Document:

exh4_10.htm

 

Exhibit 4.10

 

ARRANGEMENT AGREEMENT

 

AMONG

 

CANADIAN ZINC CORPORATION,

 

MESSINA MINERALS INC.

 

AND

 

0980829 B.C. LTD.

 

 

 

DATED AS OF

OCTOBER 21, 2013

 

 

  

  

  

 

 

	
Table of Contents

	  
	  	
Page

	
1.

	
DEFINITIONS

	
1

	
2.

	
ARRANGEMENT

	
4

	
3.

	
REPRESENTATIONS AND WARRANTIES

	
5

	
4.

	
COVENANTS

	
17

	
5.

	
CONDITIONS PRECEDENT

	
20

	
6.

	
AMENDMENT, CLOSING AND TERMINATION

	
22

	
7.

	
INDEMNITY

	
23

	
8.

	
NON-SOLICITATION AND BREAK FEE PAYMENT

	
24

	
9.

	
ORDINARY COURSE

	
26

	
10.

	
PUBLIC DISCLOSURE AND CONFIDENTIALITY

	
27

	
11.

	
ASSIGNMENT

	
27

	
12.

	
WAIVER

	
27

	
13.

	
GENERAL

	
27

  

  

  

 

ARRANGEMENT AGREEMENT

 

THIS ARRANGEMENT AGREEMENT dated as of October 21, 2013, is entered into by and among Canadian Zinc Corporation, a corporation existing under the laws of the Province of British Columbia ("Canadian Zinc"), 0980829 B.C. Ltd., a corporation existing under the laws of the Province of British Columbia and wholly-owned by Canadian Zinc ("CZN Sub"), and Messina Minerals Inc., a corporation existing under the laws of the Province of British Columbia ("Messina").

 

R E C I T A L S

 

	
A.

	
The parties have agreed to effect a business combination whereby Canadian Zinc would acquire all of the outstanding shares of Messina (the "Acquisition").

 

	
B.

	
Canadian Zinc and Messina intend to complete the Acquisition by way of a plan of arrangement under the provisions of the BCBCA under which, among other things, CZN Sub and Messina will merge and the Messina Shareholders will receive common shares of Canadian Zinc ("Canadian Zinc Shares") in exchange for their Messina Shares in accordance with the terms of the plan of arrangement.

 

	
C.

	
Canadian Zinc will apply to have the Canadian Zinc Shares issued and issuable pursuant to the Arrangement listed for trading on the Toronto Stock Exchange.

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and of the mutual covenants and agreements hereinafter set forth, the parties hereto agree each with the other as follows:

 

	
1.

	
DEFINITIONS

 

	
  

	
1.1

	
In this Agreement:

 

	
  

	
(a)

	
all capitalized terms which are not otherwise defined in this Agreement shall have the meaning ascribed to them in the Plan of Arrangement;

 

	
  

	
(b)

	
"Arrangement" means an arrangement under the provisions of Section 288 of the BCBCA on the terms and conditions set forth in the Plan of Arrangement, subject to any amendment or supplement thereto made in accordance therewith, herewith or made at the direction of the Court in the Final Order;

 

	
  

	
(c)

	
"BCBCA" means the Business Corporations Act (British Columbia);

 

	
  

	
(d)

	
"Break Fee" has the meaning ascribed thereto in Section 8.7;

 

	
  

	
(e)

	
"business day" means a day that is not a civic or statutory holiday in Vancouver, British Columbia;

 

	
  

	
(f)

	
"Canadian Zinc Public Record" has the meaning ascribed thereto in Subsection 3.1(l);

 

	
  

	
(g)

	
"Closing" has the meaning ascribed thereto in Section 6.3;

 

	
  

	
(h)

	
"Closing Date" has the meaning ascribed thereto in Section 6.3;

 

	
  

	
(i)

	
"Court" means the Supreme Court of British Columbia;

 

 

  

  

  

 

 

	
  

	
(j)

	
"Effective Date" has the meaning ascribed thereto in the Plan of Arrangement;

 

	
  

	
(k)

	
"Effective Time" means the Effective Time as defined in the Plan of Arrangement;

 

	
  

	
(l)

	
"Final Order" means the order of the Court pursuant to section 291 of the BCBCA approving the Arrangement, as such order may be amended at any time prior to the Effective Date or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or as amended on appeal;

 

	
  

	
(m)

	
"Indemnified Party" has the meaning ascribed thereto in Section 7.1;

 

	
  

	
(n)

	
"Indemnifying Party" has the meaning ascribed thereto in Section 7.1;

 

	
  

	
(o)

	
"Information Circular" means the information circular to be sent to Messina Shareholders in connection with the Messina Meeting (as such term is defined in the Plan of Arrangement);

 

	
  

	
(p)

	
"Interim Order" means the interim order of the Court pursuant to  section 291 of the BCBCA, made in connection with the Arrangement, as such order may be amended, supplemented or varied by the Court with the consent of the parties hereto, each acting reasonably;

 

	
  

	
(q)

	
"Material Adverse Change" means any one or more change, event or occurrence and any fact or state of facts, circumstance, change, effect, occurrence or event which, in either case, either individually is, or in the aggregate are, material and adverse to the business of Messina or Canadian Zinc (as applicable), taken as a whole, other than any change, event or occurrence that is temporary in nature or that is attributable or relating to:

 

	
  

	
(i)

	
changes in general economic, financial or political conditions or the securities markets;

 

	
  

	
(ii)

	
changes affecting generally the mining sector in which Messina or Canadian Zinc (as applicable) conducts business;

 

	
  

	
(iii)

	
changes or developments resulting from any natural disaster, any act of terrorism or any outbreak of hostilities or war, or any escalation of any such natural disaster or acts of terrorism or hostilities or war;

 

	
  

	
(iv)

	
changes in generally accepted accounting principles or applicable laws or interpretations thereof;

 

	
  

	
(v)

	
the announcement of this Agreement or the consummation of the transactions contemplated by this Agreement, or any actions by Messina or Canadian Zinc (as applicable), taken pursuant to this Agreement; and

 

	
  

	
(vi)

	
a change in the market price or trading volume of the Messina Shares or Canadian Zinc Shares (as applicable);

 

provided, however, that such effect (in (i) or (ii) above) does not primarily relate only to (or have the effect of primarily relating only to) Messina or Canadian Zinc, or disproportionately adversely affect Messina or Canadian Zinc, compared to other companies operating in the same industry;

 

 

  

  

  

 

 

	 	
(r)

	
 
"Material Adverse Effect" means a material adverse effect (or a series of adverse effects, none of which is material in and of itself but which, cumulatively, result in a Material Adverse Effect) on the business, operations, results of operations, prospects, assets, liabilities or financial condition of the party, other than any change, effect, event or occurrence: (a) relating to the global economy or securities markets in general; (b) affecting the worldwide mining industry in general and which does not have a materially disproportionate effect on the party; (c) resulting from changes in the price of precious or base metals; or (d) which is a change in the trading price of the publicly traded securities of the party immediately following and reasonably attributable to the disclosure of this Agreement and the matters contemplated hereby;

 

	 	
(s)

	
 
"material fact", "material change" and "misrepresentation" have the meanings ascribed to them by the Securities Act (British Columbia);

 

	 	
(t)

	
 
"Messina Public Record" has the meaning ascribed thereto in Subsection 3.2(k);

 

	 	
(u)

	
 
"Plan of Arrangement" means a plan of arrangement substantially in the form and content of Schedule A attached hereto and any amendment or variation thereto made in accordance with section 6.01 of the Plan of Arrangement or section 6.1 hereof;

 

	 	
(v)

	
"Registrar" means the registrar appointed Section 400 of the BCBCA;

 

	 	
(w)

	
 
"Section 3(a)(10) Exemption" has the meaning ascribed thereto in Section 2.2;

 

	 	
(x)

	
 
"Superior Proposal" has the meaning ascribed thereto in Section 8.4;

 

	 	
(y)

	
 
"Tax Act" means the Income Tax Act (Canada), and the regulations promulgated thereunder, as now in effect and as it may be amended from time to time prior to the Effective Date;

 

	 	
(z)

	
 
"Taxes" includes any taxes, duties, fees, premiums, assessments, imposts, levies and other charges of any kind whatsoever imposed by any governmental entity, including all interest, penalties, fines, additions to tax or other additional amounts imposed by any governmental entity in respect thereof, and including those levied on, or measured by, or referred to as, income, gross receipts, profits, capital, transfer, land transfer, sales, goods and services, harmonized sales, use, value-added, excise, stamp, withholding, business, franchising, property, development, occupancy, employer health, payroll, employment, health, social services, education and social security taxes, all surtaxes, all customs duties and import and export taxes, countervail and anti-dumping duties, all license, franchise and registration fees and all employment insurance, health insurance and Canada, Quebec and other government pension plan premiums or contributions;

 

	 	
(aa)

	
 
"Tax Returns" includes all returns, reports, declarations, elections, notices, filings, forms, statements and other documents (whether in tangible, electronic or other form) and including any amendments, schedules, attachments, supplements, appendices and exhibits thereto, made, prepared, filed or required to be made, prepared or filed by law in respect of Taxes;

 

	 	
(bb)

	
 
"Third Party" has the meaning ascribed thereto in Section 8.1;

 

	 	
(cc)

	
 
"to the best of its knowledge" or "to the best knowledge" of a party, means, with respect to such party, to the best knowledge of the senior officers of such party, after reasonable inquiry;

 

 

  

  

  

 

 

	
  

	
(dd)

	
"TSX" means the Toronto Stock Exchange;

 

	
  

	
(ee)

	
"TSXV" means the TSX Venture Exchange;

 

	
  

	
(ff)

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

 

	
  

	
(gg)

	
"U.S. Securities Act" has the meaning ascribed thereto in Section 2.2.

 

	
2.

	
ARRANGEMENT

 

	
  

	
2.1

	
The parties agree to carry out the Arrangement substantially on the terms as set out in the Plan of Arrangement, subject to such changes as may be mutually agreed to by the parties on the advice of their respective legal, tax and financial advisors.

 

	
  

	
2.2

	
The parties agree that the Arrangement will be structured and carried out with the intention that all Canadian Zinc Shares issued on completion of the Arrangement to the Messina Shareholders will be issued by Canadian Zinc in reliance on the exemption from the registration requirements of the Securities Act of 1933, as amended, of the United States (the "U.S. Securities Act") provided by Section 3(a)(10) of the U.S. Securities Act (the "Section 3(a)(10) Exemption").  In order to ensure the availability of the Section 3(a)(10) Exemption, the parties hereto agree that the Arrangement will be carried out on the following basis:

 

	 	
(a)

	
 
the Arrangement will be subject to the approval of the Court;

 

	 	
(b)

	
 
the Court will be advised as to Canadian Zinc’s intention to rely upon the Section 3(a)(10) Exemption prior to the hearing required to approve the Arrangement;

 

	 	
(c)

	
 
the Court will be required to satisfy itself as to the fairness of the Arrangement to the Messina Shareholders to be issued Canadian Zinc Shares pursuant to the Arrangement and the Final Order approving the Arrangement that is obtained from the Court will expressly state that the Arrangement is approved by the Court as being fair to such Messina Shareholders;

 

	 	
(d)

	
 
the Messina Shareholders will be given adequate and timely notice advising them of their right to attend the hearing of the Court for the Final Order to approve the Arrangement and providing them with sufficient information necessary for them to exercise that right, and the Interim Order will specify that each Messina Shareholder will have the right to appear before the Court and make submissions at the hearing of the Court for the Final Order to approve the Arrangement so long as they enter an appearance within a reasonable time;

 

	 	
(e)

	
 
the Messina Shareholders will be advised that the Canadian Zinc Shares issued in the Arrangement have not been registered under the U.S. Securities Act and will be issued by Canadian Zinc in reliance on the Section 3(a)(10) Exemption and that certain restrictions on resale under Rule 144 under the U.S. Securities Act will be applicable with respect to Canadian Zinc Shares issued to persons who are affiliates of Canadian Zinc after the Effective Date or within 90 days prior to the Effective Date; and

 

	 	
(f)

	
 
the Final Order shall include a statement to substantially the following effect:

 

	 	
 

	
“This Order will serve as a basis of a claim to an exemption, pursuant to section 3(a)(10) of the United States Securities Act of 1933, as amended, from the registration requirements otherwise imposed by that act, regarding the distribution of securities of Canadian Zinc, pursuant to the Plan of Arrangement.”

 

 

  

  

  

 

 

	
  

	
2.3

	
Messina and CZN Sub shall, as soon as reasonably practicable, but in any event not later than November 13, 2013, apply to the Court for the Interim Order providing for, among other things, the calling and holding of the Messina Meeting for the purpose of considering and, if deemed advisable, approving the Arrangement, and for the form of approval by the sole shareholder of CZN Sub of the Arrangement.  If the approval of the Arrangement as set forth in the Interim Order is obtained, Messina and CZN Sub shall take the necessary steps to submit the Arrangement to the Court and apply for the Final Order in such fashion as the Court may direct and, as soon as practicable thereafter, and subject to satisfaction or waiver of any other conditions provided for in this Agreement, Messina and CZN Sub shall file the Final Order and such other documents as may be required in order to give effect to the Arrangement.

 

	
  

	
2.4

	
The parties intend to adopt this Agreement and the Plan of Arrangement as a plan of reorganization for purposes of the United States Internal Revenue Code of 1986, as amended (the "Code") and applicable Treasury regulations thereunder and to treat the transactions contemplated by the Agreement and this Plan of Arrangement as a reorganization in accordance with the provisions of Section 368(a) of the Code for United States federal income tax purposes.  Except as provided in this Agreement, none of the parties will take any action that would cause the reorganization not to qualify as a reorganization in accordance with Section 368(a) of the Code.  Notwithstanding the foregoing, none of Canadian Zinc, CZN Sub or Messina makes any representation or warranty to any other party or to any Messina Shareholder, holder of Canadian Zinc Shares or holder of other securities of Messina or Canadian Zinc (including, without limitation, stock options, warrants or other similar rights) regarding the United States tax treatment of such transactions, including but not limited to whether such transactions will qualify as a tax deferred plan of reorganization for purposes of United States federal, state or local income tax.  Messina, Canadian Zinc and CZN Sub acknowledge that Canadian Zinc, CZN Sub, Messina and the Messina Shareholders are relying solely on their own tax advisors in connection with this Agreement and the Plan of Arrangement and related transactions and agreements.

 

	
3.

	
REPRESENTATIONS AND WARRANTIES

 

Representations and Warranties of Canadian Zinc

 

	
  

	
3.1

	
As at the date of this Agreement and as at the Closing Date, Canadian Zinc represents and warrants to Messina, and acknowledges that Messina is relying thereon, as follows:

 

	
  

	
(a)

	
each of Canadian Zinc and CZN Sub is duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, continuance or amalgamation and has the corporate power to own or lease its property and assets and to carry on its business as now conducted by it, is duly licensed or qualified as a foreign corporation in each jurisdiction in which the character of the property and assets now owned by it or the nature of its business as now conducted by it requires it to be so licensed or qualified (save where failure to have such licence or qualification is not in the aggregate material);

 

	
  

	
(b)

	
each of Canadian Zinc and CZN Sub has the corporate power to enter into this Agreement and, subject to obtaining the requisite approvals contemplated hereby, to carry out its respective obligations hereunder;

 

 

  

  

  

 

 

	
  

	
(c)

 

	
  

	
(i)

	
as of the date hereof, the authorized capital of Canadian Zinc consists of an unlimited number of common shares;

 

	
  

	
(ii)

	
as of September 30, 2013, a total of 170,695,861 Canadian Zinc Shares were issued and outstanding; and

 

	
  

	
(iii)

	
Canadian Zinc has no options, warrants or other convertible securities issued or outstanding which entitle the holder to purchase shares or any other securities of Canadian Zinc up to the Effective Date of the Arrangement, except as follows as of September 30, 2013:

 

	
  

	
(A)

	
options exercisable to acquire up to 7,109,600 Canadian Zinc Shares; and

	
  

	
(B)

	
warrants exercisable to acquire up to 12,905,455 Canadian Zinc Shares;

	
  

	
(d)

	
the Canadian Zinc Shares issuable pursuant to the Arrangement will, upon their issuance, be validly issued and outstanding, fully paid and non-assessable common shares of Canadian Zinc and will form part of a class of shares that is listed and posted for trading on the TSX;

 

	
  

	
(e)

	
the execution and delivery by Canadian Zinc of this Agreement and the performance by Canadian Zinc of its obligations hereunder and the completion of the transactions contemplated hereby, do not and will not:

 

	
  

	
(i)

	
result in a violation, contravention or breach of or constitute a default under, or entitle any party to terminate, accelerate, modify or call any obligations or rights under, require any consent to be obtained under or give rise to any termination rights under any provision of:

 

(A)           the constating documents of Canadian Zinc,

 

(B)           any applicable law or the rules or policies of the TSX, or

 

	
  

	
(C)

	
any credit agreement, note, bond, mortgage, indenture, deed of trust, lease, franchise, concession, easement, contract, agreement, licence, permit or other instrument to which Canadian Zinc is bound or is subject to or of which Canadian Zinc is the beneficiary;

 

	
  

	
(ii)

	
cause any indebtedness owing by Canadian Zinc to come due before its stated maturity or cause any available credit to cease to be available which would, individually or in the aggregate, have a Material Adverse Effect on Canadian Zinc;

 

	
  

	
(iii)

	
result in the imposition of any encumbrance upon any of the property or assets of Canadian Zinc or give any person the right to acquire any of Canadian Zinc's assets, or restrict, hinder, impair or limit the ability of Canadian Zinc to conduct the business of Canadian Zinc as and where it is now being conducted which would, individually or in the aggregate, have a Material Adverse Effect on Canadian Zinc; or

 

	
  

	
(iv)

	
result in or accelerate the time for payment or vesting of, or increase the amount of any severance, unemployment compensation, "golden parachute", bonus, termination payments or otherwise, becoming due to any director or officer of Canadian Zinc or increase any benefits otherwise payable under any pension or benefits plan of Canadian Zinc or result in the acceleration of the time of payment or vesting of any such benefits.

 

 

  

  

  

 

 

	
  

	
(f)

	
there are no actions, suits or proceedings, pending or, to the best knowledge of Canadian Zinc, threatened against or affecting Canadian Zinc or CZN Sub, or any of their principals, at law or in equity, or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau or agency, domestic or foreign, which, if successful, would reasonably be expected to cause a Material Adverse Effect on Canadian Zinc, and Canadian Zinc is not aware of any existing grounds on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success against Canadian Zinc or CZN Sub;

 

	
  

	
(g)

	
this Agreement has been duly authorized, executed and delivered by Canadian Zinc and CZN Sub and constitutes a legal, valid and binding obligation, enforceable against Canadian Zinc and CZN Sub in accordance with its terms subject to bankruptcy, insolvency and other applicable laws affecting creditors' rights generally and to general principles of equity;

 

	
  

	
(h)

	
Canadian Zinc is a "reporting issuer" within the meaning of the securities laws of British Columbia, Alberta, Ontario and Quebec, has no securities law reporting requirements under any other jurisdiction and is not on a list of defaulting issuers maintained by the securities commissions in these jurisdictions and no regulatory authority having jurisdiction has issued any order preventing or suspending trading of any securities of Canadian Zinc which is currently outstanding;

 

	
  

	
(i)

	
the latest audited financial statements of Canadian Zinc for the fiscal year ended December 31, 2012 to be disclosed in the Information Circular are true and correct in every material respect, and have been prepared in accordance with Canadian generally accepted accounting principles, including International Financial Reporting Standards, and fairly reflect the financial position of Canadian Zinc as at the date of such financial statements and the results of its operations for the period then ended and have been prepared in accordance with accounting principles generally accepted in Canada;

 

	
  

	
(j)

	
the unaudited financial statements of Canadian Zinc for the interim period ended September 30, 2013 to be disclosed in the Information Circular are true and correct in every material respect, and have been prepared in accordance with Canadian generally accepted accounting principles, including International Financial Reporting Standards, and fairly reflect the financial position of Canadian Zinc as at the date of such financial statements and the results of its operations for the period then ended and have been prepared in accordance with accounting principles generally accepted in Canada;

 

	
  

	
(k)

	
since September 30, 2013, except as disclosed by Canadian Zinc in the Canadian Zinc Public Record:

 

	
  

	
(i)

	
Canadian Zinc has conducted its business only in the ordinary and regular course of business consistent with past practice;

 

	
  

	
(ii)

	
Canadian Zinc has not incurred or suffered a Material Adverse Change;

 

	
  

	
(iii)

	
there has not been any acquisition or sale by Canadian Zinc of any material property or assets thereof;

 

 

  

  

  

 

 

	
  

	
(iv)

	
other than in the ordinary and regular course of business consistent with past practice, there has not been any incurrence, assumption or guarantee by Canadian Zinc of any debt for borrowed money, any creation or assumption by Canadian Zinc of any encumbrance, any making by Canadian Zinc of any loan, advance or capital contribution to or investment in any other person or any entering into, amendment of, relinquishment, termination or non-renewal by Canadian Zinc of any contract, agreement, licence, lease transaction, commitment or other right or obligation which would, individually or in the aggregate, have a Material Adverse Effect on Canadian Zinc;

 

	
  

	
(v)

	
Canadian Zinc has not declared or paid any dividends or made any other distribution on any of the Canadian Zinc Shares;

 

	
  

	
(vi)

	
Canadian Zinc has not effected or passed any resolution to approve a split, consolidation or reclassification of any of the outstanding Canadian Zinc Shares;

 

	
  

	
(vii)

	
Canadian Zinc has not changed or amended its constating documents;

 

	
  

	
(viii)

	
other than in the ordinary and regular course of business consistent with past practice, there has not been any material increase in or modification of the compensation payable to or to become payable by Canadian Zinc to any of its directors, officers, employees or consultants or any grant to any such director, officer, employee or consultant of any increase in severance or termination pay or any increase or modification of any bonus, pension, insurance or benefit arrangement made to, for or with any of such directors or officers;

 

	
  

	
(ix)

	
Canadian Zinc has not effected any material change in its tax election or accounting methods, principles or practices; and

 

	
  

	
(x)

	
Canadian Zinc has not adopted any, or materially amended any, collective bargaining agreement, bonus, pension, profit sharing, stock purchase, stock option or other benefit plan or shareholder rights plan;

 

	
  

	
(l)

	
Canadian Zinc has filed with all applicable securities and regulatory authorities (including exchanges and markets) all information and documents required to be filed with such authorities under the securities legislation in the jurisdictions in which it is a reporting issuer (the "Canadian Zinc Public Record") and the statements set forth in the Canadian Zinc Public Record are true, correct and complete and do not contain any misrepresentation as of the dates on which they were made, except where the failure to comply strictly with certain form requirements would not have a Material Adverse Effect on Canadian Zinc, and Canadian Zinc has not filed any confidential material change reports which currently remain confidential or similar reports;

 

	
  

	
(m)

	
the Canadian Zinc Shares trade on the TSX and Canadian Zinc is in compliance with all rules, regulations and policies of the TSX in all material respects;

 

	
  

	
(n)

	
Canadian Zinc is not in default in any material respect of any requirement of any applicable securities laws or regulatory authority having jurisdiction over any securities of Canadian Zinc;

 

	
  

	
(o)

	
Canadian Zinc is not subject to any cease trade or other order of any applicable stock exchange or securities authority and, to the best knowledge of Canadian Zinc, no investigation or other proceedings involving Canadian Zinc that may operate to prevent or restrict trading of any securities of Canadian Zinc are currently in progress, pending or threatened before any applicable stock exchange or securities authority;

 

 

  

  

  

 

 

	
  

	
(p)

	
the description of the business of Canadian Zinc and CZN Sub, its financial condition, assets and properties as provided to Messina for inclusion in the Information Circular will not contain any untrue statement of a material fact or omit to state any material fact necessary to make such description not misleading and will contain all information required by all applicable securities laws and the rules of the TSX;

 

	
  

	
(q)

	
Canadian Zinc and CZN Sub have not incurred any liability for brokerage fees, finder's fees, agent's commissions or other similar forms of compensation in connection with this Agreement or the Arrangement except as disclosed in the Information Circular;

 

	
  

	
(r)

	
there are no known or anticipated material liabilities of Canadian Zinc or CZN Sub of any kind whatsoever (including absolute, accrued or contingent liabilities) nor any commitments whether or not determined or determinable, in respect of which Canadian Zinc or CZN Sub is or may become liable other than the liabilities disclosed on, reflected in or provided for in the financial statements referred to in paragraph (j) and (k) of this Section 3.1 or to be reflected in the Information Circular or incurred in the ordinary course of business;

 

	
  

	
(s)

	
the corporate records and minute books of Canadian Zinc as required to be maintained by it under the laws of its jurisdiction of incorporation or continuation contain complete and accurate minutes of all meetings of its directors, any committees of the board of directors and shareholders held and all resolutions consented to in writing;

 

	
  

	
(t)

	
Canadian Zinc owns good and marketable title to its properties and assets free and clear of any and all mortgages, liens, pledges, charges, security interests, encumbrances, actions, claims or demands of any nature whatsoever or howsoever arising which would have a materially adverse effect on the properties or assets of Canadian Zinc, except the security interests registered in the Personal Property Registry of British Columbia;

 

	
  

	
(u)

	
Canadian Zinc maintains, with financially sound and reputable insurers, insurance with respect to its business and assets, in such amounts and against such liabilities, casualties, risks and contingencies existing from time to time as is customary for prudent owners and operators of similar businesses and similar property.  The policies for such insurance are in full force and effect and the premiums for all such policies of insurance have been duly paid and accordingly such policies are in good standing;

 

	
  

	
(v)

	
Canadian Zinc has duly filed all Tax Returns required to be filed by it and has paid or withheld all Taxes which are due and payable or required to be withheld, and has paid all assessments and reassessments, and all other Taxes due and payable on or before the date hereof; adequate provision has been made for Taxes payable for the current period for which Tax Returns are not yet required to be filed; there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any Tax Return by, or payment of any Tax against Canadian Zinc; there are no actions, suits, proceedings, investigations or claims commenced or, to the best knowledge of Canadian Zinc, threatened or contemplated against Canadian Zinc in respect of Taxes, or any matters under discussion with any governmental authority relating to Taxes, asserted by any such authority;

 

 

  

  

  

 

 

	
  

	
(w)

	
Canadian Zinc is not in default under and, to the best knowledge of Canadian Zinc, there exists no event, condition or occurrence which, after notice or lapse of time or both, would constitute a default by Canadian Zinc under any contract, agreement or licence that is material to the conduct of the business of Canadian Zinc to which it is a party or by which it is bound;

 

	
  

	
(x)

	
Canadian Zinc is in compliance in all material respects with each material license and permit held by it and is not in any material respect in violation of, or default under, the applicable statutes, ordinances, rules, regulations, orders or decrees (including, without limitation, Environmental Laws (as defined below)) of any governmental entities, regulatory agencies or bodies having, asserting or claiming jurisdiction over it or over any part of its operations or assets;

 

	
  

	
(y)

	
Canadian Zinc, to the best of its knowledge: (i) is in material compliance with any and all applicable foreign, federal, provincial, state and local laws and regulations relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants ("Environmental Laws"); (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business as currently conducted; (iii) is in material compliance with all terms and conditions of each such permit, license or approval; (iv) confirms that there have been no past, and to the best knowledge of Canadian Zinc, there are no pending or threatened claims, complaints, notices or requests for information received by Canadian Zinc with respect to any alleged material violation of any Environmental Law which would reasonably be expected to cause a Material Adverse Effect on Canadian Zinc; and (v) confirms that, to the best knowledge of Canadian Zinc, no conditions exist at, on or under any property now or previously owned, leased or occupied by Canadian Zinc which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law that would reasonably be expected to cause a Material Adverse Effect on Canadian Zinc, except for compliance investigations conducted in the normal course by any Governmental Authority;

 

	
  

	
(z)

	
neither Canadian Zinc, nor to the best of its knowledge, any other person, has ever caused or permitted hazardous or toxic waste to be placed, held, located or disposed of on, under or at any lands or premises owned, leased or occupied by Canadian Zinc otherwise than in compliance with applicable Environmental Laws and no notice has been received by Canadian Zinc of any action or potential liability in respect thereof and, to the best knowledge of Canadian Zinc, no civil, criminal or enforcement actions or complaints in respect thereof are threatened, pending or have been commenced against Canadian Zinc which, if successful, would reasonably be expected to have a Material Adverse Effect on Canadian Zinc;

 

	
  

	
(aa)

	
in the ordinary course of the permitting and environmental assessment process regarding its Prairie Creek property, Canadian Zinc has commissioned various ongoing environmental studies;

 

	
  

	
(bb)

	
Canadian Zinc has filed with the securities commission or securities regulatory authority in each of British Columbia, Alberta, Ontario and Quebec all of the technical reports required to be filed under National Instrument 43-101 in respect of each property material to Canadian Zinc and all public disclosure made by Canadian Zinc regarding its properties complies with the requirements of National Instrument 43-101;

 

 

  

  

  

 

 

	
  

	
(cc)

	
Canadian Zinc has not withheld from Messina any material information or documents concerning Canadian Zinc or its assets or liabilities during the course of Messina's review of Canadian Zinc and its properties;

 

	
  

	
(dd)

	
the Canadian Zinc Shares are registered pursuant to Section 12(g) of the U.S. Exchange Act, and Canadian Zinc has timely filed or furnished, as applicable, all reports required to be filed or furnished, as applicable, by Canadian Zinc under Section 13 of the U.S. Exchange Act;

 

	
  

	
(ee)

	
Canadian Zinc is not registered or required to be registered as an "investment company" pursuant to the provisions of the United States Investment Company Act of 1940, as amended; and

 

	
  

	
(ff)

	
none of the representations, warranties or statements of fact made in this Section contains any untrue statement of a material fact or omits to state any material fact necessary to make any such warranty or representation not misleading.

