Trilogy Metals 向 SEC 补交美国国防部（战争部）战略股权投资交割 8-K：实质为 9 月 11 日已公布的 3,560 万美元首笔 1,780 万美元交割的程序性备案

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
September 11, 2026
Trilogy Metals Inc.
(Exact name of registrant as specified in its charter)
British Columbia
001-35447
98-1006991
(State or other jurisdiction of incorporation)
(Commission File Number)
(I.R.S. Employer Identification Number)
Suite 901
,
510 Burrard Street
Vancouver
,
British Columbia
Canada
,
V6C 3A8
(Address of principal executive offices, including
zip code)
(
604
)
638-8088
(Registrant’s telephone number, including area
code)
N/A
(Former name or former address, if changed since
last report)
Check the appropriate box below if the Form 8-K filing is intended
to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Shares
TMQ
NYSE
American
Toronto Stock Exchange
Indicate by check mark whether the registrant is an emerging growth
company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities
Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
¨
If an emerging growth company, indicate by check mark if the registrant
has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant
to Section 13(a) of the Exchange Act.
¨
Item 1.01
Entry into a Material Definitive Agreement
The information included under Item 8.01 below
regarding the Investment Documents is incorporated by reference into this Item 1.01.
Item 3.02
Unregistered Sales of Equity Securities
The information included under Item 8.01 below
regarding the Strategic Investment is incorporated by reference into this Item 3.02.
The Units that were issued and sold and the securities
underlying the Units to be issued was exempt from the registration requirements of the Securities Act of 1933, as amended (the “Securities
Act”), pursuant to the exemption for transactions by an issuer not involving any public offering under Section 4(a)(2) of
the Securities Act, and in reliance on similar exemptions under applicable state laws.
The Investor has represented that it is a sophisticated
investor and has acquired the Units for investment purposes only and not with a view to any future distribution or sale in violation of
applicable securities laws. The Units were offered without any general solicitation by the Company or its representatives. The Warrants
are expected to be exercised pursuant to Section 3(a)(9) or Section 4(a)(2).
Item 7.01
Regulation FD Disclosure
On September 11, 2026, Trilogy Metals Inc. issued a press release
on the closing of the previously announced strategic equity investment by the United States Department of War. The press release is attached
hereto as Exhibit 99.1.
The information contained in the press release attached hereto is being
furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), or otherwise subject to the liability of that section, and shall not be incorporated by reference into any registration statement
or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific
reference in such filing.
Item 8.01
Other Events
As previously disclosed by Trilogy Metals Inc.
(the “Company”) in a
Current Report on Form 8-K filed with the Securities and Exchange Commission on August 31, 2026
(the “Signing 8-K”), the Company entered into the Investment Agreement (the “Investment Agreement”) with
the United States Department of War (the “Investor”), dated August 28, 2026, relating to the Investor’s strategic
investment in the Company (the “Strategic Investment”). Pursuant to the Investment Agreement, the Company agreed to sell,
and the Investor agreed to purchase, 8,215,570 units (“Units”) at a price of $2.17 per Unit, each Unit consisting of one common
share and three-quarters of one common share purchase warrant (each whole warrant, a “Warrant”), for a purchase price of approximately
$17.8 million. The Warrants are exercisable to acquire up to 6,161,678 common shares at an exercise price of $0.01 per common share for
a period of ten years. A summary of the Investment Agreement is contained in the Signing 8-K and incorporated herein by reference.
Concurrently with the Investment Agreement, the
Company’s wholly-owned subsidiary NovaCopper US Inc., dba Trilogy Metals US, South32 USA Exploration Inc., Ambler Metals LLC (“Ambler
Metals”) and the Investor entered into a Cooperation Agreement (the “Cooperation Agreement”), dated August 28,
2026. A summary of the Cooperation Agreement is contained in the Signing 8-K and incorporated herein by reference.
The Investment Agreement and the Cooperation Agreement
both reference restrictions on the Company and Ambler Metals with respect to Restricted Entities. The definition of Restricted Entity
can be found in Section 1.1 of the Investment Agreement.
The completion of the Strategic Investment occurred
on September 11, 2026 (the “Closing”), including the issuance of the Warrant. As contemplated in the Investment Agreement,
the Company entered into a participation rights agreement with the Investor, dated September 11, 2026 (the “Participation Rights
Agreement”), which grants the Investor certain rights to subscribe for future sales of the Company’s equity securities on
a pro rata basis.
Also concurrent with Closing and as contemplated
by the Investment Agreement, the Company entered into a registration rights agreement with the Investor, dated September 11, 2026
(the “Registration Rights Agreement”), which grants certain customary registration rights to the Investor.
The above descriptions of the Investment Agreement,
Cooperation Agreement, Participation Rights Agreement, Registration Rights Agreement and Warrant (collectively, the “Transaction
Documents”) do not purport to be complete and are qualified in their entirety by reference to the full text of the Transaction Documents,
copies of which are filed as exhibits 10.1 through 10.5 hereto and incorporated herein by reference.
The Transaction Documents are contractual arrangements between the Company and the Investor. References in this filing to the Strategic
Investment and the related transactions (the “DoW Transactions”), the Department of War or other U.S. government entities are not intended
to, and should not be construed to, imply that the Investor or any other U.S. Government entity endorses, recommends, sponsors, approves,
certifies, guarantees, manages, or controls the Company, its affiliates, its securities, its products, its facilities, or any project
described therein. Except for the express rights and obligations set forth in the applicable agreements, the DoW Transactions do not create
a partnership, joint venture, agency, fiduciary, or similar relationship between the Company and the Investor, and do not obligate any
U.S. Government entity to provide additional funding, assistance, permits, approvals, purchases, or other support.
Item 9.01
Financial Statements and Exhibits
(d) Exhibits
Exhibit Number
Description
10.1
Investment Agreement
10.2
Cooperation Agreement
10.3
Participation Rights Agreement
10.4
Registration Rights Agreement
10.5
Warrant
99.1
Press release, dated September 11, 2026 relating to the Closing of the Strategic Investment by the Investor
104
Cover Page Interactive Data File, formatted in Inline Extensible Business Reporting Language (iXBRL)
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
TRILOGY METALS INC.
Dated: September 14, 2026
By:
/s/ Elaine Sanders
Elaine Sanders, Chief Financial Officer

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EX-10.1
2
tm2624736d1_ex10-1.htm
EXHIBIT 10.1
Exhibit 10.1
Execution Version
INVESTMENT AGREEMENT
THE UNITED STATES DEPARTMENT OF DEFENSE
- and -
TRILOGY METALS INC.
August 28, 2026
TABLE OF CONTENTS
Page
Article 1
INTERPRETATION
1
1.1
Defined
Terms
1
1.2
Rules
of Construction
8
1.3
Time
of Essence
9
1.4
Governing
Law and Submission to Jurisdiction
9
1.5
Severability
10
1.6
Specific
Performance
10
1.7
Remedies
10
1.8
Entire
Agreement
10
1.9
Schedules
and Appendices
11
Article 2
PURCHASE OF COMMON SHARES
11
2.1
Investment
in Company
11
2.2
Use
of Proceeds
11
Article 3
REPRESENTATIONS AND WARRANTIES
11
3.1
Representations
and Warranties of the Company
11
3.2
Representations
and Warranties of the Investor
23
3.3
Survival
of Representations and Warranties
24
3.4
Legends
24
Article 4
CLOSING
25
4.1
Closing
25
4.2
Mutual
Conditions to Closing
26
4.3
Company
Closing Deliveries and Investor Conditions
26
4.4
Investor
Closing Deliveries and Company Conditions
27
4.5
Termination
27
Article 5
ADDITIONAL COVENANTS
27
5.1
Board
Nomination Right
27
5.2
Observer
Right
29
5.3
Debt
Covenant
30
5.4
AAP
Completion Date Notice
30
5.5
Restricted
Entity Event
30
5.6
Officer’s
Certificate
31
5.7
Information
and Audit Rights
31
5.8
Indemnification
31
5.9
Post-Closing
Filings
32
5.10
Investor
Notification
32
5.11
Survival
32
Article 6
GENERAL PROVISIONS
32
6.1
Notices
32
6.2
Investor
Acknowledgement
33
6.3
Expenses
34
6.4
Further
Assurances
34
6.5
Amendments
34
i
6.6
Assignment
34
6.7
Successors
and Assigns
34
6.8
No
Partnership
35
6.9
Counterparts
35
Schedule A – Registration and Delivery
Instructions
Schedule B – Investor Information
Schedule C – Form of Investor Participation
Rights Agreement
Schedule D – Form of Registration
Rights Agreement
Schedule E – Form of Warrant Certificate
ii
INVESTMENT AGREEMENT
THIS AGREEMENT made the 28th
day of August, 2026 (the “
Effective Date
”)
BETWEEN:
THE UNITED STATES DEPARTMENT OF DEFENSE
,
(also referred to herein as the “
Department
of War
” or the “
Investor
”),
- and -
TRILOGY METALS INC.
, a corporation
organised and existing under the laws of the Province of British Columbia,
(hereinafter referred to as the “
Company
”).
WHEREAS the Company has agreed to issue to the
Investor, and the Investor has agreed to purchase from the Company, 8,215,570 units (the “
Units
”) of the Company at
a price of $2.17 per Unit, with each Unit comprised of one Common Share (as defined herein) and three-quarters of one Warrant (as defined
herein) for an aggregate purchase price of $17,827,786.90 (the “
Purchase Price
”), in reliance upon the representations,
warranties and covenants contained herein. The Common Shares and the Warrants comprising the Units are immediately separable and
will be issued separately upon issuance of the Units.
NOW THEREFORE THIS AGREEMENT WITNESSES THAT in
consideration of the respective covenants and agreements of the parties hereinafter contained and for other good and valuable consideration
(the receipt and sufficiency of which are hereby acknowledged by each party), the parties agree as follows:
Article 1
INTERPRETATION
1.1
Defined
Terms
For the purposes of this Agreement (including
the recitals and the Schedules hereto), unless the context otherwise requires, the following terms shall have the respective meanings
set out below and grammatical variations of such terms shall have corresponding meanings:
“
AAP Completion Date
” means
the earlier to occur of (i) the completion of Phase 1 of the Ambler Access Project in accordance with the Joint Record of Decision
or such other federal permit(s) in place for the Ambler Access Project at the applicable time, as determined by the Engineering
Firm or AIDEA, and (ii) the use by Ambler Metals or its Affiliate of the Ambler Access Project by at least ten (10) trucks
within any ten (10) day period transporting ore concentrate or concentrate;
“
Additional Improvements Completion
Date
” means completion of both (i) Phase 1 of the Ambler Access Project in accordance with the Joint Record of Decision
or such other federal permit(s) in place for the Ambler Access Project at the applicable time, and (ii) any additional improvements
to Phase 1 as reasonably necessary, including a full-thickness embankment and road widening, to allow the Ambler Access Project to be
used on an all-season basis by trucks capable of transporting ore concentrate with sufficient passing zones to enable overall two-way
traffic, in each case, as determined by the Engineering Firm or AIDEA;
“
AAP Notice
” has the meaning
set forth in
Section 5.4
;
“
Act
” means the
Business
Corporations Act
(British Columbia);
“
Action
” shall have the meaning
set out in
Section 3.1(yy)
;
“
Affiliate
” means, with respect
to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such Person at any time
during the period for which the determination of affiliation is being made;
“
AIDEA
” means the Alaska Industrial
Development and Export Authority;
“
Ambler Access Project
” means
the proposed 211-mile industrial road from the Dalton Highway to Alaska’s remote Ambler Mining District, a region with significant
deposits of critical minerals
,
being developed by the AIDEA;
“
Ambler Metals
” means Ambler
Metals LLC, a Delaware limited liability company;
“
Applicable Law
” means, at
any time, with respect to any Person, property, transaction, event or other matter, as applicable, all laws, rules, statutes, regulations,
treaties, orders, judgments and decrees, and all official requests, directives, rules, guidelines, orders, policies, practices and other
requirements of any Governmental Authority relating or applicable at such time to such Person, property, transaction, event or other
matter, and also includes any interpretation thereof by any Person having jurisdiction over it or charged with its administration or
interpretation;
“
Applicable Canadian Securities Legislation
”
means all applicable securities laws of each of the Reporting Jurisdictions and the respective rules and regulations under such
laws together with applicable published fee schedules, prescribed forms, policy statements, national or multilateral instruments, orders,
blanket rulings and other applicable regulatory instruments of the securities regulatory authorities in any of the Reporting Jurisdictions;
“
ATM Program
” means the at-the-market
equity program of the Company pursuant to the equity distribution agreement dated November 7, 2025, among the Company, Cantor Fitzgerald &
Co., BMO Capital Markets Corp., Canaccord Genuity LLC, National Bank of Canada Financial Inc., and Raymond James (USA) Ltd.;
“
BCSC
” shall have the meaning
set out in
Section 6.2
;
“
beneficially own
,” “
beneficial
ownership of
,” or “
beneficially owning
” any securities shall have the meaning set forth in Rule 13d-3
of the rules and regulations under the U.S. Exchange Act;
provided
, that any Person shall be deemed to beneficially own any
securities that such Person has the right to acquire, whether or not such right is exercisable immediately;
“
Board
” means the board of
directors of the Company;
“
Board Designee
” shall have
the meaning set out in
Section 5.1(a);
“
Board Materials
” shall have
the meaning set out in
Section 5.2(a)
;
2
“
Borrowed Debt
” means all
obligations, liabilities and indebtedness for borrowed money which would, in accordance with generally accepted accounting principles,
be classified upon a consolidated balance sheet as liabilities, in all cases excluding:
(a)
guarantees, sureties, financial assistance,
indemnities, legally binding assurances and comfort letters or other contingent obligations
relating to the indebtedness or other obligations of another Person, including under any
indemnifications, purchase price adjustments or similar provisions of agreements in connection
with acquisitions or investments;
(b)
obligations under any operating lease
arrangements that may, under applicable accounting principles, constitute debt or liabilities
from time to time;
(c)
any monetary obligations created or assumed
as part of the purchase price of real or tangible personal property, whether or not secured
(and any extensions, renewals or refundings of any such obligation);
(d)
accounts payable to trade creditors and
accrued liabilities incurred in the ordinary course of business; and
(e)
any obligations arising under any royalty
arrangements (whether secured or unsecured) or metal streaming or prepaid commodity purchase
arrangements or any liquidated damages structures contemplated thereunder;
“
Business Day
” means any day
other than (i) Saturday, Sunday or a statutory holiday when banks are not open in New York, New York or Vancouver, British Columbia,
or (ii) a statutory holiday when banks are not open in Perth, Australia;
“
Call Option
” has the meaning
set out in the definition of Concurrent South32 Sale;
“
Canadian Securities Regulators
”
means the applicable securities commission or securities regulatory authority in each of the Reporting Jurisdictions;
“
Change of Control
” means:
(a)
the acquisition, whether directly or indirectly,
by a Person, or any Persons acting jointly or in concert (as determined in accordance with
the U.S. Exchange Act and the rules and regulations thereunder) of voting securities
of the Company which, together with any other voting securities of the Company held by such
Person or Persons, constitute, in the aggregate, more than 50% of all outstanding voting
securities of the Company;
(b)
an amalgamation, arrangement or other
form of business combination of the Company with another Person which results in the holders
of voting securities of that other Person holding, in the aggregate, 50% or more of all outstanding
voting securities of the Company (including a merged or successor company) resulting from
the business combination; or
(c)
the sale, lease or exchange of all or
substantially all of the direct or indirect property of the Company to another Person, or
other than in the ordinary course of business of the Company.
“
Closing
” means the closing
of the purchase and sale of the Units;
“
Closing Date
” shall have
the meaning set out in
Section 4.1
;
3
“
Commission
” shall mean the
U.S. Securities and Exchange Commission;
“
Common Shares
” means the
common shares in the capital of the Company;
“
Common Share Equivalents
”
means any securities of the Company that would entitle the holder thereof to acquire at any time Common Shares, including, without limitation,
any debt, preferred stock, rights, options, warrants or other instrument that is at any time convertible into or exercisable or exchangeable
for, or otherwise entitles the holder thereof to receive, Common Shares, including Equity Awards;
“
Company
” shall have the meaning
set out in the recitals hereto;
“
Company Affiliate
” means
each director, executive officer or Subsidiary of the Company;
“
Company Reports
” shall have
the meaning set out in
Section 3.1(u)
;
“
Concurrent South32 Sale
”
means the sale by South32 to the Investor of (i) 8,215,570 Common Shares of the Company for aggregate consideration of $17,827,785.90;
and (ii) a 10-year call option (the "
Call Option
") to acquire 6,161,678 Common Shares of the Company for an aggregate
amount of $1.00, at a strike price of $0.01 per Common Share, which Call Option shall not be exercisable unless and until the earlier
of (a) the determination that the AAP Completion Date has occurred or (b) a Change of Control of the Company, in each case,
pursuant to terms and conditions set forth in the South32 Transaction Agreement;
“
Control
” (including, with
correlative meaning, the terms “Controlled by” and “under common Control with”), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or otherwise.
“
Cooperation Agreement
” means
the cooperation agreement, of even date herewith, among NovaCopper US Inc., South32 USA Exploration Inc., Ambler Metals and the Investor
in form and substance satisfactory to the parties thereto;
“
Effective Date
” has the meaning
set out on the preamble;
“
Environmental Laws
” has the
meaning set out in
Section 3.1(vv)
;
“
Evaluation Date
” shall have
the meaning set out in
Section 3.1(bbb)
;
“
Engineering Firm”
means the
lead engineering firm for the construction of Phase 1 of the Ambler Access Project, or if such engineering firm is not willing or able
to determine the completion of the Ambler Access Project, an engineering firm mutually acceptable to Ambler Metals and the Investor;
“
Exchange
” means each of the
NYSE American and the Toronto Stock Exchange and each successor thereto (together, the “
Exchanges
”);
“
Equity Awards
” means the
equity incentive awards issued by the Company, from time to time, pursuant to the Plans;
“
Financial Statements
” shall
have the meaning set out in
Section 3.1(v)
;
“
Form 45-106F1
” means
Form 45-106 to National Instrument 45-106 –
Prospectus Exemptions
;
4
“
GAAP
” shall have the meaning
set out in
Section 3.1(v)
;
“
GDPR
” shall have the meaning
set out in
Section 3.1(iii)
;
“
Governmental Authority
” means
any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction of
any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental
or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental
division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and
any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining
to government and any executive official thereof;
“
Investor
” shall have the
meaning set out in the recitals hereto;
“
Investor Participation Rights Agreement
”
means the participation rights agreement to be entered in to between the Company and the Investor on the Closing Date, substantially
in the form appended hereto as Schedule C;
“
IT Systems and Data
” shall
have the meaning set out in
Section 3.1(hhh)
;
“
Liens
” means a lien, charge,
pledge, security interest, encumbrance, right of first refusal, pre-emptive right or other restriction;
“
LLC Agreement
” means Amended
and Restated Limited Liability Company Agreement, dated February 11, 2020 between South32 USA Exploration Inc., NovaCopper US Inc.
and Ambler Metals;
“
Material Adverse Effect
”
shall mean any of: (i) a material adverse effect on the legality, validity or enforceability of the Transaction Documents, (ii) a
material adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of the Company
and the Subsidiaries, taken as a whole, (iii) a material adverse effect on the results of operations, assets, business, prospects
or condition (financial or otherwise) of Ambler Metals and its subsidiaries, taken as a whole or (iv) a material adverse effect
on the Company’s ability to perform in any material respect on a timely basis its obligations under the Transaction Documents.
“
Material Properties
” means
the mineral properties described in the Company Reports as the Upper Kobuk mineral projects located in the Ambler Mining District in
Northwest Alaska, United States;
“
Money Laundering Laws
” shall
have the meaning set out in
Section 3.1(jjj)
;
“
NI 43-101
” shall have the
meaning set forth in
Section 3.1(ff)
;
“
NI 51-102
” means National
Instrument 51-102 –
Continuous Disclosure Obligations;
“
Observer
” shall have the
meaning set out in
Section 5.2(a)
;
“
OFAC
” has the meaning set
out in
Section 3.1(uu)
;
“
Offering
” means the issuance
and sale of Units by the Company for the Purchase Price;
“
Person
” means any individual,
partnership, limited partnership, joint venture, syndicate, sole proprietorship, or corporation with or without share capital, body corporate,
unincorporated association, trust, trustee, executor, administrator or other legal personal representative, government or Governmental
Authority or entity, however designated or constituted;
5
“
Personal Data
” shall have
the meaning set out in
Section 3.1(iii)
;
“
Plans
” means the Company’s
2012 Equity Incentive Plan, Restricted Share Unit Plan, Non-Executive Director Deferred Share Unit Plan and a Non-Executive Directors
Fixed Deferred Share Unit Plan;
“
Policies
” shall have the
meaning set out in
Section 3.1(iii)
;
“
Privacy Laws
” shall have
the meaning set out in
Section 3.1(iii)
;
“
Proceeding
” means any action,
appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry, investigation,
legal or administrative proceeding or other similar event, occurrence or proceeding;
“
Project
” means the Upper
Kobuk Mineral Projects located in the Ambler Mining District in Northwest Alaska, United States;
“
Purchase Price
” shall have
the meaning set out in the recitals hereto;
“
Purchase Price Allocation
”
shall have the meaning set out in
Section 2.1
;
“
QA/QC
” shall have the meaning
set out in
Section 3.1(hh);
“
Registration Rights Agreement
”
means the registration rights agreement to be entered in to between the Company and the Investor on the Closing Date, substantially in
the form appended hereto as Schedule D;
“
Reporting Jurisdictions
”
means all of the jurisdictions in Canada in which the Company is a “reporting issuer;”
“
Restricted Entity
”
means any Person that is, or is majority-owned or Controlled, directly or indirectly, by, (i) a Person then appearing upon
the “Denied Persons List,” the “Entity List,” or the “Unverified List,” as maintained by the U.S.
Department of Commerce; (ii) a Person on the U.S. Office of Foreign Assets Control “Specially Designated Nationals and Blocked
Persons List,” the “Sectoral Sanctions Identifications List,” the “Non-SDN Chinese Military-Industrial Complex
Companies List,” the “Foreign Sanctions Evaders List,” or any similar list maintained by a Governmental Authority of
the United States, including Persons resident in embargoed countries, territories, or regions; (iii) a “foreign entity of
concern” as defined by 15 U.S.C. § 4651(8) or 42 U.S.C. § 18741(a)(5) or a “foreign adversary”
as defined by 15 CFR § 791.4; (iv) the government, including any political subdivision, agency, or instrumentality thereof,
or any national, of (a) any country, territory, or region against which the United States maintains comprehensive economic sanctions
or embargos from (as of the date hereof, Cuba, Iran, North Korea, and the Crimea, so-called Donetsk People’s Republic, and
so-called Luhansk People’s Republic regions of Ukraine); (b) The People’s Republic of China or (c) a country determined
to be of risk in accordance with U.S. Department of Energy Order DOE O 486.1A(5)(d) (https://www.energy.gov/science/countries-risk);
(v) a Person that the Company knows or reasonably suspects is acting or purporting to act, directly or indirectly, on behalf of,
or a Person (wherever organized, in the case of an entity) majority-owned or Controlled by, any of the Persons listed in sub-clauses
(i)-(iv) above; or (vi) a Person with whom dealings are expressly prohibited on account of any economic sanctions laws, regulations,
or directives, of the United States, if the investment in such Person would cause the Company to be knowingly in violation of such economic
sanctions laws, regulations, or directives. With respect to any Person that is a company with a class of securities registered under
the U.S. Exchange Act (or subject to a comparable non-U.S. reporting regime), for purposes of this definition of Restricted Entity, ownership
does not include passive non-controlling beneficial ownership of less than 10% by any single person or any “group” (as defined
in Section 13(d)(3) of the U.S. Exchange Act and Rule 13d-5 thereunder);
6
“
Securities
” means, collectively,
the Units and the Subscription Shares and Warrants comprising the Units;
“
S-K 1300
” shall have the
meaning set forth in
Section 3.1(ff)
;
“
Solvent
” is, as to any Person
as of any date of determination, that on such date: (a) the fair value of the assets of such Person is greater than the total amount
of liabilities, including contingent liabilities, of such Person; (b) the present fair saleable value of such Person is not less
than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured;
(c) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person’s ability
to pay such debts and liabilities as they mature; and (d) such Person is not engaged in a business or a transaction, and is not
about to engage in a business or a transaction, for which such Person’s property would constitute an unreasonably small capital.
The amount of any contingent liability at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability;
“
South32
” means South32 International
Investment Holdings Pty. Ltd.;
“
South32 Participation Rights Agreement
”
means the Participation Rights Agreement dated December 19, 2017 between South32 and the Company;
“
South32 Transaction Agreement
”
means the transaction agreement of even date herewith between South32 and the Investor with respect to the Concurrent South32 Sale;
“
Subscription Shares
” means
the Common Shares forming part of the Units;
“
Subsidiaries
” means (i) NovaCopper
US Inc., a Delaware corporation wholly-owned by the Company, and (ii) 995 Exploration Inc., a Delaware corporation wholly-owned
by the Company;
“
Time of Closing
” means 12:00
p.m. New York, New York time (or such later time as the parties hereto agree) on the Closing Date;
“
Transactions
” means the transactions
contemplated by this Agreement, the South32 Transaction Agreement, the Warrant, the Cooperation Agreement and the Registration Rights
Agreement;
“
Transaction Documents
” means
this Agreement, the South32 Transaction Agreement, the Cooperation Agreement, the Warrant, the Registration Rights Agreement, the Investor
Participation Rights Agreement, and any other documents or agreements executed in connection with the Transactions;
“
TSX
” shall have the meaning
set out in
Section 3.4
;
“
TSX Legend
” shall have the
meaning set out in
Section 3.4;
“
U.S. Exchange Act
” means
the United States Securities Exchange Act of 1934, as amended;
“
U.S. Securities Act
” means
the United States Securities Act of 1933, as amended;
7
“
United States
” means the
United States of America, its territories and possessions, any state of the United States and the District of Columbia;
“
Units
” shall have the meaning
set out in the recitals hereto;
“
Warrant Certificate
” means
the certificates(s) representing the Warrants, substantially in the form appended hereto as Schedule E;
“
Warrant Share
” means a Common
Share issuable upon exercise of a Warrant; and
“
Warrants
” means the warrants
forming part of the Units, each full warrant exercisable to acquire a Warrant Share for a period of ten years at an exercise price of
$0.01
provided that
such warrant shall not be exercisable unless and until the earlier of (a) the determination by
the Investor that the AAP Completion Date has occurred or (b) a Change of Control of the Company occurs.
1.2
Rules of
Construction
In this Agreement:
(a)
the terms “
Agreement
”,
“
this Agreement
”, “
the Agreement
”, “
hereto
”,
“
hereof
”, “
herein
”, “
hereby
”, “
hereunder
”
and similar expressions refer to this Agreement in its entirety and not to any particular
provision hereof;
(b)
references to an “
Article
”,
“
Section
” or “
Schedule
” followed by a number or letter
refer to the specified Article or Section of or Schedule to this Agreement;
(c)
the division of this Agreement into articles
and sections and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of this Agreement;
(d)
words importing the singular number only
shall include the plural and
vice versa
and words importing the use of any gender
shall include all genders;
(e)
the word “
including
”
is deemed to mean “including without limitation”;
(f)
the terms “
party
” and
the “
parties
” refer to a party or the parties to this Agreement;
(g)
any reference to this Agreement means
this Agreement as amended, modified, replaced or supplemented from time to time;
(h)
any reference to a statute, regulation
or rule shall be construed to be a reference thereto as the same may from time to time
be amended, re-enacted or replaced, and any reference to a statute shall include any regulations
or rules made thereunder;
(i)
unless otherwise indicated, all dollar
amounts refer to United States dollars;
(j)
any time period within which a payment
is to be made or any other action is to be taken hereunder shall be calculated excluding
the day on which the period commences and including the day on which the period ends; and
8
(k)
whenever any action is required to be
taken or period of time is to expire on a day other than a Business Day, such action shall
be taken or period shall expire on the next following Business Day.
1.3
Time
of Essence
Time shall be of the essence of this Agreement.
1.4
Governing
Law and Submission to Jurisdiction
(a)
This Agreement shall be governed in all
respects by the United States Federal Law, without giving effect to the conflict-of-laws
rules thereof to the extent such rules would require or permit the application
of the Applicable Laws of another jurisdiction. To the extent that United States Federal
Law does not specify the appropriate rule of decision for a particular matter at issue,
it is the intention and agreement of the Parties that the Applicable Laws of the State of
New York (without giving effect to its conflict-of-laws rules) shall be adopted as the governing
rule of decision;
provided
, that notwithstanding the foregoing, (i) the
procedures and matters necessary for the Transaction and actually required by reason of the
Company being incorporated under the Applicable Laws of Canada, including but not limited
to the procedural requirements for the issuance of the Securities and the actions of the
Board, shall be governed by the Applicable Laws of Canada, and (ii) certain mandatory
provisions in respect of the Applicable Canadian Securities Legislation shall apply irrespective
of the governing law as provided in this Agreement.
(b)
The Company agrees to submit to the exclusive
jurisdiction and venue of the federal courts of the Southern District of New York (and its
appellate courts) for any and all civil actions, suits or proceedings arising out of or relating
to this Agreement, the other Transaction Documents or the transactions contemplated hereby
or thereby.
(c)
Investor, to the maximum extent permitted
by law, irrevocably agrees to submit itself, for any claim arising from, related to, or in
connection with this Agreement, the other Transaction Documents, or the transactions contemplated
hereby to the jurisdiction of (i) the U.S. Court of Federal Claims (ii) any other
Federal court or tribunal of competent jurisdiction; and (iii) appellate courts from
any of the foregoing.
(d)
Each Party hereby irrevocably and unconditionally
waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way
of motion or as a defense, counterclaim or otherwise, (i) any objection which it may
now or hereafter have to the laying of venue of any Proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby, (ii) any claim that it is
not personally subject to the jurisdiction of the above-mentioned courts for any reason,
and (iii) any claim that any Proceeding brought in the above-mentioned courts has been
brought in an inconvenient forum or that the venue is improper. Each Party hereto other than
Investor hereby irrevocably and unconditionally waives, to the fullest extent permitted by
Applicable Law, and agrees not to assert, by way of motion or as a defense, counterclaim
or otherwise, that it or its property is exempt or immune from jurisdiction of the above-mentioned
courts 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). Each Party hereto further irrevocably consents to service of process in the
manner provided for notices in
Section 6.1
. Nothing in this Agreement will affect
the right of any party hereto to serve process in any other manner permitted by any Applicable
Law.
9
(e)
THE PARTIES EACH HEREBY WAIVE, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION
OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT
OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT
EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL
BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE
A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES
TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
1.5
Severability
If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
1.6
Specific
Performance
The Company acknowledges that the rights of the
Investor to consummate the Transactions are unique and recognizes and affirms that in the event of a breach of this Agreement by the
Company, money damages are inadequate and Investor would have no adequate remedy at law. It is accordingly agreed that Investor shall
be entitled to (and the Company shall not oppose on the basis that injunctive relief or specific performance is not available due to
availability of an adequate remedy at law) an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically
the terms and provisions of this Agreement, without the necessity of showing any actual damages or that monetary damages would not afford
an adequate remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which
it is entitled at law or in equity.
1.7
Remedies
Except as otherwise provided herein, no remedy
herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, and each and every remedy shall be
cumulative and shall be in addition to every remedy under this Agreement or now or hereafter existing at law or in equity.
1.8
Entire
Agreement
This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions,
whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or
implied, collateral, statutory or otherwise, relating to the subject matter hereof except as provided herein.
10
1.9
Schedules
and Appendices
The following Schedules are attached to and form
an integral part of this Agreement:
Schedule A
–
Registration
and Delivery Instructions
Schedule B
–
Investor Information
Schedule C
–
Form of Investor Participation
Rights Agreement
Schedule D
–
Form of Registration
Rights Agreement
Schedule E
–
Form of Warrant Certificate
Article 2
PURCHASE OF COMMON SHARES
2.1
Investment
in Company
On the terms and subject to the conditions of
this Agreement, the Investor agrees on the date hereof to subscribe for and purchase from the Company, and the Company agrees to sell
to the Investor, the Units for the Purchase Price.
The Company and the Investor agree that the allocation
of the Purchase Price between the Subscription Shares and the Warrants (the
“Purchase Price Allocation”
) shall be
$17,827,686.90 to the Subscription Shares and $100.00 to the Warrants, except as and where otherwise required by applicable rules and
regulations, including generally accepted accounting principles in the context of the Company’s audited consolidated financial
statements. The Company shall deliver written confirmation of such Purchase Price Allocation to the Investor within a reasonable period
following the Closing Date.
2.2
Use
of Proceeds
The Company covenants and agrees that the proceeds
of the Offering will be invested by the Company into Ambler Metals to be spent by Ambler Metals on the Project.
