Royalty Purchase Agreement
XXXXXXX
THIS AGREEMENT is made as of February 22, 2005.
BETWEEN:
Xxxxx Xxxxxxx
(the “Vendor”);
AND
International Royalty Corporation
(the “Purchaser”).
WHEREAS:
A.
The Vendor owns the Royalty;
B.
The Vendor wishes to sell, and the Purchaser wishes to purchase, the Royalty on the terms and conditions set forth in this Agreement.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the covenants, agreements, representations and warranties set out below, the parties covenant and agree as follows:
1.
Interpretation
1.1
Definitions
In this Agreement, unless there is something in the subject matter or context inconsistent therewith or unless otherwise specifically provided:
(a)
“Affiliate” with respect to a corporation means another corporation which is affiliated with the first mentioned corporation within the meaning thereof in the Corporations Act;
(b)
“Agreement” means this Agreement, including its recitals and schedules, as amended and supplemented;
(c)
“Books and Records” means all files, ledgers and correspondence, reports, texts, notes, engineering, environmental and feasibility studies, data, specifications, memoranda, invoices, receipts, accounts, accounting records and books, financial statements, financial working papers and all other records and documents of any nature or kind whatsoever, including, without limitation, those recorded, stored,
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maintained, operated, held or otherwise wholly or partly dependent on discs, tapes and other means of storage including, without limitation, any electronic, magnetic, mechanical, photographic or optical process, whether computerized or not (and all software, passwords and other information and means of or for access thereto), belonging to the Vendor and relating to the Royalty;
(d)
“Business Day” means any day other than a Saturday, Sunday or any statutory holiday in British Columbia or Ontario;
(e)
“Cash” means cash or either solicitor’s trust cheque or bank draft drawn in a Canadian chartered bank;
(f)
“Cash Portion” is defined in section 2.3(a);
(g)
“Charter Documents” means articles, articles of incorporation, notice of articles, memorandum, bylaws or any similar constating document of a corporate entity;
(h)
“Closing” means the completion of the Transaction in accordance with Article 7;
(i)
“Closing Date” means February 22, 2005, or such other date as may be agreed upon in writing by the Vendor and the Purchaser or by their respective solicitors;
(j)
“Common Shares” means fully paid and non-assessable free trading voting common shares of the Purchaser to be issued and qualified pursuant to the Initial Public Offering;
(k)
“Consideration Shares” is defined in section 2.3(b);
(l)
“Contracts” means all contracts, agreements, instruments, leases, indentures, engagements, transactions and commitments, whether written or oral;
(m)
“Corporations Act” means the Canada Business Corporations Act;
(n)
“Disclosure” means the disclosure statement dated the date of this Agreement previously delivered by the Vendor to the Purchaser and initialled by the parties on the execution of this Agreement;
(o)
“Effective Time” means 12:01 a.m. on the Closing Date;
(p)
“Encumbrance” means, whether or not registered or registrable or recorded or recordable, and regardless of how created or arising:
(i)
a mortgage, assignment of receivable, lien, encumbrance, adverse claim, charge, execution, title defect, exception, right of pre-emption, privilege, security interest, hypothec or pledge, whether fixed or floating, against assets or property (whether real, personal, mixed, tangible or intangible), conditional sales contract, title retention agreement, and a subordination to any right or claim of others in respect thereof;
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(ii)
a claim, interest or estate against or in assets or property (whether real, personal, mixed, tangible or intangible), granted to or reserved or taken by any Person;
(iii)
an option or other right to acquire, or to acquire any interest in, any assets or property (whether real, personal, mixed, tangible or intangible);
(iv)
any other encumbrance of whatsoever nature and kind against assets or property (whether real, personal, mixed, tangible or intangible); and
(v)
any agreement to create, or right capable of becoming, any of the foregoing;
(q)
“Governmental Authority” means any federal, provincial, municipal, county or regional government or governmental or regulatory authority, domestic or foreign, and includes any department, commission, bureau, board, administrative agency or regulatory body of any of the foregoing;
(r)
“Indemnified Party” has the meaning given to it in section 9.3;
(s)
“Indemnifier” has the meaning given to it in section 9.3;
(t)
“Indemnity Claim” has the meaning given to it in section 9.3;
(u)
“Initial Public Offering” means the initial public offering of the Common Shares in the Qualifying Jurisdictions to which the Prospectus refers;
(v)
“Law” means any statute, regulation, bylaw, order, ruling, decision, arbitration award, judgment, decree or law;
(w)
“Operator” means the respective current owner of or holder of the mining rights to the property to which the Royalty is related.
(x)
“Permits” means all permits, licences, certificates, registrations, consents, authorizations, approvals, privileges, waivers, exemptions, orders, certificates, rulings, agreements and other concessions from, of or with any Governmental Authority which are material to the Royalty;
(y)
“Person” means an individual, legal personal representative, corporation, body corporate, firm, partnership, trust, trustee, syndicate, joint venture, unincorporated organization or Governmental Authority;
(z)
“Pre-Emptive Rights” means any rights which limit, potentially terminate or amend or otherwise affect the Royalty;
(aa)
“Prime Rate” means the floating annual rate of interest established and recorded as such from time to time by the Bank of Montreal as a reference rate then in
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effect for determining the interest rate it shall charge on Canadian dollar commercial loans in Canada;
(bb)
“Proceeding” means any action, claim, demand, lawsuit, assessment, arbitration, judgment, award, decree, order, injunction, prosecution and investigation, or other similar proceeding;
(cc)
“Prospectus” means the final Prospectus of the Purchaser pertaining to the Initial Public Offering, filed February 3, 2005;
(dd)
“Purchase Price” means the purchase price for the Royalty, as set out in section 2.2;
(ee)
“Purchaser” means International Royalty Corporation or its permitted assignee;
(ff)
“Qualifying Jurisdictions” means all the Provinces of Canada and such other jurisdictions as determined by the Purchaser and its underwriters;
(gg)
“Registrar” means the governmental official designated as such or having a role as such pursuant to the Corporations Act;
(hh)
“Regulatory Approvals” means such regulatory approvals and acceptances, including such approvals from the Toronto Stock Exchange and securities regulatory authorities in the Qualifying Jurisdictions as may be necessary for the Initial Public Offering and the Transaction;
(ii)
“Royalty” means all rights, title and interest of the Vendor in firstly a 20.3% interest in the royalty conferred by the Royalty Agreement and secondly a commensurate interest in the Royalty Agreement entitling the holder to all rights thereunder as a royalty holder including enforcement of the Royalty Agreement;
(jj)
“Royalty Agreement” means that agreement detailed in Schedule A;
(kk)
“Royalty Assignment Agreement” means that agreement in the form attached as Schedule B;
(ll)
“Third Party” has the meaning given to it in section 9.3(a);
(mm)
“Transaction” means the transaction of purchase and sale contemplated by this Agreement;
(nn)
“Vendor” means Xxxxx Xxxxxxx.
