UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR
15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of February 2015
Commission File Number: 001-32929
POLYMET MINING CORP.
(Translation of registrant's name into English)
First Canadian Place
100 King Street West, Suite
5700
Toronto, Ontario Canada M5X 1C7
(Address of
principal executive offices)
Indicate by check mark whether the registrant files or will
file annual reports under cover Form 20-F or Form 40-F.
[X] Form
20-F [ ] Form 40-F
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form
6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
Indicate by check mark whether by furnishing the information
contained in this Form, the registrant is also thereby furnishing the
information to the Commission pursuant to Rule 12g3-2(b) under the Securities
Exchange Act of 1934.
Yes [ ] No
[X]
If Yes is marked, indicate below the file number assigned to
the registrant in connection with Rule 12g3-2(b): 82- _________
EXPLANATORY NOTE
This report on Form 6-K and attached exhibit are incorporated
by reference into Registration Statements No. 333-185071 and No. 333-192208 and
this report on Form 6-K shall be deemed a part of such registration statements
from the date on which this report on Form 6-K is filed, to the extent not
superseded by documents or reports subsequently filed or furnished by PolyMet
Mining Corp. under the Securities Act of 1933, as amended, or the Securities
Exchange Act of 1934, as amended.
Amendment No. 16 Relating to the Purchase Agreement
On October 31, 2008, PolyMet Mining Corp., a corporation existing under the laws
of British Columbia (the Company), entered into a purchase agreement,
as amended (the Purchase Agreement), with Poly Met Mining, Inc., its
wholly-owned subsidiary (the Issuer), and Glencore, AG (the
Purchaser), pursuant to which, among other things, (1) the Issuer
agreed to issue Floating Rate Secured Debentures due September 30, 2011 (each, a
Debenture and collectively, the Debentures) in five separate
tranches, consisting of four Debentures in the aggregate principal amount of
US$25,000,000 and a fifth Debenture in the principal amount of US$25,000,000
(the Original Tranche E Debenture), in each case to be issued and
delivered by the Issuer and paid for by the Purchaser upon fulfillment or waiver
of certain conditions set forth therein; and (2) the Company issued a warrant,
exercisable from time to time (the Exchange Warrant), to purchase
common shares of the Company, without par value, in an amount equal to the
principal amount of the Debentures divided by US$4.00. The first Debenture in
the original principal amount of US$7,500,000 (the Tranche A Debenture)
was issued to the Purchaser on October 31, 2008; (2) the second Debenture in the
original principal amount of US$7,500,000 (the Tranche B Debenture) was
issued to the Purchaser on December 24, 2008; (3) the third Debenture in the
original principal amount of US$5,000,000 (the Tranche C Debenture) was
issued to the Purchaser on June 18, 2009; and (4) the fourth Debenture in the
original principal amount of US$5,000,000 (the Tranche D Debenture and
together with the Tranche A Debenture, Tranche B Debenture and Tranche C
Debenture, the Outstanding Debentures) was issued to the Purchaser on
September 2, 2009.
On
November 12, 2010, the Company, the Issuer and the Purchaser entered into an
Amendment and Waiver, pursuant to which, among other things, (1) the maturity
date of each of the Outstanding Debentures and the expiration date of the
Exchange Warrant were extended from September 30, 2011 to September 30, 2012,
and (2) any and all obligations of the Issuer to issue the Original Tranche E
Debenture and any and all obligations of the Purchaser to purchase the Original
Tranche E Debenture pursuant to the Purchase Agreement were terminated and
discharged in all respects (the Original Tranche E Debenture
Termination). On November 30, 2011, the Company, the Issuer and the
Purchaser entered into an Amendment and Waiver, dated as of November 30, 2011
(the 2011 Amendment and Waiver), pursuant to which, among other things,
the maturity date of each of the Outstanding Debentures was extended from
September 30, 2012 to the earlier to occur of certain events or September 30,
2014.
On April 9, 2013, the Company, the Issuer and the Purchaser entered into
Amendment No. 14 Relating to the Purchase Agreement (Amendment No. 14)
pursuant to which the Original Tranche E Debenture Termination was rescinded and
the Issuer issued to the Purchaser a fifth secured Debenture in the principal
amount of US$20,000,000 (the Amended Tranche E Debenture) due the day
which is the earlier of (i) the completion of the a US$60,000,000 rights
offering by the Company or (ii) May 1, 2014. The Amended Tranche E Debenture was
repaid by the Company on July 4, 2013.
On April 25, 2014, the Company, the Issuer and the Purchaser entered into an
Amendment, pursuant to which, among other things, the maturity date of each of
the Outstanding Debentures was extended from the earlier to occur of certain events or
September 30, 2014 to the earlier to occur of the same certain events or
September 30, 2015.
On January 28, 2015, the Company, the Issuer and the Purchaser entered into
Amendment No. 16 Relating to the Purchase Agreement (Amendment No. 16)
pursuant to which, among other things, the Issuer agreed to issue to the
Purchaser a tranche F debenture (the Tranche F Debenture), a tranche G
debenture, (the Tranche G Debenture), a tranche H debenture (the
Tranche H Debenture) and a tranche I debenture (the Tranche I
Debenture, and collectively with the Tranche F Debenture, the Tranche G
Debenture and the Tranche H Debenture, the 2015 Debentures) in the
aggregate principal amount of US$30,000,000. Each of the 2015 Debentures are due
on the earlier of the availability of at least US$100,000,0000 of the Senior
Construction Finance (as defined Amendment No. 16), or (ii) March 31, 2016 (the
2015 Debentures Maturity Date).
Tranche F Debenture
The Tranche F Debenture in the principal amount of US$8,000,000 was issued to
the Purchaser on January 30, 2015. The Tranche F Debenture accrues interest at
8.6179% per annum until March 31, 2015. Thereafter, interest will accrue at a
floating rate of LIBOR plus 8.0% per annum, such rate to be determined on March
31, June 30, September 30, and December 31 of each year. The Company shall pay
all accrued and unpaid interest in cash on the earlier of (i) the Maturity Date,
or (i) the Early Repayment Date (as defined in the Tranche F Debenture). The
Tranche F Debenture contains certain events of default that are customarily
included in financings of this nature. If an event of default occurs, the
Purchaser may declare all of the then outstanding principal amount of the
Tranche F Debenture, including any accrued and unpaid interest, to be due and
payable immediately.
Confirmation of Secured Obligations Agreement
As previously reported, in connection with the Purchase Agreement, (1) the
Issuer and the Purchaser entered into a Security Agreement, dated as of October
31, 2008 (the Issuer Security Agreement), (2) the Company and the
Purchaser entered into a Security Agreement, dated as of October 31, 2008 (the
Company Security Agreement), (3) the Company and Glencore entered into
a Pledge Agreement, dated as of October 31, 2008 (the Pledge Agreement)
and (4) the Company has executed and delivered a Parent Guarantee in favor of
Glencore, dated as of October 31, 2008 (together with the Issuer Security
Agreement, the Company Security Agreement and the Pledge Agreement, the
Security Documents). On January 30, 2015, the Company, the Issuer and
the Purchaser have entered into a Confirmation of Secured Obligations Agreement
(the Confirmation of Secured Obligations Agreement) pursuant to which
each of the Company, the Issuer and the Purchaser have confirmed all
obligations, undertakings, indebtedness and other liabilities of the Company and
the Issuer of whatever nature, monetary or otherwise, under, arising out of, or
in any way connected with Amendment No. 16 and the Tranche F Debenture, and all
other agreements, instruments and documents executed by the Company or the
Issuer in connection therewith or otherwise, constitute Obligations as defined
in, and subject to the terms of, the Security Documents, secured for the benefit
of the Purchaser by the Collateral (as defined therein).
Mortgage Amendment
On January 29, 2015, the Issuer and the Purchaser entered into, and registered,
an amendment (the Amendment) to the mortgage dated October 30, 2008 (the
Original Mortgage) given by the Issuer in favor of the Purchaser. The Original
Mortgage secured an original principal amount of US$50,000,000. The Amendment
secured the additional principal amount of US$30,000,000 (representing the 2014 Debentures). The Issuer also obtained a
standard date down endorsement to the Purchasers policy of title insurance.
Tranche G Debenture, Tranche H Debenture and Tranche I
Debenture
On or prior to April 15, 2015 (the Tranche G Closing Date), July 1,
2015 (the Tranche H Closing Date) and October 1, 2015 (the Tranche
I Closing Date), the Issuer will, subject to certain conditions, issue to
the Purchaser the Tranche G Debenture in the principal amount of US$8,000,000,
the Tranche H Debenture in the principal amount of US$8,000,000 and the Tranche
I Debenture in the principal amount of US$6,000,000, respectively. The issuance
of each of the Tranche G Debenture, Tranche H Debenture and Tranche I Debenture
is subject to the fulfillment (or waiver by the Purchaser) of certain
conditions, including, but not limited to, the following: (1) the Original
Mortgage and the Amendment being in full force and effect; (2) the standard date
down endorsement to the Purchaser policy of title insurance being in full force
and effect; (3) the actual and proposed capital expenditures and other expenses
of the Company and the Issuer being in material compliance with the projections
and planned expenditures that are set forth in the NorthMet Project Budget for
fiscal year 2016; (3) the representations and warranties of each of the Company
and the Issuer set forth in the Purchase Agreement being true and correct as of
the Tranche G Closing Date, Tranche H Closing Date and Tranche H Closing Date,
as the case may be, by reference to the facts and circumstances then existing;
(4) the execution and the confirmation of secured obligations agreement dated
each of the Tranche G Closing Date, Tranche H Closing Date and Tranche I Closing
Date, as the case may be; (5) written confirmation from the Company that its
obligations under the Parent Guarantee (as defined in the Purchase Agreement)
remaining in full force and effect following the issuance of the Tranche G
Debenture, Tranche H Debenture or the Tranche I Debenture, as the case may be;
(6) receipt by the Purchaser of customary officers certificates and opinions;
and (7) no Event of Default having occurred and be continuing as of the Tranche
G Closing Date, Tranche H Closing Date and Tranche I Closing Date, as the case
may be.
The terms of the Tranche B Debenture, Tranche C Debenture and Tranche D
Debenture will be the same as the terms of the Tranche A Debenture.
Incorporation by Reference
Incorporated herein by reference are Amendment No. 16 (Exhibit 1), the Tranche F
Debenture (Exhibit 2) and the Confirmation of Secured Obligations Agreement
(Exhibit 3). The respective descriptions of Amendment No. 16, the Amended
Tranche E Debenture and the Conformation of Secured Obligations Agreement are
brief summaries only and are qualified in their entirety by the respective terms
of each document.
A copy of the press release is attached as Exhibit 99.1 and is also incorporated
herein by reference.
SUBMITTED HEREWITH
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, thereunto duly authorized.
PolyMet Mining Corp.
(Registrant)
Date: February 2, 2015 |
By: |
/s/ Douglas Newby |
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Name: Douglas Newby |
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Title: Chief Financial Officer
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AMENDMENT NO. 16 RELATING TO PURCHASE AGREEMENT
This
Amendment Agreement (this "Agreement"), is made as of the 28th
day of January, 2015, by and among POLYMET MINING CORP., a company
existing under the laws of British Columbia (the "Company"), POLY MET
MINING, INC., a corporation existing under the laws of the State of
Minnesota (the "Issuer"), and GLENCORE AG, a corporation existing
under the laws of Switzerland (the "Purchaser").
RECITALS
WHEREAS, the Company, the Issuer and the
Purchaser are parties to that certain Purchase Agreement, dated as of October
31, 2008, as amended by Letter Agreement, dated November 28, 2008, as further
amended by Amendment Letter No. 2, dated December 12, 2008, as further amended
by Amendment Letter No. 3, dated December 19, 2008, as further amended by
Amendment Letter No. 4, dated January 30, 2009, as further amended by Amendment
Letter No. 5, dated February 24, 2009, as further amended by Amendment Letter
No. 6, dated March 30, 2009, as further amended by Amendment Letter No. 7, dated
April 28, 2009, as further amended by Amendment Letter No. 8, dated June 4,
2009, as further amended by Amendment Letter No. 9, dated August 31, 2009, as
further amended by Amendment Letter No. 10, dated October 20, 2009, as further
amended by Amendment Letter No. 11, dated November 16, 2009, as further amended
by the 2010 Amendment and Waiver (as defined below), as further amended by the
2011 Amendment and Waiver (as defined below), as further amended by Amendment
Letter No. 14, dated April 10, 2013, as further amended by the 2014 Amendment
and Waiver (as defined below) (as amended, supplemented or otherwise modified
from time to time, the "Purchase Agreement");
WHEREAS, pursuant to the Purchase
Agreement, among other things, (1) the Issuer agreed to issue Floating Rate
Secured Debentures due September 30, 2011 (each, a "Debenture" and
collectively, the "Debentures") in five separate tranches, consisting of
four Debentures in the aggregate principal amount of US$25,000,000 and a fifth
Debenture in the principal amount of US$25,000,000 (the "Original Tranche E
Debenture"), in each case to be issued and delivered by the Issuer and paid
for by the Purchaser upon fulfillment or waiver of certain conditions set forth
therein; and (2) the Company issued (i) a warrant, exercisable from time to time
(the "Exchange Warrant"), to purchase common shares of the Company,
without par value (the "Common Shares"), in an amount equal to the
principal amount of the Debentures divided by US$4.00;
WHEREAS, (1) the first Debenture in the
original principal amount of US$7,500,000 (the "Tranche A Debenture") was
issued to the Purchaser on October 31, 2008; (2) the second Debenture in the
original principal amount of US$7,500,000 (the "Tranche B Debenture") was
issued to the Purchaser on December 24, 2008; (3) the third Debenture in the
original principal amount of US$5,000,000 (the "Tranche C Debenture") was
issued to the Purchaser on June 18, 2009; (4) the fourth Debenture in the
original principal amount of US$5,000,000 (the "Tranche D Debenture" and
together with the Tranche A Debenture, Tranche B Debenture and Tranche C
Debenture, the "Outstanding Debentures") was issued to the Purchaser on
September 2, 2009; and (5) US$ $8,322,834.39 of interest has been capitalized as
at the date hereof in connection with the Outstanding Debentures;
WHEREAS, the Company, the Issuer and the
Purchaser entered into an Amendment and Waiver, dated as of November 12, 2010
(the "2010 Amendment and Waiver"), pursuant to which, among other things,
(1) the maturity date of each of the Outstanding Debentures and the expiration
date of the Exchange Warrant were extended from September 30, 2011 to September
30, 2012, and (2) any and all obligations of the Issuer to issue the Original
Tranche E Debenture and any and all obligations of the Purchaser to purchase the
Original Tranche E Debenture pursuant to the Purchase Agreement were terminated
and discharged in all respects (the "Original Tranche E Debenture
Termination");
WHEREAS, the Company, the Issuer and the
Purchaser entered into an Amendment and Waiver, dated as of November 30, 2011
(the "2011 Amendment and Waiver"), pursuant to which, among other things, the maturity date of each of the
Outstanding Debentures was extended from September 30, 2012 to the earlier to
occur of certain events or September 30, 2014;
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WHEREAS, the Company, the Issuer and the
Purchaser rescinded the Original Tranche E Debenture Termination and amended the
obligations of the Issuer pursuant to the Purchase Agreement to issue a fifth
Debenture in the principal amount of US$20,000,000 (the "Amended Tranche E
Debenture") and the obligations of the Purchaser to purchase the Amended
Tranche E Debenture pursuant to the Purchase Agreement, on the terms and subject
to the conditions contained in Agreement Letter No. 14;
WHEREAS, the Amended Tranche E Debenture were repaid in full on July 4,
2013;
WHEREAS, the Company, the Issuer and the
Purchaser entered into an Amendment and Waiver, dated as of April 25, 2014 (the
"2014 Amendment and Waiver"), pursuant to which, among other things, the
maturity date of each of the Outstanding Debentures was extended from the
earlier to occur of certain events or September 30, 2014 to the earlier to occur
of the same certain events or September 30, 2015; and
WHEREAS, the Issuer desires to issue to the
Purchaser a tranche F debenture (the Tranche F Debenture), a tranche G
debenture, (the Tranche G Debenture), a tranche H debenture (the
Tranche H Debenture) and a tranche I debenture (the Tranche I
Debenture, and collectively with the Tranche F Debenture, the Tranche G
Debenture and the Tranche H Debenture, the 2015 Debentures) in the
aggregate principal amount of US$30,000,000 pursuant to the Purchase Agreement,
on the terms and subject to the conditions contained in this Agreement.
NOW
THEREFORE, in consideration of the terms and conditions contained in this
Agreement, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1. |
Definitions |
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Capitalized terms not defined in this Agreement shall
have the meanings ascribed to such terms in the Purchase
Agreement. |
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2. |
Amendment to the Purchase Agreement |
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The Company, the Issuer and the Purchaser hereby agree to
amend the Purchase Agreement from and after the Effective Date as follows
notwithstanding any contrary provision
therein: |
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(a) |
The following definitions shall be added to Section
1: |
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"Amendment No. 16 to the Purchase Agreement" means
the amending agreement made as of January 28, 2015 by and among the
Company, the Issuer and the Purchaser." |
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(b) |
Debentures means the Tranche A Debenture, the
Tranche B Debenture, the Tranche C Debenture, the Tranche D Debenture, the
Tranche E Debenture, the Tranche F Debenture, the Tranche G Debenture, the
Tranche H Debenture and the Tranche I Debenture; provided,
however, as used in and with respect to the Exchange Warrant, the
term Debentures shall mean the Tranche A Debenture, the Tranche B
Debenture, the Tranche C Debenture and the Tranche D Debenture and shall
not include the Tranche E Debenture, the Tranche F Debenture, Tranche G
Debenture, the Tranche H Debenture and the Tranche I Debenture. |
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(c) |
"Tranche F Closing Date" shall mean the Business
Day next following the date the conditions set out in subsections (a) to
(n) in Section 4.8 are fulfilled by the Issuer and
the Company or waived in writing by the Purchaser; provided
that the Tranche F Closing Date is expected to occur no later than January
30, 2015; |
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(d) |
"Tranche G Closing Date" shall mean the Business
Day next following the date the conditions set out in subsections (a) to
(n) in Section 4.9 are fulfilled by the Issuer and the Company or waived
in writing by the Purchaser; provided that the Tranche G Closing Date is
expected to occur no later than April 15, 2015; |
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(e) |
"Tranche H Closing Date" shall mean the Business
Day next following the date the conditions set out in subsections (a) to
(n) in Section 4.10 are fulfilled by the Issuer and the Company or waived
in writing by the Purchaser; provided that the Tranche H Closing Date is
expected to occur no later than July 1, 2015; |
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(f) |
"Tranche I Closing Date" shall mean the Business
Day next following the date the conditions set out in subsections (a) to
(n) in Section 4.11 are fulfilled by the Issuer and the Company or waived
in writing by the Purchaser; provided that the Tranche I Closing Date
shall is expected to occur no later than October 1, 2015; |
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(g) |
"Tranche F Debenture" shall mean a sixth Debenture
in the principal amount of US$8,000,000 to be issued and delivered by the
Issuer and paid for by the Purchaser in the amount of the Tranche F
Subscription Amount on the Tranche F Closing Date, in the form attached as
Exhibit A to this Agreement; |
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(h) |
"Tranche G Debenture" shall mean a seventh
Debenture in the principal amount of US$8,000,000 to be issued and
delivered by the Issuer and paid for by the Purchaser in the amount of the
Tranche F Subscription Amount on the Tranche G Closing Date, in the form
attached as Exhibit B to this Agreement; |
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(i) |
"Tranche H Debenture" shall mean a eighth
Debenture in the principal amount of US$8,000,000 to be issued and
delivered by the Issuer and paid for by the Purchaser in the amount of the
Tranche H Subscription Amount on the Tranche H Closing Date, in the form
attached as Exhibit C to this Agreement; |
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(j) |
"Tranche I Debenture" shall mean a ninth Debenture
in the principal amount of US$6,000,000 to be issued and delivered by the
Issuer and paid for by the Purchaser in the amount of the Tranche I
Subscription Amount on the Tranche I Closing Date, in the form attached as
Exhibit D to this Agreement; |
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(k) |
"Tranche F Subscription Amount" shall mean
US$8,000,000; |
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(l) |
"Tranche G Subscription Amount" shall mean
US$8,000,000; |
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(m) |
"Tranche H Subscription Amount" shall mean
US$8,000,000; |
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(n) |
"Tranche I Subscription Amount" shall mean
US$6,000,000; |
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(o) |
The following Section 2.9 shall be added to the Purchase
Agreement: |
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"2.9. References to Agreements. References to any
agreement, document or instrument shall mean such agreement, document or
instrument as amended, modified, supplemented or restated from time to
time, including with respect to the Purchase Agreement, by Amendment No.
16 to the Purchase Agreement." |
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(p) |
Current Section 4.8 and Section 4.9 of the Purchase
Agreement shall be renumbered as Section 4.12 and Section 4.13,
respectively. |
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(q) |
Section 4.8 of the Purchase Agreement shall read as
follows: |
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"Tranche F Closing. On the Tranche F Closing Date,
provided the conditions set out below in subsections (a) to (n) in this
Section 4.8 have been fulfilled by the Issuer and the Company or waived in
writing by the Purchaser, the Purchaser shall promptly initiate and cause
a wire transfer in same day funds to be sent to the account of the Issuer,
as instructed in writing by the Issuer, in an amount equal to the Tranche
F Subscription Amount. On the date such funds have been received by the
Issuer, the Tranche F Debenture shall be released from escrow to the
Purchaser whereupon the Tranche F Debenture shall be deemed to be issued
and the Purchaser shall fill in by hand the date of such receipt as the
date of issuance of the Tranche F Debenture. The above- mentioned
conditions are as follows: |
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(a) |
the Issuer shall have executed and registered an
amendment to the Erie Plant Mortgage to reflect Amendment No. 16 to the
Purchase Agreement and the issuance of the Tranche F Debenture, Tranche G
Debenture, Tranche H Debenture and Tranche I Debenture (the "2015 Erie
Plant Mortgage Amendment") and delivered copies of such registered
2015 Erie Plant Mortgage Amendment to the Purchaser, and shall have paid
the mortgage registration fee payable in connection therewith; |
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(b) |
the Issuer shall have obtained, and delivered to the
Purchaser, a standard date- down endorsement to the Purchasers lenders
policy of title insurance with respect to the Erie Plant Mortgage,
insuring that the lien of the Erie Plant Mortgage remains, as of the date
of registration of the 2015 Erie Plant Mortgage Amendment, in full force
and effect as a first mortgage lien on the premises described thereon,
without any Encumbrances other than those listed on the Purchasers
original policy of title insurance; |
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(c) |
the actual and proposed capital expenditures and other
expenses of the Company and the Issuer shall be in material compliance
with the projections and planned expenditures set out in the NorthMet
Project Budget for fiscal year 2016 as approved by the Board of Directors
of the Company and each of the Company and the Issuer shall have delivered
an officers certificate dated the Tranche F Closing Date to the Purchaser
to such effect; |
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(d) |
the representations and warranties set forth in Section
5.1 shall be true and correct in all respects on and as of the Tranche F
Closing Date, by reference to the facts and circumstances then existing
(except for such representations and warranties which refer to or are made
as of another specified date, in which case such representations and
warranties will have been true and correct in all respects as of that
date) and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche F Closing Date to the Purchaser to
such effect; |
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(e) |
the Company and the Issuer shall have executed and
delivered to the Purchaser: |
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(i) |
in escrow the Tranche F Debenture, undated, duly executed
by the Issuer and registered in the name of the Purchaser; |
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(ii) |
a certificate dated the Tranche F Closing Date of an
officer of the Company and the Issuer, respectively, certifying the
resolutions Amendment No. 16 to the Purchase Agreement, confirming that
the resolutions referred to in Sections 4.2(d) and 4.2(e) of the Purchase
Agreement have not been rescinded or modified by the Company or
the Issuer, respectively, and a certificate of status, good
standing or like certificate dated the Tranche F Closing Date with respect
to the Issuer and to the Company and issued by appropriate government
officials of the jurisdiction of its organization; and |
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(iii) |
written confirmation of the Company dated the Tranche F
Closing Date that its obligations under the Parent Guarantee remain in
full force and effect following the issuance of the Tranche F
Debenture; |
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(f) |
the execution of the confirmation of secured obligations
agreement dated the Tranche F Closing Date by the Purchaser, the Issuer
and the Company; |
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(g) |
the Purchaser shall have received opinions dated the
Tranche F Closing Date of counsel to the Company and of counsel to the
Issuer, addressed to the Purchaser, substantially in the forms attached
hereto as Exhibits K-1 through K- 3, but limited to Amendment No. 16 to
the Purchase Agreement and the Tranche F Debenture, the documents executed
and delivered by the Issuer in respect of the 2015 Erie Plant Mortgage
Amendment, the confirmations of the Company referred to in Section
4.8(e)(iii) and such matters as the Purchaser may request, acting
reasonably; |
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(h) |
the Company and the Issuer shall be in compliance with
their covenants hereunder and their covenants in the Ancillary Agreements
and the Security Documents, and each of the Company and the Issuer shall
have delivered an officers certificate dated the Tranche F Closing Date
to the Purchaser to such effect; |
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(i) |
no Event of Default shall have occurred and be
continuing, and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche F Closing Date to the Purchaser to
such effect; |
|
|
|
|
(j) |
all interest and other payments then payable under the
Tranche A Debenture, the Tranche B Debenture, the Tranche C Debenture and
the Tranche D Debenture shall have been paid on a timely basis and no such
payments shall be late or outstanding; |
|
|
|
|
(k) |
no event has occurred or failed to occur since January
31, 2014 which has had or could reasonably be expected to have a Material
Adverse Effect, and each of the Company and the Issuer shall have
delivered an officers certificate dated the Tranche F Closing Date to the
Purchaser to such effect; |
|
|
|
|
(l) |
the Purchaser shall be satisfied, acting reasonably, that
all registrations and other actions necessary to perfect the security
interest created by the Security Documents and maintain the priority of
the Encumbrances in favour of the Purchaser have been made or
taken; |
|
|
|
|
(m) |
none of the assets of the Company or the Issuer shall be
subject to any Encumbrances other than Permitted Encumbrances;
and |
|
|
|
|
(n) |
the Purchaser being satisfied that there is no pending or
threatened judicial, administrative or other proceedings, investigations
or litigation which seek to adjourn, delay, enjoin, prohibit or impose
material limitations on any aspect of the transactions contemplated by
this Agreement, the Ancillary Agreements or the Security Documents or
which has, or could reasonably be expected to have a Material Adverse
Effect." |
-6-
|
(r) |
Section 4.9 of the Purchase Agreement shall read as
follows: |
|
|
|
|
|
Tranche G Closing. On the Tranche G Closing Date,
provided the conditions set out below in subsections (a) to (n) in this
Section 4.9 have been fulfilled by the Issuer and the Company or waived in
writing by the Purchaser, the Purchaser shall promptly initiate and cause
a wire transfer in same day funds to be sent to the account of the Issuer,
as instructed in writing by the Issuer, in an amount equal to the Tranche
G Subscription Amount. On the date such funds have been received by the
Issuer, the Tranche G Debenture shall be released from escrow to the
Purchaser whereupon the Tranche G Debenture shall be deemed to be issued
and the Purchaser shall fill in by hand the date of such receipt as the
date of issuance of the Tranche G Debenture. The above- mentioned
conditions are as follows: |
|
(a) |
The 2015 Erie Plan Mortgage referred to in Section 4.8(a)
of the Purchase Agreement shall be in full force and effect and continue
to be registered; |
|
|
|
|
(b) |
The standard date-down endorsement to the Purchasers
lenders policy of title insurance with respect to the Erie Plant
Mortgage, delivered to the Purchaser pursuant to Section 4.8(a) of the
Purchase Agreement and insuring that the lien of the Erie Plant Mortgage
remains, as of Tranche G Closing Date, in full force and effect as a first
mortgage lien on the premises described thereon, without any Encumbrances
other than those listed on the Purchasers original policy of title
insurance; |
|
|
|
|
(c) |
the actual and proposed capital expenditures and other
expenses of the Company and the Issuer shall be in material compliance
with the projections and planned expenditures set out in the NorthMet
Project Budget for fiscal year 2016 as approved by the Board of Directors
of the Company and each of the Company and the Issuer shall have delivered
an officers certificate dated the Tranche G Closing Date to the Purchaser
to such effect; |
|
|
|
|
(d) |
the representations and warranties set forth in Section
5.1 shall be true and correct in all respects on and as of the Tranche G
Closing Date, by reference to the facts and circumstances then existing
(except for such representations and warranties which refer to or are made
as of another specified date, in which case such representations and
warranties will have been true and correct in all respects as of that
date) and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche G Closing Date to the Purchaser to
such effect; |
|
|
|
|
(e) |
the Company and the Issuer shall have executed and
delivered to the Purchaser: |
|
(i) |
in escrow the Tranche G Debenture, undated, duly executed
by the Issuer and registered in the name of the Purchaser; |
|
|
|
|
(ii) |
a certificate dated the Tranche G Closing Date of an
officer of the Company and the Issuer, respectively, certifying the
resolutions with respect to Amendment No. 16 to the Purchase Agreement,
confirming that the resolutions referred to in Sections 4.2(d) and 4.2(e)
of the Purchase Agreement have not been rescinded or modified by the
Company or the Issuer, respectively, and a certificate of status, good
standing or like certificate dated the Tranche G Closing Date with respect
to the Issuer and to the Company and issued by appropriate government
officials of the jurisdiction of its organization;
and |
-7-
|
(iii) |
written confirmation of the Company dated the Tranche G
Closing Date that its obligations under the Parent Guarantee remain in
full force and effect following the issuance of the Tranche G
Debenture; |
|
(f) |
the execution of the confirmation of secured obligations
agreement dated Tranche G Closing Date by the Purchaser, the Issuer and
the Company; |
|
|
|
|
(g) |
the Purchaser shall have received opinions dated the
Tranche G Closing Date of counsel to the Company and of counsel to the
Issuer, addressed to the Purchaser, substantially in the forms attached
hereto as Exhibits K-1 through K- 3, but limited to Amendment No. 16 to
the Purchase Agreement and the Tranche G Debenture, the documents executed
and delivered by the Issuer in respect of the confirmations of the Company
referred to in Section 4.9(e)(iii) and such matters as the Purchaser may
request, acting reasonably; |
|
|
|
|
(h) |
the Company and the Issuer shall be in compliance with
their covenants hereunder and their covenants in the Ancillary Agreements
and the Security Documents, and each of the Company and the Issuer shall
have delivered an officers certificate dated the Tranche G Closing Date
to the Purchaser to such effect; |
|
|
|
|
(i) |
no Event of Default shall have occurred and be
continuing, and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche G Closing Date to the Purchaser to
such effect; |
|
|
|
|
(j) |
all interest and other payments then payable under the
Tranche A Debenture, the Tranche B Debenture, the Tranche C Debenture, the
Tranche D Debenture and the Tranche F Debenture shall have been paid on a
timely basis and no such payments shall be late or outstanding; |
|
|
|
|
(k) |
no event has occurred or failed to occur since January
31, 2014 which has had or could reasonably be expected to have a Material
Adverse Effect, and each of the Company and the Issuer shall have
delivered an officers certificate dated the Tranche G Closing Date to the
Purchaser to such effect; |
|
|
|
|
(l) |
the Purchaser shall be satisfied, acting reasonably, that
all registrations and other actions necessary to perfect the security
interest created by the Security Documents and maintain the priority of
the Encumbrances in favour of the Purchaser have been made or
taken; |
|
|
|
|
(m) |
none of the assets of the Company or the Issuer shall be
subject to any Encumbrances other than Permitted Encumbrances;
and |
|
|
|
|
(n) |
the Purchaser being satisfied that there is no pending or
threatened judicial, administrative or other proceedings, investigations
or litigation which seek to adjourn, delay, enjoin, prohibit or impose
material limitations on any aspect of the transactions contemplated by
this Agreement, the Ancillary Agreements or the Security Documents or
which has, or could reasonably be expected to have a Material Adverse
Effect." |
|
(s) |
Section 4.10 of the Purchase Agreement shall read as
follows: |
|
|
|
|
|
"Tranche H Closing. On the Tranche H Closing Date,
provided the conditions set out below in subsections (a) to (n) in this
Section 4.10 have been fulfilled by the Issuer and the Company or waived
in writing by the Purchaser, the Purchaser shall promptly
initiate and cause a wire transfer in same day
funds to be sent to the account of the Issuer, as instructed in writing by the
Issuer, in an amount equal to the Tranche H Subscription Amount. On the date
such funds have been received by the Issuer, the Tranche H Debenture shall be
released from escrow to the Purchaser whereupon the Tranche H Debenture shall be
deemed to be issued and the Purchaser shall fill in by hand the date of such
receipt as the date of issuance of the Tranche H Debenture. The above-mentioned
conditions are as follows: |
-8-
|
(a) |
The 2015 Erie Plan Mortgage referred to in Section 4.8(a)
of the Purchase Agreement shall be in full force and effect and continue
to be registered; |
|
|
|
|
(b) |
The standard date-down endorsement to the Purchasers
lenders policy of title insurance with respect to the Erie Plant
Mortgage, delivered to the Purchaser pursuant to Section 4.8(a) of the
Purchase Agreement and insuring that the lien of the Erie Plant Mortgage
remains, as of the Tranche H Closing Date, in full force and effect as a
first mortgage lien on the premises described thereon, without any
Encumbrances other than those listed on the Purchasers original policy of
title insurance; |
|
|
|
|
(c) |
the actual and proposed capital expenditures and other
expenses of the Company and the Issuer shall be in material compliance
with the projections and planned expenditures set out in the NorthMet
Project Budget for fiscal year 2016 as approved by the Board of Directors
of the Company and each of the Company and the Issuer shall have delivered
an officers certificate dated the Tranche H Closing Date to the Purchaser
to such effect; |
|
|
|
|
(d) |
the representations and warranties set forth in Section
5.1 shall be true and correct in all respects on and as of the Tranche H
Closing Date, by reference to the facts and circumstances then existing
(except for such representations and warranties which refer to or are made
as of another specified date, in which case such representations and
warranties will have been true and correct in all respects as of that
date) and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche H Closing Date to the Purchaser to
such effect; |
|
|
|
|
(e) |
the Company and the Issuer shall have executed and
delivered to the Purchaser: |
|
(i) |
in escrow the Tranche H Debenture, undated, duly executed
by the Issuer and registered in the name of the Purchaser; |
|
|
|
|
(ii) |
a certificate dated the Tranche H Closing Date of an
officer of the Company and the Issuer, respectively, certifying the
resolutions with respect to Amendment No. 16 to the Purchase Agreement,
confirming that the resolutions referred to in Sections 4.2(d) and 4.2(e)
of the Purchase Agreement have not been rescinded or modified by the
Company or the Issuer, respectively, and a certificate of status, good
standing or like certificate dated the Tranche H Closing Date with respect
to the Issuer and to the Company and issued by appropriate government
officials of the jurisdiction of its organization; and |
|
|
|
|
(iii) |
written confirmation of the Company dated the Tranche H
Closing Date that its obligations under the Parent Guarantee remain in
full force and effect following the issuance of the Tranche H
Debenture; |
-9-
|
(f) |
the execution of the confirmation of secured obligations
agreement dated Tranche H Closing Date by the Purchaser, the Issuer and
the Company; |
|
|
|
|
(g) |
the Purchaser shall have received opinions dated the
Tranche H Closing Date of counsel to the Company and of counsel to the
Issuer, addressed to the Purchaser, substantially in the forms attached
hereto as Exhibits K-1 through K- 3, but limited to Amendment No. 16 to
the Purchase Agreement and the Tranche H Debenture, the documents executed
and delivered by the Issuer in respect of the confirmations of the Company
referred to in Section 4.10(e)(iii) and such matters as the Purchaser may
request, acting reasonably; |
|
|
|
|
(h) |
the Company and the Issuer shall be in compliance with
their covenants hereunder and their covenants in the Ancillary Agreements
and the Security Documents, and each of the Company and the Issuer shall
have delivered an officers certificate dated the Tranche H Closing Date
to the Purchaser to such effect; |
|
|
|
|
(i) |
no Event of Default shall have occurred and be
continuing, and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche H Closing Date to the Purchaser to
such effect; |
|
|
|
|
(j) |
all interest and other payments then payable under the
Tranche A Debenture, the Tranche B Debenture, the Tranche C Debenture, the
Tranche D Debenture, the Tranche F Debenture and the Tranche G Debenture
shall have been paid on a timely basis and no such payments shall be late
or outstanding; |
|
|
|
|
(k) |
no event has occurred or failed to occur since January
31, 2015 which has had or could reasonably be expected to have a Material
Adverse Effect, and each of the Company and the Issuer shall have
delivered an officers certificate dated the Tranche H Closing Date to the
Purchaser to such effect; |
|
|
|
|
(l) |
the Purchaser shall be satisfied, acting reasonably, that
all registrations and other actions necessary to perfect the security
interest created by the Security Documents and maintain the priority of
the Encumbrances in favour of the Purchaser have been made or
taken; |
|
|
|
|
(m) |
none of the assets of the Company or the Issuer shall be
subject to any Encumbrances other than Permitted Encumbrances;
and |
|
|
|
|
(n) |
the Purchaser being satisfied that there is no pending or
threatened judicial, administrative or other proceedings, investigations
or litigation which seek to adjourn, delay, enjoin, prohibit or impose
material limitations on any aspect of the transactions contemplated by
this Agreement, the Ancillary Agreements or the Security Documents or
which has, or could reasonably be expected to have a Material Adverse
Effect." |
|
(t) |
Section 4.11 of the Purchase Agreement shall read as
follows: |
|
|
|
|
|
"Tranche I Closing. On the Tranche I Closing Date,
provided the conditions set out below in subsections (a) to (n) in this
Section 4.11 have been fulfilled by the Issuer and the Company or waived
in writing by the Purchaser, the Purchaser shall promptly initiate and
cause a wire transfer in same day funds to be sent to the account of the
Issuer, as instructed in writing by the Issuer, in an amount equal to the
Tranche I Subscription Amount. On the date such funds have been received
by the Issuer, the Tranche I Debenture shall be released from escrow to
the Purchaser whereupon the Tranche I Debenture shall be deemed to be issued
and the Purchaser shall fill in by hand the date of such receipt as the date of
issuance of the Tranche I Debenture. The above-mentioned conditions are as
follows: |
-10-
|
(a) |
The 2015 Erie Plan Mortgage referred to in Section 4.8(a)
of the Purchase Agreement shall be in full force and effect and continue
to be registered; |
|
|
|
|
(b) |
The standard date-down endorsement to the Purchasers
lenders policy of title insurance with respect to the Erie Plant
Mortgage, delivered to the Purchaser pursuant to Section 4.8(a) of the
Purchase Agreement and insuring that the lien of the Erie Plant Mortgage
remains, as of the Tranche I Closing Date, in full force and effect as a
first mortgage lien on the premises described thereon, without any
Encumbrances other than those listed on the Purchasers original policy of
title insurance; |
|
|
|
|
(c) |
the actual and proposed capital expenditures and other
expenses of the Company and the Issuer shall be in material compliance
with the projections and planned expenditures set out in the NorthMet
Project Budget for fiscal year 2016 as approved by the Board of Directors
of the Company and each of the Company and the Issuer shall have delivered
an officers certificate dated the Tranche I Closing Date to the Purchaser
to such effect; |
|
|
|
|
(d) |
the representations and warranties set forth in Section
5.1 shall be true and correct in all respects on and as of the Tranche I
Closing Date, by reference to the facts and circumstances then existing
(except for such representations and warranties which refer to or are made
as of another specified date, in which case such representations and
warranties will have been true and correct in all respects as of that
date) and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche I Closing Date to the Purchaser to
such effect; |
|
|
|
|
(e) |
the Company and the Issuer shall have executed and
delivered to the Purchaser: |
|
(i) |
in escrow the Tranche I Debenture, undated, duly executed
by the Issuer and registered in the name of the Purchaser; |
|
|
|
|
(ii) |
a certificate dated the Tranche I Closing Date of an
officer of the Company and the Issuer, respectively, certifying the
resolutions with respect to Amendment No. 16 to the Purchase Agreement,
confirming that the resolutions referred to in Sections 4.2(d) and 4.2(e)
of the Purchase Agreement have not been rescinded or modified by the
Company or the Issuer, respectively, and a certificate of status, good
standing or like certificate dated the Tranche I Closing Date with respect
to the Issuer and to the Company and issued by appropriate government
officials of the jurisdiction of its organization; and |
|
|
|
|
(iii) |
written confirmation of the Company dated the Tranche I
Closing Date that its obligations under the Parent Guarantee remain in
full force and effect following the issuance of the Tranche I
Debenture; |
|
(f) |
the execution of the confirmation of secured obligations
agreement dated Tranche I Closing Date by the Purchaser, the Issuer and
the Company; |
|
|
|
|
(g) |
the Purchaser shall have received opinions dated the
Tranche I Closing Date of counsel to the Company and of counsel to the
Issuer, addressed to the Purchaser, substantially in the forms attached hereto as
Exhibits K-1 through K- 3, but limited to Amendment No. 16 to the Purchase
Agreement and the Tranche I Debenture, the documents executed and
delivered by the Issuer in respect of the confirmations of the Company
referred to in Section 4.11(e)(iii) and such matters as the Purchaser may
request, acting reasonably; |
-11-
|
(h) |
the Company and the Issuer shall be in compliance with
their covenants hereunder and their covenants in the Ancillary Agreements
and the Security Documents, and each of the Company and the Issuer shall
have delivered an officers certificate dated the Tranche I Closing Date
to the Purchaser to such effect; |
|
|
|
|
(i) |
no Event of Default shall have occurred and be
continuing, and each of the Company and the Issuer shall have delivered an
officers certificate dated the Tranche I Closing Date to the Purchaser to
such effect; |
|
|
|
|
(j) |
all interest and other payments then payable under the
Tranche A Debenture, the Tranche B Debenture, the Tranche C Debenture, the
Tranche D Debenture, the Tranche F Debenture, the Tranche G Debenture and
the Tranche H Debenture shall have been paid on a timely basis and no such
payments shall be late or outstanding; |
|
|
|
|
(k) |
no event has occurred or failed to occur since January
31, 2015 which has had or could reasonably be expected to have a Material
Adverse Effect, and each of the Company and the Issuer shall have
delivered an officers certificate dated the Tranche I Closing Date to the
Purchaser to such effect; |
|
|
|
|
(l) |
the Purchaser shall be satisfied, acting reasonably, that
all registrations and other actions necessary to perfect the security
interest created by the Security Documents and maintain the priority of
the Encumbrances in favour of the Purchaser have been made or
taken; |
|
|
|
|
(m) |
none of the assets of the Company or the Issuer shall be
subject to any Encumbrances other than Permitted Encumbrances;
and |
|
|
|
|
(n) |
the Purchaser being satisfied that there is no pending or
threatened judicial, administrative or other proceedings, investigations
or litigation which seek to adjourn, delay, enjoin, prohibit or impose
material limitations on any aspect of the transactions contemplated by
this Agreement, the Ancillary Agreements or the Security Documents or
which has, or could reasonably be expected to have a Material Adverse
Effect." |
3. |
Effectiveness |
|
|
|
This Agreement shall become effective and be deemed
effective as of the date hereof upon execution of counterparts of this
Agreement by each of the Company, the Issuer and the Purchaser (the
"Effective Date"). |
|
|
4. |
Representations and Warranties of the Company and the
Issuer |
|
(a) |
Each of the Company and the Issuer hereby confirms the
representations and warranties in the Purchase Agreement are true and
accurate as if the representation and warranty was given as of the date
hereof and makes the following additional representations and warranties
to the Purchaser: |
-12-
|
(i) |
Authorization; Enforcement. Each of the Company
and the Issuer has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The execution and
delivery of this Agreement by the Company and the Issuer and the
consummation by the Company and the Issuer of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of the Company and the Issuer and no further action is required
by the Company and the Issuer, their boards of directors or their
shareholders in connection herewith. This Agreement has been duly executed
by the Company and the Issuer and, when delivered in accordance with the
terms hereof, will constitute the valid and binding obligation of the
Company and the Issuer enforceable against the Company and the Issuer in
accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies, and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law. |
|
(b) |
The Purchaser hereby makes the following representations
and warranties to the Company and the Issuer: |
|
(i) |
Authorization; Enforcement. The Purchaser has the
requisite corporate power and authority to enter into and to consummate
the transactions contemplated by this Agreement and otherwise to carry out
its obligations hereunder. The execution and delivery of this Agreement by
the Purchaser and the consummation by the Purchaser of the transactions
contemplated hereby have been duly authorized by all necessary action on
the part of the Purchaser and no further action is required by the
Purchaser, its board of directors or its shareholders in connection
herewith. This Agreement has been duly executed by the Purchaser and, when
delivered in accordance with the terms hereof, will constitute the valid
and binding obligation of the Purchaser enforceable against the Purchaser
in accordance with its terms except (i) as limited by general equitable
principles and applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors' rights generally, (ii) as limited by laws relating to the
availability of specific performance, injunctive relief or other equitable
remedies and (iii) insofar as indemnification and contribution provisions
may be limited by applicable law. |
5. |
Effect on Agreements |
|
|
|
Except as expressly amended hereby, all of the terms and
conditions of the Agreements (as defined in the Purchase Agreement), as
amended, shall remain in full force and effect after the execution of this
Agreement. |
|
|
6. |
Amendments and Waivers |
|
|
|
The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented,
and waivers or consents to departures from the provisions hereof may not
be given, unless the same shall be in writing and signed by the Company,
the Issuer and the Purchaser. |
-13-
7. |
Notices |
|
|
|
Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be delivered as set
forth in the applicable Agreement (as defined in the Purchase
Agreement). |
|
|
8. |
Successors and Assigns |
|
|
|
This Agreement may not be assigned by any party with the
prior written consent of the other parties. The terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the
respective permitted successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party
other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of
this Agreement, except as expressly provided in this Agreement. |
|
|
9. |
Execution and Counterparts |
|
|
|
This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and
the same agreement. In the event that any signature is delivered by
facsimile transmission or by e-mail delivery of a ".pdf" format data file,
such signature shall create a valid and binding obligation of the party
executing (or on whose behalf such signature is executed) with the same
force and effect as if such facsimile or ".pdf" signature page were an
original thereof. |
|
|
10. |
Expenses |
|
|
|
The Issuer and the Company shall promptly reimburse the
Purchaser, upon first written demand, for all actual and out-of-pocket
costs and expenses incurred by the Purchaser in respect of (a) the
negotiation, execution and delivery of the term sheet relating to this
Agreement, this Agreement and any and all related agreements and
documents, and (b) the enforcement of any right or remedy by the Purchaser
against the Issuer and/or the Company under or in respect of the term
sheet relating to this Agreement, this Agreement and any and all related
agreements and documents. |
|
|
|
The Issuer and the Company expressly agree and consent to
the deduction and reimbursement of any such costs and expenses to be
reimbursed to the Purchaser (if any) from the proceeds of the issuance of
the 2015 Debentures to be made available to the Issuer by the Purchaser
under this Agreement. |
|
|
11. |
Further Assurances |
|
|
|
The parties shall execute and deliver all such further
instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby
and to evidence the fulfillment of the agreements herein
contained. |
|
|
12. |
Governing Law |
|
|
|
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to the
principles of conflicts of law thereof that would defer to the substantive
laws of another jurisdiction. |
|
|
13. |
Severability |
|
|
|
If one or more provisions of this Agreement are held to
be unenforceable under Applicable Law, such provision shall be excluded
from this Agreement and the balance of this Agreement shall
be interpreted as if such provision were so excluded and
shall be enforceable in accordance with its terms. |
-14-
14. |
Headings |
|
|
|
The headings in this Agreement are for convenience only,
do not constitute a part of the Agreement and shall not be deemed to limit
or affect any of the provisions hereof. |
[signature page follows]
-15-
IN
WITNESS WHEREOF, the parties have duly executed this Agreement as of the
date first written above.
