document Number 2007-6394), as described in Book 314 Page 25 and identified as APN 31870-00300-090-10;
Lot 9A, Block 3, Washington Addition to the City of Lead, as shown on Plat Document Number 2007-6394, comprising 0.19 acres, more or less and identified as APN 31870-00300-090-20;
School Lots, 31 and 32, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M. comprising 12.32 acres, more or less and identified as APN 30075-00031-000-00;
Tract D, McGovern Hill Addition to the City of Deadwood, (excluding Lot D-1 of the McGovern Hill Addition to the City of Deadwood as shown on Plat Document 2019-338) as shown on Plat Document No. 2003-4122 and comprising 3.01 acres, more or less and identified as APN 30610-00000-040-00;
Tract 1, Tract 2 and Lot 6, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 11.54 acres, more or less and identified as APN 30890-00503-270-20;
Remainder of St. James patented lode mining claim, M.S. 754, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 3.25 acres, more or less and identified as APN 30900-00754-000-14;
Remainder of Hunter Lode patented lode mining claim, M.S. 1295, inside City of Deadwood, excluding Lot 1R-A, Lots 1 and 2, located in Section 27, T5N, R3E, B.H.M., comprising 4.32 acres, more or less and identified as APN 30900-01295-000-80;
Brownie patented lode mining claims, M.S. 1324 and School Lot 22, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 67.76 acres, more or less and iden tified as APN 30900-01324-000-10 ;
Remainder of Alida #1 and Alida#2 patented lode mining claims, M.S. 1463, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 6.35 acres, more or less and identified as APN 30900-01463-000-00;
Lot 15, Golden Gate, located in Section 29, T5N, R3E, B.H.M., as shown on Plat Document Number 99-1127, comprising .08 acres, more or less and identified as APN 27300 -00049-000-00;
Lot 6, located in Section 11, T4N, R3E, B.H.M., comprising .08 acres, more or less and identified as APN 13000-00403-110-03;
Gold Run Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 7.94 acres, more or less and identified as APN 31400-00000-010-00;
Park Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Nu mber 2005-4941, comprising 11.11 acres, more or less and identified as APN 31400-00000-020-00;
A-3
Tract C-3A of P.C. 51, 62, 64, 108, 252 and 255, and of M.S. 1971, 1441, 1363 and 1608, located in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2005-1326, comprising 11.95 acres, more or less and identified as APN 26200-00051-000-50.
Mineral – 100%
General Grant, M.S. 675, located in Section 1, T4N, R2E, B.H.M.;
Boss lode, M.S. 839, located in Section 6, T4N, R3E, B.H.M.;
Big Sam, Francis, Marseillase, Minnie, Ruby Hill and Glenwood lodes, M.S. 930, located in Section 7, T4N, R3E, B.H.M.;
South Lyon lode, M.S. 935, located in Section 6, T4N, R3E, B.H.M.;
Argenta, Glyn, Lemans, Oro and Oro Fraction lodes, M.S. 1109, located in Sections 12 a nd 13, T4N, R2E, BH.M.;
West Wedge Fraction, West End, Jackson, Moonlight, Sunrise, Sunset Fraction, Lizzie lodes, M.S. 1114, located in Section 12, T4N, R2E, and Section 7, T4N, R3E, B.H.M.;
Camden, Ford and Georgia lodes, M.S. 1141, located in Sections 34 and 35, T5N, R2E, B.H.M.;
Blue and Rocky Lynn lodes, M.S. 1168, located in Section 34, T5N, R2E, B.H.M.;
Buffalo, Deadwood, Link Fraction, May lodes, M.S. 1283, located in Section 33, T5N, R2E, B.H.M.;
Cardinal and Longpoint Fraction lodes, M.S. 1288, located in Section 25, T5N, R2E, B.H.M.;
Ames, Ames Fraction, Cloud, Dick, Ester, Lightning, Thunder lodes, M.S. 1289, located in Sections 27 and 28, T5N, R2E, B.H.M.;
James G. Blaine, M.S. 1349, located in Section 34, T5N, R2E, B.H.M.;
Loyd lode, M.S. 1468, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Genessee, Grenada, Peerless, Trenton lodes, M.S. 1616, located in Section 4, T4N, R2E, B.H.M.;
Snorter and Snorter Fraction lodes, M.S. 1643, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Maid of Erin, Telegram, Gannon, B&M Fraction lodes, M.S. 1659, located in Sections 33 and 34, T5N, R2E, and Section 3, T4N, R2E, B.H.M.;
Belligerent, Belligerent Fraction, Belligerent No. 3, Belligerent No. 4, Bull Hill Fraction lodes, M.S. 1673, located in Sections 27 and 34, T5N, R2E, B.H.M.;
Marconi lode, M.S. 1792, located in Section 31, T5N, R3E, B.H.M.;
A-4
EXHIBIT B
TO
DEED
OPERATING PARAMETERS AND INDEMNITY
ARTICLE I.
DEFINITIONS
1.1 Certain Defined Terms. For purposes of these Operating Parameters and Indemnity, except where the context otherwise requires, the following capitalized terms have the following meanings:
“Administrative Agent” means the Grantee.
“Affiliate” means, with respect to any Person, any other Person that directly or indirectly, through one of more intermediaries, controls, is controlled by, or is under common control with, such Person. For purposes of this definition, “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract or otherwise.
“Business Day” means any day except Saturday, Sunday or any other day on which commercial banks located in Vancouver, British Columbia, Toronto, Ontario or Reno, Nevada are closed for business.
“Claim” means any action, arbitration, cause of action, claim, counterclaim, demand, dispute, grievance, mediation, injunction, investigation, notice of violation, obligation, order, stay, suit or other proceeding.
“Corporate Reorganization” has the meaning set forth in Section 3.1.
“Cure Notice” has the meaning set forth in Section 2.5(a).
“Cure Notice Period” has the meaning set forth in Section 2.5(a).
“Cure Period” has the meaning set forth in Section 2.5(a).
“Default Cure Plan” has the meaning set forth in Section 2.5(a).
“Default Notice” has the meaning set forth in Section 2.5(a).
“Environmental Law” means all applicable Laws relating to the protection of human health and safety, the environmental, or to hazardous or toxic substances or wastes, pollutants or contaminants (including Hazardous Materials).
“Event of Default” has the meaning set forth in Section 2.5.
B-1
“Governmental Authority” means: (a) any domestic or foreign government, whether national, federal, provincial, state, territorial, municipal or local (whether administrative, legislative, executive or otherwise); (b) any agency, authority, ministry, department, regulatory body, court, central bank, bureau, board or other instrumentality having legislative, judicial, taxing, regulatory, prosecutorial or administrative powers or functions of, or pertaining to, government; (c) any court, commission, individual arbitrator, arbitration panel or other body having adjudicative, regulatory, judicial, quasi-judicial, administrative or similar functions; or (d) any 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 or professional association .
“Governmental Filings” has the meaning set forth in Section 2.1(c).
“Grantor Regulatory Rights” has the meaning set forth in Section 2.4(b).
“Hazardous Material” means any pollutant, contaminant, constituent, chemical, mixture, raw material, intermediate product, finished product or by-product, hydrocarbon or any fraction thereof, or industrial, solid, toxic, radioactive, infectious, disease-causing or hazardous substance, material, waste or agent, including all substances, materials, or wastes, the presence and amount of which is regulated by any Governmental Authority under any Environmental Law, or which may threaten life, health or property or adversely affect the environment.
“Indemnifiable Claim” means a Claim arising pursuant to an Indemnification Obligation.
“Indemnification Obligations” has the meaning set forth in Section 4.1(a).
“Indemnified Parties” means the Grantor and its Affiliates, and its and their respective Representatives, and “Indemnified Party” means any one of them.
“Indemnitors” the Grantee and the Guarantor.
“Indemnitor Parties” means, collectively, each of the Indemnitors and their respective Affiliates and its and their respective Representatives and “ Indemnitor Party” means any one of them.
“Inspection Right” has the meaning set forth in Section 2.4(a).
“Laws” means any statute, law, ordinance, regulation, rule, code, order, constitution, treaty, common law, judgment, decree, formal interpretation, or other requirement or rule of law of any Governmental Authority.
“Loss” means, in respect of any matter, all claims, demands, proceedings, losses, damages, liabilities, deficiencies, fines, costs and expenses (including reasonable legal and other professional fees and disbursements, interest, penalties and amounts paid in settlement but excluding punitive, exemplary, aggravated damages, lost opportunity damages and loss of profits), injuries and judgments arising directly or indirectly as a consequence of such matter.
“Mines” means the area within the circumambient boundaries of the Mining Property, commonly known as the Homestake mines, as depicted on the Mine Maps.
B-2
“Mine Maps” means the maps as of the Effective Date, attached as Schedule I, and includes the descriptions of the Mining Property.
“Mining Industry Best Practices” means the best practices; methods; specifications; licensing requirements; standards of care, skill, diligence, safety and performance; environmental health and safety standards (including the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles, or such other established industry standards as may be agreed in writing by the Parties from time to time); and acts generally engaged in or observed by recognized and experienced international mining companies, as in effect from time to time for Mining Operations, which are consistent with good judgment, reliability, and safety, all in compliance with applicable Permits (including the Operating Permits) and applicable Laws (including Environmental Laws).
“Mining Operations” means any mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; activities directed toward ascertaining the existence, location, quantity, quality or commercial value of mineral deposits, including drilling required after discovery of potentially commercial mineralization; any preparation for the removal and recovery of minerals, in-fill drilling, preparation of order of magnitude studies, pre-feasibility studies, feasibility studies, pre-production stripping, stripping and the construction or installation of any mill, leach facilities, or any other improvements to be used for the mining, extracting, producing, handling, milling, leaching, beneficiation or other processing of ores; actions performed during or after the foregoing to comply with the requirements of all Environmental Laws or contractual commitments related to reclamation of the Mining Property or other compliance with Environmental Laws; and the attendant reclamation and remediation and closure upon completion of the foregoing, including obligations or responsibilities that are reasonably expected to or actually continue or arise, such as, without limitation, future monitoring, management, treatment or stabilization.
“Notice of Claim” has the meaning set forth in Section 4.2(b)(i).
“Operating Parameters” has the meaning set forth in Section 2.2(b).
“Operating Parameters and Indemnity” means the Operating Parameters and Indemnity set forth in this Exhibit B, and any exhibits, schedules and addenda referenced herein or attached hereto, as the same may be amended or modified from time to time as set forth herein.
“Operating Permits” means the Permits set forth in Schedule II.
“Operating Records” has the meaning set forth in Section 2.1(b).
“Operational Default” has the meaning set forth in Section 2.5(a).
“Parties” means any combination of the Grantor, the Grantee and the Guarantor.
“Party” means any one of the Grantor, the Grantee or the Guarantor.
“Permit Modification Notice” has the meaning set forth in Section 2.3.
B-3
“Permit Modifications” has the meaning set forth in Section 2.3.
“Permits” means any permit, license, approval, consent, ruling, authorization, certification, concession, exemption, variance, notification, waiver, clearance or registration by or with a Governmental Authority or other third parties.
“Person” means any individual, corporation or company with or without share capital, partnership, joint venture, association, trust, unincorporated organization, trustee, executor, administrator or other legal personal representative, Governmental Authority or entity however designated or constituted.
“Release” means any spill, discharge, leak, emission, injection, escape, dumping, leaching, dispersal, disposal, emanation, migration or release of any Hazardous Materials into the environment, including abandonment or discard of barrels, containers, tanks or other receptacles containing or previously containing any Hazardous Materials, or the recycling of Hazardous Materials.
“Release Obligations” has the meaning set forth in Section 4.1(a).
“Representatives” means, with respect to any Person, any and all directors, officers, members, managers, employees, consultants, financial advisors, counsel, accountants and other agents of such Person.
“Transfer” means to, directly or indirectly, sell, transfer, assign, convey, dispose or otherwise grant a right, title or interest (including a joint venture interest or an expropriation or other transfer required or imposed by Law or any Governmental Authority, whether voluntary or involuntary), or to abandon, surrender or otherwise relinquish a right, title or interest.
“Uncured Operational Default” has the meaning set forth in Section 4.5.
1.2 Rules of Construction.
(a) In these Operating Parameters and Indemnity:
(i) unless the context otherwise clearly requires, (A) references to the plural include the singular, and references to the singular include the plural, (B) references to one gender include the other gender, (C) the words “include,” “includes,” and “including” do not limit the preceding terms or words and shall be deemed to be followed by the words “without limitation,” (D) the terms “hereof,” “herein,” “hereunder,” “hereto,” and similar terms refer to this entire Operating Parameters and Indemnity and not to any particular provision of this Operating Parameters and Indemnity, unless the provision otherwise provides, (E) “or” is used in the inclusive sense of “and/or,” (F) if a word or phrase is defined, then its other grammatical or derivative forms have a corresponding meaning; (G) a reference to Law or a statute, code, act, legislation, or to a provision thereof includes a modification, amendment, or substitution thereof or any successor Law, the rules and regulations promulgated thereunder, and the formal interpretations issued in accordance therewith; and (H) unless otherwise specified, the terms “day” and “days” mean and refer to calendar day(s);
B-4
(ii) unless otherwise specified, any reference to any document, instrument or agreement (including a reference to these Operating Parameters and Indemnity) (A) includes and incorporates all exhibits, schedules, and other attachments thereto, (B) includes and incorporates all documents, instruments, deeds, or agreements issued or executed in connection therewith or in replacement thereof, and (C) means such document, instrument, deed, or agreement, or replacement or predecessor thereto, as amended, modified, or supplemented from time to time in accordance with its terms and in effect at any given time (except to the extent prohibited by these Operating Parameters and Indemnity or such other agreement or document);
(iii) unless otherwise specified, all references to articles, sections, schedules and exhibits are to the Articles, Sections, Schedules, and Exhibits of th ese Operating Parameters and Indemnity; and
(iv) the headings of these Operating Parameters and Indemnity are for reference purposes only and shall not affect in any way the meaning or interpretation of th ese Operating Parameters and Indemnity.