1.2
Gender, Number and Other Terms
In this Agreement, unless the context otherwise requires, words importing the singular include the plural and vice versa, words importing gender include all genders, “or” is not exclusive and
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“including” is not limiting, whether or not non-limiting language (such as “without limitation”) is used with reference thereto.
1.3
Headings and Table of Contents
The inclusion of headings and a table of contents in this Agreement is for convenience only and shall not affect the construction or interpretation of this Agreement.
1.4
Statutes
Unless otherwise stated, any reference to a statute includes and is a reference to such statute and to the regulations made pursuant to it, with all amendments thereto and in force from time to time, and to any statute or regulations that may be passed which supplement or supersede such statute or such regulations.
1.5
No Contra Preferentum
The language in all parts of this Agreement shall in all cases be construed as a whole and neither strictly for nor strictly against any of the parties to this Agreement.
1.6
Currency
Except where otherwise expressly provided, all monetary amounts in this Agreement are stated and shall be paid in Canadian currency.
1.7
Governing Law and Attornment
This Agreement shall be governed by and construed in accordance with the laws of British Columbia and the laws of Canada applicable therein and all disputes and claims, whether for damages, specific performance, injunction, declaration or otherwise, both at law and equity, arising out of, or in any way connected with, this Agreement will be referred to the courts of British Columbia and each of the parties hereby attorns to the jurisdiction of the courts of British Columbia.
1.8
Schedules
The following are the Schedules which are attached to and form part of this Agreement:
Schedule A – Royalty Agreement
Schedule B – Royalty Assignment Agreement
1.9
Cross-References
Unless otherwise stated, a reference in this Agreement to a designated article, section, subsection, paragraph or other subdivision or to a schedule is to the designated article, section, subsection, paragraph or other subdivision of, or schedule to, this Agreement.
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1.10
References to Whole Agreement
Unless otherwise stated, the words “herein”, “hereof”, “hereby” and “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular article, section, subsection, paragraph or other subdivision or schedule.
2.
Purchase of Royalty
2.1
Purchase and Sale
Based on the representations and warranties contained in this Agreement, the Vendor agrees to sell, assign and transfer to the Purchaser and the Purchaser agrees to purchase from the Vendor, the Royalty, effective as of and from the Effective Time, free and clear of all Encumbrances, for the Purchase Price and in accordance with and subject to the terms and conditions set forth in this Agreement.
2.2
Purchase Price
The Purchase Price is $1,250,000.
2.3
Payment of Purchase Price
The Purchase Price shall be paid by the Purchaser on Closing as follows:
(a)
$312,500 by Cash (the “Cash Portion”); and
(b)
by issuance to the Vendor of 218,023 Common Shares (the “Consideration Shares”).
2.4
Risk of Loss and Damage Prior to Closing
Risk of loss of the Royalty shall pass at the Closing, and the Vendor shall bear all risk of loss or impairment of the Royalty until the Closing and the Purchaser shall bear all risk of loss or impairment after the Closing.
3.
Representations and Warranties of the Vendor
The Vendor represents and warrants to the Purchaser as follows and acknowledges that the Purchaser is relying on the following representations and warranties in connection with the Transaction notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Purchaser and that, except as set out in the Disclosure, no information which is now known or should be known or which may hereafter become known to the Purchaser, its employees, representatives, consultants or agents will limit or extinguish such rights of reliance of the Purchaser:
(a)
Due Execution: This Agreement has been duly executed and delivered by the Vendor and constitutes a legal, valid and binding obligation of the Vendor enforceable in accordance with its terms, except as may be limited by bankruptcy,
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insolvency and other similar laws of general application affecting the enforceability of remedies and rights of creditors and except that equitable remedies such as specific performance and injunction are in the discretion of a court.
(b)
Ownership: Subject to the Disclosure, the Vendor is the beneficial owner of, and has good and marketable title to, the Royalty free and clear of all Encumbrances.
(c)
Rights to Royalty: Subject to the Disclosure, the Vendor has the exclusive right to own the Royalty.
(d)
No Rights to Royalty: There is no Pre-Emptive Right, agreement, Contract, option, commitment or other right in favour of, or held by, any Person other than the Purchaser to acquire the Royalty or any portion thereof.
(e)
Royalty Assignable: The Royalty is freely assignable to the Purchaser, subject only to the consent of the counterparties to the Royalty Agreement, which consent is not to be unreasonably withheld.
(f)
Books and Records: The Vendor has no Books and Records.
(g)
Residency: The Vendor is not a non-resident of Canada for the purposes of the Income Tax Act (Canada).
(h)
Adverse Proceedings: Subject to the Disclosure, to the knowledge of the Vendor, there are no current, pending or threatened Proceedings of, by, against, or relating to, the Vendor or the Royalty, any Permit or the Royalty Agreement and the Vendor is not aware of any basis for any other Proceeding which, if pursued, would have a significant likelihood of having a material adverse effect on any Royalty.
(i)
No Seizure: There is no appropriation, expropriation or seizure of the Royalty that is pending or, to the knowledge of the Vendor, that has been threatened.