POLYMET MINING CORP.
|
By: |
/s/
Douglas Newby |
|
|
Name: Douglas Newby |
|
|
Title: Chief Financial Officer
|
POLY MET MINING, INC.
|
By: |
/s/
Douglas Newby |
|
|
Name: Douglas Newby |
|
|
Title: Chief Financial Officer
|
GLENCORE AG
|
By: |
/s/ A
Hubmann |
/s/ K. Klassen |
|
|
Name: A. Hubmann |
K. Klassen |
|
|
Title: Director |
Officer |
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Exhibit A
Tranche F Debenture
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE
DEBENTURE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT, FOLLOWING ANY
REDEMPTION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS DEBENTURE MUST NOT TRADE THIS SECURITY BEFORE MAY 31,
2015.
FLOATING RATE SECURED DEBENTURE, DUE NO LATER THAN MARCH
31, 2016
OF
POLY MET MINING,
INC.
Debenture No.: D-6 |
Original Principal Amount: US$8,000,000
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Issuance Date: January 30, 2015 |
New York, New York |
THIS
DEBENTURE is a duly authorized issue of POLY MET MINING, INC., a
corporation incorporated pursuant to the laws of Minnesota (the
Company), designated as the Companys Floating Rate Secured Debenture,
due on the day which is the earlier of (i) the availability of at least One
Hundred Million U.S. Dollars (US$100,000,0000) of the Senior Construction
Finance (as defined below), or (ii) March 31, 2016 (the Maturity Date)
in an aggregate original principal amount of Eight Million U.S. Dollars
(US$8,000,000]) (the Debenture).
FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of GLENCORE
AG or its registered assigns or successors-in-interest (the Holder)
the principal sum of Eight Million U.S. Dollars (US$8,000,000), together with
all accrued but unpaid interest thereon on the Maturity Date, to the extent such
principal amount and interest has not been repaid in accordance with the terms
hereof. Interest on the unpaid principal balance hereof shall accrue from the
date of original issuance hereof (the Issuance Date) at the Floating
Rate (as defined below) until the principal balance becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by redemption or
repayment (Early Repayment Date) in accordance with the terms hereof or
of the other Agreements. The Floating Rate shall be determined on each Floating
Rate Reset Date, and such Floating Rate shall apply until the next Floating Rate
Reset Date. Interest on this Debenture shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with Section 2
hereof. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees
and then any remaining amount to principal.
All payments
of principal and interest on this Debenture shall be made in lawful money of the
United States of America by wire transfer of immediately available funds to such
account as the Holder may from time to time designate by written notice in
accordance with the provisions of this Debenture. This Debenture may not be
prepaid or redeemed in whole or in part except as described in Section 3 or as
otherwise provided herein. Whenever any amount expressed to be due by the terms
of this Debenture is due on any day (other than the Maturity Date) which is not
a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day. If the Maturity Date falls on a day that
is not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment will accrue for
the period from and after the Maturity Date.
Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Purchase Agreement dated
October 31, 2008, as amended, among the Company, the Holder and PolyMet Mining
Corp. (the Parent), pursuant to which the Debenture was originally
issued (the Purchase Agreement). For purposes hereof the following
terms shall have the meanings ascribed to them below:
Acquisition means any transaction, or any series of related
transactions, consummated after the date hereof, by which the Company directly
or indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business, (b)
acquires control of securities of a Person engaged in a business representing
more than 50% of the ordinary voting power for the election of directors or
other governing position if the business affairs of such Person are managed by a
board of directors or other governing body, or (c) acquires control of more than
50% of the ownership interest in any Person engaged in any business that is not
managed by a board of directors or other governing body.
Affiliate means, with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the specified Person.
Appointee has the meaning given to it in Section 7(a).
Bankruptcy Event means any of the
following events: (a) the Company or the Parent commences a case or other
proceeding or proposal under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, winding-up, insolvency or
liquidation or similar law of any jurisdiction (including the Bankruptcy
Act (Canada) or the Companies Creditors Arrangement Act (Canada))
relating to the Company or the Parent; (b) there is commenced against the
Company or the Parent any such case or proceeding or proposal that is not
dismissed within thirty (30) days after commencement; (c) the Company or the
Parent is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered; (d) the Company or the
Parent suffers any appointment of any trustee, receiver, receiver and manager,
interim receiver, custodian or the like for it or any substantial part of its
property that is not discharged or stayed within thirty (30) days; (e) the
Company or the Parent makes a general assignment for the benefit of creditors;
(f) the Company or the Parent fails to pay, or states that it is unable to pay
or is unable to pay, its debts generally as they become due; (g) the Company or
the Parent calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (h) the Company or the
Parent, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.
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Business Day means any day other
than a Saturday, Sunday or a day on which commercial banks in the City of New
York, New York, Toronto, Ontario or Zug, Switzerland are authorized or required
by law or executive order to remain closed.
Canadian Securities Laws means all
applicable securities laws in each of the provinces and territories of Canada
and the respective regulations made thereunder, together with applicable
published fee schedules, prescribed forms, rules, multilateral or national
instruments, orders, rulings and other regulatory instruments issued or adopted
by the Securities Commissions.
Capital Assets means, with respect
to any Person, any tangible fixed or capital assets owned or leased (in the case
of a Capital Lease) by such Person.
Capital Expenditures means, in
respect of any Person and any period, all expenditures made by such Person
during such period for the purchase, lease or acquisition of Capital Assets
(including all amounts paid or accrued during such period on Capital Leases) and
other Debt incurred or assumed to acquire or construct Capital Assets (other
than current Capital Assets) required to be capitalized for financial reporting
purposes in accordance with IFRS.
Capitalized Lease Obligation of
any Person means any obligation of such Person to pay rent or other amounts
under a Capital Lease.
Capital Leases means any and all
lease obligations of a lessee that are capitalized for financial reporting
purposes in accordance with IFRS.
Change
in Control Offer has the meaning given to it in Section 3(a).
Change in Control Transaction will, and
will be deemed to, exist if (a) there occurs any consolidation, merger, plan of
arrangement or other business combination of the Company or the Parent with or
into any other corporation or other entity or person (whether or not the Company
or the Parent is the surviving corporation) or any other corporate
reorganization or transaction or series of related transactions in which in any
of such events the voting shareholders of the Company or the Parent prior to
such event cease to own 50% or more of the voting power, or corresponding voting
equity interests, of the surviving corporation after such event (including any
going private transaction under Rule 13e-3 promulgated pursuant to the
Exchange Act, tender offer by the Company or the Parent under Rule 13e-4
promulgated pursuant to the Exchange Act for 20% or more of the Companys common
shares or the Parents Common Shares, or take-over bid by the Company or the
Parent under Canadian Securities Laws for 20% or more of the Companys common
shares or the Parents Common Shares), (b) any person (as defined in Section
13(d) of the Exchange Act), together with its affiliates and associates (as such
terms are defined in Rule 405 under the Act), beneficially owns or is deemed to
beneficially own (as described in Rule 13d-3 under the Exchange Act without
regard to the 60-day exercise period) in excess of 35% of the Companys or the
Parents voting power other than such persons who beneficially owned or are
deemed to beneficially own such voting power as of the date hereof, (c) there is
a replacement within a consecutive period of 24 months of more than one-half of
the members of the Companys or the Parents Board of Directors which is not
approved by those individuals who are members of the Companys or the Parents
Board of Directors on the date thereof who were either directors at the
beginning of such period or where election or nomination was previously
approved, (d) in one or a series of related transactions, there is a sale or
transfer of all or substantially all of the assets of the Company or the Parent, determined on a consolidated basis, or
(e) the Company or the Parent enters into any agreement providing for an event,
circumstance or occurrence set forth in (a), (b), (c) or (d) above.
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Claim means, with respect to any
Person, any actual or prospective action, suit, order, charge, penalty, claim,
litigation, investigation or proceeding of any kind or nature whatsoever against
or otherwise involving such Person or the property or assets of such Person.
Common
Shares means the Parents common shares, without par value.
Company means Poly Met Mining, Inc., a
corporation incorporated pursuant to the laws of Minnesota.
Compliance Certificate means a
certificate of the Company signed on its behalf by its chief executive officer
and chief financial officer in the form attached hereto as Exhibit B.
"Confirmation of Secured Obligations
Agreement" means the confirmation of secured obligations agreement dated
January 30, 2015 between the Company, the Parent and the Holder.
Control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. Controlling and Controlled have
corresponding meanings.
Debenture means this Debenture,
designated as the Companys Floating Rate Secured Debenture, due on the day
which is the earlier of (i) the availability of at least One Hundred Million
U.S. Dollars (US$100,000,000 of the Senior Construction Financing, or (ii) March
31, 2016, in an aggregate original principal amount of Eight Million U.S.
Dollars (US$8,000,000).
Debenture Adjustment Schedule has the meaning given to it in
Section 2(c).
Debt of any Person means, at any
time, (without duplication): (a) all obligations of such Person for borrowed
money including borrowings of commodities, bankers acceptances, letters of
credit or letters of guarantee; (b) all obligations of such Person for the
deferred purchase price of property or services represented by a note or other
evidence of indebtedness (other than trade payables and other current
liabilities incurred in the ordinary course of business); (c) all obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (d)
all indebtedness of another Person secured by an Encumbrance on any properties
or assets of such Person (other than Encumbrances being contested in good faith
on a timely basis by appropriate proceedings); (e) all Capitalized Lease
Obligations of such Person; (f) the aggregate amount at which any shares in the
capital of such Person which are redeemable or retractable at the option of the
holder may be retracted or redeemed for cash or debt provided all conditions
precedent for such retraction or redemption have been satisfied; (g) all other
obligations of such Person upon which interest charges are customarily paid by
such Person; (h) the net amount of all obligations of such Person (determined on
a marked-to-market basis) under swap agreements; and (i) all debt guaranteed by
such Person.
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Disposition Gross-Up Payment has the meaning given to it in
Section 2(b)(ii).
Disposition Taxes has the meaning given to it in Section
2(b)(ii).
Early Repayment Date means any
Business Day prior to the Maturity Date that PolyMet elects to repay the
outstanding principal and unpaid and accrued interest on the Debentures provided
that PolyMet can demonstrate that such early repayment is prudent and PolyMet
has given ten (10) business days notice to Glencore of its intent to repay the
Debentures.
Equity Securities means, with
respect to any Person, any and all shares, interests, participations, rights in,
or other equivalents (however designated and whether voting and non-voting) of,
such Persons capital, whether outstanding on the date hereof or issued after
the date hereof, including any interest in a partnership, limited partnership or
other similar Person and any beneficial interest in a trust, and any and all
rights, warrants, options or other rights exchangeable for or convertible into
any of the foregoing.
Event of Default has the meaning given to it in Section 6(a).
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Failure to Agree has the meaning
provided for in Section 9 of the Purchase Agreement.
Financial Quarter means, in
respect of the Company, a period of three consecutive months in each Financial
Year ending on April 30, July 31, October 31, and January 31, as the case may
be, of such year.
Financial Year means, in respect
of the Company, its financial year commencing on February 1 of each calendar
year and ending on January 31 of each following calendar year.
Floating Rate means LIBOR plus
8.0% per annum; provided, however, that the Floating Rate for the period from
the Issuance Date to the first Floating Rate Reset Date will be 8.6179 %; and
provided further, that the Floating Rate shall be reset on each Floating Rate
Reset Date.
Floating Rate Reset Date means
March 31, June 30, September 30, and December 31 of each year, commencing on
March 31, 2015, provided that if any such day is not a Business Day, then such
Floating Rate Reset Date means the immediately preceding day which is a Business
Day.
Gross-Up Payment has the meaning given to it in Section 2(b).
Holder means Glencore AG or its registered assigns or
successors-in-interest.
IFRS means International Financial Reporting Standards.
Impermissible Qualification means,
relative to (a) the financial statements or notes thereto of any Person, or (b)
the opinion or report of any independent auditors as to any financial statement
or notes thereto, any qualification or exception to such financial statements,
notes, opinion or report, as the case may be, which (i) is of a going concern
or similar nature; or (ii) relates to any limited scope of examination of material
matters relevant to such financial statement, if such limitation results from
the refusal or failure of the Company to grant access to necessary information
therefor.
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Interest Amount has the meaning given to it in Section 2(a).
Issuance Date means January 30, 2015, the date of original
issuance of this Debenture.
ITA means the Income Tax Act (Canada).
LIBOR means the 12 month LIBOR rate for U.S. dollars published
in the print edition of The Wall Street Journal to be set as at the
second Business Day prior to the Issuance Date, provided that, if such 12 month
LIBOR rate is not so published on such date, LIBOR means the 12 month LIBOR rate
most recently published in the print edition of The Wall Street Journal prior to
the day which is the second Business Day prior to the Issuance Date.
Maturity Date has the meaning given to it on the cover page.
Original Currency has the meaning given to it in Section 7(j).
Other Currency has the meaning given to it in Section
7(j).
Parent means PolyMet Mining Corp.,
a corporation incorporated pursuant to the laws of British Columbia.
Payment has the meaning given to it in Section 2(b)(i).
Payment Tax has the meaning given to it in Section 2(b)(i).
Permitted Acquisitions means any
Acquisition by the Company consented prior thereto in writing by the Holder.
Permitted Debt means,
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(i) |
Debt hereunder or under any Security Document; |
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(ii) |
Debt existing on the date hereof and set forth in Note 5
to the condensed interim consolidated financial statements of the Parent
for the interim period ended October 31, 2014; |
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(iii) |
trade accounts due and payable within sixty (60) days and
considered unsecured obligations incurred in the ordinary course of
business (but excluding Debt for borrowed money); and |
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(iv) |
any Senior Construction
Financing. |
Permitted Encumbrances shall have the meaning
set forth in Section 1.51 of the Purchase Agreement.
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Principal Amount means the sum of
(a) the unpaid principal amount of this Debenture, (b) all accrued but unpaid
interest hereunder, and (c) any default payments owing under the Agreements but
not previously paid or added to the Principal Amount.
Purchase Agreement means the
purchase agreement dated October 31, 2008, as amended, among the Company, the
Holder and the Parent, pursuant to which the Debenture was originally issued.
Restricted Payment means, with
respect to any Person, any payment by such Person (a) of any dividends or other
distribution on any of its Equity Securities, (b) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its Equity
Securities, (c) of any principal of or interest or premium on or of any amount
in respect of a sinking or analogous fund or defeasance fund for any Debt of
such Person ranking in right of payment subordinate to any liability of such
Person under the Security Documents, (d) of any principal of or interest or
premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, or (e) of any
management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or
to any director or officer thereof other than as compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course.
Securities Act means the Securities Act of 1933, as amended.
Securities Commissions means,
collectively, the securities commissions or other securities regulatory
authorities in each of the provinces and territories of Canada.
Senior Construction Financing
means Debt or Equity in respect of construction financing for the NorthMet
Project which is in aggregate in an amount equal to or greater than Five Hundred
Million U.S. Dollars (US$500,000,000) such that the construction of the NorthMet
Project may reasonably be expected to be completed.
Subsidiary means any non-natural
Person of which the Company owns or controls, directly or indirectly, not less
than 50% of the total combined voting power represented by all classes of Equity
Securities issued by such Person.
The
following terms and conditions shall apply to this Debenture:
Section 1.
Interpretation.
In this Debenture:
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(a) |
a word importing the masculine, feminine or neuter gender
also includes members of the other genders; |
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(b) |
a word defined in or importing the singular number has
the same meaning when used in the plural number, and vice versa; |
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(c) |
a word importing persons shall include partnerships and
corporations; |
7
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(d) |
the headings to each section are inserted for convenience
of reference only and do not form part of this Debenture; |
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(e) |
all dollar amounts shall be in dollars of the United
States of America unless otherwise specified; and |
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(f) |
including means including without
limitation. |
Section
2.
Payments of Principal and Interest.
(a)
Interest Only Payments. Subject to and in accordance with the terms of
this Section 2, on the earlier of the Maturity Date or the Early Repayment Date,
the Company shall pay to the Holder all interest accrued and unpaid at that time
on the entire outstanding Principal Amount of this Debenture (the Interest
Amount) together with repayment of the entire outstanding Principal Amount
of this Debenture in cash.
(b) Certain Additional Payments by the
Company.
(i)
Payments Under Debenture. Any payment or distribution by the
Company to the Holder hereunder, whether for principal, interest or otherwise,
shall not be subject to any deduction, withholding or offset for any reason
whatsoever except to the extent required by law, and the Company represents that
to its best knowledge no deduction, withholding or offset is so required for any
tax or any other reason. Notwithstanding any term or provision of this Debenture
to the contrary, if it shall be determined that any payment (other than a
payment dealt with under Section 2(b)(iii)) by the Company to or for the benefit
of the Holder pursuant to the terms of this Debenture, whether for principal,
interest or otherwise and whether paid or payable or distributed or
distributable, actual or deemed (a Payment) would be or is subject to
any deduction, withholding or offset due to any duty or tax (such duty or tax,
together with any interest and/or penalties related thereto, hereinafter
collectively referred to as the Payment Tax), then the Company shall,
in addition to all sums otherwise payable hereunder, pay to the Holder an
additional payment in cash (a Gross-Up Payment) in an amount such that
after all such Payment Taxes (whether by deduction, withholding, offset or
payment), including any interest or penalties with respect to such taxes or any
Payment Taxes (and any interest and penalties imposed with respect thereto)
imposed upon any Gross-Up Payment, Holder actually receives an amount of
Gross-Up Payment equal to the Payment Tax imposed upon the Payment (i.e., the
Holder receives a net amount equal to the Payment). The Company shall timely
remit such Payment Tax to the applicable governmental authority and shall
provide evidence of such payment to Holder within ten (10) days of making such
payment.
(ii)
Assignment of Debenture. Upon an assignment of this
Debenture in whole or in part, the Company shall, in addition to all sums
otherwise payable hereunder, pay to the Holder an additional payment in cash (a
Disposition Gross-Up Payment) which shall be sufficient to cover any
taxes (including any interest or penalties) under the ITA (Disposition
Taxes) in respect of such assignment and in respect of amounts payable
under this Section 2(b)(ii). The Company shall timely remit any such Disposition
Taxes to the Receiver General of Canada on account of Holder and shall provide
evidence of such payment to Holder within ten (10) days of making such
payment.
(iii)
Indemnification. The Company shall indemnify Holder,
within fifteen (15) days after written demand therefor, for the full amount of
any Payment Taxes or Disposition Taxes paid by Holder (including any taxes
imposed or asserted on or attributable to amounts payable under this Section 2(b)(iii)) and any expenses
or losses arising therefrom or with respect thereto whether or not such Payment
Taxes or Disposition Taxes were correctly or legally imposed or asserted by the
relevant governmental authority.
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(iv) If the Holder receives a
refund of any Payment Taxes or Disposition Taxes (collectively Taxes)
as to which it has been indemnified by the Company pursuant to Section 2(b)(iii)
or with respect to which the Company has paid additional amounts pursuant to
Section 2(b)(ii), by reason that any such Taxes were incorrectly or illegally
imposed or asserted by the relevant governmental authority, the Holder shall pay
to the Company an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Company under
Section 2(b)(ii) with respect to the Taxes giving rise to such refund), and
without interest (other than any net after-Tax interest paid to the Holder with
respect to such refund) and less any costs, fees, expenses, damages, losses,
taxes or other amounts incurred by the Holder in respect of such refund. This
provision shall not be construed to require the Holder to make available any
information relating to its taxes that it considers confidential to the Company,
to arrange its affairs in any particular manner or, except as provided in the
next sentence, to claim any available refund. The Holder will, at the request
and expense of the Company, contest the payment, and seek a refund, of any Taxes
that the Company considers to be incorrectly or illegally imposed or asserted,
provided that contesting the payment, or seeking a refund, of such Taxes shall
not relieve the Company from its obligations under its indemnity or to pay
additional Taxes under Section 2(b)(ii).
(c)
Adjustments to Principal Amount. The Principal Amount owing under this
Debenture shall be decreased, as of the date of redemption, upon the early
redemption of all or a portion of the Principal Amount by an amount equal to
such Principal Amount that has been so redeemed (an Adjustment Event).
The Holder shall not be required to physically surrender the Debenture to the
Company upon the occurrence of an Adjustment Event, unless the full outstanding
Principal Amount has been redeemed. The Holder and the Company shall maintain
records showing the outstanding Principal Amount at any given time and the dates
and effect of any Adjustment Events or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of the Note upon each such Adjustment Event. In addition, following
each Adjustment Event, the Company shall update the Debenture Adjustment
Schedule attached hereto as Exhibit A (the Debenture Adjustment
Schedule), initial such schedule and transmit it to the Holder by facsimile
or other electronic transmission, who shall counter-initial such schedule and
return it to the Company by facsimile or other electronic transmission.
Section
3.
Redemption.
(a)
Change in Control Transactions. Upon the Company becoming aware of
the occurrence of a Change of Control Transaction, the Company shall, within
five Business Days, give written notice of such Change of Control Transaction to
the Holder. Such notice shall contain and constitute an offer to redeem the
Debenture, in whole or in part at the election of the Holder, on a redemption
date specified in such offer that is not less than thirty (30) days and not more
than fifty (50) days after the date of such offer at a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed (the Change
in Control Offer). The offer to redeem the Debenture shall state that the
offer is made pursuant to this Section 3(a) and shall specify, in reasonable
detail, the nature and date of the Change of Control and provide a sample
calculation of the redemption price. The Holder shall have the right to accept
or decline the offer in whole or in part at the Holders option by providing
written notice to the Company within ten (10) Business Days of receipt of the Change
in Control Offer indicating the amount, if any, of the outstanding Principal
Amount to be redeemed.
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(b)
Redemption on Failure to Agree. Within ten (10) Business Days of any
Failure to Agree under Section 9 of the Purchase Agreement, the Company shall
fully redeem the Debenture by paying to the Holder a cash redemption price equal
to 120% of the outstanding Principal Amount being redeemed.
(c)
Cancellation. After all of the Principal Amount has been paid in full,
this Debenture shall automatically be deemed canceled and the Holder shall
promptly surrender the Debenture to the Company at the Companys principal
executive offices.
(d)
Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, shall be in writing and
either (i) emailed or (ii) delivered personally, by confirmed facsimile, or by a
nationally recognized overnight courier service to the Company at the facsimile
telephone number or address of the principal place of business of the Company as
set forth in the Purchase Agreement. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
either (x) emailed or (y) delivered personally, by facsimile, or by a nationally
recognized overnight courier service addressed to the Holder at the facsimile
telephone number or address of the Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when emailed or delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
Section
4. Security.
As security for the due and punctual payment of all of its
obligations to the Holder hereunder, the Company shall promptly execute and
deliver, together with any relevant power of attorney, registrations, filings
and other supporting documentation deemed necessary by the Purchaser or its
counsel to perfect the same or otherwise in respect thereof.
Section
5. Covenants.
(a)
Affirmative Covenants. So long as any Principal Amount of the Debenture
remains outstanding, the Company shall: (i) Reporting Requirements.
During the term of this Agreement, prepare (where applicable, in accordance with
IFRS) and deliver to the Holder, in a form satisfactory to the Holder:
(A) as soon as practicable and in any
event within fifteen (15) days of the end of each calendar month, the management
prepared financial statements of the Parent as at the end of such calendar month
prepared in a form satisfactory to the Purchaser and including a balance sheet,
statement of income and retained earnings and a statement of changes in
financial position, as at the end of such calendar month as at the end of and
for such calendar month and the then elapsed portion of
the Financial Year which includes such calendar month;
10
(B) as soon as practicable and in any
event within forty-five (45) days after the end of each Financial Quarter of the
Parent, the interim unaudited consolidated financial statements of the Parent as
at the end of such Financial Quarter prepared on a consolidated basis in
accordance with IFRS including a balance sheet, statement of income and retained
earnings and a statement of changes in financial position in each case as at the
end of and for such Financial Quarter and the then elapsed portion of the
Financial Year which includes such Financial Quarter, setting forth in each case
in comparative form the figures for the corresponding period or periods of (or
in the case of the balance sheet, as at the end of) the previous Financial Year;
(C) as soon as practicable and in any
event within ninety (90) days after the end of each Financial Year of the
Parent, the annual audited consolidated financial statements of the Parent
prepared in accordance with IFRS including a balance sheet, statement of income
and retained earnings and a statement of changes in financial position for such
Financial Year (which financial statements shall be audited by an
internationally recognized accounting firm acceptable to the Holder), setting
forth in each case in comparative form the figures for the previous Financial
Year; and
(D) concurrently with the delivery of the
financial statements contemplated in (B) and (C) above, a Compliance Certificate
in respect of such Financial Quarter or Financial Year, as applicable.
None of the financial statements or reports or opinions of
auditors with respect thereto referred to above shall contain any Impermissible
Qualifications.
(ii) Environmental.
(A) At all times comply in all material
respects with Environmental Laws including environmental permits and approved
plans with respect to closure and/or rehabilitation;
(B) not to release any hazardous
substances at, on or from the Owned Real Properties, the Leased Real Properties
or other assets of the Company, nor to permit same, at any time in material
violation of Environmental Laws;
(C) immediately notify the Holder of: (1)
any release of any hazardous substances at, on or from the Owned Real
Properties, the Leased Real Properties or other assets of the Company in
material violation of any Environmental Laws; (2) any Claim received by the
Company of or relating to any material violation of any Environmental Laws or
material environmental liabilities; and (3) any facts or circumstances which
could reasonably be expected to give rise to a material Claim, material remedial
action or material breach of or in respect of any Environmental Laws;
11
(D) remove promptly any hazardous
substance from the Owned Real Properties, the Leased Real Properties or other
assets of the Company to the extent required to comply in all material respects
with Environmental Laws and to the extent required to eliminate or prevent any
material environmental liabilities;
(E) provide, at the expense of the
Company, the Holder with an assessment and/or audit report with respect to the
Owned Real Properties, the Leased Real Properties, the business or other assets
of the Company, upon the written request of the Holder acting reasonably; and
(F) permit the Holder, at its sole
discretion, at the expense of the Company, to conduct in a reasonable manner
such investigations, assessments or audits as the Holder in its reasonable
discretion deems appropriate to determine whether: (1) hazardous substances
exist on any part of the Owned Real Properties, the Leased Real Properties or
other assets of the Company and to determine the source, quantity and type of
such hazardous substances, if any; or (2) the business, the Owned Real
Properties, the Leased Real Properties or other assets of the Company or any
activities conducted at such properties comply with Environmental Laws, and the
Company shall cooperate with the Holder in conducting such investigations,
assessments and audits. The Holder and its officers, employees, agents and
contractors shall have and are hereby granted the right to enter upon and
inspect the Owned Real Properties, the Leased Real Properties or other assets of
the Company for the foregoing purposes; provided that the Holder shall use
reasonable efforts to minimize the disruption to the operation of the business.
(iii) Additional Reporting
Requirements.
(A) Deliver to the Holder as soon as
possible, and in any event within five days after the Company becomes aware of
the occurrence of each Event of Default, a statement of a senior officer setting
forth the details of such Event of Default and the action which the Company
proposes to take or has taken with respect thereto;
(B) from time to time upon request of the
Holder, deliver to the Holder evidence of maintenance of all insurance required
to be maintained by Section 5(a)(ix), including such originals or copies as the
Holder may reasonably request of policies, certificates of insurance, riders and
endorsements relating to such insurance and proof of premium payments;
(C) deliver to the Holder, together with
the Compliance Certificate to be delivered pursuant to Section 5(a)(i)(C),
written notice of any previously undisclosed (1) jurisdictions (or registration
districts within such jurisdictions) in which the Company has any place of
business or stores any tangible personal property or assets, (2) Subsidiaries of
the Company or membership, partnership, joint venture or syndicate interests of
the Company, (3) material permits or licenses which become necessary for the
conduct of the business or any amendment to, termination of or material default
under any previously disclosed material permit or license, (4) Benefit Plans or
Pension Plans of the Company, (5) Material Agreements of the Company or any amendment to, termination of or
material default under any previously disclosed Material Agreement, and (6) any
Lease or acquisition of real or immovable property by the Company or amendment
to, termination of or material default under any previously disclosed Lease, and
12
(D) deliver to the Holder such other
information respecting the condition or operations, financial or otherwise, of
the business of the Company as the Holder may from time to time reasonably
request.
(iv)
Existence; Conduct of Business. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, and obtain, preserve, renew and keep in full force and effect any and
all material permits and licenses.
(v)
Payment Obligations. Pay its obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(A) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (B) or the Company has, if required, set aside on its
books adequate reserves with respect thereto in accordance with IFRS, and (C)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
(vi)
Maintenance of Properties. Keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, except to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(vii)
Books and Records; Inspection Rights. Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Permit any
representatives designated by the Holder, upon reasonable prior notice and
during normal business hours, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and auditors, all at such reasonable
times and as often as reasonably requested by the Holder; provided that (A) the
Holder shall act reasonably in the conduct of all such visits, inspections and
inquiries, (B) the Holder shall provide at least two Business Days notice of any
such request for access; (C) the Holder shall use any confidential information
received via access provided hereunder only for purposes related to this
Debenture; and (D) the Company shall not be obligated to provide to the Holder
any confidential information if contrary to Applicable Laws.
(viii)
Compliance with Laws and Material Agreements. Comply with all
Applicable Laws and orders of any Governmental Authority applicable to it or its
property and with all Material Agreements.
(ix)
Insurance. Maintain or cause to be maintained, with financially
sound and reputable insurers acceptable to the Holder, acting reasonably,
insurance with respect to their respective properties and business against such
liabilities, casualties, risks and contingencies and in such types (including
business interruption insurance) and amounts as is customary in the case of
Persons of similar size engaged in the same or similar businesses and operating
in the same geographic area and in accordance with any requirement of any
Governmental Authority. In the case of any fire, accident or other casualty
causing loss or damage to any properties of the Company used in generating cash
flow or required by Applicable Law, all proceeds of such policies shall be used
promptly to repair or replace any such damaged properties, and otherwise shall
be used as directed by the Holder to pay any Principal then payable under the
Debenture.
13
(x)
Operation and Maintenance of Property. Manage and operate its business or
cause its business to be managed and operated (A) in accordance with prudent
industry practice in all material respects and in compliance with the terms and
provisions of all material permits and licenses, and (B) in compliance with all
Applicable Laws of the jurisdiction in which such businesses are carried on, and
all Applicable Laws of every other Governmental Authority from time to time
constituted to regulate the ownership, management and operation of such
businesses.
(xi)
Status of Accounts and Collateral. With respect to the Collateral, report
immediately to the Holder any matters adversely affecting the value,
enforceability or collectability of any of the Collateral.
(xii)
Accounts Receivable. Collect accounts receivable in the ordinary course
of business in a commercially reasonable manner.
(xiii)
Cure Defects. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Security Documents or any of the other
agreements, instruments or documents contemplated thereby or executed pursuant
thereto or any defects in the validity or enforceability of any of the Security
Documents and, at its expense, execute and deliver or cause to be executed and
delivered all such agreements, instruments and other documents as the Holder may
consider necessary or desirable for the foregoing purposes.
(xiv)
Additional Material Subsidiaries/Security. If, at any time on or
after the date hereof, the Company proposes to create or acquire an additional
Subsidiary or in some other fashion to become the holder of any Equity
Securities of a new Subsidiary, the Company will notify the Holder of such event
at least fifteen (15) Business Days prior to such event and:
(A) prior to or concurrently with the
creation or acquisition of such Subsidiary, the Company will, and will cause any
relevant Subsidiary, to execute and deliver to the Holder a securities pledge
agreement, in form and substance satisfactory to the Holder, acting reasonably,
granting a security interest in 100% of the Equity Securities of such new
Subsidiary; and
(B) prior to or concurrently with the
creation or acquisition of such Subsidiary, to the extent not prohibited or
restricted by Applicable Law, the Company will cause such new Subsidiary to
immediately execute and deliver to the Holder a guarantee and security of the
nature contemplated by the Security Agreement, all in form and substance
satisfactory to the Holder, acting reasonably, and accompanied by customary
legal opinions of counsel to the Company or such Subsidiary.
In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant to
this Section 5(a)(xiv), the Company will, or will cause the relevant Subsidiary
to, deliver at its expense to the Holder such corporate or other resolutions,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Holder and consistent with the relevant forms and
types thereof delivered on the Closing Date pursuant to the Purchase Agreement
or as shall be otherwise reasonably acceptable to the Holder and to effect such filings and
registrations with the applicable Governmental Authorities as may be requested
by the Holder to preserve and perfect the Encumbrances created by such
mortgages, pledges, and other relevant agreements. Each guarantee, pledge
agreement, mortgage, security agreement and other document delivered pursuant to
this Section 5(a)(xiv) shall be deemed to be a Security Document from and after
the date of execution thereof.
14
(xv)
Material Permits. Maintain all material permits and licenses as may
be necessary to properly conduct their respective businesses, the failure of
which to maintain could reasonably be expected to have a Material Adverse
Effect.
(xvi)
Expropriation. Advise the Holder of its receipt of any notice of
expropriation affecting any Owned Real Property where the expropriation is
likely to be successful and if successful would result in expropriation proceeds
exceeding Five Hundred Thousand U.S. Dollars (US$500,000).
(xvii)
Damage or Destruction. Advise the Holder in writing of any damage
to or destruction of any assets of the Company in respect of which the cost of
replacement or repair, individually or in the aggregate, would exceed Five
Hundred Thousand U.S. Dollars (US$500,000).
(xviii) Leases.
Duly observe and comply with all of its obligations under any Lease to which it
is a party which if not complied with would cause a material default thereunder
and shall forthwith advise the Holder in writing of its receipt of any notices
from the lessor alleging any material default by it under a Lease.
(xix)
Payment of Taxes. Pay, or cause to be paid, when due, all Taxes,
property taxes, business taxes, social security premiums, assessments and
governmental charges or levies imposed upon it or upon its income, sales,
capital or profit or any property belonging to it unless any such Tax, social
security premiums, assessment, charge or levy is contested diligently and in
good faith by appropriate proceedings and in respect of which appropriate
reserves have been maintained in accordance with IFRS.
(xx)
Withholding Taxes. Withhold from each payment made to any of its
past or present employees, officers or directors, and to any non-resident of the
country in which it is resident, the amount of all Taxes and other deductions
required to be withheld therefrom and pay the same to the property Governmental
Authorities within the time required under any Applicable Laws.
(xxi)
Collection of Taxes. Collect from all Persons the amount of all
Taxes required to be collected from them and remit the same to the Governmental
Authorities within the time required under any Applicable Laws.
(xxii)
Registration of Security. From time to time, register or cause to
be registered, and cooperate in the registration of, the Security, and any
public notices or filings in respect thereof, on a timely basis and do, observe
and perform all of its obligations and all matters and things that may be
necessary or reasonably required for the purposes of creating and maintaining
the Encumbrances intended to result from the Security as valid, effective and
perfected first priority Encumbrances (subject only to Permitted Encumbrances)
at all times and shall comply with all requirements of Section 5(b)(xiv).
15
(xxiii) Benefit Plans.
(A)
Cause to be filed or distributed in a timely manner all reports and
disclosures relating to any Benefit Plan that are required by the plan or any
Applicable Laws to be filed or distributed.
(B)
Perform all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with each
Benefit Plan and the funding media therefor; make all contributions and pay all
premiums required to be made or paid in accordance with the terms of each
Benefit Plan and all Applicable Laws; withhold, by way of authorized payroll
deductions or otherwise collect and pay into each Benefit Plan all employee
contributions required to be withheld or collected by the Company in accordance
with the terms of such plan and all Applicable Laws.
(b)
Negative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall not: (i) Debt. Create,
incur or suffer to exist, any Debt other than Permitted Debt.
(ii)
Encumbrances. Create, incur, assume or suffer to exist, any Encumbrance
on any of its assets, other than Permitted Encumbrances.
