QUALIFICATION RIGHTS AGREEMENT
THIS QUALIFICATION RIGHTS AGREEMENT (the "Agreement") is made as of
January 21, 2009 between NovaGold Resources Inc. (the "Company") and Electrum
Strategic Resources LLC (the "Purchaser").
WHEREAS, the Company and the Purchaser are parties to the Unit Purchase
Agreement (the "Purchase Agreement"), dated December 31, 2008, pursuant to which
the Purchaser purchased Units comprised of common shares in the capital of the
Company and warrants to purchase additional common shares of the Company and
received certain registration rights in connection therewith.
NOW, THEREFORE, in consideration of the premises and of the mutual
provisions, agreements and covenants contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
1. Demand Qualification. At any time after the Closing Date (as defined in
the Purchase Agreement), upon the written request of Investors (as defined
below) holding at least an aggregate of twenty-five percent (25%) of the
Qualifiable Shares (as defined below) then outstanding (the "Requesting
Holders"), the Company shall use its reasonable best efforts to prepare
and file, or to cause to be prepared and filed, all necessary documents,
including a prospectus, for one or more equity securities offerings under
Applicable Securities Laws in some or all of the provinces or territories
of Canada (or federally, if applicable) in which the Company is a
"reporting issuer" under the Applicable Securities Laws of such provinces
or territories other than the Province of Quebec (for the purposes of this
Section 1, the "Qualification Provinces") of all or any portion (as
required by the Requesting Holders) of the Qualifiable Shares held by the
Requesting Holders having an aggregate offering or sale price of at least
US$5,000,000 (a "Demand Qualification"). The Company shall not be required
to effect more than three Demand Qualifications or Demand Registrations
(as defined in the United States registration rights agreement entered
into on the date hereof (the "US Registration Rights Agreement")) in the
aggregate; provided, however, that in the event the Purchaser acquires
Warrant Shares upon the exercise of Warrants (as defined in the Purchase
Agreement) within thirty (30) days following a request by the Company that
the Purchaser exercise Warrants, the Purchaser may make a request for a
demand qualification of some or all of the Warrant Shares so acquired
(notwithstanding that such Warrant Shares may have an aggregate offering
or sale price of less than US$5,000,000), and such demand qualification
will not count as one of the three Demand Qualifications or Demand
Registrations (as defined in the US Registration Rights Agreement)
otherwise allowed by this Agreement or the US Registration Rights
Agreement.
a. For the purposes of this Agreement, "Applicable Securities Laws" of
a province or territory of Canada or federally, if applicable,
means, all applicable securities laws in such jurisdiction and the
respective regulations and rules under such laws together with
applicable published policy statements, notices and orders of the
Securities Commission in such jurisdiction as well as the applicable
by-laws, rules and regulations of any stock exchange on which the
common shares in the capital of the Company are then listed and
posted for trading;
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b. For the purposes of this Agreement, "Securities Commission" means a
securities commission or similar regulatory authority in a province
or territory of Canada or federally, as applicable;
c. For the purposes of this Agreement, "Qualifiable Shares" shall mean
(i) common shares in the capital of the Company purchased by the
Purchaser pursuant to the Purchase Agreement ("Common Shares") and
(ii) common shares issuable upon exercise of Warrants (as defined in
the Purchase Agreement) ("Warrant Shares" and together with the
Common Shares, the "Shares"); provided that such securities shall
cease to be Qualifiable Shares when (i) a receipt for a prospectus
qualifying the distribution of all such Qualifiable Shares has been
obtained from the applicable Securities Commission under Applicable
Securities Laws and such Qualifiable Shares have been sold or
otherwise transferred by the holder thereof pursuant to such
prospectus; (ii) such Qualifiable Shares are transferred to a person
that is not a permitted assign of the Purchaser pursuant to this
Agreement; or (iii) such Qualifiable Shares are sold in the
circumstances described in subparagraph 1(a)(ii) or are sold or,
except where the Investor is a member of a control block of the
Company, can be sold in the circumstances described in subparagraph
1(a)(iii) of the US Registration Rights Agreement.