Article 3
REPRESENTATIONS AND WARRANTIES
3.1
Representations
and Warranties of the Company
The Company hereby represents and warrants to
the Investor as of the date hereof that:
(a)
the Company is a company existing under
the laws of British Columbia, is current and up to date with all material filings required
to be made under the laws of its jurisdiction of incorporation to maintain its corporate
existence and has all requisite corporate power to carry on its business as now conducted
and to own, lease or operate its property, and no steps or proceedings have been taken by
any Person, voluntary or otherwise, requiring or authorizing its dissolution or winding up;
(b)
NovaCopper US Inc. is a wholly-owned Subsidiary
of the Company and is a company existing under the laws of the State of Delaware, is current
and up to date with all material filings required to be made under the laws of its jurisdiction
of incorporation to maintain its corporate existence and has all requisite corporate power
to carry on its business as now conducted and to own, lease or operate its property, and
no steps or proceedings have been taken by any Person, voluntary or otherwise, requiring
or authorizing its dissolution or winding up;
11
(c)
the Company owns, directly or indirectly,
50% of Ambler Metals, free and clear of any Liens, other than pursuant to the LLC Agreement;
(d)
the Company is not a Restricted Entity
nor is it Controlled by a Restricted Entity;
(e)
none of the members of the Board of Directors
of the Company nor any Executive Officer of the Company, within the meaning of Rule 3b-7
promulgated pursuant to the U.S. Exchange Act, is a Restricted Entity, is majority-owned
or Controlled, directly or indirectly, by a Restricted Entity, or is acting on behalf of
a Restricted Entity;
(f)
no broker, finder or investment banker
is entitled to any financial advisory, brokerage, finder’s or other fee or commission
in connection with this Agreement or the Transactions based upon arrangements made by or
on behalf of the Company or any of its Subsidiaries for which Investor could have any liability;
(g)
other than as required by the Exchanges
and pursuant to the South32 Participation Rights Agreement, 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 this Agreement, the Warrant or the Transactions;
(h)
the Company has the corporate power and
authority to enter into this Agreement and the Warrant Certificate and to perform the transactions
contemplated hereby and thereby and the issuance and sale by the Company of the Subscription
Shares and the Warrants and the issuance of Common Shares upon the due exercise of the Warrants
have been authorized by all necessary corporate action of the Company, and this Agreement
has been, and the Warrant Certificate will at the Time of Closing have been, executed and
delivered by the Company and this Agreement is, and the Warrant Certificate will upon execution
and delivery in accordance with the terms hereof and thereof be, valid and binding obligations
of the Company enforceable against the Company in accordance with their respective terms,
subject to the qualifications that such enforceability may be limited by bankruptcy, insolvency,
reorganization, liquidation, dissolution or other laws of general application relating to
or affecting the rights of creditors and that equitable remedies, including specific performance,
are discretionary and may not be ordered;
(i)
the authorized capital of the Company
consists of an unlimited number of Common Shares. At the close of business on July 30,
2026 (the “
Capitalization Date
”) (i) 172,745,639 Common Shares were
issued and outstanding, and (ii) nil Common Shares were reserved and available for issuance
pursuant to nil. Since the Capitalization Date through the date of this Agreement, the Company
has not issued any securities or established a record date for, declared, set aside for payment
or paid any dividend on, or made any other distribution in respect of, any shares of the
Company's share capital, other than, in each case, pursuant to the vesting or exercise of
any equity awards outstanding as of the Capitalization Date;
12
(j)
each of the execution and delivery of
this Agreement and the Warrant Certificate, the performance by the Company of its obligations
hereunder or thereunder, the issue and sale of Subscription Shares and the Warrants (and
the issuance of Common Shares upon the due exercise thereof) hereunder and the consummation
of the transactions contemplated hereby and thereby, respectively, do not and will not conflict
with or result in a breach or violation of any of the terms or provisions of, or constitute
a default under (whether after notice or lapse of time or both), (A) any statute, rule or
regulation applicable to the Company, including applicable securities laws; (B) the
constating documents of the Company or any resolutions passed by the board of directors or
shareholders of the Company which are in effect at the date hereof; or (C) any judgment,
decree or order binding the Company or the property or assets of the Company;
(k)
all necessary corporate action has been
taken by the Company to authorize the issuance of the Subscription Shares and to create,
authorize and issue the Warrants and to reserve the Common Shares issuable upon exercise
of the Warrants;
(l)
when issued and delivered by the Company
pursuant to this Agreement, against payment of the Purchase Price, the Subscription Shares
will be validly issued as fully paid and non-assessable Common Shares of the Company;
(m)
upon valid exercise of the Warrants in
accordance with their terms, including payment of the exercise price, the Common Shares underlying
the Warrants will be validly issued as fully paid and non-assessable Common Shares of the
Company;
(n)
at the Time of Closing, the form of certificate
representing the Subscription Shares will be in proper form under the laws of British Columbia
and the federal laws applicable therein, the Warrant Certificate will be in proper form under
the United States Federal Law and Applicable Laws of Canada, and in each case will comply
with the requirements of the Exchanges and will not conflict with the constating documents
of the Company;
(o)
the issued and outstanding Common Shares
are listed on the Exchanges and the Company is not in default of its listing requirements
on the Exchanges;
(p)
the Company has, or will have at the Time
of Closing, received the conditional approval of the TSX to the listing of the Subscription
Shares and the Warrant Shares for trading on the TSX, subject only to satisfaction by the
Company of customary post-closing conditions imposed by the Exchange for such conditional
approval;
(q)
the Company has, or will have at the Time
of Closing, received the necessary approval of the NYSE American to the listing of the Subscription
Shares and the Warrant Shares for trading on the NYSE American, subject only to satisfaction
by the Company of customary post-closing conditions imposed by the Exchange for such approval;
(r)
no shareholder approval is required to
be obtained by the Company in connection with the transactions contemplated herein;
(s)
the Company owns, directly or indirectly,
all of the capital stock or other equity interests of each Subsidiary, free and clear of
any Liens, and all of the issued and outstanding shares of capital stock or other equity
interest of each such Subsidiary are validly issued and are fully paid, non-assessable and
free of preemptive and similar rights to subscribe for or purchase securities;
13
(t)
the Company is a reporting issuer in the
Reporting Jurisdictions and on the Closing Date will have been a reporting issuer in such
provinces and territories for at least four months. The Company is not included on a list
of reporting issuers in default maintained by any of the Canadian Securities Regulators of
the Reporting Jurisdictions;
(u)
since December 1, 2023, the Company
has timely filed (subject to any permitted extension) all reports, registrations, documents,
filings, statements and submissions, together with any amendments thereto, that it was required
to file with the Commission under the U.S. Securities Act or the U.S. Exchange Act, and as
required to be filed in accordance with Applicable Canadian Securities Legislation (the foregoing,
collectively, the “
Company Reports
”). As of their respective dates of
filing, the Company Reports complied in all material respects with the U.S. Securities Act,
the U.S. Exchange Act and Applicable Canadian Securities Legislation, as applicable. Each
Company Report, as of its date, (A) did not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements made therein,
in light of the circumstances under which they were made, not misleading, and (B) complied
as to form in all material respects with the applicable requirements of the U.S. Securities
Act, the U.S. Exchange Act and Applicable Canadian Securities Legislation;
(v)
as of the date of this Agreement, there
are no outstanding or unresolved comments received from any Canadian Securities Regulators
with respect to the Company’s public disclosure record and, to the knowledge of the
Company, no part of the Canadian public disclosure record is the subject of an ongoing review
by any Canadian Securities Regulators;
(w)
as of the date of this Agreement, the
Company is an “SEC issuer” as that term is defined in NI 51-102;
(x)
the audited consolidated financial statements
of the Company for the year ended November 30, 2025 and the unaudited interim condensed
consolidated financial statements of the Company included in the Company Reports, including
the notes to such statements and the related auditors’ report on such statements, as
applicable (the “
Financial Statements
”) (i) present fairly, in all
material respects, the financial position of the Company on a consolidated basis and the
statements of operations, retained earnings, cash flow from operations and changes in financial
information of the Company on a consolidated basis for the periods specified in such Financial
Statements; (ii) have been prepared in conformity with generally accepted accounting
principles (“
GAAP
”) in the United States applied on a consistent basis
throughout the periods involved; and (iii) do not contain any misrepresentation, with
respect to the period covered by the Financial Statements;
(y)
the accountants who reported on and certified
the Financial Statements are independent chartered accountants with respect to the Company
within the meaning of Applicable Canadian Securities Legislation and independent public accountants
within the meaning of U.S. Securities Laws and the applicable rules and regulations
adopted by the Public Company Accounting Oversight Board (United States);
(z)
there has not been a “reportable
event” (within the meaning of NI 51-102) with the present auditors of the Company and
the auditors of the Company have not provided any material comments or recommendations to
the Company regarding its accounting policies, internal control systems or other accounting
or financial practices that have not been implemented by the Company;
14
(aa)
the Company has not issued any capital
stock since its most recently filed periodic report under the U.S. Exchange Act, other than
pursuant to the exercise or settlement of Equity Awards, the issuance of Common Shares pursuant
to the Plans and pursuant to the conversion and/or exercise of Common Share Equivalents outstanding
as of the date of the most recently filed periodic report under the U.S. Exchange Act. No
Person has any right of first refusal, preemptive right, right of participation, or any similar
right to participate in the Transaction, except for participation rights pursuant to the
South32 Participation Rights Agreement which were waived. Other than pursuant to the South32
Participation Rights Agreement, the ATM Program and the outstanding Equity Awards there are
no outstanding options, warrants, scrip rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities, rights or obligations convertible into or
exercisable or exchangeable for, or giving any Person any right to subscribe for or acquire,
any Common Shares or the capital stock of any Subsidiary, or contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to issue additional
Common Shares or Common Share Equivalents or capital stock of any Subsidiary. The issuance
and sale of the Securities will not obligate the Company or any Subsidiary to issue Common
Shares or other securities to any Person (other than the Investor). Other than the outstanding
Equity Awards, there are no outstanding securities or instruments of the Company or any Subsidiary
with any provision that adjusts the exercise, conversion, exchange or reset price of such
security or instrument upon an issuance of securities by the Company or any Subsidiary. There
are no outstanding securities or instruments of the Company or any Subsidiary that contain
any redemption or similar provisions, and there are no contracts, commitments, understandings
or arrangements by which the Company or any Subsidiary is or may become bound to redeem a
security of the Company or such Subsidiary. Other than the outstanding Equity Awards, the
Company does not have any stock appreciation rights or “phantom stock” plans
or agreements or any similar plan or agreement. All of the outstanding shares of capital
stock of the Company are duly authorized, validly issued, fully paid and nonassessable, have
been issued in compliance with all applicable securities laws, and none of such outstanding
shares was issued in violation of any preemptive rights or similar rights to subscribe for
or purchase securities. There are no stockholders agreements, voting agreements or other
similar agreements with respect to the Company’s capital stock to which the Company
is a party or, to the knowledge of the Company, between or among any of the Company’s
stockholders;
(bb)
the Company and its Subsidiaries, on
a consolidated basis and taken as a whole, are Solvent;
(cc)
neither the Company nor any Subsidiary
thereof is an “investment company” as defined in, or subject to regulation under,
the Investment Company Act of 1940;
(dd)
since the date of the latest audited
financial statements included within the Company Reports, (i) there has been no event,
occurrence or development that has had or that could 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 and accrued expenses incurred in the ordinary
course of business consistent with past practice and (B) liabilities not required to
be reflected in the Company’s financial statements pursuant to GAAP or disclosed in
filings made with the Commission, (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 and (v) the Company has not issued any equity
securities to any officer, director or Company Affiliate, except pursuant to existing Company
stock option plans. Except for the issuance of the securities contemplated by this Agreement,
no event, liability, fact, circumstance, occurrence or development has occurred or exists
or is reasonably expected to occur or exist with respect to the Company or its Subsidiaries
or their respective businesses, prospects, properties, operations, assets or financial condition
that would be required to be disclosed by the Company under applicable securities laws at
the time this representation is made or deemed made that has not been publicly disclosed
at least 1 Business Day prior to the date that this representation is made;
15
(ee)
the Company’s only subsidiaries
are the Subsidiaries. Each of the Subsidiaries is an entity incorporated or organized and
existing under the laws of the jurisdiction of formation, is current and up-to-date with
all material filings required to be made and has the requisite corporate power and capacity
to own, lease and operate its properties and to conduct its business as is now carried on
by it or proposed to be carried on by it, in each case as described in the Company Reports,
and is duly qualified to transact business and is in good standing in each jurisdiction in
which such qualification is required, whether by reason of the ownership or leasing of property
or the conduct of business;
(ff)
the Company has complied with the requirements
of National Instrument 43-101 –
Standards of Disclosure for Mineral Projects
(“
NI 43-101
”) and Subpart 229.1300 of Regulation S-K – Disclosure
by Registrants Engaged in Mining Operations (“
S-K 1300
”) in all material
respects, including, but not limited to, the preparation and filing of technical reports
and each of the technical reports filed with respect to the Material Properties accurately
sets forth all material facts relating to the properties that are subject thereto as at the
date of such report and there is no new material scientific or technical information nor
any other fact or circumstance that creates a requirement for updated reports to be filed;
(gg)
the information set forth in the Company
Reports relating to the estimates of the mineral resources and reserves of the Material Properties
has been prepared in accordance with Canadian industry standards set forth in NI 43-101 and
Commission rules set forth in S-K 1300 and the method of estimating the mineral resources
and reserves has been verified by “qualified persons” (as such term is defined
in NI 43-101 and S-K 1300) and the information upon which such estimates were based, was,
at the time of delivery thereof, complete and accurate in all material respects and there
have been no material adverse changes to such information since the date of delivery or preparation
thereof;
(hh)
the Company and the Subsidiaries apply
a quality assurance program and quality control measures (collectively, the “
QA/QC
”)
to provide reasonable assurance regarding the precision and accuracy of their assay data.
The Company and the Subsidiaries are not aware of any material weaknesses in the QA/QC and
maintains security measures that are designed to provide assurance in the Company’s
and the Subsidiaries’ sample preparation, sample dispatches, sample security, sample
splitting and reduction, data verification, and testing, assaying and analytical procedures;
(ii)
all scientific and technical information
set forth in the Company Reports has been reviewed or will be reviewed by a “qualified
person” as required under NI 43-101 and the Company has made available to the authors
of each of the technical reports filed with respect to the Material Properties, prior to
the issuance of such report, for the purpose of preparing such report, all information available
to the Company and requested by the authors, which information did not contain any misrepresentation
at the time such information was so provided;
16
(jj)
there are no complaints, issues, proceedings,
or discussions, which are ongoing or anticipated which could have the effect of interfering,
delaying or impairing the ability to explore, develop or operate the Material Properties
in a manner that would have a Material Adverse Effect on the Company;
(kk)
to the knowledge of the Company, all
activities on the Material Properties have been conducted in all material respects in accordance
with good engineering practices and all applicable workers’ compensation and health
and safety and workplace laws, regulations and policies have been duly complied with in all
material respects on the Material Properties;
(ll)
the Company is not aware of any material
land entitlement claims or aboriginal land claims having been asserted or any legal actions
relating to aboriginal or community issues having been instituted with respect to the properties
underlying the Material Properties, and no dispute between the Company and any local, native,
aboriginal or indigenous group exists or, to the knowledge of the Company, is threatened
or imminent that could reasonably be expected to have a Material Adverse Effect;
(mm)
except as would not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect, the Company and
the Subsidiaries have all permits, licenses, franchises, authorizations, orders and approvals
of, and have made all filings, applications and registrations with, Governmental Authorities
that are required in order to permit them to own or lease the properties and assets that
they presently owned or lease and to carry on their business as presently conducted, and
other than as set forth herein, no other permits, licenses, franchises, authorizations, orders
and approvals are required to be made or obtained by the Company and the Subsidiaries in
connection with the execution, delivery and performance of this Agreement by the Company
and the Subsidiaries and the consummation of the Transactions;
(nn)
neither the Company nor any Person acting
on its behalf has taken any action (including any offering of any securities of the Company
under circumstances which would require the integration of such offering with the offering
of the Securities under the U.S. Securities Act, and the rules and regulations of the
Commission promulgated thereunder), which might subject the offering, issuance or sale of
any of the Securities to Investor pursuant to this Agreement to the registration requirements
of the U.S. Securities Act;
(oo)
the businesses of the Company and the
Subsidiaries are being conducted in compliance in all material respects with all Applicable
Laws. There are no Proceedings by or against the Company and the Subsidiaries pending (of
which the Company and the Subsidiaries have received notice or otherwise have knowledge)
by or before any Governmental Authority, or, to the Company’s or the Subsidiaries’
knowledge, threatened to be brought by or before any Governmental Authority, that has had
or would reasonably be expected to have a Material Adverse Effect. There is no unsatisfied
order outstanding against or any open injunction binding upon the Company or the Subsidiaries
that has had or would reasonably be expected to have a Material Adverse Effect;
17
(pp)
the Company and the Subsidiaries (i) are,
and at all prior times in the prior three (3) years were, in compliance with any and
all applicable federal, state, local, tribal and foreign laws, rules, regulations, ordinances,
codes, requirements, decisions and orders relating to exploration, mining and related activities
applicable to the Material Properties (collectively, “
Mining Laws
”); (ii) have
received and are in compliance in all material respects with all permits under applicable
Mining Laws necessary to conduct their businesses as currently conducted; and (iii) have
not received notice of any actual or potential liability under or relating to any Mining
Laws and have no knowledge of any event or condition that would reasonably be expected to
result in any such notice, except, in the case of each of clauses (i), (ii) and (iii) above,
for any such failure to comply, or failure to receive required permits, licenses or approvals,
or cost or liability, as would not, individually or in the aggregate, reasonably be expected
to have a Material Adverse Effect;
(qq)
no material default exists in the due
performance and observance of any term, covenant or condition of any material license, contract,
indenture, mortgage, deed of trust, note, loan or credit agreement, or any other agreement
or instrument evidencing an obligation for borrowed money, or any other material agreement
or instrument to which the Company or the Subsidiaries is a party to or as to which any property
of the Company or the Subsidiaries or by which the Company or the Subsidiaries may be bound
or to which any of the properties or assets of the Company or the Subsidiaries are subject;
(rr)
there is no Proceeding pending involving
the Company or the Subsidiaries or, to the Company’s and the Subsidiaries’ knowledge,
any executive officer or director which would reasonably be expected to adversely affect
or challenge the legality, validity or enforceability of this Agreement;
(ss)
neither the Company nor the Subsidiaries,
nor, to the Company’s or the Subsidiaries’ knowledge, any director, officer,
agent, employee or Company Affiliate of the Company or the Subsidiaries or any other person
acting on behalf of the Company and the Subsidiaries, has, directly or indirectly, (a) given
or agreed to give any money, gift or similar benefit (other than legal price concessions
to customers in the Company or the Subsidiaries’ ordinary course of business) to any
customer, supplier, employee or agent of a customer or supplier, or official or employee
of any governmental agency or instrumentality of any government (domestic or foreign) or
any political party or candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of the Company and the Subsidiaries
(or assist it in connection with any actual or proposed transaction) that (i) might
subject the Company or the Subsidiaries to any damage or penalty in any civil, criminal or
governmental litigation or other Proceeding, (ii) if not given in the past, might have
had a Material Adverse Effect, (iii) if not continued in the future, might adversely
affect the assets, business, operations or prospects of the Company and the Subsidiaries,
or (iv) violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977, as amended or any applicable non-U.S. anti-bribery statute or regulation; (b) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (c) received
notice of any investigation, inquiry, or other Proceeding by any Governmental Authority regarding
any of the matters in clauses (a) or (b) above; and the Company and the Subsidiaries
and, to the knowledge of the Company and the Subsidiaries, the Company’s and the Subsidiaries’
affiliates, have conducted their respective businesses in compliance in all material respects
with applicable anti-bribery laws and have instituted and maintain policies and procedures
designed to ensure, and which are reasonably expected to continue to ensure, continued compliance
therewith. The Company and the Subsidiaries have taken reasonable steps to ensure that its
accounting controls and procedures are sufficient to cause the Company and the Subsidiaries
to comply in all material respects with applicable anti-bribery laws;
(tt)
no material labor dispute with the employees
of the Company or the Subsidiaries currently exists or, to the knowledge of the Company,
is imminent. Neither the Company nor the Subsidiaries is a party to any collective bargaining
agreement and, to the knowledge of the Company, no action has been taken or is contemplated
to organize any employees of the Company or the Subsidiaries.
18
(uu)
neither the Company, nor the Subsidiaries
nor, to the Company’s or Subsidiaries’ knowledge, any director, officer, agent,
employee or Company Affiliate of the Company or the Subsidiaries, or any other person acting
on behalf of the Company or the Subsidiaries, is currently subject to any U.S. sanctions
administered by the Office of Foreign Assets Control of the U.S. Department of the Treasury
(“
OFAC
”), and the Company and the Subsidiaries will not, directly or indirectly,
use any payments received by them pursuant to this Agreement, or lend, contribute or otherwise
make available such proceeds to any joint venture partner or other person or entity, for
the purpose of unlawfully financing the activities of or business with any person that is
the subject or target of any U.S. sanctions administered by OFAC, or any country or territory
subject to a comprehensive economic sanctions imposed by OFAC;
(vv)
the Company and the Subsidiaries are
in compliance with all foreign, federal, state and local Applicable Laws relating to the
use, treatment, storage and disposal of hazardous or toxic substances or waste and protection
of health and safety or the environment which are applicable to their businesses (“
Environmental
Laws
”), except where the failure to comply would not, singularly or in the aggregate,
result in a Material Adverse Effect. In the Company’s and the Subsidiaries’ ordinary
course of business, the Company and the Subsidiaries conduct periodic reviews of the effect
of Environmental Laws on their respective business and assets, in the course of which they
identify and evaluate any associated costs and liabilities (including, without limitation,
any capital or operating expenditures required for clean-up, closure of properties or compliance
with Environmental Laws or governmental permits issued thereunder, any related constraints
on operating activities and any potential liabilities to third parties). On the basis of
such reviews, the Company and the Subsidiaries have reasonably concluded that such associated
costs and liabilities would not reasonably be expected to result, singularly or in the aggregate,
in a Material Adverse Effect;
(ww)
the Company and each Subsidiary thereof
has timely filed all material federal, provincial, state and other tax returns and reports
required to be filed, and has paid all material federal, provincial, state and other taxes,
assessments, fees and other governmental charges levied or imposed upon them or their properties,
income or assets otherwise due and payable, except to the extent such taxes are being contested
in good faith by appropriate proceedings diligently conducted and for which adequate reserves
are being maintained in accordance with GAAP. The Company is not aware of any claims or adjustments
proposed for any of the Company or its Subsidiaries’ prior tax years which could result
in additional material taxes becoming due and payable;
(xx)
the Company and its Subsidiaries are
insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which the Company and
the Subsidiaries are engaged, including, but not limited to, directors and officers insurance
coverage. Neither the Company nor any Subsidiary has any reason to believe that it will not
be able to renew its existing insurance coverage as and when such coverage expires or to
obtain similar coverage from similar insurers as may be necessary to continue its business
without a significant increase in cost;
19
(yy)
there is no action, suit, inquiry, notice
of violation, proceeding or investigation pending or, to the knowledge of the Company, threatened
against or affecting the Company, any Subsidiary or any of their respective properties before
or by any court, arbitrator, governmental or administrative agency or regulatory authority
(federal, state, county, local or foreign) (collectively, an “
Action
”).
Neither the Company nor any Subsidiary, nor any director or officer thereof, is or has been
the subject of any Action involving a claim of violation of or liability under federal, state
or foreign securities laws or a claim of breach of fiduciary duty. There has not been, and
to the knowledge of the Company, there is not pending or contemplated, any investigation
by the Commission or any foreign securities regulator involving the Company or any current
or former director or officer of the Company. The Commission has not issued any stop order
or other order suspending the effectiveness of any registration statement filed by the Company
or any Subsidiary under the U.S. Exchange Act or the U.S. Securities Act;
(zz)
the Company and the Subsidiaries have
good and marketable title in fee simple to all real property owned by them and good and marketable
title in all personal property owned by them that is material to the business of the Company
and the Subsidiaries, in each case free and clear of all Liens, except for (i) Liens
as do not materially affect the value of such property and do not materially interfere with
the use made and proposed to be made of such property by the Company and the Subsidiaries
and (ii) Liens for the payment of federal, provincial, state or other taxes, for which
appropriate reserves have been made therefor in accordance with GAAP and either (A) the
payment of which is neither delinquent nor subject to penalties or (B) are being contested
in good faith by appropriate proceedings. Any real property and facilities held under lease
by the Company and the Subsidiaries are held by them under valid, subsisting and enforceable
leases with which the Company and the Subsidiaries are in compliance;
(aaa)
none of the officers or directors of
the Company and, to the knowledge of the Company, none of the employees of the Company is
presently a party to any transaction with the Company (other than for services or separation
from services as employees, officers and directors), including any contract, agreement or
other arrangement providing for the furnishing of services to or by, providing for rental
of real or personal property to or from, providing for the borrowing of money from or lending
of money to or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any entity in which any officer, director, or any such
employee has a substantial interest or is an officer, director, trustee, stockholder, member
or partner, in each case in excess of $120,000 other than for (i) payment of salary
or consulting fees for services rendered, (ii) reimbursement for expenses incurred on
behalf of the Company and (iii) other employee benefits, including Equity Awards under
the Plans;
(bbb)
the Company and the Subsidiaries are
in compliance in all material respects with any and all applicable requirements of the Sarbanes-Oxley
Act of 2002, as amended, that are effective as of the date hereof, and any and all applicable
rules and regulations promulgated by the Commission thereunder that are effective as
of the date hereof and as of the Closing Date. The Company and the Subsidiaries maintain
a system of internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with GAAP and to maintain asset accountability, (iii) access
to assets is permitted only in accordance with management’s general or specific authorization,
and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences.
The Company and the Subsidiaries have established disclosure controls and procedures (as
defined in U.S. Exchange Act Rules 13a-15(e) and 15d-15(e)) for the Company and
the Subsidiaries and designed such disclosure controls and procedures to ensure that information
required to be disclosed by the Company in the reports it files or submits under the U.S.
Exchange Act is recorded, processed, summarized and reported, within the time periods specified
in the Commission’s rules and forms. The Company’s certifying officers have
evaluated the Company’s effectiveness of the disclosure controls and procedures of
the Company and the Subsidiaries as of the end of the period covered by the Company’s
most recently filed periodic report under the U.S. Exchange Act (such date, the “
Evaluation
Date
”). The Company presented in its most recently filed periodic report under
the U.S. Exchange Act the conclusions of the certifying officers about the effectiveness
of the disclosure controls and procedures based on their evaluations as of the Evaluation
Date. Since the Evaluation Date, there have been no changes in the internal control over
financial reporting (as such term is defined in the U.S. Exchange Act) of the Company and
its Subsidiaries that have materially affected, or is reasonably likely to materially affect,
the internal control over financial reporting of the Company and its Subsidiaries;
20
(ccc)
assuming the accuracy of the Investor’s
representations and warranties set forth in
Section 3.2
, no registration under
the U.S. Securities Act is required for the offer and sale of the Securities by the Company
to the Investor as contemplated hereby;
(ddd)
no Person has any right to cause the
Company or any Subsidiary to effect the registration under the U.S. Securities Act or any
foreign securities laws of any securities of the Company or any Subsidiary;
(eee)
the Common Shares are registered pursuant
to Section 12(b) or 12(g) of the U.S. Exchange Act, and the Company has taken
no action designed to, or which to its knowledge is likely to have the effect of, terminating
the registration of the Common Shares under the U.S. Exchange Act nor has the Company received
any notification that the Commission is contemplating terminating such registration. The
Company has not, in the twelve (12) months preceding the date hereof, received notice from
any Exchange on which the Common Shares are or have been listed or quoted to the effect that
the Company is not in compliance with the listing or maintenance requirements of such Exchange.
The Company is, and has no reason to believe that it will not in the foreseeable future continue
to be, in compliance with all such listing and maintenance requirements. The Common Shares
are currently eligible for electronic transfer through the Depository Trust Company or another
established clearing corporation and the Company is current in payment of the fees to the
Depository Trust Company (or such other established clearing corporation) in connection with
such electronic transfer;
(fff)
neither the Company nor any Person acting
on behalf of the Company has offered or sold any of the Securities by any form of general
solicitation or general advertising. The Company has offered the Securities for sale only
to the Investor;
(ggg)
the Company’s accounting firm
is set forth in the Company Reports. To the knowledge and belief of the Company, such accounting
firm (i) is a registered public accounting firm as required by the U.S. Exchange Act
and (ii) shall express its opinion with respect to the financial statements to be included
in the Company’s Annual Report for the next fiscal year;
21
(hhh)
(i) there has been no material
security breach or other compromise of or relating to any of the Company’s or any Subsidiary’s
information technology and computer systems, networks, hardware, software, data (including
the data of its respective customers, employees, suppliers, vendors and any third party data
maintained by or on behalf of it), equipment or technology (collectively, “
IT Systems
and Data
”) and (y) the Company and the Subsidiaries have not been notified
of, and has no knowledge of any event or condition that would reasonably be expected to result
in, any security breach or other compromise to its IT Systems and Data; (ii) the Company
and the Subsidiaries are presently in compliance in all material respects with all applicable
laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator
or governmental or regulatory authority, internal policies and contractual obligations relating
to the privacy and security of IT Systems and Data and to the protection of such IT Systems
and Data from unauthorized use, access, misappropriation or modification, except as would
not, individually or in the aggregate, have a Material Adverse Effect; (iii) the Company
and the Subsidiaries have implemented and at all times during the last year maintained commercially
reasonable safeguards to maintain and protect its material confidential information and the
integrity, continuous operation, redundancy and security of all IT Systems and Data; and
(iv) the Company and the Subsidiaries have implemented backup and disaster recovery
technology consistent with industry standards and practices;
(iii)
(i) the Company and the Subsidiaries
are, and at all times during the last three (3) years were, in compliance in all material
respects with all applicable state, federal and foreign data privacy and security laws and
regulations, including, without limitation and to the extent applicable to Company, the European
Union General Data Protection Regulation (“
GDPR
”) (EU 2016/679) (collectively,
“
Privacy Laws
”); (ii) the Company and the Subsidiaries have in place,
materially comply with, and take appropriate steps reasonably designed to ensure compliance
with their policies and procedures relating to data privacy and security and the collection,
storage, use, disclosure, handling and analysis of Personal Data (as defined below) (the
“
Policies
”); (iii) to the extent required by Privacy Laws, the Company
provides and/or makes available accurate notice of its collection, storage, use, disclosure,
handling and analysis of Personal Data to its customers, employees, third party vendors and
representatives as required by the Privacy Laws. “
Personal Data
”
means (i) a natural person’s name, street address, telephone number, email address,
photograph, social security number, bank information, or customer or account number; (ii) any
information which would qualify as “personally identifying information” under
the Federal Trade Commission Act, as amended; (iii) “personal data” as defined
by GDPR; and (iv) any other piece of information that allows the identification of such
natural person, or his or her family, or permits the collection or analysis of any identifiable
data related to an identified person’s health or sexual orientation. To the knowledge
of Company, (i) None of such disclosures made or contained in any of the Policies have
been inaccurate, misleading, or deceptive in violation of any Privacy Laws and (ii) the
execution, delivery and performance of this Agreement will not result in a breach of any
Privacy Laws or Policies. Neither the Company nor the Subsidiaries (i) to the
knowledge of the Company, has received written notice of any actual or potential liability
of the Company or the Subsidiaries under, or actual or potential violation by the Company
or the Subsidiaries of, any of the Privacy Laws; (ii) is currently conducting or paying
for, in whole or in part, any investigation, remediation or other corrective action pursuant
to any regulatory request or demand pursuant to any Privacy Law; or (iii) is a party
to any order, decree, or agreement by or with any court or arbitrator or governmental or
regulatory authority that imposed any obligation or liability under any Privacy Law;
22
(jjj)
the operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with applicable financial
record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting
Act of 1970, as amended, applicable money laundering statutes and applicable rules and
regulations thereunder (collectively, the “
Money Laundering Laws
”), and
no Action or Proceeding by or before any court or governmental agency, authority or body
or any arbitrator involving the Company or any Subsidiary with respect to the Money Laundering
Laws is pending or, to the knowledge of the Company or any Subsidiary, threatened;
(kkk)
with respect to the Securities to be
offered and sold hereunder in reliance on Rule 506 under the U.S. Securities Act, none
of the Company, any of its predecessors, any affiliated issuer, any director, executive officer,
any beneficial owner of 20% or more of the Company's outstanding voting equity securities,
calculated on the basis of voting power, nor any promoter (as that term is defined in Rule 405
under the U.S. Securities Act) connected with the Company in any capacity at the time of
sale (each, an “
Issuer Covered Person
”) is subject to any of the 'Bad
Actor' disqualifications described in Rule 506(d)(1)(i) to (viii) under the
U.S. Securities Act (a
“Disqualification Event
”), except for a Disqualification
Event covered by Rule 506(d)(2) or (d)(3). The Company has exercised reasonable
care to determine whether any Issuer Covered Person is subject to a Disqualification Event.
The Company has complied, to the extent applicable, with its disclosure obligations under
Rule 506(e), and has furnished to the Investor a copy of any disclosures provided thereunder;
(lll)
any final judgment for a fixed or determined
sum of money rendered by any U.S. federal court located in the State of New York having jurisdiction
under its own laws in respect of any suit, action or proceeding against the Company based
upon this Agreement would be declared enforceable against the Company by the courts of British
Columbia or Canada, without reconsideration or re-examination of the merits; and
(mmm)
the Company has irrevocably submitted
to the personal jurisdiction of the United States District Court for the Southern District
of New York and has validly and irrevocably waived any objection to the laying of venue of
any suit, action or proceeding brought in such court.
3.2
Representations
and Warranties of the Investor
The Investor represents, warrants and covenants
to the Company (and acknowledges that the Company and its counsel, are relying thereon) that both at the date hereof and at the Time
of Closing:
(a)
it is not resident in any province or
territory of Canada;
(b)
it is purchasing the Securities as principal
and it acknowledges that the certificate(s) representing the Securities will be endorsed
with legends stating that the Securities will be subject to restrictions on resale in accordance
with Applicable Canadian Securities Legislation;
(c)
the Investor has such knowledge and experience
in business and financial matters so as to be capable of evaluating the merits and risks
of acquiring the Securities, including the risk that the Investor could lose the entire value
of the Securities, and has so evaluated the merits and risks of such acquisition;
(d)
it has not become aware of any advertisement
in printed media of general and regular paid circulation (or other printed public media),
radio, television or telecommunications or other form of advertisement (including electronic
display and the internet) with respect to the distribution of the Securities;
23
(e)
it understands that the Securities have
not been registered under the U.S. Securities Act and are being offered for sale only on
a “private placement” basis in reliance upon the exemption from registration
under the U.S. Securities Act afforded by Section 4(a)(2), and it is purchasing the
Securities as principal for its own account, not for the benefit of any other Person, for
investment only and not with a view to the resale or distribution, directly or indirectly,
of all or any of the Securities, in violation of the U.S. Securities Act;
(f)
it understands the Warrants may not be
exercised unless exemptions are available from the registration requirements of the U.S.
Securities Act and the securities laws of all applicable states;
(g)
other than the representations and warranties
of the Investor set forth in
Section 3.2
, neither the Investor nor any other
Person makes any representation or warranty, expressed or implied, as to the accuracy or
completeness of the information provided or to be provided to the Company by or on behalf
of the Investor with respect to the purchase of the Securities contemplated hereby, and,
except for such representations or warranties in
Section 3.2
, nothing contained
in any documents provided or statements made by or on behalf of the Investor to the Company
is, or shall be relied upon as, a promise or representation by the Investor or any other
Person that any such information is accurate or complete with respect to such purchase of
the Securities.
3.3
Survival
of Representations and Warranties
All representations and warranties contained
herein shall survive the execution and delivery of this Agreement and the consummation of the transactions contemplated hereby, regardless
of any investigation made by the Company or the Investor or on behalf of any of them.
3.4
Legends
The Investor acknowledges that the certificates
representing the Securities (and the common shares issuable upon exercise of the Warrants, if required) will bear legends in substantially
the following form and with the necessary information inserted:
“UNLESS PERMITTED UNDER APPLICABLE
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE [●], 2026”
[the date which is four
months and one day after the Closing Date will be inserted]
“THESE SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “
ACT
”), OR UNDER THE SECURITIES LAWS OF ANY STATE. THESE
SECURITIES MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE
STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM.”
24
[
US LEGEND FOR WARRANT
] “THE
SECURITIES REPRESENTED HEREBY AND THE SECURITIES ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE “
ACT
”) OR UNDER ANY SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
PLEDGED OR HYPOTHECATED, EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION
REQUIREMENTS OR AN EXEMPTION THEREFROM. THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE ISSUER THAT SUCH OFFER, SALE, TRANSFER, PLEDGE OR HYPOTHECATION OTHERWISE COMPLIES WITH THE ACT AND ANY APPLICABLE STATE SECURITIES
LAWS.”
and also acknowledges that the certificates representing
the Securities may bear a legend in substantially the following form and with the necessary information inserted if required by the policies
of the Exchange (such legend, the “
TSX Legend
”):
“THE [SHARES UNDERLYING THE WARRANTS
/ SECURITIES] REPRESENTED BY THIS WARRANT CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“
TSX
”); HOWEVER, THE
SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY WARRANT CERTIFICATE
REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.”
provided that subsequent to the date which is
four months and one day after the Closing Date the certificates representing the Securities may be exchanged for certificates bearing
no TSX Legend.
The Investor also acknowledges that it has been
advised to consult its own independent legal advisor with respect to the applicable resale restrictions; that it is solely responsible
for complying with such restrictions; and that the Company is not responsible for ensuring compliance by the Investor of the applicable
resale restrictions.
Notwithstanding anything to the contrary herein,
the Investor shall not sell, assign, transfer, pledge, hypothecate or otherwise dispose of any Warrant Shares until the earlier of (i) the
date that is three (3) years after the AAP Completion Date and (ii) the Additional Improvements Completion Date, in each case
subject to compliance with Applicable Law. The foregoing restriction and the TSX Legend shall be reflected in the Warrant Certificate
and any applicable legends or stop transfer instructions.
Article 4
CLOSING
4.1
Closing
The Closing for the purchase and sale of the
Units shall occur (a) remotely via the electronic exchange of documents and signatures at the Time of Closing on the date that is
one (1) Business Day following the satisfaction or waiver of all conditions set forth in
Section 4.2
,
Section 4.3
and
Section 4.4
(other than conditions which, by their nature, are to be satisfied on the Closing Date, but subject to the
satisfaction or waiver of such conditions by the Party or the Parties entitled to the benefit thereof) or (b) such other date and
time as the Parties mutually agree upon in writing (the “
Closing Date
”).
25
4.2
Mutual
Conditions to Closing
The obligation of each Party to consummate the
Transactions is subject to the fulfillment of each of the following conditions:
(a)
the authorization, continued authorization
and/or reauthorization of relevant authorities by the United States Congress;
(b)
the availability of appropriations;
(c)
the satisfactory completion of the FOCI
review by the United States federal Governmental Authority and confirmation that there are
no negative findings with respect thereto;
(d)
the Investor and South32 shall have consummated
the Concurrent South32 Sale concurrently with the Time of Closing;
(e)
the Registration Rights Agreement shall
have been executed by the parties thereto and shall be in full force and effect as of the
Time of Closing;
(f)
the Investor Participation Rights Agreement
shall have been executed by the parties thereto and shall be in full force and effect as
of the Time of Closing;
(g)
the Exchanges shall have conditionally
approved the transactions contemplated herein, subject only to the delivery of customary
post-closing documentation; and
(h)
the Cooperation Agreement shall have been
executed by the parties thereto and shall be in full force and effect as of the Time of Closing.
4.3
Company
Closing Deliveries and Investor Conditions
The Investor’s obligation to purchase the
Units at the Time of Closing shall be subject to the following conditions:
(a)
Representation; Covenants.
(i)
Each of the representations and warranties
of the Company contained in this Agreement shall be true and correct in all material respects
as and when made and at and as of the Time of Closing as though such representations and
warranties were made at and as of the Time of Closing.
(ii)
All covenants, agreements and conditions
of the Company contained in this Agreement to be completed prior to the Time of Closing shall
have been performed or completed in all material respects by the Company.
(b)
Delivery of Share Certificate or DRS.
The Investor shall have received at the Time of Closing a share certificate or DRS representing
the Subscription Shares registered in the name of the Investor (or as the Investor may direct),
duly executed and issued by the Company and registered in the share register of the Company
in the name of the Investor (or as the Investor may direct).