(b) The Parties acknowledge that they and their respective legal counsel have reviewed and participated in negotiating and settling the terms of these Operating Parameters and Indemnity and agree that no inference shall be drawn in favor of or against any Party by virtue of the fact that they or their respective legal counsel were or were not principally responsible for drafting these Operating Parameters and Indemnity.
(c) The following Schedules are attached to, and form an integral part of, these Operating Parameters and Indemnity:
Schedule I | - | Mine Maps |
Schedule II | - | Operating Permits |
ARTICLE II.
MINING OPERATIONS
2.1 Indemnitor Responsibilities.
(a) The Indemnitor Parties are solely responsible and liable for all Mining Operations at the Mines, and an Indemnitor Party shall at all times be the operator under applicable Laws. No Indemnified Party is, or shall be considered to be, an operator under applicable Laws or otherwise involved in any Mining Operations at the Mines. The Indemnitors shall not, and shall cause the Indemnitor Parties not to, bring any Claim against any one or more of the Indemnified Parties alleging that any one or more of such Indemnified Parties is an operator of the Mines based on any activities undertaken by one or more of the Indemnified Parties pursuant to these Operating Parameters and Indemnity, or under applicable Laws.
(b) The Indemnitor Parties shall maintain complete and accurate records of Mining Operations at the Mines in accordance with Mining Industry Best Practices (the “ Operating Records”).
B-5
(c) The Indemnitors, acting through the Administrative Agent, shall provide to the Grantor promptly, and in any event within five Business Days of the triggering event referred to below: (i) copies of material filings with, or correspondence from, all Governmental Authorities, related directly or indirectly to the Permits (including Operating Permits) for Mining Operations at the Mines; and (ii) written notice of (A) any Release, or threatened Release; (B) any contamination or threat to the environment, or human health and safety at the Mines that requires a notice or filing with a Governmental Authority, together with a copy of any such filing; and (C) copies of any filings or correspondence directly or indirectly related to any Claims or potential Claims alleged by a Governmental Authority or Losses imposed by a Governmental Authority (“Governmental Filings”).
2.2 Operating Parameters.
(a) The Indemnitor Parties shall conduct Mining Operations at the Mines, or cause Mining Operations at the Mines to be conducted, in accordance with Mining Industry Best Practices.
(b) In addition to conducting Mining Operations in compliance with Mining Industry Best Practices, the Indemnitor Parties shall conduct Mining Operations, or cause Mining Operations to be conducted, at the Mines in compliance with the following (the “ Operating Parameters”):
(i) The Indemnitor Parties shall comply with Mining Industry Best Practices with regard to environmental health and safety (such as the use of certified or third party verified environmental management systems and adherence to the International Council on Mining and Metals guiding principles);
(ii) The Indemnitor Parties shall comply with applicable Environmental Laws;
(iii) The Indemnitor Parties shall exercise due care consistent with Mining Industry Best Practices in the handling, management, acquisition, disposal, generation, recycling, use and sale of Hazardous Materials; and
(iv) The Indemnitor Parties shall not conduct Mining Operations at the Mines that will negatively affect the geotechnical stability of the open cut or the adjacent underground workings at the Mines.
2.3 Modification of Operating Parameters. Subject to the Grantor Regulatory Rights and the Indemnitor Parties’ compliance with their obligations relating to the Permit Modification Notice and the Inspection Rights, the Indemnitor Party conducting Mining Operations at the Mines may apply for additional Permits, or seek approval to modify or amend the Operating Permits, from Government Authorities having jurisdiction over the Mining Operations at the Mines (the “Permit Modifications”); provided that the Administrative Agent shall provide the Grantor not less than 30 days’ written notice (the “Permit Modification Notice”) prior to the submission of any request for Permit Modifications, which Permit Modification Notice shall include a copy of the proposed submission(s) to the relevant Governmental Authorities requesting approval of the Permit Modifications.
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2.4 Grantor Rights.
(a) Any one or more of the Indemnified Parties shall have the right, but not the obligation, to access the Operating Records in order to verify that Mining Operations at the Mines comply with Mining Industry Best Practices and the Operating Parameters, and to exercise their respective Grantor Regulatory Rights (the “Inspection Right”). The Indemnitor Parties shall ensure that the Indemnified Parties are able to exercise the Inspection Right during normal operating hours on working days at the expense of the Indemnified Parties and in a manner that does not unreasonable hinder, delay, or interfere with the Indemnitor Parties’ operations, provided that the Indemnified Parties shall deliver five days’ prior written notice to the Administrative Agent before exercising the Inspection Right. In addition, any Inspection Right related to the Mining Operations at the Mines and the Operating Parameters will be conducted in accordance with applicable health and safety standards for the Mines.
(b) To the extent that the Grantor determines, in its sole and absolute discretion, that any proposed Permit Modification or any proposed modification to the Operating Parameters represents a material risk to an Indemnified Party, any one or more of the Indemnified Parties shall have the unfettered right to make submissions to the relevant Governmental Authorities in respect of each application for additional Permits and each request for a Permit Modification, and exercise any other rights available to such Indemnified Parties under applicable Law (including injunctive rights), as applicable, in their sole and absolute discretion (the “ Grantor Regulatory Rights”). The Indemnitors shall not assert, and shall cause the Indemnitor Parties (including the Administrative Agent) not to assert, that any Indemnified Party owes any duty to the Indemnitors, any of the Indemnitor Parties or any other Person, or otherwise is restricted or prohibited in any way from exercising the Grantor Regulatory Rights or otherwise acting in the best interests of any such Indemnified Party in connection with the exercise of any of the Grantor Regulatory Rights.
(c) The Indemnified Parties may use any non-public information obtained pursuant to the Inspection Rights to confirm compliance by the Indemnitor Parties under these Operating Parameters and Indemnity and in furtherance of the exercise of the Grantor Regulatory Rights, and shall not use such non-public information for any other purpose.
2.5 Default. The occurrence of any one or more of the following events shall constitute a default under these Operating Parameters and Indemnity (as applicable, an “Event of Default”):
(a) the Indemnitor Parties fail to conduct, or fail to have conducted, Mining Operations at the Mines in accordance with Mining Industry Best Practices and the Operating Parameters in all material respects (an “Operational Default”) and such failure continues for a period of 45 days (the “Cure Period”) after receipt of written notice of such failure from the Grantor to the Administrative Agent (a “Default Notice”); provided that, (i) the Administrative Agent shall inform the Grantor in writing (the “Cure Notice”) within 48 hours of receipt off a Default Notice (the “Cure Notice Period”) of the intent of the Indemnitor Parties to cure the Operational Default within the Cure Period, and (ii) if the Indemnitor Parties, using diligent efforts, cannot cure any such Operational Default within the Cure Period, then the Indemnitor Parties shall take meaningful steps beginning on the date of the Default Notice to cure such Operational Default as quickly as possible and provide to the Grantor with the Cure Notice a detailed written plan as to the steps the Indemnitor Parties will take to cure such Operational Default and the time period in which such Operational Default will be cured (the “Default Cure Plan”), which Default Cure Plan is acceptable to the Grantor, acting reasonably;
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(b) the Indemnitor Parties fail to cure an Operational Default in accordance with the applicable Default Cure Plan;
(c) any of the Indemnitor Parties seeks to prohibit any of the Indemnified Parties from exercising its Inspection Right or Grantor Regulatory Rights;
(d) any of the Indemnitor Parties refuses any of the Indemnified Parties access to the Operating Records in contravention of Section 2.4(a);
(e) the Indemnitors undertake, or attempt to undertake, a Corporate Reorganization in contravention of Section 3.1;
(f) the Indemnitors, or either of them, transfers all or any portion of the Mining Property in contravention of Section 3.2;
(g) the Indemnitors, or either of them, abandons, or takes action to abandon, any Mining Property in contravention of Section 3.3;
(h) the Grantor, acting reasonably, determines that the Indemnitor Parties are unable or unwilling to perform any one or more of their Indemnification Obligations; or
(i) (A) any one or more of the Indemnitor Parties seeks voluntary relief under any applicable federal or state debtor relief laws; (B) an involuntary case is commenced against any one or more of the Indemnitor Parties under any applicable federal or state debtor relief laws and such case is not dismissed with prejudice within 60 days after its filing; (C) any one or more of the Indemnitor Parties is declared insolvent or unable to pay its debts as the same become due; (D) any one or more of the Indemnitor Parties commences dissolution or liquidation proceedings; or (E) a receiver, liquidator, judicial manager, sequestrator, trustee, custodian or other officer having similar powers is appointed with respect to such Indemnitor Party or its assets.
Upon the occurrence and during the continuance of an Event of Default, the Grantor, in addition to any rights set forth herein, may seek any and all remedies available to it at law or in equity.
2.6 Relationship of the Parties. Nothing in these Operating Parameters and Indemnity shall create or be deemed to create a relationship of employer and employee, joint venture or partnership between the Indemnified Parties or the Indemnitor Parties for any purpose whatsoever. Nothing in these Operating Parameters and Indemnity shall create a relationship of principal and agent between the Indemnified Parties or the Indemnitor Parties. Nothing in th ese Operating Parameters and Indemnity shall be construed to allege that any Indemnified Party is an operator of the Mines under applicable Laws. No Party shall have the authority to bind or obligate the other Parties in any manner as a result of the relationship created hereby.
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ARTICLE III.
TRANSFER AND ABANDONMENT
3.1 Preservation of Corporate Structure. Subject to Section 3.2, the Indemnitors shall not consolidate, amalgamate with, or merge with or into, or Transfer all or substantially all of its assets to, or reorganize, reincorporate or reconstitute into or as another entity (each a “Corporate Reorganization”) without the prior written consent of the Grantor unless at the time of such Corporate Reorganization, the resulting, surviving or transferee entity: (i) assumes in favor of the Indemnified Parties all the obligations of the Indemnitors under these Operating Parameters and Indemnity in an instrument in writing satisfactory to the Grantor, acting reasonably; and (ii) has the financial capability to satisfy the obligations of the Indemnitors pursuant to these Operating Parameters and Indemnity, as determined to the satisfaction of the Grantor, acting reasonably.
3.2 Limitations on Transfer. The Indemnitor Parties shall not Transfer, in whole or in part, the Mining Property without the prior written consent of the Grantor, unless the Person to whom or to which such Mining Property are Transferred: (a) agrees to conduct Mining Operations at the Mines pursuant to Mining Industry Best Practices and in accordance with the Operating Parameters; (b) assumes in favor of the Indemnified Parties all or its proportionate share thereof based on its relative interest in the Mining Property of the obligations of the Indemnitors under these Operating Parameters and Indemnity in instruments in writing satisfactory to the Grantor, acting reasonably; (c) has the financial capability to conduct Mining Operations at the Mines pursuant to Mining Industry Best Practices and in accordance with the Operating Parameters and to satisfy its obligations under these Operating Parameters and Indemnity, as determined to the reasonable satisfaction of the Grantor; and (d) the ultimate parent company of such transferee assumes in favor of the Indemnified Parties all or its proportionate share of the obligations of the Indemnitor Parties under these Operating Parameters and Indemnity based on its relative interest in the Mining Property. Any Transfer of all or any portion of the Mining Property in contravention of this Section 3.2 shall be void ab initio.
3.3 Abandonment. Subject to Section 6.1, the Indemnitor Parties may abandon any Mining Property that no longer are deemed beneficial for Mining Operations at the Mines upon not less than 30 days’ prior written notice to the Grantor.
ARTICLE IV.
RELEASE AND INDEMNITY
4.1 Release.
(a) Each Indemnitor, jointly and severally, on its behalf and on behalf of the Indemnitor Parties hereby unconditionally and irrevocably forever RELEASES, DISCHARGES AND ACQUITS the Indemnified Parties from and against all Claims and Losses of whatsoever kind or nature, under any Law or otherwise, whether accrued or unaccrued, whether known or unknown, whether now existing or that might arise hereafter, present or future, suspected or unsuspected, asserted or unasserted, foreseen or unforeseen, contingent or fixed, liquidated or unliquidated, including without limitation any Claims for contribution and/or indemnity, and for all Losses of any kind or nature, Claims for prejudgment interest, lost profits, consequential damages, exemplary damages, and other expenses or damages, incurred or to be incurred for, upon, or by reason of any matter, cause or thing arising prior to, on or following the Effective Date arising out of, in connection with, or in any way related to Mining Operations at the Mines (collectively, the “Release Obligations”), regardless of when or how any of the Claims and Losses related to the Release Obligation arose and notwithstanding their foreseeability or predictability.