(iii)
Fundamental Changes. Merge into or amalgamate or consolidate with
any other Person, or permit any other Person to merge into or amalgamate or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or any of the Equity Securities of any Subsidiary (in each case,
whether now owned or hereafter acquired), or liquidate, dissolve or be wound up.
(iv) Carry on Business.
(A) Engage in any business
which is different from the business conducted on the Closing Date and
businesses reasonably related thereto.
(B)
After the Closing Date, carry on business otherwise than through the
Company.
(v)
Transfer of Assets. Neither the Company nor any Subsidiary shall
sell, transfer, lease, part with possession or otherwise dispose of any assets,
whether by way of sale, lease, assignment, sale-leaseback or otherwise other
than (A) obsolete assets, equipment and material, (B) in the ordinary course of
business, (C) assets up to an aggregate amount not to exceed One Hundred
Thousand U.S. Dollars (US$100,000); (exclusive of the shares referred to in the
next clause) or (D) common shares of Acadian Mining Corporation owned on the
date hereof.
(vi)
Transactions with Affiliates. Transfer, sell or otherwise dispose of any
assets to, or purchase, lease or otherwise acquire any assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except (A) in the
ordinary course of business at prices and on terms and conditions not less
favourable to the Company than could be obtained on an arms-length basis from
unrelated third parties, (B) transactions between or among the Company and the Parent not involving any other Affiliate, (C)
any Restricted Payment permitted by Section 5(b)(ix), and (D) as otherwise
expressly permitted pursuant to this Agreement and the Security Documents.
Except as otherwise expressly permitted pursuant to the terms of this Agreement
and the other Security Documents, the Company will not enter into any
transaction or series of transactions with Affiliates which involve an outflow
of money or other property from the Company to an Affiliate, including repayment
of Debt, or payment of management fees, affiliation fees, administration fees,
compensation, salaries, asset purchase payments or any other type of fees or
payments similar in nature, other than on terms and conditions substantially as
favourable to the Company as would be obtainable by the Company in a reasonably
comparable arms-length transaction with a Person other than an Affiliate. The
foregoing restrictions shall not apply to: (A) the payment of reasonable and
customary fees to directors of the Company who are not employees of the Company,
(B) any other transaction with any employee, officer or director of the Company
pursuant to employee profit sharing and/or benefit plans and compensation and
non-competition arrangements in amounts customary for corporations similarly
situated to the Company and entered into in the ordinary course of business and
approved by the board of directors of the Company, or (C) any reimbursement of
reasonable out-of-pocket costs incurred by an Affiliate of the Company on behalf
of or for the account of the Company.
16
(vii)
Restrictive Agreements. Other than under the terms of Senior
Construction Financing, directly or indirectly enter into, incur or permit to
exist, any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (A) the ability of the Company to create, incur or permit to
exist any Encumbrance upon any of its assets, (B) the ability of the Company to
pay dividends or other distributions with respect to any Equity Securities or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Parent or to provide a guarantee of any Debt of the Parent, (C)
the ability of the Company to make any loan or advance to the Parent, or (D) the
ability of the Company to sell, lease or transfer any of its property or assets;
provided that the foregoing shall not apply to restrictions or conditions; (1)
imposed by Applicable Law; (2) existing on the date hereof identified on
Schedule 4.2(y) to the Purchase Agreement (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition); (3) imposed by any agreement relating to
Permitted Debt permitted by this Debenture if such restrictions or conditions
apply only to the property or assets securing such Debt; and (4) customarily
provided for in leases and other ordinary course contracts restricting the
assignment thereof.
(viii)
Share Capital. Issue any Equity Securities, except to the Parent.
(ix) Restricted Payments.
Declare, make or pay or agree to declare, make or pay, directly or indirectly,
any Restricted Payment, except (A) Restricted Payments by the Company to the
Parent, (B) regularly scheduled payments in respect of Permitted Debt hereunder,
and (C) Restricted Payments by the Company pursuant to and in accordance with
Benefit Plans for the directors or officers of the Company, provided that the
aggregate amount of cash payments made by the Company and the Parent in any
Financial Year pursuant to all such Benefit Plans shall not exceed reasonable
commercial amounts paid in the normal course of business and approved by the
board of directors of the Company.
(x)
Investments. Purchase, hold or acquire (including pursuant to any
amalgamation with any Person that was not a wholly-owned Subsidiary of the
Company prior to such amalgamation), any Equity Securities, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person, except:
17
(A)
inter-company loans or advances between the Company and the Parent;
(B)
Permitted Debt; and
(C)
Permitted Investments.
(xi)
Acquisitions. Make any Acquisition, other than a Permitted
Acquisition, provided in the case of a Permitted Acquisition no Event of Default
has occurred and is continuing or would occur as a result of such Permitted
Acquisition.
(xii)
Subsidiaries. Create or acquire any Subsidiary unless the Company
and the Subsidiary shall have complied with Section 5(a)(xiv).
(xiii) Sale-Leasebacks. Enter into
sale-leaseback transactions.
(xiv)
Capital Expenditures. Make or commit to make any Capital
Expenditures during the period from the Closing Date to the Maturity Date other
than as provided for in the NorthMet Project Budget.
(xv)
Change of Name; Business Outside Certain Jurisdictions. (A) Change
its name, registered office, chief executive office or jurisdiction of
incorporation, or (B) have any place of business or keep or store any material
tangible property outside of those jurisdictions (or registration districts
within such jurisdictions) set forth in Schedule 5.1(m) to the Purchase
Agreement, (1) except upon thirty (30) days prior written notice thereof to the
Holder; and (2) unless the Company has done or caused to be done all such acts
and things and executed and delivered or caused to be executed and delivered all
such deeds, transfers, assignments and instruments as the Holder may reasonably
require for perfecting or maintaining the perfection of the Encumbrances of the
Security and the priority thereof in the Collateral in favour of the Holder.
(xvi) Financial Year. Change its
Financial Year.
(xvii)
Amendments. Allow (A) any amendments to its constating documents or
by-laws; or (B) any amendments to, or grant any waivers in respect of any
Material Agreement or any guarantee or security in respect thereof.
(xviii)
Change of Auditors. Change its auditors other than to a nationally
recognized accounting firm approved by the Holder acting reasonably.
(xix)
Speculative Transactions. Engage in any interest rate, currency
rate, commodity hedge or similar agreement, understanding or obligation, except
in the normal course of business and not for speculative purposes.
18
(c)
Indemnification. The Company will pay, and will indemnify and same
harmless the Holder against, all costs and expenses (including legal fees and
expenses) incurred with respect to the exercising of any of the rights, remedies
and powers of the Holder under this Debenture, or the taking of any other
proceedings taken for the purpose of enforcing the remedies provided for under
law by reason of non-payment of the obligations hereunder.
Section 6.
Defaults and Remedies.
(a)
Events of Default. An Event of Default is: (i) a default
in payment of any principal amount due hereunder; (ii) a default in payment of
any interest or other amount due hereunder which default continues for more than
five (5) Business Days after the due date thereof; (iii) a default in the timely
issuance of Underlying Shares upon and in accordance with the terms of the
Warrants, which default continues for five (5) Business Days after the Parent
has received written notice informing the Parent that it has failed to issue
shares or deliver share certificates within the fifth day following the exercise
date; (iv) failure by the Company or the Parent for fifteen (15) days after
written notice has been received by the Company or the Parent, as applicable, to
comply with any material provision of any of the Agreements (including the
failure of the Company to make a Change in Control Offer in accordance with
Section 3(a)), the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (v) a material breach by the Company or the Parent of its
covenants, representations or warranties in any of the Agreements, the Escrow
Agreement, the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (vi) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or the Parent for in excess of
One Million U.S. Dollars (US$1,000,000) or for money borrowed the repayment of
which is guaranteed by the Company or the Parent for in excess of One Million
U.S. Dollars (US$1,000,000), whether such indebtedness or guarantee now exists
or shall be created hereafter; (vii) if the Company or the Parent is subject to
any Bankruptcy Event; (viii) if a judgment or order is obtained against the
Company or the Parent which has or would have a Material Adverse Effect, and, if
such judgment or order is for the payment of money, the judgment or order has
not been dismissed, stayed or satisfied within twenty (20) days of the date that
such judgment or order is issued; (ix) if any material permit or license or
Material Agreement of the Company or the Parent expires or is withdrawn,
cancelled, terminated, or modified (and such expiry, withdrawal, cancellation,
termination or modification would have a Material Adverse Effect) and is not
reinstated or replaced within thirty (30) days thereafter without material
impairment of the property or business of the Company or the Parent; (x) a final
judgment, writ of execution, garnishment or attachment or similar process is
issued or levied against any property of the Company or the Parent having a fair
market value in excess of One Million U.S. Dollars (US$1,000,000) and
such judgment, writ, execution, garnishment, attachment or similar process is
not released, bonded, satisfied, discharged, vacated or stayed within forty-five
(45) days after its entry, commencement or levy; (x) solely with respect to
Principal Amounts held by Glencore AG, a material breach by the Parent of its
covenants, representations or warranties in the Marketing Agreement, Copper
Offtake Agreement or Nickel Offtake Agreement; or (xi) the termination of the
Standby Purchase Agreement prior to the completion of the Rights Offering.
(b)
Remedies. If an Event of Default occurs and is continuing with respect to
the Debenture, the Holder may declare all of the then outstanding Principal
Amount of this Debenture and all other debentures held by the Holder, to be due
and payable immediately, and the Holder may commence such legal action or
proceedings as it, in its sole discretion, deems necessary, all without any
additional notice, presentation, demand, protest, notice of dishonor, entering into of possession of any of the assets of the Company
or any other action or notice, all of which the Company hereby expressly waives,
except that in the case of an Event of Default arising from events described in
clauses (vi) through (x) of Section 6(a), inclusive, this Debenture shall become
due and payable without further action or notice. In the event of such
acceleration, the amount due and owing to the Holder shall be 120% of the
outstanding Principal Amount of the Debenture held by the Holder. In either case
the Company shall pay interest on such amount in cash at the Default Rate (as
defined below) to the Holder if such amount is not paid within seven (7) days of
Holders request. The remedies under this Debenture shall be cumulative.
19
(c)
Notice of Default. The Company covenants to provide written notice
to the Holder within two (2) Business Days upon the occurrence of any Event of
Default.
(d)
Default Interest. Notwithstanding anything contained herein, this
Debenture shall bear interest on the due and unpaid outstanding Principal Amount
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 6(a) at the rate (the Default Rate) equal to the
lower of 18% per annum or the highest rate permitted by law.
Section
7. General.
(a)
Technical Services Committee. The Holder of a majority of the Principal
Amount outstanding under this Debenture shall be entitled to select and appoint
one (1) member (the Appointee) to the Technical Services Committee of
the Company and shall be entitled to select and appoint any successor to or
replacement of such Appointee, subject, in each case, to the Companys consent
which shall not be unreasonably withheld.
(b)
Payment of Expenses. The Company agrees to pay all reasonable charges and
expenses, including attorneys fees and expenses, which may be incurred by the
Holder in successfully enforcing this Debenture and/or collecting any amount due
under this Debenture.
(c)
Interest Act (Canada) Disclosure. For the purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of
interest to which the rate of interest applicable to any interest period,
computed as provided under Section 2 above, is equivalent is the rate of
interest for such interest period multiplied by a fraction of which (i) the
numerator is the actual number of days in the 12-month period commencing on the
date of the commencement of such interest period and ending on the day
immediately preceding the anniversary of such date of commencement, and (ii) the
denominator is three hundred sixty-five (365).
(d)
Savings Clause. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby. In no event shall the amount of interest paid
hereunder exceed the maximum rate of interest on the unpaid principal balance
hereof allowable by applicable law. If any sum is collected in excess of the
applicable maximum rate, the excess collected shall be applied to reduce the
principal debt. If the interest actually collected hereunder is still in excess
of the applicable maximum rate, the interest rate shall be reduced so as not to
exceed the maximum allowable under law.
20
(e)
Amendment. Neither this Debenture nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Holder.
(f)
Assignment, Etc. The Holder may assign or transfer this Debenture
at any time and from time to time in whole or in part to any transferee, without
the consent of the Company, provided that any partial assignment of this
Debenture shall be for a minimum principal amount of not less than Five Million
U.S. Dollars (US$5,000,000). The Holder shall notify the Company of any such
assignment or transfer promptly. This Debenture shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.
(g)
No Waiver. Neither the extension of time for making any payment which is
due and payable under this Debenture at any time or times, nor the failure on
the part of the Holder to exercise, and no delay in exercising any right, remedy
or power hereunder shall operate as a waiver thereof, nor shall any single or
partial exercise by the Holder of any right, remedy or power hereunder preclude
any other or future exercise of any other right, remedy or power. Each and every
right, remedy or power hereby granted to the Holder or allowed it by law or
other agreement shall be cumulative and not exclusive of any other, and may be
exercised by the Holder from time to time.
(h) Governing Law; Jurisdiction.
(i)
Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF
ANOTHER JURISDICTION.
(ii)
Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Debenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum.
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three (3) days
after the same has been posted as aforesaid) or by personal service shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holders right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(iii)
NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE.
(i)
Replacement Debenture. This Debenture may be exchanged by Holder at any
time and from time to time for a Debenture or debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge will be
made for such registration or exchange. In the event that Holder notifies the
Company that this Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Principal Amount, if different than that shown on the
original Debenture), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture.
21
(f)
Judgment Currency. If, for the purposes of obtaining judgment in any
court, it is necessary to convert a sum due to the Holder in any currency (the
Original Currency) into another currency (the Other Currency),
the parties agree, to the fullest extent that they may effectively do so, that
the rate of exchange used shall be that at which, in accordance with normal
banking procedures, the Holder could purchase the Original Currency with the
Other Currency on the Business Day preceding the day on which final judgment is
given or, if permitted by Applicable Law, on the day on which the judgment is
paid or satisfied. The obligations of the Company in respect of any sum due in
the Original Currency from it to the Holder under any of the Security Documents
shall, notwithstanding any judgment in any Other Currency, be discharged only to
the extent that on the Business Day following receipt by the Holder of any sum
adjudged to be so due in the Other Currency, the Holder may, in accordance with
normal banking procedures, purchase the Original Currency with such Other
Currency. If the amount of the Original Currency so purchased is less than the
sum originally due to the Lender in the Original Currency, the Company agrees,
as a separate obligation and notwithstanding the judgment, to indemnify the
Holder, against any loss, and, if the amount of the Original Currency so
purchased exceeds the sum originally due to the Holder in the Original Currency,
the Holder shall remit such excess to the Company.
(k)
Further Assurances. Each party shall from time to time promptly execute
and deliver all further documents and take all further action necessary to give
effect to the provisions and intent of this Debenture.
[Signature Page Follows]
22
IN WITNESS WHEREOF, the Company has caused this
Debenture to be duly executed on the day and in the year first above written.
POLY MET MINING, INC.
By:
_________________________________________________
Name: Douglas
Newby
Title: Chief Financial Officer
EXHIBIT A
DEBENTURE ADJUSTMENT SCHEDULE
Debenture Adjustment Schedule for the Debenture issued by
POLY MET MINING, INC. to GLENCORE AG on or about January 30, 2015 in the
original principal amount of Eight Million U.S. Dollars (US$8,000,000), to be
completed and exchanged by fax or email following each principal repayment of
such Debenture.
Date |
Decreases Principal amount
repaid
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Remaining principal balance of
Debenture |
Initialed by Company CEO/CFO |
Initialed by authorized
representative of Holder |
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A-1
EXHIBIT B
COMPLIANCE CERTIFICATE
[Date]
TO: (the "Holder")
The undersigned (the
"Corporation") refers to the Floating Rate Secured Debenture issued on January
30, 2015 (the "Debenture", the terms defined therein being used herein as
therein defined). This Compliance Certificate is delivered pursuant to Section
5(a)(i) of the Debenture for the Financial Quarter/Year ending on [] (the
"Period").
We, __________________________ and _________________________ ,
the respective Chief Executive Officer and Chief Financial Officer of the
Corporation, in such capacity and not personally, hereby certify that:
1. |
We are the duly appointed Chief Executive Officer and
Chief Financial Officer of the Corporation and as such we are providing
this certificate for and on behalf of the Corporation pursuant to the
Debenture. |
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2. |
We are familiar with and have examined the provisions of
the Debenture. |
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3. |
The financial statements most recently delivered pursuant
to [Section 5(a)(i)(B) or Section 5(a)(i)(C)] of the Debenture
present fairly the financial position, results of operations and changes
in financial position of the persons specified therein for the Period and
as at the last day of such Period, as the case may be, in accordance with
IFRS. |
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4. |
The representations and warranties contained in Section
5.1 of the Purchase Agreement are true and correct as though made on the
date hereof, except for and any such representation and warranty which is
stated to be made as of a certain date. |
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5. |
As of the date hereof, the Corporation is not in breach
of any of the covenants contained in Section 5 of the Debenture, and no
Event of Default has occurred and is continuing as at the date
hereof. |
Dated this _________________day of
_________________________________________________.
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(Name please print) |
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Chief Executive Officer |
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(Name please print) |
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Chief Financial Officer |
B-1
-17-
Exhibit B
Tranche G Debenture
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE
DEBENTURE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT, FOLLOWING ANY
REDEMPTION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS DEBENTURE MUST NOT TRADE THIS SECURITY BEFORE [_____],
2015.
FLOATING RATE SECURED DEBENTURE, DUE NO LATER THAN MARCH
31, 2016
OF
POLY MET MINING,
INC.
Debenture No.: D-7 |
Original Principal Amount: US$8,000,000
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Issuance Date: [April 15], 2015 |
New York, New York |
THIS
DEBENTURE is a duly authorized issue of POLY MET MINING, INC., a
corporation incorporated pursuant to the laws of Minnesota (the
Company), designated as the Companys Floating Rate Secured Debenture,
due on the day which is the earlier of (i) the availability of at least One
Hundred Million U.S. Dollars (US$100,000,0000) of the Senior Construction
Finance (as defined below), or (ii) March 31, 2016 (the Maturity Date)
in an aggregate original principal amount of Eight Million U.S. Dollars
(US$8,000,000]) (the Debenture).
FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of GLENCORE
AG or its registered assigns or successors-in-interest (the Holder)
the principal sum of Eight Million U.S. Dollars (US$8,000,000]), together with
all accrued but unpaid interest thereon on the Maturity Date, to the extent such
principal amount and interest has not been repaid in accordance with the terms
hereof. Interest on the unpaid principal balance hereof shall accrue from the
date of original issuance hereof (the Issuance Date) at the Floating
Rate (as defined below) until the principal balance becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by redemption or
repayment (Early Repayment Date) in accordance with the terms hereof or
of the other Agreements. The Floating Rate shall be determined on each Floating
Rate Reset Date, and such Floating Rate shall apply until the next Floating Rate
Reset Date. Interest on this Debenture shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with Section 2
hereof. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees
and then any remaining amount to principal.
All
payments of principal and interest on this Debenture shall be made in lawful
money of the United States of America by wire transfer of immediately available
funds to such account as the Holder may from time to time designate by written notice
in accordance with the provisions of this Debenture. This Debenture may not be
prepaid or redeemed in whole or in part except as described in Section 3 or as
otherwise provided herein. Whenever any amount expressed to be due by the terms
of this Debenture is due on any day (other than the Maturity Date) which is not
a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day. If the Maturity Date falls on a day that
is not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment will accrue for
the period from and after the Maturity Date.
Capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Purchase Agreement dated October 31,
2008, as amended, among the Company, the Holder and PolyMet Mining Corp. (the
Parent), pursuant to which the Debenture was originally issued (the
Purchase Agreement). For purposes hereof the following terms shall have
the meanings ascribed to them below:
Acquisition means any transaction, or any series of related
transactions, consummated after the date hereof, by which the Company directly
or indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business, (b)
acquires control of securities of a Person engaged in a business representing
more than 50% of the ordinary voting power for the election of directors or
other governing position if the business affairs of such Person are managed by a
board of directors or other governing body, or (c) acquires control of more than
50% of the ownership interest in any Person engaged in any business that is not
managed by a board of directors or other governing body.
Affiliate means, with respect to a
specified Person, another Person that directly or indirectly through one or more
intermediaries, Controls or is Controlled by or is under common Control with the
specified Person.
Appointee has the meaning given to it in Section 7(a).
Bankruptcy Event means any of the following
events: (a) the Company or the Parent commences a case or other proceeding or
proposal under any bankruptcy, reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, winding-up, insolvency or liquidation or similar
law of any jurisdiction (including the Bankruptcy Act (Canada) or the
Companies Creditors Arrangement Act (Canada)) relating to the Company or
the Parent; (b) there is commenced against the Company or the Parent any such
case or proceeding or proposal that is not dismissed within thirty (30) days
after commencement; (c) the Company or the Parent is adjudicated insolvent or
bankrupt or any order of relief or other order approving any such case or
proceeding is entered; (d) the Company or the Parent suffers any appointment of
any trustee, receiver, receiver and manager, interim receiver, custodian or the
like for it or any substantial part of its property that is not discharged or
stayed within thirty (30) days; (e) the Company or the Parent makes a general
assignment for the benefit of creditors; (f) the Company or the Parent fails to
pay, or states that it is unable to pay or is unable to pay, its debts generally
as they become due; (g) the Company or the Parent calls a meeting of its
creditors with a view to arranging a composition, adjustment or restructuring of
its debts; or (h) the Company or the Parent, by any act or failure to act,
expressly indicates its consent to, approval of or acquiescence in any of the
foregoing or takes any corporate or other action for the purpose of effecting
any of the foregoing.
Business Day means any day other than a
Saturday, Sunday or a day on which commercial banks in the City of New York, New
York, Toronto, Ontario or Zug, Switzerland are authorized or required by law or
executive order to remain closed.
Canadian Securities Laws means all
applicable securities laws in each of the provinces and territories of Canada
and the respective regulations made thereunder, together with applicable
published fee schedules, prescribed forms, rules, multilateral or national
instruments, orders, rulings and other regulatory instruments issued or adopted
by the Securities Commissions.
Capital Assets means, with respect
to any Person, any tangible fixed or capital assets owned or leased (in the case
of a Capital Lease) by such Person.
Capital Expenditures means, in
respect of any Person and any period, all expenditures made by such Person
during such period for the purchase, lease or acquisition of Capital Assets
(including all amounts paid or accrued during such period on Capital Leases) and
other Debt incurred or assumed to acquire or construct Capital Assets (other
than current Capital Assets) required to be capitalized for financial reporting
purposes in accordance with IFRS.
Capitalized Lease Obligation of any
Person means any obligation of such Person to pay rent or other amounts under a
Capital Lease.
Capital Leases means any and all
lease obligations of a lessee that are capitalized for financial reporting
purposes in accordance with IFRS.
Change in Control Offer has the meaning given to it in Section
3(a).
Change in Control Transaction
will, and will be deemed to, exist if (a) there occurs any consolidation,
merger, plan of arrangement or other business combination of the Company or the
Parent with or into any other corporation or other entity or person (whether or
not the Company or the Parent is the surviving corporation) or any other
corporate reorganization or transaction or series of related transactions in
which in any of such events the voting shareholders of the Company or the Parent
prior to such event cease to own 50% or more of the voting power, or
corresponding voting equity interests, of the surviving corporation after such
event (including any going private transaction under Rule 13e-3 promulgated
pursuant to the Exchange Act, tender offer by the Company or the Parent under
Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the
Companys common shares or the Parents Common Shares, or take-over bid by the
Company or the Parent under Canadian Securities Laws for 20% or more of the
Companys common shares or the Parents Common Shares), (b) any person (as
defined in Section 13(d) of the Exchange Act), together with its affiliates and
associates (as such terms are defined in Rule 405 under the Act), beneficially
owns or is deemed to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in excess of 35% of
the Companys or the Parents voting power other than such persons who
beneficially owned or are deemed to beneficially own such voting power as of the
date hereof, (c) there is a replacement within a consecutive period of 24 months
of more than one-half of the members of the Companys or the Parents Board of
Directors which is not approved by those individuals who are members of the
Companys or the Parents Board of Directors on the date thereof who were either
directors at the beginning of such period or where election or nomination was
previously approved, (d) in one or a series of related transactions, there is a
sale or transfer of all or substantially all of the assets of the Company or the Parent, determined on a consolidated basis, or
(e) the Company or the Parent enters into any agreement providing for an event,
circumstance or occurrence set forth in (a), (b), (c) or (d) above.
Claim means, with respect to any Person, any
actual or prospective action, suit, order, charge, penalty, claim, litigation,
investigation or proceeding of any kind or nature whatsoever against or
otherwise involving such Person or the property or assets of such Person.
Common Shares means the Parents common shares, without par
value.
Company means Poly Met Mining,
Inc., a corporation incorporated pursuant to the laws of Minnesota.
Compliance Certificate means a
certificate of the Company signed on its behalf by its chief executive officer
and chief financial officer in the form attached hereto as Exhibit B.
"Confirmation of Secured Obligations
Agreement" means the confirmation of secured obligations agreement dated
[April 15], 2015 between the Company, the Parent and the Holder.
Control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. Controlling and Controlled have
corresponding meanings.
Debenture means this Debenture,
designated as the Companys Floating Rate Secured Debenture, due on the day
which is the earlier of (i) the availability of at least One Hundred Million
U.S. Dollars (US$100,000,000 of the Senior Construction Financing, or (ii) March
31, 2016, in an aggregate original principal amount of Eight Million U.S.
Dollars (US$8,000,000]).
Debenture Adjustment Schedule has the meaning given to it in
Section 2(c).
Debt of any Person means, at any time,
(without duplication): (a) all obligations of such Person for borrowed money
including borrowings of commodities, bankers acceptances, letters of credit or
letters of guarantee; (b) all obligations of such Person for the deferred
purchase price of property or services represented by a note or other evidence
of indebtedness (other than trade payables and other current liabilities
incurred in the ordinary course of business); (c) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (d) all indebtedness of
another Person secured by an Encumbrance on any properties or assets of such
Person (other than Encumbrances being contested in good faith on a timely basis
by appropriate proceedings); (e) all Capitalized Lease Obligations of such
Person; (f) the aggregate amount at which any shares in the capital of such
Person which are redeemable or retractable at the option of the holder may be
retracted or redeemed for cash or debt provided all conditions precedent for
such retraction or redemption have been satisfied; (g) all other obligations of
such Person upon which interest charges are customarily paid by such Person; (h)
the net amount of all obligations of such Person (determined on a
marked-to-market basis) under swap agreements; and (i) all debt guaranteed by
such Person.
Disposition Gross-Up Payment has the meaning given to it in
Section 2(b)(ii).
Disposition Taxes has the meaning given to it in Section
2(b)(ii).
Early Repayment Date means any Business Day
prior to the Maturity Date that PolyMet elects to repay the outstanding
principal and unpaid and accrued interest on the Debentures provided that
PolyMet can demonstrate that such early repayment is prudent and PolyMet has
given ten (10) business days notice to Glencore of its intent to repay the
Debentures.
Equity Securities means, with
respect to any Person, any and all shares, interests, participations, rights in,
or other equivalents (however designated and whether voting and non-voting) of,
such Persons capital, whether outstanding on the date hereof or issued after
the date hereof, including any interest in a partnership, limited partnership or
other similar Person and any beneficial interest in a trust, and any and all
rights, warrants, options or other rights exchangeable for or convertible into
any of the foregoing.
Event of Default has the meaning given to it in Section 6(a).
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Failure to Agree has the meaning
provided for in Section 9 of the Purchase Agreement.
Financial Quarter means, in
respect of the Company, a period of three consecutive months in each Financial
Year ending on April 30, July 31, October 31, and January 31, as the case may
be, of such year.
Financial Year means, in respect
of the Company, its financial year commencing on February 1 of each calendar
year and ending on January 31 of each following calendar year.
Floating Rate means LIBOR plus
8.0% per annum; provided, however, that the Floating Rate for the period from
the Issuance Date to the first Floating Rate Reset Date will be _____%; and
provided further, that the Floating Rate shall be reset on each Floating Rate
Reset Date..
Floating Rate Reset Date means March 31,
June 30, September 30, and December 31 of each year, commencing on March 31,
2015, provided that if any such day is not a Business Day, then such Floating
Rate Reset Date means the immediately preceding day which is a Business Day.
Gross-Up Payment has the meaning given to it in Section 2(b).
Holder means Glencore AG or its registered assigns or
successors-in-interest.
IFRS means International Financial Reporting Standards.
Impermissible Qualification means,
relative to (a) the financial statements or notes thereto of any Person, or (b)
the opinion or report of any independent auditors as to any financial statement
or notes thereto, any qualification or exception to such financial statements,
notes, opinion or report, as the case may be, which (i) is of a going concern
or similar nature; or (ii) relates to any limited scope of examination of material
matters relevant to such financial statement, if such limitation results from
the refusal or failure of the Company to grant access to necessary information
therefor.
Interest Amount has the meaning given to it in Section 2(a).
Issuance Date means [April 15], 2015, the date of original
issuance of this Debenture.
ITA means the Income Tax Act (Canada).
LIBOR means the 12 month LIBOR rate for U.S. dollars published
in the print edition of The Wall Street Journal to be set as at the
second Business Day prior to the Issuance Date, provided that, if such 12 month
LIBOR rate is not so published on such date, LIBOR means the 12 month LIBOR rate
most recently published in the print edition of The Wall Street Journal prior to
the day which is the second Business Day prior to the Issuance Date.
Maturity Date has the meaning given to it on the cover page.
Original Currency has the meaning given to it in Section 7(j).
Other Currency has the meaning given to it in Section
7(j).
Parent means PolyMet Mining Corp.,
a corporation incorporated pursuant to the laws of British Columbia.
Payment has the meaning given to it in Section 2(b)(i).
Payment Tax has the meaning given to it in Section 2(b)(i).
Permitted Acquisitions means any
Acquisition by the Company consented prior thereto in writing by the Holder.
Permitted Debt means,
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(i) |
Debt hereunder or under any Security Document; |
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(ii) |
Debt existing on the date hereof and set forth in Note 5
to the condensed interim consolidated financial statements of the Parent
for the interim period ended October 31, 2014; |
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(iii) |
trade accounts due and payable within sixty (60) days and
considered unsecured obligations incurred in the ordinary course of
business (but excluding Debt for borrowed money); and |
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(iv) |
any Senior Construction
Financing. |
Permitted Encumbrances shall have the
meaning set forth in Section 1.51 of the Purchase Agreement.
Principal Amount means the sum of (a) the
unpaid principal amount of this Debenture, (b) all accrued but unpaid interest
hereunder, and (c) any default payments owing under the Agreements but not
previously paid or added to the Principal Amount.
Purchase Agreement means the
purchase agreement dated October 31, 2008, as amended, among the Company, the
Holder and the Parent, pursuant to which the Debenture was originally issued.
Restricted Payment means, with
respect to any Person, any payment by such Person (a) of any dividends or other
distribution on any of its Equity Securities, (b) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its Equity
Securities, (c) of any principal of or interest or premium on or of any amount
in respect of a sinking or analogous fund or defeasance fund for any Debt of
such Person ranking in right of payment subordinate to any liability of such
Person under the Security Documents, (d) of any principal of or interest or
premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, or (e) of any
management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or
to any director or officer thereof other than as compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course.
Securities Act means the Securities Act of 1933, as amended.
Securities Commissions means,
collectively, the securities commissions or other securities regulatory
authorities in each of the provinces and territories of Canada.
Senior Construction Financing
means Debt or Equity in respect of construction financing for the NorthMet
Project which is in aggregate in an amount equal to or greater than Five Hundred
Million U.S. Dollars (US$500,000,000) such that the construction of the NorthMet
Project may reasonably be expected to be completed.
Subsidiary means any non-natural
Person of which the Company owns or controls, directly or indirectly, not less
than 50% of the total combined voting power represented by all classes of Equity
Securities issued by such Person.
The
following terms and conditions shall apply to this Debenture:
Section 1.
Interpretation.
In this
Debenture:
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(a) |
a word importing the masculine, feminine or neuter gender
also includes members of the other genders; |
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(b) |
a word defined in or importing the singular number has
the same meaning when used in the plural number, and vice versa; |
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(c) |
a word importing persons shall include partnerships and
corporations; |
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(d) |
the headings to each section are inserted for convenience
of reference only and do not form part of this
Debenture; |
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(e) |
all dollar amounts shall be in dollars of the United
States of America unless otherwise specified; and |
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(f) |
including means including without
limitation. |
Section 2.
Payments of Principal and Interest.
(a)
Interest Only Payments. Subject to and in accordance with the terms of
this Section 2, on the earlier of the Maturity Date or the Early Repayment Date,
the Company shall pay to the Holder all interest accrued and unpaid at that time
on the entire outstanding Principal Amount of this Debenture (the Interest
Amount) together with repayment of the entire outstanding Principal Amount
of this Debenture in cash.
(b) Certain Additional Payments by the
Company.
(i)
Payments Under Debenture. Any payment or distribution by the
Company to the Holder hereunder, whether for principal, interest or otherwise,
shall not be subject to any deduction, withholding or offset for any reason
whatsoever except to the extent required by law, and the Company represents that
to its best knowledge no deduction, withholding or offset is so required for any
tax or any other reason. Notwithstanding any term or provision of this Debenture
to the contrary, if it shall be determined that any payment (other than a
payment dealt with under Section 2(b)(iii)) by the Company to or for the benefit
of the Holder pursuant to the terms of this Debenture, whether for principal,
interest or otherwise and whether paid or payable or distributed or
distributable, actual or deemed (a Payment) would be or is subject to
any deduction, withholding or offset due to any duty or tax (such duty or tax,
together with any interest and/or penalties related thereto, hereinafter
collectively referred to as the Payment Tax), then the Company shall,
in addition to all sums otherwise payable hereunder, pay to the Holder an
additional payment in cash (a Gross-Up Payment) in an amount such that
after all such Payment Taxes (whether by deduction, withholding, offset or
payment), including any interest or penalties with respect to such taxes or any
Payment Taxes (and any interest and penalties imposed with respect thereto)
imposed upon any Gross-Up Payment, Holder actually receives an amount of
Gross-Up Payment equal to the Payment Tax imposed upon the Payment (i.e., the
Holder receives a net amount equal to the Payment). The Company shall timely
remit such Payment Tax to the applicable governmental authority and shall
provide evidence of such payment to Holder within ten (10) days of making such
payment.
(ii)
Assignment of Debenture. Upon an assignment of this Debenture in whole or
in part, the Company shall, in addition to all sums otherwise payable hereunder,
pay to the Holder an additional payment in cash (a Disposition Gross-Up
Payment) which shall be sufficient to cover any taxes (including any
interest or penalties) under the ITA (Disposition Taxes) in respect of
such assignment and in respect of amounts payable under this Section 2(b)(ii).
The Company shall timely remit any such Disposition Taxes to the Receiver
General of Canada on account of Holder and shall provide evidence of such
payment to Holder within ten (10) days of making such payment.
(iii)
Indemnification. The Company shall indemnify Holder, within fifteen
(15) days after written demand therefor, for the full amount of any Payment
Taxes or Disposition Taxes paid by Holder (including any taxes imposed or
asserted on or attributable to amounts payable under this Section 2(b)(iii)) and
any expenses or losses arising therefrom or with respect thereto whether or not
such Payment Taxes or Disposition Taxes were correctly or legally imposed or
asserted by the relevant governmental authority.
(iv) If the Holder receives a refund of any
Payment Taxes or Disposition Taxes (collectively Taxes) as to which it
has been indemnified by the Company pursuant to Section 2(b)(iii) or with
respect to which the Company has paid additional amounts pursuant to Section
2(b)(ii), by reason that any such Taxes were incorrectly or illegally imposed or
asserted by the relevant governmental authority, the Holder shall pay to the
Company an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Company under Section 2(b)(ii)
with respect to the Taxes giving rise to such refund), and without interest
(other than any net after-Tax interest paid to the Holder with respect to such
refund) and less any costs, fees, expenses, damages, losses, taxes or other
amounts incurred by the Holder in respect of such refund. This provision shall
not be construed to require the Holder to make available any information
relating to its taxes that it considers confidential to the Company, to arrange
its affairs in any particular manner or, except as provided in the next
sentence, to claim any available refund. The Holder will, at the request and
expense of the Company, contest the payment, and seek a refund, of any Taxes
that the Company considers to be incorrectly or illegally imposed or asserted,
provided that contesting the payment, or seeking a refund, of such Taxes shall
not relieve the Company from its obligations under its indemnity or to pay
additional Taxes under Section 2(b)(ii).
(c)
Adjustments to Principal Amount. The Principal Amount owing under
this Debenture shall be decreased, as of the date of redemption, upon the early
redemption of all or a portion of the Principal Amount by an amount equal to
such Principal Amount that has been so redeemed (an Adjustment Event).
The Holder shall not be required to physically surrender the Debenture to the
Company upon the occurrence of an Adjustment Event, unless the full outstanding
Principal Amount has been redeemed. The Holder and the Company shall maintain
records showing the outstanding Principal Amount at any given time and the dates
and effect of any Adjustment Events or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of the Note upon each such Adjustment Event. In addition, following
each Adjustment Event, the Company shall update the Debenture Adjustment
Schedule attached hereto as Exhibit A (the Debenture Adjustment
Schedule), initial such schedule and transmit it to the Holder by facsimile
or other electronic transmission, who shall counter-initial such schedule and
return it to the Company by facsimile or other electronic transmission.
Section 3.
Redemption.
(a)
Change in Control Transactions. Upon the Company becoming aware of
the occurrence of a Change of Control Transaction, the Company shall, within
five Business Days, give written notice of such Change of Control Transaction to
the Holder. Such notice shall contain and constitute an offer to redeem the
Debenture, in whole or in part at the election of the Holder, on a redemption
date specified in such offer that is not less than thirty (30) days and not more
than fifty (50) days after the date of such offer at a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed (the Change
in Control Offer). The offer to redeem the Debenture shall state that the
offer is made pursuant to this Section 3(a) and shall specify, in reasonable
detail, the nature and date of the Change of Control and provide a sample
calculation of the redemption price. The Holder shall have the right to accept
or decline the offer in whole or in part at the Holders option by providing
written notice to the Company within ten (10) Business Days of receipt of the
Change in Control Offer indicating the amount, if any, of the outstanding
Principal Amount to be redeemed.
(b)
Redemption on Failure to Agree. Within ten (10) Business Days of any
Failure to Agree under Section 9 of the Purchase Agreement, the Company shall
fully redeem the Debenture by paying to the Holder a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed.
(c)
Cancellation. After all of the Principal Amount has been paid in full,
this Debenture shall automatically be deemed canceled and the Holder shall
promptly surrender the Debenture to the Company at the Companys principal
executive offices.
(d)
Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, shall be in writing and
either (i) emailed or (ii) delivered personally, by confirmed facsimile, or by a
nationally recognized overnight courier service to the Company at the facsimile
telephone number or address of the principal place of business of the Company as
set forth in the Purchase Agreement. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
either (x) emailed or (y) delivered personally, by facsimile, or by a nationally
recognized overnight courier service addressed to the Holder at the facsimile
telephone number or address of the Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when emailed or delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
Section 4.
Security.
As security for the due and punctual payment of all of its
obligations to the Holder hereunder, the Company shall promptly execute and
deliver, together with any relevant power of attorney, registrations, filings
and other supporting documentation deemed necessary by the Purchaser or its
counsel to perfect the same or otherwise in respect thereof.
Section 5.
Covenants.
(a)
Affirmative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall:
(i) Reporting Requirements. During
the term of this Agreement, prepare (where applicable, in accordance with IFRS)
and deliver to the Holder, in a form satisfactory to the Holder:
(A) as soon as practicable and in any event within
fifteen (15) days of the end of each calendar month, the management prepared
financial statements of the Parent as at the end of such calendar month prepared
in a form satisfactory to the Purchaser and including a balance sheet, statement
of income and retained earnings and a statement of changes in financial
position, as at the end of such calendar month as at the end of and for such
calendar month and the then elapsed portion of the Financial Year which includes
such calendar month;
(B) as soon as practicable and in any event within
forty-five (45) days after the end of each Financial Quarter of the Parent, the
interim unaudited consolidated financial statements of the Parent as at the end
of such Financial Quarter prepared on a
consolidated basis in accordance with IFRS including a balance sheet, statement
of income and retained earnings and a statement of changes in financial position
in each case as at the end of and for such Financial Quarter and the then
elapsed portion of the Financial Year which includes such Financial Quarter,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or in the case of the balance sheet, as at the end of) the
previous Financial Year;
(C) as soon as practicable and in any event within
ninety (90) days after the end of each Financial Year of the Parent, the annual
audited consolidated financial statements of the Parent prepared in accordance
with IFRS including a balance sheet, statement of income and retained earnings
and a statement of changes in financial position for such Financial Year (which
financial statements shall be audited by an internationally recognized
accounting firm acceptable to the Holder), setting forth in each case in
comparative form the figures for the previous Financial Year; and
(D) concurrently with the delivery of the
financial statements contemplated in (B) and (C) above, a Compliance Certificate
in respect of such Financial Quarter or Financial Year, as applicable.
None of the financial statements or reports or opinions of
auditors with respect thereto referred to above shall contain any Impermissible
Qualifications.
(ii) Environmental.