26
(c)
Delivery of Warrants. The Investor shall
have received at the Time of Closing 6,161,678 Warrants registered in the name of the Investor
(or as the Investor may in writing direct), duly executed and issued by the Company.
(d)
Restricted Entity. The Investor has received
an officer’s certificate signed by a named executive officer of the Company confirming
that, based on available public filings, the Company is not Controlled by any Restricted
Entities.
4.4
Investor
Closing Deliveries and Company Conditions
The Investor acknowledges and agrees that the
obligations of the Company to sell the Units at the Time of Closing shall be subject to the following conditions:
(a)
Representations; Covenants.
(i)
Each of the representations and warranties
made by the Investor herein shall be accurate in all material respects as of the Time of
Closing with the same force and effect as if made at and as of the Time of Closing.
(ii)
All covenants, agreements and conditions
of the Investor contained in this Agreement to be completed prior to the Time of Closing
shall have been performed or completed in all material respects by the Investor.
(b)
Deliveries. The Investor shall deliver,
or cause to be delivered to the Company, payment of the Purchase Price.
4.5
Termination
This Agreement may be terminated by the mutual
written consent of the Investor and the Company.
Article 5
ADDITIONAL COVENANTS
5.1
Board
Nomination Right
(a)
Until October 6, 2028, the Investor
shall be entitled, but not obligated, to designate one (1) independent third-party nominee
(the “
Board Designee
”) for election or appointment to the Board from time
to time and the Board, or a committee thereof, will promptly cause to be appointed, and recommend
for election at each annual meeting of shareholders commencing with the annual meeting to
be held in the year 2027 the Board Designee, if any, selected by the Investor following the
Investor delivering existing members of the Board with the name and biography of such proposed
nominee and discussing the appointment of such nominee in good faith with the Board;
provided
however
that (i) the Board Designee satisfies the Company’s eligibility criteria
of general application (as determined in good faith by the Board or an authorized committee
thereof) for director candidates, the rules of the Exchanges (or any other stock exchanges
on which the Common Shares may be listed from time to time) and the Act, and (ii) the
Board, or an authorized committee thereof, determines that the Board Designee is “independent”
pursuant to applicable United States and Applicable Canadian Securities Legislation, including
Rule 10A-3, Rule 10C-3 and Rule 16b-3 under the U.S. Exchange Act (collectively,
the “
Director Eligibility Criteria
”).
27
(b)
Subject to the foregoing, the initial
Board Designee shall be appointed to the Board as promptly as practicable (and in any event
within the later of (i) ten (10) Business Days following receipt of notice of the
identity of such Board Designee, and (ii) the Closing Date).
(c)
The Company shall provide the Investor
with written notice (the “
Nomination Notice
”), promptly, and in any event,
not less than 60 days in advance of the date set for the meeting of shareholders at which
directors are to be elected. The Nomination Notice shall include a request for the identification
of the Board Designee and the detailed information required to be included in an information
circular with respect to the appointment of any Board Designee. The Investor shall be required
to, not later than forty-five (45) days in advance of the date set for a meeting of shareholders
of which the Investor is notified pursuant to a Nomination Notice, provide the Company with
written notice of the identity and particulars requested in the Nomination Notice. If the
Investor does not advise the Company of the identity of the Board Designee at least forty-five
(45) days prior to the date set for the meeting of shareholders at which directors are to
be elected (for any reason other than failure by the Company to provide the Investor with
the Nomination Notice within the period prescribed above), then the Investor will be deemed
to have nominated the incumbent Board Designee, or if there is no incumbent Board Designee,
no nominee.
(d)
The Company shall endorse and recommend
each Board Designee for election to the Board and shall vote any shares in respect of which
management is granted a discretionary proxy in favor of the election of such Board Designee
to the Board at every such meeting. If any Board Designee nominated by the Investor is not
validly elected at a meeting of the shareholders of the Company, the Company shall promptly
cause to be appointed a replacement Board Designee nominated by the Investor who satisfies
the Director Eligibility Criteria.
(e)
The Investor acknowledges that any appointment
to the Board must be ratified annually by a shareholder vote at the Company’s annual
general or special meetings of shareholders.
(f)
So long as the Board Designee serves as
a member of the Board, such Board Designee shall be entitled to serve on all of the committees
of the Board provided that such Board Designee satisfies the eligibility criteria for such
committee, also including with regard to committee independence requirements. Without limiting
the foregoing, the Company shall appoint the Board Designee to the Audit Committee and any
technical, reserves or similar committee of the Board, in each case to the extent permitted
by Applicable Law and stock exchange independence requirements.
(g)
If a Board Designee ceases to be a director
of the Company for any reason, the Investor shall nominate another Board Designee to fill
the vacancy thereby created, and as soon as reasonably possible following that nomination,
the Company shall fill the vacancy by electing or appointing that nominee as a director;
provided however that the Board Designee meets the Director Eligibility Criteria.
(h)
In the event that the Company determines
that any Board Designee (i) is not qualified under any Applicable Law to serve as a
director of the Company, (ii) fails to comply with the Company’s corporate governance
policies, Code of Business Conduct and Ethics or Majority Voting Policy; the Company will
provide to the Investor written notice of its determination together with the grounds for
such determination. In such an event, the Investor shall cause the Board Designee to resign
(if he or she is still serving as a director) following which the Investor shall be entitled
to select another individual as a replacement Board Designee and, so long as such individual
meets the Director Eligibility Criteria, the Company shall cause such replacement Board Designee
to be elected or appointed as a director as soon as reasonably practicable (it being acknowledged
that any such appointment may be reasonably delayed in the event that the Company has already
mailed an information circular in respect of a shareholder meeting at which directors are
to be elected).
28
(i)
Each Board Designee shall be entitled
to the benefit of any directors’ liability insurance or indemnities to which the other
directors of the Company are entitled or have the benefit thereof.
(j)
Each Board Designee shall be entitled
to compensation consistent with the compensation received by other non-employee independent
members of the Board, including any fees and equity awards, and shall be reimbursed for all
reasonable expenses related to its service on the Board on a basis that is consistent with
the Company’s policies for director reimbursement.
(k)
The Company covenants and agrees that
it shall immediately remove from the Audit Committee and any technical, reserves or similar
committee of the Board, any director who becomes subject to a “Bad Actor” disqualification
as defined under Rule 506(d) of the U.S. Securities Act, or who is formally indicted,
convicted, or subject to a final, non-appealable order or sanction by the Commission or a
court of competent jurisdiction for securities fraud, intentional financial misstatement,
or gross breach of fiduciary duty. The Company shall provide the Investor with written notice
within forty-eight (48) hours after the Company becomes aware of any such indictment, conviction,
order or sanction against any active director.
5.2
Observer
Right
(a)
For so long as the Investor beneficially
owns at least 8,000,000 Common Shares (subject to appropriate adjustment for any share splits,
share consolidations, combinations, recapitalizations or other similar events), the Investor
shall be entitled to designate one representative (who may change from time to time upon
thirty (30) days’ written notice to the Company) as an observer (an “
Observer
”)
to attend all meetings of the Board. The Observer shall have the right to receive notice
of, and review the same information and materials (“
Board Materials
”)
as are provided to Directors for, such meetings and to speak at such meetings, but shall
not be entitled to vote. The Company shall deliver to the Observer copies of any resolutions
proposed to be adopted by the Board at the same time as such resolutions are circulated to
members of the Board or any committee of the Board. Prior to the Observer attending the first
meeting of the Board, the Investor shall cause the Observer to sign a customary non-disclosure
agreement provided by the Company, provided that any such non-disclosure agreement is reasonable
in both form and in substance, and sign an acknowledgement agreeing to be bound by the Company’s
disclosure and insider trading policies. The Investor shall be liable for any breaches of
the confidentiality and use-restriction provisions set forth in such agreements and acknowledgements
by the Observer. The Observer shall be reimbursed for all reasonable expenses related to
attending all meetings of the Board on a basis that is consistent with the Company’s
policies for Director reimbursement, as if the Observer were a member of the Board. The Observer
shall not be entitled to any other compensation by the Company.
29
(b)
Notwithstanding anything to the contrary
in this Agreement, the Company may exclude the Observer from access to any Board Materials
or from any meeting of the Board or any committee of the Board (or any portion of such meeting)
if the Board concludes that: (i) such exclusion is necessary to preserve the solicitor-client
or litigation privilege between the Company and/or its Company Affiliates and their respective
counsel (provided that any such exclusion shall only apply to such portion of such Board
Materials or meeting which would be required to preserve such privilege); (ii) such
Board Materials or discussion relates to the Company’s or its Company Affiliates’
relationship, contractual or otherwise, with the Investor or its Affiliates or any actual
or potential transactions between or involving the Company or its Company Affiliates and
the Investor or its Affiliates; (iii) such exclusion is necessary to avoid a conflict
of interest or disclosure that is restricted by any agreement to which the Company or any
of its Company Affiliates is a party or otherwise bound; or (iv) such exclusion is necessary
to comply with Applicable Laws; provided, however, that the Observer shall not be excluded
under clause (i) from any discussions, executive sessions, or portions of meetings concerning
(A) the permitting status of or litigation regarding the Ambler Access Project, (B) audits
or assessments of the Company’s mineral resources or reserves, or (C) the Company’s
financial statements or internal controls, unless outside legal counsel provides a written
opinion or otherwise advises that the Observer’s presence would waive the attorney-client
privilege with respect to a specific and active legal claim asserted directly by or against
the United States government or the United States Department of Defense.
5.3
Debt
Covenant
Until the earlier of (i) January 1,
2029 or (ii) any Change of Control, the Company shall not incur any Borrowed Debt in excess of $1,000,000,000 in the aggregate without
the prior written approval of the Investor (such approval not to be unreasonably withheld).
5.4
AAP
Completion Date Notice
Pursuant to the Cooperation Agreement, Ambler
Metals is required to provide prompt written notice to the Investor upon the occurrence of each of the AAP Completion Date and the Additional
Improvements Completion Date, and to use commercially reasonable efforts to obtain a written undertaking from AIDEA and/or the Engineering
Firm to provide prompt written notice directly to the Investor upon the occurrence of each such date. The notice delivered with respect
to each of the AAP Completion Date and the Additional Improvements Completion Date is referred to herein as the “AAP Notice”.
5.5
Restricted
Entity Event
The Parties acknowledge and agree that the definition
of “Restricted Entity Event” and the rights, remedies, restrictions, obligations and consequences arising from or relating
to a Restricted Entity Event are set forth in, and governed exclusively by, the Cooperation Agreement, including any notice provisions,
agreements or covenants set forth therein. The Company shall not take any action the primary purpose of which is to circumvent the operation
of the Restricted Entity Event provisions of the Cooperation Agreement.
30
5.6
Officer’s
Certificate
(a)
For so long as the Investor holds at least
8,165,570 of the issued Common Shares of the Company (subject to appropriate adjustment for
any share split, share consolidation, stock dividend, combination, recapitalization or other
similar event), the Company agrees, from time to time upon request, to:
(i)
Promptly provide the Investor a certificate
of a named executive officer of the Company, certifying that the Purchase Price and any funds
provided by the Investor to the Company pursuant to the Transactions have been invested by
the Company pursuant to
Section 2.2
herein; and
(ii)
Cause a certificate of a named executive
officer of Ambler Metals, certifying that it has contributed funds as set forth in
Section 2.2
herein to be delivered to the Investor.
5.7
Information
and Audit Rights
For so long as the Investor beneficially owns
at least 4,107,785 Common Shares of the Company (subject to appropriate adjustment for any share split, share consolidation, stock dividend,
combination, recapitalization or other similar event):
(a)
the Company shall provide written notice
to the Investor within forty-eight (48) hours after becoming aware of any new material legal
claim or material development in any existing claim, any inquiry or investigation by the
Commission or other securities regulator, or any bone fide whistleblower complaint relating
to the Company;
(b)
the Company shall permit a representative
of the Investor, at the expense of the Company, to visit the principal executive office of
the Company during normal business hours, to discuss the affairs, finances and accounts of
the Company and its Subsidiaries with the Company’s officers, and its independent public
accountants, and to visit the other offices and properties of the Company and each Subsidiary,
all at such reasonable times and as often as may be reasonably requested in writing; and
(c)
the Company shall allow the Investor and
permit the Investor access to examine all the Company’s and its Subsidiaries’
respective books of account, records, reports and other papers, to make copies or extracts
therefrom, and to discuss their respective affairs, finances and accounts with their respective
officers and independent public accountants (and by this provision the Company authorizes
said accountants to discuss the affairs, finances and accounts of the Company and its Subsidiaries),
all at such reasonable times and as often as may be reasonably requested in writing.
5.8
Indemnification
(a)
The Company shall indemnify, defend and
hold harmless the Investor, its Affiliates and each of their respective officers, directors,
employees, agents and representatives (collectively, the
“Investor Indemnitees”
)
from and against any and all losses (excluding indirect or consequential losses and lost
profits), damages, liabilities, claims, actions, judgments, settlements, interest, awards,
penalties, fines, costs or expenses of whatever kind (including reasonable attorneys' fees
and disbursements) that any Investor Indemnitee may suffer or incur arising out of or resulting
from (i) any breach by the Company of any representation, warranty, covenant or agreement
of the Company contained in this Agreement, or (ii) any violation by the Company of
applicable United States federal or state securities laws or Applicable Canadian Securities
Legislation in connection with the Transactions.
(b)
The indemnification obligations of the
Company under this Section together with any indemnification obligations of the Company
and its Subsidiaries under the Cooperation Agreement shall be limited to the Purchase Price,
except that such limitation shall not apply to losses arising out of or resulting from fraud,
willful misconduct or intentional misrepresentation.
31
(c)
The indemnification obligations of the
Company under this Section shall not apply to matters that are the subject of the indemnification
provisions of the Registration Rights Agreement.
5.9
Post-Closing
Filings
The Company undertakes to file, or cause to be
filed, all forms, notices or undertakings required to be filed or delivered by the Company in connection with the issue of the Securities
with the applicable securities regulatory authorities and the Exchanges (including a Form 45-106F1 with the applicable Canadian
Securities Regulators).
5.10
Investor
Notification
The Investor will, upon ten (10) Business
Days notice, provide the Company with details of its beneficial ownership of Common Shares.
5.11
Survival
The covenants of the Company and the Investor
in this
Article 5
shall survive the Closing.
Article 6
GENERAL PROVISIONS
6.1
Notices
(a)
Any notice or other communication that
is required or permitted to be given hereunder shall be in writing and shall be validly given
delivered in person (including by courier service) or by email as follows:
(i)
in the case of the Investor:
United States Department of Defense
The Office of Industrial Base Policy
Assistant Secretary of Defense
Pentagon, Washington, DC 20301
Attention: Deputy Chief of Staff to the Deputy Secretary
of Defense
Email: [redacted]
With a copy to:
McDermott Will & Schulte LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067-3206
Attention: Edward Zaelke
Email: [redacted]
32
(ii)
in the case of the Company:
Trilogy Metals Inc.
510 Burrard Street, Suite 901
Vancouver, British Columbia V6C 3A8
Attention:      Elaine Sanders
Email:      [redacted]
(b)
Any such notice or other communication
shall be deemed to have been given and received (i) when personally delivered, or delivered
by same-day courier; or (ii) on the fourth business day after mailing by registered
or certified mail, postage prepaid, return receipt requested; or (iii) upon delivery
when sent by nationally recognized prepaid overnight express delivery service (e.g., FedEx,
UPS); or (iv) when sent by email or facsimile and upon the receipt by the sending party
of written confirmation by the receiving party; provided, however, that an automated facsimile
or email confirmation of delivery or read receipt shall not constitute such confirmation.
(c)
Any party may at any time change its address
for service from time to time by giving notice to the other parties in accordance with this
Section 6.1
.
6.2
Investor
Acknowledgement
The Investor acknowledges that Company may request
that Investor provide certain information to the Company. Such information is being collected by the Company for the purposes of completing
the Offering, which includes, without limitation, determining the Investor’s eligibility to purchase the Securities under Applicable
Canadian Securities Legislation, preparing and registering certificates representing the Securities to be issued to the Investor and
completing filings required by any stock exchange or securities regulatory authority. The Investor’s information will be included
in closing books prepared in connection with the Offering and may be disclosed by the Company to: (i) stock exchanges and/or securities
regulatory authorities (including the Ontario Securities Commission and the British Columbia Securities Commission (“
BCSC
”));
(ii) the Company’s registrar and transfer agent; (iii) Canadian tax authorities; (iv) any of the other parties involved
in the Offering, including legal counsel; and (v) other parties subsequent to the Offering, including legal counsel, reviewing closing
books prepared in connection with the Offering. By executing this Agreement, the Investor:
(a)
consents to the foregoing collection of
Investor’s information only to the extent any requested documents would otherwise be
subject to disclosure under the Freedom of Information Act, 5. U.S.C. § 552 (FOIA),
(b)
consents to the filing of copies or originals
of any of the Investor’s documents delivered in connection with this Agreement as may
be required to be filed with any stock exchange or securities regulatory authority in connection
with the transactions contemplated hereby and expressly consents to the collection, use and
disclosure of the Investor’s information by the Exchanges for the purposes identified
by such exchange, from time to time; and
33
(c)
acknowledges that it has been notified
by the Company that any Investor information delivered in connection with this Agreement
that is required under Form 45-106F1 (i) will be delivered by the Company to the
securities regulatory authority or regulator in the local jurisdiction(s), (ii) is being
collected on behalf of and used by the securities regulatory authority or regulator under
the authority granted in securities legislation for the purposes of the administration and
enforcement of such securities legislation, (iii) will not be placed on the public file
of any securities regulatory authority or regulator and (iv) may be made available if
freedom of information legislation so requires the securities regulatory authority or regulator
to make this information available if requested. The Investor further acknowledge that it
has been informed by the Company that, if the Investor has any questions about the collection
and use of this information, it may contact the securities regulatory authority or regulator
in the local jurisdiction(s) where the report is filed, at the address(es) listed at
the end of Form 45-106F1. The address for the BCSC is:
P.O. Box 10142, Pacific Centre
701 West Georgia Street
Vancouver, British Columbia V7Y 1L2
1-604-899-6854
1-800-373-6393
6.3
Expenses
Subject to the obligations of Ambler Metals to
the Investor pursuant to the Cooperation Agreement, the Company will pay for the Investor’s reasonable and documented internal
and external costs and expenses incurred in connection with the negotiation and consummation of the transactions contemplated herein.
The Company shall pay for its own internal and external costs and expenses incurred in connection with the Transactions.
6.4
Further
Assurances
Each of the parties hereto shall, from time to
time hereafter and upon any reasonable request of the other, promptly do, execute, deliver or cause to be done, executed and delivered
all further acts, documents and things as may be required or necessary for the purposes of giving effect to this Agreement.
6.5
Amendments
No amendment or waiver of any provision of this
Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
6.6
Assignment
No party may assign any of its rights or benefits
under this Agreement, or delegate any of its duties or obligations, except with the prior written consent of the other parties.
6.7
Successors
and Assigns
This Agreement shall inure to the benefit of
and shall be binding on and enforceable by and against the parties and their respective successors or heirs, executors, administrators
and other legal personal representatives, and permitted assigns.
34
6.8
No
Partnership
Nothing in this Agreement or in the relationship
of the parties hereto shall be construed as in any sense creating a partnership among the parties or as giving to any party any of the
rights or subjecting any party to any of the creditors of the other parties.
6.9
Counterparts
This Agreement and all documents contemplated
by or delivered under or in connection with this Agreement may be executed and delivered in any number of counterparts (whether by facsimile,
email, DocuSign or other electronic means), with the same effect as if all parties had signed and delivered the same document, and all
counterparts shall be construed together to be an original and will constitute one and the same agreement.
[The remainder of this page has been intentionally
left blank.]
35
IN WITNESS WHEREOF this Agreement has
been executed by the parties.
TRILOGY
METALS INC.
By:
/s/
Tony Giardini
Name:
Tony
Giardini
Title:
President and Chief Executive
Officer
UNITED
STATES DEPARTMENT OF DEFENSE
By:
/s/
Michael P. Duffey
Name:
Hon. Michael P. Duffey
Title:
Under
Secretary of War for
Acquisition and Sustainment
[
Signature Page to Investment
Agreement
]
SCHEDULE A
REGISTRATION AND DELIVERY INSTRUCTIONS
1.
Delivery
:
Please deliver the certificates representing the Securities to:
Name
Account reference, if applicable
Contact name
Address, including postal
or zip code
Telephone number
2.
Registration
: The
certificates representing the Securities which are to be delivered at Closing should be registered as follows:
Name
Account reference, if applicable
Address, including postal
or zip code
Words and terms
herein with the initial letter or letters thereof capitalized and defined in the Investment Agreement shall have the meanings given
to such capitalized words and terms in the Investment Agreement.
SCHEDULE B
INVESTOR INFORMATION
Investor’s Present
Holdings
:
The Investor represents that securities
of the Company presently owned (beneficially, directly or indirectly) by the Investor or over which the Investor exercises control
or direction, are as follows
(please indicate “nil” if you do not currently own or control any securities of the
Company)
:
Type
of Securities Presently Owned
Number
or Amount
The
Investor represents that the Investor is
¨
or
is not
¨
(check one) an
insider
of the Company (as defined below).
The
Investor represents that the Investor is
¨
or
is not
¨
(check one) a
promoter
of the Company (as defined below).
The
Investor represents that the Investor is
¨
or
is not
¨
(check one) a
registrant
(as defined below).
“
insider
” means: (a) a
director or an officer of an issuer; (b) a director or an officer of a person that is itself an insider or a subsidiary of an issuer;
(c) a person that has (i) beneficial ownership of, or control or direction over, directly or indirectly, or (ii) a combination
of beneficial ownership of, and control or direction over, directly or indirectly, securities of an issuer carrying more than 10% of
the voting rights attached to all the issuer’s outstanding voting securities, excluding, for the purpose of the calculation of
the percentage held, any securities held by the person as underwriter in the course of a distribution; (d) an issuer that has purchased,
redeemed or otherwise acquired a security of its own issue, for so long as it continues to hold that security; (e) a person designated
as an insider in an order made under the
Securities Act
(British Columbia); or (f) a person that is in a prescribed class
of persons;
“
promoter
” means a person
who (a) acting alone or in concert with one or more other persons, directly or indirectly, takes the initiative in founding, organizing
or substantially reorganizing the business of the issuer, or (b) in connection with the founding, organization or substantial reorganization
of the business of the issuer, directly or indirectly receives, in consideration of services or property or both, 10% or more of a class
of the issuer’s own securities or 10% or more of the proceeds from the sale of a class of the issuer’s own securities of
a particular issue, but does not include a person who (c) receives securities or proceeds referred to in paragraph (b) solely
(i) as underwriting commissions, or (ii) in consideration for property, and (d) does not otherwise take part in founding,
organizing or substantially reorganizing the business; and
“
registrant
” means a person
registered or required to be registered under the
Securities Act
(British Columbia).
SCHEDULE C - FORM OF INVESTOR PARTICIPATION
RIGHTS AGREEMENT
SCHEDULE D - FORM OF REGISTRATION RIGHTS
AGREEMENT
SCHEDULE E - FORM OF WARRANT CERTIFICATE

----- tm2624736d1_ex10-2.htm -----
EX-10.2
3
tm2624736d1_ex10-2.htm
EXHIBIT 10.2
Exhibit 10.2
Execution Version
COOPERATION AGREEMENT
among
THE UNITED STATES DEPARTMENT OF DEFENSE (also
referred to herein as “Department of War” or “Investor”)
- and -
NOVACOPPER US INC., dba TRILOGY METALS US (“Trilogy
US”)
- and -
SOUTH32
USA Exploration Inc.
(“South32 USA Exploration”)
- and -
AMBLER METALS LLC (“Ambler Metals”)
AUGUST 28, 2026
WHEREAS
South32 USA Exploration is an affiliate
of South32 Limited;
AND WHEREAS
Trilogy US is a wholly-owned
subsidiary of Trilogy Metals Inc. (“
Trilogy Metals
”);
AND WHEREAS
South32 USA Exploration and
Trilogy US are equal owners of Ambler Metals;
AND WHEREAS
this cooperation agreement
(the “
Agreement
”) sets out certain understandings and agreements among the parties hereto in connection with the Transactions
(as defined below).
Each of the parties hereto is referred to herein
individually as a “
Party
” and together as the “
Parties
”.
1.
Definitions
For the purpose of this Agreement the following
words and phrases will have the following meanings:
“
AAP Completion Date
”
means the earlier to occur of (i) the completion of Phase 1 of the Ambler Access Project in accordance with the Joint Record of Decision
or such other federal permit(s) in place for the Ambler Access Project at the applicable time, as determined by the Engineering Firm
or AIDEA, and (ii) the use by Ambler Metals or its Affiliate of the Ambler Access Project by at least ten (10) trucks within
any ten (10) day period transporting ore concentrate or concentrate;
“
Additional Improvements Completion
Date
” means completion of both (i) Phase 1 of the Ambler Access Project in accordance with the Joint Record of Decision
or such other federal permit(s) in place for the Ambler Access Project at the applicable time, and (ii) any additional improvements
to Phase 1 as reasonably necessary, including a full-thickness embankment and road widening, to allow the Ambler Access Project to be
used on an all-season basis by trucks capable of transporting ore concentrate with sufficient passing zones to enable overall two-way
traffic, in each case, as determined by the Engineering Firm or AIDEA;
“
Affiliate
” has the
meaning ascribed to that term in the Trilogy Investment Agreement;
“
AIDEA
” means the
Alaska Industrial Development and Export Authority;
“
Ambler Access Project
”
means the proposed 211-mile industrial road from the Dalton Highway to Alaska’s remote Ambler Mining District, a region with significant
deposits of critical minerals, being developed by the AIDEA;
“
Applicable Canadian Securities
Legislation
” means all applicable securities laws of each of the Reporting Jurisdictions and the respective rules and regulations
under such laws together with applicable published fee schedules, prescribed forms, policy statements, national or multilateral instruments,
orders, blanket rulings and other applicable regulatory instruments of the securities regulatory authorities in any of the Reporting Jurisdictions;
“
Applicable Law
”
means, at any time, with respect to any Person, property, transaction, event or other matter, as applicable, all laws, rules, statutes,
regulations, treaties, orders, judgments and decrees, and all official requests, directives, rules, guidelines, orders, policies, practices
and other requirements of any Governmental Authority relating or applicable at such time to such Person, property, transaction, event
or other matter, and also includes any interpretation thereof by any Person having jurisdiction over it or charged with its administration
or interpretation;
“
Business Day
” means
any day other than (i) Saturday, Sunday or a statutory holiday when banks are not open in New York, New York or Vancouver, British
Columbia, or (ii) a statutory holiday when banks are not open in Perth, Australia;
“Closing Date”
means
the date of the closing of the transactions contemplated by the Trilogy Investment Agreement and the South32 Transaction Agreement.
“
Control
” (including
its correlative meanings “Controlled by” and “under common Control with”) has the meaning ascribed to that term
in the Trilogy Investment Agreement;
“
Disclosure Schedules
”
means the Disclosure Schedules delivered by Ambler Metals concurrently with the execution and delivery of this Agreement;
“
EAR
” means the Export
Administration Regulations (15 C.F.R. Parts 730–774), as administered by the U.S. Department of Commerce's Bureau of Industry and
Security, as the same may be amended, re-enacted or replaced from time to time.
“
Effective Date
”
means the Closing Date;
“
Engineering Firm
”
means the lead engineering firm for the construction of Phase 1 of the Ambler Access Project, or if such engineering firm is not willing
or able to determine the completion of the Ambler Access Project, an engineering firm mutually acceptable to Ambler Metals and the Investor;
“
Governmental Authority
”
means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction
of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental
or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental
division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and
any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining
to government and any executive official thereof;
“
Investor Expenses
”
means the reasonable and documented (i) third-party fees and expenses incurred by the Investor in connection with the consultants
and advisors engaged by the Investor to conduct legal, tax, corporate, technical, environmental and other due diligence, and (ii) legal
fees incurred by the Investor in connection with the transactions described herein and in the Trilogy Investment Agreement and the South32
Transaction Agreement;
“ITAR”
means the
International Traffic in Arms Regulations (22 C.F.R. Parts 120–130), as administered by the U.S. Department of State's Directorate
of Defense Trade Controls, as the same may be amended, re-enacted or replaced from time to time;
“LLC Agreement”
means
the Amended and Restated Limited Liability Company Agreement, dated February 11, 2020, among South32 USA Exploration Inc., NovaCopper
US Inc. and Ambler Metals;
“
Losses
” means any
and all actual losses, damages, liabilities, claims, actions, judgments, settlements, interest, awards, penalties, fines, costs or expenses
(including reasonable, documented and out-of-pocket attorneys’ fees and disbursements), but excluding any consequential, indirect,
special, exemplary or punitive damages, lost profits, diminution in value or damages calculated by reference to any multiple of earnings
or similar financial measure;
“
South32 Purchase Price
”
means the aggregate purchase price paid by the Investor to South32 International Investment Holdings Pty Ltd. pursuant to the South32
Transaction Agreement;
“
Material Adverse Effect
”
shall mean any of: (i) a material adverse effect on the legality, validity or enforceability of this Agreement, (ii) a material
adverse effect on the results of operations, assets, business, prospects or condition (financial or otherwise) of Ambler Metals or (iii) a
material adverse effect on Ambler Metals’ ability to perform in any material respect on a timely basis its obligations under the
Agreement;
“
Material Permits
”
means such permits, instruments and other authorizations issued by, and all declarations and filings that have been made with, the appropriate
federal, state, or local governmental or regulatory authorities that are necessary to conduct Ambler Metals’ business and activity
as currently conducted, including for the exploration of minerals, except where the failure to possess such permits, instruments or authorizations
could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect;
“
Mining Rights Exceptions
”
shall mean (i) liens for taxes not yet payable or are being contested in good faith by appropriate proceedings, (ii) all rights
reserved to, or vested in, any Governmental Authority by the terms of any mining claim, lease, license, franchise, grant or permit held
by it, or by any statutory provision, (iii) easements, rights-of-way, roads, covenants, restrictions that do not materially detract
from the value of, or impair the use of, any of the Material Properties, (iv) conflicts among the unpatented mining claims included
in the Material Properties and unpatented mining claims owned by any other person, and overlaps onto patented mining claims, fee lands
and other lands withdrawn from mineral entry under the Mining Law of 1872, as amended, (v) with respect to any unpatented mining
claims included in the Material Properties, the paramount title of the United States, the rights of citizens of the United States and
other qualified persons to enter onto and use the public lands, and the authority and right of the United States to administer and manage
entry onto and use of the public lands;
“
Person
” means any
individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, or corporation with or without share capital,
body corporate, unincorporated association, trust, trustee, executor, administrator or other legal personal representative, government
or Governmental Authority or entity, however designated or constituted;
“
Proceeding
” means
any action, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation, arbitration, mediation, hearing, inquiry, investigation,
legal or administrative proceeding or other similar event, occurrence or proceeding;
“
Project
” means the
Upper Kobuk Mineral Projects located in the Ambler Mining District in Northwest Alaska, United States;
“
Registration Rights Agreement
”
means the registration rights agreement dated of even date herewith between Trilogy Metals and the Investor;
“
Reporting Jurisdictions
”
means all of the jurisdictions in Canada in which Trilogy Metals is a “reporting issuer”;
“
Restricted Entity
”
has the meaning ascribed to that term in the Trilogy Investment Agreement;
“
Solvent
” means,
with respect to a particular date, that on such date (i) the present fair market value (or present fair saleable value) of the assets
of Ambler Metals is not less than the total amount required to pay the liabilities of Ambler Metals on its total existing debts and liabilities
(including contingent liabilities) as they become absolute and matured; (ii) Ambler Metals is able to realize upon its assets and
pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business;
(iii) Ambler Metals is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature; and (iv) Ambler
Metals is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property
would constitute unreasonably small capital;
“
Transactions
” means
the transactions contemplated by this Agreement, the Trilogy Investment Agreement, the South32 Transaction Agreement, the Registration
Rights Agreement and the Warrants;
“
Trilogy Investment Agreement
”
means the investment agreement between Trilogy Metals and the Investor dated of even date herewith;
“
Trilogy US Purchase Price
”
means the aggregate purchase price paid by the Investor to Trilogy Metals pursuant to the Trilogy Investment Agreement;
“
South32 Transaction Agreement
”
means the transaction agreement between South32 International Investment Holdings Pty Ltd. and the Investor dated of even date herewith;
“
Upper Kobuk Mineral Projects
”
are comprised of (i) the Arctic Project, which contains a high-grade polymetallic volcanogenic massive sulfide deposit; (ii) the
Bornite Project, which contains a carbonate-hosted copper deposit, and (iii) other projects within the Area of Interest as set forth
in the LLC Agreement; and
“
Warrants
” shall
mean the warrants issued to Investor pursuant to the Trilogy Investment Agreement.
2.
Framework Agreement
The Parties will discuss in good faith the establishment
of a framework agreement among Ambler Metals, South32 USA Exploration, Trilogy US, the United States Government and other interested parties,
as applicable, to establish the basis on which the Ambler Access Project can be permitted, financed and constructed—unlocking the
development of the Project and any other mineral projects identified through Ambler Metals’ exploration efforts.
3.
AAP Financing
Investor will work in good faith to help facilitate
financing required for the construction of the Ambler Access Project in coordination with the State of Alaska.
4.
Shares
All references to the number of shares in this
Agreement shall be appropriately adjusted to reflect any stock split, stock dividend or other change in the shares which may be made by
Trilogy Metals after the date of this Agreement.
5.
Costs and Expenses
(a)            To
the extent permissible under Applicable Law, Ambler Metals shall pay the Investor Expenses as directed by the Investor by way of certified
cheque or wire transfer in favor of the Investor, or as otherwise directed, within five (5) Business Days following receipt of an
invoice of the Investor Expenses actually incurred by the Investor.
(b)            Subject
to the foregoing, each Party will pay for its own internal and external costs and expenses incurred in connection with the negotiation
and consummation of the transactions contemplated herein and in the Trilogy Investment Agreement and the South32 Transaction Agreement.
6.
Termination
This Agreement shall terminate upon the mutual
agreement of the Parties to terminate this Agreement.
The obligations of the Parties pursuant to Section 5
(Costs and Expenses), Section 22 (Indemnification) and Section 23 (Restricted Entity Event), and the representations and warranties
made in Schedules A, B and C, shall survive the termination of this Agreement.
7.
Notice of AAP Completion Date and Additional Improvements Completion Date
Ambler Metals hereby covenants that it shall provide
prompt written notice to the Investor upon the occurrence of each of the AAP Completion Date and the Additional Improvements Completion
Date. Ambler Metals shall use commercially reasonable efforts to obtain a written undertaking from AIDEA and/or the Engineering Firm to
provide prompt written notice directly to the Investor upon the occurrence of each such date.
8.
Governance and Security Covenants
(a)
Ambler
Metals Observer Right.
For so long as the Investor beneficially owns at least 8,000,000 common shares of Trilogy Metals, (subject
to appropriate adjustment for any share splits, share consolidations, combinations, recapitalizations or other similar events) the Investor
shall be entitled to designate one representative (who may change from time to time upon thirty (30) days’ written notice to Ambler
Metals) as an observer (the “
Board Observer
”) to attend all meetings of the board of directors, board of managers,
management committee or similar governing body of Ambler Metals (the “
Ambler Metals Board
”) and any technical, audit,
reserves, compliance or similar committee of Ambler Metals. Such Board Observer shall have the right to receive notice of, and review
the same information and materials as are provided to the members of the Ambler Metals Board (“
Board Materials
”) for,
such meetings and to speak at such meetings, but shall not be entitled to vote. For the avoidance of doubt, the Board Observer may be
a different individual than the Special Representative (as defined in Section 24(c)(iv)), and the Board Observer’s rights under
this Section 8(a) are separate from and independent of any rights of the Special Representative under Section 24. Ambler
Metals may exclude such Board Observer from access to any Board Materials or from any meeting of the Ambler Metals Board (or any portion
of such meeting) if the Ambler Metals Board concludes that: (i) such exclusion is necessary to preserve the solicitor-client or litigation
privilege between Ambler Metals and/or its Affiliates and their respective counsel (provided that any such exclusion shall only apply
to such portion of such Board Materials or meeting which would be required to preserve such privilege); (ii) such Board Materials
or discussion relates to Ambler Metals’ or its Affiliates’ relationship, contractual or otherwise, with the Investor or its
Affiliates or any actual or potential transactions between or involving Ambler Metals or its Affiliates and the Investor or its Affiliates;
(iii) such exclusion is necessary to avoid a conflict of interest or disclosure that is restricted by any agreement to which Ambler
Metals or any of its Affiliates is a party or otherwise bound; or (iv) such exclusion is necessary to comply with Applicable Laws;
provided, however, that the Board Observer shall not be excluded under clause (i) from any discussions, executive sessions, or portions
of meetings concerning (A) the permitting status of or litigation regarding the Ambler Access Project, (B) audits or assessments
of Ambler Metals’ mineral resources or reserves, or (C) Ambler Metals’ financial statements or internal controls, unless
outside legal counsel provides a written opinion or otherwise advises that the Board Observer’s presence would waive the attorney-client
privilege with respect to a specific and active legal claim asserted directly by or against the United States government or the United
States Department of Defense.
