Document:

District Metals Corp.: Exhibit 4.4 - Filed by newsfilecorp.com

    

    
SHAREHOLDER RIGHTS AGREEMENT

     THIS AGREEMENT is made as of the 29th day of June, 2020 (the "Effective Date") 

    BETWEEN:

    DISTRICT METALS CORP.,

    a corporation existing under the laws of the Province of British Columbia,

    (the "Corporation"),

    - and -

    EMX ROYALTY CORP.

    a corporation existing under the laws of a the Province of British Columbia,

    (the "Shareholder").

    WHEREAS pursuant to an amended and restated purchase and sale agreement dated June 29, 2020 between the Shareholder, Viad Royalties AB a wholly owned subsidiary of the Shareholder (the "Seller"), the Corporation and District Metals AB , a wholly-owned subsidiary of the Corporation (the "Buyer"), Buyer agreed to purchase (the "Acquisition"), from the Seller, all of the exploration licenses comprising the Tomtebo exploration project and the Trollberget Project, each in Sweden (the "Purchase and Sale Agreement")

    AND WHEREAS in connection with, and as partial consideration for, the Acquisition, the Shareholder was issued an aggregate of 5,882,830 common shares of the Corporation (the "Common Shares") representing 9.9% of the then issued and outstanding Common Shares and the Corporation has agreed to grant certain rights to the Shareholder as set forth herein.

    NOW THEREFORE, in consideration of the respective covenants and agreements of the Parties herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows:

    ARTICLE 1
GENERAL

    1.1 Definitions

    As used in this Agreement the following terms shall have the following respective meanings and grammatical variations of such terms shall have corresponding meanings:

    "Affiliate" means, with respect to any specified Person, any other Person which, directly or indirectly, through one or more Persons Controls, or is Controlled by, or is under common Control with, such specified Person;

    

    "Agreement" means this shareholder rights agreement among the Corporation and the Shareholder, as amended from time to time in accordance with the terms hereof;

    "Anti-Dilution Period" has the meaning ascribed to that term in the Purchase and Sale Agreement;

    "Board" means the board of directors of the Corporation as it is constituted from time to time;

    "Business Day" means a day other than a Saturday, Sunday or statutory holiday in the Province of British Columbia;

    "Control", "Controlled by" and "under common Control with", as used with respect to any Person, means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of such Person, whether through the ownership of voting securities, by agreement or otherwise;

    "Convertible Securities" means a security of the Corporation that is convertible or exercisable into or exchangeable for Common Shares;

    "Exchange" means, as of the date hereof and for so long as the Common Shares are listed thereon, the TSX Venture Exchange and, thereafter any market or exchange upon which the Common Shares are then listed;

    "Excluded New Securities" means Common Shares or Convertible Securities issued pursuant to any of the following:

    (i) upon conversion of, or with respect to, convertible securities, including warrants and stock options, outstanding as of the date hereof;

    (ii) pursuant to the acquisition of mining and related property interests or the acquisition of another resource corporation by Corporation by merger, asset purchase, take-over or other reorganization;

    (iii) pursuant to compensation or incentive plans that have been approved by the shareholders of the Corporation and the Exchange, if such Exchange approval is required;

    (iv) in connection with any stock split or subdivision, stock dividend, or recapitalization by Corporation in which all shareholders are recipients or affected equally;

    (v) issued in payment or satisfaction of bona fide arm's length indebtedness or for services;

    (vi) issued as a bona fide commission or finder's fee (including bonus shares in respect of a loan to the Corporation);

    (vii) issued pursuant to any shareholder rights plan adopted by the Board;

    

    (viii) issued upon conversion of Convertible Securities issued in compliance with Section 4.1 hereof, as applicable; or

    (ix) issued in connection with a rights offering made available to all shareholders, including the Shareholder.

    "Parties" means, collectively, the Corporation and the Shareholder;

    "Permitted Assign" means any Affiliate of the Shareholder; and

    "Person" means any individual, corporation or corporation with or without share capital, partnership, joint venture, association, trust, unincorporated organization, trustee, executor, administrator or other legal personal representative, governmental entity or entity however designated or constituted.

    1.2 Rules of Construction

    Except as may be otherwise specifically provided in this Agreement and unless the context otherwise requires, in this Agreement:

    (a) the terms "Agreement", "this Agreement", "the Agreement", "hereto", "hereof", "herein", "hereby", "hereunder" and similar expressions refer to this Shareholder Rights Agreement in its entirety and not to any particular provision hereof;

    (b) references to an "Article" or "Section" followed by a number or letter refer to the specified Article or Section of this Agreement;

    (c) the division of this Agreement into articles and sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement;

    (d) words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include all genders;

    (e) the word "including" is deemed to mean "including without limitation";

    (f) any reference to a statute, regulation or rule shall be construed to be a reference thereto as the same may from time to time be amended, re-enacted or replaced, and any reference to a statute shall include any regulations or rules made thereunder;

    (g) all references to the Shareholder's percentage ownership of Common Shares shall be calculated on a non-diluted basis, except as otherwise provided in this Agreement, and shall include all Common Shares owned directly or indirectly by the Shareholder, including Common Shares beneficially owned by Affiliates of the Shareholder;

    (h) any time period within which a payment is to be made or any other action is to be taken hereunder shall be calculated excluding the day on which the period commences and including the day on which the period ends; and

    

    (i) whenever any action is required to be taken or period of time is to expire on a day other than a Business Day, such action shall be taken or period shall expire on the next following Business Day.

    1.3 Currency

    Except where otherwise expressly provided, all amounts in this Agreement are stated in Canadian dollars.

    1.4 Time of Essence

    Time shall be of the essence of this Agreement.