(A)
At all times comply in all material respects with Environmental Laws including
environmental permits and approved plans with respect to closure and/or
rehabilitation;
(B) not to release any hazardous substances at, on
or from the Owned Real Properties, the Leased Real Properties or other assets of
the Company, nor to permit same, at any time in material violation of
Environmental Laws;
(C) immediately notify the Holder of: (1) any
release of any hazardous substances at, on or from the Owned Real Properties,
the Leased Real Properties or other assets of the Company in material violation
of any Environmental Laws; (2) any Claim received by the Company of or relating
to any material violation of any Environmental Laws or material environmental
liabilities; and (3) any facts or circumstances which could reasonably be
expected to give rise to a material Claim, material remedial action or material
breach of or in respect of any Environmental Laws;
(D) remove promptly any hazardous substance from
the Owned Real Properties, the Leased Real Properties or other assets of the
Company to the extent required to comply in all material respects with
Environmental Laws and to the extent required to eliminate or prevent any
material environmental liabilities;
(E)
provide, at the expense of the Company, the Holder with an assessment
and/or audit report with respect to the Owned Real Properties, the Leased Real
Properties, the business or other assets of the Company, upon the written
request of the Holder acting reasonably; and
(F) permit the Holder, at its sole discretion, at
the expense of the Company, to conduct in a reasonable manner such
investigations, assessments or audits as the Holder in its reasonable discretion
deems appropriate to determine whether: (1) hazardous substances exist on any
part of the Owned Real Properties, the Leased Real Properties or other assets of
the Company and to determine the source, quantity and type of such hazardous
substances, if any; or (2) the business, the Owned Real Properties, the Leased
Real Properties or other assets of the Company or any activities conducted at
such properties comply with Environmental Laws, and the Company shall cooperate
with the Holder in conducting such investigations, assessments and audits. The
Holder and its officers, employees, agents and contractors shall have and are
hereby granted the right to enter upon and inspect the Owned Real Properties,
the Leased Real Properties or other assets of the Company for the foregoing
purposes; provided that the Holder shall use reasonable efforts to minimize the
disruption to the operation of the business.
(iii) Additional Reporting
Requirements.
(A) Deliver to the Holder as soon as
possible, and in any event within five days after the Company becomes aware of
the occurrence of each Event of Default, a statement of a senior officer setting
forth the details of such Event of Default and the action which the Company
proposes to take or has taken with respect thereto;
(B)
from time to time upon request of the Holder, deliver to the Holder
evidence of maintenance of all insurance required to be maintained by Section
5(a)(ix), including such originals or copies as the Holder may reasonably
request of policies, certificates of insurance, riders and endorsements relating
to such insurance and proof of premium payments;
(C)
deliver to the Holder, together with the Compliance Certificate to be delivered
pursuant to Section 5(a)(i)(C), written notice of any previously undisclosed (1)
jurisdictions (or registration districts within such jurisdictions) in which the
Company has any place of business or stores any tangible personal property or
assets, (2) Subsidiaries of the Company or membership, partnership, joint
venture or syndicate interests of the Company, (3) material permits or licenses
which become necessary for the conduct of the business or any amendment to,
termination of or material default under any previously disclosed material
permit or license, (4) Benefit Plans or Pension Plans of the Company, (5)
Material Agreements of the Company or any amendment to, termination of or
material default under any previously disclosed Material Agreement, and (6) any
Lease or acquisition of real or immovable property by the Company or amendment
to, termination of or material default under any previously disclosed Lease,
and
(D)
deliver to the Holder such other information respecting the condition or
operations, financial or otherwise, of the business of the Company as the Holder
may from time to time reasonably request.
(iv)
Existence; Conduct of Business. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, and obtain, preserve, renew and keep in full force and effect any and
all material permits and licenses.
(v)
Payment Obligations. Pay its obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(A) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (B) or the Company has, if required, set aside on its
books adequate reserves with respect thereto in accordance with IFRS, and (C)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
(vi)
Maintenance of Properties. Keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, except to the extent that the failure to do so, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(vii)
Books and Records; Inspection Rights. Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Permit any
representatives designated by the Holder, upon reasonable prior notice and
during normal business hours, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and auditors, all at such reasonable
times and as often as reasonably requested by the Holder; provided that (A) the
Holder shall act reasonably in the conduct of all such visits, inspections and
inquiries, (B) the Holder shall provide at least two Business Days notice of any
such request for access; (C) the Holder shall use any confidential information
received via access provided hereunder only for purposes related to this
Debenture; and (D) the Company shall not be obligated to provide to the Holder
any confidential information if contrary to Applicable Laws.
(viii)
Compliance with Laws and Material Agreements. Comply with all
Applicable Laws and orders of any Governmental Authority applicable to it or its
property and with all Material Agreements.
(ix)
Insurance. Maintain or cause to be maintained, with financially
sound and reputable insurers acceptable to the Holder, acting reasonably,
insurance with respect to their respective properties and business against such
liabilities, casualties, risks and contingencies and in such types (including
business interruption insurance) and amounts as is customary in the case of
Persons of similar size engaged in the same or similar businesses and operating
in the same geographic area and in accordance with any requirement of any
Governmental Authority. In the case of any fire, accident or other casualty
causing loss or damage to any properties of the Company used in generating cash
flow or required by Applicable Law, all proceeds of such policies shall be used
promptly to repair or replace any such damaged properties, and otherwise shall
be used as directed by the Holder to pay any Principal then payable under the
Debenture.
(x)
Operation and Maintenance of Property. Manage and operate its business or
cause its business to be managed and operated (A) in accordance with prudent
industry practice in all material respects and in compliance with the terms and
provisions of all material permits and licenses, and (B) in compliance with all
Applicable Laws of the jurisdiction in which such businesses are carried on, and
all Applicable Laws of every other Governmental Authority from time to time
constituted to regulate the ownership, management and operation of such
businesses.
(xi)
Status of Accounts and Collateral. With respect to the Collateral,
report immediately to the Holder any matters adversely affecting the value,
enforceability or collectability of any of the Collateral.
(xii)
Accounts Receivable. Collect accounts receivable in the ordinary course
of business in a commercially reasonable manner.
(xiii)
Cure Defects. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Security Documents or any of the other
agreements, instruments or documents contemplated thereby or executed pursuant
thereto or any defects in the validity or enforceability of any of the Security
Documents and, at its expense, execute and deliver or cause to be executed and
delivered all such agreements, instruments and other documents as the Holder may
consider necessary or desirable for the foregoing purposes.
(xiv)
Additional Material Subsidiaries/Security. If, at any time on or after
the date hereof, the Company proposes to create or acquire an additional
Subsidiary or in some other fashion to become the holder of any Equity
Securities of a new Subsidiary, the Company will notify the Holder of such event
at least fifteen (15) Business Days prior to such event and:
(A) prior to or concurrently with the creation or
acquisition of such Subsidiary, the Company will, and will cause any relevant
Subsidiary, to execute and deliver to the Holder a securities pledge agreement,
in form and substance satisfactory to the Holder, acting reasonably, granting a
security interest in 100% of the Equity Securities of such new Subsidiary; and
(B) prior to or concurrently with the creation or
acquisition of such Subsidiary, to the extent not prohibited or restricted by
Applicable Law, the Company will cause such new Subsidiary to immediately
execute and deliver to the Holder a guarantee and security of the nature
contemplated by the Security Agreement, all in form and substance satisfactory
to the Holder, acting reasonably, and accompanied by customary legal opinions of
counsel to the Company or such Subsidiary.
In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant to
this Section 5(a)(xiv), the Company will, or will cause the relevant Subsidiary
to, deliver at its expense to the Holder such corporate or other resolutions,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Holder and consistent with the relevant forms and
types thereof delivered on the Closing Date pursuant to the Purchase Agreement
or as shall be otherwise reasonably acceptable to the Holder and to effect such
filings and registrations with the applicable Governmental Authorities as may be
requested by the Holder to preserve and perfect the Encumbrances created by such
mortgages, pledges, and other relevant agreements. Each guarantee, pledge
agreement, mortgage, security agreement and other document delivered pursuant to this Section 5(a)(xiv) shall be deemed to be a
Security Document from and after the date of execution thereof.
(xv)
Material Permits. Maintain all material permits and licenses as may
be necessary to properly conduct their respective businesses, the failure of
which to maintain could reasonably be expected to have a Material Adverse
Effect.
(xvi)
Expropriation. Advise the Holder of its receipt of any notice of
expropriation affecting any Owned Real Property where the expropriation is
likely to be successful and if successful would result in expropriation proceeds
exceeding Five Hundred Thousand U.S. Dollars (US$500,000).
(xvii)
Damage or Destruction. Advise the Holder in writing of any damage to or
destruction of any assets of the Company in respect of which the cost of
replacement or repair, individually or in the aggregate, would exceed Five
Hundred Thousand U.S. Dollars (US$500,000).
(xviii)
Leases. Duly observe and comply with all of its obligations under
any Lease to which it is a party which if not complied with would cause a
material default thereunder and shall forthwith advise the Holder in writing of
its receipt of any notices from the lessor alleging any material default by it
under a Lease.
(xix)
Payment of Taxes. Pay, or cause to be paid, when due, all Taxes, property
taxes, business taxes, social security premiums, assessments and governmental
charges or levies imposed upon it or upon its income, sales, capital or profit
or any property belonging to it unless any such Tax, social security premiums,
assessment, charge or levy is contested diligently and in good faith by
appropriate proceedings and in respect of which appropriate reserves have been
maintained in accordance with IFRS.
(xx)
Withholding Taxes. Withhold from each payment made to any of its
past or present employees, officers or directors, and to any non-resident of the
country in which it is resident, the amount of all Taxes and other deductions
required to be withheld therefrom and pay the same to the property Governmental
Authorities within the time required under any Applicable Laws.
(xxi)
Collection of Taxes. Collect from all Persons the amount of all
Taxes required to be collected from them and remit the same to the Governmental
Authorities within the time required under any Applicable Laws.
(xxii)
Registration of Security. From time to time, register or cause to
be registered, and cooperate in the registration of, the Security, and any
public notices or filings in respect thereof, on a timely basis and do, observe
and perform all of its obligations and all matters and things that may be
necessary or reasonably required for the purposes of creating and maintaining
the Encumbrances intended to result from the Security as valid, effective and
perfected first priority Encumbrances (subject only to Permitted Encumbrances)
at all times and shall comply with all requirements of Section 5(b)(xiv).
(xxiii) Benefit Plans.
(A)
Cause to be filed or distributed in a timely manner all reports and
disclosures relating to any Benefit Plan that are required by the plan or any Applicable Laws to be filed or distributed.
(B)
Perform all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with each
Benefit Plan and the funding media therefor; make all contributions and pay all
premiums required to be made or paid in accordance with the terms of each
Benefit Plan and all Applicable Laws; withhold, by way of authorized payroll
deductions or otherwise collect and pay into each Benefit Plan all employee
contributions required to be withheld or collected by the Company in accordance
with the terms of such plan and all Applicable Laws.
(b)
Negative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall not: (i) Debt. Create,
incur or suffer to exist, any Debt other than Permitted Debt.
(ii)
Encumbrances. Create, incur, assume or suffer to exist, any Encumbrance
on any of its assets, other than Permitted Encumbrances.
(iii)
Fundamental Changes. Merge into or amalgamate or consolidate with any
other Person, or permit any other Person to merge into or amalgamate or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or any of the Equity Securities of any Subsidiary (in each case,
whether now owned or hereafter acquired), or liquidate, dissolve or be wound up.
(iv) Carry on Business.
(A)
Engage in any business which is different from the business conducted on
the Closing Date and businesses reasonably related thereto.
(B)
After the Closing Date, carry on business otherwise than through the Company.
(v)
Transfer of Assets. Neither the Company nor any Subsidiary shall
sell, transfer, lease, part with possession or otherwise dispose of any assets,
whether by way of sale, lease, assignment, sale-leaseback or otherwise other
than (A) obsolete assets, equipment and material, (B) in the ordinary course of
business, (C) assets up to an aggregate amount not to exceed One Hundred
Thousand U.S. Dollars (US$100,000); (exclusive of the shares referred to in the
next clause) or (D) common shares of Acadian Mining Corporation owned on the
date hereof.
(vi)
Transactions with Affiliates. Transfer, sell or otherwise dispose
of any assets to, or purchase, lease or otherwise acquire any assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
(A) in the ordinary course of business at prices and on terms and conditions not
less favourable to the Company than could be obtained on an arms-length basis
from unrelated third parties, (B) transactions between or among the Company and
the Parent not involving any other Affiliate, (C) any Restricted Payment
permitted by Section 5(b)(ix), and (D) as otherwise expressly permitted pursuant
to this Agreement and the Security Documents. Except as otherwise expressly
permitted pursuant to the terms of this Agreement and the other Security
Documents, the Company will not enter into any transaction or series of transactions with Affiliates which involve an
outflow of money or other property from the Company to an Affiliate, including
repayment of Debt, or payment of management fees, affiliation fees,
administration fees, compensation, salaries, asset purchase payments or any
other type of fees or payments similar in nature, other than on terms and
conditions substantially as favourable to the Company as would be obtainable by
the Company in a reasonably comparable arms-length transaction with a Person
other than an Affiliate. The foregoing restrictions shall not apply to: (A) the
payment of reasonable and customary fees to directors of the Company who are not
employees of the Company, (B) any other transaction with any employee, officer
or director of the Company pursuant to employee profit sharing and/or benefit
plans and compensation and non-competition arrangements in amounts customary for
corporations similarly situated to the Company and entered into in the ordinary
course of business and approved by the board of directors of the Company, or (C)
any reimbursement of reasonable out-of-pocket costs incurred by an Affiliate of
the Company on behalf of or for the account of the Company.
(vii)
Restrictive Agreements. Other than under the terms of Senior
Construction Financing, directly or indirectly enter into, incur or permit to
exist, any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (A) the ability of the Company to create, incur or permit to
exist any Encumbrance upon any of its assets, (B) the ability of the Company to
pay dividends or other distributions with respect to any Equity Securities or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Parent or to provide a guarantee of any Debt of the Parent, (C)
the ability of the Company to make any loan or advance to the Parent, or (D) the
ability of the Company to sell, lease or transfer any of its property or assets;
provided that the foregoing shall not apply to restrictions or conditions; (1)
imposed by Applicable Law; (2) existing on the date hereof identified on
Schedule 4.2(y) to the Purchase Agreement (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition); (3) imposed by any agreement relating to
Permitted Debt permitted by this Debenture if such restrictions or conditions
apply only to the property or assets securing such Debt; and (4) customarily
provided for in leases and other ordinary course contracts restricting the
assignment thereof.
(viii)
Share Capital. Issue any Equity Securities, except to the Parent.
(ix) Restricted Payments. Declare,
make or pay or agree to declare, make or pay, directly or indirectly, any
Restricted Payment, except (A) Restricted Payments by the Company to the Parent,
(B) regularly scheduled payments in respect of Permitted Debt hereunder, and (C)
Restricted Payments by the Company pursuant to and in accordance with Benefit
Plans for the directors or officers of the Company, provided that the aggregate
amount of cash payments made by the Company and the Parent in any Financial Year
pursuant to all such Benefit Plans shall not exceed reasonable commercial
amounts paid in the normal course of business and approved by the board of
directors of the Company.
(x)
Investments. Purchase, hold or acquire (including pursuant to any
amalgamation with any Person that was not a wholly-owned Subsidiary of the
Company prior to such amalgamation), any Equity Securities, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person, except:
(A)
inter-company loans or advances between the Company and the Parent;
(B) Permitted Debt; and
(C) Permitted Investments.
(xi)
Acquisitions. Make any Acquisition, other than a Permitted Acquisition,
provided in the case of a Permitted Acquisition no Event of Default has occurred
and is continuing or would occur as a result of such Permitted Acquisition.
(xii)
Subsidiaries. Create or acquire any Subsidiary unless the Company
and the Subsidiary shall have complied with Section 5(a)(xiv).
(xiii) Sale-Leasebacks. Enter into sale-leaseback
transactions.
(xiv)
Capital Expenditures. Make or commit to make any Capital
Expenditures during the period from the Closing Date to the Maturity Date other
than as provided for in the NorthMet Project Budget.
(xv)
Change of Name; Business Outside Certain Jurisdictions. (A) Change its
name, registered office, chief executive office or jurisdiction of
incorporation, or (B) have any place of business or keep or store any material
tangible property outside of those jurisdictions (or registration districts
within such jurisdictions) set forth in Schedule 5.1(m) to the Purchase
Agreement, (1) except upon thirty (30) days prior written notice thereof to the
Holder; and (2) unless the Company has done or caused to be done all such acts
and things and executed and delivered or caused to be executed and delivered all
such deeds, transfers, assignments and instruments as the Holder may reasonably
require for perfecting or maintaining the perfection of the Encumbrances of the
Security and the priority thereof in the Collateral in favour of the Holder.
(xvi) Financial Year. Change its Financial Year.
(xvii)
Amendments. Allow (A) any amendments to its constating documents or
by-laws; or (B) any amendments to, or grant any waivers in respect of any
Material Agreement or any guarantee or security in respect thereof.
(xviii)
Change of Auditors. Change its auditors other than to a nationally
recognized accounting firm approved by the Holder acting reasonably.
(xix)
Speculative Transactions. Engage in any interest rate, currency rate,
commodity hedge or similar agreement, understanding or obligation, except in the
normal course of business and not for speculative purposes.
(c)
Indemnification. The Company will pay, and will indemnify and same
harmless the Holder against, all costs and expenses (including legal fees and
expenses) incurred with respect to the exercising of any of the rights, remedies
and powers of the Holder under this Debenture, or the taking of any other proceedings
taken for the purpose of enforcing the remedies provided for under law by reason
of non-payment of the obligations hereunder.
Section 6. Defaults
and Remedies.
(a)
Events of Default. An Event of Default is: (i) a default
in payment of any principal amount due hereunder; (ii) a default in payment of
any interest or other amount due hereunder which default continues for more than
five (5) Business Days after the due date thereof; (iii) a default in the timely
issuance of Underlying Shares upon and in accordance with the terms of the
Warrants, which default continues for five (5) Business Days after the Parent
has received written notice informing the Parent that it has failed to issue
shares or deliver share certificates within the fifth day following the exercise
date; (iv) failure by the Company or the Parent for fifteen (15) days after
written notice has been received by the Company or the Parent, as applicable, to
comply with any material provision of any of the Agreements (including the
failure of the Company to make a Change in Control Offer in accordance with
Section 3(a)), the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (v) a material breach by the Company or the Parent of its
covenants, representations or warranties in any of the Agreements, the Escrow
Agreement, the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (vi) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or the Parent for in excess of
One Million U.S. Dollars (US$1,000,000) or for money borrowed the repayment of
which is guaranteed by the Company or the Parent for in excess of One Million
U.S. Dollars (US$1,000,000), whether such indebtedness or guarantee now exists
or shall be created hereafter; (vii) if the Company or the Parent is subject to
any Bankruptcy Event; (viii) if a judgment or order is obtained against the
Company or the Parent which has or would have a Material Adverse Effect, and, if
such judgment or order is for the payment of money, the judgment or order has
not been dismissed, stayed or satisfied within twenty (20) days of the date that
such judgment or order is issued; (ix) if any material permit or license or
Material Agreement of the Company or the Parent expires or is withdrawn,
cancelled, terminated, or modified (and such expiry, withdrawal, cancellation,
termination or modification would have a Material Adverse Effect) and is not
reinstated or replaced within thirty (30) days thereafter without material
impairment of the property or business of the Company or the Parent; (x) a final
judgment, writ of execution, garnishment or attachment or similar process is
issued or levied against any property of the Company or the Parent having a fair
market value in excess of One Million U.S. Dollars (US$1,000,000) and
such judgment, writ, execution, garnishment, attachment or similar process is
not released, bonded, satisfied, discharged, vacated or stayed within forty-five
(45) days after its entry, commencement or levy; (x) solely with respect to
Principal Amounts held by Glencore AG, a material breach by the Parent of its
covenants, representations or warranties in the Marketing Agreement, Copper
Offtake Agreement or Nickel Offtake Agreement; or (xi) the termination of the
Standby Purchase Agreement prior to the completion of the Rights Offering.
(b)
Remedies. If an Event of Default occurs and is continuing with respect to
the Debenture, the Holder may declare all of the then outstanding Principal
Amount of this Debenture and all other debentures held by the Holder, to be due
and payable immediately, and the Holder may commence such legal action or
proceedings as it, in its sole discretion, deems necessary, all without any
additional notice, presentation, demand, protest, notice of dishonor, entering
into of possession of any of the assets of the Company or any other action or
notice, all of which the Company hereby expressly waives, except that in the
case of an Event of Default arising from events described in clauses (vi)
through (x) of Section 6(a), inclusive, this Debenture shall become due and payable without further action
or notice. In the event of such acceleration, the amount due and owing to the
Holder shall be 120% of the outstanding Principal Amount of the Debenture held
by the Holder. In either case the Company shall pay interest on such amount in
cash at the Default Rate (as defined below) to the Holder if such amount is not
paid within seven (7) days of Holders request. The remedies under this
Debenture shall be cumulative.
(c)
Notice of Default. The Company covenants to provide written notice to the
Holder within two (2) Business Days upon the occurrence of any Event of Default.
(d)
Default Interest. Notwithstanding anything contained herein, this
Debenture shall bear interest on the due and unpaid outstanding Principal Amount
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 6(a) at the rate (the Default Rate) equal to the
lower of 18% per annum or the highest rate permitted by law.
Section 7.
General.
(a)
Technical Services Committee. The Holder of a majority of the
Principal Amount outstanding under this Debenture shall be entitled to select
and appoint one (1) member (the Appointee) to the Technical Services
Committee of the Company and shall be entitled to select and appoint any
successor to or replacement of such Appointee, subject, in each case, to the
Companys consent which shall not be unreasonably withheld.
(b)
Payment of Expenses. The Company agrees to pay all reasonable charges and
expenses, including attorneys fees and expenses, which may be incurred by the
Holder in successfully enforcing this Debenture and/or collecting any amount due
under this Debenture.
(c)
Interest Act (Canada) Disclosure. For the purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of
interest to which the rate of interest applicable to any interest period,
computed as provided under Section 2 above, is equivalent is the rate of
interest for such interest period multiplied by a fraction of which (i) the
numerator is the actual number of days in the 12-month period commencing on the
date of the commencement of such interest period and ending on the day
immediately preceding the anniversary of such date of commencement, and (ii) the
denominator is three hundred sixty-five (365).
(d)
Savings Clause. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby. In no event shall the amount of interest paid
hereunder exceed the maximum rate of interest on the unpaid principal balance
hereof allowable by applicable law. If any sum is collected in excess of the
applicable maximum rate, the excess collected shall be applied to reduce the
principal debt. If the interest actually collected hereunder is still in excess
of the applicable maximum rate, the interest rate shall be reduced so as not to
exceed the maximum allowable under law.
(e)
Amendment. Neither this Debenture nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.
(f)
Assignment, Etc. The Holder may assign or transfer this Debenture at any
time and from time to time in whole or in part to any transferee, without the
consent of the Company, provided that any partial assignment of this Debenture
shall be for a minimum principal amount of not less than Five Million U.S.
Dollars (US$5,000,000). The Holder shall notify the Company of any such
assignment or transfer promptly. This Debenture shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.
(g)
No Waiver. Neither the extension of time for making any payment
which is due and payable under this Debenture at any time or times, nor the
failure on the part of the Holder to exercise, and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Holder of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy or power hereby granted to the Holder or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Holder from time to time.
(h) Governing Law; Jurisdiction.
(i)
Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF
ANOTHER JURISDICTION.
(ii)
Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Debenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum.
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three (3) days
after the same has been posted as aforesaid) or by personal service shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holders right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(iii)
NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY
AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE.
(i) Replacement Debenture. This
Debenture may be exchanged by Holder at any time and from time to time for a
Debenture or debentures with different denominations representing an equal
aggregate outstanding Principal Amount, as reasonably requested by Holder, upon surrendering the same. No service charge will be
made for such registration or exchange. In the event that Holder notifies the
Company that this Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Principal Amount, if different than that shown on the
original Debenture), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture.
(f)
Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due to the Holder in any currency
(the Original Currency) into another currency (the Other
Currency), the parties agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Holder could purchase the
Original Currency with the Other Currency on the Business Day preceding the day
on which final judgment is given or, if permitted by Applicable Law, on the day
on which the judgment is paid or satisfied. The obligations of the Company in
respect of any sum due in the Original Currency from it to the Holder under any
of the Security Documents shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Holder of any sum adjudged to be so due in the Other Currency,
the Holder may, in accordance with normal banking procedures, purchase the
Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Lender in the
Original Currency, the Company agrees, as a separate obligation and
notwithstanding the judgment, to indemnify the Holder, against any loss, and, if
the amount of the Original Currency so purchased exceeds the sum originally due
to the Holder in the Original Currency, the Holder shall remit such excess to
the Company.
(k)
Further Assurances. Each party shall from time to time promptly
execute and deliver all further documents and take all further action necessary
to give effect to the provisions and intent of this Debenture.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed on the day and in the year first above written.
POLY MET MINING, INC.
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By:
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Name: |
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Title: |
Attest:
Sign: _____________________________________________
Print
Name:
23
EXHIBIT A
DEBENTURE ADJUSTMENT SCHEDULE
Debenture Adjustment Schedule for the Debenture issued by
POLY MET MINING, INC. to GLENCORE AG on or about [April 15], 2015 in the
original principal amount of Eight Million U.S. Dollars (US$8,000,000] ), to be
completed and exchanged by fax or email following each principal repayment of
such Debenture.
Date |
Decreases
Principal
amount
repaid
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Remaining
principal
balance of
Debenture |
Initialed by
Company
CEO/CFO |
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authorized
representative
of Holder |
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A-1
EXHIBIT B
COMPLIANCE CERTIFICATE
[Date]
TO: (the "Holder")
The
undersigned (the "Corporation") refers to the Floating Rate Secured Debenture
issued on [April 15], 2015 (the "Debenture", the terms defined therein being
used herein as therein defined). This Compliance Certificate is delivered
pursuant to Section 5(a)(i) of the Debenture for the Financial Quarter/Year
ending on [] (the "Period").
We, __________________________ and _________________________,
the respective Chief Executive Officer and Chief Financial Officer of the
Corporation, in such capacity and not personally, hereby certify that:
1. |
We are the duly appointed Chief Executive Officer and
Chief Financial Officer of the Corporation and as such we are providing
this certificate for and on behalf of the Corporation pursuant to the
Debenture. |
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2. |
We are familiar with and have examined the provisions of
the Debenture. |
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3. |
The financial statements most recently delivered pursuant
to [Section 5(a)(i)(B) or Section 5(a)(i)(C)] of the Debenture
present fairly the financial position, results of operations and changes
in financial position of the persons specified therein for the Period and
as at the last day of such Period, as the case may be, in accordance with
IFRS. |
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4. |
The representations and warranties contained in Section
5.1 of the Purchase Agreement are true and correct as though made on the
date hereof, except for and any such representation and warranty which is
stated to be made as of a certain date. |
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5. |
As of the date hereof, the Corporation is not in breach
of any of the covenants contained in Section 5 of the Debenture, and no
Event of Default has occurred and is continuing as at the date
hereof. |
Dated this ___________day of _____________________________.
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(Name please print) |
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Chief Executive Officer |
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(Name please print) |
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Chief Financial Officer |
B-1
-18-
Exhibit C
Tranche H Debenture
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE
DEBENTURE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT, FOLLOWING ANY
REDEMPTION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS DEBENTURE MUST NOT TRADE THIS SECURITY BEFORE [_____],
2015.
FLOATING RATE SECURED DEBENTURE, DUE NO LATER THAN MARCH
31, 2016
OF
POLY MET MINING,
INC.
Debenture No.: D-8 |
Original Principal Amount: US$8,000,000
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Issuance Date: [July 1], 2015 |
New York, New York |
THIS
DEBENTURE is a duly authorized issue of POLY MET MINING, INC., a
corporation incorporated pursuant to the laws of Minnesota (the
Company), designated as the Companys Floating Rate Secured Debenture,
due on the day which is the earlier of (i) the availability of at least One
Hundred Million U.S. Dollars (US$100,000,0000) of the Senior Construction
Finance (as defined below), or (ii) March 31, 2016 (the Maturity Date)
in an aggregate original principal amount of Eight Million U.S. Dollars
(US$8,000,000]) (the Debenture).
FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of GLENCORE
AG or its registered assigns or successors-in-interest (the Holder)
the principal sum of Eight Million U.S. Dollars (US$8,000,000), together with
all accrued but unpaid interest thereon on the Maturity Date, to the extent such
principal amount and interest has not been repaid in accordance with the terms
hereof. Interest on the unpaid principal balance hereof shall accrue from the
date of original issuance hereof (the Issuance Date) at the Floating
Rate (as defined below) until the principal balance becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by redemption or
repayment (Early Repayment Date) in accordance with the terms hereof or
of the other Agreements. The Floating Rate shall be determined on each Floating
Rate Reset Date, and such Floating Rate shall apply until the next Floating Rate
Reset Date. Interest on this Debenture shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with Section 2
hereof. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees
and then any remaining amount to principal.
All
payments of principal and interest on this Debenture shall be made in lawful
money of the United States of America by wire transfer of immediately available
funds to such account as the Holder may from time to time designate by written
notice in accordance with the provisions of this Debenture. This Debenture may
not be prepaid or redeemed in whole or in part except as described in Section 3
or as otherwise provided herein. Whenever any amount expressed to be due by the
terms of this Debenture is due on any day (other than the Maturity Date) which
is not a Business Day (as defined below), the same shall instead be due on the
next succeeding day which is a Business Day. If the Maturity Date falls on a day
that is not a Business Day, the payment of principal and interest will be made
on the next succeeding Business Day, and no interest on such payment will accrue
for the period from and after the Maturity Date.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Purchase Agreement dated October 31, 2008, as
amended, among the Company, the Holder and PolyMet Mining Corp. (the
Parent), pursuant to which the Debenture was originally issued (the
Purchase Agreement). For purposes hereof the following terms shall have
the meanings ascribed to them below:
Acquisition means any transaction, or any series of related
transactions, consummated after the date hereof, by which the Company directly
or indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business, (b)
acquires control of securities of a Person engaged in a business representing
more than 50% of the ordinary voting power for the election of directors or
other governing position if the business affairs of such Person are managed by a
board of directors or other governing body, or (c) acquires control of more than
50% of the ownership interest in any Person engaged in any business that is not
managed by a board of directors or other governing body.
Affiliate means, with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the specified Person.
Appointee has the meaning given to it in Section 7(a).
Bankruptcy Event means any of the
following events: (a) the Company or the Parent commences a case or other
proceeding or proposal under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, winding-up, insolvency or
liquidation or similar law of any jurisdiction (including the Bankruptcy
Act (Canada) or the Companies Creditors Arrangement Act (Canada))
relating to the Company or the Parent; (b) there is commenced against the
Company or the Parent any such case or proceeding or proposal that is not
dismissed within thirty (30) days after commencement; (c) the Company or the
Parent is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered; (d) the Company or the
Parent suffers any appointment of any trustee, receiver, receiver and manager,
interim receiver, custodian or the like for it or any substantial part of its
property that is not discharged or stayed within thirty (30) days; (e) the
Company or the Parent makes a general assignment for the benefit of creditors;
(f) the Company or the Parent fails to pay, or states that it is unable to pay
or is unable to pay, its debts generally as they become due; (g) the Company or
the Parent calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (h) the Company or the
Parent, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.
Business Day means any day other
than a Saturday, Sunday or a day on which commercial banks in the City of New
York, New York, Toronto, Ontario or Zug, Switzerland are authorized or required
by law or executive order to remain closed.
Canadian Securities Laws means all
applicable securities laws in each of the provinces and territories of Canada
and the respective regulations made thereunder, together with applicable
published fee schedules, prescribed forms, rules, multilateral or national
instruments, orders, rulings and other regulatory instruments issued or adopted
by the Securities Commissions.
Capital Assets means, with respect
to any Person, any tangible fixed or capital assets owned or leased (in the case
of a Capital Lease) by such Person.
Capital Expenditures means, in respect
of any Person and any period, all expenditures made by such Person during such
period for the purchase, lease or acquisition of Capital Assets (including all
amounts paid or accrued during such period on Capital Leases) and other Debt
incurred or assumed to acquire or construct Capital Assets (other than current
Capital Assets) required to be capitalized for financial reporting purposes in
accordance with IFRS.
Capitalized Lease Obligation of any
Person means any obligation of such Person to pay rent or other amounts under a
Capital Lease.
Capital Leases means any and all
lease obligations of a lessee that are capitalized for financial reporting
purposes in accordance with IFRS.
Change in Control Offer has the meaning given to it in Section
3(a).
Change in Control Transaction
will, and will be deemed to, exist if (a) there occurs any consolidation,
merger, plan of arrangement or other business combination of the Company or the
Parent with or into any other corporation or other entity or person (whether or
not the Company or the Parent is the surviving corporation) or any other
corporate reorganization or transaction or series of related transactions in
which in any of such events the voting shareholders of the Company or the Parent
prior to such event cease to own 50% or more of the voting power, or
corresponding voting equity interests, of the surviving corporation after such
event (including any going private transaction under Rule 13e-3 promulgated
pursuant to the Exchange Act, tender offer by the Company or the Parent under
Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the
Companys common shares or the Parents Common Shares, or take-over bid by the
Company or the Parent under Canadian Securities Laws for 20% or more of the
Companys common shares or the Parents Common Shares), (b) any person (as
defined in Section 13(d) of the Exchange Act), together with its affiliates and
associates (as such terms are defined in Rule 405 under the Act), beneficially
owns or is deemed to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in excess of 35% of
the Companys or the Parents voting power other than such persons who
beneficially owned or are deemed to beneficially own such voting power as of the
date hereof, (c) there is a replacement within a consecutive period of 24 months
of more than one-half of the members of the Companys or the Parents Board of
Directors which is not approved by those individuals who are members of the
Companys or the Parents Board of Directors on the date thereof who were either
directors at the beginning of such period or where election or nomination was
previously approved, (d) in one or a series of related transactions, there is a
sale or transfer of all or substantially all of the assets of the Company or the Parent, determined on a consolidated basis, or
(e) the Company or the Parent enters into any agreement providing for an event,
circumstance or occurrence set forth in (a), (b), (c) or (d) above.
Claim means, with respect to any
Person, any actual or prospective action, suit, order, charge, penalty, claim,
litigation, investigation or proceeding of any kind or nature whatsoever against
or otherwise involving such Person or the property or assets of such Person.
Common Shares means the Parents common shares, without par
value.
Company means Poly Met Mining, Inc., a
corporation incorporated pursuant to the laws of Minnesota.
Compliance Certificate means a
certificate of the Company signed on its behalf by its chief executive officer
and chief financial officer in the form attached hereto as Exhibit B.
"Confirmation of Secured Obligations
Agreement" means the confirmation of secured obligations agreement dated
[July 1], 2015 between the Company, the Parent and the Holder.
Control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. Controlling and Controlled have
corresponding meanings.
Debenture means this Debenture,
designated as the Companys Floating Rate Secured Debenture, due on the day
which is the earlier of (i) the availability of at least One Hundred Million
U.S. Dollars (US$100,000,000 of the Senior Construction Financing, or (ii) March
31, 2016, in an aggregate original principal amount of Eight Million U.S.
Dollars (US$8,000,000).
Debenture Adjustment Schedule has the meaning given to it in
Section 2(c).
Debt of any Person means, at any time,
(without duplication): (a) all obligations of such Person for borrowed money
including borrowings of commodities, bankers acceptances, letters of credit or
letters of guarantee; (b) all obligations of such Person for the deferred
purchase price of property or services represented by a note or other evidence
of indebtedness (other than trade payables and other current liabilities
incurred in the ordinary course of business); (c) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (d) all indebtedness of
another Person secured by an Encumbrance on any properties or assets of such
Person (other than Encumbrances being contested in good faith on a timely basis
by appropriate proceedings); (e) all Capitalized Lease Obligations of such
Person; (f) the aggregate amount at which any shares in the capital of such
Person which are redeemable or retractable at the option of the holder may be
retracted or redeemed for cash or debt provided all conditions precedent for
such retraction or redemption have been satisfied; (g) all other obligations of
such Person upon which interest charges are customarily paid by such Person; (h)
the net amount of all obligations of such Person (determined on a
marked-to-market basis) under swap agreements; and (i) all debt guaranteed by
such Person.
Disposition Gross-Up Payment has the meaning given to it in
Section 2(b)(ii).
Disposition Taxes has the meaning given to it in Section
2(b)(ii).
Early Repayment Date means any
Business Day prior to the Maturity Date that PolyMet elects to repay the
outstanding principal and unpaid and accrued interest on the Debentures provided
that PolyMet can demonstrate that such early repayment is prudent and PolyMet
has given ten (10) business days notice to Glencore of its intent to repay the
Debentures.
Equity Securities means, with
respect to any Person, any and all shares, interests, participations, rights in,
or other equivalents (however designated and whether voting and non-voting) of,
such Persons capital, whether outstanding on the date hereof or issued after
the date hereof, including any interest in a partnership, limited partnership or
other similar Person and any beneficial interest in a trust, and any and all
rights, warrants, options or other rights exchangeable for or convertible into
any of the foregoing.
Event
of Default has the meaning given to it in Section 6(a).
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Failure to Agree has the meaning
provided for in Section 9 of the Purchase Agreement.
Financial Quarter means, in
respect of the Company, a period of three consecutive months in each Financial
Year ending on April 30, July 31, October 31, and January 31, as the case may
be, of such year.
Financial Year means, in respect
of the Company, its financial year commencing on February 1 of each calendar
year and ending on January 31 of each following calendar year.
Floating Rate means LIBOR plus 8.0% per
annum; provided, however, that the Floating Rate for the period from the
Issuance Date to the first Floating Rate Reset Date will be _____%; and provided
further, that the Floating Rate shall be reset on each Floating Rate Reset
Date..
Floating Rate Reset Date means
March 31, June 30, September 30, and December 31 of each year, commencing on
March 31, 2015, provided that if any such day is not a Business Day, then such
Floating Rate Reset Date means the immediately preceding day which is a Business
Day.
Gross-Up Payment has the meaning given to it in Section 2(b).
Holder means Glencore AG or its registered assigns or
successors-in-interest.
IFRS means International Financial Reporting Standards.
Impermissible Qualification means,
relative to (a) the financial statements or notes thereto of any Person, or (b)
the opinion or report of any independent auditors as to any financial statement
or notes thereto, any qualification or exception to such financial statements,
notes, opinion or report, as the case may be, which (i) is of a going concern
or similar nature; or (ii) relates to any limited scope of examination of material
matters relevant to such financial statement, if such limitation results from
the refusal or failure of the Company to grant access to necessary information
therefor.
Interest Amount has the meaning given to it in Section 2(a).
Issuance Date means [July 1,] 2015, the date of original
issuance of this Debenture.
ITA means the Income Tax Act (Canada).
LIBOR means the 12 month LIBOR rate for U.S. dollars published
in the print edition of The Wall Street Journal to be set as at the
second Business Day prior to the Issuance Date, provided that, if such 12 month
LIBOR rate is not so published on such date, LIBOR means the 12 month LIBOR rate
most recently published in the print edition of The Wall Street Journal prior to
the day which is the second Business Day prior to the Issuance Date.
Maturity Date has the meaning given to it on the cover page.
Original Currency has the meaning given to it in Section 7(j).
Other Currency has the meaning given to it in Section
7(j).
Parent means PolyMet Mining Corp.,
a corporation incorporated pursuant to the laws of British Columbia.
Payment has the meaning given to it in Section 2(b)(i).
Payment Tax has the meaning given to it in Section 2(b)(i).
Permitted Acquisitions means any
Acquisition by the Company consented prior thereto in writing by the Holder.
Permitted Debt means,
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(i) |
Debt hereunder or under any Security Document; |
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(ii) |
Debt existing on the date hereof and set forth in Note 5
to the condensed interim consolidated financial statements of the Parent
for the interim period ended April 30, 2015; |
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(iii) |
trade accounts due and payable within sixty (60) days and
considered unsecured obligations incurred in the ordinary course of
business (but excluding Debt for borrowed money); and |
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(iv) |
any Senior Construction
Financing. |
Permitted Encumbrances shall have
the meaning set forth in Section 1.51 of the Purchase Agreement.
Principal Amount means the sum of
(a) the unpaid principal amount of this Debenture, (b) all accrued but unpaid
interest hereunder, and (c) any default payments owing under the Agreements but
not previously paid or added to the Principal Amount.
Purchase Agreement means the
purchase agreement dated October 31, 2008, as amended, among the Company, the
Holder and the Parent, pursuant to which the Debenture was originally issued.
Restricted Payment means, with
respect to any Person, any payment by such Person (a) of any dividends or other
distribution on any of its Equity Securities, (b) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its Equity
Securities, (c) of any principal of or interest or premium on or of any amount
in respect of a sinking or analogous fund or defeasance fund for any Debt of
such Person ranking in right of payment subordinate to any liability of such
Person under the Security Documents, (d) of any principal of or interest or
premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, or (e) of any
management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or
to any director or officer thereof other than as compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course.
Securities Act means the Securities Act of 1933, as amended.
Securities Commissions means,
collectively, the securities commissions or other securities regulatory
authorities in each of the provinces and territories of Canada.
Senior Construction Financing
means Debt or Equity in respect of construction financing for the NorthMet
Project which is in aggregate in an amount equal to or greater than Five Hundred
Million U.S. Dollars (US$500,000,000) such that the construction of the NorthMet
Project may reasonably be expected to be completed.
Subsidiary means any non-natural
Person of which the Company owns or controls, directly or indirectly, not less
than 50% of the total combined voting power represented by all classes of Equity
Securities issued by such Person.
The
following terms and conditions shall apply to this Debenture:
Section
1.
Interpretation.
In this
Debenture:
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(a) |
a word importing the masculine, feminine or neuter gender
also includes members of the other genders; |
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(b) |
a word defined in or importing the singular number has
the same meaning when used in the plural number, and vice versa; |
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(c) |
a word importing persons shall include partnerships and
corporations; |
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(d) |
the headings to each section are inserted for convenience
of reference only and do not form part of this
Debenture; |
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(e) |
all dollar amounts shall be in dollars of the United
States of America unless otherwise specified; and |
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(f) |
including means including without
limitation. |
Section 2.
Payments of Principal and Interest.
(a)
Interest Only Payments. Subject to and in accordance with the terms
of this Section 2, on the earlier of the Maturity Date or the Early Repayment
Date, the Company shall pay to the Holder all interest accrued and unpaid at
that time on the entire outstanding Principal Amount of this Debenture (the
Interest Amount) together with repayment of the entire outstanding
Principal Amount of this Debenture in cash.