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(b) Each Indemnitor, jointly and severally, on its behalf and on behalf o f the Indemnitor Parties, hereby unconditionally and irrevocably agrees to indemnify and hold harmless the Indemnified Parties from and against any and all Claims and Losses of whatsoever kind or nature (including prejudgment interest, lost profits, consequential damages, exemplary damages) directly or indirectly arising from Claims of any Person (including any Governmental Authority) relating to any Release Obligations.
(c) Any Indemnified Party that is named in a Claim that is related to the Release Obligations or pursuant to which indemnification is available under Section 4.1(b) shall have control over the management, prosecution and settlement of such Claim, all at the expense of the Indemnitors.
4.2 Indemnity.
(a) Each Indemnitor, jointly and severally, on its behalf and on behalf of the Indemnitor Parties, hereby unconditionally and irrevocably agrees to indemnify, defend, and hold harmless the Indemnified Parties from and against any and all Claims and Losses (including prejudgment interest, lost profits, consequential damages, exemplary damages) directly or indirectly arising from Claims of any Person (including any Governmental Authority), whenever arising, relating to any one or more of (i) Mining Operations at the Mines (including any failure or alleged failure to conduct Mining Operations at the Mines in accordance with Mining Industry Best Practices or the Operating Parameters) and (ii) allegations that any one or more of the Indemnified Parties is or was an operator of the Mine under applicable Law (collectively, the “Indemnification Obligations”).
(b) The obligation of the Indemnitor Parties to indemnify, defend and hold harmless the Indemnified Parties for Indemnification Obligations is subject to the following notice requirements:
(i) An Indemnified Party seeking indemnification pursuant to an Indemnifiable Claim shall give written notification to the Administrative Agent of such Indemnifiable Claim (a “Notice of Claim”) promptly upon becoming aware of the Claim or Loss. The Notice of Claim shall specify with reasonable particularity, to the extent that the information is available, the factual basis for the Indemnifiable Claim and the amount of the Indemnif iable Claim.
(ii) If an Indemnified Party fails to provide the Indemnitor with a Notice of Claim promptly as required by Section 4.2(b)(i), then the Indemnitor Parties shall be relieved of the obligation to pay damages to the extent they can show that they were materially prejudiced in the defense of the Indemnifiable Claim or in proceeding against a third party who or which would have been liable to them but for the fact of the delay, but the failure to provide such Notice of Claim promptly shall not otherwise release the Indemnitor Parties from their obligations under this Section 4.2(b)(ii).
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4.3 Indemnification Procedure.
(a) Subject to Section 4.3(d), upon receiving a Notice of Claim, the Indemnitors, acting through the Administrative Agent, may participate in the investigation and defense of the Indemnifiable Claim, and may also elect to assume the investigation and defense of the Indemnifiable Claim with counsel satisfactory to the Indemnified Party, acting reasonably; provided that the Indemnitors shall not have the right to assume such investigation and defense, and shall pay the reasonable fees and expenses of counsel retained by the Indemnified Party, if the Indemnifiable Claim involves a Claim that, in the good faith judgment of the Indemnified Party, the Administrative Agent failed or is failing to vigorously prosecute or defend. The Indemnified Party shall have the right, at its own cost and expense, to participate in the defense of any Indemnifiable Claim with counsel selected by it subject to the Indemnitor’s right to control the defense thereof (except in the circumstances described above).
(b) In order to assume the investigation and defense of an Indemnifiable Claim, the Administrative Agent must give the Indemnified Party written notice of its election within 20 days of receipt by the Administrative Agent of the Notice of Claim.
(c) Subject to Section 4.3(d), if the Indemnitors assume the investigation and defense of an Indemnifiable Claim:
(i) the Indemnitor Parties will pay for all reasonable costs and expenses of the investigation and defense of the Indemnifiable Claim except that the Indemnitor Parties will not, so long as the Administrative Agent diligently conducts such defense, be liable to the Indemnified Party for any fees of other counsel or any other expenses with respect to the defense of the Indemnifiable Claim, incurred by the Indemnified Party after the date the Indemnitor validly exercised its right to assume the investigation and defense of the Indemnifiable Claim;
(ii) the Indemnitor Parties will reimburse the Indemnified Parties for all reasonable costs and expenses incurred by the Indemnified Parties in connection with the investigation and defense of the Indemnifiable Claim prior to the date the Indemnitors, through the Administrative Agent, validly exercised its right to assume the investigation and defense of the Indemnifiable Claim; and
(iii) if the Indemnitors, acting through the Administrative Agent, thereafter fail to defend the Indemnifiable Claim within a reasonable time, the Indemnified Parties shall be entitled to assume such defense at the Indemnitor Parties’ cost and expense and the Indemnitors shall be bound by the results obtained by the Indemnified Party with respect to the Indemnifiable Claim.
(d) Where the named parties to any Indemnifiable Claim include an Indemnified Party as well as any Indemnitor Party and the Indemnified Party determines in good faith, based on advice from legal counsel, that joint representation would be inappropriate due to the actual or potential differing interests between them or there may be one or more legal defenses available to the Indemnified Party which are different from or in addition to those available to the Indemnitor Parties, and such Indemnified Party notifies the Administrative Agent in writing that it elects to retain separate counsel, the Indemnitors shall not have the right to assume the defense of such Indemnifiable Claim on behalf of the Indemnified Party but shall be liable to pay the reasonable fees and expenses of counsel of the Indemnified Party. In no event, however, shall the Indemnitor Parties be liable hereunder to pay the fees and disbursements of more than one counsel in any one jurisdiction acting as counsel on behalf of all Indemnified Parties. Throughout the course of any legal proceeding, to the extent there are not actual or potential conflicts between the Indemnitor Parties and any Indemnified Parties, the Indemnified Parties and the Indemnitor Parties shall reasonably cooperate with each other in connection with the conduct of the settlement or defense thereof.
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(e) If an Indemnified Party undertakes the defense of the Indemnifiable Claim, the Indemnitor Parties will not be bound by any compromise or settlement of the Indemnifiable Claim effected without the consent of the Indemnitor Parties (which consent may not be unreasonably withheld, conditioned or delayed).
(f) Neither of the Indemnitor Parties will be permitted to compromise and settle or to cause a compromise and settlement of a Indemnifiable Claim without the prior written consent of the applicable Indemnified Party, which consent may not be unreasonably withheld, conditioned or delayed; provided, however, that no such consent shall be required if:
(i) the terms of the compromise and settlement require only the payment of money for which the Indemnified Party is entitled to full indemnification under these Operating Parameters and Indemnity and the Indemnitor Parties agree to timely pay such amount in full; and
(ii) the Indemnified Party is not required to admit any wrongdoing, take or refrain from taking any action, acknowledge any rights of the Person making the Indemnifiable Claim or waive any rights that the Indemnified Party may have against the Person making the Indemnifiable Claim.
(g) No Party shall be liable to pay any amount in discharge of a Claim under these Operating Parameters and Indemnity unless and until the liability in respect of which the Claim is made has become due and payable.
4.4 Nature of Release and Indemnity.
(a) The Release Obligations and the Indemnification Obligations given hereunder are freely and voluntarily given and the Parties acknowledge and represent that they have fully reviewed the terms contained herein, that they are fully informed with respect to the legal effect of the Release Obligations and the Indemnification Obligations, and that they have voluntarily chosen to accept the terms and conditions.
(b) The Release Obligations and the Indemnification Obligations shall be read liberally to give the Indemnified Parties the broadest possible protection.
4.5 Injunction. Each of Grantee and Guarantor, on its behalf and on behalf of its Affiliates and its and their respective Representatives, hereby absolutely, unconditionally and irrevocably stipulate (a) that Grantor will suffer irreparable injury in the event that (i) the Indemnitor Parties fail to cure an Operational Default within the Cure Period, (ii) the Indemnitor Parties fail to perform under the approved Default Cure Plan, or (iii) the Administrative Agent fails to provide a Cure Notice with a Default Cure Plan within the Cure Notice Period in which case the Cure Period shall not apply (each, an “Uncured Operational Default”), as determined by Grantor in its sole and absolute discretion, acting in good faith; and (b) that, as a result of such failure, (i) Grantor will succeed on the merits of any claim based on such Uncured Operational Default, (ii) the balance of equities between the Parties support a claim by Grantor, and (iii) a claim initiated by Grantor is in the public interest. Based on the foregoing, for a period of 10 years after the commencement of Mining Operations at the Mines, in the event of an Uncured Operational Default, Grantor, upon five days’ prior written notice to the Administrative Agent, shall have the unrestricted right to file, or have filed on its behalf, an injunction requiring Grantee to cease, or the cause the cessation of, Mining Operations at the Mines. Each of Grantee and Guarantor, on its behalf and on behalf of its and their Affiliates and its and their respective Representatives, hereby absolutely, unconditionally, and irrevocably agree not to oppose such injunction filed by or on behalf of Grantee. Notwithstanding the foregoing, Grantee and Guarantor reserve the right to contest the continued existence of an Uncured Operational Default on the merits.
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ARTICLE V.
REPRESENTATIONS
Each of the Indemnitors, severally and not jointly, hereby represents to the Grantor, and the Grantor represents to the Indemnitors, as of the Effective Date that:
5.1 Existence. It is a corporation or limited liability company, as applicable, duly organized, validly existing and in good standing in the jurisdiction of its organization and has the power and authority to carry on its business as currently conducted and as contemplated to be conducted under these Operating Parameters and Indemnity, to the extent a party thereto.
5.2 Authority. It has full right, power and authority to enter into and be bound by the terms and conditions of these Operating Parameters and Indemnity, to the extent a party thereto, and to carry out their respective obligations under these Operating Parameters and Indemnity, to the extent a party thereto, without the approval or consent of any other individual, corporation, partnership, association, trust or other entity or organization, including a governmental or political subdivision or any agency or instrumentality thereof.
5.3 Enforceability. It has duly authorized these Operating Parameters and Indemnity, to the extent a party thereto, by all requisite company action. To the extent a party thereto, these Operating Parameters and Indemnity have been duly executed and delivered and constitute a the legal, valid and binding obligation, enforceable against it in accordance with its terms, except as such enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights generally and by general principles of equity (regardless of whether enforcement is sought in a proceeding at law or in equity).
5.4 Validity. The entering into these Operating Parameters and Indemnity, to the extent a party thereto, and the carrying out of their respective obligations hereunder and thereunder are not prohibited, restricted or otherwise limited by any contract, agreement or understanding entered into by them, or by which any of them is bound, with any other Person.
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5.5 No Conflict. The execution, delivery and performance of these Operating Parameters and Indemnity, to the extent a party thereto, do not: (i) conflict with or result in a violation or breach of any provision of its constating documents; or (ii) violate in any material respect any Law applicable to it.
5.6 Governmental Actions. There is no Claim pending or currently threatened against it which, if adversely determined, would restrict or limit its right to enter into these Operating Parameters and Indemnity, to the extent a party thereto, or carry out its obligations under these Operating Parameters and Indemnity, to the extent a party thereto.
ARTICLE VI.
MISCELLANEOUS
6.1 Real Property Interest. The Parties intend that the obligations of the Indemnitor Parties to conduct Mining Operations at the Mines in accordance with Mining Industry Best Practices and the Operating Parameters constitute a valuable right, shall continue during the conduct of Mining Operations at the Mines by the Indemnitor Parties, and shall constitute a presently vested interest in and a covenant running with the Mining Property which shall inure to the benefit of and be binding upon the Indemnitor Parties and the Grantor and their respective, successors and assigns. The obligations of the Indemnitor Parties to conduct Mining Operations at the Mines in accordance with Mining Industry Best Practices and the Operating Parameters shall attach to any amendments, relocations or conversions of any Mining Property, or to any renewals or extensions thereof. If the Indemnitor Parties or any successor or assignee of the Indemnitor Parties surrenders, allows to lapse or otherwise relinquishes or terminates its interest in any of the Mining Property, and reacquires a direct or indirect interest in the land or minerals covered by the former Mining Property, then from and after the date of such reacquisition such reacquired properties shall be included in the Mining Property and the obligations of the Indemnitor Parties to conduct Mining Operations at the Mines in accordance with Mining Industry Best Practices and the Operating Parameters shall apply to such interest so acquired. Indemnitor shall give written notice to the Administrative Agent within 30 days of any acquisition or reacquisition of an interest in the Mining Property. The Parties do not intend that there be any violation of the rule against perpetuities. Accordingly, any right that is subject to such rule shall be exercised within the maximum time periods permitted under applicable Law.
6.2 Registration. To the extent the Grantor is able to do so under applicable Law, the Grantor shall be entitled from time to time and at its sole cost and expense to register or record notice of its interest in these Operating Parameters and Indemnity against title to the Mining Property or elsewhere, and the Indemnitor Parties shall cooperate with the Grantor to effect such reasonable registrations and recordings and provide their written consent, acting reasonably, to any documents in connection therewith and do such other things, at the cost and expense of the Grantor, as soon as reasonably practicable, as are reasonably necessary to effect any such registrations or recordings.
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6.3 Expenses. Except as otherwise set forth in these Operating Parameters and Indemnity, all costs and expenses, including, without limitation, fees and disbursements of counsel, financial advisors and accountants, incurred in connection with these Operating Parameters and Indemnity shall be paid by the Party incurring such costs and expenses.