    ARTICLE 2
DIRECTOR NOMINEE

    2.1 Board Representation

    (a) From and after the Effective Date and as long as the Shareholder owns in the aggregate of 9.9% or more of the issued and outstanding Common Shares (on a non-diluted basis), the Shareholder shall be entitled to designate one nominee to serve as a director of the Corporation (a "Shareholder Nominee") provided that he or she is qualified under applicable law, including the Exchange to act as a director of the Corporation. In the case of any proposed nomine who is not an officer, director or employee of the Shareholder or any Affiliate thereof such person must be acceptable to the Corporation acting reasonably. (For greater certainty, the Shareholder shall have the right but not the obligation to nominate a Shareholder Nominee.)

    (b) The Shareholder Nominee shall not be entitled to any salary or other compensation from the Corporation for his or her service as a director of the Corporation.

    (c) The Shareholder shall advise the Corporation of the identity of any Shareholder Nominee at least ten Business Days prior to the date on which proxy solicitation materials are to be mailed (as advised by the Corporation to the Shareholder) for purposes of any meeting of shareholders of the Corporation at which the election of directors to the Board is to be considered. If the Shareholder does not advise the Corporation of the identity of any such Shareholder Nominee prior to such deadline, then the Shareholder shall be deemed to have nominated its incumbent nominee. The Corporation shall advise the Shareholder of the mailing date of any such proxy solicitation materials at least 20 Business Days prior to such date.

    (d) Notwithstanding anything herein to the contrary, if either any governmental authority or stock exchange or market, as applicable objects to the Shareholder Nominee, the Shareholder Nominee shall immediately resign as a director of the Corporation.

    ARTICLE 3

    3.1 Top-up Issuance

    (a) Subject to Section 3.1(d), the Corporation agrees that from the Effective Date and until the expiry of the Anti-Dilution Period if the Shareholder's percentage ownership in the issued and outstanding Common Shares is reduced by more than 1.0% as a result of the issuance of Common for any reason (a "Top-Up Dilutive Event"), the Corporation will, within 10 days of such reduction, notify Shareholder of such reduction, and the Corporation will cause to be issued to Shareholder, that number of Common Shares as is necessary so that the Shareholder's maintains its percentage ownership of Common Shares immediately prior to the Top-Up Dilutive Event (on a non-diluted basis) after giving effect to the issuance of the Common Shares pursuant to the Top- Up Dilutive Event, for no additional consideration.

    

    (b) Subject to Section 3.1(d), for greater clarity, Corporation shall not be required to issue any Common Shares pursuant to Section 3.1, unless and until Shareholder's percentage ownership changes by more than 1.0% except that concurrently with the expiration of the Anti- Dilution Period, the Corporation shall issue such number of Common Shares (if any) as would have been issued under Section 3.1(a), but for this Section 3.1(b), even if the change in Shareholder's percentage ownership is less than 1.0%.

    (c) Any issuance of Common Shares pursuant to this Section 3.1 is subject to applicable stock exchange and regulatory approvals (and any shareholder approval as may be required thereby), and Corporation will use its commercially reasonable efforts to make such filings or obtain such approvals as may be required.

    (d) Notwithstanding anything herein to the contrary, the maximum number of Common Shares issuable under Sections 3.1(a) and (b) of this Agreement shall not exceed an aggregate of 3,000,000 Common Shares and EMX shall not , directly or indirectly, own, control or exercise control over more than 19.9% of the issued and outstanding voting or equity securities of the Corporation as a result of the issue Common Shares pursuant to this Section 3.1.

    ARTICLE 4
PRE-EMPTIVE RIGHT

    4.1 Pre-Emptive Right

    (a) From the expiry of the Anti-Dilution Period and for as long as the Shareholder owns at least 5% of the issued and outstanding Common Shares, and upon an offering of Common Shares or Convertible Securities (other than Excluded New Securities) (a "Pre-Emptive Dilutive Event") the Corporation hereby grants to Shareholder, effective from the end of the Anti-Dilution Period, a pre-emptive right (the "Pre-Emptive Right") to purchase:

    (i) in the case of an issuance of Common Shares, up to such number of Common Shares that will allow the Shareholder to maintain a percentage ownership interest in the issued and outstanding Common Shares, after giving effect to such Pre-Emptive Dilutive Event (but excluding any Excluded New Securities), that is the same as the percentage ownership interest that it had immediately prior to completion of such Pre-Emptive Dilutive Event; and

    (ii) in the case of an issuance of Convertible Securities , up to such number of Convertible Securities that will (assuming, for all purposes of this Section 4.1(a)(ii), the conversion, exercise or exchange of all of the Convertible Securities issued in connection with the Pre-Emptive Dilutive Event and issuable pursuant to this Section 4.1) allow the Shareholder to maintain a percentage ownership interest in the issued and outstanding Common Shares, after giving effect to such Pre-Emptive Dilutive Event, that is the same as the percentage ownership interest that it had immediately prior to completion of such Pre-Emptive Dilutive Event,

    

    for the same price and on the same terms as such Common Shares and/or Convertible Securities are being issued under the Pre-Emptive Dilutive Event.

    (b) The Pre-Emptive Right shall operate as follows:

    (i) If Corporation proposes to undertake a Pre-Emptive Dilutive Event, it shall give written notice to the Shareholder of its intention, describing the Pre- Emptive Dilutive Event including the price and the general terms upon which the Corporation proposes to issue the Common Shares and/or Convertible Securities (the "Offering Notice").

    (ii) Shareholder shall have five (5) Business Days from the date of receipt of any such Offering Notice to give notice to Corporation of its election to exercise the Pre-Emptive Right up to the extent of the percentage referred to above and to purchase Common Shares and/or Convertible Securities for the price and upon the general terms specified in the Offering Notice or in the case of a public offering that is a" bought deal" financing , within two (2) Business Days of receipt of an Offering Notice.

