ARRANGEMENT AGREEMENT

 

between

ALLIED GOLD LIMITED

- and -

NORD PACIFIC LIMITED

 

 

 

December 20, 2003

Execution Copy

 

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TABLE OF CONTENTS

 

 

Page

 

 

 

ARTICLE 1

          INTERPRETATION

  1

      1.1

Definitions

  1

      1.2

Knowledge

  9

      1.3

Interpretation Not Affected by Headings, Etc

10

      1.4

Article References

10

      1.5

Number, Etc

10

      1.6

Date For Any Action

10

      1.7

Currency

10

      1.8

Entire Agreement

10

ARTICLE 2

          THE ARRANGEMENT

11

      2.1

Arrangement

11

      2.2

Interim Order

11

      2.3

Alternative Structure

11

ARTICLE 3

          REPRESENTATIONS AND WARRANTIES

12

      3.1

Representations and Warranties of Nord

12

      3.2

Representations and Warranties of Allied

22

ARTICLE 4

          COVENANTS OF NORD

24

      4.1

Conduct of Business

24

      4.2

Non-Solicitation

30

      4.3

Superior Proposal

31

      4.4

Access to Information

34

ARTICLE 5

          COVENANTS OF ALLIED

34

      5.1

Covenants of Allied

34

ARTICLE 6

          MUTUAL COVENANTS

36

      6.1

Mutual Covenants of Nord and Allied

36

ARTICLE 7

          CONDITIONS PRECEDENT

37

      7.1

Mutual Conditions Precedent

37

      7.2

Conditions to Obligation of Nord

39

      7.3

Conditions to Obligation of Allied

40

      7.4

Notice of Non-Compliance

43

      7.5

Satisfaction of Conditions

43

      7.6

Adjustments in Event of Change in Allied Shares

44

ARTICLE 8

          AMENDMENT

44

      8.1

Amendment

44

ARTICLE 9

          TERMINATION AND REMEDIES

44

      9.1

Termination

44

      9.2

Effect of Termination

45

      9.3

Limitation

45

      9.4

Allied Termination Event

45

      9.5

Nord Termination Event

46

      9.6

Liquidated Damages

46

      9.7

Judgment Currency

46

-i-

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TABLE OF CONTENTS
(continued)

 

 

 

 

               

 

 

 

Page

ARTICLE 10

          GENERAL

 

47

   10.1

Notices

 

47

   10.2

Survival

 

48

   10.3

Binding Effect and Assignment

48

   10.4

Public Disclosure

 

49

   10.5

Expenses

 

49

   10.6

Time of Essence

 

49

   10.7

Governing Law

 

49

   10.8

Counterparts

 

49

   10.9

Further Assurances

 

50

 

 

 

 

SCHEDULE 1

 

51

ARTICLE 1

          INTERPRETATION

51

   1.1

Definitions

 

51

   1.2

Interpretation Not Affected by Headings, Etc

53

   1.3

Article References

 

53

   1.4

Number, Etc

 

53

ARTICLE 2

          THE ARRANGEMENT

53

   2.1

Arrangement

 

53

   2.2

Fractional Shares

 

54

ARTICLE 3

          RIGHTS OF DISSENT

55

   3.1

Rights of Dissent

 

55

ARTICLE 4

          SHARE CERTIFICATES AND CASH PAYMENTS

55

   4.1

Rights of Holders

 

55

   4.2

Transmittal

 

56

   4.3

No Entitlement

 

56

   4.4

Termination of Rights

 

56

   4.5

Distributions

 

56

-ii-

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ARRANGEMENT AGREEMENT

THIS AGREEMENT made as of the 20th day of December, 2003

BETWEEN:

ALLIED GOLD LIMITED, a corporation continued
under the laws of Western Australia ("Allied")

- and -

NORD PACIFIC LIMITED, a corporation continued
under the laws of New Brunswick ("Nord")

WHEREAS Nord intends to propose to its securityholders an arrangement under
Section 128 of the Business Corporations Act (New Brunswick) on the terms and
conditions of the Plan of Arrangement annexed hereto as Schedule 1;

AND WHEREAS the parties hereto have entered into this Agreement to provide for
the matter referred to in the foregoing recital and for other matters relating
to such arrangement;

NOW THEREFORE THIS AGREEMENT WITNESSES THAT in consideration of the premises and
the respective covenants and agreements herein contained, the parties hereto
covenant and agree as follows:

ARTICLE 1
INTERPRETATION

1.1       Definitions

In this Agreement, unless there is something in the subject matter or context
inconsistent therewith, the following terms shall have the following meanings:

"Acquisition Proposal" has the meaning ascribed thereto in subsection 4.2;

"Acquisition Transaction" has the meaning given thereto in Section 4.2;

"Act" means the Business Corporations Act, S.N.B. 1981, c. B‑9.1, as amended;

"affiliate" has the meaning ascribed thereto in the Act;

"Allied" means Allied Gold Limited, a corporation continued under the laws of
Western Australia;

 

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"Allied Financial Statements" means the audited consolidated financial
statements of Allied for the year ended December 31, 2003, including the notes
thereto;

"Allied Meeting" means the special meeting of the holders of Allied Shares
(including any adjournment thereof) to be held to consider and, if thought fit,
to approve the Arrangement or any other matter required for the implementation
of the Arrangement;

"Allied Shares" means common shares of Allied;

"Allied Termination Event" has the meaning given thereto in Section 9.4;

"Amended Transaction" has the meaning given thereto in Section 4.3;

"Arrangement" means an arrangement under the provisions of Section 128 of the
Act on the terms and conditions set forth in the Plan of Arrangement;

            "ASX" means the Australian Stock Exchange;

"Australex" means Nord Australex Nominees (PNG) Limited, a corporation organized
under the laws of Papua New Guinea, and which is a wholly-owned subsidiary of
Nord;

"Australian GAAP" means generally accepted accounting principles as in effect in
Australia from time to time, applied on a basis consistent with that of prior
periods;

"Australian Securities Laws" means all applicable securities laws in Australia
and the respective regulations or rules made thereunder, together with
applicable published policy statements, orders, rulings, notices and
interpretation notes of the Australian Securities and Investments Commission
("ASIC");

"Board Approval Modification" means the Board of Directors of Nord approving,
recommending or voting in favor of an Acquisition Proposal other than that of
Allied or withdrawing or modifying in a manner adverse to Allied its approval,
recommendation or support of the Arrangement;

"business day" means a day other than a Saturday, Sunday or a day when banks in
Albuquerque, New Mexico generally are not open for business;

"Canadian GAAP" means generally accepted accounting principles as in effect in
Canada from time to time, applied on a basis consistent with that of prior
periods;

"Canadian Securities Laws" means all applicable securities laws in each of the
provinces of British Columbia, Alberta, Ontario and New Brunswick and the
respective regulations or rules made thereunder, together with applicable
published policy statements, orders, rulings, notices and interpretation notes
of the securities regulatory authorities in such province, including national
instruments, multi-jurisdictional instruments and policy statements of the
Canadian Securities Administrators;

 

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"Cease Trade Orders" means the cease trade orders issued by the Alberta
Securities Commission on August 17, 2001; by the British Columbia Securities
Commission on February 19, 2002; and by a temporary order issued by the Ontario
Securities Commission on July 23, 2001, as extended by a further order dated
August 3, 2001;

"CMNP" means Compania Minera Nord Pacific De Mexico, S.A. de C.V., a corporation
organized under the laws of Mexico;

"Competition Act" means the Competition Act, R.S.C. 1985, c. C‑34, as amended;

"Confidentiality Agreement" means the confidentiality agreement dated as of
November 24, 2003 between Allied and Nord;

"Court" means the Court of Queen's Bench of New Brunswick;

"Credit Agreement" means the Credit Facility Agreement dated December 20, 2003
between Nord and Allied, under which Allied has agreed to provide certain
financing to Nord in exchange for convertible notes issued to it by Nord;

"Dissenting Securityholders" means Nord Securityholders who exercise, and do not
prior to the Effective Date withdraw or otherwise relinquish, the right of
dissent available to such holders in respect of the special resolution to be
placed before the Nord Securityholders at the Nord Meeting to approve the
Arrangement;

"Effective Date" means the date on which the Arrangement becomes effective under
the Act;

"EL 609" means Exploration License 609 which covers substantially all of the
Tabar Islands other than Simberi Island as well as that portion of Simberi
Island not covered by ML 136, as more particularly described in the Nord
Disclosure Letter;

"Employment Agreements" mean all employment, severance, collective bargaining or
similar agreements, policies or arrangements between Nord and the Nord
Subsidiaries and their respective officers, directors, employees and
consultants;

"Encumbrance" includes, without limitation, any mortgage, pledge, assignment,
charge (fixed or floating), lien, security interest, claim or trust, or any
royalty, carried, working, participation, net profits or other third party
interest and any agreement, option, right or privilege capable of becoming any
of the foregoing;

 

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"Environmental Law" includes any principles of equity or common law and any
federal, provincial, state, municipal or local laws, statutes, ordinances,
regulations, rules, permits, approvals, certificates, registrations, by-laws,
guidelines, orders, directives, judgments, decisions or other instruments having
the force of law which are rendered or issued by any Governmental Authority
having jurisdiction, including but not limited to any judicial or administrative
order, consent, decree, judgment or directive, that relates in any way to the
protection of the environment or to the health and safety of persons or property
or product liability, handling or transportation, and whether applying to or
governing any actual or threatened presence, release, discharge, escape,
manufacture, processing, distribution, use, treatment, storage, disposal,
transport, recycling or handling of any Hazardous Material or any material or
substance capable of becoming a Hazardous Material when in combination with any
other substance;

"Facility Documents" means:

(a)    the Credit Agreement,

(b)    the Notes evidencing advances thereunder, and

(c)   such other documents and certificates which in the opinion of Allied,
acting reasonably, are required to fully document or satisfy the terms and
conditions contained in the Credit Agreement;

"Final Order" means the final order of the Court approving the Arrangement, as
such order may be amended or modified by the highest court to which an appeal
may be applied for;

"Financing" means the financing contemplated by the Credit Agreement;

"Government" means the Government of Papua New Guinea;

"Governmental Authority" includes any federal, provincial, state, municipal, or
other political subdivision, government department, commission, board, court,
bureau, agency, arbitrator or instrumentality, domestic or foreign;

"Hazardous Material" means pollutants, contaminants, dangerous goods or
substances, toxic or hazardous chemicals, substances, materials or waste,
petroleum products or any derivatives or by-products thereof, other hydrocarbons
or other substances, and any other substance or material released into or
present in the environment, where such release or presence is prohibited,
controlled, managed or regulated in any manner under Environmental Law or by any
Governmental Authority thereunder or pursuant thereto, and whether or not any
release of such substance or material was permitted by Environmental Law
applicable at the relevant time;

"Hicor" means Hicor Corporation, a corporation organized under the laws of
Delaware;

 

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5

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976 of the
United States, as amended;

"Interim Order" means the order of the Court providing for, among other things,
the calling and holding of the Nord Meeting;

"Investment Canada Act" means the Investment Canada Act, R.S.C. 1985, c. 28 (1st
Supp.);

"Joint Information Circular" means the information circular to be sent by Nord
to Nord Securityholders in connection with the Nord Meeting and by Allied to the
holders of Allied Shares in connection with the Allied Meeting;

"Joint Venture" means the Simberi Mining Joint Venture and the Tabar Exploration
Joint Venture;

"Joint Venture Agreements" means the agreement dated November 29, 2002, as
amended by an agreement among such parties dated January 27, 2003, the Deed of
Agreement among such parties (dated 28.01.2003 in the footer of the text
thereof) with respect to the Simberi Mining Joint Venture and the Deed of
Agreement among such parties (dated 28.01.2003 in the footer of the text
thereof) with respect to the Tabar Exploration Joint Venture;

"Joint Venture Partner" means each of Nord, SGC, Australex and PGM;

"Lien" means any mortgage, pledge, priority, security interest, encumbrance,
statutory deemed trust, contractual deposit or escrow arrangement, collateral
account, lien (statutory or otherwise) or charge of any kind (including any
agreement to give any of the foregoing, any conditional sale or other title
retention agreement, any lease in the nature thereof including a sale-leaseback
and a capitalized lease) or any other type of preferential arrangement for the
purpose, or having the effect, of protecting a creditor against loss or securing
the payment or performance of an obligation, but excluding any right of set-off
given in the ordinary course of the mining business;

"Material Adverse Effect" and "Material Adverse Change" mean, with respect to
any party, an effect or change, respectively, in each case which is materially
adverse to the business, financial condition, operations, property, condition
(financial or otherwise) or prospects of such party and its subsidiaries, taken
as a whole, or on the ability of a party to perform its obligations under this
Agreement, the Credit Agreement or to complete this Arrangement;

"ML 136" means the mining lease granted by the Government covering 2,560
hectares on Simberi Island in the Province of New Ireland, as more particularly
described in the Nord Disclosure Letter;

"NANPL" means Nord Australex Nominees Pty. Ltd., a corporation organized under
the laws of Australia;

 

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6

 

"Nord" means Nord Pacific Limited, a corporation organized under the Act, and
includes any successor corporation;

"Nord 2003 Financial Statements" means the audited consolidated financial
statements of Nord for the year ended December 31, 2003, including the notes
thereto;

"Nord Disclosure Letter" means the written disclosure letter dated the date of
this Agreement provided by Nord to Allied concurrently with the execution of
this Agreement;

"Nord Meeting" means the special meeting of Nord Securityholders (including any
adjournment thereof) to be held to consider and, if thought fit, to approve the
Arrangement;

"Nord Optionholders" means the holders of Nord Options;

"Nord Options" means the options to purchase Nord Shares issued and outstanding
or any agreement to issue shares on the occurrence of one or more conditions in
existence under the Nord Stock Option Plans or otherwise;

"Nord Prior Period Financial Statements" means the audited consolidated
financial statements of Nord for the years ended December 31, 2002, December 31,
2001 and December 31, 2000 including the notes thereto;

