EXHIBIT 10.3
 
 
EXECUTION COPY
 

SIDE LETTER (PREFERRED SUPER MAJORITY)

This Side Letter (the "Side Letter") is entered into on November 21, 2012, by
and among Midway Gold Corp.(the "Company") and the Investors.  Reference is made
to those certain Share Purchase Agreements, dated as of the date hereof (the
"Purchase Agreements"), by and among the Company and the investors listed on the
signature pages attached thereto (the “Investors”).  Capitalized terms used but
not defined herein shall have the meanings given to them in the Purchase
Agreements or the Company’s Articles.

1.           From the Closing Date and for so long as the Preferred Governance
Majority exists (the “Designation Period”), the Preferred Governance Majority
shall have the right to designate one (1) director nominee for election to be a
member of the Board of Directors of the Company (the "Board") at each annual or
special meeting of shareholders of the Company or action by written consent of
shareholders at which directors will be elected (each director to the Board
designated pursuant to this Side Letter, a "Preferred Holder Director"). The
Preferred Holder Director shall be qualified to serve as a director of the
Company.  Each Preferred Holder Director elected shall be a member of the Board
until the next annual shareholders meeting or until such Preferred Holder
Director ceases to hold office by reason of death, resignation, removal, or
disqualification, in each case in accordance with the Company's Articles and
the provisions set forth in this Side Letter that are not inconsistent with the
Company’s Articles.  The Preferred Governance Majority shall not be deemed to
owe any fiduciary duties to the Company or any of its shareholders by reason of
any terms of this Side Letter.

2.           Nathaniel Klein shall be nominated as the initial Preferred Holder
Director to be elected to the Board at the next annual shareholders meeting.

3.           During the Designation Period, the Company shall include the
designee of the Preferred Governance Majority as a Preferred Holder Director as
the Company's nominee for election as a director at each annual or special
meeting of shareholders of the Company or action by written consent of
stockholders at which directors will be elected.  The Company shall recommend
that the Company's shareholders vote, and shall solicit proxies, in favor of the
election of the designee by the Preferred Governance Majority for a Preferred
Holder Director at such annual or special meeting or by such written consent,
and the Company shall otherwise support such designee for election in a manner
no less rigorous and favorable than the manner in which the Company supports its
other nominees.  The Preferred Governance Majority shall not be subject to
compliance with any advance notice requirements set forth in the Company's
Articles in connection with the terms and provisions set forth in this Side
Letter.

4.           Any vacancy created by the death, resignation, removal or
disqualification of any Preferred Holder Director shall only be filled by an
eligible person designated by the Preferred Governance Majority to be a nominee
in accordance with this Side Letter unless the Preferred Super Majority agrees
otherwise.  If a person designated by the Preferred Governance Majority to be a
Preferred Holder Director is not a Preferred Holder Director because of such
person's death, disability, disqualification, withdrawal as a Preferred Holder
Director or is for any other reason unavailable or unable to serve on the Board,
the Preferred Governance Majority shall be entitled to promptly designate
another person to be a Preferred Holder Director in accordance with the
applicable provisions of this Side Letter and such vacancy shall not be filled
prior to the designation of an individual by the Preferred Governance
Majority.  The Preferred Holder Director may resign from the Board at any time
without notice.  If the position of Preferred Holder Director is vacant and the
Preferred Governance Majority designates a person for a Preferred Holder
Director, the Board shall appoint such person to the Board as the Preferred
Holder Director to serve on the Board until his or her term expires at the next
annual shareholders meeting.

5.           Each Preferred Holder Director that satisfies applicable criteria
and requirements (if any) under applicable law and listing standards of the
Company’s Primary Eligible Market or, if the Primary Eligible Market is not the
principal trading market for the Common Stock, then on the principal securities
exchange or securities market on which the shares of Common Stock are then
traded in respect of a
 
 
 

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Board committee or sub-committee, shall have the right to serve on such
committee and sub-committee of the Board.

6.           The Company hereby renounces, to the extent permitted by applicable
law, any interest, expectancy or right of the Company in, or in being offered an
opportunity to participate in, any Excluded Opportunity.  An "Excluded
Opportunity" is any matter, transaction, interest or opportunity that is
presented to, or acquired, created or developed by, or which otherwise comes
into the possession of, (a) any Preferred Holder Director who is not an employee
of the Company or any of its Subsidiaries, or (b) the Preferred Governance
Majority or any direct or indirect partner, member, director, shareholder,
employee or agent of the Preferred Super Majority, other than someone who is an
employee of the Company or any of its Subsidiaries (collectively, "Covered
Persons"), unless (i) such matter, transaction, interest or opportunity is
presented to, or acquired, created or developed by, or otherwise comes into the
possession of, a Covered Person expressly and solely in such Covered Person's
capacity as a Preferred Holder Director or (ii) where the Covered Person is not
the Preferred Holder Director, such matter, transaction, interest or opportunity
is presented to, or acquired, created or developed by, or otherwise comes into
the possession of, the Preferred Holder Director expressly and solely in its
capacity as a Preferred Holder Director and its existence is disclosed or
conveyed to the Covered Person expressly and solely by the Preferred Holder
Director.

7.           During such time and as long as the Preferred Governance Majority
has designated a Preferred Holder Director to the Board and such Preferred
Holder Director is a member of the Board, in each case, in accordance with and
pursuant to the terms of this Side Letter, the Board shall approve the
declaration and issuance of any securities, including without limitation any
Preferred Shares, Conversion Shares and Dividend Shares, pursuant to and in
accordance with Rule 16b-3 promulgated under the 1934 Act, as amended, (or a
successor rule thereto) for the purpose of making such securities exempt from
the provisions of Section 16(b) of the 1934 Act.