    (iii) Failure of Shareholder to respond to the notice within such five (5) Business Day period (or two Business Day period if applicable) shall be deemed an election to decline to exercise the Pre-Emptive Right and any rights that the Shareholder may have had to subscribe for any of the Common Shares and/or Convertible Securities issuable pursuant to such Pre-Emptive Dilutive Event shall be extinguished, in respect of such Pre-Emptive Dilutive Event.

    (iv) Where Common Shares and Convertible Securities are offered together in combination (in what are customarily referred to as "units"), Shareholder may only elect to exercise the Pre-Emptive Right in respect of the Common Shares and Convertible Securities in the same combination and on the same basis as all other purchasers thereof.

    (v) The acquisition by Shareholder of Common Shares and/or Convertible Securities pursuant to its Pre-Emptive Right will be subject to applicable regulatory and shareholders' approval requirements.

    (vi) Notwithstanding the foregoing, the Corporation shall not be obligated to provide notice to Shareholder pursuant to Section 4.1(b)(i) of any proposed Pre-Emptive Dilutive Event unless the resulting dilution to Shareholder, together with any previous issuance as to which Corporation has not provided Shareholder such notice, is 1.0% or more on a non-diluted basis.

    (c) As used in this Section 4.1, Shareholder shall mean Shareholder and any Affiliate of Shareholder then owning Common Shares, collectively. Shareholder may direct that the Common Shares be issued in the name of an Affiliate of Shareholder.

    

    ARTICLE 5
STANDSTILL

    5.1 Standstill

    (a) For so long as the Shareholder owns at least 9.9% of the issued and outstanding Common Shares (on a non-diluted basis), neither the Shareholder nor any of its Affiliates will, directly or indirectly, whether alone or jointly or in concert with any other Person, without the prior approval of the Corporation:

    (i) acquire, agree to acquire, or make any proposal or offer to acquire, directly or indirectly, ownership of (or control or direction over) any voting or equity securities of the Corporation or any of its Affiliates; by purchase or otherwise and whether such agreement or proposal is with the Corporation or any of its Affiliates or security holders or with any third party, where following such transaction the Shareholder, together with any Affiliates and Persons acting jointly or in concert therewith would collectively, directly or indirectly, own, control or exercise control over more than 19.9% of the issued and outstanding voting or equity securities of the Corporation; or

    (ii) solicit proxies from shareholders or other security holders of the Corporation or any of its Affiliates or otherwise attempt to influence the conduct of the shareholders or other security holders of the Corporation or any of its Affiliates;

    (iii) solicit, initiate or engage in any discussions or negotiations, or enter into any agreement, commitment or understanding, or otherwise act jointly or in concert with any Person in order to propose or effect any take-over bid, tender or exchange offer, amalgamation, merger, arrangement or other business combination involving the Corporation or any of its Affiliates or propose or effect any acquisition of assets from the Corporation or any of its Affiliates;

    (iv) in any manner, directly or indirectly, seek to control or influence the Board or the board of directors of any Affiliate of the Corporation or the management or policies of the Corporation or affect control of the Corporation or any of its Affiliates;

    (v) make any public announcement with respect to the foregoing or inconsistent with the foregoing, or assist, advise, encourage or agree, discuss, negotiate or otherwise act in concert with, any Person to do any of the foregoing (including by providing or arranging any financing);

    (vi) take any action with respect to the Corporation or its Affiliates that would reasonably be expected to require the Corporation or its Affiliates to make a public announcement regarding any of the types of matters described in items (i) through (v) above; or

    (vii) request the Corporation, directly or indirectly, to amend or waive any of these standstill provisions.

    

    (b) The restrictions contained in Section 5.1(a) shall terminate immediately upon the earlier of :

    (i) the date on which the Board announces an intention to agree or agrees with a third party to a merger, amalgamation, arrangement or similar transaction or the sale of all or substantially all of the assets of the Corporation (collectively, a "Transaction"), or agrees to support a Transaction which, if such Transaction is successfully completed, will result in shareholders of the Corporation holding less than 50% of the outstanding voting securities of the resulting corporation or entity; or

    (ii) the date on which a third party makes a public announcement of a bona fide take-over bid to acquire more than 50% of the outstanding voting securities of the Corporation.

    ARTICLE 6

    6.1 Sale of Shares

    (a) Without the prior written consent of the Corporation, the Shareholder covenants and agrees with the Corporation that, (i) for so long as the Shareholder owns at least 9.9% of the issued and outstanding Common Shares it shall not, directly or indirectly, sell or transfer (in a single transaction or series of transactions within a 30 day period) any Common Shares held by it or over which it exercises control or direction, representing more than 1.0% of the outstanding Common Shares then outstanding (on a non-diluted basis) without first notifying the Corporation in writing of the number of Common Shares proposed to be sold and the price at which it desires to sell such Common Shares (which price for greater certainty, may be, or may be determined with reference to, a market price of the Common Shares on the date of sale) and the Corporation will have five business days following its receipt of the notice from the Shareholder to elect to identify one or more purchasers of all or any portion of the Common Shares at the price offered by the Shareholder. If the Corporation fails to identify a purchaser within the five business day period, the Shareholder may only sell such Common Shares for a period of 30 days through a broad distribution, through the facilities of an exchange or trading system.

    ARTICLE 7
MISCELLANEOUS

    7.1 Termination

    This Agreement shall terminate and all rights and obligations hereunder shall cease immediately at such time as the Shareholder ceases to hold at least 5% of the issued and outstanding Common Shares (on a non-diluted basis) any time after the expiry of the Anti-Dilution Period. For certainty, this Agreement shall not terminate pursuant to this Article 7 prior to the expiry of the Anti-Dilution Period.