"Nord Securityholders" means the Nord Shareholders and the Nord Optionholders;

"Nord Shareholders" means the registered holders of Nord Shares;

"Nord Shares" means common shares of Nord;

"Nord Stock Option Plans" means the stock option plans of Nord as set forth in
the Disclosure Letter;

"Nord Subsidiaries" means, collectively, SGC, Australex, NANPL, NRPPL, CMNP and
Hicor;

"NRC" means Nord Resources Corporation, a corporation incorporated under the
laws of Delaware and a holder of 3,697,561 Nord Shares as of December 15, 2003;

"NRPPL" means Nord Resources (Pacific) Pty. Ltd., a corporation organized under
the laws of Australia;

 

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"Permitted Encumbrances" means:

(a)   Liens in any judicial proceedings filed against Nord or any of the Nord
Subsidiaries in respect of which final judgment has not been rendered and which
Nord or any of the Nord Subsidiaries shall be contesting in good faith if and
for so long as (i) a stay of enforcement of such Lien (if enforceable by
seizure, sale or other remedy against any property), as the case may be, shall
be in effect and (ii) in respect of all such Liens which are in excess of
$50,000 in the aggregate, an amount in cash (or cash equivalent security)
sufficient to obtain a discharge thereof shall have been deposited with a court
of competent jurisdiction;

(b)   Liens incurred or created in the ordinary course of business of Nord or
any of the Nord Subsidiaries and in accordance with sound industry practice and
incidental to construction or operations which have not at such time been filed
pursuant to law or which relate to obligations not due or delinquent;

(c)   Liens incurred or created in the ordinary course of business and in
accordance with sound industry practice in respect of any of the assets of Nord
or any of the Nord Subsidiaries as security in favour of any other person who is
conducting the exploration, development or operation of the property to which
such Liens relate for Nord's or any of the Nord Subsidiaries' portion of the
costs and expenses of such exploration, development or operation which have not
at such time been filed pursuant to law or which relate to obligations not due
or delinquent;

(d)   Liens given to a public utility or any municipality or governmental or
other authority when required by such public utility or municipality or other
authority in connection with the operations of Nord or any of the Nord
Subsidiaries, and which relate to obligations not due or delinquent;

(e)  Liens securing assessments under workers' compensation laws, unemployment
insurance or similar social security legislation which are not due or
delinquent;

(f)    Liens for penalties arising under ordinary course non-participation
provisions of operating agreements in respect of Nord or any of  the Nord
Subsidiaries mining properties (and related tangibles) which do not,
individually or in the aggregate, materially detract from the use or value of
the property subject thereto;

(g)   undetermined or inchoate Liens incidental to operations in the ordinary
course of business which have not been filed pursuant to law against title to
such properties or assets and which relate to obligations not due or delinquent;
and

 

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(h)   any security granted under the terms of the Joint Venture Agreements by
Nord, SGC or Australex to PGM or to lenders to the Joint Venture;

"person" includes any individual, partnership, firm, trust, body corporate,
government, governmental body, agency or instrumentality, unincorporated body or
association;

"PGM" means PGM Ventures Corporation, a corporation organized under the Act;

"Plan of Arrangement" means the plan of arrangement set out as Schedule 1 hereto
and any amendment thereto made in accordance with Section 8.1;

"Proposed Agreement" has the meaning given thereto in Section 4.3;

"Registrar" means the Director of Corporations or a Deputy Director of
Corporations for the Province of New Brunswick, duly appointed under the Act;

"Representative" means, with respect to a person, that person's directors,
officers, employees, financial or professional advisors, accountants and all
other authorized representatives of such person or a subsidiary of such person,
and legal counsel and advisors to any of the foregoing;

"SEC" means the United States Securities and Exchange Commission;

"Security Interest" means a mortgage, pledge, deposit by way of security,
charge, hypothec, assignment by way of security, security interest, lien
(whether statutory, equitable or at common law), title retention agreement,
possessory lien, lease with option or requirement to purchase, a right of
off‑set (if created for the purpose of directly or indirectly securing the
repayment of debt), the rights of a lender or purchaser under a prepaid
obligation, the agreement to give any of the foregoing, and any other interest
in property or assets, howsoever created or arising, that secures payment or
performance of an obligation (including a lease without option to purchase if
the economic effect thereof is to secure an obligation other than reasonable
rent for the current use of the leased property, and a trust, a statutory deemed
trust and statutory lien or charge);

"SGC" means Simberi Gold Company Limited, a corporation organized under the laws
of Papua New Guinea and which is a wholly-owned subsidiary of Nord;

"Simberi Mining Joint Venture" means the Simberi Mining Joint Venture among
Nord, SGC, Australex and PGM pursuant to the Joint Venture Agreements;

"subsidiary" has the meaning ascribed thereto in the Act and, with respect to
Nord, includes the Nord Subsidiaries;

"Superior Transaction" has the meaning given thereto in Section 4.3;

 

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"Tabar Exploration Joint Venture" means the exploration joint venture among
Nord, SGC, Australex and PGM pursuant to the Joint Venture Agreements;

"Termination Amount" means an amount equal to the sum of:

(a)   Allied's actual out of pocket expenses (including fees and disbursements
of legal counsel) incurred in connection with this Agreement, the Arrangement,
and the transactions contemplated thereby;

(b)   if requested by Allied, all amounts (including principal and accrued but
unpaid interest) due and owing under the Credit Agreement; and

(c)   $240,000.00;

"U.S. Exchange Act" means the United States Securities Exchange Act of 1934, as
amended;

"U.S. GAAP" means generally accepted accounting principles as in effect in the
United States from time to time applied on a basis consistent with that of prior
periods;

"U.S. Securities Act" means the United States Securities Act of 1933, as
amended;

"U.S. Securities Filings" means all forms, reports, schedules, statements and
other documents required to be filed by it with the SEC, collectively, as
supplemented and amended since the time of filing; and

"U.S. Securities Laws" means the U.S. Securities Act, the U.S. Exchange Act, the
United States Investment Company Act of 1940, as amended, the United States
Trust Indenture Act of 1939, as amended and applicable state securities and
"blue sky" laws, and the rules, regulations, forms, policies and orders adopted
by the SEC and other Governmental Authorities pursuant thereto.

1.2       Knowledge

The use in this Agreement of the phrases "Nord's knowledge", "knowledge of Nord"
and "known to Nord" with respect to any matter or thing shall be interpreted to
mean the actual knowledge of the senior officers of Nord after enquiry by such
officers of the management, employees and consultants of Nord and the Nord
Subsidiaries who have significant responsibilities with respect to the area of
business of Nord and the Nord Subsidiaries to which the matter relates or who
would reasonably be expected to have knowledge with respect to such matter, and
the phrases "Allied's knowledge", "knowledge of Allied" and "known to Allied"
have a corresponding meaning.

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1.3       Interpretation Not Affected by Headings, Etc.

The division of this Agreement into articles, sections and other portions and
the insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement. The terms "this
Agreement", "hereof", "herein" and "hereunder" and similar expressions refer to
this Agreement and the Schedule hereto and not to any particular article,
section or other portion hereof and include any agreement or instrument
supplementary or ancillary hereto.

1.4       Article References

Unless the contrary intention appears, references in this Agreement (excluding
the Plan of Arrangement) to an Article, Section, subsection, paragraph or
subparagraph by number or letter or both refer to the Article, Section,
subsection, paragraph or subparagraph, respectively, bearing that designation in
this Agreement (excluding the Plan of Arrangement).

1.5       Number, Etc.

Unless the context requires the contrary, words importing the singular number
only shall include the plural and vice versa and words importing the use of any
gender shall include all genders.

1.6       Date For Any Action

If any date on which any action is required to be taken hereunder by any of the
parties hereto is not a business day, such action shall be required to be taken
on the next succeeding day which is a business day.

1.7       Currency

Unless otherwise stated, all references in this Agreement to "$" and sums of
money are expressed in lawful money of the United States.

1.8       Entire Agreement

This Agreement, together with the Credit Agreement, constitutes the entire
agreement among the parties pertaining to the subject matter hereof and
supersedes all prior agreements, understandings, negotiations and discussions,
whether oral or written, among the parties with respect to the subject matter
hereof.  If there is any conflict between any provision of the Confidentiality
Agreement and this Agreement, the provisions of this Agreement shall prevail.

 

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ARTICLE 2
THE ARRANGEMENT

2.1       Arrangement

As soon as reasonably practicable, and subject to compliance with the terms and
conditions contained herein, Nord shall:

(a)   apply to the Court pursuant to Section 128 of the Act for an order
approving the Arrangement and in connection with such application shall:

(i)    forthwith file, proceed with and diligently prosecute an application for
an Interim Order under Section 128(4) of the Act providing for, among other
things, the calling and holding of the Nord Meeting for the purpose of
considering and, if deemed advisable, approving the Arrangement; and

(ii)   subject to obtaining securityholder approval as contemplated in the
Interim Order, forthwith file, proceed with and diligently prosecute an
application to the Court for a Final Order; and

(b)   deliver to the Registrar articles of arrangement and such other documents
as may be required to give effect to the Arrangement.

2.2       Interim Order

The Interim Order sought by Nord shall provide that for the purpose of the Nord
Meeting:

(a)   the securities of Nord for which the holders shall be entitled to vote on
the Arrangement shall be the Nord Shares and the Nord Options;

(b)   the Nord Shareholders and the Nord Optionholders shall be entitled to vote
on the Arrangement together, and not as separate classes, with the Nord
Shareholders being entitled to one vote for each Nord Share held and the Nord
Optionholders being entitled to one vote for each Nord Share issuable pursuant
to the Nord Options; and

(c)   the requisite majority for the approval of the Arrangement by the Nord
Securityholders shall be two-thirds of the votes cast by the Nord
Securityholders present in person or by proxy at the Nord Meeting, voting
together.

2.3       Alternative Structure

If it proves desirable to Allied to do so, Allied may carry out the Arrangement
through a wholly-owned subsidiary as long as the obligations of Allied hereunder
shall be joint and several with such subsidiary and the effect thereof shall be
the same as under the structure contemplated herein.

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12

ARTICLE 3
REPRESENTATIONS AND WARRANTIES

3.1       Representations and Warranties of Nord

Except as is fully and fairly disclosed and set forth in the corresponding
paragraph of the Nord Disclosure Letter (and subject to the representation and
warranties and covenants made in the Nord Disclosure Letter), Nord represents
and warrants to and in favour of Allied as follows and acknowledges that Allied
is relying upon such representations and warranties in connection with the
matters contemplated by this Agreement:

(a)                as of the date hereof, the board of directors of Nord has
determined unanimously that:

(i)  the Arrangement is fair to the Nord Securityholders and is in the best
interests of Nord; and

(ii)  the board of directors of Nord will recommend that the Nord
Securityholders vote in favour of the Arrangement;

(b)   each of Nord and the Nord Subsidiaries is duly incorporated and validly
existing under the laws of its jurisdiction of incorporation and has the
corporate power to own or lease its property and assets and to carry on business
as now conducted;

(c)   Nord has the corporate power and authority to enter into this Agreement
and, subject to obtaining the requisite approvals contemplated hereby, to
perform its obligations hereunder;

(d)   this Agreement has been duly executed and delivered by Nord and
constitutes a valid and binding obligation of Nord enforceable against it in
accordance with its terms;

(e)  the execution and delivery of this Agreement by Nord and the completion of
the transactions contemplated hereby and by the Plan of Arrangement have been
duly authorized by the board of directors of Nord and do not and will not:

(i)    result in the breach of, or violate any term or provision of, the
articles or by-laws of Nord or any of the Nord Subsidiaries;

(ii)   conflict with, result in the breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required by, any
agreement, instrument, license, permit or authority to which Nord or any of the
Nord Subsidiaries is a party or by which Nord or any of the Nord Subsidiaries or
any of their assets is bound, or result in the creation of any Encumbrance upon
any assets of Nord or any of the Nord Subsidiaries under any such agreement,
instrument, license, permit or authority, or give to others any interest or
right, including rights of purchase, termination, cancellation or acceleration,
under any such agreement, instrument, license, permit or authority, where such
conflict, breach, default, acceleration, creation or giving would have a
Material Adverse Effect on Nord or could reasonably be expected to prevent or
materially hinder the completion of the Arrangement or the Financing; or

 

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13

(iii)  violate or contravene any provision of any law or regulation or any
judicial or administrative award, judgment or decree applicable to Nord or any
of the Nord Subsidiaries or any of their assets, where such violation or
contravention would have a Material Adverse Effect on Nord or could reasonably
be expected to prevent or materially hinder the completion of the Arrangement or
the Financing;

(f)   the subsidiaries of Nord consist of (and only of) the Nord Subsidiaries
and Nord does not have any equity securities or have the right to acquire equity
securities of any other entity;

(g)   CMNP, Hicor, NRPPL, SGC and Australex are the only subsidiaries of Nord
which actively carry on business or have any assets (other than tax pools) or
liabilities or potential liabilities greater than $100,000 other than
inter-company indebtedness;

(h)   Nord owns all of the issued and outstanding shares of the Nord
Subsidiaries, and such shares have been validly issued to Nord as fully paid and
non-assessable and all such shares owned directly or indirectly by Nord are
owned free and clear of all Encumbrances and there are no outstanding options,
rights, entitlements, understandings or commitments (contingent or otherwise)
regarding the right to acquire any shares or other ownership interests in any
subsidiary of Nord save and except under the Deed of Agreement among such
parties (dated 28.01.2003 in the footer of the text thereof) with respect to the
Simberi Mining Joint Venture, PGM may pledge the shares of SGC;

(i)    each of Nord, SGC and Australex and the other Nord Subsidiaries has all
licences, permits, orders or approvals of, and has made all required
registrations with any government or regulatory body that are material to its
assets or the conduct of its business as presently conducted;

 

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14

 