d. For purposes of this Agreement, "Investor" means the Purchaser, any
transferee(s) or assignee(s) to whom the Purchaser assigns its
rights under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 12 and any
transferee(s) or assignee(s) to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with Section
12.
e. Following receipt of any notice by Requesting Holders, the Company
shall immediately notify Investors holding Qualifiable Shares from
whom notice has not been received and such Investors shall then be
entitled within ten (10) days thereafter to request the Company to
include in the requested registration all or any portion of their
Qualifiable Shares. The Company may also register for sale for its
own account or that of other security holders having the contractual
right to include such securities in such registration statement such
additional shares of the Company's capital stock as it shall desire,
subject to paragraph (g) below. For purposes of this Agreement,
Investors that elect to have such securities registered in
accordance with the terms of this Agreement shall be referred to
individually as a "Selling Holder" and collectively as the "Selling
Holders".
f. In connection with any qualification of distribution of Qualifiable
Shares pursuant to this Section 1, the Company shall:
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i. subject to receipt of necessary information from the Selling
Holders after prompt request from the Company to such holders
to provide such information (provided that failure on the part
of one or more of the Selling Holders to provide the necessary
information requested shall not relieve the Company from its
obligation to use reasonable best efforts with respect to
complying Selling Holders), prepare and file with the
Securities Commissions in the Qualification Provinces, within
thirty (30) days after the end of the notice period set forth
in paragraph (e) above, a preliminary prospectus and as soon
as reasonably practical following the settlement of any
comments received from a Securities Commission in any
Qualification Province, a prospectus to qualify the
distribution of the Qualifiable Shares by the Selling Holders
(a "Demand Prospectus"); provided, that if the terms of the
underwriting agreement executed in connection with any
qualification pursuant to Section 1 or 2 of this Agreement
prohibit the Company from filing any Demand Prospectus, the
Company shall have the right to delay such filing for the
required period, which period shall not exceed forty-five (45)
days;
ii. If, in the good faith judgment of the Company's board of
directors it would be seriously detrimental to the Company or
its shareholders to file a preliminary prospectus or a
prospectus in connection with a Demand Qualification, or an
amendment or supplement to such a preliminary prospectus or
prospectus in the near future (and the Company provides the
Investors with a certificate from its Chief Executive Officer
or Chief Financial Officer stating as such), the Company may
defer taking action to comply with this Section 1, provided
that the Company shall not defer actions pursuant to such
notices for more than sixty (60) days in the aggregate in any
twelve (12) month period; and
iii. The Company shall not be required to file a preliminary
prospectus in connection with a Demand Qualification pursuant
to this Section 1 if within ten (10) days of receipt of a
Demand Qualification, it notifies the Requesting Holders that
it intends to conduct a public offering of equity securities
for the account of the Company within the next sixty (60)
days, provided that the Company shall not exercise its rights
under this subsection more than twice in any 12 month period.
If the Company determines not to conduct such public offering,
the Company shall provide prompt notice to the Investors of
such determination.
g. In connection with any qualification of the distribution of
Qualifiable Shares pursuant to this Section 1, the Requesting
Holders may elect to sell Qualifiable Shares in an underwritten
offering in accordance with the conditions set forth in this
paragraph. In any such underwritten offering, the investment bank
that will manage the offering will be selected by, and the
underwriting arrangements with respect thereto will be approved by,
the Requesting Holders holding a majority of the Qualifiable Shares
to be sold pursuant to such offering by such Requesting Holders,
subject, in each case, to the consent of the Company, which consent
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will not be unreasonably withheld. No Investor may participate in
any underwritten offering hereunder unless such Investor (A) agrees
to sell such Investor's Qualifiable Shares to be sold thereunder on
the basis provided in any underwriting arrangements approved
pursuant hereto and (B) completes and executes all other customary
questionnaires, powers of attorney, indemnities, underwriting
agreements and other documents required under the terms of such
underwriting arrangements. In the case of any such underwritten
offering, if the managing underwriter for such offering advises the
Company in writing that in their good faith opinion the amount of
securities requested to be included therein exceeds the amount of
securities that can be sold in such offering such that the inclusion
of such Qualifiable Shares would adversely affect marketing of the
securities to be sold pursuant to the offering, the Company shall
not exclude any Qualifiable Shares unless the Company has first
excluded, all outstanding securities, the holders of which are not
entitled by contract to inclusion of such securities in such
preliminary prospectus and prospectus or are not entitled to pro
rata inclusion with the Qualifiable Shares, provided, that after
giving effect to the foregoing, any exclusion of Qualifiable Shares
shall be made pro rata with holders of other securities having the
contractual right to include such securities in the preliminary
prospectus and the prospectus other than holders of securities
entitled to inclusion of their securities in such preliminary
prospectus and prospectus by reason of a demand qualification right
or demand registration rights.
