Document:

PolyMet Mining Corp. - Exhibit 4.1 - Filed by newsfilecorp.com

 

 

Private & Confidential

 

STANDBY PURCHASE AGREEMENT 

 

 

 

POLYMET MINING CORP. 

and 

GLENCORE AG 

 

 

Dated: April 10, 2013 

Contents 

	1
      	Definitions
      and Interpretation 	2 
	 	 	 
	2
      	The
      Rights Offering 	2
	 	 	 
	3
      	Representations
      and Warranties 	3
	 	 	 
	4
      	Further
      Undertakings 	4
	 	 	 
	5
      	Conditions
      and Termination Rights 	4
	 	 	 
	6
      	Exclusivity
      	6
	 	 	 
	7
      	Confidentiality
      and Announcements 	6
	 	 	 
	8
      	Further
      Assurance 	7
	 	 	 
	9
      	Notices
      	7
	 	 	 
	10
      	General
      	9
	 	 	 
	11
      	Governing
      Law and Jurisdiction 	10
	 	 	 

	Schedule
      1 	Definitions
      
	 	 
	Schedule
      2 	Provisions
      Relating to the Rights Offering 
	 	 
	Schedule
      3 	Form of Initial Press Release
	 	 
	Schedule
      4 	Form of Preliminary Prospectus
	 	 
	Schedule
      4.3.3 	Corporate
      Governance Agreement 
	 	 
	Schedule
      5 	Representations
      and Warranties of PolyMet 
	 	 
	Schedule
      5(A) 	  
	 	 
	Schedule
      5(E) 	  
	 	 
	Schedule
      5(J) 	  
	 	 
	Schedule
      5(K) 	  
	 	 
	Schedule
      5(L) 	  
	 	 
	Schedule 5(Q)	 
	 	 
	Schedule
      5(R) 	  
	 	 
	Schedule 5(S)	 
	 	 
	Schedule
      5(W) 	  
	 	 
	Schedule 5(X)	 
	 	 
	Schedule
      6 	Representations
      and Warranties of Glencore 
	 	 
	Schedule
      S1 	Material
      Agreements 
	 	 
	Exhibit
      5.4(e) 	Form
      of Farris, Vaughan, Wills & Murphy LLP 

	Exhibit
      5.4(f) 	Form
      of Troutman Sanders LLP 

 

THIS AGREEMENT is entered into as of April 10, 2013 

PARTIES: 

          POLYMET
MINING CORP., (registered in British Columbia) whose registered office is at 700
West Georgia Street, Suite 2500, Vancouver, British Columbia V7Y 1B3
("PolyMet" or the "Company"); 

          GLENCORE
AG, a corporation formed under the laws of Switzerland whose registered office
is at Baarermatstrasse 3, CH-6431, Baar, Switzerland ("Glencore"). 

WHEREAS 

	(A) 	
      The Company intends to raise US$60,000,000 by way of a
      rights offering (the "Rights Offering") to its Shareholders on the
      terms and conditions set out herein and in the draft Preliminary
      Prospectus attached hereto as Schedule 4.

	 	 
	(B) 	
      Glencore has agreed to provide a standby commitment in
      respect of the Rights Offering on the terms and conditions set out in
      Schedule 2.

	 	 
	(C) 	
      Glencore has agreed to advance US$20 million (the
      "Loan") to PolyMet’s wholly-owned subsidiary, Poly Met Mining, Inc,
      a corporation existing under the laws of Minnesota ("PMI"), by the
      purchase of a Tranche E Debenture (the "Tranche E Debenture") under
      the Purchase Agreement, dated as of October 31, 2008, as amended by Letter
      Agreement, dated November 28, 2008, as further amended by Amendment Letter
      No. 2, dated December 12, 2008, as further amended by Amendment Letter No.
      3, dated December 19, 2008, as further amended by Amendment Letter No. 4,
      dated January 30, 2009, as further amended by Amendment Letter No. 5,
      dated February 24, 2009, as further amended by Amendment Letter No. 6,
      dated March 30, 2009, as further amended by Amendment Letter No. 7, dated
      April 28, 2009, as further amended by Amendment Letter No. 8, dated June
      4, 2009, as further amended by Amendment Letter No. 9, dated August 31,
      2009, as further amended by Amendment Letter No. 10, dated October 20,
      2009, as further amended by Amendment Letter No. 11, dated November 16,
      2009, as further amended by the Amendment and Waiver, dated as of November
      12, 2010, as further amended by Amendment and Waiver, dated as of November
      30, 2011, and as further amended by Amendment No 14 Relating to the
      Purchase Agreement, dated of even date herewith (collectively the
      "Purchase Agreement").

	 	 
	(D) 	
      The Company has issued warrants to Glencore pursuant to
      the Purchase Agreement entitling Glencore to purchase up to an aggregate
      of 5,600,000 Common Shares at a price of US$1.50 per share at any time
      until December 31, 2015.

	 	 
	(E) 	
      PolyMet has waived the  application of the Shareholders Rights Plan of the Company dated December 4,  2003 as amended and restated on May 25, 2007 (approved by the Company's Shareholders on June 27, 2007) and  January 16, 2008 (approved by the  Company's Shareholders on June 17, 2008 and reapproved by the Company's  Shareholders on July 13, 2011 and July 10, 2012) (the "Rights Plan") between the Company  and Computershare Investor Services Inc. (formerly known as Pacific Corporate  Trust Company) to the transactions contemplated by this Agreement

	 	 
	(F) 	
      Glencore agrees to waive its right of first refusal
      contained in paragraphs 11, 12 and 13 of the subscription agreement dated
      November 12, 2010 between the Company and Glencore (as confirmed by
      paragraph 13 of the subscription agreement dated November 30, 2011 between
      the Company and Glencore), as applicable, to the issue of the Rights and
      the Rights Offering Shares and the Standby Shares.

1 

- 2 - 

THE PARTIES AGREE as follows: 

	
1 		
Definitions and Interpretation

	
	 	 	 
	
1.1 		
Words defined in Schedule 1 have, where used in this Agreement, the meanings given to them in that Schedule.

	
	 	 	 
	
1.2 		
In this Agreement:

	
	 	 	 
		
1.2.1 		
the table of contents and the headings are inserted for convenience only and do not affect the interpretation of this Agreement;

	
	 	 	 
		
1.2.2 		
references to Sections, Articles and Schedules are to sections of this Agreement, sections of the Schedules, articles of the Schedules and schedules to this Agreement respectively unless otherwise stated and references to "this
Agreement" include the Schedules;

	
	 	 	 
		
1.2.3 		
references to a statutory provision are references to it as from time to time amended, consolidated or re-enacted (with or without modification) and include all instruments or orders made under it;

	
	 	 	 
		
1.2.4 		
whenever a provision of this Agreement requires an approval or consent and the approval or consent is not delivered in writing within the applicable time limit, then, unless otherwise specified, the Party whose consent or approval
is required shall be conclusively deemed to have withheld its approval or consent;

	
	 	 	 
		
1.2.5 		
unless the context requires otherwise, (i) any definition of or reference to any agreement, instrument or other document shall be construed as referring to such agreement, instrument or other document as from time to time amended,
supplemented or otherwise modified (subject to any restrictions on such amendments, supplements or modifications set out herein or in any such agreement, instrument or other document) in accordance with the terms hereof and thereof, (ii) any
reference herein to any Person shall be construed to include such Person’s successors and permitted assigns, and (iii) the words "this Agreement", "herein," "hereof" and "hereunder," and words of similar import, when used in this Agreement,
shall be construed to refer to this Agreement in its entirety and not to any particular provision hereof;

	
	 	 	 
		
1.2.6 		
where the "including" or "includes" is used in this Agreement it means "including (or includes) without limitation";

	
	 	 	 
		
1.2.7 		
words importing the plural include the singular and vice versa; and

	
	 	 	 
		
1.2.8 		
except as otherwise provided herein, references to a time of day are to Vancouver, B.C. time.

	
	 	 	 
	
2 		
The Rights Offering

	
	 	 	 
	
2.1 		
In  accordance with the terms and conditions of this Agreement, the Company agrees to make the Rights Offering and issue Rights to the holders of its outstanding Shares on the Record Date and Glencore agrees to exercise its Basic Subscription Right in full and has informed the Company that it
has yet to determine whether or not it will exercise its Additional Subscription Privilege, and shall subscribe for the Standby Shares in accordance with the provisions of Schedule 2.

	

- 3 - 

	
2.2 		
Glencore and the Company hereby acknowledge that the completion of the Rights Offering will trigger Section 4 of the Purchase Warrants which will require the exercise prices in the Purchase Warrants to be adjusted in accordance
with the formulae set forth in Section 4(c) of the Purchase Warrants.

	
	 	 
	
2.3 		
Glencore and the Company hereby acknowledge that the completion of the Rights Offering will trigger Section 12 in the Exchange Warrant which will require the exercise prices in the Exchange Warrants to be adjusted in accordance
with the formulae set forth in Section 12(d) of the Exchange Warrant.

	
	 	 
	
2.4 		
Glencore waives the provisions of paragraphs 11, 12, and 13 of the Subscription Agreement dated November 12, 2010 between the Company and Glencore (as confirmed by paragraph 13 of the Subscription Agreement dated November 30, 2011
between the Company and Glencore) with respect to the issue of the Rights Offering Securities, provided that the waiver contemplated by this Section 2.4 shall be revoked upon (x) termination of this Agreement or (y) the Company has committed a
material breach of this Agreement.

	
	 	 
	
2.5 		
The Company confirms that the application of the Rights Plan has been waived by the Board of Directors of the Company in connection with the Rights Offering and the issue of the Rights Offering Securities to Glencore.

	
	 	 
	
3 		
Representations and Warranties

	
	 	 
	
3.1 		
All representations and warranties of PolyMet and Glencore contained in this Agreement shall survive the completion of the transactions contemplated herein.

	
	 	 
		
Representations and Warranties of the Company

	
	 	 
	
3.2 		
The Company represents and warrants to Glencore as set out in Schedule 5.

	
	 	 
	
3.3 		
The Company shall not do, or omit to do, anything which would or might reasonably be expected to cause a representation or warranty set out in Schedule 5 to become untrue, inaccurate or misleading at any time (by reference to the
circumstances subsisting at that time) before the Rights Offering Closing Date.

	
	 	 
	
3.4 		
The Company shall notify Glencore immediately if it becomes aware of a fact or circumstance which has caused or would be reasonably likely to cause a representation or warranty set out in Schedule 5 to become untrue, inaccurate or
misleading at any time (by reference to circumstances subsisting at that time) before the Rights Offering Closing Date.

	
	 	 
	
3.5 		
The Company accepts that Glencore is relying upon the representations and warranties set out in Schedule 5 in connection with entering into this Agreement and consummating the transactions contemplated hereby.

	
	 	 
		
Representations and Warranties of Glencore

	
	 	 
	
3.6 		
Glencore represents and warrants to the Company as set out in Schedule 6.

	
	 	 
	
3.7 		
Glencore accepts that the Company is relying upon the representations and warranties set out in Schedule 6 in connection with entering into this Agreement and consummating the transactions contemplated hereby.

	

- 4 - 

	4 	
      Further Undertakings

	 	 	 
		
      Conduct of Business During Rights
  Offering

	 	 	 
	4.1 	
      The Company hereby undertakes that, except with the prior
      written approval of Glencore, between the date of this Agreement and the
      Rights Offering Closing Date it shall (and procure that its Subsidiaries
      shall):

	 	 	 
		4.1.1 	
      operate their business in the ordinary course, provided
      that for the avoidance of doubt the transactions which are entered
      pursuant to this Agreement or in connection with the Loan shall be deemed
      to be in the ordinary course for this purpose; and

	 	 	 
		4.1.2 	
      not enter into or agree to enter into, or amend, any
      material contracts.

	 	 	 
	4.2 	
      The Company shall allow representatives of Glencore
      reasonable access to the operations of the Company and its Subsidiaries
      (subject to the Company receiving reasonable notice), subject always to
      appropriate restrictions to ensure that the Company or any of its
      Subsidiaries does not breach any legal or contractual confidentiality
      obligations.

	 	 	 
	4.3 	
      Nomination of Directors and Corporate Governance
      Agreements

	 	 	 
		4.3.1 	
      Subject to Section 4.3.2, effective as of the Rights
      Offering Closing Date, the Board shall resolve as necessary to appoint or
      nominate (as the case may be) such number of directors (the "Glencore
      Nominees") nominated by Glencore to the Board proportional to the
      number of issued and outstanding Shares held by Glencore (on a fully
      diluted basis) at the applicable time relative to all the issued and
      outstanding Shares (on a fully diluted basis) rounding down to the nearest
      whole director.

	 	 	 
		4.3.2 	
      Notwithstanding anything in this Section 4.3, Glencore does
      not intend to exercise the right set forth in Section 4.3.1 any earlier
      than January 1, 2014.

	 	 	 
		4.3.3 	
      The Company covenants and agrees, prior to the Rights
      Offering Closing Date to execute the corporate governance agreement in
      substantially the form set out in Schedule 4.3.3 (the "Corporate
      Governance Agreement") to give effect to this Section 4.

	 	 	 
		
    Demand Registration

	 	 	 
	4.4 	
      Effective as of the Rights Offering Closing Date,
      Glencore and the Company shall, execute and deliver a registration rights
      agreement (the "Registration Rights Agreement") substantially in
      the form of the registration rights agreement entered into between the
      Company and Glencore AG dated November 12, 2010, pursuant to which the
      Company will agree to provide registration rights under the 1933 Act, and
      the rules and regulations promulgated thereunder, and applicable state
      securities laws, and qualification rights under Canadian Securities Laws
      with respect to the Shares acquired by Glencore in connection with this
      Agreement.

	 	 	 
	5 	
      Conditions and Termination Rights

	 	 	 
	5.1 	
      For the avoidance of doubt, no obligation under this
      Agreement is subject to any conditions precedent other than as expressly
      set out in this Section 5 or Article 5 of Schedule 2.

	 	 	 
	5.2 	
      The Company will use its best efforts to procure that
      each of the conditions set out in the relevant sections of Article 5 of
      Schedule 2 and this Section 5 are fulfilled by the time referred to
      therein or herein or by such later time as may be agreed in writing with
      Glencore. The Company shall notify Glencore immediately in the event that
      the Company or any of its directors or officers
become aware that any such condition has become or might
      reasonably be expected to become incapable of fulfilment by the time
      referred to therein or by such later time as may be agreed in writing with
  Glencore.

- 5 - 

	5.3 	
      Neither Party shall be entitled to claim that any
      obligation under this Agreement need not be performed as a result of any
      condition set out in Article 5 of Schedule 2 not being satisfied if the failure to
      satisfy such condition is as a result of any action or inaction by the
      Party seeking to rely on it.

	 	 	 
		
      Termination Rights

	 	 	 
	5.4 	
      Glencore may terminate this Agreement by providing
      written notice to the Company at any time if PolyMet shall have not
      prepared and filed the Preliminary Prospectus with the Securities
      Authorities and Registration Statement with the SEC and obtained a receipt
      or analogous decision document (the "Decision Document") on or as
      of the date that this Agreement is executed.

	 	 	 
	5.5 	
      Glencore may terminate this Agreement by providing
      written notice to the Company at any time prior to, but not after, the
      date on which the Final Prospectus and Registration Statement is mailed to
      the Qualifying Shareholders pursuant to Section 2.6(b) of Schedule 2
    if:

	 	 	 
		5.5.1 	
      the Company has committed a material breach of this
      Agreement (which shall include, for the avoidance of doubt, any material
      breach of any representations or warranties set out in this Agreement)
      and, if capable of cure, has not cured it within a reasonable
  time;

	 	 	 
		5.5.2 	
      an Event of Default (as defined in the Debentures) has
      occurred and is continuing under the Debentures; or

	 	 	 
		5.5.3 	
      the Company has committed a material breach of any other
      material agreement between the Company and/or its Affiliates on the one
      hand and Glencore and/or its Affiliates on the other hand and if capable
      of cure, has not been cured in the time permitted under the applicable
      agreement.

	 	 	 
	5.6 	
      The Company may terminate this Agreement by giving
      written notice to Glencore: (i) if payment for the Tranche E Debenture is
      not received by the Issuer pursuant to Amendment No. 14 related to the
      Purchase Agreement on or before the date therein provided for due to the
      fault or negligence of Glencore; and (ii) at any time prior to, but not
      after, the date on which the Final Prospectus and Registration Statement
      is mailed to the Qualifying Shareholders pursuant to Section 2.6(b) of
      Schedule 2 if Glencore has committed a material breach of this Agreement
      and, if capable of cure, has not cured it within a reasonable
  time.

	 	 	 
		
      Consequences of Termination

	 	 	 
	5.7 	
      If this Agreement is terminated pursuant to Sections 5.4,
      5.5, or 5.6, or Article 6 of Schedule 2, then:

	 	 	 
		5.7.1 	
      this Agreement shall terminate and the Parties’
      obligations under this Agreement shall cease immediately, except as set
      out in Section 5.7.4;

	 	 	 
		5.7.2 	
      neither Party will have any Claim against any other Party
      except, provided however that this limitation shall not apply in the event
      of fraud or a material breach of this Agreement (which fraud or breach and
      liability therefore shall not be effected by the termination of this
      Agreement);

- 6 - 

	 	5.7.3 	
      the applications for the listing of the Rights Offering
      Securities shall be withdrawn and the Company shall procure that the
      listing will not become effective (except to the extent such listing has
      already become effective); and

	 	 	 
	 	5.7.4 	
      the provisions of Sections 1, 4.3, 4.4, 7.5, 7.6, 9 to 11
      and Article 7 of Schedule 2 will remain in full force and
  effect.

	6 	
      Exclusivity

	 	 	 
	6.1 	
      The Company hereby agrees that, from the date of this
      Agreement until the earliest of (a) the Rights Offering Closing Date, or
      (b) the termination of this Agreement in accordance with its terms, it
      shall not, and shall procure that none of its Subsidiaries,
      representatives, advisers, agents or employees shall, directly or
      indirectly:

	 	 	 
		6.1.1 	
      solicit, negotiate or initiate the submission of
      proposals, indications of interest or offers of any kind which could lead
      to a Competing Transaction;

	 	 	 
		6.1.2 	
      enter into or participate in any discussions or
      negotiations with any third party in relation to a proposal or request in
      respect of a Competing Transaction, or which may lead to a Competing
      Transaction;

	 	 	 
		6.1.3 	
      provide any information to any third party in connection
      with a possible Competing Transaction; or

	 	 	 
		6.1.4 	
      recommend any Competing Transaction to its
      Shareholders.

	6.2 	
      The Company hereby agrees that, with immediate effect, it
      shall and shall procure that its Subsidiaries and its or their
      representatives, advisors, agents or employees shall cease any ongoing
      activities that are prohibited pursuant to Section 6.1.

	 	 
	6.3 	
      The Company will promptly (and in any event within one
      Business Day) inform Glencore if the Company or any of its advisers
      receives or is informed of any proposal that could lead to a Competing
      Transaction.

	 	 
	7 	
      Confidentiality and Announcements

	 	 
	7.1 	
      The Company shall release the Initial Press Announcement
      immediately after the conclusion of trading on the TSX and NYSE MKT on the
      date of execution of this Agreement or, in the event that this Agreement
      is executed outside of trading hours of the TSX and NYSE MKT, before the
      commencement of trading on the next trading day following the execution of
      this Agreement.

	 	 
	7.2 	
      The Company shall release press announcements as required
      in relation to:

	 	7.2.1	
      obtaining a receipt for the Final Prospectus from the
      Securities Authorities and the filing of the Registration Statement, the
      setting of the Record Date and the commencement of the Rights Offering;
      and

	 	 	 
	 	7.2.2	
      the levels of take up of Rights following the expiry of
      the Rights Offering;

the above being referred to as the
"Press Announcements", provided that any Press Announcement shall, so far as is
practicable, be made after consultation with Glencore and after taking into
account its reasonable requirements regarding the content, timing and manner of
the Press Announcement. 

- 7 - 

	7.3 	
      Subject to Section 7.4, no announcement, circular or
      communication (each an "Announcement") concerning the existence or
      content of this Agreement shall be made by either Party (or any of its
      Subsidiaries or, in the case of Glencore, any Subsidiaries of Glencore
      International plc) without the prior written approval of the other Party
      provided that, for the avoidance of doubt, Glencore hereby approves the
      release of the Initial Press Announcement.

	 	 
	7.4 	
      Section 7.3 does not apply to any Announcement if, and to
      the extent that, it is required to be made by the rules of any Securities
      Authority or any governmental, regulatory, stock exchange or supervisory
      body or court of competent jurisdiction ("Relevant Authority") to
      which the Party making the Announcement is subject, whether or not any of
      the same has the force of Law, provided that any Announcement shall, so
      far as is practicable, be made after consultation with the other Party and
      after taking into account its reasonable requirements regarding the
      content, timing and manner of despatch of the Announcement in
    question.

	 	 
	7.5 	
      Subject to Section 7.6, each Party shall treat as
      strictly confidential all information received or obtained as a result of
      entering into or performing this Agreement which relates to the subject
      matter and provisions of this Agreement; the negotiations relating to this
      Agreement; or the other Party.

	 	 
	7.6 	
      A Party may disclose information which would otherwise be
      confidential if and to the extent:

	 	7.6.1	
      required by the law of any relevant
  jurisdiction;

	 	 	 
	 	7.6.2	
      required by any Relevant Authority to which the Party
      making the disclosure is subject, whether or not such requirement has the
      force of law;

	 	 	 
	 	7.6.3	
      disclosure is made to the professional advisers, auditors
      and bankers of either Party;

	 	 	 
	 	7.6.4	
      the information has come into the public domain through
      no fault of that Party; or

	 	 	 
	 	7.6.5	
      the other Party has given prior written approval to the
      disclosure,

		
      provided that any disclosure shall, so far as is
      practicable, be made only after consultation with the other
  Party.

	 	 	 
	8 	
      Further Assurance

	 	 	 
	8.1 	
      The Company and Glencore each undertake that they will
      execute such further documents and give any such further consents as may
      be required in order to give effect to this Agreement.

	 	 	 
	8.2 	
      The Company and Glencore will provide all reasonable
      assistance and co-operation and supply all such information as may be
      required in order to obtain the necessary approvals for the transactions
      contemplated hereunder (subject always to any legal or contractual
      confidentiality obligations owed to third parties).

	 	 	 
	9 	
      Notices

	 	 	 
	9.1 	
      Except as otherwise provided in this Agreement, a notice
      or other communication given under or in connection with this Agreement (a
      "Notice") must be:

	 	 	 
		9.1.1 	
      in writing;

	 	 	 
		9.1.2 	
      in the English language; and

- 8 - 

	 	9.1.3 	
      sent by a Permitted Method to the Notified
  Address.

	9.2 	
      A Permitted Method means any of the methods set out in
      the first column below. The second column sets out the time on which a
      Notice given by such Permitted Method will be deemed to be given and in
      proving service of such Notice it will be sufficient to prove that
      delivery was made or that the Notice was properly addressed and posted or
      faxed or emailed in full to the Notified
Address.

	(1) 
Permitted Method 	(2) 
Date on which
      Notice Deemed Given 
	Personal delivery 	
      When delivered at the Notified Address if delivered
      before 6.00 p.m. (recipient’s time) on any Business Day and in any other
      case at 9.00 a.m. (recipient’s time) on the Business Day following
      delivery 

	First class pre-paid post 	
      Two Business Days after posting 

	Fax transmission 	
      On completion of transmission if before 6.00 p.m.
      (recipient’s time) on any Business Day and in any other case at 9.00 a.m.
      (recipient’s time) on the Business Day following transmission 

	Email transmission 	
      On completion of transmission if before 6.00 p.m.
      (recipient’s time) on any Business Day and in any other case at 9.00 a.m.
      (recipient’s time) on the Business Day following transmission
  

	9.3 	
      The Notified Addresses of each of the parties is as set
      out below:

      
        	Name of Party 	Address 	Fax number/Email 	Attention: 
	Glencore 

                
	Baarermattstrasse 3 

              PO Box 777, 6341 Baar 

              Switzerland 	+41 41 709 2621 

                
	General 

              Counsel 

	Copy to (which shall 

              not constitute 

              notice): 	Baarermattstrasse 3 

              PO Box 777, 6341 Baar 

              Switzerland 	Rajiv.Singhal@glencore.com 

                
	Rajiv Singhal 

                

	Copy to (which shall 

              not constitute 

              

              notice): 
	301 Tresser Boulevard 

              14th Floor 

              

              Stamford, CT 06901 

              USA 	+1 203 328 3177 

                

              Stephen.Rowland@glencore-us.com 

              
	Stephen 

              Rowland 

              

              

	Copy to (which shall 

              not constitute 

              notice): 

              
	Bennett Jones LLP 

              3400 One First
              Canadian 

              Place, P.O. Box 130 

              Toronto, ON M5X 1A4 

              Canada 	+1 416-863-1716 

              taylora@bennettjones.com 

              

              
	Adam Taylor 

                

              

              

	Company 

                

              

              

              
	c/o Farris, Vaughan Wills & 

              Murphy LLP 

              700 West Georgia Street 

              Suite 2500 

              Vancouver, BC V7Y 1B3 

              Canada 	+1 604-661-9349 

                

              

              

              
	Company 

              Secretary 

              

              

              

	Copy to (which shall 

              not constitute 

              notice): 

              
	Troutman Sanders LLP 

              The Chrysler
              Building 

              405 Lexington Avenue 

              New York, NY 10174 

              United States 	+1 212-704-5950 

              henry.rothman@troutmansanders.com 

              

              
	Henry I. 

              Rothman 

              

              

	Copy to (which shall 

              not constitute 

              notice): 

              

              
	Farris, Vaughan, Wills & 

                Murphy LLP 

              700 West Georgia Street 

              Suite 2500 

              Vancouver, BC V7Y 1B3 

              Canada 	+1 604-661-9349 

              mgropper@farris.com 

              

              

              
	Mitchell H. 

              Gropper, Q.C. 

              

              

              

      

- 9 - 

		
      or such other Notified Address as any of the parties may,
      by written notice to the other parties, substitute for their Notified
      Address set out above.

	 	 
	10 	
      General

	 	 
	10.1 	
      This Agreement may be executed in any number of
      counterparts, each of which when executed and delivered is an original and
      all of which taken together evidence the same agreement.

	 	 
	10.2 	
      This Agreement, and each other agreement or instrument
      entered into in connection herewith or therewith or contemplated hereby or
      thereby, and any amendments hereto or thereto, to the extent signed and
      delivered by means of a facsimile machine or by a PDF attachment to an
      email, shall be treated in all manner and respects as an original
      agreement or instrument and shall be considered to have the same binding
      legal effect as if it were the original signed version thereof delivered
      in person. At the request of any Party hereto or to any such agreement or
      instrument, each other Party hereto or thereto shall re-execute original
      forms thereof and deliver them to all other Parties. No Party hereto or to
      any such agreement or instrument shall raise the use of a facsimile
      machine or by a PDF attachment to an email to deliver a signature or the
      fact that any signature or agreement or instrument was transmitted or
      communicated through the use of a facsimile machine or email as a defence
      to the formation or enforceability of a contract and each such Party
      forever waives any such defence.