(j)    the authorized capital of Nord consists of an unlimited number of common
shares, of which 20,838,670 (and no more) are issued and outstanding as of the
date hereof and all of the outstanding shares of Nord are validly issued, fully
paid and non-assessable;

(k)  no person has any agreement, option, right or privilege (including, without
limitation, whether by law, pre-emptive right, contract or otherwise) to
purchase, subscribe for, convert into, exchange for or otherwise require the
issuance of, nor any agreement, option, right or privilege capable of becoming
any such agreement, option, right or privilege, any of the unissued shares of
Nord or any of the Nord Subsidiaries, except for Nord Options currently granted
and outstanding to purchase an aggregate of 1,651,482 Nord Shares;

(l)    the Nord Prior Period Financial Statements are complete and accurate in
all material respects, comply with all applicable requirements of Canadian
Securities Laws and U.S. Securities Laws, and present fairly the consolidated
financial position of Nord and the Nord Subsidiaries and the results of its
operations as of the dates and throughout the periods indicated in accordance
with U.S. GAAP (reconciled to Canadian GAAP), Nord and the Nord Subsidiaries had
no material liabilities (contingent or otherwise), on a consolidated basis,
which were not fully reflected in such statements in accordance with U.S. GAAP,
and all legal proceedings against Nord or any of the Nord Subsidiaries which are
required in accordance with U.S. GAAP to be reflected in Nord's financial
statements had been properly reflected in the Nord Prior Period Financial
Statements in accordance with such principles;

(m)   neither Nord nor any of the Nord Subsidiaries is:

(i)    in breach or violation of any of the provisions of its articles or
by‑laws, where such breach or violation would have a Material Adverse Effect on
Nord, or

(ii)   in breach or violation of any of the terms or provisions of, or in
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement (written or oral) or instrument to which Nord or any of the Nord
Subsidiaries is a party or by which Nord or any of the Nord Subsidiaries is
bound or to which any of the assets of Nord or any of the Nord Subsidiaries is
subject or any statute or any order, rule or regulation of any court or
government or governmental agency or authority having jurisdiction over Nord or
any of the Nord Subsidiaries or any of their assets, where such breach,
violation or default has or may have a Material Adverse Effect on Nord, or

 

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(iii)   a party to or is bound by any agreement of guarantee, indemnification,
assumption or endorsement or any other like commitment of the obligations,
liabilities (contingent or otherwise) or indebtedness of any other person;

except pursuant to the Credit Agreement;

(n)   the corporate records and minute books of Nord and the Nord Subsidiaries
are complete and accurate in all material respects;

(o)  the books of account and other records of Nord and the Nord Subsidiaries,
whether of a financial or accounting nature or otherwise:

(i)    have been maintained in accordance with prudent business practices in all
material respects, and

(ii)   are stated in reasonable detail and accurately and fairly reflect in all
material respects the transactions and acquisitions and dispositions of assets
by Nord and the Nord Subsidiaries;

(p)   neither Nord nor, to the knowledge of Nord, any of its Representatives nor
anyone acting on their behalf has made any payment or given anything of value in
violation of section 30A(a) of the U.S. Exchange Act, commonly known as the
"Foreign Corrupt Practices Act", and Nord and the Nord Subsidiaries have devised
and currently maintain a system of internal accounting controls sufficient to
provide reasonable assurances that transactions are executed in accordance with
management's general or specific authorization, and transactions are recorded as
necessary to permit preparation of financial statements in conformity with U.S.
GAAP and any other criteria applicable to such financial statements and
preparation of non-consolidated financial statements for tax purposes, and to
maintain accountability for assets;

(q)   each of Nord and the Nord Subsidiaries owns its properties and assets free
and clear of all Security Interests other than Permitted Encumbrances;

(r)   there are:

(i)   no claims, actions, suits, proceedings or investigations commenced or, to
the knowledge of Nord, contemplated or threatened against or affecting Nord or
any of the Nord Subsidiaries or any of their assets before or by any
Governmental Authority;

(ii)   to the knowledge of Nord, no existing facts or conditions which may
reasonably be expected to be a proper basis for any claims, actions, suits,
proceedings or investigations; and

 

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(iii)  no outstanding judgments, awards, decrees, injunctions or orders against
Nord or any of the Nord Subsidiaries;

which in any case could prevent or materially hinder the completion of the
Arrangement or the Financing or which could have a Material Adverse Effect on
Nord;

(s)   other than in connection with or in compliance with the provisions of the
Act, Canadian Securities Laws and U.S. Securities Laws:

(i)    there is no legal impediment to Nord's consummation of the transactions
contemplated by this agreement; and

(ii)    no filing or registration with, or authorization, consent or approval
of, any domestic or foreign public body or authority is necessary by Nord or any
of the Nord Subsidiaries in connection with the consummation of the Arrangement,
except for such filings or registrations which, if not made, or for such
authorizations, consents or approvals, which, if not received, would not have a
Material Adverse Effect on the ability of Nord to consummate the transactions
contemplated hereby;

(t)    the public filings made by Nord under applicable United States and
Canadian disclosure laws up to December 15, 2000 when taken together,
constituted full, true and plain disclosure of all material facts relating to
the business, operations and capital of Nord and the Nord Subsidiaries on a
consolidated basis and the other matters therein and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein not
misleading in light of the circumstances under which they were made and, in
particular, no material fact existed on December 15, 2000 which had not been
disclosed in such public filings and which if publicly disclosed would reflect
that a Material Adverse Change (or an event, condition or state of facts which
might reasonably have been expected to give rise to any such change) had
occurred in the assets, liabilities, business, operations or capital of Nord and
the Nord Subsidiaries on a consolidated basis;

(u)   since April 12, 2000, except as has been publicly disclosed by Nord, none
of Nord or any of the Nord Subsidiaries has:

(i)    amended its articles or by-laws;

(ii)  conducted its business other than in the ordinary course of business
consistent with normal industry practice;

(iii)  made any material loans or advances (other than loans or advances from
Nord to SGC and Australex) or incurred any indebtedness;

 

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(iv)  suffered a Material Adverse Change;

(v)  made any change in its accounting principles and practices as theretofore
applied including, without limitation, the basis upon which its assets and
liabilities are recorded on its books and its earnings and profits and losses
are ascertained;

(vi)  made any changes to its salary and other compensation levels, benefits,
retention terms or severance arrangements;

(vii)  declared, paid or set aside for payment any dividend or distribution of
any kind in respect of any of its outstanding shares nor made any repayments of
share capital;

(viii)  acquired or sold any assets which are material;

(ix)  made any payment to or entered into any agreement with any person not
dealing at arms length with Nord; or

(x)  entered into any agreement or commitment to do any of the foregoing;

(v)  Nord has fully disclosed the terms and conditions of all Employment
Agreements to Allied, and such Employment Agreements, as disclosed, are
unamended as at the date hereof;

(w)    neither Nord nor any of the Nord Subsidiaries:

(i)    has any Employment Agreements, whether written or oral, which cannot be
terminated without cause by Nord or such subsidiary, as the case may be, upon
giving such notice as may be required by law and without the payment of any
bonus, damages or penalty, and

(ii)   is a party to any written or oral policy, agreement, obligation or
understanding providing for severance or termination payments to, or any
employment agreements with, any person;

(x)    neither Nord nor any of the Nord Subsidiaries has made, nor will any of
them make any payment to any officer, director, consultant, employee or agent in
respect of any increase in compensation in any form, nor make any loan to any
such person, nor make any payment to any such person in respect of any severance
or termination pay arising from the Arrangement or a change of control of Nord
other than pursuant to pre-existing agreements, and the amounts of such payments
and the terms of such agreements shall have been disclosed in the Nord
Disclosure Letter;

 

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(y)   all operations of Nord and the Nord Subsidiaries have been and are now in
compliance with all Environmental Laws, except where the failure to be in
compliance would not individually or in the aggregate have a Material Adverse
Effect on Nord;

(z)   neither Nord nor any of the Nord Subsidiaries is aware of, or is subject
to:

(i)   any proceeding, application, order, or directive which relates to
environmental, health or safety matters, and which may require any material
work, repairs, construction or expenditures; or

(ii)   any demand or notice with respect to the breach of any Environmental Laws
applicable to Nord, any of the Nord Subsidiaries or any other party to the Joint
Venture, including, without limitation, any regulations respecting the use,
storage, treatment, transportation or disposition of Hazardous Material,

which individually or in the aggregate would have a Material Adverse Effect on
Nord;

(aa)  each of Nord and the Nord Subsidiaries has filed all tax returns and
information returns required to be filed by it in all applicable jurisdictions
and has paid all taxes, levies, assessments, reassessments, penalties, interest
and fines due and payable by it on the basis of such tax returns or demands from
taxation authorities;

(bb) provision has been made, in accordance with U.S. GAAP, in the Nord Prior
Period Financial Statements for all taxes, governmental charges and assessments,
whether relating to income, sales, real or personal property, or other types of
taxes, governmental charges or assessments, including interest and penalties
thereon, payable in respect of the business or assets of Nord and the Nord
Subsidiaries or otherwise;

(cc) there are no material actions, suits or other proceedings or claims in
progress or, to Nord's knowledge, pending or threatened against Nord or any of
the Nord Subsidiaries in respect of any taxes, governmental charges or
assessments and, in particular, there are no currently outstanding material
reassessments or written enquiries which have been issued or raised by any
Governmental Authority relating to any such taxes, governmental charges and
assessments;

(dd) to the knowledge of Nord, each of Nord and the Nord Subsidiaries has
withheld or collected and remitted all amounts required to be withheld or
collected and remitted by it in respect of any taxes, governmental charges or
assessments, and has received no indication or notice of any sort from any
Governmental Authority to the contrary;

 

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(ee)  in respect of each taxation year ending on or after December 31, 1998 of
Nord, each of its affiliates and subsidiaries, and the predecessors of such
corporations, Nord has provided to Allied:

(i)    full and complete disclosure with respect to the status of any audits
carried out by taxation authorities in Canada, the United States, Papua New
Guinea or elsewhere;

(ii)   copies of all objections or waivers with respect to such years pursuant
to the Income Tax Act (Canada) or other similar legislation, tax rulings and
opinions from applicable taxing authorities pursuant to which Nord, its
affiliates and any predecessors of such corporations operated or now operate;
and

(iii)  copies of all tax returns;

which comprise all of the information necessary to form a reasonably accurate
understanding of the current tax position of Nord and the Nord Subsidiaries;

(ff)   the tax pools of each of Nord, SGC, Australex and the other Nord
Subsidiaries as of December 31, 2002 was as set forth in the Nord Disclosure
Letter;

(gg) Nord and the Nord Subsidiaries maintain business and property insurance in
connection with their assets and business and liability insurance with respect
to claims for personal injury, death or property damage in relation to the
operation of their businesses, all with responsible and reputable insurance
companies in such amounts and with such deductibles as are customary in the case
of businesses of established reputation engaged in the mining industry;

(hh)  none of Nord or the Nord Subsidiaries have any outstanding indebtedness,
including letters of credit, nor have Nord or the Nord Subsidiaries guaranteed
the obligations of any other person or each other, as of the date hereof;

(ii)  Nord, SGC and Australex are the legal, beneficial and registered owner of
a current undivided 50% participating interest in and to the Simberi Mining
Joint Venture and a current 99% participating interest in the Tabar Exploration
Joint Venture (in the future the Borrower's interest is subject to, and may be
modified by, the terms of the Joint Venture Agreements), free and clear of any
Security Interests other than Permitted Encumbrances;

(jj)   none of Nord, SGC or Australex is in default of any of their respective
obligations under the Joint Venture Agreements or any right, licence, permit,
authorization or consent, governmental or otherwise related to the Joint
Venture;

 

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(kk)  each of the Joint Venture Agreements is in full force and effect and, to
the best of Nord's knowledge, PGM is not in default of any of its obligations
thereunder; PGM currently does not have any right to terminate any of the Joint
Venture Agreements; PGM has not given any notice of any assignment of its
interest in the Joint Venture or any Joint Venture Agreement; PGM has not
threatened to terminate any Joint Venture Agreement or to fail to perform any
obligations thereunder; no person has threatened to terminate any right,
licence, permit, authorization or consent, governmental or otherwise related to
the Joint Venture;

(ll)   Nord has provided to Allied a true and complete copy of each Joint
Venture Agreement and each licence, permit, authorization or consent,
governmental or otherwise, issued in connection therewith and there are no other
material contracts or agreements that pertain to the Joint Venture that are not
one of the Joint Venture Agreements;

(mm) there are no material services, materials or rights required for the
current and foreseeable stages of development of the Joint Venture that are not
available to the Joint Venture Partners;

(nn)  all conditions precedent to the obligations of the respective parties
under the Joint Venture Agreements have been satisfied or waived except for such
conditions precedent which need not and cannot be satisfied until a later stage
of development of the Joint Venture, and Nord has no reason to believe that any
such condition precedent cannot be satisfied on or prior to the commencement of
the appropriate stage of development of the Joint Venture;

(oo)  to the knowledge of Nord, all permits, licenses, trademarks, patents or
agreements with respect to the usage of technology or other similar property
that are necessary for the current stage of the development of the Joint Venture
have been obtained, are final and are in full force and effect;

(pp) Nord is not aware of any event or circumstance currently existing or
threatened that could reasonably be expected to hinder the development of the
Joint Venture on its current schedule;

(qq)  the completion of the Arrangement and the Financing (including all
transactions contemplated by the Credit Agreement) will not result in any person
having any right or entitlement to assert any claims adverse to the interest of
Nord, SGC and Australex in the Joint Venture or the Joint Venture Agreements;

(rr)    no person has any right or option to acquire any of Nord's, SGC's or
Australex's interest in the Joint Venture or the Joint Venture Agreements other
than under the express written terms of the Joint Venture Agreements;

 

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21

(ss)   no person has taken any steps or asserted or threatened any action
against Nord, SGC or Australex or the Joint Venture which would, if carried out,
hinder the development of the Joint Venture on its current schedule;