2. Incidental Qualification. If, at any time, the Company proposes to qualify
for distribution any equity securities of the Company by way of prospectus
under any Applicable Securities Laws of any province or territory in
Canada or federally, if applicable (for the purposes of this Section 2,
the "Qualification Provinces"), or any other jurisdiction in Canada in
which securities of the Company may be qualified (including, without
limitation, securities distributed from treasury by the Company or
distributed by way of secondary offering by any other shareholder), the
Company will serve written notice (a "Notice") of such proposed
distribution on each Investor prior to the anticipated date of filing of a
preliminary prospectus under such Applicable Securities Laws. A Notice
shall include reasonable details of such proposed distribution. Subject to
the restrictions and in accordance with the procedures set forth below,
the Company will use its reasonable best efforts to include in any such
distribution to which a Notice relates, all Qualifiable Shares with
respect to which the Company has received from an Investor a written
request for inclusion therein within: (i) two (2) Business Days following
receipt of the Notice in respect of a "bought deal" financing pursuant to
National Instrument 44-101 Short Form Prospectus Distributions of the
Canadian Securities Administrators ("NI 44-101") or any successor thereto;
and (ii) ten (10) days, in any other case, provided that:
A. notwithstanding that an Investor shall have provided a
written request for inclusion in any such distribution
of certain Qualifiable Shares, such Investor shall not
be required to include such shares in any such
distribution if the price at which such Qualifiable
Shares are to be sold is determined not to be acceptable
by such Investor;
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B. each Investor must sell its Qualifiable Shares at the
same price as the Company in respect of identical
securities; and
C. if, at any time after giving a Notice and prior to the
date a receipt is issued by the applicable Securities
Commission under Applicable Securities Laws in respect
of the prospectus to be filed in connection with such
proposed distribution, the Company shall be unable to or
shall determine for any reason not to proceed with the
proposed distribution, the Company may, at its election,
give written notice of such determination to the
Investors and thereupon the Company shall be relieved of
its obligation hereunder to effect the proposed
distribution and any qualification of any such
Qualifiable Shares (without prejudice to the rights of
the Investors in respect of any subsequent
distribution).
For the purposes of this Agreement, "Business Day" means a day that is not a
Saturday, Sunday or a statutory holiday in Vancouver, British Columbia or New
York, New York.
The Company shall have the right to select the managing underwriter(s) for any
underwritten distribution made pursuant to this Section 2. All Investors
proposing to sell their Qualifiable Shares in such underwritten offering shall
(together with the Company) enter into an underwriting agreement in customary
form. If such proposed distribution is an underwritten offering and the managing
underwriter for such offering advises the Company that the securities requested
to be included therein exceed the amount of securities that can be sold in such
offering such that the inclusion of such Qualifiable Shares would adversely
affect marketing of the securities to be sold by the Company, the Company shall
not exclude any Qualifiable Shares unless the Company has first excluded, all
outstanding securities, the holders of which are not entitled by contract to
inclusion of such securities in such preliminary prospectus and prospectus or
are not entitled to pro rata inclusion with the Qualifiable Shares, provided,
that after giving effect to the foregoing, any exclusion of Qualifiable Shares
shall be made pro rata with holders of other securities having the contractual
rights right to include such securities in the preliminary prospectus and the
prospectus other than holders of securities entitled to inclusion of their
securities in such preliminary prospectus and the prospectus by reason of an
incidental qualification right or piggyback registration rights.