 

Representations and Warranties of Messina

 

	
  

	
3.2

	
As at the date of this Agreement and as at the Closing Date, Messina represents and warrants to the other parties, and acknowledges that the other parties are relying thereon, as follows:

 

	
  

	
(a)

	
Messina is a company duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation, continuance or amalgamation and has the corporate power to own or lease its property and assets and to carry on its business as now conducted by it, is duly licensed or qualified as a foreign corporation in each jurisdiction in which the character of the property and assets now owned by it or the nature of its business as now conducted by it requires it to be so licensed or qualified (save where failure to have such licence or qualification is not in the aggregate material);

 

	
  

	
(b)

	
Messina has the corporate power to enter into this Agreement and, subject to obtaining the requisite approvals contemplated hereby, to carry out its obligations hereunder;

 

	
  

	
(c)

	
the execution and delivery by Messina of this Agreement and the performance by Messina of its obligations hereunder and the completion of the transactions contemplated hereby, do not and will not:

 

	
  

	
(i)

	
result in a violation, contravention or breach of or constitute a default under, or entitle any party to terminate, accelerate, modify or call any obligations or rights under, require any consent to be obtained under or give rise to any termination rights under any provision of:

 

(A)           the constating documents of Messina,

 

(B)           any applicable law or the rules or policies of the TSXV, or

 

	
  

	
(C)

	
any credit agreement, note, bond, mortgage, indenture, deed of trust, lease, franchise, concession, easement, contract, agreement, licence, permit or other instrument to which Messina is bound or is subject to or of which Messina is the beneficiary;

 

 

  

  

  

 

 

	
  

	
(ii)

	
cause any indebtedness owing by Messina to come due before its stated maturity or cause any available credit to cease to be available which would, individually or in the aggregate, have a Material Adverse Effect on Messina;

 

	
  

	
(iii)

	
result in the imposition of any encumbrance upon any of the property or assets of Messina or give any person the right to acquire any of Messina's assets, or restrict, hinder, impair or limit the ability of Messina to conduct the business of Messina as and where it is now being conducted which would, individually or in the aggregate, have a Material Adverse Effect on Messina; or

 

	
  

	
(iv)

	
result in or accelerate the time for payment or vesting of, or increase the amount of any severance, unemployment compensation, "golden parachute", bonus, termination payments or otherwise, becoming due to any director or officer of Messina or increase any benefits otherwise payable under any pension or benefits plan of Messina or result in the acceleration of the time of payment or vesting of any such benefits.

 

	
  

	
(d)

	
as of the date hereof:

 

	
  

	
(i)

	
the authorized capital of Messina consists of an unlimited number of common shares and a total of 15,583,112 Messina Shares are issued and outstanding; and

 

	
  

	
(ii)

	
except for:

 

	
  

	
(A)

	
the outstanding Messina Options exercisable to acquire up to 815,000 Messina Shares; and

 

	
  

	
(B)

	
Messina Warrants exercisable to acquire up to 780,000 Messina Shares, of which warrants exercisable to acquire 280,000 Messina Shares will have been cancelled prior to the Effective Date,

 

Messina has no obligation, and is not party to any agreement requiring it, to issue any securities to any person, and Messina has no options, warrants or other convertible securities issued or outstanding which entitle the holder to purchase Messina Shares or any other securities of Messina up to the Effective Date of the Arrangement;

 

	
  

	
(e)

	
there are no actions, suits or proceedings, pending or, to the best knowledge of Messina, threatened against or affecting Messina, or any of its principals, at law or in equity, or before or by any federal, provincial, state, municipal or other governmental department, commission, board, bureau or agency, domestic or foreign, and is not aware of any existing grounds on which any such action, suit or proceeding might be commenced with any reasonable likelihood of success against Messina;

 

	
  

	
(f)

	
this Agreement has been duly authorized, executed and delivered by Messina and constitutes a legal, valid and binding obligation, enforceable against it in accordance with its terms subject to bankruptcy, insolvency and other applicable laws affecting creditors' rights generally and to general principles of equity;

 

	
  

	
(g)

	
Messina is a "reporting issuer" within the meaning of the securities laws of British Columbia and Alberta, has no securities law reporting requirements under any other jurisdiction, is not on a list of defaulting issuers maintained by the securities commissions in these jurisdictions and no regulatory authority having jurisdiction has issued any order preventing or suspending trading of any securities of Messina which is currently outstanding;

 

 

  

  

  

 

 

	
  

	
(h)

	
the latest audited financial statements of Messina for the year ended September 30, 2012 are true and correct in every material respect, and have been prepared on a consolidated basis in accordance with Canadian generally accepted accounting principles, including International Financial Reporting Standards, and fairly reflect the consolidated financial position of Messina as at the date of such financial statements and the results of its operations for the period then ended and have been prepared in accordance with accounting principles generally accepted in Canada;

 

	
  

	
(i)

	
the unaudited financial statements of Messina for the interim period ended June 30, 2013 to be disclosed in the Information Circular are true and correct in every material respect, and have been prepared on a consolidated basis in accordance with Canadian generally accepted accounting principles, including International Financial Reporting Standards, and fairly reflect the financial position of Messina as at the date of such financial statements and the results of its operations for the period then ended and have been prepared in accordance with accounting principles generally accepted in Canada;

 

	
  

	
(j)

	
since June 30, 2013, except as disclosed by Messina in the Messina Public Record:

 

	
  

	
(i)

	
Messina has conducted its business only in the ordinary and regular course of business consistent with past practice;

 

	
  

	
(ii)

	
Messina has not incurred or suffered a Material Adverse Change;

 

	
  

	
(iii)

	
there has not been any acquisition or sale by Messina of any material property or assets thereof;

 

	
  

	
(iv)

	
other than in the ordinary and regular course of business consistent with past practice, there has not been any incurrence, assumption or guarantee by Messina of any debt for borrowed money, any creation or assumption by Messina of any encumbrance, any making by Messina of any loan, advance or capital contribution to or investment in any other person or any entering into, amendment of, relinquishment, termination or non-renewal by Messina of any contract, agreement, licence, lease transaction, commitment or other right or obligation which would, individually or in the aggregate, have a Material Adverse Effect on Messina;

 

	
  

	
(v)

	
Messina has not declared or paid any dividends or made any other distribution on any of the Messina Shares;

 

	
  

	
(vi)

	
Messina has not effected or passed any resolution to approve a split, consolidation or reclassification of any of the outstanding Messina Shares;

 

	
  

	
(vii)

	
Messina has not changed or amended its constating documents;

 

	
  

	
(viii)

	
other than in the ordinary and regular course of business consistent with past practice, there has not been any material increase in or modification of the compensation payable to or to become payable by Messina to any of its directors, officers, employees or consultants or any grant to any such director, officer, employee or consultant of any increase in severance or termination pay or any increase or modification of any bonus, pension, insurance or benefit arrangement (including, without limitation, the granting of Messina Options) made to, for or with any of such directors or officers;

 

 

  

  

  

 

 

	
  

	
(ix)

	
Messina has not effected any material change in its tax election or accounting methods, principles or practices; and

 

	
  

	
(x)

	
Messina has not adopted any, or materially amended any, collective bargaining agreement, bonus, pension, profit sharing, stock purchase, stock option or other benefit plan or shareholder rights plan;

 

	
  

	
(k)

	
the statements set forth in the documents filed with securities and regulatory authorities (including exchanges and markets) under the securities legislation in the jurisdictions in which it is a reporting issuer (the "Messina Public Record")  are true, correct and complete and do not contain any misrepresentation as of the dates on which they were made, except where the failure to comply strictly with certain form requirements would not have a Material Adverse Effect on Messina, and Messina has not filed any confidential material change reports which currently remain confidential or similar reports and, to the best of its knowledge, Messina has filed with all applicable securities and regulatory authorities (including exchanges and markets) all information and documents required to be filed with such authorities;

 

	
  

	
(l)

	
the Messina Shares trade on the TSXV and, to the best of its knowledge, Messina is in compliance with all rules, regulations and policies of the TSXV in all material respects;

 

	
  

	
(m)

	
to the best of its knowledge, Messina is not in default in any material respect of any requirement of any applicable securities laws or regulatory authority having jurisdiction over any securities of Messina;

 

	
  

	
(n)

	
Messina is not subject to any cease trade or other order of any applicable stock exchange or securities regulatory authority and, to the best knowledge of Messina, no investigation or other proceedings involving Messina that may operate to prevent or restrict trading of any securities of Messina are currently in progress, pending or threatened before any applicable stock exchange or securities regulatory authority;

 

	
  

	
(o)

	
the description of the business of Messina, its financial condition, assets and properties in the Information Circular will not contain any untrue statement of a material fact or omit to state any material fact necessary to make such description not misleading and will contain all information required by all applicable securities laws and the rules of the TSXV;

 

	
  

	
(p)

	
Messina has not incurred any liability for brokerage fees, finder's fees, agent's commissions or other similar forms of compensation in connection with this Agreement or the Arrangement except as disclosed in the Information Circular;

 

	
  

	
(q)

	
there are no known or anticipated material liabilities of Messina of any kind whatsoever (including absolute, accrued or contingent liabilities) nor any commitments whether or not determined or determinable, in respect of which Messina is or may become liable other than the liabilities disclosed on, reflected in or provided for in the financial statements referred to in paragraph (h) and (i) of this Section 3.2 or to be reflected in the Information Circular or incurred in the ordinary course of business;

 

 

  

  

  

 

 

	
  

	
(r)

	
Messina does not at present own shares in and is not a party to any agreement of any nature to acquire any shares in any other corporation or entity and is not a party to any agreement to acquire or lease any other business operations;

 

	
  

	
(s)

	
the corporate records and minute books of Messina as required to be maintained by it under the laws of its jurisdiction of incorporation or continuation are up to date and contain complete and accurate minutes of all meetings of its directors, any committees of the board of directors and shareholders held and all resolutions consented to in writing;

 

	
  

	
(t)

	
Messina owns good and marketable title to its properties and assets free and clear of any and all mortgages, liens, pledges, charges, security interests, encumbrances, actions, claims or demands of any nature whatsoever or howsoever arising which would have a materially adverse effect on the properties or assets of Messina except as disclosed in the Information Circular;

 

	
  

	
(u)

	
as of the date hereof, Messina has no employees and two consultants. Messina:

 

	
  

	
(i)

	
is not a party to any written or oral policy, agreement, obligation or understanding providing for severance or termination payments to, or any employment or consulting agreement with, any director or officer of Messina that would be triggered by Messina entering into this Agreement or the completion of the Arrangement;

 

	
  

	
(ii)

	
does not have any employee or consultant whose employment or contract with Messina cannot be terminated by Messina following completion of the Arrangement; and

 

	
  

	
(iii)

	
(A) is not a party to any collective bargaining agreement, (B) is not, to the best knowledge of Messina, subject to any application for certification or threatened or apparent union-organizing campaigns for employees not covered under a collective bargaining agreement, or (C) is not subject to any current, or to the best knowledge of Messina, pending or threatened strike or lockout;

 

	
  

	
(v)

	
Messina has complied, in all material respects, with all of the terms of the employee compensation and benefit obligations of Messina, including the provisions of any collective agreements, funding and investment contracts or obligations applicable thereto, arising under or relating to each of the employee compensation or benefit plans, agreements, policies, programs, arrangements or practices, whether written or oral, which are maintained by or binding upon Messina, other than such non-compliance that would not reasonably be expected to have a Material Adverse Effect on Messina. Messina does not have any employee compensation or benefit plans, agreement, policies, programs, arrangements or practices, whether written or oral other than Messina Option Plan, pursuant to which the Messina Options have been granted.  Messina has not sponsored or participated in any pension or retirement income plan;

 

	
  

	
(w)

	
Messina has duly filed all Tax Returns required to be filed by it and has paid or withheld all Taxes which are due and payable or required to be withheld, and has paid all assessments and reassessments, and all other Taxes due and payable on or before the date hereof; adequate provision has been made for Taxes payable for the current period for which Tax Returns are not yet required to be filed; there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any Tax Return by, or payment of any Tax against Messina; there are no actions, suits, proceedings, investigations or claims commenced or to the best knowledge of Messina, threatened or contemplated against Messina in respect of Taxes or any matters under discussion with any governmental authority relating to Taxes asserted by any such authority;

 

 

  

  

  

 

 

	
  

	
(x)

	
Messina is not in default under and, to the best knowledge of Messina, there exists no event, condition or occurrence which, after notice or lapse of time or both, would constitute a default by Messina under any contract, agreement or licence that is material to the conduct of the business of Messina to which it is a party or by which it is bound;

 

	
  

	
(y)

	
Messina is in compliance in all material respects with each material license and permit held by it and is not in any material respect in violation of, or default under, the applicable statutes, ordinances, rules, regulations, orders or decrees (including, without limitation, Environmental Laws) of any governmental entities, regulatory agencies or bodies having, asserting or claiming jurisdiction over it or over any part of its operations or assets;

 

	
  

	
(z)

	
Messina, to the best of its knowledge: (i) is in material compliance with any and all applicable Environmental Laws; (ii) has received all permits, licenses or other approvals required of it under applicable Environmental Laws to conduct its business as currently conducted; (iii) is in material compliance with all terms and conditions of each such permit, license or approval; (iv) confirms that there have been no past, and, to the best knowledge of Messina, there are no pending or threatened claims, complaints, notices or requests for information received by Messina with respect to any alleged material violation of any Environmental Law which would reasonably be expected to cause a Material Adverse Effect on Messina; and (v) confirms that no conditions exist at, on or under any property now or previously owned, leased or occupied by Messina which, with the passage of time, or the giving of notice or both, would give rise to liability under any Environmental Law that would reasonably be expected to cause a Material Adverse Effect on Messina, except for compliance investigations conducted in the normal course by any Governmental Authority;

 

	
  

	
(aa)

	
neither Messina, nor to the best of its knowledge, any other person, has ever caused or permitted hazardous or toxic waste to be placed, held, located or disposed of on, under or at any lands or premises owned, leased or occupied by Messina otherwise than in compliance with applicable Environmental Laws and no notice has been received by Messina of any action or potential liability in respect thereof and, to the best knowledge of Messina, no civil, criminal or enforcement actions or complaints in respect thereof are threatened, pending or have been commenced against Messina which, if successful, would reasonably be expected to have a Material Adverse Effect on Messina;

 

	
  

	
(bb)

	
there are no environmental audits, evaluations, assessments, studies or tests that were commissioned by Messina respecting the business, operations, properties or facilities of Messina;

 

	
  

	
(cc)

	
Messina has filed with the securities commission in each of British Columbia and Alberta all of the technical reports required to be filed under National Instrument 43-101 in respect of each property material to Messina and all public disclosure made by Messina regarding its properties complies in all material respects with the requirements of National Instrument 43-101;

 

 

  

  

  

 

 

	
  

	
(dd)

	
as at the date hereof, there has not been a material change to Messina's working capital since June 30, 2013 and Messina has not entered into any agreements, and is not otherwise committed, to expend more than $50,000 in each calendar month commencing with September, 2013 and each calendar month thereafter up to and including December, 2013, other than the commitments to incur expenditures on Messina's current activities or transaction costs in respect of the transactions contemplated by this Agreement;

 

	
  

	
(ee)

	
the only votes of the holders of any class or series of the Messina Shares, Messina Options, Messina Warrants or other securities of Messina necessary to approve this Agreement and the Arrangement and the transactions contemplated hereby or thereby is, subject to the Interim Order, the approval of the Arrangement by 662⁄3 of the votes cast by Messina Shareholders in person or by proxy at the Messina Meeting (which may include, as a separate tabulation, the "minority approval" required by Multilateral Instrument 61-101, Protection of Minority Security Holders in Special Transactions, excluding the votes of Canadian Zinc);

 

	
  

	
(ff)

	
to Messina’s knowledge, Messina (i) is a Foreign Private Issuer (as defined in the U.S. Exchange Act) (ii) has no class of securities outstanding that is or is required to be registered under Section 12 of the U.S. Exchange Act or that is subject to the reporting requirements of Section 13 or 15(d) of the U.S. Exchange Act, and (iii) is not registered or required to register as an “investment company” pursuant to the provisions of the United States Investment Company Act of 1940, as amended;

 

	
  

	
(gg)

	
Messina has not withheld from Canadian Zinc any material information or documents concerning Messina or its assets or liabilities during the course of Canadian Zinc's review of Messina and its properties; and

 

	
  

	
(hh)

	
none of the representations, warranties or statements of fact made in this Section 3.2 contains any untrue statement of a material fact or omits to state any material fact necessary to make any such warranty or representation not misleading.

 

	
4.

	
COVENANTS

 

Covenants of Canadian Zinc and CZN Sub

 

	
  

	
4.1

	
Each of Canadian Zinc and CZN Sub hereby covenants and agrees that it shall take such steps and do all such other acts and things, as may be necessary or desirable in order to give effect to the transactions contemplated by this Agreement (including making all necessary filings under corporate and securities laws), subject to regulatory and, if necessary, shareholder approval, and, without limiting the generality of the foregoing, shall:

 

	
  

	
(a)

	
use its commercially reasonable best efforts to, prior to the completion of the Arrangement, obtain conditional listing on the TSX of the Canadian Zinc Shares to be issued pursuant to the Arrangement;

 

	
  

	
(b)

	
use its best efforts to ensure that the Information Circular shall contain, to the extent required by applicable securities laws, prospectus-level disclosure respecting Canadian Zinc and CZN Sub and the information and consolidated financial statements related to Canadian Zinc and CZN Sub and the pro forma financial statements to be contained in the Information Circular, if any, shall be true, correct and complete in all material respects and shall not contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances in which they are made and shall comply with applicable securities laws and the rules of the TSX;

 

 

  

  

  

 

 

	
  

	
(c)

	
obtain all required certifications and consent of the auditors of Canadian Zinc in respect of the Canadian Zinc financial statements to be provided in the Information Circular;

 

	
  

	
(d)

	
make arrangements for the prompt delivery of certificates representing Canadian Zinc Shares to the registered Messina Shareholders, as provided in the Plan of Arrangement; and

 

	
  

	
(e)

	
promptly notify Messina if at any time it becomes aware that the Information Circular contains any material misrepresentation or otherwise requires an amendment or supplement to the Information Circular or any related application and promptly deliver written notice to Messina setting out full particulars thereof.  In any such event, Canadian Zinc and CZN Sub shall cooperate with Messina in the preparation of any required supplement or amendment to the Information Circular or such other document, as the case may be.

 

Covenants of Messina

 

	
  

	
4.2

	
Messina shall take such steps and to do all such other acts and things, as may be necessary or desirable in order to give effect to the transactions contemplated by this Agreement and, without limiting the generality of the foregoing, shall:

 

	
  

	
(a)

	
use its commercially reasonable best efforts to apply for and obtain such consents, orders or approvals as counsel for Canadian Zinc may advise are necessary or desirable for the implementation of the Arrangement and, without limiting the generality of the foregoing, to:

 

	
  

	
(i)

	
apply for and obtain the Interim Order and the Final Order as provided in Section 2.3 hereof; and

 

	
  

	
(ii)

	
obtain written consents, in a form acceptable to Canadian Zinc, acting reasonably, from any persons who are parties to agreements with Messina where consents to the transactions contemplated by the Arrangement are required under those contracts or agreements;

 

	
  

	
(b)

	
as soon as reasonably practicable, prepare and file the Information Circular in all jurisdictions where the same is required in accordance with applicable law and provide the same to the  Messina Shareholders in accordance with the requirements of applicable securities regulatory authorities;

 

	
  

	
(c)

	
use its best efforts to ensure that the Information Circular shall contain, to the extent required by applicable securities laws, prospectus-level disclosure respecting Messina and the information and consolidated financial statements related to Messina contained in the Information Circular and any related documentation regarding Messina to be distributed in connection with the solicitation of proxies by the management of Messina in connection with the Messina Meeting shall be true, correct and complete in all material respects and shall not contain any untrue statement of any material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading in light of the circumstances in which they are made and shall comply with applicable securities laws and the rules of the TSXV;

 

 

  

  

  

 

 

	
  

	
(d)

	
obtain all required certifications and consents of the auditors of Messina in respect of the Messina financial statements to be provided in the Information Circular;

 

	
  

	
(e)

	
convene and use commercially reasonable best efforts to hold the Messina Meeting in accordance with the Interim Order for the purpose of considering the special resolutions to approve the Arrangement;

 

	
  

	
(f)

	
subject to the terms of this Agreement:

 

	
  

	
(i)

	
use commercially reasonable efforts to solicit proxies in favour of the Arrangement;

 

	
  

	
(ii)

	
recommend to the Messina Shareholders that they vote in favour of the Arrangement; and

 

	
  

	
(iii)

	
not withdraw, modify, qualify or change in a manner adverse to Canadian Zinc, or publicly state that it intends to withdraw, modify, qualify or change in a manner adverse to Canadian  Zinc such recommendation except, in each case, as expressly permitted by this Agreement;

 

	
  

	
(g)

	
not dispose of an interest in any of its material properties or otherwise enter into any material transaction with, or incur any material liability to, any other corporation or person or agree to do any of the foregoing or perform any act or enter into any transaction or negotiation which interferes or is inconsistent with the completion of the transactions contemplated hereby, other than as contemplated in this Agreement, without the written consent of Canadian Zinc thereto;

 

	
  

	
(h)

	
at Closing, have:

 

	
  

	
(i)

	
an authorized capital of an unlimited number of common shares without par value of which 15,583,112 Messina Shares will be duly issued and outstanding as fully paid and non-assessable; and

 

	
  

	
(ii)

	
1,315,000 Messina Shares issuable on exercise of all outstanding Messina Options and Messina Warrants and no Messina Shares otherwise issuable;

 

save as may be altered by the exercise of outstanding Messina Options or Messina Warrants;

 

	
  

	
(i)

	
not, between the date of this Agreement and the Closing Date:

 

	
  

	
(i)

	
incur any significant expenses or liabilities otherwise than in the ordinary course of its business or in connection with its obligations under this Agreement;

 

	
  

	
(ii)

	
alter its authorized capital nor issue (other than on exercise of presently outstanding convertible securities), nor reach any agreement or understanding with any other party to issue, any securities; or

 

	
  

	
(iii)

	
appoint any directors or officers or adopt, establish, enter into or implement any new employee benefit plan, policy, severance or termination agreement providing for any form of benefits or other compensation to any former, present or future director, officer or employee of Messina or amend any employee benefit plan, policy, severance or termination agreement;

 

 

  

  

  

 

 

except as otherwise provided herein or with the prior written consent of Canadian Zinc, such consent not to be unreasonably withheld; and

 

	
  

	
(j)

	
concurrently with the execution of this Agreement, deliver to Canadian Zinc a lock-up agreement in support of the Plan of Arrangement in form and substance acceptable to Canadian Zinc executed by each director of Messina, namely, Peter Tallman, Gary McDonald, Steven Brunelle and John Pallot.

 

	
5.

	
CONDITIONS PRECEDENT

 

Mutual Conditions Precedent

	
  

	
5.1

	
The parties' obligations to complete the transactions contemplated in this Agreement are subject to satisfaction of the following conditions on or before the Closing Date:

 

	
  

	
(a)

	
all necessary approvals of Messina Shareholders by the requisite majorities will have been obtained in respect of the Arrangement;

 

	
  

	
(b)

	
all necessary orders of the Court with respect to the Arrangement will have been obtained;

 

	
  

	
(c)

	
all other consents, orders, regulations and approvals, including regulatory and judicial approvals and orders, necessary for the completion of the transactions provided for in this Agreement and the Plan of Arrangement shall have been obtained or received from the persons, authorities or bodies having jurisdiction in the circumstances;

 

	
  

	
(d)

	
there shall not be in force any order or decree restraining or enjoining the consummation of the transactions contemplated by this Agreement or the Arrangement;

 

	
  

	
(e)

	
Messina and Canadian Zinc shall each be satisfied, acting reasonably, that the issuance of the Canadian Zinc Shares pursuant to the Arrangement will not require registration under the U.S. Securities Act, pursuant to the Section 3(a)(10) Exemption, and will not require registration pursuant to applicable state securities law exemptions; and

 

	
  

	
(f)

	
the issue of Canadian Zinc Shares pursuant to the Arrangement, and the issue of Canadian Zinc Shares following the Effective Date on exercise of Messina Options or Messina Warrants, will be exempt from the registration and prospectus requirements of applicable securities laws in each of the provinces and territories of Canada in which holders of securities of Messina are resident.

 

Conditions solely for the benefit of Canadian Zinc

	
  

	
5.2

	
The obligations of Canadian Zinc to complete the transactions contemplated in this Agreement are subject to satisfaction of the following conditions on or before the Closing Date:

 

	
  

	
(a)

	
no Material Adverse Change will have occurred in the business, affairs, financial condition or operations of Messina;

 

	
  

	
(b)

	
Dissent Rights to the Arrangement shall not have been exercised prior to the Effective Date by registered Messina Shareholders representing in the aggregate 5% or more of the total number of Messina Shares outstanding at such time;

 

 

  

  

  

 

 

	
  

	
(c)

	
Messina shall not have disposed of an interest in any of its properties or otherwise have entered into any material transaction with, or have incurred any material liability to, any other corporation or person or have agreed to do any of the foregoing or have performed any act or have entered into any transaction or negotiation which interferes or is inconsistent with the completion of the transactions contemplated hereby, other than as contemplated in this Agreement, without the consent of Canadian Zinc thereto, such consent not to be unreasonably withheld;

 

	
  

	
(d)

	
Canadian Zinc shall have received a certificate of a senior officer of Messina confirming that the representations and warranties of Messina set out in Section 3.2 are true and correct in all material respects on and as of Closing; and

 

	
  

	
(e)

	
Canadian Zinc shall have received a certificate of a senior officer of Messina confirming that the covenants of Messina set out in Section 4.2 have been completed and complied with as at the Closing Date.

 

The foregoing conditions in this Section 5.2 are inserted for the exclusive benefit of Canadian Zinc and may be waived by it in whole or in part at any time.

Conditions solely for the benefit of Messina

	
  

	
5.3

	
The obligations of Messina to complete the transactions contemplated in this Agreement are subject to satisfaction of the following conditions on or before the Closing Date:

 

	
  

	
(a)

	
no Material Adverse Change will have occurred in the business, affairs, financial condition or operations of Canadian Zinc or CZN Sub;

 

	
  

	
(b)

	
the shares of Canadian Zinc to be issued pursuant to the Arrangement will be listed or conditionally listed subject to standard conditions on the TSX and Canadian Zinc will be in compliance with all rules, regulations and policies of the TSX in all material respects;

 

	
  

	
(c)

	
Messina shall have received a certificate of a senior officer of Canadian Zinc confirming that the representations and warranties of Canadian Zinc set out in Section 3.1 are true and correct in all material respects on and as of Closing;

 

	
  

	
(d)

	
Messina shall have received a certificate of a senior officer of Canadian Zinc confirming that the covenants of Canadian Zinc and CZN Sub set out in Section 4.1 have been completed and complied with as at the Closing Date;

 

	
  

	
(e)

	
the TSX shall have accepted the Arrangement and shall have conditionally approved the listing thereon of the shares of Canadian Zinc to be issued and issuable pursuant to the Arrangement which shares shall not be subject to statutory hold periods, subject to usual terms and conditions of the TSX;

 

	
  

	
(f)

	
each director and officer of Messina shall have received an executed release from Canadian Zinc and CZN Sub, in form and substance satisfactory to Canadian Zinc, CZN Sub and Messina, each acting reasonably; and

 

	
  

	
(g)

	
the issue of Canadian Zinc Shares pursuant to the Arrangement will have been approved by all necessary corporate action to permit such shares to be issued as fully paid and non-assessable.

 

 

  

  

  

 

 

The foregoing conditions in this Section 5.3 are inserted for the exclusive benefit of Messina and may be waived by it in whole or in part at any time.

	
6.

	
AMENDMENT, CLOSING AND TERMINATION

 

Amendment

 

	
  

	
6.1

	
This Agreement and the Plan of Arrangement may, at any time and from time to time before 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 shareholders.  Without limiting the generality of the foregoing, any such amendment may:

 

	
  

	
(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 contained herein or any document to be delivered pursuant hereto;

 

	
  

	
(c)

	
waive compliance with or modify any of the covenants herein contained or waive or modify performance of any of the obligations of the parties hereto; or

 

	
  

	
(d)

	
amend the terms of Section 3.02 of the Plan of Arrangement and Subsections 5.1(a), (b), (c) and (d) of this Agreement and the sequence of transactions described in the Plan of Arrangement subject to any required approval of the Messina Shareholders, given in the same manner as required for the approval of the Arrangement or as may be ordered by the Court.