	 	 
	10.3 	
      This Agreement is binding on and enures for the benefit
      of the successors, assigns or legal personal representatives of the
      Parties.

	 	 
	10.4 	
      No Party may assign its rights under this Agreement
      without the prior written consent of the other Party. Notwithstanding the
      foregoing, Glencore may assign its rights and interests in this Agreement
      to an Affiliate without PolyMet’s prior written consent subject to the
      transferee agreeing in writing to be bound by the terms and conditions
      hereof.

- 10 - 

	
10.5 		
Other than in respect of the Glencore Indemnified Parties in Article 7 of Schedule 2, nothing in this Agreement, express or implied, is intended to or shall confer upon any Person, other than the Parties, any right, benefit, or
remedy of any nature whatsoever under or by reason of this Agreement. With respect to those provisions of the Agreement applicable to Glencore Indemnified Parties, Glencore is executing, delivering and holding this Agreement as agent and trustee for
such Glencore Indemnified Parties.

	
	 	 
	
10.6 		
The obligations of the Parties under this Agreement have effect notwithstanding anything revealed in any investigation made by or on behalf of any Person.

	
	 	 
	
10.7 		
The language used in this Agreement is the language chosen by the Parties to express their mutual intent, and no rule of strict construction shall apply against any Party.

	
	 	 
	
10.8 		
No failure by any Party to exercise any right or remedy under any provision of this Agreement will operate as a waiver and no single or partial exercise of any right or remedy of any Party will preclude the further exercise or
enforcement of any such right or remedy.

	
	 	 
	
10.9 		
No amendment of this Agreement or of any of the documents referred to in this Agreement will be effective unless it is in writing, refers specifically to this Agreement and is duly executed by each Party.

	
	 	 
	
10.10 		
This Agreement shall not create, nor shall be deemed to create, any partnership, fiduciary relationship or duty between the Parties or constitute either Party the agent or legal representative of the other.

	
	 	 
	
10.11 		
Unless otherwise specified, time periods within or following which any payment is to be made or act is to be done, shall be calculated by excluding the day on which the period commences and including the day on which the period
ends and by extending the period to the next Business Day following if the last day of the period is not a Business Day.

	
	 	 
	
10.12 		
If any provision of this Agreement is or becomes illegal, invalid or unenforceable under the law of any jurisdiction, neither the legality, validity nor enforceability of the remaining parts of this Agreement will be affected or
impaired in any way.

	
	 	 
	
10.13 		
Each Party shall bear its own expenses in the preparation of this Agreement.

	
	 	 
	
10.14 		
This Agreement and the documents contemplated herein represent the entire agreement with respect to the subject matter dealt with herein and supersede all prior discussions and negotiations.

	
	 	 
	
10.15 		
Time is of the essence in this Agreement.

	
	 	 
	
10.16 		
Unless otherwise provided, all dollar amounts referred to in this Agreement are to United States currency or "American dollars". If, in connection with any action or proceeding brought in connection with this Agreement or any
resulting judgment, it becomes necessary to convert any amount due hereunder in one currency (the "first currency") into another currency (the "second currency"), then the conversion shall be made at the Judgment Conversion Rate on the
first Business Day prior to the day on which payment is received. If the conversion is not able to be made in the manner contemplated by the preceding paragraph in the jurisdiction in which the action or proceeding is brought, then the conversion
shall be made at the Judgment Conversion Rate on the day on which the judgment is given. If the Judgment Conversion Rate on the date of payment is different from the Judgment Conversion Rate on such first Business Day or on the date of judgment, as
the case may be, the party shall pay such additional amount (if any) in the second currency as may be necessary to ensure that the amount paid on such payment date is the aggregate amount in the second currency which, when converted at the
Judgment Conversion Rate on the date of payment, is the amount due
      in the first currency, together with all costs, charges and expenses of
      conversion. Any additional amount owing pursuant to the provisions of this
      section shall be due as a separate debt and shall give rise to a separate
      cause of action and shall not be affected by or merged into any judgment
      obtained for any other amounts due under or in respect of this
      Agreement.

	

	10.17 	
      The term "Judgment Conversion Rate" used in this
      section means the noon rate of exchange for Canadian dollars in the other
      currency published by the Bank of Canada for the date in
  question.

	 	 
	11 	
      Governing Law and Jurisdiction

	 	 
	11.1 	
      This Agreement shall be governed, including as to
      validity, interpretation and effect, by the laws of the Province of
      British Columbia and the federal laws of Canada applicable therein, and
      shall be construed and treated in all respects as a British Columbia
      contract. Each Party hereby irrevocably attorns to the non-exclusive
      jurisdiction of the courts of the Province of British Columbia in respect
      to all matters arising under and in relation to this
Agreement.

Signatures to appear on the following page. 

- 11 - 

This Agreement has been entered into on the date stated at the
beginning of this Agreement.

	Signed by Jonathan Cherry, 	  
	President and Chief Executive Officer 	/s/ Jonathan Cherry
	for and on behalf of 	Authorised signatory 
	POLYMET MINING CORP. 	  
	  	  
	  	  
	  	  
	Signed by [. . ] 	  
	for and on behalf of 	 
    
	GLENCORE AG 	Authorised signatory 

SCHEDULE 1 

DEFINITIONS

	1933 Act 	
      means the U.S. Securities Act of 1933, as amended and the
      rules and regulations promulgated thereunder 

	1934 Act 	
      means the U.S. Securities Exchange Act of 1934, as
      amended, and the rules and regulations promulgated thereunder 

	2010 Purchase Warrant 	
      means the non-transferable common share purchase warrant
      to acquire 2,600,000 Shares that was issued by PolyMet to Glencore AG on
      December 6, 2011, as such warrant may be amended, restated and/or modified
      from time to time 

	2011 Purchase Warrant 	
      means the non-transferable common share purchase warrant
      to acquire 3,000,000 Shares that was issued by PolyMet to Glencore AG on
      November 12, 2010, as such warrant may be amended, restated and/or
      modified from time to time 

	Additional Subscription Privilege 	
      has the meaning given to it in Section 2.2 of Schedule 2

	Additional Subscription Shares 	
    has the meaning given to it in Section 2.7(b) of Schedule 2

	Affiliate 	
      has the meaning given to it under NI 45-106, and in the
      case of Glencore, includes all investment funds and other Persons that
      Glencore or an Affiliate manages or exercises control over or in respect
      of which it has discretionary trading authority over such investment
      fund’s or Person’s investments 

	AGP Technical Report 	
      means the technical report entitled "Updated NI 43-101
      Technical Report on the NorthMet Deposit, Minnesota, USA" dated January
      14, 2013 prepared by AGP Mining Consultants Inc. 

	Agreement 	
      means this Standby Purchase Agreement 

	Announcement 	
      has the meaning given to it in Section 7.3 

	Annual Report 	
      means the Company’s Annual Report on Form 20-F for the
      fiscal year ended January 31, 2012, as amended

	Applicable Pension Legislation 	
      means, at any time, any applicable Canadian or United
      States federal, state or provincial pension legislation, including all
      regulations made thereunder and all rules, regulations, rulings,
      guidelines, directives and interpretations made or issued by any
      Governmental Entity in Canada or the United States having or asserting
      jurisdiction in respect thereof, each as amended or replaced from time to
      time 

	Basic Entitlement Shares 	
      has the meaning given to it in Section 2.5(d) of Schedule
      2

1 - 2

	Basic Subscription Right 	
      has the meaning given to it in Section 2.5(c) of Schedule
      2 

	BCSC 	
    means the British Columbia Securities Commission  

	Benefit Plan 	
      means all employee benefit plans or arrangements that are
      not Pension Plans, including all profit sharing, savings, supplemental
      retirement, retiring allowance, severance, pension, deferred compensation,
      stock, stock option, welfare, bonus, incentive compensation, phantom
      stock, legal services, supplementary unemployment benefit plans or
      arrangements and all life, health, dental and disability plans and
      arrangements in which the employees or former employees of the Company
      participate or are eligible to participate 

	Board or Board of Directors 	
      means the Board of Directors of PolyMet 

	Business Day 	
      means any day, other than a Saturday or a Sunday, upon
      which banks are open for business in the City of Vancouver, Canada and the
      City of Zurich, Switzerland 

	CE Remediation Obligations	has the meaning given to it in Schedule 5(W)
	Claim 	
      any actual or potential claims, actions, proceedings or
      investigations (whether by governmental or regulatory bodies or
      otherwise), demands, judgments or awards 

	Company or PolyMet 	
      means PolyMet Mining Corp., a British Columbia company      

	Company AGM 	
      has the meaning given to it in Section 2(b) of Schedule
      4.3.3

	Competing Transaction 	
      any transaction or proposed transaction involving the
      Company under which a third party would (i) acquire any of the business
      (otherwise than in the ordinary course of business) or assets of the
      Company or any of its Subsidiaries or (ii) acquire, from the Company or
      any of its Subsidiaries, any Shares or other securities in the Company or
      any of its Subsidiaries; or (iii) undertake any merger, business
      combination, recapitalisation, amalgamation, scheme of arrangement or
      similar transaction involving the Company or any of its Subsidiaries; or
      (iv) provide any equity or debt financing to the Company or any of its
      Subsidiaries, (provided that the Rights Offering shall not constitute a
      Competing Transaction) 

	Computershare 	
      means Computershare Trust Company of Canada, the
      registrar and transfer agent of the Company 

	Corporate Governance Agreement 	
      has the meaning given to it in Section 4.3.3

	Debentures 	
      means the Tranche A Debenture, the Tranche B Debenture,
      the Tranche C Debenture and the Tranche D Debenture, each as defined in
      the Purchase Agreement, and the Tranche E Debenture 

	Decision Document 	
      has the meaning given to it in Section 5.4

	Disclosure Documents 	
      means the Company’s Management Information Circular dated
      June 15, 2012; the Company’s Annual Information Form (on Form 20-F) for
      the year ended January 31, 2012 dated May 1, 2012; and the audited
      consolidated financial statements and accompanying management’s discussion
      and analysis and all interim financial statements, interim management’s
      discussion and analyses and material change reports filed pursuant to
      applicable Securities Laws since January 31, 2012; any material change
      report required to be filed under Securities Laws since January 31, 2012;
      the Annual Report; all other reports filed by the Company pursuant to the
      1934 Act since January 31, 2012 and any other disclosure documents
      incorporated by reference in the Prospectus or Registration Statement

1 - 3

	Encumbrance 	
      means any hypothec, mortgage, pledge, security interest,
      encumbrance, lien, charge, deposit arrangement, lease, adverse claim,
      right of set-off or agreement, trust, deemed trust or any other
      arrangement or condition that in substance secures payment or performance
      of an obligation of the Company, statutory and other non- commercial
      leases or encumbrances and includes the interest of a vendor or lessor
      under any conditional sale agreement, capital lease or other title
      retention agreement 

	Environmental Laws	
      has the meaning given to it in Section 5(w) of Schedule 5
	Erie Plant 	
      means the owned taconite concentrator and pellet plant
      and supporting infrastructure and surrounding lands located approximately
      six miles west of the NorthMet Deposit, together with all related property
      and assets 

	Event of Default 	
      means (i) an “Event of Default” as defined in the
      Debentures, and (ii) an event of default under a Material Agreement that
      has had, or reasonably could have, a Material Adverse Effect 

	Exchange Warrant 	
      means the exchange warrant to purchase Shares that was
      issued by PolyMet to Glencore AG pursuant to the Purchase Agreement, as
      such exchange warrant may be amended, restated and/or modified from time
      to time 

	Exercise Price 	
      has the meaning given to it in Section 2.5(a) of Schedule
      2

	Fair market value 	
    has the meaning given to it in Section 1.1 of MI 61-101    

	Final Prospectus 	
      means the (final) short form prospectus to be filed by
      PolyMet with the Securities Authorities (and the Prospectus to be filed
      with the SEC pursuant to the Multi-Jurisdictional Disclosure System) in
      connection with the Rights Offering, as amended by any Prospectus
      Amendment 

	First currency 	
      has the meaning given to it in Section 10.16 

	Glencore 	
      means Glencore AG, a corporation existing under the laws
      of Switzerland

	Glencore Indemnified Parties 	
      has the meaning given to it in Section 7.1 of Schedule 2      

1 - 4

	Glencore Nominees 	has the meaning given to it in Section 4.3.1
	Governmental Entity 	
      means (a) any multinational, federal, provincial, state,
      regional, municipal, local or other government, governmental or public
      department, central bank, court, tribunal, arbitral body, commission,
      board, bureau or agency, domestic or foreign, (b) any subdivision, agent,
      commission, board or authority of any of the foregoing, (c) any
      quasi-governmental or private body, including any tribunal, commission,
      regulatory agency or self-regulatory organization, exercising any
      regulatory, expropriation or taxing authority under or for the account of
      any of the foregoing, or (d) any stock exchange, including the TSX and
      NYSE MKT 

	IFRS 	
      means international financial reporting standards, as
      issued by the International Accounting Standard Board and as adopted in
      Canada, as in effect from time to time 

	Indemnified Party 	
      has the meaning given to it in Section 7.5 of Schedule 2

	Indemnifying Party 	
      has the meaning given to it in Section 7.5 of Schedule 2

	Initial Press Announcement 	
      means the press announcement, in form attached as
      Schedule 3 

	Intellectual Property Rights	
      Has the meaning given to it in Section 5(v) of Schedule 5
	Judgment Conversion Rate 	
      has the meaning given to it in Section 10.17

	Laws 	
      means any and all applicable laws including all statutes,
      codes, ordinances, decrees, rules, regulations, municipal by-laws,
      judicial or arbitral or administrative or ministerial or departmental or
      regulatory judgments, orders, decisions, rulings or awards, instruments,
      policies, guidelines, and general principles of common law and equity,
      binding on or affecting the Person referred to in the context in which the
      word is used 

	Loan 	
      has the meaning given to it in the Recitals to this Agreement 

	Loss (or Losses) 	
      has the meaning given to it in Section 7.1 of Schedule 2
      

	Market Capitalization 	
      has the meaning given to it in section 1.1 of MI 61-101
      

	Market Capitalization Limit	
      has the meaning given to it in Section 2.4(a) of Schedule 2
	Market Price 	
      has the meaning given to it in Section 2.5(a) of Schedule 2

	Material Adverse Effect 	
      means any event, occurrence or condition (or series of
      related events, occurrences or conditions) which, individually or in the
      aggregate, could reasonably be expected to have a material adverse effect
      on or results in a material adverse change in any of the following: (i)
      the condition (financial or otherwise), business, assets or results of
      operations of the Company and its Subsidiaries considered as a whole; (ii)
      the ability of the Company to perform any of its obligations under the
      terms of this Agreement; and (iii) the validity or enforceability of any
      of this Agreement or the rights and remedies of Glencore under the terms
      of this Agreement, except any such effect resulting from or arising in
      connection with: (a) any change in IFRS (b) any change in the global,
      national or regional political conditions (including the outbreak of war
      or acts of terrorism) or in the general economic,
business, regulatory, political or market conditions or
      in the national or global financial or capital markets, (c) any change in
      the industry in which the Company operates, provided that for the purposes
      of (b) and (c) such effect does not primarily relate to (or have the
      effect primarily relating to) the Company or disproportionately adversely
      affects the Company compared to other entities operating in the industries
    in which the Company operates 

1 - 5

	Material Agreements 	
      means (i) those agreements listed on Schedule S1 (as
      amended, restated, supplemented or replaced as permitted hereunder), and
      (ii) those agreements (as amended, supplemented, revised or restated as
      permitted herein from time to time) of PolyMet or PMI, the breach, non-
      performance or cancellation of which or the failure of which to renew
      could reasonably be expected to have a Material Adverse Effect 

	Material change 	
    has the meaning given to it in the Securities Act  

	Material fact 	
    has the meaning given to it in the Securities Act  

	Maximum Investment 	
      has the meaning given to it in Section 2.4(b) of Schedule 2

	MI 61-101 	
      means Multilateral Instrument 61-101 – Protection of
      Minority Shareholders in Special Transactions of the Ontario
      Securities Commission and the AMF 

	Mineral Rights	has the meaning given to it in Section 5(x) of Schedule 5
	Misrepresentation 	
      means: (a) a "misrepresentation" as defined in Section
      1(1) of the Securities Act; or (b) as to any document, any untrue
      statement of a material fact or omission to state any material fact
      required to be stated therein or necessary in order to make the statements
      therein, in the light of the circumstances under which they were made, not
      misleading 

	MPCA	has the meaning given to it in Section 2 of Schedule 5(W)
	NI 45-106 	
      means National Instrument 45-106 – Prospectus and Registration  Exemptions of the Canadian Securities Regulators

	NI 54-101	
      means National Instrument 54-101 – Communication with Beneficial Owners
      of Securities of a Reporting Issuer of the Canadian Securities
      Regulators
	NorthMet Deposit 	
      means the polymetallic copper-nickel-cobalt-platinum
      group element deposit situated on a mineral lease of approximately 4,200
      acres located in St. Louis County in northeastern Minnesota, U.S.A., at
      approximately latitude 47° 36’ north, longitude 91° 58’ west, about 70
      miles north of the City of Duluth and 6.5 miles south of the town of
      Babbitt, together with all related property and assets 

	NorthMet Project 	
      means the mining project comprised of the NorthMet
      Deposit and the Erie Plant 

	Notice 	
      has the meaning given to it in Section 9.1

	NYSE MKT 	
      means the NYSE MKT LLC 

	Omnibus Share Compensation Plan 	
      means the PolyMet Mining Corp. 2007 Omnibus Share
  Compensation Plan, as amended and restated

1 - 6

	Owned Real Property 	
      means the land and premises listed on, and legally
      described in, Schedule 5(K) and the buildings and fixtures thereon
  

	Parties or Party 	
      means Glencore and the Company; "Party" means any one of
      them and reference to either of them includes a reference to that Party’s
      legal personal representatives, successors and permitted assigns

	Pension Plan 	
      means any plan, program, agreement or arrangement for the
      purpose of Applicable Pension Legislation or under the Tax Act (whether or
      not required under such law) that is maintained or contributed to or to
      which there is or may be an obligation to contribute by the Company in
      respect of their respective employees or former employees 

	Permitted Encumbrances 	
      means the following types of encumbrances: (i) statutory
      Encumbrances of landlords and Encumbrances of carriers, warehousemen,
      mechanics, suppliers, material men, repairmen and other Encumbrances
      imposed by law incurred in the ordinary course of business and
      Encumbrances for taxes, assessments or governmental charges or claims, in
      either case, for sums not yet overdue or being contested in good faith by
      appropriate proceedings, if such reserve or other appropriate provision,
      if any, as shall be required by IFRS shall have been made in respect
      thereof; (ii) Encumbrances incurred or deposits made in the ordinary
      course of business in connection with workers’ compensation, unemployment
      insurance and other types of social security, or to secure the performance
      of tenders, statutory obligations, surety and appeal bonds, bids, leases,
      government contracts, performance and return-of-money bonds and other
      similar obligations (exclusive of obligations for the payment of borrowed
      money); (iii) Encumbrances upon specific items of inventory or other goods
      and proceeds of any Person securing such Person’s obligations in respect
      of bankers’ acceptances issued or created for the account of such Person
      to facilitate the purchase, shipment or storage of such inventory or other
      goods; (iv) Encumbrances encumbering deposits made to secure obligations
      arising from statutory, regulatory, contractual or warranty requirements
      of the Company, including rights of offset and setoff; (v) bankers’ liens,
      rights of setoff and other similar Encumbrances existing solely with
      respect to cash on deposit in one or more accounts maintained by the
      Company, in each case granted in the ordinary course of business in favour
      of the bank or banks with which such accounts are maintained, securing
      amounts owing to such bank with respect to cash management and operating
      account arrangements, including those involving pooled accounts and
      netting arrangements; provided, however, that in no case shall any such
      Encumbrances secure (either directly or indirectly) the repayment of any
      debt; (vi) leases or subleases (or any Encumbrances related thereto)
      granted to others that do not materially interfere with the ordinary
      course of business of the Company; (vii) attachment or judgment
      Encumbrances not giving rise to an Event of Default and which are being
      contested in good faith by appropriate proceedings; (viii) easements,
      rights-of-way, restrictions and other similar charges or encumbrances not
      materially interfering with the ordinary course of business of the
      Company; (ix) zoning restrictions, licenses, restrictions on the use of
      real property or minor irregularities in title thereto, which do not
      materially impair the use of such real property in the ordinary
  course of business of the Company and its Subsidiaries or
      the value of such real property for the purpose of such business; (x) any
      right of first refusal, right of first offer, option, contract or other
      agreement to sell an asset existing on the date hereof; and (xi)
      Encumbrances securing hedging obligations entered into for bona fide
    hedging purposes of the Company not for the purpose of speculation  

1 - 7

	Person 	
      includes an individual, corporation, partnership, limited
      partnership, limited liability partnership, limited liability company,
      association, trust, estate, custodian, trustee, executor, administrator,
      nominee or other entity or organization, including (without limitation) a
      Governmental Entity or political subdivision or an agency or
      instrumentality thereof 

	PMI 	
      means Poly Met Mining Inc. 

	Preliminary Prospectus 	
      means the preliminary short form prospectus in the form
      attached as Schedule 4 to be filed by PolyMet with the Securities
      Authorities including in the case of the Preliminary Prospectus filed with
      the SEC, prepared in accordance with the Multi-Jurisdictional Disclosure
      System, in connection with the Rights Offering, as amended by any
      Prospectus Amendment 

	Press Announcements 	
      has the meaning given to it in Section 7.2

	Prospectus 	
      means, collectively, the Preliminary Prospectus, the
      Final Prospectus, and any Prospectus Amendment(s) 

	Prospectus Amendment 	
      means any amendment to the Preliminary Prospectus or the
      Final Prospectus 

	Purchase Agreement 	
      has the meaning given to it in the Recitals to this
      Agreement 

	Purchase Warrants 	
      means the 2010 Purchase Warrant and 2011 Purchase Warrant      

	Qualifying Jurisdictions 	
      means the Provinces of British Columbia, Alberta and
      Ontario 

	Qualifying Shareholders 	
      has the meaning given to it in Section 2.1 of Schedule 2

	Record Date 	
      means the record date established pursuant to Section
      2.6(a) of Schedule 2 for the purpose of determining the holders of Shares
    who are entitled to receive Rights pursuant to the Rights Offering  

	Registration 	
      means the qualification of Shares under Securities Laws,
      by prospectus or otherwise, for distribution in any of the provinces or
      territories of Canada in which PolyMet is a "reporting issuer", or in the
      United States 

	Registration Rights 
Agreement 	
      has the meaning given to it in Section 4.4 

	Registration Statement 	
    means the registration statement on Form F-10 of which the Prospectus shall form a  part, as amended, registering, inter alia, the Rights Offering  Securities under the 1933 Act  and prepared in accordance  with the Multi-Jurisdictional Disclosure System including  the  exhibits and any schedules thereto  and the documents incorporated by reference therein

1 - 8

	Relevant Authority 	
      has the meaning given to it in Section 7.4 

	Rights 	
      means the transferable rights to subscribe for Shares
      offered by PolyMet pursuant to the Rights Offering, with each holder of
      Shares receiving one right per Share held 

	Rights Certificate 	
      has the meaning given to it in Section 2.6(b) of Schedule
      2

	Rights Issue Date 	
      means the date on which the Rights are issued by the
    Company to the holders of record of its Shares on the Record Date  

	Rights Offering 	
      has the meaning given to it in the Recitals to the
      Agreement

	Rights Offering Closing Date 	
      has the meaning given to it in Section 5.1 of Schedule 2      

	Rights Offering Closing Time 	
      has the meaning given to it in Section 5.1 of Schedule 2

	Rights Offering Expiry Date 	
      means the date on which the Rights will expire and become
      null and void as set out in the Final Prospectus and Registration
      Statement, such date being the 21st day following the date on which the
      Final Prospectus or Registration Statement is delivered to holders of
      record of the Shares on the Record Date, or such other date as may be
      agreed in writing by PolyMet and Glencore 

	Rights Offering Expiry Time 	
      means 5:00 p.m. (Toronto time) on the Rights Offering
      Expiry Date 

	Rights Offering Ratio 	
      has the meaning given to it in Section 2.5(d) of Schedule
      2

	Rights Offering Securities 	
      means, collectively, the Rights, the Shares issuable upon
      exercise of the Rights and the Standby Shares 

	Rights Offering Shares 	
      means the Shares issuable pursuant to the Rights Offering      

	Rights Plan 	
      has the meaning given to it in the Recitals to this
      Agreement 

	Sarbanes-Oxley Act 	
      means the Sarbanes-Oxley Act of 2002 and all rules and
      regulations promulgated thereunder 

	SEC 	
    means the U.S. Securities and Exchange Commission  

	second currency 	
      has the meaning given to it in Section 10.16 

	Securities Act 	
      means the Securities Act (British Columbia) and the
      rules, regulations and published policies made thereunder, as now in
    effect and as they may be promulgated or amended from time to time  

	Securities Authorities 	
      means the TSX, the BCSC, the SEC and the NYSE MKT and the
      applicable securities commissions and other securities regulatory
    authorities in each of the other provinces and territories of Canada    

	Securities Laws 	
      means the Securities Act, together with all other
      applicable Canadian provincial and territorial securities laws, rules and
      regulations and published policies thereunder, the 1933 Act, the 1934 Act
      and all other applicable U.S. federal and state securities laws and rules
      and regulations promulgated thereunder, as now in effect and as they may
      be promulgated or amended from time to time, together with the applicable
      rules of the TSX and NYSE MKT 

1 - 9

	Shareholder 	
      means a holder of Shares from time to time 

	Shares 	
      means common shares in the capital of PolyMet 

	Standby Commitment 	
      has the meaning given to it in Section 2.3(a) of Schedule
      2

	Standby Purchaser 	
      means Glencore 

	Standby Shares 	
      has the meaning given to it in Section 2.3(a) of Schedule 2

	Subscription Agent 	
      means Computershare 

	Subsidiary 	
      has the meaning given to it in NI 45-106 

	Tax Act 	
      means the Income Tax Act (Canada), as amended 

	Tranche E Debenture 	
      has the meaning given to it in the Recitals to this
      Agreement 

	TSX 	
      means the Toronto Stock Exchange 

	US or United States 	
      means the United States of America its territories and
      possessions and any of the United States of America and the District of
      Columbia and other areas subject to its jurisdiction 

	VWAP 	
      has the meaning given to it in Section 2.5 of Schedule 2

	Warrants 	
    means the Exchange Warrants and the Purchase Warrants    

SCHEDULE 2

PROVISIONS RELATING TO THE RIGHTS OFFERING 

ARTICLE 1 
INTERPRETATION 

	1.1 	
      Definitions. The defined terms used in this
      Schedule 2, unless the context otherwise requires, are set out in Schedule
      1.