3. Registration Procedures and Other Matters. If and when the Company is
required by the provisions of Section 1 or 2 to qualify the distribution
of Qualifiable Shares by prospectus, the Company shall:
a. furnish to the Selling Holders' legal counsel, copies of the
preliminary prospectus, prospectus, or any amendments or supplements
thereto, which documents will be subject to the comment and review
of the Selling Holders and one legal counsel for all of the Selling
Holders;
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b. prepare and file such amendments to the prospectus or other
qualification document used in connection with such secondary
offering as may be necessary to enable the distribution by way of
secondary offering for a period of not less than one hundred and
twenty (120) days (in the case of a qualification referred to in
Section 2) or such period of time, not exceeding one hundred and
eighty (180) days, as requested by the Selling Holders (in the case
of a qualification referred to in Section 1) (or in any case such
shorter period as shall be necessary under applicable securities
laws to permit the Selling Holders to complete the distribution of
the Qualifiable Shares to which such prospectus or other
qualification document relates in accordance with its intended
methods of distribution) and to comply with the provisions of
Applicable Securities Laws of the Qualification Provinces with
respect to the disposition of all Qualifiable Shares covered by the
prospectus or other qualification document for the period required
to effect the distribution thereof, but in no event shall the
Company be required to do so for a period of more than one hundred
and twenty (120) days (in the case of a qualification referred to in
Section 2) or one hundred and eighty (180) days (in the case of a
qualification referred to in Section 1) following the effective date
of such prospectus or other qualification document;
c. furnish to the Selling Holders and the underwriter(s), if any, and
to one legal counsel for all of the Selling Holders and the
underwriter(s), such number of conformed copies of the prospectus
(including each preliminary prospectus) and any amendments or
supplements thereto, and any documents incorporated by reference
therein, as the Selling Holders or such underwriter(s) may
reasonably request in order to facilitate the disposition of the
Qualifiable Shares being sold by the Selling Holders (it being
understood that the Company consents to the use of the preliminary
prospectus, the prospectus and any amendment or supplement thereto
(including any documents incorporated by reference therein) by the
Selling Holders and the underwriter(s), if any, in connection with
the offering and sale of the Qualifiable Shares covered by the
prospectus or any amendment or supplement thereto);
d. at any time when a prospectus relating to an offering of Qualifiable
Shares is required to be delivered under Applicable Securities Laws
of any province or territory of Canada, notify the Selling Holders
and the underwriter(s), if any, when the Company becomes aware of
the happening of any event as a result of which any prospectus or
other qualification document (as then in effect) contains an untrue
statement of a material fact or any omission to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they
were made, not misleading and, thereafter, prepare and file pursuant
to such Applicable Securities Laws and furnish a supplement or
amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Qualifiable Shares, such prospectus will not
contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading. Notwithstanding the foregoing
sentence, for an aggregate period of no more than sixty (60) days
over a twelve (12) month period, the Company shall not be required
to file any supplement or amendment to a prospectus, if at such
time, the board of directors of the Company determines in good faith
that taking such action would be seriously detrimental to the
Company and its shareholders (and the Company provides to the
Selling Holders a certificate of the Chief Executive Officer or
Chief Financial Officer of the Company as to such). No Investor
will, until a receipt for such supplement or amendment to such
prospectus is obtained from the applicable Securities Commission
under Applicable Securities Laws, effect sales of Qualifiable Shares
or deliver any prospectus in respect of such sale;
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e. subject to paragraph (b) above and subparagraph 1(f)(i), do all such
acts and things necessary to enable the distribution in all such
jurisdictions of the Qualifiable Shares covered by the applicable
prospectus or other qualification document for such period of time
as is required to complete the distribution contemplated by the
offering contemplated by the prospectus or other qualification