 

	
  

	
6.2

	
This Agreement and the Plan of Arrangement hereto 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 5.1, 5.2, 5.3, 6.1, 6.2 and 6.4 shall remain unaffected.

 

Closing

	
  

	
6.3

	
The completion of the Arrangement (the "Closing") will be at the offices of DuMoulin Black LLP, 595 Howe Street, 10th Floor, Vancouver, British Columbia, V6C 2T5, on or about December 19, 2013 (the "Closing Date"), or such other place or date as may be mutually agreed by the parties, provided it is not later than January 31, 2014.  At the Closing, the parties will exchange documents to effect the Closing including documents to confirm the matters set out in the Plan of Arrangement and to complete the Arrangement and related matters as contemplated hereby.

 

Termination

	
  

	
6.4

	
This Agreement shall terminate:

 

	
  

	
(a)

	
if the Arrangement has not been completed on or before January 31, 2014, at the election of any of the parties, provided the electing party has used commercially reasonable efforts to complete the Arrangement by such date;

 

	
  

	
(b)

	
in the event that the conditions are not satisfied or waived by the parties to whom they are of benefit prior to the Closing Date, or any earlier date contemplated herein, this Agreement will terminate and be of no further force or effect on January 31, 2014, or such earlier date;

 

 

  

  

  

 

 

	
  

	
(c)

	
by unanimous agreement of the parties hereto without any further action on the part of their respective shareholders;

 

	
  

	
(d)

	
upon the earlier of (i) the Messina Shareholders failing to approve the Arrangement at the Messina Meeting; and (ii) a final determination from the Court or an appeal court which denies the granting of the Final Order;

 

	
  

	
(e)

	
in the event of receipt by Messina of a Superior Proposal; or

 

	
  

	
(f)

	
if any applicable laws make the consummation of the Arrangement illegal or prohibited,

 

in each such case upon payment by Messina to Canadian Zinc of the Break Fee, if applicable, in accordance with Article 8 hereof (and if the Break Fee is not payable on the occurrence of such termination event, then this Agreement shall terminate on the occurrence of such termination event).

 

	
  

	
6.5

	
The provisions of Article 7 will survive any termination under Section 6.4.

 

	
7.

	
INDEMNITY

 

Indemnification

 

	
  

	
7.1

	
Each party (the "Indemnifying Party") hereto undertakes with the other parties hereto (the "Indemnified Party") to hold the Indemnified Party fully and effectually indemnified from and against all losses, claims, damages, liabilities, actions or demands (including amounts paid in any settlement approved by the Indemnifying Party of any action, suit, proceeding or claim but excluding lost profits and consequential damages), to which such Indemnified Party may become subject insofar as such losses, claims, damages, liabilities, actions or demands arise out of or are based upon any breach of a representation, warranty, covenant or obligation of the Indemnifying Party contained in this Agreement or any certificate or notice delivered by it in connection herewith, and will reimburse such Indemnified Party for any legal or other expenses reasonably incurred by such Indemnified Party in connection with investigating or defending any such loss, claim, damage, liability, action or demand.

 

Defence

	
  

	
7.2

 

	
  

	
(a)

	
Promptly after receipt by an Indemnified Party of notice of a possible action, suit, proceeding or claim referred to in Section 7.1 hereof, such Indemnified Party, if a claim in respect thereof is to be made against the Indemnifying Party under such Section, shall provide the Indemnifying Party with written particulars thereof; provided that failure to provide the Indemnifying Party with such particulars shall not relieve such Indemnifying Party from any liability which it might have on account of the indemnity provided for in this Article 7 except insofar as such failure shall prejudice such Indemnifying Party.  The Indemnified Party shall also provide to the Indemnifying Party copies of all relevant documentation and, unless the Indemnifying Party assumes the defence thereof, shall keep such Indemnifying Party advised of the progress thereof and will discuss with the Indemnifying Party all significant actions proposed.

 

	
  

	
(b)

	
An Indemnifying Party shall be entitled, at its own expense, to participate in (and, to the extent that it may wish, to assume) the defence of any such action, suit, proceeding or claim but such defence shall be conducted by counsel of good standing approved by the Indemnified Party, such approval not to be unreasonably withheld.  Upon the Indemnifying Party notifying the Indemnified Party of its election so to assume the defence and retaining such counsel, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by it in connection with such defence other than for reasonable costs of investigation.  If such defence is assumed by the Indemnifying Party, it shall, through the course thereof, provide copies of all relevant documentation to the Indemnified Party, keep such Indemnified Party advised of the progress thereof and shall discuss with the Indemnified Party all significant actions proposed.  No Indemnifying Party shall enter into any settlement without the consent of the Indemnified Party, but such consent shall not be unreasonably withheld.  If such defence is not assumed by the Indemnifying Party, the Indemnifying Party shall not be liable for any settlement made without its consent, but such consent shall not be unreasonably withheld.

 

 

  

  

  

 

 

	
  

	
(c)

	
Notwithstanding the foregoing, an Indemnified Party shall have the right, at the Indemnifying Party's expense, to employ counsel of its own choice in respect of the defence of any such action, suit, proceeding or claim if (i) the employment of such counsel has been authorized by the Indemnifying Party in connection with such defence; or (ii) counsel retained by the Indemnifying Party or the Indemnified Party shall have advised the Indemnified Party that there may be legal defences available to it which are different from or in addition to those available to the Indemnifying Party (in which event and to that extent, the Indemnifying Party shall not have the right to assume or direct the defence on behalf of the Indemnified Party) or that there may be a conflict of interest between the Indemnifying Party and the Indemnified Party; or (iii) the Indemnifying Party shall not have assumed such defence and employed counsel therefor within a reasonable time after receiving notice of such action, suit, proceeding or claim.

 

Term

 

	
  

	
7.3

	
The obligations of each party hereto under this Article 7 shall terminate one year after the Arrangement is consummated, save with respect to all losses, claims, damages, liabilities, actions or demands notice of which is given to the Indemnifying Party by the Indemnified Party on or before one year from the date hereof in compliance with Section 7.2.

 

	
8.

	
NON-SOLICITATION AND BREAK FEE PAYMENT

 

	
  

	
8.1

	
Until the date of termination of this Agreement, Messina will not, directly or indirectly, through any officer, director, employee, shareholder, representative, counsel, advisor or agent, as the case may be, take or continue any action to solicit, initiate, assist, encourage or otherwise facilitate (including by way of furnishing information or entering into any form of agreement, arrangement or understanding or providing any other form of assistance) the initiation of any inquiries, submissions, proposals or offers from any person or entity other than Canadian Zinc (a "Third Party") relating to, and will not initiate, continue or otherwise participate in any discussions or negotiations with a Third Party regarding, or furnish to any Third Party any information with respect to, enter into any form of agreement, arrangement or understanding with any Third Party with respect to, or otherwise co-operate in any way with or assist or participate in, or facilitate or encourage any effort or attempt by, any Third Party with respect to:

 

	
  

	
(a)

	
the direct or indirect acquisition or disposition of all or, except in the ordinary course of business, any of Messina's securities, or

 

 

  

  

  

 

 

	
  

	
(b)

	
any amalgamation, merger, sale of all of Messina's assets or, except in the ordinary course of business, any part of Messina's assets, take-over bid, tender offer, plan of arrangement, issuer bid, reorganization, dividend or distribution, recapitalization, liquidation or winding-up of, or other business combination or similar transaction involving such Third Party, all of Messina's assets or, except in the ordinary course of business, any part of Messina's assets;

 

provided however that Messina shall not be prohibited from considering, discussing, negotiating or providing any information (including access to its management) to a Third Party in respect of a bona fide unsolicited proposal to Messina or its shareholders that the board of directors of Messina (after consultation with its financial advisors and having received advice of outside counsel that Messina's board of directors is required to consider the proposal in order to discharge its fiduciary duties) in good faith reasonably expects to be a Superior Proposal (as hereinafter defined), in which event Messina shall promptly notify Canadian Zinc of any inquiry or proposal that it receives that constitutes, or may reasonably be expected to lead to, such a proposal and shall promptly provide to Canadian Zinc a copy of any such written proposal received by it.  For a period of ten business days following receipt by Canadian Zinc of a copy of such proposal, Canadian Zinc shall be entitled to deliver to Messina a counter-proposal to such proposal.  In the event a Superior Proposal is accepted and recommended by its board of directors, Messina may terminate its obligations under this Agreement upon payment to Canadian Zinc of the Break Fee.

	
  

	
8.2

	
Subject to Sections 8.3, 8.4 and 8.5, the parties agree and acknowledge that each of them will bear responsibility for their own expenses and costs incurred and to be incurred by each of them in connection with the Arrangement including, without limitation, amounts paid or payable to financial advisors, auditors, legal counsel, printers, transfer agents, and other arm's length third parties that perform services on their behalf in connection with the negotiation of the Agreement, the Arrangement, the due diligence review conducted in connection with the Arrangement, the preparation and distribution of all necessary disclosure documents and other steps to implement the Arrangement.

 

	
  

	
8.3

	
Each of Messina and Canadian Zinc agrees and acknowledges that the Break Fee represents liquidated damages and a reasonable estimate of the expenses and costs incurred and to be incurred by Canadian Zinc in connection with the Arrangement including, without limitation, amounts paid or payable to financial advisors, auditors, legal counsel, printers, transfer agents, and other arm's length third parties that perform services on behalf of Canadian Zinc in connection with the negotiation of this Agreement and the Arrangement, the due diligence review conducted by Canadian Zinc in connection with the Arrangement, the preparation of this Agreement and related documents, and other steps to implement the Arrangement.

 

	
  

	
8.4

	
For the purposes of this Agreement, "Superior Proposal" means an unsolicited bona fide offer regarding the direct or indirect acquisition or disposition of all or any of Messina's securities, or any amalgamation, merger, sale of all of Messina's assets or, except in the ordinary course of business, any part of Messina's assets, take-over bid, tender offer, plan of arrangement, issuer bid, reorganization, dividend or distribution, recapitalization, liquidation or winding-up of, or other business combination or similar transaction involving Messina, all of Messina's assets or, except in the ordinary course of business, any part of Messina's assets or similar fundamental transaction involving Messina which the board of directors of Messina considers, in good faith, to be superior to the terms of the Arrangement and must be recommended to Messina's shareholders in order that the board of directors may discharge its fiduciary obligations.  Any good faith determination by the board of directors of Messina of a Superior Proposal shall only be made after consultation with its financial advisors and receipt by the board of directors of Messina of an opinion of outside counsel or advice of outside counsel that is reflected in the minutes of the board of directors of Messina to the effect that the failure to entertain and negotiate such a Superior Proposal or to furnish information concerning Messina to a third party in connection therewith could, in the particular circumstances, result in a finding that the directors had breached their fiduciary duties under applicable law.

 

 

  

  

  

 

 

	
  

	
8.5

	
Until the termination of this Agreement in accordance with its terms, Messina shall not change, release or modify any confidentiality or non-disclosure agreement executed by a Third Party. In addition, Messina shall immediately cease and cause to be terminated any existing solicitation, discussion, negotiations, encouragement or activity with any person (other than Canadian Zinc) with respect to any proposal of the nature described in Subsection 8.1(a) or (b), immediately close any data rooms made available to any Third Party and immediately request the return or destruction and certification of destruction of information previously provided to any Third Party in accordance with the terms of any such confidentiality or non-disclosure agreement executed by any Third Party.

 

	
  

	
8.6

	
Nothing contained in this Agreement shall prohibit or prevent Messina or its board of directors or officers from:  (a) making any disclosure of or in relation to an unsolicited proposal from a Third Party prior to the Effective Time if, in the good faith judgment of the board of directors, after consultation with outside legal counsel, such disclosure is necessary for the directors or officers of Messina to act in a manner consistent with their fiduciary duties or is otherwise required under applicable laws; (b) responding, within the time and in the manner required by applicable laws, to any unsolicited take-over bid or tender or exchange offer made for Messina Shares or any other securities of Messina; or (c) taking any other action in relation to an unsolicited proposal from a Third Party to the extent required under applicable securities laws or orders or otherwise mandated by any governmental entity.

 

	
  

	
8.7

	
In the event that:

 

	
  

	
(a)

	
this Agreement is terminated by Messina pursuant to Subsection 6.4(e) in respect of a Superior Proposal;

 

	
  

	
(b)

	
this Agreement is not approved by the Messina Shareholders or by the Court pursuant to Subsection 6.4(d); or

 

	
  

	
(c)

	
for any other reason, the Arrangement is not completed (other than through the failure of Canadian Zinc or CZN Sub to satisfy any conditions or perform any covenants provided for in this Agreement, or in the event of a termination pursuant to Subsection 6.4(c) or 6.4(f) or a termination by Canadian Zinc pursuant to Subsection 6.4(a) or 6.4(b),

 

Messina shall pay to Canadian Zinc, within one business day following such event, a fee equal to $150,000 (the "Break Fee") in immediately available funds.

 

	
9.

	
ORDINARY COURSE

 

	
  

	
9.1

	
Until the earlier of the Closing and the termination of this Agreement without completion of the Arrangement, Messina will not, without the prior written consent of Canadian Zinc, enter into any contract in respect of its business or assets, other than in the ordinary course of business, and Messina will continue to carry on its business and maintain its assets in the ordinary course of business, with the exception of reasonable costs incurred in connection with the Arrangement, and, without limitation, but subject to the above exceptions, will maintain payables and other liabilities at levels consistent with past practice and will not engage in any extraordinary material transactions or agree to do any of the foregoing or perform any act or enter into any transaction or negotiation which interferes or is inconsistent with the completion of the transactions contemplated hereby without the prior written consent of Canadian Zinc.

 

 

  

  

  

 

 

	
10.

	
PUBLIC DISCLOSURE AND CONFIDENTIALITY

 

	
  

	
10.1

	
No disclosure or announcement, public or otherwise, in respect of this Agreement or the transactions contemplated herein will be made by any party without the prior written agreement of the other parties as to timing, content and method, provided that the obligations herein will not prevent any party from making, after consultation with the other parties, such disclosure as its counsel advises is required by applicable laws or the rules and policies of the reporting jurisdictions of the party or of the TSX or the TSXV, as applicable.

 

	
  

	
10.2

	
Unless and until the transactions contemplated in this Agreement have been completed, except with the prior written consent of the other parties, each party and their respective employees, officers, directors, shareholders, agents, advisors and other representatives will hold all information received from the other parties in confidence, except such information and documents which (i) are or subsequently may become generally available to the public; (ii) are required to be disclosed by applicable law or the rules and policies of an applicable stock exchange; (iii) are available on a non-confidential basis prior to their disclosure to the other parties; (iv) become available to one party on a non-confidential basis from a source other than the other parties provided that such other source is, to the knowledge of such party, not bound by a confidentiality agreement with the other parties; (v) are independently developed; or (vi) were available to each party as a result of the relationship of the parties prior to the date hereof.

 

	
  

	
10.3

	
All such information in written form and documents will be returned to the party originally delivering them in the event that the transactions provided for in this Agreement are not completed.

 

	
11.

	
ASSIGNMENT

 

	
  

	
11.1

	
No party may assign its rights or obligations under this Agreement.

 

	
12.

	
WAIVER

 

	
  

	
12.1

	
Any waiver or release of any conditions of this Agreement, to be effective, must be in writing executed by the party for whom such condition is expressed by this Agreement to benefit.

 

	
13.

	
GENERAL

 

	
  

	
13.1

	
The covenants, representations and warranties contained herein will survive the Closing.

 

	
  

	
13.2

	
Time is of the essence herein.

 

	
  

	
13.3

	
Each party hereto will, from time to time, at the request of the other parties, do such further acts and execute and deliver all such further documents, agreements and instruments as will be reasonably required in order to fully perform and carry out the terms, conditions and intent of this Agreement.

 

	
  

	
13.4

	
All references to currency are references to Canadian dollars unless otherwise indicated.

 

	
  

	
13.5

	
The parties intend that this Agreement will be binding upon them until terminated.

 

 

  

  

  

 

 

	
  

	
13.6

	
Any notice to be given hereunder to the parties will be deemed to be validly given if delivered, or if sent by facsimile:

 

	 	if to Canadian Zinc or CZN Sub, to:
	 	 
	
 

 

 

	Suite 1710 – 650 West Georgia Street 

Vancouver, BC  V6B 4N9

Attention:  John F. Kearney

Facsimile No.: 604-688-2043

	 	 
	 	with a copy to:
	 	 
	 	DuMoulin Black LLP 

10th Floor, 595 Howe Street

Vancouver, BC  V6C 2T6

Attention:  J. Douglas Seppala

Facsimile No.: 604-687-8772

	 	 
	 	if to Messina, to:
	 	 
	 	300 – 1055 West Hastings Street 

Vancouver, BC  V6E 2E9

Attention:  Peter Tallman, President

Facsimile No.: 604-233-7971

	 	 
	 	with a copy to:
	 	 
	 	Jeffrey T.K. Fraser Law Corporation 

1710 – 1177 West Hastings Street

Vancouver, BC  V6E 2L3

Attention:  Jeffrey T.K. Fraser

Facsimile No.: 604-681-0139

 

and any such notice delivered on a business day in accordance with the foregoing will be deemed to have been received on the date of delivery or facsimile transmission.

	
  

	
13.7

	
This Agreement and the rights and obligations of the parties hereunder will be governed by and construed according to the laws of the Province of British Columbia.

 

	
  

	
13.8

	
This Agreement will enure to the benefit of and be binding upon the parties hereto and their successors.

 

	
  

	
13.9

	
This Agreement may be executed in any number of counterparts with the same effect as if all parties had signed the same document.  All of these counterparts will for all purposes constitute one agreement, binding on the parties, notwithstanding that all parties are not signatories to the same counterpart.  A fax transcribed copy or photocopy of this Agreement executed by a party in counterpart or otherwise will constitute a properly executed, delivered and binding agreement or counterpart of the executing party.

 

 

  

  

  

 

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the year and day set out on page 1 hereof.

 

	CANADIAN ZINC CORPORATION	 	 
	 	 	 
	Per: 	(Signed) "John F. Kearney"       	 	 
	Name:  	John F. Kearney 	 	 
	Title: 	President and Chief Executive Officer 	 	 
	 	 	 	 
	MESSINA MINERALS INC.	 	 
	 	 	 	 
	Per: 	(Signed) "Peter Tallman"        	 	 
	Name: 	Peter Tallman                 	 	 
	Title:	President and Chief Executive Officer        	 	 
	 	 	 	 
	0980829 B.C. LTD.	 	 
	 	 	 	 
	Per:  	(Signed) "John F. Kearney"          	 	 
	Name: 	John F. Kearney	 	 
	Title:	Directorexh4_11.htm

 

Exhibit 4.11

 

 

 

UNDERWRITING AGREEMENT

 

July 15, 2014

 

Canadian Zinc Corporation 

650 West Georgia Street, Suite 1710 

Vancouver, British Columbia 

V6B 4N9

 

Attention: John F. Kearney, Chairman, President and Chief Executive Officer 

 

Dear Sir:

 

Dundee Securities Ltd. (“Dundee”), Canaccord Genuity Corp. and Paradigm Capital Inc. (collectively, the "Underwriters") understand that Canadian Zinc Corporation (the "Company") proposes to issue and hereby offers to sell to the Underwriters (i) 28,572,000 units ("Units") of the Company (the "Offered Units") at a price of $0.35 per Unit (the “Unit Price”) for distribution to the public in accordance with the terms of this Agreement (as hereinafter defined), with each Unit consisting of one common share (a "Unit Share") of the Company and one half of one common share purchase warrant (each whole common share purchase warrant, a "Warrant") and with each Warrant entitling the holder to purchase one common share of the Company (a "Warrant Share") at a price of $0.50 per Warrant Share at any time on or before that date which is 36 months after the Closing Date (as defined below), and (ii) 13,160,000 common shares of the Company that each constitutes a “flow-through share” (the “Flow­Through Shares”) as defined in subsection 66(15) of the Tax Act (as hereinafter defined) at a price of $0.38 per Flow-Through Share (the “Flow-Through Share Price”) and that the Company will incur and thereafter renounce Qualifying Expenditures (as hereinafter defined) to the original purchasers of such Flow-Through Shares. The Warrants shall be issued under and in accordance with the terms and conditions of the Warrant Indenture (as hereinafter defined). The Offered Units and the Flow-Through Shares are hereby collectively referred to as the “Offered Securities”.

 

Based on the foregoing and upon and subject to the terms and conditions of this Agreement, the Underwriters hereby severally, and not jointly, nor jointly and severally, in their respective percentages set out in Section 8.1 of this Agreement, agree to purchase from the Company, or, in the case of the Flow-Through Shares, alternatively to arrange, as agent for the Company, for substituted eligible purchasers to purchase from the Company on the Closing Date (as hereinafter defined), and the Company hereby agrees to sell to the Underwriters or, in the case of the Flow­Through Shares, to such eligible substituted purchasers on the Closing Date, (i) 28,572,000 Offered Units at the Unit Price, and (ii) 13,160,000 Flow-Through Shares at the Flow-Through Share Price, for total aggregate gross proceeds of $15,001,000.

 

 

 

  

- 1 -

  

 

The Company hereby grants to the Underwriters (in accordance with the respective percentages set forth in Section 8.1 of this Agreement) an option (the “Over-Allotment Option”), entitling the Underwriters to purchase severally and not jointly, nor jointly and severally, or, in the case of the Additional Flow-Through Shares (as hereinafter defined), alternatively to arrange, as agent for the Company, for substituted eligible purchasers to purchase from the Company, up to 4,285,800 additional Units (each an “Additional Unit”) at the Unit Price and up to 1,974,000 additional Flow-Through Shares (each an “Additional Flow-Through Share”) at the Flow­Through Share Price for the purpose of covering the Underwriters’ over-allocation position (as defined in National Instrument 41-101 General Prospectus Requirements ("NI 41-101")). The Over-Allotment Option in respect of the Additional Units may be exercisable by the Underwriters: (i) to acquire Additional Units at the Unit Price; (ii) to acquire additional Unit Shares (“Additional Unit Shares”) at a price of $0.325 per Additional Unit Share, (iii) to acquire additional Warrants (the “Additional Warrants”) at a price of $0.05 per Additional Warrant; or (iv) to acquire any combination of Additional Units, Additional Unit Shares and/or Additional Warrants, so long as the aggregate number of Additional Unit Shares and Additional Warrants that may be issued under such Over-Allotment Option does not exceed 4,285,800 Additional Unit Shares and 2,142,900 Additional Warrants. For greater certainty, the number of Additional Unit Shares and Additional Warrants issued in connection with the exercise of the Over-Allotment Option shall not exceed 15% of the number of Unit Shares and Warrants issued pursuant to the base offering (as defined in NI 41-101). The Additional Units, the Additional Unit Shares, the Additional Warrants and the Additional Flow-Through Shares are collectively referred to herein as the “Additional Securities”. The Over-Allotment Option shall be non- assignable and shall be exercisable, in whole, at any time, or in parts and from time to time for up to 30 days after the Closing Time (as hereinafter defined). The offering of the Offered Securities and any Additional Securities and Additional Flow-Through Shares by the Company described in this Agreement is hereinafter referred to as the “Offering”.

 

The net proceeds of the Offering shall be used as set forth in the Final Prospectus (as hereinafter defined) under the heading “Use of Proceeds”. In consideration of the Underwriters’ services hereunder, the Company shall on the Closing Date or the Over-Allotment Closing Date (as hereinafter defined), as applicable, (i) pay to Dundee, for and on behalf of all of the Underwriters, a cash fee (the “Underwriting Fee”) in an amount equal to 6.0% of the gross proceeds received by the Company from the issue and sale of the Offered Securities and any Additional Securities, and (ii) issue to the Underwriters that number of compensation warrants (the “Compensation Warrants”) equal to 6.0% of the number of Offered Securities and Additional Securities sold pursuant to the Offering. Each Compensation Warrant shall entitle the holder thereof to acquire, at any time prior to the 24 month anniversary of the Closing Date, one common share of the Company (each a “Compensation Share”) at an exercise price of $0.35 per Compensation Share, subject to TSX approval.

 

The Offering shall take place in the Qualifying Jurisdictions (as hereinafter defined) and in the United States, provided, however, that offers and sales of Offered Securities and any Additional Securities in the United States shall be made only to Qualified Institutional Buyers (as hereinafter defined) on a private placement basis pursuant to an exemption from the registration requirements of the U.S. Securities Act (as hereinafter defined) provided by Rule 144A (as hereinafter defined) and exemptions from the securities laws of the states of the United States, as applicable, in accordance with United States securities laws and the provisions of Schedule “A” to this Agreement. No Flow-Through Shares will be offered or sold within the United States. The Underwriters, on their own behalf and on behalf of their U.S. Affiliates (as hereinafter defined), and the Company acknowledge that Schedule “A” forms part of this Agreement.

 

 

  

- 2 -

  

 

The Underwriters acknowledge that the Compensation Warrants and the Compensation Shares (collectively, the “Compensation Securities”) have not been and will not be registered under the U.S. Securities Act, and the Compensation Warrants may not be exercised in the United States or by, or for the account or benefit of, any U.S. Person or person in the United States, except pursuant to an exemption from the registration requirements of the U.S. Securities Act. In connection with the issuance of the Compensation Securities, as the case may be, each of the Underwriters represents and warrants that (i) it is not a U.S. Person and it is not acquiring the Compensation Securities in the United States, or on behalf of a U.S. Person or a person located in the United States, (ii) this Agreement was executed and delivered outside the United States and (iii) it is acquiring the Compensation Securities, as principal for its own account and not for the benefit of any other person. The Underwriters agree that they will not engage in any Directed Selling Efforts (as defined in Schedule “A”) with respect to any Compensation Securities.

 

The additional terms and conditions of this underwriting agreement (the “Agreement”) are set forth below.