ARTICLE 2 
TIMING AND STANDBY COMMITMENT 

	2.1 	
      Conduct of Rights Offering. Subject to and in
      accordance with the provisions hereof, PolyMet agrees to offer, in
      accordance with Securities Laws and pursuant to the Prospectus and
      Registration Statement, the Rights to Persons that are the holders of
      record of Shares on the Record Date: (a) with an address in one of the
      Qualifying Jurisdictions; or (b) with an address in any other
      jurisdiction, where PolyMet has satisfied itself that such holder is
      entitled to receive the Rights Offering Securities under the Rights
      Offering in accordance with the laws of such jurisdiction and without
      obliging PolyMet to register the Rights Offering Securities or file a
      prospectus or other disclosure document or to make any other filings or
      become subject to any reporting or disclosure obligations that PolyMet is
      not already obligated to make (together, "Qualifying
      Shareholders"). The Parties hereby acknowledge and agree that Glencore
      is a Qualifying Shareholder. With respect to non-Qualifying Shareholders,
      the Parties acknowledge and agree that Rights will be issued to the
      Subscription Agent to hold for their benefit.

	 	 	 
	2.2 	
      Additional Subscription Privilege. PolyMet shall
      ensure that each Qualifying Shareholder who has exercised its Rights in
      full by the Rights Offering Expiry Time shall have the right to subscribe
      for additional Shares immediately prior to the Rights Offering Expiry Time
      (if such are available) as a result of Rights that are not exercised by
      the Rights Offering Expiry Time, subject to pro ration as provided for in
      the Prospectus (the "Additional Subscription Privilege").

	 	 	 
	2.3 	
      Standby Commitment.

	 	 	 
		(a) 	
      Subject to and in accordance with the provisions hereof,
      Glencore hereby agrees to subscribe for and PolyMet hereby agrees to issue
      to Glencore at the Exercise Price and on the Rights Offering Closing Date,
      as fully paid and non-assessable Shares, such number of Shares (the
      "Standby Shares") equal to the lesser of: (A) the number of Shares
      available under the Maximum Investment; and (B) the result of (x) minus
      (y), where: (x) equals the number of Shares determined by dividing US$60
      million by the Exercise Price; and (y) equals the number of Shares
      subscribed for and taken up under the Rights Offering by holders of
      Rights, including Glencore, pursuant to the Basic Subscription Right and
      Additional Subscription Privilege (if any) (such commitment referred to as
      the "Standby Commitment").

	 	 	 
		(b) 	
      Glencore and PolyMet hereby agree that it is the intent
      of both Parties that Glencore, by virtue of acting as Standby Purchaser
      hereunder, shall not be deemed an "underwriter" or deemed to be engaged in
      broker-dealer activity requiring registration as defined in Applicable
      Securities Laws, and Glencore and PolyMet shall in the fulfillment of
      their obligations hereunder act in accordance with this mutual
      understanding.

2 - 2

	2.4 	
      Maximum Investment.

	 	(a) 	
      Notwithstanding any other provision, the Parties agree
      that Glencore shall not be required or permitted to subscribe for any
      Rights Offering Shares and/or  Standby Shares pursuant to its Basic Subscription Right,
      Additional Subscription Privilege and/or Standby Commitment if the
      subscription for such Shares would result in the value of Glencore’s
      aggregate subscription under the Rights Offering having a fair market
      value greater than the result of: (x) 24.99% of PolyMet’s Market
      Capitalization as of the date of this Agreement; less (y) the sum of: (A)
      the Standby Fee; and (B) the fair market value of all other transactions
      contemplated by the Rights Offering and related transaction in so far as
      they relate to Glencore (other than the Loan) as determined by the Board
      acting reasonably (the "Market Capitalization Limit") such amount
      being US$53,063,160. If the fair market value of the subject matter of, or
      the fair market value of the consideration, for the transactions
      contemplated by this Agreement exceeds 25% of PolyMet’s Market
      Capitalization as of the date of this Agreement the Parties shall
      endeavour in good faith negotiations to amend this Agreement and any
      related document which amendments the economic effect of which would come
      as close to as possible of the intent of the Parties underlying this
  Agreement and applicable related documents.

	 	 	 
	 	(b) 	
      Notwithstanding anything to the contrary in this
      Agreement, Glencore shall not be required or permitted to subscribe for
      any Rights Offering Shares and/or Standby Shares pursuant to its Basic
      Subscription Right, Additional Subscription Privilege and/or Standby
      Commitment to the extent that any such subscription for any such Shares
      would result in Glencore's ultimate parent entity (within the meaning of
      the HSR Act) holding (within the meaning of the HSR Act) more than 49.99%
      of PolyMet's then outstanding Shares (with the Market Capitalization
      Limit the "Maximum Investment"). For the avoidance of doubt, the
      foregoing shall not be construed to limit any right and/or obligation of
      Glencore hereunder to subscribe for any Rights Offering Shares and/or
      Standby Shares to the extent that any such subscription for any such
      Shares would not result in Glencore's ultimate parent entity (within the
      meaning of the HSR Act) holding (within the meaning of the HSR Act) more
      than 49.99% of PolyMet's then outstanding Shares. If, through Glencore's
      subscription for the Rights Offering Shares and/or Standby Shares,
      Glencore's ultimate parent entity would hold more than 49.99% of PolyMet’s
      outstanding Shares, the Parties shall endeavour in good faith negotiations
      to amend this Agreement and any related document which amendments the
      economic effect of which would come as close to as possible of the intent
      of the Parties underlying this Agreement and applicable related
documents.

	2.5 	
      Offering Size and Price Determination

	 	 	 
		(a) 	
      The gross proceeds from the Rights Offering will, subject
      as provided in Section 2.5(c) of this Schedule 2 below, be equal (as nearly as reasonably
      practicable) to US$60 million. The exercise price per Rights Offering
      Share (the "Exercise Price") will be payable in US dollars (and the
      US dollar price will be fixed on the date of the filing of the Final
      Prospectus). The Exercise Price will be determined by the Board of PolyMet
      at the date of filing of the Final Prospectus in consultation with
      Glencore, provided that it shall be no greater than the U.S. dollar
      equivalent of the Market Price of the Shares determined as of the date of
      filing the Final Prospectus less a 20% discount, subject to TSX rules. For
      the purposes of this Section 2.5(a), "Market Price" means the VWAP on TSX
      for the five trading days ending on the trading date immediately preceding
      the date of filing of the Final Prospectus, and "VWAP" means the volume weighted average trading
      price of the Shares on the TSX, calculated by dividing the total value by
      the total volume of securities traded for the relevant period and by
      converting the total value of the trading prices of such securities on the
      TSX into U.S. dollars at the Judgement Conversion
Rate.

2 - 3

	 	(b) 	
      The aggregate number of Rights Offering Shares (as nearly
      as practicable) which are issuable will be determined by dividing US$60
      million by the Exercise Price, which number will be subject to increase as
      described in Section 2.5(d) of this Schedule 2 below.

	 	 	 
	 	(c) 	
      For each Right held, the holder thereof will be entitled
      to subscribe for a fractional number of Shares (the "Basic Subscription
      Right") determined by dividing the total number of Rights Offering
      Shares (calculated in accordance with Section 2.5(b) of this Schedule 2 above) by the total
      the number of Shares outstanding determined on the latest practicable date
      before the date of the filing of the Final Prospectus.

	 	 	 
	 	(d) 	
      The ratio of new Rights Offering Shares offered pursuant
      to the Basic Subscription Right ("Basic Entitlement Shares") for
      each existing Share held will be fixed at the date of the filing of the
      Final Prospectus as described above ("Rights Offering Ratio").
      However, if any Shares are issued prior to the Record Date (where such
      Shares are not already included in the number of shares determined on the
      Record Date), the Rights Offering Ratio will remain fixed as determined in
      the Prospectus and consequently, the number of Rights issued and the
      Rights Offering Shares will be increased. For the avoidance of doubt, this
      will not increase the Standby Commitment of Glencore nor raise the Maximum
      Investment.

	 	 	 
	 	(e) 	
      Where a holder’s exercise of Rights would otherwise
      entitle such holder to fractional Shares, such holder’s entitlement will
      be reduced to the next lowest whole number of Shares. PolyMet will not be
      required to issue fractional Shares or to pay cash in lieu
  thereof.

	2.6 	
      Timing of Rights Offering. Subject to and in
      accordance with the provisions hereof, PolyMet agrees that it will file
      with the Securities Authorities in the Qualifying Jurisdictions and with
      the SEC: (i) the Preliminary Prospectus and the Registration Statement as
      soon as practicable following the execution of this Agreement and in any
      event no later than the date hereof; and (ii) the Final Prospectus and the
      Registration Statement on or before the day which is five Business Days
      immediately following the date on which all necessary approvals and
      consents are received from the Securities Authorities that are necessary
      or advisable, in PolyMet’s opinion, acting reasonably, to proceed with the
      filing of the Final Prospectus and the Registration Statement and
      completion of the Rights Offering (or such other date as the Parties may
      agree acting reasonably). PolyMet will use its best efforts to obtain a
      Decision Document as soon as possible following the filing of each of the
      Preliminary Prospectus and Final Prospectus with the Securities
      Authorities and to obtain final TSX and NYSE MKT approval of the Rights
      Offering as soon as possible following the filing of the Final Prospectus
      with the Securities Authorities and the Registration Statement with the
      SEC. On receipt of the Decision Document and final TSX and NYSE MKT
      approval, PolyMet shall:

	 	 	 
		(a) 	
      as soon as reasonably practicable announce that the
      record date will be the date falling not less than seven trading days
      after that announcement (the "Record Date"); and

	 	 	 
		(b) 	
      (i) within two Business Days after the Record Date, mail
      to holders of record in a Qualifying Jurisdiction a certificate (a
      "Rights Certificate") evidencing the total number of rights to
      which a Qualifying Shareholder is entitled, together with a commercial
      copy of the Final Prospectus or the Registration Statement, as applicable,
      (ii) within six Business Days after the Record Date, mail to beneficial
      holders in a Qualifying Jurisdiction (determined pursuant to and in the
      manner contemplated by NI 54-101) a Rights Certificate
      evidencing the total number of rights to which a Qualifying Shareholder is
      entitled, together with a commercial copy of the Final Prospectus or the
      Registration Statement, as applicable, (iii) within two Business Days
      after the Record Date, mail to holders of record not in a Qualifying
      Jurisdiction a commercial copy of the Final Prospectus or the Registration
      Statement, as applicable, together with a letter advising them that their
      Rights Certificates will be issued to and on their behalf by
  the Subscription Agent; and (iv) within
six Business Days after the Record Date, mail to beneficial holders not in a
Qualifying Jurisdiction (determined pursuant to and in the manner contemplated
by NI 54-101) a commercial copy of the Final Prospectus or the
Registration Statement, as applicable together with a letter advising them that
their Rights Certificates will be issued to and on their behalf by the
Subscription Agent.

2 - 4

	2.7 	
      Additional Subscription Shares and Standby
      Shares.

	 	 	 
		(a) 	
      Subject to and in accordance with the provisions hereof,
      on the Rights Offering Closing Date, Glencore will pay in immediately
      available funds by wire transfer to an account designated by PolyMet, the
      aggregate Exercise Price that is payable for the Basic Entitlement Shares
      and the Standby Shares to be purchased by it hereunder, and PolyMet will
      issue the Basic Entitlement Shares and the Standby Shares to Glencore as
      fully paid and non-assessable Shares, shall update the share register of
      the Company to enter Glencore as a holder of record of those Shares, and
      shall deliver to Glencore a certificate in respect of those
  Shares.

	 	 	 
		(b) 	
      In the event that Glencore exercises, in full or in part,
      its Additional Subscription Privilege, Glencore shall be obligated to pay
      for such Shares ("Additional Subscription Shares") in accordance
      with the provisions of the Rights Offering, and on the Rights Offering
      Closing Date PolyMet will issue the Additional Subscription Shares to
      Glencore as fully paid and non-assessable Shares, shall update the share
      register of the Company to enter Glencore as a holder of record of those
      Shares, and shall deliver to Glencore a certificate in respect of those
      Shares.

	2.8 	
      Standby Fee to Glencore. Subject to the successful
      completion of the Rights Offering and the Standby Commitment on the Rights
      Offering Closing Date, in consideration of Glencore providing the Standby
      Commitment, the Company shall pay Glencore a standby commitment fee equal
      to 2.00% of the Maximum Investment, being US$1,061,263.   Such fee shall
      be payable in cash on the Rights Offering Closing
Date.

	2.9 	
      Payment Mechanics. Notwithstanding Section 2.7 and
      2.8 of this Schedule 2, PolyMet hereby irrevocably authorizes and directs
      Glencore (i) to pay and apply such amount of the funds owing by Glencore
      under Section 2.7 of this Schedule 2 against and in satisfaction of the
      amounts owing to Glencore by PolyMet under Section 2.8 of this Schedule 2
      and under the Tranche E Debenture on account of all principal and interest
      outstanding, and (ii) to pay the balance of the funds owing by Glencore to
      PolyMet under Section 2.7 of this Schedule 2 in immediately available
      funds by wire transfer to an account designated by PolyMet.

	 	 
	2.10 	
      Registration Rights Agreement. On or before the
      Rights Offering Closing Date, the Company and Glencore shall execute and
      deliver to the other the Registration Rights Agreement.

	 	 
	2.11 	
      Miscellaneous. Any Shares held by a member of the
      Glencore International plc group of companies, other than Glencore, shall
      for all purposes of this Schedule 2, be deemed to be held by Glencore and
      Glencore shall be entitled to execute and deliver (as agent or otherwise
      for such other members of the Glencore International plc group of
      companies) any and all notices and/or other documents to be executed
      and/or delivered by a holder of Shares or Rights and PolyMet shall accept
      any such notices or other documents so executed and/or
  delivered.

ARTICLE 3 
COVENANTS OF POLYMET 

	3.1 	
      Subject to and in accordance with the provisions hereof,
      PolyMet undertakes and agrees with and in favour of Glencore
  that:

2 - 5

	 	(a) 	
      Preliminary Prospectus. As provided in Section 2.6
      of this Schedule 2, PolyMet will file with the Securities Authorities in the Qualifying
      Jurisdictions, the Preliminary Prospectus and with the SEC the
      Registration Statement relating to the proposed distribution of the Rights
      Offering Securities. The Company will provide Glencore with the reasonable
      opportunity to review and comment on the Preliminary Prospectus and
      Registration Statement and will take into account Glencore’s reasonable
      comments thereon. If requested by PolyMet (acting reasonably), Glencore
      shall provide to PolyMet, for the purposes of the Prospectus, Registration
      Statement and any Press Announcement, information regarding Glencore’s
      future intentions for its holding in PolyMet and will confirm the accuracy
      of such information provided.

	 	 	 
	 	(b) 	
      Final Prospectus and Qualification. As provided in
      Section 2.6 of this Schedule 2, PolyMet will file with the Securities Authorities in the
      Qualifying Jurisdictions the Final Prospectus and with the SEC the
      Registration Statement relating to the proposed distribution of the Rights
      Offering Securities, and take all other reasonable steps and proceedings
      that may be necessary in order to qualify the distribution of the Rights
      Offering Securities in each of the Qualifying Jurisdictions in which the
      Final Prospectus and Registration Statement has been filed. The Company
      will provide Glencore with the reasonable opportunity to review and
      comment on the Final Prospectus and Registration Statement and will take
      into account Glencore’s reasonable comments thereon.

	 	 	 
	 	(c) 	
      Supplementary Material. If required by Securities
      Laws, PolyMet will prepare any Prospectus Amendments or amendments to the
      Registration Statement and/or any documentation supplemental thereto
      and/or any amending or supplemental documentation and/or any similar
      document required to be filed by it under the Securities Laws. PolyMet
      will also promptly, and in any event within any applicable time
      limitation, comply with all applicable filing and other requirements under
      the Securities Laws as a result of any material change. The Company will
      provide Glencore with the reasonable opportunity to review and comment on
      any such documentation and will take into account Glencore’s reasonable
      comments thereon.

	 	 	 
	 	(d) 	
      Consents and Approvals. PolyMet will use its best
      efforts to obtain all necessary consents, approvals or exemptions for the
      creation, offering and issuance of the Rights Offering Securities in all
      Qualifying Jurisdictions and to Glencore as contemplated herein and in the
      Prospectus and Registration Statement and the entering into and
      performance by it of the Agreement (including, for the avoidance of doubt,
      the issuance of the Rights Offering Securities).

	 	 	 
	 	(e) 	
      Cease Trade Order or Other Investigation. From the
      date hereof through the earlier of: (i) the Rights Offering Closing Date;
      and (ii) the termination of the Agreement in accordance with its terms, it
      will immediately notify Glencore in writing of any written demand, request
      or inquiry (formal or informal) by any of the Securities Authorities of
      the NYSE MKT or SEC or other Governmental Entity that concerns any matter
      relating to the affairs of PolyMet that may affect the Rights Offering,
      the transactions contemplated herein, or any other matter contemplated by
      the Agreement, or that relates to the issuance, or threatened issuance, by
      any such authority of any cease trading or similar order or ruling
      relating to any securities of PolyMet. Any notice delivered to Glencore as
      aforesaid will contain reasonable details of the demand, request, inquiry,
      order or ruling in question. PolyMet will use its best efforts to prevent
      the issuance of any orders contemplated in this Section 3.1(e) and, if
      issued, to obtain their prompt withdrawal.

	 	 	 
	 	(f) 	
      Listing. PolyMet will take all lawful action as
      may be required and appropriate so that the Rights Offering Securities
      have been conditionally approved for listing on the TSX and NYSE MKT,
      subject to receipt of customary final
documentation.

2 - 6

	 	(g) 	
      Securities Laws. PolyMet will take all lawful
      action as may be necessary and appropriate so that the Rights Offering and
      the other transactions contemplated in the Agreement will be effected in
      accordance with Securities Laws. It will consult with Glencore and its
      advisors upon their reasonable request regarding the manner in which the
      Rights Offering and the other transactions contemplated herein will comply
      with applicable Securities Laws, and it will provide to Glencore and its
      advisors copies of any documents that are to be submitted by it to any
      Securities Authorities or other regulatory authority for such purpose
      prior to being so submitted and it will give Glencore and its advisors an
      opportunity to comment on same and will take into account Glencore's
      reasonable comments thereon.

	 	 	 
	 	(h) 	
      Obtaining of Report. PolyMet will cause
      Computershare to deliver to Glencore, as soon as is practicable following
      the Rights Offering Expiry Time, details concerning the total number of
      Shares duly subscribed and paid for by holders of Rights under the Rights
      Offering, including (without limitation) those Shares subscribed and paid
      for pursuant to the Additional Subscription Privilege, and accordingly the
      number of Standby Shares for which Glencore must subscribe pursuant to
      Section 2.3 of this Schedule 2. 

	 	 	 
	 	(i) 	
      Mailing of Materials. PolyMet will effect and
      complete the mailing of commercial copies of the Final Prospectus and
      Registration Statement and the other materials as set out in Section
      2.6(b) of this Schedule 2. 

	 	 	 
	 	(j) 	
      Application of Proceeds. PolyMet shall immediately
      apply the proceeds of the Rights Offering to repay in full the principal
      and interest outstanding on the Loan. The balance of the proceeds from the
      Rights Offering shall be applied in the manner and for the purposes
      described in the Final Prospectus and Registration Statement.

	 	 	 
	 	(k) 	
      Registration Rights Agreement. On or before the
      Rights Offering Closing Date, PolyMet shall execute and deliver the
      Registration Rights Agreement to Glencore.

ARTICLE 4 
CHANGES 

	4.1 	
      Material Change During Distribution.

	 	 	 	 
		(a) 	
      During the period from the date of the Agreement to the
      Rights Offering Closing Date, PolyMet will promptly (and in any event
      within one Business Day) notify Glencore in writing of any material change
      (actual, anticipated, contemplated or threatened, financial or otherwise)
      in the business, affairs, operations, assets, liabilities (contingent or
      otherwise) or capital of PolyMet and its Subsidiaries taken as a
    whole.

	 	 	 	 
		(b) 	
      During the period from the date hereof to the Rights
      Offering Closing Date, PolyMet will promptly (and in any event within one
      Business Day) notify Glencore in writing of:

	 	 	 	 
			(i) 	
      any material fact that has arisen or been discovered and
      that would be required to be disclosed in the Prospectus or Registration
      Statement if filed on such date; and

	 	 	 	 
			(ii) 	
      any change in any material fact contained in the
      Prospectus or Registration Statement, including (without limitation) all
      documents incorporated by reference, which fact or change is, or may be,
      of such a nature as to result in a Misrepresentation in the Prospectus or
      Registration Statement or that would result in the Prospectus or
      Registration Statement not complying with applicable Securities
    Laws.

2 - 7

	 	(c) 	
      PolyMet will promptly, and in any event within any
      applicable time limitation, comply, to the satisfaction of Glencore,
      acting reasonably, with all applicable filings and other requirements
      under the Securities Laws as a result of such fact or
  change.

	4.2 	
      Change in Securities Laws. If during the period of
      distribution to the public of the Rights, there is any change in the
      Securities Laws that, in the opinion of Glencore, acting reasonably,
      requires the filing of a Prospectus Amendment or an amendment to the
      Registration Statement, PolyMet will promptly prepare and file such
      Prospectus Amendment with the appropriate Securities Authority in each of
      the Qualifying Jurisdictions where such filing is required and file any
      amendment to the Registration Statement with the SEC. PolyMet will provide
      Glencore with the reasonable opportunity to review any comment on any
      Prospectus Amendment and any amendment to the Registration Statement and
      will take into account Glencore’s reasonable comments thereon.

	 	 
	4.3 	
      Change in Rights Offering Closing Date. If a
      material change occurs after the date of filing of the Final Prospectus
      with the Securities Authorities and the filing of the Registration
      Statement with the SEC and prior to the Rights Offering Closing Date, the
      Rights Offering Closing Date will be, unless PolyMet and Glencore
      otherwise agree in writing, the earlier of the previously scheduled Rights
      Offering Closing Date and the sixth Business Day following the date on
      which all applicable filings or other requirements of the Securities Laws
      with respect to such material change have been complied with in all
      Qualifying Jurisdictions and any appropriate documents obtained for such
      filings and notice of such filings from PolyMet or PolyMet’s counsel have
      been received by Glencore.

ARTICLE 5 
RIGHTS OFFERING CLOSINGS AND CONDITIONS

	5.1 	
      Rights Offering Closing. The closing of the Rights
      Offering, including the closing of the purchase by Glencore and sale by
      PolyMet of the Standby Shares, if any, to be purchased by Glencore
      hereunder will be completed at 5:30 a.m. (Vancouver time) (the "Rights
      Offering Closing Time") on the second Business Day following the
      Rights Offering Expiry Date (the "Rights Offering Closing Date") or
      at such other time and/or on such other date as PolyMet and Glencore may
      agree upon in writing. On such date, and upon payment being made by
      Glencore in accordance with Sections 2.7 and 2.9 of this Schedule 2 PolyMet will: (x) deliver (or
      cause to be delivered) to Glencore definitive certificates representing
      the number of Shares that is equal to the aggregate of (a) the number of
      Basic Entitlement Shares to be purchased by Glencore, (b) the number of
      any Standby Shares to be purchased by Glencore, and (c) the number of any
      Additional Subscription Shares to be purchased by Glencore, such
      certificates to be registered in the name of Glencore or one or more
      designees of Glencore, as applicable; and (y) pay the fee set out in
      Section 2.8 of this Schedule 2 to Glencore or one or more of its designees.

	 	 
	5.2 	
      Electronic Closing.  On or before the Rights Offering Closing  Time, the Company will deliver to  Ken Klassen at ken.klassen@glencore.com,  with a copy to Adam Taylor at taylora@bennettjones.com, by  electronic delivery of all documents and instruments to be executed and  delivered by or on behalf of the Company other than the delivery at the Rights  Offering Closing Time, as the case may be, the certificates representing the  number of Shares that is equal to the number of Standby Shares to be purchased  by Glencore, which certificates will be delivered by Computershare to Ken Klassen,  Baarermatsrasse 3, PO Box 777, CH-6341, Baar, Switzerland and Glencore will  deliver to Douglas J. Newby at dnewby@polymetmining.com, with a copy to  Mitchell Gropper, Q.C. at mgropper@farris.com by electronic delivery all documents and instruments to be executed  and delivered by or on behalf of Glencore and will wire, in immediately  available funds, the amounts to be paid by Glencore on the Rights Offering  Closing Date to an account designated in writing by the Company at least two  Business Days prior to the Rights Offering Closing Date for receipt by the  Company at the Rights Offering Closing Time.   All documents and instruments delivered to  Ken Klassen on behalf of Glencore or  Douglas Newby on behalf of  the Company are to be held for delivery to the appropriate Party at the Rights  Offering Closing Time if and when all such documents and instruments have been  delivered and such certificates have been delivered as aforesaid and such funds  have been received.

  

2 - 8

	5.3 	
      Mutual Conditions. The respective obligations of
      each of PolyMet and Glencore to complete the issuance by PolyMet and the
      subscription by Glencore for the Rights Offering Shares are subject to the
      following conditions being satisfied in full, provided that in the case of
      PolyMet, only if PolyMet has used its best efforts to comply with (or
      cause to be complied with) such conditions:

	 	 	 
		(a) 	
      There shall not be any order issued by a Governmental
      Entity pursuant to Laws, nor shall there be any determination or change of
      Law, in either case which suspends, ceases, restricts or suspends trading
      in the Rights or the Shares or operates to prevent or restrict the lawful
      sale or distribution of the Rights Offering Securities (which suspension,
      cessation, prevention or restriction, as the case may be, is
      continuing).

	 	 	 
		(b) 	
      The Rights shall be listed on the TSX and NYSE
  MKT.

	 	 	 
		(c) 	
      The TSX and NYSE MKT shall have approved the listing of
      the Rights Offering Shares, subject to the filing of customary documents
      with the TSX and NYSE MKT.

	 	 	 
	5.4 	
      Conditions in Favour of Glencore. The obligation
      of Glencore to complete the subscription of the Rights Offering Share is
      subject to the following conditions being satisfied in full, which
      conditions are for the exclusive benefit of Glencore, any of which may be
      waived, in whole or in part, by Glencore, in its sole and absolute
      discretion:

	 	 	 
		(a) 	
      The Parties shall have entered into the Corporate
      Governance Agreement.

	 	 	 
		(b) 	
      The Parties shall have entered into the Registration
      Rights Agreement.

	 	 	 
		(c) 	
      This Agreement shall not have been terminated in
      accordance with its terms.