(b)
Ambler
Metals Governance Designees; Bad Actors
. Each of Trilogy US and South32 USA Exploration covenants and agrees that it shall not designate,
appoint or cause to be appointed to any board of directors, board of managers, management committee or similar governing body of Ambler
Metals, or any technical, audit, reserves, compliance or similar committee of Ambler Metals, any individual who is subject to a “Bad
Actor” disqualification as defined under Rule 506(d) of the U.S. Securities Act, or who is formally indicted, convicted,
or subject to a final, non-appealable order or sanction by the Commission or a court of competent jurisdiction for securities fraud, intentional
financial misstatement or gross breach of fiduciary duty. Each of Trilogy US and South32 USA Exploration shall promptly remove, or cause
to be removed, any such designee or appointee from such governing body or committee and shall provide the Investor with written notice
within forty-eight (48) hours after becoming aware of any such indictment, conviction, order or sanction against any such designee or
appointee. Trilogy US shall cause Trilogy Metals not to nominate or renominate any individual for election to the board of directors of
Trilogy Metals, or appoint or continue any individual as an officer of Trilogy Metals, if such individual is subject to any such disqualification,
indictment, conviction, order or sanction, and shall cause Trilogy Metals to promptly remove any officer who becomes subject to any such
disqualification, indictment, conviction, order or sanction and provide the Investor with written notice within forty-eight (48) hours
after becoming aware thereof.
(c)
USG-Approved
Security Plan.
Within ninety (90) days of the Effective Date, Ambler Metals shall develop, implement and maintain a comprehensive
security plan (the “Security Plan”) designed to control access to all sensitive intellectual property, technology and technical
data related to Ambler Metals and the Project. The Security Plan shall be submitted to the Investor for written approval. The Security
Plan shall require periodic, and in any event no less than annual, formal reviews of (i) key suppliers and commercial partners, (ii) export
control compliance protocols, including ITAR and EAR, as applicable, and (iii) the beneficial ownership of Ambler Metals and its
joint venture parents.
(d)
Reporting
of Foreign Investment
. Ambler Metals, Trilogy US and South32 USA Exploration, as applicable, shall provide written notice to the Investor
within five (5) Business Days after becoming aware of any new direct or Indirect investment, whether debt, equity or convertible
securities, in Ambler Metals, Trilogy US and South32 USA Exploration made by (i) any foreign firm, foreign government or foreign
national, or (ii) any United States-based firm that is directly or indirectly owned or controlled by a foreign entity or foreign
national. Trilogy US and South32 USA Exploration, as applicable, shall provide written notice to the Investor within five (5) Business
Days after becoming aware of any direct or Indirect debt investment in Trilogy US and South32 USA Exploration, as applicable, in excess
of $25 million made by (i) any foreign firm, foreign government or foreign national, or (ii) any United States-based firm that
is directly or indirectly owned or controlled by a foreign entity or foreign national; provided that no such notice need be made if such
debt investment is made by the direct or indirect subsidiary of Trilogy Metals or South32 Limited, as applicable, and such loan does not
contain terms that alter control of Trilogy US or South32 USA, as applicable. For purposes of this Section 8(d), “Indirect”
refers to a direct transaction with Ambler Metals, Trilogy US or South32 USA Exploration where Ambler Metals, Trilogy US or South32 USA
Exploration knows, after reasonable inquiry, that the counterparty is (i) a foreign firm, foreign government or foreign national,
or (ii) a United States-based firm that is directly or indirectly owned or controlled by a foreign entity or foreign national.
(e)
Compliance
Committee and Oversight.
Ambler Metals shall establish a dedicated compliance committee within sixty (60) days after the Effective
Date. The compliance committee shall be chaired by a vetted, USG-approved compliance officer who possesses the appropriate security clearance
and credentials acceptable to the Investor and shall be responsible for overseeing implementation of the Security Plan and ensuring adherence
to the security, foreign investment reporting and technical security provisions of this Agreement. Ambler Metals shall deliver to the
Investor a comprehensive annual compliance report detailing its adherence to such provisions.
(f)
IT
and Technical Security Measures.
Ambler Metals shall deploy and strictly enforce cybersecurity procedures designed to mitigate business
email compromise, phishing and spoofing risks, including implementation and maintenance of (i) DomainKeys Identified Mail (DKIM)
utilizing 2048-bit key strength for all outbound and third-party sending services and (ii) a Domain-based Message Authentication,
Reporting and Conformance (DMARC) enforcement policy of “reject” (p=reject) or “quarantine” (p=quarantine), or
any successor or equivalent industry-standard controls approved in writing by the Investor.
9.
Information and Audit Rights
(a)            For
so long as the Investor beneficially owns at least 4,107,785 Trilogy Metals Common Shares (subject to appropriate adjustment for any share
split, share consolidation, stock dividend, combination, recapitalization or other similar event), Ambler Metals shall provide to the
Investor copies of the unaudited and unreviewed quarterly and audited annual financial statements for Ambler Metals;
(b)            Ambler
Metals shall permit a representative of the Investor, at the expense of Ambler Metals, to visit the principal executive offices of Ambler
Metals during normal business hours, to discuss the affairs, finances and accounts of Ambler Metals with its officers, and its independent
public accountants, all at such reasonable times and as often as may be reasonably requested in writing; and
(c)            Ambler
Metals shall allow the Investor access to examine all Ambler Metals’ respective books of account, records, reports and other papers,
to make copies and extracts therefrom, and to discuss their respective affairs, finances and accounts with their respective officers and
independent public accountants, all at such reasonable times and as often as may be reasonably requested in writing.
10.
Governing Law and Jurisdiction
(a)            This
Agreement shall be governed in all respects by the United States Federal Law, without giving effect to the conflict-of-laws rules thereof
to the extent such rules would require or permit the application of the Applicable Laws of another jurisdiction. To the extent that
United States Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention
and agreement of the Parties that the Applicable Laws of the State of New York (without giving effect to its conflict-of-laws rules) shall
be adopted as the governing rule of decision; provided, that notwithstanding the foregoing, (i) the procedures and matters necessary
for the Transactions and actually required by reason of Trilogy Metals being incorporated under the Applicable Laws of Canada, including
but not limited to the procedural requirements for the issuance of the Securities (as defined in the Trilogy Investment Agreement) and
the actions of the board of directors of Trilogy Metals, shall be governed by the Applicable Laws of Canada, and (ii) certain mandatory
provisions in respect of the Applicable Canadian Securities Legislation shall apply irrespective of the governing law as provided in this
Agreement.
(b)            Trilogy
US, South32 USA Exploration, and Ambler Metals each agree to submit to the exclusive jurisdiction and venue of the federal courts of the
Southern District of New York (and its appellate courts) for any and all civil actions, suits or proceedings arising out of or relating
to this Agreement, all documents contemplated by or delivered under or in connection with this Agreement or the transactions contemplated
hereby or thereby.
(c)            Investor,
to the maximum extent permitted by law, irrevocably agrees to submit itself, for any claim arising from, related to, or in connection
with this Agreement, to the jurisdiction of (i) the U.S. Court of Federal Claims (ii) any other Federal court or tribunal of
competent jurisdiction; and (iii) appellate courts from any of the foregoing.
(d)            Each
Party hereby irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way
of motion or as a defense, counterclaim or otherwise, (i) any objection which it may now or hereafter have to the laying of venue
of any Proceeding arising out of or relating to this Agreement or the transactions contemplated hereby, (ii) any claim that it is
not personally subject to the jurisdiction of the above-mentioned courts for any reason, and (iii) any claim that any Proceeding
brought in the above-mentioned courts has been brought in an inconvenient forum or that the venue is improper. Each Party hereto further
irrevocably consents to service of process in the manner provided for notices in
Section 10
. Nothing in this Agreement will
affect the right of any party hereto to serve process in any other manner permitted by any Applicable Law.
(e)            THE
PARTIES EACH HEREBY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION (A) ARISING UNDER THIS AGREEMENT OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES
IN RESPECT OF THIS AGREEMENT OR ANY OF THE TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND
WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE. THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY
OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
11.
Notices
(a)            Any
notice or other communication that is required or permitted to be given hereunder shall be in writing and shall be validly given:
if to Investor:
United States Department of Defense
The Office of Industrial Base Policy
Assistant Secretary of Defense
Pentagon, Washington, DC 20301
Attention: Deputy Chief of Staff to the Deputy Secretary of Defense
E-mail: [redacted]
with a simultaneous copy (which will not constitute notice) to:
McDermott Will & Schulte LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067-3206
Attention: Edward Zaelke
Email: [redacted]
if to South32:
South32 International Investment Holdings Pty. Ltd.
Level 2, 100 St Georges Terrace
Perth WA 6000, Australia
Attention: Simon Collins, Chief Development Officer
E-mail: [redacted]
with a simultaneous copy (which will not constitute notice) to:
Vinson & Elkins L.L.P.
845 Texas Avenue, Suite 4700, Houston, TX 77002
Attention: Alan J. Alexander
E-mail: [redacted]
Address: 1114 Avenue of the Americas, 32nd Floor, New York, NY 10036
Attention: Benjamin Heriaud
E-mail:
[redacted]
If to Trilogy US:
c/o Trilogy Metals Inc.
510 Burrard Street, Suite 901
Vancouver, British Columbia V6C 3A8
Attention: Elaine Sanders
Email:  [redacted]
If to Ambler Metals:
Ambler Metals LLC
2550 Denali Street, Suite 1605
Anchorage, AK 99503
Attention: Ron Rimelman
Email:  [redacted]
For notices to Trilogy US or Ambler Metals,
with a simultaneous copy (which will not constitute notice) to:
Dorsey &Whitney LLP
701 Fifth Avenue. Suite 6100
Seattle, WA 98104
Attention: Kimberley Anderson
E-mail: [redacted]
(b)            Any
such notice or other communication shall be deemed to have been given and received (i) when personally delivered, or delivered by
same-day courier; or (ii) on the fourth business day after mailing by registered or certified mail, postage prepaid, return receipt
requested; or (iii) upon delivery when sent by nationally recognized prepaid overnight express delivery service (e.g., FedEx, UPS);
or (iv) when sent by email or facsimile and upon the receipt by the sending party of written confirmation by the receiving party;
provided, however, that an automated facsimile or email confirmation of delivery or read receipt shall not constitute such confirmation.
(c)            Any
party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this
Section 10
.
12.
Assignment
No party may assign any of its rights or benefits
under this Agreement, or delegate any of its duties or obligations, except with the prior written consent of the other parties.
13.
Entire Agreement
This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions,
whether written or oral. There are no conditions, covenants, agreements, representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except as provided herein.
14.
Specific Performance
Each of Trilogy US, South32 USA Exploration and
Ambler Metals acknowledges that the rights of the Investor to consummate the Transactions are unique and recognizes and affirms that in
the event of a breach of this Agreement by any such Party, money damages are inadequate and the Investor would have no adequate remedy
at law. It is accordingly agreed that the Investor shall be entitled to (and none of Trilogy US, South32 USA Exploration or Ambler Metals
shall oppose on the basis that injunctive relief or specific performance is not available due to availability of an adequate remedy at
law) an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement,
without the necessity of showing any actual damages or that monetary damages would not afford an adequate remedy, and without the necessity
of posting any bond or other security, this being in addition to any other remedy to which it is entitled at law or in equity.
15.
Remedies
Except as otherwise provided herein, no remedy
herein conferred or reserved is intended to be exclusive of any other available remedy or remedies, and each and every remedy shall be
cumulative and shall be in addition to every remedy under this Agreement or now or hereafter existing at law or in equity.
16.
Amendments
No amendment or waiver of any provision of this
Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
17.
Severability
If any provision of this Agreement is determined
by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, all other provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby are not
affected in any manner materially adverse to any party hereto. Upon such determination that any term or other provision is invalid, illegal
or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties hereto as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled
to the extent possible.
18.
Ambler Metals Representations and Warranties
Ambler Metals hereby represents and warrants to
the Investor the representations and warranties on its own behalf as specified in Schedule “A” to this Agreement.
19.
Representations and Warranties
(a)            Each
of Trilogy US, South32 USA Exploration and Ambler Metals represents and warrants to the other Parties, as of the date hereof and as of
the Closing Date, that the execution and delivery of this Agreement and any other agreements, documents and instruments to be executed
and delivered by such Party in connection with the transaction contemplated hereby have been approved by all necessary corporate and other
action and that this Agreement constitutes a legal, valid and binding obligation of such Party, enforceable against such Party in accordance
with its terms, subject to the usual exceptions as to bankruptcy and equitable remedies.
(b)            Trilogy
US hereby represents and warrants to the Investor, as of the date hereof and as of the Closing Date, the representations and warranties
on its own behalf as specified in Schedule “B” to this Agreement.
(c)            South32
USA Exploration hereby represents and warrants to the Investor, as of the date hereof and as of the Closing Date, the representations
and warranties on its own behalf as specified in Schedule “C” to this Agreement.
20.
Successors and Assigns
This Agreement shall inure to the benefit of and shall be binding on
and enforceable by and against the parties and their respective successors or heirs, executors, administrators and other legal personal
representatives, and permitted assigns.
21.
No Partnership.
Nothing in this Agreement or in the relationship
of the parties hereto shall be construed as in any sense creating a partnership among the parties or as giving to any party any of the
rights or subjecting any party to any of the creditors of the other parties.
22.
Counterparts
This Agreement and all documents contemplated
by or delivered under or in connection with this Agreement may be executed and delivered in any number of counterparts (whether by facsimile,
email, DocuSign or other electronic means), with the same effect as if all parties had signed and delivered the same document, and all
counterparts shall be construed together to be an original and will constitute one and the same agreement.
23.
Indemnification
(a)            Each
of Trilogy US, South32 USA Exploration and Ambler Metals shall indemnify, defend and hold harmless the Investor, its Affiliates and each
of their respective officers, directors, employees, agents and representatives from and against any Losses arising out of or resulting
from any breach by such Party of any representation, warranty, covenant or agreement of such Party contained in this Agreement (including
the applicable Schedule to this Agreement).
(b)            The
indemnification obligations of Trilogy US, South32 USA Exploration and Ambler Metals under this Section shall be several and not
joint.
(c)            Ambler
Metals shall indemnify, defend and hold harmless each of Trilogy US and South32 USA Exploration from and against any Losses arising out
of or resulting from any breach by such Party of any representation, warranty, covenant or agreement contained in the applicable Schedule
to this Agreement, but only to the extent that (i) such representation, warranty, covenant or agreement was given or made based upon
information, documentation or due diligence provided by or through Ambler Metals, and (ii) such breach did not result from the gross
negligence or willful misconduct of such Party in giving such representation, warranty, covenant or agreement.
(d)            Notwithstanding
anything to the contrary contained in this Agreement, the aggregate liability of South32 USA Exploration under this Section 23 shall
not exceed the South32 Purchase Price and the aggregate liability of Trilogy US under this Section 23 and the Trilogy Investment
Agreement shall not exceed the Trilogy US Purchase Price.
24.
Restricted Entity Event
For so long as (i) the Investor
beneficially owns twenty-five percent (25%) of the common shares (or common share equivalents) of Trilogy Metals initially acquired pursuant
to the Trilogy Investment Agreement and (ii) Trilogy US or South32 USA Exploration, as applicable (and, for the avoidance of doubt,
if either such Party no longer meets this clause (ii), this
Section 23
shall not apply to such Party or its Affiliates) beneficially
owns at least twenty-five percent (25%) or more of the voting and/or economic ownership interests of Ambler Metals:
(a)
Notice
and Monitoring; Public Company Acknowledgment.
(i)
Each of Trilogy US and South32 USA Exploration shall reasonably promptly, and in any event within seven
(7) Business Days after becoming aware thereof, provide written notice to the Investor of any (A) acquisition, purchase, transfer
or other disposition of shares of the capital stock (or other securities convertible into or exercisable for such capital stock) of, in
the case of Trilogy US, Trilogy Metals, and in the case of South32 USA Exploration, South32 Limited, by any one or more Restricted Entities
if, as a result of such transaction or series of related transactions, any such Restricted Entity (or Restricted Entities in the aggregate
in accordance with
Section 23(e)
) beneficially owns five percent (5%) or more of the outstanding voting securities of Trilogy
Metals or South32 Limited, as applicable, or (B) event in which any such Restricted Entity (1) acquires the right to appoint
a board member to the board of directors of Trilogy Metals or South32 Limited, as applicable, or (2) acquires material commercial
rights pursuant to an offtake or other similar agreement with Ambler Metals for ore or ore concentrate produced from the Project (each
of clauses (A) and (B), a “
Restricted Entity Event
”).
(ii)
With respect to the foregoing, and subject to (e) below, (A) Trilogy US shall review and monitor
substantial holding notice filings under Applicable Laws of the jurisdictions where Trilogy Metals maintains an exchange listing, and
(B) South32 USA Exploration shall review and monitor substantial holding notice filings under Applicable Laws of the jurisdictions
where South32 Limited maintains an exchange listing, in each case to reasonably identify whether the acquiring Person or group is a Restricted
Entity.
(iii)
Upon Trilogy Metals or South32 Limited becoming aware of a Restricted Entity Event, Trilogy US or South32
USA Exploration, respectively, shall promptly notify the Investor within ten (10) Business Days in accordance with the foregoing
clause (i).
(b)
Covenants.
Trilogy US, South32 USA Exploration and Ambler Metals shall not agree to and/or enter into, and shall revise the organizational documents
of Ambler Metals to prohibit, without the prior written consent of the Investor: (i) any direct or Indirect investment (including
the sale of any equity securities or debt securities) in Ambler Metals, Trilogy US or South32 USA Exploration from a Restricted Entity
or (ii) any direct or Indirect sale or transfer of material assets or any products that Ambler Metals produces to any Restricted
Entity (including a covenant from any purchaser of assets or products to not resell to a Restricted Entity). For purposes of this Section 23(b),
“Indirect” refers to a direct transaction with Ambler Metals, Trilogy US or South32 USA Exploration where Ambler Metals, Trilogy
US or South32 USA Exploration knows, after reasonable inquiry, that the counterparty is controlled by, acting on behalf of or is otherwise
representing a Restricted Entity.
(c)
Consequence.
(i)
If a Restricted Entity Event occurs, and Restricted Entities, directly or indirectly, in the aggregate
per
Section 23(e)
beneficially own ten percent (10%) or more of the outstanding voting securities of Trilogy Metals or
South32 Limited (a “
Restricted Entity Control Even
t”), then while such Restricted Entity Control Event is continuing:
(1)
The Special Representative (as defined below) shall have a veto right with respect to the following matters,
which shall be exercised solely for reasons of US national security concerns, as appropriately recorded in Ambler Metals governance records
(collectively, the “
Golden Share Veto
”):
a.
Ambler Metals (i) entering into any material offtake agreement or similar ore or ore concentrate
supply agreement or technology agreement, or (ii) terminating or materially amending any existing offtake agreement or similar ore
or ore concentrate supply agreement or technology agreement, in the case of (i) and (ii) for the sale of ore or ore concentrate
or that relates to the sale of ore or ore concentrate;
b.
Any material change to the business plan, annual budget or project scope of Ambler Metals that would reasonably
be expected to result in a curtailment of mine production of at least 20% over at least one year as compared to such plan, budget or scope
(other than for sound operational reasons, because of a force majeure event or in the ordinary course of business);
c.
Any issuance of new equity or admission of new members to Ambler Metals, other than issuances to members
of Ambler Metals pursuant to rights in existence as of the date hereof;
d.
suspension or termination of the Project, other than in the ordinary course of business;
e.
any transaction whereby Ambler Metals becomes an entity domiciled in a jurisdiction other than the United
States;
f.
subject to Applicable Law, any filing of a petition or application by Ambler Metals relating to bankruptcy,
insolvency, readjustment of debt, moratorium on payments or creditors’ rights;
g.
the sale, transfer or other disposition or the encumbrance of all or substantially all of the Material
Properties or the sale, transfer or other disposition or the encumbrance, whether in a single transaction or a series of related transactions,
of assets representing more than 25% of Ambler Metals’ total assets; other than, in any such case, the abandonment, relocation and
amendment of mining claims in the ordinary course of business, equipment financings or pursuant to agreements and obligations in existence
as of the date hereof;
h.
surrender or abandonment of all or substantially all of the Material Properties, other than actions relating
to relocation and amendment of mining claims or conversion of properties to mining leases;
i.
Ambler Metals entering into a joint venture or similar arrangement, other than pursuant to agreements
and obligations in existence as of the date hereof; and
j.
dissolution of Ambler Metals.
(2)
If the board or members, as applicable, of Ambler Metals are deadlocked with respect to a decision and
such deadlock is not resolved pursuant to the terms of the LLC Agreement in existence as of the date hereof, the Special Representative
shall have the authority to break the deadlock, which shall be exercised solely for reasons of US national security concerns, as appropriately
recorded in Ambler Metals governance records.
(ii)
Trilogy US, South32 USA Exploration and Ambler Metals shall revise the organizational documents of Ambler
Metals within 20 Business days after the date of this Agreement to provide for the appointment of the Special Representative and the veto
rights as set out in this
Section 23(c)
. Such revisions shall be subject to the approval of the Investor.
(iii)
For the avoidance of doubt, the Special Representative appointment and Golden Share Veto and deadlock
breaking rights set forth in this
Section 23(c)
shall apply automatically without any further action by any Person and
shall continue until, and only until, such time as such Restricted Entity Control Event is no longer continuing and Trilogy US or South32
USA Exploration, as applicable, has provided written evidence reasonably satisfactory to the Investor that such condition has been cured
and, following cure of such Restricted Entity Control Event, the Special Representative shall automatically cease to serve in such capacity.
(iv)
The Investor shall have the right to appoint one (1) Person to serve as the special Investor representative
to Ambler Metals (the “
Special Representative
”) at any time whether or not a Restricted Equity Event or a Restricted
Equity Control Event has occurred and such appointment shall be immediately effective upon notice by Investor to Ambler Metals, provided
that such Special Representative shall not have authority with respect to Ambler Metals until a Restricted Entity Control Event shall
have occurred. The Investor shall have the sole right to remove the Special Representative and shall have the sole right to appoint a
replacement Special Representative at any time should the position be vacant, with such appointment to be immediately effective upon notice
by Investor to Ambler Metals.
(v)
The exercise of rights under this Section shall be in addition to any other rights or remedies available
to the Investor under Applicable Law.
(d)
Additional
Covenants.
(i)
Neither Trilogy US nor South32 USA Exploration shall take any action designed to circumvent the purposes
of this Section, and each shall cooperate in good faith with the Investor in implementing the provisions of this Section and any
related remedial actions reasonably requested by the Investor in connection with a Restricted Entity Event. Neither Trilogy US nor South32
USA Exploration nor their respective parents shall transfer, directly or indirectly, any economic or voting interest in Ambler Metals
other than to a wholly-owned subsidiary of Trilogy Metals or South32 Limited, respectively, that assumes all of such Party’s obligations
pursuant to this Agreement.
(ii)
Each of Trilogy US and South32 USA Exploration shall use commercially reasonable efforts to obtain representations
from all Persons in any equity or material asset transaction with any third party or parties that such Persons are not Restricted Entities.
(e)
Aggregation.
For purposes of this Section, the beneficial ownership of all Restricted Entities shall be aggregated and treated as a single ownership
position. Each of Trilogy US and South32 USA Exploration shall be entitled to rely on the information contained in filings and disclosures
under Applicable Laws of the jurisdictions where Trilogy Metals or South32 Limited, respectively, maintains an exchange listing, unless
it has actual knowledge of a Restricted Entity Event despite the absence of such filings and disclosures.
25.
Construction
In this Agreement:
(a)            the
terms “
Agreement
”, “
this Agreement
”, “
the Agreement
”, “
hereto
”,
“
hereof
”, “
herein
”, “
hereby
”, “
hereunder
” and similar expressions
refer to this Agreement in its entirety and not to any particular provision hereof;
(b)            references
to an “
Article
”, “
Section
” or “
Schedule
” followed by a number or letter refer
to the specified Article or Section of or Schedule to this Agreement;
(c)            the
division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement;
(d)            words
importing the singular number only shall include the plural and
vice versa
and words importing the use of any gender shall include
all genders;
(e)            the
word “
including
” is deemed to mean “including without limitation”;
(f)            the
terms “
party
” and the “
parties
” refer to a party or the parties to this Agreement;
(g)            any
reference to this Agreement means this Agreement as amended, modified, replaced or supplemented from time to time;
(h)            any
reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended,
re-enacted or replaced, and any reference to a statute shall include any regulations or rules made thereunder;
(i)            unless
otherwise indicated, all dollar amounts refer to United States dollars;
(j)            any
time period within which a payment is to be made or any other action is to be taken hereunder shall be calculated excluding the day on
which the period commences and including the day on which the period ends; and
(k)            whenever
any action is required to be taken or period of time is to expire on a day other than a Business Day, such action shall be taken or period
shall expire on the next following Business Day.
[
Signature page follows
]
IN WITNESS WHEREOF
the Parties have agreed
to this Agreement as of the day first written above.
UNITED
STATES DEPARTMENT OF DEFENSE
Per:
/s/
Michael P. Duffey
Name:
Hon. Michael P. Duffey
Title:
Under Secretary of War for Acquisition and Sustainment
NOVACOPPER
US INC. (dba TRILOGY METALS US)
Per:
/s/
Tony Giardini
Name:
Tony Giardini
Title:
President
SOUTH32
USA Exploration Inc.
Per:
/s/
Simon Collins
Name:
Simon Collins
Title:
Director
AMBLER
METALS LLC
Per:
/s/
Ron Rimelman
Name:
Ron Rimelman
Title:
President
Signature Page to Cooperation
Agreement
SCHEDULE “A”
REPRESENTATIONS AND WARRANTIES OF AMBLER METALS
Ambler Metals hereby represents and warrants to the Investor, as of
the date hereof and as of the Closing Date, that:
(a)
Ambler Metals is owned equally by Trilogy US and South32 USA Exploration, and has no subsidiaries. The
LLC Agreement is in full force and effect and constitutes a valid and binding obligation of Ambler Metals;
(b)
Ambler Metals is a limited liability company existing under the Applicable Laws of the State of Delaware,
is current and up to date with all material filings required to be made under the Applicable Laws of its jurisdiction of formation to
maintain its corporate existence and has all requisite corporate power to carry on its business as now conducted and to own, lease or
operate its property, and no steps or proceedings have been taken by any Person, voluntary or otherwise, requiring or authorizing its
dissolution or winding up;
(c)
Except as set forth in the Disclosure Schedules, the prospecting and mining rights, as applicable (the
“
Mining Rights
”), of Ambler Metals relating to the mineral properties described as the Upper Kobuk Mineral Projects
located in the Ambler Mining District in Northwest Alaska, United States (the “
Material Properties
”), are in good standing,
are valid and enforceable, are free and clear of any material liens or charges and, other than Mining Rights Exceptions or as set forth
in the Disclosure Schedules, no material royalty is payable in respect of any of them. Except as set forth in the Disclosure Schedules,
no property rights other than the Mining Rights are necessary for the conduct of Ambler Metals' business as now conducted or proposed
to be conducted, and except as set forth in the Disclosure Schedules, there are no material restrictions on the ability of Ambler Metals
to use, transfer or otherwise exploit any such rights. Ambler Metals is the holder of the Mining Rights required to carry on the activities
of Ambler Metals as currently conducted. The Mining Rights held by Ambler Metals cover the areas required by Applicable Law for such purposes,
except as set forth in the Disclosure Schedules. Ambler Metals does not know of any claim or basis for any claim that would reasonably
be expected to have a Material Adverse Effect on such Mining Rights;
(d)
All activities on the Material Properties have been conducted in all material respects in accordance with
good engineering practices and all applicable workers’ compensation and health and safety and workplace Applicable Laws have been
duly complied with in all material respects on the Material Properties;
(e)
Except as set forth on the Disclosure Schedules, Ambler Metals is not aware of any material land entitlement
claims or aboriginal land claims having been asserted or any Proceedings relating to aboriginal or community issues having been instituted
with respect to the properties underlying the Material Properties, and no dispute between Ambler Metals and any local, native, aboriginal
or indigenous group exists or, to the knowledge of Ambler Metals, is threatened or imminent that could reasonably be expected to have
a Material Adverse Effect;
(f)
Except as would not reasonably be expected to have a Material Adverse Effect, the business of Ambler Metals
is being conducted in compliance with all Applicable Laws. Except as set forth on the Disclosure Schedules, there are no Proceedings by
or against Ambler Metals pending (of which Ambler Metals has received written notice or otherwise has knowledge) by or before any Governmental
Authority, or, to Ambler Metals’ knowledge, threatened to be brought by or before any Governmental Authority, that has had or would
reasonably be expected to have a Material Adverse Effect. There is no unsatisfied order outstanding against or any open injunction binding
upon Ambler Metals that has had or would reasonably be expected to have a Material Adverse Effect;
(g)
Ambler Metals (i) is in compliance with all Applicable Laws relating to exploration, mining and related
activities applicable to the Material Properties (collectively, “
Mining Laws
”); (ii) has received and is in compliance
with all Material Permits under applicable Mining Laws necessary to conduct their businesses as currently conducted as of the date hereof;
and (iii) has not received written notice of any actual or potential liability under or relating to any Mining Laws and has no knowledge
of any event or condition that would reasonably be expected to result in any such written notice, except, in the case of each of clauses
(i), (ii) and (iii) above, for any such failure to comply, or failure to receive required permits, licenses or approvals, or
cost or liability, as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse Effect;
(h)
No material default exists in the due performance and observance of any term, covenant or condition of
any material license, contract, indenture, mortgage, deed of trust, note, loan or credit agreement, or any other material agreement or
instrument evidencing an obligation for borrowed money, or any other material agreement or instrument, in each case, by Ambler Metals
to which Ambler Metals is a party to or as to which any property of Ambler Metals or by which Ambler Metals is bound or to which any of
the properties or assets of Ambler Metals is subject as of the date hereof;
(i)
The audited financial statements of Ambler Metals for the year ended November 30, 2025, including
the notes to such statements and the related auditors' report on such statements, as applicable (the “
Financial Statements
”)
(i) present fairly, in all material respects, the financial position of Ambler Metals and the statements of operations, retained
earnings, cash flow from operations and changes in financial information of Ambler Metals for the periods specified in such Financial
Statements; (ii) have been prepared in conformity with generally accepted accounting principles ('GAAP') in the United States applied
on a consistent basis throughout the periods involved; and (iii) do not contain any misrepresentation, with respect to the period
covered by the Financial Statements;
(j)
Since the date of the Financial Statements, (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) Ambler Metals has not incurred any
material liabilities (contingent or otherwise) other than (A) trade payables and accrued expenses incurred in the ordinary course
of business consistent with past practice and (B) material liabilities not required to be reflected in the Ambler Metals’ financial
statements pursuant to GAAP, (iii) Ambler Metals has not altered its method of accounting, (iv) Ambler Metals has not declared
or made any dividend or distribution of cash or other property to its members or purchased, redeemed or made any agreements to purchase
or redeem any limited liability interests, and (v) Ambler Metals has not issued any equity securities other than in the ordinary
course of business, except, in the case of (ii), (iii), (iv) and (v), as is disclosed in the Financial Statements;
(k)
There is no Proceeding pending involving Ambler Metals or, to Ambler Metals’ knowledge, any executive
officer or board member of Ambler Metals which would reasonably be expected to adversely affect or challenge the legality, validity or
enforceability of this Agreement;
(l)
Neither Ambler Metals nor, to Ambler Metals’ knowledge, any board member, officer, agent, or employee
of Ambler Metals or any other person acting on behalf of Ambler Metals, has, directly or indirectly, (a) given or agreed to give
any money, gift or similar benefit (other than legal price concessions to customers in Ambler Metals’ ordinary course of business)
to any customer, supplier, employee or agent of a customer or supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for office (domestic or foreign) or other person who was,
is, or may be in a position to help or hinder the business of Ambler Metals (or assist it in connection with any actual or proposed transaction)
that (i) might subject Ambler Metals to any damage or penalty in any civil, criminal or governmental litigation or other Proceeding,
(ii) if not given in the past, might have had a Material Adverse Effect, or (iii) violated or is in violation of any provision
of the Foreign Corrupt Practices Act of 1977, as amended or any applicable non-U.S. anti-bribery statute or regulation; (b) made
any bribe, rebate, payoff, influence payment, kickback or other unlawful payment; or (c) received notice of any investigation, inquiry,
or other Proceeding by any Governmental Authority regarding any of the matters in clauses (a) or (b) above; and Ambler Metals
and, to the knowledge of Ambler Metals, Ambler Metals’ affiliates, have conducted their respective businesses in compliance with
applicable anti-bribery laws and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected
to continue to ensure, continued compliance therewith. Ambler Metals has taken reasonable steps to ensure that its accounting controls
and procedures are sufficient to cause Ambler Metals to comply in all material respects with applicable anti-bribery laws;
(m)
Neither Ambler Metals nor, to Ambler Metals’ knowledge, any director, officer, agent, or employee
of Ambler Metals, or any other person acting on behalf of Ambler Metals, is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the Treasury (“
OFAC
”), and Ambler Metals will not, directly
or indirectly, use any payments received by them pursuant to this Agreement, or lend, contribute or otherwise make available such proceeds
to any joint venture partner or other person or entity, for the purpose of unlawfully financing the activities of or business with any
person that is the subject or target of any U.S. sanctions administered by OFAC, or any country or territory subject to a comprehensive
economic sanctions imposed by OFAC;
(n)
Ambler Metals is in compliance with all Applicable Laws relating to the use, treatment, storage and disposal
of hazardous or toxic substances or waste and protection of worker health and safety or the environment which are applicable to its business
as currently conducted (“
Environmental Laws
”), except where the failure to comply would not, singularly or in the aggregate,
result in a Material Adverse Effect. In Ambler Metals’ ordinary course of business, Ambler Metals has conducted periodic reviews
of the effect of applicable Environmental Laws on its respective business and assets as currently conducted, in the course of which they
identify and evaluate any associated costs and liabilities. On the basis of such reviews, Ambler Metals has reasonably concluded that
any such associated costs and liabilities would not reasonably be expected to result, singularly or in the aggregate, in a Material Adverse
Effect.
(o)
Ambler Metals applies a quality assurance program and quality control measures (collectively, the “
QA/QC
”)
to provide reasonable assurance regarding the precision and accuracy of its assay data. Ambler Metals is not aware of any material weaknesses
in the QA/QC and maintains security measures that are designed to provide assurance in Ambler Metals' sample preparation, sample dispatches,
sample security, sample splitting and reduction, data verification, and testing, assaying and analytical procedures.
(p)
Except as set forth on the Disclosure Schedules, there are no material complaints, issues, proceedings,
or discussions, which are ongoing or anticipated, which could have the effect of interfering with, delaying or impairing the ability to
explore, develop or operate the Material Properties in a manner that would reasonably be expected to have a Material Adverse Effect.
(q)
Except as would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect, Ambler Metals has all permits, licenses, franchises, authorizations, orders and approvals of, and has made all filings, applications
and registrations with, Governmental Authorities that are required in order to permit it to own or lease the properties and assets that
it presently owns or leases and to carry on its business as presently conducted and that are material to the business of Ambler Metals,
and no other permits, licenses, franchises, authorizations, orders and approvals are required to be made or obtained by Ambler Metals
in connection with the execution, delivery and performance of this Agreement and the consummation of the Transactions.
(r)
Ambler Metals is the registered owner of and possesses, in good standing without default, all licenses,
certificates, rights (including surface rights, access rights and water rights), permits, concessions, authorizations, instruments and
other authorizations issued by, and has made all declarations and filings with, the appropriate federal, state, local, provincial, territorial
or foreign governmental or regulatory authorities that are necessary to conduct Ambler Metals' business as currently conducted, including
for the exploration, exploitation, extraction, removal, processing and refinery of minerals, except where the failure to possess such
permits could not, individually or in the aggregate, reasonably be expected to result in a Material Adverse Effect. Ambler Metals has
not received any notice of proceedings relating to the revocation or modification of any Material Permit, and has no reason to believe
that any such Material Permit will not be renewed in the ordinary course.