(b) Certain Additional Payments by the
Company.
(i)
Payments Under Debenture. Any payment or distribution by the
Company to the Holder hereunder, whether for principal, interest or otherwise,
shall not be subject to any deduction, withholding or offset for any reason
whatsoever except to the extent required by law, and the Company represents that
to its best knowledge no deduction, withholding or offset is so required for any
tax or any other reason. Notwithstanding any term or provision of this Debenture
to the contrary, if it shall be determined that any payment (other than a
payment dealt with under Section 2(b)(iii)) by the Company to or for the benefit
of the Holder pursuant to the terms of this Debenture, whether for principal,
interest or otherwise and whether paid or payable or distributed or
distributable, actual or deemed (a Payment) would be or is subject to
any deduction, withholding or offset due to any duty or tax (such duty or tax,
together with any interest and/or penalties related thereto, hereinafter
collectively referred to as the Payment Tax), then the Company shall,
in addition to all sums otherwise payable hereunder, pay to the Holder an
additional payment in cash (a Gross-Up Payment) in an amount such that
after all such Payment Taxes (whether by deduction, withholding, offset or
payment), including any interest or penalties with respect to such taxes or any
Payment Taxes (and any interest and penalties imposed with respect thereto)
imposed upon any Gross-Up Payment, Holder actually receives an amount of
Gross-Up Payment equal to the Payment Tax imposed upon the Payment (i.e., the
Holder receives a net amount equal to the Payment). The Company shall timely
remit such Payment Tax to the applicable governmental authority and shall
provide evidence of such payment to Holder within ten (10) days of making such
payment.
(ii)
Assignment of Debenture. Upon an assignment of this
Debenture in whole or in part, the Company shall, in addition to all sums
otherwise payable hereunder, pay to the Holder an additional payment in cash (a
Disposition Gross-Up Payment) which shall be sufficient to cover any
taxes (including any interest or penalties) under the ITA (Disposition
Taxes) in respect of such assignment and in respect of amounts payable
under this Section 2(b)(ii). The Company shall timely remit any such Disposition
Taxes to the Receiver General of Canada on account of Holder and shall provide
evidence of such payment to Holder within ten (10) days of making such
payment.
(iii)
Indemnification. The Company shall indemnify Holder, within fifteen (15)
days after written demand therefor, for the full amount of any Payment Taxes or
Disposition Taxes paid by Holder (including any taxes imposed or asserted on or
attributable to amounts payable under this Section 2(b)(iii)) and any expenses
or losses arising therefrom or with respect thereto whether or not such Payment
Taxes or Disposition Taxes were correctly or legally imposed or asserted by the
relevant governmental authority.
(iv) If the Holder receives a refund of
any Payment Taxes or Disposition Taxes (collectively Taxes) as to which
it has been indemnified by the Company pursuant to Section 2(b)(iii) or with
respect to which the Company has paid additional amounts pursuant to Section
2(b)(ii), by reason that any such Taxes were incorrectly or illegally imposed or
asserted by the relevant governmental authority, the Holder shall pay to the
Company an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Company under Section 2(b)(ii)
with respect to the Taxes giving rise to such refund), and without interest
(other than any net after-Tax interest paid to the Holder with respect to such
refund) and less any costs, fees, expenses, damages, losses, taxes or other
amounts incurred by the Holder in respect of such refund. This provision shall
not be construed to require the Holder to make available any information
relating to its taxes that it considers confidential to the Company, to arrange
its affairs in any particular manner or, except as provided in the next
sentence, to claim any available refund. The Holder will, at the request and
expense of the Company, contest the payment, and seek a refund, of any Taxes
that the Company considers to be incorrectly or illegally imposed or asserted,
provided that contesting the payment, or seeking a refund, of such Taxes shall
not relieve the Company from its obligations under its indemnity or to pay
additional Taxes under Section 2(b)(ii).
(c)
Adjustments to Principal Amount. The Principal Amount owing under this
Debenture shall be decreased, as of the date of redemption, upon the early
redemption of all or a portion of the Principal Amount by an amount equal to
such Principal Amount that has been so redeemed (an Adjustment Event).
The Holder shall not be required to physically surrender the Debenture to the
Company upon the occurrence of an Adjustment Event, unless the full outstanding
Principal Amount has been redeemed. The Holder and the Company shall maintain
records showing the outstanding Principal Amount at any given time and the dates
and effect of any Adjustment Events or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of the Note upon each such Adjustment Event. In addition, following
each Adjustment Event, the Company shall update the Debenture Adjustment
Schedule attached hereto as Exhibit A (the Debenture Adjustment
Schedule), initial such schedule and transmit it to the Holder by facsimile
or other electronic transmission, who shall counter-initial such schedule and
return it to the Company by facsimile or other electronic transmission.
Section 3.
Redemption.
(a) Change in Control
Transactions. Upon the Company becoming aware of the occurrence of a Change
of Control Transaction, the Company shall, within five Business Days, give
written notice of such Change of Control Transaction to the Holder. Such notice
shall contain and constitute an offer to redeem the Debenture, in whole or in
part at the election of the Holder, on a redemption date specified in such offer
that is not less than thirty (30) days and not more than fifty (50) days after
the date of such offer at a cash redemption price equal to 120% of the
outstanding Principal Amount being redeemed (the Change in Control
Offer). The offer to redeem the Debenture shall state that the offer is
made pursuant to this Section 3(a) and shall specify, in reasonable detail, the
nature and date of the Change of Control and provide a sample calculation of the
redemption price. The Holder shall have the right to accept or decline the offer
in whole or in part at the Holders option by providing written notice to the
Company within ten (10) Business Days of receipt of the Change in Control Offer
indicating the amount, if any, of the outstanding Principal Amount to be
redeemed.
(b)
Redemption on Failure to Agree. Within ten (10) Business Days of any
Failure to Agree under Section 9 of the Purchase Agreement, the Company shall
fully redeem the Debenture by paying to the Holder a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed.
(c) Cancellation. After all of the
Principal Amount has been paid in full, this Debenture shall automatically be
deemed canceled and the Holder shall promptly surrender the Debenture to the
Company at the Companys principal executive offices.
(d)
Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, shall be in writing and
either (i) emailed or (ii) delivered personally, by confirmed facsimile, or by a
nationally recognized overnight courier service to the Company at the facsimile
telephone number or address of the principal place of business of the Company as
set forth in the Purchase Agreement. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
either (x) emailed or (y) delivered personally, by facsimile, or by a nationally
recognized overnight courier service addressed to the Holder at the facsimile
telephone number or address of the Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when emailed or delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
Section 4.
Security.
As security for the due and punctual payment of all of its
obligations to the Holder hereunder, the Company shall promptly execute and
deliver, together with any relevant power of attorney, registrations, filings
and other supporting documentation deemed necessary by the Purchaser or its
counsel to perfect the same or otherwise in respect thereof.
Section 5.
Covenants.
(a)
Affirmative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall:
(i) Reporting Requirements. During the term
of this Agreement, prepare (where applicable, in accordance with IFRS) and
deliver to the Holder, in a form satisfactory to the Holder:
(A) as soon as practicable and in any event within
fifteen (15) days of the end of each calendar month, the management prepared
financial statements of the Parent as at the end of such calendar month prepared
in a form satisfactory to the Purchaser and including a balance sheet, statement
of income and retained earnings and a statement of changes in financial
position, as at the end of such calendar month as at the end of and for such
calendar month and the then elapsed portion of the Financial Year which includes
such calendar month;
(B) as soon as practicable and in any event within
forty-five (45) days after the end of each Financial Quarter of the Parent, the
interim unaudited consolidated financial statements of the Parent as at the end
of such Financial Quarter prepared on a
consolidated basis in accordance with IFRS including a balance sheet, statement
of income and retained earnings and a statement of changes in financial position
in each case as at the end of and for such Financial Quarter and the then
elapsed portion of the Financial Year which includes such Financial Quarter,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or in the case of the balance sheet, as at the end of) the
previous Financial Year;
(C) as soon as practicable and in any event within
ninety (90) days after the end of each Financial Year of the Parent, the annual
audited consolidated financial statements of the Parent prepared in accordance
with IFRS including a balance sheet, statement of income and retained earnings
and a statement of changes in financial position for such Financial Year (which
financial statements shall be audited by an internationally recognized
accounting firm acceptable to the Holder), setting forth in each case in
comparative form the figures for the previous Financial Year; and
(D) concurrently with the delivery of the
financial statements contemplated in (B) and (C) above, a Compliance Certificate
in respect of such Financial Quarter or Financial Year, as applicable.
None of the financial statements or reports or opinions of
auditors with respect thereto referred to above shall contain any Impermissible
Qualifications.
(ii) Environmental.
(A)
At all times comply in all material respects with Environmental Laws including
environmental permits and approved plans with respect to closure and/or
rehabilitation;
(B) not to release any hazardous substances at, on
or from the Owned Real Properties, the Leased Real Properties or other assets of
the Company, nor to permit same, at any time in material violation of
Environmental Laws;
(C) immediately notify the Holder of: (1) any
release of any hazardous substances at, on or from the Owned Real Properties,
the Leased Real Properties or other assets of the Company in material violation
of any Environmental Laws; (2) any Claim received by the Company of or relating
to any material violation of any Environmental Laws or material environmental
liabilities; and (3) any facts or circumstances which could reasonably be
expected to give rise to a material Claim, material remedial action or material
breach of or in respect of any Environmental Laws;
(D) remove promptly any hazardous substance from
the Owned Real Properties, the Leased Real Properties or other assets of the
Company to the extent required to comply in all material respects with
Environmental Laws and to the extent required to eliminate or prevent any
material environmental liabilities;
(E)
provide, at the expense of the Company, the Holder with an assessment
and/or audit report with respect to the Owned Real Properties, the Leased Real
Properties, the business or other assets of the Company, upon the written
request of the Holder acting reasonably; and
(F) permit the Holder, at its sole discretion, at
the expense of the Company, to conduct in a reasonable manner such
investigations, assessments or audits as the Holder in its reasonable discretion
deems appropriate to determine whether: (1) hazardous substances exist on any
part of the Owned Real Properties, the Leased Real Properties or other assets of
the Company and to determine the source, quantity and type of such hazardous
substances, if any; or (2) the business, the Owned Real Properties, the Leased
Real Properties or other assets of the Company or any activities conducted at
such properties comply with Environmental Laws, and the Company shall cooperate
with the Holder in conducting such investigations, assessments and audits. The
Holder and its officers, employees, agents and contractors shall have and are
hereby granted the right to enter upon and inspect the Owned Real Properties,
the Leased Real Properties or other assets of the Company for the foregoing
purposes; provided that the Holder shall use reasonable efforts to minimize the
disruption to the operation of the business.
(iii) Additional Reporting Requirements.
(A)
Deliver to the Holder as soon as possible, and in any event within five
days after the Company becomes aware of the occurrence of each Event of Default,
a statement of a senior officer setting forth the details of such Event of
Default and the action which the Company proposes to take or has taken with
respect thereto;
(B) from time to time upon request of the Holder,
deliver to the Holder evidence of maintenance of all insurance required to be
maintained by Section 5(a)(ix), including such originals or copies as the Holder
may reasonably request of policies, certificates of insurance, riders and
endorsements relating to such insurance and proof of premium payments;
(C) deliver to the Holder, together with the
Compliance Certificate to be delivered pursuant to Section 5(a)(i)(C), written
notice of any previously undisclosed (1) jurisdictions (or registration
districts within such jurisdictions) in which the Company has any place of
business or stores any tangible personal property or assets, (2) Subsidiaries of
the Company or membership, partnership, joint venture or syndicate interests of
the Company, (3) material permits or licenses which become necessary for the
conduct of the business or any amendment to, termination of or material default
under any previously disclosed material permit or license, (4) Benefit Plans or
Pension Plans of the Company, (5) Material Agreements of the Company or any
amendment to, termination of or material default under any previously disclosed
Material Agreement, and (6) any Lease or acquisition of real or immovable
property by the Company or amendment to, termination of or material default
under any previously disclosed Lease, and
(D)
deliver to the Holder such other information respecting the condition or
operations, financial or otherwise, of the business of the Company as the Holder
may from time to time reasonably request.
(iv)
Existence; Conduct of Business. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, and obtain, preserve, renew and keep in full force and effect any and
all material permits and licenses.
(v)
Payment Obligations. Pay its obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(A) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (B) or the Company has, if required, set aside on its
books adequate reserves with respect thereto in accordance with IFRS, and (C)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
(vi)
Maintenance of Properties. Keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, except to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(vii)
Books and Records; Inspection Rights. Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Permit any
representatives designated by the Holder, upon reasonable prior notice and
during normal business hours, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and auditors, all at such reasonable
times and as often as reasonably requested by the Holder; provided that (A) the
Holder shall act reasonably in the conduct of all such visits, inspections and
inquiries, (B) the Holder shall provide at least two Business Days notice of any
such request for access; (C) the Holder shall use any confidential information
received via access provided hereunder only for purposes related to this
Debenture; and (D) the Company shall not be obligated to provide to the Holder
any confidential information if contrary to Applicable Laws.
(viii)
Compliance with Laws and Material Agreements. Comply with all
Applicable Laws and orders of any Governmental Authority applicable to it or its
property and with all Material Agreements.
(ix)
Insurance. Maintain or cause to be maintained, with financially
sound and reputable insurers acceptable to the Holder, acting reasonably,
insurance with respect to their respective properties and business against such
liabilities, casualties, risks and contingencies and in such types (including
business interruption insurance) and amounts as is customary in the case of
Persons of similar size engaged in the same or similar businesses and operating
in the same geographic area and in accordance with any requirement of any
Governmental Authority. In the case of any fire, accident or other casualty
causing loss or damage to any properties of the Company used in generating cash
flow or required by Applicable Law, all proceeds of such policies shall be used
promptly to repair or replace any such damaged properties, and otherwise shall
be used as directed by the Holder to pay any Principal then payable under the
Debenture.
(x)
Operation and Maintenance of Property. Manage and operate its business or
cause its business to be managed and operated (A) in accordance with prudent
industry practice in all material respects and in compliance with the terms and
provisions of all material permits and licenses, and (B) in compliance with all
Applicable Laws of the jurisdiction in which such businesses are carried on, and
all Applicable Laws of every other Governmental Authority from time to time
constituted to regulate the ownership, management and operation of such
businesses.
(xi)
Status of Accounts and Collateral. With respect to the Collateral,
report immediately to the Holder any matters adversely affecting the value,
enforceability or collectability of any of the Collateral.
(xii)
Accounts Receivable. Collect accounts receivable in the ordinary
course of business in a commercially reasonable manner.
(xiii)
Cure Defects. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Security Documents or any of the other
agreements, instruments or documents contemplated thereby or executed pursuant
thereto or any defects in the validity or enforceability of any of the Security
Documents and, at its expense, execute and deliver or cause to be executed and
delivered all such agreements, instruments and other documents as the Holder may
consider necessary or desirable for the foregoing purposes.
(xiv)
Additional Material Subsidiaries/Security. If, at any time on or after
the date hereof, the Company proposes to create or acquire an additional
Subsidiary or in some other fashion to become the holder of any Equity
Securities of a new Subsidiary, the Company will notify the Holder of such event
at least fifteen (15) Business Days prior to such event and:
(A) prior to or concurrently with the creation or
acquisition of such Subsidiary, the Company will, and will cause any relevant
Subsidiary, to execute and deliver to the Holder a securities pledge agreement,
in form and substance satisfactory to the Holder, acting reasonably, granting a
security interest in 100% of the Equity Securities of such new Subsidiary; and
(B) prior to or concurrently with the creation or
acquisition of such Subsidiary, to the extent not prohibited or restricted by
Applicable Law, the Company will cause such new Subsidiary to immediately
execute and deliver to the Holder a guarantee and security of the nature
contemplated by the Security Agreement, all in form and substance satisfactory
to the Holder, acting reasonably, and accompanied by customary legal opinions of
counsel to the Company or such Subsidiary.
In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant to
this Section 5(a)(xiv), the Company will, or will cause the relevant Subsidiary
to, deliver at its expense to the Holder such corporate or other resolutions,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Holder and consistent with the relevant forms and
types thereof delivered on the Closing Date pursuant to the Purchase Agreement
or as shall be otherwise reasonably acceptable to the Holder and to effect such
filings and registrations with the applicable Governmental Authorities as may be
requested by the Holder to preserve and perfect the Encumbrances created by such
mortgages, pledges, and other relevant agreements. Each guarantee, pledge
agreement, mortgage, security agreement and other document delivered pursuant to this Section 5(a)(xiv) shall be deemed to be a
Security Document from and after the date of execution thereof.
(xv)
Material Permits. Maintain all material permits and licenses as may
be necessary to properly conduct their respective businesses, the failure of
which to maintain could reasonably be expected to have a Material Adverse
Effect.
(xvi)
Expropriation. Advise the Holder of its receipt of any notice of
expropriation affecting any Owned Real Property where the expropriation is
likely to be successful and if successful would result in expropriation proceeds
exceeding Five Hundred Thousand U.S. Dollars (US$500,000).
(xvii)
Damage or Destruction. Advise the Holder in writing of any damage to or
destruction of any assets of the Company in respect of which the cost of
replacement or repair, individually or in the aggregate, would exceed Five
Hundred Thousand U.S. Dollars (US$500,000).
(xviii)
Leases. Duly observe and comply with all of its obligations under
any Lease to which it is a party which if not complied with would cause a
material default thereunder and shall forthwith advise the Holder in writing of
its receipt of any notices from the lessor alleging any material default by it
under a Lease.
(xix)
Payment of Taxes. Pay, or cause to be paid, when due, all Taxes,
property taxes, business taxes, social security premiums, assessments and
governmental charges or levies imposed upon it or upon its income, sales,
capital or profit or any property belonging to it unless any such Tax, social
security premiums, assessment, charge or levy is contested diligently and in
good faith by appropriate proceedings and in respect of which appropriate
reserves have been maintained in accordance with IFRS.
(xx)
Withholding Taxes. Withhold from each payment made to any of its
past or present employees, officers or directors, and to any non-resident of the
country in which it is resident, the amount of all Taxes and other deductions
required to be withheld therefrom and pay the same to the property Governmental
Authorities within the time required under any Applicable Laws.
(xxi)
Collection of Taxes. Collect from all Persons the amount of all
Taxes required to be collected from them and remit the same to the Governmental
Authorities within the time required under any Applicable Laws.
(xxii)
Registration of Security. From time to time, register or cause to be
registered, and cooperate in the registration of, the Security, and any public
notices or filings in respect thereof, on a timely basis and do, observe and
perform all of its obligations and all matters and things that may be necessary
or reasonably required for the purposes of creating and maintaining the
Encumbrances intended to result from the Security as valid, effective and
perfected first priority Encumbrances (subject only to Permitted Encumbrances)
at all times and shall comply with all requirements of Section 5(b)(xiv).
(xxiii) Benefit Plans.
(A)
Cause to be filed or distributed in a timely manner all reports and
disclosures relating to any Benefit Plan that are required by the plan or any Applicable Laws to be filed or distributed.
(B)
Perform all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with each
Benefit Plan and the funding media therefor; make all contributions and pay all
premiums required to be made or paid in accordance with the terms of each
Benefit Plan and all Applicable Laws; withhold, by way of authorized payroll
deductions or otherwise collect and pay into each Benefit Plan all employee
contributions required to be withheld or collected by the Company in accordance
with the terms of such plan and all Applicable Laws.
(b)
Negative Covenants. So long as any Principal Amount of the Debenture
remains outstanding, the Company shall not:
(i) Debt. Create, incur or suffer to
exist, any Debt other than Permitted Debt.
(ii)
Encumbrances. Create, incur, assume or suffer to exist, any
Encumbrance on any of its assets, other than Permitted Encumbrances.
(iii)
Fundamental Changes. Merge into or amalgamate or consolidate with
any other Person, or permit any other Person to merge into or amalgamate or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or any of the Equity Securities of any Subsidiary (in each case,
whether now owned or hereafter acquired), or liquidate, dissolve or be wound up.
(iv) Carry on Business.
(A)
Engage in any business which is different from the business conducted on
the Closing Date and businesses reasonably related thereto.
(B)
After the Closing Date, carry on business otherwise than through the
Company.
(v)
Transfer of Assets. Neither the Company nor any Subsidiary shall
sell, transfer, lease, part with possession or otherwise dispose of any assets,
whether by way of sale, lease, assignment, sale-leaseback or otherwise other
than (A) obsolete assets, equipment and material, (B) in the ordinary course of
business, (C) assets up to an aggregate amount not to exceed One Hundred
Thousand U.S. Dollars (US$100,000); (exclusive of the shares referred to in the
next clause) or (D) common shares of Acadian Mining Corporation owned on the
date hereof.
(vi)
Transactions with Affiliates. Transfer, sell or otherwise dispose of any
assets to, or purchase, lease or otherwise acquire any assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except (A) in the
ordinary course of business at prices and on terms and conditions not less
favourable to the Company than could be obtained on an arms-length basis from
unrelated third parties, (B) transactions between or among the Company and the
Parent not involving any other Affiliate, (C) any Restricted Payment permitted
by Section 5(b)(ix), and (D) as otherwise expressly permitted pursuant to this
Agreement and the Security Documents. Except as otherwise expressly permitted
pursuant to the terms of this Agreement and the other Security Documents, the
Company will not enter into any transaction or series of transactions with Affiliates which involve an
outflow of money or other property from the Company to an Affiliate, including
repayment of Debt, or payment of management fees, affiliation fees,
administration fees, compensation, salaries, asset purchase payments or any
other type of fees or payments similar in nature, other than on terms and
conditions substantially as favourable to the Company as would be obtainable by
the Company in a reasonably comparable arms-length transaction with a Person
other than an Affiliate. The foregoing restrictions shall not apply to: (A) the
payment of reasonable and customary fees to directors of the Company who are not
employees of the Company, (B) any other transaction with any employee, officer
or director of the Company pursuant to employee profit sharing and/or benefit
plans and compensation and non-competition arrangements in amounts customary for
corporations similarly situated to the Company and entered into in the ordinary
course of business and approved by the board of directors of the Company, or (C)
any reimbursement of reasonable out-of-pocket costs incurred by an Affiliate of
the Company on behalf of or for the account of the Company.
(vii)
Restrictive Agreements. Other than under the terms of Senior
Construction Financing, directly or indirectly enter into, incur or permit to
exist, any agreement or other arrangement that prohibits, restricts or imposes
any condition upon (A) the ability of the Company to create, incur or permit to
exist any Encumbrance upon any of its assets, (B) the ability of the Company to
pay dividends or other distributions with respect to any Equity Securities or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Parent or to provide a guarantee of any Debt of the Parent, (C)
the ability of the Company to make any loan or advance to the Parent, or (D) the
ability of the Company to sell, lease or transfer any of its property or assets;
provided that the foregoing shall not apply to restrictions or conditions; (1)
imposed by Applicable Law; (2) existing on the date hereof identified on
Schedule 4.2(y) to the Purchase Agreement (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition); (3) imposed by any agreement relating to
Permitted Debt permitted by this Debenture if such restrictions or conditions
apply only to the property or assets securing such Debt; and (4) customarily
provided for in leases and other ordinary course contracts restricting the
assignment thereof.
(viii)
Share Capital. Issue any Equity Securities, except to the Parent.
(ix) Restricted Payments. Declare,
make or pay or agree to declare, make or pay, directly or indirectly, any
Restricted Payment, except (A) Restricted Payments by the Company to the Parent,
(B) regularly scheduled payments in respect of Permitted Debt hereunder, and (C)
Restricted Payments by the Company pursuant to and in accordance with Benefit
Plans for the directors or officers of the Company, provided that the aggregate
amount of cash payments made by the Company and the Parent in any Financial Year
pursuant to all such Benefit Plans shall not exceed reasonable commercial
amounts paid in the normal course of business and approved by the board of
directors of the Company.
(x)
Investments. Purchase, hold or acquire (including pursuant to any
amalgamation with any Person that was not a wholly-owned Subsidiary of the
Company prior to such amalgamation), any Equity Securities, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or
advances to, guarantee any obligations of, or make or permit to exist any
investment or any other interest in, any other Person, or purchase or otherwise
acquire (in one transaction or a series of transactions) any assets of any other
Person, except:
(A)
inter-company loans or advances between the Company and the Parent;
(B) Permitted Debt; and
(C) Permitted Investments.
(xi)
Acquisitions. Make any Acquisition, other than a Permitted
Acquisition, provided in the case of a Permitted Acquisition no Event of Default
has occurred and is continuing or would occur as a result of such Permitted
Acquisition.
(xii) Subsidiaries. Create or
acquire any Subsidiary unless the Company and the Subsidiary shall have complied
with Section 5(a)(xiv).
(xiii) Sale-Leasebacks. Enter into
sale-leaseback transactions.
(xiv)
Capital Expenditures. Make or commit to make any Capital
Expenditures during the period from the Closing Date to the Maturity Date other
than as provided for in the NorthMet Project Budget.
(xv)
Change of Name; Business Outside Certain Jurisdictions. (A) Change its
name, registered office, chief executive office or jurisdiction of
incorporation, or (B) have any place of business or keep or store any material
tangible property outside of those jurisdictions (or registration districts
within such jurisdictions) set forth in Schedule 5.1(m) to the Purchase
Agreement, (1) except upon thirty (30) days prior written notice thereof to the
Holder; and (2) unless the Company has done or caused to be done all such acts
and things and executed and delivered or caused to be executed and delivered all
such deeds, transfers, assignments and instruments as the Holder may reasonably
require for perfecting or maintaining the perfection of the Encumbrances of the
Security and the priority thereof in the Collateral in favour of the Holder.
(xvi) Financial Year. Change its
Financial Year.
(xvii)
Amendments. Allow (A) any amendments to its constating documents or
by-laws; or (B) any amendments to, or grant any waivers in respect of any
Material Agreement or any guarantee or security in respect thereof.
(xviii)
Change of Auditors. Change its auditors other than to a nationally
recognized accounting firm approved by the Holder acting reasonably.
(xix)
Speculative Transactions. Engage in any interest rate, currency
rate, commodity hedge or similar agreement, understanding or obligation, except
in the normal course of business and not for speculative purposes.
(c)
Indemnification. The Company will pay, and will indemnify and same
harmless the Holder against, all costs and expenses (including legal fees and
expenses) incurred with respect to the exercising of any of the rights, remedies
and powers of the Holder under this Debenture, or the taking of any other proceedings
taken for the purpose of enforcing the remedies provided for under law by reason
of non-payment of the obligations hereunder.
Section 6.
Defaults and Remedies.
(a)
Events of Default. An Event of Default is: (i) a default in
payment of any principal amount due hereunder; (ii) a default in payment of any
interest or other amount due hereunder which default continues for more than
five (5) Business Days after the due date thereof; (iii) a default in the timely
issuance of Underlying Shares upon and in accordance with the terms of the
Warrants, which default continues for five (5) Business Days after the Parent
has received written notice informing the Parent that it has failed to issue
shares or deliver share certificates within the fifth day following the exercise
date; (iv) failure by the Company or the Parent for fifteen (15) days after
written notice has been received by the Company or the Parent, as applicable, to
comply with any material provision of any of the Agreements (including the
failure of the Company to make a Change in Control Offer in accordance with
Section 3(a)), the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (v) a material breach by the Company or the Parent of its
covenants, representations or warranties in any of the Agreements, the Escrow
Agreement, the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (vi) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or the Parent for in excess of
One Million U.S. Dollars (US$1,000,000) or for money borrowed the repayment of
which is guaranteed by the Company or the Parent for in excess of One Million
U.S. Dollars (US$1,000,000), whether such indebtedness or guarantee now exists
or shall be created hereafter; (vii) if the Company or the Parent is subject to
any Bankruptcy Event; (viii) if a judgment or order is obtained against the
Company or the Parent which has or would have a Material Adverse Effect, and, if
such judgment or order is for the payment of money, the judgment or order has
not been dismissed, stayed or satisfied within twenty (20) days of the date that
such judgment or order is issued; (ix) if any material permit or license or
Material Agreement of the Company or the Parent expires or is withdrawn,
cancelled, terminated, or modified (and such expiry, withdrawal, cancellation,
termination or modification would have a Material Adverse Effect) and is not
reinstated or replaced within thirty (30) days thereafter without material
impairment of the property or business of the Company or the Parent; (x) a final
judgment, writ of execution, garnishment or attachment or similar process is
issued or levied against any property of the Company or the Parent having a fair
market value in excess of One Million U.S. Dollars (US$1,000,000) and
such judgment, writ, execution, garnishment, attachment or similar process is
not released, bonded, satisfied, discharged, vacated or stayed within forty-five
(45) days after its entry, commencement or levy; (x) solely with respect to
Principal Amounts held by Glencore AG, a material breach by the Parent of its
covenants, representations or warranties in the Marketing Agreement, Copper
Offtake Agreement or Nickel Offtake Agreement; or (xi) the termination of the
Standby Purchase Agreement prior to the completion of the Rights Offering.
(b)
Remedies. If an Event of Default occurs and is continuing with
respect to the Debenture, the Holder may declare all of the then outstanding
Principal Amount of this Debenture and all other debentures held by the Holder,
to be due and payable immediately, and the Holder may commence such legal action
or proceedings as it, in its sole discretion, deems necessary, all without any
additional notice, presentation, demand, protest, notice of dishonor, entering
into of possession of any of the assets of the Company or any other action or
notice, all of which the Company hereby expressly waives, except that in the
case of an Event of Default arising from events described in clauses (vi)
through (x) of Section 6(a), inclusive, this Debenture shall become due and payable without further action
or notice. In the event of such acceleration, the amount due and owing to the
Holder shall be 120% of the outstanding Principal Amount of the Debenture held
by the Holder. In either case the Company shall pay interest on such amount in
cash at the Default Rate (as defined below) to the Holder if such amount is not
paid within seven (7) days of Holders request. The remedies under this
Debenture shall be cumulative.
(c)
Notice of Default. The Company covenants to provide written notice
to the Holder within two (2) Business Days upon the occurrence of any Event of
Default.
(d)
Default Interest. Notwithstanding anything contained herein, this
Debenture shall bear interest on the due and unpaid outstanding Principal Amount
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 6(a) at the rate (the Default Rate) equal to the
lower of 18% per annum or the highest rate permitted by law.
Section 7.
General.
(a)
Technical Services Committee. The Holder of a majority of the
Principal Amount outstanding under this Debenture shall be entitled to select
and appoint one (1) member (the Appointee) to the Technical Services
Committee of the Company and shall be entitled to select and appoint any
successor to or replacement of such Appointee, subject, in each case, to the
Companys consent which shall not be unreasonably withheld.
(b)
Payment of Expenses. The Company agrees to pay all reasonable
charges and expenses, including attorneys fees and expenses, which may be
incurred by the Holder in successfully enforcing this Debenture and/or
collecting any amount due under this Debenture.
(c)
Interest Act (Canada) Disclosure. For the purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of
interest to which the rate of interest applicable to any interest period,
computed as provided under Section 2 above, is equivalent is the rate of
interest for such interest period multiplied by a fraction of which (i) the
numerator is the actual number of days in the 12-month period commencing on the
date of the commencement of such interest period and ending on the day
immediately preceding the anniversary of such date of commencement, and (ii) the
denominator is three hundred sixty-five (365).
(d)
Savings Clause. In case any provision of this Debenture is held by
a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby. In no event shall the amount of
interest paid hereunder exceed the maximum rate of interest on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable maximum rate, the excess collected shall be applied to
reduce the principal debt. If the interest actually collected hereunder is still
in excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.
(e)
Amendment. Neither this Debenture nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.
(f)
Assignment, Etc. The Holder may assign or transfer this Debenture at any
time and from time to time in whole or in part to any transferee, without the
consent of the Company, provided that any partial assignment of this Debenture
shall be for a minimum principal amount of not less than Five Million U.S.
Dollars (US$5,000,000). The Holder shall notify the Company of any such
assignment or transfer promptly. This Debenture shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.
(g)
No Waiver. Neither the extension of time for making any payment
which is due and payable under this Debenture at any time or times, nor the
failure on the part of the Holder to exercise, and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Holder of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy or power hereby granted to the Holder or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Holder from time to time.
(h)
Governing Law; Jurisdiction.
(i)
Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
ANY CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE
LAWS OF ANOTHER JURISDICTION.
(ii)
Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Debenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum.
The Company agrees that the service of process upon it mailed by
certified or registered mail (and service so made shall be deemed complete three
(3) days after the same has been posted as aforesaid) or by personal service
shall be deemed in every respect effective service of process upon it in any
such suit or proceeding. Nothing herein shall affect Holders right to serve
process in any other manner permitted by law. The Company agrees that a final
non-appealable judgment in any such suit or proceeding shall be conclusive and
may be enforced in other jurisdictions by suit on such judgment or in any other
lawful manner.
(iii)
NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES
ANY AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE.
(i)
Replacement Debenture. This Debenture may be exchanged by Holder at
any time and from time to time for a Debenture or debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge will be
made for such registration or exchange. In the event that Holder notifies the
Company that this Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Principal Amount, if different than that shown on the
original Debenture), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture.
(f)
Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due to the Holder in any currency
(the Original Currency) into another currency (the Other
Currency), the parties agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Holder could purchase the
Original Currency with the Other Currency on the Business Day preceding the day
on which final judgment is given or, if permitted by Applicable Law, on the day
on which the judgment is paid or satisfied. The obligations of the Company in
respect of any sum due in the Original Currency from it to the Holder under any
of the Security Documents shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Holder of any sum adjudged to be so due in the Other Currency,
the Holder may, in accordance with normal banking procedures, purchase the
Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Lender in the
Original Currency, the Company agrees, as a separate obligation and
notwithstanding the judgment, to indemnify the Holder, against any loss, and, if
the amount of the Original Currency so purchased exceeds the sum originally due
to the Holder in the Original Currency, the Holder shall remit such excess to
the Company.
(k)
Further Assurances. Each party shall from time to time promptly execute
and deliver all further documents and take all further action necessary to give
effect to the provisions and intent of this Debenture.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed on the day and in the year first above written.
POLY MET MINING, INC.
By:
______________________________________________
Name:
Title:
Attest:
Sign:
_________________________________________________
Print Name:
23
EXHIBIT A
DEBENTURE ADJUSTMENT SCHEDULE
Debenture Adjustment Schedule for the Debenture issued by
POLY MET MINING, INC. to GLENCORE AG on or about [July 1,] 2015 in the original
principal amount of Eight Million U.S. Dollars (US$8,000,000), to be completed
and exchanged by fax or email following each principal repayment of such
Debenture.
Date |
Decreases
Principal
amount
repaid
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Remaining
principal
balance of
Debenture |
Initialed by
Company
CEO/CFO |
Initialed by
authorized
representative
of Holder |
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A-1
EXHIBIT B
COMPLIANCE CERTIFICATE
[Date]
TO: (the "Holder")
The undersigned (the "Corporation") refers to the Floating Rate Secured
Debenture issued on [July 1], 2015 (the "Debenture", the terms defined therein
being used herein as therein defined). This Compliance Certificate is delivered
pursuant to Section 5(a)(i) of the Debenture for the Financial Quarter/Year
ending on [] (the "Period").
We, __________________________ and _________________________,
the respective Chief Executive Officer and Chief Financial Officer of the
Corporation, in such capacity and not personally, hereby certify that:
1. |
We are the duly appointed Chief Executive Officer and
Chief Financial Officer of the Corporation and as such we are providing
this certificate for and on behalf of the Corporation pursuant to the
Debenture. |
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2. |
We are familiar with and have examined the provisions of
the Debenture. |
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3. |
The financial statements most recently delivered pursuant
to [Section 5(a)(i)(B) or Section 5(a)(i)(C)] of the Debenture
present fairly the financial position, results of operations and changes
in financial position of the persons specified therein for the Period and
as at the last day of such Period, as the case may be, in accordance with
IFRS. |
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4. |
The representations and warranties contained in Section
5.1 of the Purchase Agreement are true and correct as though made on the
date hereof, except for and any such representation and warranty which is
stated to be made as of a certain date. |
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5. |
As of the date hereof, the Corporation is not in breach
of any of the covenants contained in Section 5 of the Debenture, and no
Event of Default has occurred and is continuing as at the date
hereof. |
Dated this _______________day of
____________________________________.
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(Name please print) |
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Chief Executive Officer |
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(Name please print) |
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Chief Financial Officer |
B-1
-19-
Exhibit D
Tranche I Debenture
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE
DEBENTURE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT, FOLLOWING ANY
REDEMPTION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS DEBENTURE MUST NOT TRADE THIS SECURITY BEFORE [_____],
2015.
FLOATING RATE SECURED DEBENTURE, DUE NO LATER THAN MARCH
31, 2016
OF
POLY MET MINING,
INC.
Debenture No.: D-9 |
Original Principal Amount: US$6,000,000
|
Issuance Date: [October 1], 2015 |
New York, New York |
THIS
DEBENTURE is a duly authorized issue of POLY MET MINING, INC., a
corporation incorporated pursuant to the laws of Minnesota (the
Company), designated as the Companys Floating Rate Secured Debenture,
due on the day which is the earlier of (i) the availability of at least One
Hundred Million U.S. Dollars (US$100,000,0000) of the Senior Construction
Finance (as defined below), or (ii) March 31, 2016 (the Maturity Date)
in an aggregate original principal amount of Six Million U.S. Dollars
(US$6,000,000]) (the Debenture).
FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of GLENCORE
AG or its registered assigns or successors-in-interest (the Holder)
the principal sum of Six Million U.S. Dollars (US$6,000,000), together with all
accrued but unpaid interest thereon on the Maturity Date, to the extent such
principal amount and interest has not been repaid in accordance with the terms
hereof. Interest on the unpaid principal balance hereof shall accrue from the
date of original issuance hereof (the Issuance Date) at the Floating
Rate (as defined below) until the principal balance becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by redemption or
repayment (Early Repayment Date) in accordance with the terms hereof or
of the other Agreements. The Floating Rate shall be determined on each Floating
Rate Reset Date, and such Floating Rate shall apply until the next Floating Rate
Reset Date. Interest on this Debenture shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with Section 2
hereof. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees
and then any remaining amount to principal.
All
payments of principal and interest on this Debenture shall be made in lawful
money of the United States of America by wire transfer of immediately available
funds to such account as the Holder may from time to time designate by written notice
in accordance with the provisions of this Debenture. This Debenture may not be
prepaid or redeemed in whole or in part except as described in Section 3 or as
otherwise provided herein. Whenever any amount expressed to be due by the terms
of this Debenture is due on any day (other than the Maturity Date) which is not
a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day. If the Maturity Date falls on a day that
is not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment will accrue for
the period from and after the Maturity Date.
Capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Purchase Agreement dated October 31, 2008, as
amended, among the Company, the Holder and PolyMet Mining Corp. (the
Parent), pursuant to which the Debenture was originally issued (the
Purchase Agreement). For purposes hereof the following terms shall have
the meanings ascribed to them below:
Acquisition means any transaction, or any series of related
transactions, consummated after the date hereof, by which the Company directly
or indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business, (b)
acquires control of securities of a Person engaged in a business representing
more than 50% of the ordinary voting power for the election of directors or
other governing position if the business affairs of such Person are managed by a
board of directors or other governing body, or (c) acquires control of more than
50% of the ownership interest in any Person engaged in any business that is not
managed by a board of directors or other governing body.
Affiliate means, with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the specified Person.
Appointee has the meaning given to it in Section 7(a).
Bankruptcy Event means any of the
following events: (a) the Company or the Parent commences a case or other
proceeding or proposal under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, winding-up, insolvency or
liquidation or similar law of any jurisdiction (including the Bankruptcy
Act (Canada) or the Companies Creditors Arrangement Act (Canada))
relating to the Company or the Parent; (b) there is commenced against the
Company or the Parent any such case or proceeding or proposal that is not
dismissed within thirty (30) days after commencement; (c) the Company or the
Parent is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered; (d) the Company or the
Parent suffers any appointment of any trustee, receiver, receiver and manager,
interim receiver, custodian or the like for it or any substantial part of its
property that is not discharged or stayed within thirty (30) days; (e) the
Company or the Parent makes a general assignment for the benefit of creditors;
(f) the Company or the Parent fails to pay, or states that it is unable to pay
or is unable to pay, its debts generally as they become due; (g) the Company or
the Parent calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (h) the Company or the
Parent, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.
Business Day means any day other
than a Saturday, Sunday or a day on which commercial banks in the City of New
York, New York, Toronto, Ontario or Zug, Switzerland are authorized or required
by law or executive order to remain closed.
Canadian Securities Laws means all
applicable securities laws in each of the provinces and territories of Canada
and the respective regulations made thereunder, together with applicable
published fee schedules, prescribed forms, rules, multilateral or national
instruments, orders, rulings and other regulatory instruments issued or adopted
by the Securities Commissions.
Capital Assets means, with respect
to any Person, any tangible fixed or capital assets owned or leased (in the case
of a Capital Lease) by such Person.
Capital Expenditures means, in
respect of any Person and any period, all expenditures made by such Person
during such period for the purchase, lease or acquisition of Capital Assets
(including all amounts paid or accrued during such period on Capital Leases) and
other Debt incurred or assumed to acquire or construct Capital Assets (other
than current Capital Assets) required to be capitalized for financial reporting
purposes in accordance with IFRS.
Capitalized Lease Obligation of any
Person means any obligation of such Person to pay rent or other amounts under a
Capital Lease.
Capital Leases means any and all
lease obligations of a lessee that are capitalized for financial reporting
purposes in accordance with IFRS.
Change in Control Offer has the meaning given to it in Section
3(a).