	 	 	 
		(d) 	
      All actions required to be taken by or on behalf of
      PolyMet including the passing of all requisite resolutions of the
      directors of PolyMet and all requisite filings with any Governmental
      Entity will have occurred on or prior to the Rights Offering Closing Date,
      so as to validly authorize the execution and filing of the Preliminary
      Prospectus, the Final Prospectus, any Prospectus Amendment and
      Registration Statement and to create and issue the Rights Offering
      Securities, in each case having the attributes contemplated by the
      Prospectus and Registration Statement, and PolyMet will have taken all
      requisite actions, including the passing of all requisite resolutions of
      the directors of PolyMet, and have made and/or obtained all necessary
      filings, approvals, orders, rulings and consents of all relevant
      securities regulatory authorities and other Governmental Entities required
      in connection with the Rights Offering, the other transactions
      contemplated in the Agreement and the purchase of Standby Shares by
      Glencore as contemplated herein.

	 	 	 
		(e) 	
      Glencore shall have received a legal opinion as to
      matters of the laws of Canada dated as of the Rights Offering Closing Date
      from Farris, Vaughan Wills & Murphy LLP, Canadian counsel to PolyMet
      (who may rely, to the extent appropriate in the circumstances, as to
      matters of fact, on certificates of officers of PolyMet) substantially in
      the form of Exhibit 5.4(e).

	 	 	 
		(f) 	
      Glencore shall have received a legal opinion as to
      matters of the laws of the United States dated as of the Rights Offering
      Closing Date from Troutman Sanders LLP, United States counsel to the
      Company (who may rely, to the extent appropriate in the circumstances, as
      to matters of fact, on certificates of officers of PolyMet) substantially
      in the form of Exhibit 5.4(f).

	 	 	 
		(g) 	
      Glencore shall have received at the Rights Offering
      Closing Date, a certificate or certificates dated the Rights Offering
      Closing Date signed on behalf of PolyMet by the Chief Executive Officer
      and the Chief Financial Officer of PolyMet or such other
  officers of PolyMet acceptable to Glencore,
acting reasonably, in form and content satisfactory to Glencore, acting
reasonably, addressed to Glencore certifying for and on behalf of PolyMet and
not in their personal capacity after having made due enquiry, with respect to
the following matters:

2 - 9

	 	(i) 	
      its constating documents;

	 	 	 
	 	(ii) 	
      the resolutions of its board of directors relevant to the
      approval of the Preliminary Prospectus, the Final Prospectus and
      Registration Statement and the signing and filing thereof, the allotment
      and issue of the Rights Offering Securities and the authorization of the
      Agreement and the transactions contemplated therein; and

	 	 	 
	 	(iii) 	
      the incumbency and signatures of certain of its
      authorized signing officers.

	 	(h) 	
      PolyMet shall have performed or complied with, in all
      material respects, each of its covenants contained in the Agreement and
      each of its representations and warranties which are qualified as to
      materiality shall be true and correct, and all representations and
      warranties not so qualified shall be true and correct in all material
      respects, and Glencore shall have received at the Rights Offering Closing
      Date a certificate or certificates dated the Rights Offering Closing Date,
      and signed on behalf of PolyMet by the Chief Executive Officer and the
      Chief Financial Officer of PolyMet or such other officers of PolyMet
      acceptable to Glencore, acting reasonably, in form and content
      satisfactory to Glencore, acting reasonably, addressed to Glencore
      certifying for and on behalf of PolyMet and not in their personal capacity
      after having made due enquiry and after having carefully examined the
      Prospectus and Registration Statement, including all documents
      incorporated by reference that:

	 	 	 	 
	 		(i) 	
      since the respective dates as of which information is
      given in the Final Prospectus or Registration Statement, as amended or
      supplemented which has been filed and receipted, as required, there has
      been no requirement to file a Prospectus Amendment under Securities Laws
      or an amendment of the Registration Statement with the SEC;

	 	 	 	 
	 		(ii) 	
      no order, ruling, determination or change in Law, in any
      such case, having the effect of preventing, restricting or suspending the
      sale or distribution of the Rights suspending the sale or ceasing the
      trading of the Rights Offering Securities or any other securities of
      PolyMet or prohibiting the sale of the Rights Offering Securities has been
      issued by any regulatory authority and is continuing in effect and no
      proceedings for that purpose have been instituted or are pending or, to
      the knowledge of such officers, contemplated or threatened under
      Securities Laws or by any Governmental Entity;

	 	 	 	 
	 		(iii) 	
      all representations and warranties of PolyMet made in the
      Agreement which are qualified as to materiality shall be true and correct,
      and all representations and warranties not so qualified shall be true and
      correct in all material respects, as of the Rights Offering Closing Time,
      as though made on and as of the Rights Offering Closing Time;

	 	 	 	 
	 		(iv) 	
      all covenants of PolyMet in the Agreement to be performed
      on or before the Rights Offering Closing Time, shall have been duly
      performed by PolyMet in all material respects;

2 - 10

	 	(v) 	
      neither the Rights nor any Shares will have been delisted
      or suspended or halted from trading for a period of greater than one
      Business Day at any time prior to the Rights Offering Closing
  Date;

	 	 	 
	 	(vi) 	
      no Material Adverse Effect will have occurred or have
      been disclosed (if previously undisclosed) at any time after the date
      hereof and prior to the Rights Offering Closing Date; and

	 	 	 
	 	(vii) 	
      the Rights Offering Closing Date will have occurred
      within 90 days after the date of this
Agreement.

	5.5 	
      Conditions in Favour of PolyMet. The obligation of
      PolyMet to issue the Standby Shares to Glencore is subject to the
      following conditions being satisfied in full which conditions are for the
      exclusive benefit of PolyMet, any of which may be waived, in whole or in
      part, by PolyMet, in its sole and absolute discretion:

	 	 	 	 
		(a) 	
      Glencore shall have performed or complied with, in all
      material respects, each of its covenants contained in the Agreement and
      each of its representations and warranties shall be true and correct and
      PolyMet shall have received at the Rights Offering Closing a certificate
      or certificates dated the Rights Offering Closing Date and signed on
      behalf of Glencore by such officers of Glencore acceptable to PolyMet,
      acting reasonably, addressed to PolyMet certifying for and on behalf of
      Glencore and not in their personal capacity after having made due enquiry
      that:

	 	 	 	 
			(i) 	
      all representations and warranties of Glencore made in
      the Agreement shall be true and correct as of the Rights Offering Closing
      Time, as though made on and as of the Rights Offering Closing Time;
    and

	 	 	 	 
			(ii) 	
      all covenants of Glencore in the Agreement to be
      performed on or before the Rights Offering Closing Time, shall have been
      duly performed by Glencore in all material
respects.

ARTICLE 6 
TERMINATION 

	6.1 	
      Termination by PolyMet or Glencore. Either PolyMet
      or Glencore may terminate the Agreement by giving written notice to the
      other Party, if the conditions set out in Section 5.3 of this Schedule 2 are not satisfied on
      or before the Rights Offering Closing Date or such other date as may be
      agreed in writing by PolyMet and Glencore.

	 	 	 
	6.2 	
      Termination by PolyMet. PolyMet may terminate the
      Agreement by giving written notice to Glencore at any time if any of the
      conditions set out in Section 5.5 of this Schedule 2 are not satisfied on or before the
      Rights Offering Closing Date provided however that PolyMet will be
      entitled to make such election to terminate only if PolyMet has complied
      with its obligations under the Agreement.

	 	 	 
	6.3 	
      Termination by Glencore. Glencore may terminate
      the Agreement by giving written notice to PolyMet at any time
if:

	 	 	 
		(a) 	
      PolyMet fails to: (i) obtain final listing approval from
      the TSX or NYSE MKT for the Rights at least two days prior to the date
      named as the Record Date in the Final Prospectus; (ii) obtain conditional
      listing approval from the TSX and NYSE MKT in respect of the Shares
      issuable upon exercise of the Rights and the Standby Shares, prior to or
      on the Rights Offering Closing Date, subject to receipt of customary final
      documentation; and (iii) satisfy any of the conditions set out in Section
      5.4 of this Schedule 2 on or before the Rights Offering Closing
Date;

2 - 11

	 	(b) 	
      the Shares are de-listed or suspended or halted for
      trading for a period greater than one Business Day for any reason by the
      TSX or NYSE MKT at any time; or

	 	 	 
	 	(c) 	
      if the Rights Offering is otherwise terminated or
      cancelled.

Article 7 
INDEMNIFICATION 

	7.1 	
      PolyMet covenants and agrees to protect, indemnify and
      hold harmless Glencore for and on behalf of itself and for and on behalf
      of and in trust for each of its affiliates and its and their respective
      directors, officers, shareholders, partners, employees and agents
      (collectively, the "Glencore Indemnified Parties") from and against
      any and all direct and indirect losses, claims, damages, demands, costs,
      expenses and other liabilities of any kind, ("Losses") which any of
      them may be subject to or suffer or incur to any third party:

	 	 	 
		(a) 	
      by reason of or in any way arising, directly or
      indirectly, out of any Misrepresentation or alleged Misrepresentation in
      the Prospectus or Registration Statement (other than a Misrepresentation
      in the Prospectus or Registration Statement attributable to information
      provided by or on behalf of Glencore in respect of itself expressly for
      inclusion in the Prospectus or Registration Statement); and/or

	 	 	 
		(b) 	
      by reason of or in any way, directly or indirectly, out
      of any order made or any inquiry, investigation or proceeding instituted,
      threatened or announced by any Governmental Entity or by any other Person,
      based upon any Misrepresentation or alleged Misrepresentation in the
      Prospectus or Registration Statement (other than a Misrepresentation in
      the Prospectus or Registration Statement attributable to information
      provided by or on behalf of the Glencore Indemnified Parties in respect of
      themselves for inclusion in the Prospectus or Registration Statement);
      and/or

	 	 	 
		(c) 	
      the non-compliance or alleged non-compliance by PolyMet
      with any requirement of Securities Laws or any other Laws in connection
      with the Rights Offering; and/or

	 	 	 
		(d) 	
      by reason of, or in any way arising, directly or
      indirectly, out of any breach or default of or under any representation,
      warranty, covenant or agreement of PolyMet contained in the
    Agreement.

	 	 	 
		
      Nothing in this Article 7 shall affect the ability of the
      Company to bring a claim against Glencore in respect of any breach of this
      Agreement by Glencore, and nothing in this Article 7 shall affect the
      ability of Glencore to bring a claim against the Company in respect of any
      breach of this Agreement by the Company.

	 	 	 
	7.2 	
      Glencore covenants and agrees to protect, indemnify and
      hold harmless PolyMet for and on behalf of itself and for and on behalf of
      and in trust for each of its directors, officers, employees and agents
      from and against any and all Losses caused or incurred to any third party
      by reason of, or in any way arising, directly or indirectly, out of (a)
      any breach or default of or under any representation, warranty, covenant
      or agreement of Glencore contained herein, or (b) any information relating
      solely to Glencore that Glencore provided to PolyMet in writing expressly
      for inclusion in the Prospectus or Registration Statement.

	 	 	 
	7.3 	
      The indemnification by PolyMet contained in Section 7.1
      of this Schedule 2 will not apply in respect of any Losses caused or incurred by reason of or
      arising out of any Misrepresentation, order, inquiry, investigation or
      other matter or thing referred to herein which is based upon or results
      directly from any information relating solely to Glencore that Glencore
      provided to PolyMet in writing expressly for inclusion in the Prospectus
      or Registration Statement.

2 - 12

	
7.4 		
The indemnification in this Article 7 may not be used by Glencore to bring a claim against PolyMet in circumstances where Glencore has not suffered any Losses to a third party. The indemnification in this Article 7 may not be used
by PolyMet to bring a claim against Glencore in circumstances where PolyMet has not suffered any Losses.

	
	 	 	 
	
7.5 		
In the event that any claim, action, suit or proceeding, including, without limitation, any inquiry or investigation (whether formal or informal), is brought or instituted against any of the Persons in respect of which
indemnification is or might reasonably be considered to be provided for herein, such Person (an "Indemnified Party") shall promptly notify the Person from whom indemnification is being sought (being either PolyMet under Section 7.1
of this Schedule 2 or Glencore under Section 7.2 of this Schedule 2, as the case may be (the "Indemnifying Party")) and the Indemnifying Party shall promptly retain counsel who shall be reasonably satisfactory to the Indemnified Party to represent the Indemnified Party in such
claim, action, suit or proceeding, and the Indemnifying Party shall pay all of the reasonable fees and disbursements of such counsel relating to such claim, action, suit or proceeding.

	
	 	 	 
	
7.6 		
In any such claim, action, suit or proceeding, the Indemnified Party shall have the right to retain other counsel to act on such Person’s behalf, provided that the fees and disbursements of such other counsel shall be paid
by the Indemnified Party unless:

	
	 	 	 
		
(a) 		
the Indemnifying Party and the Indemnified Party shall have mutually agreed in writing to the retention of such other counsel; or

	
	 	 	 
		
(b) 		
the named parties to any such claim, action, suit or proceeding (including any added, third or impleaded parties) include both the Indemnifying Party and the Indemnified Party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between them (such as the availability of different defenses);

	
	 	 	 
		
provided, however, the Indemnifying Party shall not, in connection with any such claim, action, suit or proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate legal firm for
all Persons or corporations in respect of which indemnification is or might reasonably be considered to be provided for herein and such firm shall be designated in writing by the Indemnified Party (on behalf of itself and its directors, officers,
employees and agents).

	
	 	 	 
	
7.7 		
Notwithstanding anything herein contained, neither PolyMet nor Glencore shall agree to any settlement of any such claim, action, suit or proceeding unless the other has consented in writing thereto, and neither Party shall be
liable for any settlement of any such claim, action, suit or proceeding unless it has consented in writing thereto.

	
	 	 	 
	
7.8 		
If the indemnification provided for in this Article 7 is held by a court of competent jurisdiction to be unavailable to an Indemnified Party with respect to any Losses referred to herein, the Indemnifying Party, in lieu of indemnifying
such Indemnified Party thereunder, shall to the extent permitted by Law contribute to the amount paid or payable by such Indemnified Party as a result of such Loss in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in connection with the act or omission that resulted in such Loss, as well as any other relevant equitable considerations. The relative fault of the Indemnifying Party and
of the Indemnified Party shall be determined by a court of law by reference to, among other things, whether the untrue or alleged untrue statement of material fact or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission.

	
	 	 	 
	
7.9 		
The obligations of PolyMet and Glencore under this Article 7 shall survive completion of any offerings described herein and any termination of the Agreement. No Indemnifying Party, in the defense of any such claim or litigation, shall, except
      with the consent of the Indemnified Party, consent to entry of any
      judgment or enter into any settlement which does not include as an
      unconditional term thereof the giving by the claimant or plaintiff to such
      Indemnified Party of a release from all liability in respect to such claim
      or litigation.

	

2 - 13

	7.10 	
      To the extent any indemnification by an Indemnifying
      Party is prohibited or limited by Law, the Indemnifying Party agrees to
      make the maximum contribution with respect to any amounts for which it
      would otherwise be liable under this Article 7 to the fullest extent
      permitted by Law; provided, however, that no Person guilty of fraudulent
      misrepresentation shall be entitled to contribution from any Person who
      was not guilty of such fraudulent
misrepresentation.

SCHEDULE 3

FORM OF INITIAL PRESS ANNOUNCEMENT

SCHEDULE 4

FORM OF PRELIMINARY PROSPECTUS 

SCHEDULE 4.3.3

FORM OF CORPORATE GOVERNANCE AGREEMENT 

CORPORATE GOVERNANCE AGREEMENT 

DATED the ___ day of _____________, 2013. 

WHEREAS: 

	 	A. 	
      PolyMet Mining Corp. ("PolyMet" or the "Company") and Glencore AG
      ("Glencore") are party to a standby purchase agreement dated April 10, 2013
      (the "Standby Purchase Agreement").

	 	 	 
	 	B. 	
      Pursuant to the Standby Purchase Agreement, Glencore has
      agreed to provide a partial standby commitment in respect of an offering
      by the Company of rights (the "Rights Offering") to holders of the
      Company's common shares.

	 	 	 
	 	C. 	
      PolyMet has granted to Glencore certain rights in respect
      of the ongoing corporate governance of the Company, including rights to
      nominate directors of the Company.

	 	 	 
	 	D. 	
      Pursuant to Section 4.3.3 of the Standby Purchase
      Agreement, the Parties have agreed to enter into this Corporate Governance
      Agreement to set out the terms and conditions of the ongoing corporate
      governance arrangements between Glencore and the
Company.

NOW THEREFORE in consideration of the foregoing, and for
other good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties agree as follows. 

	1. 	
      All capitalized terms used but not otherwise defined
      herein shall have the meanings given thereto in the Standby Purchase
      Agreement.

	 	 	 	 
	2. 	
      The Company hereby covenants and agrees:

	 	 	 	 
		(a) 	
      at the relevant time, as long as the number of issued and
      outstanding Shares held by Glencore (on a fully diluted basis) relative to
      all the issued and outstanding Shares (on a fully diluted basis) is at
      least 10%, Glencore shall have the right but not the obligation to
      designate that number of Glencore Nominees that is the greater
  of:

	 	 	 	 
			(i) 	
      one; and

	 	 	 	 
			(ii) 	
      the number of the directors of the Company out of the
      total number of directors of the Company which is proportionate to
      Glencore's holdings of issued and outstanding Shares (on a fully diluted
      basis) relative to all the issued and outstanding Shares (on a fully
      diluted basis), provided that if the foregoing calculation does not result
      in a whole number, the number of Glencore Nominees which Glencore is
      entitled to designate will be rounded down to the nearest whole
    number;

	 	 	 	 
			(iii) 	
      to take all such actions to appoint the Glencore Nominees
      to the Board as soon as reasonably practicable following notice of
      Glencore’s request to appoint the Glencore Nominees, which, for the
      avoidance of doubt, such actions may include increasing the number of
      directors on the Board or procuring the resignation of members of the
      Board at the time of appointing the Glencore
Nominees.

4.3.3 - 2

	 	(b) 	
      to mail to Shareholders in accordance with applicable
      corporate and Securities Laws, a management proxy circular in which the
      Board will:

	 	 	 	 
	 		(i) 	
      nominate all of the Glencore Nominees for election at the
      Company’s annual general meetings held after the completion of the
      transactions contemplated by the Standby Purchase Agreement where
      directors are elected (and every such Company meeting thereafter)
      following the Rights Offering Closing Date ("Company AGM");
    and

	 	 	 	 
	 		(ii) 	
      make a written recommendation to Shareholders in favour
      of the election of all of the Glencore Nominees;

	 	 	 	 
	 	(c) 	
      to solicit proxies for the Company AGM in favour of
      Shareholder approval of the election of all of the Glencore
    Nominees;

	 	 	 	 
	 	(d) 	
      to notify Glencore in advance of any meeting of
      shareholders of PolyMet to be called by PolyMet after the completion of
      the transactions contemplated by this Agreement, of the intention of
      PolyMet to include the election of directors of PolyMet as business to be
      conducted at such meeting in sufficient time for Glencore to designate the
      Glencore Nominees to be included in the proxy circular for such meeting
      and the Company agrees to include such individuals so designated by
      Glencore among managements nominees as directors of the Company at such
      meeting; and

	 	 	 	 
	 	(e) 	
      that if any individual nominated or designated by
      Glencore as aforesaid as a director of PolyMet and elected or appointed as
      a director of PolyMet should resign, other than at an annual general
      meeting of shareholders of PolyMet, then Glencore shall be entitled to
      designate another individual as a director of PolyMet in place of the
      individual who so resigned;

	3. 	
      Glencore hereby covenants and agrees:

	 	 	 
		(a) 	
      to nominate or designate as a director of PolyMet only
      individuals who are qualified to serve as a director of PolyMet under
      applicable Law (notwithstanding that such individual may not be
      "independent" under Securities Laws);

	 	 	 
		(b) 	
      that notwithstanding anything in this Corporate  Governance Agreement, Glencore shall not be entitled to nominate greater than 49% (rounding
  down) of the directors to the Board; and

	 	 	 
		(c) 	
      that it does not intend to exercise its rights under this
      Agreement any earlier than January 1, 2014.

	 	 	 
	4. 	
      Subject to Section 3(b) of this Corporate  Governance Agreement, all rights previously granted by PolyMet to Glencore to appoint directors to the Board remain in full force
  and effect unamended by this Agreement.

	 	 	 
	5. 	
      This agreement shall be governed and construed in
      accordance with the laws of the Province of British Columbia and the laws
      of Canada applicable therein. Each of the parties hereto hereby attorn to
      the jurisdiction of the courts of the Province of British
  Columbia.

	 	 	 
	6. 	
      No supplement, modification, amendment, waiver, discharge
      or termination of this agreement is binding unless it is executed in
      writing by each of the parties to this agreement. No waiver of, failure to
      exercise or delay in exercising any provision of this agreement
      constitutes a waiver of any other provision (whether or not similar) nor
      does such waiver constitute a continuing waiver unless otherwise expressly
      provided.

4.3.3 - 3

	7. 	
      This agreement may be executed in counterparts, all of
      which will be considered one and the same agreement, and will become
      effective when one or more counterparts will have been signed by each
      party and delivered to the other party. Delivery of an executed
      counterpart of this agreement by facsimile or transmitted electronically
      shall be equally effective as delivery of a manually executed counterpart
      of this Agreement.

[Signature page follows] 

4.3.3 - 4

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

POLYMET MINING CORP. 

By:__________________________________
Name: 
Title: 

 

GLENCORE AG 

By:__________________________________
Name: 
Title:

SCHEDULE 5

REPRESENTATIONS AND WARRANTIES OF POLYMET 

PolyMet represents and warrants to Glencore as at the date of
the Agreement, the Rights Issue Date and the Rights Offering Closing Date (by
reference to the circumstances subsisting on each respective date), that: 

	 	(a) 	
      The Company is a corporation duly incorporated, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation and has the corporate power and authority to own its
      properties and to carry on its business as now being conducted. The
      Company is duly qualified to do business as a foreign corporation and is
      in good standing in each jurisdiction in which the nature of the business
      conducted or property owned or leased by it makes such qualification
      necessary. The only Subsidiary of the Company is PMI, which is
      incorporated under the laws of the State of Minnesota and which is wholly-
      owned by the Company. Except as set out in Schedule 5(A), the Company
      does not own or hold any shares of, or any other interest in, directly or
      indirectly, any Person other than PolyMet Mining.

	 	 	 
	 	(b) 	
      The Company has full corporate power and authority and
      has taken all requisite action on its part necessary for (i) the
      authorization, execution and delivery of the Agreement, (ii) authorization
      of the performance of all of its obligations hereunder and thereunder,
      and, (iii) in respect of the Company, the authorization, issuance (or
      reservation for issuance) and delivery of the Rights Offering
      Securities.

	 	 	 
	 	(c) 	
      The Agreement has been duly executed and delivered by the
      Company and the Agreement constitutes a legal, valid and binding
      obligation of the Company, enforceable against the Company in accordance
      with its terms, except as such enforceability may be limited by (i)
      applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
      moratorium, liquidation or similar Laws relating to, or affecting
      generally the enforcement of, creditors’ rights and remedies or (ii)
      equitable principles relating to the availability of specific performance,
      injunctive relief and other equitable remedies.

	 	 	 
	 	(d) 	
      There has been no voluntary or involuntary action taken
      either by or against the Company for any such Person’s winding-up,
      dissolution, liquidation, bankruptcy, receivership, administration or
      similar or analogous events in respect of such Person or all or any part
      of its assets or revenues.

	 	 	 
	 	(e) 	
      Set forth on Schedule 5(E) hereto is, in each case as of
      the date hereof, (a) a description of the authorized capital stock of the
      Company; (b) the number of Shares of capital stock of the Company issued
      and outstanding; (c) the number of Shares of capital stock of the Company issuable pursuant to the Company’s equity compensation plans (including
      those issuable subject to approval by the Company’s shareholders); and (d)
      the number of Shares of capital stock of the Company issuable and reserved
      for issuance pursuant to securities exercisable for, or convertible into
      or exchangeable for any Shares of capital stock of the Company. All of the
      issued and outstanding Shares of the Company’s capital stock have been
      duly authorized and validly issued and are fully paid and non- assessable.
      Except as set forth on Schedule 5(E), no Person is entitled to preemptive
      or similar statutory or contractual rights with respect to any securities
      of the Company. Except as set forth on Schedule 5(E), there are no
      outstanding warrants, options, convertible securities or other rights,
      agreements or arrangements of any character under which the Company is or
      may be obligated to issue any equity securities of any kind,
  and except as contemplated by this Agreement, the Company’s
      equity compensation plans (including those issuable subject to approval by
      the Company’s shareholders), the Company is not currently in negotiations
      for the issuance of any equity securities of any kind. Except as set forth
      on Schedule 5(E), the Company has no knowledge of any voting agreements,
      buy-sell agreements, option or right of first purchase agreements or other
      agreements of any kind among any of the securityholders of the Company
      relating to the securities of the Company held by them. Except as set
      forth on Schedule 5(E), the Company has not granted any Person the right
      to require the Company to register any securities of the Company under the
      1933 Act, whether on a demand basis or in connection with the registration
      of securities of the Company for its own account or for the account of any
other Person.

5 - 2

	 	(f) 	
      The Company has filed all Disclosure Documents with the
      Securities Authorities and SEC pursuant to Canadian Securities Laws and
      1934 Act, respectively, since January 31, 2012. When filed, all Disclosure
      Documents complied as to form in all material respects with the
      requirements of the applicable Securities Laws and 1934 Act, respectively,
      and did not contain any untrue statement of a material fact or omit to
      state any material fact necessary in order to make the statements made
      therein, not misleading. The Company is engaged only in the business
      described in the Disclosure Documents, and the Disclosure Documents
      contain a complete and accurate description of the business of the Company
      in all material respects.

	 	 	 	 
	 	(g) 	
      Since January 31, 2012, there has not been:

	 	 	 	 
	 		(i) 	
      any change in the consolidated assets, liabilities,
      financial condition or operating results of the Company from that
      reflected in the financial statements included in the Annual Report,
      except changes in the ordinary course of business which have not had, in
      the aggregate, a Material Adverse Effect;

	 	 	 	 
	 		(ii) 	
      any declaration or payment of any dividend, or any
      authorization or payment of any distribution, on any of the capital stock
      of the Company, or any redemption or repurchase of any securities of the
      Company;

	 	 	 	 
	 		(iii) 	
      material damage, destruction or loss, whether or not
      covered by insurance, to any assets or properties of the
Company;

	 	 	 	 
	 		(iv) 	
      any waiver by the Company of a material right or of a
      material debt owed to it;

	 	 	 	 
	 		(v) 	
      any satisfaction or discharge of any Encumbrance or
      payment of any obligation by the Company, except in the ordinary course of
      business and which is not material to the assets, properties, financial
      condition, operating results or business of the Company taken as a whole
      (as such business is presently conducted and as it is proposed to be
      conducted);

	 	 	 	 
	 		(vi) 	
      any material change or amendment to a material agreement
      by which the Company or any of their respective assets or properties are
      bound or subject;

	 	 	 	 
	 		(vii) 	
      any material labour difficulties or labour union
      organizing activities with respect to employees of the Company;

	 	 	 	 
	 		(viii) 	
      any material transaction entered into by the Company
      other than in the ordinary course of business;
or

5 - 3

	 	(ix) 	
      any other event or condition of any character that may
      have a Material Adverse Effect.

	 	(h) 	
      The execution, delivery and performance of the Agreement
      by the Company and the issuance and sale of the Rights Offering Securities
      by the Company will not conflict with or result in a breach or violation
      of any of the terms and provisions of, or constitute a default under (i)
      the Company’s constating documents (including any certificates of
      designation) or articles or any shareholders agreement relating to it, as
      in effect on the date hereof, or (ii) except where it could not,
      individually or in the aggregate, reasonably be expected to result in a
      Material Adverse Effect, (A) any statute, rule, regulation or order of any
      Governmental Entity having jurisdiction over the Company or any of their
      respective properties, or (B) any agreement or instrument to which the
      Company is a party or by which the Company is bound or to which any of the
      properties of the Company is subject (including an event that with notice
      or lapse of time or both would become a default, and including any event
      that would give to others any rights of termination, amendment,
      acceleration or cancellation, with or without notice, lapse of time or
      both). Except where it could not, individually or in the aggregate,
      reasonably be expected to result in a Material Adverse Effect, the
      Company, to its knowledge, (i) is not in violation of any statute, rule or
      regulation applicable to the Company or its assets or activities, (ii) is
      not in violation of any judgment, order or decree applicable to the
      Company or its assets and, (iii) is not in breach or violation of any
      agreement, note or instrument to which they or their assets are a party or
      are bound or subject. The Company has not received written notice from any
      Person of any claim or investigation that, if adversely determined, would
      render the preceding sentence untrue or incomplete.

	 	 	 
	 	(i) 	
      The Company has prepared and filed all tax returns
      required to have been filed by it with all appropriate Governmental
      Entities and paid all taxes due owed by it, taking into account permitted
      extensions. The charges, accruals and reserves on the books of the Company
      in respect of taxes for all fiscal periods are adequate, and there are no
      unpaid assessments against the Company nor, to the knowledge of the
      Company, any basis for the assessment of any additional taxes, penalties
      or interest for any fiscal period or audits by any federal, state or local
      taxing authority except such as which are not material. All taxes and
      assessments and levies that the Company is required to withhold or to
      collect for payment have been duly withheld and collected and paid to the
      proper Governmental Entity or third party when due, taking into account
      permitted extensions. There are no tax liens or claims pending or, to the
      Company’s knowledge, threatened against the Company or any of its assets
      or property. There are no outstanding tax sharing agreements or other such
      arrangements between the Company and any other Person.

	 	 	 
	 	(j) 	
      The only jurisdictions (or registration districts within
      such jurisdictions) in which the Company has any place of business or
      stores any material tangible assets are as set forth in Schedule 5(J).

	 	 	 
	 	(k) 	
      The Company has good and marketable title to all real
      properties and all other properties and assets owned by it and material to
      its operations, in each case free from Encumbrances other than Permitted
      Encumbrances and defects that would materially affect the value thereof or
      materially interfere with the use made or currently planned to be made
      thereof by them; and the Company directly or indirectly holds any leased
      real or personal property material to its operations under valid and
      enforceable leases with no exceptions that would materially interfere with
      the use made or currently planned to be made thereof by them. Schedule
      5(K) sets forth a complete and accurate legal description of all the real
      property owned by the Company. The Company has adequate rights of ingress
      and egress for the operation of the business in the ordinary course from
      and to the Owned Real Property. The Company does not own any real property
      other than the Owned Real Property, and the Company has not agreed to
      acquire any real property or interest in real property other than the
      Owned Real Property.

5 - 4

	 	(l) 	
      The Company is not party to any lease, sublease,
      agreement to lease, offer to lease, renewal of lease or other right or
      interest in or to real property (each a "Lease") except in respect
      of the Leased Real Properties. Each Lease is in good standing in all
      material respects and all amounts owing thereunder have been paid by the
      Company. Schedule 5(L) sets forth a complete and accurate legal
      description of all the real property leased by the Company. The Company
      has adequate rights of ingress and egress for the operation of the
      business from and to Leased Real Property.

	 	 	 
	 	(m) 	
      The uses to which the Owned Real Property and the Leased
      Real Property are being put by the Company are not in breach, in any
      material respect, of any applicable Law.

	 	 	 
	 	(n) 	
      No part of the Owned Real Property or the Leased Real
      Property of the Company has been taken or expropriated by any Governmental
      Entity nor has any written notice or proceeding in respect thereof been
      given or commenced nor is the Company aware of any intent or proposal to
      give any such notice or commence any such proceedings.

	 	 	 
	 	(o) 	
      The Company possesses adequate certificates, authorities
      or permits issued by appropriate Governmental Entities necessary to
      conduct the business now operated by it which could, individually or in
      the aggregate, reasonably be expected to result in a Material Adverse
      Effect if not obtained, and has not received any written notice of
      proceedings relating to the revocation or modification of any such
      certificate, authority or permit. The Company is in compliance with all
      applicable Laws, non-compliance with which could reasonably be expected to
      have a Material Adverse Effect.

	 	 	 
	 	(p) 	
      The Company is not in default, nor has any event or
      circumstance occurred which, but for the passage of time or the giving of
      notice, or both, would constitute a default under any material agreement.
      No Event of Default has occurred and is continuing.

	 	 	 
	 	(q) 	
      There are no existing Encumbrances relating to the assets
      of the Company other than Permitted Encumbrances, except as set out on Schedule 5(Q).

	 	 	 
	 	(r) 	
      There are no Pension Plans in existence. All Benefit
      Plans to which the Company is a party are described in Schedule 5(R).
      There has not been any improper withdrawal or application of any asset of
      the Benefit Plans. There is no proceeding, action, suit or claim,
      including by any Governmental Entity (other than routine claims for
      benefits) pending or, to the Company’s knowledge, threatened involving the
      Benefit Plans, and no fact exists which could give rise to that type of
      proceeding, action, suit or claim. All contributions or premiums required
      to be made or paid by the Company in respect of the Benefit Plans have
      been made or paid in accordance with the terms of such plans and all
      applicable Law. All contributions to the Benefit Plans by way of
      authorized payroll deduction or otherwise have been properly withheld or
      collected by the Company and have been fully paid into those plans in
      compliance with the plans and applicable Law. All reports and disclosures
      relating to the Benefit Plans required by those plans and any applicable
      Law to be filed or distributed have been filed or distributed in
      compliance with the plans and applicable Law.

	 	
      (s) 
	
      Except as set out on Schedule5(S);

      
	 	 	 	 
	 	 	(i)	No material labor dispute with the employees of the
  Company exists or, to the knowledge of the Company, is imminent. 

	 	(ii) 	
      The Company has paid all wages and other forms of
      compensation due and owing and have made and remitted all required
      statutory and other deductions and there are no outstanding or pending
      labor or employment-related liabilities.

	 	 	 
	 	(iii) 	
      (A) The Company is not a party to any collective
      agreement or other labour contract, (B) no union or other labor
      organization is actively seeking to organize, or to be recognized as, a collective
bargaining unit of employees of the Company, and (C) there is no pending or, to
the Company’s knowledge, threatened, strike, work stoppage, material unfair
labor practice claim, or other material labor dispute against or affecting the
Company.

5 - 5

	 	(t) 	
      All Material Agreements of the Company are in full force
      and effect, unamended, and the Company or, to their knowledge, any other
      party to any such agreement is not in material default with respect
      thereto.

	 	 	 	 
	 	(u) 	
      All books and records of the Company have been fully,
      properly and accurately kept and completed in accordance with IFRS and
      there are no material inaccuracies or discrepancies of any kind contained
      or reflected therein.

	 	 	 	 
	 	(v) 	
      The Company owns or possesses adequate rights or licenses
      to the inventions, know- how, patents, patent rights, copyrights,
      trademarks, trade names, licenses, approvals, governmental authorizations,
      trade secrets, confidential information and other intellectual property
      rights, free and clear of all Encumbrances, equities and other adverse
      claims, necessary to conduct the business now operated by it and presently
      contemplated to be operated by it (collectively, "Intellectual Property
      Rights"), and the Company has not received any written notice of
      infringement of or conflict with asserted rights of others with respect to
      any Intellectual Property Rights.

	 	 	 	 
	 	(w) 	
      Except as set out on Schedule 5(W), to the knowledge of the Company, the Company is not in
      violation of any statute, rule, regulation, decision or order of any
      Governmental Entity relating to the use, disposal or release of hazardous
      or toxic substances or relating to the protection or restoration of the
      environment or human exposure to hazardous or toxic substances
      (collectively, "Environmental Laws"), do not own or operate any
      real property contaminated with any substance that is subject to any
      Environmental Laws, are not liable for any off-site disposal or
      contamination pursuant to any Environmental Laws, and are not subject to
      any claim relating to any Environmental Laws, which violation,
      contamination, ownership, operation, liability or claim would individually
      or in the aggregate have a Material Adverse Effect; and the Company is not
      aware of any pending investigation that might lead to such a claim. The
      business and operations of the Company complies in all material respects
      with Environmental Laws and the Company holds all permits and licenses
      necessary to conduct its business and operations in compliance with
      Environmental Laws. All material costs to ensure compliance with
      Environmental Laws, including those with respect to future closure and
      rehabilitation costs, are accurately reflected in the Company’s financial
      statements.

	 	 	 	 
	 	(x) 	
      Schedule 5(X) lists all mineral interests and rights,
      including claims, concessions, surface rights, easements, exploration
      licenses and exploitation licenses and leases (collectively, the
      "Mineral Rights") associated with the NorthMet Project which are
      held directly or indirectly by the Company or to which it is a party.
      Except as would not reasonably be expected to have a Material Adverse
      Effect:

	 	 	 	 
	 		(i) 	
      the Company is the sole legal and beneficial owner of all
      right, title and interest in and to the Mineral Rights, free and clear of
      any Encumbrances, except Permitted Encumbrances;

	 	 	 	 
	 		(ii) 	
      all of the Mineral Rights have been properly located and
      recorded in compliance with applicable Laws and are comprised of valid and
      subsisting mineral claims;

	 	 	 	 
	 		(iii) 	
      the Mineral Rights are in good standing under applicable
      Laws and all work required to be performed and filed in respect thereof
      has been performed and filed, all taxes, rentals, fees, expenditures and
      other payments in respect thereof have been paid or incurred and all
      filings in respect thereof have been made;

5 - 6

	 	(iv) 	
      there is no adverse claim against or challenge to the
      title to or ownership of any of the Mineral Rights;

	 	 	 
	 	(v) 	
      the Company has the exclusive right to deal with all of
      the Mineral Rights;

	 	 	 
	 	(vi) 	
      no person other than the Company has any interest in any
      of the Mineral Rights or the production or profits therefrom or any
      royalty in respect thereof or any right to acquire any such
    interest;

	 	 	 
	 	(vii) 	
      there are no options, back-in rights, earn-in rights,
      rights of first refusal or similar provisions or rights which would affect
      the interest of the Company in any of the Mineral Rights;

	 	 	 
	 	(viii) 	
      there are no restrictions on the ability of the Company
      to use, transfer or exploit any of the Mineral Rights, except pursuant to
      applicable Laws;

	 	 	 
	 	(ix) 	
      the Company has not received any written notice from any
      Governmental Entity of any revocation or intention to revoke any interest
      of the Company in any of the Mineral Rights; and

	 	 	 
	 	(x) 	
      the Company has all surface rights, including easements
      and rights of way from landowners or Governmental Entities, that are
      required to develop and exploit the NorthMet Project as contemplated in
      the AGP Technical Report and no third party or group holds any such rights
      that would be required by the Company to develop and exploit the NorthMet
      Project as contemplated in the AGP Technical Report on or before the date
      hereof.

	 	(y) 	
      There are no pending actions, suits or proceedings
      against or affecting the Company or any of its respective properties that,
      if determined adversely, would individually or in the aggregate have a
      Material Adverse Effect and, to the knowledge of the Company, no such
      actions, suits or proceedings are threatened or contemplated. There are no
      pending actions, suits or proceedings against or affecting the Company
      that involve this Agreement or the rights of Glencore or the obligations
      of the Company thereunder and, to the knowledge of the Company, no such
      actions, suits or proceedings are threatened or contemplated.

	 	 	 
	 	(z) 	
      The financial statements included in the Disclosure Documents present
      fairly and accurately in all material respects the consolidated balance
      sheet of the Company as of the dates shown and its consolidated statements
      of loss and comprehensive loss, consolidated statements of changes in
      shareholder equity and consolidated statement of cash flows for the
      periods shown, and such other financial statements have been prepared in
      conformity with IFRS in effect from time to time in Canada applied on a
      consistent basis throughout the periods involved except as set forth in
      the notes thereto. Except as set forth in the annual financial statements
      of the Company included in the Annual Report, the Company does not have
      any liabilities, contingent or otherwise, which individually or in the
      aggregate would result in a Material Adverse Effect.
	 	 	 
	 	(aa) 	
      The Company maintains in full force and effect insurance
      coverage that the Company reasonably believes to be adequate against all
      liabilities, claims and risks against which it is customary for comparably
      situated companies to insure. All such insurance policies are (i)
      sufficient for compliance with all requirements of applicable Law and of
      all Material Agreements, (ii) are valid, outstanding and enforceable
      policies, and (iii) provide adequate insurance coverage in at least such
      amounts and against at least such risks (but including in any event,
      public liability) as are usually insured against in the
  same general area by companies engaged in the same or a
      similar business. All premiums with respect thereto have been paid in
      accordance with their respective terms, and no written notice of
      cancellation or termination has been received with respect to any such
  policy.

5 - 7

	 	(bb) 	
      There are no proceedings pending or, to the Company’s
      knowledge, threatened against the Company relating to the continued
      listing of the Shares on the TSX or the NYSE MKT.

	 	 	 
	 	(cc) 	
      The Company is in material compliance with all applicable
      provisions of the Sarbanes- Oxley Act that
      are in effect.

	 	 	 
	 	(dd) 	
      The Company is in material compliance with all applicable
      corporate governance requirements set forth in the rules of the NYSE MKT
      currently in effect.

	 	 	 
	 	(ee) 	
      In respect of financial reporting for the fiscal year
      ended January 31, 2012 and all subsequent periods, the Company maintains a
      system of internal control over financial reporting sufficient to provide
      reasonable assurances that (i) transactions are executed in accordance
      with management’s general or specific authorization; (ii) transactions are
      recorded as necessary to permit preparation of financial statements of the
      Company in conformity with generally accepted accounting principles and to
      maintain accountability for assets; (iii) access to the Company’s assets
      is permitted only in accordance with management’s general or specific
      authorization; and (iv) the recorded accountability for assets of the
      Company is compared with existing assets at reasonable intervals and
      appropriate actions is taken with respect to any differences. The Company
      has not been advised of (i) any significant deficiencies in the design or
      operation of its internal control over financial reporting that could
      adversely affect its ability to record, process, summarize and report
      financial data, (ii) any material weaknesses in its internal control over
      financial reporting or (iii) any fraud, whether or not material, that
      involves management or other employees who have significant role in the
      internal control over its financial reporting.

	 	 	 
	 	(ff) 	
      The Company has established and maintains disclosure
      controls and procedures (as such term is defined in Rules 12a-15(e) and
      15d-15(e) of the 1934 Act), which are effective in all material respects
      to perform the functions for which they are established.

	 	 	 
	 	(gg) 	
      PricewaterhouseCoopers LLP, who have audited certain financial statements
      of the Company and delivered their report with respect to the audited
      financial statements included in the Annual Report, is an independent
      registered public accountant with respect to the Company within the
      meaning of the 1933 Act (including without limitation the Sarbanes-Oxley
      Act).
	 	 	 
	 	(hh) 	
      Neither the aggregate value of the assets in Canada of
      PolyMet and its Subsidiaries, nor the gross revenues from sales in or from
      Canada generated from those assets, as determined in accordance with Part
      IX of the Competition Act (Canada) and the Regulations Respecting
      Notifiable Transactions Pursuant to Part VIII of the Competition Act
      (Canada), SOR 87-348, exceeds the prescribed value referred to in Section
      110 of the Competition Act.

	 	 	 
	 	(ii) 	
      The value of the assets of PolyMet and its Subsidiaries
      carrying on a Canadian business is, collectively, less than C$344 million,
      as determined by Section 3 of the Investment Canada Regulations.

	 	 	 
	 	(jj) 	
      The Rights Offering Shares issuable to Glencore will be
      duly and validly issued and registered in the name of Glencore (or as it
      may direct in writing) and upon receipt of the Exercise Price in respect of the Basic Entitlement Shares
      and Additional Subscription Shares and on fulfillment of the Standby
      Commitment, the Rights Offering Shares will be validly issued, fully paid,
      non-assessable and will be free and clear of all liens, pledges, claims,
      encumbrances, security interests or other restrictions except for any
      restrictions on resale or transfer imposed by Securities Laws and not
      subject to any option to purchase or similar right (it being acknowledged
      by Glencore that the number of Standby Shares that it may be entitled to
      receive pursuant to the Rights Offering will depend on the number of
      Shares issued to those Persons who have exercised Rights prior to the
      Rights Offering Expiry Time and the limitation in Section 2.4 of Schedule
      2).

5 - 8

	 	(kk) 	
      The Rights Offering Shares will be allotted and issued
      subject to the notice of articles and articles of PolyMet, and on terms
      that they will, when issued, be fully paid, non- assessable and free and
      clear of all encumbrances and restrictions, except for restrictions on
      transfer imposed by applicable securities
laws.

	 	(ll) 	
      PolyMet is a reporting issuer in good standing in the
      Provinces of British Columbia, Alberta and Ontario.

	 	 	 
	 	(mm) 	
      PolyMet is qualified to file a prospectus in the form of
      a short form prospectus pursuant to the provisions of NI
      44-101 – Short Form Prospectus Distributions.

	 	 	 
	 	(nn) 	
      (i) the common shares, without par value, of PolyMet are
      registered under Section 12(b) of the 1934 Act, (ii) PolyMet is required
      to file reports pursuant to Section 13 of the 1934 Act, (iii) PolyMet has
      filed all reports required to be filed pursuant to Section 13 of the 1934
      Act and (iv) PolyMet is in compliance with all of its other obligations
      under the 1934 Act.

	 	(oo) 	
      PolyMet is a "foreign private issuer" within the meaning
      of Rule 3b-4 under the 1934 Act, and PolyMet meets the requirements for
      use of Form F-10 under the 1933 Act for registration under the 1933 Act of
      the offering of the Rights Offering Securities to be issued in connection
      with the Rights Offering.

	 	 	 
	 	(pp) 	
      No order halting or suspending trading in securities of
      PolyMet or prohibiting the sale of such securities is outstanding against
      PolyMet, and to the knowledge of PolyMet and the directors and officers
      thereof, no investigations or proceedings for such purpose are pending or
      threatened.

	 	(qq) 	
      PolyMet has waived the application of its Rights Plan to
      the transactions contemplated by this Agreement.

	 	 	 
	 	(rr) 	
      The Board has determined that neither the fair market
      value of the subject matter of, nor the fair market value of the
      consideration for, the transactions contemplated by this Agreement
      relating to Glencore (other than the Loan), exceeds 25% of PolyMet’s
      market capitalization in accordance with Part 5 of MI 61-101.

	 	 	 
	 	(ss) 	
      The Board has determined that the Loan and related
      transactions are exempt from the formal valuation and minority approval
      requirements of Part 5 of MI 61-101.

	 	 	 
	 	(tt) 	No approval of the Company’s Shareholders is required for  (i) the execution and delivery by the Company of this Agreement, (ii) the  issuance of any of the Rights, the Shares issuable upon exercise of the Rights  and/or the Standby Shares as contemplated by this Agreement, or (iii) the  consummation of the other transactions contemplated by this Agreement.

	 	(uu)	
      The Market Capitalization for the purposes of MI 61-101
  is $US$216,584,327.

	 	 	 
	 	(vv)	
      At the time of its filing with any Securities Authority
      and the SEC or otherwise and as at the Rights Offering Closing Date, the
      Prospectus and Registration Statement did and will comply with the
      requirements of Securities Laws in all material respects; and at the time
      of its filing and as at the Rights Offering Closing Date, the information
      and statements contained therein are true and correct in all material
respects, contain no Misrepresentation and constitute full,
true and plain disclosure of all material facts and do not omit any material
facts relating to PolyMet and its Subsidiaries taken as a whole and as concerns
the Rights Offering and the transactions contemplated herein; provided that the
foregoing will not apply to any information or statements contained in the
Prospectus or Registration Statement relating solely to Glencore that Glencore
has specifically provided to PolyMet in writing for inclusion in such Prospectus
and Registration Statement. 

SCHEDULE 5(A) 

The Company does not own or hold any shares of, or have any
other interest in, directly or indirectly, any person other than PMI
except the following:

	 	1)	200,000 common shares of Acadian Mining Corporation (TSX:ADA),
representing approximately 0.3% of Acadian Mining Corporation’s issued and
outstanding common shares, as of April 10, 2013.
	 	 	 
	 	2)	36,806  common shares of Medgold Resources Corporation (TSX:MED), representing less  than 0.1% of Medgold Resources Corporation’s issued and outstanding common  shares, as of April 10, 2013.  

SCHEDULE 5(E) 

As of the date hereof: 

	(a) 	
      the authorized capital stock of the Company is an
      unlimited number of Common Shares in the capital of the Company, without
      par value;

	 	 
	(b) 	
      the number of Shares of capital stock of the Company
      issued and outstanding is 183,250,082;

	 	 
	(c) 	
      the number of Shares of capital stock of the Company
      issuable pursuant to the Company’s equity compensation plans (including
      those issuable subject to approval by the Company’s shareholders) is
      18,636,000; and

	 	 
	(d) 	
      the number of Shares of capital stock of the Company
      issuable and reserved for issuance pursuant to securities exercisable for,
      or convertible into or exchangeable for any Shares of capital stock of the
      Company is 7,083,333.

No person is entitled to preemptive or similar statutory or
contractual rights with respect to any securities of the Company except for the
pre-emptive rights that the Standby Purchaser currently has with respect to their
right of first refusal to provide material financings other than certain forms
of equity financing, subject to regulatory approval, as long as the Standby
Purchaser owns 10% or more of the issued and outstanding Common Shares of the
Company. As long as the Standby Purchaser owns more than 5% of the issued and
outstanding Common Shares of the Company, it has the right to participate pro
rata in any equity-related financing by the Company to maintain its ownership
interest on a fully diluted basis. 

The Company has no knowledge of any voting agreements, buy-sell
agreements, option or right of first purchase agreements or other agreements of
any kind among any of the securityholders of the Company relating to the
securities of the Company held by them.

The Company has not granted any person the right to require the
Company to register any securities of the Company under the 1933 Act, whether on
a demand basis or in connection with the registration of securities of the
Company for its own account or for the account of any other Person except the
Standby Purchaser.

SCHEDULE 5(J) 

The only jurisdictions (or registration districts within such
jurisdictions) in which the Company has any place of business or stores any
material tangible assets are: 

	 	1) 	
      Vancouver, British Columbia, Canada

	 	 	 
	 	2) 	
      Toronto, Ontario Canada

	 	 	 
	 	3) 	
      St. Paul, Minnesota, USA

	 	 	 
	 	4) 	
      St. Louis County, Minnesota,
USA

SCHEDULE 5(K) 

The following sets forth a complete and accurate legal
  description of all the real property owned by the Company:

	 	1) 	Erie Plant Site Complex

	 	 	 
	 		All the real property located within St. Louis County,
      Minnesota, legally described as follows, to-wit:

	 	 	 
	 		The Northwest Quarter of the Northwest Quarter, the
      Southwest Quarter of the Northwest Quarter, the Northwest Quarter of the
      Southwest Quarter, and the Southwest Quarter of the Southwest Quarter; all
      in Section 2, Township 59 North, Range 14 West, except all minerals and
      mineral rights as shown on the Certificates of Title for this land.
      (Torrens property. Parts of Certificate of Title Nos. 311938 and
      312572.)

	 	 	 
	 		All of Section 3, Township 59 North, Range 14 West,
      except all minerals and mineral rights as shown on the Certificates of
      Title for this land. (Torrens property. Parts of Certificate of Title Nos.
      315402, 311834, and 312572.)

	 	 	 
	 		All of Section 4, Township 59 North, Range 14 West,
      except all minerals and mineral rights as shown on the Certificates of
      Title for this land. (Torrens property. Parts of Certificate of Title Nos.
      311938, 311834 and 312572.)

	 	 	 
	 		All of Section 5, Township 59 North, Range 14 West,
      except all minerals and mineral rights as shown on the Certificates of
      Title for this land. (Torrens property. Parts of Certificate of Title Nos.
      311834 and 312572.)

	 	 	 
	 		The East Half of the Northeast Quarter, and the East Half
      of the Southeast Quarter; all in Section 6, Township 59 North, Range 14
      West, except all minerals and mineral rights as shown on the Certificates
      of Title for this land. (Torrens property. Parts of Certificate of Title
      Nos. 311834 and 312572.)

	 	 	 
	 		The East Half of the Northeast Quarter, and the Northeast
      Quarter of the Southeast Quarter; all in Section 7, Township 59 North,
      Range 14 West, except all minerals and mineral rights as shown on the
      Certificates of Title for this land. (Torrens property. Parts of
      Certificate of Title Nos. 311834 and 312572.)

	 	 	 
	 		The Northeast Quarter, the Northwest Quarter except
      railroad right of way, the Southwest Quarter except railroad right of way,
      and the Southeast Quarter except railroad right of way; all in Section 8,
      Township 59 North, Range 14 West, except all minerals and mineral rights
      as shown on the Certificates of Title for this land. (Torrens property.
      Parts of Certificate of Title Nos. 311834 and 312572.)

	 	 	 
	 		All of Section 9, Township 59 North, Range 14 West,
      except all minerals and mineral rights as shown on the Certificates of
      Title for this land. Torrens property. Parts of Certificate of Title Nos.
      311834 and 312572.)

	 	 	 
	 		All of Section 10, Township 59 North, Range 14 West,
      except all minerals and mineral rights as shown on the Certificates of
      Title for this land. (Torrens property. Parts of Certificate of Title Nos.
      305424, 315402, 305334, 305297, 311938, 311834, and 312572.)

	 	 	 
	 		The Northwest Quarter of the Northwest Quarter of Section
      11, Township 59 North, Range 14 West, except all minerals and mineral
      rights as shown on the Certificate of Title for this land. (Torrens
  property. Part of Certificate of Title No. 312572.)