    7.2 Governing Law; Specific Performance

    (a) This Agreement shall be governed by and construed under the laws of the Province of British Columbia and the federal laws applicable therein.

    

    (b) Each of the Parties irrevocably and unconditionally (i) submits to the non-exclusive jurisdiction of the courts of the Province of British Columbia over any action or proceeding arising out of or relating to this Agreement, (ii) waives any objection that it might otherwise be entitled to assert to the jurisdiction of such courts and (iii) agrees not to assert that such courts are not a convenient forum for the determination of any such action or proceeding.

    (c) It is agreed and understood that monetary damages would not adequately compensate an injured Party for the breach of this Agreement by any Party, that this Agreement shall be specifically enforceable, and that any breach or threatened breach of this Agreement shall be the proper subject of a temporary or permanent injunction or restraining order, without bond. Further, each Party hereto waives any claim or defense that there is an adequate remedy at law for such breach or threatened breach.

    7.3 Amendments

    No amendment or waiver of any provision of this Agreement, nor any consent or approval to any departure therefrom, shall in any event be effective unless the same shall be in writing and executed by all Parties hereto.

    7.4 Successors and Assigns

    The rights provided by this Agreement may only be assigned, in whole or in part, by the Shareholder to a Permitted Assign without the prior approval of the other Parties. Upon such assignment, the Permitted Assign shall be treated as the Shareholder for all purposes under this Agreement, except that any entitlements to notice and any entitlements to furnished documentation pursuant to this Agreement shall be satisfied by the Corporation through delivery to the transferring Shareholder on behalf of the Permitted Assign. Except as otherwise expressly provided, the provisions prescribed herein shall inure to the benefit of, and be binding upon, the successors, assigns, heirs, executors, and administrators of the Parties and Permitted Assigns hereto.

    7.5 Entire Agreement

    This Agreement and the other agreements and documents delivered pursuant hereto and thereto constitute the full and entire understanding and agreement between the Parties with regard to the subject hereof and no Party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein.

    7.6 Severability

    If any provision of this Agreement is determined by a court of competent jurisdiction to be invalid, illegal or unenforceable in any respect, all other provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon a determination that any term or other provision of this Agreement is invalid, illegal or incapable of being enforced, the Parties shall negotiate in good faith to modify this Agreement so as to effect the original intent of the Parties as closely as possible.

    

    7.7 Delays or Omissions

    It is agreed that no delay or omission to exercise any right, power, or remedy accruing to any holder, upon any breach, default or noncompliance of any Party under this Agreement shall impair any such right, power, or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of any similar breach, default or noncompliance thereafter occurring. It is further agreed that any waiver, permit, consent, or approval of any kind or character on any Party's part of any breach, default or noncompliance under the Agreement or any waiver on such Party's part of any provisions or conditions of this Agreement must be in writing and shall be effective only to the extent specifically set forth in such writing. All remedies, either under this Agreement, by law, or otherwise afforded to holders, shall be cumulative and not alternative.

    7.8 Further Assurances

    Each of the Parties shall, from time to time hereafter and upon any reasonable request of the other, promptly do, execute, deliver or cause to be done, executed and delivered all further acts, documents and things as may be required or necessary for the purposes of giving effect to this Agreement.

    7.9 Notices

    Any notice under this Agreement shall be given in writing and either delivered, sent by electronic means (including facsimile transmission or email) or mailed by prepaid registered post to the Party to receive such notice at the address, facsimile number or email address indicated below:

    (a) to the Corporation at:

    District Metals Corp.

    907-1030 West Georgia Street 
Vancouver, British Columbia V6E 2Y3 
Attention:          Chief Executive Officer

    Email: gainsworth@districtmetals.com

    with a copy (which shall not constitute notice) to: DuMoulin Black LLP

    10th Floor, 595 Howe Street Vancouver, British Columbia V6C 2T5

    Attention: Joanna Cameron 
Facsimile: (604) 602-6804

    Email: jcameron@dumoulinblack.com

    (b) to the Shareholder at:

    EMX Royalty Corporation 
501-543 Granville Street

    Vancouver, British Columbia V6C 1X8 
Attention: President and CEO

    

    Email: corporate@emxroyalty.com

    or such other address or email address as such Party may hereafter designate by notice in writing to the other Parties. If a notice is delivered, it shall be effective from the date of delivery; if such notice is sent by electronic means during normal business hours of the addressee, it shall be effective on the Business Day such notice is sent and, if not sent during normal business hours of the addressee, then on the Business Day following the date such notice is sent; and if such notice is sent by mail, it shall be effective seven Business Days following the date of mailing, excluding all days when normal mail service is interrupted.

    7.10 Counterparts

    This Agreement may be executed in any number of counterparts (whether by electronic means), each of which shall be deemed an original, but all of which together shall constitute one instrument.

    

    IN WITNESS WHEREOF, the parties hereto have executed this Shareholder Rights Agreement as of the date set forth above.

    	 	DISTRICT METALS CORP.
	 	 	 
	 	by	/s/ Garrett Ainsworth
	 	 	Name: Garrett Ainsworth
Title: Chief Executive Officer
	 	 	 
	 	 	 
	 	EMX ROYALTY CORP.
	 	 	 
	 	by	/s/ David M. Cole
	 	 	Name: David M. Cole
Title: President & CEODistrict Metals Corp.: Exhibit 4.5 - Filed by newsfilecorp.com

    

    

    DISTRICT METALS CORP.