(tt)   Nord, SGC and Australex have not failed to disclose to Allied any
information relating to the Joint Venture within the possession or control of
Nord, SGC or Australex that could reasonably be considered to be material to
Allied for purposes of its technical evaluation of the Joint Venture;

(uu)   Nord, SGC and Australex have not failed to disclose to Allied any
material fact or circumstance relating to the development of the Joint Venture
on its current schedule that could reasonably be expected to hinder or delay
such development;

(vv)  to the knowledge of Nord, the data and information in respect of Nord, the
Nord Subsidiaries and their respective assets, liabilities, business and
operations, including without limitation the engineering, geological,
geophysical and technical information relating to the Joint Venture, provided by
Nord to Allied prior to the date of this Agreement was accurate and correct in
all material respects at the time it was provided and did not omit any data or
information necessary to make any data or information provided not misleading at
the time it was provided, and there has been no Material Adverse Change with
respect to any such data or information since the time it was provided;

(ww) Nord has not incurred any obligation or liability contingent or otherwise
for brokerage fees, finders fees, agent's commission, financial advisory fees or
other similar forms of compensation with respect to the transactions
contemplated herein;

(xx)  Nord is a "reporting issuer" or its equivalent in the provinces of British
Columbia, Alberta, Ontario and New Brunswick and the Nord Shares are registered
with the SEC under section 12(g) of the U.S. Exchange Act and are not listed on
any stock exchange, and except as disclosed in the Nord Disclosure Letter, Nord
has not been notified of any default or possible or alleged default by Nord or
any of its current or former directors or officers of any requirement of
securities or corporate laws, regulations, rules, orders, notices or policies;

(yy)  none of the U.S. Securities Filings at the date of its filing contained an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements made therein not
misleading in light of the circumstances in which they were made and to the
knowledge of Nord, all of Nord's officers, directors and beneficial owners of
Nord's common shares have complied to the extent required, with sections 16(a)
and 13(d) of the U.S. Exchange Act;

 

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(zz)   neither Nord nor the Nord Subsidiaries nor, to Nord's knowledge, any
employee or agent of Nord or any of the Nord Subsidiaries, has made any payment
of funds of Nord or any of the Nord Subsidiaries or received or retained any
funds in violation of any law, rule or regulation;

(aaa) since July 30, 2002, Nord has not, directly or indirectly, including
through any of the Nord Subsidiaries: 

(i)    extended credit, arranged to extend credit or renewed any extension of
credit, in the form of a personal loan, to or for any director or executive
officer of Nord, or to or for any family member or affiliate of any director or
executive officer of Nord; or

(ii)   made any material modification, including any renewal  thereof, to any
term of any personal loan to any director or executive officer of Nord, or any
family member or affiliate of any director or executive officer, which loan was
outstanding on July 30, 2002; and

(bbb) neither Nord nor any of the Nord Subsidiaries has any outstanding loans to
or extensions of credit to, or any guarantee or any indebtedness of, any
employee, officer or director of Nord or any of the Nord Subsidiaries.

3.2       Representations and Warranties of Allied

Allied represents and warrants to and in favour of Nord as follows, and
acknowledges that Nord is relying upon such representations and warranties in
connection with the matters contemplated by this Agreement:

(a)   Allied is duly incorporated and validly existing under the laws of its
jurisdiction of incorporation and has the corporate power to own or lease its
property and assets and to carry on business as now conducted;

(b)   Allied has the corporate power and authority to enter into this Agreement
and, subject to obtaining the requisite approvals contemplated hereby, to
perform its obligations hereunder;

(c)   subject to the approval of the holders of the Allied Shares at the Allied
Meeting, all necessary corporate action on the part of Allied has been taken to
authorize the execution and delivery of this Agreement by Allied and the
completion of the transactions contemplated hereby and by the Plan of
Arrangement, and this Agreement has been duly executed and delivered by Allied
and constitutes a valid and binding obligation of Allied enforceable against it
in accordance with its terms;

 

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(d)  the execution and delivery of this Agreement by Allied and the completion
of the transactions contemplated hereby and by the Plan of Arrangement do not
and will not:

(i)     result in the breach of, or violate any term or provision of, the
articles or by-laws of Allied;

(ii)   conflict with, result in the breach of, constitute a default under, or
accelerate or permit the acceleration of the performance required by, any
agreement, instrument, license, permit or authority to which Allied is a party
or is bound, or result in the creation of any Encumbrance upon any assets of
Allied under any such agreement, instrument, licence, permit or authority, or
give to others any interest or right, including rights of purchase, termination,
cancellation or acceleration, under any such agreement, instrument, license,
permit or authority, where such conflict, breach, default, acceleration,
creation or giving would have a Material Adverse Effect on Allied or could
reasonably be expected to prevent or materially hinder the completion of the
Arrangement; or

(iii)  violate or contravene any provision of any Australian law or regulation
or any judicial or administrative award, judgment or decree known to Allied,
where such violation or contravention would have a Material Adverse Effect on
Allied or could reasonably be expected to prevent or materially hinder the
completion of the Arrangement;

(e)   the authorized capital of Allied consists of an unlimited number of Allied
Shares, of which 28,500,000 (and no more) are issued and outstanding as of the
date hereof;

(f)   as of the date of this Agreement, no person has any agreement, right or
option, or any privilege capable of becoming an agreement, right or option, for
the purchase or issuance of any unissued shares of Allied or any material
subsidiary of Allied, except for options to purchase 18,500,000 Allied Shares;

(g)   neither Allied nor any of its subsidiaries is:

(i)    in breach or violation of any of the provisions of its articles or
by‑laws,  where such breach or violation would have a Material Adverse Effect on
Allied; or

(ii)   in breach or violation of any of the terms or provisions of, or in
default under, any indenture, mortgage, deed of trust, loan agreement or other
agreement (written or oral) or instrument to which Allied is a party or by which
Allied is bound or to which any of the properties or assets of Allied is subject
or any statute or any order, rule or regulation of any court or government or
governmental agency or authority having jurisdiction over Allied or any of its
properties or assets, where such breach, violation or default has or may have a
Material Adverse Effect on Allied;

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24

(h)           there are:

(i)    no claims, actions, suits, proceedings or investigations commenced or, to
the knowledge of Allied, contemplated or threatened against or affecting Allied
or any of its subsidiaries, before or by any Governmental Authority;

(ii)   to the knowledge of Allied, no existing facts or conditions which may
reasonably be expected to be a proper basis for any claims, actions, suits,
proceedings or investigations; and

(iii)  no outstanding judgments, awards, decrees, injunctions or orders against
Allied or any of its subsidiaries;

which in any case could prevent or materially hinder the completion of the
Arrangement or the Financing or which could have a Material Adverse Effect on
Allied;

(i)    the Prospectus of Allied dated 20 October 2003 and the disclosure
provided in this Agreement, when taken together, constitute full, true and plain
disclosure of all material facts relating to the business, operations and
capital of Allied and its subsidiaries on a consolidated basis and the other
matters therein and do not contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein not misleading in light of the
circumstances under which they were made and, in particular, no material fact
exists on the date hereof which has not been disclosed in the public filings
made by Allied and which if publicly disclosed would reflect that a Material
Adverse Change (or an event, condition or state of facts which might reasonably
have been expected to give rise to any such change) had occurred in the assets,
liabilities, business, operations or capital of Allied and its subsidiaries on a
consolidated basis; and

ARTICLE 4
COVENANTS OF NORD

4.1       Conduct of Business

Nord covenants in favour of Allied that prior to the Effective Date it shall,
and it shall cause each of the Nord Subsidiaries to, do, take or perform or
refrain from doing, taking and performing such actions and steps as may be
necessary or advisable to ensure compliance with the following:

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25

(a)   subject to Section 4.3, neither Nord nor any of the Nord Subsidiaries will
take any action which might, directly or indirectly, interfere or be
inconsistent with or otherwise adversely affect the completion of the
Arrangement or the Financing and, without limiting the generality of the
foregoing, subject to Section 4.3, each of Nord, SGC and Australex:

(i)    will carry on its business in, and only in, the ordinary course in
substantially the same manner as heretofore conducted and, to the extent
consistent with such business, use all reasonable efforts to preserve intact its
present business organization, licences and permits to the end that its goodwill
and business shall be maintained;

(ii)   will not declare any dividends on or make any other distributions in
respect of its outstanding securities and Nord will not amend its articles or
by‑laws;

(iii)  will not, without prior written consent of Allied, issue, authorize or
propose the issuance of, or purchase or redeem or propose the purchase or
redemption of, any of its shares of any class or securities convertible into or
rights, warrants or options to acquire any such shares or other exchangeable or
convertible securities, other than the issue of shares pursuant to the exercise
of presently outstanding Nord Options or the issue of securities to Allied;

(iv)  will not reorganize, amalgamate or merge with any other person,
corporation, partnership or other business organization whatsoever;

(v)   will not adopt a plan of liquidation or resolutions providing for its
liquidation, dissolution, merger, amalgamation, consolidation or reorganization;

(vi)  will not relinquish any material contractual rights or enter into any
interest rate, currency or commodity swaps, hedges or other similar financial
instruments;

(vii) will not, without the prior written consent of Allied, which shall not be
unreasonably withheld, settle any material actions, claims or liabilities;

(viii) will not, without the prior written consent of Allied, sell, transfer,
assign, convey or otherwise dispose of assets having an aggregate market value
in excess of $10,000, and Nord will not in any way dispose of its shares of, nor
allow the issuance to any person (other than to Nord) of shares of, any
subsidiary of Nord;

(ix)   will not dispose of, in any way, its interests in the Joint Venture;

 

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(x)   will not acquire or agree to acquire any assets or acquire or agree to
acquire by amalgamating, merging or consolidating with, purchasing substantially
all of the assets of or otherwise, any business or any corporation, partnership,
association or other business organization or division thereof, other than with
the prior written consent of Allied;

(xi)   will not, and shall cause each of the Nord Subsidiaries not to:

(A)  enter into or modify any Employment Agreement with, or grant any bonuses,
salary increases, severance or termination pay to or make any loan to, any
officers or directors of Nord or any of the Nord Subsidiaries except as approved
in writing by Allied; or

(B)  in the case of employees who are not officers or directors, take any action
with respect to the entering into or modifying of any employment, severance,
collective bargaining or similar agreements, policies or arrangements or with
respect to the grant of any bonuses, salary increases, stock options, pension
benefits, profit sharing, retirement allowances, deferred compensation,
incentive compensation, severance or termination pay or any other form of
compensation or profit sharing or with respect to any increase of benefits
payable except as approved in writing by Allied;

(xii)  other than under the Facility Documents or with the prior written consent
of Allied, will not guarantee the payment of indebtedness or incur indebtedness
for additional borrowed money or issue any debt securities;

(xiii) will not, without the prior written consent of Allied, which shall not be
unreasonably withheld, make any tax filings, including any returns or elections,
with any Governmental Authority, and Allied will be considered to be acting
reasonably in any case where Allied requires that any tax filings not be made
until the final due date;

(xiv) will promptly make and file such corporate filings as are required and
past due under the Act;

(b)  Nord, SGC and Australex shall confer on a regular basis with Allied with
respect to operational matters related to the Joint Venture, including matters
related to human resources, safety, environmental, security, marketing and
off-take arrangements as well as all Joint Venture activities and shall make
their best efforts to allow Allied representatives to attend operation committee
meetings of the Joint Venture;

 

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(c)  Nord, SGC and Australex shall confer with Allied with respect to SGC's and
Australex's participation in any meetings of Joint Venture Partners or the
Government regarding the Joint Venture;

(d)  Nord, SGC and Australex shall obtain prior written approval or
authorisation from Allied, which shall not be unreasonably withheld, for any
material decisions relating to the Joint Venture and the Joint Venture
Agreements, including, without limitation:

(i)    any development proposal contemplated under the Joint Venture Agreements;

(ii)    the amendment of any of the Joint Venture Agreements or the programs or
budgets thereunder;

(iii)   material changes to the development plan with respect to the Simberi
Mining Joint Venture;

(iv)  material changes in the technical design basis of the Simberi Mining Joint
Venture that would lead to amendments to any of the Joint Venture Agreements;

(v)   material communications with the Government or other Joint Venture
Partners or any communications regarding legal issues;

(vi)  payment of any cash calls relating to the Joint Venture;

(vii)  membership in the committees under the Joint Venture Agreements or
staffing of the work to be done under the Joint Venture Agreements;

(viii) material changes to the terms and conditions of employment for any
employee or consultant of Nord, the Nord Subsidiaries or the Joint Venture; and

(ix)   security arrangements for personnel and equipment;

(e)   Nord, SGC and Australex shall comply with their obligations under the
Joint Venture Agreements and Nord shall take, and shall cause the Nord
Subsidiaries to take, all action necessary in order to keep the Joint Venture
Agreements in good standing and will make its best efforts to pay all cash calls
thereunder to prevent the interest of Nord, SGC and Australex from being
reduced;

(f)   Nord shall ensure that SGC and Australex do not, without the prior written
consent of Allied, which shall not be unreasonably withheld:

 

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(i)   amend or modify any Joint Venture Agreement, or terminate or give any
notice of termination thereunder, or fail to comply with any of its obligations
thereunder, or fail to enforce compliance by the other parties to each Joint
Venture Agreement, or fail to defend and protect its interests therein or in the
Joint Venture from all adverse claims whatsoever; and

(ii)   allow any right, licence, approval, consent or authorization related to
the Joint Venture to terminate, lapse or be suspended, or do or omit to do any
act or thing that would entitle any person to terminate, lapse or suspend the
same;

(g)   Nord shall not, and shall not permit the Nord Subsidiaries to create,
incur, assume or suffer to exist any Security Interest on its properties and
assets other than under Permitted Encumbrances;

(h)   Nord shall comply with its obligations under the Facility Documents;

(i)   Nord shall promptly and expeditiously do all acts and things as may be
necessary or desirable to ensure the successful implementation of the
Arrangement and, without limiting the generality of the foregoing:

(i)    prepare or cause to be prepared the Nord 2003 Financial Statements, and
the Nord Prior Period Financial Statements (the latter as notified to Nord by
Allied) which shall be complete and accurate in all material respects, comply
with all applicable requirements of Canadian Securities Laws and U.S. Securities
Laws, and present fairly the consolidated financial position of Nord and the
Nord Subsidiaries and the results of its operations and cash flows as of the
dates and throughout the periods indicated in accordance with U.S. GAAP
(reconciled to Canadian GAAP), Nord and the Nord Subsidiaries shall have no
material liabilities (contingent or otherwise), on a consolidated basis, which
are not fully reflected in such statements in accordance with U.S. GAAP, and all
legal proceedings against Nord or any of the Nord Subsidiaries which are
required in accordance with U.S. GAAP to be reflected in Nord's financial
statements shall be properly reflected in the Nord 2003 Financial Statements and
the Nord Prior Period Financial Statements (the latter as notified to Nord by
Allied) in accordance with such principles;

(ii)  prepare and file, and correct any defect in any previously prepared and
filed, tax returns and information returns, and pay all taxes, levies,
assessments, reassessments, penalties, interest and fines due and payable by it
on the basis of such tax returns or demands from taxing authorities, not
previously prepared, filed, corrected and paid, as set out in the Nord
Disclosure Letter;

 

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(iii)  subject to the granting of the Interim Order, Nord will use all
reasonable efforts, as soon as practicable and in any event on or before
April 30, 2004, to complete the preparation of the Joint Information Circular
and disseminate to the Nord Securityholders and file in all jurisdictions where
required the Joint Information Circular and other documentation required in
connection with the Nord Meeting, all in accordance with National
Instrument 54-101 of the Canadian Securities Administrators, the requirements of
the U.S. Securities Laws, the Interim Order and applicable law, and Nord will
use all reasonable efforts to, as soon as practicable and in any event on or
before June 25, 2004, convene the Nord Meeting for the purpose of approving the
Arrangement in accordance with the Interim Order;

(iv)  Nord will cause a list of Nord Securityholders as of the record date for
the Nord Meeting, in a form suitable for soliciting of Nord Securityholders and
prepared by the transfer agent of Nord, to be delivered to Allied no later than
the second business day after such record date; and

(v)   Nord will use all reasonable efforts to promptly and expeditiously perform
its obligations under this Agreement and cause each of the conditions precedent
set forth in Sections 7.1, 7.2 and 7.3, to the extent it is within its control,
to be complied with;

provided that nothing contained herein shall obligate Nord to waive any
condition for its benefit contained herein;

(j)    Nord will provide Allied in a timely and expeditious manner with all
information relating to Nord and the Nord Subsidiaries required to be included
in the Joint Information Circular, including the Nord 2003 Financial Statements,
in order for the Joint Information Circular to comply with all applicable
disclosure laws and the Interim Order;

(k)  Nord shall cause the resignation, effective as of the Effective Date, of
such of the directors of Nord and the Nord Subsidiaries as is requested by
Allied not less than three business days prior to the Nord Meeting;

(l)   Nord shall cause its current insurance policies, whether held by it or
another entity, not to be cancelled or terminated or any of the coverage
thereunder to lapse, unless simultaneously with such termination, cancellation
or lapse, replacement policies underwritten by insurance companies of nationally
recognized standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially similar
premiums are in full force and effect; and

 

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(m)    Nord shall:

(i)    use its best efforts, and cause each of the Nord Subsidiaries to use its
best efforts, to preserve intact their respective business organizations and
goodwill, to keep available the services of its officers and employees as a
group and to maintain satisfactory relationships with all persons having
business relationships with it or the Nord Subsidiaries;

(ii)   not take any action, or permit any of the Nord Subsidiaries to take any
action, that would render, or that reasonably may be expected to render, any
representation or warranty made by it in this Agreement untrue in any material
respect at any time prior to the time that the Arrangement is effected if then
made; and

(iii)   promptly notify Allied orally and in writing of any Material Adverse
Change in its or any of the Nord Subsidiaries' businesses or affairs or in the
operation of its or any of the Nord Subsidiaries' businesses or in the operation
of its or any of the Nord Subsidiaries' properties, and of any material
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated).

(n)   If required at the time of holding the Nord Meeting by order of the Court
of Queen's Bench of New Brunswick in order to participate in the Arrangement,
Nord shall propose to Nord shareholders at the Nord Meeting the following
resolutions to be approved by disinterested vote:

(i)    the issuance to Alex Chisholm as trustee, in trust for Mark R. Welch and
Sharon Welch of 4,000,000 Nord Shares approved by the board of directors of Nord
on or about March 31, 2003; and

(ii)   the issuance to Mark Welch, Lucile Lansing and John Roberts of 1,200,000
Nord Shares approved by the Board of Directors of Nord on or about dated
February 25, 2002 and December 16, 2002.

In the event one or the other of such resolutions are not approved, the shares
so issued shall be cancelled and shall not participate in either the vote on the
Arrangement nor in the Arrangement and the persons to whom such shares had been
issued shall be entitled to no compensation therefor and the Plan of Arrangement
shall be amended to so state.

 

 

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4.2         Non-Solicitation

(a)   Nord will not (subject to the exceptions described herein), directly or
indirectly, and will not authorize or permit any Representative of Nord or any
Nord Subsidiary to, directly or indirectly, (i) solicit, initiate, invite,
assist, facilitate, promote, consent to or encourage proposals or offers from,
or entertain or enter into discussions or negotiations with any other person
relating to the acquisition of Nord Shares or any other securities of Nord or
any Nord Subsidiary, any amalgamation, merger or other form of business
combination involving Nord or any Nord Subsidiary, any sale, lease, exchange or
transfer of all or a substantial portion of the assets of Nord (on a
consolidated basis), or any takeover bid, reorganization, recapitalization,
liquidation or winding-up of or other business combination or transaction
involving Nord or any Nord Subsidiary with any person other than Allied or any
of its affiliates (each an "Acquisition Transaction" and any offer or proposal
relating to any transaction or series of related transactions involving an
Acquisition Transaction, an "Acquisition Proposal") or (ii) enter into any
letter of intent or similar document or any contractual agreement or commitment
contemplating or otherwise relating to any Acquisition Proposal. Nord shall, and
shall direct its Representatives to, immediately cease and cause to be
terminated any existing discussions or negotiations with any parties (other than
Allied) with respect to any potential Acquisition Proposal.  Nord shall
immediately close any data room which may be open.  Nord agrees not to release
any third party from any confidentiality or standstill agreement to which Nord
and such third party are a party and agrees not to amend any such agreement or
to waive any rights Nord may have thereunder.  Nord shall immediately request
the return or destruction of all non-public information provided to any third
parties relating to a potential Acquisition Proposal and shall use all
reasonable efforts to ensure that such requests are honoured.  Nord shall not
make available, after the date hereof, any material non-public information to
any party in connection with any potential or actual Acquisition Proposal.

(b)  Nord will ensure that its Representatives, including those of the Nord
Subsidiaries, and any financial or other advisors or representatives retained by
it or any of them are aware of the provisions of this Section 4.2 and Nord will
be responsible for any breach of this Section 4.2 by any of the foregoing and
any such breach shall be considered a breach by Nord.  Nord shall immediately
advise Allied of receipt of any written or oral Acquisition Proposal or any
request for non-public information relating to Nord or any Nord Subsidiary
related to an Acquisition Proposal or consideration whether or not to make an
Acquisition Proposal, and provide Allied with the identity of the party making
the Acquisition Proposal and the material terms thereof, and copies of any
correspondence or draft agreement received by Nord with respect thereto.

4.3       Superior Proposal

Notwithstanding Sections 4.1 and 4.2, provided that there has been no breach
thereof, the Board of Directors of Nord and Nord are not prohibited by
Section 4.1 or 4.2 from:

 

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(a)  considering, negotiating and providing information and disclosure in
respect of Nord if Nord's Board of Directors determines in good faith (after
consultation with its financial advisors, after appropriately considering all
relevant factors and after receiving the advice of outside counsel to the effect
that the board of directors of Nord must do so in order to discharge properly
its fiduciary duties) that an Acquisition Proposal is, or is reasonably likely
to result in, a transaction (a "Superior Transaction"):

(i)    pursuant to which (A) more than 50% of the then outstanding Nord Shares
would be transferred, (B) an amount of Nord Shares greater than 100% of the then
outstanding Nord Shares would be issued, (C) the holders of more than 50% of the
Nord Shares outstanding immediately prior to such transaction would following
such transaction receive in exchange for Nord Shares an amount of securities (if
any) of the surviving or resulting entity (or its direct or indirect parent, as
applicable) constituting less than 50% of the voting power of the surviving or
resulting entity (or its direct or indirect parent, as applicable) or (D) in
which all or substantially all of the assets of Nord (on a consolidated basis)
would be transferred;

(ii)   on terms which are more favourable from a financial point of view to the
holders of Nord Shares than the Arrangement (taking into account all of the
terms, conditions and aspects of such Acquisition Proposal and the Arrangement);

(iii)   for which any necessary financing is committed; and

(iv)   that does not contain a due diligence condition;

provided that:

(v)  Nord promptly (and in any event at least one business day prior to taking
any such action) notifies Allied orally and in writing of the identity of a
party to whom it is providing information or with whom it is discussing or
negotiating and the material terms and conditions of any Acquisition Proposal
together with copies of all correspondence and draft agreements or documents
related to such Acquisition Proposal;

 

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(vi) Nord receives from such person or group an executed confidentiality
agreement containing commercially reasonable limitations on the use and
disclosure of all non-public written and oral information furnished to such
person or group by or on behalf of Nord, and a standstill agreement which
provides to the effect that, for a period of one year from the date of this
Agreement, without the prior written consent of Nord and in compliance with this
Section 4.3, such person or group (or any member of such group) will not in any
manner, directly or indirectly, or in conjunction with any other person or
entity: (A) effect or seek, offer or propose (whether publicly or otherwise) to
effect or participate in, (1) any acquisition of any securities (or beneficial
ownership thereof) or assets of Nord or a Nord Subsidiary, (2) any tender or
exchange offer, merger or other business combination involving Nord or a Nord
Subsidiary, (3) any recapitalization, restructuring, liquidation, dissolution or
other extraordinary transaction with respect to Nord or a Nord Subsidiary, or
(4) any "solicitation" of "proxies" (as such terms are defined in Rule 14a-1
under the U.S. Exchange Act) or consents to vote any securities of Nord or a
Nord Subsidiary; (B) form, join or in any way participate in a "group" (as such
term is used in Section 13(d)(3) of the U.S. Exchange Act) or otherwise act,
alone or with others, to seek to acquire or affect control or influence the
management, Board of Directors or policies of Nord or a Nord Subsidiary;
(C) enter into any discussions or arrangements with any third party regarding
any of the foregoing; or (D) take any action which might force Nord to make a
public announcement regarding any of the foregoing; in each case in form and
substance satisfactory of Allied, acting reasonably; and

(vii) contemporaneously with furnishing any such non-public information to such
person or group, Nord furnishes such non-public information to Allied (to the
extent such non-public information has not been previously furnished by Nord to
Allied); or

(b)   accepting, approving, recommending to its shareholders or entering into an
unsolicited bona fide agreement or arrangement regarding an Acquisition Proposal
if the board of directors of Nord determines in good faith (after consultation
with its financial advisors, after appropriately considering all relevant
factors and after receiving the advice of outside counsel to the effect that the
board of directors of Nord must do so in order to discharge properly its
fiduciary duties) that such Acquisition Proposal would, if consummated in
accordance with its terms (but taking into account the risk of non-completion),
result in a Superior Transaction; provided that immediately prior to any entry
into an agreement or arrangement pursuant to this Subsection 4.3(b), Nord
terminates this agreement pursuant to Section 9.5 and at or prior to such
termination pays the Termination Amount as provided in such Section 9.5.

 

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Nord will not terminate this Agreement pursuant to Subsection 4.3(b) or enter
into any agreement, arrangement or understanding regarding a Superior
Transaction (a "Proposed Agreement") and will not effect a Board Approval
Modification relating to a Superior Transaction without first providing Allied
with an opportunity to amend the Arrangement contemplated by this agreement as
described below.  Nord will in any event (i) provide Allied with a copy of any
Proposed Agreement in the final form proposed by the person making the proposal,
as soon as possible and in any event not less than five business days prior to
its proposed execution by Nord, and (ii) provide Allied not less than five
business days prior written notice of any such Board Approval Modification
together with a description of the material terms of the Superior Transaction
related thereto.  If Allied agrees to amend the Arrangement contemplated by this
agreement (an "Amended Transaction") within such five business day period such
that in the good faith determination of the Board of Directors of Nord in the
exercise of its fiduciary duties (after having received the advice of its
financial advisors in this regard), the Amended Transaction, if consummated, is
reasonably likely to result in a transaction which is as favourable or more
favourable from a financial point of view to the holders of Nord Shares as the
Superior Transaction (taking into account all of the terms, conditions and
aspects of such Amended Transaction and Superior Transaction), Nord will not
enter into the Proposed Agreement or, as applicable, effect the Board Approval
Modification, and will agree to the Amended Transaction.  Any amendment to an
Acquisition Proposal will be deemed for purposes hereof to be a new Acquisition
Proposal which will be subject to the provisions of this Section 4.3.

4.4       Access to Information

Nord shall (and shall cause each of the Nord Subsidiaries to) afford Allied's
Representatives access, at all reasonable times from the date hereof and until
the expiration of this Agreement, to its properties, books, contracts and
records as well as to its management personnel, employees and agents or
advisors, and, during such period, Nord shall (and shall cause each of the Nord
Subsidiaries to) furnish promptly to Allied all information concerning its
business, properties and personnel as Allied may reasonably request, including,
as soon as they are available, the Nord Financial Statements.