(j)
Material Contracts: Schedule A contains a complete and accurate listing and description of, and specifically identifies all Permits and Contracts by which the Vendor is bound or under which the Vendor is entitled to any benefits pertaining to the Royalty and correct and complete copies of all Permits and Contracts have been made available to the Purchaser.
(k)
Good Standing: The Vendor is not in breach or default of any of the terms of the Royalty Agreement or Permit and the Vendor is not aware of any breach or default of any term of the Royalty Agreement or Permit by any other party thereto, to the knowledge of the Vendor, the Royalty Agreement and Permit is in good standing and in full force and effect and the Royalty Agreement or Permit has not been amended save as detailed in Schedule A. No state of facts exists, which, after notice or lapse of time or both, would constitute a default or breach by the Vendor under the Royalty Agreement or Permit. Subject to the Disclosure,
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the Vendor has not received any notice of any default, breach or termination of the Royalty Agreement or Permit or of any fact or circumstance which will, or is likely to, result in such a default, breach or termination.
(l)
No Adverse Implications: Neither the execution and delivery of this Agreement nor the completion and performance of the Transaction and obligations contemplated by or contained in this Agreement will:
(i)
give any Person the right to terminate, cancel or amend any contractual or other right of the Vendor where such termination, cancellation or removal would have an adverse effect on the Royalty;
(ii)
result in the creation of any Encumbrance on the Royalty or in a breach of or a default under any agreement giving a third party security against any Royalty or in the crystallization of any floating charge on the Royalty, where any of such events could have an adverse effect on the Royalty;
(iii)
result in a breach or contravention of or default under any provision of any Permit, the Royalty Agreement or any Law to which the Vendor is a party or by or to which the Vendor or the Royalty is bound or is subject, which could have an adverse effect on the Royalty or which could impair the legality or enforceability of this Agreement or the Transaction, or require the consent of any Person; or
(iv)
result in any fees, duties, taxes, assessments or other amounts relating to the Royalty becoming due or payable, other than any tax imposed pursuant to Part IX of the Excise Tax Act (Canada) payable by the Purchaser in connection with the Transaction.
(m)
Government Approvals: There is no Permit or any other action of, or any registration, declaration, filing or notice with or to any Governmental Authority, court, board or arbitrator that is required for the execution or delivery by the Vendor of this Agreement, or the completion or performance by the Vendor of the Transaction, or the validity or enforceability of this Agreement against the Vendor.
(n)
No Adverse Knowledge: Subject to the Disclosure, the Vendor has no information or knowledge of any fact relating to the Royalty, the Royalty Agreement, any Permits, the counter-party to the Royalty Agreement, or the Transaction which might reasonably be expected to materially and adversely affect the Royalty.
(o)
Full Disclosure. The Vendor has disclosed to the Purchaser all facts relating to the Royalty which could be reasonably expected to be material to a Person intending to purchase the Royalty. In respect of the Disclosure nothing further has been asserted since the last respective dates detailed therein.
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(p)
Material Facts. This Agreement does not contain any untrue statement by the Vendor of a material fact nor has the Vendor omitted to state in this Agreement a material fact necessary in order to make the statements contained herein not misleading.
(q)
Enforceability. This Agreement and the Disclosure has been, and each document to be delivered on Closing to which the Vendor is a party will on Closing be, duly executed and delivered by the Vendor and this Agreement and each such Closing document to which the Vendor is a party will on Closing constitute a valid and binding obligation of the Vendor enforceable against the Vendor in accordance with its terms.
(r)
U.S. Securities. The Vendor understands that the Common Shares have not been, and will not be, registered under the United States Securities Act of 1933, as amended (the “U.S. Securities Act”), or the securities laws of any state. In connection with the Transaction and the issuance of the Consideration Shares, the Vendor hereby acknowledges, represents and warrants as follows:
(i)
the Vendor was not offered the Common Shares while in the United States;
(ii)
the Vendor was outside the United States when the decision to acquire the Common Shares was made;
(iii)
neither this Agreement nor other document relating to the acquisition or purchase of the Common Shares was received by Vendor in the United States, nor was this Agreement or any other document relating to the acquisition or purchase of the Common Shares executed or delivered by Holder in the United States; and
(iv)
neither the structure of the Transaction nor any transactions and activities contemplated in connection with the acquisition of the Common Shares comprise a scheme to avoid the registration requirements of the U.S. Securities Act.
and the Vendor hereby undertakes to execute and deliver all such further documentation as may be required to give effect to the matters contemplated in this subsection 3(s).
4.
Representations and Warranties of the Purchaser
4.1
Representations and Warranties of the Purchaser
The Purchaser represents and warrants to the Vendor as follows and acknowledges that the Vendor is relying upon the following representations and warranties in connection with the sale of the Royalty, notwithstanding any independent searches or investigations that may be undertaken by or on behalf of the Vendor and that no information which is now known or should
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be known or which may hereafter become known to the Vendor, its employees, representatives, consultants or agents will limit or extinguish such rights of reliance of the Vendor:
(a)
Status: The Purchaser is an incorporated and validly existing company under the Corporations Act, in good standing with respect to the filing of annual reports in the office of the Registrar, has never been struck from the register maintained by the Registrar or dissolved or liquidated, and has full power and capacity to enter into, carry out the Transaction, and duly observe and perform all its obligations contained in this Agreement.
(b)
Due Authorization: The execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by the Purchaser pursuant to this Agreement, and the completion of the Transaction, have been authorized by all necessary corporate action on the part of the Purchaser, and this Agreement has been duly executed and delivered by the Purchaser and constitutes a legal, valid and binding obligation of the Purchaser enforceable in accordance with its terms, except as may be limited by bankruptcy, insolvency, liquidation, reorganization, reconstruction and other similar laws of general application affecting the enforceability of remedies and rights of creditors and except that equitable remedies such as specific performance and injunction are in the discretion of a court.
(c)
Non-contravention: Neither the execution and delivery of this Agreement nor the completion and performance of the Transaction and obligations contained in this Agreement will result in a breach of or default under, or be contrary to, any of the provisions of the Charter Documents of the Purchaser or any Encumbrance, indenture, Contract, agreement or instrument to which the Purchaser is a party or by which the Purchaser is bound.