5(K) - 2 

That part of the Northwest Quarter of
  Section 15, Township 59 North, Range 14 West of the Fourth Principal Meridian,
  lying northerly of a line lying 200 feet north of the following described line,
  measured perpendicular thereto and perpendicular to the tangent to curves
  therein: Commencing at the northwest corner of said Section 15; thence South 05
  degrees 49 minutes 40 seconds East, based on the St. Louis County Central Zone
  Coordinate System, for a distance of 400.76 feet to the point of beginning;
  thence North 86 degrees 44 minutes 30 seconds East 1235.77 feet; thence along a
  tangential curve concave to the south having a radius of 1699.87 feet, the chord
  of which bears South 65 degrees 34 minutes 06 seconds East with a chord length
  of 1415.84 feet; thence North 85 degrees 08 minutes 37 seconds East 167.41 feet
  more or less to the east line of said Northwest Quarter of Section 15 and there
  terminating, except all minerals and mineral rights as shown on the Certificates
  of Title for this land. (Torrens property. Parts of Certificate of Title Nos.
  305424 and 311938.)

The North Half of the Northeast
  Quarter, the North Half of the Northwest Quarter, the Southwest Quarter of the
  Northwest Quarter, and the North Half of the Southeast Quarter of the Northwest
  Quarter; all in Section 16, Township 59 North, Range 14 West, except all
  minerals and mineral rights as shown on the Certificate of Title for this land.
  (Torrens property. Part of Certificate of Title No. 305297.)

The East Half of the Northeast Quarter
  of Section 17, Township 59 North, Range 14 West; and also that part of the
  Southwest Quarter of the Northeast Quarter of Section 17, Township 59 North,
  Range 14 West of the Fourth Principal Meridian, lying easterly of a line lying
  40 feet west of the following described line, measured perpendicular thereto,
  and the extension thereof to the south boundary of said Southwest Quarter of the
  Northeast Quarter: Commencing at the Center Quarter corner of said Section 17;
  thence North 89 degrees 14 minutes 59 seconds East based on the St. Louis County
  Central Zone Coordinate System for a distance of 986.23 feet to the point of
  beginning; thence North 06 degrees 28 minutes 39 seconds East 1224.55 feet more
  or less to the north line of the Southwest Quarter of the Northeast Quarter of
  said Section 17 and there terminating; and also that part of the Northwest
  Quarter of the Northeast Quarter of Section 17, Township 59 North, Range 14 West
  of the Fourth Principal Meridian lying easterly of the following described line:
  Commencing at the North Quarter corner of said Section 17; thence North 88
  degrees 50 minutes 33 seconds East based on the St. Louis County Central Zone
  Coordinate System for a distance of 486.89 feet to the point of beginning;
  thence South 11 degrees 19 minutes 32 seconds East 719.70 feet; thence along a
  tangential curve concave to the west having a radius of 1494.37 feet, the chord
  of which bears South 00 degrees 27 minutes 55 seconds West with a chord length
  of 505.49 feet, to the south line of said Northwest Quarter of the Northeast
  Quarter of Section 17 and there terminating, except all minerals and mineral
  rights as shown on the Certificates of Title for this land. (Torrens property.
  Parts of Certificate of Title Nos. 311834 and 312572.) 

The Northwest Quarter of the Southeast
  Quarter of Section 18, Township 59 North, Range 14 West, and an undivided
  5/288ths interest in that part of the Southeast Quarter of the Southwest Quarter
  and of the Northeast Quarter of the Southwest Quarter of Section 18, Township 59
  North, Range 14 West of the Fourth Principal Meridian, lying northerly of the
  following described line: Commencing at the southeast corner of the Northeast
  Quarter of the Southwest Quarter of said Section 18; thence North 89 degrees 59
  minutes 35 seconds West, based on the St. Louis County Central Zone Coordinate
  System for a distance of 333.97 feet to the point of beginning; thence South 65
  degrees 24 minutes 26 seconds West 484.44 feet ; thence North 23 degrees 19
  minutes 04 seconds West 1244.30 feet; thence on a tangential curve concave to
  the southwest having a radius of 517.57 feet, the chord of which bears North 35
  degrees 16 minutes 19 seconds West with a chord
  length of 204.99 feet, to the west line of the Northeast Quarter of the
  Southwest Quarter of said Section 18 and there terminating, except all minerals
  and mineral rights as shown on the Certificates of Title for this land. (Torrens
  property. Parts of Certificate of Title Nos. 305424, 305295, and 305292.)

5(K) - 3 

The Southeast Quarter of the Northeast
  Quarter, and the East Half of the Southeast Quarter; all in Section 31, Township
  60 North, Range 14 West, except minerals and mineral rights as shown on the
  Certificates of Title for this land. (Torrens property. Parts of Certificate of
  Title Nos. 305296 and 311757.)

All of Section 32, Township 60 North,
  Range 14 West, except all minerals and mineral rights as shown on the
  Certificates of Title for this land. (Torrens property. Parts of Certificate of
  Title Nos. 305296 and 305295.)

All of Section 33, Township 60 North,
  Range 14 West, except all minerals and mineral rights as shown on the
  Certificates of Title for this land. (Torrens property. Parts of Certificate of
  Title Nos. 305296 and 305295.)

All of Section 34, Township 60 North,
  Range 14 West, except all minerals and mineral rights as shown on the
  Certificates of Title for this land. (Torrens property. Parts of Certificate of
  Title Nos. 315402 and 305296.)

The West Half of the Northwest
  Quarter, and the West Half of the Southwest Quarter; all in Section 35, Township
  60 North, Range 14 West, except all minerals and mineral rights as shown on the
  Certificates of Title for this land. (Torrens property. Parts of Certificate of
  Title Nos. 315402 and 305296.) 

5(K) - 4 

5(K) - 5 

5(K) - 6 

5(K) - 7 

5(K) - 8 

5(K) - 9 

5(K) - 10 

5(K) - 11 

5(K) - 12 

5(K) - 13 

	2) 	Leonard Land Company Purchase

	 	 
		The following described lands lying in Township 59 North,
      Range 16 West of the Fourth Principal Meridian, St. Louis County,
      Minnesota:

Tract 1: S1⁄2 of SW1⁄4,
  Section 9; 

Tract 2: All of Section
  16; 

Tract 3: E1⁄2 of Section
  19; 

Tract 4: All of Section
  20; 

Tract 5: All of Section
  21; 

Tract 6: That portion of
  SW1⁄4 of SW1⁄4 lying West of Pike River Road, Section 22; 

Tract 7: Those portions
  of the W1⁄2 of NW1⁄4 and W1⁄2 of SW1⁄4, lying West of Pike River Road, Section 27; 

Tract 8: All of Section
  28 except that part lying East of Pike River Road and except that part of the S1⁄2
  of the S1⁄2 lying South and Southeast of the Pike River; 

Tract 9: All of Section
  29; 

Tract 10: E1⁄2 of Section
  30; 

Tract 11: E1⁄2, SW1⁄4 of SW1⁄4,
  and E1⁄2 of SW1⁄4 of Section 31; 

Tract 12: All of Section
  32 lying West and North of the Pike River, except the E1⁄2 of the NE1⁄4 of SE1⁄4 of
  SW1⁄4, excluding the Southerly 264 feet; and, 

Tract 13: That part of
  Section 33 lying West of the Pike River.

Subject to mineral reservations of record. 

AND 

The following described lands lying in Township 58 North, Range
  16 West of the Fourth Principal Meridian, St. Louis County, Minnesota: 

Tract 14: That part of
  Section 5 lying north and west of Pike River; and, 

Tract 15: That part of
  Section 6 lying north and west of Pike River.

Subject to mineral reservations of record. 

5(K) - 14 

	3) 	Wheaton College Purchase

	 	 
		Lot Three (3), Section Nine (9), Township Sixty-four (64)
      North, Range Three (3) East of the Fourth Principal Meridian, Cook County,
      Minnesota. Subject to mineral reservations of record.

	 	 
	4) 	Lake-Forest Enterprise Purchase

	 	 
		The following described lands lying in Lake County,
      Minnesota:

		Subject to mineral reservations of record.

	 	 
	5) 	O’Reilly Hunting Club Purchase

	 	 
		The following described lands lying in St. Louis County,
      Minnesota:

	 	 
		E 1⁄2 of NW 1⁄4, NE 1⁄4 of SW 1⁄4, and E 1⁄2 of W 1⁄2 of NW 1⁄4,
      Section 17, Township 66 North, Range 17 East

	 	 
		Subject to mineral reservations of
      record.

5(K) - 15 

	6) 	Encumbrances on assets of the Company other than
      Permitted Encumbrances

5(K) - 16 

5(K) - 17 

5(K) - 18 

5(K) - 19 

SCHEDULE 5(L) 

The following sets forth a complete and accurate legal
  description of all the real property leased by the Company: 

	 	1) 	PolyMet is party to an agreement dated November 13, 2012
      whereby it leases office space in Suite 5700 of the building commonly
      known as First Canadian Place, located at 100 King Street West ,Toronto,
      Ontario.

	 	 	 
	 	2) 	PMI Inc. is party to a Lease Agreement dated October 27,
      2011 whereby it leases approximately 2,379 rentable square feet in Suites
      2005 and 2060 of the building commonly known as UBS Plaza, located at 444
      Cedar Street, St. Paul, Minnesota.

	 	 	 
	 	3) 	Mineral rights on 4,162 acres in St. Louis County
      acquired under a Mineral Lease between USX Corporation and PolyMet, dated
      January 4, 1989, as subsequently amended and assigned December 19, 1994,
      as further amended on July 20, 2001, and February 13, 2007. During the
      year ended January 31, 2005, United States Steel Corporation assigned the
      lease to RGGS Land & Minerals Ltd., L.P.

	 	 	 
	 	4) 	Mineral rights on 120 acres in St. Louis County acquired
      under a Mineral Lease between LMC Minerals and PolyMet, dated December 1,
      2008.

	 	 	 
	 	5) 	PMI, Inc. is party to a Contract for Deed (Block 1),
      dated December 20, 2006, whereby it obtained rights to the leased real
      property legally described in Schedule 1.4 of the Contract for Deed as
      follows:

 

	 	6) 	EIP/AG for Waterfowl options

	 	 	 
	 		PolyMet holds a mortgage over real property in Aitkin
      County, Minnesota, legally described as
      follows:

5(L) - 2 

5(L) - 3 

	 	7) 	Lake-Forest Enterprises option

	 	 	 
	 		An exclusive option to purchase the following described
      lands lying in Lake County Minnesota:

	 	Section 8, Township 57, Range 11 
	 	NE 1/4 of NW 1⁄4, SE 1⁄4 of NW 1⁄4, SW 1⁄4 of NW 1⁄4 
	 	 
	 	Section 30, Township 59, Range 9, 
	 	SE 1⁄4 of SW 1⁄4, NE 1⁄4 of SE 1⁄4, SW 1⁄4 of SE 1⁄4, SE 1⁄4
      of SE 1⁄4 
	 	 
	 	Section 31, Township 59, Range 9, 
	 	NW 1⁄4 of NE 1⁄4, NE 1⁄4 of NW 1⁄4, NW 1⁄4 of NW 1⁄4 or Lot
      1 
	 	 
	 	Section 7, Township 59, Range 9, 
	 	SE 1⁄4 of SE 1⁄4, SW 1⁄4 of SE 1⁄4, SE 1⁄4 of SW 1⁄4 
	 	 
	 	Section 8, Township 59, Range 9, 
	 	SW 1⁄4 of SW 1⁄4 
	 	 
	 	Section 17, Township 59, Range 9, 
	 	NW 1⁄4 of NW 1⁄4 
	 	 
	 	Section 18, Township 59, Range 9, 
	 	NE 1⁄4 of NE 1⁄4, NW 1⁄4 of NE 1⁄4, SE 1⁄4 of NE 1⁄4, SW 1⁄4
      of NE 1⁄4, NE 1⁄4 of NW 1⁄4 
	 	 
	 	Section 15, Township 58, Range 10, 
	 	NE 1⁄4 of NE 1⁄4, NW 1⁄4 of NE 1⁄4, SW 1⁄4 of NE 1⁄4, SE 1⁄4
      of NE 1⁄4 
	 	NE 1⁄4 of NW 1⁄4, NW 1⁄4 of NW 1⁄4, SW 1⁄4 of NW 1⁄4, SE 1⁄4
      of NW 1⁄4 
	 	NE 1⁄4 of SW 1⁄4, NW 1⁄4 of SW 1⁄4, SW 1⁄4 of SW 1⁄4, SE 1⁄4
      of SW 1⁄4 
	 	NE 1⁄4 of SE 1⁄4, NW 1⁄4 of SE 1⁄4, SW 1⁄4 of SE 1⁄4, SE 1⁄4
      of SE 1⁄4 
	 	 
	 	Section 22, Township 58, Range 10 
	 	NE 1⁄4 of NE 1⁄4, NW 1⁄4 of NE 1⁄4 
	 	NE 1⁄4 of NW 1⁄4 

	 	8) 	Harley Investment Company options

	 	 	 
	 		An exclusive option to purchase the following described
      lands lying in Pine County, Minnesota:

5(L) - 4 

	 	9) 	Burns-Enterprises-–-Aitkin-County-options-

	 	 	 
	 		An-exclusive-option-to-purchase-the- following-
      described- lands- lying- in-Aitkin-County,-
      Minnesota:-

5(L) - 5 

5(L) - 6 

5(L) - 7 

SCHEDULE 5(Q) 

Refer to the disclosure set out at Schedule 5(K)(6) for a listing
  of any existing Encumbrances relating to the assets of the Company other than
  Permitted Encumbrances. 

SCHEDULE 5(R) 

All Benefit Plans to which the Company
  is a party are described below: 

	 	1) 	Canadian Insurance – Great West Life – Policy No.
      277003

  	Classification 

          
	All eligible employees 

        3-month waiting
        period 

        Number of hours worked = 24/week 
	Life Insurance 

          
	100% of annual earnings to a maximum of
        $100,000 

        Benefits reduce 50% at age 65, and terminates at the age of
        71 

        Non Evidence Limit: $100,000 
	AD&D 
	Same as life 

        24 hour coverage including
        loss of use 
	Long Term Disability 

          

        

        

        
	66.67% of monthly earnings 

        Maximum
        Benefit: $5,000 

        Commences: 120th Day 

        Benefit Period: to age 65 

        Primary CPP integration 

        Taxable 
	Extended Health 

          

        

        

        

        

        

        

        

        

        

        

        

        

        
	Deductible – Nil 

        100% Co-Insurance – pay
        direct drug card 

        100% reimbursement on global medical assistance,
        out-of-country care, for in-Canada ambulance and hospital 

        Overall
        Lifetime Maximum: unlimited 

        Semi-private hospital coverage 

        Out-of-country travel 

        Private duty nursing - $10,000/year 

        Hearing Aids - $300 per 5 years 

        Paramedical practitioners - $500
        per practitioner per year including: 

        acupuncturist, chiropractor,
        physiotherapists, psychologist/social workers, 

        dieticians,
        podiatrists, speech therapists, massage therapists, 

        Custom-made
        orthopedic shoes – one pair per calendar year up to $300 

        Custom-made
        orthotics - $300 per year 

        Eyeglasses or contact lenses - $250/2 years
        for adults. Every year for children 

        under 18 
	Dental Coverage 

          

        

        

        

        

        
	Deductible – Nil – Recall examination every 6
        months, fluoride included 

        Basic Services – 100% 

        Coverage includes
        diagnostic and preventative services, routine restorative, 

        surgical,
        periodontal, endodontics and denture repairs 

        Amalgam and composite
        fillings. 

        Major services – 50% 

        Dentures and bridgework: $1,500 for
        5 years 

        Combined maximum for basic and major: $2,500 per person per
        year 

5(R) - 2 

	 	2) 	U.S. Insurance

	Group Medical Plan 	Provider: Blue Cross Blue Shield of
      Minnesota 
	 	Group Policy Number: 4A933-A0 
	 	Plan Year: January 1 – December 31 
	 	Effective Date: January 1, 2013 
	 	Eligibility: Immediate for all employees + dependents 
	 	Participating employees contribute as follows: 
	 	 	Monthly Pre-Tax 
	 	       
                 Coverage 	Employee Contribution 
	 	       
                 Employee 	$
      60.00 
	 	       
                 Employee + 1 	$
      90.00 
	 	                  
      Family 	$120.00 
	 	Premiums paid for this coverage pays all
      claims. 
	Group Dental Plan 	Provider: Delta Dental 
	 	Group Policy Number: 3626-1642 
	 	Plan Year: January 1 – December 31 
	 	Effective Date: January 1, 2013 
	 	Eligibility: Immediate for all employees and dependents 
	 	Participating employees contribute as follows: 
	 	 	Monthly Pre-Tax 
	 	       
                 Coverage 	Employee Contribution 
	 	       
                 Employee: 	$25.00 
	 	       
                 Employee + 1 	$40.00 
	 	                  
      Family 	$70.00 
	 	Premiums paid for this coverage pays all
      claims. 
	Group Life & AD&D 	Provider: Reliance Standard 
	(Accidental Death & 	Group Number: GL 143854 
	Dismemberment) 	Effective Date: January 1, 2013 
	 	Eligibility: Immediate, automatic coverage for all employees 
	 	       
                 Coverage: 	2x
      salary up to $250,000 per employee 
	 	 	 $10,000 spouse/$2,000 child (6 mo. – 19 yrs.) 
	 	 	$500
      infant (14 days but less than 6 mo.) 
		Participating employees
      contribute $0. 
	Group Short Term 	Provider: Reliance Standard 
	Disability 	Group Number: STD 159501 

      Effective Date: January 1, 2013 
	 
	 	Eligibility: Immediate, automatic coverage for all employees 

      Benefit Percentage: 60% with maximum of $1,000 per week 

      Benefit
      Duration: 25 weeks 
	 
	 
		Participating employees
      contribute $0. 
	Group Long Term Disability 	Provider: Reliance Standard 
	 	Group Number: LTD 117699 
	 	Effective Date: January 1, 2013 
	 	Eligibility: Immediate, automatic coverage for all employees 
	 	Benefit Percentage: 60% with maximum of $5,000 per month 
	 	Elimination Period: 180 days 
	 	Benefit Duration: To Social Security Normal Retirement Age 
	 	Participating employees
      contribute $0. 
	Vacation 	Varies by employee. 
	 	A formal vacation policy is being
      developed. 
	Retirement Savings Plan 	Funds Administrator: American Funds 
	(401k and Profit Sharing) 	Plan ID Number: BRK81428 
	 	Plan Year: January 1 –
      December 31 

5(R) - 3 

  	
	Third Party Administrator for Retirement Plans:
        TSC (Tax Shelter Corp) 

        Effective Date: January 1, 2013. 
	

          

        

        

        

        

        

        

        
	401k Contributions 

        Eligibility: 1st day of month OR 1st day of
        month following date of hire. 

        Employees must be 21 years of age. 

        The Company will make a monthly contribution equal to 3% of employee’s 

        monthly compensation to the Plan. 

        Employee may also elect to
        contribute to the 401K through a salary reduction 

        program. Employees
        may contribute up to the maximum amount allowed by the 

        IRS on a
        pre-tax basis. The Company will make a monthly matching 

        contribution
        of $.50 on the dollar up to 6% of employee’s contribution (maximum 

        matching contribution of 3%). 
	

          

        

        
	Profit Sharing 

        Eligibility:
        Employee must be 21 years of age, completed 1,000 hours of 

        service,
        and be employed on the last day of the Plan year. 

        The annual
        contribution amount is discretionary and set by the Company each 

        year. 

SCHEDULE 5(S) 

Project Labour Agreement among On Site Contractors and Iron
  Range Building and Construction Trades Counsel, Affiliated International Unions,
  The United Brotherhood of Carpenters and The International Brotherhood of
  Teamsters and Laborers' International Union of North America for The
  Refurbishment of the Existing Plant and Construction of the Metallurgical Plant
  dated August 17, 2007 and First Amendment dated September 2, 2008. 

SCHEDULE 5(W)

ENVIRONMENTAL MATTERS 

1. Environmental Remediation and Reclamation 

Under the Contract for Deed between Cliffs Erie LLC and PMI
  dated November 15, 2005, an easement over, under, and across the premises is
  specifically reserved for the benefit of Cliffs Erie LLC, and its successors and
  assigns for the purpose of performing all environmental remediation and
  reclamation activities on the premises that may be required pursuant to Cliffs
  Erie LLC’s Permit to Mine, Mine Closure Plan, environmental permits issued by
  the State of Minnesota, and the State Master Agreement among Cliffs Erie LLC,
  the State of Minnesota, the Minnesota Iron Range Resources and Rehabilitation,
  the Minnesota Department of Natural Resources, Minnesota Pollution Control
  Agency, the Minnesota Department of Revenue, Cleveland-Cliffs Inc, Minnesota
  Power, Rainy River Energy Corporation – Taconite Harbor, LTV Steel Mining
  Company, and LTV Steel Company, Inc. (i.e. the “CE Remediation Obligations”).
  The easement is for ingress and egress, excavation, contouring, earth moving,
  blasting, filling, demolition and removal of buildings and structures, soil or
  substance removal, soil, air and water testing and monitoring, and all other
  actions incidental to or required pursuant to the CE Remediation Obligations.
  The easement does not create any duty, obligation or liability whatsoever to
  perform the CE Remediation Obligations to Cliffs Erie LLC or any third party; it
  is strictly for the benefit of Cliffs Erie LLC and its successors and assigns. 

By accepting the Contract for Deed, PMI, and its successors and
  assigns, consented to the performance of the CE Remediation Obligations by PMI,
  and its successors and assigns, if and to the extent required by the State of
  Minnesota or an agency thereof, as an improvement to the premises for the
  purposes of Chapter 514 of the Minnesota Statutes, and to any mechanics’ lien
  that may arise thereunder. 

2. Environmental Rehabilitation Provision 

As part of the consideration for the Contract for Deed between
  Cliffs Erie LLC and PMI dated November 15, 2005 and the Asset Purchase Agreement
  between Cliffs Erie LLC and PolyMet dated December 20, 2006 (“Cliffs
    II”), PolyMet indemnified Cliffs Erie LLC for the liability for final
  reclamation and closure of the mine and acquired property.

PolyMet’s provisions for future site closure and reclamation
  costs are based on known requirements. It is not currently possible to estimate
  the impact on operating results, if any, of future legislative or regulatory
  developments.

In April 2010, Cliffs Erie LLC entered into a consent decree
  with the Minnesota Pollution Control Agency (“MPCA”) relating to alleged
  violations on the Cliffs Erie Property. This consent decree required submission
  of field study plan outlines and short term mitigation plans. In April 2012,
  long-term mitigation plans were submitted to the MPCA for its review and
  approval. In October 2012, a response was received from the MPCA approving plans
  for pilot tests of various treatment options to determine the best course of
  action. Although there is substantial uncertainty related to applicable water
  quality standards, engineering scope, and responsibility for the financial
  liability, the October response from the MPCA provides clarification to the
  potential liability for the long term mitigation plan. The Company has included
  its best estimate of the liabilities related to this consent decree in its
  environmental rehabilitation provision. 

PolyMet’s estimate of the present value of the obligation to
  reclaim the NorthMet Project is based upon existing reclamation standards at
  October 31, 2012 and IFRS. PolyMet’s estimate of the fair value of the asset
  retirement obligation was $56.8 million. The estimate was based upon an October
  31, 2012 undiscounted future cost of $28.2 million for the first Cliffs
  transaction and $32.9 million for Cliffs II. 

SCHEDULE 5(X)

PROPERTY AND MINERAL RIGHTS 

1. Resource Property Agreements 

By an agreement dated January 4, 1989, and subsequently amended
  and assigned December 19, 1994, and amended on July 20, 2001 and on February 13,
  2007, PolyMet leases certain lands in St. Louis County, Minnesota from USX
  Corporation. During the year ended January 31, 2005, United States Steel
  Corporation assigned the lease to RGGS Land & Minerals Ltd., L.P. The
  current term of the renewable lease is 20 years and calls for total lease
  payments of $1,475,000. All lease payments have been paid or accrued to January
  31, 2013. The agreement requires future annual lease payments of $150,000.

PolyMet can, at its option, terminate the lease at any time by
  giving written notice to the lessor not less than 90 days prior to the effective
  termination date or can indefinitely extend the 20-year term by continuing to
  make $150,000 annual lease payments on each successive anniversary date. 

The lease payments are considered advance royalty payments and
  shall be deducted from future production royalties payable to the lessor, which
  range from 3% to 5% based on the net smelter return received by PolyMet.
  PolyMet’s recovery of the advance royalty payments is subject to the lessor
  receiving an amount not less than the amount of the annual lease payment due for
  that year. 

The mineral rights include: 

	 	 	DESCRIPTION 	ACREAGE 	OWNERSHIP 
	 	 	 	 	 	 
	T59N, R13W 	 	 	 	 
	 	 	 	 	 	 
	Sec. 1 - 	Lot 1 	(NE1/4 	NE1/4) 	34.63 	100% Minerals (RR) 
	 	Lot 2 	(NW1/4 	NE1/4) 	34.86 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	 	40.00 	100% Minerals (RR) 
	 	Lot 3 	(NE1/4 	NW1/4) 	35.09 	100% Minerals (RR) 
	 	Lot 4 	(NW1/4 	NW1/4) 	35.32 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SW1/4 	 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	 	40.00 	100% Minerals (RR) 
	 	 	 	 	 	 
	Sec. 2 - 	Lot 1 	(NE1/4 	NE1/4) 	37.48 	100% Minerals (RR) 
	 	Lot 2 	(NW1/4 	NE1/4) 	37.57 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	 	40.00 	100% Minerals (RR) 
	 	Lot 3 	(NE1/4 	NW1/4) 	37.66 	100% Minerals (RR) 
	 	Lot 4 	(NW1/4 	NW1/4) 	37.75 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	 	40.00 	100% Minerals (RR) 

5(X) - 2 

	 	NW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 3 - 	Lot 1 	(NE1/4 NE1/4) 	37.85 	100% Minerals (RR) 
	 	Lot 2 	(NW1/4 NE1/4) 	37.96 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	(Sec 3) 	Lot 3 	(NE1/4 NW1/4) 	38.07 	100% Minerals (RR) 
	 	Lot 4 	(NW1/4 NW1/4) 	38.18 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 4 - 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 9 - 	NE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 10 - NE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	40.00 	100% Minerals (RR) 

5(X) - 3 

	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 11 - 	NE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NE-1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	(Sec 11) 	NW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	 	 	 	 
	Sec. 12 - 	NE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NE1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	NW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SW1/4 	40.00 	100% Minerals (RR) 
	 	NE1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	NW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SW1/4 	SE1/4 	40.00 	100% Minerals (RR) 
	 	SE1/4 	SE1/4 	40.00 	100% Minerals (RR) 

Pursuant to an agreement effective December 1, 2008, the
  Company leases 120 acres from LMC Minerals. The initial term of the renewable
  lease is 20 years and calls for minimum annual lease payments of $3,000 on each
  successive anniversary date for the first four years after which the minimum
  annual lease payment increases to $30,000. The initial term may be extended for
  up to four additional five-year periods on the same terms. All lease payments
  have been paid or accrued to January 31, 2013. The next payment is due in
  November 2013. 