    (the "Company")

    SHARE OPTION PLAN

    Dated for Reference December 3, 2010

    ARTICLE 1

    PURPOSE AND INTERPRETATION

    Purpose

    1.1 The purpose of this Plan is to advance the interests of the Company by encouraging equity participation in the Company through the acquisition of Common Shares of the Company. It is the intention of the Company that this Plan will at all times be in compliance with the TSX Venture Policies (or, if applicable, the NEX Policies) and any inconsistencies between this Plan and the TSX Venture Policies) (or, if applicable, the NEX Policies) will be resolved in favour of the latter.

    Definitions

    1.2 In this Plan

    (a) Affiliate means a company that is a parent or subsidiary of the Company, or that is controlled by the same entity as the Company;

    (b) Associate has the meaning set out in the Securities Act;

    (c) Board means the board of directors of the Company or any committee thereof duly empowered or authorized the grant Options under this Plan;

    (d) Change of Control includes situations where after giving effect to the contemplated transaction and as a result of such transaction:

    (i) any one Person holds a sufficient number of voting shares of the Company or resulting company to affect materially the control of the Company or resulting company, or,

    (ii) any combination of Persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding, holds in total a sufficient number of voting shares of the Company or its successor to affect materially the control of the Company or its successor,

    where such Person or combination of Persons did not previously hold a sufficient number of voting shares to affect materially control of the Company or its successor. In the absence of evidence to the contrary, any Person or combination of Persons acting in concert by virtue of an agreement, arrangement, commitment or understanding, holding more than 20% of the voting shares of the Company or resulting company is deemed to materially affect control of the Company or resulting company;

    

    
        - 2 -

    

    (e) Common Shares means common shares without par value in the capital of the Company providing such class is listed on the TSX Venture (or the NEX, as the case may be);

    (f) Company means the company named at the top hereof and includes, unless the context otherwise requires, all of its Affiliates and successors according to law;

    (g) Consultant means an individual or Consultant Company, other than an  Employee, Officer or Director that:

    (i)   provides on an ongoing bona fide basis, consulting, technical, managerial or like services to the Company or an Affiliate of the Company, other than services provided in relation to a Distribution

    (ii)   provides the services under a written contract between the Company or an Affiliate and the individual or the Consultant Company;

    (iii)   in the reasonable opinion of the Company, spends or will spend a significant amount of time and attention on the business and affairs of the Company or an Affiliate of the Company; and

    (iv)   Has a relationship with the Company or an Affiliate of the Company that enables the individual or Consultant Company to be knowledgeable about the business and affairs of the Company;

    (h)  Consultant Company means for an individual consultant, a company or partnership of which the individual is an employee, shareholder or partner;

    (i)  Directors means the directors of the Company as may be elected from time to time;

    (j)  Discounted Market Price has the meaning assigned by Policy 1.1 of the TSX Ventures Policies;

    (k)  Disinterested Shareholder Approval means approval by a majority of the votes cast by all the Company's shareholders at a duly constituted shareholders' meeting, excluding votes attached to Common Shares beneficially owned by Insiders who are Service Providers or their Associates;

    (l)  Distribution has the meaning assigned by the Securities Act, and generally refers to a distribution of securities by the Company from treasury;

    (m)  Effective Date for an Option means the date of grant thereof by the Board;

    (n) Employee Means:

    

    
        - 3 -

    

    (i)  an individual who is considered an employee under the Income Tax Act (i.e. for whom income tax, employment insurance and CPP deductions must be made at source);

    (ii)  an individual who works full-time for the Company or a subsidiary thereof providing services normally provided by an employee and who is subject to the same control and direction by the Company over the details and methods of work as an employee of the Company, but for whom income tax deductions are not made at source; or

    (o) Exercise Price means the amount payable per Common Share on the exercise of an Option, as determined in accordance with the terms herof;

    (p) Expiry Date means the day on which an Option lapses as specified in the Option Commitment therefor or in accordance with the terms of this Plan;

    (q) Insider means an insider as defined in the TSX Venture Policies or as defined in securities legislation applicable to the Company;

    (r) Investor Relations Activities has the meaning assigned by Policy 1.1 of the TSX Ventures Policies;

    (s) Management Company Employee means an individual employed by a Person providing management services to the Company which are required for the ongoing successful operation of the business enterprise of the Company, but excluding a Person engaged in Investor Relations Activities;

    (t) NEX means a separate board of the TSX Venture for companies previously listed on the TSX Venture or the Toronto Stock Exchange which have failed to maintain compliance with the ongoing financial listing standards of those markets;

    (u) NEX Issuer means a company listed on the NEX;

    (v) NEX Policies means the rules and policies of the NEX as amended from time to time;

    (w) Officer means a board appointed officer of the Company;

    (x) Option means the right to purchase Common Shares granted hereunder to a Service Provider;

    

    
        - 4 -

    

    (y) Option Commitment means the notice of grant of an Option delivered by the Company hereunder to a Service Provider and substantially in the form of Schedule A attached hereto;

    (z) Optioned Shares means Common Shares that may be issued in the future to a Service Provider upon the exercise of an Option;

    (aa) Optionee means the recipient of an Option hereunder;

    (bb) Outstanding Shares means at the relevant time, the number of issued and outstanding Common Shares of the Company from time to time;

    (cc)  Participant means a Service Provider that becomes an Optionee;

    (dd) Person includes a company, any unincorporated entity or an individual;

    (ee) Plan means this share option plan, the terms of which are set out herein or as may be amended;

    (ff) Plan Shares means the total number of Common Shares which may be reserved for issuance as Optioned Shares under the Plan as provided in §2.2;

    (gg) Regulatory Approval means the approval of the TSX Venture and any other securities regulatory authority that has lawful jurisdiction over the Plan and any Options issued hereunder;