ARTICLE 5
COVENANTS OF ALLIED

5.1       Covenants of Allied

Allied covenants in favour of Nord that it shall, do, take or perform or refrain
from doing, taking and performing such actions and steps as may be necessary or
advisable to ensure compliance with the following:

(a)  prior to the Effective Date, Allied will not take any action which might,
directly or indirectly, interfere or be inconsistent with or otherwise adversely
affect the completion of the Arrangement or the Financing;

(b)   prior to the Effective Date, Allied will use all reasonable efforts to do
all acts and things as may be necessary or desirable to ensure the successful
implementation of the Arrangement and, without limiting the generality of the
foregoing:

 

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(i)    prepare or cause to be prepared the Allied Financial Statements, which
shall be complete and accurate in all material respects and present fairly the
consolidated financial position of Allied and the results of its operations and
cash flows as of the dates and throughout the periods indicated in accordance
with Australian GAAP and reconciled to U.S. GAAP in accordance with item 18 of
SEC Form 20F (and to Canadian GAAP if required by Canadian Securities Laws),
Allied shall have no material liabilities (contingent or otherwise), on a
consolidated basis, which are not fully reflected in such statements in
accordance with Australian GAAP, and all legal proceedings against Allied or any
of its subsidiaries which are required in accordance with Australian GAAP to be
reflected in Allied's financial statements shall be properly reflected in the
Allied Financial Statements in accordance with such principles;

(ii)    Allied will co-operate in obtaining the Interim Order and the Final
Order; and

(iii)  Allied will use all reasonable efforts to cause each of the conditions
precedent set forth in Sections 7.1, 7.2 and 7.3, to the extent it is within its
control, to be complied with;

provided that nothing contained herein shall obligate Allied to waive any
condition for its benefit contained herein or in the Credit Agreement;

(c)   subject to compliance by Nord with paragraph 4.1(j), Allied will ensure
that all information concerning Allied set forth in the Joint Information
Circular complies with all applicable disclosure laws and the Interim Order;

(d)  Allied will issue fully paid and non-assessable Allied Shares, in
accordance with the terms of the Plan of Arrangement, to those Nord
Securityholders who are entitled to receive Allied Shares pursuant to the
Arrangement;

(e)   Allied will assume, in accordance with the terms of the Plan of
Arrangement, the obligations of Nord under the Nord Options as converted in
accordance with the terms of the Plan of Arrangement;

(f)    Allied will comply with its obligations under the Credit Agreement; and

(g)   after the Effective Date, Allied will cause Nord to satisfy any
obligations which Nord may have to Dissenting Securityholders.

 

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ARTICLE 6
MUTUAL COVENANTS

6.1       Mutual Covenants of Nord and Allied

Each of Nord and Allied covenant in favour of the other that prior to the
Effective Date, it shall and it shall cause each of its subsidiaries, to do,
take or perform or refrain from doing, taking and performing such actions and
steps as may be necessary or advisable to ensure compliance with the following:

(a)   each of Nord and Allied will use all reasonable efforts to satisfy (or
cause the satisfaction of) the conditions precedent to its obligations hereunder
and to take, or cause to be taken, all other action and to do, or cause to be
done, all other things necessary, proper or advisable under applicable laws and
regulations to complete the Arrangement, including using all reasonable efforts
to:

(i)    obtain all necessary waivers, consents and approvals required to be
obtained by it from other parties to contracts;

(ii)   obtain all necessary consents, approvals and authorizations as are
required to be obtained by it under any Canadian or foreign law or regulation;
and

(iii)   effect all necessary registrations and filings and submissions of
information requested by governmental authorities required to be effected by it
in connection with the Arrangement;

and each of Nord and Allied will use all reasonable efforts to cooperate with
the other in connection with the performance by the other of its obligations
under this subsection including, without limitation, continuing to provide
reasonable access to information and to maintain ongoing communications as
between officers of Nord and Allied; and

(b)  each of Nord and Allied will as soon as reasonably practicable notify the
other of any actual, imminent or incipient Material Adverse Change.

(c)   As promptly as practicable after execution of this Agreement, Nord and
Allied shall prepare and Nord shall file with the SEC the Joint Information
Circular, together with any other documents required by the U.S. Securities or
U.S. Exchange Act in connection with the Arrangement and the other transactions
contemplated hereby.  The Joint Information Circular shall constitute (i) the
management information circular of Allied with respect to the Allied meeting and
(ii) the management information circular of Nord with respect to the Nord
meeting.  As promptly as practicable after the Joint Information Circular is
cleared by the SEC, Allied and Nord shall cause the Joint Information Circular
to be mailed to each company's respective securityholders entitled to vote, as
the case may be.

 

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(d)   Each of Allied and Nord shall promptly furnish to the other party all
information concerning such party and its securityholders as may be reasonably
required in connection with any action contemplated by this Agreement.  The
Joint Information Circular shall comply in all material respects with all
applicable requirements of law.  Each of Allied and Nord will notify the other
promptly of the receipt of any comments from the SEC or other securities
regulatory authorities or stock exchanges and of any request by the SEC or other
securities regulatory authorities or stock exchanges for amendments or
supplements to the Joint Information Circular, or for additional information,
and will supply the other with copies of all correspondence with the SEC or
other securities regulatory authorities or stock exchanges with respect to the
Joint Information Circular or concerning other documents to be filed with
securities regulatory authorities.  Whenever any event occurs which should be
described in an amendment or supplement to the Joint Information Circular,
Allied or Nord, as the case may be, shall promptly inform the other of such
occurrence and cooperate in filing with the SEC and other securities regulatory
authorities or stock exchanges and/or mailing to securityholders of Allied and
Nord entitled to vote on the Arrangement, as may be required, such amendment or
supplement.

ARTICLE 7
CONDITIONS PRECEDENT

7.1       Mutual Conditions Precedent

The respective obligations of Nord and Allied to complete the transactions
contemplated by this Agreement and the obligation of Nord to file articles of
arrangement to give effect to the Arrangement shall be subject to the
satisfaction, on or before the Effective Date, of the following conditions, any
of which may be waived in whole or in part by the mutual consent of such parties
without prejudice to their right to rely on any other of such conditions:

(a)   the Cease Trade Orders shall have been revoked and Nord shall become
current in its reports to the SEC as required by U.S. Securities Laws;

(b)  the Arrangement shall have been approved without material amendment at the
Nord Meeting by the requisite majority of persons entitled to vote thereon as
may be determined by the Court;

(c)   the Interim Order and the Final Order shall have been obtained in form and
substance satisfactory to Nord and Allied, acting reasonably;

(d)   the Allied Shares to be issued pursuant to the Plan of Arrangement are
approved for official quotation by the ASX (conditional only on the issue of
those shares and on Allied providing the ASX with an Appendix 3B as required by
the Listing Rules) and shall be tradeable on the ASX (other than as limited by
Rule 145 under the U.S. Securities Act or other restrictions on sales by
affiliates (as defined in Rule 144 under the U.S. Securities Act) or control
persons which may be applicable) under applicable Canadian Securities Laws and
U.S. Securities Laws;

 

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(e)   all notification and any review requirements of the Investment Canada Act
shall have been satisfied;

(f)   all other consents, orders and approvals necessary or that Nord and Allied
agree are appropriate for the completion of the Arrangement shall have been
obtained;

(g)   there shall be no action taken under any existing applicable law or
regulation, nor any statute, rule, regulation or order which is enacted,
enforced, promulgated or issued by any court, department, commission, board,
regulatory body, government or governmental authority or similar agency,
domestic or foreign, that:

(i)    makes it illegal or otherwise directly or indirectly restrains, enjoins
or prohibits the Arrangement or any other transactions contemplated herein or in
the Credit Agreement, where the failure to complete such transactions would have
a Material Adverse Effect on the completion of the Arrangement;

(ii)  results in a judgment or assessment of material damages, directly or
indirectly, relating to the transactions contemplated herein or in the Credit
Agreement; or

(iii)  imposes or confirms material limitations on the ability of Allied to
effectively exercise full rights of ownership of the Nord Shares to be acquired
by Allied pursuant to the Arrangement or on the ability of those Nord
Securityholders to whom Allied Shares are issued pursuant to the Arrangement to
effectively exercise full rights of ownership of such Allied Shares subject to
securities law restrictions in applicable jurisdictions but, including the right
to vote or trade any such shares on the ASX;

(h)   there shall not be in force any law, order or decree making illegal,
restraining or enjoining the completion of the Arrangement or any other
transactions contemplated herein or in the Credit Agreement or which enables any
court, department, commission, board, regulatory body, government or
governmental authority or similar agency, domestic or foreign, as a result of
the transactions contemplated herein, to:

 

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(i)    prohibit Allied or any of its subsidiaries or Nord or any of the Nord
Subsidiaries from owning or operating all or any portion of their respective
businesses or assets; or

(ii)   compel Allied or any of its subsidiaries or Nord or any of the Nord
Subsidiaries to dispose of or hold separately all or any portion of their
respective businesses or assets or the shares of Nord to be indirectly acquired
by Allied pursuant to the Arrangement;

if such prohibition or compulsion could have a Material Adverse Effect on Allied
and its subsidiaries (including Nord), on a consolidated basis, after completion
of the Arrangement; and

(i)    none of the consents, orders or approvals contemplated herein shall
contain terms or conditions or require undertakings or security deemed
unacceptable by Nord or Allied, acting reasonably.

7.2       Conditions to Obligation of Nord

In addition to the conditions set forth in Section 7.1, the obligation of Nord
to complete the transactions contemplated by this Agreement is subject to the
satisfaction, on or before the Effective Date, of the following conditions, any
of which may be waived by Nord in whole or in part without prejudice to Nord's
right to rely on any other condition in favour of Nord:

(a)   the covenants of Allied to be performed on or before the Effective Date
pursuant to the terms of this Agreement shall have been duly performed in all
material respects by Allied, and Nord shall have received a certificate to that
effect dated the Effective Date, signed by two senior officers of Allied on
behalf of Allied, and Nord shall not have reasonably established that it has
knowledge to the contrary;

(b)   Allied shall have furnished Nord with certified copies of the resolutions
duly passed by the board of directors of Allied approving this Agreement and the
completion of the transactions contemplated hereby, including the issuance of
Allied Shares in accordance with the Plan of Arrangement;

(c)   the representations and warranties of Allied set out in Section 3.2 shall
have been true and correct in all material respects on the date of this
Agreement and such representations and warranties shall be true and correct in
all material respects on the Effective Date (before giving effect to the
Arrangement) as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement, and Nord shall have
received a certificate from Allied to that effect, dated the Effective Date and
signed by two senior officers of Allied, and Nord shall not have reasonably
established that it has knowledge to the contrary; and

 

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(d)   no Material Adverse Change (or any event, condition or state of facts
which may reasonably be expected to give rise to any such change) shall have
occurred with respect to Allied from and after the date hereof.

7.3       Conditions to Obligation of Allied

In addition to the conditions set forth in Section 7.1, the obligation of Allied
to complete the transactions contemplated by this Agreement is subject to the
satisfaction, on or before the Effective Date, of the following conditions, any
of which may be waived by Allied in whole or in part without prejudice to
Allied's right to rely on any other condition in favour of Allied:

(a)   all lawsuits and actions involving Nord or any Nord Subsidiary shall have
been settled to the satisfaction of Allied, including the litigation relating to
the composition of the Board of Directors of Nord and the issued and outstanding
Nord Shares;

(b)   Allied shall be satisfied with the results of its due diligence review of
Nord and the Nord Subsidiaries and their respective assets and operations,
including their interests in the Joint Venture and the Joint Venture Agreements;

(c)   the covenants of Nord to be performed on or before the Effective Date
pursuant to the terms of this Agreement shall have been duly performed in all
material respects by Nord, and Allied shall have received a certificate from
Nord to that effect, dated the Effective Date and signed by two senior officers
of Nord, and Allied shall not have reasonably established that it has knowledge
to the contrary;

(d)   on or before the Effective Date, Nord shall have furnished Allied with:

(i)    certified copies of the resolutions duly passed by the board of directors
of Nord approving this Agreement and the completion of the transactions
contemplated hereby and directing the submission of the Arrangement for approval
at the Nord Meeting; and

(ii)    certified copies of the resolutions duly passed at the Nord Meeting
approving the Arrangement;

(e)   the representations and warranties of Nord set out in Section 3.1 shall
have been true and correct in all material respects on the date of this
Agreement and such representations and warranties shall be true and correct in
all material respects on the Effective Date (before giving effect to the
Arrangement) as if made on and as of such date, except as affected by
transactions contemplated or permitted by this Agreement, and Allied shall have
received a certificate from Nord to that effect, dated the Effective Date and
signed by two senior officers of Nord, and Allied shall not have reasonably
established that it has knowledge to the contrary;

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41

(f)  Nord Securityholders representing less than 5% of the then outstanding Nord
Shares shall be Dissenting Securityholders;

(g)   on the Effective Date, Nord shall have furnished Allied with a certificate
of Nord, signed by the President of Nord, certifying as to the number of shares
in respect of which holders of the Nord Shares have exercised rights of dissent
granted under the Plan of Arrangement;

(h)   no adverse change (or any event, condition or state of facts which may
reasonably be expected to give rise to any such change) shall have occurred in
the business, operations, assets, capitalization, financial condition, licenses,
permits, rights, liabilities, prospects or privileges, whether contractual or
otherwise, of Nord and any Nord Subsidiaries on a consolidated basis, including
without limitation in SGC's and Australex's interest in the Joint Venture or any
of the Joint Venture Agreements, that, in the sole judgment of Allied, acting
reasonably, would make it inadvisable for Allied to proceed with the
Arrangement;

(i)    Allied shall have received from the Government and the Joint Venture
Partners, in a form satisfactory to Allied, such consents, orders, approvals and
confirmations as Allied, acting reasonably, considers are necessary or advisable
under the Joint Venture Agreements or applicable law for the Arrangement, the
Financing and the post-Arrangement transactions contemplated by Allied (which
have been disclosed in writing to Nord), and none of such consents, orders,
approvals or confirmations shall contain terms or conditions or require
undertakings, security, payments or actions deemed unacceptable by Allied,
acting reasonably;