6.4 Notices. All notices, requests, consents, claims, demands, waivers and other communications hereunder shall be in writing and shall be deemed to have been given: (a) when delivered by hand (with written confirmation of receipt), (b) when received by the addressee if sent by a nationally recognized overnight courier (receipt requested), (c) on the date sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal business hours of the recipient, or (d) when received by the addressee if mailed, by certified or registered mail, return receipt requested, postage prepaid. Such communications must be sent to the respective parties at the following addresses (or at such other address for a Party as shall be specified in a notice given in accordance with this Section 6.4):
If to Grantor: | Barrick Gold Corporation | ||||
Brookfield Place | |||||
TD Canada Trust Tower | |||||
161 Bay Street, Suite 3700
P.O. Box 212 |
|||||
Toronto, Canada M5J 2S1 | |||||
Attention: General Counsel
email: notices@barrick.com |
|||||
With a copies to: | Barrick Gold of North America Inc. | ||||
310 S. Main Street, Suite 1150 | |||||
Salt Lake City, Utah 84101 | |||||
Attention: Michael McCarthy | |||||
General Counsel (North America) | |||||
email: |
USLegalNotices@barrick.com
mmccarthy@barrick.com |
||||
If to Indemnitors: | c/o Administrative Agent | ||||
Dakota Territory Resource Corporation | |||||
106 Glendale Drive, Suite A | |||||
Lead, South Dakota 57754 | |||||
Attention: Jonathan Awde, CEO | |||||
email: jawde@gold-sd.com |
6.5 Severability. If any provision of these Operating Parameters and Indemnity is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, all other provisions of these Operating Parameters and Indemnity shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in a manner materially adverse to a Party.
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6.6 Entire Agreement. These Operating Parameters and Indemnity is an essential element of the transactions contemplated in the Purchase Agreement; these Operating Parameters and Indemnity constitutes valuable consideration under the Purchase Agreement; and the Grantor will realize benefits and economic advantages from these Operating Parameters and Indemnity. Subject to the foregoing, these Operating Parameters and Indemnity constitutes the sole and entire agreement of the Parties with respect to the subject matter contained herein and supersedes all prior and contemporaneous representations, warranties, understandings and agreements, both written and oral, with respect to such subject matter.
6.7 Waiver. No waiver of any provision of these Operating Parameters and Indemnity shall be of any force or effect unless such waiver is in writing, expressly stating to be a waiver of a specified provision of these Operating Parameters and Indemnity, and is signed by the Party to be bound thereby. A Party’s waiver of any breach of these Operating Parameters and Indemnity or failure to enforce any of the provisions of these Operating Parameters and Indemnity, at any time, shall not in any way limit or waive that Party’s right thereafter to enforce or compel strict compliance with these Operating Parameters and Indemnity or any portion or provision or right under these Operating Parameters and Indemnity.
6.8 Successors and Assigns. These Operating Parameters and Indemnity shall be binding upon and shall inure to the benefit of the Parties hereto and their respective successors and permitted assigns. Except as provided in Section 3.2, no Party may assign its rights or obligations hereunder without the prior written consent of the other Parties.
6.9 Beneficiaries. These Operating Parameters and Indemnity include rights and benefits for the Indemnitor Parties and the Indemnified Parties, and the Parties will exercise their respective rights and obligations under these Operating Parameters and Indemnity with due consideration for the rights and benefits of the Indemnitor Parties and the Indemnified Parties. Subject to the foregoing, these Operating Parameters and Indemnity are for the sole benefit of the Parties and their respective successors and permitted assigns and nothing herein, express or implied, is intended to or shall confer upon any other Person any legal or equitable right, benefit or remedy of any nature whatsoever under or by reason of these Operating Parameters and Indemnity.
6.10 Amendment and Modification; Waiver. These Operating Parameters and Indemnity may only be amended, modified or supplemented by an agreement in writing signed by each Party hereto or, in the case of the Indemnitors, by the Administrative Agent. No waiver by any Party of any of the provisions hereof shall be effective unless explicitly set forth in writing and signed by the party so waiving or, in the case of the Indemnitors, by the Administrative Agent. No waiver by any Party shall operate or be construed as a waiver in respect of any failure, breach or default not expressly identified by such written waiver, whether of a similar or different character, and whether occurring before or after that waiver. No failure to exercise, or delay in exercising, any right, remedy, power or privilege arising from these Operating Parameters and Indemnity shall operate or be construed as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power or privilege hereunder preclude any other or further exercise thereof or the exercise of any other right, remedy, power or privilege.
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6.11 Governing Law; Submission to Jurisdiction.
(a) These Operating Parameters and Indemnity shall be governed by and construed in accordance with the internal laws of the State of South Dakota without giving effect to any choice or conflict of law provision or rule (whether of the State of South Dakota or any other jurisdiction).
(b) Any Claim arising out of or based upon these Operating Parameters and Indemnity or the interpretation thereof may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts in any such Claim. Service of process, summons, notice or other document by mail to such Party’s address set forth herein shall be effective service of process for any Claim brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any Claim in such courts and irrevocably waive and agree not to plead or claim in any such court that any such Claim brought in any such court has been brought in an inconvenient forum.
(c) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THESE OPERATING PARAMETERS AND INDEMNITY. THE JURY TRIAL WAIVER CONTAINED IN THESE OPERATING PARAMETERS AND INDEMNITY IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THESE OPERATING PARAMETERS AND INDEMNITY MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS A PARTY’S WRITTEN CONSENT TO SUCH PARTY’S WAIVER OF A JURY TRIAL.
6.12 Specific Performance. The Parties hereby agree that irreparable damage would occur in the event that any provision of these Operating Parameters and Indemnity are not performed in accordance with its specific terms or is otherwise breached, and that money damages or other legal remedies would not be an adequate remedy for any such damages. Accordingly, the Parties acknowledge and hereby agree that in the event of any breach or threatened breach by any Party of any of its covenants or obligations set forth in these Operating Parameters and Indemnity, the other Parties shall be entitled to injunctive relief to prevent or restrain breaches or threatened breaches of these Operating Parameters and Indemnity by the other, and to specifically enforce the terms and provisions of these Operating Parameters and Indemnity to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other under these Operating Parameters and Indemnity. Each of the Parties hereby agrees not to raise any objections to the availability of the equitable remedy of specific performance to prevent or restrain breaches or threatened breaches of these Operating Parameters and Indemnity by it, and to specifically enforce the terms and provisions of these Operating Parameters and Indemnity to prevent breaches or threatened breaches of, or to enforce compliance with, the covenants and obligations of the other parties under these Operating Parameters and Indemnity.
6.13 Further Assurances. The Parties shall each do, or cause to be done, any such further acts, or execute and deliver, or cause to be executed and delivered, such further documents as may be reasonably necessary for their respective performance under these Operating Parameters and Indemnity.
B-17
6.14 Administrative Agent. The Indemnitors hereby appoint Grantee as the Administrative Agent of the Indemnitors under these Operating Parameters and Indemnity, and each Indemnitor hereby authorizes the Grantee to act on behalf of each such Indemnitor as its Administrative Agent in accordance with the terms of these Operating Parameters and Indemnity. The Grantee hereby agrees to act as the Administrative Agent of the Indemnitors as set forth in these Operating Parameters and Indemnity. The Grantor Parties hereby acknowledge and agree that the Grantee is acting as the Administrative Agent of the Indemnitors under these Operating Parameters and Indemnity. The Indemnitors may replace the Administrative Agent upon written notice to the Grantor.
6.15. Benefits of Guarantor. Guarantor will realize benefits and economic advantages arising from the conduct of Mining Operations at the Mines.
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SCHEDULE I
MINE MAP
I-1
SCHEDULE II
OPERATING PERMITS
PERMIT TYPE | PERMIT | PERMIT | ISSUE/ | RESPONSIBLE |
NUMBER | HOLDER | APPROVAL | AGENCY | |
DATE | ||||
Homestake Mining | July-1988 | SD DANR | ||
Mining Permit | 332 | Company of | ||
California | ||||
Homestake Mining | May-1992 | SD DANR | ||
Mining Permit | 456 | Company of | ||
California | ||||
Homestake Mining | Jan-1988 | Lawrence | ||
Conditional Use Permit | 124 | Company of | County, SD | |
California | ||||
Homestake Mining | June-1990 | Lawrence | ||
Conditional Use Permit | 144 | Company of | County, SD | |
California |
II-1
EXHIBIT E
ROYALTY DEED
(See Attached)
E-1
APN #: N/A (mineral royalty interest) | |
Prepared by: | |
Parsons Behle & Latimer | |
201 South Main Street | |
Salt Lake City, Utah | |
84111 | |
(801)532-12234 | |
Mail Tax Statement to: N/A | |
(mineral royalty interest) |
Space above for County Recorder’s Use
Pursuant to South Dakota Codified Laws 43-28-24 thru 43-28-28 inclusive: this Deed does not contain any individual’s personally identifiable information.
NET SMELTER RETURNS ROYALTY DEED
This Net Smelter Returns Royalty Deed (this “Deed”), executed to be effective as of [DATE], 2021(“Effective Date”) is from Dakota Territory Resource Corp, a Nevada corporation (“Grantor”), the address of which is 106 Glendale Drive, Suite A, Lead, South Dakota 57754, to Homestake Mining Company of California, California corporation (“Grantee”), the address of which is 310 S. Main Street, Suite 1150, Salt Lake City, Utah 84101. Grantor and Grantee sometimes are referred to in this Deed individually as a “Party” and collectively as the “Parties.”
RECITALS
A. Grantor owns fee lands and patented mining claims (collectively, the “Mining Property”) located in Lawrence County, South Dakota. The Mining Property is more particularly described in Exhibit A to this Deed.
B. Pursuant to that certain Asset Purchase Agreement (the “Agreement”) made and entered into as of the Effective Date, by and between Grantor and Grantee, Grantor is required to execute, acknowledge and deliver to Grantee an instrument granting to Grantee a Net Smelter Returns Royalty on all gold and other minerals of any type produced from the tailings facility located on the Mining Property and from dumps or stockpiles located on the Mining Property (referred to as the “Royalty Property”), from and after the Effective Date.
C. Grantor executes and delivers this Deed to Grantee pursuant to the terms of the Agreement.
CONVEYANCE
1. Grant of Royalty.
(a) Royalty Percentage. For good and valuable consideration, the receipt and sufficiency of which are acknowledged by the Parties, Grantor grants, assigns, conveys and agrees to pay to Grantee, and its successors and assigns, forever, a Royalty equal to 2.5% of Net Smelter Returns (the “Royalty Percentage”), as hereinafter defined and computed, for all gold and other minerals of any type produced from the Royalty Property, from and after the Effective Date (the “Royalty”), subject to Section 1(b). For the purpose of clarity, the Royalty shall only apply to gold and other minerals of any type produced from the Royalty Property and not the underlying Mining Property on which the Royalty Property is located.
(b) No Buy Down. Grantor will not have the right to buy down all or any portion of the Royalty.
2. Representations and Warranties.
(a) Full Authority. Grantor represents and warrants that as of the date hereof it has all authority necessary for it to execute and deliver this Deed.
(b) No Encumbrances. Grantor represents and warrants that it has not taken any action by which the Royalty Property, will be subject to a lien or other encumbrance that will in any way be a lien or other encumbrance on the Royalty.
(c) Grantee’s Acceptance. Grantee acknowledges and agrees that this Deed is accepted by Grantee in satisfaction of Grantor’s obligation to deliver this Deed pursuant to the Agreement.
3. Definition of Net Smelter Returns.
(a) For Gold Bullion. “Net Smelter Returns,” for gold produced from the Royalty Property, and refined by or for Grantor to a form that meets good delivery standards in the London Bullion Market or comparable terminal market (“Gold Bullion”), will be determined by multiplying (i) the gross number of troy ounces of Gold Bullion produced from the Royalty Property, and returned to or credited to Grantor or purchased and paid for by a smelter, refiner, processor, purchaser or other recipient of such bullion during a calendar quarter, by (ii) the arithmetic average of the London Bullion Market Association P.M. Fixing Price (in United States dollars) reported on its website for Gold Bullion for the calendar quarter (or should such quotation cease, another similar quotation acceptable to Grantee, acting reasonably) calculated by summing the quoted prices reported for each day of the calendar quarter and dividing the sum by the number of days for which such prices were reported, and (iii) by deducting from the product of (i) times (ii), the Allowable Deductions permitted in Section 4(a) below.
(b) For Other Products. For gold and other minerals of any type produced from the Royalty Property, and sold in a crude or intermediate form other than as Gold Bullion (“ Other Products”), Net Smelter Returns will be equal to (i) the actual sales price for the minerals contained in such Other Products received by Grantor from a smelter, refiner, processor, purchaser or other recipient of such products during a calendar quarter, less (ii) the Allowable Deductions permitted in Section 4(b) below.
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(c) Affiliate Transactions. If Other Products are delivered in kind or sold to an entity which, under the broadest definition, directly or indirectly controls, is controlled by, or is under common control with Grantor (an “Affiliate”), and are sold by such Affiliate with or without further processing, Net Smelter Returns will be calculated based on the value of Gold Bullion sold by or credited or returned to the Affiliate (calculated pursuant to Subsection 3(a)), or the proceeds actually received by such Affiliate in an arm's length transaction for sale of Other Products, less Allowable Deductions actually incurred by the Affiliate, and the Gold Bullion or Other Products will be deemed to have been sold by Grantor, the proceeds will be deemed to have been received by Grantor and the Allowable Deductions will be deemed to have been made by Grantor for purposes of calculating Net Smelter Returns, in each case as if Grantor had sold (or received or was credited with) such Gold Bullion or Other Products in an arm’s-length transaction.
(d) Insurance Proceeds. In the event Grantor receives insurance proceeds for gold in Gold Bullion or for gold or other minerals in Other Products lost or damaged, Net Smelter Returns will equal any such insurance proceeds that are received by Grantor for such loss.
4. Allowable Deductions.
(a) For Gold Bullion. For gold produced and sold as Gold Bullion, “Allowable Deductions” means, to the extent actually incurred:
(i) charges imposed by a smelter or refinery for refining Gold Bullion from doré or concentrates produced in Grantor’s, or a third party’s, mill or other processing plant; however, charges incurred by Grantor for processing raw or crushed ore or other preliminary products in Grantor’s mill or other processing plant shall not be subtracted in determining Net Smelter Returns;
(ii) penalty substance, assaying, and sampling charges imposed on or incurred by Grantor for refining Gold Bullion contained in such production;
(iii) charges and costs, if any, for transportation and insurance of doré or concentrates produced in Grantor’s mill or other processing plant to places where such doré or concentrates are smelted, refined and/or sold or otherwise disposed of; and
(iv) all taxes paid on production of Gold Bullion, except income tax, including but not limited to, production, severance, sales and privilege taxes and all local, state and federal taxes that are based on the production of Gold Bullion.
(b) For Other Products. For gold and other minerals of any type produced and sold in Other Products, “Allowable Deductions” means, to the extent actually incurred:
(i) charges imposed by the smelter, refiner or other processor for smelting, refining or processing gold and other minerals of any type contained in Other Products,but excluding any and all charges and costs related to Grantor’s, or a third party’s, mill or other processing plant constructed for the purpose of milling or processing Other Products;
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(ii) penalty substance, assaying, and sampling charges imposed by a smelter, refiner or other processor for smelting, refining, or processing gold and other minerals of any type contained in Other Products, but excluding any and all charges and costs of or related to Grantor’s mill or other processing plant constructed for the purpose of milling or processing Other Products;
(iii) charges and costs, if any, for transportation and insurance of the gold and other minerals of any type contained in Other Products and the beneficiated products thereof from Grantor’s mill or other processing plant to places where such Other Products or the beneficiated products thereof are smelted, refined and/or sold or otherwise disposed of; and
(iv) all taxes paid on production of the gold and other minerals of any type contained in Other Products, except income tax, including but not limited to, production, severance, sales and privilege taxes and all local, state and federal taxes that are based on the production of gold contained in Other Products.
(c) Custom Facilities. In the event Grantor carries out smelting, refining or other processing operations to produce Gold Bullion or gold and other minerals of any type contained in Other Products in facilities owned or controlled, in whole or in part, by Grantor, which facilities were not constructed for the sole purpose of smelting, refining or processing crude or intermediate products produced from the Royalty Property, then charges, costs and penalties for such smelting, refining or processing shall mean the amount Grantor would have incurred as “Allowable Deductions” under Section 4(a)(i) or Section 4(b)(i) above if such smelting, refining or other processing operations were carried out at facilities not owned or controlled by Grantor, but in no event will such Allowable Deductions be greater than actual costs incurred by Grantor with respect to such smelting, refining or other processing.
5. Calculating and Paying Royalty; Reporting.
(a) Calculation. The dollar amount of the Royalties due to Grantee for a calendar quarter will be the product of the sum of the Net Smelter Returns for Gold Bullion plus the Net Smelter Returns for the gold and other minerals of any type contained in Other Products for such quarter multiplied by the Royalty Percentage.
(b) Payment. Payment of Royalties for a calendar quarter will be due by the last day of the month following the end of each calendar quarter in which Gold Bullion or Other Products containing gold and other minerals of any type are sold or returned or credited to Grantor (the “Payment Date”). If, for any reason, all information necessary to calculate and make a payment on the Payment Date is not available, Grantor will make a provisional payment on the Payment Date based on the available information and provide a final reconciliation for such payment promptly after all needed information becomes available to Grantor. In the event Grantee has been underpaid in any provisional payment, Grantor will promptly pay the difference to Grantee in cash or other readily available funds and if Grantee has been overpaid in any provisional payment, Grantee will promptly pay to Grantor the difference in cash or other readily available funds. All payments of the Royalties will be made by Grantor to Grantee, and will be paid free of any and all withholding taxes.
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(c) Detailed Statement. All payments of Royalty will be accompanied by a detailed statement explaining the calculation thereof together with any available settlement sheets received by Grantor from the smelter, refiner or other purchaser of Gold Bullion or gold and other minerals of any type contained in Other Products.
6. Other Provisions Related to Payment.
(a) Hedging Transactions. All profits and losses resulting from Grantor’s engaging in any commodity futures trading, option trading, or metals trading, or any combination thereof, and any other hedging transactions including trading transactions designed to avoid losses and obtain possible gains due to metal price fluctuations are specifically excluded from calculation of Net Smelter Returns and will be solely for Grantor’s account.
(b) Commingling. Grantor will have the right to commingle, either underground, at the surface, in stockpiles or at a mill, autoclave, roaster or other processing facility used by Grantor, ore or concentrates, minerals and other material mined and removed from the Royalty Property with ore, concentrates, minerals and other material mined and removed from other property. Before commingling, the average grade of the commingled materials and other measures as are appropriate will first be calculated by Grantor from representative samples, and the weight of such materials will be determined before commingling using practices which will be as good as or better than prevailing industry practices. In obtaining representative samples, calculating the average grade of the ore and average recovery percentages, the procedures used will be as good as or better than prevailing industry practices . Representative samples of the materials to be commingled will be retained by Grantor and assays (including moisture and penalty substances) and other appropriate analyses of these samples shall be retained for a reasonable amount of time, but not less than 18 months, after receipt by Grantee of the applicable royalty payment.
(c) No Obligation to Mine or Process. Subject to the Agreement, Grantor will have sole discretion to determine the extent of its operations on or for the benefit of the Royalty Property and the time or the times for development, mining, stockpiling, processing and selling products produced from the Royalty Property and the suspension or resumption of any operation with respect thereto. Grantor will have no obligation to Grantee (in its capacity as the holder of this royalty) or otherwise to mine, explore or to conduct any other operation on any of the Royalty Property.
(d) Lesser Interest. The Royalty will only be paid on the basis of Grantor’s proportionate share of production of gold and other minerals of any type from the Royalty Property as the Royalty Property exists as of the Effective Date of this Deed. By way of illustration, if a portion of the Royalty Property, as of the Effective Date, entitle Grantor to only an undivided 75% interest in the gold and other minerals of any type produced from such portion of the Royalty Property, then the Royalty will be paid based only on 75% of the production of gold and other minerals of any type from such portion of the Royalty Property.
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7. Books, Records, Inspections and Confidentiality.
(a) Inspection of Books and Records. Grantee will have the right, upon reasonable notice to Grantor, to inspect and copy all books, records, technical data, information and materials (the “Data”) pertaining to calculation of Royalty payments, including those with respect to commingling; provided that such inspections will not unreasonably interfere with Grantor’s operations. Grantor makes no representations or warranties to Grantee concerning any of the Data except that the Data will be prepared in good faith and Grantee agrees that if it elects to rely on any such Data or any other information made available by Grantor, it does so at its sole risk, except in the event of bad faith or fraud.
(b) Audit. Grantee will have the right to audit the books and records pertaining to production from the Royalty Property and the calculation of the Royalty and to contest payments of Royalty for a period of 24 months following receipt by Grantee of each Royalty payment. Each Royalty payment will be deemed conclusively correct unless Grantee objects to it in writing within 24 months after receipt of such payment, setting forth in detail the basis for the Grantee’s objection. If it is finally determined, through agreement by the Parties or following completion of the dispute as set out in Section 7(c) below, that Grantee has been underpaid in any such payment, Grantor will promptly pay to Grantee the underpaid amount. In addition, if it is finally determined, through agreement by the Parties or following completion of the dispute as set out in Section 7(c) below, that Royalty payments for any calendar year are underpaid by more than 5%, then Grantor will reimburse Grantee for its reasonable costs incurred in auditing the books and records of Grantor.
(c) Dispute Resolution.
(i) If Grantee objects to a Royalty payment in a timely manner as set out in Section 7(b) above, then the Parties will meet within 30 days of Grantor’s receipt of the Grantee’s objection and, acting in good faith, seek to resolve the dispute. If the Parties fail to resolve the dispute within 30 days of the initial meeting, the dispute will be referred to the respective chief executive officers (or persons holding analogous positions) of the Parties who will, in good faith, attempt to resolve the dispute within 21 days of such referral. If the chief executive officers of the Parties are unable to resolve the matter within such 21 -day period, then either Party may submit the dispute to a court as provided in Section (c)(iii) below.
(ii) If any Party objects to the performance by the other Party of any obligation arising under this Deed or of its interpretation, the Parties will meet within 30 days of the receipt by the other Party of the objecting Party’s objection and, acting in good faith, seek to resolve the dispute. If the Parties fail to resolve the dispute within 30 days of the initial meeting, the dispute will be referred to the respective chief executive officers (or persons holding analogous positions) of the Parties who will, in good faith, attempt to resolve the dispute within 21 days of such referral. If the chief executive officers of the Parties are unable to resolve the matter within such 21-day period, then either Party may submit the dispute to a court as provided in Section (c)(iii) below
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(iii) Any dispute arising out of or based upon this Deed or a Royalty payment or may be instituted in the state courts of South Dakota or the federal courts of the United States, in each case located in Rapid City, South Dakota, and each Party irrevocably submits to the exclusive jurisdiction of such courts. Service of process, summons, notice or other document delivered by mail to such Party’s address set forth herein shall be effective service of process for dispute brought in any such court. The Parties irrevocably and unconditionally waive any objection to the laying of venue of any dispute in such courts and irrevocably waive and agree not to plead or claim in any such court that any such dispute brought in any such court has been brought in an inconvenient forum.
(iv) EACH PARTY HEREBY IRREVOCABLY WAIVES ALL RIGHTS TO A JURY TRIAL IN ANY ACTION, SUIT, OR PROCEEDING OF ANY KIND DIRECTLY OR INDIRECTLY ARISING OUT OF OR IN ANY WAY RELATING TO THIS AGREEMENT. THE JURY TRIAL WAIVER CONTAINED IN THIS DEED IS INTENDED TO APPLY, TO THE FULLEST EXTENT PERMITTED BY LAW, TO ANY AND ALL DISPUTES AND CONTROVERSIES THAT ARISE OUT OF OR IN ANY WAY RELATE TO ANY OR ALL OF THE MATTERS DESCRIBED IN THE PRECEDING SENTENCE, INCLUDING WITHOUT LIMITATION CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS OF ANY KIND. THIS DEED MAY BE FILED WITH ANY COURT OF COMPETENT JURISDICTION AS A PARTY’S WRITTEN CONSENT TO SUCH PARTY’S WAIVER OF A JURY TRIAL.
(v) Except as otherwise specified herein, in the event of a dispute arising under this Deed is submitted to court, the prevailing Party will be entitled to payment of its reasonable attorneys’ fees and costs in litigating the dispute.
(d) Inspection of Facilities. Grantee will have the right, upon reasonable notice, to inspect the facilities associated with the Royalty Property to the extent necessary to confirm Grantor’s proper performance of its obligations in this Deed. Such inspection will be at the sole risk of Grantee, and Grantee will indemnify Grantor from any liability caused by Grantee's exercise of inspection rights, unless such liability is caused by the gross negligence or intentional acts of Grantor or its employees or agents.
(e) Confidentiality.
(i) No Party shall, without the express written consent of the other Parties, which consent may be withheld for any purpose, disclose any non-public information generated or received under this Deed relating to the calculation of Net Smelter Returns or Grantor’s operations on the Royalty Property or other property (“Confidential Information”), other than to employees, agents or consultants of the receiving Party in respect of the administration or enforcement of its rights hereunder and who agree to be bound by the confidentiality provisions of this Deed (the breach of which shall be deemed to be a breach by the Party).
(ii) Any Party may disclose Confidential Information received from another Party (A) to a prospective lender to whom or to which the Party may, in good faith, grant a security interest in its interest in the Royalty Property, or (B) to a prospective purchaser of all or part of a Party’s interest in the Royalty or the Royalty Property, but only, in each case, if the prospective recipient of Confidential Information has executed a confidentiality agreement that includes confidentiality provisions substantially similar to this subsection.
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(iii) Confidential Information may also be disclosed if such disclosure is required for compliance with applicable laws, rules, regulations or orders of any governmental agency or stock exchange having jurisdiction over a Party, provided, however, that the notice shall have been given to the non-disclosing Party or Parties of such disclosure as far in advance of such disclosure as is reasonably practicable and the disclosing Party or Parties ensures that only such information as is necessary to comply with the obligations is disclosed.