8.           In the event the size of the Board is increased beyond 7 members,
the Preferred Governance Majority shall have the right to designate one
additional (1) director nominee for each increase beyond 7 members for election
to be a member of the Board (each such director to the Board designated pursuant
to this Side Letter, an "Additional Preferred Holder Director").  Increases to
the Board beyond seven members shall occur in increments of two where one of the
new Directors shall be a nominee designated by the Preferred Governance
Majority. The provisions of this Side Letter shall apply mutatis mutandis to
such Additional Preferred Holder Director as thought they were a Preferred
Holder Director.
 
9.           At the next annual or special meeting of shareholders of the
Company, the Company shall seek shareholder approval (the "Shareholder
Approval") of those provisions of the Company’s Articles that will permit the
Preferred Super Majority to (a) formally elect a Class A Preferred Director as
provided in Article 26.2(4) of the Company’s Articles and (b) have the
preferential board nomination and election rights as provided in Article 26.7(3)
of the Company’s Articles ((a) and (b), collectively, the “Preferred
Resolutions”).  The Company shall use commercially reasonable efforts to obtain
Shareholder Approval to the Preferred Resolutions, including but not limited to
soliciting proxies therefor, and ensuring that the Board supports and recommends
the Preferred Resolutions in all statements (either written or oral), at each
annual or special meeting of shareholders of the Company until such Preferred
Resolutions have been adopted.  For greater certainty, in the event the
Preferred Resolutions do not receive Shareholder Approval at the next annual or
special meeting of the Company, the Company shall seek Shareholder Approval for
the Preferred Resolutions at each annual or special meeting of shareholders of
the Company until such Preferred Resolutions have been adopted, and the Company
shall otherwise support such Preferred Resolutions in a manner no less rigorous
and favorable than the manner in which the Company supports other resolutions
proposed by the Board.

10.           The Company agrees to select Martin Hale or his designee as a
member of the nominating committee and compensation committee of the Board of
Directors until the earlier of (i) his no longer serving on the Board or (ii)
all obligations under this Side Letter shall have been satisfied in full.  The
Company hereby undertakes to strike a committee of the Board as and from Closing
made up of
 
 
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three non executive directors, one of whom will be either Martin Hale or upon
his election to the board the Preferred Holder Director, and the Chief Executive
Officer of the Company (CEO), whose mandate shall be to review and approve the
annual business and financing plans and capital and operating budgets (and any
modifications of, or deviations from such plans or budgets). The mandate of the
committee shall stipulate that any and all approvals of the committee relating
to such plans and budgets must be unanimous. The mandate shall further provide
that in the event that unanimous approval of the committee is not obtained
Martin Hale or the Preferred Holder Director, as the case may be, and the CEO of
the Company shall cooperate and work together in good faith to resolve any
issues that the committee has identified as an impediment to their unanimous
approval.

11.           To facilitate the appointment on Closing of Martin Hale as a
director, Nathanial Klein shall resign as a director on the Closing Date and
Martin Hale shall be appointed as a director by the Board in his place. Mr.
Klein shall serve as an observer to the Board from his resignation until his
election as the initial Preferred Holder Director at the next annual general
meeting of the Company.

12.           This Side Letter shall be governed by and construed in accordance
with the laws of the State of New York, without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of New York or
any other jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York.  Each of the parties hereto
irrevocably consents to the exclusive jurisdiction of all courts, federal and
state, located in the City of New York for the adjudication of any dispute
arising hereunder.  This Side Letter may not be amended or waived except in
writing, by a document executed by the Company and the Investors.

13.           This Side Letter may be executed in two (2) or more counterparts,
together constituting one (1) agreement, and may be executed by facsimile,
having the same force as if originally executed.

[Signature Pages Follow]
 
 
 
 

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IN WITNESS WHEREOF, each party to this Side Letter has caused their respective
signature page to this Side Letter to be duly executed as of the date first
written above.

 

  COMPANY:       MIDWAY GOLD CORP.       By:                          Name: 
Kenneth Brunk     Title:    Chief Executive Officer

 
 
 
 
 

 
[Signature Page to Side Letter]
 

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IN WITNESS WHEREOF, each party to this Side Letter has caused their respective
signature page to this Side Letter to be duly executed as of the date first
written above.
 
 
 

  BUYER:       HCP-MID, LLC       By:                          Name:  Martin M.
Hale, Jr.     Title:    Hale Fund Management, LLC,    
Managing Member

 
 
 
 
 
 
[Signature Page to Side Letter]
 

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IN WITNESS WHEREOF, each party to this Side Letter has caused their respective
signature page to this Side Letter to be duly executed as of the date first
written above.
 
 

  BUYER:       EREF-MID II, LLC       By:                          Name:  Martin
M. Hale, Jr.     Title:    Hale Fund Management, LLC,    
Managing Member

 
 
 
 
[Signature Page to Side Letter]
 

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IN WITNESS WHEREOF, each party to this Side Letter has caused their respective
signature page to this Side Letter to be duly executed as of the date first
written above.
 

  BUYER:       INV-MID, LLC       By:                          Name:  Martin M.
Hale, Jr.     Title:    Hale Fund Management, LLC,    
Managing Member

 
 
 
 
 
[Signature Page to Side Letter]
 

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