Change in Control Transaction will, and
will be deemed to, exist if (a) there occurs any consolidation, merger, plan of
arrangement or other business combination of the Company or the Parent with or
into any other corporation or other entity or person (whether or not the Company
or the Parent is the surviving corporation) or any other corporate
reorganization or transaction or series of related transactions in which in any
of such events the voting shareholders of the Company or the Parent prior to
such event cease to own 50% or more of the voting power, or corresponding voting
equity interests, of the surviving corporation after such event (including any
going private transaction under Rule 13e-3 promulgated pursuant to the
Exchange Act, tender offer by the Company or the Parent under Rule 13e-4
promulgated pursuant to the Exchange Act for 20% or more of the Companys common
shares or the Parents Common Shares, or take-over bid by the Company or the
Parent under Canadian Securities Laws for 20% or more of the Companys common
shares or the Parents Common Shares), (b) any person (as defined in Section
13(d) of the Exchange Act), together with its affiliates and associates (as such
terms are defined in Rule 405 under the Act), beneficially owns or is deemed to
beneficially own (as described in Rule 13d-3 under the Exchange Act without
regard to the 60-day exercise period) in excess of 35% of the Companys or the
Parents voting power other than such persons who beneficially owned or are
deemed to beneficially own such voting power as of the date hereof, (c) there is
a replacement within a consecutive period of 24 months of more than one-half of
the members of the Companys or the Parents Board of Directors which is not
approved by those individuals who are members of the Companys or the Parents
Board of Directors on the date thereof who were either directors at the
beginning of such period or where election or nomination was previously
approved, (d) in one or a series of related transactions, there is a sale or
transfer of all or substantially all of the assets of the Company or the Parent, determined on a consolidated basis, or
(e) the Company or the Parent enters into any agreement providing for an event,
circumstance or occurrence set forth in (a), (b), (c) or (d) above.
Claim means, with respect to any
Person, any actual or prospective action, suit, order, charge, penalty, claim,
litigation, investigation or proceeding of any kind or nature whatsoever against
or otherwise involving such Person or the property or assets of such Person.
Common Shares means the Parents common shares, without par
value.
Company means Poly Met Mining, Inc., a
corporation incorporated pursuant to the laws of Minnesota.
Compliance Certificate means a
certificate of the Company signed on its behalf by its chief executive officer
and chief financial officer in the form attached hereto as Exhibit B.
"Confirmation of Secured Obligations
Agreement" means the confirmation of secured obligations agreement dated
[October 1], 2015 between the Company, the Parent and the Holder.
Control means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of a Person, whether through the ability to exercise voting power,
by contract or otherwise. Controlling and Controlled have corresponding
meanings.
Debenture means this Debenture,
designated as the Companys Floating Rate Secured Debenture, due on the day
which is the earlier of (i) the availability of at least One Hundred Million
U.S. Dollars (US$100,000,000 of the Senior Construction Financing, or (ii) March
31, 2016, in an aggregate original principal amount of Six Million U.S. Dollars
(US$6,000,000).
Debenture Adjustment Schedule has the meaning given to it in
Section 2(c).
Debt of any Person means, at any time,
(without duplication): (a) all obligations of such Person for borrowed money
including borrowings of commodities, bankers acceptances, letters of credit or
letters of guarantee; (b) all obligations of such Person for the deferred
purchase price of property or services represented by a note or other evidence
of indebtedness (other than trade payables and other current liabilities
incurred in the ordinary course of business); (c) all obligations of such Person
created or arising under any conditional sale or other title retention agreement
with respect to property acquired by such Person (even though the rights and
remedies of the seller or lender under such agreement in the event of default
are limited to repossession or sale of such property); (d) all indebtedness of
another Person secured by an Encumbrance on any properties or assets of such
Person (other than Encumbrances being contested in good faith on a timely basis
by appropriate proceedings); (e) all Capitalized Lease Obligations of such
Person; (f) the aggregate amount at which any shares in the capital of such
Person which are redeemable or retractable at the option of the holder may be
retracted or redeemed for cash or debt provided all conditions precedent for
such retraction or redemption have been satisfied; (g) all other obligations of
such Person upon which interest charges are customarily paid by such Person; (h)
the net amount of all obligations of such Person (determined on a
marked-to-market basis) under swap agreements; and (i) all debt guaranteed by
such Person.
Disposition Gross-Up Payment has the meaning given to it in
Section 2(b)(ii).
Disposition Taxes has the meaning given to it in Section
2(b)(ii).
Early Repayment Date means any
Business Day prior to the Maturity Date that PolyMet elects to repay the
outstanding principal and unpaid and accrued interest on the Debentures provided
that PolyMet can demonstrate that such early repayment is prudent and PolyMet
has given ten (10) business days notice to Glencore of its intent to repay the
Debentures.
Equity Securities means, with respect to
any Person, any and all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting and non-voting) of, such
Persons capital, whether outstanding on the date hereof or issued after the
date hereof, including any interest in a partnership, limited partnership or
other similar Person and any beneficial interest in a trust, and any and all
rights, warrants, options or other rights exchangeable for or convertible into
any of the foregoing.
Event of Default has the meaning given to it in Section 6(a).
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Failure to Agree has the meaning
provided for in Section 9 of the Purchase Agreement.
Financial Quarter means, in
respect of the Company, a period of three consecutive months in each Financial
Year ending on April 30, July 31, October 31, and January 31, as the case may
be, of such year.
Financial Year means, in respect of the
Company, its financial year commencing on February 1 of each calendar year and
ending on January 31 of each following calendar year.
Floating Rate means LIBOR plus
8.0% per annum; provided, however, that the Floating Rate for the period from
the Issuance Date to the first Floating Rate Reset Date will be _____%; and
provided further, that the Floating Rate shall be reset on each Floating Rate
Reset Date..
Floating Rate Reset Date means
March 31, June 30, September 30, and December 31 of each year, commencing on
March 31, 2015, provided that if any such day is not a Business Day, then such
Floating Rate Reset Date means the immediately preceding day which is a Business
Day.
Gross-Up Payment has the meaning given to it in Section 2(b).
Holder means Glencore AG or its registered assigns or
successors-in-interest.
IFRS means International Financial Reporting Standards.
Impermissible Qualification means,
relative to (a) the financial statements or notes thereto of any Person, or (b)
the opinion or report of any independent auditors as to any financial statement
or notes thereto, any qualification or exception to such financial statements,
notes, opinion or report, as the case may be, which (i) is of a going concern
or similar nature; or (ii) relates to any limited scope of examination of material
matters relevant to such financial statement, if such limitation results from
the refusal or failure of the Company to grant access to necessary information
therefor.
Interest Amount has the meaning given to it in Section 2(a).
Issuance Date means [October 1,] 2015, the date of original
issuance of this Debenture.
ITA means the Income Tax Act (Canada).
LIBOR means the 12 month LIBOR rate for U.S. dollars published
in the print edition of The Wall Street Journal to be set as at the
second Business Day prior to the Issuance Date, provided that, if such 12 month
LIBOR rate is not so published on such date, LIBOR means the 12 month LIBOR rate
most recently published in the print edition of The Wall Street Journal prior to
the day which is the second Business Day prior to the Issuance Date.
Maturity Date has the meaning given to it on the cover page.
Original Currency has the meaning given to it in Section 7(j).
Other Currency has the meaning given to it in Section
7(j).
Parent means PolyMet Mining Corp., a
corporation incorporated pursuant to the laws of British Columbia.
Payment has the meaning given to it in Section 2(b)(i).
Payment Tax has the meaning given to it in Section 2(b)(i).
Permitted Acquisitions means any
Acquisition by the Company consented prior thereto in writing by the Holder.
Permitted Debt means,
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(i) |
Debt hereunder or under any Security Document; |
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(ii) |
Debt existing on the date hereof and set forth in Note 5
to the condensed interim consolidated financial statements of the Parent
for the interim period ended April 30, 2015; |
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(iii) |
trade accounts due and payable within sixty (60) days and
considered unsecured obligations incurred in the ordinary course of
business (but excluding Debt for borrowed money); and |
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(iv) |
any Senior Construction
Financing. |
Permitted Encumbrances shall have the
meaning set forth in Section 1.51 of the Purchase Agreement.
Principal Amount means the sum of
(a) the unpaid principal amount of this Debenture, (b) all accrued but unpaid
interest hereunder, and (c) any default payments owing under the Agreements but
not previously paid or added to the Principal Amount.
Purchase Agreement means the
purchase agreement dated October 31, 2008, as amended, among the Company, the
Holder and the Parent, pursuant to which the Debenture was originally issued.
Restricted Payment means, with
respect to any Person, any payment by such Person (a) of any dividends or other
distribution on any of its Equity Securities, (b) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its Equity
Securities, (c) of any principal of or interest or premium on or of any amount
in respect of a sinking or analogous fund or defeasance fund for any Debt of
such Person ranking in right of payment subordinate to any liability of such
Person under the Security Documents, (d) of any principal of or interest or
premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, or (e) of any
management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or
to any director or officer thereof other than as compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course.
Securities Act means the Securities Act of 1933, as amended.
Securities Commissions means,
collectively, the securities commissions or other securities regulatory
authorities in each of the provinces and territories of Canada.
Senior Construction Financing
means Debt or Equity in respect of construction financing for the NorthMet
Project which is in aggregate in an amount equal to or greater than Five Hundred
Million U.S. Dollars (US$500,000,000) such that the construction of the NorthMet
Project may reasonably be expected to be completed.
Subsidiary means any non-natural
Person of which the Company owns or controls, directly or indirectly, not less
than 50% of the total combined voting power represented by all classes of Equity
Securities issued by such Person.
The
following terms and conditions shall apply to this Debenture:
Section 1.
Interpretation.
In this Debenture:
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(a) |
a word importing the masculine, feminine or neuter gender
also includes members of the other genders; |
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(b) |
a word defined in or importing the singular number has
the same meaning when used in the plural number, and vice versa; |
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(c) |
a word importing persons shall include partnerships and
corporations; |
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(d) |
the headings to each section are inserted for convenience
of reference only and do not form part of this Debenture; |
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(e) |
all dollar amounts shall be in dollars of the United
States of America unless otherwise specified; and |
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(f) |
including means including without
limitation. |
Section 2.
Payments of Principal and Interest.
(a)
Interest Only Payments. Subject to and in accordance with the terms
of this Section 2, on the earlier of the Maturity Date or the Early Repayment
Date, the Company shall pay to the Holder all interest accrued and unpaid at
that time on the entire outstanding Principal Amount of this Debenture (the
Interest Amount) together with repayment of the entire outstanding
Principal Amount of this Debenture in cash.
(b) Certain Additional Payments by the
Company.
(i)
Payments Under Debenture. Any payment or distribution by the
Company to the Holder hereunder, whether for principal, interest or otherwise,
shall not be subject to any deduction, withholding or offset for any reason
whatsoever except to the extent required by law, and the Company represents that
to its best knowledge no deduction, withholding or offset is so required for any
tax or any other reason. Notwithstanding any term or provision of this Debenture
to the contrary, if it shall be determined that any payment (other than a
payment dealt with under Section 2(b)(iii)) by the Company to or for the benefit
of the Holder pursuant to the terms of this Debenture, whether for principal,
interest or otherwise and whether paid or payable or distributed or
distributable, actual or deemed (a Payment) would be or is subject to
any deduction, withholding or offset due to any duty or tax (such duty or tax,
together with any interest and/or penalties related thereto, hereinafter
collectively referred to as the Payment Tax), then the Company shall,
in addition to all sums otherwise payable hereunder, pay to the Holder an
additional payment in cash (a Gross-Up Payment) in an amount such that
after all such Payment Taxes (whether by deduction, withholding, offset or
payment), including any interest or penalties with respect to such taxes or any
Payment Taxes (and any interest and penalties imposed with respect thereto)
imposed upon any Gross-Up Payment, Holder actually receives an amount of
Gross-Up Payment equal to the Payment Tax imposed upon the Payment (i.e., the
Holder receives a net amount equal to the Payment). The Company shall timely
remit such Payment Tax to the applicable governmental authority and shall
provide evidence of such payment to Holder within ten (10) days of making such
payment.
(ii)
Assignment of Debenture. Upon an assignment of this Debenture in
whole or in part, the Company shall, in addition to all sums otherwise payable
hereunder, pay to the Holder an additional payment in cash (a Disposition
Gross-Up Payment) which shall be sufficient to cover any taxes (including
any interest or penalties) under the ITA (Disposition Taxes) in respect
of such assignment and in respect of amounts payable under this Section
2(b)(ii). The Company shall timely remit any such Disposition Taxes to the
Receiver General of Canada on account of Holder and shall provide evidence of
such payment to Holder within ten (10) days of making such payment.
(iii)
Indemnification. The Company shall indemnify Holder, within fifteen
(15) days after written demand therefor, for the full amount of any Payment
Taxes or Disposition Taxes paid by Holder (including any taxes imposed or
asserted on or attributable to amounts payable under this Section 2(b)(iii)) and any expenses
or losses arising therefrom or with respect thereto whether or not such Payment
Taxes or Disposition Taxes were correctly or legally imposed or asserted by the
relevant governmental authority.
(iv) If the Holder receives a
refund of any Payment Taxes or Disposition Taxes (collectively Taxes)
as to which it has been indemnified by the Company pursuant to Section 2(b)(iii)
or with respect to which the Company has paid additional amounts pursuant to
Section 2(b)(ii), by reason that any such Taxes were incorrectly or illegally
imposed or asserted by the relevant governmental authority, the Holder shall pay
to the Company an amount equal to such refund (but only to the extent of
indemnity payments made, or additional amounts paid, by the Company under
Section 2(b)(ii) with respect to the Taxes giving rise to such refund), and
without interest (other than any net after-Tax interest paid to the Holder with
respect to such refund) and less any costs, fees, expenses, damages, losses,
taxes or other amounts incurred by the Holder in respect of such refund. This
provision shall not be construed to require the Holder to make available any
information relating to its taxes that it considers confidential to the Company,
to arrange its affairs in any particular manner or, except as provided in the
next sentence, to claim any available refund. The Holder will, at the request
and expense of the Company, contest the payment, and seek a refund, of any Taxes
that the Company considers to be incorrectly or illegally imposed or asserted,
provided that contesting the payment, or seeking a refund, of such Taxes shall
not relieve the Company from its obligations under its indemnity or to pay
additional Taxes under Section 2(b)(ii).
(c)
Adjustments to Principal Amount. The Principal Amount owing under
this Debenture shall be decreased, as of the date of redemption, upon the early
redemption of all or a portion of the Principal Amount by an amount equal to
such Principal Amount that has been so redeemed (an Adjustment Event).
The Holder shall not be required to physically surrender the Debenture to the
Company upon the occurrence of an Adjustment Event, unless the full outstanding
Principal Amount has been redeemed. The Holder and the Company shall maintain
records showing the outstanding Principal Amount at any given time and the dates
and effect of any Adjustment Events or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of the Note upon each such Adjustment Event. In addition, following
each Adjustment Event, the Company shall update the Debenture Adjustment
Schedule attached hereto as Exhibit A (the Debenture Adjustment
Schedule), initial such schedule and transmit it to the Holder by facsimile
or other electronic transmission, who shall counter-initial such schedule and
return it to the Company by facsimile or other electronic transmission.
Section 3.
Redemption.
(a)
Change in Control Transactions. Upon the Company becoming aware of
the occurrence of a Change of Control Transaction, the Company shall, within
five Business Days, give written notice of such Change of Control Transaction to
the Holder. Such notice shall contain and constitute an offer to redeem the
Debenture, in whole or in part at the election of the Holder, on a redemption
date specified in such offer that is not less than thirty (30) days and not more
than fifty (50) days after the date of such offer at a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed (the Change
in Control Offer). The offer to redeem the Debenture shall state that the
offer is made pursuant to this Section 3(a) and shall specify, in reasonable
detail, the nature and date of the Change of Control and provide a sample
calculation of the redemption price. The Holder shall have the right to accept
or decline the offer in whole or in part at the Holders option by providing
written notice to the Company within ten (10) Business Days of receipt of the Change
in Control Offer indicating the amount, if any, of the outstanding Principal
Amount to be redeemed.
(b)
Redemption on Failure to Agree. Within ten (10) Business Days of
any Failure to Agree under Section 9 of the Purchase Agreement, the Company
shall fully redeem the Debenture by paying to the Holder a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed.
(c)
Cancellation. After all of the Principal Amount has been paid in
full, this Debenture shall automatically be deemed canceled and the Holder shall
promptly surrender the Debenture to the Company at the Companys principal
executive offices.
(d)
Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, shall be in writing and
either (i) emailed or (ii) delivered personally, by confirmed facsimile, or by a
nationally recognized overnight courier service to the Company at the facsimile
telephone number or address of the principal place of business of the Company as
set forth in the Purchase Agreement. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
either (x) emailed or (y) delivered personally, by facsimile, or by a nationally
recognized overnight courier service addressed to the Holder at the facsimile
telephone number or address of the Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when emailed or delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
Section 4.
Security.
As security for the due and punctual payment of all of its
obligations to the Holder hereunder, the Company shall promptly execute and
deliver, together with any relevant power of attorney, registrations, filings
and other supporting documentation deemed necessary by the Purchaser or its
counsel to perfect the same or otherwise in respect thereof.
Section 5.
Covenants.
(a)
Affirmative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall:
(i) Reporting Requirements.
During the term of this Agreement, prepare (where applicable, in accordance with
IFRS) and deliver to the Holder, in a form satisfactory to the Holder:
(A) as soon as practicable and in any event within
fifteen (15) days of the end of each calendar month, the management prepared
financial statements of the Parent as at the end of such calendar month prepared
in a form satisfactory to the Purchaser and including a balance sheet, statement
of income and retained earnings and a statement of changes in financial
position, as at the end of such calendar month as at the end of and for such
calendar month and the then elapsed portion of
the Financial Year which includes such calendar month;
(B) as soon as practicable and in any event within
forty-five (45) days after the end of each Financial Quarter of the Parent, the
interim unaudited consolidated financial statements of the Parent as at the end
of such Financial Quarter prepared on a consolidated basis in accordance with
IFRS including a balance sheet, statement of income and retained earnings and a
statement of changes in financial position in each case as at the end of and for
such Financial Quarter and the then elapsed portion of the Financial Year which
includes such Financial Quarter, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or in the case of the
balance sheet, as at the end of) the previous Financial Year;
(C) as soon as practicable and in any event within
ninety (90) days after the end of each Financial Year of the Parent, the annual
audited consolidated financial statements of the Parent prepared in accordance
with IFRS including a balance sheet, statement of income and retained earnings
and a statement of changes in financial position for such Financial Year (which
financial statements shall be audited by an internationally recognized
accounting firm acceptable to the Holder), setting forth in each case in
comparative form the figures for the previous Financial Year; and
(D) concurrently with the delivery of the
financial statements contemplated in (B) and (C) above, a Compliance Certificate
in respect of such Financial Quarter or Financial Year, as applicable.
None of the financial statements or reports or opinions of
auditors with respect thereto referred to above shall contain any Impermissible
Qualifications.
(ii) Environmental.
(A)
At all times comply in all material respects with Environmental Laws
including environmental permits and approved plans with respect to closure
and/or rehabilitation;
(B) not to release any hazardous substances at, on
or from the Owned Real Properties, the Leased Real Properties or other assets of
the Company, nor to permit same, at any time in material violation of
Environmental Laws;
(C)
immediately notify the Holder of: (1) any release of any hazardous substances
at, on or from the Owned Real Properties, the Leased Real Properties or other
assets of the Company in material violation of any Environmental Laws; (2) any
Claim received by the Company of or relating to any material violation of any
Environmental Laws or material environmental liabilities; and (3) any facts or
circumstances which could reasonably be expected to give rise to a material
Claim, material remedial action or material breach of or in respect of any
Environmental Laws;
(D)
remove promptly any hazardous substance from the Owned Real Properties,
the Leased Real Properties or other assets of the Company to the extent required
to comply in all material respects with Environmental Laws and to the extent
required to eliminate or prevent any material environmental liabilities;
(E) provide, at the expense of the Company, the
Holder with an assessment and/or audit report with respect to the Owned Real
Properties, the Leased Real Properties, the business or other assets of the
Company, upon the written request of the Holder acting reasonably; and
(F) permit the Holder, at its sole discretion, at
the expense of the Company, to conduct in a reasonable manner such
investigations, assessments or audits as the Holder in its reasonable discretion
deems appropriate to determine whether: (1) hazardous substances exist on any
part of the Owned Real Properties, the Leased Real Properties or other assets of
the Company and to determine the source, quantity and type of such hazardous
substances, if any; or (2) the business, the Owned Real Properties, the Leased
Real Properties or other assets of the Company or any activities conducted at
such properties comply with Environmental Laws, and the Company shall cooperate
with the Holder in conducting such investigations, assessments and audits. The
Holder and its officers, employees, agents and contractors shall have and are
hereby granted the right to enter upon and inspect the Owned Real Properties,
the Leased Real Properties or other assets of the Company for the foregoing
purposes; provided that the Holder shall use reasonable efforts to minimize the
disruption to the operation of the business.
(iii) Additional Reporting
Requirements.
(A)
Deliver to the Holder as soon as possible, and in any event within five days
after the Company becomes aware of the occurrence of each Event of Default, a
statement of a senior officer setting forth the details of such Event of Default
and the action which the Company proposes to take or has taken with respect
thereto;
(B) from time to time upon request of the
Holder, deliver to the Holder evidence of maintenance of all insurance required
to be maintained by Section 5(a)(ix), including such originals or copies as the
Holder may reasonably request of policies, certificates of insurance, riders and
endorsements relating to such insurance and proof of premium payments;
(C) deliver to the Holder, together with the
Compliance Certificate to be delivered pursuant to Section 5(a)(i)(C), written
notice of any previously undisclosed (1) jurisdictions (or registration
districts within such jurisdictions) in which the Company has any place of
business or stores any tangible personal property or assets, (2) Subsidiaries of
the Company or membership, partnership, joint venture or syndicate interests of
the Company, (3) material permits or licenses which become necessary for the
conduct of the business or any amendment to, termination of or material default
under any previously disclosed material permit or license, (4) Benefit Plans or
Pension Plans of the Company, (5) Material Agreements of the Company or any amendment to, termination of or
material default under any previously disclosed Material Agreement, and (6) any
Lease or acquisition of real or immovable property by the Company or amendment
to, termination of or material default under any previously disclosed Lease, and
(D) deliver to the Holder such other
information respecting the condition or operations, financial or otherwise, of
the business of the Company as the Holder may from time to time reasonably
request.
(iv)
Existence; Conduct of Business. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, and obtain, preserve, renew and keep in full force and effect any and
all material permits and licenses.
(v)
Payment Obligations. Pay its obligations, including Tax liabilities,
before the same shall become delinquent or in default, except where (A) the
validity or amount thereof is being contested in good faith by appropriate
proceedings, (B) or the Company has, if required, set aside on its books
adequate reserves with respect thereto in accordance with IFRS, and (C) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect.
(vi)
Maintenance of Properties. Keep and maintain all property material to the
conduct of its business in good working order and condition, ordinary wear and
tear excepted, except to the extent that the failure to do so, individually or
in the aggregate, could not reasonably be expected to have a Material Adverse
Effect.
(vii)
Books and Records; Inspection Rights. Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Permit any
representatives designated by the Holder, upon reasonable prior notice and
during normal business hours, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and auditors, all at such reasonable
times and as often as reasonably requested by the Holder; provided that (A) the
Holder shall act reasonably in the conduct of all such visits, inspections and
inquiries, (B) the Holder shall provide at least two Business Days notice of any
such request for access; (C) the Holder shall use any confidential information
received via access provided hereunder only for purposes related to this
Debenture; and (D) the Company shall not be obligated to provide to the Holder
any confidential information if contrary to Applicable Laws.
(viii)
Compliance with Laws and Material Agreements. Comply with all Applicable
Laws and orders of any Governmental Authority applicable to it or its property
and with all Material Agreements.
(ix)
Insurance. Maintain or cause to be maintained, with financially
sound and reputable insurers acceptable to the Holder, acting reasonably,
insurance with respect to their respective properties and business against such
liabilities, casualties, risks and contingencies and in such types (including
business interruption insurance) and amounts as is customary in the case of
Persons of similar size engaged in the same or similar businesses and operating
in the same geographic area and in accordance with any requirement of any
Governmental Authority. In the case of any fire, accident or other casualty
causing loss or damage to any properties of the Company used in generating cash
flow or required by Applicable Law, all proceeds of such policies shall be used
promptly to repair or replace any such damaged properties, and otherwise shall
be used as directed by the Holder to pay any Principal then payable under the
Debenture.
(x)
Operation and Maintenance of Property. Manage and operate its
business or cause its business to be managed and operated (A) in accordance with
prudent industry practice in all material respects and in compliance with the
terms and provisions of all material permits and licenses, and (B) in compliance
with all Applicable Laws of the jurisdiction in which such businesses are
carried on, and all Applicable Laws of every other Governmental Authority from
time to time constituted to regulate the ownership, management and operation of
such businesses.
(xi)
Status of Accounts and Collateral. With respect to the Collateral,
report immediately to the Holder any matters adversely affecting the value,
enforceability or collectability of any of the Collateral.
(xii)
Accounts Receivable. Collect accounts receivable in the ordinary course
of business in a commercially reasonable manner.
(xiii)
Cure Defects. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Security Documents or any of the other
agreements, instruments or documents contemplated thereby or executed pursuant
thereto or any defects in the validity or enforceability of any of the Security
Documents and, at its expense, execute and deliver or cause to be executed and
delivered all such agreements, instruments and other documents as the Holder may
consider necessary or desirable for the foregoing purposes.
(xiv)
Additional Material Subsidiaries/Security. If, at any time on or after
the date hereof, the Company proposes to create or acquire an additional
Subsidiary or in some other fashion to become the holder of any Equity
Securities of a new Subsidiary, the Company will notify the Holder of such event
at least fifteen (15) Business Days prior to such event and:
(A) prior to or concurrently with the creation or
acquisition of such Subsidiary, the Company will, and will cause any relevant
Subsidiary, to execute and deliver to the Holder a securities pledge agreement,
in form and substance satisfactory to the Holder, acting reasonably, granting a
security interest in 100% of the Equity Securities of such new Subsidiary; and
(B) prior to or concurrently with the creation or
acquisition of such Subsidiary, to the extent not prohibited or restricted by
Applicable Law, the Company will cause such new Subsidiary to immediately
execute and deliver to the Holder a guarantee and security of the nature
contemplated by the Security Agreement, all in form and substance satisfactory
to the Holder, acting reasonably, and accompanied by customary legal opinions of
counsel to the Company or such Subsidiary.
In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant to
this Section 5(a)(xiv), the Company will, or will cause the relevant Subsidiary
to, deliver at its expense to the Holder such corporate or other resolutions,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Holder and consistent with the relevant forms and
types thereof delivered on the Closing Date pursuant to the Purchase Agreement
or as shall be otherwise reasonably acceptable to the Holder and to effect such filings and
registrations with the applicable Governmental Authorities as may be requested
by the Holder to preserve and perfect the Encumbrances created by such
mortgages, pledges, and other relevant agreements. Each guarantee, pledge
agreement, mortgage, security agreement and other document delivered pursuant to
this Section 5(a)(xiv) shall be deemed to be a Security Document from and after
the date of execution thereof.
(xv)
Material Permits. Maintain all material permits and licenses as may
be necessary to properly conduct their respective businesses, the failure of
which to maintain could reasonably be expected to have a Material Adverse
Effect.
(xvi)
Expropriation. Advise the Holder of its receipt of any notice of
expropriation affecting any Owned Real Property where the expropriation is
likely to be successful and if successful would result in expropriation proceeds
exceeding Five Hundred Thousand U.S. Dollars (US$500,000).
(xvii)
Damage or Destruction. Advise the Holder in writing of any damage
to or destruction of any assets of the Company in respect of which the cost of
replacement or repair, individually or in the aggregate, would exceed Five
Hundred Thousand U.S. Dollars (US$500,000).
(xviii)
Leases. Duly observe and comply with all of its obligations under
any Lease to which it is a party which if not complied with would cause a
material default thereunder and shall forthwith advise the Holder in writing of
its receipt of any notices from the lessor alleging any material default by it
under a Lease.
(xix)
Payment of Taxes. Pay, or cause to be paid, when due, all Taxes, property
taxes, business taxes, social security premiums, assessments and governmental
charges or levies imposed upon it or upon its income, sales, capital or profit
or any property belonging to it unless any such Tax, social security premiums,
assessment, charge or levy is contested diligently and in good faith by
appropriate proceedings and in respect of which appropriate reserves have been
maintained in accordance with IFRS.
(xx)
Withholding Taxes. Withhold from each payment made to any of its past or
present employees, officers or directors, and to any non-resident of the country
in which it is resident, the amount of all Taxes and other deductions required
to be withheld therefrom and pay the same to the property Governmental
Authorities within the time required under any Applicable Laws.
(xxi)
Collection of Taxes. Collect from all Persons the amount of all
Taxes required to be collected from them and remit the same to the Governmental
Authorities within the time required under any Applicable Laws.
(xxii)
Registration of Security. From time to time, register or cause to
be registered, and cooperate in the registration of, the Security, and any
public notices or filings in respect thereof, on a timely basis and do, observe
and perform all of its obligations and all matters and things that may be
necessary or reasonably required for the purposes of creating and maintaining
the Encumbrances intended to result from the Security as valid, effective and
perfected first priority Encumbrances (subject only to Permitted Encumbrances)
at all times and shall comply with all requirements of Section 5(b)(xiv).
(xxiii) Benefit Plans.
(A)
Cause to be filed or distributed in a timely manner all reports and disclosures
relating to any Benefit Plan that are required by the plan or any Applicable
Laws to be filed or distributed.
(B)
Perform all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with each
Benefit Plan and the funding media therefor; make all contributions and pay all
premiums required to be made or paid in accordance with the terms of each
Benefit Plan and all Applicable Laws; withhold, by way of authorized payroll
deductions or otherwise collect and pay into each Benefit Plan all employee
contributions required to be withheld or collected by the Company in accordance
with the terms of such plan and all Applicable Laws.
(b)
Negative Covenants. So long as any Principal Amount of the
Debenture remains outstanding, the Company shall not:
(i) Debt. Create, incur or
suffer to exist, any Debt other than Permitted Debt.
(ii)
Encumbrances. Create, incur, assume or suffer to exist, any
Encumbrance on any of its assets, other than Permitted Encumbrances.
(iii)
Fundamental Changes. Merge into or amalgamate or consolidate with
any other Person, or permit any other Person to merge into or amalgamate or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or any of the Equity Securities of any Subsidiary (in each case,
whether now owned or hereafter acquired), or liquidate, dissolve or be wound up.
(iv) Carry on Business.
(A)
Engage in any business which is different from the business conducted on the
Closing Date and businesses reasonably related thereto.
(B)
After the Closing Date, carry on business otherwise than through the Company.
(v)
Transfer of Assets. Neither the Company nor any Subsidiary shall sell,
transfer, lease, part with possession or otherwise dispose of any assets,
whether by way of sale, lease, assignment, sale-leaseback or otherwise other
than (A) obsolete assets, equipment and material, (B) in the ordinary course of
business, (C) assets up to an aggregate amount not to exceed One Hundred
Thousand U.S. Dollars (US$100,000); (exclusive of the shares referred to in the
next clause) or (D) common shares of Acadian Mining Corporation owned on the
date hereof.
(vi)
Transactions with Affiliates. Transfer, sell or otherwise dispose of any
assets to, or purchase, lease or otherwise acquire any assets from, or otherwise
engage in any other transactions with, any of its Affiliates, except (A) in the
ordinary course of business at prices and on terms and conditions not less
favourable to the Company than could be obtained on an arms-length basis from
unrelated third parties, (B) transactions between or among the Company and the Parent not involving any other Affiliate, (C)
any Restricted Payment permitted by Section 5(b)(ix), and (D) as otherwise
expressly permitted pursuant to this Agreement and the Security Documents.
Except as otherwise expressly permitted pursuant to the terms of this Agreement
and the other Security Documents, the Company will not enter into any
transaction or series of transactions with Affiliates which involve an outflow
of money or other property from the Company to an Affiliate, including repayment
of Debt, or payment of management fees, affiliation fees, administration fees,
compensation, salaries, asset purchase payments or any other type of fees or
payments similar in nature, other than on terms and conditions substantially as
favourable to the Company as would be obtainable by the Company in a reasonably
comparable arms-length transaction with a Person other than an Affiliate. The
foregoing restrictions shall not apply to: (A) the payment of reasonable and
customary fees to directors of the Company who are not employees of the Company,
(B) any other transaction with any employee, officer or director of the Company
pursuant to employee profit sharing and/or benefit plans and compensation and
non-competition arrangements in amounts customary for corporations similarly
situated to the Company and entered into in the ordinary course of business and
approved by the board of directors of the Company, or (C) any reimbursement of
reasonable out-of-pocket costs incurred by an Affiliate of the Company on behalf
of or for the account of the Company.
(vii)
Restrictive Agreements. Other than under the terms of Senior Construction
Financing, directly or indirectly enter into, incur or permit to exist, any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (A) the ability of the Company to create, incur or permit to
exist any Encumbrance upon any of its assets, (B) the ability of the Company to
pay dividends or other distributions with respect to any Equity Securities or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Parent or to provide a guarantee of any Debt of the Parent, (C)
the ability of the Company to make any loan or advance to the Parent, or (D) the
ability of the Company to sell, lease or transfer any of its property or assets;
provided that the foregoing shall not apply to restrictions or conditions; (1)
imposed by Applicable Law; (2) existing on the date hereof identified on
Schedule 4.2(y) to the Purchase Agreement (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition); (3) imposed by any agreement relating to
Permitted Debt permitted by this Debenture if such restrictions or conditions
apply only to the property or assets securing such Debt; and (4) customarily
provided for in leases and other ordinary course contracts restricting the
assignment thereof.
(viii)
Share Capital. Issue any Equity Securities, except to the
Parent.
(ix)
Restricted Payments. Declare, make or pay or agree to declare, make
or pay, directly or indirectly, any Restricted Payment, except (A) Restricted
Payments by the Company to the Parent, (B) regularly scheduled payments in
respect of Permitted Debt hereunder, and (C) Restricted Payments by the Company
pursuant to and in accordance with Benefit Plans for the directors or officers
of the Company, provided that the aggregate amount of cash payments made by the
Company and the Parent in any Financial Year pursuant to all such Benefit Plans
shall not exceed reasonable commercial amounts paid in the normal course of
business and approved by the board of directors of the Company.
(x)
Investments. Purchase, hold or acquire (including pursuant to any
amalgamation with any Person that was not a wholly-owned Subsidiary of the
Company prior to such amalgamation), any Equity Securities, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person, except:
(A) inter-company loans or advances between the
Company and the Parent;
(B) Permitted Debt; and
(C) Permitted Investments.
(xi)
Acquisitions. Make any Acquisition, other than a Permitted
Acquisition, provided in the case of a Permitted Acquisition no Event of Default
has occurred and is continuing or would occur as a result of such Permitted
Acquisition.
(xii)
Subsidiaries. Create or acquire any Subsidiary unless the Company and the
Subsidiary shall have complied with Section 5(a)(xiv).
(xiii) Sale-Leasebacks. Enter into
sale-leaseback transactions.
(xiv)
Capital Expenditures. Make or commit to make any Capital
Expenditures during the period from the Closing Date to the Maturity Date other
than as provided for in the NorthMet Project Budget.
(xv)
Change of Name; Business Outside Certain Jurisdictions. (A) Change
its name, registered office, chief executive office or jurisdiction of
incorporation, or (B) have any place of business or keep or store any material
tangible property outside of those jurisdictions (or registration districts
within such jurisdictions) set forth in Schedule 5.1(m) to the Purchase
Agreement, (1) except upon thirty (30) days prior written notice thereof to the
Holder; and (2) unless the Company has done or caused to be done all such acts
and things and executed and delivered or caused to be executed and delivered all
such deeds, transfers, assignments and instruments as the Holder may reasonably
require for perfecting or maintaining the perfection of the Encumbrances of the
Security and the priority thereof in the Collateral in favour of the Holder.
(xvi) Financial Year. Change its Financial
Year.
(xvii)
Amendments. Allow (A) any amendments to its constating documents or
by-laws; or (B) any amendments to, or grant any waivers in respect of any
Material Agreement or any guarantee or security in respect thereof.
(xviii)
Change of Auditors. Change its auditors other than to a nationally
recognized accounting firm approved by the Holder acting reasonably.
(xix)
Speculative Transactions. Engage in any interest rate, currency
rate, commodity hedge or similar agreement, understanding or obligation, except
in the normal course of business and not for speculative purposes.
(c)
Indemnification. The Company will pay, and will indemnify and same
harmless the Holder against, all costs and expenses (including legal fees and
expenses) incurred with respect to the exercising of any of the rights, remedies
and powers of the Holder under this Debenture, or the taking of any other
proceedings taken for the purpose of enforcing the remedies provided for under
law by reason of non-payment of the obligations hereunder.
Section 6.
Defaults and Remedies.
(a)
Events of Default. An Event of Default is: (i) a default
in payment of any principal amount due hereunder; (ii) a default in payment of
any interest or other amount due hereunder which default continues for more than
five (5) Business Days after the due date thereof; (iii) a default in the timely
issuance of Underlying Shares upon and in accordance with the terms of the
Warrants, which default continues for five (5) Business Days after the Parent
has received written notice informing the Parent that it has failed to issue
shares or deliver share certificates within the fifth day following the exercise
date; (iv) failure by the Company or the Parent for fifteen (15) days after
written notice has been received by the Company or the Parent, as applicable, to
comply with any material provision of any of the Agreements (including the
failure of the Company to make a Change in Control Offer in accordance with
Section 3(a)), the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (v) a material breach by the Company or the Parent of its
covenants, representations or warranties in any of the Agreements, the Escrow
Agreement, the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (vi) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or the Parent for in excess of
One Million U.S. Dollars (US$1,000,000) or for money borrowed the repayment of
which is guaranteed by the Company or the Parent for in excess of One Million
U.S. Dollars (US$1,000,000), whether such indebtedness or guarantee now exists
or shall be created hereafter; (vii) if the Company or the Parent is subject to
any Bankruptcy Event; (viii) if a judgment or order is obtained against the
Company or the Parent which has or would have a Material Adverse Effect, and, if
such judgment or order is for the payment of money, the judgment or order has
not been dismissed, stayed or satisfied within twenty (20) days of the date that
such judgment or order is issued; (ix) if any material permit or license or
Material Agreement of the Company or the Parent expires or is withdrawn,
cancelled, terminated, or modified (and such expiry, withdrawal, cancellation,
termination or modification would have a Material Adverse Effect) and is not
reinstated or replaced within thirty (30) days thereafter without material
impairment of the property or business of the Company or the Parent; (x) a final
judgment, writ of execution, garnishment or attachment or similar process is
issued or levied against any property of the Company or the Parent having a fair
market value in excess of One Million U.S. Dollars (US$1,000,000) and
such judgment, writ, execution, garnishment, attachment or similar process is
not released, bonded, satisfied, discharged, vacated or stayed within forty-five
(45) days after its entry, commencement or levy; (x) solely with respect to
Principal Amounts held by Glencore AG, a material breach by the Parent of its
covenants, representations or warranties in the Marketing Agreement, Copper
Offtake Agreement or Nickel Offtake Agreement; or (xi) the termination of the
Standby Purchase Agreement prior to the completion of the Rights Offering.
(b)
Remedies. If an Event of Default occurs and is continuing with
respect to the Debenture, the Holder may declare all of the then outstanding
Principal Amount of this Debenture and all other debentures held by the Holder,
to be due and payable immediately, and the Holder may commence such legal action
or proceedings as it, in its sole discretion, deems necessary, all without any
additional notice, presentation, demand, protest, notice of dishonor, entering into of possession of any of the assets of the Company
or any other action or notice, all of which the Company hereby expressly waives,
except that in the case of an Event of Default arising from events described in
clauses (vi) through (x) of Section 6(a), inclusive, this Debenture shall become
due and payable without further action or notice. In the event of such
acceleration, the amount due and owing to the Holder shall be 120% of the
outstanding Principal Amount of the Debenture held by the Holder. In either case
the Company shall pay interest on such amount in cash at the Default Rate (as
defined below) to the Holder if such amount is not paid within seven (7) days of
Holders request. The remedies under this Debenture shall be cumulative.
(c)
Notice of Default. The Company covenants to provide written notice to the
Holder within two (2) Business Days upon the occurrence of any Event of Default.
(d)
Default Interest. Notwithstanding anything contained herein, this
Debenture shall bear interest on the due and unpaid outstanding Principal Amount
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 6(a) at the rate (the Default Rate) equal to the
lower of 18% per annum or the highest rate permitted by law.
Section 7.
General.
(a)
Technical Services Committee. The Holder of a majority of the
Principal Amount outstanding under this Debenture shall be entitled to select
and appoint one (1) member (the Appointee) to the Technical Services
Committee of the Company and shall be entitled to select and appoint any
successor to or replacement of such Appointee, subject, in each case, to the
Companys consent which shall not be unreasonably withheld.
(b)
Payment of Expenses. The Company agrees to pay all reasonable
charges and expenses, including attorneys fees and expenses, which may be
incurred by the Holder in successfully enforcing this Debenture and/or
collecting any amount due under this Debenture.
(c)
Interest Act (Canada) Disclosure. For the purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of
interest to which the rate of interest applicable to any interest period,
computed as provided under Section 2 above, is equivalent is the rate of
interest for such interest period multiplied by a fraction of which (i) the
numerator is the actual number of days in the 12-month period commencing on the
date of the commencement of such interest period and ending on the day
immediately preceding the anniversary of such date of commencement, and (ii) the
denominator is three hundred sixty-five (365).
(d)
Savings Clause. In case any provision of this Debenture is held by
a court of competent jurisdiction to be excessive in scope or otherwise invalid
or unenforceable, such provision shall be adjusted rather than voided, if
possible, so that it is enforceable to the maximum extent possible, and the
validity and enforceability of the remaining provisions of this Debenture will
not in any way be affected or impaired thereby. In no event shall the amount of
interest paid hereunder exceed the maximum rate of interest on the unpaid
principal balance hereof allowable by applicable law. If any sum is collected in
excess of the applicable maximum rate, the excess collected shall be applied to
reduce the principal debt. If the interest actually collected hereunder is still
in excess of the applicable maximum rate, the interest rate shall be reduced so
as not to exceed the maximum allowable under law.