(d)
Investment Canada: The Purchaser is not a non-Canadian within the meaning of the Investment Canada Act (Canada).
(e)
GST Registration: The Purchaser is a registrant for purposes of Part IX of the Excise Tax Act (Canada), and the Purchaser’s registration number is 88352 0702 RP0001.
(f)
IPO: The Initial Public Offering on Closing has the attributes disclosed in the Prospectus.
(g)
Reporting Issuer. On Closing, the Purchaser shall be a reporting issuer under securities laws of British Columbia and Ontario and the Consideration Shares shall be exempt from escrow requirements and hold periods except as may be imposed by applicable laws or the Toronto Stock Exchange.
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5.
Pre-closing Matters
5.1
Operations until Closing
Except as otherwise provided in this Agreement or as otherwise agreed in writing by the Purchaser, the Vendor shall from the date of this Agreement up to the Closing:
(a)
use all reasonable efforts to preserve the Royalty;
(b)
not allow the Royalty to become subject to any Encumbrance;
(c)
not sell, lease, license, transfer or otherwise dispose of, or agree to sell, lease, license, transfer or otherwise dispose of, the Royalty;
(d)
take good care of the Royalty and take reasonable care to protect and safeguard the Royalty;
(e)
make all necessary tax, governmental and other filings necessary in respect to the Royalty in a timely fashion; and
(f)
Not, without the prior written consent of the Purchaser, amend or vary the Royalty Agreement or any Permit, or obtain any additional Permit in connection with the Royalty except:
(i)
renewals or replacements of any of the Permits on substantially the same terms and conditions; and
(ii)
any additional Permits required so as to maintain the Royalty;
(g)
Provide to the Purchaser, its employees, representatives and agents, full access during normal business hours to the Vendor’s personnel and its facilities and properties and to the Books and Records and to the Royalty Agreement and all, or true copies of all, title documents, Encumbrances, Permits, Contracts and other documents relating to the Royalty, and furnish them with all such information relating to the Royalty as the Purchaser from time to time reasonably requests; it being acknowledged and agreed by the Vendor that no investigation made by the Purchaser or any of its employees, representatives or agents shall have the effect of waiving or diminishing the scope of, or otherwise affect the Purchaser’s right to rely on, any representation or warranty made by the Vendor in this Agreement or in any document, instrument or agreement delivered pursuant to this Agreement; and
(h)
Use all reasonable efforts to ensure that the representations and warranties of the Vendor in this Agreement are true and correct at the Closing and that the conditions of the Purchaser in section 6.1 and the mutual conditions in section 6.3 are fulfilled at the Closing, and will inform the Purchaser promptly of any state of facts which will result in any representation or warranty of the Vendor being
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untrue or incorrect or in any condition of the Purchaser in section 6.1 or mutual condition in section 6.3 being unfulfilled at the Closing.
5.2
Confidentiality
The Purchaser acknowledges that some of information, materials and documentation received or observed by it pursuant to subsection 5.1(g), including, without limitation, the Disclosure, may be confidential. The Purchaser shall take, and shall cause its employees, representatives and agents to take, all reasonable steps and precautions to protect and maintain the confidentiality of such information, materials and documentation; provided that the foregoing will not prevent the Purchaser from disclosing or making available to its accountants, professional advisers and bankers and other lenders, whether current or prospective, any such information, materials and documentation on a confidential basis for the purpose of carrying out the Transaction. This clause shall terminate on Closing save in respect to the Disclosure.
5.3
Return of Information
If the purchase of the Royalty pursuant to this Agreement is not completed, the Purchaser shall return to the Vendor all materials, documentation, data, records, drawings and other papers and copies thereof (whether on paper or in electronic, magnetic, photographic, mechanical or optical storage) referred to in subsection 5.1(g) in the possession of the Purchaser and maintain the confidentiality of all information or knowledge obtained from the Vendor, and not use any such information or knowledge for any purpose whatsoever.
5.4
Remedies
The Purchaser acknowledges and agrees that if any of the provisions contained in sections 5.2 and 5.3 are not performed in accordance with the terms set out therein, the Vendor will be entitled to an injunction to prevent any breach of such provisions and may specifically enforce such provisions in any action instituted in any court having jurisdiction. These specific remedies are in addition to any other remedy to which the Vendor may be entitled at law or in equity.
5.5
Consents and Re-issues
The Vendor shall use all reasonable efforts to obtain, prior to the Closing Date:
(a)
all consents, approvals, releases and waivers in form and substance satisfactory to the Purchaser, acting reasonably, necessary for the assignment of the purchased interest in the Royalty Agreement and the Permits to the Purchaser and the transfer of the Royalty to the Purchaser. Without limiting the generality of the foregoing, the Vendor agrees to execute a Royalty Assignment Agreement in respect of the Royalty and to use its reasonable efforts to obtain an executed copy thereof from the Operator prior to and for delivery at Closing;
(b)
if applicable, the re-issue or novation of the Royalty Agreement or Permit in the name of the Purchaser, and the Vendor shall not, except as presently contemplated by the terms thereof, or except with the prior written consent of the Purchaser, agree to any amendment or variation to the terms of the Royalty Agreement or
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Permit in connection with, or as a condition of, such assignment or re-issue. The Purchaser shall give to the Vendor such information and copies of such documents relating to the Purchaser which the Vendor may reasonably request in order to obtain any consent or approval, or re-issue referred to above; and
(c)
if applicable, the waiver of any third party’s Pre-emptive Rights which are appropriate to seek to be waived in the circumstances of a sale of the Royalty.
5.6
Consent Not Received by Closing
If a consent or approval of a third party, which is required to permit the transfer or assignment to the Purchaser of the purchased interest in the Royalty Agreement or Permit, is not received on or before the Closing, and if, notwithstanding such non-receipt, the Vendor and the Purchaser proceed to complete the Transaction, the transfer or assignment of such interest in the Royalty Agreement and Permit in respect of which the required consent has not been received on or before the Closing will not be effective in each case until the applicable consent or approval has been received and such interest in the Royalty Agreement or Permit will be held by the Vendor following the Closing in trust for the benefit and exclusive use of the Purchaser. The Vendor shall continue to use all reasonable efforts to obtain the required consents and approvals and shall only make use of the Royalty Agreement and Permit in accordance with the directions of the Purchaser that do not conflict with the terms of such Royalty Agreement or Permit.
5.7
Purchaser’s Covenant
The Purchaser shall:
(a)
prior to the Closing Date:
(i)
execute and deliver such assignment and assumption agreements and applications for consents in such form and content as may be reasonably required by the Vendor to obtain the consents, approvals, waivers, novations and re-issues, referred to in section 5.5; and
(ii)
diligently and in good faith use its best efforts to obtain the Regulatory Approvals and to complete the Initial Public Offering prior to the Closing Date;
(b)
if requested by the Vendor execute a joint election made by the Vendor as transferor and by the Purchaser as transferee under subsection 85(1) of the Income Tax Act of Canada (the “Act”) at such agreed amount as may be designated by the Vendor within the limits allowed thereunder (or such subsection of the Act, as may be mutually agreed upon by the both parties to this Agreement), respecting the transfer of the Royalty to the Purchaser by the Vendor, as such amount may be determined by the Vendor in conformity with the provisions of such subsection, or such other subsection of the Act, as may be agreed upon by both parties to this Agreement.
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5.8
Vendor’s Covenant
The Vendor hereby covenants and agrees that:
(a)
in the event that any of the “Properties” as defined in the Royalty Agreement or the tenures in respect thereof are or become vested in the name of the Vendor, then such respective Royalty and interest in the respective Royalty Agreement shall not merge with such greater interest in such respective Property or Properties;
(b)
the Vendor has all right, title and authority to disclose all information provided by the Vendor to the Purchaser in respect to the Royalty, the Royalty Agreement and the Properties, licences and tenures relative to the Royalty Agreement and upon Closing, such information shall become property of the Purchaser;
(c)
the Vendor shall promptly forward to the Purchaser any notices he receives, to and after Closing, in respect to the Royalty and the Royalty Agreement; and
(d)
in the event the validity of the Royalty is challenged or payments thereunder are refused or an interest in the Royalty is asserted by any third party or any other action is taken that is based upon the claim described in the Disclosure then the Vendor agree, at his expense, to cooperate and fully participate in such legal action as the Purchaser may consider reasonably necessary so as to confirm the validity and enforceability of the Royalty, the Purchaser’s title to the Royalty and the Purchaser’s right to receive payments thereunder.
6.
Conditions of Closing
6.1
Conditions of the Purchaser
The obligation of the Purchaser to complete the Transaction is subject to the fulfilment of the following conditions:
(a)
Representations and Warranties: The representations and warranties of the Vendor contained in this Agreement being true and correct on and as of the Closing with the same effect as though such representations and warranties had been made as of the Closing (subject to subsection 5.1(f) if the Purchaser’s consent required thereunder has been obtained);
(b)
Covenants: All of the covenants and obligations of the Vendor to be performed or observed on or before the Closing pursuant to this Agreement having been duly performed or observed;
(c)
Certificate of Vendor: There having been delivered to the Purchaser a certificate of the Vendor dated the Closing Date, executed by the Vendor, certifying that the representations and warranties made by the Vendor in this Agreement are true and correct as at the Closing (subject to subsections 5.1(f) and that all covenants and
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obligations to be observed or performed by the Vendor on or before the Closing pursuant to the terms of this Agreement have been duly observed and performed;
(d)
Releases: There having been delivered to the Purchaser duly executed releases, in registrable form where applicable, of or evidence to the satisfaction of the Purchaser as to, the discharge of all Encumbrances against the Royalty;
(e)
Satisfactory Due Diligence: The Purchaser being satisfied with the results of its due diligence investigations with respect to the Royalty;
(f)
Regulatory Approvals: The receipt of the Regulatory Approvals;
(g)
IPO Closing: Completion of the Initial Public Offering;
(h)
Royalty Assignment Agreements: The receipt of fully executed Royalty Assignment Agreements in respect to each of Mt. Xxxxxxx, Xxxxx Creek, Hermann and West Brazion in substantially the form attached as Schedule B, which includes consents to the assignment and transfer of the Royalty, from all parties to the Royalty Agreement other than the Vendor.
In the event that any of the foregoing conditions are not performed or fulfilled at or before the Closing, the Purchaser may, subject to section 10.11, terminate this Agreement, in which event, subject to section 10.11, the Purchaser will be released from all obligations under this Agreement, and the Vendor will also be so released unless the Vendor was reasonably capable of causing such condition or conditions to be fulfilled or unless the Vendor has breached any of its covenants or obligations in or under this Agreement. The foregoing conditions are for the benefit of the Purchaser only and accordingly the Purchaser will be entitled to waive compliance with any such conditions if it sees fit to do so, without prejudice to its rights and remedies at law and in equity and also without prejudice to any of its rights of termination in the event of non-performance of any other conditions in whole or in part.
6.2
Conditions of the Vendor
The obligation of the Vendor to complete the Transaction is subject to the fulfilment of each of the following conditions:
(a)
Representations and Warranties: The representations and warranties of the Purchaser contained in this Agreement being true on and as of the Closing with the same effect as though such representations and warranties had been made as of the Closing;
(b)
Covenants: All of the covenants and obligations of the Purchaser to be performed or observed on or before the Closing pursuant to this Agreement having been duly performed or observed;
(c)
Certificate of Purchaser: There having been delivered to the Vendor a certificate of the Purchaser dated the Closing Date, executed by an authorized
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officer or director of the Purchaser, certifying that the representations and warranties made by the Purchaser in this Agreement are true and correct as at the Closing and that the covenants and obligations to be observed or performed by the Purchaser on or before the Closing pursuant to the terms of this Agreement have been duly observed and performed; and
(d)
Consideration Shares: The Vendor’s reasonable satisfaction that the Consideration Shares shall have those attributes as disclosed in the Prospectus.
In the event that any of the foregoing conditions are not performed or fulfilled at or before the Closing, the Vendor may, subject to section 10.11, terminate this Agreement, in which event, subject to section 10.11, the Vendor will be released from all obligations under this Agreement, and the Purchaser will also be so released unless the Purchaser was reasonably capable of causing such condition or conditions to be fulfilled or unless the Purchaser has breached any of its covenants or obligations in or under this Agreement. The foregoing conditions are for the benefit of the Vendor only and accordingly the Vendor will be entitled to waive compliance with any such conditions if it sees fit to do so, without prejudice to its rights and remedies at law and in equity and also without prejudice to any of its rights of termination in the event of non-performance of any other conditions in whole or in part.
6.3
Mutual Conditions
The obligations of the Vendor and of the Purchaser to complete the Transaction are subject to fulfilment of the following conditions:
(a)
No Orders or Proceedings: No injunction or restraining order or other decision, ruling or order of a court or administrative tribunal of competent jurisdiction being in effect which prohibits, restrains, limits or imposes conditions on, the Transaction and no action or proceeding having been instituted or remaining pending or having been threatened before any such court or administrative tribunal to restrain, prohibit, limit or impose conditions on the Transaction; and
(b)
Obtain Consents: The Vendor having obtained all consents, approvals, novations, reissues and waivers referred to in section 5.5 in each case in form and substance satisfactory to the Purchaser, acting reasonably, and the same having been delivered to the Purchaser.
In the event that any of the foregoing conditions is not performed or fulfilled at or before the Closing, either the Purchaser or the Vendor may, subject to section 10.11, terminate this Agreement, in which event, subject to section 10.11, the party so terminating this Agreement will be released from all obligations under this Agreement, and the Vendor, if the Purchaser is the party terminating this Agreement, and the Purchaser, if the Vendor is the party terminating this Agreement, will also be so released unless the Vendor, or the Purchaser, as the case may be, was reasonably capable of causing such condition or conditions to be fulfilled or has breached any of its covenants or obligations in or under this Agreement.
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7.
Closing Transactions
7.1
Time and Place
The Closing shall take place in the Vancouver offices of Fasken Xxxxxxxxx XxXxxxxx LLP at 11:00 o’clock a.m. on the Closing Date; or at such other time and date, or both, as the Vendor and the Purchaser or their respective solicitors may agree upon.
7.2
Vendor’s Closing Documents
At the Closing, the Vendor shall deliver the following to the Purchaser:
(a)
all executed deeds, bills of sale, conveyances, transfers, assignments, instruments and other documents, including Royalty Assignment Agreements, which are necessary to assign, sell and transfer the Royalty as contemplated by this Agreement in such form and content as the Purchaser may require, acting reasonably;
(b)
a certificate of the Vendor pursuant to section 6.1(c);
(c)
a receipt for Cash Portion; and
(d)
a receipt for the certificate representing the Consideration Shares.
7.3
Purchaser’s Closing Documents
At the Closing the Purchaser shall deliver the following to the Vendor:
(a)
Cash in the amount of the Cash Portion;
(b)
A share certificate representing the Consideration Shares;
(c)
certified copies of resolutions of the directors of the Purchaser approving the Transaction and the execution and delivery of this Agreement and all documents, instruments and agreements required to be executed and delivered by the Purchaser pursuant to this Agreement; and
(d)
a certificate of the Purchaser pursuant to section 6.2(c).
7.4
Concurrent Delivery
It shall be a condition of the Closing that all matters of payment and the execution and delivery of documents by any party to the others pursuant to the terms of this Agreement shall be concurrent requirements and that nothing will be complete at the Closing until everything required as a condition precedent to the Closing has been paid, executed and delivered, as the case may be.
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7.5
Transfer of Royalty
Subject to compliance with the terms and conditions of this Agreement and, subject to section 5.6 the transfer of the Royalty to the Purchaser shall be deemed to take effect as at the Closing.
8.
Responsibility for Obligations and Liabilities
8.1
Assumption by Purchaser
On the Closing, the Purchaser shall assume and be commensurately responsible for the observance, performance and payment of all obligations and liabilities which are to be observed, performed or paid by a royalty holder from and after the Effective Time, under the Royalty Agreement and the Purchaser shall indemnify and save the Vendor harmless from and against any claims, demands, actions, suits, causes of action, losses, damages, costs and expenses whatsoever, including legal fees, suffered or incurred by the Vendor by reason of the failure of the Purchaser to perform or pay its commensurate share of any of the obligations and liabilities referred to in this section 8.1.
8.2
Vendor’s Obligations and Liabilities
The Vendor shall be responsible for the observance and performance of all obligations and payment of all liabilities relating to the Royalty other than those to be observed, performed or paid by the Purchaser as set out in this Agreement and the Vendor shall indemnify and save the Purchaser harmless from and against any claims, demands, actions, suits, causes of action, losses, damages, costs and expenses whatsoever, including legal fees, suffered or incurred by the Purchaser by reason of any failure of the Vendor to perform or satisfy any of the obligations and liabilities for which the Vendor is responsible.
8.3
Payment of Taxes on Sale and Transfer
The Purchaser shall be responsible for and shall pay when due any excise taxes (goods and services taxes) and similar taxes (but not income taxes of the Vendor) and any registration fees payable in respect of the sale and transfer of the Royalty to the Purchaser.
9.
Survival of Representations and Recourse
9.1
Survival
The representations, warranties, covenants and obligations of:
(a)
the Vendor in or under this Agreement and in or under any documents, instruments and agreements delivered pursuant to this Agreement; and
(b)
the Purchaser in or under this Agreement and in or under any documents, instruments and agreements delivered pursuant to this Agreement,
shall survive the Closing and shall continue in full force and effect for a period of 18 months from the Closing Date.
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9.2
Limitation
(a)
The Purchaser will be entitled to make a claim against the Vendor in respect of the breach of any warranty, representation, covenant or obligation of the Vendor in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement only if:
(i)
written notice of any such claim is given by or on behalf of the Purchaser to the Vendor within 18 months from the Closing Date; and
(ii)
the aggregate amount of all such claims exceeds $50,000;
provided that the Vendor’s liability to the Purchaser shall be for the entire aggregate amount of such claim and not for amounts in excess of the said aggregate amount.