 

1. ADDITIONAL DEFINITIONS

 

1.1 In this Agreement, including any schedules forming a part of this Agreement:

 

	
(a)  

	
“Acts” means the Securities Acts or equivalent securities regulatory legislation of the Qualifying Jurisdictions and “Act” means the Securities Act or equivalent securities regulatory legislation of a specified Qualifying Jurisdiction;

 

	
(b)  

	
“Additional Flow-Through Shares” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(c)  

	
“Additional Securities” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(d)  

	
“Additional Units” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(e)  

	
“Additional Unit Shares” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(f)  

	
“Additional Warrants” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(g)  

	
“Agreement” means this Underwriting Agreement;

 

	
(h)  

	
“Ancillary Documents” means all agreements, certificates (including any

certificates representing the Offered Securities and Additional Securities, officer’s certificates, notices and other documents executed and delivered,orto be

executed and delivered, by the Company in connection with the Offering   and/or pursuant to this Agreement;

 

 

  

- 3 -

  

 

 

(i)   “Applicable Securities Laws” means, collectively, and, as the context may

require, the Acts and Regulations and the rules, policies, instruments, notices and orders issued by the applicable Regulatory Authorities including, for greater certainty, the application and interpretation of such rules, policies, instruments, notices and orders by the applicable Regulatory Authorities;

 

(j)          “BCA “ means the Business Corporations Act (British Columbia);

 

(k)          “Canadian Exploration Expense(s)” or “CEE” means an expense described in

paragraph (f) of the definition of “Canadian exploration expense” in subsection 66.1(6) of the Tax Act or that would be described in paragraph (h) of such definition if the reference therein to “paragraphs (a) to (d) and (f) to (g.4)” were a reference to “paragraph (f)”, excluding any amounts which are prescribed to constitute “Canadian exploration and development overhead expense” under the Tax Act, the amount of any assistance received by the Company described in paragraph 66(12.6)(a) of the Tax Act and any expense described in paragraph 66(12.6)(b.1) of the Tax Act or any amount paid or payable for prepaid services or rent that do not qualify as outlays or expenses for the period as described in the definition of “expense” in subsection 66(15) of the Tax Act;

 

(l)   “Claim” has the meaning given to that term in Section 12.1;

 

(m)          “Closing” and “Closing Date” have the meanings given to those terms in Section

10.1;

 

(n)          “Closing Materials” has the meaning given to that term in Section 6.1(k)(x)

hereto;

 

(o)          “Closing Time” means 8:00 a.m. (Toronto time) or such other time as may be

agreed to by the Company and the Underwriters;

 

(p)          “Comfort Letter” has the meaning given to that term in Section 6.1(k)(i) hereto;

 

(q)          “Commissions” means the securities regulatory authorities (other than stock

exchanges) of the Qualifying Jurisdictions and “Commission” means the securities regulatory authority of a specified Qualifying Jurisdiction;

 

(r)          “Common Shares” means common shares in the capital of the Company;

 

(s)          "Compensation Securities" has the meaning given to that term in the sixth

paragraph of this Agreement;

 

(t)          "Compensation Share" has the meaning given to that term in the fourth

paragraph of this Agreement;

 

(u)          "Compensation Warrant" has the meaning given to that term in the fourth

paragraph of this Agreement;

 

  

- 4 -

  

(v)          “Continuing Underwriters” has the meaning given to that term in Section 8.2

hereto;

 

(w)          “CRA “ means the Canada Revenue Agency;

 

(x)          “Debt Instrument” means any loan, bond, debenture, promissory note or other

instrument evidencing indebtedness (demand or otherwise) for borrowed money or other liability;

 

(y)          “Defaulting Underwriters” has the meaning given to that term in Section 8.2

hereto;

 

(z)          “Distribution” (or “distribute” as derived therefrom) has the meaning given to

that term in the Securities Act (Ontario);

 

(aa)          "Dundee" has the meaning given to that term in the first paragraph of this

Agreement;

 

(bb)          "Enforceability Qualifications" means the qualifications that enforcement may

be limited by limitations contained in the Limitation Act, (British Columbia), by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally, that equitable remedies may be granted in the discretion of a court of competent jurisdiction, that rights of indemnity, contribution and waiver of contribution may be limited under applicable law, and that the enforceability of provisions in an agreement which purport to sever from such agreement any provision which is prohibited or unenforceable under applicable law without affecting the enforceability or validity of the remainder of such agreement would be determined only in the discretion of a court;

 

(cc)          “Exchange” means the TSX;

 

(dd)          “Expenditure Period” means the period commencing on thedate of acceptance

of the Flow-Through Subscription Agreement and ending on the earlier of:

 

	
(i)  

	
 the date on which the Commitment Amount (within the meaning of such Flow-Through Subscription Agreement) has been fully expended in accordance with the terms of the Flow-Through Subscription Agreement; and

 

         (ii)  December 31, 2015;

 

(ee)         “Final Prospectus” means the final short form prospectus of the Company to be

dated on or about July 23, 2014 and filed with the Commissions for the purpose of qualifying the distribution in Canada of the Offered Securities and the Additional

Securities and the grant of the Over-Allotment Option, including all documents incorporated therein by reference and any Supplementary Material;

 

 

  

- 5 -

  

 

	
(ff)

	
“Final Receipt” means the receipt for the Final Prospectus issued in accordance

with the Passport System;

 

	
(gg)

	
“Final U.S. Placement Memorandum” means the U.S. placement memorandum,

in a form satisfactory to the Underwriters and the Company, to which will be attached the Final Prospectus, to be delivered to any offerees and purchasers of the Offered Securities and Additional Securities, if any, in the United States in accordance with Schedule “A” hereto;

 

	
(hh)

	
"Flow-Through Shares" has the meaning given to that term in the first paragraph

of this Agreement;

 

	
(ii)  

	
"Flow-Through Share Price" has the meaning given to that term in the first

paragraph of this Agreement;

 

	
(jj)  

	
 “Flow-Through Subscription Agreement” means, collectively, the agreements to be entered into between the Company and one or more of the Underwriters or any participants in the Selling Dealer Group for and on behalf of and as agents for purchasers of Flow-Through Shares on or prior to the Closing Date or the Over­Allotment Closing Date, as applicable, setting out the contractual relationship between the Company and the purchasers of Flow-Through Shares, in form and substance satisfactory to the Company and the Underwriters and substantially as set out as Schedule “C” to this Agreement or such other form agreed to by the Company and the Underwriters;

 

	
(kk)

	
“Indemnified Parties” has the meaning given to that term in Section 12.1 hereto;

 

	
(ll)

	
“Legal Opinions” has the meaning given to that term in Section 6.1(k)(ii) hereto;

 

 

(mm)        “Lock-Up Agreements” has the meaning given to that term in Section 6.1(n)

                   hereto;

 

	
  

	
(nn)

	
“material adverse effect” means (i) the effect resulting from any event or change

which is materially adverse to the business, affairs, capital, operations, property rights or assets, liabilities (contingent or otherwise) of the Company, or which event or change would reasonably be expected to have a significant negative effect on the market price or value of the common shares of the Company or (ii) any fact, event or change that would result in any Offering Document containing a misrepresentation;

 

	
(oo)

	
“material change” has the meaning given to that term in the Securities Act

(Ontario);

 

	
(pp)

	
“material fact” has the meaning given to that term in the Securities Act (Ontario);

 

	
(qq)

	
"Mineral Properties" means the Company’s Prairie Creek property, South Tally

Pond project, Tulks South project and Long Lake project;

 

  

- 6 -

  

	
(rr)

	
“misrepresentation” has the meaning given to that term in the Securities Act

(British Columbia);

 

	
(ss)

	
“Money Laundering Laws” has the meaning given to that term in Section

    5.1(ccc) hereto;

 

	
(tt) 

	
 “Named Executive Officers” means as of July 15, 2014, the Chief Executive Officer, the Chief Financial Officer and each of the three most highly compensated executive officers, other than the Chief Executive Officer and Chief Financial Officer who were serving as executive officers at the end of the most recently completed financial year and whose total salary and bonus exceeds $150,000 as well as any additional individuals for whom disclosure would have been provided except that the individual was not serving as an officer of the Company at the end of the Company’s most recently completed financial year end;

 

	
(uu)

	
“NI 43-101” means National Instrument 43-101 — Standards of Disclosure for

Mineral Projects;

 

	
(vv)

	
“NI 44-101” means National Instrument 44-101 — Short Form Prospectus

Distributions;

 

	
(ww)  

	
 “NP 11-202” means National Policy 11-202 - Process for Prospectus Reviews in Multiple Jurisdictions;

 

	
(xx)

	
“OFAC” has the meaning given to that term in Section 5.1(ddd) hereto;

 

	
(yy)

	
"Offered Units" has the meaning given to that term in the first paragraph of this

Agreement;

 

	
(zz)

	
"Offered Securities" has the meaning given to that term in the first paragraph of

this Agreement;

 

	
(aaa) 

	
 “Offering” has the meaning given to that term in the third paragraph of this Agreement;

 

	
(bbb)

	
 “Offering Documents” means, collectively, the Prospectuses, any Supplementary Material and the U.S. Memorandum;

 

	
(ccc) 

	
“Officers’ Certificate” has the meaning given to that term in Section 6.1(k)(iv) hereto;

 

	
(ddd)

	
 “Option Closing” means the purchase of Additional Securities contemplated upon the exercise of the Over-Allotment Option;

 

	
(eee)

	
 “Over-Allotment Closing Date” means, in respect of any exercise of the Over­Allotment Option, the closing date for such exercise of the Over-Allotment Option which shall be not more than three business days after the notice of exercise of such option has been delivered in accordance with the terms of the Over-Allotment Option;

 

  

- 7 -

  

	
(fff)

	
 “Passport System” means the system for review and procedures for the filing of prospectuses and related materials in one or more Canadian jurisdictions pursuant to Multilateral Instrument 11-102 - Passport System and NP 11-202;

 

	
(ggg) 

	
 “Preliminary Prospectus” means the preliminary short form prospectus of the Company dated July 15, 2014 and filed with the Commissions for the purpose of allowing the Underwriters to solicit expressions of interest for the Offering, including all documents incorporated therein by reference and any Supplemental Material;

 

	
(hhh)

	
 “Preliminary Receipt” means the receipt for the Preliminary Prospectus issued in accordance with the Passport System;

 

	
(iii)

	
“Preliminary U.S. Placement Memorandum” means the U.S. placement

memorandum, in a form satisfactory to the Underwriters and the Company, to which will be attached a copy of any Preliminary Prospectus, to be delivered to offerees and purchasers of the Offered Securities and Additional Securities, if any, in the United States in accordance with Schedule “A” hereto;

 

	
(jjj)

	
 “Prospectuses” means collectively the Preliminary Prospectus and the Final Prospectus, including any documents incorporated by reference therein;

 

	
(kkk) 

	
"Public Record" means all information contained in any news release, material change report (excluding any confidential material change report), financial statements, technical reports, continuous disclosure documents or other document of the Company which has been publicly filed by or on behalf of the Company pursuant to Applicable Securities Laws, including any information which appears on the Company’s website;

 

	
(lll)

	
“Qualified Institutional Buyer” means a qualified institutional buyer as that term is defined in Rule 144A;

 

	
(mmm)

	
 “Qualifying Expenditures” means expenses that are CEE;

 

	
(nnn)  

	
 “Qualifying Jurisdictions” means all of the provinces of Canada, other than Quebec, and such other jurisdictions to which the Underwriters and the Company may agree and “Qualifying Jurisdiction” means any one of them;

 

	
(ooo)

	
“Regulations” means the securities rules or regulations proclaimed under the Acts and “Regulation” means the securities rules or regulations proclaimed under a specified Act;

 

	
(ppp) 

	
 “Regulation S” means Regulation S adopted by the United States Securities and Exchange Commission under the U.S. Securities Act;

 

 

  

- 8 -

  

 

	
(qqq) 

	
“Regulatory Authorities” means collectively the Commissions and the Exchange;

 

	
(rrr)  

	
 “Rule 144A” means Rule 144A under the U.S. Securities Act;

 

	
(sss)

	
 “Selling Dealer Group” means the dealers and brokers other than the Underwriters who participate in the offer and sale of the Offered Securities pursuant to this Agreement;

 

	
(ttt) 

	
“Standard Listing Conditions” has the meaning given to that term in Section 6.1(o) hereto;

 

	
(uuu)

	
 “subsidiary” has the meaning given to that term in the BCA and “subsidiaries” means more than one of them;

 

	
(vvv)

	
 “Supplementary Material” means any documents supplemental to the Prospectuses including any amending or supplementary prospectus or other supplemental documents (including documents incorporated by reference after the date of the Prospectuses) or similar documents;

 

	
(www)

	
(www) “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder as amended from time to time;

 

	
(xxx) 

	
“Title Opinions” has the meaning given to that term in Section 6.1(k)(v);

 

	
(yyy)

	
 “TMX Group” has the meaning given to that term in Section 14.9;

 

	
(zzz) 

	
 “trade” has the meaning given to that term in the Securities Act (Ontario);

 

	
(aaaa)

	
 “TSX” means the Toronto Stock Exchange;

 

	
(bbbb)

	
 "Underwriting Fee" has the meaning given to that term in the fourth paragraph of this Agreement;

 

	
(cccc)

	
 "Unit" has the meaning given to that term in the first paragraph of this Agreement;

 

	
(dddd)

	
 "Unit Price" has the meaning given to that term in the first paragraph of this Agreement;

 

	
(eeee)

	
 "Unit Shares" has the meaning given to that term in the first paragraph of this Agreement;

 

	
(ffff)

	
 “United States” or “U.S.” means the United States of America, its territories and possessions, any state of the United States and the District of Columbia;

 

	
(gggg) 

	
“U.S. Affiliates” means the U.S. registered broker-dealer affiliates of the Underwriters;

 

 

  

- 9 -

  

 

 

	
(hhhh)

	
 “U.S. Legal Opinion” has the meaning given to that term in Section 6.1(k)(iii);

 

	
(iiii)

	
 “U.S. Memorandum” means, together, the Preliminary U.S. Placement Memorandum and Final U.S. Placement Memorandum;

 

	
(jjjj)

	
 “U.S. Person” has the meaning given to it under Regulation S;

 

	
(kkkk)

	
 “U.S. Securities Act” means the United States Securities Act of 1933, as amended, and the rules and regulations made thereunder;

 

	
(llll)

	
 

	
"Warrant" or “Warrants” has the meaning given to that term in the first

paragraph of this Agreement;

 

	
(mmmm)

	
 “Warrant Agent” means Computershare Trust Company of Canada, in its capacity as warrant agent under the Warrant Indenture;

 

	
(nnnn)

	
 “Warrant Indenture” means the indenture to be dated the Closing Date between the Company and the Warrant Agent governing the Warrants; and

 

	
(oooo)

	
 

	
"Warrant Share" has the meaning given to that term in the first paragraph of this Agreement. For greater certainty, “Warrant Share” refers to any Common Shares issuable or issued under any Warrants or Additional Warrants.

 

	
1.2  

	
All references to dollar figures inthis Agreement are to Canadian dollars.

 

	
1.3  

	
Certain terms applicable solely toSchedule“A” aredefined inSchedule“A”.

 

	
1.4  

	
 Where any representation or warranty contained in this Agreement is expressly qualified by reference to the “knowledge” of the Company, or where any other reference is made herein to the “knowledge” of the Company, it shall be deemed to refer to the actual knowledge of the Named Executive Officers, after having made due enquiry of appropriate and relevant persons and after reviewing relevant documentation.

 

	
2.  

	
FILING OF PROSPECTUS

 

	
2.1  

	
The Company shall:

 

	
(a)  

	
not later than 5:00 p.m. (Vancouver time) on July 15, 2014, have obtained the Preliminary Receipt with respect to the Preliminary Prospectus; and

 

	
(b)  

	
forthwith after any comments with respect to the Preliminary Prospectus have  been received from, and have been resolved with, the Commissions, but no later than 5:00 p.m. (Vancouver time) on July 23, 2014 or such later date as may be agreed to in writing by Dundee, use its reasonable commercial efforts to obtain a Final Receipt with respect to the Final Prospectus or otherwise fulfill all legal requirements to enable the Offered Securities and AdditionalSecurities to be offered and sold to the public through the Underwriters or anyother investment dealer or broker registered to transact such business in the applicable Qualifying Jurisdictions.

  

  

- 10 -

  

	
2.2 

	
Prior to the delivery or filing of the Offering Documents and thereafter, during the period of distribution of the Offered Securities and any Additional Securities, the Company shall have allowed the Underwriters to participate fully in the preparation of, and to approve the form and content of, such Offering Documents and shall have allowed the Underwriters to conduct all due diligence investigations which they may reasonably require in order to fulfill their obligations as underwriters and in order to enable them to execute the certificate in the Prospectus required to be executed by them.

 

	
3.  

	
OVER-ALLOTMENT OPTION

 

	
3.1  

	
The Company hereby grants to the Underwriters the Over-Allotment Option to purchase severally and not jointly, nor jointly and severally, and to offer for sale to the public pursuant hereto the Additional Securities upon the terms and conditions set forth herein.

 

	
3.2  

	
The Over-Allotment Option shall be non-assignable and shall be exercisable, in whole, at any time, or in parts, from time to time, up to 30 days after the Closing Date by Dundee, on behalf of the Underwriters giving written notice to the Company by such date, specifying the number of Additional Securities to be purchased (the “Over-Allotment Closing Date”), which date shall be not more than three business days after the date of such notice.

 

	
3.3  

	
Following receipt of notice delivered in accordance with Section 3.2, the Company agrees to issue and sell to the Underwriters and the Underwriters agree to purchase that number of Additional Securities requested in the notice of exercise of the Over-Allotment Option and the Company shall proceed to hold the Option Closing in accordance with Section 11.

 

	
4.  

	
DISTRIBUTION AND CERTAIN OBLIGATIONS OF THE UNDERWRITERS AND THE COMPANY

 

	
4.1  

	
Subject to the terms and conditions of this Agreement, the Underwriters offer to purchase the Offered Securities, and by acceptance of this Agreement the Company agreesto sell  to the Underwriters, and the Underwriters agree to purchase at the Closing Timeon the  Closing Date, all, but not less than all, of the Offered Securities as describedin the  second paragraph of this Agreement.

	
  

	
 

 

	
4.2  

	
The distribution of the Offered Securities, the Over-Allotment Option, and any Additional Securities shall be qualified by the Prospectuses under Applicable Securities Laws. Offered Securities and/or Additional Securities may also be offered and sold:

 

	
(a)  

	
in the United States in accordance with the terms, conditions, representations, warranties and covenants of the parties contained in Schedule “A” hereto, the provisions of which are agreed to by the Company, the Underwriters and the U.S. Affiliates, and which Schedule “A” forms part of this Agreement; and

 

  

- 11 -

  

 

 

	
(b)  

	
in such other jurisdictions as the Company and the Underwriters may agree, provided the distribution of Offered Securities and/or Additional Securities in such other jurisdictions are completed in accordance with the applicable laws of such other jurisdictions.

 

	
4.3  

	
 Until the date on which the distribution of the Offered Securities and Additional Securities is completed or this Agreement is terminated, the Company shall promptly take, or cause to be taken, all additional steps and proceedings that may from time to time be required under Applicable Securities Laws to continue to qualify the distribution of the Offered Securities and the Additional Securities, or in the event that the Offered Securities and the Additional Securities have, for any reason ceased to so qualify, to so qualify again the Offered Securities and the Additional Securities for distribution in the Qualifying Jurisdictions.

 

	
4.4  

	
The Company agrees that the Underwriters will be permitted to appoint other registered dealers (or other dealers duly licensed in their respective jurisdictions) as their agents to assist in the Offering and that the Underwriters may determine the remuneration payable to such other dealers appointed by them. Such remuneration shall be payable by the Underwriters. The Underwriters shall use their best efforts to ensure that such other dealers, if any, comply with the terms of this Agreement as applicable to the Underwriters.

 

	
4.5  

	
Each Underwriter covenants, represents and warrants to the Company that it will comply, to the extent applicable to the Underwriters, with the rules and policies of the Exchange and with all applicable securities legislation of each Qualifying Jurisdiction in which it acts as Underwriter of the Company in connection with the Offering.

 

	
5.  

	
REPRESENTATIONS AND WARRANTIES

 

	
5.1  

	
The Company represents and warrants to the Underwriters, and acknowledges that the Underwriters are relying upon such representations and warranties in entering into this Agreement, that:

 

(a) Incorporation and Organization: The Company has been duly organized, is a valid and subsisting corporation under the laws of the Province of British Columbia and has all requisite corporate power and authority to carry on its business as now conducted or proposed to be conducted and to own or lease and operate the property and assets thereof and the Company has all requisite corporate power and authority to enter into, execute and deliver this Agreement, the Warrant Indenture, the Flow-Through Subscription Agreement and any certificates representing the Warrants and the Compensation Warrants and to carry out its obligations thereunder. To the Company’s knowledge, other than the constating documents of the Company (to the extent that they would constitute an agreement), no agreement exists among the shareholders of the Company in respect of the Company and no such agreement will exist on the Closing Date.

 

 

 

  

- 12 -

  

 

	
(b)  

	
 Extra-Provincial Registration: The Company and its subsidiaries together hold all licences, registrations and qualifications in all jurisdictions where the character of the property or assets thereof owned or leased or the nature of the activities conducted make licensing, registration or qualification necessary and is carrying on the business thereof in compliance in all material respects with all applicable laws, rules and regulations of each such jurisdiction.

 

	
(c)  

	
Authorized Capital: The Company is authorized to issue, among other things, an unlimited number of Common Shares, of which, as of the close of business on July 14, 2014, 174,341,709 Common Shares were issued and outstanding as fully paid and non-assessable shares.

 

	
(d)  

	
Listing: The Common Shares are, and at the time of issue of the Offered Securities will be, listed on the TSX and the Unit Shares, Flow-Through Shares, Compensation Shares, Warrant Shares, Additional Unit Shares and Additional Flow-Through Shares will, at the time of issue thereof, be conditionally approved for listing on the TSX or such other stock exchange or quotation system on which the Common Shares may trade or be quoted at the applicable time.

 

	
(e)  

	
 Certain Security Law Matters: The Common Shares are listed only on the TSX and the Company is a reporting issuer or the equivalent only in British Columbia, Alberta, Ontario and Quebec and is not in default of any material requirement of the securities legislation of any of such provinces.

 

	
(f)  

	
NI 44-101. The Company is eligible under NI 44-101 to file the Preliminary Prospectus and the Final Prospectus;

 

	
(g)  

	
Transfer Agent: Computershare Trust Company of Canada, at its principal office in the City of Vancouver, is the duly appointed registrar and transfer agent for the Common Shares.

 

	
(h)  

	
Rights to Acquire Securities: Other than pursuant hereto, no Person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issue of any of the unissued shares or other securities of the Company, except for 6,122,200 common shares issuable on the due exercise of 5.734.600 outstanding options under the Company's stock option plan and 387.600 outstanding common share purchase warrants as of July 14, 2014.

 

	
(i)  

	
No Pre-emptive Rights: The issue of the Offered Securities will not be subject to any pre-emptive right or other contractual right to purchase securities granted by the Company or to which the Company is subject.

 

	
(j)

	
Subsidiaries: The Company has no subsidiaries other than Messina Minerals Inc.

and Paragon Minerals Corporation.

 

	
(k)

	
Issue of Unit Shares and Flow-Through Shares: All necessary corporate action has been taken to authorize the issue, sale and delivery of the Unit Shares and Flow-Through Shares and, upon payment of the requisite consideration therefor, the Unit Shares and Flow-Through Shares will be validly issued as fully paid and non-assessable shares.

 

 

  

- 13 -

  

 

	
(l)  

	
Issuance of Warrants. All necessary corporate action has been taken to authorize the issuance of, and the delivery of any certificates representing the Warrants and upon issuance and delivery, will be valid obligations of the Company enforceable in accordance with their terms, except as may be qualified by the Enforceability Qualifications. The Warrant Shares issuable upon the due exercise of the Warrants (and Additional Warrants), in accordance with the terms thereof, will, when issued, be validly issued and outstanding as fully paid and non-assessable Common Shares.

 

 

	
(m)

	
Grant of Compensation Warrants: All necessary corporate action has been taken to authorize the grant of, and the delivery of the certificates representing, the Compensation Warrants and upon issuance and delivery, will be valid obligations of the Company enforceable in accordance with their terms, except as may be qualified by the Enforceability Qualifications. The Compensation Shares issuable upon the due exercise of the Compensation Warrants in accordance with the terms thereof, will, when issued, be validly issued and outstanding as fully paid and non-assessable Common Shares.

 

	
(n) 

	
Consents, Approvals and Conflicts: None of the offering and sale of the Offered Securities or the issue of the Compensation Warrants, the issue of the Warrant Shares on the exercise of the Warrants, the issuance of the Compensation Shares on the exercise of the Compensation Warrants, the execution and delivery of this Agreement or the Warrant Indenture, the compliance by the Company with the provisions of this Agreement or the consummation of the transactions contemplated herein and therein, all in accordance with the terms of this agreement, do or will (i) require the consent, approval, or authorization, order or agreement of, or registration or qualification with, any governmental agency, body or authority, court, stock exchange, securities regulatory authority or other person, except (A) such as have been obtained, or (B) such as may be required under Applicable Securities Laws and will be obtained by the Closing Date, or (ii) to the best of the knowledge of the Company, conflict with or result in any breach or violation of any of the provisions of, or constitute a default under, any indenture, mortgage, deed of trust, lease or other agreement or instrument to which the Company is a party or by which it or any of the properties or assets thereof is bound, or (iii) conflict with or result in any breach or violation of any of the provisions of, or constitute a default under, the notice of articles or articles of the Company or any resolution passed by the directors (or any committee thereof) or shareholders of the Company, or any statute or any judgment, decree, order, rule, policy or regulation of any court, governmental authority, any arbitrator, stock exchange or securities regulatory authority applicable to the Company or any of the properties or assets thereof which could have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations, taken as a whole, of the Company.

 

 

  

- 14 -

  

 

	
(o)

	
Authority and Authorization: The Company has full corporate power and authority to enter into this Agreement, the Warrant Indenture, the Flow-Through Subscription Agreement and any certificates representing the Warrants and the Compensation Warrants and to do all acts and things and execute and deliver all documents as are required hereunder or thereunder to be done, observed, performed or executed and delivered by it in accordance with the terms hereof or thereof and the Company has taken all necessary corporate action to authorize the execution, delivery and performance of this Agreement, the Warrant Indenture, the Flow-Through Subscription Agreement and any certificates representing the Warrants and the Compensation Warrants and to observe and perform the provisions thereof in accordance with the provisions hereof.

 

	
(p)

	
Validity and Enforceability: This Agreement, the Warrant Indenture,the Flow­Through Subscription Agreement and any certificates representing the Warrants and the Compensation Warrants have been authorized and have been or will be executed and delivered by the Company and constitute or will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, except as may be qualified by the Enforceability Qualifications.

 

	
(q)

	
Public Disclosure: Each of the documents which contains any of  the Public Record is, as of the date thereof, in compliance in all material respects with Applicable Securities Laws and did not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. There is no material fact known to the Company which the Company has not publicly disclosed which materially adversely affects, or so far as the Company can now reasonably foresee, will materially adverselyaffect, the assets, liabilities (contingent or otherwise), affairs, business, prospects,operations or condition (financial or otherwise), taken as a whole, of the Company or the ability of the Company to perform its obligations under this Agreement.

	
 

  

	
(r)

	
Timely Disclosure: The Company is in compliance with all timely disclosure obligations under Applicable Securities Laws and, without limiting the generality of the foregoing, there has not occurred any material adverse change, financial or otherwise, in the assets, liabilities (contingent or otherwise), business, condition (financial or otherwise), capital or prospects, taken as a whole, of the Company which has not been publicly disclosed and none of the documents filed by or on behalf of the Company pursuant to Applicable Securities Laws contain a misrepresentation (as such term is defined in the Securities Act (British Columbia)) at the date of the filing thereof.

 

 

	
(s)

	
No Cease Trade Order: No order preventing, ceasing or suspending trading in any securities of the Company or prohibiting the issue and sale of securities by the Company is outstanding and no proceedings for either of such purposes have been instituted or, to the best of the knowledge of the Company, are pending, contemplated or threatened.

 

 

  

- 15 -

  

 

 

	
(t) 

	
Financial Statements: The audited financial statements of the Company for the year ended December 31, 2013 together with the auditors' report thereon and the notes thereto and the unaudited financial statements of the Company for the period ended March 31, 2014 together with the notes thereto have been prepared in accordance with international financial reporting standards applied on a basis consistent with prior periods, are substantially correct in every particular and present fairly the financial condition and position of the Company as at the dates thereof and such financial statements contain no direct or implied statement of a material fact which is untrue on the date of such financial statements and do not omit to state any material fact which is required by international financial reporting standards or by applicable law to be stated or reflected therein or which is necessary to make the statements contained therein not misleading. The certifications of the Company's annual filing for 2013 and interim filing for the period ended March 31, 2014 are materially correct and fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of the date and for the periods presented in the financial statements.

 

	
(u)

	
Changes in Financial Position: Since December 31, 2013:

 

	
(i)  

	
 the Company has not paid or declared any dividend or incurred any material capital expenditure or made any commitment therefor;

 

	
(ii)  

	
 the Company has not incurred any obligation or liability, direct or indirect, contingent or otherwise, except in the ordinary course of business and which is not, and which in the aggregate are not, material; and

 

	
(iii)  

	
 the Company has not entered into any material transaction; except in each case as disclosed in the Public Record.

 

	
(v)

	
Independence: To the knowledge of the Company, the Auditor is an independent

public accountant as required by the Applicable Securities Laws.

 

	
(w)

	
Reportable Events: There has not been any "reportable event" (within the meaning

of National Instrument 51-102 — Continuous Disclosure Obligations) with the Auditor.

 

	
(x)  

	
No Contemplated Changes: Except as disclosed in the Public Record, the

Company has not, other than in the ordinary course of business, approved or entered into any agreement in respect of:

 

(i) the purchase of any property or assets or any interest therein or the sale, transfer or other disposition of   any property  or assets or any interest

therein currently owned, directly  or indirectly, by the Company whether by asset sale, transfer of shares or otherwise;

 

 

  

- 16 -

  

	
(ii)  

	
the change of control (by sale or transfer of shares or sale of all or  substantially all of theproperty and assets of the Company or otherwise) of the Company; or

  

	
(iii)  

	
a proposed or planned disposition of shares by any shareholder who owns, directly or indirectly, 10% or more of the outstanding shares of the Company.

  

	
  

	
(y) Material Changes. Since March 31, 2014, the Company has carried on business in the ordinary course and except as disclosed in the Preliminary Prospectus there has not been:

 

	
(i)  

	
 any material change in the assets, liabilities or obligations (absolute, accrued, contingent or otherwise), business, business prospects, condition (financial or otherwise) or results of operations of the Company or any of its subsidiaries, other than: (A) the growth and expansion of the business of the Company and (B) those changes occurring in the ordinary course of business, none of which is (either singly or taken together) materially adverse to the Company on a consolidated basis;

 

	
(ii)  

	
 except as contemplated in this Agreement or as disclosed in the Preliminary Prospectus, any material change in the share capital or long­term debt of the Company or any of its subsidiaries;

 

	
(iii)  

	
 any adverse material change to the Company on a consolidated basis;

 

	
(iv)  

	
 any declaration, setting aside or payment of any dividend or other distribution with respect to any shares in the capital of the Company or any direct or indirect redemption, purchase or other acquisition of any shares; or

 

	
(v)  

	
 any change in accounting or tax practices followed by the Company or any of its subsidiaries.