(e)
Amendment. Neither this Debenture nor any term hereof may be amended,
waived, discharged or terminated other than by a written instrument signed by
the Company and the Holder.
(f)
Assignment, Etc. The Holder may assign or transfer this Debenture at any
time and from time to time in whole or in part to any transferee, without the
consent of the Company, provided that any partial assignment of this Debenture
shall be for a minimum principal amount of not less than Five Million U.S.
Dollars (US$5,000,000). The Holder shall notify the Company of any such
assignment or transfer promptly. This Debenture shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.
(g)
No Waiver. Neither the extension of time for making any payment
which is due and payable under this Debenture at any time or times, nor the
failure on the part of the Holder to exercise, and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Holder of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy or power hereby granted to the Holder or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Holder from time to time.
(h) Governing Law; Jurisdiction.
(i)
Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF
ANOTHER JURISDICTION.
(ii)
Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Debenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum.
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three (3) days
after the same has been posted as aforesaid) or by personal service shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holders right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(iii)
NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY
AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE.
(i)
Replacement Debenture. This Debenture may be exchanged by Holder at
any time and from time to time for a Debenture or debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge will be
made for such registration or exchange. In the event that Holder notifies the
Company that this Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Principal Amount, if different than that shown on the
original Debenture), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture.
(f)
Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due to the Holder in any currency
(the Original Currency) into another currency (the Other
Currency), the parties agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Holder could purchase the
Original Currency with the Other Currency on the Business Day preceding the day
on which final judgment is given or, if permitted by Applicable Law, on the day
on which the judgment is paid or satisfied. The obligations of the Company in
respect of any sum due in the Original Currency from it to the Holder under any
of the Security Documents shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Holder of any sum adjudged to be so due in the Other Currency,
the Holder may, in accordance with normal banking procedures, purchase the
Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Lender in the
Original Currency, the Company agrees, as a separate obligation and
notwithstanding the judgment, to indemnify the Holder, against any loss, and, if
the amount of the Original Currency so purchased exceeds the sum originally due
to the Holder in the Original Currency, the Holder shall remit such excess to
the Company.
(k)
Further Assurances. Each party shall from time to time promptly execute
and deliver all further documents and take all further action necessary to give
effect to the provisions and intent of this Debenture.
[Signature Page Follows]
IN WITNESS WHEREOF, the Company has caused this Debenture to be duly
executed on the day and in the year first above written.
POLY MET MINING, INC.
By:
________________________________________________
Name:
Title:
Attest:
Sign: _______________________________________________
Print
Name:
23
EXHIBIT A
DEBENTURE ADJUSTMENT SCHEDULE
Debenture Adjustment Schedule for the Debenture issued by
POLY MET MINING, INC. to GLENCORE AG on or about [Ocotber 1,] 2015 in the
original principal amount of Six Million U.S. Dollars (US$6,000,000), to be
completed and exchanged by fax or email following each principal repayment of
such Debenture.
Date |
Decreases
Principal
amount
repaid
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Remaining
principal
balance of
Debenture |
Initialed by
Company
CEO/CFO |
Initialed by
authorized
representative
of Holder |
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A-1
EXHIBIT B
COMPLIANCE CERTIFICATE
[Date]
TO: (the "Holder")
The
undersigned (the "Corporation") refers to the Floating Rate Secured Debenture
issued on [October 1], 2015 (the "Debenture", the terms defined therein being
used herein as therein defined). This Compliance Certificate is delivered
pursuant to Section 5(a)(i) of the Debenture for the Financial Quarter/Year
ending on [] (the "Period").
We, __________________________ and _________________________,
the respective Chief Executive Officer and Chief Financial Officer of the
Corporation, in such capacity and not personally, hereby certify that:
1. |
We are the duly appointed Chief Executive Officer and
Chief Financial Officer of the Corporation and as such we are providing
this certificate for and on behalf of the Corporation pursuant to the
Debenture. |
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2. |
We are familiar with and have examined the provisions of
the Debenture. |
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3. |
The financial statements most recently delivered pursuant
to [Section 5(a)(i)(B) or Section 5(a)(i)(C)] of the Debenture
present fairly the financial position, results of operations and changes
in financial position of the persons specified therein for the Period and
as at the last day of such Period, as the case may be, in accordance with
IFRS. |
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4. |
The representations and warranties contained in Section
5.1 of the Purchase Agreement are true and correct as though made on the
date hereof, except for and any such representation and warranty which is
stated to be made as of a certain date. |
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5. |
As of the date hereof, the Corporation is not in breach
of any of the covenants contained in Section 5 of the Debenture, and no
Event of Default has occurred and is continuing as at the date
hereof. |
Dated this _____________day of
__________________________________________.
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(Name please print) |
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Chief Executive Officer |
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(Name please print) |
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Chief Financial Officer |
B-1
THIS SECURITY HAS NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE IN RELIANCE
UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED
(THE SECURITIES ACT), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR
PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH
APPLICABLE STATE SECURITIES LAWS. THIS SECURITY MAY BE PLEDGED IN CONNECTION
WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN SECURED BY THIS SECURITY.
THIS DEBENTURE DOES NOT REQUIRE PHYSICAL SURRENDER OF THE
DEBENTURE IN THE EVENT OF A PARTIAL REDEMPTION. AS A RESULT, FOLLOWING ANY
REDEMPTION OF ANY PORTION OF THIS DEBENTURE, THE OUTSTANDING PRINCIPAL AMOUNT
REPRESENTED BY THIS DEBENTURE MAY BE LESS THAN THE PRINCIPAL AMOUNT AND ACCRUED
INTEREST SET FORTH BELOW.
UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE
HOLDER OF THIS DEBENTURE MUST NOT TRADE THIS SECURITY BEFORE MAY 31,
2015.
FLOATING RATE SECURED DEBENTURE, DUE NO LATER THAN MARCH
31, 2016
OF
POLY MET MINING,
INC.
Debenture No.: D-6 |
Original Principal Amount: US$8,000,000
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Issuance Date: January 30, 2015 |
New York, New York |
THIS
DEBENTURE is a duly authorized issue of POLY MET MINING, INC., a
corporation incorporated pursuant to the laws of Minnesota (the
Company), designated as the Companys Floating Rate Secured Debenture,
due on the day which is the earlier of (i) the availability of at least One
Hundred Million U.S. Dollars (US$100,000,0000) of the Senior Construction
Finance (as defined below), or (ii) March 31, 2016 (the Maturity Date)
in an aggregate original principal amount of Eight Million U.S. Dollars
(US$8,000,000]) (the Debenture).
FOR
VALUE RECEIVED, the Company hereby promises to pay to the order of GLENCORE
AG or its registered assigns or successors-in-interest (the Holder)
the principal sum of Eight Million U.S. Dollars (US$8,000,000), together with
all accrued but unpaid interest thereon on the Maturity Date, to the extent such
principal amount and interest has not been repaid in accordance with the terms
hereof. Interest on the unpaid principal balance hereof shall accrue from the
date of original issuance hereof (the Issuance Date) at the Floating
Rate (as defined below) until the principal balance becomes due and payable on
the Maturity Date, or such earlier date upon acceleration or by redemption or
repayment (Early Repayment Date) in accordance with the terms hereof or
of the other Agreements. The Floating Rate shall be determined on each Floating
Rate Reset Date, and such Floating Rate shall apply until the next Floating Rate
Reset Date. Interest on this Debenture shall accrue daily commencing on the
Issuance Date and shall be computed on the basis of a 360-day year, 30-day
months and actual days elapsed and shall be payable in accordance with Section 2
hereof. Unless otherwise agreed or required by applicable law, payments will be
applied first to any unpaid collection costs, then to unpaid interest and fees
and then any remaining amount to principal.
All
payments of principal and interest on this Debenture shall be made in lawful
money of the United States of America by wire transfer of immediately available
funds to such account as the Holder may from time to time designate by written notice
in accordance with the provisions of this Debenture. This Debenture may not be
prepaid or redeemed in whole or in part except as described in Section 3 or as
otherwise provided herein. Whenever any amount expressed to be due by the terms
of this Debenture is due on any day (other than the Maturity Date) which is not
a Business Day (as defined below), the same shall instead be due on the next
succeeding day which is a Business Day. If the Maturity Date falls on a day that
is not a Business Day, the payment of principal and interest will be made on the
next succeeding Business Day, and no interest on such payment will accrue for
the period from and after the Maturity Date.
Capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Purchase Agreement dated
October 31, 2008, as amended, among the Company, the Holder and PolyMet Mining
Corp. (the Parent), pursuant to which the Debenture was originally
issued (the Purchase Agreement). For purposes hereof the following
terms shall have the meanings ascribed to them below:
Acquisition means any transaction, or any series of related
transactions, consummated after the date hereof, by which the Company directly
or indirectly, by means of a take-over bid, tender offer, amalgamation, merger,
purchase of assets or otherwise (a) acquires any business or all or
substantially all of the assets of any Person engaged in any business, (b)
acquires control of securities of a Person engaged in a business representing
more than 50% of the ordinary voting power for the election of directors or
other governing position if the business affairs of such Person are managed by a
board of directors or other governing body, or (c) acquires control of more than
50% of the ownership interest in any Person engaged in any business that is not
managed by a board of directors or other governing body.
Affiliate means, with respect to a
specified Person, another Person that directly, or indirectly through one or
more intermediaries, Controls or is Controlled by or is under common Control
with the specified Person.
Appointee has the meaning given to it in Section 7(a).
Bankruptcy Event means any of the
following events: (a) the Company or the Parent commences a case or other
proceeding or proposal under any bankruptcy, reorganization, arrangement,
adjustment of debt, relief of debtors, dissolution, winding-up, insolvency or
liquidation or similar law of any jurisdiction (including the Bankruptcy
Act (Canada) or the Companies Creditors Arrangement Act (Canada))
relating to the Company or the Parent; (b) there is commenced against the
Company or the Parent any such case or proceeding or proposal that is not
dismissed within thirty (30) days after commencement; (c) the Company or the
Parent is adjudicated insolvent or bankrupt or any order of relief or other
order approving any such case or proceeding is entered; (d) the Company or the
Parent suffers any appointment of any trustee, receiver, receiver and manager,
interim receiver, custodian or the like for it or any substantial part of its
property that is not discharged or stayed within thirty (30) days; (e) the
Company or the Parent makes a general assignment for the benefit of creditors;
(f) the Company or the Parent fails to pay, or states that it is unable to pay
or is unable to pay, its debts generally as they become due; (g) the Company or
the Parent calls a meeting of its creditors with a view to arranging a
composition, adjustment or restructuring of its debts; or (h) the Company or the
Parent, by any act or failure to act, expressly indicates its consent to,
approval of or acquiescence in any of the foregoing or takes any corporate or
other action for the purpose of effecting any of the foregoing.
2
Business Day means any day other
than a Saturday, Sunday or a day on which commercial banks in the City of New
York, New York, Toronto, Ontario or Zug, Switzerland are authorized or required
by law or executive order to remain closed.
Canadian Securities Laws means all
applicable securities laws in each of the provinces and territories of Canada
and the respective regulations made thereunder, together with applicable
published fee schedules, prescribed forms, rules, multilateral or national
instruments, orders, rulings and other regulatory instruments issued or adopted
by the Securities Commissions.
Capital Assets means, with respect
to any Person, any tangible fixed or capital assets owned or leased (in the case
of a Capital Lease) by such Person.
Capital Expenditures means, in respect
of any Person and any period, all expenditures made by such Person during such
period for the purchase, lease or acquisition of Capital Assets (including all
amounts paid or accrued during such period on Capital Leases) and other Debt
incurred or assumed to acquire or construct Capital Assets (other than current
Capital Assets) required to be capitalized for financial reporting purposes in
accordance with IFRS.
Capitalized Lease Obligation of
any Person means any obligation of such Person to pay rent or other amounts
under a Capital Lease.
Capital Leases means any and all
lease obligations of a lessee that are capitalized for financial reporting
purposes in accordance with IFRS.
Change in Control Offer has the meaning given to it in Section
3(a).
Change in Control Transaction
will, and will be deemed to, exist if (a) there occurs any consolidation,
merger, plan of arrangement or other business combination of the Company or the
Parent with or into any other corporation or other entity or person (whether or
not the Company or the Parent is the surviving corporation) or any other
corporate reorganization or transaction or series of related transactions in
which in any of such events the voting shareholders of the Company or the Parent
prior to such event cease to own 50% or more of the voting power, or
corresponding voting equity interests, of the surviving corporation after such
event (including any going private transaction under Rule 13e-3 promulgated
pursuant to the Exchange Act, tender offer by the Company or the Parent under
Rule 13e-4 promulgated pursuant to the Exchange Act for 20% or more of the
Companys common shares or the Parents Common Shares, or take-over bid by the
Company or the Parent under Canadian Securities Laws for 20% or more of the
Companys common shares or the Parents Common Shares), (b) any person (as
defined in Section 13(d) of the Exchange Act), together with its affiliates and
associates (as such terms are defined in Rule 405 under the Act), beneficially
owns or is deemed to beneficially own (as described in Rule 13d-3 under the
Exchange Act without regard to the 60-day exercise period) in excess of 35% of
the Companys or the Parents voting power other than such persons who
beneficially owned or are deemed to beneficially own such voting power as of the
date hereof, (c) there is a replacement within a consecutive period of 24 months
of more than one-half of the members of the Companys or the Parents Board of
Directors which is not approved by those individuals who are members of the
Companys or the Parents Board of Directors on the date thereof who were either
directors at the beginning of such period or where election or nomination was
previously approved, (d) in one or a series of related transactions, there is a
sale or transfer of all or substantially all of the assets of the Company or the Parent, determined on a consolidated basis, or
(e) the Company or the Parent enters into any agreement providing for an event,
circumstance or occurrence set forth in (a), (b), (c) or (d) above.
3
Claim means, with respect to any
Person, any actual or prospective action, suit, order, charge, penalty, claim,
litigation, investigation or proceeding of any kind or nature whatsoever against
or otherwise involving such Person or the property or assets of such Person.
Common Shares means the Parents common shares, without par
value.
Company means Poly Met Mining,
Inc., a corporation incorporated pursuant to the laws of Minnesota.
Compliance Certificate means a
certificate of the Company signed on its behalf by its chief executive officer
and chief financial officer in the form attached hereto as Exhibit B.
"Confirmation of Secured Obligations
Agreement" means the confirmation of secured obligations agreement dated
January 30, 2015 between the Company, the Parent and the Holder.
Control means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management or policies of a Person, whether through the ability to exercise
voting power, by contract or otherwise. Controlling and Controlled have
corresponding meanings.
Debenture means this Debenture,
designated as the Companys Floating Rate Secured Debenture, due on the day
which is the earlier of (i) the availability of at least One Hundred Million
U.S. Dollars (US$100,000,000 of the Senior Construction Financing, or (ii) March
31, 2016, in an aggregate original principal amount of Eight Million U.S.
Dollars (US$8,000,000).
Debenture Adjustment Schedule has the meaning given to it in
Section 2(c).
Debt of any Person means, at any
time, (without duplication): (a) all obligations of such Person for borrowed
money including borrowings of commodities, bankers acceptances, letters of
credit or letters of guarantee; (b) all obligations of such Person for the
deferred purchase price of property or services represented by a note or other
evidence of indebtedness (other than trade payables and other current
liabilities incurred in the ordinary course of business); (c) all obligations of
such Person created or arising under any conditional sale or other title
retention agreement with respect to property acquired by such Person (even
though the rights and remedies of the seller or lender under such agreement in
the event of default are limited to repossession or sale of such property); (d)
all indebtedness of another Person secured by an Encumbrance on any properties
or assets of such Person (other than Encumbrances being contested in good faith
on a timely basis by appropriate proceedings); (e) all Capitalized Lease
Obligations of such Person; (f) the aggregate amount at which any shares in the
capital of such Person which are redeemable or retractable at the option of the
holder may be retracted or redeemed for cash or debt provided all conditions
precedent for such retraction or redemption have been satisfied; (g) all other
obligations of such Person upon which interest charges are customarily paid by
such Person; (h) the net amount of all obligations of such Person (determined on
a marked-to-market basis) under swap agreements; and (i) all debt guaranteed by
such Person.
4
Disposition Gross-Up Payment has the meaning given to it in
Section 2(b)(ii).
Disposition
Taxes has the meaning given to it in Section 2(b)(ii).
Early Repayment Date means any
Business Day prior to the Maturity Date that PolyMet elects to repay the
outstanding principal and unpaid and accrued interest on the Debentures provided
that PolyMet can demonstrate that such early repayment is prudent and PolyMet
has given ten (10) business days notice to Glencore of its intent to repay the
Debentures.
Equity Securities means, with respect to
any Person, any and all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting and non-voting) of, such
Persons capital, whether outstanding on the date hereof or issued after the
date hereof, including any interest in a partnership, limited partnership or
other similar Person and any beneficial interest in a trust, and any and all
rights, warrants, options or other rights exchangeable for or convertible into
any of the foregoing.
Event of Default has the meaning given to it in Section 6(a).
Exchange Act means the Securities Exchange Act of 1934, as
amended.
Failure to Agree has the meaning
provided for in Section 9 of the Purchase Agreement.
Financial Quarter means, in
respect of the Company, a period of three consecutive months in each Financial
Year ending on April 30, July 31, October 31, and January 31, as the case may
be, of such year.
Financial Year means, in respect
of the Company, its financial year commencing on February 1 of each calendar
year and ending on January 31 of each following calendar year.
Floating Rate means LIBOR plus
8.0% per annum; provided, however, that the Floating Rate for the period from
the Issuance Date to the first Floating Rate Reset Date will be 8.6179 %; and
provided further, that the Floating Rate shall be reset on each Floating Rate
Reset Date.
Floating Rate Reset Date means
March 31, June 30, September 30, and December 31 of each year, commencing on
March 31, 2015, provided that if any such day is not a Business Day, then such
Floating Rate Reset Date means the immediately preceding day which is a Business
Day.
Gross-Up Payment has the meaning given to it in Section 2(b).
Holder means Glencore AG or its registered assigns or
successors-in-interest.
IFRS means International Financial Reporting Standards.
Impermissible Qualification means,
relative to (a) the financial statements or notes thereto of any Person, or (b)
the opinion or report of any independent auditors as to any financial statement
or notes thereto, any qualification or exception to such financial statements,
notes, opinion or report, as the case may be, which (i) is of a going concern
or similar nature; or (ii) relates to any limited scope of examination of material
matters relevant to such financial statement, if such limitation results from
the refusal or failure of the Company to grant access to necessary information
therefor.
5
Interest Amount has the meaning given to it in Section 2(a).
Issuance Date means January 30, 2015, the date of original
issuance of this Debenture.
ITA means the Income Tax Act (Canada).
LIBOR means the 12 month LIBOR rate for U.S. dollars published
in the print edition of The Wall Street Journal to be set as at the
second Business Day prior to the Issuance Date, provided that, if such 12 month
LIBOR rate is not so published on such date, LIBOR means the 12 month LIBOR rate
most recently published in the print edition of The Wall Street Journal prior to
the day which is the second Business Day prior to the Issuance Date.
Maturity Date has the meaning given to it on the
cover page.
Original Currency has the meaning given to it in Section 7(j).
Other Currency has the meaning given to it in Section
7(j).
Parent means PolyMet Mining Corp., a corporation
incorporated pursuant to the laws of British Columbia.
Payment has the meaning given to it in Section 2(b)(i).
Payment Tax has the meaning given to it in Section 2(b)(i).
Permitted Acquisitions means any
Acquisition by the Company consented prior thereto in writing by the Holder.
Permitted Debt means,
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(i) |
Debt hereunder or under any Security Document; |
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(ii) |
Debt existing on the date hereof and set forth in Note 5
to the condensed interim consolidated financial statements of the Parent
for the interim period ended October 31, 2014; |
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(iii) |
trade accounts due and payable within sixty (60) days and
considered unsecured obligations incurred in the ordinary course of
business (but excluding Debt for borrowed money); and |
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(iv) |
any Senior Construction
Financing. |
Permitted Encumbrances shall have the meaning set forth in
Section 1.51 of the Purchase Agreement.
6
Principal Amount means the sum of (a) the
unpaid principal amount of this Debenture, (b) all accrued but unpaid interest
hereunder, and (c) any default payments owing under the Agreements but not
previously paid or added to the Principal Amount.
Purchase Agreement means the
purchase agreement dated October 31, 2008, as amended, among the Company, the
Holder and the Parent, pursuant to which the Debenture was originally issued.
Restricted Payment means, with respect
to any Person, any payment by such Person (a) of any dividends or other
distribution on any of its Equity Securities, (b) on account of, or for the
purpose of setting apart any property for a sinking or other analogous fund for,
the purchase, redemption, retirement or other acquisition of any of its Equity
Securities or any warrants, options or rights to acquire any such shares, or the
making by such Person of any other distribution in respect of any of its Equity
Securities, (c) of any principal of or interest or premium on or of any amount
in respect of a sinking or analogous fund or defeasance fund for any Debt of
such Person ranking in right of payment subordinate to any liability of such
Person under the Security Documents, (d) of any principal of or interest or
premium on or of any amount in respect of a sinking or analogous fund or
defeasance fund for any indebtedness of such Person to a shareholder of such
Person or to an Affiliate of a shareholder of such Person, or (e) of any
management, consulting or similar fee or any bonus payment or comparable
payment, or by way of gift or other gratuity, to any Affiliate of such Person or
to any director or officer thereof other than as compensation for services
rendered to the Company or any of its subsidiaries in the ordinary course.
Securities Act means the Securities Act of 1933, as amended.
Securities Commissions means,
collectively, the securities commissions or other securities regulatory
authorities in each of the provinces and territories of Canada.
Senior Construction Financing means Debt
or Equity in respect of construction financing for the NorthMet Project which is
in aggregate in an amount equal to or greater than Five Hundred Million U.S.
Dollars (US$500,000,000) such that the construction of the NorthMet Project may
reasonably be expected to be completed.
Subsidiary means any non-natural Person of
which the Company owns or controls, directly or indirectly, not less than 50% of
the total combined voting power represented by all classes of Equity Securities
issued by such Person.
The following terms and conditions shall apply to this
Debenture:
Section 1. Interpretation.
In
this Debenture:
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(a) |
a word importing the masculine, feminine or neuter gender
also includes members of the other genders; |
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(b) |
a word defined in or importing the singular number has
the same meaning when used in the plural number, and vice versa; |
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(c) |
a word importing persons shall include partnerships and
corporations; |
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(d) |
the headings to each section are inserted for convenience
of reference only and do not form part of this Debenture; |
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(e) |
all dollar amounts shall be in dollars of the United
States of America unless otherwise specified; and |
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(f) |
including means including without
limitation. |
Section 2. Payments of
Principal and Interest.
(a)
Interest Only Payments. Subject to and in accordance with the terms
of this Section 2, on the earlier of the Maturity Date or the Early Repayment
Date, the Company shall pay to the Holder all interest accrued and unpaid at
that time on the entire outstanding Principal Amount of this Debenture (the
Interest Amount) together with repayment of the entire outstanding
Principal Amount of this Debenture in cash.
(b) Certain Additional Payments by the
Company.
(i)
Payments Under Debenture. Any payment or distribution by the
Company to the Holder hereunder, whether for principal, interest or otherwise,
shall not be subject to any deduction, withholding or offset for any reason
whatsoever except to the extent required by law, and the Company represents that
to its best knowledge no deduction, withholding or offset is so required for any
tax or any other reason. Notwithstanding any term or provision of this Debenture
to the contrary, if it shall be determined that any payment (other than a
payment dealt with under Section 2(b)(iii)) by the Company to or for the benefit
of the Holder pursuant to the terms of this Debenture, whether for principal,
interest or otherwise and whether paid or payable or distributed or
distributable, actual or deemed (a Payment) would be or is subject to
any deduction, withholding or offset due to any duty or tax (such duty or tax,
together with any interest and/or penalties related thereto, hereinafter
collectively referred to as the Payment Tax), then the Company shall,
in addition to all sums otherwise payable hereunder, pay to the Holder an
additional payment in cash (a Gross-Up Payment) in an amount such that
after all such Payment Taxes (whether by deduction, withholding, offset or
payment), including any interest or penalties with respect to such taxes or any
Payment Taxes (and any interest and penalties imposed with respect thereto)
imposed upon any Gross-Up Payment, Holder actually receives an amount of
Gross-Up Payment equal to the Payment Tax imposed upon the Payment (i.e., the
Holder receives a net amount equal to the Payment). The Company shall timely
remit such Payment Tax to the applicable governmental authority and shall
provide evidence of such payment to Holder within ten (10) days of making such
payment.
(ii)
Assignment of Debenture. Upon an assignment of this Debenture in
whole or in part, the Company shall, in addition to all sums otherwise payable
hereunder, pay to the Holder an additional payment in cash (a Disposition
Gross-Up Payment) which shall be sufficient to cover any taxes (including
any interest or penalties) under the ITA (Disposition Taxes) in respect
of such assignment and in respect of amounts payable under this Section
2(b)(ii). The Company shall timely remit any such Disposition Taxes to the
Receiver General of Canada on account of Holder and shall provide evidence of
such payment to Holder within ten (10) days of making such payment.
(iii)
Indemnification. The Company shall indemnify Holder, within fifteen
(15) days after written demand therefor, for the full amount of any Payment
Taxes or Disposition Taxes paid by Holder (including any taxes imposed or
asserted on or attributable to amounts payable under this Section 2(b)(iii)) and any expenses
or losses arising therefrom or with respect thereto whether or not such Payment
Taxes or Disposition Taxes were correctly or legally imposed or asserted by the
relevant governmental authority.
8
(iv) If the Holder receives a refund of any
Payment Taxes or Disposition Taxes (collectively Taxes) as to which it
has been indemnified by the Company pursuant to Section 2(b)(iii) or with
respect to which the Company has paid additional amounts pursuant to Section
2(b)(ii), by reason that any such Taxes were incorrectly or illegally imposed or
asserted by the relevant governmental authority, the Holder shall pay to the
Company an amount equal to such refund (but only to the extent of indemnity
payments made, or additional amounts paid, by the Company under Section 2(b)(ii)
with respect to the Taxes giving rise to such refund), and without interest
(other than any net after-Tax interest paid to the Holder with respect to such
refund) and less any costs, fees, expenses, damages, losses, taxes or other
amounts incurred by the Holder in respect of such refund. This provision shall
not be construed to require the Holder to make available any information
relating to its taxes that it considers confidential to the Company, to arrange
its affairs in any particular manner or, except as provided in the next
sentence, to claim any available refund. The Holder will, at the request and
expense of the Company, contest the payment, and seek a refund, of any Taxes
that the Company considers to be incorrectly or illegally imposed or asserted,
provided that contesting the payment, or seeking a refund, of such Taxes shall
not relieve the Company from its obligations under its indemnity or to pay
additional Taxes under Section 2(b)(ii).
(c)
Adjustments to Principal Amount. The Principal Amount owing under
this Debenture shall be decreased, as of the date of redemption, upon the early
redemption of all or a portion of the Principal Amount by an amount equal to
such Principal Amount that has been so redeemed (an Adjustment Event).
The Holder shall not be required to physically surrender the Debenture to the
Company upon the occurrence of an Adjustment Event, unless the full outstanding
Principal Amount has been redeemed. The Holder and the Company shall maintain
records showing the outstanding Principal Amount at any given time and the dates
and effect of any Adjustment Events or shall use such other method, reasonably
satisfactory to the Holder and the Company, so as not to require physical
surrender of the Note upon each such Adjustment Event. In addition, following
each Adjustment Event, the Company shall update the Debenture Adjustment
Schedule attached hereto as Exhibit A (the Debenture Adjustment
Schedule), initial such schedule and transmit it to the Holder by facsimile
or other electronic transmission, who shall counter-initial such schedule and
return it to the Company by facsimile or other electronic transmission.
Section 3.
Redemption.
(a)
Change in Control Transactions. Upon the Company becoming aware of
the occurrence of a Change of Control Transaction, the Company shall, within
five Business Days, give written notice of such Change of Control Transaction to
the Holder. Such notice shall contain and constitute an offer to redeem the
Debenture, in whole or in part at the election of the Holder, on a redemption
date specified in such offer that is not less than thirty (30) days and not more
than fifty (50) days after the date of such offer at a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed (the Change
in Control Offer). The offer to redeem the Debenture shall state that the
offer is made pursuant to this Section 3(a) and shall specify, in reasonable
detail, the nature and date of the Change of Control and provide a sample
calculation of the redemption price. The Holder shall have the right to accept
or decline the offer in whole or in part at the Holders option by providing
written notice to the Company within ten (10) Business Days of receipt of the Change
in Control Offer indicating the amount, if any, of the outstanding Principal
Amount to be redeemed.
9
(b)
Redemption on Failure to Agree. Within ten (10) Business Days of
any Failure to Agree under Section 9 of the Purchase Agreement, the Company
shall fully redeem the Debenture by paying to the Holder a cash redemption price
equal to 120% of the outstanding Principal Amount being redeemed.
(c)
Cancellation. After all of the Principal Amount has been paid in
full, this Debenture shall automatically be deemed canceled and the Holder shall
promptly surrender the Debenture to the Company at the Companys principal
executive offices.
(d)
Notices Procedures. Any and all notices or other communications or
deliveries to be provided by the Holder hereunder, shall be in writing and
either (i) emailed or (ii) delivered personally, by confirmed facsimile, or by a
nationally recognized overnight courier service to the Company at the facsimile
telephone number or address of the principal place of business of the Company as
set forth in the Purchase Agreement. Any and all notices or other communications
or deliveries to be provided by the Company hereunder shall be in writing and
either (x) emailed or (y) delivered personally, by facsimile, or by a nationally
recognized overnight courier service addressed to the Holder at the facsimile
telephone number or address of the Holder appearing on the books of the Company,
or if no such facsimile telephone number or address appears, at the principal
place of business of the Holder. Any notice or other communication or deliveries
hereunder shall be deemed delivered (i) upon receipt, when emailed or delivered
personally, (ii) when sent by facsimile, upon receipt if received on a Business
Day prior to 5:00 p.m. (Eastern Time), or on the first Business Day following
such receipt if received on a Business Day after 5:00 p.m. (Eastern Time) or
(iii) upon receipt, when deposited with a nationally recognized overnight
courier service.
Section 4.
Security.
As security for the due and punctual payment of all of its
obligations to the Holder hereunder, the Company shall promptly execute and
deliver, together with any relevant power of attorney, registrations, filings
and other supporting documentation deemed necessary by the Purchaser or its
counsel to perfect the same or otherwise in respect thereof.
Section 5. Covenants.
(a)
Affirmative Covenants. So long as any Principal Amount of the Debenture
remains outstanding, the Company shall:
(i) Reporting Requirements. During
the term of this Agreement, prepare (where applicable, in accordance with IFRS)
and deliver to the Holder, in a form satisfactory to the Holder:
(A) as soon as practicable and in any event within
fifteen (15) days of the end of each calendar month, the management prepared
financial statements of the Parent as at the end of such calendar month prepared
in a form satisfactory to the Purchaser and including a balance sheet, statement
of income and retained earnings and a statement of changes in financial
position, as at the end of such calendar month as at the end of and for such
calendar month and the then elapsed portion of
the Financial Year which includes such calendar month;
10
(B) as soon as practicable and in any event within
forty-five (45) days after the end of each Financial Quarter of the Parent, the
interim unaudited consolidated financial statements of the Parent as at the end
of such Financial Quarter prepared on a consolidated basis in accordance with
IFRS including a balance sheet, statement of income and retained earnings and a
statement of changes in financial position in each case as at the end of and for
such Financial Quarter and the then elapsed portion of the Financial Year which
includes such Financial Quarter, setting forth in each case in comparative form
the figures for the corresponding period or periods of (or in the case of the
balance sheet, as at the end of) the previous Financial Year;
(C) as soon as practicable and in any event within
ninety (90) days after the end of each Financial Year of the Parent, the annual
audited consolidated financial statements of the Parent prepared in accordance
with IFRS including a balance sheet, statement of income and retained earnings
and a statement of changes in financial position for such Financial Year (which
financial statements shall be audited by an internationally recognized
accounting firm acceptable to the Holder), setting forth in each case in
comparative form the figures for the previous Financial Year; and
(D)
concurrently with the delivery of the financial statements contemplated in
(B) and (C) above, a Compliance Certificate in respect of such Financial Quarter
or Financial Year, as applicable.
None of the financial statements or reports or opinions of
auditors with respect thereto referred to above shall contain any Impermissible
Qualifications.
(ii) Environmental.
(A)
At all times comply in all material respects with Environmental Laws
including environmental permits and approved plans with respect to closure
and/or rehabilitation;
(B) not to release any hazardous substances at, on
or from the Owned Real Properties, the Leased Real Properties or other assets of
the Company, nor to permit same, at any time in material violation of
Environmental Laws;
(C) immediately notify the Holder of: (1) any
release of any hazardous substances at, on or from the Owned Real Properties,
the Leased Real Properties or other assets of the Company in material violation
of any Environmental Laws; (2) any Claim received by the Company of or relating
to any material violation of any Environmental Laws or material environmental
liabilities; and (3) any facts or circumstances which could reasonably be
expected to give rise to a material Claim, material remedial action or material
breach of or in respect of any Environmental Laws;
11
(D)
remove promptly any hazardous substance from the Owned Real Properties,
the Leased Real Properties or other assets of the Company to the extent required
to comply in all material respects with Environmental Laws and to the extent
required to eliminate or prevent any material environmental liabilities;
(E) provide, at the expense of the Company, the
Holder with an assessment and/or audit report with respect to the Owned Real
Properties, the Leased Real Properties, the business or other assets of the
Company, upon the written request of the Holder acting reasonably; and
(F) permit the Holder, at its sole discretion, at
the expense of the Company, to conduct in a reasonable manner such
investigations, assessments or audits as the Holder in its reasonable discretion
deems appropriate to determine whether: (1) hazardous substances exist on any
part of the Owned Real Properties, the Leased Real Properties or other assets of
the Company and to determine the source, quantity and type of such hazardous
substances, if any; or (2) the business, the Owned Real Properties, the Leased
Real Properties or other assets of the Company or any activities conducted at
such properties comply with Environmental Laws, and the Company shall cooperate
with the Holder in conducting such investigations, assessments and audits. The
Holder and its officers, employees, agents and contractors shall have and are
hereby granted the right to enter upon and inspect the Owned Real Properties,
the Leased Real Properties or other assets of the Company for the foregoing
purposes; provided that the Holder shall use reasonable efforts to minimize the
disruption to the operation of the business.
(iii) Additional Reporting
Requirements.
(A)
Deliver to the Holder as soon as possible, and in any event within five days
after the Company becomes aware of the occurrence of each Event of Default, a
statement of a senior officer setting forth the details of such Event of Default
and the action which the Company proposes to take or has taken with respect
thereto;
(B) from time to time upon request of the Holder,
deliver to the Holder evidence of maintenance of all insurance required to be
maintained by Section 5(a)(ix), including such originals or copies as the Holder
may reasonably request of policies, certificates of insurance, riders and
endorsements relating to such insurance and proof of premium payments;
(C) deliver to the Holder, together with the
Compliance Certificate to be delivered pursuant to Section 5(a)(i)(C), written
notice of any previously undisclosed (1) jurisdictions (or registration
districts within such jurisdictions) in which the Company has any place of
business or stores any tangible personal property or assets, (2) Subsidiaries of
the Company or membership, partnership, joint venture or syndicate interests of
the Company, (3) material permits or licenses which become necessary for the
conduct of the business or any amendment to, termination of or material default
under any previously disclosed material permit or license, (4) Benefit Plans or
Pension Plans of the Company, (5) Material Agreements of the Company or any amendment to, termination of or
material default under any previously disclosed Material Agreement, and (6) any
Lease or acquisition of real or immovable property by the Company or amendment
to, termination of or material default under any previously disclosed Lease, and
12
(D) deliver to the Holder such other information
respecting the condition or operations, financial or otherwise, of the business
of the Company as the Holder may from time to time reasonably request.
(iv)
Existence; Conduct of Business. Do or cause to be done all things
necessary to preserve, renew and keep in full force and effect its legal
existence, and obtain, preserve, renew and keep in full force and effect any and
all material permits and licenses.
(v)
Payment Obligations. Pay its obligations, including Tax
liabilities, before the same shall become delinquent or in default, except where
(A) the validity or amount thereof is being contested in good faith by
appropriate proceedings, (B) or the Company has, if required, set aside on its
books adequate reserves with respect thereto in accordance with IFRS, and (C)
the failure to make payment pending such contest could not reasonably be
expected to result in a Material Adverse Effect.
(vi)
Maintenance of Properties. Keep and maintain all property material
to the conduct of its business in good working order and condition, ordinary
wear and tear excepted, except to the extent that the failure to do so,
individually or in the aggregate, could not reasonably be expected to have a
Material Adverse Effect.
(vii)
Books and Records; Inspection Rights. Keep proper books of record and
account in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. Permit any
representatives designated by the Holder, upon reasonable prior notice and
during normal business hours, to visit and inspect its properties, to examine
and make extracts from its books and records, and to discuss its affairs,
finances and condition with its officers and auditors, all at such reasonable
times and as often as reasonably requested by the Holder; provided that (A) the
Holder shall act reasonably in the conduct of all such visits, inspections and
inquiries, (B) the Holder shall provide at least two Business Days notice of any
such request for access; (C) the Holder shall use any confidential information
received via access provided hereunder only for purposes related to this
Debenture; and (D) the Company shall not be obligated to provide to the Holder
any confidential information if contrary to Applicable Laws.
(viii)
Compliance with Laws and Material Agreements. Comply with all Applicable
Laws and orders of any Governmental Authority applicable to it or its property
and with all Material Agreements.
(ix)
Insurance. Maintain or cause to be maintained, with financially sound and
reputable insurers acceptable to the Holder, acting reasonably, insurance with
respect to their respective properties and business against such liabilities,
casualties, risks and contingencies and in such types (including business
interruption insurance) and amounts as is customary in the case of Persons of
similar size engaged in the same or similar businesses and operating in the same
geographic area and in accordance with any requirement of any Governmental
Authority. In the case of any fire, accident or other casualty causing loss or
damage to any properties of the Company used in generating cash flow or required
by Applicable Law, all proceeds of such policies shall be used
promptly to repair or replace any such damaged properties, and otherwise shall
be used as directed by the Holder to pay any Principal then payable under the
Debenture.
13
(x)
Operation and Maintenance of Property. Manage and operate its
business or cause its business to be managed and operated (A) in accordance with
prudent industry practice in all material respects and in compliance with the
terms and provisions of all material permits and licenses, and (B) in compliance
with all Applicable Laws of the jurisdiction in which such businesses are
carried on, and all Applicable Laws of every other Governmental Authority from
time to time constituted to regulate the ownership, management and operation of
such businesses.
(xi)
Status of Accounts and Collateral. With respect to the Collateral, report
immediately to the Holder any matters adversely affecting the value,
enforceability or collectability of any of the Collateral.
(xii)
Accounts Receivable. Collect accounts receivable in the ordinary course
of business in a commercially reasonable manner.
(xiii)
Cure Defects. Promptly cure or cause to be cured any defects in the
execution and delivery of any of the Security Documents or any of the other
agreements, instruments or documents contemplated thereby or executed pursuant
thereto or any defects in the validity or enforceability of any of the Security
Documents and, at its expense, execute and deliver or cause to be executed and
delivered all such agreements, instruments and other documents as the Holder may
consider necessary or desirable for the foregoing purposes.
(xiv)
Additional Material Subsidiaries/Security. If, at any time on or after
the date hereof, the Company proposes to create or acquire an additional
Subsidiary or in some other fashion to become the holder of any Equity
Securities of a new Subsidiary, the Company will notify the Holder of such event
at least fifteen (15) Business Days prior to such event and:
(A) prior to or concurrently with the creation or
acquisition of such Subsidiary, the Company will, and will cause any relevant
Subsidiary, to execute and deliver to the Holder a securities pledge agreement,
in form and substance satisfactory to the Holder, acting reasonably, granting a
security interest in 100% of the Equity Securities of such new Subsidiary; and
(B) prior to or concurrently with the creation or
acquisition of such Subsidiary, to the extent not prohibited or restricted by
Applicable Law, the Company will cause such new Subsidiary to immediately
execute and deliver to the Holder a guarantee and security of the nature
contemplated by the Security Agreement, all in form and substance satisfactory
to the Holder, acting reasonably, and accompanied by customary legal opinions of
counsel to the Company or such Subsidiary.
In connection with the execution and delivery of any guarantee,
pledge agreement, mortgage, security agreement or related document pursuant to
this Section 5(a)(xiv), the Company will, or will cause the relevant Subsidiary
to, deliver at its expense to the Holder such corporate or other resolutions,
certificates, legal opinions and such other related documents as shall be
reasonably requested by the Holder and consistent with the relevant forms and
types thereof delivered on the Closing Date pursuant to the Purchase Agreement
or as shall be otherwise reasonably acceptable to the Holder and to effect such filings and
registrations with the applicable Governmental Authorities as may be requested
by the Holder to preserve and perfect the Encumbrances created by such
mortgages, pledges, and other relevant agreements. Each guarantee, pledge
agreement, mortgage, security agreement and other document delivered pursuant to
this Section 5(a)(xiv) shall be deemed to be a Security Document from and after
the date of execution thereof.
14
(xv)
Material Permits. Maintain all material permits and licenses as may
be necessary to properly conduct their respective businesses, the failure of
which to maintain could reasonably be expected to have a Material Adverse
Effect.
(xvi)
Expropriation. Advise the Holder of its receipt of any notice of
expropriation affecting any Owned Real Property where the expropriation is
likely to be successful and if successful would result in expropriation proceeds
exceeding Five Hundred Thousand U.S. Dollars (US$500,000).