8. | General Provisions. |
(a) | Transfers. |
(i) Grantor may freely transfer all or any portion of its interest in the Royalty Property so long as such transfer is expressly made subject to the Royalty. If Grantor transfers all or any portion of its interest in the Royalty Property, Grantor will obtain from the transferee a written acknowledgement and assumption of the obligations of Grantor under this Deed with respect to the interest so transferred, and promptly provide evidence of such acknowledgement and assumption to Grantee. Upon obtaining and delivering such acknowledgment and assumption to Grantee, Grantor will thereupon be relieved of all liability for payment of the Royalty with respect to the Royalty Property transferred for any Royalty that may thereafter arise with respect to such transferred interest, except with respect to any Royalty payments made prior to the date of transfer, which will continue to be governed by this Deed.
(ii) In the event Grantor desires to mortgage, pledge, encumber or otherwise create a security interest in all or any portion of the products produced from the Royalty Property, Grantor will cause each agreement, indenture, bond, deed of trust, filing, application or other instrument that creates or purports to create a lien, mortgage, security interest or other charge secured by any interest in any of the Royalty Property or such products to include an express agreement and acknowledgement by the Parties to such instrument, in form and substance reasonably satisfactory to Grantee, that the Royalty is (A) senior in right of payment and collection from Revenues to any and all obligations created thereby in respect of any of the Royalty Property or such products, and (B) that the Royalty is an independent interest in the Royalty Property and is not subject to foreclosure pursuant to such mortgage, encumbrance or other form of security interest.
(iii) Grantee may freely transfer, mortgage, pledge, encumber or otherwise create a security interest in all or any portion of the Royalty, provided that Grantor will have no obligation to make payments of Royalty to a transferee until receipt of written notice of the transfer and a copy of the transferring document.
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(b) No Partnership or Special Relationship. The relationship of Grantor and Grantee with respect to the Royalty will not be construed to create, expressly or by implication, a joint venture, mining partnership, commercial partnership, or other partnership relationship.
(c) Certain Definitions. As used in the Deed, the term “Grantee” will include all of the successors-in-interest to each of the Grantee and the term “Grantor” will include all of Grantor’s successors-in-interest.
(d) Tailings and Other Waste Material. All tailings, residues, waste rock, spoiled leach materials, and other materials resulting from Grantor’s operations and activities with respect to the Royalty Property shall be the sole property of Grantor but if Grantor processes such materials in the future, all gold and other minerals produced from such materials will be subject to the Royalty and the terms of this Deed.
(e) Property Interest. This Deed shall constitute a security agreement for purposes of the Uniform Commercial Code. In addition, Grantor and Grantee intend that the Royalty will be perpetual and will constitute a presently vested interest in and a covenant running with the Royalty Property which will inure to the benefit of and be binding upon the Parties and their respective successors and assigns so long as Grantor or any successor or assign of Grantor holds any rights or interests in the Royalty Property. The Royalty shall attach to any amendments, relocations or conversions of any mining claim, license, or lease, concession, permit, patent or other tenure comprising the Royalty Property or the Mining Property on which the Royalty Property is located, or to any renewals or extensions thereof. If Grantor or any affiliate or successor or assignee of Grantor surrenders, allows to lapse or otherwise relinquishes or terminates its interest in any of the Royalty Property or the Mining Property on which the Royalty Property is located, and reacquires a direct or indirect interest in the land or minerals covered by the former Royalty Property or Mining Property on which the Royalty Property is located, then from and after the date of such reacquisition the Royalty will apply to the Royalty Property so affected. Grantor will give written Notice to Grantee within 30 days of any such acquisition or reacquisition. The Parties do not intend that there be any violation of the rule against perpetuities. Accordingly, any right that is subject to such rule shall be exercised within the maximum time periods permitted under applicable law.
(f) Notices. Any notice, demand or other communication under this Deed (“Notice”) required or permitted to be given or made under this Deed will be in writing and shall be given to a Party at the address below (i) by courier or recognized overnight delivery service, or (ii) by registered or certified mail, return receipt requested. All Notices shall be effective and will be deemed delivered (A) if by courier or recognized overnight delivery service on the date of delivery, (B) if solely by mail on the day delivered as shown on the actual receipt. A Party may change its address for purposes of Notices from time-to-time by Notice to the other Party.
If to Grantor:
Dakota Territory Resource Corporation
106 Glendale Drive, Suite A
Lead, South Dakota 57754
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If to Grantee:
Barrick Gold Corporation
Brookfield Place
TD Canada Trust Tower
161 Bay Street, Suite 3700
P.O. Box 212
Toronto, Canada M5J 2S1
Attn: General Counsel
email: notices@barrick.com
With a copy to:
Barrick Gold of North America Inc.
310 S. Main Street, Suite 1150
Salt Lake City, Utah 84101
Attn: Michael McCarthy, General Counsel (North America)
email: mmccarthy@barrick.com
(g) Section Headings. The section headings contained in this Deed are inserted for convenience only and do not affect in any way the meaning or interpretation of this Deed.
(h) Amendment. No amendment of any provision of this Deed will be valid with respect to any Party unless the same shall be in writing and signed by each Party. No waiver by any Party of any default or covenant hereunder, whether intentional or not, will be deemed to extend to any prior or subsequent default or covenant or affect in any way any rights arising by virtue of any prior or subsequent occurrence.
(i) Invalidity. If any term or provision of this Deed is invalid or unenforceable in any situation in any jurisdiction it will not affect the validity or enforceability of the remaining terms and provisions.
(j) Governing Law. This Deed will be governed by and construed in accordance with the laws of the State of South Dakota without giving effect to any choice or conflicts of law provision or rule (whether of the State of South Dakota or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of South Dakota.
(k) Interpretation. The Parties have participated jointly in the negotiation and drafting of this Deed. In the event an ambiguity or question of intent or interpretation arises, this Deed will be construed as if drafted jointly by the Parties and no presumption or burden of proof will arise favoring or disfavoring either Party by virtue of the authorship of any of the provisions of this Deed.
(l) Counting. If the final day of any period or any date of performance under this Deed falls on a Saturday, Sunday or legal holiday in South Dakota, then the final day of the period or the date of performance will be extended to the next day that is not a Saturday, Sunday or legal holiday in South Dakota. For purposes of computing the time for performance of any obligation hereunder, however, Saturday, Sundays and legal holidays will be included.
[Signature Page Follows]
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Exempt from Transfer Fee, Mineral Royalty Interest only.
Executed by Grantor and Grantee to be effective as of the Ef fective Date.
GRANTOR: | ||
Dakota Territory Resource Corp, a Nevada corporation | ||
By: | ||
Name: | ||
Title: | ||
GRANTEE: | ||
Homestake Mining Company of California, a California corporation | ||
By: | ||
Name: | ||
Title: |
State of )
) ss.
County of )
This instrument was acknowledged before me on __________ ___, 20[__], by [____________] as [________________] of Dakota Territory Resource Corp
Notary Public in and for the State of |
Residing at: |
Commission Expires: |
State of )
) ss.
County of )
This instrument was acknowledged before me on __________ ___, 20[__], by [________________] as [____________] of Homestake Mining Company of California.
Notary Public in and for the State of Utah | ||
Residing at: | ||
Commission Expires: |
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EXHIBIT A
To
Net Smelter Returns Royalty Deed
(Lawrence County, South Dakota Royalty Property)
The tailings facility and dumps or stockpiles located on the following described real property located in Lawrence County, South Dakota:
Lot 3 of Grizzly Gulch Tract (excluding Ryan Tract Revised as shown on Plat Document 2012- 4206 and excluding Keller Tract as shown on Plat Document 2019-4247), including the Morton Lode, M.S. 208, located in Sections 2, 3, 4, 9, 10, 11, 14 and 15, T4N, R3E and Section 34, T5N, R3E, B.H.M., as shown on Plat Document Number 2010-1746 and comprising 2,025.26 acres, more or less and identified as 26030-00000-030-00;
A-1
EXHIBIT F
SELLER CLOSING CERTIFICATE
HOMESTAKE MINING COMPANY OF CALIFORNIA
SELLER’S CLOSING CERTIFICATE
The undersigned, a duly authorized officer of Homestake Mining Company of California a California corporation (“Seller”), does hereby certify pursuant to Section 4(a)(v) of that certain Asset Purchase Agreement (the “Agreement”) dated [__________], 20__ by and among Seller and the individuals whose names are listed on the signature page thereto that:
1. Each of the Seller's representations and warranties set forth in Section 5 of the Agreement are true and correct in all material respects at and as of the Closing Date (as defined in the Agreement).
2. The Seller has performed and complied, in all material respects, with all of its covenants set forth in the Agreement through the Closing (as defined in the Agreement).
3. No action, suit, or proceeding is pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by the Agreement, (B) cause any of the transactions contemplated by the Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge is in effect), or (C) adversely affect the right of the Seller to own or dispose of the property as contemplated by this Agreement and the other agreements contemplated thereby.
Dated this [__] day of [_________], 20[__]
Homestake Mining Company of California, a California corporation
By: |
Name: |
Title: |
F-1
EXHIBIT G
PURCHASER CLOSING CERTIFICATE
DAKOTA TERRITORY RESOURCE CORPORATION
BUYER’S CLOSING CERTIFICATE
The undersigned, a duly authorized officer of Dakota Territory Resource Corporation (“buyer”), does hereby certify pursuant to Section 4(b)(vii) of that certain Asset Purchase Agreement (the “Agreement”) dated [__________], 20[__] by and among Buyer and the individuals whose names are listed on the signature page thereto that:
1. Each of the Buyer’s representations and warranties set forth in Section 6 of the Agreement are true and correct in all material respects at and as of the Closing Date (as defined in the Agreement).
2. The Buyer has performed and complied, in all material respects, with all of its covenants set forth in the Agreement through the Closing (as defined in the Agreement).
3. No action, suit, or proceeding is pending or threatened before any court or quasi-judicial or administrative agency of any federal, state, local, or foreign jurisdiction or before any arbitrator wherein an unfavorable injunction, judgment, order, decree, ruling, or charge would (A) prevent consummation of any of the transactions contemplated by the Agreement, (B) cause any of the transactions contemplated by the Agreement to be rescinded following consummation (and no such injunction, judgment, order, decree, ruling, or charge is in effect), or (C) adversely affect the right of the Buyer to purchase the property as contemplated by this Agreement and the other agreements contemplated thereby.