    (hh) Securities Act means the Securities Act, R.S.B.C 1996, c. 418, or any successor legislation

    (ii) Securities Provider means a Person who is a bona fide Director, Officer, Employee, Management Company Employee, Consultant or Company Consultant and also includes a company, 100% of the share capital of which is beneficially owned by one or more Service Providers;

    (jj) Share Compensation Arrangement means any Option under this Plan but also includes any other stock option, stock option plan, employee stock purchase plan or any other compensation or incentive mechanism involving the issuance or potential issuance of Common Shares to a Service Provider;

    (kk) Shareholder Approval means approval by a majority of the votes cast by eligible shareholders of the Company at a duly constituted shareholder's meeting;

    (ll) TSX Venture means the TSX Venture Exchange and any successor thereto; and

    

    
        - 5 -

    

    (mm) TSX Venture Policies means the rules and policies of the TSX Venture as amended from time to time.

    Other Words and Phrases

    1.3   Words and phrases used in this Plan but which are not defined in the Plan, but are defined in the TSX Venture Policies (and, if applicable, the NEX Policies), will have the meaning assigned to them in the TSX Ventures Policies (and, if applicable, the NEX Policies).

    Gender

    1.4   Words importing the masculine gender include the feminine or neuter, words in the singular include the plural, words importing a corporate entity include individuals, and vice versa.

    ARTICLE 2

    SHARE OPTION PLAN

    Establishment of Share Option Plan

    2.1  The Plan is hereby established to recognize contributions made by Service Providers and to create an incentive for their continuing assistance to the Company and its Affiliates.

    Maximum Plan Shares

    2.2 The maximum aggregate number of Plan Shares that may be reserved for issuance under the Plan at any point in time is 10% of the Outstanding Shares at the time Plan Shares are reserved for issuance as a result of the grant of an Option, less any Common Shares reserved for issuance under share options granted under Share Compensation Arrangements other than this Plan, unless this Plan is amended pursuant to the requirements of the TSX Venture Policies and, if applicable, the NEX Policies.

    Eligibility

    2.3 Options to purchase Common Shares may be granted hereunder to Service Providers from time to time by the Board. Service Providers that are not individuals will be required to undertake in writing not to effect or permit any transfer of ownership or option of any of its securities, or to issue more of its securities (so as to indirectly transfer the benefits of an Option), as long as such Option remains outstanding, unless the written permission of the TSX Venture and the Company is obtained.

    Options Granted Under the Plan

    2.4  All Options granted under the Plan will be evidenced by an Option Commitment in the form attached as Schedule A, showing the number of Optioned Shares, the term of the Option, a reference to vesting terms, if any, and the Exercise Price.

    

    
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    2.5  Subject to specific variations approved by the Board, all terms and conditions set out herein will be deemed to be incorporated into and form part of an Option Commitment made hereunder.

    Limitations on Issue

    2.6  Subject to §2.9, the following restrictions on issuances of Options are applicable under the Plan:

    (a) no Service Provider can be granted an Option if that Option would result in the total number of Options, together with all other Share Compensation Arrangements granted to such Service Provider in the previous 12 Months, exceeding 5% of the Outstanding Shares (unless the Company has obtained Disinterested Shareholder Approval to do so);

    (b)  no Options can be granted under the Plan if the Company is on notice from the TSX Venture to transfer its listed shares to the NEX;

    (c)  the aggregate number of Options granted to Service Providers conducting Investor Relations Activities in any 12 - month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant, without the prior consent of the TSX Venture; and

    (d)  the aggregate number of the Options granted to any one Consultant in any 12 - month period cannot exceed 2% of the Outstanding Shares, calculated at the time of grant, without the prior consent of the TSX Venture.

    Options Not Exercised

    2.7  In the event an Option granted under the Plan expires unexercised or is terminated by reason of dismissal of the Optionee for cause or is otherwise lawfully cancelled prior to exercise of the Option, the Optioned Shares that were issuable thereunder will be returned to the Plan and will be eligible for re-issuance.

    Powers of the Board

    2.8  The Board will be responsible for the general administration of the Plan and the proper execution of its provisions, the interpretation of the Plan and the determination of all questions arising hereunder. Without limiting the generality of the foregoing, the Board has the power to

    (a) allot Common Shares for issuance in connection with the exercise of Options;

    (b) grant Options hereunder;

    (c) subject to any necessary Regulatory Approval, amend, suspend, terminate or discontinue the Plan, or revoke or alter any action taken in connection therewith, except that no general amendment or suspension of the Plan will, without the prior written consent of all Optionees, alter or impair any Option previously granted under the Plan unless the alteration or impairment occurred as a result of a change in the TSX Venture Policies or the Company's tier classification thereunder;

    

    
        - 7 -

    

    (d) delegate all or such portion of its powers hereunder as it may determine to one or more committees of the Board, either indefinitely or for such period of time as it may specify, and thereafter each such committee may exercise the powers and discharge the duties of the board in respect of the Plan so delegated to the same extent as the Board is hereby authorized so to do; and

    (e) Amend this Plan (except for previously granted and outstanding Options) to reduce the benefits that may be granted to Service Providers (before a particular Option is granted) subject to the other terms hereof.

    Terms or Amendments Requiring Disinterested Shareholder Approval

    2.9  The Company will be required to obtain Disinterested Shareholder Approval prior to any of the following actions becoming effective:

    (a) the Plan, together with all of the Company's other Share Compensation Arrangements, could result at any time in:

    (i) the aggregate number of Common Shares reserved for issuance under Options granted to Insiders exceeding 10% of the Outstanding Shares (in the event that this Plan is amended to reserve for issuance more than 10% of the Outstanding Shares);

    (ii) the number of Optioned Shares issued to Insiders within a one-year period exceeding 10% of the Outstanding Shares (in the event that this Plan is amended to reserve for issuance more than 10% of the Outstanding Shares);or

    (iii) the issuance to any one Optionee, within a 12 - month period, of a number of Common Shares exceeding 5% of Outstanding Shares; or

    (b) any reduction in the Exercise Price on an Option previously granted to an Insider.