 

	
(z) 

	
Taxes and Tax Returns: The Company has prepared and filed all material tax returns required to be filed by applicable law, has reported all income and other amounts required by applicable law to be reported on such tax returns and each such tax return is true, correct and complete in all material respects. The Company has timely paid all applicable taxes and instalments of taxes which are required to be paid pursuant to applicable law and the Company is not aware of any tax deficiencies or interest or penalties accrued or accruing, or alleged to be accrued or accruing, thereon and there are no agreements, waivers or other arrangements providing for an extension of time with respect to the filing of any tax return by the Company or the payment of any material tax, governmental charge, penalty, interest or fine against the Company. There are no material actions, suits, proceedings, investigations or claims now threatened or, to the best of the knowledge of the Company, pending against the Company which could result in a material liability in respect of taxes, charges or levies of any governmental authority, penalties, interest, fines, assessments or reassessments or any matters under discussion with any governmental authority relating to taxes, governmental charges, penalties, interest, fines, assessments or reassessments asserted by any such authority. The Company has duly and timely withheld and collected all taxes required by applicable law to be withheld or collected by it and has duly and timely remitted to the appropriate taxing authority as such taxes as and when required by applicable law.

 

  

- 17 -

  

	
(aa) 

	
Compliance with Laws, Licenses and Permits: The Company has conducted and is conducting the business thereof in compliance in all material respects with all applicable laws, rules, regulations, tariffs, orders and directives of each jurisdiction in which it carries on business and possesses all material approvals, consents, certificates, registrations, authorizations, permits and licenses issued by the appropriate provincial, state, municipal, federal or other regulatory agency or body necessary to carry on the business currently carried on by it, is in compliance in all material respects with the terms and conditions of all such approvals, consents, certificates, authorizations,, permits and licenses and with all laws, regulations, tariffs, rules, orders and directives material to the operations, and the Company has not received any notice of the modification, revocation or cancellation of, any intention to modify, revoke or cancel or any proceeding relating to the modification, revocation or cancellation of any such approval, consent, certificate, authorization, permit or license which, singly or in the aggregate, if the subject of an unfavourable decision, order, ruling or finding, would materially and adversely affect the conduct of the business or operations of or the assets, liabilities (contingent or otherwise), condition (financial or otherwise) or prospects of, the Company, taken as a whole. For greater certainty, in 2013, the Company filed requests with the Mackenzie Valley Land and Water Board for amendments to the timing schedules of the various security deposits to be provided to the Minister of Aboriginal Affairs and Northern Development Canada under the Company’s Type “A” Water Licence and the Land Use Permit for the Prairie Creek Mine.

 

	
(bb)

	
 Minute Books: The minute books and records of the Company contain copies of all constating documents and all approved material resolutions of its directors and securityholders.

 

	
(cc) 

	
Agreements and Actions: The Company is not in violation of any term of its notice of articles or articles or any constating document thereof. The Company is not in violation of any term or provision of any agreement, indenture or other instrument applicable to it which violation would, or could, result in any material adverse effect on the business, condition (financial or otherwise), affairs or operations, taken as a whole, of the Company. The Company is not in default in the payment of any obligation owed which is now due and there is no action, suit, proceeding or investigation commenced or, to the knowledge of the Company after due inquiry, pending or, to the best of the knowledge of the Company, threatened which, either in any case or in the aggregate, might result in any material adverse effect on the business, condition (financial or otherwise), affairs, prospects or operations, taken as a whole, of the Company or in any of the material properties or assets thereof or in any material liability on the part of the Company or which places, or could place, in question the validity or enforceability of this Agreement or any document or instrument delivered, or to be delivered, by the Company pursuant hereto or thereto.

 

  

- 18 -

  

	
(dd)

	
 Owner of Property: Except as disclosed in the Public Record, no property rights are necessary for the conduct of the business of the Company as currently conducted, the Company is not aware of any claim or the basis for any claim that might or could adversely affect the right thereof to use, transfer or otherwise exploit such property rights once acquired and the Company does not have any responsibility or obligation to pay any commission, royalty, licence fee or similar payment to any Person with respect to the property rights thereof.

 

	
(ee)

	
 Mineral Rights: Except as disclosed in the Public Record, the Company holds the options to acquire or owns mining leases, mining claims or other conventional property or proprietary interests or rights described in the Public Record, recognized in the jurisdiction in which each property is located, in respect of the ore bodies and minerals located in properties in which the Company conducts business under valid, subsisting and enforceable title documents or other recognized and enforceable agreements or instruments, sufficient to permit the Company to explore the minerals relating thereto (the "Mining Rights"). Except as disclosed in the Public Record, the Company has all necessary surface rights, access rights and other necessary rights and interests relating to the properties on which the Company conducts business granting the Company the right and ability to explore for minerals, ore and metals for development purposes as are appropriate in view of the rights and interest therein of the Company with only such exceptions as do not materially interfere with the use made by the Company of the rights or interests so held and each of the proprietary interests or rights and each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing in the name of the Company.

 

	
(ff)

	
Property Agreements: Any and all of the agreements and other documents and instruments pursuant to which the Company holds the Mineral Properties are valid and subsisting agreements, documents or instruments in full force and effect, enforceable in accordance with the terms thereof (except as may be qualified by the Enforceability Qualifications), the Company is not in default of any of the material provisions of any such agreements, documents or instruments nor to the Company's knowledge, has any such default been alleged, and such properties and assets are in good standing under the applicable statutes and regulations of the jurisdictions in which they are situated, all leases, licences and claims pursuant to which the Company derives the interests thereof in such property and assets are in good standing and there has been no material default under any such lease, licence or claim and all taxes required to be paid with respect to such properties and assets to the date hereof have been paid.

 

 

  

- 19 -

  

	
(gg) 

	
Operations: Any and all operations of the Company, and to the best of the Company's knowledge, information and belief, any and all operations by predecessors, on or in respect of the assets and properties of the Company have been conducted substantially in accordance with good industry practices in the jurisdiction of operation and in material compliance with applicable laws, rules, regulations, orders and directions of governmental and other competent authorities.

 

	
(hh)

	
 Non-Arm's Length Interests: No officer, director, employee or other person not dealing at arm's length with the Company, or to the knowledge of the Company, any associate or affiliate of any such person owns, has or is entitled to any royalty, interest or any other encumbrances or claims of any nature whatsoever which are based on production from the Company's properties or assets or any revenue or rights attributable thereto.

 

	
(ii)    

	
No Defaults: The Company is not in default of any material term, covenant or condition under or in respect of any judgment, order, agreement or instrument to which it is a party or to which it or any of the property or assets thereof are or may be subject, and no event has occurred and is continuing, and, to the Company's knowledge, no circumstance exists which has not been waived, which constitutes a default in respect of any commitment, agreement, document or other instrument to which the Company is a party or by which it is otherwise bound entitling any other party thereto to accelerate the maturity of any amount owing thereunder which could have a material adverse effect upon the condition (financial or otherwise), property, assets, operations or business, taken as a whole, of the Company.

 

	
(jj) 

	
Compliance with Employment Laws: The Company is in compliance with all laws and regulations respecting employment and employment practices, terms and conditions of employment, pay equity and wages, except where such non­compliance would not constitute an adverse material fact concerning the Company or result in an adverse material change to the Company and has not and is not engaged in any unfair labour practice, there is no labour strike, dispute, slowdown, stoppage, complaint or grievance pending or, to the best of the knowledge of the Company after due inquiry, threatened against the Company, no union representation question exists respecting the employees of the Company and no collective bargaining agreement is in place or currently being negotiated by the Company, the Company has not received any notice of any unresolved matter and there are no outstanding orders under the Employment Standards Act (Ontario), the Human Rights Code (Ontario), the Occupational Health and Safety Act (Ontario) or the Workers' Compensation Act (Ontario) or any other similar legislation in any jurisdiction in which the Company carries on business, no employee has any agreement as to the length of notice required to terminate his or her employment with the Company in excess of twelve months or equivalent compensation other than as disclosed in the information circular in respect of its 2014 annual general meeting, and all benefit or pension plans of the Company are funded in accordance with applicable laws and no past service funding liability exist thereunder.

 

 

- 20 -

 

	
(kk)

	
 Use of Proceeds: The Company confirms that the proceeds of the Offering will be used as set forth in the Offering Documents.

 

	
 (ll)

	
Offered Securities: The attributes of the Offered Securities will conform in all material respects with the description thereof in the Offering Documents.

 

	
(mm) 

	
Environmental Compliance: Except as disclosed in the Public Record, the Company:

 

	
(i)  

	
and the property, assets and operations thereof comply, to the best of the Company's knowledge, in all material respects with all applicable Environmental Laws (which term means and includes, without limitation, any and all applicable international, federal, provincial, state, municipal or local laws, statutes, regulations, treaties, orders, judgments, decrees, ordinances, official directives and all authorizations relating to the environment, occupational health and safety, or any Environmental Activity (which term means and includes, without limitation, any past, present or future activity, event or circumstance by or in respect of a Contaminant (which term means and includes, without limitation, any pollutants, hazardous wastes, hazardous materials, hazardous substances or contaminants or any other matter (including any of the foregoing), which is defined or described as such pursuant to any such applicable Environmental Law), including, without limitation, the storage, use, holding, collection, purchase, accumulation, assessment, generation, manufacture, construction, processing, treatment, stabilization, disposition, handling or transportation thereof, or the release, escape, leaching, dispersal or migration thereof into the natural environment, including the movement through or in the air, soil, surface water or groundwater));

 

	
(ii)  

	
does not have any knowledge of, and has not received any notice of, any material claim, judicial or administrative proceeding, pending or threatened against, or which may materially adversely affect, the Company or any of the property, assets or operations thereof, relating to, or alleging any violation of any Environmental Laws, the Company is not aware of any facts which could give rise to any such claim or judicial or administrative proceeding and, to the best of the Company's knowledge, neither the Company nor any of the property, assets or operations thereof is the subject of any investigation, evaluation, audit or review by any Governmental Authority (which term means and includes, without limitation, any national, federal government, province, state, municipality or other political subdivision of any of the foregoing, any entity exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government and any corporation or other entity owned or controlled (through stock or capital ownership or otherwise) by any of the foregoing) to determine whether any violation of any Environmental Laws has occurred or is occurring or whether any remedial action is needed in connection with a release of any Contaminant into the environment, except for compliance investigations conducted in the normal course by any Governmental Authority. For greater certainty, the Company was issued an environmental protection compliance order by Environment Canada on December 1, 2010 in connection with an alleged contravention of the Storage Tank Systems for Petroleum Products and Allied Petroleum Products Regulations and the Canadian Environmental Protection Act with respect to the containment area. The Company complied with the terms of the order and the file has been closed by Environment Canada. For greater certainty, on July 4, 2012 an inspector from Aboriginal Affairs and Northern Development Canada visited the Prairie Creek site, including a location of diamond drilling. A sump adjacent to the drill intended to allow collection of drill cuttings and the percolation of drill water was found to be overflowing to an adjacent creek. The inspector ordered that drilling cease immediately, a spill report be completed, and drilling not commence until a suitable plan is provided to manage the drill water. A drill water management plan was presented to the inspector the next day, and was approved by the inspector on July 6, 2012 allowing drilling to resume

 

 

 

- 21 -

 

	
(iii)  

	
 has not given or filed any notice under any federal, state, provincial or local law with respect to any Environmental Activity, the Company does not, to the best of the Company's knowledge, have any liability (whether contingent or otherwise) in connection with any Environmental Activity and the Company is not aware of any notice being given under any federal, state, provincial or local law or of any liability (whether contingent or otherwise) with respect to any Environmental Activity relating to or affecting the Company or the property, assets, business or operations thereof;

 

	
(iv)  

	
 subject to the next following sentence, the Company has not stored any hazardous or toxic waste or toxic substance on the property thereof and has not disposed of any hazardous or toxic waste, in each case in a manner contrary to any Environmental Laws, and, to the best of the Company's knowledge, there are no Contaminants on any of the premises at which the Company carries on business, in each case other than in compliance with Environmental Laws. For greater certainty, the Company is storing waste on the Mineral Properties and has surface impoundment containing petroleum products, cleaning and degreasing solutions as well as mill reagents as described in the Public Record; and

 

	
(v)  

	
 is not, to the best of the Company's knowledge, subject to any contingent or other liability relating to the restoration or rehabilitation of land, water or any other part of the environment or non-compliance with Environmental Laws. For greater certainty, the Company currently holds a surface lease for the Prairie Creek minesite, issued by the Minister of Aboriginal Affairs and Northern Development Canada, which limits the use of the land for mine site care and maintenance purposes only and establishes the Company's current responsibility for abandonment and restoration in accordance with an abandonment and restoration plan attached as a schedule to the surface lease. The Company has applied to the Minister of Aboriginal Affairs and Northern Development Canada for a new lease for production to replace the existing care and maintenance surface lease. The Department of Aboriginal Affairs and Northern Development Canada has confirmed to the Mackenzie Land and Water Board that the Board’s assessment of the Company’s liability for the site and cost of closure and reclamation is not applicable until a new lease for production replaces the existing care and maintenance surface lease.

 

 

 

- 22 -

 

	
(nn)

	
 No Litigation: There are no actions, suits, proceedings, inquiries or investigations existing, or to the best of the Company's knowledge, pending or threatened against or adversely affecting the Company or to which any of the property or assets thereof is subject, at law or equity, or before or by any court, federal, provincial, state, municipal or other governmental department, commission, board, bureau, agency or instrumentality, domestic or foreign, which may in any way materially adversely affect the condition (financial or otherwise), property, assets, operations or business, taken as a whole, of the Company or the ability of it to perform its obligations and the Company is not subject to any judgment, order, writ, injunction, decree, award, rule, policy or regulation of any Governmental Authority, which, either separately or in the aggregate, may result in a material adverse effect on the condition (financial or otherwise), property, assets, operations or business, taken as a whole, of the Company or the ability of the Company to perform its obligations pursuant hereto.

 

	
(oo)

	
Legislation and Proposed Legislation: The Company is not aware of any legislation, or proposed legislation published by a legislative body, which it anticipates will have a material adverse effect on the condition (financial or otherwise), business, properties or results of operations, taken as a whole, of the Company.

 

	
 (pp)

	
 Brokerage Fees: No brokerage, agency or other fiscal advisory or similar fee is payable in connection with the transactions contemplated herein except as provided by this Agreement.

 

	
(qq)

	
Indebtedness: The Company does not have any material loans or other indebtedness outstanding which has been made to any of its shareholders, officers, directors or employees, past or present, or any person not dealing at arm's length with them.

 

 

- 23 -

 

	
(rr)

	
 Debt. Except as disclosed in the Public record, neither the Company nor any of its subsidiaries is party to any Debt Instrument or any agreement, contract or commitment to create, assume or issue any Debt Instrument.

 

	
(ss)

	
 Insurance: The assets of the Company and its business and operations are insured against loss or damage with responsible insurers on a basis consistent with insurance obtained by reasonably prudent participants in comparable businesses, and such coverage is in full force and effect, and the Company has not failed to promptly give any notice or present any material claim thereunder.

 

	
(tt)

	
 Good Practices: To the Company's knowledge, all mining operations on the properties of the Company have been conducted in all material respects in accordance with good mining and engineering practices and all applicable material workers' compensation and health and safety and workplace laws, regulations and policies have been complied with in all material respects;

 

	
 (uu)

	
 Registration of Mining Rights: Except as disclosed in the Offering Documents, all material Mining Rights in which the Company holds an interest or right have been validly registered and recorded in accordance in all material respects with all applicable laws and are valid and subsisting; the Company has all necessary surface rights, access rights and other necessary rights and interests relating to the Mineral Properties granting the Company the right and ability to explore for mineral deposits as are appropriate in view of the rights and interests therein of the Company, with only such exceptions as do not unreasonably interfere with the use made by the Company of the rights or interest so held; and each of the Mining Rights and each of the documents, agreements and instruments and obligations relating thereto referred to above is currently in good standing in the name of the Company.

 

	
(vv) 

	
Description of Property and Rights: The Mineral Properties and Mining Rights of the Company as disclosed in the Offering Documents, constitute an accurate description of the Mineral Properties and all material Mining Rights held by the Company, and no other property or assets are necessary for the conduct of the business of the Company as currently conducted, the Company does not know of any claim or the basis for any claim that might or could have a material adverse effect on the right thereof to use, transfer or otherwise explore for mineral deposits on such Mineral Properties.

 

	
(ww)

	
 Native Rights. Except as disclosed in the Public Record, there are no claims with respect to native rights currently or, to the best of the knowledge, information and belief of the Company, after due inquiry, pending or threatened with respect to any of the Mineral Properties.

 

	
(xx) 

	
43-101 Compliance: The Company is in compliance with the provisions of NI 43­101 and has filed all technical reports required thereby and there have been no developments of which the Company is aware that would require the filing of a new technical report under NI 43-101.

 

 

 

- 24 -

 

 

	
(yy)

	
 Internal Controls: The Company maintains a system of internal accounting controls sufficient to provide reasonable assurances that (A) transactions are executed in accordance with management's general or specific authorization, and (B) transactions are recorded as necessary to permit preparation of financial statements in conformity with International Financial Reporting Standards and to maintain accountability for assets.

 

	
(zz) 

	
Disclosure of Information: All information which has been prepared by the Company relating to the Company and the business, property and liabilities thereof and either publicly disclosed, provided or made available to the Underwriters, including the Offering Documents and all financial, marketing, sales and operational information provided to the Underwriters is, as of the date of such information, true and correct in all material respects, taken as whole, and no fact or facts have been omitted therefrom which would make such information materially misleading.

 

	
(aaa) 

	
Significant Acquisitions. The Company has not completed any "significant acquisition" nor is it proposing any "significant acquisitions" that would require the inclusion of any additional financial statements or pro forma financial statements in the Offering Documents pursuant to Canadian Securities Laws.

 

	
(bbb) 

	
Brokers. There is no person acting at the request of the Company, other than the Underwriters, who is entitled to any brokerage, agency or similar fee in connection with the transactions contemplated herein.

 

	
(ccc)

	
 Money Laundering. The operations of the Company are and have been conducted at all times in all material respects in compliance with applicable financial recordkeeping and reporting requirements of the money laundering statutes of all jurisdictions, the rules and regulations thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental authority (collectively, the “Money Laundering Laws”) and no action, suit or proceeding by or before any court of governmental authority or any arbitrator non-governmental authority involving the Company with respect to the Money Laundering Laws is to the best knowledge of the Company pending or threatened.

 

  

	
(ddd)

	
OFAC. Neither the Company nor, to the best of the Company’s knowledge, any director, officer, agent, employee, affiliate or person acting on behalf of the Company or any of its subsidiaries is currently subject to any United States sanctions administered by the Office of Foreign Assets Control of the United States Treasury Department (“OFAC”); and the Company will not knowingly, directly or indirectly, use the proceeds of the Offering, or knowingly lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose of financing the activities of any person currently subject to any United States sanctions administered by OFAC.

 

 

 

 

- 25 -

 

	
(eee)

	
 Regulation M. None of the Company, any of its affiliates or any person acting on its or their behalf (other than the Underwriters or any person acting on their behalf, as to which no representation, warranty or covenant is made) has violated or will violate Regulation M under the U.S. Exchange Act in connection with offers and sales of the Offered Securities.

 

	
(fff) 

	
U.S. Representations and Warranties. The Company makes the representations, warranties and covenants applicable to it in Schedule “A” hereto and acknowledges that the terms and conditions of the representations, warranties and covenants of the parties contained in Schedule “A” form part of this Agreement.

 

	
(ggg)

	
 Principal Business Corporation. The Company is, and at all relevant times will be, a “principal business corporation” within the meaning of subsection 66(15) of the Tax Act.

 

	
(hhh)

	
 Flow-Through Shares. Except as the result of any agreement or arrangement to which the Company is not a party and of which it has no knowledge, upon issuance pursuant to the provisions of the Flow-Through Subscription Agreement, the Flow-Through Shares will be “flow-through shares” as defined in subsection 66(15) of the Tax Act and such Flow-Through Shares will not constitute “prescribed shares” for the purpose of section 6202.1 of the regulations to the Tax Act.

 

	
(iii)         

	
Renunciation. Except for the $4,000,000 in flow-through funds raised by the Company in 2013, the Company has not entered into any agreements or made any covenants with any parties with respect to the renunciation of CEE, which amounts have not been fully expended and renounced as required thereunder.

 

	
(jjj)         

	
 Flow-Through Subscription Agreement. The representations and warranties of the Company in the Flow-Through Subscription Agreement are, or will on the Closing Date be, true and correct; and

 

	
(kkk)

	
 Other Agreements. Subject to paragraph (iii) above, the Company has not entered into any agreements or made any covenants with any parties that would restrict the company from entering into the Flow-Through Subscription Agreement and agreeing to incur and renounce Qualifying Expenditures during the Expenditure Period in accordance with the Flow-Through Subscription Agreement, nor that would require the prior renunciation to any other person of Qualifying Expenditures prior to the renunciation of the aggregate Commitment Amount (as defined in the Flow-Through Subscription Agreement) in favour of the eligible substituted purchasers of the Underwriter and the Company has no outstanding obligations to incur and renounce Qualifying Expenditures to any persons.

 

5.2 The representations and warranties of the Company contained in this Agreement shall be true at the Closing Time as though they were made at the Closing Time and they shall  survive the completion of the Offering in accordance with Section 14.6.

	
  

	
 

	
  

	
 

 

  

- 26 -

  

 

 

5.3 Each Underwriter hereby severally, and not jointly, nor jointly and severally, represents and warrants to the Company that:

 

	
(a)  

	
it is, and will remain so, until the completion of the Offering, appropriately registered under Applicable Securities Laws so as to permit it to lawfully fulfill its obligations hereunder; and

 

	
(b)  

	
it has good and sufficient right and authority to enter into this Agreement and complete the Offering on the terms and conditions set forth herein.

 

5.4 The Underwriters hereby covenant and agree with the Company the following:

 

	
(a)  

	
during the period of distribution of the Offered Securities by or through the Underwriters, the Underwriters will offer and sell Offered Securities to the public only in the Qualifying Jurisdictions or where they may lawfully be offered for sale upon the terms and conditions set forth in the Prospectus and this Agreement either directly or through other registered investment dealers and brokers. The Underwriters shall be entitled to assume that the Offered Securities are qualified for distribution in any Qualifying Jurisdiction where the Final Receipt shall have been obtained following the filing of the Prospectus;

 

	
(b)  

	
theUnderwriters will comply with Applicable Securities Laws in connection with the offer and sale and distribution of the Offered Securities;

 

	
(c)  

	
theUnderwriters will use their commercially reasonable efforts to complete the

distribution of the Offered Securities as promptly as possible after the Closing Date, but in any event no later than seven business days following the date of exercise of the entire Over-Allotment Option, if exercised. The Underwriters will notify the Company when, in the Underwriters’ opinion, the Underwritershave ceased the distribution of the Offered Securities, and, within thirty daysafter completion of the distribution, will provide the Company, in writing, with a breakdown of the number of Offered Securities distributed in each of the Qualifying Jurisdictions where that breakdown in required by a Commission for the purpose of calculating fees payable to, or making filings with, that Commission; and

 

	
(d)  

	
theUnderwriters will use their commercially reasonable efforts to advise the Company, prior to July 23, 2014, of any Qualifying Jurisdiction in which it will not sell any of the Offered Securities.

 

5.5 Therepresentations and warranties of the Underwriters contained in this Agreement shall be true at the Closing Time as though they were made at the Closing.

 

6. ADDITIONAL COVENANTS

 

6.1 TheCompany covenants and agrees with the Underwriters that it shall:

 

 

  

- 27 -

  

	
(a)  

	
 file with the Exchange all required documents and pay all required filing fees, and do all things required by the rules and policies of the Exchange, in order to obtain prior to the Closing Date the requisite acceptance or approval of the Exchange for:

 

       (i) the Offering; and

 

	
(ii)  

	
the conditional listing of the Unit Shares, Flow-Through Shares, Warrant Shares, Compensation Shares and any Additional Unit Shares and Additional Flow-Through Shares, subject only to Standard Listing Conditions, which the Company agrees to fully satisfy in a timely manner forthwith after the Closing;

 

	
(b)  

	
with respect to the filing of the Prospectuses as contemplated herein, fulfill all legal requirements required to be fulfilled by the Company in connection therewith, in each case in form and substance satisfactory to the Underwriters as evidenced by the Underwriters’ execution of the certificates attached thereto;

 

	
(c)  

	
prior to the completion of the Offering, allow the Underwriters to review the Offering Documents and conduct all due diligence which the Underwriters may reasonably require in order to fulfill their statutory obligations as underwriters and in order to enable them to execute, acting prudently and responsibly, the certificates required to be executed by the Underwriters in such documents, including, without limitation, all corporate and operating records, documentation with respect to property rights, technical information, financial information (including budgets), copies of the financial statements to be incorporated by reference in the Prospectuses and access to key officers of the Company;

 

	
(d)  

	
during the period prior to the completion of the Offering, promptly notify the Underwriters in writing of:

 

	
(i)  

	
any material change (actual, contemplated or threatened) in the business, affairs, operations, assets or liabilities (contingent or otherwise), financial position or capital or ownership of the Company or proposed ownership of the Company (other than a change disclosed in the Prospectuses); and

 

	
(ii)  

	
any change which is of such a nature as to result in a misrepresentation in either of the Prospectuses or any amendment thereto; and any material fact that has arisen or been discovered and that would be required to have been disclosed in the Prospectuses or in Supplementary Material had that fact arisen or been discovered on or prior to the date of the Prospectuses or any Supplementary Material,

 

which change or fact is, or may be, of such a nature as to render the Prospectuses or any Supplementary Material misleading or untrue in any material respect or would result in any of such documents containing a misrepresentation, as defined under Applicable Securities Laws, or which would result in any of such documents not complying in any material respect with any of the Applicable Securities Laws or which change would reasonably be expected to have a significant effect on the market price or value of the Offered Securities or Additional Securities. The Company shall in good faith discuss with the Underwriters any change in circumstances (actual or proposed within the knowledge of the Company) which is of such a nature that there is reasonable doubt whether notice need be given to the Underwriters pursuant to this subsection and, in any event, prior to making any filing;

 

  

- 28 -

  

	
(e)  

	
deliver to the Underwriters duly executed copies of any Supplementary Material required to be filed by the Company in accordance with subsection (d) above and, if any financial or accounting information is contained in any of the Supplementary Material, an additional Comfort Letter to that required by subsection (k) below;

 

	
(f)  

	
cause commercial copies of the Prospectuses, the U.S. Memorandum and Supplementary Material to be delivered to the Underwriters without charge, in such quantities and in such cities as the Underwriters may reasonably request, as soon as possible after the filing of the Preliminary Prospectus, Final Prospectus or Supplementary Material, as the case may be, but in any event on or before noon (in the time zone of such delivery) on the day after obtaining the receipt therefor, as applicable, and such delivery will constitute the Company’s consent to the Underwriters’ use of such documents in connection with the Offering;

 

	
(g)  

	
by the act of having delivered each of the Prospectuses and any Supplementary Material to the Underwriters, have represented and warranted to the Underwriters that all material information and statements (except information and statements relating to the Underwriters and provided by the Underwriters to the Company in writing expressly for inclusion in Prospectuses) contained in such documents, at the respective dates of initial delivery thereof, comply with the Applicable Securities Laws of the Qualifying Jurisdictions and are true and correct in all material respects, and that such documents, at such dates, contain no misrepresentation and together constitute full, true and plain disclosure of all material facts relating to the Company, the Offered Securities, the Over-Allotment Option and the Additional Securities as required by the Applicable Securities Laws of the Qualifying Jurisdictions;

 

	
(h)  

	
prior to the Closing Time, fulfill to the satisfaction of the Underwriters all legal requirements (including, without limitation, compliance with Applicable Securities Laws) to be fulfilled by the Company to enable the Offered Securities and the Additional Securities to be distributed free of trade restrictions in the Qualifying Jurisdictions, subject only to the requirements of Applicable Securities Laws;

 

	
(i)  

	
use its best efforts to maintain its status as a “reporting issuer” or the equivalent not in default in each of the Qualifying Jurisdictions for a period of three years from the Closing Date, other than:

 

 

  

- 29 -

  

 

(i) in connection with a merger, amalgamation, arrangement, take-over bid,

going private transaction or other similar transaction involving the purchase or sale of all of the outstanding common shares of the Company; and

 

	
(ii)  

	
 in any jurisdiction where the Underwriters do not sell any of the Offered Securities and in which the Final Prospectus is not filed;

 

	
  

	
(j) use its commercially reasonable best efforts to maintain the listing of its common shares on the Exchange for a period of three years from the Closing Date, other than in connection with a merger, amalgamation, arrangement, take-over bid, going private transaction or other similar transaction involving the purchase or sale of all of the outstanding common shares of theCompany;

 

	
     (k) deliver to the Underwriters and their legal counsel, as applicable:

	
 

 

	
(i)  

	
at the time of execution of the Final Prospectus by the Underwriters, a long form Comfort Letter (the “ComfortLetter”) from the Company’s auditors addressed to the Underwriters and to the directors of the Company and dated as of the date of the Final Prospectus and based on procedures performed within two business days of the Final Prospectus, in form and content acceptable to the Underwriters, acting reasonably, relating to the verification of the financial information and accounting data contained in the Final Prospectus and to such other matters as the Underwriters may reasonably require;

 