Dated this [__] day of [___________], 20[__]
Dakota Territory Resource Corporation, a Nevada corporation
By: | ||
Name: | ||
Title: |
G-1
EXHIBIT B
LEGAL DESCRIPTION
The following described real property located in Lawrence County, South Dakota:
(surface)
Lot 3 of Grizzly Gulch Tract (excluding Ryan Tract Revised as shown on Plat Document 2012-4206 and excluding Keller Tract as shown on Plat Document 2019-4247), including the Morton Lode, M.S. 208, located in Sections 2, 3, 4, 9, 10, 11, 14 and 15, T4N, R3E and Section 34, T5N, R3E, B.H.M., as shown on Plat Document Number 2010-1746 and comprising 2,025.26 acres, more or less and identified as 26030-00000-030-00;
Open Cut Tract, including the Highland Chief, M.S. 50, located in Sections 27, 28, 29, 32, 33 and 34, T5N, R3E, B.H.M. as shown on Plat Document Number 2006-6682 and comprising 817.40 acres, more or less and identified as APN 26055-00000-000-00;
Sawpit Tract (excluding Sign Lot as shown on Plat Document 2008-4655 and a portion of Lot B-1A2 as shown on Plat Document 2010-4631, and Lot D of the Sawpit Tract as shown on Plat Document 2016-1775), including the Hidden Treasure, M.S. 49, located in Sections 19, 20, 29 and 30, T5N, R3E, B.H.M., as shown on Plat Document Number 2006-7130 and comprising 480.67 acres, more or less and identified as APN 26070-00000-000-00;
Tract 1 of the Sawpit Addition to the Town of Central City (excluding Lots 1A, 1B, 2 and 3 of Tract 1 of Sawpit Addition as shown on Plat Document 2008-3880, 2009-1926 & 1025-1396), as shown on Plat Document Number 2007-677 and comprising 26.63 acres, more or less and identified as APN 27900-00100-000-00;
Lot 3, located in Section 28, T5N, R3E, B.H.M., comprising 0.68 acres, more or less and identified as APN-17000-00503-280-00;
General Jackson and Cowboy #1, M.S. 1583, located in Section 28, T5N, R3E, B.H.M., comprising 16.67 acres, more or less and identified as APN 26680-01583-000-00;
Tract G, Tract H, Tract J and Tract K, located in a portion of Placer 252 in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2011-5451 and aggregating 0.40 acres more or less and identified as APN 26280-00252-030-00, 26280-00252-0040-00, 26280-00252-0060-00, 26280-00252-070-00;
Lot 2, Lot 3 and Lot 4, of M.S. 1557, located in the SW/4 Section 3, the SE/4 Section 4, E/2 Section 9 & NW/4 Section 10, T4N, R3E, B.H.M., as shown on Plat Document Number 2005-1092 and aggregating 193.33 acres, more or less and identified as APN 26620-01557-020-00, 26620-01557-030-00, 26620-01557-040-00;
Tract A, Centennial Addition to the Town of Central City, a portion of M.S. 892, as shown on Plat Document Number 2006-494 and comprising 24.14 acres, more or less and identified as APN 26020-00000-000-00, 27200-00000-000-00;
Tract D of the Yates Subdivision, (excluding Lot-D1 of Tract D the Yates Subdivision and a portion of Lot 3 of the Grizzly Gulch Tract as shown on Plat Document 2019-4246); and Tract E of the Yates Subdivision, City of Lead, (excluding Lot E-1 of Tract E of the Yates Subdivision as shown on Plat Document 2017-1960), including the Evanston, M.S. 235, as shown on Plat Document 2005-8217 and aggregating 117.19 acres, more or less and identif ied as APN 26090-00400-000-00, 26090-00500-000-00, 31910-00400-000-00, 31910-00500-000-00;
Tract A, Block 16, Billings Addition to the City of Lead, as shown on Plat Document Number 2007-1490, excluding Lot 1 of Tract 16, Billings Addition to the City of Lead as shown on Plat Document 2020-909, and comprising 24.22 acres, more or less and identified as APN 31210-01600-010-00;
Tract 1, Terraville Addition to the City of Lead, as shown on Plat Document 2009-3218, comprising 60.12 acres, more or less and identified as APN 31820-00000-000-00;
Lot A of Lot 1, Tract 4, Homestake Addition to the City of Lead, as shown on Plat Document Number 96-1826, comprising 0.443 acres, more or less and identified as APN 31440-00400-001-00;
Lots 1, 2 and 18, Block 1, Washington Addition to the City of Lead, and McCloud Extension, as shown on the Cricks Map of the City of Lead, and identified as APN 31870-00100-200-00, 31870-00100-020-00;
Remainder of Lot 1, Tract 1, of the Homestake Addition to the City of Lead, as shown on Plat Document Number 94-5906 and 2000-3708, comprising 7.25 acres, more or less and identified as APN 31440-00100-001-00;
Tract 2 of the Homestake Addition to the City of Lead including a portion of Lot AB1 and excluding Dog Run Park plat, as shown on Plat Document Number 94-5906, comprising 39.18 acres, more or less and identified as APN 31440-00200-000-00;
Remainder of Tract 8 of the Homestake Addition to the City of Lead (excluding Tract 1, Terraville Addition to City of Lead as shown on Plat Document 2009-3218), as shown on Plat Document Number 2007-996 and comprising 41.37 acres, more or less and identified as APN 31440 -00800-000-00;
Tract 9 of the Homestake Addition to the City of Lead and vacated portion of Spring Street (excluding Dog Run Park of Tract 9 as shown on Plat Document Number 2009-5880), as shown on Plat Document Number 2007-5814 and comprising 34.39 acres, more or less and identified as APN 31440-00900-000-00;
Remainder of Lot 9, Block 3, Washington Addition to the City of Lead (excluding Lot 9A, Block 3 as shown on Plat Document Number 2007 -6394), as described in Book 314 Page 25 and identified as APN 31870-00300-090-10;
Lot 9A, Block 3, Washington Addition to the City of Lead, as shown on Plat Docume nt Number 2007-6394, comprising 0.19 acres, more or less and identified as APN 31870-00300-090-20;
School Lots, 31 and 32, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M. comprising 12.32 acres, more or less and identified as APN 30075-00031-000-00;
Tract D, McGovern Hill Addition to the City of Deadwood, (excluding Lot D-1 of the McGovern Hill Addition to the City of Deadwood as shown on Plat Document 2019 -338) as shown on Plat Document No. 2003-4122 and comprising 3.01 acres, more or less and identified as APN 30610-00000-040-00;
Tract 1, Tract 2 and Lot 6, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 11.54 acres, more or less and identified as APN 30890-00503-270-20;
Remainder of St. James patented lode mining claim, M.S. 754, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 3.25 acres, more or less and identified as APN 30900-00754-000-14;
Remainder of Hunter Lode patented lode mining claim, M.S. 1295, inside City of Deadwood, excluding Lot 1R-A, Lots 1 and 2, located in Section 27, T5N, R3E, B.H.M., comprising 4.32 acres, more or less and identified as APN 30900 -01295-000-80;
Brownie patented lode mining claims, M.S. 1324 and School Lot 22, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 67.76 acres, more or less and identified as APN 30900-01324-000-10;
Remainder of Alida #1 and Alida#2 patented lode mining claims, M.S. 1463, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 6.35 acres, more or less and identified as APN 30900-01463-000-00;
Lot 15, Golden Gate, located in Section 29, T5N, R3E, B.H.M., as shown on Plat Document Number 99-1127, comprising .08 acres, more or less and identified as APN 27300 -00049-000-00;
Lot 6, located in Section 11, T4N, R3E, B.H.M., comprising .08 acres, more or less and identified as APN 13000-00403-110-03;
Gold Run Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 7.94 acres, more or less and identified as APN 31400-00000-010-00;
Park Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 11.11 acres, more or less and identified as APN 31400 -00000-020-00;
Tract C-3A of P.C. 51, 62, 64, 108, 252 and 255, and of M.S. 1971, 1441, 1363 and 1608, located in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Nu mber 2005-1326, comprising 11.95 acres, more or less and identified as APN 26200-00051-000-50.
Mineral – 100%
General Grant, M.S. 675, located in Section 1, T4N, R2E, B.H.M.;
Boss lode, M.S. 839, located in Section 6, T4N, R3E, B.H.M.;
Big Sam, Francis, Marseillase, Minnie, Ruby Hill and Glenwood lodes, M.S. 930, located in Section 7, T4N, R3E, B.H.M.;
South Lyon lode, M.S. 935, located in Section 6, T4N, R3E, B.H.M.;
Argenta, Glyn, Lemans, Oro and Oro Fraction lodes, M.S. 1109, located in Sections 12 and 13, T4N, R2E, BH.M.;
West Wedge Fraction, West End, Jackson, Moonlight, Sunrise, Sunset Fraction, Lizzie lodes, M.S. 1114, located in Section 12, T4N, R2E, and Section 7, T4N, R3E, B.H.M.;
Camden, Ford and Georgia lodes, M.S. 1141, located in Sections 34 and 35, T5N, R2E, B.H.M.;
Blue and Rocky Lynn lodes, M.S. 1168, located in Section 34, T5N, R2E, B.H.M.;
Buffalo, Deadwood, Link Fraction, May lodes, M.S. 1283, located in Section 33, T5N, R2E, B.H.M.;
Cardinal and Longpoint Fraction lodes, M.S. 1288, located in Section 25, T5N, R2E, B.H.M.;
Ames, Ames Fraction, Cloud, Dick, Ester, Lightning, Thunder lodes, M.S. 1289, located in Sections 27 and 28, T5N, R2E, B.H.M.;
James G. Blaine, M.S. 1349, located in Section 34, T5N, R2E, B.H.M.;
Loyd lode, M.S. 1468, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Genessee, Grenada, Peerless, Trenton lodes, M.S. 1616, located in Section 4, T4N, R2E, B.H.M.;
Snorter and Snorter Fraction lodes, M.S. 1643, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Maid of Erin, Telegram, Gannon, B&M Fraction lodes, M.S. 1659, located in Sections 33 and 34, T5N, R2E, and Section 3, T4N, R2E, B.H.M.;
Belligerent, Belligerent Fraction, Belligerent No. 3, Belligerent No. 4, Bull Hill Fraction lodes, M.S. 1673, located in Sections 27 and 34, T5N, R2E, B.H.M.;
Marconi lode, M.S. 1792, located in Section 31, T5N, R3E, B.H.M.;
EXHIBIT C
MEMORANDUM OF OPTION
Attached.
HOMESTAKE MINING COMPANY OF CALIFORNIA
Optionor
and
DAKOTA TERRITORY RESOURCE CORP.
Optionee
MEMORANDUM OF OPTION
Dated as of September 7, 2021
The properties affected by the within instrument are located in Lawrence County, South Dakota
Prepared By and Record and Return to:
Skadden, Arps, Slate, Meagher & Flom
One Manhattan West
New York, New York 10001
Attention: Michael J. Hong, Esq.
Memorandum of Option
THIS MEMORANDUM OF OPTION AGREEMENT ("Memorandum") dated as of the 7th day of September, 2021, by and between HOMESTAKE MINING COMPANY OF CALIFORNIA, a California corporation ("Optionor") and Dakota Territory Resource Corp., a Nevada corporation ("Optionee").
Optionor and Optionee hereby acknowledge the following:
1. Option to Purchase. For valuable consideration described in that certain Option Agreement for Purchase and Sale of Real Property, dated as of September 7, 2021 (the "Option Agreement"), Optionor has granted to Optionee (i) the exclusive and irrevocable option (the "Option") to purchase the fee lands and patented mining claims situated in Lawrence County, South Dakota, which are more particularly described in Exhibit A attached hereto and made a part hereof, together with any buildings and other improvements thereon and any and all rights, privileges, easements, accessions, appurtenances, hereditaments, claims, permits and licenses therein or relating thereto (collectively, the “Property”) and (ii) all of Optionor’s rights, title and interest under that certain Property Donation Agreement dated April 14, 2006, among Optionor, the State of South Dakota and The South Dakota Science and Technology Authority.
2. Term. Optionee may exercise the Option anytime during the period commencing on September 7, 2021 and ending on September 7, 2024. Optionee shall have an additional one hundred and twenty (120) days after Optionee's exercise of the Option to close on the purchase of the Property (the "Term").
3. Conflicts. This Memorandum is intended only for recording purposes to provide notice of certain terms and conditions contained in the Option Agreement and is not to be construed as a complete summary of the terms and conditions thereof. This Memorandum is subject to the Option Agreement and any amendments, modifications, alterations, renewals, and extensions of the Option Agreement. The terms and provisions of the Option Agreement are incorporated in this Memorandum by reference. If there is any conflict between this Memorandum and the Option Agreement, the provisions of the Option Agreement shall control.
4. Counterparts. This Memorandum may be executed in multiple counterparts, each of which shall be deemed an original and all of which when taken together shall constitute one and the same document.
[SIGNATURE PAGE FOLLOWS]
IN WITNESS WHEREOF, the Parties hereto have executed this Memorandum as of the date first above written.
OPTIONOR: | ||
HOMESTAKE MINING COMPANY OF CALIFORNIA, | ||
a California corporation | ||
By: | ||
Name: | ||
Title: | ||
OPTIONEE: | ||
DAKOTA TERRITORY RESOURCE CORP., a Nevada corporation | ||
By: | ||
Name: | ||
Title: |
Optionor Acknowledgment
STATE OF | ) | |
) ss.: |
COUNTY OF | ) |
On the day of ____________, 2021 before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
__________________________ | ||
Notary Public |
Optionee Acknowledgment
STATE OF | ) | |
) ss.: |
COUNTY OF | ) |
On the __ day of ____________, 2021 before me, the undersigned, a Notary Public in and for said State, personally appeared ___________________, personally known to me or proved to me on the basis of satisfactory evidence to be the individual(s) whose name(s) is (are) subscribed to the within instrument and acknowledged to me that he/she/they executed the same in his/her/their capacity(ies), and that by his/her/their signature(s) on the instrument, the individual(s), or the person upon behalf of which the individual(s) acted, executed the instrument.