(s)
Ambler Metals has good and marketable title in fee simple to all real property owned by it and good and
marketable title in all personal property owned by it that is material to the business of Ambler Metals, in each case free and clear of
all Liens, except for (i) Liens that do not materially affect the value of such property and do not materially interfere with the
use made and proposed to be made of such property by Ambler Metals and (ii) Liens for the payment of federal, provincial, state or
other taxes for which appropriate reserves have been made in accordance with GAAP and the payment of which is neither delinquent nor subject
to penalties. Any real property and facilities held under lease by Ambler Metals are held under valid, subsisting and enforceable leases
with which Ambler Metals is in compliance in all material respects.
(t)
Ambler Metals has timely filed (subject to any permitted extension) all federal, provincial, state and
other tax returns and reports required to be filed, and has paid all material federal, provincial, state and other taxes, assessments,
fees and other governmental charges levied or imposed upon it or its properties, income or assets otherwise due and payable, except to
the extent such taxes are being contested in good faith by appropriate proceedings diligently conducted and for which adequate reserves
are being maintained in accordance with GAAP. Ambler Metals is not aware of any claims or adjustments proposed for any of its prior tax
years which could result in additional material taxes becoming due and payable.
(u)
Ambler Metals is insured by insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which Ambler Metals is engaged, including directors and officers
insurance coverage. Ambler Metals has no reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business without a significant
increase in cost.
(v)
The operations of Ambler Metals are and have been conducted at all times in compliance with applicable
financial record-keeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable
money laundering statutes and applicable rules and regulations thereunder (collectively, the “
Money Laundering Laws
”),
and no Action or Proceeding by or before any court or governmental agency, authority or body or any arbitrator involving Ambler Metals
with respect to the Money Laundering Laws is pending or, to the knowledge of Ambler Metals, threatened.
(w)
(i) To the knowledge of Ambler Metals, there has been no material security breach or other compromise
of or relating to any of Ambler Metals' information technology and computer systems, networks, hardware, software, data (including the
data of its respective customers, employees, suppliers, vendors and any third party data maintained by or on behalf of it), equipment
or technology (collectively, “
IT Systems and Data
”), and Ambler Metals has not been notified of, and has no knowledge
of, any event or condition that would reasonably be expected to result in any such breach or compromise; (ii) Ambler Metals is presently
in compliance with all applicable laws or statutes and all judgments, orders, rules and regulations of any court or arbitrator or
governmental or regulatory authority, internal policies and contractual obligations relating to the privacy and security of IT Systems
and Data and to the protection of such IT Systems and Data from unauthorized use, access, misappropriation or modification, except as
would not, individually or in the aggregate, have a Material Adverse Effect; (iii) Ambler Metals has implemented and maintained commercially
reasonable safeguards to maintain and protect its material confidential information and the integrity, continuous operation, redundancy
and security of all IT Systems and Data; and (iv) Ambler Metals has implemented backup and disaster recovery technology consistent
with industry standards and practices.
(x)
(i) To the knowledge of Ambler Metals, Ambler Metals is, and at all times during the last three (3) years
was, in material compliance with all applicable state, federal and foreign data privacy and security laws and regulations, including,
without limitation and to the extent applicable, the European Union General Data Protection Regulation (“
GDPR
”) (EU
2016/679) (collectively, “
Privacy Laws
”); (ii) Ambler Metals has in place, materially complies with, and takes
appropriate steps reasonably designed to ensure compliance with its policies and procedures relating to data privacy and security and
the collection, storage, use, disclosure, handling and analysis of Personal Data (the “
Policies
”); and (iii) to
the extent required by Privacy Laws, Ambler Metals provides and/or makes available accurate notice of its collection, storage, use, disclosure,
handling and analysis of Personal Data to its customers, employees, third party vendors and representatives as required by the Privacy
Laws. “
Personal Data
” means (i) a natural person's name, street address, telephone number, email address, photograph,
social security number, bank information, or customer or account number; (ii) any information which would qualify as “personally
identifying information” under the Federal Trade Commission Act, as amended; (iii) “personal data” as defined by
GDPR; and (iv) any other piece of information that allows the identification of such natural person, or his or her family, or permits
the collection or analysis of any identifiable data related to an identified person's health or sexual orientation. Ambler Metals (A) has
not received written notice of any actual or potential liability of Ambler Metals under, or actual or potential violation by Ambler Metals
of, any of the Privacy Laws; (B) is not currently conducting or paying for, in whole or in part, any investigation, remediation or
other corrective action pursuant to any regulatory request or demand pursuant to any Privacy Law; and (C) is not a party to any order,
decree, or agreement by or with any court or arbitrator or governmental or regulatory authority that imposes any obligation or liability
under any Privacy Law.
(y)
Ambler Metals is Solvent.
(z)
(i) Ambler Metals is not a Restricted Entity nor is owned or Controlled by a Restricted Entity, and
(ii) none of the members of the board of directors or any executive officer (within the meaning of Rule 3b-7 promulgated pursuant
to the U.S. Exchange Act) of Ambler Metals is a Restricted Entity, is owned or Controlled, directly or indirectly, by a Restricted Entity,
or is acting on behalf of a Restricted Entity.
SCHEDULE “B”
REPRESENTATIONS AND WARRANTIES OF TRILOGY US
Trilogy US hereby represents and warrants to the Investor, as of the
date hereof and as of the Closing Date, that:
(a)
To the knowledge of Trilogy US, the information (the “
Information
”) with respect to
Ambler Metals contained in Part I, Item 2 of the Trilogy Metals Inc. Annual Report on Form 10-K for the year ended November 30,
2025 (the “
Form 10-K
”) filed with the Securities and Exchange Commission is accurate and complete in all material
respects as of the date that the Form 10-K was filed, and Trilogy US is not aware after reasonable inquiry of any material adverse
changes to the information.
SCHEDULE “C”
REPRESENTATIONS AND WARRANTIES OF SOUTH32 USA
EXPLORATION
South32 USA Exploration hereby represents and warrants to the Investor,
as of the date hereof and as of the Closing Date, that:
(b)
To the knowledge of South32 USA Exploration, the information (the “
Information
”) with
respect to Ambler Metals contained in the South32 Annual Report 2025 filed under Applicable Law is accurate and complete in all material
respects as of the date that the South32 Annual Report 2025 was filed and South32 USA Exploration is not aware after reasonable inquiry
of any material adverse changes to the Information.

----- tm2624736d1_ex10-3.htm -----
EX-10.3
4
tm2624736d1_ex10-3.htm
EXHIBIT 10.3
Exhibit 10.3
PARTICIPATION
RIGHTS
AGREEMENT
THE UNITED STATES DEPARTMENT OF DEFENSE
- and -
TRILOGY METALS INC.
September 11, 2026
PARTICIPATION RIGHTS AGREEMENT
THIS AGREEMENT
is made
as of the 11th day of September, 2026.
AMONG
:
TRILOGY
METALS INC.
, a Company organised and existing under the laws of the Province of British Columbia (hereinafter referred to as
the “
Company
”),
- and -
THE
UNITED STATES DEPARTMENT OF DEFENSE
, (also referred to herein as the “
Department of War
” or
“
Investor
”).
WHEREAS
A.
Pursuant to an investment agreement between the Company and the Investor dated August 28, 2026 (the
“
Investment Agreement
”), the Investor has agreed to purchase 8,215,570 Units (as defined in the Investment Agreement)
of the Company at a price of $2.17 per Unit, with each Unit comprised of one Common Share (as defined herein) and three-quarters of one
Warrant (as defined in the Investment Agreement) for an aggregate purchase price of $17,827,786.90 (the “
Private Placement
”);
and
B.
It is a condition to the completion of the Private Placement that the Company provide the Investor with
the rights provided for herein.
NOW THEREFORE
,
in consideration of the respective covenants and agreements of the Parties herein contained and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the Parties agree hereto as follows:
SECTION 1
GENERAL
1.1
Definitions
As used in this Agreement the following terms shall have the following
respective meanings:
(a)
“
Affiliate
” means, with respect to any specified Person, any other Person which, directly
or indirectly, through one or more Persons Controls, or is Controlled by, or is under common Control with, such specified Person;
(b)
“
Agreement
” means this participation rights agreement among the Company and the Investor
and all schedules hereto, as well as any amendment or modification which may be made hereto in writing as permitted by Section 4.5
from time to time;
(c)
“
Applicable Canadian Securities Legislation
” means all applicable securities laws of
each of the Reporting Jurisdictions and the respective rules and regulations
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2
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under such laws together with applicable
published fee schedules, prescribed forms, policy statements, national or multilateral instruments, orders, blanket rulings and other
applicable regulatory instruments of the securities regulatory authorities in any of the Reporting Jurisdictions;
(d)
“
Applicable Law
” means, at any time, with respect to any Person, property, transaction,
event or other matter, as applicable, all laws, rules, statutes, regulations, treaties, orders, judgments and decrees, and all official
requests, directives, rules, guidelines, orders, policies, practices and other requirements of any Governmental Authority relating or
applicable at such time to such Person, property, transaction, event or other matter, and also includes any interpretation thereof by
any Person having jurisdiction over it or charged with its administration or interpretation;
(e)
“
Business Day
” means any day other than Saturday, Sunday or a statutory holiday when
banks are not open in New York, New York or Vancouver, British Columbia;
(f)
“
Common Shares
” means common shares of the Company;
(g)
“
Control
”, “
Controlled by
” and “
under common Control with
”,
as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise;
(h)
“
Convertible Securities
” means any security convertible, exchangeable or exercisable
for or into, with or without consideration, any Common Shares or other equity security of the Company, including any warrants, options
or other rights;
(i)
“
Company
” has the meaning set forth in the preamble hereto;
(j)
“
Equity Securities
” means (A) any Common Shares or other equity securities of
the Company and/or (B) any Convertible Securities;
(k)
“
Exempt Securities
” means:
(i)
Common Shares or other equity securities issued pursuant to, or pursuant to the exercise of Convertible
Securities issued under the Company’s Equity Incentive Plan, Restricted Share Unit Plan, Deferred Share Unit Plans or other equity
incentive plans;
(ii)
Common Shares or other equity securities issued upon the exercise, conversion or exchange of any Convertible
Securities;
(iii)
Common Shares or other equity securities issued pursuant to a Non-Cash Transaction;
(iv)
Common shares or other equity securities issued pursuant to any “at-the-market distribution”
as such term is defined under National Instrument 44-102 –
Shelf Distributions
and in Rule 415 under the United States
Securities Act of 1933, as amended; and
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-
(v)
Common Shares or other equity securities issued in connection with any stock split, stock dividend or
recapitalization by the Company;
(l)
“
Exchange
” means either the Toronto Stock Exchange or the NYSE American LLC and “
Exchanges
”
means both the Toronto Stock Exchange or the NYSE American LLC
(m)
“
Governmental Authority
” means any (a) nation or government, state, commonwealth,
province, territory, county, municipality, district, or other jurisdiction of any nature, or any political subdivision thereof, (b) federal,
state, local, municipal, foreign, or other government, or (c) governmental or quasi-governmental authority of any nature (including
any relevant domestic, foreign, multinational or international body, governmental division, department, agency, board, bureau, commission,
instrumentality, official, organization, regulatory body, or other entity and any court, arbitrator, or other tribunal) exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining to government and any executive official thereof;
(n)
“
Investor
” has the meaning set forth in the preamble hereto;
(o)
"
Non-Cash Transaction
" means a transaction whereby the Company issues Equity Securities
for non-cash consideration, or as a result of a consolidation, amalgamation, merger, arrangement, corporate reorganization or similar
transaction or business reorganization resulting in a combined Company;
(p)
“
Ownership Interest
” means the percentage of the Equity Securities owned beneficially
by the Investor and its Affiliates, collectively, calculated in accordance with Section 1.6;
(q)
“
Participation Right
” has the meaning set forth in Section 2.1;
(r)
“
Participation Right Acceptance Notice
” has the meaning set forth in Section 2.4;
(s)
“
Participation Right Notice Period
” has the meaning set forth in Section 2.4;
(t)
“
Participation Right Offer Notice
” has the meaning set forth in Section 2.3;
(u)
“
Parties
” means, collectively, the Company and the Investor, and “
Party
”
means either the Company or the Investor;
(v)
“
Person
” means any individual, Company or company with or without share capital, partnership,
joint venture, association, trust, unincorporated organization, trustee, executor, administrator or other legal personal representative,
regulatory body or agency, government or governmental agency, authority or entity however designated or constituted;
(w)
“
Proceeding
” means any action, appeal, petition, plea, charge, complaint, claim, suit,
demand, litigation, arbitration, mediation, hearing, inquiry, investigation, legal or administrative proceeding or other similar event,
occurrence or proceeding;
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4
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(x)
“
Proposed Offering
” has the meaning set forth in Section 2.1;
(y)
“
Reporting Jurisdictions
” means all of the jurisdictions in Canada in which the Company
is a “reporting issuer;”
(z)
“
Rights Offering
” means a rights offering, dividend distribution, or any other transaction
in which the general body of holders of affected securities of the same class are treated identically on a per security basis and the
exercise, conversion or exchange of the securities offered pursuant to any such transaction;
(aa)
“
Shareholders
” means the shareholders of
the Company;
(bb)
“
South 32
” means South32 International Investment
Holdings Pty. Ltd.;
(cc)
“
South32 Participation Rights Agreement
” means the Participation Rights Agreement dated
December 19, 2017 between South32 International Investment Holdings Pty. Ltd. and the Company, as it may be amended, restated or
replaced from time to time;
1.2
Recitals
The recitals form an integral part of this Agreement.
1.3
Headings
The inclusion of headings in this Agreement is
for convenience of reference only and shall not affect in any way the construction or interpretation of this Agreement.
1.4
Gender
and Number
In this Agreement, unless the context otherwise
requires, words importing the singular include the plural and vice versa and words importing gender include all genders.
1.5
Currency
Except where otherwise expressly provided, all
amounts in this Agreement are stated and shall be paid in the currency of the United States.
1.6
Calculation
of Ownership Interest
For the purpose of this Agreement, the Ownership
Interest at any given time shall be calculated by using the number of the Common Shares on a non-diluted basis owned beneficially by the
Investor and its Affiliates, collectively, and dividing such number by the number of issued and outstanding Common Shares of the Company.
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5
-
SECTION 2
PARTICIPATION RIGHT GRANTED BY THE COMPANY
2.1
Participation
Right
Subject to Section 2.7, the Investor shall
have a right (the “
Participation Right
”) to subscribe for any Equity Securities that the Company may, from time to
time, sell and issue after the date hereof whether pursuant to a public offering, private placement or otherwise, excluding any issuances
of Exempt Securities or issuances of Equity Securities pursuant to a Rights Offerings (“
Proposed Offering
”), in order
to maintain the Investor’s Ownership Interest in effect as of the date of a Participation Right Acceptance Notice.
The Parties acknowledge that South32 holds pre-emptive
participation rights pursuant to the South32 Participation Rights Agreement. The Company shall not be obligated to issue Equity Securities
to the Investor pursuant to the Participation Right to the extent that doing so, together with any securities issuable to South32 in respect
of the same Proposed Offering under the South32 Participation Rights Agreement, would exceed the number of Equity Securities available
in such Proposed Offering pursuant to Applicable Law and Exchange rules and requirements. The Company shall administer the Participation
Right and the South32 Participation Rights Agreement in a commercially reasonable manner so as to give effect to both participation rights
to the maximum extent practicable.
2.2
Shareholder
Approval
In the event that a Participation Right shall
be subject to Shareholder approval, the Company shall use its commercially reasonable efforts to cause the approval of such Participation
Right at the next meeting of Shareholders that is convened by the Company in order to allow the Investor to exercise its Participation
Right. The Company shall solicit proxies from the Shareholders for use at such meeting to obtain such approval.
2.3
Notice
of Participation Right
The Company shall send a written notice to the
Investor (the “
Participation Right Offer Notice
”) of any Proposed Offering specifying:
(a)
the number and type of Equity Securities to be issued under the Proposed Offering;
(b)
the price per Equity Security to be issued under the Proposed Offering;
(c)
the expected closing date of the Proposed Offering;
(d)
whether the Proposed Offering is a “bought deal”;
(e)
the total number of the then issued and outstanding Common Shares (which shall include any securities
to be issued to persons having similar participation rights);
(f)
all of the other material terms and conditions of the Proposed Offering.
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2.4
Exercise
of Participation Right
The Investor shall have a period of five (5) Business
Days from the date of the Participation Right Offer Notice (the “
Participation Right Notice Period
”) to notify the
Company in writing (the “
Participation Right Acceptance Notice
”) of the exercise of its Participation Right. Such Participation
Right Acceptance Notice shall specify:
(a)
the number of Common Shares and other Equity Securities owned beneficially by the Investor and its Affiliates;
(b)
the Investor’s Ownership Interest;
(c)
the number of Equity Securities the Investor wishes to acquire under the Proposed Offering pursuant to
its Participation Right; and
(d)
the number of Equity Securities that the Investor and its Affiliates will hold post the exercise of the
Participation Right.
If the Investor gives a Participation Right Acceptance
Notice, the sale of the Equity Securities to the Investor shall be completed at the same time as the completion of the Proposed Offering,
provided that the sale to the Investor may be completed after the completion of the Proposed Offering if such sale is subject to the approval
of the Shareholders.
2.5
Company’s
Failure to Close Proposed Offering
If the Company has not issued the Equity Securities
under a Proposed Offering within sixty (60) days of the expiry of the Participation Right Notice Period, the Company shall not thereafter
proceed with such Proposed Offering without providing the Investor with another opportunity to exercise its Participation Right in respect
of such Proposed Offering.
2.6
Bought
Deals
Notwithstanding the foregoing, if any Proposed
Offering to which this paragraph applies is to be conducted on a “bought deal” basis, then:
(a)
the period for the Investor’s response under Section 2.5 shall be reduced to three (3) Business
Days; and
(b)
notwithstanding any other provision of this Agreement, the Company may, in its sole discretion, choose
not to include the Investor in the “bought deal” Proposed Offering but may instead complete a private placement with the Investor
at the same price as the “bought deal” Proposed Offering, to close concurrently with the ‘bought deal” Proposed
Offering, and the Investor and the Company shall act reasonably and in good faith, having regard to the specific circumstances surrounding
such “bought deal” Proposed Offering, so determine the Investors participation within the parameters contemplated by Section 2.1.
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2.7
Termination
The Participation Right and this Participation
Rights Agreement will automatically terminate if the Investor’s and its Affiliates’ aggregate beneficial ownership of Common
Shares of the Company is reduced to less than 8,000,000 Common Shares (subject to appropriate adjustments for any share splits, share
consolidations. Combinations, recapitalizations or other similar events).
SECTION 3
ANTI-CORRUPTION
3.1
Compliance
with Laws
The Company shall not take, and shall cause its
subsidiaries not to take, any action, directly or indirectly, that will result in a violation of the
Foreign Corrupt Practices Act
of 1977
(United States), as amended, and the rules and regulations thereunder, any applicable state law of the United States
of America regarding corruption, and the
Corruption of Foreign Public Officials Act
(Canada) (collectively, “
Anti-corruption
Laws
”). The Company shall maintain an internal accounting controls system and anti-corruption policies and procedures that meet
the Investor’s anti-corruption and anti-bribery requirements (as applicable to the Company), are reasonably designed to ensure the
proper authorization, recording and reporting of all transactions, and provide reasonable assurance that violations of applicable Anti-corruption
Laws will be prevented, detected and deterred.
SECTION 4
MISCELLANEOUS
4.1
Governing
Law
This Agreement shall be governed in all respects
by the United States Federal Law, without giving effect to the conflict-of-laws rules thereof to the extent such rules would
require or permit the application of the Applicable Laws of another jurisdiction. To the extent that United States Federal Law does not
specify the appropriate rule of decision for a particular matter at issue, it is the intention and agreement of the Parties that
the Applicable Laws of the State of New York (without giving effect to its conflict-of-laws rules) shall be adopted as the governing rule of
decision;
provided
, that notwithstanding the foregoing, (i) the procedures and matters necessary for the matters contemplated
hereby and actually required by reason of the Company being incorporated under the Applicable Laws of Canada, including but not limited
to the procedural requirements for the issuance of the Equity Securities, shall be governed by the Applicable Laws of Canada, and (ii) certain
mandatory provisions in respect of the Applicable Canadian Securities Legislation shall apply irrespective of the governing law as provided
in this Agreement.
The Company agrees to submit to the exclusive
jurisdiction and venue of the federal courts of the Southern District of New York (and its appellate courts) for any and all civil actions,
suits or proceedings arising out of or relating to this Agreement or the transactions contemplated hereby.
Investor, to the maximum extent permitted by law,
irrevocably agrees to submit itself, for any claim arising from, related to, or in connection with this Agreement or the transactions
contemplated hereby to the jurisdiction of (i) the U.S. Court of Federal Claims (ii) any other
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8
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Federal court or tribunal of competent jurisdiction;
and (iii) appellate courts from any of the foregoing.
Each Party hereby irrevocably and unconditionally
waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way of motion or as a defense, counterclaim or
otherwise, (i) any objection which it may now or hereafter have to the laying of venue of any Proceeding arising out of or relating
to this Agreement or the transactions contemplated hereby, (ii) any claim that it is not personally subject to the jurisdiction of
the above-mentioned courts for any reason, and (iii) any claim that any Proceeding brought in the above-mentioned courts has been
brought in an inconvenient forum or that the venue is improper. Each Party hereto other than Investor hereby irrevocably and unconditionally
waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way of motion or as a defense, counterclaim or
otherwise, that it or its property is exempt or immune from jurisdiction of the above-mentioned courts 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). Each Party hereto further irrevocably consents to service of process in the manner provided for notices in
Section 4.13. Nothing in this Agreement will affect the right of any party hereto to serve process in any other manner permitted
by any Applicable Law.
THE PARTIES EACH HEREBY WAIVE, TO THE FULLEST
EXTENT PERMITTED BY LAW, ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF ACTION (A) ARISING UNDER THIS AGREEMENT
OR (B) IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES IN RESPECT OF THIS AGREEMENT OR ANY OF THE
TRANSACTIONS RELATED HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER IN CONTRACT, TORT, EQUITY OR OTHERWISE.
THE PARTIES TO THIS AGREEMENT EACH HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED
BY COURT TRIAL WITHOUT A JURY, AND THAT THE PARTIES TO THIS AGREEMENT MAY FILE A COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN
EVIDENCE OF THE CONSENT OF THE PARTIES TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
4.2
Specific
Performance
The Company acknowledges that the rights of the
Investor to enforce this Agreement are unique and recognizes and affirms that in the event of a breach of this Agreement by the Company,
money damages are inadequate and Investor would have no adequate remedy at law. It is accordingly agreed that Investor shall be entitled
to (and the Company shall not oppose on the basis that injunctive relief or specific performance is not available due to availability
of an adequate remedy at law) an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms
and provisions of this Agreement, without the necessity of showing any actual damages or that monetary damages would not afford an adequate
remedy, and without the necessity of posting any bond or other security, this being in addition to any other remedy to which it is entitled
at law or in equity.
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4.3
Further
Assurances
Each of the Parties hereto shall, from time to
time hereafter and upon any reasonable request of the other, promptly do, execute, deliver or cause to be done, executed and delivered
all further acts, documents and things as may be required or necessary for the purposes of giving effect to this Agreement.
4.4
Statements
as to Factual Matters
All statements as to factual matters contained
in the recitals, any certificate or other instrument delivered pursuant hereto in connection with the transactions contemplated hereby
shall be deemed to be representations and warranties under this Agreement.
4.5
Amendments
No amendment or waiver of any provision of this
Agreement shall be binding on any party unless consented to in writing by such party. No waiver of any provision of this Agreement shall
constitute a waiver of any other provision, nor shall any waiver of any provision of this Agreement constitute a continuing waiver unless
otherwise expressly provided.
4.6
Assignment
No party may assign any of its rights or benefits
under this Agreement, or delegate any of its duties or obligations, except with the prior written consent of the other parties. Notwithstanding
the foregoing the Investor shall be entitled to assign any or its rights or benefits under this Agreement to an Affiliate of the Investor.
4.7
Successors
and Assigns
This Agreement shall enure to the benefit of and
shall be binding on and enforceable by and against the parties and their respective permitted assigns and successors or executors or administrators.
4.8
Entire
Agreement
This Agreement constitutes the full and entire
understanding and agreement between the Parties with regard to the subject hereof and no Party shall be liable or bound to any other in
any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.
4.9
Severability
In the event one or more of the provisions of
this Agreement should, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provisions of this Agreement, and this Agreement shall be construed as if such invalid, illegal
or unenforceable provision had never been contained herein.
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4.10
Delays
and Omissions
It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any holder, upon any breach, default or noncompliance of any Party under this Agreement shall
impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any
acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit,
consent, or approval of any kind or character on any Party’s part of any breach, default or noncompliance under the Agreement or
any waiver on such Party’s part of any provisions or conditions of this Agreement must be in writing and shall be effective only
to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to holders,
shall be cumulative and not alternative.
4.11
Counterparts
This Agreement and all documents contemplated
by or delivered under or in connection with this Agreement may be executed and delivered in any number of counterparts (whether by fax
or other electronic means), with the same effect as if all parties had signed and delivered the same document, and all counterparts shall
be construed together to be an original and will constitute one and the same agreement.
4.12
Expenses
Each party will pay for its own costs and expenses
incurred in connection with the negotiation, preparation, execution and performance of this Agreement and the transactions contemplated
herein, including the fees and expenses of legal counsel, financial advisors, accountants, consultants and other professional advisors.
4.13
Notices
Any notice or other communication that is required
or permitted to be given hereunder shall be in writing and shall be validly given delivered in person (including by courier service) or
by email as follows:
(a)
in
the case of the Investor:
United States Department of Defense
The Office of Industrial Base Policy
Assistant Secretary of Defense
Pentagon, Washington, DC 20301
Attention: Deputy Chief of Staff to the Deputy Secretary
of Defense
Email: [redacted]
With a copy to:
McDermott Will & Schulte LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067-3206
Attention: Edward Zaelke
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Email: [redacted]
(b)
in
the case of the Company:
Trilogy Metals Inc.
510 Burrard Street, Suite 901
Vancouver, British Columbia V6C 3A8
Attention:
Elaine
Sanders
Email:
[redacted]
Any such notice or other communication shall be
deemed to have been given and received (i) when personally delivered, or delivered by same-day courier; or (ii) on the fourth
business day after mailing by registered or certified mail, postage prepaid, return receipt requested; or (iii) upon delivery when
sent by nationally recognized prepaid overnight express delivery service (e.g., FedEx, UPS); or (iv) when sent by email or facsimile
and upon the receipt by the sending party of written confirmation by the receiving party; provided, however, that an automated facsimile
or email confirmation of delivery or read receipt shall not constitute such confirmation.
Any party may at any time change its address for
service from time to time by giving notice to the other parties in accordance with this Section 4.13.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have executed this Participation
Rights Agreement as of the date set forth above.
THE
UNITED STATES DEPARTMENT OF DEFENSE
By:
/s/
Michael P. Duffey
Name:
Hon. Michael P. Duffey
Title:
Under Secretary of War for Acquisition and Sustainment
TRILOGY
METALS INC.
By:
/s/
Tony Giardini
Name:
Tony Giardini
Title:
President and Chief Executive Officer

----- tm2624736d1_ex10-4.htm -----
EX-10.4
5
tm2624736d1_ex10-4.htm
EXHIBIT 10.4
Exhibit 10.4
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this “
Agreement
”),
dated as of September 11, 2026, by and among TRILOGY METALS INC., a corporation organized and existing under the laws of the Province
of British Columbia, Canada (the “
Company
”), and the UNITED STATES DEPARTMENT OF DEFENSE (also referred to herein
as the “
Department of War
” or the “
Initial Investor
,” and together with its successors and any
Permitted Holders that becomes a party hereto pursuant to, and in accordance with,
Section 13(c)
, the “
Investors
”
and each, an “
Investor
”).
WHEREAS, the Company and the Initial Investor
entered into an Investment Agreement, dated as of August 28, 2026 (the “
Investment Agreement
”), pursuant to which
the Company agreed to sell to the Initial Investor, and the Initial Investor agreed to purchase from the Company, units of the Company,
with each unit comprised of one common share, without par value (the “
Common Shares
”), and three-quarters of one warrant
(the “
Warrants
”), each full warrant exercisable to acquire a Common Share, on the terms and subject to the conditions
set forth in the Investment Agreement;
WHEREAS, the Initial Investor and South32 International
Investment Holdings Pty. Ltd., a company existing under the Laws of Australia (“
South32
”), entered into a Transaction
Agreement, dated as of August 28, 2026 (the “
South32 Transaction Agreement
”), pursuant to which South32 agreed
to sell to the Initial Investor, and the Initial Investor agreed to purchase from South32, (i) 8,215,570 Common Shares of the Company;
and (ii) a 10-year call option (the “
Call Option
”) to acquire 6,161,678 Common Shares of the Company at a strike
price of $0.01 per Common Share, on the terms and subject to the conditions set forth in the South32 Transaction Agreement; and
WHEREAS, it is a condition to the closing of the transactions
contemplated by the Investment Agreement (the “
Closing
”) that the Company and the Initial Investor enter into this
Agreement.
NOW, THEREFORE, in consideration of the foregoing and the
agreements contained in this Agreement, and intending to be legally bound by this Agreement, the Company and the Initial Investor agree
as follows:
Section 1.
Definitions
.
Capitalized terms used and not otherwise defined in this Agreement shall have the respective meanings given such terms in the Investment
Agreement. As used in this Agreement, the following terms shall have the respective meanings set forth in this
Section 1
:
“
Adverse Disclosure
” means
the public disclosure of material non-public information that, in the good faith judgment of the independent members of the Board (after
consultation with the Investors and legal counsel), (i) would be required to be made in any registration statement filed with the
SEC by the Company so that such registration statement would not be materially misleading under applicable securities laws, (ii) would
not be required to be made at such time but for the filing, effectiveness or continued use of such registration statement and (iii) the
Company has a bona fide business purpose for not disclosing publicly.
“
affiliate
” of a specified person means
a person who, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with,
such specified person.
“
Blackout Period
” shall have the meaning
set forth in
Section 2(c)
.
“
Blackout Period Payment Date
” shall
have the meaning set forth in
Section 2(c)
.
“
Block Trade
” means a registered
offering and/or sale of Registrable Securities by any Investor on a coordinated or underwritten basis commonly known as a “block
trade” or “bought deal” (whether firm commitment or otherwise) not involving a roadshow or other substantial marketing
efforts prior to pricing, including, without limitation, a same day trade, overnight trade or similar transaction.
“
Board
” means the Board of Directors
of the Company.
“
Business Day
” means any day
other than Saturday, Sunday or a statutory holiday when banks are not open in New York, New York or Vancouver, British Columbia.
“
Closing
” shall have the meaning set
forth in the recitals of this Agreement.
“
Common Shares
” shall have the meaning
set forth in the recitals of this Agreement.
“
Company
” shall have the meaning set
forth in the preamble of this Agreement.
“
control
” (including the terms
“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, partnership
interests or other ownership interests, as trustee or executor, by contract or credit arrangement or otherwise.
“
Cut Back Shares
” shall have the meaning
set forth in
Section 2(e)
. “
Effectiveness Deadline
” shall have the meaning set forth in
Section 2(b)
.
“
Exchange Act
” means the Securities
Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
“
Federal Government
” means the
United States government or any department, instrumentality or agency thereof, and any state government or any department,
instrumentality or agency thereof, other than the Initial Investor.
“
Filing Deadline
” shall have the meaning
set forth in
Section 2(a)
.
“
Indemnified Party
” shall have the meaning
set forth in
Section 9(c)
.
“
Indemnifying Party
” shall have the meaning
set forth in
Section 9(c)
.
“
Initial Investor
” shall have the meaning
set forth in the preamble of this Agreement.
2
“
Initial Registration Statement
” shall
have the meaning set forth in
Section 2(a)
.
“
Inspectors
” shall have the meaning set
forth in
Section 7(k)
.
“
Investment Agreement
” shall
have the meaning set forth in the recitals of this Agreement.
“
Investor(s)
” shall have the meaning
set forth in the preamble of this Agreement.
“
Investor Indemnitee
” shall have the
meaning set forth in
Section 9(a)
.
“
Investors’ Counsel
” shall have
the meaning set forth in
Section 6(b)
.
“
Law
” means any U.S. or non-U.S. law,
including any statute, ordinance, regulation, rule, code, executive order, injunction, judgment, decree or other order of a Governmental
Authority of competent jurisdiction.
“
Non-Party Affiliates
” shall have the
meaning set forth in
Section 13(j)
.
“
Other Securities
” shall have the meaning
set forth in
Section 4(a)
.
“
Permitted Holders
” means (i) (a) the
Federal Government, (b) any department, agency, instrumentality or other entity of the Federal Government, or (c) any Affiliate
of any of the foregoing, in each case holding Registrable Securities as a result of one or more transfers, dispositions or distributions
by the Initial Investor or any Person described in clauses (a), (b) or (c), and (ii) any successor entity of the Initial Investor
or any Person described in clause (i).
“
Person
” shall have the meaning set forth
in the Investment Agreement.
“
Piggyback Notice
” shall have the meaning
set forth in
Section 4(a)
.
“
Piggyback Registration
” shall have the
meaning set forth in
Section 4(a)
.
“
Principal Trading Market
” means the
national securities exchange(s) or other trading market(s) on which the Common Shares are primarily listed on and quoted for
trading, which, as of the date hereof, shall be the Exchanges.
“
prospectus
” means the prospectus
included in a registration statement (including a prospectus that includes any information previously omitted from a prospectus filed
as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented
by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by a registration
statement, and all other amendments and supplements to the prospectus, including post-effective amendments.
“
Register
,” “
registered
,”
and “
registration
” shall refer to a registration effected by preparing and (i) filing a registration statement
with the SEC in compliance with the Securities Act and applicable rules and regulations thereunder, and the declaration or ordering
of effectiveness of such registration statement by the SEC or (ii) filing a prospectus and/or prospectus supplement in respect of
an appropriate effective registration statement.
3
“
Registrable Securities
” means
(i) Common Shares issued pursuant to the Investment Agreement, (ii) Common Shares sold pursuant to the South32 Transaction
Agreement, including all Common Shares sold to the Investor upon exercise of the Call Option, (iii) Warrant Shares issuable (directly
or indirectly) upon exercise of the Warrants, (iv) any Common Shares hereafter acquired by an Investor or any Permitted Holder thereof,
including, for the avoidance of doubt, any Common Shares issuable (directly or indirectly) upon exercise of the Warrants and any Common
Shares issuable (directly or indirectly) upon the exercise of the Call Option, (v) any Common Shares acquired by any Affiliate of
the Investors, including the Federal Government, directly or indirectly from the Investors or another Permitted Holder thereof and which
shares were originally acquired in connection with the Investment Agreement or the South32 Transaction Agreement, and (vi) any securities
issued as (or issuable upon the conversion or exercise of any warrant, right or other security that is issued as) a dividend, stock split,
recapitalization or other distribution with respect to, or in exchange for, or in replacement of, the Common Shares referenced in clauses
(i) through (v) above; provided that the term “Registrable Securities” shall exclude in all cases any securities
(x) that are sold pursuant to an effective registration statement under the Securities Act or publicly resold in compliance with
Rule 144, or (y) that shall have ceased to be outstanding. Solely for purposes of determining at any time whether any Registrable
Securities are then held, outstanding or transferred, the Warrant shall be treated on an as-exercised basis (without regard to any limitation
on conversion in the Warrant), as Registrable Securities.
“
Registration Expenses
” shall
mean, with respect to any registration and without limitation, (i) all SEC, stock exchange, FINRA and other registration and filing
fees, (ii) all fees and expenses of compliance with securities or blue sky laws (including reasonable fees, charges and disbursements
of counsel to any underwriter incurred in connection with blue sky qualifications of Registrable Securities as may be set forth in any
underwriting agreement), all word processing, duplicating and printing expenses, messenger and delivery expenses, fees and disbursements
of counsel for the Company and all independent public accountants, fees paid to other Persons retained by the Company, (vi) the
Company’s internal expenses (including, without limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (vii) the expenses of any annual audit or quarterly review or comfort letter, (viii) the expenses
(including premiums) of any liability or other insurance and (ix) the expenses and fees for listing the securities to be registered
on each securities exchange on which the same class of securities issued by the Company are then listed.
“
Registration Statement
” means
any registration statement that is required to register the resale of Registrable Securities under this Agreement, including the related
prospectus and any pre- and post-effective amendments and supplements to each such registration statement or prospectus.
“
Requisite Investors
” shall have the
meaning set forth in Section 12.
“
SEC
” means the Securities and Exchange
Commission.
4
“
SEC Restrictions
” shall have the meaning
set forth in
Section 2(e)
.
“
Securities
” means collectively, Registrable
Securities.
“
Securities Act
” means the
Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder.