document;
f. cooperate with the Selling Holders and the lead underwriter or
underwriters, if any, to facilitate the timely preparation and
delivery of certificates (not bearing any restrictive legends except
to the extent required by law) representing securities to be sold
pursuant to the prospectus or other qualification document, and to
enable such securities to be in such denominations and registered in
such names as the lead underwriter or underwriters, if any, or any
Investor may request;
g. enter into such customary agreements (including an underwriting or
similar such agreement in customary form, including customary
standstill provisions), and take all such other actions (including,
without limitation, delivery of customary legal opinions and
officers' certificates) as the Selling Holders or the underwriters
reasonably request in order to expedite or facilitate the
disposition of such Qualifiable Shares;
h. make available for inspection by the Selling Holders and any
underwriter participating in any distribution pursuant to such
prospectus or other qualification document, and any one law firm,
accountant or other agent retained by all of the Selling Holders or
any such underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, as shall be
reasonably necessary to enable it to exercise its due diligence
responsibility provided such parties, if requested, have entered
into a confidentiality agreement with the Company, as applicable;
i. use its reasonable best efforts to obtain a long-form comfort letter
from the Company's independent auditor and legal opinion of the
Company's counsel in customary form and covering such matters of the
type customarily covered by such comfort letters and opinions as the
Selling Holders or the underwriter reasonably request;
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j. in the event of the issuance of any order or ruling suspending the
effectiveness of a prospectus receipt or of any order suspending or
preventing the use of any prospectus or suspending the qualification
of any securities qualified by such prospectus for sale in any
jurisdiction, including, where the offering is being made, under the
multijurisdictional disclosure system or any replacement thereof
("MJDS"), in the United States, or any event or circumstance which,
in the good faith judgment of the Company's Chief Executive Officer
and Chief Financial Officer, makes it advisable to make any changes
in a prospectus, or any document incorporated or deemed to be
incorporated therein by reference, so that the prospectus will not
contain any untrue statement of a material fact or any omission to
state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading, the Company will notify the
Selling Holders of such event and use all reasonable commercial
efforts promptly to obtain the withdrawal of such order or ruling.
Notwithstanding the foregoing sentence, for an aggregate period of
no more than 60 days over any 12 month period, the Company shall not
be required to file any document or make any public disclosure
necessary to end such an event, if at such time, the board of
directors of the Company determines in good faith that taking such
action would be seriously detrimental to the Company and its
shareholders (and the Company provides to the Selling Holders a
certificate of the Chief Executive Officer or Chief Financial
Officer of the Company as to such). No Investor will (until further
notice) effect sales thereof or deliver any prospectus in respect of
such sale after notification by the Company to the Selling Holders
under this paragraph (j); and
k. bear all reasonable expenses in connection with the procedures in
Section 1 or 2 hereof and to qualify the distribution of the
Qualifiable Shares pursuant to the prospectus, including the fees of
one legal counsel for all of the Selling Holders not to exceed
US$25,000 in the aggregate for each prospectus and Registration
Statement (as defined in the US Registration Rights Agreement).
4. Indemnification. For the purpose of this Section 4, the term "Selling
Stockholder" shall include each Investor, the directors, officers,
partners, mangers, members, employees, agents, each person who controls
(within the meaning of Applicable Securities Laws) any Investor and any
affiliate (within the meaning of Applicable Securities Laws) of such
Investor; the term "prospectus" shall include the preliminary prospectus
and the prospectus and each amendment or supplement thereto; and the term
"untrue statement" shall include any untrue statement or alleged untrue
statement of a material fact, or any omission or alleged omission to state
in the prospectus a material fact required to be stated therein or
necessary to prevent a statement that is made from being false or
misleading in the circumstances in which it was made.