(b)
The Vendor will be entitled to make a claim against the Purchaser in respect of the breach of any warranty, representation, covenant or obligation of the Purchaser in or under this Agreement or in or under any document, instrument or agreement delivered pursuant to this Agreement only if:
(i)
written notice of any such claim is given by or on behalf of the Vendor to the Purchaser within three years from the Closing Date;
(ii)
the aggregate amount of all such claims exceeds $50,000;
provided that the Purchaser’s liability to the Vendor shall be for the entire aggregate amount of such claim and not for amounts in excess of the said aggregate amount.
(c)
In no event shall the aggregate of the claims by the Purchaser against the Vendor hereunder exceed $1,250,000.
(d)
Payment of a claim of the Purchaser against the Vendor may be partly or fully made by delivery of the Vendor to the Purchaser of Consideration Shares to be valued as at the time of delivery at the greater of $4.30 per share or the weighted average price of the common shares over the 10 trading days prior to such delivery.
9.3
Defence of Third Party Claims
In the event of a claim (an “Indemnity Claim”) being made by a third party against a party (the “Indemnified Party”) in respect of which, subject to section 9.2 another party (the “Indemnifier”) is or may be obligated under or arising out of this Agreement to indemnify, pay damages to or otherwise compensate the Indemnified Party, the following provisions shall apply.
The Indemnified Party shall promptly give written notice to the Indemnifier of any Indemnity Claim in respect of which the Indemnified Party intends to claim for indemnification against the
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Indemnifier. Such notice shall specify with reasonable particularity (to the extent that the information is available) the nature of the Indemnity Claim. The Indemnifier shall, at its own expense, assume control of the negotiation, settlement and defence of such Indemnity Claim. The Indemnified Party shall co-operate with the Indemnifier in respect of such Indemnity Claim and the Indemnifier shall reimburse the Indemnified Party for all the Indemnified Party’s reasonable expenses as a result of the Indemnifier’s assumption of such Indemnity Claim and arising from the Indemnified Party’s co-operation.
The Indemnified Party will have the right to participate in the negotiation, settlement and defence of such Indemnity Claim at its own expense and will have the right to disagree on reasonable grounds with the selection and retention of counsel, in which case counsel satisfactory to the Indemnifier and the Indemnified Party shall be retained by the Indemnifier. If the Indemnifier fails to defend any Indemnity Claim within a reasonable time, the Indemnified Party will be entitled to assume control of the Indemnity Claim at the expense of the Indemnifier and the Indemnifier will be bound by the results obtained by the Indemnified Party with respect to such Indemnity Claim.
The following provisions shall also apply with respect to Indemnity Claims:
(a)
In the event that any Indemnity Claim is of a nature such that the Indemnified Party is legally bound or required by applicable law to make a payment to any person (a “Third Party”) with respect to such Indemnity Claim before the completion of settlement negotiations or related legal proceedings, including, without limitation, the posting of any security to stay any process of execution or judgment, the Indemnifier shall be obligated to make such payment or post security herefore on behalf of the Indemnified Party. If the Indemnifier fails to do so, the Indemnified Party may make such payment or post security herefore and the Indemnifier shall, forthwith after demand by the Indemnified Party, reimburse the Indemnified Party for any such payment or cause the security to be replaced and released. If the amount of any liability of the Indemnified Party under the Indemnity Claim in respect of which such a payment was made, as finally determined, is less than the amount which was paid by the Indemnifier to the Indemnified Party, the Indemnified Party shall, forthwith after receipt of the difference from the Third Party, pay the amount of such difference to the Indemnifier.
(b)
Except in the circumstance contemplated by subsection 9.3(a) above, and unless the Indemnifier fails to assume control of the negotiation, settlement and defence of any Indemnity Claim, the Indemnified Party shall not negotiate, settle, compromise or pay any Indemnity Claim except with the prior written consent of the Indemnifier (which consent shall not be unreasonably withheld).
(c)
The Indemnified Party shall not permit any right of appeal in respect of any Indemnity Claim to terminate without giving the Indemnifier notice thereof and an opportunity to contest such Indemnity Claim.
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(d)
The Indemnified Party and the Indemnifier shall co-operate fully with each other with respect to Indemnity Claims, shall keep each other fully advised with respect thereto (including supplying copies of all relevant documentation promptly as it becomes available) and shall each designate a senior officer who will keep himself informed about and be prepared to discuss the Indemnity Claim with his or her counterpart and with counsel at all reasonable times.
(e)
Notwithstanding the above provisions of this section 9.3, the Indemnifier shall not settle any Indemnity Claim or conduct any related legal or administrative proceeding in a manner which would, in the opinion of the Indemnified Party, acting reasonably, have a material adverse impact on the Indemnified Party.
(f)
The provisions of this section 9.3 are intended to set out the procedures to be followed with respect to an Indemnity Claim and, provided the Indemnified Party follows such procedures in all material respects, nothing contained in this section 9.3 will derogate from the Indemnifier’s obligations to indemnify the Indemnified Party.
10.
Miscellaneous
10.1
Legal and Other Fees and Expenses
Unless otherwise specifically provided herein, the parties will pay their respective legal, accounting and other professional fees and expenses incurred by each of them in connection with the negotiation and settlement of this Agreement, the completion of the Transaction and other matters pertaining hereto.
10.2
Notices
All notices, requests, demands or other communications required or permitted to be given by any party to another pursuant to this Agreement shall be given in writing and delivered by personal service, pre-paid registered mail or facsimile, addressed as follows:
To the Vendor:
Xxxxx Xxxxxxx
x/x Xxxxx 0000, Xxxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX
X0X 0X0
Facsimile: (000) 000-0000
with a copy to:
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XxXxxxxxxx O’Xxxxxx Xxxxx
1100 – 000 Xxxxxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
Attention: Xxxxxxxx XxXxxxxxxx
Facsimile: (000) 000-0000
To the Purchaser:
International Royalty Corporation
00 Xxxxxxxxx Xxxxx Xxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx, XXX 00000
Attention: Xxxx Silver
Facsimile: (000) 000-0000
and
Attention: Xxxxxx Xxxxx
Facsimile: (000) 000-0000
with a copy to:
Fasken Xxxxxxxxx XxXxxxxx LLP
4200 – 00 Xxxxxxxxxx Xx. X.