“
Selling Expenses
” shall mean
all underwriting discounts, selling commissions and stock transfer taxes, if any, applicable to the sale of Registrable Securities and
all related fees and expenses of the Investors (other than such fees and expenses included in Registration Expenses).
“
Subsidiary
” shall mean any company,
partnership, limited liability company, joint venture, joint stock company, trust, unincorporated organization or other entity at least
50% of the voting capital stock of which is owned, directly or indirectly, by the Company.
“
Suspension Period
” shall have the meaning
set forth in
Section 3(d)
.
“
Warrant Shares
” means the
Common Shares issued or issuable upon exercise of the Warrants.
“
WKSI
” means a “well
known seasoned issuer” as defined under Rule 405 of the Securities Act.
Section 2.
Resale
Registration Rights
.
(a)
No
later than sixty (60) calendar days after the Closing Date (the “
Filing Deadline
”), the Company shall prepare and
file with the SEC one registration statement on Form S-3 (the “
Initial Registration Statement
”) covering the
resale of all of the Registrable Securities not currently registered and naming the Investors as selling stockholders therein. Such Registration
Statement shall cover, to the extent allowable under the Securities Act and the rules promulgated thereunder (including Rule 416),
such indeterminate number of additional Common Shares resulting from stock splits, stock dividends or similar transactions with respect
to the Registrable Securities. If the Company is a WKSI, the Initial Registration Statement shall be an automatically effective Registration
Statement on Form S-3ASR or, if an existing registration statement on Form S-3ASR is effective, the Company may file a prospectus
supplement to such existing registration statement registering the resale of the Registrable Securities. If Form S-3 is not then
available for the registration of the resale of the Registrable Securities hereunder, the Company shall (i) register the resale
of the Registrable Securities on another appropriate form such as Form S-1 and (ii) undertake to register the Registrable Securities
on Form S-3, as soon as such form is available,
provided
, that the Company shall maintain the effectiveness of the registration
statement then in effect until such time as a registration statement on Form S-3 covering the Registrable Securities has been declared
effective by the SEC. Subject to any SEC comments, such Registration Statement shall include the plan of distribution substantially in
the form attached hereto as
Exhibit A
.
5
(b)
The
Company shall use reasonable best efforts to have the Initial Registration Statement declared effective by the SEC at the earliest possible
date but no later than the earlier of (a) the 90th calendar day following the initial filing date of the Initial
Registration Statement, if the SEC notifies the Company that it will
“review” the Initial Registration Statement, and (b) the fifth Business Day after the date the Company is notified (orally
or in writing, whichever is earlier) by the SEC that the Registration Statement will not be “reviewed” or will not be subject
to further review (the “
Effectiveness Deadline
”);
provided
,
however
, that if the Company has filed the
Initial Registration Statement pursuant to a Registration Statement on Form S-3ASR, the Effectiveness Deadline shall be the initial
filing date of the Initial Registration Statement. The Company shall notify the Investors via email within twenty-four (24) hours after
any Registration Statement is declared effective and shall simultaneously provide the Investors with access to a copy of any related
prospectus to be used in connection with the sale or other disposition of the securities covered thereby. The Company shall use reasonable
best efforts to keep the Initial Registration Statement continuously effective pursuant to Rule 415 promulgated under the Securities
Act and available for the resale by the Investors of all of the Registrable Securities covered thereby at all times until the earliest
to occur of the following events: (i) the date on which the Investors shall have resold all the Registrable Securities covered by
the applicable Registration Statement or pursuant to Rule 144; and (ii) the date on which the Registrable Securities may be
resold by the Investors without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144,
and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 or
any other rule of similar effect, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the transfer agent for the Common Shares and the affected Investor. The Company will prepare and file with the SEC
any amendments, post-effective amendments or supplements to the Initial Registration Statement or any related prospectus, as applicable,
that, (a) may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act
and the Exchange Act with respect to the sale of all of the applicable Registrable Securities covered thereby, or (b) in the reasonable
opinion of the Investors and the Company, may be necessary or advisable in connection with any acquisition or sale of applicable Registrable
Securities by the Investors. The Initial Registration Statement (including any amendments or supplements thereto and prospectuses contained
therein) shall each not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein,
or necessary to make the statements therein, in light of the circumstances in which they were made, not misleading.
(c)
If
(i) the Initial Registration Statement has not been filed by the Filing Deadline, (ii) the Initial Registration Statement has
not been declared effective by the Effectiveness Deadline, or (iii) after any Registration Statement has been declared effective
by the SEC, sales cannot be made pursuant to such Registration Statement for any reason (including without limitation by reason of a
stop order, or the Company's failure to update such Registration Statement), but excluding any Allowed Delay (as defined below) or, if
the Registration Statement is on Form S-1, for a period of 20 days following the date on which the Company files a post-effective
amendment to incorporate the Company's Annual Report on Form 10-K, then the Company will make pro rata payments to each Investor
then holding Registrable Securities, as liquidated damages and not as a penalty, in an amount equal to 1.0% of the aggregate amount paid
pursuant to the Investment Agreement by such Investor for such Registrable Securities then held by such Investor on the date of the applicable
failure and for each 30-day period or pro rata for any portion thereof during which the failure continues (the
“Blackout Period”
).
Such payments shall constitute the Investors' exclusive monetary remedy for such events, but shall not affect the right of the Investors
to seek injunctive relief. The amounts payable as liquidated damages pursuant to this paragraph shall be paid in cash no later than five
Business Days after each such failure and each such 30-day period (pro-rated for periods totaling less than 30 days) following the commencement
of the Blackout Period until the termination of the Blackout Period (the
“Blackout Period Payment Date”
). Interest
shall accrue at the rate of 1.0% per month on any such liquidated damages payments that shall not be paid by the Blackout Period Payment
Date until such amount is paid in full. Notwithstanding the above, in no event shall the aggregate amount of liquidated damages (or interest
thereon) paid under this Agreement to any Investor exceed, in the aggregate, 5.0% of the aggregate purchase price of the Securities (as
defined in the Investment Agreement) purchased by such Investor under the Investment Agreement.
6
(d)
Notwithstanding
anything to the contrary contained herein, (i) the Company shall not be required to file a Registration Statement (or any amendment
thereto) or, if a Registration Statement has been filed but not declared effective by the SEC, request effectiveness of such Registration
Statement, for a period of up to forty-five (45) days, if (A) the Company determines in good faith that a postponement is in the
best interest of the Company and its stockholders generally due to a pending transaction involving the Company (including a pending securities
offering by the Company, or any proposed financing, acquisition, merger, tender offer, business combination, corporate reorganization,
consolidation or other significant transaction involving the Company), (B) the Company determines such registration would render
the Company unable to comply with applicable securities laws, (C) the Company determines such registration would require disclosure
of material information that the Company has a bona fide business purpose for preserving as confidential, or (D) audited financial
statements as of a date other than the fiscal year end of the Company would be required to be prepared; and (ii) the Company may,
upon written notice to any holder of Registrable Securities included in a Registration Statement, suspend the use of any Registration
Statement, including any prospectus that forms a part of a Registration Statement, if the Company (X) determines that it would be
required to make disclosure of material information in the Registration Statement that the Company has a bona fide business purpose for
preserving as confidential, (Y) the Company determines it must amend or supplement the Registration Statement or the related prospectus
so that such Registration Statement or prospectus shall not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein, in the case of the prospectus in light of the circumstances
under which they were made, not misleading or (Z) the Company has experienced or is experiencing some other material non-public
event, including a pending transaction involving the Company, the disclosure of which at such time, in the good faith judgment of the
Company, would adversely affect the Company;
provided
,
however
, in no event shall holders of Registrable Securities be
suspended from selling Registrable Securities pursuant to the Registration Statement on more than two occasions or for a period that
exceeds 30 consecutive Business Days or 60 total Business Days in any 12-month period (any such suspension contemplated by this
Section 2(d)
,
an “
Allowed Delay
”). In no event shall the Company provide, without the prior written consent of an Investor, to such
Investor any material, non-public information giving rise to an Allowed Delay. Upon disclosure of such information or the termination
of the condition described above, the Company shall provide prompt notice to holders whose Registrable Securities are included in the
Registration Statement and shall promptly terminate any suspension of sales it has put into effect and shall take such other reasonable
actions to permit registered sales of Registrable Securities as contemplated hereby.
7
(e)
If
at any time the SEC takes the position that the offering of some or all of the Registrable Securities in a Registration Statement are
not eligible to be made on a delayed or continuous basis under the provisions of Rule 415 under the Securities Act or requires any
Investor to be named as an “underwriter,” the Company shall (i) promptly notify each holder of Registrable Securities
thereof and (ii) make commercially reasonable efforts to persuade the SEC that the offering contemplated by such Registration Statement
is a valid secondary offering and not an offering “by or on behalf of the issuer” as defined in Rule 415 and that none
of the Investors is an “underwriter.” The Investors shall have the right to select one legal counsel, at such Investors’
expense, to review and oversee any registration or matters pursuant to this
Section 2(e)
, including participation in any
meetings or discussions with the SEC regarding the SEC’s position and to comment on any written submission made to the SEC with
respect thereto. No such written submission with respect to this matter shall be made to the SEC to which the Investors’ Counsel
reasonably objects. In the event that, despite the Company’s commercially reasonable efforts and compliance with the terms of this
Section 2(e)
, the SEC refuses to alter its position, the Company shall (i) remove from such Registration Statement such
portion of the Registrable Securities (the “
Cut Back Shares
”) as provided below and/or (ii) agree to such restrictions
and limitations on the registration and resale of the Registrable Securities as the SEC may require to assure the Company’s compliance
with the requirements of Rule 415 (collectively, the “
SEC Restrictions
”);
provided
,
however
, that
the Company shall not name any Investor as an “underwriter” in such Registration Statement without the prior written consent
of such Investor (
provided
that, in the event an Investor withholds such consent, the Company shall have no obligation hereunder
to include any Registrable Securities of such Investor in any Registration Statement covering the resale thereof until such time as the
SEC no longer requires such Investor to be named as an “underwriter” in such Registration Statement or such Investor otherwise
consents in writing to being so named). Unless otherwise directed in writing by a holder as to its Registrable Securities, the number
of Registrable Securities to be registered on such Registration Statement will be reduced as follows (unless the SEC Restrictions otherwise
require or provide or the holders otherwise agree):
(i)
First,
the Company shall reduce or eliminate any securities to be included other than Registrable Securities;
(ii)
Second,
in the case of the Initial Registration Statement, the Company shall reduce Registrable Securities represented by Warrant Shares (applied,
in the case that some Warrant Shares may be registered, to the Investors on a
pro rata
basis
based on the total number of unregistered Warrant Shares held by such Investors); and
(iii)
Third,
the Company shall reduce Registrable Securities represented by Common Shares (applied, in the case that some Common Shares may be registered,
to the Investors on a
pro rata
basis based on the total number of unregistered Common Shares
held by such Investors).
From and after such date as the Company is
able to effect the registration of such Cut Back Shares in accordance with any SEC Restrictions applicable to such Cut Back Shares
all of the provisions of this Section 2 (including the Company’s obligations with respect to the filing of a Registration
Statement and its obligations to use reasonable efforts to have such Registration Statement declared effective within the time
periods set forth herein and the liquidated damages provisions relating thereto) shall again be applicable to such Cut Back Shares
and any registration statement so filed shall be deemed a “Registration Statement” under this Agreement.
8
Section 3.
Demand
Registration
.
(a)
Subject
to the terms and conditions of this Agreement, including
Section 2(d)
, if at any time following the Closing Date, the Company
receives a written request from an Investor, or group of Investors, that the Company register under the Securities Act, Registrable Securities
representing at least 20% of the Registrable Securities then held by all Investors, then the Company shall file, as promptly as reasonably
practicable but no later than thirty (30) calendar days following the date of receipt of such request, a Registration Statement under
the Securities Act covering all Registrable Securities that the Investors request to be registered. If the Company is a WKSI, the Initial
Registration Statement shall be an automatically effective Registration Statement on Form S-3ASR or, if an existing registration
statement on Form S-3ASR is effective, the Company may file a prospectus supplement to such existing registration statement registering
the resale of the Registrable Securities. If Form S-3 is not then available for the registration of the resale of Registrable Securities
hereunder, the Company shall (i) register the resale of the Registrable Securities on another appropriate form such as Form S-1
and (ii) undertake to register the Registrable Securities on Form S-3, as soon as such form is available,
provided
,
that the Company shall maintain the effectiveness of the Registration Statement then in effect until such time as a Registration Statement
on Form S-3 or covering the Registrable Securities has been declared effective by the SEC.
(b)
If
the requesting Investors intend to distribute the Registrable Securities covered by their request by means of an underwriting, (i) such
Investors shall so advise the Company as a part of its request made pursuant to
Section 3(a)
and (ii) such Investors
shall have the right to appoint the book-running, managing and other underwriter(s) after consultation with the Company.
(c)
The
Company shall not be required to effect a registration pursuant to this
Section 3
: (i) after the Company has effected
three registrations pursuant to this
Section 3
, and each of such registrations has been declared or ordered effective and
kept effective by the Company as required by
Section 7(a)
; or (ii) more than twice during any single calendar year;
provided
,
however
, that a request for registration will not count for the purposes of this limitation if (x) the applicable
Investors determine in good faith to withdraw (prior to the effective date of the Registration Statement relating to such request) the
proposed registration, or (y) the Registration Statement relating to such request is not declared effective within the Effectiveness
Deadline.
9
(d)
Notwithstanding
anything to the contrary in this Agreement, (1) upon notice to the applicable Investors, the Company may delay the filing and/or
the Effectiveness Deadline with respect to, or suspend the effectiveness or availability of, any Registration Statement filed pursuant
to this
Section 3
for up to ninety (90) days in the aggregate in any twelve-month period (a “
Suspension Period
”)
if the Company would have to make an Adverse Disclosure in connection with the Registration Statement;
provided
that any suspension
of a Registration Statement pursuant to
Section 8(a)
or
Section 7(j)
shall be treated as a Suspension
Period for purposes of calculating the maximum number of days of any Suspension Period under this
Section 3(d)
; and (2) upon
notice to the applicable Investors, the Company may delay the filing and/or the Effectiveness Deadline with respect to any Registration
Statement for a period not to exceed thirty (30) days prior to the Company’s good faith estimate of the launch date of, and ninety
(90) days after the closing date of, a Company initiated registered offering of equity securities (including equity securities convertible
into or exchangeable for Common Shares);
provided
that (i) the Company is actively employing in good faith all commercially
reasonable efforts to launch such registered offering throughout such period, (ii) the Investors are afforded the opportunity to
include Registrable Securities in such registered offering in accordance with
Section 4
and (iii) the right to delay
or suspend the effectiveness or availability of such Registration Statement pursuant to this clause (2) shall not be exercised by
the Company more than two (2) times in any twelve-month period and not more than ninety (90) days in the aggregate in any twelve-month
period. If the Company shall delay any filing pursuant to this
Section 3(d)
for more than ten (10) Business Days,
the applicable Investors may withdraw the demand therefor at any time after such ten (10) Business Days so long as such delay is
then continuing by providing written notice to the Company to such effect, and any demand so withdrawn shall not count as a demand for
registration for any purpose under this
Section 3
, including
Section 3(c)
.
(e)
The
Company shall use reasonable best efforts to have each Registration Statement filed pursuant to this
Section 3
declared effective
by the SEC at the earliest possible date but no later than the earlier of (a) the 90th calendar day following the initial filing
date of such Registration Statement, if the SEC notifies the Company that it will “review” the Registration Statement and
(b) the fifth Business Day after the applicable Effectiveness Deadline, and in any event, will notify the applicable Investors via
email within twenty-four (24) hours after any Registration Statement is declared effective and shall simultaneously provide the Investors
with access to a copy of any related prospectus to be used in connection with the sale or other disposition of the securities covered
thereby. The Company shall use reasonable best efforts to keep the Registration Statement continuously effective pursuant to Rule 415
promulgated under the Securities Act and available for the resale by the Investors of all of the Registrable Securities covered thereby
at all times until the earliest to occur of the following events: (i) the date on which the Investors shall have resold all the
Registrable Securities covered thereby by the applicable Registration Statement; and (ii) the date on which the Registrable Securities
may be resold by the Investors without registration and without regard to any volume or manner-of-sale limitations by reason of Rule 144,
and without the requirement for the Company to be in compliance with the current public information requirement under Rule 144 or
any other rule of similar effect, as determined by counsel to the Company pursuant to a written opinion letter to such effect, addressed
and acceptable to the transfer agent for the Common Shares and the affected Investor. The Company will prepare and file with the SEC
any amendments, post-effective amendments or supplements to the Registration Statement or any related prospectus, as applicable, that,
(a) may be necessary to keep such Registration Statement effective and to comply with the provisions of the Securities Act and the
Exchange Act with respect to the sale of all of the Registrable Securities covered thereby, or (b) in the reasonable opinion of
the Investors and the Company, may be necessary or advisable in connection with any acquisition or sale of Registrable Securities by
the Investors. The Registration Statement (including any amendments or supplements thereto and prospectuses contained therein) shall
each not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein, or necessary
to make the statements therein, in light of the circumstances in which they were made, not misleading.
10
(f)
Notwithstanding
the foregoing, if the managing underwriter(s) of an underwritten offering in connection with any registration pursuant to this
Section 3
advises the Company and the Investors in writing that, in its good faith judgment, the number of Registrable Securities requested to
be included in such offering exceeds the number of Registrable Securities which can be sold in such offering at a price acceptable to
the Investors, then the number of Registrable Securities so requested to be included in such offering shall be reduced to that number
of shares which, in the good faith judgment of the managing underwriter, can be sold in such offering at such price.
Section 4.
Piggyback
Registration
.
(a)
Subject
to the terms and conditions of this Agreement, if at any time the Company files a registration statement under the Securities Act with
respect to an offering of Common Shares or other equity securities of the Company (such Common Shares and other equity securities collectively,
“
Other Securities
”), whether or not for sale for its own account (other than a registration statement (i) on
Form S-4, Form S-8 or any successor forms, (ii) filed solely in connection with any employee benefit or dividend reinvestment
plan, (iii) for a rights offering or an exchange offer or offering of securities solely to the Company’s existing shareholders,
(iv) for an offering of debt, preferred equity or other securities convertible, exchangeable or exercisable into equity securities
of the Company or (v) pursuant to and in accordance with
Section 2
or
Section 3
) and, at such time (with
respect to the proposition to file a registration statement), there is not an already existing Registration Statement covering the Registrable
Securities, then the Company shall use commercially reasonable efforts to give written notice of such filing to the Investors at least
ten (10) Business Days before the anticipated filing date (the “
Piggyback Notice
”). In no event shall the Company
provide, without the prior written consent of an Investor, to such Investor any material, non-public information in the Piggyback Notice.
The Piggyback Notice shall offer each Investor the opportunity to include in such registration statement, subject to the terms and conditions
of this Agreement, the number of Registrable Securities as such Investor may reasonably request (a “
Piggyback Registration
”).
Subject to the terms and conditions of this Agreement, the Company shall use its commercially reasonable efforts to include in each such
Piggyback Registration all Registrable Securities with respect to which the Company has received from the Investors written requests
for inclusion therein within ten (10) Business Days following receipt of any Piggyback Notice by the Investors, which request shall
specify the maximum number of Registrable Securities intended to be disposed of by the Investors and the intended method of distribution.
For the avoidance of doubt and notwithstanding anything in this Agreement to the contrary, the Company may not commence or permit the
commencement of any sale of Other Securities in a public offering to which this
Section 4
applies unless the Investors shall
have received the Piggyback Notice in respect to such public offering not less than ten (10) Business Days prior to the commencement
of such sale of Other Securities. Each Investor shall be permitted to withdraw all or part of the Registrable Securities from a Piggyback
Registration at any time at least two (2) Business Days prior to the effective date of the registration statement relating to such
Piggyback Registration. No Piggyback Registration shall count towards the number of demand registrations that the Investors are entitled
to make in any period or in total pursuant to
Section 3
. The Company shall 11 not be required to maintain the effectiveness
of a Piggyback Registration beyond the earlier of (x) 180 days after the effective date thereof and (y) consummation of the
distribution by the Investors of the Registrable Securities, if any, included in such registration statement.
11
(b)
If
any Other Securities are to be sold in an underwritten offering, (1) the Company or other Persons designated by the Company shall
have the right to appoint the book-running, managing and other underwriter(s) for such offering in their discretion and (2) the
Investors shall be permitted to include all Registrable Securities requested by the Investors to be included in such registration in
such underwritten offering on the same terms and conditions as such Other Securities proposed by the Company or any third party to be
included in such offering;
provided
,
however
, that if such offering involves an underwritten offering and the managing
underwriter(s) of such underwritten offering advise the Company in writing that it is their good faith opinion that the total amount
of Registrable Securities requested to be so included, together with all Other Securities that the Company and any other Persons having
rights to participate in such registration intend to include in such offering, exceeds the total number or dollar amount of such securities
that can be sold without having an adverse effect on the price, timing or distribution of the Registrable Securities to be so included
together with all Other Securities, then there shall be included in such firm commitment underwritten offering the number or dollar amount
of Registrable Securities and such Other Securities that in the good faith opinion of such managing underwriter(s) can be sold without
so adversely affecting such offering, and such number of Registrable Securities and Other Securities shall be allocated for inclusion
as follows: (x) to the extent such public offering is the result of a registration initiated by the Company, (i)
first
,
all Other Securities being sold by the Company; (ii)
second
, all Registrable Securities requested to be included in such
registration by the Investors and (iii)
third
all Other Securities of any holders thereof (other than the Company and the
Investors) requesting inclusion in such registration, or (y) to the extent such public offering is the result of a registration
initiated by any Persons (other than the Company or the Investors) exercising a contractual right to demand registration, (i)
first
,
pro rata
among all Other Securities owned by such Persons exercising the contractual right
and all Registrable Securities requested by the Investors to be included in such registration, (ii)
second
, all Other Securities
of any holders thereof (other than the Investors, the Company and the Persons exercising the contractual right) requesting inclusion
in such registration,
pro rata
, based on the aggregate number of Other Securities beneficially
owned by each such holder; and (iii)
third
, all Other Securities being sold by the Company.
Section 5.
Block
Trades
. Notwithstanding any other provision of this Agreement, if an Investor desires to effect a Block Trade, then such Investor
shall provide written notice to the Company at least five (5) Business Days prior to the date such Block Trade will commence. The
Company shall use its commercially reasonable efforts to facilitate such Block Trade,
provided
that such Investor engaging in
such Block Trade use their reasonable best efforts to work with the Company (including by disclosing the maximum number of Registrable
Securities proposed to be the subject of such Block Trade) in order to facilitate preparation of the Registration Statement, prospectus
and other offering documentation related to the Block Trade and any related due diligence and comfort procedures. In the event of a Block
Trade, and after consultation with the Company, the Investor shall determine the maximum number of Registrable Securities, the underwriter
or underwriters (which shall consist of one or more reputable nationally recognized investment banks) and share price of such offering,
provided
, that any such Investors may not, without the Company’s prior written consent, request a Block Trade the reasonably
anticipated gross proceeds of which shall be less than $5,000,000 (unless the participating Investors are proposing to sell all of their
remaining Registrable Securities).
12
Section 6.
Expenses
of Registration
.
(a)
Except
as specifically provided for in this Agreement, all Registration Expenses incurred in connection with any registration, qualification
or compliance hereunder shall be borne by the Company. All Selling Expenses incurred in connection with any registration hereunder, shall
be borne by the Investors in proportion to the number of Registrable Securities for which registration was requested. The Company shall
not, however, be required to reimburse the Investors, as applicable, for any Registration Expenses incurred by them for any registration
proceeding begun pursuant to
Section 3
, the request of which has been subsequently withdrawn by the Investors unless (a) the
withdrawal is based upon materially adverse circumstances or conditions or material adverse information concerning the Company or its
Subsidiaries that the Company had not publicly disclosed in a report filed with or furnished to the SEC under the Exchange Act at least
three (3) Business Days prior to the request, (b) the withdrawal is made in accordance with the last sentence of
Section 3(d)
,
or (c) the Investors agree to forfeit their right to one requested registration pursuant to
Section 3
.
(b)
In
connection with each registration pursuant to
Sections 2
and 3, in addition to the Registration Expenses payable pursuant to
Section 6(a)
,
the Company shall pay, or cause to be paid, the reasonable fees and expenses incurred by Investor for no more than one United States
counsel, which shall initially be McDermott Will & Schulte LLP (“
Investors’ Counsel
”).
(c)
The
Company’s payment of fees and expenses of the Investors pursuant to clauses (a) and (b) above shall not exceed $100,000.
Section 7.
Obligations
of the Company
. Whenever required to effect the registration of any Registrable Securities pursuant to
Section 2
,
Section 3
or
Section 4
of this Agreement, the Company shall, as promptly as reasonably practicable:
(a)
With
respect to a registration pursuant to
Section 2
or
Section 3
of this Agreement, prepare and as soon as practicable
file with the SEC a Registration Statement (including all required exhibits to such Registration Statement ) with respect to such Registrable
Securities and use reasonable best efforts to cause such Registration Statement to become effective, or prepare and file with the SEC
a prospectus supplement with respect to such Registrable Securities pursuant to an effective Registration Statement and keep such Registration
Statement effective or such prospectus supplement current, in the case of a registration pursuant to
Section 2
,
Section 3
,
or
Section 4
, in accordance with
Section 2
,
Section 3
, or
Section 4
, as applicable. The
Company shall file any final prospectus, including any supplement or amendment thereof, with the SEC pursuant to Rule 424 under
the Securities Act by 9:30 a.m. New York time on the Business Day following the date the applicable Registration Statement is declared
effective.
13
(b)
Prepare
and file with the SEC such amendments and supplements to the applicable Registration Statement and the prospectus or prospectus supplement
used in connection with such Registration Statement as may be necessary to comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such Registration Statement for the period required by
Section 2
,
Section 3
or
Section 4
of this Agreement (including any extension provided for therein).
(c)
Not
less than five (5) Business Days prior to the filing of a Registration Statement or any related prospectus or any amendment or supplement
thereto, the Company shall furnish to the Investors and Investors’ Counsel copies of all such documents proposed to be filed and
give reasonable consideration to the inclusion in such documents of any comments reasonably and timely made by the Investors and Investors’
Counsel;
provided
that the Company shall include in such documents any such comments that are necessary to correct any material
misstatement or omission regarding the Investor.
(d)
Furnish
to the Investors and Investors’ Counsel such number of copies of the applicable Registration Statement and each such amendment
and supplement thereto (including upon request in each case all exhibits but not documents incorporated by reference) and of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as the Investors
may reasonably request in order to facilitate the disposition of Registrable Securities by the Investors. The Company hereby consents
to the use of such prospectus and each amendment or supplement thereto by the Investors in accordance with applicable Law in connection
with the offering and sale of the Registrable Securities covered by such prospectus and any amendment or supplement thereto.
(e)
Prior
to any offering of Common Shares pursuant to the Registration Statement, the Company shall use commercially reasonable efforts to (i) arrange
for the qualification of the Common Shares for offer and sale under the securities or “blue sky” laws of such states of the
United States as the Investors shall reasonably request and shall maintain such qualification in effect so long as required to enable
the Investors to consummate the disposition in such jurisdictions of the Common Shares, and (ii) reasonably cooperate with the Investors
in connection with any filings required to be made with FINRA;
provided
, that in no event shall the Company be obligated to qualify
to do business in any jurisdiction where it is not then so qualified or to take any action that would subject it to taxation or service
of process in suits, other than those arising out of any offering pursuant to the Registration Statement, in any jurisdiction where it
is not then so subject.
(f)
Enter
customary agreements and take such other actions as are reasonably required in order to facilitate the disposition of such Registrable
Securities, including, if the method of distribution of Registrable Securities is by means of an underwritten offering, using commercially
reasonable efforts to, (i) participate in and make documents available for the reasonable and customary due diligence review of
underwriters during normal business hours, on reasonable advance notice and without undue burden or hardship on the Company;
provided
that (A) any party receiving confidential materials shall execute a confidentiality agreement on customary terms if reasonably requested
by the Company and (B) the Company may in its reasonable discretion restrict access to competitively sensitive or legally privileged
documents or information, (ii) cause the chief executive officer and chief financial officer to be available at reasonable dates
and times to participate in “road show” presentations and/or investor conference calls to market the Registrable Securities
during normal business hours, on reasonable advance notice and without undue burden or hardship on the Company or the conduct of the
Business of the Company;
provided
that the aggregate number of days of “road show” presentations in connection with
an underwritten offering of Registrable Securities for each registration pursuant to a demand made under
Section 3
shall
not exceed five (5) Business Days and (iii) negotiate and execute an underwriting agreement in customary form with the managing
underwriter(s) of such offering and such other documents reasonably required under the terms of such underwriting arrangements,
including using commercially reasonable efforts to procure a customary legal opinion and auditor “comfort” letters;
provided
,
that the Company’s obligations under this section 7(f) is limited to an underwritten offering of Registrable Securities the
reasonably anticipated gross proceeds of which shall be no less than $10,000,000 (unless the participating Investors are proposing to
sell all of their remaining Registrable Securities). The Investors shall also enter into and perform their obligations under any such
underwriting agreement.
14
(g)
Give
notice to the Investors as promptly as reasonably practicable:
(i)
when
any Registration Statement filed pursuant to
Section 3
or in which Registrable Securities are included pursuant to
Section 4
or any amendment to such Registration Statement has been filed with the SEC and when such Registration Statement or any post-effective
amendment to such Registration Statement has become effective;
(ii)
of
any request by the SEC for amendments or supplements to any Registration Statement (or any information incorporated by reference in,
or exhibits to, such Registration Statement ) filed pursuant to
Section 3
or in which Registrable Securities are included
pursuant to
Section 4
or the prospectus (including information incorporated by reference in such prospectus) included in
such Registration Statement or for additional information;
(iii)
of
the issuance by the SEC of any stop order suspending the effectiveness of any Registration Statement filed pursuant to
Section 3
or in which Registrable Securities are included pursuant to
Section 4
or the initiation of any proceedings for that purpose;
(iv)
of
the receipt by the Company or its legal counsel of any notification with respect to the suspension of the qualification of the Common
Shares for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and
(v)
of
the occurrence of any event that requires the Company to make changes to any effective Registration Statement or the prospectus so that,
as of such date, they (A) do not contain any untrue statement of a material fact and (B) do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in the case of the prospectus, in the light of the circumstances
under which they were made) not misleading.
(h)
Use
its commercially reasonable efforts to prevent the issuance or obtain the withdrawal of any order suspending the effectiveness of any
Registration Statement referred to in
Section 7(g)(iii)
at the earliest practicable time.
15
(i)
Upon
request, furnish to the Investors, without charge, at least one copy of the Registration Statement and any post-effective amendment thereto,
and, if the Investors so request in writing, all exhibits thereto.
(j)
Upon
the occurrence of any event contemplated by subsections
(g)(iii)
through
(v)
above, the Company shall promptly
prepare and file a post-effective amendment to the Registration Statement or an amendment or supplement to the related prospectus or
file any other required document to remedy the basis for any suspension of the Registration Statement and so that, as thereafter delivered
to any sales or placement agents or underwriters acting on the Investors’ behalf, the prospectus will not include an untrue statement
of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading. If the Company notifies the Investors in accordance with subsections
(g)(iii)
through
(v)
above to suspend the use of the prospectus until the requisite changes to the prospectus
have been made, then the Investors shall suspend the use of such prospectus and use its commercially reasonable efforts to return to
the Company all copies of such prospectus (at the Company’s expense) other than permanent file copies then in the Investors’
or its representatives’ possession;
provided
that such suspension shall be treated as a Suspension Period for purposes of
calculating the maximum number of days of any Suspension Period under
Section 3(d)
.
(k)
Use
all commercially reasonable efforts to furnish or make available (and cause the Company’s officers, directors, employees and independent
public accountants to furnish or make available) upon reasonable notice and during normal business hours, for inspection by the Investors, Investors’
Counsel, any underwriter participating in any disposition pursuant to such Registration Statement and any attorney, accountant or other
agent retained by any such seller or underwriter (collectively the “
Inspectors
”), all pertinent financial and other
records, pertinent documents and properties of the Company and its Subsidiaries, as shall be reasonably necessary to enable them to exercise
their due diligence responsibility pursuant to the Securities Act, the Exchange Act and the rules and regulations thereunder, and
cause the Company’s officers, directors and employees to supply all information reasonably requested by any such Inspector in connection
with such Registration Statement. Records that the Company determines, in good faith, to be confidential and which it notifies the Inspectors
are confidential shall not be disclosed by the Inspectors (and the Inspectors shall confirm their agreement in writing in advance to
the Company if the Company shall so request) unless (A) the disclosure of such Records is necessary, in the Inspector’s judgment,
to avoid or correct a misstatement or omission in the Registration Statement, (B) the release of such records is ordered pursuant
to a subpoena or other order from a court of competent jurisdiction after compliance with the last sentence of this
clause (k)
or
(C) the information in such records was known to the Inspectors on a nonconfidential basis prior to its disclosure by the Company
or has been made generally available to the public. The Company understands that Initial Investor is subject to the U.S. Freedom of Information
Act (“FOIA”), 5 U.S.C. § 551 et seq., and is required to disclose records requested by the public unless the records
are exempt from disclosure under FOIA. If Initial Investor or any successor Investor receives requests from the public for disclosure
of Parent’s confidential information, it will, consistent with the regulations at 32 C.F.R. § 286.10, notify the Company and
will reasonably consider any request from the Company to withhold the confidential information from disclosure under any applicable exemptions
in the FOIA, in accordance with relevant agency procedures. If the Investor determines that an exemption applies, it will withhold the
confidential information from disclosure unless ordered by a federal court to disclose the confidential information. If the Investor
determines that no exemption applies, Investor shall (i) use commercially reasonable efforts to provide Parent with prior written
notice of any information that it intends to disclose, to the extent permitted by applicable Law, and (ii) limit its disclosure
to the maximum extent permitted by applicable Law. The Investors agree that they shall, upon learning that disclosure of such records
is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to
undertake appropriate action to prevent disclosure of the records deemed confidential.
16
(l)
Keep
Investors and Investors’ Counsel advised in writing as to the initiation and, as appropriate, of the progress of any registration
under
Section 3
or
Section 4
and provide Investors’ Counsel with all correspondence with the SEC in connection
with any such Registration Statement.
(m)
No
later than the later of (i) the date which is four months and one day after the Closing Date, and (ii) the effective date of
any Registration Statement, use commercially reasonable efforts to procure the cooperation of the Company’s transfer agent for
settling any offering or sale of Registrable Securities, including with respect to the transfer of physical stock certificates into book-entry
form in accordance with any procedures reasonably requested by the Investors or the managing underwriter(s). In connection therewith,
if reasonably required by the Company’s transfer agent, the Company shall promptly after the effectiveness of the Registration
Statement cause an opinion of counsel as to the effectiveness of the Registration Statement to be delivered to and maintained with its
transfer agent, together with any other authorizations, certificates and directions required by the transfer agent which authorize and
direct the transfer agent to issue such Registrable Securities without legend upon sale by the holder of such shares of Registrable Securities
under the Registration Statement following the date that is four months and one day after the Closing Date.
(n)
Use
its reasonable best efforts to take or cause to be taken all other actions, and do and cause to be done all other things, necessary or
reasonably advisable in the opinion of the Investors to effect the registration of the Registrable Securities contemplated hereby and
to cause all Registrable Securities covered by a Registration Statement to be listed on the Principal Trading Market.
Section 8.
Suspension
of Sales
.
(a)
Upon
receipt of written notice from the Company pursuant to
Section 7(g)(v)
of an Allowed Delay, the Investors shall promptly
discontinue disposition of Registrable Securities until the Investors (i) have received copies of a supplemented or amended prospectus
or prospectus supplement pursuant to
Section 7(j)
or (ii) is advised in writing by the Company that the use of
the prospectus and, if applicable, prospectus supplement may be resumed, and, if so directed by the Company, the Investors shall deliver
to the Company (at the Company’s expense) all copies, other than permanent file copies then in the Investors’ possession,
of the prospectus and, if applicable, prospectus supplement covering such Registrable Securities current at the time of receipt of such
notice. Notwithstanding anything to the contrary, the Company shall cause its transfer agent to deliver unlegended securities to a transferee
of an Investor in connection with any sale of Registrable Securities with respect to which such Investor has entered into a contract
for sale, prior to such Investor’s receipt of the notice and for which such Investor has not yet settled.
17
Section 9.
Indemnification
.