(j)    there shall not have occurred any change in the political or governmental
structure of Papua New Guinea that, in the sole judgment of Allied, acting
reasonably, would make it inadvisable for Allied to proceed with the
Arrangement;

(k)  there shall not have occurred any general hostilities in Papua New Guinea
that result in a threat to the construction or operation of the Simberi Mining
Joint Venture or any actual direct threat to the Joint Venture or to Nord or any
of the Nord Subsidiaries, such threats may be evidenced by an increase in the
security measures regarding the Joint Venture or personnel working on the Joint
Venture, the evacuation of personnel working on the Joint Venture, a stoppage in
the construction or operation of the Simberi Mining Joint Venture or actual
physical damage to the Joint Venture, that, in the sole judgment of Allied,
acting reasonably, would make it inadvisable to proceed with the Arrangement;

(l)    no law, regulation or policy shall have been proposed, enacted,
promulgated or applied, whether or not having the force of law, in any
jurisdiction (including, without limitation, the imposition of sanctions
involving Papua New Guinea in Canada or the United States) which, in the sole
judgment of Allied, acting reasonably, would make it inadvisable for Allied to
proceed with the Arrangement;

 

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(m)  there shall not have occurred any actual or threatened change (including
any proposal by the Minister of Finance (Canada) to amend the Income Tax Act
(Canada), similar proposals in any other jurisdiction or any announcement,
governmental or regulatory initiative, condition, event or development involving
a change or a prospective change) that, in the sole judgment of Allied, acting
reasonably, has or may have material adverse significance with respect to the
current or anticipated business or operations of Nord and the Nord Subsidiaries,
or with respect to the regulatory regime applicable to their businesses and
operations, or with respect to any potential integration of Nord or any of the
Nord Subsidiaries with Allied or any reorganization of Nord, Allied or any of
their respective subsidiaries in connection with any such potential integration;

(n)   no change shall have occurred with respect to any existing action, suit or
proceeding against Nord or any of the Nord Subsidiaries, and no act, action,
suit or proceeding shall have been threatened or taken before or by any domestic
or foreign court or tribunal or governmental agents or other regulatory
authority or administrative agency or commission in any jurisdiction, whether or
not having the force of law, which, in the sole judgment of Allied, acting
reasonably, would make it inadvisable for Allied to proceed with the
Arrangement;

(o)   no adverse change (or any event, condition or state of facts which may
reasonably be expected to give rise to any such change) shall have occurred in
the Joint Venture or the Joint Venture Agreements, or any development proposal,
program or budget thereunder, which, in the sole judgment of Allied, acting
reasonably, would make it inadvisable for Allied to proceed with the
Arrangement;

(p)  Allied shall have received an opinion of New Brunswick counsel to Nord (and
such other counsel in other jurisdictions as Allied may reasonably request) as
to the enforceability of this Agreement and such other matters as it may
reasonably request, in a form acceptable to counsel to Allied, acting
reasonably, which opinion may reasonably rely on certificates of an officer or
officers of Nord as to matters of fact;

(q)   such members of the board of directors and officers of Nord and the Nord
Subsidiaries as Allied shall have designated in writing to Nord not less than
three days prior to the Effective Date, shall have provided their written
resignations as directors and officers of Nord effective as of the Effective
Date together with releases (satisfactory to Allied acting reasonably) in favour
of Nord;

 

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(r)   Allied shall be satisfied that the securities to be issued by Allied
pursuant to the Plan of Arrangement shall be exempt from registration under the
U.S. Securities Act pursuant to section 3(a)(10) thereof and under applicable
State securities laws and all "affiliates" of Nord (within the meaning of
Rule 145 under the U.S. Securities Act) shall have executed and delivered to
Allied agreements in form and substance satisfactory to Allied restricting
offers, sales, pledges and other disposition of Allied Shares received pursuant
to the Arrangement except in compliance with Rule 145(d) or another exemption or
exclusion from registration under the U.S. Securities Act; and

(s)   Allied shall receive support agreements ("Support Agreements") from the
directors of Nord and Nord Resources Corporation and others with respect to an
aggregate of 50% of the currently outstanding Nord Shares being voted in favor
of the Arrangement substantially in the form of Schedule 7.3(s) hereto.

Nord shall file articles of arrangement to give effect to the Arrangement only
upon the written certificate of Allied as to the satisfaction or waiver by
Allied of all the conditions for Allied's benefit set forth in Section 7.1 and
this Section 7.3.

7.4       Notice of Non‑Compliance

Each of Nord and Allied shall give prompt notice to the other of the occurrence,
or failure to occur, at any time from the date hereof to the Effective Date of
any event or state of facts which occurrence or failure would, or would be
likely to:

(a)   cause any of the representations or warranties of any party contained
herein to be untrue or inaccurate in any material respect, or

(b)  result in the failure to comply with or satisfy any covenant, condition or
agreement to be complied with or satisfied hereunder,

provided that no such notification shall affect the representations or
warranties of the parties or the conditions to the obligations of the parties
hereunder.  Neither Nord nor Allied may elect not to complete the transactions
contemplated herein pursuant to the conditions precedent contained in
Sections 7.1, 7.2 or 7.3 unless, prior to the filing on the Effective Date of
articles of arrangement for the purpose of giving effect to the Arrangement, the
party intending to rely thereon has delivered a written notice to the other
party, specifying in reasonable detail all matters which the party delivering
such notice is asserting as the basis for the non-fulfilment of the applicable
condition precedent.  More than one such notice may be delivered by a party.

7.5       Satisfaction of Conditions

The conditions set out in Sections 7.1, 7.2 and 7.3 shall be conclusively deemed
to have been satisfied, waived or released when, with the agreement of Allied
and Nord, articles of arrangement are filed under the Act to carry the
Arrangement into effect.

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7.6       Adjustments in Event of Change in Allied Shares

In the event, at any time or from time to time, of a subdivision, consolidation
or reclassification of the share capital of Allied, the payment of stock
dividends by Allied or other similar changes in the capital of Allied (other
than the issuance of Allied Shares for value, contemplated in this Agreement or
pursuant to options or agreements referred to in the Agreement) prior to
completion of the Plan of Arrangement, the number of Allied Shares issuable to
Nord Securityholders shall be proportionately adjusted so that Nord
Securityholders shall, upon completion of the Plan of Arrangement, be entitled
to receive such proportion of Allied Shares as they would have received upon
completion of the Plan of Arrangement if such change in the share capital of
Allied had not occurred.

ARTICLE 8
AMENDMENT

8.1       Amendment

This Agreement and the Plan of Arrangement may at any time and from time to
time, before or after the holding of the Nord Meeting but not later than the
Effective Date, be amended by written agreement of the parties hereto without,
subject to applicable law, further notice to or authorization on the part of
their respective securityholders and any such amendment may, without limitation:

(a)   change the time for performance of any of the obligations or acts of the
parties hereto;

(b)   waive any inaccuracies or modify any representation or warranty contained
herein or in any document delivered pursuant hereto; or

(c)    waive compliance with or modify any of the conditions precedent contained
herein;

provided that no such amendment shall decrease the consideration to be received
by the Nord Securityholders in exchange for their Nord securities pursuant to
the Arrangement without the approval of such securityholders in the same manner
as required for the approval of the Arrangement or in such other manner as may
be ordered by the Court.  This Agreement including the Plan of Arrangement may
be amended in accordance with the Final Order but if the terms of the Final
Order require any such amendment, the rights of the parties hereto under
Sections 7.1, 7.2, 7.3 and Article 9 shall remain unaffected.

ARTICLE 9
TERMINATION AND REMEDIES

9.1       Termination

This Agreement may be terminated prior to the completion of the Arrangement,
without prejudice to any rights or causes of action which may exist at the date
of termination:

 

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(a)   by mutual written consent of Nord and Allied;

(b)  subject to Section 9.5, by either Nord or Allied giving notice in writing
to the other if any of the conditions contained in this Agreement for the
benefit of the terminating party are not met or waived on or before the date
required for their performance provided that no party may terminate this
Agreement pursuant to this Section 9.1(b) if the failure to meet the conditions
involved is principally the result of such parties actions or failure to act and
such actions or failure to act constitutes a breach of this Agreement;

(c)   by Allied upon the occurrence of an Allied Termination Event; and

(d)   by Nord, in compliance with Section 9.5.

This Agreement shall also terminate without further notice or agreement if the
Arrangement has not become effective by June 30, 2004, unless extended by Allied
in its sole discretion by up to three calendar months in the aggregate or such
other date as may be agreed to by the parties hereto in writing.

9.2       Effect of Termination

In the event of such termination of this Agreement, this Agreement shall
forthwith become void and neither party shall have any liability or further
obligation to the other party hereunder except with respect to the obligations
set forth in Sections 9.4, 9.5 and 9.6, which shall survive such termination.

9.3       Limitation

Nothing contained in this Article 9, including the payment of any amount under
Section 9.4, shall, however, relieve or have the effect of resulting in
relieving any party in any way from liability for damages incurred or suffered
by a party as a result of a breach of this Agreement by a party acting in bad
faith intended or designed to result in the conditions precedent to this
Agreement not being satisfied.

9.4       Allied Termination Event

If at any time after the execution of this Agreement Allied exercises its right
to terminate this agreement pursuant to Section 9.1(c) as the result of the
occurrence of any of the following:

(a)   the board of directors of Nord has failed to make or has withdrawn or
changed the recommendation referred to in Section 3.1(a) in a manner adverse to
Allied or shall have made any recommendation in favour of any other Acquisition
Proposal or shall have resolved to do so prior to the Arrangement becoming
effective or has failed to promptly and publicly reconfirm its recommendation
referred to in Section 3.1(a) if requested to do so by Allied;

 

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(b)  Nord enters into an agreement (other than a confidentiality agreement) with
any person with respect to an Acquisition Proposal;

(c)   Nord Securityholders do not approve the Arrangement or the Arrangement is
not submitted for their approval on or before June 25, 2004; or

(d)  Nord is in material breach of or breaches any of its representations,
warranties or covenants made in this Agreement which breach or breaches
individually or in the aggregate would have a Material Adverse Effect on Nord or
materially impede the completion of the Arrangement;

(each of the above being a "Allied Termination Event"), then Nord shall pay to
Allied the Allied Termination Amount in immediately available funds to an
account designated by Allied within one Business Day after Allied gives notice
of termination.

9.5       Nord Termination Event

If Nord shall wish to terminate this Agreement pursuant to Section 4.3 or as a
result of a failure of the conditions set forth in Subsection 7.1(b), Nord
shall, immediately prior to such termination, pay to Allied the Termination
Amount in immediately available funds to an account designated by Allied.

9.6       Liquidated Damages

Nord acknowledges that the Termination Amount is liquidated damages and a
genuine pre-estimate of damages which Allied will suffer or incur as a result of
the event giving rise to such damages and resultant termination of this
Agreement and is not a penalty.  Nord irrevocably waives any right it may have
to raise as a defence that any such liquidated damages are excessive or
punitive. Nothing set forth in this Section 9.6 or elsewhere in this Agreement
will relieve Nord in any way for liability for damages suffered or incurred by
Allied as a result of intentional misrepresentations or fraud in connection
with, or an intentional or wilful breach of, this Agreement.

9.7       Judgment Currency

(a)   If, for the purposes of obtaining judgment in any court it becomes
necessary to convert any amount due under this Agreement in one currency (the
"Proper Currency") into anther currency (the "Other Currency"), then the
conversion shall be made at the rate at which Allied is able, in accordance with
normal banking procedures, to purchase the Proper Currency with such Other
Currency on the business day immediately prior to the day on which the judgment
is given.

(b)   Notwithstanding any judgment expressed in a currency other than the Proper
Currency, the obligation of Nord under this Agreement in respect of any amount
originally due from it in the Proper Currency shall be discharged only to the
extent that, on the business day following receipt by Allied of any amount in
any Other Currency, Allied is able in accordance with normal banking procedures
to purchase the Proper Currency with such Other Currency.  If the Proper
Currency so purchased is less than the amount originally due to Allied in the
Proper Currency, Nord shall pay to Allied the difference; if the Proper Currency
so purchased exceeds the amount originally due to Allied in the Proper Currency,
Allied agrees to credit such excess to Nord.

 

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(c)   Nord shall indemnify Allied for any premiums and costs of exchange
incurred by Allied in connection with the conversion into, or purchase of, the
Proper Currency.

(d)  The obligations in this Section shall constitute separate and independent
obligations of Nord from its other obligations under this Agreement and shall
not merge in any judgment granted in respect of this Agreement.

ARTICLE 10
GENERAL

10.1     Notices

All notices which may or are required to be given pursuant to any provision of
this Agreement shall be given or made in writing and shall be served personally
or sent by telecopy and in the case of:

(a)                Nord, addressed to:

 

Nord Pacific Limited
Suite 116, 2727 San Pedro Dr. N.E.
Albuquerque, New Mexico  87110
United States

     

Attention:          President and Chief Executive Officer

 

Facsimile:         +1-505-830-9332

(b)               Allied, addressed to:

 

Allied Gold Limited
Unit 15, Level 1
51-53 Kewdale Road
Welshpool, WA  6106

  Australia       Attention:          Managing Director   Facsimile:        
+62-8-9353-4894

 

 

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With a copy to:

Macleod Dixon LLP
Barristers and Solicitors
3700 Canterra Tower
400 - 3rd Avenue S.W.
Calgary, AB  T2P 4H2
Canada

Attention:  Tad Gruchalla-Wesierski
Facsimile No.:  +1-403-264-5973

or such other address or facsimile number as the parties may, from time to time,
advise the other parties hereto by notice in writing.  The date of receipt of
any such notice shall be deemed to be the date of delivery thereof or, in the
case of notice sent by facsimile, the date of successful transmission thereof
(unless transmission is received on a day that is not a business day or after
5:00 p.m. local time on a business day, in which case the date of receipt shall
be deemed to be the next business day).