	
(ii)  

	
at the Closing Time, such legal opinions (the “Legal Opinions”) of the Company’s legal counsel (excluding U.S. legal counsel), addressed to the Underwriters and their legal counsel and dated as of the Closing Date, in form and content acceptable to the Underwriters, acting reasonably, relating to the matters set forth in Schedule “B” and to such other matters as the Underwriters may reasonably require (and such counsel may rely upon or arrange for separate deliveries of opinions of local counsel where such counsel deems such reliance or delivery proper as to the laws of any jurisdiction other than British Columbia and may rely, as to matters of fact, on certificates of auditors, public officials and officers of the Company) relating to the Final Prospectus, the trade and distribution of the Offered Securities and the Additional Securities without restriction, and to such other matters as the Underwriters may reasonably require;

 

	
(iii) 

	
at the Closing Time, if any Offered Securities and/or Additional Securities are being sold in the United States in accordance with Schedule “A” hereto, a legal opinion of Dorsey Whitney LLP, addressed to the Underwriters and dated as of the Closing Dateand/or the Over-Allotment Closing Date, as applicable, in form and content acceptable to the Underwriters, acting reasonably, to the effect that no registrations will be required under the U.S. Securities Act in respect of: (i) the offer and sale of Offered Securities and/or any Additional Securities that are offered or sold in the United States or to U.S. Persons, and (ii) the issuance of the Warrant Shares upon exercise of the Warrants by purchasers of Offered Securities and/or Additional Securities that are in the United States or U.S. Persons (“U.S. Legal Opinion”);

 

  

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(iv)  

	
 at the Closing Time, a certificate (the “Officers’ Certificate”) of the Company signed by its Chief Executive Officer and Chief Financial Officer, addressed to the Underwriters and their legal counsel and dated as of the Closing Date, in form and content acceptable to the Underwriters, acting reasonably, certifying for and on behalf of the Company and not in their personal capacities that, to the actual knowledge of the persons signing such certificate, after having made due and relevant inquiry:

 

	
(A)  

	
the Company has complied in all material respects with all covenants and satisfied all terms and conditions of this Agreement on its part to be complied with and satisfied at or prior to the Closing Time on the Closing Date;

 

	
(B)  

	
no order, ruling or determination having the effect of ceasing or suspending trading in any securities of the Company or prohibiting the sale of the Offered Securities or Additional Securities or any of the Company’s issued securities has been issued and no proceeding for such purpose is pending or, to the knowledge of such officers, threatened;

 

	
(C)  

	
the Company is a “reporting issuer” or its equivalent under the securities laws of each of the Qualifying Jurisdictions and eligible to use the Short Form Prospectus System established under NI 44­101, and no material change relating to the Company has occurred since the date of this Agreement with respect to which the requisite material change report has not been filed and no such disclosure has been made on a confidential basis that remains subject to confidentiality; and

 

	
(D)  

	
all of the representations and warranties made by the Company in this Agreement are true and correct as of the Closing Time with the same force and effect as if made at and as of the Closing Time after giving effect to the transactions contemplated hereby;

 

	
(v)  

	
 at the Closing Time, such legal opinions (the “Title Opinions”) of the Company’s legal counsel, addressed to the Underwriters and their legal counsel, dated as of the Closing Date, in the form and content acceptable to the Underwriters acting reasonably, with respect to the Company’s title and ownership interests in the Prairie Creek Property;

 

 

 

  

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(vi)  

	
 the Underwriters having received certificates dated the Closing Date (or, in the case of the Option Closing, dated the Over-Allotment Closing Date) signed by the Corporate Secretary of the Company or another officer acceptable to the Underwriters, acting reasonably, in form and content satisfactory to the Underwriters, acting reasonably, with respect to the constating documents of the Company; the resolutions of the directors of the Company relevant to the Offering, including the allotment, issue (or reservation for issue) and sale of the Offered Securities and Additional Securities, the grant of the Over-Allotment Option, the authorization of this Agreement, the listing of the Offered Securities on the Exchange and transactions contemplated by this Agreement; and the incumbency and signatures of signing officers of the Company;

 

	
(vii)  

	
at the Closing Time, a certificate of status (or equivalent) for the Company dated within one (1) business day (or such earlier or later date as the Underwriters may accept) of the Closing Date;

 

	
(viii)  

	
at the Closing Time, a certificate of the registrar and transfer agent of the common shares of the Company, which certifies the number of common shares of the Company issued and outstanding on the date prior to the Closing Date;

 

	
(ix)  

	
at the Closing Time, a Comfort Letter, dated the Closing Date, in form and substance satisfactory to the Underwriters, acting reasonably, bringing forward to the date which is two (2) business days prior to the Closing Date, the information contained in the Comfort Letter;

 

       (x) executed copies of any Flow-Through Subscription Agreement; and

 

	
(xi)  

	
at the Closing Time, such other materials (the “Closing Materials”) as the Underwriters may reasonably require and as are customary in an offering of this nature, and the Closing Materials will be addressed to the Underwriters and to such parties as may be reasonably directed by the Underwriters and will be dated as of the Closing Date or such other date as the Underwriters may reasonably require;

 

(l) from and including the date of this Agreement through to and including the Closing Time, do all such acts and things necessary to ensure that all of the representations and warranties of the Company contained in this Agreement or any certificates or documents delivered by it pursuant to this Agreement remain materially true and correct and not do any such act or thing that would render any representation or warranty of the Company contained in this Agreement or any certificates or documents delivered by it pursuant to this Agreement materially untrue or incorrect;

 

(m)          during the period commencing on the Closing Date and ending on the date which is 90 days after the Closing Date, not, without the prior written consent of Dundee, which consent will not be unreasonably withheld, directly or indirectly issue any common shares or securities or other financial instruments convertible into or having the right to acquire common shares (other than pursuant to rights or obligations under securities outstanding or existing commitments to issue securities) or enter into any agreement or arrangement under which you acquire or transfer to another, in whole or in part, any of the economic consequences of ownership of common shares, whether that agreement or arrangement may be settled by the delivery of common shares or other securities or cash, or agree to become bound to do so, or disclose to the public any intention to do so;

 

  

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(n)

	
 cause each of its directors and officers to enter into lock-up agreements (the “Lock-Up Agreements”) in form and substance satisfactory to Dundee evidencing their agreement to not, without the prior written consent of Dundee (which consent will not be unreasonably withheld or delayed), offer, sell or resell any common shares of the Company or financial instruments or securities convertible into or exercisable or exchangeable for common shares of the Company held by them or agree to or announce any such offer or sale for a period of 90 days following the Closing Date;

 

	
  

	
(o)

	
prior to the filing of the Final Prospectus, provide evidence satisfactory to the

Underwriters of the conditional approval of the Exchange of the listing and posting for trading on the Exchange of the Unit Shares, Flow-Through Shares, Warrant Shares, Compensation Shares and any Additional Unit Shares and Additional Flow-Through Shares, subject only to satisfaction by the Company of customary post-closing conditions imposed by the Exchange in similar circumstances (the “Standard Listing Conditions”);

 

	
  

	
(p)

	
advise the Underwriters, promptly after receiving notice or obtaining knowledge

thereof, of: (i) the issuance by any Commission of any order suspending or preventing the use of the Preliminary Prospectus, the Final Prospectus or any Supplementary Material; (ii) the suspension of the qualification of the Offered Securities, Over-Allotment Option or Additional Securities for offering or sale in any of the Qualifying Jurisdictions; (iii) the institution, threatening or contemplation of any proceeding for any such purposes; or (iv) any requests made by any Commission for amending or supplementing the Preliminary Prospectus or the Final Prospectus or any Supplementary Material or for additional information, and will use its commercially reasonable efforts to prevent the issuance of any order referred to in (i) or (ii) above and, if any such order is issued, to obtain the withdrawal thereof as promptly as possible;

 

	
  

	
(q)

	
not reproduce, disseminate, quote from or refer to any written or oral opinions,

advice, analysis and materials provided by the Underwriters to the Company in connection with the Offering in whole or in part at any time, in any manner or for any purpose, without the Underwriters’ prior written consent in each specific instance, and the Company shall and shall cause its affiliates, officers, directors, shareholders, agents and advisors (including those shareholders who have an advisory relationship with the Company and the directors, officers, and employee of such shareholders) to keep confidential the opinions, advice, analysis and materials furnished to the Company by the Underwriters and their counsel in connection with the Offering;

 

  

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(r)          promptly do, make, execute, deliver or cause to be done, made, executed or

delivered, all such acts, documents and things as the Underwriters may reasonably require from time to time for the purpose of giving effect to this Agreement;

 

(s)          during the period commencing on the date hereof and until completion of the

distribution of any Additional Securities, promptly provide to the Underwriters drafts of any press releases of the Company for review by the Underwriters and the Underwriters’ counsel prior to issuance, provided that any such review will be completed in a timely manner;

 

(t)          forthwith notify the Underwriters of any breach of any covenant of this

Agreement or any Ancillary Documents by any party thereto, or upon it becoming aware that any representation or warranty of the Company contained in this Agreement or any Ancillary Document is or has become untrue or inaccurate in any material respect; and

 

(u)          use the net proceeds of the Offering substantially in the manner set out in the

Final Prospectus under the heading “Use of Proceeds”.

 

	
7.  

	
UNDERWRITERS’ FEES AND EXPENSES

 

	
7.1  

	
In consideration of the services to be rendered by the Underwriters to the Company under this Agreement, the Company agrees to pay to the Underwriters, at the time and in the manner specified in this Agreement, the Underwriting Fee and to issue to the Underwriters the Compensation Warrants.

 

	
7.2  

	
 Whether or not the purchase and sale of the Offered Securities shall be completed, all costs and expenses of or incidental to the sale and delivery of the Offered Securities and of or incidental to all matters in connection with the Offering shall be borne by the Company, and the Company shall reimburse the Underwriters for any and all expenses reasonably incurred by the Underwriters, including, without limitation and for greater certainty, the “out-of-pocket” expenses of the Underwriters, and the fees and disbursements of Underwriters’ legal counsel up to a maximum of $90,000, excluding taxes and disbursements. However, in the event the Offering is terminated due to the failure of the Company to comply with the terms and conditions of this Agreement, then the Company shall reimburse the Underwriters for any and all expenses reasonably incurred by the Underwriters, including, without limitation and for greater certainty, the “out-of-pocket” expenses of the Underwriters and the reasonable fees and disbursements of the Underwriters’ legal counsel.

 

	
7.3  

	
 All fees, expenses and other payments under this Agreement shall be paid free and clear of any withholding or deduction of any tax except as required by law. If the Company is required by law to deduct or withhold any amounts with respect to any tax (other than tax on net income) or if any such tax is required to be paid by the Underwriters or any of their affiliates as a result or arising out of this Agreement, the Company shall pay the Underwriters such additional amounts as are necessary to ensure that the net amount received by the Underwriters from the Company after such deduction, withholding or payment (including any deduction, withholding or payment required on additional amounts payable under this Section 7.3) shall equal the amounts otherwise payable to the Underwriters under this Agreement. If any goods and services tax, harmonized sales tax or provincial sales taxes or other similar tax is payable with respect to the fees paid or payable to the Underwriters under this Agreement, the Underwriters will add the amount of such tax to its invoice and the Company shall pay such tax directly to the Underwriters.

 

  

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8.  

	
UNDERWRITING PERCENTAGES

 

	
8.1  

	
The obligations of the Underwriters hereunder, including the obligation to purchase

Offered Securities and if the Over-Allotment Option is exercised, any obligation to purchase Additional Securities at the Closing Time shall be several, and not joint, and shall be limited to the percentages of the aggregate percentage of the Offered Securities and Additional Securities set out opposite the name of each Underwriter below:

 

 

Dundee Securities Ltd.              55%

Canaccord Genuity Corp.         35%

Paradigm Capital Inc.                10%

                                                    100%

 

	
8.2  

	
Subject to Section 8.3, if one or more of the Underwriters (the “Defaulting Underwriters”) fails to purchase their percentage of the Offered Securities or Additional Securities at the Closing Time, then the other Underwriters (the “Continuing Underwriters”) shall have the right, but shall not be obligated, to purchase such Offered Securities or Additional Securities on a pro rata basis (or on such other basis as they may agree). If the Continuing Underwriters do not purchase all the Offered Securities or Additional Securities of the Defaulting Underwriters, the Company shall be entitled to terminate its obligations under this Agreement without further liability of the Company to the Continuing Underwriters, on the one hand, or on the part of the Continuing Underwriters to the Company, on the other hand, except in respect of any liability which may have arisen or may arise under Sections 7, 12 and 13. Nothing in this Section 8.2 shall relieve any Defaulting Underwriter from liability to the Company.

 

	
8.3  

	
If one or more but not all of the Underwriters shall exercise their right of termination under Section 13, then the other Underwriters shall have the right, but shall not be obligated, to purchase all of the percentage of the Offered Securities or Additional Securities which would otherwise have been purchased by such Underwriters which have so exercised their right of termination. If the amount of such Offered Securities or Additional Securities which the remaining Underwriters wish, but are not obliged, to purchase exceeds the amount of such Offered Securities or Additional Securities which remain available for purchase, such Offered Securities or Additional Securities shall be divided pro rata among the Underwriters desiring to purchase such Offered Securities or Additional Securities in proportion to the percentage of Offered Securities or Additional Securities which such Underwriters have agreed to purchase as set forth in Section 8.1. If the other Underwriters do not purchase all the Offered Securities or Additional Securities of the Underwriters who exercise their right of termination under Section 13, the Company shall be entitled to terminate its obligations under this Agreement without further liability of the Company, except in respectof any liability which may have arisen or may arise under Sections 7, 12 and 13.

 

  

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9. CONDITIONS PRECEDENT

 

9.1 The following are conditions to the obligationsof the Underwriters to complete the

Offering as contemplated in this Agreement, which conditions may be waived in writing in whole or in part by the Underwriters in their sole discretion:

 

	
(a)  

	
all actions required to be taken by or on behalf of the Company, including without limitation the passing of all requisite resolutions of directors of the Company approving the transaction contemplated hereunder, will have been taken so as to approve the Prospectuses and the U.S. Memorandum, to obtain the requisite approval of the Exchange to the Offering and to validly offer, sell and distribute the Offered Securities, grant the Over-Allotment Option, distribute the Additional Securities;

 

	
(b)  

	
there shall be no requirement under applicable law and no requirement imposed on the Company by the Regulatory Authorities to obtain, nor shall the Company voluntarily seek, shareholder approval of the Offering or of the issuance of the Offered Securities or Additional Securities;

 

	
(c)  

	
the Company will have made all necessary filings with and obtained all necessary approvals, consents and acceptances of the Regulatory Authorities for the Offering and the Prospectuses, including without limitation a receipt from the Commissions pursuant to NP 11-202 in respect of the Prospectuses, to permit the Company to complete its obligations hereunder;

 

	
(d)  

	
the Company will have, within the required time set out hereunder, delivered or

caused the delivery of the required Comfort Letter, Legal Opinions, U.S. Legal Opinion, Officer’s Certificate, Title Opinions, Lock-Up Agreements and other Closing Materials as the Underwriters may reasonably require in form and substance satisfactory to the Underwriters and their counsel, acting reasonably;

 

	
(e)  

	
no order ceasing or suspending trading in any securities of the Company,or

ceasing or suspending trading by the directors or officers of the Company, or any one of them, or prohibiting the trade or distribution of any of the securities referred to herein will have been issued and no proceedings for such purpose, to the knowledge of the Company, will be pending or threatened;

 

	
(f)  

	
as of the Closing Time, there shall be: (i) no reports or information that in accordance with the requirements of Regulatory Authorities in Canada must be made publicly available in connection with the sale of the Offered Securities and the Additional Securities that have not been made publicly available as required; (ii) no contracts, documents or other materials required to be filed with Regulatory Authorities in connection with the Prospectuses that have not been filed as required and delivered to the Underwriters; and (iii) no contracts, documents or other materials required to be described or referred to in the Prospectuses or the U.S. Memorandum that are not described or referred to as required and delivered to the Underwriters;

 

 

  

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(g)  

	
theUnderwriters shall have received at the Closing Time a letter from the transfer agent of the Company dated the date of Closing and signed by an authorized officer of such transfer agent confirming the issued and outstanding capital of the Company;

 

 

	
(h)  

	
theUnderwriters not having exercised any rights of termination set forth in this Agreement;

 

 

	
(i)  

	
theUnderwriters having received at the Closing Time such further certificates, opinions of counsel and other documentation from the Company as the Underwriters or their counsel may reasonably require and as are customary in an offering of this nature;

 

 

	
(j)

	
there shall not have occurred since March 31, 2014 and the Closing Time, any adverse material change (actual, anticipated, contemplated or, to the knowledge of the Company, threatened, whether financial or otherwise) in the business, affairs, operations, assets, liabilities (contingent or otherwise), prospects, financial position or capital of the Company;

 

 

	
(k)

	
the

	
due diligence conducted by the Underwriters shall not have revealed any adverse material change or material fact in respect of the Company not generally known to the public which should have been previously disclosed pursuant to Applicable Securities Laws;

 

 

	
(l)  

	
the Company will have, as of the Closing Time, complied with all of its covenants and agreements contained in this Agreement, including without limitation all requirements for approval of the Offering and the listing and posting for trading of the Offered Securities and the Additional Securities on the Exchange as required to be provided prior to the Closing Time; and

 

 

	
(m) 

	
the representations and warranties of the Company contained in this Agreement will be true and correct as of the Closing Time in all material respects (except for those representations and warranties which are qualified by materiality which must be true and correct in all respects) as if such representations and warranties had been made as of the Closing Time.

 

 

 

 

  

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10.  

	
CLOSING

 

	
10.1  

	
The Company and the Underwriters shall cause the Closing to occur on July 31, 2014 or such other date not later than 42 days following the date of the Final Receipt, as may be agreed by the Company and the Underwriters in writing (the “Closing Date”). The closing of the Offering under this Agreement (the “Closing”) shall be completed in Vancouver at the offices of DuMoulin Black LLP, counsel to the Company, or such other location as may be agreed between the Company and the Underwriters.

 

	
10.2  

	
On the Closing, the Company shall issue and deliver to the Underwriters:

 

	
(a)  

	
 one or more global certificates (in physical, electronic or such other form as Dundee may advise) representing the Offered Securities in the names and denominations reasonably requested by the Underwriter; provided that separate certificates in such form determined by Dundee shall be issued to or in respect of each Qualified Institutional Buyer in the United States, if any, that is purchasing Offered Securities at the Closing or Additional Securities at the Option Closing, registered in the name of such Qualified Institutional Buyer or its nominee or as otherwise directed by Dundee; and

 

	
(b)  

	
 the Company shall deliver to the Underwriters such documents set forth in Section 6.1(k) as the Underwriters may request.

 

	
10.3  

	
 If the Company has satisfied all of its obligations under this Agreement that are required to be satisfied before or at the Closing Time, on the Closing the Underwriters shall pay to the Company by certified cheque or by wire transfer the aggregate gross proceeds, less (i) the Underwriting Fee and (ii) any costs and expenses owing to the Underwriter pursuant to Section 7.2.

 

	
11.

	
OPTION CLOSING

 

	
11.1  

	
 In the event the Over-Allotment Option is exercised, at the Option Closing, subject to the terms and conditions contained in this Agreement, the Company shall issue and deliver to the Underwriters in such locations that Dundee may advise the Company the certificates (in physical, electronic or such other form as Dundee may advise) representing the Additional Securities to be issued at the Option Closing in the names and denominations reasonably requested by the Underwriters.

 

	
11.2  

	
The Option Closing shalloccur not morethanthree businessdays afterthedate that the   notice of exercise of theOver-Allotment   Optionhasbeen  given inaccordance  with the  terms of the Over-Allotment Option.

 

	
11.3  

	
 At the Option Closing, the Company shall deliver to the Underwriters such documents set forth in Section 6.1(k) as the Underwriters may request.

 

	
11.4  

	
 If the Company has satisfied all of its obligations under this Agreement, on the Over­Allotment Closing Date the Underwriters shall pay to the Company by certified cheque or by wire transfer the gross proceeds of the sale of the Additional Securities, less (i) the Underwriting Fee and (ii) any costs and expenses owing to the Underwriters pursuant to Section 7.2.

 

 

  

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11.5  

	
The Company and Underwriters agree that the Over-Allotment Option Closing Date may occur on the same date as the Closing Date, subject to the Company’s prior receipt of the notice in accordance with the Over-Allotment Option.

 

	
12.  

	
INDEMNITY

 

	
12.1  

	
The Company shall protect, hold harmless and indemnify each of the Underwriters and their respective affiliates and their respective directors, officers, partners, employees, advisors and agents (as applicable) (collectively, the “Indemnified Parties” and individually an “Indemnified Party”) from and against all losses (other than loss of profit in connection with the distribution of the Offered Securities), claims, damages, liabilities, costs and expenses, including, without limitation, all amounts paid to settle actions or satisfy judgments or awards and all reasonable legal fees and expenses incurred by any Indemnified Party in connection with investigating or defending any of the foregoing on a solicitor and own client basis (collectively, a “Claim”) caused by or arising directly or indirectly by reason of:

 

 

	
(a)  

	
any information or statement (except any information or statement relating to the Underwriters, or any of them, provided by the Underwriters to the Company in writing expressly for inclusion in the Prospectuses or the U.S. Memorandum) contained in any of the Offering Documents being or being alleged to be a misrepresentation or untrue, or any omission or alleged omission to state therein any information;

 

	
(b)  

	
any breach by the Company of, or default under, any representation, covenant or agreement of the Company in this Agreement or any other document delivered pursuant to this Agreement or under Applicable Securities Laws or the failure by the Company to comply with its obligation under the Underwriting Agreement or Applicable Securities Laws;

 

	
(c)  

	
the Company not complying prior to the completion of the distribution of the Offered Securities or the Additional Securities with any requirement of any Applicable Securities Laws or other applicable securities legislation of any jurisdiction;

 

	
(d)  

	
any order made or any inquiry, investigation or proceeding instituted, threatened or announced by any court, securities regulatory authority or stock exchange (including the Exchange) or by any other competent authority, based upon any untrue statement, omission or misrepresentation or alleged untrue statement, omission or misrepresentation (except a statement, omission or misrepresentation relating to the Underwriters, or any of them, provided by the Underwriters to the Company in writing expressly for inclusion in the Prospectuses or the U.S. Memorandum) contained in any of the Prospectuses or the U.S. Memorandum, which operates to prevent or restrict the trading in or the sale or distribution of the Offered Securities or the Additional Securities;

 

  

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and shall reimburse the Indemnified Parties for all reasonable costs, charges and expenses, as incurred, which any of them may pay or incur in connection with investigating or disputing any Claim or action related thereto including the fees and expenses of legal counsel on a solicitor and own client basis and including reimbursement paid to the Underwriters for the time spent by the Indemnified Parties in connection with any Claim payable at the normal per diem rates of such Indemnified Parties.

 

This indemnity shall be in addition to any liability that the Company may otherwise have.

 

The Company agrees that, in any event, no Indemnified Party shall have any liability (either direct or indirect, in contract or tort or otherwise) to the Company, or any person asserting claims on their behalf or in connection with this Agreement, except to the extent that, if and to the extent that a court of competent jurisdiction in a final judgment from which no appeal can be made determines that a Claim resulted from the negligence, fraud or willful misconduct of the Indemnified Party claiming the indemnity, such Indemnified Party shall promptly reimburse to the Company any funds advanced to the Indemnified Party in respect of such Claim and the indemnity provided for in this Section 12 shall cease to apply to such Indemnified Party in respect of such Claim. For greater certainty, the Company and the Underwriters agree that they do not intend that any failure of the Underwriters to conduct such reasonable investigation as necessary to provide the Underwriters with reasonable grounds for believing the Offering Documents contained no misrepresentation shall constitute “negligence”, “fraud” or “willful misconduct” for the purposes of this Section 12 or otherwise disentitle the Underwriters from indemnification hereunder.

 

	
12.2 

	
If any Claim contemplated by this Section 12 is asserted against any of the Indemnified Parties, or if any potential Claim contemplated by this Section 12 comes to the knowledge of any of the Indemnified Parties, the Indemnified Party concerned shall notify in writing the Company as soon as reasonably practicable, of the nature of the Claim (provided that any failure or delay to so notify in respect of any potential Claim shall not affect the liability of the Company under this Section 12, except to the extent that such failure or delay significantly prejudices the defense of the proceedings or significantly increases the liability which the Company would otherwise have hereunder). The Company shall, subject to the following, be entitled (but not required) to assume the defence on behalf of the Indemnified Party of any suit brought to enforce the Claim; provided that the defence shall be through legal counsel selected by the Company and acceptable to the Indemnified Party, acting reasonably, and no admission of liability or settlement of the Claim shall be made by the Company without the prior written consent of the Indemnified Party. An Indemnified Party shall have the right to employ separate counsel in any such suit and participate in its defence but the fees and expenses of that counsel shall be at the expense of the Indemnified Parties unless:

 

  

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(a)  

	
the  Company fails to assume the defence of the suit on behalf of the Indemnified Party within ten days of receiving notice of the suit;

 

 

	
(b)  

	
the employment of that counsel has been authorized in writing by the Company;

or

 

	
(c)  

	
the named parties to the suit (including any added or third parties) including the

Company and the Indemnified Party have been advised in writing by outside counsel that representation of the Indemnified Party by counsel for the Company is inappropriate as a result of the potential or actual conflicting interests of those represented.

 

In each of the cases set out in Sections 12.2(a), (b) or (c), the Company shall not have the right to assume the defence of the suit on behalf of the Indemnified Party, but the Company shall be liable to pay the reasonable fees and expenses of separate counsel for all Indemnified Parties; provided that no Indemnified Party shall be entitled to have more than one law firm in any jurisdiction on a solicitor and own client basis.

 

	
12.  

	
 The Company shall not be liable under this Section 12 for any settlement of any claim or action effected without its prior written consent, which consent shall not be unreasonably withheld.

 

	
12.4  

	
 The Company hereby acknowledges and agrees that, with respect to this Section 12, the Underwriters are contracting on their own behalf and as agents for their affiliates, directors, officers, employees and agents and their respective affiliates’ directors, officers, employees, partners, shareholders, advisers and agents (collectively, the “Beneficiaries”). In this regard, each of the Underwriters shall act as trustee for the Beneficiaries of the covenants of the Company under this Section 12 with respect to the Beneficiaries and accepts these trusts and will hold and enforce those covenants on behalf of the Beneficiaries.

 

	
12.5  

	
 In order to provide for just and equitable contribution in circumstances in which the indemnity provided in this Section 12 would otherwise be available in accordance with its terms but is, for any reason not attributable to any one or more of the Indemnified Parties, held to be unavailable to or unenforceable by an Indemnified Party or is insufficient to hold the Indemnified Party harmless, the Company shall contribute to the amount paid or payable (or, if such indemnity is unavailable only in respect of a portion of the amount so paid or payable, such portion of the amount so paid or payable) by such Indemnified Party as a result of such liabilities, claims, demands, losses (other than loss of profits in connection with the distribution of the Offered Securities), costs, damages and expenses:

 

	
(a)  

	
in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand (being the proceeds of the Offering net of the Underwriting Fee but before deducting expenses) and the Underwriters (being the Underwriting Fee) on the other from the offering of the Offered Securities and the Additional Securities, if any; or

 

  

- 41 -

  

 

 

	
(b)  

	
if the allocation provided by clause (a) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (a) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the matters or things referred to in which resulted in such liabilities, claims, demands, losses, costs, damages or expenses, as well as any other relevant equitable considerations,

 

provided that the Underwriters shall not in any event be liable to contribute, in the aggregate, any amount in excess of the Underwriting Fee or any portion thereof actually received.

 

The relative fault of the Company on the one hand and of the Underwriters on the other shall be determined by reference to, among other things, whether the matters or things referred to in this Section 12 which resulted in such liabilities, claims, demands, losses, costs, damages and expenses relate to information supplied by or steps or actions taken or done or not taken or done by or on behalf of the Company or to information supplied by or steps or actions taken or done or not taken or done by or on behalf of the Underwriters and the relative intent, knowledge, access to information and opportunity to correct or prevent such statement, omission or misrepresentation, or other matter or thing referred to this Section 12. The amount paid or payable by an Indemnified Party as a result of the liabilities, claims, demands, losses, costs, damages and expenses referred to above shall be deemed to include any legal orother expensesreasonably incurred by such  Indemnified Party in connection withinvestigating ordefending any such liabilities, claims, demands, losses, costs, damages and expenses, whether or not resulting in an action, suit, proceeding or claim.

 

The parties agree that it would not be just and equitable if contribution pursuant to this section were determined by any method of allocation which does not take into account the equitable considerations referred to in this section.