The lease payments are considered advance royalty payments and
  will be deducted from future production royalties payable to the lessor, which
  range from 3% to 5% based on the net smelter return that we receive. The
  Company’s recovery of the advance royalty payments is subject to the lessor
  receiving an amount not less than the amount of the annual lease payment due for
  that year. 

The mineral rights include: 

SW 1⁄4 of SE 1⁄4, Section 9; NW 1⁄4 of SW 1⁄4, Section 10; SW 1⁄4 of SW
  1⁄4, Section 10; all located in Township 59 North, Range 13 West-

SCHEDULE 6 

  REPRESENTATIONS AND WARRANTIES OF
    GLENCORE 

Glencore represents and warrants to the Company as at the date
  of this Agreement that: 

	 	(a) 	Glencore is a corporation duly incorporated, validly
      existing and in good standing under the laws of the jurisdiction of its
      incorporation and has the corporate power and authority to own its
      properties and to carry on its business as now being conducted.

	 	 	 
	 	(b) 	Glencore has full corporate power and authority and has
      taken all requisite action on its part necessary for (i) the
      authorization, execution and delivery of the Agreement, (ii) authorization
      of the performance of all of its obligations hereunder and
      thereunder.

	 	 	 
	 	(c) 	The Agreement has been duly executed and delivered by
      Glencore and the Agreement constitutes a legal, valid and binding
      obligation of Glencore, enforceable against Glencore in accordance with
      its terms, except as such enforceability may be limited by (i) applicable
      bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium,
      liquidation or similar laws relating to, or affecting generally the
      enforcement of, creditors’ rights and remedies or (ii) equitable
      principles relating to the availability of specific performance,
      injunctive relief and other equitable remedies.

	 	 	 
	 	(d) 	There has been no voluntary or involuntary action taken
      either by or against Glencore for any winding-up, dissolution,
      liquidation, bankruptcy, receivership, administration or similar or
      analogous events in respect of Glencore or all or any part of its assets
      or revenues.

	 	 	 
	 	(e) 	The execution and delivery of this Agreement by Glencore
      will not result in any material breach of any agreement to which it is a
      party which would have a material adverse effect on its ability to perform
      its obligations under this Agreement.

SCHEDULE S1 

  MATERIAL AGREEMENTS 

	1. 	Contract for Deed between Cliffs Erie LLC and PMI dated
      November 15, 2005.

	 	 
	2. 	Sale Agreement II between Cliffs Erie LLC and PMI dated
      December 20, 2006.

	 	 
	3. 	Contract for Deed between Cliffs Erie LLC and PMI dated
      December 20, 2006 recorded as document no. 1070975.

	 	 
	4. 	Contract for Deed between Cliffs Erie LLC and PMI dated
      December 20, 2006 recorded as document no. 1070974.

	 	 
	5. 	Mineral Lease between USX Corporation and PolyMet, dated
      January 4, 1989, and subsequently amended and assigned December 19, 1994,
      as further amended on July 20, 2001 and February 13, 2007. During the year
      ended January 31, 2005, United States Steel Corporation assigned the lease
      to RGGS Land & Minerals Ltd., L.P.

	 	 
	6. 	Electric Services Agreement between Minnesota Power and
      PolyMet, dated December 11, 2006.

	 	 
	7. 	Amendment to Electric Services Agreement between
      Minnesota Power and PolyMet, dated September 24, 2008, extending the
      project milestone dates of the December 11, 2006 agreement.

	 	 
	8. 	Electric Services Agreement Negotiation Letter (with
      attached term sheet) between Minnesota Power and PolyMet, dated October
      30, 2006.

	 	 
	9. 	Project Labour Agreement between On Site Contractors and
      Iron Range Building and Construction Trades Counsel, Affiliated
      International Unions, The United Brotherhood of Carpenters and The
      International Brotherhood of Teamsters and Laborers' International Union
      of North America for The Refurbishment of the Existing Plant and
      Construction of the Metallurgical Plant dated August 17, 2007 and First
      Amendment dated September 2, 2008.

	 	 
	10. 	Bateman Engineering Professional and Technical Services
      Agreement dated April 1, 2007.

	 	 
	11. 	Contract#A87462 between the State of Minnesota, through
      its Department of Natural Resources Commissioners Office and PolyMet
      Mining Inc. dated April 3, 2006 and most recently amended March 23,
      2013.

	 	 
	12. 	Purchase Agreement between PMI and Glencore, dated
      October 31, 2008.

	 	 
	13. 	Floating Rate Secured Debenture between PMI and Glencore,
      dated October 31, 2008.

	 	 
	14. 	Guarantee between PolyMet and Glencore, dated October 31,
      2008.

	 	 
	15. 	Security Agreement between PolyMet and Glencore, dated
      October 31, 2008.

	 	 
	16. 	Security Agreement between PMI and Glencore, dated
      October 31, 2008.

	 	 
	17. 	Pledge Agreement between PolyMet and Glencore, dated
      October 31, 2008.

	 	 
	18. 	Exchange Warrant of PolyMet, dated October 31,
      2008.

	 	 
	19. 	Purchase Warrant of PolyMet, dated October 31,
      2008.

	 	 
	20. 	Amendment Letter number 11 to Purchase Agreement between
      PolyMet and Glencore.

S1 - 2 

	21. 	Mineral Lease between PMI and Longyear Mesaba Company,
      dated December 1, 2008.

	 	 
	22. 	Amendment and Waiver between PMI, PolyMet and
      Glencore dated November 12, 2010.

	 	 
	23. 	Purchase Warrant between PolyMet and Glencore, dated
      November 12, 2010.

	 	 
	24. 	Land Acquisition Agreement between PolyMet, Andresen
      Butterworth, P.A., and Lake-Forest Enterprise, Inc, dated May 21,
      2010.

	 	 
	25. 	Land Acquisition Agreement between PolyMet, Andresen
      Butterworth, P.A., and Lake-Forest Enterprise, Inc, dated June 17,
      2010.

	 	 
	26. 	Land Acquisition Agreement between PolyMet, Andresen
      Butterworth, P.A., and Mick O’Reilly Hunting Club, LLC, dated March 28,
      2011.

	 	 
	27. 	Loan Agreement between PolyMet and the State of
      Minnesota’s Office of the Commissioner of Iron Range Resources and
      Rehabilitation dated June 29, 2011 and related schedules.

	 	 
	28. 	Warranty Deed from Leonard Land Company for real property
      in St. Louis County, Minnesota, dated June 29, 2011 (recorded as document
      no. 901695).

	 	 
	29. 	Warranty Deed from Wheaton College for real property in
      Cook County, Minnesota, dated June 30, 2011 (recorded as document no.
      115045).

	 	 
	30. 	Purchase Warrant between PolyMet and Glencore, dated
      November 30, 2011.

	 	 
	31. 	Amendment and Waiver between PolyMet and Glencore dated
      November 30, 2011.

	 	 
	32. 	Amended and Restated Exchange Warrant between PolyMet and
      Glencore, dated November 30, 2011.

	 	 
	33. 	Registration Rights Agreement and Amendment to Existing
      Registration Rights Agreement between PolyMet and Glencore dated November
      30, 2011.

	 	 
	34. 	Agreement for the Purchase and Development of Wetland
      Credits between PolyMet and AG for Waterfowl, LLP, dated February 28, 2012
      and related schedules. During the year ended January 31, 2013, AG for
      Waterfowl assigned the agreement to EIP Minnesota, LLC.

	 	 
	35. 	Option to Purchase Agreement between PMI and Harley
      Investment Company, dated February 9, 2007, most recently renewed on
      October 29, 2012.

	 	 
	36. 	Option to Purchase Agreement between PMI and Burns
      Enterprises, LLC, dated May 23, 2007, most recently renewed on January 21,
      2013.

	 	 
	37. 	Option to Purchase Agreement between PMI and Burns
      Enterprises, LLC, dated July 2, 2010, most recently renewed on April 2,
      2012.

	 	 
	38. 	Omnibus Share Compensation Plan, most recently ratified
      and reconfirmed on July 10, 2012.

	 	 
	39. 	Shareholder Rights Plan, most recently approved on July
      10, 2012 between PolyMet and Computershare (formerly known as Pacific
      Corporate Trust Company).

EXHIBIT 5.4(e) 

  FORM OF FARRIS, VAUGHAN, WILLS
  & MURPHY LLP OPINION 

	April 10, 2013
	 
	Glencore AG 
	Baarermattstrasse 3 
	PO Box 777, 6341 Baar 
	Switzerland 
	 
	Dear Sirs: 

	 	RE: 	PolyMet Mining Corp. 

1. SCOPE OF REVIEW 

1.1 We have acted as counsel to PolyMet Mining Corp. (the
  “Company”) in connection with the negotiation, execution and delivery of
  a Standby Purchase Agreement (the “Agreement”) dated April 10,
  2013 between the Company and Glencore AG (“Glencore”). 

1.2 This opinion is being provided pursuant to section 5.4(e)
  of the Agreement. Capitalized terms used but otherwise not defined in this
  opinion have the same meaning herein as are ascribed thereto in the Agreement. 

1.3 For the purposes of giving this opinion, we have examined
  and reviewed execution copies of the following documents: 

	(a) 	the Agreement;

	 	 
	(b) 	the Registration Rights Agreement;

	 	 
	(c) 	the Rights Certificate (and together with the Agreement
      and the Registration Rights Agreement, the “Transaction
        Documents”);

	 	 
	(d) 	the Preliminary Prospectus dated April 10, 2013; and

	 	 
	(e) 	the Final Prospectus dated [<>],
      2013.

2. LEGAL SYSTEM 

2.1 The scope of our review is restricted to and this opinion
  is rendered solely with respect to the laws of the Province of British Columbia,
  and the federal laws of Canada having application therein as of the date
  hereof.

3. RELIANCE AND ASSUMPTIONS 

3.1 In the examination and consideration of the documents
  (including the Transaction Documents) required to deliver this opinion, we have
  assumed the genuineness of all signatures thereto, the legal capacity of all
  individuals, the authenticity of all documents submitted to us as originals, the
  conformity to authentic original documents of all documents submitted to us as
  photostatted, telecopied or certified copies and the accuracy and completeness
  of any information provided to us by any office of public record. We have
  assumed the Transaction Documents are the legal, valid and binding obligations
  of the Parties thereto, other than the Company, enforceable against such Parties
  in accordance with their respective terms. 

5.4(e) - 2 

3.2 For the purposes of this opinion, we have also examined
  such other records, certificates and documents and have considered such
  questions of law and made such investigations and inquiries as we have
  considered necessary or advisable for the purposes of this opinion, including
  the following: 

	(a) 	Certificates of Good Standing for the Company dated
      [<>], 2013 and issued by the Registrar under the Business
        Corporations Act (British Columbia)

	 	 	 
	(b) 	An officer's certificate of the Company dated [<>],
      2013 (the “Officer’s Certificate”) attaching thereto a copy of each
      of the following:

	 	 	 
		(i) 	the Company’s constating documents; and

	 	 	 
		(ii) 	resolutions of the Board (“Corporate
      Resolutions”).

3.3 In expressing the opinion in paragraph 4.1 we have relied
  exclusively upon the certificate referred to in paragraph 3.2(a) . 

3.4 In expressing the opinion in paragraph 4.3, with respect to
  the number of common shares of the Company (the “Shares”) that are issued
  and outstanding, we have relied exclusively upon a letter dated April
  [<>], 2013 and provided to us by Computershare Investor Services Inc.,
  acting in its capacity as registrar and transfer agent to the Company, a copy of
  which has been delivered to you. 

3.5 In expressing the opinion in paragraph 4.4, we have relied
  exclusively upon our review of the reporting issuers list prepared by the
  British Columbia Securities Commission (“BCSC”) and published on the
  BCSC's website on April [<>], 2013 which list we assume continues to be
  accurate as of the date hereof. 

3.6 In expressing the opinion in paragraphs 4.5 to 4.9
  inclusive we have relied upon our review of the Officer’s Certificate referred
  to in paragraph 3.2(b) . 

3.7 In expressing the opinion in paragraphs 4.14, we have
  relied exclusively upon the letter from the Toronto Stock Exchange
  (“TSX”) dated April [<>], 2013, a copy of which has been provided
  to you. 

3.8 Whenever our opinion herein with respect to the existence
  or absence of any agreement or other instrument or any agreement or other
  instrument or any judgment, writ, injunction, decree, order, award or ruling is
  qualified by the expression “to our knowledge” or “of which we are aware” or
  words to like effect, it is based solely on the actual knowledge of our current
  partners and associate lawyers directly involved in, and obtained during the
  course of, representing the Company in connection with the matters contemplated
  by the Transaction Documents. 

3.9 We understand that the assumptions, qualifications and
  reliances expressed in the preceding paragraphs are satisfactory to you. 

4. OPINION 

     Based upon and subject to the
  foregoing and subject to the qualifications hereinafter set forth, we are of the
  opinion that: 

4.1 The Company exists as a company under the Business
  Corporations Act (British Columbia) and is, with respect to the filing of
  annual reports, in good standing with the Office of the Registrar of Companies
  for the Province of British Columbia.

5.4(e) - 3 

4.2 The Company has the necessary corporate power and capacity
  to enter into and carry out its obligations under each Transaction Document and
  to issue the Rights Offering Securities as contemplated by the Agreement.

4.3 The authorized capital of the Company consists of an
  unlimited number of Shares of which <> Share are issued and outstanding. 

4.4 The Company is a “reporting issuer” under the Securities
  Act (British Columbia) and is not included in the list of issuers in default
  prepared by the BCSC. 

4.5 Each Transaction Document and the performance by the
  Company of its obligations thereunder have been duly authorized by all necessary
  corporate action by the Company. 

4.6 Each Transaction Document 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. 

4.7 All necessary corporate action has been taken by the
  Company to authorize the creation, issuance and distribution of the Rights
  Offering Securities. 

4.8 The execution and delivery of the Prospectus and the filing
  of the Prospectus pursuant to Securities Laws of the Province of British
  Columbia has been duly authorized by all necessary corporate action by the
  Company. 

4.9 The Rights have been duly authorized and validly issued by
  the Company and upon the valid exercise of the Rights and payment of the
  exercise price for the Rights Offering Shares as provided for in the Rights
  Certificate, the Rights Offering Shares issued upon the exercise of the Rights
  will be duly authorized and validly issued as fully paid and non-assessable
  common shares in the capital of the Company. 

4.10 Upon the payment of the exercise price for the Standby
  Shares as provided for in the Agreement, the Standby Shares will be duly
  authorized and validly issued as fully paid and non-assessable common shares in
  the capital of the Company. 

4.11 Neither the execution and delivery by the Company of a
  Transaction Document nor the consummation of the transactions contemplated
  thereby results in a breach (whether after notice or lapse of time or both) of
  any of the terms, conditions or provisions of or constitute a default under: (i)
  the notice of articles or articles of the Company; (ii) any applicable law of
  the of the Province of British Columbia, and the federal laws of Canada having
  application therein; (iii) any agreement of which we are aware to which the
  Company is a party or by which the Company is bound; or (iv) any judgment, writ,
  injunction, decree, order award or ruling of a Governmental Entity of the
  Province of British Columbia or of Canada and of which we are aware and to which
  the Company is subject. 

4.12 All documents required to have been filed or delivered by
  the Company and all proceedings, approvals, consents, authorizations and permits
  required to have been taken or obtained by the Company under Securities Laws
  have been filed, delivered, taken or obtained to qualify the distribution of the
  Rights in the Qualifying Jurisdictions. 

4.13 No prospectus or other documents are required to be filed
  or delivered, proceedings taken or approvals, permits, consents or
  authorizations required to be obtained under the Securities Laws of the
  Qualifying Jurisdictions (other than such as have been filed or obtained) to
  permit the issue and delivery of the Rights Offering Shares and the Standby
  Shares. 

5.4(e) - 4 

4.14 The Rights have been approved for listing on the TSX and
  the Rights Offering Shares and Standby Shares have been conditionally approved
  for listing on the TSX subject only to the listing conditions set out in the
  letter from the TSX referred to in paragraph 3.5. 

4.15 No notice, registration and filing or report with, an no
  consent, approval, order or other authorization of, any Governmental Entity
  having jurisdiction in British Columbia is require in connection with the
  execution, delivery and performance of the Transaction Documents by the Company,
  other than those that have been obtained. 

4.16 Based on the provisions of the Tax Act the Regulations
  thereunder, and the proposals to amend the Tax Act and the Regulations publicly
  announced by or on behalf of the Minister of Finance (Canada) prior to the date
  hereof, the Rights Offering Securities, when issued, will be qualified
  investments under the Tax Act and the regulations thereunder for trusts governed
  by registered retirement savings plans, registered retirement income funds,
  deferred profit sharing plans and registered education savings plans, provided
  that the Rights and common shares of the Company are listed at that time on a
  “designated” stock exchange in Canada (which currently includes the TSX). 

4.17 The statements set forth under the heading “Canadian
  Federal Income Tax Considerations” and “Eligibility for Investment” in the Final
  Prospectus are accurate subject to the assumptions and other qualifications
  referred to therein. 

5. QUALIFICATIONS 

5.1 The opinions expressed herein are subject to the following
  qualifications: 

	(a) 	the effects of any applicable bankruptcy, winding up,
      liquidation, insolvency, fraudulent preference, reorganization, moratorium
      or any other laws or judicial decisions of whatsoever nature or kind
      affecting the enforcement of creditors' rights and remedies generally,
      including, without limitation, the applicable provisions of the Bankruptcy and Insolvency Act (Canada),

	 	 	 
		Winding-Up and Restructuring Act (Canada), Companies' Creditors Arrangement Act (Canada) and British
      Columbia Business Corporations Act;

	 	 	 
	(b) 	general principles of equity which may apply to any
      proceeding, whether in equity or at law, including, without
      limitation:

	 	 	 
		(i) 	the powers of the court to stay proceedings before it and
      to stay the execution of judgments and to relieve from the consequences of
      default;

	 	 	 
		(ii) 	the concepts of materiality, good faith and fair
      dealing;

	 	 	 
		(iii) 	equitable remedies, such as specific performance and
      injunctive relief, may only be available in the discretion of the court
      and accordingly may not be available as a remedy in any particular
      circumstance;

	 	 	 
		(iv) 	principles limiting the availability of a remedy under a
      circumstance where Glencore has elected another remedy;

	 	 	 
		(v) 	limitations which may be imposed by law on the
      effectiveness of terms exculpating or exempting a party from a liability;
      and

	 	 	 
		(vi) 	the requirement that determinations, requests or demands
      which may be made pursuant to the exercise of discretion must be made
      reasonably;

5.4(e) - 5 

	(c) 	the ability to recover certain costs, fees and expenses
      in connection with litigation brought before the British Columbia Courts
      to enforce provisions of the Transaction Documents is in the discretion of
      the British Columbia Courts and counsel fees are subject to
      taxation;

	 	 	 
	(d) 	claims becoming barred under laws regarding limitation of
      actions;

	 	 	 
	(e) 	the Judgment Interest Act (British Columbia)
      limits interest on a judgment debt;

	 	 	 
	(f) 	determinations, calculations, demands, requests,
      instructions and acts made by Glencore in the exercise of a discretion
      given to it under any Transaction Document, may not be enforceable if made
      or performed unreasonably or arbitrarily, and may not be treated as
      conclusive notwithstanding contrary provisions in any Transaction
      Document;

	 	 	 
	(g) 	the Currency Act (Canada) precludes a court in
      Canada from giving a judgment in any currency other than Canadian
      currency;

	 	 	 
	(h) 	limitations upon the right of Glencore to receive
      immediate payment of amounts stated to be payable on demand;

	 	 	 
	(i) 	limitations upon the right of Glencore to enforce any
      Transaction Document on the basis of a default of a minor or
      non-substantive nature or having insubstantial consequences to
      Glencore;

	 	 	 
	(j) 	we express no opinion on provisions of the Transaction
      Documents:

	 	 	 
		(i) 	directly or indirectly purporting to exclude unwritten
      variations, amendments, waivers or consents or to establish evidentiary
      standards;

	 	 	 
		(ii) 	purporting to bind or confer a benefit upon, persons who
      are not parties to that document;

	 	 	 
		(iii) 	purporting to allow severance of invalid, illegal or
      unenforceable provisions;

	 	 	 
		(iv) 	dealing with the waiving by a party of certain legal,
      statutory or equitable rights or doctrines;

	 	 	 
		(v) 	purporting to relieve Glencore from the consequence of
      its own negligence;

	 	 	 
		(vi) 	which deem the Company to be holding certain assets in
      trust for Glencore on behalf of Glencore, since third parties dealing with
      the Company might otherwise have a preferential interest in the assets
      which are the subject of the deemed trust; or

	 	 	 
		(vii) 	which provide or have the effect of providing for a
      higher rate of interest after than before default or for the payment of
      rates and/or fees which may exceed the “criminal interest rate” provisions
      of the Criminal Code (Canada); and

	 	 	 
		(viii) 	which constitute an agreement to agree;

	 	 	 
	(k) 	provisions providing indemnification for a party's own
      acts or omissions when such act or omission involves negligence, a wilful
      or unlawful conduct or is found to constitute a penalty or be against
      public policy may not be enforceable and the enforceability of rights of
      indemnity may be limited to the extent that any such indemnity is found by
      a court to indemnify a party against the consequences of an unlawful act
      or is found to constitute a penalty or be against public policy;
      and

5.4(e) - 6 

	(l) 	to the extent that a particular contractual provision
      (including the obligation to pay default interest) is characterized by the
      British Columbia Courts as a penalty, and not as a genuine pre-estimate of
      damages, it will not be enforceable notwithstanding its characterization
      by the parties.

6. RELIANCE LIMITATION 

     This opinion is intended for the
  sole benefit of the addressees and may not be made available to or relied upon
  by any other person, firm or entity without our prior written consent. This
  opinion is limited to the matters expressly set forth in this letter, and no
  opinion has been implied, or may be inferred, beyond the matters expressly
  stated. This opinion speaks only as to law and facts in effect or existing as of
  the date hereof and we undertake no obligation or responsibility to update or
  supplement this opinion to reflect any facts or circumstances that may hereafter
  come to our attention or any changes in any law that may hereafter occur. 

Yours truly, 

EXHIBIT 5.4(f) 

FORM OF TROUTMAN SANDERS OPINION 

     1. The Registration Statement
  became effective upon filing with the Securities and Exchange Commission. To the
  best of our knowledge, no stop order suspending the effectiveness of the
  Registration Statement has been issued under the Securities Act of 1933, as
  amended no proceedings for such purpose have been instituted or are pending,
  contemplated or threatened by the Securities and Exchange Commission.

     2. The execution and delivery
  each of the Agreement, the Registration Rights Agreement and the Rights
  Certificate, by the Company and the performance by the Company of obligations
  thereunder (i) will not result in any violation of the United States federal
  securities law or the laws of the State of New York and (iii) will not require
  any consent, approval, authorization or other order of, or registration with,
  any New York or United States court or other governmental or regulatory
  authority or agency, except for such consents, approvals, authorizations,
  orders, or registrations which have been obtained or made by the Company or its
  subsidiaries and are in full force and effect under the Securities Act of 1933
  or applicable state securities or blue sky laws. 

     3. Based solely on the review of a letter, dated ____________,
  2013, from the NYSE Regulation delivered to you on the date hereof, the Rights
  Offering Shares and the Standby Shares have been conditionally approved for
  listing on the NYSE MKT.

     4. Based solely on the review of a letter, dated ____________,
  2013, from the NYSE Regulation delivered to you on the date hereof, the Rights
  have been approved for listing on the NYSE MKT. 

     5. The statements under the
  heading “Certain United States Federal Income Tax Consideration” in the Final
  Prospectus, to the extent that such statements purport to constitute summaries
  of matters of law or regulation or legal conclusions, fairly and accurately
  summarize the matters described therein in all material respects, except that we
  render no opinion as to the Company’s status as a “passive foreign investment
  company” within the meaning of such term in the U.S. Internal Revenue Code of
  1986, as amended.ex4x2.htm

Exhibit 4.2

 

 

 

	
  

	
INCENTIVE STOCK OPTION AGREEMENT

 

This Incentive Stock Option Agreement ("Agreement") is made and entered into as January 11, 2013, by and between Santeon Group, Inc., a Delaware corporation (the "Company") and the individual named in Section 1.2 below (the "Optionee"), who is an employee of the Company.

 

 

In consideration of the covenants herein set forth, the parties hereto agree as follows:

1.  Option Information.

	
1.1

	
Grant Date:

	
January 11, 2013

	 

	
1.2

	
Optionee:

	
1.3

	
Number of Shares:

	
1.4

	
Exercise Price:

	
$2.00 per share

2.  Grant of Option.

 

2.1         Grant; Price. The Company hereby grants to Optionee an option (the "Option") to purchase, upon and subject to the terms and conditions herein stated, the total number of Shares of Common Stock of the Company set forth in Section 1.3 above at the price per Share set forth in Section 1.4 above (the “Exercise Price”), such price being not less than the fair market value per share of the Shares covered by this Option as of the date hereof (unless Optionee is the owner of Stock possessing ten percent or more of the total voting power or value of all outstanding Stock of the Company, in which case the Exercise Price shall be no less than 110% of the fair market value of such Stock).

 

2.2         Type of Option. The Option is intended to be an Incentive Stock Option within the meaning of Section 422 of the Code, although the Company makes no representation or guarantee that the Option will qualify as an Incentive Stock Option. To the extent that the aggregate Fair Market Value (determined on the Grant Date) of the Shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by the Optionee during any calendar year (under all plans of the Company and its Affiliates) exceeds $100,000, the Options or portions thereof which exceed such limit (according to the order in which they were granted) shall be treated as Non-qualified Stock Options.

 

 

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 1

 

  

  

 

  

 

2.3         Consideration; Subject to Plan. The grant of the Option is made in consideration of the services to be rendered by the Optionee to the Company and is subject to the terms and conditions of the Company's 2012 Stock Option and Stock Award Plan (the "Plan"). Capitalized terms used but not defined herein will have the meaning ascribed to them in the Plan.

 

3.  Exercise Period; Vesting.

 

3.1           Term of Option; Continuation of Employment.  This Option shall expire, and all rights hereunder to purchase the Shares shall terminate ten (10) years from the date hereof (the “Expiration Date”), except in the case of an Optionee who, at the time of the Option grant, owns stock representing ten percent (10.0%) or more of the of the total combined voting power of all classes of stock of the Company or any Subsidiary. In this case, the term of the Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Option Agreement. This Option shall earlier terminate, subject to Section 4 hereof, as of the date of the termination of Optionee's Continuous Status as an Employee, if such termination occurs prior to the Expiration Date. Except as provided in this Agreement, the unvested portion of the Option will not be exercisable on or after the Optionee’s termination of Employee’s Continuous Status as an Employee.  Nothing contained herein shall confer upon Optionee the right to the continuation of his or her employment by the Company or to interfere with the right of the Company to terminate such employment or to increase or decrease the compensation of Optionee from the rate in existence at the date hereof.

 

3.2         Vesting Schedule. Optionee’s right to purchase Shares of Stock under this option will vest as follows: twenty-five percent (25%) of the total number of Shares covered by this Option, as set forth in Section 1.3 above, six months from the Grant Date (the “Initial Vesting Date”), with an additional twenty-five percent (25%) of such Shares becoming exercisable on each of the three (3) successive six (6) month periods following the Initial Vesting Date, until the Option is one hundred percent (100%) vested.  The installments shall be cumulative (i.e., the Option may be exercised, as to any or all Shares covered by an installment, at any time or times after an installment becomes exercisable and until expiration or termination of the Option). The resulting aggregate number of vested Shares will be rounded to the nearest whole number (with 0.5 of a Share rounded down), and Optionee may not vest in more than the number of Shares covered by this Option.

 

4.  Termination of Continuous Status as an Employee.

 

4.1         Termination for Reasons Other Than Cause, Death, Disability. If the Optionee's Continuous Status as an Employee is terminated for any reason other than Cause, death or Disability, the Optionee may exercise the vested portion of the Option, but only within such period of time ending on the earlier of: (a) the date three (3) months following the termination of the Optionee's Continuous Status as an Employee; or (b) the Expiration Date.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 2

 

  

  

 

  

4.2         Termination for Cause. If the Optionee's Continuous Status as an Employee is terminated for Cause, the Option (whether vested or unvested) shall immediately terminate and cease to be exercisable.

 

4.3         Termination Due to Disability. If the Optionee's Continuous Status as an Employee terminates as a result of the Optionee's Disability, the Optionee may exercise the vested portion of the Option, but only within such period of time ending on the earlier of: (a) the date twelve (12) months following the Optionee's termination of Continuous Status as an Employee; or (b) the Expiration Date.

 

4.4         Termination Due to Death. If the Optionee's Continuous Status as an Employee terminates as a result of the Optionee's death, the vested portion of the Option may be exercised by the Optionee's estate, by a person who acquired the right to exercise the Option by bequest or inheritance or by the person designated to exercise the Option upon the Optionee's death, but only within the time period ending on the earlier of: (a) the date twelve (12) months following the Optionee's termination of Continuous Status as an Employee due to the Optionee’s death; or (b) the Expiration Date.

 

5.  Manner of Exercise.

 

5.1         Election to Exercise. This Option shall be exercised by delivery to the Company of (a) written notice of exercise stating the number of Shares being purchased (in whole shares only) and such other information set forth on the form of Notice of Exercise attached hereto as Appendix A, which shall set forth, inter alia:

 

(a) the Optionee's election to exercise the Option;

 

(b) the number of Shares of Common Stock being purchased;

 

(c) any restrictions imposed on the Shares; and

 

(d) any representations, warranties and agreements regarding the Optionee's investment intent and access to information as may be required by the Company to comply with applicable securities laws.

 

If someone other than the Optionee exercises the Option, then such person must submit documentation reasonably acceptable to the Company verifying that such person has the legal right to exercise the Option.

 

 

5.2         Payment of Exercise Price. The entire Exercise Price of the Option shall be payable in full at the time of exercise to the extent permitted by applicable statutes and regulations, either:

 

(a) in cash or by certified or bank check at the time the Option is exercised;

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 3

 

  

  

 

  

(b) pursuant to a fully-executed agreement providing for the cancellation of indebtedness of the Company to Optionee;

 

(c) pursuant to a promissory note issued by the Optionee to the Company (subject to approval by the Company);

 

(d)  by surrender of previously acquired Shares, duly endorsed for transfer to the Company, that (i) have been owned by the Optionee for more than six months on the date of surrender or such other period as may be required to avoid a charge to the Company’s earnings, and (ii) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of Shares to be purchased by the Optionee as to which such Option shall be exercised (“Stock for Stock Exchange”);

 

(e) by written notice of the Optionee’s intention to effect a cashless exercise, including a calculation of the number of Shares of Common Stock to be issued upon such exercise in accordance with the terms hereof (a “Cashless Exercise”).  In the event of a Cashless Exercise, the Optionee shall surrender this Option for that number of Shares of Common Stock determined by multiplying the number of Shares to which it would otherwise be entitled by a fraction, the numerator of which shall be the difference between the then current Market Price per share of the Common Stock and the Exercise Price, and the denominator of which shall be the then current Market Price per share of Common Stock.  For example, if the holder is exercising 1,000 Options with a per Option exercise price of $0.75 per share through a cashless exercise when the Common Stock’s current Market Price per share is $2.00 per share, then upon such Cashless Exercise the holder will receive 625 shares of Common Stock.  Market Price is defined as the average of the last reported sale prices on the principal trading market for the Common Stock during the five (5) trading days immediately preceding such date; pursuant to any combination of the foregoing methods of payment; or

 

(f) by such other form of legal consideration and method of payment for the issuance of Shares that may be acceptable to the Committee (e.g., by reduction in the number of Shares otherwise deliverable upon exercise with a Fair Market Value equal to the aggregate Exercise Price).

 

5.3         Withholding. If the Company, in its discretion, determines that it is obligated to withhold any tax in connection with the exercise of the Option, the Optionee must make arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the Company. The Optionee may satisfy any federal, state or local tax withholding obligation relating to the exercise of the Option by any of the following means:

 

(a) tendering a cash payment;

 

(b) authorizing the Company to withhold Shares of Common Stock from the Shares of Common Stock otherwise issuable to the Optionee as a result of the exercise of the Option; provided, however, that no Shares of Common Stock are withheld with a value exceeding the minimum amount of tax required to be withheld by law; or

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 4

  

  

  

 

  

(c) delivering to the Company previously owned and unencumbered Shares of Common Stock.

 

The Company reserves the right to satisfy its withholding obligations incurred by the Optionee’s exercise of the Option by withholding any such amounts from any compensation paid to an Optionee.

 

5.4         Issuance of Shares. Provided that the Exercise Agreement and payment are in form and substance satisfactory to the Company, the Company shall issue the Shares of Common Stock registered in the name of the Optionee, the Optionee's authorized assignee, or the Optionee's legal representative, which shall be evidenced by stock certificates representing the Shares with the appropriate legends affixed thereto, appropriate entry on the books of the Company or of a duly authorized transfer agent, or other appropriate means as determined by the Company.

6.  Tax Liability and Withholding.

 

Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding ("Tax-Related Items"), the ultimate liability for all Tax-Related Items is and remains the Optionee's responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting, or exercise of the Option or the subsequent sale of any Shares acquired on exercise; and (b) does not commit to structure the Option to reduce or eliminate the Optionee's liability for Tax-Related Items.

7.  No Right to Continued Employment; No Rights as Shareholder.

 Neither the Plan nor this Agreement shall confer upon the Optionee any right to be retained in any position, as an Employee, Consultant or Director of the Company. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company to terminate the Optionee's Continuous Status as an Employee at any time, with or without Cause. The Optionee shall not have any rights as a Shareholder with respect to any Shares of Common Stock subject to the Option unless and until certificates representing the Shares have been issued by the Company to the holder of such Shares, or the Shares have otherwise been recorded on the books of the Company or of a duly authorized transfer agent as owned by such holder.

8.  Transferability.

The Option is not transferable by the Optionee other than to a designated beneficiary upon the Optionee's death or by will or the laws of descent and distribution, and is exercisable during the Optionee's lifetime only by him or her. No assignment or transfer of the Option, or the rights represented thereby, whether voluntary or involuntary, by operation of law or otherwise (except to a designated beneficiary, upon death, by will or the laws of descent or distribution) will vest in the assignee or transferee any interest or right herein whatsoever, but immediately upon such assignment or transfer the Option will terminate and become of no further effect.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 5

 

  

  

 

  

9.           Adjustments, Recapitalization, Change in Control.

9.1         General. The Shares of Common Stock subject to this Option may be adjusted or terminated in any manner as contemplated by Section 9 of the Plan. The grant of this Option shall not affect in any way the right or power of the Company to make adjustments, reclassifications, reorganizations or changes in its capital or business structure or to merge, consolidate, dissolve or liquidate or to sell or transfer all or any part of its business or assets.

9.2         Recapitalization. Subject to any required action by the shareholders of the Company, the number of Shares covered by this Option, and the Exercise Price thereof, shall be proportionately adjusted for any increase or decrease in the number of issued shares resulting from a subdivision or consolidation of shares or the payment of a stock dividend, or any other increase or decrease in the number of such shares effected without receipt of consideration by the Company; provided however that the conversion of any convertible securities of the Company shall not be deemed having been "effected without receipt of consideration by the Company".

9.3         Termination of Option Upon Dissolution or Liquidation.  In the event of a proposed dissolution or liquidation of the Company, the Administrator shall notify Optionee at least fifteen (15) days prior to such proposed action that this Option shall terminate immediately prior to the consummation of such proposed dissolution or liquidation of the Company.

9.4         Acceleration of Vesting Upon Change in Control.  In the event of a Change in Control, if the entity which shall be the surviving entity does not tender to Optionee an offer, for which it has no obligation to do so, to substitute for any unexercised portion of the Option granted herein a stock option or capital stock of such surviving of such surviving entity, as applicable, which on an equitable basis shall provide the Optionee with substantially the same economic benefit as such unexercised portion of this Option, then, subject to Section 9.3 of the Plan, the Option granted herein shall immediately prior to the specified effective date for the Change in Control, become 100% vested and the Optionee shall have the right to exercise any unexercised portion of this Option without regard to the vesting schedule set forth in Section 3.2 hereinabove; provided, however, that such exercise shall be subject to the consummation of such Change in Control. All unexercised portions of this Option shall terminate and cease to remain outstanding immediately following the consummation of the Change in Control, except to the extent assumed by the successor corporation or an affiliate thereof.

9.5         No Acceleration if the Company is the Surviving Entity. Subject to any required action by the shareholders of the Company, if the Company shall be the surviving entity in any merger or consolidation, this Option thereafter shall pertain to and apply to the securities to which a holder of Shares equal to the Shares subject to this Option would have been entitled by reason of such merger or consolidation, and the vesting schedule set forth in Section 3.2 hereinabove shall continue to apply.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 6

 

  

  

 

  

9.6         Limitation of Optionee’s Rights. To the extent that the foregoing adjustments relate to shares or securities of the Company, such adjustments shall be made by the Board, whose determination in that respect shall be final, binding and conclusive. Except as hereinbefore expressly provided, Optionee shall have no rights by reason of any subdivision or consolidation of shares of Stock of any class or the payment of any stock dividend or any other increase or decrease in the number of shares of stock of any class, and the number and price of Shares subject to this Option shall not be affected by, and no adjustments shall be made by reason of, any dissolution, liquidation, merger, consolidation or sale of assets or capital stock, or any issue by the Company of shares of stock of any class or securities convertible into shares of stock of any class.

 

10.  Qualification as an Incentive Stock Option.

 

It is understood that this Option is intended to qualify as an incentive stock option as defined in Section 422 of the Code to the extent permitted under Applicable Law. Accordingly, the Optionee understands that in order to obtain the benefits of an incentive stock option, no sale or other disposition may be made of Shares for which incentive stock option treatment is desired within one (1) year following the date of exercise of the Option or within two (2) years from the Grant Date. The Optionee understands and agrees that the Company shall not be liable or responsible for any additional tax liability the Optionee incurs in the event that the Internal Revenue Service for any reason determines that this Option does not qualify as an incentive stock option within the meaning of the Code.

 

11.           Disqualifying Disposition.

 

If the Optionee disposes of the Shares of Common Stock prior to the expiration of either two (2) years from the Grant Date or one (1) year from the date the Shares are transferred to the Optionee pursuant to the exercise of the Option (a "Disqualifying Disposition"), the Optionee shall notify the Company in writing within thirty (30) days after such disposition of the date and terms of such disposition. The Optionee also agrees to provide the Company with any information concerning any such dispositions as the Company requires for tax purposes.

12.  Acknowledgements Applicable to Restricted Stock.

12.1         Investment Intent.  Optionee represents and agrees that: (a) upon the Optionee’s exercise of this Option in whole or in part, Optionee will in each case acquire the Shares upon such exercise for the purpose of investment and not with a view to, or for resale in connection with, any distribution thereof; (b) Optionee has had access to the financial statements or books and records of the Company, has had the opportunity to ask questions of the Company concerning its business, operations and financial condition, and to obtain additional information reasonably necessary to verify the accuracy of such information; and (c) upon such exercise of this Option in whole or in part, Optionee (or any person or persons entitled to exercise this Option under Section 4.4 hereof) shall furnish to the Company a written statement confirming each of the two foregoing representations, satisfactory to the Company in form and substance. If the Shares represented by this Option are registered under the Securities Act, either before or after the exercise of this Option in whole or in part, the Optionee shall be relieved of the foregoing investment representation and agreement and shall not be required to furnish the Company with the foregoing written statement.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 7

 

  

  

 

  

12.2         Restrictions on Transfer.  Unless and until the Shares represented by this Option are registered under the Securities Act, all certificates representing the Shares and any certificates subsequently issued in substitution therefor and any certificate for any securities issued pursuant to any stock split, share reclassification, stock dividend or other similar capital event shall bear legends in substantially the following form:

	
  

	
THESE SECURITIES HAVE NOT BEEN REGISTERED OR OTHERWISE QUALIFIED UNDER THE SECURITIES ACT OF 1933 (THE 'SECURITIES ACT') OR UNDER THE APPLICABLE OR SECURITIES LAWS OF ANY STATE. NEITHER THESE SECURITIES NOR ANY INTEREST THEREIN MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF REGISTRATION UNDER THE SECURITIES ACT OR ANY APPLICABLE SECURITIES LAWS OF ANY STATE, UNLESS PURSUANT TO EXEMPTIONS THEREFROM.

	
  

	
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ISSUED PURSUANT TO THAT CERTAIN INCENTIVE STOCK OPTION AGREEMENT DATED JANUARY 11, 2013 BETWEEN THE COMPANY AND THE ISSUEE WHICH RESTRICTS THE TRANSFER OF THESE SHARES WHICH ARE SUBJECT TO REPURCHASE BY THE COMPANY UNDER CERTAIN CONDITIONS.

In addition to the foregoing legend, any such certificate may include other legend or legends as the Company and its counsel deem necessary or appropriate. Appropriate stop transfer instructions have been placed with the Company's transfer agent, insofar as such is applicable with respect to the Shares.

13.  Stand-off Agreement.

Optionee agrees that in connection with any registration of the Company's securities under the Securities Act, and upon the request of the Company or any underwriter managing an underwritten offering of the Company's securities, Optionee shall not sell, short any sale of, loan, grant an option for, or otherwise dispose of any of the Shares (other than Shares included in the offering) without the prior written consent of the Company or such managing underwriter, as applicable, for a period of at least one year following the effective date of registration of such offering.

14.  Restriction Upon Transfer.

14.1         General. The Shares may not be sold, transferred or otherwise disposed of and shall not be pledged or otherwise hypothecated by the Optionee except as hereinafter provided.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 18

 

  

  

  

14.2         Repurchase Right on Termination Other Than for Cause. For the purposes of this Section, a "Repurchase Event" shall mean an occurrence of one of (i) termination of Optionee's employment by the Company, voluntary or involuntary and with or without cause; (ii) retirement or death of Optionee; (iii) bankruptcy of Optionee, which shall be deemed to have occurred as of the date on which a voluntary or involuntary petition in bankruptcy is filed with a court of competent jurisdiction; (iv) dissolution of the marriage of Optionee, to the extent that any of the Shares are allocated as the sole and separate property of Optionee's spouse pursuant thereto (in which case this Section shall only apply to the Shares so affected); or (v) any attempted transfer by the Optionee of Shares, or any interest therein, in violation of this Agreement. Upon the occurrence of a Repurchase Event, the Company shall have the right (but not an obligation) to repurchase all or any portion of the Shares of Optionee at a price equal to the fair value of the Shares as of the date of the Repurchase Event.

14.3         Repurchase Right on Termination for Cause.  In the event Optionee's employment is terminated by the Company "for cause", then the Company shall have the right (but not an obligation) to repurchase Shares of Optionee at a price equal to the Exercise Price. Such right of the Company to repurchase Shares shall apply to 100% of the Shares for one (1) year from the date of this Agreement; and shall thereafter lapse at the rate of twenty percent (20%) of the Shares on each anniversary of the date of this Agreement. In addition, the Company shall have the right, in the sole discretion of the Board and without obligation, to repurchase upon termination for cause all or any portion of the Shares of Optionee, at a price equal to the fair market value of the Shares as of the date of termination, which right is not subject to the foregoing lapsing of rights. In the event the Company elects to repurchase the Shares, the stock certificates representing the same shall forthwith be returned to the Company for cancellation.

14.4  Exercise of Repurchase Right.  Any Repurchase Right under Paragraphs 14.2 or 14.3 shall be exercised by giving notice of exercise as provided herein to Optionee or the estate of Optionee, as applicable. Such right shall be exercised, and the repurchase price thereunder shall be paid, by the Company within a ninety (90) day period beginning on the date of notice to the Company of the occurrence of such Repurchase Event (except in the case of termination of employment or retirement, where such option period shall begin upon the occurrence of the Repurchase Event). Such repurchase price shall be payable only in the form of cash (including a check drafted on immediately available funds) or cancellation of purchase money indebtedness of the Optionee for the Shares. If the Company cannot purchase all such Shares because it is unable to meet the financial tests under applicable laws, the Company shall have the right to purchase as many Shares as it is permitted to purchase under such sections. Any Shares not purchased by the Company hereunder shall no longer be subject to the provisions of this Section 14.

14.5         Right of First Refusal.  In the event Optionee desires to transfer any Shares during his or her lifetime, Optionee shall first offer to sell such Shares to the Company. Optionee shall deliver to the Company written notice of the intended sale, such notice to specify the number of Shares to be sold, the proposed purchase price and terms of payment, and grant the Company an option for a period of thirty days following receipt of such notice to purchase the offered Shares upon the same terms and conditions. To exercise such option, the Company shall give notice of that fact to Optionee within the thirty (30) day notice period and agree to pay the purchase price in the manner provided in the notice. If the Company does not purchase all of the Shares so offered during foregoing option period, Optionee shall be under no obligation to sell any of the offered Shares to the Company, but may dispose of such Shares in any lawful manner during a period of one hundred and eighty (180) days following the end of such notice period, except that Optionee shall not sell any such Shares to any other person at a lower price or upon more favorable terms than those offered to the Company.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 9

 

  

  

 

  

14.6         Acceptance of Restrictions.  Acceptance of the Shares shall constitute the Optionee's agreement to such restrictions and the legending of his certificates with respect thereto. Notwithstanding such restrictions, however, so long as the Optionee is the holder of the Shares, or any portion thereof, he shall be entitled to receive all dividends declared on and to vote the Shares and to all other rights of a shareholder with respect thereto.

14.7 Permitted Transfers.  Notwithstanding any provisions in this Section 14 to the contrary, the Optionee may transfer Shares subject to this Agreement to his or her parents, spouse, children, or grandchildren, or a trust for the benefit of the Optionee or any such transferee(s); provided, that such permitted transferee(s) shall hold the Shares subject to all the provisions of this Agreement (all references to the Optionee herein shall in such cases refer mutatis mutandis to the permitted transferee, except in the case of clause (iv) of Section 16(a) wherein the permitted transfer shall be deemed to be rescinded); and provided further, that notwithstanding any other provisions in this Agreement, a permitted transferee may not, in turn, make permitted transfers without the written consent of the Optionee and the Company.

14.8  Release of Restrictions on Shares.  All other restrictions under this Section 14 shall terminate five (5) years following the date of this Agreement, or when the Company's securities are publicly traded, whichever occurs earlier.

 

15.  Compliance with Law.

The exercise of the Option and the issuance and transfer of Shares of Common Stock shall be subject to compliance by the Company and the Optionee with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Company's Shares of Common Stock may be listed. No Shares of Common Stock shall be issued pursuant to this Option unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Optionee understands that the Company is under no obligation to register the Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.

16.  Notices.

Any notice required to be given pursuant to this Option or the Plan shall be in writing and shall be deemed to be delivered upon receipt or, in the case of notices by the Company, five (5) days after deposit in the U.S. mail, postage prepaid, addressed to Optionee at the address last provided to the Company by Optionee for his or her employee records. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 10

 

  

  

 

  

17.  Governing Law.

 

This Option has been granted, executed and delivered in the Commonwealth of Virginia, and the interpretation and enforcement shall be governed by the laws thereof without regard to conflict of law principles, and subject to the exclusive jurisdiction of the courts therein.

 

18.  Options Subject to Plan.

 

This Agreement is subject to the Plan as approved by the Company's Shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.

 

19.  Successors and Assigns.

The Company may assign any of its rights under this Agreement. This Agreement will be binding upon and inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer set forth herein, this Agreement will be binding upon the Optionee and the Optionee's beneficiaries, executors, administrators and the person(s) to whom this Agreement may be transferred by will or the laws of descent or distribution.

20.  Severability.

The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law.

 

21.  Discretionary Nature of Plan.

 

The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Option in this Agreement does not create any contractual right or other right to receive any Options or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Optionee's employment with the Company.

 

22.  Amendment.

 

The Committee has the right to amend, alter, suspend, discontinue or cancel the Option, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Optionee's material rights under this Agreement without the Optionee's consent.

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 11

 

  

  

 

  

23.  No Impact on Other Benefits.

The value of the Optionee's Option is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.

24.  Counterparts.

This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.

25.  Acceptance.

The Optionee hereby acknowledges receipt of a copy of the Plan and this Agreement. The Optionee has read and understands the terms and provisions thereof, and accepts the Option subject to all of the terms and conditions of the Plan and this Agreement. The Optionee acknowledges that there may be adverse tax consequences upon exercise of the Option or disposition of the underlying Shares and that the Optionee should consult a tax advisor prior to such exercise or disposition.

 

 

 

 

[SIGNATURE PAGE FOLLOWS]

 

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 12

 

  

  

 

  

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

	  	
SANTEON GROUP, INC.

 

	  	
By____________________________

 

Name: Ashraf Rofail

Title: Chairman & CEO

	  	
OPTIONEE

 

	  	
By__________________________

 

Name:

 

 

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 13

 

  

  

 

  

APPENDIX A

Notice of Exercise

Ash Rofail

Chairman and CEO

Santeon Group, Inc.

11720 Plaza America Drive

Suite 150

Reston, VA 20120

Re: Notice to Santeon Group, Inc. (the “Company”) of Exercise of Incentive Stock Option

Dear Sir:

1.         Exercise of Option. Notice is hereby given pursuant to Section 5.1 of my Qualified Stock Option Agreement with the Company, dated January 11, 2013, (the “Stock Option Agreement”) that I hereby elect to exercise the option to purchase ________ Shares, as granted therein (the “Option”), all of which are vested pursuant to the terms of the Company’s 2012 Stock Option and Stock Award Plan (the “Plan”) and the Stock Option Agreement. The aggregate Exercise Price for all of the Shares being purchased is _____________ (Total Shares times Exercise Price per Share).

 

2. Payment of the Exercise Price; Delivery of Required Documents.  Payment in full of the total Exercise Price for the Shares is enclosed herewith in the following form(s), as authorized by the Plan and Stock Option Agreement (check and complete as appropriate):

____ In cash (by certified or bank check) in the amount of ____________.

____ Pursuant to a fully-executed agreement providing for the cancellation of indebtedness of the Company to Purchaser.

_____Pursuant to a promissory note issued by the Purchaser to the Company (subject to approval by the Company).

 

 ____ By surrender of ______ previously acquired Shares, duly endorsed for transfer to the Company, that (A) have been owned by Purchaser for more than six months on the date of surrender or such other period as may be required to avoid a charge to the Company’s earnings, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of Shares to be purchased by Purchaser as to which such Option shall be exercised.

 

_____ A cashless exercise pursuant to Section 5.2(e) of the Stock Option Agreement with the Company. The Average Market Price as of _______ was $_____.

 

_____ Pursuant to any combination of the foregoing methods of payment, as specifically delineated below:

 

_______________________________________________________________

 

_______________________________________________________________

 

_________________________________________________________________.

 

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 14

 

  

  

 

  

_____ By such other form of legal consideration and method of payment for the issuance of Shares that may be acceptable to the Committee (e.g., by reduction in the number of Shares otherwise deliverable upon exercise with a Fair Market Value equal to the aggregate Exercise Price).

 

In addition to the foregoing, I will deliver any other documents that the Company requires.

 

3. Tax Withholding. I hereby authorize payroll withholding and will make arrangements satisfactory to the Company to pay or provide for any applicable federal, state and local withholding obligations of the Company relating to the exercise of the Option by any of the methods set forth in the Plan. I understand and agree that ownership of the Shares will not be transferred to me until the total Exercise Price and all applicable withholding taxes have been paid.

 

4. Notice of Disqualifying Disposition. I understand that the exemption from taxable income at the time of exercise is dependent upon my holding the Shares purchased hereunder for a period of at least one year from the date of exercise and two years from the date of grant of the Option; and, further, I will promptly notify the Chief Financial Officer of the Company if I transfer any of the Shares within one year from the date of exercise of the Option or within two years from the date of grant of the Option.

 

5. Tax Consequences. I understand and agree that there may be adverse federal or state tax consequences as a result of my purchase or disposition of the Shares, and I acknowledge that I have been advised to consult with a tax advisor in connection with the purchase or disposition of the Shares. I am not relying on the Company for tax advice.

 

6. Compliance with Law. I understand and agree that the issuance and transfer of the Shares will be subject to, and conditioned upon compliance by the Company and me with, all applicable federal, state and local laws and regulations and all applicable requirements of any stock exchange or automated quotation system on which the Shares may be listed or quoted at the time of such issuance or transfer.

 

7. Restricted Securities. Insofar as the Shares that I am purchasing hereunder have not been registered under the Securities Act of 1933, I hereby confirm that such Shares are being acquired by me for my own account for investment purposes, and not with a view to, or for resale in connection with, any distribution thereof. I will not sell or dispose of my Shares in violation of the Securities Act of 1933, as amended, or any applicable federal or state securities laws. Further, I understand that the certificate representing such Shares will bear a restrictive legend within the contemplation of the Securities Act and as required by such other state or federal law or regulation applicable to the issuance or delivery of the Option Shares.

 

8. Acknowledgement. I understand and agree that I am purchasing the Shares pursuant to the terms and conditions of the Plan and the Stock Option Agreement, copies of which I have read and understand.

By:           _________________________________                                                                                     Date:           __________________

(signature)

Name:      _________________________________

 

 

 

	SANTEON GROUP, INC.	Qualified Incentive Stock Option Agreement	Page 15

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