Xxxxxxx, Xxxxxxx
X0X 0X0
Attention: Xxxxxxx Xxxxxxxx
Facsimile: (000) 000-0000
subject to any notice of change of address or fax number given in accordance herewith. Any notice shall be deemed to have been given and received:
(a)
if personally delivered, then on the day of personal service to the recipient party, provided that if such date is a day other than a Business Day such notice shall be deemed to have been given and received on the first Business Day following the date of personal service;
(b)
if by pre-paid registered mail, then the first Business Day, after the expiration of five (5) days following the date of mailing; or
(c)
if sent by facsimile transmission and successfully transmitted prior to noon on a Business Day of the recipient party, then on that Business Day, and if successfully
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transmitted after noon on a Business Day of a recipient party then on the first Business Day following the date of transmission.
10.3
Further Assurances
Each of the parties shall execute and deliver such further documents and do such further acts and things as may be reasonably required from time to time, either before, on or after the Closing Date, to carry out the full intent and meaning of this Agreement and to assure to the Purchaser good and valid title to the Royalty, free and clear of all Encumbrances.
10.4
Time of the Essence
Time shall be of the essence of this Agreement.
10.5
Brokers’ Fees
Each of the parties acknowledges and agrees that it is not aware of any current or possible future claim for brokerage, agency, finder’s fee or commission in connection with the transactions contemplated by this Agreement and that if any such claim should arise through, or under, or by virtue of any action taken by, any party, such party shall indemnify and hold harmless the others in respect thereof.
10.6
Entire Agreement
This Agreement and the Disclosure constitutes the entire agreement between the Vendor and the Purchaser pertaining to the Transaction and supersedes all prior agreements, undertakings, negotiations and discussions, whether oral or written, of the Vendor and the Purchaser, including the letter agreement between the parties dated December 6, 2004, and there are no warranties, representations, covenants, obligations or agreements between the Vendor (or any Affiliate thereof) and the Purchaser except as set forth in this Agreement.
10.7
Confidentiality, Public Disclosure
(a)
This Agreement and the contents hereof, and any instruments or agreements in implementation of this Agreement, shall be maintained in confidence by the parties and not disclosed to any other person (except as may be required by applicable Law and then upon notice by the disclosing party to the other party) without the prior written approval of the other party.
(b)
The content of any public disclosure or press release respecting this Agreement or the Transaction shall be approved by both parties hereto prior to the making of such public disclosure or press release, which approval shall not be unreasonably withheld by the party not subject to such disclosure requirements, provided that this section 10.7 is subject always to all disclosure obligations of the Purchaser under applicable securities laws.
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10.8
Assignment
Prior to completion of the Initial Public Offering, this Agreement shall not be assigned by either party hereto without the written consent of the other party first obtained, such consent not to be unreasonably withheld. The Vendor hereby confirms his consent to the transfer of this Agreement by the Purchaser to an Affiliate of the Purchaser so long as the Purchaser remains fully obligated to the Vendor under the terms of this Agreement notwithstanding such transfer.
10.9
Invalidity
Each of the provisions contained in this Agreement is distinct and severable and a determination of illegality, invalidity or unenforceability of any such provision or part hereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof, unless as a result of such determination this Agreement would fail in its essential purposes.
10.10
Waiver and Amendment
Except as expressly provided in this Agreement, no amendment or waiver of it will be binding unless made in writing by the party to be bound by such amendment or waiver. No waiver of any provision, or any portion of any provision, of this Agreement will constitute a waiver of any other part of the provision or any other provision of this Agreement nor a continuing waiver unless otherwise expressly provided.
10.11
Surviving Provisions on Termination
Notwithstanding any other provisions of this Agreement, if this Agreement is terminated, the provisions of subsections 5.2, 5.3, 5.4, 10.1, 10.5 and 10.7 shall survive such termination and remain in full force and effect.
10.12
Counterparts
This Agreement may be signed in counterparts and by facsimile counterparts and each such counterpart will constitute an original document and such counterparts, taken together, will constitute one and the same instrument.
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10.13
Enurement
This Agreement will enure to the benefit of and will be binding upon the parties and their respective successors and permitted assigns.
IN WITNESS WHEREOF the parties have executed this Agreement as of the day and year first above written.
SIGNED, SEALED AND DELIVERED by Xxxxx Xxxxxxx in the presence of: | ) ) ) ) |
|
Witness | ) ) | Xxxxx Xxxxxxx |
Address | ) ) |
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| ) ) |
|
Occupation | ) |
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International Royalty Corporation by its authorized signatory: |
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Xxxxxx Xxxxx |
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SCHEDULE A
Royalty Agreements
Royalty Sharing Agreement made March 31, 2000 among Xxxxx Xxxxxxx, Xxxxx Xxxxx, Xxxx Xxxxxx and Western Canadian Coal Corp. pertaining to an aggregate 1% royalty (divided 40.6% Xxxxx Xxxxxxx, 21.9% Xxxxx Xxxxx, 37.5% Xxxx Xxxxxx) in the price (FOBT at cost) for all product tonnes produced from the following properties:
Project | Property | Tenure No. |
Wolverine | Mt. Xxxxxxx | 381711 to 381717, 379597, 379598 and 379600 |
Wolverine | Xxxxx Xxxxx | 000000 to 379596, 379601, 383177 to 383179 |
Wolverine | Hermann | 383180 to 383183 |
Xxxxxxx | Xxxx Xxxxxxx | 000000 to 379582 and 379585 |
all per the agreement attached.
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SCHEDULE B
Royalty Assignment Agreement
attached
DM_VAN/237461-00001/6298157.6