 

11. TERMINATION OF AGREEMENT

 

11.1 In addition to any other remedies which  may be availableto the Underwriters, each of the Underwriters shall have the right to terminate its obligations under this Agreement including its obligation to purchase Offered Securities and any Additional Securities upon delivery of written notice to the Company at any time up to the Closing of the Offering:

 

	
(a)  

	
if in the sole opinion of the Underwriters (or any of them), acting reasonably, there shall have occurred any material change or change in material fact in relation to the Company or there shall be discovered any previously undisclosed material fact required to be disclosed in the Prospectus, in each case which would be expected to result, in the sole opinion of the Underwriters (or any of them) in a material adverse change in relation to the Company or have a material adverse effect on the market price or value of the Common Shares; or

 

 

  

- 42 -

  

 

 

	
(b)  

	
if any enquiry, action, suit, investigation or other proceeding, whether formal or informal, is commenced, announced or threatened or any order is made by any regulatory authority, stock exchange or any other federal, provincial or other governmental body having jurisdiction or authority over the Company or any of its material assets or operations, which, in the opinion of the Underwriters (or any of them), acting reasonably, operates to prevent or restrict materially the distribution or trading of the Offered Securities or which, in the opinion of the Underwriters (or any of them), might reasonably be expected to have a material adverse effect; or

 

	
(c)  

	
if there should develop, occur or come into effect or existence any event, action, state, condition, or major occurrence of national or international consequence (including any natural catastrophe, act of war, terrorism or similar event) or any governmental action, or change of any applicable law or regulation (or any judicial interpretation thereof) which, in the opinion of the Underwriters (or any of them), acting reasonably, materially adversely affects or involves, or will materially adversely affect or involve, the financial markets (including the commodity markets) or the business, operations or affairs of the Company; or

 

	
(d)  

	
the Underwriters (or any of them) become aware of, as a result of their due diligence review or otherwise, of (in the sole opinion of Underwriters (or any of them), acting reasonably) any material adverse change, or a change in any material fact or any material fact with respect to the Company which has not been disclosed to the Underwriters prior to the Closing Date; or

 

	
(e)  

	
if the Company is in breach of any material term, conditionor covenant of this Agreement or any representation or warranty given by the Company in this Agreement is or becomes false.

 

	
13.2  

	
The Underwriters shall make reasonable best effortsto give notice to the Company (in writing or by other means) of the occurrence of any of the events referred to in Section 13.1 provided that neither the giving nor the failure to give such notice shall in any way affect the entitlement of the Underwriters to exercise their rights under Section 13.1 at any time prior to or at the Closing Time on the Closing Date or the Over-Allotment Closing Date (as the case may be).

  

	
13.3  

	
 The rights of termination contained in this Section 13 may be exercised by any Underwriters giving written notice thereof to the Company and Dundee at any time prior to the Closing Time and are in addition to any other rights or remedies the Underwriters may have in respect of any default, act or failure to act or non-compliance by the Company in respect of any of the matters contemplated by this Agreement or otherwise.

 

	
13.4  

	
If the obligations of an Underwriter are terminatedunder this Agreement pursuant to these termination rights, the Company’s liabilities to the Underwriter shall be limited to the Company’s obligations under Sections 7, 12 and 13.

 

 

  

- 43 -

  

 

 

  

	
12.  

	
GENERAL

 

	
12.1  

	
 Any notice to be given hereunder shall be in writing and may be given by facsimile or by hand delivery and shall, in the case of notice to the Company, be addressed and faxed or delivered to:

 

Canadian Zinc Corporation

650 West Georgia Street, Suite 1710

Vancouver, British Columbia V6B 4N9

 

Attention:                     John F. Kearney

Fax No.:                     (604) 688-2043

 

with a copy to:

 

DuMoulin Black LLP

10th Floor, 595 Howe Street

Vancouver, British Columbia V6C 2T5

 

Attention:                     J. Douglas Seppala

Facsimile:                     (604) 687-3635

 

and on behalf of the Underwriters, be addressed and faxed or delivered to:

 

Dundee Securities Ltd.

Dynamic Funds Tower 1 Adelaide St. E., Suite 2100 

Toronto, Ontario M5C 2V9

 

Attention:                     Brad Ralph

Fax No.:                     (416) 350-3312

 

with a copy to:

 

Norton Rose Fulbright Canada LLP 

Royal Bank Plaza, South Tower, Suite 3800 

200 Bay Street, P.O. Box 84 

Toronto, Ontario M5J 2Z4

 

Attention:                     Robert Mason

Fax No.:                     (416) 216-3930

 

The Company and the Underwriters may change their respective addresses for notice by notice given in the manner referred to above.

 

	
14.2  

	
 Time and each of the terms and conditions of this Agreement shall be of the essence of this Agreement.

 

  

- 44 -

  

 

	
14.3  

	
 The forbearance or failure of one of the parties hereto to insist upon strict compliance by the other with any provision of this Agreement, whether continuing or not, shall not be construed as a waiver of any rights or privileges hereunder. No waiver of any right or privilege of a party arising from any default or failure hereunder of performance by the other shall affect such party’s rights or privileges in the event of a further default or failure of performance.

 

	
14.4  

	
 This Agreement constitutes the entire agreement between the parties hereto in respect of the matters referred to herein and there are no representations, warranties, covenants or agreements, expressed or implied, collateral hereto other than as expressly set forth or referred to herein and this Agreement supersedes any previous agreements, arrangements or understandings among the parties, including the “bought deal” offering letter dated July 9, 2014 between the Company and Dundee.

 

	
14.5  

	
 The headings in this Agreement are for reference only and do not constitute terms of the Agreement.

 

	
14.6  

	
 Except as expressly provided for in this Agreement, all warranties, representations, covenants and agreements of the Company herein contained, or contained in, documents submitted or required to be submitted pursuant to this Agreement, shall survive the purchase by the Underwriters of the Offered Securities and any Additional Securities and shall continue in full force and effect, regardless of the closing of the sale of the Offered Securities and any Additional Securities and regardless of any investigation which may be carried on by the Underwriters, or on their behalf, subject only to the applicable limitation period prescribed by law. For greater certainty, the provisions contained in this Agreement in any way related to the indemnification or the contribution obligations, including those provided for in Section 12, shall survive and continue in full force and effect, subject only to the applicable limitation period prescribed by law.

 

	
14.7  

	
 The Company hereby acknowledges that the Underwriters are acting solely as underwriters in connection with the purchase and sale of the Offered Securities contemplated hereby. The Company further acknowledges that the Underwriters are acting pursuant to a contractual relationship created solely by this Agreement entered into on an arm’s length basis, and in no event do the parties intend that the Underwriters act or be responsible as a fiduciary to the Company, its management, shareholders or creditors or any other person in connection with any activity that the Underwriters may undertake or have undertaken in furtherance of such purchase and sale of the Offered Securities, either before or after the date hereof. The Underwriters hereby expressly disclaim any fiduciary or similar obligations to the Company, either in connection with the Offering or any matters leading up to the Offering, and the Company hereby confirms its understanding and agreement to that effect. The Company and the Underwriters agree that they are each responsible for making their own independent judgments with respect to the Offering and that any opinions or views expressed by the Underwriters to the Company regarding the Offering, including, but not limited to, any opinions or views with respect to the price or market for the Offered Securities, do not constitute advice or recommendations to the Company. The Company and the Underwriters agree that the Underwriters are acting as principal and not the agent or fiduciary of the Company and no Underwriter has assumed, and no Underwriter will assume, any advisory responsibility in favour of the Company with respect to the Offering or the process leading thereto (irrespective of whether any Underwriter has advised or is currently advising the Company on other matters). The Company hereby waives and releases, to the fullest extent permitted by law, any claims that the Company may have against the Underwriters with respect to any breach or alleged breach of any fiduciary, advisory or similar duty to the Company in connection with Offering or any matters leading up to the Offering.

 

  

- 45 -

  

	
14.8  

	
 Dundee is hereby authorized by each of the other Underwriters to act on its behalf and the Company shall be entitled to and shall act on any notice, waiver or extension given hereunder by Dundee or agreement entered into by or on behalf of the Underwriters by Dundee, which represents and warrants that it has irrevocable authority to bind the Underwriters with respect to all matters contained herein, except in respect of any waiver of a condition of closing contained in Section 9, which waiver must be signed by all the Underwriters; any extension of any time requirement contained herein, which extension must be signed by all the Underwriters; any consent to a settlement pursuant to Section 12, which consent shall be given by the Indemnified Party or a notice of termination pursuant to Section 13, which notice may be given by any of the Underwriters exercising such right. Dundee shall, where practicable, consult with the other Underwriters concerning any matter in respect of which they act as representatives of the Underwriters.

 

	
14.9  

	
 Certain of the Underwriters, or affiliates thereof, own or control an equity interest in TMX Group Limited (“TMX Group”). In addition, certain of the Underwriters, or affiliates thereof, have nominee directors serving on the TMX Group’s board of directors. As such, each such investment dealer may be considered to have an economic interest in the listing of securities on any exchange owned or operated by TMX Group, including the TSX, the TSX Venture Exchange and the Alpha Exchange. No person or company is required to obtain products or services from TMX Group or its affiliates as a condition of any such dealer supplying or continuing to supply a product or service.

 

	
14.10  

	
 No alteration, amendment, modification or interpretation of this Agreement or any provision of this Agreement shall be valid and binding upon the parties hereto unless such alteration, amendment, modification or interpretation is in written form executed by the parties directly affected by such alteration, amendment, modification or interpretation.

 

	
14.11  

	
 The parties hereto shall execute and deliver all such further documents and instruments and do all such acts and things as any party may, either before or after the Closing Date, reasonably require in order to carry out the full intent and meaning of this Agreement.

 

	
14.12  

	
 This Agreement may not be assigned by any party hereto without the prior written consent of all of the parties hereto.

 

	
14.13  

	
 This Agreement shall be subject to, governed by, and construed in accordance with the laws of the Province of British Columbia and the Canadian federal laws applicable therein.

 

 

  

- 46 -

  

 

 

	
14.14  

	
 The invalidity or unenforceability of any particular provision of this Agreement shall not affect or limit the validity or enforceability of the remaining provisions of this Agreement.

 

	
14.15  

	
 The parties may sign this Agreement as many counterparts as may be deemed necessary and may be delivered by facsimile, portable document format (“pdf”) or other electronic means all of which so signed and delivered shall be deemed to be an original and together shall constitute one and the same instrument.

 

	
14.16  

	
 The Underwriters hereby acknowledge that they have consented that this Agreement and all documents evidencing or relating in any way to the purchase be drawn up in the English language only. Nous reconnaissons par les presentes avoir consenti que tous les documents faisant foi ou se rapportant de quelque maniere a notre achat soient rediges en anglais seulement.

 

 

 

 

  

- 47 -

  

If the foregoing is in accordance with your understanding and agreed to by you, please signify your acceptance on the accompanying counterparts of this letter and return same to the Underwriters whereupon this letter as so accepted shall constitute an agreement between the Company and the Underwriters enforceable in accordance with its terms.

 

Yours truly,

 

DUNDEE SECURITIES LTD.

By:                                                   

Authorized Signatory

 

 

CANACCORD GENUITY CORP.

By:                                                   

Authorized Signatory

 

 

PARADIGM CAPITAL INC.

By:                                                                            

Authorized Signatory

 

 

The foregoing is accepted and agreed to on July 15, 2014, effective as of the date appearing on the first page of this Agreement.

 

CANADIAN ZINC CORPORATION

By:__________________________

              Authorized Signatory

 

 

  

- 48 -

  

 

If the foregoing is in accordance with your understanding and agreed to by you, please signify your acceptance on the accompanying counterparts of this letter and return same to the Underwriters whereupon this letter as so accepted shall constitute an agreement between the Company and the Underwriters enforceable in accordance with its terms.

 

Yours truly,

 

DUNDEE SECURITIES LTD.

By:                                                                           

Authorized Signatory

 

 

CANACCORD GENUITY CORP.

By:                                                   

Authorized Signatory

PARADIGM CAPITAL INC.

 

By:________________________

                  Authorized Signatory

 

The foregoing is accepted and agreed to on July 15, 2014, effective as of the date appearing on the first page of this Agreement.

 

CANADIAN ZINC CORPORATION

 

By:_____________________

              Authorized Signatory

 

 

  

- 49 -

  

If the foregoing is in accordance with your understanding and agreed to by you, please signify your acceptance on the accompanying counterparts of this letter and return same to the Underwriters whereupon this letter as so accepted shall constitute an agreement between the Company and the Underwriters enforceable in accordance with its terms.

 

Yours truly,

 

DUNDEE SECURITIES LTD.

By:                                                                          

Authorized Signatory

 

 

CANACCORD GENUITY CORP.

By:                                                   

Authorized Signatory

 

PARADIGM CAPITAL INC.

 

By:________________________

Authorized Signatory

 

 

The foregoing is accepted and agreed to on July 15, 2014, effective as of the date appearing on the first page of this Agreement.

 

CANADIAN ZINC CORPORATION

 

By:___________________________

           Authorized Signatory

 

 

  

- 50 -

  

If the foregoing is in accordance with your understanding and agreed to by you, please signify your acceptance on the accompanying counterparts of this letter and return same to the Underwriters whereupon this letter as so accepted shall constitute an agreement between the Company and the Underwriters enforceable in accordance with its terms.

 

Yours truly,

 

DUNDEE SECURITIES LTD.

By:                                                                                

Authorized Signatory

 

 

CANACCORD GENUITY CORP.

By:                                                      

Authorized Signatory

 

 

PARADIGM CAPITAL INC.

By:                                                                                

Authorized Signatory

 

The foregoing is accepted and agreed to on July 15,2014, effective as of the date appearing on the first page of this Agreement.

  

 

CANADIAN ZINC CORPORATION

 

By:___________________________

           Authorized Signatory

 

 

  

- 51 -

  

SCHEDULE“A”

 

UNITED STATES OFFERS AND SALES

 

As used in this Schedule “A”, capitalized terms used herein and not defined herein shall have the meanings ascribed thereto in the underwriting agreement to which this Schedule is annexed and the following terms shall have the meanings indicated:

 

	
(a)  

	
“Directed Selling Efforts” means directed selling efforts as that term is defined in Rule 902(c) of Regulation S. Without limiting the foregoing, but for greater clarity in this Schedule, it means, subject to the exclusions from the definition of directed selling efforts contained in Regulation S, any activity undertaken for the purpose of, or that could reasonably be expected to have the effect of, conditioning the market in the United States for any of the Offered Securities or Additional Securities and includes the placement of any advertisement in a publication with a general circulation in the United States that refers to the offering of the Offered Securities or Additional Securities;

 

	
(b)  

	
“Regulation D” means Regulation D adopted by the SEC under the U.S. Securities Act;

 

	
(c)  

	
“Regulation S” means Regulation S adopted by the SEC under the U.S. Securities Act;

 

	
(d)  

	
“SEC” means the United States Securities and Exchange Commission;

 

	
(e)  

	
“Securities” means, together, the Offered Securities and the Additional Securities, if any;

 

	
(f)  

	
“Shares” means common shares in the capital of the Company;

 

	
(g)  

	
“Substantial U.S. Market Interest” means substantial U.S. market interest as that term is defined in Regulation S; and

 

	
(h)  

	
“U.S. Exchange Act” means the United States Securities Exchange Act of 1934, as amended.

 

Representations, Warranties and Covenants of the Underwriters

 

Each Underwriter acknowledges that the Offered Securities and the Additional Securities have not been and will not be registered under the U.S. Securities Act and may be offered and sold only in transactions exempt from or not subject to the registration requirements of the U.S. Securities Act.

 

Each Underwriter represents, warrants and covenants to the Company that:

 

1. Neither it nor any of its affiliates, nor any person acting on its or their behalf, has offered or sold, nor will not offer or sell, any Offered Securities or Additional Securities forming part of its allotment except (a) in an offshore transaction in accordance with Rule 903 of Regulation S or (b) in the case of Shares only, in the United States in accordance with Rule 144A as provided in paragraphs 4 through 8 below.

 

 

  

  

  

 

	
2.  

	
It has not entered and will not enter into any contractual arrangement with respect to the distribution of the Offered Securities or Additional Securities, except with its affiliates, any selling group members or with the prior written consent of the Company. It shall require each selling group member to agree, for the benefit of the Company, to comply with, and shall use its best efforts to ensure that each selling group member complies with, the same provisions of this Schedule as apply to such Underwriter as if such provisions applied to such selling group member.

 

	
3.  

	
Neither it nor any of its affiliates, nor any person acting on its or their behalf, has made or will make any Directed Selling Efforts in the United States with respect to the Offered Securities or Additional Securities.

 

	
4.  

	
All offers and sales of Offered Securities in the United States or to, or for the account or benefit of, any U.S. Person or a person in the United States, by it shall be made (i) through its U.S. Affiliate in compliance with all applicable U.S. federal and state broker- dealer requirements, or (ii) directly by it in accordance with Rule 15a-6 under the Exchange Act. It and its U.S. Affiliate, as applicable, are Qualified Institutional Buyers. Its U.S. Affiliate is and will be, on the date of each offer and sale of Offered Securities in the United States, duly registered as a broker-dealer pursuant to the Section 15(b) of the U.S. Exchange Act and the securities laws of each state in which such offer or sale is made (unless exempted from the respective state’s broker-dealer registration requirements) and a member of and in good standing with the Financial Industry Regulatory Authority Inc. No Flow-Through Shares have been or will be offered or sold by it or its U.S. Affiliates in the United States.

 

	
5.  

	
Offers and sales of Offered Securities in the United States or to, or for the account or benefit of, any U.S. Person or a person in the United States, by it shall not be made (i) by any form of general solicitation or general advertising (as those terms are used in Regulation D), including without limitation advertisements, articles, notices or other communications published in any newspaper, magazine, the internet or similar media or broadcast over radio, television or the internet, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising or (ii) in any manner involving a public offering within the meaning of Section 4(a)(2) of the U.S. Securities Act.

 

	
6.  

	
Offers to sell and solicitations of offers to buy the Offered Securities in the United States or to or for the account or benefit of a U.S. Person or a person in the United States shall be made by it in accordance with Rule 144A only to persons reasonably believed to be Qualified Institutional Buyers.

 

	
7.  

	
All purchasers of the Offered Securities in the United States shall be informed that the Offered Securities have not been and will not be registered under the U.S. Securities Act and are being offered and sold to such purchasers in reliance on the exemption from the registration requirements of the U.S. Securities Act provided by Rule 144A thereunder.

 

  

- 2 -

  

	
8.  

	
Each offeree in the United States shall be provided with a U.S. Memorandum, and each purchaser in the United States will have received at or prior to the time of purchase of any Offered Securities the U.S. Memorandum including the Final Prospectus.

 

	
9.  

	
Any offer, sale or solicitation of an offer to buy Offered Securities that has been made or will be made in the United States or to or for the account or benefit of a U.S. Person or a person in the United States, was or will be made only to Qualified Institutional Buyers that are exempt, or in transactions that are exempt, from registration under applicable state securities laws.

 

	
10.  

	
At least one business day prior to the Closing Time or the time of the Option Closing, if applicable, it will provide the transfer agent with a list of all purchasers of the Units in the United States or who are U.S. Persons.

 

	
11.  

	
Each U.S. Affiliate of the Underwriters that is purchasing the Units in the United States is a Qualified Institutional Buyer.

 

	
12.  

	
At the Closing Time or the time of the Option Closing, if applicable, it, together with its U.S. Affiliate selling Offered Securities in the United States, will provide a certificate, substantially in the form of Exhibit A to this Schedule, relating to the manner of the offer and sale of the Offered Securities in the United States, or will be deemed to have represented and warranted for the benefit of the Company that neither it nor any of its U.S. Affiliates offered or sold Offered Securities within the United States.

 

	
13.  

	
None of the Underwriter, its affiliates or any person acting on behalf of any of them has violated or will violate Regulation M under the U.S. Exchange Act in connection with offers and sales of the Offered Securities.

 

	
Representations, Warranties and Covenants of the Company

 

	
  

	
The Company represents, warrants and covenants to the Underwriters that:

 

	
14.  

	
The Company is a “foreign issuer” within the meaning of Rule 902(e) of Regulation S and reasonably believes that there is no Substantial U.S. Market Interest in the common shares in the capital of the Company.

 

	
15.  

	
The Company is not now, and as a result of the sale of Offered Securities or the Additional Securities contemplated hereby will not be, an “investment company” as defined in the United States Investment Company Act of 1940, as amended.

 

	
16.  

	
None of the Company, anyof its affiliates or any person acting on its or their behalf (other than the Underwriters or any person acting on their behalf, as to which no representation, warranty or covenant is made) has made or will make any Directed Selling Efforts in the United States, or has engaged or will engage in any form of general solicitation or general advertising (as those terms are used in Rule 502(c) of Regulation D), including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine, the internet or similar media or broadcast over radio, television or the internet, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Offered Securities in the United States.

 

 

  

- 3 -

  

	
17.  

	
The Shares and the Warrants are not, and as of the Closing Time will not be, and no securities of the same class as the Shares or the Warrants are or will be, (i) listed on a national securities exchange in the United States registered under Section 6 of the U.S. Exchange Act, (ii) quoted in an “automated inter-dealer quotation system”, as such term is used in the U.S. Exchange Act, or (iii) convertible or exchangeable at an effective conversion premium (calculated as specified in paragraph (a)(6) of Rule 144A) of less than ten percent for securities so listed or quoted.

 

	
18.  

	
For so long as any of the Shares are outstanding and are “restricted securities” within the meaning of Rule 144(a)(3) under the U.S. Securities Act, and if the Company is not subject to and in compliance with the reporting requirements of Section 13 or Section 15(d) of the U.S. Exchange Act or exempt from such reporting requirements pursuant to Rule 12g3-2(b) thereunder, the Company will provide to any holder of such Shares, or to any prospective purchaser of such Shares designated by such holder, upon the request of such holder or prospective purchaser, at or prior to the time of resale, the information required to be provided by Rule 144A(d)(4).

 

	
19.  

	

Except with respect to the offer and sale of the Offered Securities, the Company has not, for a period of six months prior to the date hereof, sold, offered for sale or solicited any offer to buy any of its securities in the United States.

 

 

 

  

- 4 -

  

EXHIBIT A

 

UNDERWRITERS' CERTIFICATE

 

	
  

	
In connection with the private placement in the United States of units (the “Securities”) of  Canadian Zinc Corporation (the “Company”) pursuant to the Underwriting Agreement dated  July 15, 2014 between the Company and the Underwriters named therein (the “Underwriting  Agreement”), each of the undersigned does hereby certify as follows:

 

	
(i)  

	
[Name of U.S. broker-dealer affiliate] is, and was on the date of each offer and sale of Securities in the United States, or to or for the account or benefit of a U.S. Person or a person in the United States, a duly registered broker or dealer with the United States Securities and Exchange Commission and under the securities laws of each state in which such offers or sales were made (unless exempted from such registration) and a member of and in good standing with the Financial Industry Regulatory Authority, Inc.;

 

	
(ii)  

	
all offers and sales of Securities that we made in the United States or to or for the account or benefit of a U.S. Person or a person in the United States were made by the [Name of U.S. broker-dealer affiliate] in compliance with all applicable U.S. federal and state broker-dealer requirements;

 

	
(iii)  

	
 each offeree in the United States was provided with a copy of the U.S. Memorandum for the offering of the Securities in the United States, and we provided each purchaser of Securities in the United States, prior to the sale of Securities to such purchaser, with a copy of the U.S. Memorandum including the Final Prospectus;

 

	
(iv)  

	
 immediately prior to our transmitting such U.S. Memorandum to such offerees, we had reasonable grounds to believe and did believe that each offeree was a Qualified Institutional Buyer (as defined in Rule 144A under the Securities Act of 1933, as amended (the “U.S. Securities Act”)) and, on the date hereof, we continue to believe that each U.S. person purchasing Securities from us is a Qualified Institutional Buyer;

 

	
(v)  

	
 no form of general solicitation or general advertising (as those terms are used in Rule 502(c) of Regulation D under the U.S. Securities Act) was used by us, including, without limitation, advertisements, articles, notices or other communications published in any newspaper, magazine, the internet or similar media or broadcast over radio, television or the internet, or any seminar or meeting whose attendees had been invited by general solicitation or general advertising, in connection with the offer or sale of the Securities in the United States; and

 

	
(vi)  

	
 the offering of the Securities has been conducted by us in accordance with the terms of the Underwriting Agreement.

 

	
  

	
Terms used in this certificate have the meanings given to them in the Underwriting Agreement 

unless otherwise defined herein.

 

 

  

  

  

 

Dated this___ day of ______________ ,2014.

 

[UNDERWRITER]                                                                          [U.S. BROKER-DEALER AFFILIATE]

 

By:                                                                         By:_______________________________________

 

Name:                                                                       Name:

Title:                                                                          Title:

 

 

 

 

  - 2 -

  

  

 

 

SCHEDULE“B”

 

MATTERS IN RESPECT OF WHICH COMPANY’S COUNSEL SHALL DELIVER OPINIONS PURSUANT TO SECTION 6.1(k)(ii)

 

	
(a)  

	
the Company is a “reporting issuer”, or its equivalent, in each of the Qualifying Jurisdictions and it is not listed as in default of any requirement of the Applicable Securities Laws in any of the Qualifying Jurisdictions;

 

	
(b)  

	
the Company is a corporation duly incorporatedand validly existing and is in good standing under the laws of the jurisdiction in which it was incorporated;

 

 

	
(c)  

	
the Company has all requisite corporate powerand capacity to carry on its business as now conducted as described in the Final Prospectus and to own, lease and operate its property and assets and the Company has the requisite corporate power and capacity to execute and deliver this Agreement, the Warrant Indenture, the Flow-Through Subscription Agreement and any certificates representing the Warrants and Compensation Warrants and to perform its obligations thereunder;

 

	
(d)  

	
the authorized and issued capital of the Company;

 

	
(e)  

	
the rights, privileges, restrictions, conditions, attributes and characteristics attaching to the Offered Securities and Additional Securities are accurately summarized in all material respects in the Prospectuses;

 

	
(f)  

	
all necessary corporate action having been takenby Company to authorize the

execution and delivery of this Agreement, the Warrant Indenture, the Flow­Through Subscription Agreement and the performance by the Company of its obligations hereunder and thereunder and to authorize the issuance, sale and delivery of the Offered Securities and Additional Securities and the grant of the Over-Allotment Option;

 

	
(g)  

	
 the Unit Shares and Flow-Through Shares have been validly issued as fully-paid and non-assessable common shares in the capital of the Company and upon full payment therefor and the issue thereof, the Warrant Shares, Additional Unit Shares, Additional Flow-Through Shares and Compensation Shares will have been validly issued as fully paid and non-assessable common shares in the capital of the Company;

 

	
(h)  

	
the Warrant Shares, Additional Unit Shares, Additional Flow-Through Shares and Compensation Shares have been duly allotted and reserved for issuance by the Company;

 

	
(i)  

	
the form and terms of the definitive certificate representing the Common Shares, the Warrants and the Compensation Warrants have been approved by the directors of the Company and comply in all material respects with the BCA, the notice of articles and articles of the Company and the rules, policies and by-laws of the TSX;

 

  

  

  

 

	(j)	
the Company has all necessary corporate power deliver this Agreement, the Warrant Indenture,  the Flow-Through Subscription Agreement and any certificates representing the Warrants and Compensation Warrants and to perform its obligations thereunder; and (ii) to issue and sell the Offered Securities and the Additional Securities and to grant the Over-Allotment Option;

 

	
(k) 

	
all necessary corporate action has been taken by the Company to authorize the execution and delivery of each of the Preliminary Prospectus, the Final Prospectus and any Supplementary Material and the filing thereof with the Commissions;

 

	
(l) 

	

each of this Agreement, the Warrant Indenture, the Flow-Through Subscription Agreement and any certificates representing the Warrants and Compensation Warrants has been duly executed and delivered by the Company and constitutes a legal, valid and binding obligation of the Company enforceable against the Company in accordance with its terms, subject to bankruptcy, insolvency and other laws affecting the rights of creditors generally and subject to the qualification that equitable remedies may be granted in the discretion of a court of competent jurisdiction and that enforcement of rights to indemnity, contribution and waiver of contribution set out in this Agreement may be limited by applicable law;

 

	
  

	
(m)

	
the execution and delivery of this Agreement, the Warrant Indenture, the Flow­ Through Subscription Agreement and any certificates representing the Warrants and Compensation Warrants, the fulfillment of the terms thereof by the Company and the offering, issuance, sale and delivery of the Offered Securities, Additional Securities and the grant of the Over-Allotment Option do not and will not result in a breach of or default under, and do not and will not create a state of facts which, after notice or lapse of time or both, will result in a breach of or default under, and do not and will not conflict with any of: (i) the terms, conditions or provisions of the articles or notice of articles of the Company; or (ii) any resolutions of the shareholders or directors (or any committee thereof) of the Company; (iii) any applicable laws of the Province of British Columbia or federal laws of Canada applicable therein;

 

	
  

	
(n)

	
Computershare Investor Services Inc. is the duly appointed registrar and transfer agent for the common shares of the Company;

 

 

	
  

	
(o)

	
Computershare Trust Company of Canada is the duly appointed warrant agent for the Warrants under the Warrant Indenture;

 

 

	
  

	
(p)

	
all necessary documents have been filed, all requisite proceedings have been taken and all approvals, permits and consents of the appropriate regulatory authority in each Qualifying Jurisdiction to qualify the distribution of the Offered Securities, the Over-Allotment Option, the Compensation Option and the Additional Securities in each of the Qualifying Jurisdictions through persons who are registered under Applicable Securities Laws and who have complied with the relevant provisions of such applicable laws;

 

 

  

- 2 -

  

(q)          subject only to the Standard Listing Conditions, the Unit Shares, Flow-Through Shares, Warrant Shares, Additional Unit Shares, Additional Flow-Through Shares and Compensation Shares have been conditionally listed or approved for listing on the TSX;

 

(r)          the Flow-Through Shares are “flow-through shares” as defined in subsection 66(15) of the Tax Act and are not “prescribed shares” for purposes of section 6202.1 of the regulations to the Tax Act;

 

(s)          the Company qualifies as a “principal business corporation” within the meaning of subsection 66(15) of the Tax Act; and

 

(t)          as to the accuracy of the statements under the headings “Eligibility For Investment” and “Certain Canadian Federal Income Tax Considerations” in the Prospectuses.