__________________________ | ||
Notary Public |
EXHIBIT A
LEGAL DESCRIPTION
The following described real property located in Lawrence County, South Dakota:
(surface)
Lot 3 of Grizzly Gulch Tract (excluding Ryan Tract Revised as shown on Plat Document 2012-4206 and excluding Keller Tract as shown on Plat Document 2019-4247), including the Morton Lode, M.S. 208, located in Sections 2, 3, 4, 9, 10, 11, 14 and 15, T4N, R3E and Section 34, T5N, R3E, B.H.M., as shown on Plat Document Number 2010-1746 and comprising 2,025.26 acres, more or less and identified as 26030-00000-030-00;
Open Cut Tract, including the Highland Chief, M.S. 50, located in Sections 27, 28, 29, 32, 33 and 34, T5N, R3E, B.H.M. as shown on Plat Document Number 2006-6682 and comprising 817.40 acres, more or less and identified as APN 26055-00000-000-00;
Sawpit Tract (excluding Sign Lot as shown on Plat Document 2008-4655 and a portion of Lot B-1A2 as shown on Plat Document 2010 -4631, and Lot D of the Sawpit Tract as shown on Plat Document 2016-1775), including the Hidden Treasure, M.S. 49, located in Sections 19, 20, 29 and 30, T5N, R3E, B.H.M., as shown on Plat Document Number 2006-7130 and comprising 480.67 acres, more or less and identified as APN 26070 -00000-000-00;
Tract 1 of the Sawpit Addition to the Town of Central City (excluding Lots 1A, 1B, 2 and 3 of Tract 1 of Sawpit Addition as shown on Plat Document 2008-3880, 2009-1926 & 1025-1396), as shown on Plat Document Number 2007-677 and comprising 26.63 acres, more or less and identified as APN 27900-00100-000-00;
Lot 3, located in Section 28, T5N, R3E, B.H.M., comprising 0.68 acres, more or less and identified as APN-17000-00503-280-00;
General Jackson and Cowboy #1, M.S. 1583, located in Section 28, T5N, R3E, B.H.M., comprising 16.67 acres, more or less and identified as APN 26680-01583-000-00;
Tract G, Tract H, Tract J and Tract K, located in a portion of Placer 252 in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2011-5451 and aggregating 0.40 acres more or less and identified as APN 26280-00252-030-00, 26280-00252-0040-00, 26280-00252-0060-00, 26280-00252-070-00;
Lot 2, Lot 3 and Lot 4, of M.S. 1557, located in the SW/4 Section 3, the SE/4 Section 4, E/2 Section 9 & NW/4 Section 10, T4N, R3E, B.H.M., as shown on Plat Document Number 2005-1092 and aggregating 193.33 acres, more or less and identified as APN 26620-01557-020-00, 26620-01557-030-00, 26620-01557-040-00;
Tract A, Centennial Addition to the Town of Central City, a portion of M.S. 892, as shown on Plat Document Number 2006-494 and comprising 24.14 acres, more or less and identified as APN 26020-00000-000-00, 27200-00000-000-00;
Tract D of the Yates Subdivision, (excluding Lot-D1 of Tract D the Yates Subdivision and a portion of Lot 3 of the Grizzly Gulch Tract as shown on Plat Document 2019-4246); and Tract E of the Yates Subdivision, City of Lead, (excluding Lot E-1 of Tract E of the Yates Subdivision as shown on Plat Document 2017-1960), including the Evanston, M.S. 235, as shown on Plat Document 2005-8217 and aggregating 117.19 acres, more or less and identified as APN 26090-00400-000-00, 26090-00500-000-00, 31910-00400-000-00, 31910-00500-000-00;
Tract A, Block 16, Billings Addition to the City of Lead, as shown on Plat Document Number 2007-1490, excluding Lot 1 of Tract 16, Billings Addition to the City of Lead as shown on Plat Document 2020-909, and comprising 24.22 acres, more or less and identified as APN 31210-01600-010-00;
Tract 1, Terraville Addition to the City of Lead, as shown on Plat Document 2009 -3218, comprising 60.12 acres, more or less and identified as APN 31820-00000-000-00;
Lot A of Lot 1, Tract 4, Homestake Addition to the City of Lead, as shown on Plat Document Number 96-1826, comprising 0.443 acres, more or less and identified as APN 31440 -00400-001-00;
Lots 1, 2 and 18, Block 1, Washington Addition to the City of Lead, and McCloud Extension, as shown on the Cricks Map of the City of Lead, and identified as APN 31870 -00100-200-00, 31870-00100-020-00;
Remainder of Lot 1, Tract 1, of the Homestake Addition to the City of Lead, as shown on Plat Document Number 94-5906 and 2000-3708, comprising 7.25 acres, more or less and identified as APN 31440-00100-001-00;
Tract 2 of the Homestake Addition to the City of Lead including a portion of Lot AB1 and excluding Dog Run Park plat, as shown on Plat Document Number 94-5906, comprising 39.18 acres, more or less and identified as APN 31440 -00200-000-00;
Remainder of Tract 8 of the Homestake Addition to the City of Lead (excluding Tract 1, Terraville Addition to City of Lead as shown on Plat Document 2009-3218), as shown on Plat Document Number 2007-996 and comprising 41.37 acres, more or less and identified as APN 31440 -00800-000-00;
Tract 9 of the Homestake Addition to the City of Lead and vacated portion of Spring Street (excluding Dog Run Park of Tract 9 as shown on Plat Document Number 2009-5880), as shown on Plat Document Number 2007-5814 and comprising 34.39 acres, more or less and identified as APN 31440-00900-000-00;
Remainder of Lot 9, Block 3, Washington Addition to the City of Lead (excluding Lot 9A, Block 3 as shown on Plat Document Number 2007-6394), as described in Book 314 Page 25 and identified as APN 31870-00300-090-10;
Lot 9A, Block 3, Washington Addition to the City of Lead, as shown on Plat Document Number 2007-6394, comprising 0.19 acres, more or less and identified as APN 31870-00300-090-20;
School Lots, 31 and 32, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M. comprising 12.32 acres, more or less and identified as APN 30075-00031-000-00;
Tract D, McGovern Hill Addition to the City of Deadwood, (excluding Lot D-1 of the McGovern Hill Addition to the City of Deadwood as shown on Plat Document 2019 -338) as shown on Plat Document No. 2003-4122 and comprising 3.01 acres, more or less and identified as APN 30610-00000-040-00;
Tract 1, Tract 2 and Lot 6, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 11.54 acres, more or less and identified as APN 30890-00503-270-20;
Remainder of St. James patented lode mining claim, M.S. 754, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 3.25 acres, more or less and identified as APN 30900-00754-000-14;
Remainder of Hunter Lode patented lode mining claim, M.S. 1295, inside City of Deadwood, excluding Lot 1R-A, Lots 1 and 2, located in Section 27, T5N, R3E, B.H.M., comprising 4.32 acres, more or less and identified as APN 30900 -01295-000-80;
Brownie patented lode mining claims, M.S. 1324 and School Lot 22, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 67.76 acres, more or less and identified as APN 30900-01324-000-10;
Remainder of Alida #1 and Alida#2 patented lode mining claims, M.S. 1463, inside City of Deadwood, located in Section 27, T5N, R3E, B.H.M., comprising 6.35 acres, more or less and identified as APN 30900-01463-000-00;
Lot 15, Golden Gate, located in Section 29, T5N, R3E, B.H.M., as shown on Plat Document Number 99-1127, comprising .08 acres, more or less and identified as APN 27300 -00049-000-00;
Lot 6, located in Section 11, T4N, R3E, B.H.M., comprising .08 acres, more or less and identified as APN 13000-00403-110-03;
Gold Run Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 7.94 acres, more or less and identified as APN 31400-00000-010-00;
Park Tract, Gold Run Addition to the City of Lead, as shown on Plat Document Number 2005-4941, comprising 11.11 acres, more or less and identified as APN 31400 -00000-020-00;
Tract C-3A of P.C. 51, 62, 64, 108, 252 and 255, and of M.S. 1971, 1441, 1363 and 1608, located in Section 28, T5N, R3E, B.H.M., as shown on Plat Document Number 2005-1326, comprising 11.95 acres, more or less and identified as APN 26200-00051-000-50.
Mineral – 100%
General Grant, M.S. 675, located in Section 1, T4N, R2E, B.H.M.;
Boss lode, M.S. 839, located in Section 6, T4N, R3E, B.H.M.;
Big Sam, Francis, Marseillase, Minnie, Ruby Hill and Glenwood lodes, M.S. 930, located in Section 7, T4N, R3E, B.H.M.;
South Lyon lode, M.S. 935, located in Section 6, T4N, R3E, B.H.M.;
Argenta, Glyn, Lemans, Oro and Oro Fraction lodes, M.S. 1109, located in Sections 12 and 13, T4N, R2E, BH.M.;
West Wedge Fraction, West End, Jackson, Moonlight, Sunrise, Sunset Fraction, Lizzie lodes, M.S. 1114, located in Section 12, T4N, R2E, and Section 7, T4N, R3E, B.H.M.;
Camden, Ford and Georgia lodes, M.S. 1141, located in Sections 34 and 35, T5N, R2E, B.H.M.;
Blue and Rocky Lynn lodes, M.S. 1168, located in Section 34, T5N, R2E, B.H.M.;
Buffalo, Deadwood, Link Fraction, May lodes, M.S. 1283, located in Section 33, T5N, R2E, B.H.M.;
Cardinal and Longpoint Fraction lodes, M.S. 1288, located in Section 25, T5N, R2E, B.H.M.;
Ames, Ames Fraction, Cloud, Dick, Ester, Lightning, Thund er lodes, M.S. 1289, located in Sections 27 and 28, T5N, R2E, B.H.M.;
James G. Blaine, M.S. 1349, located in Section 34, T5N, R2E, B.H.M.;
Loyd lode, M.S. 1468, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Genessee, Grenada, Peerless, Trenton lodes, M.S. 1616, located in Section 4, T4N, R2E, B.H.M.;
Snorter and Snorter Fraction lodes, M.S. 1643, located in Sections 33 and 34, T5N, R2E, B.H.M.;
Maid of Erin, Telegram, Gannon, B&M Fraction lodes, M.S. 1659, located in Sections 33 and 34, T5N, R2E, and Section 3, T4N, R2E, B.H.M.;
Belligerent, Belligerent Fraction, Belligerent No. 3, Belligerent No. 4, Bull Hill Fraction lodes, M.S. 1673, located in Sections 27 and 34, T5N, R2E, B.H.M.;
Marconi lode, M.S. 1792, located in Section 31, T5N, R3E, B.H.M.;
Exhibit 21.1
Subsidiaries of the Registrant
Name of Company | State of Organization | |
DGC Merger Sub I Corp. | Nevada | |
DGC Merger Sub II LLC | Nevada | |
JR (Canada) Resources Services Corp. | British Columbia, Canada | |
Dakota Territory Resource Corp. | Nevada |
Exhibit 23.3
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-4 of JR Resources Corp. of our report dated June 25, 2021, which includes an explanatory paragraph as to the Company’s ability to continue as a going concern, with respect to our audit of the financial statements of Dakota Territory Resource Corp. as of and for the years ended March 31, 2021 and 2020, included herein. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
February 1, 2022
Exhibit 23.4
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the use in this Registration Statement on Form S-4 of JR Resources Corp. of our report dated October 21, 2021 with respect to our audit of the consolidated financial statements of JR Resources Corp. and Subsidiaries as of and for the years ended March 31, 2021 and 2020, included herein. We also consent to the reference to us under the heading “Experts” in such Registration Statement.
/s/ Ham, Langston & Brezina, L.L.P.
Houston, Texas
February 1, 2022
EX-FILING FEES
Calculation of Filing Fee Tables
FORM
S-4
(Form Type)
JR
RESOURCES CORP.
(Exact Name of Registrant as Specified in its Charter)
Table 1: Newly Registered and Carry Forward Securities
Security Type(1) |
Security
Class Title |
Fee
Calculation or Carry Forward Rule |
Amount
Registered |
Proposed
Maximum Offering Price Per Unit |
Maximum
Aggregate Offering Price |
Fee Rate |
Amount of
Registration Fee |
|||||||||||||||||||
Newly Registered Securities | ||||||||||||||||||||||||||
Fees to Be Paid | Equity | Common stock, par value $0.001 per share | Rules 457(c) and 457(f) | 75,332,787 | (2) | $ | 4.31 | (3) | $ | 324,684,311.97 | (4) | $ | 0.0000927 | $ | 30,098.24 | |||||||||||
Equity | Common stock, par value $0.001 per share, underlying warrants | Rule 457(g) | 7,616,374 | $ | 2.08 | (5) | $ | 15,842,057.90 | $ | 0.0000927 | $ | 1,468.56 | ||||||||||||||
Fees Previously Paid | - | - | - | - | - | - | - | - | ||||||||||||||||||
Total Offering Amounts | $ | 340,526,369.87 | $ | 31,566.80 | ||||||||||||||||||||||
Total Fees Previously Paid | $ | 0.00 | ||||||||||||||||||||||||
Total Fee Offsets | $ | 0.00 | ||||||||||||||||||||||||
Net Fee Due | $ | 31,566.80 |
(1) | This registration statement relates to the registration of the estimated maximum number of shares of common stock, par value $0.001 per share, of the Registrant (the “JR common stock”) issuable by the Registrant pursuant to the mergers described herein and the Amended and Restated Agreement and Plan of Merger, dated as of September 10, 2021, by and among Dakota Territory Resource Corp., a Nevada corporation (“Dakota”), the Registrant, DGC Merger Sub I Corp., a Nevada corporation, and DGC Merger Sub II LLC, a Nevada limited liability company. JR intends to conduct a reverse stock split prior to the closing date of the transactions described herein. The figures in the table above assume a completion of a reverse share split of JR at a ratio of 35,641,667/49,398,602 of a share for each JR share currently outstanding. |
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(2) | The estimated maximum number of shares of JR common stock to be issued in connection with the mergers is based on the sum of (i) 35,641,667, which represents the number of shares of common stock of JR outstanding immediately prior to the First Merger described herein and in the merger agreement and (ii) 38,691,120, which represents the maximum number of shares of common stock, par value $0.01 per share, of Dakota Territory Resource Corp. (the “Dakota common stock”) estimated to be outstanding immediately prior to the First Merger described herein and in the merger agreement (calculated as the sum of (A) 70,828,204 shares of Dakota common stock outstanding as of January 28, 2022, less the 35,641,667 Dakota shares owned by JR, (B) 3,354,583 shares of Dakota common stock in respect of compensatory stock options of Dakota that were outstanding as of January 28, 2022 and (C) 1,150,000 shares of Dakota common stock in respect of restricted stock units of Dakota that were outstanding as of January 31, 2022)). |
(3) | Estimated solely for purposes of calculating the amount of the registration fee pursuant to Rule 457(c) under the Securities Act, based upon the average of the high ($4.35) and low ($4.2645) per share of shares of Dakota common stock as reported on the OTCQB on January 27, 2022. |
(4) | Estimated solely for the purpose of calculating the registration fee required by Section 6(b) of the Securities Act of 1933 and computed pursuant to Rule 457(c) and 457(f) of the Securities Act of 1933. The proposed maximum offering price is equal to the product of (a) $4.31, the average of the high and low prices per share of shares of Dakota common stock as reported on the OTCQB and (b) the estimated maximum number of shares of JR common stock to be registered as calculated in Note 2 above. |
(5) | Represents the weighted-average exercise price of warrants to purchase shares of JR common stock. |
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Table 2: Fee Offset Claims and Sources
Table 3: Combined Prospectuses
Security Type | Security Class Title |
Amount of Securities
Previously Registered |
Maximum Aggregate
Offering Price of Securities Previously Registered |
Form
Type |
File
Number |
Initial
Effective Date |
||||||
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