a. The Company agrees to indemnify and hold harmless each Selling
Stockholder from and against any joint or several losses, claims,
damages, expenses or liabilities to which such Selling Stockholder
may become subject (under Applicable Securities Laws or otherwise)
insofar as such losses, claims, damages, expenses or liabilities (or
actions or proceedings in respect thereof) arise out of, or are
based upon, (A) any breach of the representations or warranties of
the Company contained in this Agreement; (B) any untrue statement or
alleged untrue statement contained in the prospectus, as amended at
the time of effectiveness, (C) any failure by the Company to fulfill
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any undertaking included in the prospectus or (D) any violation or
alleged violation by the Company of Applicable Securities Laws, any
other law, or any rule or regulation thereunder relating to the
offer or sale of the Qualifiable Shares. The Company will reimburse
such Selling Stockholder for any reasonable legal or other expenses
reasonably incurred in investigating, defending or preparing to
defend any such action, proceeding or claim; provided, however, that
the Company shall not be liable in any such case to the extent that
such loss, claim, damage or liability arises out of, or is based
upon, any untrue statement made in such prospectus in reliance upon
and in conformity with written information furnished to the Company
by or on behalf of any Selling Stockholder specifically for use in
preparation of the prospectus or the failure of such Selling
Stockholder to comply with its covenants and agreements contained in
this Agreement respecting the sale of the Qualifiable Shares or any
untrue statement in any prospectus that is corrected in any
subsequent prospectus that was delivered to the Selling Stockholder
prior to the pertinent sale or sales by the Selling Stockholder or
the Selling Stockholder's failure to deliver to a purchaser of
securities a copy of the prospectus or other qualification document
or any amendments thereof or supplements thereto at a time when the
Selling Stockholder is required under Applicable Securities Laws to
do so after the Company has furnished such Selling Stockholder with
a sufficient number of copies of the same. The Company shall
reimburse each Selling Stockholder for the amounts provided for
herein on demand as such expenses are incurred.
b. Each Investor, severally but not jointly, agrees to indemnify and
hold harmless the Company (and each person, if any, who controls
(within the meaning of Applicable Securities Laws) the Company, each
officer of the Company who signs the prospectus and each director of
the Company) from and against any losses, claims, damages or
liabilities to which the Company (or any such officer, director or
controlling person) may become subject (under Applicable Securities
Laws or otherwise), insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out
of, or are based upon, (A) any failure by such Investor to comply
with the covenants and agreements contained in this Agreement
respecting sale of the Qualifiable Shares, (B) any untrue statement
contained in the prospectus if such untrue statement was made in
reliance upon and in conformity with written information furnished
by or on behalf of such Investor specifically for use in preparation
of the prospectus, or (C) such Investor's failure to deliver to a
purchaser of securities a copy of the prospectus or other
qualification document or any amendments thereof or supplements
thereto at a time when the Investor is required under Applicable
Securities Laws to do so after the Company has furnished such
Investor with a sufficient number of copies of the same. Such
Investor will reimburse the Company (or such officer, director or
controlling person, as the case may be) for any reasonable legal or
other expenses reasonably incurred in investigating, defending or
preparing to defend any such action, proceeding or claim; provided
that such Investor's obligation to indemnify the Company shall be
limited to the amount received by such Investor from the sale of the
Qualifiable Shares giving rise to such obligation.
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c. Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity
is to be sought against an indemnifying person pursuant to this
Section 4, such indemnified person shall notify the indemnifying
person in writing of such claim or of the commencement of such
action, but the omission to so notify the indemnifying person will
not relieve such indemnifying person from any liability which it may
have to any indemnified person under this Section 4, except to the
extent that such omission materially and adversely affects the
indemnifying person's ability to defend such action. Subject to the
provisions hereinafter stated, in case any such action shall be
brought against an indemnified person, the indemnifying person shall
be entitled to participate therein, and, to the extent that it shall
elect by written notice delivered to the indemnified person promptly
after receiving the aforesaid notice from such indemnified person,
shall be entitled to assume the defense thereof, with counsel
reasonably satisfactory to such indemnified person. After notice
from the indemnifying person to such indemnified person of its
election to assume the defense thereof, such indemnifying person
shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in
connection with the defense thereof; provided, however, that if
there exists or shall exist a conflict of interest that would make
it inappropriate, in the opinion of counsel to the indemnified
person, for the same counsel to represent both the indemnified
person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own
counsel at the reasonable expense of such indemnifying person;
provided, however, that no indemnifying person shall be responsible
for the fees and expenses of more than one separate counsel
(together with appropriate local counsel) for all indemnified
parties. In no event shall any indemnifying person be liable in
respect of any amounts paid in settlement of any action unless the
indemnifying person shall have approved the terms of such
settlement; provided that such consent shall not be unreasonably
withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified
person is or could have been a party and indemnification could have
been sought hereunder by such indemnified person, unless such
settlement includes an unconditional release of such indemnified
person from all liability on claims that are the subject matter of
such proceeding.