(xvii)
Damage or Destruction. Advise the Holder in writing of any damage to or
destruction of any assets of the Company in respect of which the cost of
replacement or repair, individually or in the aggregate, would exceed Five
Hundred Thousand U.S. Dollars (US$500,000).
(xviii)
Leases. Duly observe and comply with all of its obligations under
any Lease to which it is a party which if not complied with would cause a
material default thereunder and shall forthwith advise the Holder in writing of
its receipt of any notices from the lessor alleging any material default by it
under a Lease.
(xix)
Payment of Taxes. Pay, or cause to be paid, when due, all Taxes, property
taxes, business taxes, social security premiums, assessments and governmental
charges or levies imposed upon it or upon its income, sales, capital or profit
or any property belonging to it unless any such Tax, social security premiums,
assessment, charge or levy is contested diligently and in good faith by
appropriate proceedings and in respect of which appropriate reserves have been
maintained in accordance with IFRS.
(xx)
Withholding Taxes. Withhold from each payment made to any of its
past or present employees, officers or directors, and to any non-resident of the
country in which it is resident, the amount of all Taxes and other deductions
required to be withheld therefrom and pay the same to the property Governmental
Authorities within the time required under any Applicable Laws.
(xxi)
Collection of Taxes. Collect from all Persons the amount of all
Taxes required to be collected from them and remit the same to the Governmental
Authorities within the time required under any Applicable Laws.
(xxii)
Registration of Security. From time to time, register or cause to
be registered, and cooperate in the registration of, the Security, and any
public notices or filings in respect thereof, on a timely basis and do, observe
and perform all of its obligations and all matters and things that may be
necessary or reasonably required for the purposes of creating and maintaining
the Encumbrances intended to result from the Security as valid, effective and
perfected first priority Encumbrances (subject only to Permitted Encumbrances)
at all times and shall comply with all requirements of Section 5(b)(xiv).
15
(xxiii) Benefit Plans.
(A)
Cause to be filed or distributed in a timely manner all reports and
disclosures relating to any Benefit Plan that are required by the plan or any
Applicable Laws to be filed or distributed.
(B)
Perform all obligations (including fiduciary, funding, investment and
administration obligations) required to be performed in connection with each
Benefit Plan and the funding media therefor; make all contributions and pay all
premiums required to be made or paid in accordance with the terms of each
Benefit Plan and all Applicable Laws; withhold, by way of authorized payroll
deductions or otherwise collect and pay into each Benefit Plan all employee
contributions required to be withheld or collected by the Company in accordance
with the terms of such plan and all Applicable Laws.
(b)
Negative Covenants. So long as any Principal Amount of the Debenture
remains outstanding, the Company shall not:
(i) Debt. Create, incur or suffer to exist,
any Debt other than Permitted Debt.
(ii)
Encumbrances. Create, incur, assume or suffer to exist, any
Encumbrance on any of its assets, other than Permitted Encumbrances.
(iii)
Fundamental Changes. Merge into or amalgamate or consolidate with
any other Person, or permit any other Person to merge into or amalgamate or
consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or substantially all of its
assets, or all or any of the Equity Securities of any Subsidiary (in each case,
whether now owned or hereafter acquired), or liquidate, dissolve or be wound up.
(iv) Carry on Business.
(A)
Engage in any business which is different from the business conducted on
the Closing Date and businesses reasonably related thereto.
(B)
After the Closing Date, carry on business otherwise than through the Company.
(v)
Transfer of Assets. Neither the Company nor any Subsidiary shall
sell, transfer, lease, part with possession or otherwise dispose of any assets,
whether by way of sale, lease, assignment, sale-leaseback or otherwise other
than (A) obsolete assets, equipment and material, (B) in the ordinary course of
business, (C) assets up to an aggregate amount not to exceed One Hundred
Thousand U.S. Dollars (US$100,000); (exclusive of the shares referred to in the
next clause) or (D) common shares of Acadian Mining Corporation owned on the
date hereof.
(vi)
Transactions with Affiliates. Transfer, sell or otherwise dispose
of any assets to, or purchase, lease or otherwise acquire any assets from, or
otherwise engage in any other transactions with, any of its Affiliates, except
(A) in the ordinary course of business at prices and on terms and conditions not
less favourable to the Company than could be obtained on an arms-length basis
from unrelated third parties, (B) transactions between or among the Company and the Parent not involving any other Affiliate, (C)
any Restricted Payment permitted by Section 5(b)(ix), and (D) as otherwise
expressly permitted pursuant to this Agreement and the Security Documents.
Except as otherwise expressly permitted pursuant to the terms of this Agreement
and the other Security Documents, the Company will not enter into any
transaction or series of transactions with Affiliates which involve an outflow
of money or other property from the Company to an Affiliate, including repayment
of Debt, or payment of management fees, affiliation fees, administration fees,
compensation, salaries, asset purchase payments or any other type of fees or
payments similar in nature, other than on terms and conditions substantially as
favourable to the Company as would be obtainable by the Company in a reasonably
comparable arms-length transaction with a Person other than an Affiliate. The
foregoing restrictions shall not apply to: (A) the payment of reasonable and
customary fees to directors of the Company who are not employees of the Company,
(B) any other transaction with any employee, officer or director of the Company
pursuant to employee profit sharing and/or benefit plans and compensation and
non-competition arrangements in amounts customary for corporations similarly
situated to the Company and entered into in the ordinary course of business and
approved by the board of directors of the Company, or (C) any reimbursement of
reasonable out-of-pocket costs incurred by an Affiliate of the Company on behalf
of or for the account of the Company.
16
(vii)
Restrictive Agreements. Other than under the terms of Senior Construction
Financing, directly or indirectly enter into, incur or permit to exist, any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon (A) the ability of the Company to create, incur or permit to
exist any Encumbrance upon any of its assets, (B) the ability of the Company to
pay dividends or other distributions with respect to any Equity Securities or
with respect to, or measured by, its profits or to make or repay loans or
advances to the Parent or to provide a guarantee of any Debt of the Parent, (C)
the ability of the Company to make any loan or advance to the Parent, or (D) the
ability of the Company to sell, lease or transfer any of its property or assets;
provided that the foregoing shall not apply to restrictions or conditions; (1)
imposed by Applicable Law; (2) existing on the date hereof identified on
Schedule 4.2(y) to the Purchase Agreement (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition); (3) imposed by any agreement relating to
Permitted Debt permitted by this Debenture if such restrictions or conditions
apply only to the property or assets securing such Debt; and (4) customarily
provided for in leases and other ordinary course contracts restricting the
assignment thereof.
(viii)
Share Capital. Issue any Equity Securities, except to the Parent.
(ix) Restricted Payments. Declare, make or pay or agree to declare, make
or pay, directly or indirectly, any Restricted Payment, except (A) Restricted
Payments by the Company to the Parent, (B) regularly scheduled payments in
respect of Permitted Debt hereunder, and (C) Restricted Payments by the Company
pursuant to and in accordance with Benefit Plans for the directors or officers
of the Company, provided that the aggregate amount of cash payments made by the
Company and the Parent in any Financial Year pursuant to all such Benefit Plans
shall not exceed reasonable commercial amounts paid in the normal course of
business and approved by the board of directors of the Company.
(x)
Investments. Purchase, hold or acquire (including pursuant to any
amalgamation with any Person that was not a wholly-owned Subsidiary of the
Company prior to such amalgamation), any Equity Securities, evidences of
indebtedness or other securities (including any option, warrant or other right
to acquire any of the foregoing) of, make or permit to exist any loans or advances to, guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person, or purchase or otherwise acquire (in one transaction or a series
of transactions) any assets of any other Person, except: (A) inter-company loans
or advances between the Company and the Parent; (B) Permitted Debt; and (C)
Permitted Investments.
17
(xi)
Acquisitions. Make any Acquisition, other than a Permitted
Acquisition, provided in the case of a Permitted Acquisition no Event of Default
has occurred and is continuing or would occur as a result of such Permitted
Acquisition.
(xii)
Subsidiaries. Create or acquire any Subsidiary unless the Company
and the Subsidiary shall have complied with Section 5(a)(xiv).
(xiii) Sale-Leasebacks. Enter into sale-leaseback
transactions.
(xiv)
Capital Expenditures. Make or commit to make any Capital
Expenditures during the period from the Closing Date to the Maturity Date other
than as provided for in the NorthMet Project Budget.
(xv)
Change of Name; Business Outside Certain Jurisdictions. (A) Change
its name, registered office, chief executive office or jurisdiction of
incorporation, or (B) have any place of business or keep or store any material
tangible property outside of those jurisdictions (or registration districts
within such jurisdictions) set forth in Schedule 5.1(m) to the Purchase
Agreement, (1) except upon thirty (30) days prior written notice thereof to the
Holder; and (2) unless the Company has done or caused to be done all such acts
and things and executed and delivered or caused to be executed and delivered all
such deeds, transfers, assignments and instruments as the Holder may reasonably
require for perfecting or maintaining the perfection of the Encumbrances of the
Security and the priority thereof in the Collateral in favour of the Holder.
(xvi)
Financial Year. Change its Financial Year.
(xvii) Amendments. Allow (A) any amendments to its constating
documents or by-laws; or (B) any amendments to, or grant any waivers in respect
of any Material Agreement or any guarantee or security in respect thereof.
(xviii)
Change of Auditors. Change its auditors other than to a nationally
recognized accounting firm approved by the Holder acting reasonably.
(xix)
Speculative Transactions. Engage in any interest rate, currency
rate, commodity hedge or similar agreement, understanding or obligation, except
in the normal course of business and not for speculative purposes.
18
(c)
Indemnification. The Company will pay, and will indemnify and same
harmless the Holder against, all costs and expenses (including legal fees and
expenses) incurred with respect to the exercising of any of the rights, remedies
and powers of the Holder under this Debenture, or the taking of any other
proceedings taken for the purpose of enforcing the remedies provided for under
law by reason of non-payment of the obligations hereunder.
Section 6. Defaults and Remedies.
(a)
Events of Default. An Event of Default is: (i) a default
in payment of any principal amount due hereunder; (ii) a default in payment of
any interest or other amount due hereunder which default continues for more than
five (5) Business Days after the due date thereof; (iii) a default in the timely
issuance of Underlying Shares upon and in accordance with the terms of the
Warrants, which default continues for five (5) Business Days after the Parent
has received written notice informing the Parent that it has failed to issue
shares or deliver share certificates within the fifth day following the exercise
date; (iv) failure by the Company or the Parent for fifteen (15) days after
written notice has been received by the Company or the Parent, as applicable, to
comply with any material provision of any of the Agreements (including the
failure of the Company to make a Change in Control Offer in accordance with
Section 3(a)), the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (v) a material breach by the Company or the Parent of its
covenants, representations or warranties in any of the Agreements, the Escrow
Agreement, the Standby Purchase Agreement or the Confirmation of Secured
Obligations Agreement; (vi) any default after any cure period under, or
acceleration prior to maturity of, any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
indebtedness for money borrowed by the Company or the Parent for in excess of
One Million U.S. Dollars (US$1,000,000) or for money borrowed the repayment of
which is guaranteed by the Company or the Parent for in excess of One Million
U.S. Dollars (US$1,000,000), whether such indebtedness or guarantee now exists
or shall be created hereafter; (vii) if the Company or the Parent is subject to
any Bankruptcy Event; (viii) if a judgment or order is obtained against the
Company or the Parent which has or would have a Material Adverse Effect, and, if
such judgment or order is for the payment of money, the judgment or order has
not been dismissed, stayed or satisfied within twenty (20) days of the date that
such judgment or order is issued; (ix) if any material permit or license or
Material Agreement of the Company or the Parent expires or is withdrawn,
cancelled, terminated, or modified (and such expiry, withdrawal, cancellation,
termination or modification would have a Material Adverse Effect) and is not
reinstated or replaced within thirty (30) days thereafter without material
impairment of the property or business of the Company or the Parent; (x) a final
judgment, writ of execution, garnishment or attachment or similar process is
issued or levied against any property of the Company or the Parent having a fair
market value in excess of One Million U.S. Dollars (US$1,000,000) and
such judgment, writ, execution, garnishment, attachment or similar process is
not released, bonded, satisfied, discharged, vacated or stayed within forty-five
(45) days after its entry, commencement or levy; (x) solely with respect to
Principal Amounts held by Glencore AG, a material breach by the Parent of its
covenants, representations or warranties in the Marketing Agreement, Copper
Offtake Agreement or Nickel Offtake Agreement; or (xi) the termination of the
Standby Purchase Agreement prior to the completion of the Rights Offering.
(b)
Remedies. If an Event of Default occurs and is continuing with respect to
the Debenture, the Holder may declare all of the then outstanding Principal
Amount of this Debenture and all other debentures held by the Holder, to be due
and payable immediately, and the Holder may commence such legal action or
proceedings as it, in its sole discretion, deems necessary, all without any
additional notice, presentation, demand, protest, notice of dishonor, entering into of possession of any of the assets of the Company
or any other action or notice, all of which the Company hereby expressly waives,
except that in the case of an Event of Default arising from events described in
clauses (vi) through (x) of Section 6(a), inclusive, this Debenture shall become
due and payable without further action or notice. In the event of such
acceleration, the amount due and owing to the Holder shall be 120% of the
outstanding Principal Amount of the Debenture held by the Holder. In either case
the Company shall pay interest on such amount in cash at the Default Rate (as
defined below) to the Holder if such amount is not paid within seven (7) days of
Holders request. The remedies under this Debenture shall be cumulative.
19
(c)
Notice of Default. The Company covenants to provide written notice to the
Holder within two (2) Business Days upon the occurrence of any Event of Default.
(d)
Default Interest. Notwithstanding anything contained herein, this
Debenture shall bear interest on the due and unpaid outstanding Principal Amount
from and after the occurrence and during the continuance of an Event of Default
pursuant to Section 6(a) at the rate (the Default Rate) equal to the
lower of 18% per annum or the highest rate permitted by law.
Section 7. General.
(a)
Technical Services Committee. The Holder of a majority of the
Principal Amount outstanding under this Debenture shall be entitled to select
and appoint one (1) member (the Appointee) to the Technical Services
Committee of the Company and shall be entitled to select and appoint any
successor to or replacement of such Appointee, subject, in each case, to the
Companys consent which shall not be unreasonably withheld.
(b)
Payment of Expenses. The Company agrees to pay all reasonable charges and
expenses, including attorneys fees and expenses, which may be incurred by the
Holder in successfully enforcing this Debenture and/or collecting any amount due
under this Debenture.
(c)
Interest Act (Canada) Disclosure. For the purposes of
disclosure pursuant to the Interest Act (Canada), the yearly rate of
interest to which the rate of interest applicable to any interest period,
computed as provided under Section 2 above, is equivalent is the rate of
interest for such interest period multiplied by a fraction of which (i) the
numerator is the actual number of days in the 12-month period commencing on the
date of the commencement of such interest period and ending on the day
immediately preceding the anniversary of such date of commencement, and (ii) the
denominator is three hundred sixty-five (365).
(d)
Savings Clause. In case any provision of this Debenture is held by a
court of competent jurisdiction to be excessive in scope or otherwise invalid or
unenforceable, such provision shall be adjusted rather than voided, if possible,
so that it is enforceable to the maximum extent possible, and the validity and
enforceability of the remaining provisions of this Debenture will not in any way
be affected or impaired thereby. In no event shall the amount of interest paid
hereunder exceed the maximum rate of interest on the unpaid principal balance
hereof allowable by applicable law. If any sum is collected in excess of the
applicable maximum rate, the excess collected shall be applied to reduce the
principal debt. If the interest actually collected hereunder is still in excess
of the applicable maximum rate, the interest rate shall be reduced so as not to
exceed the maximum allowable under law.
20
(e)
Amendment. Neither this Debenture nor any term hereof may be
amended, waived, discharged or terminated other than by a written instrument
signed by the Company and the Holder.
(f)
Assignment, Etc. The Holder may assign or transfer this Debenture at any
time and from time to time in whole or in part to any transferee, without the
consent of the Company, provided that any partial assignment of this Debenture
shall be for a minimum principal amount of not less than Five Million U.S.
Dollars (US$5,000,000). The Holder shall notify the Company of any such
assignment or transfer promptly. This Debenture shall be binding upon the
Company and its successors and shall inure to the benefit of the Holder and its
successors and assigns.
(g)
No Waiver. Neither the extension of time for making any payment
which is due and payable under this Debenture at any time or times, nor the
failure on the part of the Holder to exercise, and no delay in exercising any
right, remedy or power hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise by the Holder of any right, remedy or power
hereunder preclude any other or future exercise of any other right, remedy or
power. Each and every right, remedy or power hereby granted to the Holder or
allowed it by law or other agreement shall be cumulative and not exclusive of
any other, and may be exercised by the Holder from time to time.
(h) Governing Law; Jurisdiction.
(i)
Governing Law. THIS DEBENTURE WILL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY
CONFLICTS OF LAWS PROVISIONS THEREOF THAT WOULD DEFER TO THE SUBSTANTIVE LAWS OF
ANOTHER JURISDICTION.
(ii)
Jurisdiction. The Company irrevocably submits to the exclusive
jurisdiction of any State or Federal Court sitting in the State of New York,
County of New York, over any suit, action, or proceeding arising out of or
relating to this Debenture. The Company irrevocably waives, to the fullest
extent permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such suit, action, or proceeding brought in such a
court and any claim that suit, action, or proceeding has been brought in an
inconvenient forum.
The
Company agrees that the service of process upon it mailed by certified or
registered mail (and service so made shall be deemed complete three (3) days
after the same has been posted as aforesaid) or by personal service shall be
deemed in every respect effective service of process upon it in any such suit or
proceeding. Nothing herein shall affect Holders right to serve process in any
other manner permitted by law. The Company agrees that a final non-appealable
judgment in any such suit or proceeding shall be conclusive and may be enforced
in other jurisdictions by suit on such judgment or in any other lawful manner.
(iii)
NO JURY TRIAL. THE COMPANY HERETO KNOWINGLY AND VOLUNTARILY WAIVES ANY
AND ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION
BASED ON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS DEBENTURE.
(i)
Replacement Debenture. This Debenture may be exchanged by Holder at any
time and from time to time for a Debenture or debentures with different
denominations representing an equal aggregate outstanding Principal Amount, as
reasonably requested by Holder, upon surrendering the same. No service charge will be
made for such registration or exchange. In the event that Holder notifies the
Company that this Debenture has been lost, stolen or destroyed, a replacement
Debenture identical in all respects to the original Debenture (except for
registration number and Principal Amount, if different than that shown on the
original Debenture), shall be issued to the Holder, provided that the Holder
executes and delivers to the Company an agreement reasonably satisfactory to the
Company to indemnify the Company from any loss incurred by it in connection with
the Debenture.
21
(f)
Judgment Currency. If, for the purposes of obtaining judgment in
any court, it is necessary to convert a sum due to the Holder in any currency
(the Original Currency) into another currency (the Other
Currency), the parties agree, to the fullest extent that they may
effectively do so, that the rate of exchange used shall be that at which, in
accordance with normal banking procedures, the Holder could purchase the
Original Currency with the Other Currency on the Business Day preceding the day
on which final judgment is given or, if permitted by Applicable Law, on the day
on which the judgment is paid or satisfied. The obligations of the Company in
respect of any sum due in the Original Currency from it to the Holder under any
of the Security Documents shall, notwithstanding any judgment in any Other
Currency, be discharged only to the extent that on the Business Day following
receipt by the Holder of any sum adjudged to be so due in the Other Currency,
the Holder may, in accordance with normal banking procedures, purchase the
Original Currency with such Other Currency. If the amount of the Original
Currency so purchased is less than the sum originally due to the Lender in the
Original Currency, the Company agrees, as a separate obligation and
notwithstanding the judgment, to indemnify the Holder, against any loss, and, if
the amount of the Original Currency so purchased exceeds the sum originally due
to the Holder in the Original Currency, the Holder shall remit such excess to
the Company.
(k)
Further Assurances. Each party shall from time to time promptly
execute and deliver all further documents and take all further action necessary
to give effect to the provisions and intent of this Debenture.
[Signature Page Follows]
22
IN WITNESS WHEREOF, the Company has caused this Debenture to be
duly executed on the day and in the year first above written.
POLY MET MINING, INC.
By:/s/ Douglas
Newby
Name: Douglas Newby
Title: Chief Financial Officer
EXHIBIT A
DEBENTURE ADJUSTMENT SCHEDULE
Debenture Adjustment Schedule for the Debenture issued by
POLY MET MINING, INC. to GLENCORE AG on or about January 30, 2015 in the
original principal amount of Eight Million U.S. Dollars (US$8,000,000), to be
completed and exchanged by fax or email following each principal repayment of
such Debenture.
Date |
Decreases
Principal
amount
repaid
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Remaining
principal
balance of
Debenture |
Initialed by
Company
CEO/CFO |
Initialed by
authorized
representative
of Holder |
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A-1
EXHIBIT B
COMPLIANCE CERTIFICATE
[Date]
TO: ? (the "Holder")
The
undersigned (the "Corporation") refers to the Floating Rate Secured Debenture
issued on January 30, 2015 (the "Debenture", the terms defined therein being
used herein as therein defined). This Compliance Certificate is delivered
pursuant to Section 5(a)(i) of the Debenture for the Financial Quarter/Year
ending on [?] (the "Period").
We, __________________________ and _________________________,
the respective Chief Executive Officer and Chief Financial Officer of the
Corporation, in such capacity and not personally, hereby certify that:
1. |
We are the duly appointed Chief Executive Officer and
Chief Financial Officer of the Corporation and as such we are providing
this certificate for and on behalf of the Corporation pursuant to the
Debenture. |
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2. |
We are familiar with and have examined the provisions of
the Debenture. |
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3. |
The financial statements most recently delivered pursuant
to [Section 5(a)(i)(B) or Section 5(a)(i)(C)] of the Debenture
present fairly the financial position, results of operations and changes
in financial position of the persons specified therein for the Period and
as at the last day of such Period, as the case may be, in accordance with
IFRS. |
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4. |
The representations and warranties contained in Section
5.1 of the Purchase Agreement are true and correct as though made on the
date hereof, except for and any such representation and warranty which is
stated to be made as of a certain date. |
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5. |
As of the date hereof, the Corporation is not in breach
of any of the covenants contained in Section 5 of the Debenture, and no
Event of Default has occurred and is continuing as at the date
hereof. |
Dated this _______________day of
_____________________________________.
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(Name please print) |
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Chief Executive Officer |
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(Name please print) |
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Chief Financial Officer |
B-1
CONFIRMATION OF SECURED OBLIGATIONS AGREEMENT
This
CONFIRMATION OF SECURED OBLIGATIONS AGREEMENT (this Agreement), dated
as of January 30, 2015, by Poly Met Mining, Inc., a Minnesota corporation
(PMI); PolyMet Mining Corp., a British Columbia company (PMC)
and Glencore AG, a Swiss corporation (Glencore).
WHEREAS,
PMI, PMC, and Glencore (the Parties) are parties to a Purchase
Agreement, dated as of October 31, 2008 (as amended, modified, supplemented or
restated from time to time, the Purchase Agreement);
WHEREAS,
PMI, PMC and Glencore wish to amend the Purchase Agreement pursuant to an
Amendment No. 16 Relating to Purchase Agreement, dated as of January 28, 2015
(Amendment No. 16), to provide for, among other things, the
issuance of a sixth debenture in the principal amount of US$8,000,000 (the
Tranche F Debenture);
WHEREAS,
PMI and Glencore are parties to a Security Agreement, dated as of October 31,
2008 (the PMI Security Agreement), PMC and Glencore are parties to a
Security Agreement, dated as of October 31, 2008 (the PMC Security
Agreement), PMC and Glencore are parties to a Pledge Agreement, dated as of
October 31, 2008 (the Pledge Agreement) and PMC has executed and
delivered a Parent Guarantee in favor of Glencore, dated as of October 31, 2008
(the Parent Guarantee, and together with the PMI Security
Agreement, the PMC Security Agreement and the Pledge Agreement, and as each such
agreement may be amended, modified, supplemented or restated from time to time,
the Security Documents); and
WHEREAS,
the Parties wish to confirm their intention that the Tranche F Debenture is a
Debenture, as defined in the Security Documents and that the obligations of PMI
and PMC under the Tranche F Debenture and Amendment No. 16 are secured
obligations under the Security Documents.
NOW,
THEREFORE, the Parties hereto hereby agree as follows:
Section
1. Confirmation of Obligation`s
(a)
PMC and Glencore hereby agree and confirm that: (i) all obligations,
undertakings, indebtedness and other liabilities of PMC of whatever nature,
monetary or otherwise, under, arising out of, or in any way connected with
Amendment No. 16 and the Tranche F Debenture, and all other agreements,
instruments and documents executed by PMC in connection therewith or otherwise,
constitute Obligations as defined in, and subject to the terms of, the PMC
Security Agreement and the Pledge Agreement, secured for the benefit of Glencore
by the Collateral Agent (as defined in each such agreement), and (ii) all
obligations, undertakings, indebtedness and other liabilities of PMI of whatever
nature, monetary or otherwise, under, arising out of or in any way connected
with Amendment No. 16 and the Tranche F Debenture, and all other agreements,
instruments and documents executed by PMI in connection therewith or otherwise,
constitute Obligations as defined in, and subject to the terms of, the Parent
Guarantee guaranteed by PMC for the benefit of Glencore as provided therein.
(b)
PMI and Glencore hereby agree and confirm that all obligations, undertakings,
indebtedness and other liabilities of PMC of whatever nature, monetary or
otherwise, of PMI under, arising out of or in any way connected with Amendment
No. 16 and the Tranche F Debenture, and all other agreements, instruments and
documents executed by PMI in connection therewith or otherwise, constitute
Obligations as defined in, and subject to the terms of, the PMI Security
Agreement.
Section
2. Representations And Warranties.
Without
limitation of the representations and warranties of PMC and PMI under Amendment
No. 16 or the Tranche F Debenture, each of PMC and PMI represents and warrants
the following to and in favor of Glencore:
(a)
The representations and warranties of PMC and PMI set forth in the Security
Documents are true and complete as if such representations and warranties were
given as of the date hereof.
(b)
Each of PMC and PMI has the requisite corporate power and authority to enter
into and to consummate the transactions contemplated by this Agreement and
otherwise to carry out its obligations hereunder. The execution and delivery of
this Agreement by PMC and PMI and the consummation by PMC and PMI of the
transactions contemplated hereby have been duly authorized by all necessary
action on the part of PMC and PMI and no further action is required by PMC and
PMI, their boards of directors or their shareholders in connection herewith.
This Agreement has been duly executed by PMC and PMI and, when delivered in
accordance with the terms hereof, will constitute the valid and binding
obligation of PMC and PMI enforceable against PMC and PMI in accordance with its
terms except: (i) as limited by general equitable principles and applicable
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting enforcement of creditors rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive
relief or other equitable remedies, and (iii) insofar as indemnification and
contribution provisions may be limited by applicable law.
(c)
All representations and warranties of PMC or PMI contained herein or in any
certificate or other document furnished by PMC or PMI pursuant hereto or in
connection with the transactions contemplated hereby are true and complete as of
the date hereof and shall survive the execution, delivery and acceptance of this
Agreement.
Section
3. Events Of Default.
PMC,
PMI and Glencore hereby agree and confirm that the occurrence of any one or more
of the following events shall constitute an additional Event of Default as
defined in and subject to the terms of each of the Debentures, the PMC Security
Agreement, the PMI Security Agreement and the Pledge Agreement:
(a)
either PMC or PMI fails or neglects to perform or observe any term, covenant,
warranty or representation contained in this Agreement that is required to be
performed or observed and the same is not cured to Glencores reasonable
satisfaction within fifteen (15) days after the giving of notice by Glencore to
PMC or PMI; or
(b)
if any statement, certificate or representation made or given by PMC or PMI to
Glencore in this Agreement shall be untrue, false or inaccurate in any material
respect.
Section
4. Miscellaneous.
(a)
Further Assurances. Each of PMC and PMI shall at any time and from time
to time upon the written request of Glencore, execute and deliver such further
agreements, instruments and documents and do such further acts and things as
Glencore may reasonably request in order to effect the purposes of this
Agreement.
(b)
Modification of Agreement. 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 with
the written consent of all of the Parties and each assignee of Glencore shall be
bound by such amendment or waiver.
(c)
Waiver by Glencore. Failure by Glencore to exercise any right, remedy or
option under this Agreement or any other document, agreement or instrument
between the Parties or provided by law, or delay by Glencore in exercising the
same, shall not operate as a waiver; and no waiver shall be effective unless it
is in writing, signed by the Party against whom such waiver is sought to be
enforced and then only to the extent specifically stated. Glencores failure, at
any time or times hereafter, to require strict performance by PMC or PMI of any
provision of this Agreement shall not waive, affect or diminish any right of
Glencore thereafter to demand strict compliance and performance therewith. Any
suspension or waiver by Glencore of any Event of Default shall not suspend,
waive or affect any other Event of Default, whether the same is prior or
subsequent thereto and whether of the same or of a different type. None of the
undertakings, agreements, warranties, covenants and representations of PMC or
PMI contained in this Agreement and no Event of Default shall be deemed to have
been suspended or waived by Glencore, unless such suspension or waiver is by an
instrument in writing specifying such suspension or waiver and signed by an
officer or other authorized person of Glencore and directed to PMC or PMI.
(d)
Continuing Agreement. This Agreement shall be a continuing agreement in
every respect and shall remain in full force and effect until all of the
Obligations (as defined in each of the Security Documents), both for principal
and interest, have been fully and indefeasibly paid and satisfied.
(e)
Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of this Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
(f)
Section Headings. The section headings used in this Agreement are for
convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.
(g)
Assignment. This Agreement may not be assigned by PMC or PMI without the
prior written consent of Glencore, which consent may be withheld in Glencores
sole discretion, acting reasonably. Glencore may, upon notice to PMC and PMI,
assign its rights and delegate its duties hereunder, in whole or in part, to an
Affiliate (as defined in the Tranche F Debenture) or to any person or entity to
which Glencore has transferred or assigned all or part of any Debenture or any
of the Security Documents. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the Parties.
(h)
No Amendment. The Parties agree that they have entered into this
Agreement only for the purposes of confirming their respective rights and
obligations under the Security Documents as they relate to Amendment No. 16 and
the Tranche F Debenture, and the Security Documents shall not be otherwise
amended or modified in any respect and shall continue in full force and effect
in accordance with their terms.
(i)
Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to conflicts
of laws principles that would result in the application of the laws of another
jurisdiction.
(j)
Venue. Each of PMC and PMI hereby agrees that all actions or proceedings
arising directly or indirectly from or in connection with this Agreement shall
be litigated only in the Supreme Court of the State of New York or the United
States District Court for the Southern District of New York located in New York
County, New York. Each of PMC and PMI consents to the jurisdiction and venue of
the foregoing courts and waives any objection which it may have to the laying of
venue in any such action or proceeding and consent that any process or notice of
motion or other application to either of said courts or a judge thereof may be
served inside or outside the State of New York or the Southern District of New
York by registered mail, return receipt requested, directed to the Party being
served at its address set forth in this Agreement (and service so made shall be
deemed complete three (3) days after the same has been posted as aforesaid) or by personal service or in such
other manner as may be permissible under the rules of said courts.
(k)
Waiver of Jury Trial. EACH OF PMC AND PMI HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY WITH RESPECT TO ANY ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED AND DELIVERED IN
CONNECTION HEREWITH OR THEREWITH. EACH OF PMC AND PMI DOES HEREBY DESIGNATE AND
APPOINT POLY MET MINING, INC., 444 CEDAR STREET, SUITE 2060, ST. PAUL, MINNESOTA
55101, ATTENTION: CHIEF FINANCIAL OFFICER, AS ITS AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON ITS BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN
ANY SUCH SUIT, ACTION OR PROCEEDING IN ANY FEDERAL OR STATE COURT IN NEW YORK,
NEW YORK, AND AGREES THAT SERVICE OF PROCESS UPON SAID AGENT AT SAID ADDRESS AND
WRITTEN NOTICE OF SAID SERVICE OF PMC OR PMI MAILED OR DELIVERED TO PMC OR PMI
IN THE MANNER PROVIDED HEREIN SHALL BE DEEMED IN EVERY RESPECT EFFECTIVE SERVICE
OF PROCESS UPON IT (UNLESS LOCAL LAW REQUIRES ANOTHER METHOD OF SERVICE), IN ANY
SUCH SUIT, ACTION OR PROCEEDING IN THE STATE OF NEW YORK. EACH OF PMC AND PMI
(i) SHALL GIVE PROMPT NOTICE TO GLENCORE OF ANY CHANGED ADDRESS OF ITS
AUTHORIZED AGENT HEREUNDER, (ii) MAY AT ANY TIME AND FROM TIME TO TIME DESIGNATE
A SUBSTITUTE AUTHORIZED AGENT WITH AN OFFICE IN NEW YORK, NEW YORK (WHICH OFFICE
SHALL BE DESIGNATED AS THE ADDRESS FOR SERVICE OF PROCESS), AND (iii) SHALL
PROMPTLY DESIGNATE SUCH A SUBSTITUTE IF ITS AUTHORIZED AGENT CEASES TO HAVE AN
OFFICE IN NEW YORK, NEW YORK OR IS DISSOLVED WITHOUT LEAVING A SUCCESSOR.
(l)
Notice. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
only upon delivery to each Party to be notified by (i) personal delivery, (ii)
facsimile, with electronic confirmation of transmittal, (iii) certified mail,
return receipt requested, or (iv) an internationally recognized overnight air
courier, addressed to the Party to be notified at the address as follows, or at
such other address as such Party may designate by ten days advance written
notice to the other Parties:
If to PMI:
Poly Met Mining,
Inc.
444 Cedar Street, Suite 2060
St. Paul, Minnesota
55101
Attn:
Douglas J. Newby, Chief Financial Officer
Email:
dnewby@polymetmining.com
Fax: (651) 846-5849
With a copy to PMC:
PolyMet Mining Corp.
First Canadian
Place
100 King Street West, Suite 5700
Toronto, Ontario Canada M5X
1C7
Attn: Douglas J. Newby, Chief Financial Officer
Email:
dnewby@polymetmining.com
Fax: (651) 846-5849
If to PMC:
PolyMet Mining Corp.
First Canadian
Place
100 King Street West, Suite
5700
Toronto, Ontario Canada M5X 1C7
Attn: Douglas J. Newby, Chief
Financial Officer
Email: dnewby@polymetmining.com
Fax: (651)
846-5849
And in the case of notice to PMI or PMC
with a copy to (which shall not constitute notice):
Troutman Sanders LLP
The Chrysler
Building
405 Lexington Avenue
New York, NY 10174
Attn: Joseph
Walsh
Fax: (212) 704-5099
If to Glencore:
Glencore
AG
Baarermattstrasse 3
CH-6341
Baar, Switzerland
Attn: General
Counsel
Fax: +41 41 709 2621
And with a copy to (which shall not
constitute notice):
Glencore AG
Baarermattstrasse
3
CH-6341
Baar, Switzerland
Attn: Rajiv Singhal
Email:
rajiv.singhal@glencore.com
And with a copy to (which shall not
constitute notice):
Glencore Ltd.
Three Stamford
Plaza
301 Tresser Boulevard
Stamford, CT 06901
Attn: Stephen
Rowland
Fax: +1 203 328 3177
Email:
stephen.rowland@glencore-us.com
(m)
Complete Agreement. This Agreement, Amendment No. 16, the Tranche F
Debenture, the Purchase Agreement, the other Agreements (as defined in the
Purchase Agreement) and all other agreements, instrument and documents executed
by any of the Parties in connection with any of the foregoing are the complete
agreement of the Parties with respect to the subject matter hereof and thereof.
(n)
Execution; Counterparts. This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement. In the event that any signature is delivered by facsimile
transmission or by e-mail delivery of a .pdf format data file, such signature
shall create a valid and binding obligation of the Party executing (or on whose
behalf such signature is executed) with the same force and effect as if
such facsimile or .pdf signature page were an original thereof.
[The remainder of this page is intentionally
blank.]
IN WITNESS WHEREOF, this Agreement has been duly executed as of
the day and year first above set forth.
POLYMET MINING CORP.
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By: |
/s/ Douglas Newby |
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Name: Douglas Newby |
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Title: Chief Financial Officer
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POLY MET MINING, INC.
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By: |
/s/ Douglas Newby |
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Name: Douglas Newby |
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Title: Chief Financial Officer
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GLENCORE AG
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By: |
/s/ A Hubmann |
/s/ K. Klassen |
|
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Name: A. Hubmann |
K. Klassen |
|
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Title: Director |
Officer |
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100 King Street West, Suite 5700, Toronto,
Ontario, Canada, M5X 1C7 |
Tel: +1 (416) 915-4149 |
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444 Cedar Street, Suite 2060, St. Paul, MN
55101 |
Tel: +1 (651) 389-4100 |
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www.polymetmining.com |
TSX: POM, NYSE MKT: PLM |
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NEWS RELEASE |
2015-01 |
POLYMET SECURES US$30 MILLION LOAN FACILITY DRAWS US$8 MILLION
St. Paul, Minn., February 2, 2015 PolyMet Mining Corp.
TSX: POM; NYSE MKT: PLM today reported that its wholly-owned subsidiary Poly
Met Mining, Inc. (together PolyMet or the Company) has entered into a US$30
million loan facility with Glencore AG, a wholly-owned subsidiary of Glencore
plc (together Glencore).
The Loan Facility comprises four secured debentures issued by
Poly Met Mining, Inc. and guaranteed by PolyMet Mining Corp., each debenture due
on the earlier of March 31, 2016 or the availability of at least $100 million of
construction finance:
|
1. |
First tranche of US$8 million issued January 30,
2015 |
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|
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2. |
Second tranche of US$8 million to be issued on or before
April 15, 2015 |
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3. |
Third tranche of US$8 million to be issued on or before
July 1, 2015 |
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4. |
Fourth tranche of US$6 million to be issued on or before
October 1, 2015 |
The interest rate on each of the debentures is 12-month US$
LIBOR plus 8%, reset for each calendar quarter using LIBOR on the last day of
the previous quarter. The initial interest rate is 8.6179% . Interest will be
paid in cash on the due date.
This loan facility covers our anticipated costs through 2015
as we work through completion of the final Environmental Impact Statement and
subsequent issuance of permits needed to construct and operate NorthMet, stated
PolyMet President and CEO Jon Cherry.
Our focus continues to be completion of permitting,
construction finance and project implementation, Cherry continued. The
environmental review and permitting process continues to track in line with the
schedule outlined by the Commissioners of the Department of Natural Resources
and the Pollution Control Agency last fall.
At a mining forum held in Virginia,
Minn. last fall sponsored by the Range Association of Municipalities and
Schools, DNR Commissioner Tom Landwehr said My goal is to have the EIS out the
door next spring. Pollution Control Agency Commissioner John Linc Stine added
that his agency aims to come to a decision on those permits within 150 days of
application in accordance with state law.
* * * * *
About PolyMet
PolyMet Mining Corp.
(www.polymetmining.com) is a publicly-traded mine development company that owns
100 percent of Poly Met Mining, Inc., a Minnesota corporation that controls 100
percent of the NorthMet copper-nickel-precious metals ore body through a
long-term lease and owns 100 percent of the Erie Plant, a large processing
facility located approximately six miles from the ore body in the established
mining district of the Mesabi Range in northeastern Minnesota. Poly Met Mining,
Inc. has completed its Definitive Feasibility Study and is seeking environmental and operating permits to enable it to commence
production. The NorthMet project is expected to require approximately two
million hours of construction labor, creating approximately 360 long-term jobs,
a level of activity that will have a significant multiplier effect in the local
economy.
POLYMET MINING CORP.
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Per: |
"Jon Cherry" |
|
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Jon Cherry, CEO
|
For further information, please contact:
Media
Bruce Richardson
Corporate Communications
Tel: +1 (651) 389-4111
brichardson@polymetmining.com
Investor Relations
Jenny Knudson
Investor
Relations
Tel: +1 (651) 389-4110
jknudson@polymetmining.com
This news release does not constitute an offer to sell or
the solicitation of an offer to buy any of the securities mentioned in this
release. This press release is being issued pursuant to and in accordance with
Rule 135c under the Securities Act of 1933, as amended. These securities
described in this release have not been registered under the Securities Act of
1933, as amended, or any state securities laws, and may not be offered or sold
in the United States absent an effective registration statement covering such
securities or an applicable exemption from such registration requirements.
This news release contains certain forward-looking
statements concerning anticipated developments in PolyMets operations in the
future. Forward-looking statements are frequently, but not always, identified by
words such as expects, anticipates, believes, intends, estimates,
potential, possible, projects, plans, and similar expressions, or
statements that events, conditions or results will, may, could, or
should occur or be achieved or their negatives or other comparable words.
These forward-looking statements may include statements regarding the ability to
receive environmental and operating permits, job creation, or other statements
that are not a statement of fact. Forward-looking statements address future
events and conditions and therefore involve inherent known and unknown risks and
uncertainties. Actual results may differ materially from those in the
forward-looking statements due to risks facing PolyMet or due to actual facts
differing from the assumptions underlying its predictions.
PolyMets forward-looking statements are based on the
beliefs, expectations and opinions of management on the date the statements are
made, and PolyMet does not assume any obligation to update forward-looking
statements if circumstances or managements beliefs, expectations and opinions
should change.
Specific reference is made to PolyMets most recent Annual
Report on Form 20-F for the fiscal year ended January 31, 2014 and in our other
filings with Canadian securities authorities and the U.S. Securities and
Exchange Commission, including our Report on Form 6-K providing information with
respect to our operations for the three months ended October 31, 2014 for a
discussion of some of the risk factors and other considerations underlying
forward-looking statements.
The TSX has not reviewed and does not accept responsibility
for the adequacy or accuracy of this release.
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