    ARTICLE 3

    TERMS AND CONDITIONS OF OPTIONS

    Exercise Price

    3.1  The Exercise Price of an Option will be set by the Board at the time such Option is allocated under the Plan, and cannot be less than the Discounted Market Price.

    Term of Option

    3.2  An Option can be exercisable for a maximum of 10 years from the Effective Date

    

    
        - 8 -

    

    Option Amendment

    3.3  Subject to §2.9(b), the Exercise Price of an Option may be amended only if at least six (6) months have elapsed since the later of the date of commencement of the term of the Option, the date the Common Shares commenced trading on the TSX Venture, and the date of the last amendment of the Exercise Price.

    3.4  An Option must be outstanding for at least one year before the Company may extend its term, subject to the limits contained in §3.2.

    3.5  Any proposed amendment to the terms of an Option must be approved by the TSX Venture prior to the exercise of such Option.

    Vesting of Options

    3.6  Subject to §3.7, vesting of Options shall be at the discretion of the Board and, with respect to any particular Options granted under the Plan, in the absence of a vesting schedule being specified at the time of grant, all such Options shall vest immediately. Where applicable, the vesting of Options will be generally subject to:

    (a) the Service Provider remaining employed by or continuing to provide services to the Company or any of its Affiliates as well as, at the discretion of the Board, achieving certain milestones which may be defined by the Board from time to time or receiving a satisfactory performance review by the Company or any of its Affiliates during the vesting period; or

    (b) the Service Provider remaining as a Director of the Company or any of its Affiliates during the vesting period.

    Vesting of Options Granted to Consultants Conducting Investor Relations Activities

    3.7  Notwithstanding §3.6, Options granted to Consultants conducting Investor Relations Activities will vest:

    (a) over a period of not less than 12 months as to 25% on the date that is three months from the date of grant, and a further 25% on each successive date that is three months from the date of the previous vesting; or

    (b)   such longer vesting period as the Board may determine

    Optionee Ceasing to be Director, Employee or Service Provider

    3.8  No Option may be exercised after the Service Provider has left his employ / office or has been advised by the Company that his services are no longer required or his service contract has expired, except as follows:

    (a) in the case of the death of an Optionee, any vested Option held by him at the date of death will become exercisable by the Optionee's lawful personal representatives, heirs or executors until the earlier of one year after the date of death of such Optionee and the date of expiration of the term otherwise applicable to such Option;

    

    
        - 9 -

    

    (b) an Option granted to any Service Provider will expire 90 days (or such other time, not to exceed one year, as shall be determined by the Board as at the date of grant or agreed to by the Board and the Optionee at any times prior to the expiry of the Option) after the date the Optionee ceases to be employed by or provide services to the Company, but only to the extent that such Option has vested at the date the Optionee ceased to be so employed by or to provide services to the Company; and

    (c) in the case of an Optionee being dismissed from employment or service for cause, such Optionee's Options, whether or not vested at the date of dismissal will immediately terminate without right to exercise same.

    Non Assignable

    2.9  Subject to §3.8, all Options will be exercisable only by the Optionee to whom they are granted and will not be assignable or transferable.

    Adjustment of the Number of Optioned Shares

    3.10  The number of Common Shares subject to an Option will be subject to adjustment in the events and in the manner following:

    (a) in the event of a subdivision of Common Shares as constituted on the date hereof, at any time while and Option is in effect, into a greater number of Common Shares, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder, in addition to the number of Optioned Shares in respect of which the right to purchase is then being exercised, such additional number of Common Shares as result from the subdivision without an Optionee making any additional payment or giving any other consideration therefor;

    (b) in the event of a consolidation of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, into a lesser number of Common Shares, the Company will thereafter deliver and an Optionee will accept, at the time of purchase of Optioned Shares hereunder, in lieu of the number of Optioned Shares in respect of which the right to purchase is then being exercised, the lesser number of Common Shares as result from the consolidation;

    (c) in the event of any change of the Common Shares as constituted on the date hereof, at any time while an Option is in effect, the Company will thereafter deliver at the time of purchase of Optioned Shares hereunder the umber of shares of the appropriate class resulting from the said change as an Optionee would have been entitled to receive in respect of the number of Common Shares so purchased had the right to purchase been exercise before such change;

    

    
        - 10 -

    

    (d) in the event of a capital reorganization, reclassification or change of outstanding equity shares (other than a change in the par value thereof) of the Company, a consolidation, merger or amalgamation of the Company with or into any other company or a sale of the property of the Company as or substantially as an entirety at any time while an Option is in effect, an Optionee will thereafter have the right to purchase and receive, in lieu of the Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option, the kind and amount of shares and other securities and property receivable upon such capital reorganization, reclassification, change, consolidation, merger, amalgamation or sale which the holder of a number of Common Shares equal to the number of Optioned Shares immediately theretofore purchasable and receivable upon the exercise of the Option would have received as a result thereof. The subdivision of consolidation of Common Shares at any time outstanding (whether with or without par value) will not be deemed to be a capital reorganization or a reclassification of the capital of the Company for the purposes of this §3.10;

    (e) an adjustment will take effect at the time of the event giving rise to the adjustment, and the adjustments provided for in this section are cumulative;

    (f) the Company will not be required to issue fractional shares in satisfaction of its obligations hereunder. Any fractional interest in at Common Share that would, except for the provisions of this §3.10, be deliverable upon the exercise of an Option will be cancelled and not be deliverable by the Company; and

    (g) if any questions arise at any time with respect to the Exercise Price or number of Optioned Shares deliverable upon exercise of an Option in any of the events set out in this §3.10, such questions will be conclusively determined by the Company's auditors, or, if they decline to so act, any other firm of Chartered Accountants, in Vancouver, British Columbia (or in the city of the Company's principal executive office) that the Company may designate and who will be granted access to all appropriate records. Such determination will be binging upon the Company and all Optionees.

    ARTICLE 4

    COMMITMENT AND EXERCISE PROCEDURES

    Option Commitment

    4.1  Upon grant of an Option hereunder, an authorized officer of the Company will deliver to the Optionee an Option Commitment detailing the terms of such Options and upon such delivery the Optionee will be subject to the Plan and have the right to purchase the Optioned Shares at the Exercise Price set out therein subject to the terms and conditions hereof.

    Manner of Exercise

    4.2  An Optionee who wishes to exercise his Option may do so by delivering

    (a) a written notice to the Company specifying the number of Optioned Shares being acquired pursuant to the Option; and

    

    
        - 11 -

    

    (b) a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price by the Optioned Shares being acquired.

    Delivery of Certificate and Hold Periods

    4.3  As soon as practicable after receipt of the notice of exercise described in §4.2and payment in full for the Optioned Shares being acquire, the Company will direct its transfer agent to issue a certificate to the Optionee for the appropriate number of Optioned Shares. Such certificate issued will bear a legend stipulating any resale restrictions required under applicable securities laws. Further, if the Exercise Price is set bellow than the then current market price of the Common Shares on the TSX Venture, the certificate will also bear a legend stipulating that the Optioned Shares are subject to a four-month TSX Venture hold period commencing the date of the grant of the Option.

    ARTICLE 5

    GENERAL

    Employment and Services

    5.1  Nothing contained in the Plan will confer upon or imply in favour of any Optionee any right with respect to office, employment or provision of services with the Company, or interfere in any way with the right of the Company to lawfully terminate the Optionee's office, employment or service at any time pursuant to the arrangements pertaining to same. Participation in the Plan by an Optionee is voluntary.

    No Representation or Warranty

    5.2  The Company makes no representation or warrant as to the future market value of Common Shares issued in accordance with the provisions of the Plan or to the effect of the Income Tax Act (Canada) or any other taxing statute governing the Options or the Common Shares issuable thereunder or the tax consequences to a Service Provider. Compliance with applicable securities laws as to the disclosure and resale obligations of each Participant is the responsibility of each Participant and not the Company.

    Interpretation

    5.3  The Plan will be governed and construed in accordance with the laws of the Province of British Columbia.

    Continuation of Plan

    5.4  The Plan will become effective from and after December 15, 2008.

    

    
        - 12 -

    

    SCHEDULE A

    SHARE OPTION PLAN

    OPTION COMMITMENT

    Notice is hereby given that, effective this ___________ day of _______________, ______________ (the "Effective Date") District Metals Corp. (the "Company") has granted to _________________________________________ ( the "Optionee"), an Option to acquire ______________ Common Shares ("Optioned Shares") up to 5.00pm Vancouver Time on the ___________ day of ______________________, ________ ( the "Expiry Date") at a Exercise Price of Cdn$______________ per share.

    At the date of grant of the Option , the Company is classified as [ a Tier ____ Issuer under TSX Venture Policies] [an NEX Issuer].

    Optioned Shares will vest and may be exercised as follows:

    [INSERT VESTING SCHEDULE] [INSERT VESTING TERMS]

    The Option shall expire ______ days after the date the Optionee ceases to be employed by or provide services to the Company.

    The grant of the Option evidenced hereby is made subject to the terms and conditions of the Plan, which are hereby incorporated herein and forms part hereof.

    To exercise your Option, deliver a written notice specifying the number of Optioned Shares you wish to acquire, together with a certified cheque, wire transfer or bank draft payable to the Company for the aggregate Exercise Price. A certificate for the Optioned Shares so acquired will be issued by the transfer agent as soon as practicable thereafter and may bear a minimum four month non-transferability legend from the date of this Option Commitment, the text of which is as follows. [An issuer may grant stock options without a hold period, provided the exercise price of the options is set at or above the market price of the Company's shares rather than below.].

    "WITHOUT PRIOR WRITTEN APPROVAL OF THE TSX VENTURE EXCHANGE AND COMPLIANCE WITH ALL APPLICABLE SECURITIES LEGISLATION, THESECURITIES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, TRANSFERRED, HYPOTHECATED OR OTHERWISE TRADED ON ORTHROUGH THE FACILITIES OF THE TSX VENTURE EXCHANGE OR OTHERWISE IN CANADA OR TO OR FOR THE BENEFIT OF A CANADIAN RESIDENT UNTIL 12:00 AM (MIDNIGHT) ON [insert date 4 months from the date of grant]"

    The Company and the Optionee represent that the Optionee under the terms and conditions of the Plan is a bona fide Service Provider (as defined in the Plan), entitled to receive Options under TSX Venture Policies.

    

    
        - 13 -

    

    The Optionee also acknowledges and consents to the collection and use of Personal Information (as defined in the Policies of the TSX Venture Exchange) by both the Company and the TSX Venture (or the NEX, as the case may be) as more particularly set out in the Acknowledgement - Personal Information in use by the TSX Venture (or the NEX,  as the case may be) on the date of this Share Option Plan.

     

    DISTRICT METALS CORP.

     

    ____________________________________

    Authorized Signatory

     

    _____________________________________

    [insert name of optionee]

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