 

 

 

 

 

  

- 3 -

  

SCHEDULE“C”

 

FORM OF FLOW-THROUGH SHARE SUBSCRIPTION AGREEMENT

 

	
THIS AGREEMENT is dated for reference____________________________________

	
, 2014

 

BETWEEN: EACH PERSON LISTED AS A PURCHASER IN APPENDIX I TO THIS AGREEMENT 

 

(each, a “Purchaser”); 

 

AND

 

CANADIAN ZINC CORPORATION, having an office at 650 West Georgia

Street, Suite 1710, Vancouver, British Columbia V6B 4N9

 

(the “Issuer”).

 

WHEREAS pursuant to the preliminary short form prospectus of the Issuer dated July 15, 2014 (the “Prospectus”) the Issuer proposed to sell Flow-Through Shares (as that term is defined in the Prospectus) at a price of $0.38 per share (the “Flow-Through Offering Price”) on the terms and conditions set out in the Prospectus and this Agreement.

 

NOW THEREFORE, the Issuer and each Purchaser agree as follows:

 

	
1.  

	
Dundee Securities Ltd. (“Dundee”), on behalf of the Underwriters (as hereinafter defined), is executing this Agreement for and on behalf of and as agent for each Purchaser with the intent that this Agreement is entered into between the Issuer and each Purchaser, respectively.

 

	
2.  

	
Each Purchaser hereby irrevocably subscribes for and agrees to purchase from the Issuer, on and subject to the terms and conditions set out in the Prospectus and this Agreement (including Appendix II attached hereto), the number of Flow-Through Shares of the Issuer set forth across from such Purchaser’s name on Appendix I to this Agreement at a total issue price equal to the Flow-Through Offering Price payable in cash, of which such Purchaser agrees to pay such Purchaser’s full Commitment Amount (as hereinafter defined).

 

	
3.  

	
The Issuer hereby agrees to issue and sell to each Purchaser, on and subject to the terms and conditions set out in the Prospectus and this Agreement (including Appendix II attached hereto), the number of Flow-Through Shares of the Issuer set forth across from such Purchaser’s name on Appendix I to this Agreement at the Flow-Through Offering Price payable in cash.

 

	
4.  

	
For greater certainty, Flow-Through Shares will only be issued to a Purchaser pursuant to this Agreement when such Purchaser has paid such Purchaser’s full Commitment Amount and when the Issuer has received the full Flow-Through Offering Price therefor in cash to or to the order of the Issuer and the Issuer and such Purchaser hereby irrevocably agree to be bound by the terms and conditions set forth in Appendix II to this Agreement with respect to such Flow-Through Shares.

 

  

  

  

 

EXECUTED by Dundee, in its capacity as agent for each of the Purchasers this _________________ day of __________________________, 2014.

 

DUNDEE SECURITIES LTD., in its capacity as agent for each of the Purchasers

 

By:                                                                        

Authorized Signatory

 

EXECUTED by the Issuer this                                                          day       of                            ,2014.

 

CANADIAN ZINC CORPORATION

 

By:______________________________________

Authorized Signatory

 

 

 

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APPENDIX I

 

TO THE FLOW-THROUGH SHARE SUBSCRIPTION AGREEMENT

 

 

	
Name of Purchaser

	
Address and Telephone Number of Purchaser

	
Number of Flow­Through Shares Purchased

	
Commitment Amount Paid by Purchaser per Flow-Through Share

	
Social Insurance Number (If Purchaser is an Individual)

	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  
	  	  	  	  	  

 

 

 

  

  

  

APPENDIX I

 

 

TO THE FLOW-THROUGH SHARE SUBSCRIPTION AGREEMENT

 

 

 

THE FOLLOWING TERMS AND CONDITIONS GOVERN THE OFFERING OF THE FLOW-THROUGH SHARES:

 

1. LEAD UNDERWRITER ACTING AS AGENT FOR PURCHASERS

 

1.1 Dundee, on behalf of the Underwriters, represents, warrants, covenants, certifies,  acknowledges and declares to the Issuer (and acknowledges that the Issuer is relying  thereon) that:

 

	
(a)  

	
Dundee is the duly authorized agent for each Purchaser;

 

	
(b)  

	
Dundee has been authorized by each Purchaser to executethe Agreement for and

on behalf of and as agent for such Purchaser and to agree for and on behalf of and in the name of each Purchaser to the covenants, agreements, representations, warranties, statements and acknowledgements of the Purchasers contained in the Agreement;

 

	
(c)  

	
 all covenants, agreements, representations, warranties, statements and acknowledgements set out in the Agreement of the Purchasers are made by each Purchaser; and

 

	
(d)  

	
 each Purchaser has received a copy of the Prospectus and has tendered payment to Dundee of such Purchaser’s full Commitment Amountfor the Flow-Through Shares which such Purchaser has subscribed for pursuant to this Agreement in order that Dundee may deliver a certified cheque or bank draft payable to the Issuer in full payment of the Flow-Through Offering Price for such Flow-Through Shares for and on behalf of such Purchaser.

 

2. DEFINITIONS

 

2.1 In this Appendix, the following words have the following meanings:

 

	
(a)  

	
“Agreement” means the Flow-Through Share Subscription Agreement between the Issuer and each Purchaser dated for reference July 31, 2014 which, for greater certainty, includes Appendix I and this Appendix II;

 

	
(b)  

	
“Appendix” means thisAppendix II to the Agreement;

 

	
(c)  

	
“Business Day” meansa day on which Canadian chartered banks are open for the

transaction of regular business in the cities of Toronto, Ontario or Vancouver, British Columbia;

 

	
(d)  

	
“Canadian Exploration Expense” or “CEE” means an expense described in paragraph (f) of the definition of Canadian exploration expense in subsection 66.1(6) of the Tax Act, or that would be described in paragraph (h) of that definition if the reference therein to paragraphs (a) to (d) and (f) to (g.4) was a reference to paragraph (f), other than amounts which are prescribed to constitute “Canadian exploration and development overhead expenses” for the purposes of paragraph 66(12.6)(b) of the Tax Act, Canadian exploration expenses to the extent of the amount of any assistance described in paragraph 66(12.6)(a) of the Tax Act, any specified expenses described in paragraph 66(12.6)(b.1) of the Tax Act in respect of seismic data, or any amount paid or payable for prepaid services or rent that do not qualify as outlays or expenses for the period as described in the definition of “expense” in subsection 66(15) of the Tax Act;

 

 

  

  

  

	
(e)  

	
“Closing Date” means July 31, 2014 or such other date as the Issuer and Dundee may agree;

 

	
(f)  

	
“Commitment Amount” in respect of any Purchaser means the amount paid by such Purchaser for the Purchased Securities of such Purchaser, being the amount per Flow-Through Share set forth across from such Purchaser’s name on Appendix I; provided, for greater certainty, that the Commitment Amount will not be greater than the Flow-Through Offering Price;

 

	
(g)  

	
“Common Shares” means the common shares without par value of the Issuer as constituted on the date hereof;

 

	
(h)  

	
“CRA” means the Canada Revenue Agency;

 

	
(i)  

	
“Exploration Program” has the meaning set forth in Section 8.11;

 

	
  

	
(j)     

	
“Flow-Through Offering Price” means the issue price of $0.38 per Flow­ Through Share;

 

	
  

	
(k)     

	
“Flow-Through Shares” means the previously unissued Common Shares of the Issuer that are “flow-through shares” as defined in subsection 66(15) of the Tax Act;

 

	
(l)  

	
“Issuer” means Canadian Zinc Corporation;

 

	
  

	
(m)

	
“Dundee” means Dundee Securities Ltd.;

 

	
  

	
(n)

	
“Offered Securities” means the Flow-Through Shares offered for sale by the Issuer, through the Underwriters as agent for the Issuer, pursuant to the Prospectus;

 

 

	
  

	
(o)

	
“Person” means an individual, a firm, a corporation, a syndicate, a partnership, a trust, an association, an unincorporated organization, a joint venture, an investment club, a government or an agency or political subdivision thereof and every other form of legal or business entity of whatsoever nature or kind;

 

  

- 2 -

  

(p)          “Prescribed Forms” means the forms prescribed from time to time under

subsection 66(12.7) of the Tax Act filed or to be filed by the Issuer within the prescribed times renouncing to each Purchaser the Qualifying Expenditures incurred pursuant to the Agreement and all parts or copies of such forms required by the CRA to be delivered to such Purchaser;

 

(q)          “Prescribed Relationship” in respect of any Purchaser means a relationship

between the Issuer and such Purchaser where such Purchaser and the Issuer are related or otherwise do not deal at arm’s length for purposes of the Tax Act;

 

(r)          “Purchased Securities” in respect of any Purchaser means the Offered Securities

purchased by such Purchaser pursuant to the Prospectus;

 

(s)          “Purchaser” means each person listed as a purchaser in Appendix I to the

Agreement;

 

(t)          “Prospectus” means the preliminary short form prospectus of the Issuer dated

July 15, 2014;

 

(u)          “Qualifying Expenditures” means expenses that (a) are CEE on the date they are

incurred, (b) are incurred on or after the Closing Date and on or before the Termination Date, (c) may be renounced by the Issuer pursuant to subsection 66(12.6) in conjunction with subsection 66(12.66) of the Tax Act with an effective date not later than December 31, 2014 , and (d) but for the renunciation, the Issuer would be entitled to deduct in computing its income for income tax purposes;

 

(v) “Tax Act” means the Income Tax Act (Canada) and the regulations thereunder, as

amended, reenacted or replaced from time to time, including where applicable any specific proposals to amend the Tax Act that are publicly announced by the Minister of Finance (Canada) to have effect prior to the date hereof;

 

(w)          “Termination Date” means December 31, 2015;

 

(x)          “Underwriters” means collectively, Dundee, Canaccord Genuity Corp. and

Paradigm Capital Inc.; and

 

(y)          “Underwriting Agreement” means the underwriting agreement dated July 15,

2014 among the Underwriters and the Issuer.

 

 

  

- 3 -

  

	
3.  

	
FLOW-THROUGH SHARES

 

On Closing, and upon receipt by the Issuer from each Purchaser of such Purchaser’s full Commitment Amount, the Issuer will issue to such Purchaser such Offered Securities.

 

	
4.  

	
ADDITIONAL PURCHASERS TO PARTICIPATE IN THE PROGRAM

 

Each Purchaser acknowledges that the Issuer may have entered into, and may continue entering into, agreements similar to the Agreement with other persons in respect of Flow-Through Shares. Such agreements will be made and be dated for reference the same date as the Agreement. The Issuer will expend the funds from each issuance of Flow-Through Shares in the order of:

 

	
(a)  

	
 the reference date of any private placement “flow-through” subscription agreements entered into for such private placements; and

 

        (b)  the date of closing of any public offerings;

 

such that the subscription funds from the oldest “flow-through” financing will always be spent first and renunciation made in respect of such expenditures before any renunciations are made in respect of any Qualifying Expenditures that are financed from subsequent “flow-through” financings.

 

	
5.  

	
ACCRUED INTEREST

 

Each Purchaser acknowledges that any interest accruing on the Commitment Amount paid to the Issuer by such Purchaser belongs solely to the Issuer and will accrue to the sole benefit of the Issuer and may be applied by the Issuer for general corporate purposes.

 

	
6.  

	
REPRESENTATIONS AND WARRANTIES OF THE ISSUER

 

The Issuer hereby represents and warrants to each Purchaser as follows and acknowledges and confirms that each Purchaser is relying upon each of such representations and warranties in entering into the Agreement and completing the transactions contemplated herein:

 

	
6.1  

	
Flow-Through Shares: Upon issue, the Purchased Securities of eachPurchaserwill be “flow-through shares” as defined in subsection 66(15) of the Tax Act andare not  and will not be “prescribed shares” within the meaning of section 6202.1 of the regulations to the Tax Act. The Issuer does not have and will not have prior to the Termination Date a Prescribed Relationship with any Purchaser or, if a Purchaser is a partnership, any partner or limited partner of such partnership.

  

	
6.2  

	
 Principal-Business Corporation: The Issuer is a “principal-business corporation” as defined in subsection 66(15) of the Tax Act and will continue to be a “principal-business corporation” until such time as all of the Qualifying Expenditures required to be renounced under the Agreement have been incurred and validly renounced pursuant to the Tax Act.

 

 

 

  

- 4 -

  

	
6.3 

	
Commitment Amount: The Issuer has no reason to believe that it will be unable to incur, on or after the Closing Date and on or before the Termination Date or that it will be unable to renounce to each Purchaser effective on or before December 31, 2014, Qualifying Expenditures in an aggregate amount equal to the Commitment Amount of such Purchaser, and the Issuer has no reason to expect any reduction of such amount by virtue of subsection 66(12.73) of the Tax Act.

 

	
7.  

	
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS

 

Each Purchaser hereby represents and warrants for and on behalf of itself to the Issuer as follows  and acknowledges and confirms that the Issuer is relying upon such representations and  warranties in entering into the Agreement and completing the transactions contemplated herein:

 

	
7.1  

	
Prescribed Relationship: Each Purchaser represents that it, and if such Purchaser is a partnership, any partner or limited partner of such partnership, does not have and will not have prior to the Termination Date a Prescribed Relationship with the Issuer.

 

	
7.2  

	
 Not in the United States and a Non-U.S. Person: Each Purchaser represents that it did not receive the offer to purchase the Purchased Securities in the United States, as defined in Regulations under the United States Securities Act of 1933, as amended; was not in the United States at the time the Agreement was executed by it or on its behalf; and is not, and is not purchasing the Purchased Securities for the account or benefit of, a “U.S. person”, as defined in Regulations under the United States Securities Act of 1933, as amended.

 

	
7.3  

	
Purchasing as Principal: Each Purchaser represents that it is purchasing the Purchased Securities as principal for its own account.

 

	
8.  

	
COVENANTS OF THE ISSUER

 

The Issuer hereby covenants and agrees with each Purchaser as follows:

 

	
8.1  

	
Filing Selling Instruments: The Issuer shall file with the CRA within the time prescribed by subsection 66(12.68) of the Tax Act the forms prescribed for the purposes of such subsection together with a copy of this Agreement and any “selling instrument” contemplated by such subsection.

 

	
8.2  

	
Principal-Business Corporation: The Issuer shallmaintainitsstatus as a “principal-business corporation” as defined in subsection 66(15) of the Tax Act until such time as all of the Qualifying Expenditures required to be renounced under this Agreement have been incurred and validly renounced pursuant to the Tax Act.

                                                                                                                           

	
8.3  

	
Performance of Acts: The Issuer shall perform andcarry outallof the acts and things to be completed by it as provided in this Agreement.

 

	
8.4  

	
 Incurring and Renouncing of CEE: The Issuer shall incur Qualifying Expenditures in an amount equal to the Flow-Through Offering Price for the Purchased Securities of each Purchaser on or before the Termination Date in accordance with the Agreement and agrees to renounce to each Purchaser Qualifying Expenditures in an amount equal to the Commitment Amount of such Purchaser with an effective date no later than December 31, 2014.

 

  

- 5 -

  

	
8.5  

	
 Renunciation: The Issuer shall deliver to each Purchaser, by March 1, 2015, the relevant Prescribed Forms, fully completed and executed, renouncing to such Purchaser Qualifying Expenditures in an amount equal to the Commitment Amount of such Purchaser with an effective date of no later than December 31, 2014, and shall timely file such Prescribed Forms with the relevant taxation authorities.

 

	
8.6  

	
 Priority: The Issuer shall incur and renounce Qualifying Expenditures to all Purchasers pursuant to the Agreement and all other agreements with other Persons providing for the issue of Offered Securities entered into by the Issuer on the Closing Date (collectively the “Other Agreements”) pro rata by the number of Offered Securities issued or to be issued pursuant thereto before incurring and renouncing Qualifying Expenditures pursuant to any other agreement which the Issuer has entered into or shall enter into with any Person with respect to the issue of Flow-Through Shares. The Issuer shall not, without the prior written consent of Dundee (such consent not to be unreasonably withheld) enter into any other agreement which would prevent or restrict its ability to renounce Qualifying Expenditures to any Purchaser in the amount of such Purchaser’s Commitment Amount. If the Issuer is required under the Tax Act to reduce Qualifying Expenditures previously renounced to any Purchaser, the reduction shall be made pro rata by the number of Offered Securities issued or to be issued pursuant to this Agreement and pro rata to the reduction made under the Other Agreements but the Issuer shall not reduce Qualifying Expenditures renounced to any Purchaser under this Agreement until it has first reduced to the extent possible all CEE renounced to Persons other than the Purchasers and Persons under the Other Agreements.

 

	
8.7  

	
 QualifyingExpenditures: The expenses to be renounced by the Issuer to each Purchaser:

 

(a) willconstitute Qualifying Expenditures on the effective date of the renunciation;

 

(b) willnot include expenses that are (1) “Canadian exploration and development overhead expenses” (as defined in the regulations to the Tax Act for purposes of paragraph 66(12.6)(b) of the Tax Act) of the Issuer, 

 (2) amounts which constitute specified expenses for seismic data described in paragraph 66(12.6)(b.1) of the Tax Act, (3) any expenses for prepaid services or rent that do not qualifyas                                                                

outlays and expenses for the period as described in the definition of “expense” in subsection 66(15) of the Tax Act, or (4) any assistance received by the Issuer of the type described in paragraph 66(12.6)(a) of the Tax Act;

 

(c) willnot include any amount that has previously been renounced by the Issuer to such Purchasers or  to any other Person;

 

(d) would be deductible by the Issuer in computingits income for the purposesof Part I of the Tax Act but for the renunciation to such Purchaser; and

 

(e) will not be subject to any reduction under subsection 66(12.73) of the Tax Act.

 

 

  

- 6 -

  

	
8.8  

	
Avoidance of Transactions Requiring a Reduction in Qualifying Expenditures: The Issuer shall refrain from entering into transactions or taking deductions which would be likely to reduce its cumulative CEE to an extent that would preclude a renunciation of Qualifying Expenditures under this Agreement in an amount equal to the total of the Commitment Amount for all Purchasers.

 

	
8.9  

	
Valid Renunciation: The Issuer shall not be subject to the provisions of subsection 66(12.67) of the Tax Act in a manner which impairs its ability to renounce Qualifying Expenditures to any Purchaser in an amount equal to the Commitment Amount of such Purchaser.

 

	
8.10  

	
Applications for Prescribed Grants: If the Issuer receives, or becomes entitled to receive, any government assistance which is described in paragraph (a) of the definition of “excluded obligation” in subsection 6202.1(5) of the regulations to the Tax Act and the receipt or entitlement to receive such government assistance has or will have the effect of reducing the amount of CEE validly renounced to any Purchaser to less than the Commitment Amount of such Purchaser, the Issuer shall incur additional CEE so that it may renounce to such Purchaser Qualifying Expenditures in an amount not less than the Commitment Amount of such Purchaser.

 

	
8.11  

	
Use of Commitment Amount: The Issuer shall use the Commitment Amount of each Purchaser for an exploration program on certain interests in mineral resource properties situated in Canada for the purpose of determining the existence, location, extent and quality of the mineral resources located thereon, as more particularly described in the Prospectus (the “Exploration Program”).

 

	
8.12  

	
Records. The Issuer will maintain proper, complete and accurate accounting books and records relating to the Qualifying Expenditures. The Issuer will retain all such books and records as may be required to support the renunciation of Qualifying Expenditures contemplated by the Agreement and shall make such books and records available for inspection and audit by or on behalf of the Purchaser, the CRA or any governmental authority upon reasonable request.

 

	
8.13  

	
Information. The Issuer shall provide, forthwith upon the request of the Purchaser, such publicly available information as the Purchaser requires concerning the mineral exploration program pursuant to which the Issuer has incurred or will incur Qualifying Expenditures and the business affairs of the Issuer.

 

	
8.14  

	
Filing. The Issuer will file with the CRA, before March 31 of the year following a particular year, any return required to be filed under Part XII.6 of the Tax Act in respect of the particular year, and will pay any tax or other amount owing in respect of that return on a timely basis.

 

	
8.15  

	
Amalgamation. If the Issuer amalgamates with any one or more companies, any shares issued to or held by the Purchaser as a replacement for the Flow-Through Shares as a result of such amalgamation will qualify, by virtue of subsection 87(4.4) of the Tax Act, as “flow-through” shares and in particular will not be “prescribed shares” as defined in section 6202.1 of the regulations to the Tax Act.

 

  

- 7 -

  

	
8.16  

	
 Acts. The Issuer shall perform and carry out all acts and things to be completed by it as provided in this Subscription Agreement.

 

	
8.17  

	
 Representations. The representations, warranties, acknowledgments and covenants of the Issuer made in or pursuant to the Agreement shall be true as at the Closing Date with the same force and effect as if they had been made by the Issuer at the Closing Date.

 

	
8.18  

	
 Benefit. The Purchaser shall have the benefit of the representations, warranties and covenants made by the Issuer to the Underwriters and set forth in the Underwriting Agreement. Such representations, warranties and covenants shall form an integral part of this Subscription Agreement and shall survive the closing of the purchase and sale of the Flow-Through Shares and shall continue in full force and effect for the benefit of the Purchaser in accordance with the Underwriting Agreement.

 

	
8.19  

	
 Other Agreements. The Issuer has not entered into any agreements or made any covenants with any parties that would restrict the Issuer from entering into the Agreement and agreeing to incur and renounce Qualifying Expenditures in accordance with the Agreement, nor that would require the prior renunciation to any other person of Qualifying Expenditures prior to the renunciation of the Commitment Amount in favour of the Purchasers and the Issuer has no outstanding obligations to incur and renounce Qualifying Expenditures to any persons.

 

9. COVENANTS OF THE PURCHASERS

 

Each Purchaser hereby covenants and agrees with the Issuer that such Purchaser will not enter into any agreement or arrangement with any person or partnership which will cause such Purchaser’s Purchased Securities to be “prescribed shares” for the purposes of section 6202.1 of the regulations to the Tax Act, and the Purchaser acknowledges that if the Purchaser enters into an agreement or arrangement which would cause the Purchased Securities to be “prescribed shares” for the purposes of section 6202.1 of the regulations to the Tax Act, then the Purchaser will not be entitled to any tax benefits in relation to any Qualifying Expenditures and the Issuer will have no obligations to the Purchaser in respect of the Purchaser’s inability to receive any benefits from renounced Qualifying Expenditures or any compensation, indemnification or damages in respect thereof, notwithstanding the other provisions of this Agreement.

 

10. NO DISSEMINATION OF CONFIDENTIAL INFORMATION

 

The Issuer will be entitled to hold confidential all exploration information relating to any program on which any portion of the Commitment Amount of any Purchaser is expended pursuant to the Agreement and it will not be obligated to make such information available to any Purchaser except in the manner and at such time as it makes any such information available to its shareholders or to the public pursuant to the rules and policies of any stock exchange or laws, regulations or policies of any province.

 

 

  

- 8 -

  

	
11.  

	
 REVISION OF EXPLORATION PROGRAM

 

While it is the present intention of the Issuer to undertake the Exploration Program, it is the nature of mining exploration that data and information acquired during the conduct of an exploration program may alter the initially proposed Exploration Program and the Issuer expressly reserves the right to alter the Exploration Program on the advice of its technical staff or consultants and further reserves the right to substitute other exploration programs on which to expend part of the Commitment Amount, provided such programs entail the incurrence of Qualifying Expenditures and are otherwise capable of renunciation by the Issuer to each Purchaser pursuant to the Agreement.

 

	
12.  

	
INDEMNITY BY ISSUER

 

	
12.1  

	
 Failure to Renounce: If the Issuer does not incur by the Termination Date, and renounce to any Purchaser, effective on or before December 31, 2014 Qualifying Expenditures equal to the Commitment Amount of such Purchaser, the Issuer shall indemnify and hold harmless such Purchaser and each of the partners thereof if such Purchaser is a partnership or a limited partnership (for the purposes of this paragraph each an “Indemnified Person”) as to, and pay in settlement thereof to the Indemnified Person on or before the twentieth Business Day following the Termination Date an amount equal to the amount of any tax payable within the meaning of paragraph (c) of the definition of “excluded obligation” in subsection 6202.1(5) of the regulations to the Tax Act) under the Tax Act (and under the laws of a province) by any Indemnified Person as a consequence of such failure. In the event that the amount renounced by the Issuer to a Purchaser is reduced pursuant to subsection 66(12.73) of the Tax Act (or the corresponding laws of a province), the Issuer shall indemnify and hold harmless each Indemnified Person as to, and pay in settlement thereof to the Indemnified Person an amount equal to the amount of any tax payable (within the meaning of paragraph (c) of the definition of “excluded obligation” in subsection 6202.1(5) of the regulations to the Tax Act) under the Tax Act (and under the laws of a province ) by the Indemnified Person as a consequence of such reduction; provided that nothing in this paragraph shall derogate from any rights or remedies that any of the Purchasers may have at common law with respect to liabilities other than those payable under the Tax Act.

 

	
12.2  

	
Indemnities Held in Trust: To the extent that any Person entitled to be indemnified hereunder is not a party to the Agreement, Dundee shall obtain and hold the rights and benefits of the Agreement in trust for, and on behalf of, such Person and such Person shall be entitled to enforce the provisions of this section notwithstanding that such Person is not a party to the Agreement.

 

 

 

  

- 9 -

  

	
13.  

	
 OTHER FLOW-THROUGH SHARE SALES

 

Each Purchaser acknowledges that there may be other sales of Flow-Through Shares, some or all of which may occur after the acquisition of Flow-Through Shares by such Purchaser. Each Purchaser further acknowledges that there is a risk that insufficient funds may be raised from the sale of Flow-Through Shares to fund the Issuer’s objectives described in the Prospectus, if any, and that it is possible that no Flow-Through Shares may be purchased after such Purchaser has done so.

 

	
14.  

	
 ISSUER’S ACCEPTANCE

 

The Agreement, when executed by or on behalf of any Purchaser and delivered to the Issuer, will constitute a subscription for Flow-Through Shares by such Purchaser which will not be binding on the Issuer until accepted by the Issuer by executing the Agreement in the space provided on the Agreement and, notwithstanding the reference date on the Agreement, if the Issuer accepts the subscription by such Purchaser, the Agreement will be entered into on the date of such execution by the Issuer.

 

	
15.  

	
 MISCELLANEOUS

 

	
15.1  

	
 Each Purchaser has irrevocably authorized Dundee, in its sole discretion:

 

	
(a)  

	
to act as such Purchaser’s representative to receive certificates for Flow-Through Shares subscribed for and to execute in his, her or its name and on his, her or its behalf all closing receipts and documents required;

 

	
(b)  

	
to have the certificates for Flow-Through Shares registered in such name or names as Dundee may direct the Issuer; and

 

	
(c)  

	
to waive, in whole or in part, any representations, warranties, covenants or conditions for the benefit of such Purchaser contained herein or in any agreement or document ancillary or related thereto.

 

	
15.2  

	
 The Agreement is not assignable or transferable by any Purchaser or the Issuer without the express written consent of the other party.

 

	
15.3  

	
 Time is of the essence of this Appendix and the Agreement and will be calculated in accordance with the provisions of the Interpretation Act (Ontario).

 

	
15.4  

	
 Except as expressly provided in this Appendix, the Agreement and the Prospectus, and all agreements, instruments and other documents contemplated or provided for herein, the Agreement contains the entire agreement between the parties with respect to Flow­Through Shares and there are no other terms, conditions, representations or warranties whether expressed, implied, oral or written, by statute, by common law, by the Issuer, by Dundee, or by anyone else.

 

	
15.5  

	
 The Agreement may only be amended by agreement in writing by the parties hereto.

 

 

  

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15.6  

	
 The Agreement enures to the benefit of and is binding upon the Purchasers and the Issuer and their successors and permitted assigns.

 

	
15.7  

	
 Any party to the Agreement must give all notices to or other written communications concerning the Agreement to any other party to the Agreement by hand or by registered mail addressed to such party, in the case of the Issuer to the address given on the Prospectus and in the case of the Purchaser, to Dundee on behalf of the Purchasers at the address given on the Prospectus.

 

	
15.8  

	
 This Appendix is to be read with all changes in gender or number as required by the context.

 

	
15.9  

	
 The Agreement will be governed by and construed in accordance with the laws of British Columbia, and the parties hereto irrevocably attorn and submit to the jurisdiction of the courts of British Columbia with respect to any dispute related to the Agreement.

 

END OF APPENDIX II

 

 

 

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