d. If the indemnification provided for in this Section 4 is unavailable
to or insufficient to hold harmless an indemnified person under
paragraph (a) or (b) above in respect of any losses, claims, damages
or liabilities (or actions or proceedings in respect thereof)
referred to therein, then each indemnifying person shall contribute
to the amount paid or payable by such indemnified person as a result
of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative fault of the Company, on the one hand, and the applicable
Investor, as well as any other Selling Stockholders under such
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prospectus, on the other, in connection with the statements or
omissions or other matters which resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as
any other relevant equitable considerations. The relative fault
shall be determined by reference to, among other things, in the case
of an untrue statement, whether the untrue statement relates to
information supplied by the Company, on the one hand, or an Investor
or other Selling Stockholder, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement. The Company and each
Investor, severally but not jointly, agree that it would not be just
and equitable if contribution pursuant to this paragraph (d) were
determined by pro rata allocation (even if the Investor and other
Selling Stockholders were treated as one entity for such purpose) or
by any other method of allocation which does not take into account
the equitable considerations referred to above in this paragraph
(d). The amount paid or payable by an indemnified person as a result
of the losses, claims, damages or liabilities (or actions in respect
thereof) referred to above in this paragraph (d) shall be deemed to
include any legal or other expenses reasonably incurred by such
indemnified person in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this
paragraph (d), each Investor shall not be required to contribute any
amount in excess of the amount by which the amount received by such
Investor from the sale of the Qualifiable Shares to which such loss
relates exceeds the amount of any damages which such Investor has
otherwise been required to pay by reason of such untrue statement.
No person guilty of fraudulent misrepresentation shall be entitled
to contribution from any person who was not guilty of such
fraudulent misrepresentation. Each Investor's obligations in this
paragraph to contribute shall be in proportion to its sale of
Qualifiable Shares to which such loss relates and shall not be joint
with any other Selling Stockholders.
e. The parties agree that if the offering is being made pursuant to
MJDS, and indemnity is to be sought against an indemnifying person,
the indemnified person's right to indemnification pursuant to this
Section 4 is not applicable if such indemnified person has already
sought or will seek an indemnity for the same claim pursuant to
Section 5 of the US Registration Rights Agreement.
5. Information Available. During the period of distribution by way of
secondary offering, the Company will furnish to such Selling Holders, upon
the reasonable request of any Investor, an adequate number of copies of
the prospectuses to supply to any other party requiring such prospectuses;
and upon the reasonable request of such Investor, the President or the
Chief Financial Officer of the Company (or an appropriate designee
thereof) will meet with such Investor or a representative thereof at the
Company's headquarters to discuss all information relevant for disclosure
in the prospectus qualifying the distribution of the Qualifiable Shares
and will otherwise cooperate with any Investor conducting an investigation
for the purpose of reducing or eliminating such Investor's exposure to
liability under the Applicable Securities Laws, including, the reasonable
production of information at the Company's headquarters; provided, that
the Company shall not be required to disclose any confidential information
to or meet at its headquarters with any Investor until and unless the
Investor shall have entered into a confidentiality agreement in form and
substance reasonably satisfactory to the Company with the Company with
respect thereto.