(a)
Notwithstanding
any termination of this Agreement, the Company shall indemnify and hold harmless the Investors, including for the avoidance of doubt,
any Permitted Holder, and their respective officers, directors, employees, agents, partners, members, stockholders, representatives and
affiliates, and each person or entity, if any, that controls the Investors and any participating Permitted Holder within the meaning
of Section 15 of the Securities Act or Section 20 of the Exchange Act and the officers, directors, employees, agents and employees
of each such controlling Person (each, an “
Investor Indemnitee
”), against any and all losses, claims, damages, actions,
liabilities, costs and expenses (including reasonable fees, expenses and disbursements of attorneys and other professionals), joint or
several, arising out of or based upon any untrue or alleged untrue statement of material fact contained or incorporated by reference
in any registration statement, including any preliminary prospectus or final prospectus contained therein or any amendments or supplements
thereto or contained in any “issuer free writing prospectus” (as such term is defined in Rule 433 under the Securities
Act) prepared by the Company or authorized by it in writing for use by the Investors or any amendment or supplement thereto; or any omission
or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading;
provided
that the Company shall not be liable to such Investor
Indemnitee to the extent that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises
out of or is based upon (i) any untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance
upon and in conformity with written information furnished to the Company by or on behalf of the Investor Indemnitee claiming indemnification
specifically for inclusion therein, (ii) offers or sales effected by or on behalf such Investor Indemnitee “by means of”
(as defined in Securities Act Rule 159A) a “free writing prospectus” (as defined in Securities Act Rule 405) that
was not authorized in writing by the Company, or (iii) the failure to deliver or make available to a purchaser of Registrable Securities
a copy of any preliminary prospectus, pricing information or final prospectus contained in the applicable registration statement or any
amendments or supplements thereto (to the extent the same is required by applicable Law to be delivered or made available to such purchaser
at the time of sale of contract);
provided
that the Company shall have delivered to the Investors such preliminary prospectus
or final prospectus contained in the applicable registration statement and any amendments or supplements thereto pursuant to
Section 7(d)
no
later than the time of contract of sale in accordance with Rule 159 under the Securities Act.
Section 10.
Agreement
to Furnish Information
. If reasonably requested by the Company or the book-running managing underwriters of Common Shares
(or other securities of the Company convertible into Common Shares), the Investors shall provide such information regarding the Investors,
and their respective Registrable Securities, as may be reasonably required by the Company or such representative of the book-running
managing underwriters in connection with the filing of a Registration Statement and the completion of any public offering of the Registrable
Securities pursuant to this Agreement. In so far as this Section 10 applies to 18 Initial Investor or any successor Investor that
is an agency or instrumentality of the Federal Government, the Company shall not request, and neither Initial Investor nor any successor
Investor shall provide, any information that would not otherwise be subject to disclosure under the Freedom of Information Act, 5 U.S.C.
§ 552 (FOIA).
18
Section 11.
Rule 144
Reporting
. With a view to making available to the Investors the benefits of certain rules and regulations of the SEC which
may permit the sale of the Registrable Securities that are Common Shares to the public without registration, the Company agrees to use
its commercially reasonable efforts to: (i) make and keep public information available, as those terms are understood and defined
in Rule 144 under the Securities Act or any similar or analogous rule promulgated under the Securities Act, at all times after
the effective date of this Agreement; (ii) file with the SEC, in a timely manner, all reports and other documents required of the
Company under the Exchange Act; and (iii) so long as the Investors and any Permitted Holder owns any Registrable Securities, furnish
to the Investors forthwith upon request: a written statement by the Company as to its compliance with the reporting requirements of Rule 144
under the Securities Act, and of the Exchange Act; a copy of the most recent annual or quarterly report of the Company; and such other
reports and documents as the Investors may reasonably request in availing themselves of any rule or regulation of the SEC allowing
it to sell any such Common Shares without registration.
Section 12.
Termination
.
Other than as expressly set forth in this Agreement, this Agreement shall terminate (a) upon the mutual written agreement of the
Company, and the Investors holding a majority of the Registrable Securities then outstanding (determined as if all of the Warrants then
outstanding have been exercised without regard to any limitations on the exercise of such Warrants), which shall include the Initial
Investor if the Initial Investor then holds Registrable Securities (the “
Requisite Investors
”), or (b) the date
on which all Investors or their Permitted Holders no longer hold any Registrable Securities;
provided
,
however
, that the
provisions of
Section 9
shall survive the expiration or earlier termination of this Agreement for any reason whatsoever.
Section 13.
Canadian
Securities Matters
. Notwithstanding anything to the contrary in this Agreement, if the Registrable Securities are issued within
four months and a day from the date on which the Warrants are issued, such Registrable Securities will bear the following legend: “UNLESS
PERMITTED UNDER SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE JANUARY 12, 2027”.
Section 15.
Miscellaneous
.
(a)
No
Inconsistent Agreements; Additional Rights
. The Company represents and warrants that it has not entered into, and agrees that it
will not enter into, any agreement with respect to its securities that violates or subordinates or is otherwise inconsistent with the
rights granted to the Investors under this Agreement. If the Company enters into any agreement after the date hereof granting any Person
registration rights with respect to any security of the Company which agreement contains any material provisions more favorable to such
Person than those set forth in this Agreement, the Company will notify the Investors and will agree to such amendments to this Agreement
as may be necessary to provide these rights to the Investors, at Investors’ election.
19
(b)
Governing
Law
. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be determined in
accordance with the provisions of the Investment Agreement and
Section 1.4
thereof is hereby incorporated herein
mutatis
mutandis
.
(c)
Successors
and Assigns
. None of the parties may assign its rights or obligations under this Agreement or designate another person (i) to
perform all or part of its obligations under this Agreement or (ii) to have all or part of its rights and benefits under this Agreement,
in each case without the prior written consent of (x) the Company, in the case of an Investor, and (y) the Requisite Investors,
in the case of the Company;
provided
,
however
, that such prior written consent shall not be required in the event of a
transfer or assignment to a Permitted Holder. In the event of any assignment in accordance with the terms of this Agreement, the assignee
shall specifically assume and be bound by the provisions of this Agreement by executing a writing agreeing to be bound by and subject
to the provisions of this Agreement and shall deliver an executed counterpart signature page to this Agreement and, notwithstanding
such assumption or agreement to be bound hereby by an assignee, no such assignment shall relieve any party assigning any interest hereunder
from its obligations or liability pursuant to this Agreement.
(d)
No
Third-Party Beneficiaries
. Notwithstanding anything contained in this Agreement to the contrary, nothing in this Agreement, expressed
or implied, is intended to confer, and this Agreement shall not confer, on any Person other than the parties to this Agreement thereof
any rights, remedies, obligations or liabilities under or by reason of this Agreement, and no other Persons shall have any standing with
respect to this Agreement or the transactions contemplated by this Agreement.
(e)
Entire
Agreement
. This Agreement, the Investment Agreement, and the other documents delivered pursuant to the Investment Agreement constitute
the full and entire understanding and agreement among the parties hereto with regard to the subjects of this Agreement and such other
agreements and documents.
(f)
Notices
.
Except as otherwise provided in this Agreement, all notices, requests, claims, demands, waivers and other communications required or
permitted under this Agreement shall be in writing and shall be mailed by reliable overnight delivery service or delivered by hand, facsimile
or messenger, and email, as follows:
If to the Company:
Trilogy Metals Inc.
510 Burrard Street, Suite 901
Vancouver, British Columbia V6C 3A8
Attention: Elaine Sanders
Email: [redacted]
20
With a copy (which will not constitute notice) to:
Dorsey &Whitney LLP
701 Fifth Avenue. Suite 6100
Seattle, WA 98104
Attention: Kimberley Anderson
E-mail: [redacted]
If to the Investors:
to the address set forth on the signature pages hereto
with a copy (which will not constitute notice) to:
McDermott Will & Schulte LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067-3206
Attention: Edward Zaelke
Email: [redacted]
or in any such case to such other address, facsimile number or telephone
as any party hereto may, from time to time, designate in a written notice given in a like manner. Notices shall be deemed given when
actually delivered by overnight delivery service, hand or messenger, or when received by facsimile if promptly confirmed, or, in the
case of email to the email addresses given above, on the date that the recipient acknowledges having received the email.
(g)
Delays
or Omissions
. No delay or omission to exercise any right, power, or remedy accruing to any party to this Agreement shall impair any
such right, power, or remedy of such party, nor shall it be construed to be a waiver of or acquiescence in any breach or default, or
of or in any similar breach or default thereafter occurring; nor shall any waiver of any single breach or default be deemed a waiver
of any other breach or default. All remedies, either under this Agreement or by law or otherwise afforded to the Investors, shall be
cumulative and not alternative.
(h)
Expenses
.
The Company and the Investors shall bear their own expenses and legal fees incurred on their behalf with respect to this Agreement and
the transactions contemplated hereby, except as otherwise provided in
Section 6
.
(i)
Amendments
and Waivers
. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only if such amendment or waiver is in writing and signed, in
the case of an amendment, by the Company and the Requisite Investors. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities at the time outstanding (including securities convertible into Registrable
Securities), each future holder of all such Registrable Securities, and the Company;
provided
, that any amendment, modification,
supplement or waiver that disproportionately and adversely affects the rights and obligations of any Investor relative to the comparable
rights and obligations of the other Investors shall require the prior written consent of such adversely affected Investor.
21
(j)
Non-Recourse
.
All claims or causes of action (whether in contract or in tort, in law or in equity) that may be based upon, arise out of or relate to
this Agreement, or the negotiation, execution or performance of this Agreement (including any representation or warranty made in or in
connection with this Agreement or as an inducement to enter into this Agreement), may be made only against the entities that are expressly
identified as parties hereto and only with respect to the specific obligations undertaken by such parties as set forth herein with respect
to such parties and no other Person shall have any liability for any obligations or liabilities based upon, arising out of, or related
to this Agreement or the Transactions and no Person who is not a named party to this Agreement, including without limitation any present
or past director, officer, employee, incorporator, member, partner, direct or indirect equityholder (including any members, partners
or stockholders), manager, employee, incorporator, controlling person, management company, general partner, affiliate, trustees, agent,
attorney, advisor, permitted assign and predecessor of any named party to this Agreement (“
Non-Party Affiliates
”),
shall have any liability (whether in contract or in tort, in law or in equity, or based upon any theory that seeks to impose damages
of an entity party against its owners or affiliates) for any damages arising under, in connection with or related to this Agreement or
for any claim based on, in respect of, or by reason of this Agreement or its negotiation, execution, performance, non-performance, interpretation,
termination, enforcement, construction or execution or any of the transactions contemplated hereby and each party hereto other than Initial
Investor and any other or successor Investor that is an agency or instrumentality of the Federal Government hereby waives and releases
all such damages, claims and obligations against any such Non-Party Affiliates.
(k)
Counterparts
.
This Agreement may be executed in any number of counterparts and signatures may be delivered by facsimile or in electronic format, each
of which may be executed by less than all the parties, each of which shall be enforceable against the parties actually executing such
counterparts and all of which together shall constitute one instrument.
(l)
Severability
.
If any provision of this Agreement becomes or is declared by a court of competent jurisdiction to be illegal, unenforceable, or void,
portions of such provision, or such provision in its entirety, to the extent necessary, shall be severed from this Agreement and the
balance of this Agreement shall be enforceable in accordance with its terms.
(m)
Titles
and Subtitles; Interpretation
. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered
in construing or interpreting this Agreement. When a reference is made in this Agreement to a Section or Schedule, such reference
shall be to a Section or Schedule of this Agreement unless otherwise indicated. Whenever the words “include,” “includes”
or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation.”
The definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms and to the masculine
as well as to the feminine and neuter genders of such term. Any agreement, instrument or statute, rule or regulation defined or
referred to in this Agreement means such agreement, instrument or statute, rule or regulation as from time to time amended, modified
or supplemented, including (in the case of agreements or instruments) by waiver or consent and (in the case of statutes) by succession
of comparable successor statutes. Any reference to any section under the Securities Act or Exchange Act, or any rule promulgated
thereunder, shall include any publicly available interpretive releases, policy statements, staff accounting bulletins, staff accounting
manuals, staff legal bulletins, staff “no-action”, interpretive and exemptive letters, and staff compliance and disclosure
interpretations (including “telephone interpretations”) of such section or rule by the SEC. Each of the parties has
participated in the drafting and negotiation of this Agreement. If an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if it is drafted by each of the parties, and no presumption or burden of proof shall arise favoring or
disfavoring any party by virtue of authorship of any of the provisions of this Agreement.
[
signature page follows
]
22
IN WITNESS WHEREOF, the parties
have executed this Agreement as of the date first above written.
TRILOGY METALS INC.
By:
/s/ Tony Giardini
Name: Tony Giardini
Title: President and Chief Executive Officer
UNITED STATES DEPARTMENT OF DEFENSE
By:
/s/ Michael P. Duffey
Name: Hon. Michael P. Duffey
Title: Under Secretary of War for Acquisition and Sustainment
Address:
The Office of Industrial Base Policy
Assistant Secretary of Defense
Pentagon,
Washington D.C. 20301
Attention: Deputy Chief of Staff to the
Deputy Secretary of Defense
Email: [redacted]
[Signature Page to Registration Rights Agreement]
Exhibit A
PLAN OF DISTRIBUTION
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest, including the Federal Government, selling common shares or interests in common shares received
after the date of this prospectus from a selling stockholder as a gift, pledge, partnership distribution or other transfer, may, from
time to time, sell, transfer or otherwise dispose of any or all of their common shares or interests in common shares on any stock exchange,
market or trading facility on which the shares are traded or in private transactions. These dispositions may be at fixed prices, at prevailing
market prices at the time of sale, at prices related to the prevailing market price, at varying prices determined at the time of sale,
or at negotiated prices.
The selling stockholders may use any one or more of the following
methods when disposing of shares or interests therein:
·
distributions
to members, partners, stockholders or other equityholders of the selling stockholders;
·
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers;
·
block
trades in which the broker-dealer will attempt to sell the shares as agent, but may position
and resell a portion of the block as principal to facilitate the transaction;
·
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account;
·
an
exchange distribution in accordance with the rules of the applicable exchange;
·
privately
negotiated transactions;
·
short
sales and settlement of short sales;
·
through
the writing or settlement of options or other hedging transactions, whether through an options
exchange or otherwise;
·
broker-dealers
may agree with the selling stockholders to sell a specified number of such shares at a stipulated
price per share;
·
a
combination of any such methods of sale; and
·
any
other method permitted pursuant to applicable law.
The selling stockholders may, from time to time, pledge or grant
a security interest in some or all of the common shares owned by them and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the common shares, from time to time, under this prospectus, or
under an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act, amending
the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under
this prospectus. The selling stockholders also may transfer the common shares in other circumstances, in which case the transferees,
pledgees or other successors in interest will be the selling stockholders for purposes of this prospectus.
In addition, a selling stockholder that is an entity may elect to
make an in-kind distribution of securities to its members, partners or stockholders pursuant to the registration statement of which this
prospectus is a part by delivering a prospectus with a plan of distribution. Such members, partners or stockholders would thereby receive
freely tradeable securities pursuant to the distribution through a registration statement. To the extent a distributee is an affiliate
of ours (or to the extent otherwise required by law), we may file a prospectus supplement in order to permit the distributees to use
the prospectus to resell the securities acquired in the distribution.
In connection with the sale of our common shares or interests therein,
the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage
in short sales of the common shares in the course of hedging the positions they assume. The selling stockholders may also sell shares
of our common shares short and deliver these securities to close out their short positions, or loan or pledge the common shares to broker-dealers
that in turn may sell these securities. The selling stockholders may also enter into option or other transactions with broker-dealers
or other financial institutions or the creation of one or more derivative securities which require the delivery to such broker-dealer
or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may
resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).
The aggregate proceeds to the selling stockholders from the sale of
the common shares offered by them will be the purchase price of the common shares less discounts or commissions, if any. Each of the
selling stockholders reserves the right to accept and, together with their agents from time to time, to reject, in whole or in part,
any proposed purchase of common shares to be made directly or through agents. We will not receive any of the proceeds from this offering.
Upon any exercise of the common warrants by payment of cash, however, we will receive the exercise price of the common warrants.
The selling stockholders also may resell all or a portion of the shares
in open market transactions in reliance upon Rule 144 under the Securities Act,
provided
that they meet the criteria and
conform to the requirements of that rule, or another available exemption from the registration requirements under the Securities Act.
The selling stockholders and any underwriters, broker-dealers or
agents that participate in the sale of the common shares or interests therein may be “underwriters” within the meaning
of Section 2(a)(11) of the Securities Act (it being understood that the selling stockholders shall not be deemed to be
underwriters solely as a result of their participation in this offering). Any discounts, commissions, concessions or profit they
earn on any resale of the shares may be underwriting discounts and commissions under the Securities Act. Selling stockholders who
are “underwriters” within the meaning of Section 2(a)(11) of the Securities Act will be subject to the prospectus
delivery requirements of the Securities Act.
2
To the extent required, the shares of our common shares to be sold,
the names of the selling stockholders, the respective purchase prices and public offering prices, the names of any agent, dealer or underwriter,
and any applicable commissions or discounts with respect to a particular offer will be set forth in an accompanying prospectus supplement
or, if appropriate, a post-effective amendment to the registration statement that includes this prospectus.
In order to comply with the securities laws of some states, if applicable,
the common shares may be sold in these jurisdictions only through registered or licensed brokers or dealers. In addition, in some states
the common shares may not be sold unless it has been registered or qualified for sale or an exemption from registration or qualification
requirements is available and is complied with.
We have advised the selling stockholders that the anti-manipulation
rules of Regulation M under the Exchange Act may apply to sales of shares in the market and to the activities of the selling stockholders
and their affiliates. In addition, to the extent applicable, we will make copies of this prospectus (as it may be supplemented or amended
from time to time) available to the selling stockholders for the purpose of satisfying the prospectus delivery requirements of the Securities
Act. The selling stockholders may indemnify any broker-dealer that participates in transactions involving the sale of the shares against
certain liabilities, including liabilities arising under the Securities Act.
We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws, relating to the registration of the shares offered by this
prospectus.
We have agreed with the selling stockholders to use commercially reasonable
efforts to cause the registration statement of which this prospectus constitutes a part to become effective and to remain continuously
effective until the earlier of: (i) the date on which the selling stockholders shall have resold or otherwise disposed of all the
shares covered by this prospectus pursuant to Rule 144 or pursuant to this prospectus and (ii) the date on which the shares
covered by this prospectus may be resold by the selling stockholders without registration and without regard to any volume or manner-of-sale
limitations and without current public information pursuant to Rule 144 under the Securities Act or any other rule of similar
effect.
3

----- tm2624736d1_ex10-5.htm -----
EX-10.5
6
tm2624736d1_ex10-5.htm
EXHIBIT 10.5
Exhibit 10.5
THE SECURITIES REPRESENTED HEREBY AND THE SECURITIES
ISSUABLE UPON EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR UNDER ANY SECURITIES
LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT AS PERMITTED UNDER THE ACT
AND APPLICABLE STATE SECURITIES LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM.
UNLESS PERMITTED UNDER APPLICABLE SECURITIES
LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE JANUARY 12, 2027.
THE SHARES UNDERLYING THE WARRANTS REPRESENTED
BY THIS WARRANT CERTIFICATE ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED
THROUGH THE FACILITIES OF TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY WARRANT CERTIFICATE REPRESENTING SUCH SECURITIES
IS NOT “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON TSX.
TRILOGY METALS INC.
COMMON SHARE PURCHASE WARRANT
Dated: September 11, 2026
Number of Warrants: 6,161,678
Warrant Certificate No.: W2026-W001
THIS IS TO CERTIFY THAT, for a total aggregate
purchase price of $100.00 paid to the Company (as defined below),
THE UNITED STATES DEPARTMENT OF DEFENSE
acting through the
OFFICE OF THE DEPUTY ASSISTANT SECRETARY OF
DEFENSE (INDUSTRIAL BASE RESILIENCE)
PENTAGON, WASHINGTON, DC 20301
(also referred to herein as the “
Department
of War
” or the “
Holder
”) is the registered holder of 6,161,678 common share purchase warrants (the “
Warrants
”)
of
TRILOGY METALS INC.
, a corporation organized and existing under the laws of the province of British Columbia, Canada (the “
Company
”).
Each Warrant entitles the Holder to subscribe for and purchase, subject to the terms hereof including, without limitation, certain adjustment
provisions, one common share (a “
Share
”) in the share capital of the Company until 4:00 p.m.
(Vancouver
time) on September 10, 2036 (the “
Expiry Time
”) for an exercise price of US$0.01 per Share (the “
Exercise
Price
”) after which time the Warrants represented hereby will expire, all subject to adjustment as hereinafter provided. The
Warrants shall not be exercisable by the Holder unless and until the earlier of (a) the occurrence of the AAP Completion Date or
(b) a Change of Control of the Company occurs.
For the purpose of this Warrant:
“
Ambler Access Project
”
means the proposed 211-mile industrial road from the Dalton Highway to Alaska’s remote Ambler Mining District, a region with significant
deposits of critical minerals
,
being developed by the Alaska Industrial Development and Export Authority (the “
AIDEA
”);
“
Ambler Metals
”
means Ambler Metals LLC;
“
AAP Completion Date
”
means the earlier to occur of (i) the completion of Phase 1 of the Ambler Access Project in accordance with the Joint Record of Decision
or such other federal permit(s) in place for the Ambler Access Project at the applicable time, as determined by the Engineering Firm
or AIDEA, and (ii) the use by Ambler Metals or its Affiliate of the Ambler Access Project by at least ten (10) trucks within
any ten (10) day period transporting ore concentrate or concentrate;
“
Additional Improvements
Completion Date
” means completion of both (i) Phase 1 of the Ambler Access Project in accordance with the Joint Record
of Decision or such other federal permit(s) in place for the Ambler Access Project at the applicable time, and (ii) any additional
improvements to Phase 1 as reasonably necessary, including a full-thickness embankment and road widening, to allow the Ambler Access Project
to be used on an all-season basis by trucks capable of transporting ore concentrate with sufficient passing zones to enable overall two-way
traffic, in each case, as determined by the Engineering Firm or AIDEA;
“
Affiliate
”
means, with respect to any Person, any other Person directly or indirectly Controlling, Controlled by, or under common Control with, such
Person at any time during the period for which the determination of affiliation is being made;
“
AIDEA
”
means the Alaska Industrial Development and Export Authority;
“
Business Day
”
means any day other than Saturday, Sunday or a statutory holiday when banks are not open in New York, New York or Vancouver, British Columbia;
“
Change of Control
”
means (a) the acquisition, whether directly or indirectly, by a Person, or any Persons acting jointly or in concert (as determined
in accordance with the U.S. Exchange Act and the rules and regulations thereunder) of voting securities of the Company which, together
with any other voting securities of the Company held by such Person or Persons, constitute, in the aggregate, more than 50% of all outstanding
voting securities of the Company; (b) an amalgamation, arrangement or other form of business combination of the Company with another
Person which results in the holders of voting securities of that other Person holding, in the aggregate, 50% or more of all outstanding
voting securities of the Company (including a merged or successor company) resulting from the business combination; or (c) the sale,
lease or exchange of all or substantially all of the direct or indirect property of the Company to another Person, or other than in the
ordinary course of business of the Company;
“
Engineering Firm”
means the lead engineering firm for the construction of Phase 1 of the Ambler Access Project, or if such engineering firm is not willing
or able to determine the completion of the Ambler Access Project, an engineering firm mutually acceptable to Ambler Metals and the Holder;
“
Governmental Authority
”
means any (a) nation or government, state, commonwealth, province, territory, county, municipality, district, or other jurisdiction
of any nature, or any political subdivision thereof, (b) federal, state, local, municipal, foreign, or other government, or (c) governmental
or quasi-governmental authority of any nature (including any relevant domestic, foreign, multinational or international body, governmental
division, department, agency, board, bureau, commission, instrumentality, official, organization, regulatory body, or other entity and
any court, arbitrator, or other tribunal) exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining
to government and any executive official thereof;
-
2
-
“
Investment Agreement
”
means that certain Investment Agreement between the Holder and the Company dated August 28, 2026;
“
Person
”
means any individual, partnership, limited partnership, joint venture, syndicate, sole proprietorship, or corporation with or without
share capital, body corporate, unincorporated association, trust, trustee, executor, administrator or other legal personal representative,
government or Governmental Authority or entity, however designated or constituted; and
“
U.S. Exchange Act
”
means the United States Securities Exchange Act of 1934, as amended;
The right to acquire the Shares
underlying the Warrants (the “
Warrant Shares
”) hereunder may only be exercised by the Holder in whole or in part, at
any time or times within the time period set forth above by:
(a)           duly
completing, executing and delivering to the Company, either at the address set forth on the Exercise Form (or such other address
as may be specified by the Company, in a written notice to the Holder for this purpose, from time to time) or by e-mail or e-mail attachment,
the Exercise Form attached hereto as Appendix “A” (the “
Exercise Form
”); and
(b)           payment
by wire of immediately available funds in an amount equal to the Exercise Price multiplied by the number of Shares to be acquired, subject
to adjustment in accordance with the terms hereof, to the Company at the address shown on the Exercise Form.
In the event that any Warrants
remain outstanding and have not been exercised as of the Expiry Time, the Company shall, promptly and in any event no later than one (1) Business
Day following the Expiry Time, deliver a written notice to the Holder specifying the aggregate number of Warrants then outstanding and
remaining unexercised. Notwithstanding the Expiry Time, the Holder shall have the right to exercise any such remaining Warrants at any
time during the ten (10) Business Day period following delivery of such notice.
“
Bid Price
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Shares are then listed or
quoted on a Trading Market, the bid price of the Shares for the time in question (or the nearest preceding date) on the Principal Trading
Market as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New York City time)),
(b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Shares for such date (or the nearest preceding
date) on OTCQB or OTCQX as applicable, (c) if the Shares are not then listed or quoted for trading on OTCQB or OTCQX and if prices
for the Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its functions of reporting
prices), the most recent bid price per share of the Shares so reported, or (d) in all other cases, the fair market value of a share
of Shares as determined by an independent appraiser selected in good faith by the Holder and reasonably acceptable to the Company, the
fees and expenses of which shall be paid by the Company.
“
Principal Trading
Market
” means the NYSE American,
provided
,
however
, if the Shares are not listed on NYSE American, the Trading
Market on which the largest trading volume in the Shares occurred during the Company’s most recent financial year that ended before
the date the determination is being made.
-
3
-
“
Trading Market
”
means any of the following markets or exchanges on which the Shares are listed or quoted for trading on the date in question: the NYSE
American, the Nasdaq Capital Market, the Nasdaq Global Market, the Nasdaq Global Select Market, the New York Stock Exchange, the OTCQB,
the OTCQX or the TSX (or any successors to any of the foregoing).
“
Trading Day
”
means a day on which the Shares are traded on a Trading Market.
“
VWAP
”
means, for any date, the price determined by the first of the following clauses that applies: (a) if the Shares are then listed or
quoted on a Trading Market, the daily volume weighted average price of the Shares for such date (or the nearest preceding date) on the
Principal Trading Market as reported by Bloomberg (based on a Trading Day from 9:30 a.m. (New York City time) to 4:02 p.m. (New
York City time)), (b) if OTCQB or OTCQX is not a Trading Market, the volume weighted average price of the Shares for such date (or
the nearest preceding date) on OTCQB or OTCQX as applicable, (c) if the Shares are not then listed or quoted for trading on OTCQB
or OTCQX and if prices for the Shares are then reported on the Pink Open Market (or a similar organization or agency succeeding to its
functions of reporting prices), the most recent Bid Price per share of the Shares so reported, or (d) in all other cases, the fair
market value of a share of Shares as determined by an independent appraiser selected in good faith by the holders of a majority in interest
of the Warrants then outstanding and reasonably acceptable to the Company, the fees and expenses of which shall be paid by the Company.
This certificate representing
the Warrants (the “
Warrant Certificate
”) will effectively be surrendered only upon personal delivery hereof or, if
sent by mail or other means of transmission, upon actual receipt thereof by the Company at the address shown on the Exercise Form or
such other address as may be specified by the Company, in a written notice to the Holder, from time to time.
1.
Mechanics
:
(a)           The
Company shall initially serve as warrant agent (the “
Warrant Agent
”) with respect to the Warrants. Upon ten (10) days’
notice to the Holder, the Company may appoint a new Warrant Agent. Any corporation into which the Company or any new Warrant Agent may
be merged or any corporation resulting from any consolidation to which the Company or any new Warrant Agent shall be a party or any corporation
to which the Company or any new Warrant Agent transfers substantially all of its corporate trust or shareholders services business shall
be a successor Warrant Agent under this Warrant without any further act. Any such successor Warrant Agent shall promptly cause notice
of its succession as Warrant Agent to be mailed (by first class mail, postage prepaid) to the Holder at the Holder’s last address
as shown on the Warrant Register. The Holder acknowledges that this Warrant will be held as a Warrant Certificate through the facilities
of the Company’s Warrant Agent. The Company agrees to maintain a Warrant Agent so long as this Warrant remains outstanding and exercisable.
(b)           The
Warrant Agent shall maintain books (“
Warrant Register
”) for the registration of original issuance and the registration
of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants in the
names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant Agent
by the Company. Ownership of beneficial interests in the Warrant Certificates shall be shown on, and the transfer of such ownership shall
be effected directly on the records of the Warrant Agent with respect only to owners of beneficial interests that represent such direct
registration.
(c)
Beneficial
Owner; Registered Holder
. The term “
beneficial owner
” shall mean any person in whose name ownership of a beneficial
interest in the Warrants evidenced by a Warrant Certificate is recorded in the records maintained by the Warrant Agent or its nominee.
Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and treat the person
in whose name such Warrant shall be registered upon the Warrant Register (“
registered holder
”), as the absolute owner
of such Warrant and of each Warrant represented thereby, for the purpose of any exercise thereof, and for all other purposes, and neither
the Company nor the Warrant Agent shall be affected by any notice to the contrary.
-
4
-
(d)
Electronic
Warrants
. The Company shall be entitled to rely on delivery of an executed Warrant Certificate by electronic means, and acceptance
by the Holder of such electronic Warrant Certificate (including, without limitation by facsimile or email delivery) shall be legally effective
between the Holder and the Company in accordance with the terms hereof. Unless otherwise specified, all references to the Warrants herein
may refer to the Warrants in electronic form if delivery and acceptance of the Warrant has occurred through electronic means.
(e)
Physical
Warrants Exchange
. A beneficial owner has the right to elect at any time or from time to time a Warrant Exchange (as defined below)
pursuant to a written notice (which written notice shall include delivery instructions) (“
Warrant Certificate Request Notice
”)
made by a Holder to the Warrant Agent for the exchange of some or all of such beneficial owner’s Warrants in electronic form for
a definitive Warrant Certificate in physical form evidencing such Warrants (“
Definitive Certificate
”) evidencing the
same number of Warrants
(the date of delivery of such Warrant Certificate Request Notice by the Holder, the “Warrant
Certificate Request Notice Date,” and the surrender by the beneficial owner to the Warrant Agent of a number of Warrants in electronic
form for the same number of Warrants evidenced by a Warrant Certificate, a “
Warrant Exchange
”). The Warrant Agent shall
promptly effect the Warrant Exchange and the Warrant Agent shall promptly issue and deliver to the Holder a Definitive Certificate for
such number of Warrants in electronic form in the name set forth in the Warrant Certificate Request Notice. Such Definitive Certificate
shall be dated the original issue date of the Warrants and shall be manually executed by an authorized signatory of the Company. In connection
with a Warrant Exchange, the Warrant Agent agrees to deliver the Definitive Certificate to the Holder within five (5) Business Days
of the Warrant Certificate Request Notice pursuant to the delivery instructions in the Warrant Certificate Request Notice (“
Warrant
Certificate Delivery Date
”). The Warrant Agent shall act as warrant agent with respect to any Definitive Certificate requested
and issued pursuant to this section. Notwithstanding anything to the contrary contained in this Warrant, to the extent any provisions
of this Warrant conflict with the express provisions of a Definitive Certificate, the provisions of the Definitive Certificate shall prevail;
provided, however, that to the extent a modification or amendment of the provisions of a Definitive Certificate adversely affects the
Warrant Agent’s rights, duties or obligations under such Definitive Certificate or this Warrant, such modification or amendment
shall not be effective against the Warrant Agent without its express written consent.
(f)
Delivery
of Warrant Shares Upon Exercise
. Subject to subsection (k) hereof, the Company shall cause the Warrant Shares purchased hereunder
to be transmitted by the Transfer Agent to the Holder by crediting the account of the Holder’s or its designee’s balance account
with The Depository Trust Company through its Deposit or Withdrawal at Custodian system (“
DWAC
”) if the Company is
then a participant in such system and there is an effective registration statement permitting the issuance of the Warrant Shares to or
resale of the Warrant Shares by Holder and the Warrant was issued more than four months and one day ago and otherwise, at the election
of the Holder, by physical delivery of a certificate or a direct registration system account statement, registered in the Company’s
share register in the name of the Holder or its designee, for the number of Warrant Shares to which the Holder is entitled pursuant to
such exercise to the address specified by the Holder in the Exercise Form by the date that is the latest of (i) seven (7) Trading
Days after the delivery to the Company of the Exercise Form and (ii) seven (7) Trading Day after delivery of the aggregate
Exercise Price to the Company (such date, the “
Warrant Share Delivery Date
”). If the Company fails for any reason to
deliver to the Holder the Warrant Shares subject to an Exercise Form by the Warrant Share Delivery Date, the Company shall pay to
the Holder, in cash, as liquidated damages and not as a penalty, for each $1,000 of Warrant Shares subject to such exercise (based on
the VWAP of the Shares on the date of the applicable Exercise Form), $10 per Trading Day (increasing to $20 per Trading Day on the third
Trading Day after the Warrant Share Delivery Date) for each Trading Day after such Warrant Share Delivery Date until such Warrant Shares
are delivered or Holder rescinds such exercise. The Company agrees to maintain a transfer agent that is a participant in the FAST program
so long as this Warrant remains outstanding and exercisable. “
Transfer Agent
” means the Company’s registrar and
transfer agent.
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(g)
Delivery
of New Warrants Upon Exercise
. If this Warrant shall have been exercised in part, the Company shall, at the request of a Holder and
upon surrender of the Warrant Certificate, at the time of delivery of the Warrant Shares, deliver to the Holder a new Warrant Certificate
evidencing the rights of the Holder to purchase the unpurchased Warrant Shares called for by this Warrant, which new Warrant shall in
all other respects be identical with this Warrant.
(h)
Rescission
Rights
. If the Company fails to cause the Transfer Agent to transmit to the Holder the Warrant Shares pursuant to paragraph (f) above
under the Section entitled “Mechanics” by the Warrant Share Delivery Date, then the Holder will have the right to rescind
such exercise.
(i)
No
Fractional Shares or Scrip
. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this
Warrant. As to any fraction of a share which the Holder would otherwise be entitled to purchase upon such exercise, the Company shall,
at its election, either pay a cash adjustment in respect of such final fraction in an amount equal to such fraction multiplied by the
Exercise Price or round down to the next whole share.
(j)
Charges,
Taxes and Expenses
. Issuance of Warrant Shares shall be made without charge to the Holder for any issue or transfer tax or other incidental
expense in respect of the issuance of such Warrant Shares, all of which taxes and expenses shall be paid by the Company, and such Warrant
Shares shall be issued in the name of the Holder or in such name or names as may be directed by the Holder;
provided
,
however
,
that, in the event that Warrant Shares are to be issued in a name other than the name of the Holder, this Warrant when surrendered for
exercise shall be accompanied by the Transfer Form attached hereto duly executed by the Holder and the Company may require, as a
condition thereto, the payment of a sum sufficient to reimburse it for any transfer tax incidental thereto. The Company shall pay all
Transfer Agent fees required for same-day processing of any Exercise Form and all fees to The Depository Trust Company (or another
established clearing corporation performing similar functions) required for same-day electronic delivery of the Warrant Shares. For the
avoidance of doubt, nothing in this paragraph (j) shall require the Company to deliver the Warrant Shares on a date earlier than
the Warrant Share Delivery Date.
(k)
Resale
Restriction on Warrant Shares
. Notwithstanding any other provision of this Warrant Certificate, the Holder shall not, directly or
indirectly, sell, assign, transfer, pledge, hypothecate or otherwise dispose of any Warrant Shares until the earlier of (i) the date
that is three (3) years after the AAP Completion Date and (ii) the Additional Improvements Completion Date, in each case subject
to compliance with Applicable Law (such earlier date, the "
Warrant Share Release Date
"); provided that the foregoing
shall not restrict any transfer of Warrant Shares to an Affiliate of the Holder that agrees in writing to be bound by this restriction.
This restriction shall be in addition to, and not in limitation of, any restrictions on transfer arising under the Investment Agreement,
the Company's constating documents or applicable securities laws, and shall be reflected in the legends set forth below and in any stop
transfer instructions delivered to the Transfer Agent with respect to the Warrant Shares.
(l)
Closing
of Books
. The Company will not close its stockholder books or records in any manner which prevents the timely exercise of this Warrant,
pursuant to the terms hereof.
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The Company further covenants
and agrees that, during the period within which the Warrants may be exercised, the Company will at all times have authorized and reserved
a sufficient number of its Shares to provide for the exercise of the rights represented by this Warrant Certificate.
The Holder of this Warrant Certificate
may acquire any lesser number of Shares than the total number of Shares, free and clear of any taxes, liens or other restrictions (other
than those arising under the Investment Agreement, under the Company’s organizational documents or required pursuant to applicable
laws), which may be acquired upon exercise of the Warrants represented by this Warrant Certificate. In such event, the Holder will be
entitled to receive a new Warrant Certificate representing Warrants exercisable to acquire up to the balance of the Shares which may be
acquired.
The holding of the Warrants
evidenced by this Warrant Certificate will not constitute the Holder hereof a shareholder of the Company or entitle the Holder to any
right or interest in respect thereof except as expressly provided for herein.
The Warrants and all rights
hereunder are transferable by the Holder in accordance with applicable laws by written notice of surrender of this Warrant Certificate
together with a Transfer Form in the form attached hereto as Appendix “B” at the office of the Company, 510 Burrard Street,
Suite 901 Vancouver, British Columbia Canada V6C 3A8. Such surrender may be made by personal delivery or a nationally recognized
courier service. Any Warrant Certificate issued to a transferee will bear such restrictive or other legends as may be required under applicable
securities laws and applicable stock exchange rules. This Warrant and all rights hereunder (including, without limitation, any registration
rights) are transferable in whole to any affiliate of the Holder without the prior consent of the Company.
2.
Adjustment
.
From and after the date hereof, the Exercise Price and the number of Shares deliverable upon the exercise of the Warrants will be subject
to adjustment as follows:
(a)           In
the event the Company shall:
(i)           pay
a dividend in Shares or make a distribution in Shares;
(ii)          subdivide
its outstanding Shares;
(iii)         combine
its outstanding Shares into a smaller number of Shares; or
(iv)         issue
by reclassification of its Shares other securities of the Company (including any such reclassification in connection with a consolidation,
merger, amalgamation or other combination in which the Company is the surviving corporation);
the number of Shares (or other
securities) purchasable upon exercise of each Warrant immediately prior thereto shall be adjusted so that the Holder shall be entitled
to receive the kind and number of Shares or other securities of the Company which it would have owned or have been entitled to receive
after the happening of any of the events described above, had such Warrant been exercised immediately prior to the happening of such event
or any record date with respect thereto. An adjustment made pursuant to this subsection (a) shall become effective immediately after
the effective date of such event retroactive to the record date, if any, for such event.
(b)           In
case the Company shall issue rights, options or warrants to all or substantially all holders of its outstanding Shares, without any charge
to such holders, entitling them (for a period within 45 days after the record date mentioned below) to subscribe for or purchase Shares
at a price per share which is lower than 95% of the Current Market Price at the record date mentioned below (as determined in accordance
with subsection (e) below), the number of Shares thereafter purchasable upon the exercise of each Warrant shall be determined by
multiplying the number of Shares theretofore purchasable upon exercise of each Warrant by a fraction, of which the numerator shall be
the number of Shares outstanding on the date of issuance of such rights, options or warrants plus the number of additional Shares offered
for subscription or purchase, and of which the denominator shall be the number of Shares outstanding on the date of issuance of such rights,
options or warrants plus the number of shares which the aggregate offering price of the total number of Shares so offered would purchase
at the Current Market Price per Share at such record date. Such adjustment shall be made whenever such rights, options or warrants are
issued, and shall become effective immediately after the record date for the determination of shareholders entitled to receive such rights,
options or warrants.
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(c)           In
case the Company shall distribute to all or substantially all holders of its Shares evidences of its indebtedness or assets (excluding
cash dividends or distributions payable out of consolidated earnings or earned surplus and dividends or distributions referred to in subsection
(a) above or in subsection (d) below or rights, options or warrants, or convertible or exchangeable securities containing the
right to subscribe for or purchase Shares (excluding those referred to in subsection (b) above)), then in each case the number of
Shares thereafter purchasable upon the exercise of each Warrant shall be determined by multiplying the number of Shares theretofore purchasable
upon the exercise of each Warrant by a fraction, of which the numerator shall be the then Current Market Price per Share (as determined
in accordance with subsection (d) below) on the date of such distribution, and of which the denominator shall be the then Current
Market Price per Share less the then fair value (as determined by the board of directors of the Company, acting reasonably) of the portion
of the assets or evidences of indebtedness so distributed or of such subscription rights, options or warrants, or of such convertible
or exchangeable securities applicable to one Share. Such adjustment shall be made whenever any such distribution is made, and shall become
effective on the date of distribution retroactive to the record date for the determination of shareholders entitled to receive such distribution.
(d)           In
the event of the distribution by the Company to all or substantially all of the holders of its Shares of shares of a subsidiary or securities
convertible or exercisable for such shares, then in lieu of an adjustment in the number of Shares purchasable upon the exercise of each
Warrant, the Holder of each Warrant, upon the exercise thereof, shall receive from the Company, such subsidiary or both, as the Company
shall reasonably determine, the shares or other securities to which such Holder would have been entitled if such Holder had exercised
such Warrant immediately prior thereto, all subject to further adjustment as provided in this
Section 2
provided, however,
that no adjustment in respect of dividends or interest on such shares or other securities shall be made during the term of a Warrant or
upon the exercise of a Warrant.
(e)           For
the purpose of any computation under subsections (b) and (c) of this
Section 2
, the Current Market Price per Share
at any date shall be the weighted average price per Share for twenty- five (25) consecutive trading days, commencing not more than 45
trading days before such date on the stock exchange on which the Shares are then traded; provided if the Shares are then traded on more
than one stock exchange, then on the stock exchange on which the largest volume of Shares were traded during such twenty-five (25) consecutive
trading day period. The weighted average price per Share shall be determined by dividing the aggregate sale price of all Shares sold on
such exchange or market, as the case may be, during the said twenty-five (25) consecutive trading days by the total number of shares so
sold. For purposes of this subsection (d), trading day means, with respect to a stock exchange, a day on which such exchange is open for
the transaction of business. Should the Shares not be listed on any stock exchange the Current Market Price per Share at any date shall
be determined by the board of directors of the Company, acting reasonably.
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(f)           In
any case in which this
Section 2
shall require that any adjustment in the Exercise Price be made effective immediately after
a record date for a specified event, the Company may elect to defer until the occurrence of the event the issuance, to the holder of any
Warrant exercised after that record date, of the Shares and other shares of the Company, if any, issuable upon the exercise of the Warrant
over and above the Shares and other shares of the Company; provided, however, that the Company shall deliver to the holder an appropriate
instrument evidencing the holder's right to receive such additional shares upon the occurrence of the event requiring such adjustment.
(g)           If
any issuer bid (other than a normal course issuer bid made through the facilities of the NYSE American, TSX or such other exchange on
which the Shares are listed and posted for trading) made by the Company or any of its subsidiaries for all or any portion of the Shares
shall expire, then, if the issuer bid shall require the payment to holders of Shares of consideration per Share having a fair market value
(determined as provided below) that exceeds the Current Market Price on the last date (the “
Expiration Date
”) deposits
could have been made under the terms of such issuer bid (as it may be amended) (the last time at which such deposits could have been made
on the Expiration Date is referred to in this paragraph (g) as the “
Expiration Time
”), the Exercise Price shall
be adjusted so that it shall equal the price determined by multiplying the Exercise Price in effect immediately preceding the close of
business on the Expiration Date by a fraction, of which: (A) the numerator shall be the product of the number of Shares outstanding
(including Purchased Shares (as defined below)) at the Expiration Time multiplied by the Current Market Price on the Expiration Date,
and (B) the denominator shall be the sum of the fair market value of the aggregate consideration (as determined in good faith by
the directors of the Company, with any applicable approval of the NYSE American or TSX, whose determination shall be conclusive evidence
of such fair market value and which shall be evidenced by an officer’s certificate delivered to the Holder) payable to holders of
Shares based on the acceptance (up to any maximum specified in the terms of the issuer bid) of all Shares validly tendered and not withdrawn
as of the Expiration Time (the Shares deemed so accepted, up to any such maximum, being referred to in this paragraph (g) as the
“
Purchased Shares
”) and the product of the number of Shares outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price on the Expiration Date. In the event that the Company is obligated to purchase Shares pursuant to any
such issuer bid, but the Company is prevented by applicable law or stock exchange rules from effecting any or all such purchases
or any or all such purchases are rescinded, the Exercise Price shall again be adjusted to be the Exercise Price which would have been
in effect based upon the number of Shares actually purchased, if any. If the application of this paragraph (g) to any issuer bid
would result in an increase in the Exercise Price, no adjustment shall be made for such issuer bid. Any decrease in the Exercise Price
that results from the application of this paragraph (g) to any issuer bid will become effective immediately preceding the opening
of business on the Business Day following the Expiration Date. For purposes of this paragraph (g), the term “issuer bid” shall
mean an issuer bid, tender offer or exchange offer under applicable securities legislation by the Company for Shares or a take-over bid,
tender offer or exchange offer under applicable securities legislation by a subsidiary of the Company for the Shares.
(h)           Wherever
the number of Shares purchasable upon the exercise of each Warrant is adjusted, as herein provided, the Exercise Price payable upon exercise
of each Warrant shall be adjusted by multiplying such Exercise Price immediately prior to such adjustment by a fraction, of which the
numerator shall be the number of Shares purchasable upon the exercise of such Warrant immediately prior to such adjustment, and of which
the denominator shall be the number of Shares purchasable immediately thereafter.
(i)            No
adjustment in the number of Shares purchasable upon the exercise of each Warrant need by made under subsection (b) if, the Company
issues or distributes to the Holder the rights, options, warrants, or convertible or exchangeable securities, or evidences of indebtedness
or assets referred to in those subsections which the Holder would have been entitled to receive had the Warrants been exercised prior
to the happening of such event or the record date with respect thereto.
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(j)            In
the event that at any time, as a result of an adjustment made pursuant to subsection (a) above, the Holder shall become entitled
to purchase any securities of the Company other than Shares, thereafter the number of such other shares so purchasable upon exercise of
each Warrant and the Exercise Price of such shares shall be subject to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Shares contained in subsections (a) through (h), inclusive, above,
of this
Section 2
with respect to the Shares, shall apply on like terms to any such other securities.
(k)            As
a condition precedent to the taking of any action which would require an adjustment in the subscription rights pursuant to the Warrant,
including the Exercise Price and the number of such classes of shares or other securities or property which are to be received upon the
exercise thereof, the Company will take all corporate action which may, in the opinion of its external counsel, be necessary in order
that the Company has reserved and there will remain unissued out of its authorized capital a sufficient number of Shares for issuance
upon the exercise of the Warrants evidenced hereby, and that the Company may validly and legally issue as fully paid and non-assessable
all the shares of such classes or other securities or may validly and legally distribute the property which the Holder is entitled to
receive on the full exercise thereof in accordance with the provisions hereof.
(l)            At
least 14 days prior to the effective date or record date, as the case may be, of any event which requires an adjustment in the subscription
rights pursuant to this Warrant, including the Exercise Price and the number and classes of shares or other securities or property which
are to be received upon the exercise thereof, the Company will give notice to the Holder of the particulars of such event and the required
adjustment.
(m)           Upon
the expiration of any rights, options, warrants or conversion or exchange privileges, if any thereof shall not have been exercised, the
Exercise Price and the number of Shares purchasable upon the exercise of each Warrant shall, upon such expiration, be readjusted and shall
thereafter be such as it would have been had it been originally adjusted (or had the original adjustment not been required, as the case
may be) as if:
(i)           the
only Shares so issued were the Shares, if any, actually issued or sold upon the exercise of such rights, options, warrants or conversion
or exchange rights; and
(ii)          such
Shares, if any, were issued or sold for the consideration actually received by the Company upon such exercise plus the aggregate consideration,
if any, actually received by the Company for the issuance, sale or grant of all such rights, options, warrants or conversion or exchange
rights whether or not exercised;
provided further, that no
such readjustment made in this
Section 2
shall have the effect of increasing the Exercise Price or decreasing the number of
Shares purchasable upon the exercise of each Warrant by an amount in excess of the amount of the adjustment initially made with respect
to the issuance, sale or grant of such rights, options, warrants or conversion or exchange rights.
(n)           These
Warrants and the Shares deliverable upon exercise thereof have not been registered under the United States Securities Act of 1933, as
amended (the “U.S. Securities Act”), or the securities laws of any state of the United States. These Warrants may not be exercised
unless so registered or an exemption from the registration requirements of the U.S. Securities Act and applicable state securities laws
is available to the holder.
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(o)           The
certificates or DRS advices representing any Shares issued pursuant to the exercise of the Warrants will have imprinted on them the following
legend:
“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR UNDER ANY SECURITIES LAWS OF ANY STATE AND MAY NOT
BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED, EXCEPT AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES
LAWS IN ACCORDANCE WITH APPLICABLE REGISTRATION REQUIREMENTS OR AN EXEMPTION THEREFROM.”
The certificates or DRS advices
representing any Shares issued pursuant to the exercise of the Warrants on or before January 12, 2027 will have imprinted on them
the following legends:
“UNLESS PERMITTED UNDER APPLICABLE
SECURITIES LEGISLATION, THE HOLDER OF THIS SECURITY MUST NOT TRADE THE SECURITY BEFORE JANAURY 12, 2027.”
THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF
TSX SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY”
IN SETTLEMENT OF TRANSACTIONS ON TSX.”
The certificates or DRS advices
representing any Shares issued pursuant to the exercise of the Warrants on or before the Warrant Share Release Date will have imprinted
on them the following legends:
"THE SHARES REPRESENTED HEREBY ARE
SUBJECT TO RESALE AND TRANSFER RESTRICTIONS PURSUANT TO THE WARRANT CERTIFICATE AND THE INVESTMENT AGREEMENT AND MAY NOT BE SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF UNTIL THE EARLIER OF (I) THE DATE THAT IS THREE YEARS AFTER
THE AAP COMPLETION DATE AND (II) THE ADDITIONAL IMPROVEMENTS COMPLETION DATE, EXCEPT AS PERMITTED THEREUNDER.
THE SECURITIES REPRESENTED HEREBY ARE
LISTED ON THE TORONTO STOCK EXCHANGE (“TSX”); HOWEVER, THE SAID SECURITIES CANNOT BE TRADED THROUGH THE FACILITIES OF TSX
SINCE THEY ARE NOT FREELY TRANSFERABLE, AND CONSEQUENTLY ANY CERTIFICATE REPRESENTING SUCH SECURITIES IS NOT “GOOD DELIVERY”
IN SETTLEMENT OF TRANSACTIONS ON TSX.”
The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant or any
stock certificate relating to the Warrant Shares, and in case of loss, theft or destruction, of indemnity or security reasonably satisfactory
to it (which, in the case of the Warrant, shall not include the posting of any bond), and upon surrender and cancellation of such Warrant
or stock certificate, if mutilated, the Company will make and deliver a new Warrant or stock certificate of like tenor and dated as of
such cancellation, in lieu of such Warrant or stock certificate.
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If the last or appointed day
for the taking of any action or the expiration of any right required or granted herein shall not be a Business Day, then such action may
be taken or such right may be exercised on the next succeeding Business Day.
3.
Authorized
Shares
: (i) The Company covenants that, during the period the Warrant is outstanding, it will reserve from its authorized and
unissued Shares a sufficient number of shares to provide for the issuance of the Warrant Shares upon the exercise of any purchase rights
under this Warrant. The Company further covenants that its issuance of this Warrant shall constitute full authority to its officers who
are charged with the duty of issuing the necessary Warrant Shares upon the exercise of the purchase rights under this Warrant. The Company
will take all such reasonable action as may be necessary to assure that such Warrant Shares may be issued as provided herein without violation
of any applicable law or regulation, or of any requirements of the Trading Market upon which the Shares may be listed. The Company covenants
that all Warrant Shares which may be issued upon the exercise of the purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for such Warrant Shares in accordance herewith, be duly authorized, validly
issued, fully paid and nonassessable and free from all taxes, liens and charges created by the Company in respect of the issue thereof
(other than taxes in respect of any transfer occurring contemporaneously with such issue).
(ii)           Except
and to the extent as waived or consented to by the Holder, the Company shall not by any action, including, without limitation, amending
its notice of articles or articles or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale
of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant,
but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary
or appropriate to protect the rights of Holder as set forth in this Warrant against impairment. Without limiting the generality of the
foregoing, the Company will (i) not increase the par value of any Warrant Shares above the amount payable therefor upon such exercise
immediately prior to such increase in par value, (ii) take all such action as may be necessary or appropriate in order that the Company
may validly and legally issue fully paid and nonassessable Warrant Shares upon the exercise of this Warrant and (iii) use commercially
reasonable efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof,
as may be, necessary to enable the Company to perform its obligations under this Warrant.
(iii)          Before
taking any action which would result in an adjustment in the number of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction thereof.
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4.
Governing
Law
.
(a)           This
Warrant shall be governed in all respects by the United States Federal Law, without giving effect to the conflict-of-laws rules thereof
to the extent such rules would require or permit the application of the Applicable Laws of another jurisdiction. To the extent that
United States Federal Law does not specify the appropriate rule of decision for a particular matter at issue, it is the intention
and agreement of the Parties that the Applicable Laws of the State of New York (without giving effect to its conflict-of-laws rules) shall
be adopted as the governing rule of decision; provided, that notwithstanding the foregoing, (i) the procedures and matters necessary
hereunder and actually required by reason of the Company being incorporated under the Applicable Laws of Canada, including but not limited
to the procedural requirements for the issuance of the Warrants, the Shares and the Warrant Shares and the actions of the Board, shall
be governed by the Applicable Laws of Canada, and (ii) certain mandatory provisions in respect of the Applicable Canadian Securities
Legislation shall apply irrespective of the governing law as provided in this Warrant. “
Applicable Law
” means, at any
time, with respect to any Person, property, transaction, event or other matter, as applicable, all laws, rules, statutes, regulations,
treaties, orders, judgments and decrees, and all official requests, directives, rules, guidelines, orders, policies, practices and other
requirements of any Governmental Authority relating or applicable at such time to such Person, property, transaction, event or other matter,
and also includes any interpretation thereof by any Person having jurisdiction over it or charged with its administration or interpretation.
“
Applicable Canadian Securities Legislation
” means all applicable securities laws of each of the Reporting Jurisdictions
and the respective rules and regulations under such laws together with applicable published fee schedules, prescribed forms, policy
statements, national or multilateral instruments, orders, blanket rulings and other applicable regulatory instruments of the securities
regulatory authorities in any of the Reporting Jurisdictions. “
Reporting Jurisdictions
” means all of the jurisdictions
in Canada in which the Company is a “reporting issuer”.
(b)           The
Company agrees to submit to the exclusive jurisdiction and venue of the federal courts of the Southern District of New York (and its appellate
courts) for any and all civil actions, suits or proceedings arising out of or relating to this Warrant or the transactions contemplated
hereby or thereby.
(c)           Holder,
to the maximum extent permitted by law, irrevocably agrees to submit for itself in any claim arising from, related to, or in connection
with this Warrant to the jurisdiction of (i) the U.S. Court of Federal Claims (ii) any other Federal court or tribunal of competent
jurisdiction; and (iii) appellate courts from any of the foregoing.
(d)           Each
party hereby irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way
of motion or as a defense, counterclaim or otherwise, (i) any objection which it may now or hereafter have to the laying of venue
of any Proceeding arising out of or relating to this Warrant or the transactions contemplated hereby, (ii) any claim that it is not
personally subject to the jurisdiction of the above-mentioned courts for any reason, and (iii) any claim that any Proceeding brought
in the above-mentioned courts has been brought in an inconvenient forum or that the venue is improper. Each party other than Holder hereby
irrevocably and unconditionally waives, to the fullest extent permitted by Applicable Law, and agrees not to assert, by way of motion
or as a defense, counterclaim or otherwise, that it or its property is exempt or immune from jurisdiction of the above-mentioned courts
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). Each party hereto further irrevocably consents to service of process in
the manner provided for notices hereunder. Nothing in this Warrant will affect the right of any party hereto to serve process in any other
manner permitted by any Applicable Law. “
Party
” and the “
parties
” shall mean the Holder and the
Company. “
Proceeding
” means any action, appeal, petition, plea, charge, complaint, claim, suit, demand, litigation,
arbitration, mediation, hearing, inquiry, investigation, legal or administrative proceeding or other similar event, occurrence or proceeding.
5.
Nonwaiver
and Expenses
. No course of dealing or any delay or failure to exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder’s rights, powers or remedies. Without limiting any other provision of this
Warrant, if the Company willfully and knowingly fails to comply with any provision of this Warrant, which results in any material damages
to the Holder, the Company shall pay to the Holder such amounts as shall be sufficient to cover any costs and expenses including, but
not limited to, reasonable attorneys’ fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts
due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder.
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6.
Notices
.
(a)           Any
notice or other communication that is required or permitted to be given hereunder shall be in writing and shall be validly given delivered
in person (including by courier service) or by email as follows:
in the case of the
Holder:
United States Department of Defense
The Office of Industrial Base Policy
Assistant Secretary of Defense
Pentagon, Washington, DC 20301
Attention: Deputy Chief of Staff to
the Deputy Secretary of Defense
Email: [redacted]
With a copy to:
McDermott Will & Schulte LLP
2049 Century Park East, Suite 3200
Los Angeles, CA 90067-3206
Attention: Edward Zaelke
Email:    [redacted]
in the case of the
Company:
Trilogy Metals Inc.
510 Burrard Street, Suite 901
Vancouver, British Columbia V6C 3A8
Attention: Elaine Sanders
Email: [redacted]
(b)           Any
such notice or other communication shall be deemed to have been given and received (i) when personally delivered, or delivered by
same-day courier; or (ii) on the fourth business day after mailing by registered or certified mail, postage prepaid, return receipt
requested; or (iii) upon delivery when sent by nationally recognized prepaid overnight express delivery service (e.g., FedEx, UPS);
or (iv) when sent by email or facsimile and upon the receipt by the sending party of written confirmation by the receiving party;
provided, however, that an automated facsimile or email confirmation of delivery or read receipt shall not constitute such confirmation.
(c)           Any
party may at any time change its address for service from time to time by giving notice to the other parties in accordance with this
Section 6
.
7.
Severability
.
If any provision of this Warrant is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect,
all other provisions of this Warrant shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby are not affected in any manner materially adverse to any party hereto. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify
this Warrant so as to effect the original intent of the parties hereto as closely as possible in an acceptable manner to the end that
transactions contemplated hereby are fulfilled to the extent possible.
-
14
-
8.
Specific
Performance
. The Company acknowledges that the rights of the Holder to consummate the transactions hereunder are unique and recognizes
and affirms that in the event of a breach of this Warrant by the Company, money damages are inadequate and Holder would have no adequate
remedy at law. It is accordingly agreed that Holder shall be entitled to (and the Company shall not oppose on the basis that injunctive
relief or specific performance is not available due to availability of an adequate remedy at law) an injunction or injunctions to prevent
breaches of this Warrant and to enforce specifically the terms and provisions of this Warrant, without the necessity of showing any actual
damages or that monetary damages would not afford an adequate remedy, and without the necessity of posting any bond or other security,
this being in addition to any other remedy to which it is entitled at law or in equity.
9.
Limitation
of Liability
. No provision hereof, in the absence of any affirmative action by the Holder to exercise this Warrant to purchase Warrant
Shares, and no enumeration herein of the rights or privileges of the Holder, shall give rise to any liability of the Holder for the purchase
price of any Shares or as a stockholder of the Company, whether such liability is asserted by the Company or by creditors of the Company.
10.
Remedies
.
Except as otherwise provided herein, no remedy herein conferred or reserved is intended to be exclusive of any other available remedy
or remedies, and each and every remedy shall be cumulative and shall be in addition to every remedy under this Warrant or now or hereafter
existing at law or in equity.
11.
Assignment
.
No party may assign any of its rights or benefits under this Warrant, or delegate any of its duties or obligations, except with the prior
written consent of the other parties, subject to Holder’s right to transfer this Warrant to any affiliate of the Holder without
the prior consent of the Company.
12.
Successors
and Assigns
. This Warrant shall inure to the benefit of and shall be binding on and enforceable by and against the parties and their
respective successors or heirs, executors, administrators and other legal personal representatives, and permitted assigns.
13.
Amendment
.
No amendment or waiver of any provision of this Warrant shall be binding on any party unless consented to in writing by such party. No
waiver of any provision of this Warrant shall constitute a waiver of any other provision, nor shall any waiver of any provision of this
Warrant constitute a continuing waiver unless otherwise expressly provided.
14.
No
Partnership
. Nothing in this Warrant or in the relationship of the parties hereto shall be construed as in any sense creating a partnership
among the parties or as giving to any party any of the rights or subjecting any party to any of the creditors of the other parties.
15.
Counterparts
.
This Warrant and all documents contemplated by or delivered under or in connection with this Warrant may be executed and delivered in
any number of counterparts (whether by facsimile, email, DocuSign or other electronic means), with the same effect as if all parties had
signed and delivered the same document, and all counterparts shall be construed together to be an original and will constitute one and
the same agreement.
-
15
-
16.
Headings
.
The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant.
17.
Time
is of the Essence
. Time will be of the essence hereof.
-
16
-
IN WITNESS WHEREOF the Company has caused this
Warrant Certificate to be executed by its duly authorized officer.
TRILOGY METALS INC.
Per:
/s/ Tony Giardini
Name:
Tony Giardini
Title:
President and Chief Executive Officer
APPENDIX “A”
EXERCISE FORM
TO:
TRILOGY METALS INC.
510 Burrard Street, Suite 901
Vancouver, British Columbia
Canada V6C 3A8
E-mail: info@trilogymetals.com
The undersigned holder of the attached Warrant
Certificate hereby subscribes for ___________ common shares (the “
Shares
”) in the authorized share capital of
TRILOGY
METALS INC.
pursuant to the terms of the Warrant Certificate at the Exercise Price (as defined in the Warrant Certificate) on the
terms specified in the Warrant Certificate and agrees to make payment therefor on the terms specified in the Warrant Certificate.
Payment shall be in lawful money of the United
States.
The undersigned holder represents and warrants
that it is (check one box):
¨
(A) (i) the original purchaser
of the Warrants pursuant to the Investment Agreement; (ii) is exercising the Warrants as principal for its own account for investment
purposes only; and (iii) at the time of exercise of these Warrants, the representations and warranties of the undersigned made by
it in the Investment Agreement in connection with its acquisition of the Warrants remain true and correct as of the date of exercise of
these Warrants and as though made in connection with the acquisition of the Warrant Shares issuable upon exercise of the Warrants; or
¨
(B) concurrently herewith is providing
documentation satisfactory to the Company to the effect that such exercise is being made in transaction that is exempt from the registration
requirements of the Securities Act.
If permitted pursuant to Section 1(f) of
the Warrant, the undersigned irrevocably hereby directs that Shares be issued and delivered to the following DWAC Account Number or in
such other name and form as is specified below (otherwise the instructions are contained in the table below for DRS or physical delivery):
Name
in Full
Address
Number
of
Shares
Form of
Subscription
¨
Direct
Registration System Advice
¨
Physical
Share Certificate
¨
D
irect
Registration System Advice
¨
P
hysical
Share Certificate
- A-
2
-
DATED this ____ day of ___________.
WARRANT HOLDER:
Per:
Authorized Signatory
- A-
3
-
APPENDIX “B”
TRANSFER FORM
FOR VALUE RECEIVED, the undersigned (the “
Transferor
”)
hereby sells, assigns and transfers
to:
Name
in Full
Address
___________________________
_____________________________
___________________________
_____________________________
number
of Warrants, issued by
TRILOGY METALS INC.
(the “
Company
”), represented by the enclosed Warrant Certificate
(if no amount is specified, the Transferor will be deemed to be transferring the entire amount of the Warrant Certificate) and does hereby
irrevocably constitute and appoint:
as attorney to
transfer said number of Warrants on the books of the Company with full power of substitution in the premises.
The undersigned hereby represents, warrants and
certifies that (one (only) of the following must be checked):
¨
(A)           the
transfer is being made only to the Company;
¨
(B)           the
transfer is being made in accordance with a transaction that does not require registration
under the U.S. Securities Act or applicable securities laws of any state of the United States
and the undersigned has furnished to the Company an opinion of counsel of recognized standing
in form and substance reasonably satisfactory to the Company to such effect; or
¨
(C)           the
transfer is being made to an affiliate of the Transferor.
[Signature Page Follows]
DATED the _____ day of __,
20____.
}
}
}
}
Print Name of registered holder as on certificate
}
X
}
X
Signature of Witness
}
Signature of registered holder or Signatory thereof
[Please Note Instruction 2]
}
}
}
If applicable, print Name and Office of Signatory
INSTRUCTIONS:
}
}
}
Street Address
}
}
}
}
City, Province and Postal Code

----- tm2624736d1_ex99-1.htm -----
EX-99.1
7
tm2624736d1_ex99-1.htm
EXHIBIT 99.1
Exhibit 99.1
NYSE American / TSX
Symbol: TMQ
News Release
Trilogy Metals Closes US$35.6 Million Strategic
Equity Investment by the U.S. Department of War
U.S. Government Becomes an Approximately 10%
Shareholder of Trilogy Metals, Advancing Domestic Copper Supply from Alaska’s Ambler Mining District
September 11, 2026 – Vancouver,
British Columbia –
Trilogy Metals Inc. (NYSE American / TSX: TMQ) (“
Trilogy Metals
”, “
Trilogy
”
or the “
Company
”) announced today that it has completed the previously announced strategic equity investment by the
U.S. Department of War (the “
DOW
” or “
U.S. Government
”).
The investment, totaling approximately US$35.6
million across transactions with Trilogy Metals and South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (
“South32”
),
is being deployed in full to advance exploration and development of the Upper Kobuk Mineral Projects (“
UKMP
”) in northwestern
Alaska. The UKMP asset portfolio, which encompasses approximately 190,929 hectares and hosts both the high-grade Arctic polymetallic
deposit (the “
Arctic Project
” or “
Arctic
”) and the Bornite carbonate replacement (copper-cobalt)
deposit (the “
Bornite Project
” or “
Bornite
”), is being advanced by Ambler Metals LLC (“
Ambler
Metals
”). Ambler Metals is a 50/50 joint venture operating company equally owned by Trilogy and South32.
For more information on the transaction, see
Trilogy’s news release dated August 28, 2026.
Use of Proceeds and Next Steps
Trilogy Metals and South32 have each committed
the full proceeds of the DOW investment to Ambler Metals to advance exploration and development of the UKMP.
The DOW has committed to work in good faith to
help facilitate financing required for construction of the proposed 211-mile, industrial-use-only Ambler Road in coordination with the
State of Alaska and the Alaska Industrial Development and Export Authority (
“AIDEA”
), which holds the project.
Closing follows two significant federal permitting
milestones for the Arctic Project – the April 2026 filing of a Clean Water Act Section 404 permit application with the
U.S. Army Corps of Engineers, and the May 15, 2026 acceptance of the Arctic Project as a “Covered Project” under Title
41 of the Fixing America’s Surface Transportation Act (
“FAST-41”
), which established a transparent, enforceable
permitting timetable published on the Federal Permitting Dashboard at permits.performance.gov.
1
Trust | Respect | Integrity
U.S. Securities Act Disclaimer
The offer and sale of the securities described
above were made in a transaction not involving a public offering and the securities have not been registered under the Securities Act
of 1933, as amended, and may not be reoffered or resold in the United States except pursuant to an effective registration statement or
an applicable exemption from the registration requirements. This news release shall not constitute an offer to sell or a solicitation
of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such
offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state
or other jurisdiction.
Early Warning Disclosure
Based upon the daily average C$/US$ exchange
rate quoted by the Bank of Canada as of the date hereof, the consideration of US$17,827,787 for the transaction between the DOW and South32
is equivalent to approximately C$24.7 million or C$3.01 per share.
Prior to the closing of the transaction, South32
had beneficial ownership of, or control and direction over, 18,595,311 common shares of Trilogy, representing approximately 10.7% of
the issued and outstanding common shares of Trilogy on a non-diluted basis. As a result of, and immediately following, the transaction,
South32’s beneficial ownership, control and direction was reduced to 10,379,741 common shares of Trilogy, representing approximately
6.0% of the issued and outstanding common shares of Trilogy on a non-diluted basis as of the date hereof.
South32 advises that the common shares of Trilogy
were disposed of pursuant to the definitive agreements for investment purposes. Pursuant to the definitive agreements, for a period of
ten (10) years following closing, the DOW will have the option to purchase 6,161,678 common shares of Trilogy from South32 at a
price of US$0.01 per share subject to certain terms and conditions, and South32 will be obligated to hold such shares at all times during
that period and to sell them to the DOW upon exercise of the option. In addition, South32 may, depending on market and other conditions,
increase or decrease its beneficial ownership of Trilogy’s securities, whether in the open market, by privately negotiated agreements
or otherwise, subject to a number of factors, including general market conditions and other available investment and business opportunities.
South32’s head office is located at Level 2, 100 St Georges Terrace, Perth WA 6000, Australia.
This disclosure is provided under the early warning
system under applicable Canadian securities laws, which also requires an early warning report to be filed containing additional information
with respect to the foregoing matters. A copy of the early warning report will be available on SEDAR+ under Trilogy’s issuer profile
at www.sedarplus.ca and may be obtained upon request from South32 by contacting Ben Baker at +61 403 763 086.
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Trust | Respect | Integrity
About Trilogy Metals
Trilogy Metals Inc. is a metal exploration and
development company holding a 50 percent interest in Ambler Metals LLC, which has a 100 percent interest in the Upper Kobuk Mineral Projects
(“
UKMP
”) in northwestern Alaska. On December 19, 2019, South32 Limited, a globally diversified mining and metals
company, exercised its option to form a 50/50 joint venture with Trilogy Metals. The UKMP is located within the Ambler Mining District
which is one of the richest and most prospective known copper-dominant districts in the world. It hosts polymetallic volcanogenic massive
sulfide (“
VMS
”) deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which
have been found to host high-grade copper and cobalt mineralization. Exploration efforts have been focused on two deposits in the Ambler
Mining District – the Arctic VMS deposit and the Bornite carbonate replacement deposit. Both deposits are located within a land
package that spans approximately 190,929 hectares. Ambler Metals has an agreement with NANA Regional Corporation, Inc., an Alaska
Native Corporation, that provides a framework for the exploration and potential development of the Ambler Mining District in cooperation
with local communities. Trilogy Metals’ vision is to develop the Ambler Mining District into a premier North American copper producer
while protecting and respecting subsistence livelihoods.
Company Contact
Matthew Keevil
Vice President, Investor Relations and Business
Development
ir@trilogymetals.com
Phone: +1 604 638 8088
# # #
Cautionary Note Regarding Forward-Looking
Statements
This news release includes certain “forward-looking
information” and “forward-looking statements” (collectively “forward-looking statements”) within the meaning
of applicable Canadian and United States securities legislation, including the United States Private Securities Litigation Reform Act
of 1995. All statements, other than statements of historical fact, included herein, including, without limitation, statements regarding
the anticipated use of proceeds of the strategic equity investment; the expected benefits of the investment to the Company, Ambler Metals
and the Ambler Mining District; the availability of financing for the Ambler Road; the anticipated timing and outcome of federal and
state permitting processes, including the FAST-41 permitting timetable and the Clean Water Act Section 404 permit application; planned
exploration and development activities at the UKMP; and the strategic importance of the Arctic Project to domestic critical mineral supply
chains are forward-looking statements. Forward-looking statements are frequently, but not always, identified by words such as “expects”,
“anticipates”, “believes”, “intends”, “estimates”, “potential”, “possible”,
and similar expressions, or statements that events, conditions, or results “will”, “may”, “could”,
or “should” occur or be achieved. Forward-looking statements involve various risks and uncertainties. There can be no assurance
that such statements will prove to be accurate, and actual results and future events could differ materially from those anticipated in
such statements. Important factors that could cause actual results to differ materially from the Company's expectations include the uncertainties
involving the outcome of pending litigation, success of exploration activities, permitting timelines, requirements for additional capital,
government regulation of mining operations, environmental risks, prices for energy inputs, labour, materials, supplies and services,
uncertainties involved in the interpretation of drilling results and geological tests, unexpected cost increases and other risks and
uncertainties disclosed in the Company's Annual Report on Form 10-K for the year ended November 30, 2025 filed with Canadian
securities regulatory authorities and with the United States Securities and Exchange Commission and in other Company reports and documents
filed with applicable securities regulatory authorities from time to time. The Company's forward-looking statements reflect the beliefs,
opinions, and projections on the date the statements are made. The Company assumes no obligation to update the forward-looking statements
or beliefs, opinions, projections, or other factors, should they change, except as required by law.
3
Trust | Respect | Integrity