10.2     Survival

The representations and warranties contained herein shall, notwithstanding any
investigation by any party, survive the execution of this Agreement until the
Effective Date, whereupon such representations and warranties shall expire and
be of no further force or effect.

10.3     Binding Effect and Assignment

This Agreement and the Arrangement shall be binding upon and shall enure to the
benefit of the parties hereto and their respective successors and permitted
assigns.  Neither this Agreement nor any rights hereunder or under the
Arrangement may be assigned by either party without the prior written consent of
the other.

10.4     Public Disclosure

With the exception of the initial news release pertaining to this Agreement, the
contents of which must be acceptable to both parties hereto, none of Nord, the
Nord Subsidiaries or their respective Representatives shall disclose or
communicate, by press release or other public announcement, any aspect of the
transactions contemplated hereby, without the prior written consent of Allied;
provided that, if Nord is required by law or administrative regulation to make
any disclosure relating to the transactions contemplated herein, such disclosure
may be made, but Nord will inform and consult with Allied, to the extent and as
early as possible, as to the wording of such disclosure prior to its being
made.  To the extent possible, Nord and Allied will use best efforts to issue
joint press releases if so requested by Allied.

 

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10.5     Expenses

Each party shall pay its own costs incurred in connection with the Arrangement
and shall not be responsible for any costs, expenses or fees incurred or paid by
the other party.

10.6     Time of Essence

Time shall be of the essence of this Agreement.

10.7     Governing Law

This Agreement shall be governed by and construed in accordance with the laws of
the Province of New Brunswick and the parties hereto irrevocably attorn to the
non‑exclusive jurisdiction of the courts of the Province of New Brunswick.

10.8     Counterparts

This Agreement may be executed in counterparts, each of which shall be deemed an
original, and all of which together shall constitute one and the same
instrument.  Each party that signs a counterpart shall provide an original of
that counterpart to the other parties hereto.

10.9     Further Assurances

Each of the parties shall make, do and execute, or cause to be made, done and
executed all such further acts, deeds, agreements, transfers, assurances,
instruments or documents as may reasonably be required in order to implement
this Agreement and the Plan of Arrangement.

IN WITNESS WHEREOF the parties have executed this Agreement as of the date first
above written.

Allied Gold Limited                                              Nord Pacific
Limited

By:                                                                        
                                                                             

By:                                                                        
                                                                             

 

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SCHEDULE 1
to the Arrangement Agreement made as of December ., 2003
between ALLIED GOLD LIMITED and
NORD PACIFIC LIMITED

PLAN OF ARRANGEMENT OF NORD PACIFIC LIMITED
 UNDER SECTION 128 OF THE
BUSINESS CORPORATIONS ACT (NEW BRUNSWICK)

ARTICLE 1
INTERPRETATION

1.1       Definitions

In this Plan of Arrangement, unless there is something in the subject matter or
context inconsistent therewith, the following terms shall have the following
respective meanings, and grammatical variations of such terms shall have
corresponding meanings:

"Act" means the Business Corporations Act, S.N.B. 1981, c. B-9.1, as amended;

            "Aggregate Option Exercise Price" means the aggregate value of the
cash that would have been payable upon exercise of the Nord Option in full,
expressed in Australian Dollars after conversion at the Exchange Rate;

            "Aggregate Option Worth" means the product obtained by multiplying
the aggregate number of Nord Shares issuable upon exercise of the Nord Option in
full by AUS $0.20;

"Allied" means Allied Gold Limited, a corporation incorporated under the laws of
Western Australia;

"Allied Shares" means common shares of Allied;

"Arrangement" means an arrangement under the provisions of Section 128 of the
Act, on the terms and conditions set forth in this Plan of Arrangement;

"Arrangement Agreement" means the Arrangement Agreement made as of December 20,
2003 between Allied and Nord, as the same may be amended or amended and
restated;

"AUS$" means Australian dollars, the lawful currency of Australia;

"business day" means a day other than a Saturday, Sunday or a day when banks in
the City of Albuquerque generally are not open for business;

"Court" means the Court of Queen's Bench of New Brunswick;

 

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"Depository" means . and such other depository, if any, specified in the Letter
of Transmittal;

"Effective Date" means the date on which the Arrangement becomes effective under
the Act;

"Effective Time" means 12:01 a.m. (Fredericton time) on the Effective Date;

"Exchange Rate" means the exchange rate used to calculate the conversion of U.S.
Dollars into Australian Dollars based upon the noon rate quoted by the Federal
Reserve Bank of New York on the 2nd business day prior to the Effective Date;

"Letter of Transmittal" means the letter of transmittal to be forwarded by Nord
to the Nord Securityholders, for use by the Nord Shareholders in order to
receive share certificates representing Allied Shares in exchange for their
share certificates formerly representing Nord Shares and for use by the Nord
Optionholders in order to receive share certificates representing Allied Shares
in exchange for the cancellation of their Nord Options;

"Nord" means Nord Pacific Limited, a corporation continued under the laws of New
Brunswick;

"Nord Options" means options to purchase Nord Shares issued and outstanding, or
any agreement to issue shares on the occurrence of one or more conditions in
existence, immediately prior to the Effective Time under the Nord Stock Option
Plans or otherwise;

"Nord Meeting" means the special meeting of Nord Securityholders (including any
adjournment thereof) to be held to consider and, if thought fit, approve the
Arrangement;

"Nord Securityholders" means the registered holders of Nord Shares and the
holders of Nord Options;

"Nord Shares" means common shares of Nord;

"Nord Stock Option Plans" means the Nord Stock Option Plans as defined in the
Arrangement Agreement;

"Registrar" means the Director of Corporations or a Deputy Director of
Corporations for the Province of New Brunswick, duly appointed under the Act;

"U.S." means the United States of America including the states thereof, the
District of Columbia, and its territories and possessions.

 

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1.2       Interpretation Not Affected by Headings, Etc.

The division of this Plan of Arrangement into articles, sections and other
portions and the insertion of headings are for convenience of reference only and
shall not affect the construction or interpretation of this Plan of
Arrangement.  The terms "this Plan of Arrangement", "hereof", "herein" and
"hereunder" and similar expressions refer to this Plan of Arrangement and the
Appendix hereto and not to any particular article, section or other portion
hereof and include any agreement or instrument supplementary or ancillary
hereto.

1.3       Article References

Unless the contrary intention appears, references in this Plan of Arrangement to
a Section, subsection, paragraph or subparagraph by number or letter or both
refer to the Section, subsection, paragraph or subparagraph, respectively,
bearing that designation in this Plan of Arrangement.

1.4       Number, Etc.

Unless the context requires the contrary, words importing the singular number
only shall include the plural and vice versa; words importing the use of any
gender shall include all genders; and words importing persons shall include
natural persons, firms, trusts, partnerships, corporations, associations,
unincorporated organizations, governmental bodies and other legal or business
entities of any kind.

ARTICLE 2
THE ARRANGEMENT

2.1       Arrangement

At the Effective Time on the Effective Date, each of the following transactions
shall occur and shall be deemed to occur in the following order without any
further act or formality:

(a)   all the issued and outstanding Nord Shares (other than Nord Shares held by
Allied or by registered holders who have exercised dissent rights in accordance
with Section 3.1 and who are ultimately entitled to be paid fair value for such
shares) and all of the Nord Options (other than Nord Options held by Allied or
holders who have exercised dissent rights in accordance with Section 3.1 and who
are ultimately entitled to be paid fair value for such options) shall be, and
shall be deemed to be, exchanged with Allied as follows:

(i)    in respect of each Nord Shareholder whose Nord Shares are so exchanged,
each Nord Share shall be exchanged for AUS$0.20 payable in Allied Shares at the
rate of one Allied Share for AUS$0.20; and

 

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(ii)   in respect of each Nord Optionholder whose Nord Options are so exchanged,
an amount in Australian dollars equal to the difference, if positive, between
the Aggregate Option Exercise Price and the Aggregate Option Worth, and such
amount shall be payable in Allied Shares at the rate of one Allied Share for
AUS$0.20;

(b)    with respect to each Nord Share or Nord Option to which Subsection 2.1(a)
applies:

(i)    the holder thereof shall cease to be a holder of such securities and such
holder's name shall be removed from the register of Nord Shares with respect to
such shares or shall cease to have any rights under the Nord Options, as the
case may be;

(ii)   the holder thereof shall cease to have any rights of action related to
the holder's ownership of such Nord Shares or Nord Options other than to be paid
the consideration therefor contemplated herein (where applicable, net of
withholding tax paid by Allied in respect thereof); and

(iii)  Allied shall be, and shall be deemed to be, the transferee of such Nord
Shares (free of any claims) and shall be entered in the register of such Nord
Shares as the legal and beneficial owner of all Nord Shares so exchanged and
transferred and the Nord Options shall be cancelled;

(c)   to the extent Allied pays withholding tax in respect of the consideration
payable to any Nord Shareholder or Nord Optionholder, Allied shall have thereby
satisfied its obligations in respect of that Nord Shareholder or Nord
Optionholder to the extent of such withholding tax paid; and

(d)   the subordinated indebtedness of Nord to Nord Resources Corporation in the
amount of AUS$280,000 on the books of Nord shall be converted into shares of
Allied at the rate of AUS$0.20 of such indebtedness for one Allied Share (or
1,400,000 Allied Shares in the aggregate).

2.2       Fractional Shares

Notwithstanding anything herein contained, no fractional Allied Shares will be
issued.  Where the aggregate number of Allied Shares to be issued to a former
Nord Shareholder would result in a fraction of a Allied Share being issued, the
number of Allied Shares shall be rounded down to the nearest number of whole
shares.

 

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ARTICLE 3
RIGHTS OF DISSENT

3.1       Rights of Dissent

Registered holders of Nord Shares and Nord Options may exercise rights of
dissent in the manner set forth in Section 131 of the Act in connection with the
Arrangement, subject to the following provisions:

(a)   securityholders who exercise their rights of dissent and who are
ultimately entitled to be paid fair value shall be deemed to have transferred
their Nord Shares or Nord Options to Nord for cancellation as of the Effective
Time and such shares shall be deemed to have no longer been issued and
outstanding or valid as of the Effective Time; and

(b)   securityholders who exercise such rights of dissent and who are ultimately
not entitled for any reason to be paid fair value for their Nord Shares or Nord
Options or securityholders who withdraw their dissent in accordance with
Section 131 of the Act shall be deemed to have participated in the Arrangement
as of and from the Effective Time on the same basis as the non‑dissenting
securityholders, and in particular:

(i)   the Nord Shares and Nord Options held by such securityholders shall be
deemed to have been transferred to Allied as of the Effective Time in accordance
with Section 2.1; and

(ii)   such securityholders shall be entitled to receive Allied Shares in
accordance with Section 2.1 and the other relevant provisions of this Plan of
Arrangement.

In no case shall Nord or Allied be required to recognize securityholders who
exercise their rights of dissent as holders of Nord Shares or Nord Options at
and after the Effective Time, and the names of such securityholders shall be
deleted from Nord's registers of holders of such shares or options on the
Effective Date.

ARTICLE 4
SHARE CERTIFICATES AND CASH PAYMENTS

4.1       Rights of Holders

After the Effective Time, certificates formerly representing Nord Shares and
agreements relating to Nord Options to which Section 2.1 applies shall represent
only the right to receive certificates representing the Allied Shares, if any,
which the former holder of such Nord Shares or Nord Options is entitled to
receive pursuant to Article 2 subject to compliance with the requirements set
forth in this Article 4. 

 

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4.2       Transmittal

Before, or as soon as practicable after, the Effective Date, Nord shall forward
to each former registered holder of Nord Shares and Nord Options to which
Section 2.1 applies at the address of such holder as it appeared in the relevant
share register of Nord a Letter of Transmittal containing, among other things,
instructions for obtaining delivery of certificates representing the Allied
Shares pursuant to this Plan of Arrangement.  Such former holder of Nord Shares
or Nord Options shall be entitled to receive certificates representing the
Allied Shares which such holder is entitled to receive pursuant to Section 2.1,
upon delivering the certificate formerly representing such holder's Nord Shares
or agreement relating to such holder's Nord Options to the Depository, or as the
Depository may otherwise direct, in accordance with the instructions contained
in the Letter of Transmittal.  Such certificate formerly representing such
holder's Nord Shares or agreement relating to such holder's Nord Options shall
be accompanied by the Letter of Transmittal, duly completed, and such other
documents as the Depository may reasonably require.  The Depository shall
register the Allied Shares in such name, and shall deliver by first class mail,
postage prepaid, or, in the case of postal disruption, by such other means as
the Depository deems prudent, such shares, to such address as such holder may
direct in such Letter of Transmittal, as soon as practicable after receipt by
the Depository of such documents.

4.3       No Entitlement

The holders of Nord Shares or Nord Options shall not be entitled to any
interest, dividend, premium or other payment on or with respect to the Nord
Shares other than the Allied Shares which they are entitled to receive for the
Nord Shares or Nord Options pursuant to this Plan of Arrangement.

4.4       Termination of Rights

Any certificate formerly representing Nord Shares or agreement relating to such
holder's Nord Options that is not deposited with all other documents as provided
in Section 4.2 on or before the sixth anniversary of the Effective Date shall
cease to represent a right or claim of any kind or nature whatsoever and the
rights of the holder of such certificate in respect of the Allied Shares
represented thereby or any payment pursuant to Section 2.2 shall be deemed to be
surrendered to Allied together with all dividends or distributions thereon held
for such holder.

4.5       Distributions

All dividends paid or distributions made in respect of the Allied Shares issued
to a former Nord Securityholder for which a certificate representing Allied
Shares has not been delivered to such holder in accordance with Section 4.2
shall be paid or delivered to the Depository to be held in trust for such
holder, subject to Section 4.4, for delivery to the holder, net of all
withholding and other taxes, upon delivery of the certificate in accordance with
Section 4.2.