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6. Notices. All notices, requests, consents and other communications
hereunder shall be in writing, shall be mailed (a) if within Canada by
first-class registered or certified airmail, or nationally recognized
overnight express courier, postage prepaid, or by facsimile, or (b) if
delivered from outside Canada, by International Federal Express or
facsimile, and shall be deemed given and received (i) if delivered by
first-class registered or certified mail, three (3) Business Days after so
mailed, (ii) if delivered by nationally recognized overnight carrier, one
(1) Business Day after so mailed, (iii) if delivered by International
Federal Express, two (2) Business Days after so mailed, (iv) if delivered
by facsimile, upon electronic confirmation of receipt and shall be
delivered as addressed as follows:
a. if to the Company, to:
NovaGold Resources Inc.
Xxxxx 0000-000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Attn: Xxxx Xxx Xxxxxxxxxxxx
Fax: 000-000-0000
b. if to the Investor, at the address set forth below, or at such other
address or addresses as may have been furnished to the Company in
writing:
Electrum Strategic Resources LLC
0000 Xxxxxx xx xxx Xxxxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxxxx
Fax: 000-000-0000
7. Governing Law and Attornment. This Agreement shall be governed by and
construed in accordance with the laws of the Province of British Columbia.
The parties hereto hereby irrevocably attorn to the jurisdiction of the
courts of the Province of British Columbia.
8. Changes. This Agreement may not be modified, waived or amended except
pursuant to an instrument in writing signed by the Company and Investors
holding the majority of the Qualifiable Shares, and any such modification,
waiver or amendment shall bind all Investors.
9. Severability. In case any provision contained in this Agreement should be
invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein shall not
in any way be affected or impaired thereby.
10. Prior Agreements. This Agreement constitutes the entire agreement between
the parties and supersedes any prior understandings or agreements
(including without limitation oral agreements) concerning the registration
rights described herein.
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11. Headings. The headings of the various sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be
part of this Agreement.
12. Transfer of Rights. All covenants and agreements contained in this
Agreement by or on behalf of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Shares), whether so
expressed or not; provided, however, that rights conferred to the
Purchaser may be transferred to a transferee of Shares only if the Company
has been given written notice thereof, such transfer complies with the
requirements of applicable law, such transferee agrees to be bound by all
of the provisions of this Agreement applicable to Purchaser or an Investor
and such transferee is a recipient of Shares from a holder of Qualifiable
Shares representing at least ten percent (10%) of the Shares issued
pursuant to the Purchase Agreement in the aggregate.
13. Independent Nature of Investor's Obligations and Rights. The obligations
of each Investor under this Agreement are several and not joint with the
obligations of any other Investor, and no Investor shall be responsible in
any way for the performance of the obligations of any other Investor under
this Agreement. Nothing contained herein or in any other document, and no
action taken by any Investor pursuant thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture
or any other kind of entity, or create a presumption that the Investors
are in any way acting in concert or as a group with respect to such
obligations or the transactions contemplated by this Agreement. Each
Investor shall be entitled to independently protect and enforce its
rights, including without limitation, the rights arising out of this
Agreement or out of the other related documents, and it shall not be
necessary for any other Investor to be joined as an additional party in
any proceeding for such purpose.
14. Counterparts. This Agreement and any modification, waiver or amendment to
this Agreement may be executed in two or more counterparts, each of which
shall constitute an original, but all of which, when taken together, shall
constitute but one instrument, and shall become effective when one or more
counterparts have been signed by each party hereto and delivered to the
other parties.
15. Further Assurances. Each party hereto shall, from time to time, and at all
times hereafter, at the request of the other party hereto, but without
further consideration, do all such further acts and execute and deliver
all such further documents and instruments as shall be reasonably required
in order to fully perform and carry out the terms and intent hereof.
16. Time. Time shall be of the essence in this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.
NOVAGOLD RESOURCES INC.
By: _______________________________
Name:
Title:
ELECTRUM STRATEGIC RESOURCES LLC
By: _______________________________
Name:
Title:
