Lithium Argentina AG 6-K, filed Oct 4, 2023
Lithium Argentina AG (LAR)
About this 6-K
Lithium Argentina AG filed this 6-K on October 4, 2023.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of: October, 2023
Commission file number: 001-38350
Lithium Americas (Argentina) Corp.
(Translation of Registrant's name into English)
900 West Hastings Street, Suite 300,
Vancouver, British Columbia,
Canada V6C 1E5
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F [ ] Form 40-F [X]
EXHIBIT INDEX
# Portions of this exhibit have been redacted in compliance with Items 601(a)(6) or 601(b) of Regulation S-K. The Company agrees to furnish a copy of any omitted schedule or exhibit to the SEC upon its request.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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Lithium Americas (Argentina) Corp. |
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(Registrant) |
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By: |
"John Kanellitsas" |
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Name: |
John Kanellitsas |
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Title: |
President and Interim Chief Executive Officer |
Dated: October 4, 2023
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NEWS RELEASE
Lithium Americas Closes Separation
to Create Two Leading Lithium Companies
October 3, 2023 - Vancouver, Canada: Lithium Americas Corp. ("Lithium Americas" or the "Company"), now Lithium Americas (Argentina) Corp. ("Lithium Argentina") (TSX: LAAC) (NYSE: LAAC) and a new Lithium Americas Corp. ("Lithium Americas (NewCo)") (TSX: LAC) (NYSE: LAC) today jointly announced the completion of the reorganization of Lithium Americas into two independent publicly traded companies, implemented by way of statutory plan of arrangement (the "Separation").
"We look forward to seeing these two market-leading companies thrive independently," said Jonathan Evans, President and CEO of Lithium Americas (NewCo) and former President and CEO of Lithium Americas. "The Separation offers investors two unique and highly focused pure-play lithium companies with world-class assets in our respective regions of operation."
"I am extremely proud of the Lithium Argentina and Lithium Americas (NewCo) teams for their hard work and dedication in redesigning these companies with the right management teams and resources to flourish independently," said John Kanellitsas, Executive Chairman, President and Interim CEO of Lithium Argentina and former Executive Vice Chair of Lithium Americas. "The closing of this Separation is a pivotal moment in allowing each company to sharpen its focus and pursue independent and unique growth opportunities within the lithium industry."
As of close of trading on Tuesday, October 3, 2023 (the "Effective Date"), common shares of Lithium Americas ("Lithium Americas Shares") have concluded regular-way trading on the Toronto Stock Exchange ("TSX") and New York Stock Exchange ("NYSE") under the symbol "LAC," and Lithium Argentina common shares ("Lithium Argentina Shares") and Lithium Americas (NewCo) common shares ("Lithium Americas (NewCo) Shares") have concluded trading on a "when-issued" basis on the NYSE.
At the start of trading on Wednesday, October 4, 2023, Lithium Argentina Shares and Lithium Americas (NewCo) Shares will commence trading on the TSX and NYSE on a regular-way basis under the ticker symbols "LAAC" and "LAC," respectively.
REGISTERED SHAREHOLDERS
Registered shareholders of Lithium Americas ("LAC Registered Shareholders") are reminded to submit their certificates or direct registration statements ("DR Statements") representing their Lithium Americas Shares with a duly completed letter of transmittal ("Letter of Transmittal") to Computershare Investor Services Inc., as depositary, in order to receive DR Statements representing their Lithium Argentina Shares and Lithium Americas (NewCo) Shares. The Letter of Transmittal is filed on Lithium Argentina's SEDAR profile (www.sedarplus.ca).
LAC Registered Shareholders who fail to submit their certificates or DR Statements and their Letter of Transmittals on or before October 3, 2026, the third anniversary of the Effective Date of the Separation, will cease to have any right or claim against or interest of any kind or nature in Lithium Argentina or Lithium Americas (NewCo). Accordingly, persons who tender certificates or DR Statements for Lithium Americas Shares after October 3, 2026 will not receive any Lithium Argentina Shares or Lithium Americas (NewCo) Shares, will not own any interest in Lithium Argentina or Lithium Americas (NewCo) and will not be paid any cash or other compensation in lieu thereof.
GM TRANSACTION - LITHIUM AMERICAS (NEWCO)
Upon completion of the Separation, General Motors Holdings LLC ("GM") executed a second tranche subscription agreement (pursuant to which GM will, subject to the fulfillment of certain conditions precedent, purchase US$329,852,134.38 in Lithium Americas (NewCo) Shares). GM also executed an investor rights agreement with Lithium Americas (NewCo) and GM's offtake agreement with the Company was assigned to Lithium Americas (NewCo). The second tranche alternative exercise warrants previously issued to GM by the Company and the second tranche subscription agreement between GM and the Company are no longer effective in accordance with the terms of those agreements. GM is the largest shareholder of both Lithium Americas (NewCo) and Lithium Argentina with approximately 9.4% of the shares of each company.
CONVERTIBLE NOTES - LITHIUM ARGENTINA
The Separation constitutes a Make-Whole Fundamental Change as defined in the indenture, dated December 6, 2021 (the "Indenture"), between the Company (now Lithium Argentina) and Computershare Trust Company N.A., governing the Company's 1.75% Convertible Senior Notes due 2027 (the "Notes"). The effective date (as defined in the Indenture) of such Make-Whole Fundamental Change is October 3, 2023. In addition, the Separation will result in an adjustment to the conversion rate of the Notes. Notices will be sent to the Depository Trust Company ("DTC") as the holder of the Notes and filed on SEDAR and EDGAR regarding (i) the number of additional Lithium Argentina Shares by which the conversion rate of the Notes may be increased per US$1,000 principal amount of Notes with respect to conversions occurring in connection with such Make-Whole Fundamental Change being nil, as the last reported sale prices of the Company's common shares over the five trading day period ending on, and including, the trading day immediately preceding the applicable effective date Make-Whole Fundamental Change, was less than US$34.89, and (ii) the adjustment to the conversion rate for the Notes as a result of the Separation.
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ABOUT LITHIUM ARGENTINA Lithium Argentina owns a 44.8% interest in the Caucharí-Olaroz project located in Jujuy, Argentina. The company is focused on advancing its Caucharí-Olaroz project toward full production capacity and exploring regional growth opportunities in the Pastos Grandes basin with its Pastos Grandes and Sal de la Puna projects (100% and 65% owned, respectively). Lithium Argentina contact: Kelly O'Brien, VP Investor Relations and ESG Telephone: +54-11-52630616 Email: ir@lithium-argentina.com Website: www.lithium-argentina.com |
ABOUT LITHIUM AMERICAS (NEWCO) Lithium Americas (NewCo) owns the Thacker Pass project located in Nevada, which hosts the largest known Measured and Indicated lithium resource in the United States. The company is focused on advancing construction at Thacker Pass; construction commenced in early 2023. Thacker Pass is expected to employ over 1,000 workers during construction and create 500 permanent jobs during operations over its 40-year mine life. Lithium Americas (NewCo) contact: Virginia Morgan, VP Investor Relations and ESG Telephone: 778-726-4070 Email: ir@lithiumamericas.com Website: www.lithiumamericas.com |
FORWARD-LOOKING INFORMATION
Certain statements in this release constitute "forward-looking statements" within the meaning of applicable United States securities legislation and "forward-looking information" under applicable Canadian securities legislation (collectively, "forward-looking statements"). Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, events, performance or achievements of the Separation and of Lithium Americas (NewCo) / Lithium Argentina (collectively the "Entities" and individually, an "Entity"), its projects, or industry results, to be materially different from any future results, events, performance or achievements expressed or implied by such forward-looking statements. Such statements can be identified by the use of words such as "may," "would," "could," "will," "intend," "expect," "believe," "plan," "anticipate," "estimate," "schedule," "forecast," "predict" and other similar terminology, or state that certain actions, events or results "may," "could," "would," "might" or "will" be taken, occur or be achieved. These statements reflect the Entity's current expectations regarding future events, financial or operating performance and results, and speak only as of the date of this release. Such statements include without limitation, statements with respect to the expected benefits of the Separation for each business and the Entity's shareholders and other stakeholders, the strategic advantages, future opportunities and focus of each business and expectations regarding the status of development of the Entity's projects, and expectation for the completion of the second tranche investment by GM; statements with respect to expectations around Thacker Pass supporting North American supply chain, the number of workers it will employ and its expected mine life.
Forward-looking statements involve significant risks and uncertainties, should not be read as guarantees of future performance, events or results and will not necessarily be accurate indicators of whether or not such events or results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking statements or information, including, but not limited to, the performance, the operations and financial condition of Lithium Americas (NewCo) and Lithium Argentina as separately traded public companies, including the reduced geographical and property portfolio diversification resulting from the Separation; the impact of the Separation on the trading prices for, and market for trading in, the shares of the Entities; the potential for significant tax liability for a violation of the tax-deferred spinoff rules applicable in Canada and the United States; uncertainties with realizing the potential benefits of the Separation; risks with respect to Lithium Americas (NewCo) not meeting the conditions with respect to GM's second tranche investment and other risks with respect to any delays in completing such transaction; risks associated with mining project development, achieving anticipated milestones and budgets as planned, and meeting expected timelines; risks inherent in litigation or rulings that are adverse for an Entity or its projects; maintaining local community support in the regions where an Entity's projects are located; changing social perceptions and their impact on project development and litigation; ongoing global supply chain disruptions and their impact on developing an Entity's projects; availability of personnel, supplies and equipment; the impact of inflation or changing economic conditions on an Entity, its projects and their feasibility; any impacts of COVID-19 or an escalation thereof on the business of an Entity; unanticipated changes in market price for an Entity's shares; changes to an Entity's current and future business plans and the strategic alternatives available to the Entity; industry and stock market conditions generally; demand, supply and pricing for lithium; and general economic and political conditions in Canada, the United States, Argentina and other jurisdictions where an Entity conducts business. Additional information about certain of these assumptions and risks and uncertainties is contained in the Entity's filings with securities regulators, including the Company's management information circular dated June 16, 2023 available on SEDAR+ at www.sedarplus.ca and EDGAR at www.sec.gov.
Although the forward-looking statements contained in this release are based upon what management of the applicable Entity believes are reasonable assumptions as of the date hereof, there can be no assurance that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this release and are expressly qualified in their entirety by this cautionary statement. Subject to applicable securities laws, none of the Entities assume any obligation to update or revise the forward-looking statements contained herein to reflect events or circumstances occurring after the date of this release.
LITHIUM AMERICAS (ARGENTINA) CORP.
LITHIUM AMERICAS CORP.
NOTICE OF CHANGE IN CORPORATE STRUCTURE
Pursuant to Section 4.9 of National Instrument 51-102
1. Names of the Parties to the Transaction
Lithium Americas (Argentina) Corp. ("Lithium Argentina"), formerly Lithium Americas Corp. ("Former LAC")
Lithium Americas Corp. ("Lithium Americas (Newco)"), formerly 1397468 B.C. Ltd. ("Spinco")
2. Effective Date of the Transaction
October 3, 2023.
3. Description of the Transaction
On October 3, 2023, Former LAC was reorganized into two independent companies (the "Separation"), Lithium Argentina and Lithium Americas (Newco), by way of a plan of arrangement under the Business Corporations Act (British Columbia) (the "Arrangement"). Pursuant to the Arrangement, the North American business of Former LAC, which includes Former LAC's ownership and rights in the Thacker Pass lithium project, its investment in Green Technology Metals Limited and Ascend Elements Inc., among other things, was transferred to Lithium Americas (Newco).
In connection with the Arrangement, holders of common shares of Former LAC ("Former LAC Shares") will be entitled to receive one common share of Lithium Argentina and one common share of Lithium Americas (Newco) for every Former LAC Share held immediately before the effective time of the Arrangement.
In connection with the Arrangement, the name of Lithium Argentina was changed from "Lithium Americas Corp." to "Lithium Americas (Argentina) Corp." and the name of Lithium Americas (Newco) was changed from "1397468 B.C. Ltd." to "Lithium Americas Corp.".
For additional information relating to the Arrangement, please refer to the management information circular of Former LAC dated June 16, 2023 (the "Circular"), which is available on the SEDAR+ profile of Lithium Argentina at www.sedarplus.ca.
4. Name of each Party that Ceased to be a Reporting Issuer subsequent to Event and of each Continuing Entity
Lithium Argentina will continue to be a reporting issuer in British Columbia, Alberta, Manitoba, New Brunswick, Newfoundland and Labrador, Northwest Territories, Nova Scotia, Nunavut, Ontario, Prince Edward Island, Québec, Saskatchewan, Yukon (collectively, the "Reporting Jurisdictions").
As a result of the completion of the Arrangement, Lithium Americas (Newco) became a reporting issuer in all of the Reporting Jurisdictions, except Ontario where it will become a reporting issuer once its shares are listed and posted for trading on the Toronto Stock Exchange, which is expected to occur on October 4, 2023.
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5. The date of Lithium Americas (Newco)'s First Financial Year-End after the Transaction
Lithium Americas (Newco)'s first financial year-end will be December 31, 2023.
6. Periods for Filing Interim Financial Statements and Annual Financial Statements after the Transaction, if Section 4.9(a) or 4.9(b)(ii) of NI 51-102 applies
Lithium Americas (Newco) will be required to file interim financial statements for the period from incorporation on January 23, 2023 to June 30, 2023. Lithium Americas (Newco) will also be required to file interim financial statements from period from July 1, 2023 to September 30, 2023. Lithium Americas (Newco) will then be required to file the year-end financial statements for the period from incorporation to December 31, 2023.
7. Documents Filed in respect of the Transaction if Section 4.9(a) or 4.9(b)(ii) of NI 51- 102 applies
The following documents describing the Arrangement were filed on SEDAR+ and are available under Lithium Argentina's profile at www.sedarplus.ca:
1. News release dated November 3, 2022 announcing the intention of Former LAC to proceed with the Separation;
2. News release dated May 15, 2023 announcing board approval of the Arrangement;
3. Notice to trustee and holders of convertible notes of Former LAC ("Noteholders") dated May 19, 2023, regarding events resulting in conversion rate adjustment;
4. Material change report dated May 25, 2023 with respect to board approval of the Arrangement;
5. Amended and restated notice to trustee and Noteholders dated May 30, 2023, regarding events resulting in conversion rate adjustment;
6. Amended and restated arrangement agreement between Former LAC and Spinco dated June 14, 2023 detailing the Arrangement (the "Arrangement Agreement");
7. Circular;
8. News release dated June 26, 2023 announcing the filing of the Circular in connection with the Separation and the annual general and special meeting of LAC;
9. News release dated July 31, 2023 announcing shareholder approval of the Arrangement, among other things;
10. Notice to trustee and Noteholders dated August 18, 2023 of event triggering right to convert;
11. News release dated September 28 announcing the expected effective date of the Arrangement and other matters;
12. Amended Notice to trustee and Noteholders dated October 2, 2023;
13. Notice of Make-Whole Fundamental Change to Noteholders dated October 3, 2023; and
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14. News release dated October 3, 2023 with respect to the closing of the Arrangement.
The following documents describing the Arrangement were filed on SEDAR+ and are available under Lithium Americas (Newco)'s profile at www.sedarplus.ca:
1. Arrangement Agreement; and
2. News release dated October 3, 2023 with respect to the closing of the Arrangement.
Dated: October 3, 2023
LITHIUM AMERICAS (ARGENTINA) CORP.
SECOND AMENDED AND RESTATED EQUITY INCENTIVE PLAN
(as amended by the Board on May 15, 2023)
PART 1
PURPOSE
1.1 Purpose
The purpose of this Plan is to secure for the Company and its shareholders the benefits inherent in share ownership by the employees and directors of the Company and its affiliates who, in the judgment of the Board, will be largely responsible for its future growth and success. It is generally recognized that equity incentive plans of the nature provided for herein aid in retaining and encouraging employees and directors of exceptional ability because of the opportunity offered them to acquire a proprietary interest in the Company.
1.2 Available Awards
Awards that may be granted under this Plan include:
(a) Options;
(b) Deferred Share Units; and
(c) Restricted Share Rights (time based or in the form of Performance Share Units).
PART 2
INTERPRETATION
2.1 Definitions
(a) "Affiliate" has the meaning set forth in the BCA.
(b) "Arrangement Deferred Share Units" means Deferred Share Units issued as part of the Plan of Arrangement in partial exchange for Outstanding Deferred Share Units.
(c) "Arrangement Departing Participant" has such meaning ascribed thereto in Section 9.2 of this Plan.
(d) "Arrangement Effective Date" means the Effective Date as such term is defined in the Plan of Arrangement.
(e) "Arrangement Effective Time" means the Effective Time as such term is defined in the Plan of Arrangement.
(f) "Arrangement Restricted Share Rights" means Restricted Share Rights issued as part of the Plan of Arrangement in partial exchange for Outstanding Restricted Share Rights.
(g) "Award" means any right granted under this Plan, including Options, Restricted Share Rights and Deferred Share Units.
(h) "BCA" means the Business Corporations Act (British Columbia).
(i) "Blackout Period" means a period in which the trading of Shares or other securities of the Company is restricted under the Company's Corporate Disclosure, Confidentiality and Securities Trading Policy, or under any similar policy of the Company then in effect.
(j) "Board" means the board of directors of the Company.
(k) "Cashless Surrender Right" has the meaning set forth in Section 3.5 of this Plan.
(l) "CEO" means the Chief Executive Officer of the Company.
(m) "Change of Control" means, for greater certainty except for any transaction under the Plan of Arrangement, the occurrence and completion of any one or more of the following events:
(A) the Company shall not be the surviving entity in a merger, amalgamation or other reorganization (or survives only as a subsidiary of an entity other than a previously wholly-owned subsidiary of the Company);
(B) the Company shall sell or otherwise transfer, including by way of the grant of a leasehold interest or joint venture interest (or one or more subsidiaries of the Company shall sell or otherwise transfer, including without limitation by way of the grant of a leasehold interest or joint venture interest) property or assets (i) aggregating more than 50% of the consolidated assets (measured by either book value or fair market value) of the Company and its subsidiaries as at the end of the most recently completed financial year of the Company or (ii) which during the most recently completed financial year of the Company generated, or during the then current financial year of the Company are expected to generate, more than 50% of the consolidated operating income or cash flow of the Company and its subsidiaries, to any other person or persons (other than one or more Designated Affiliates of the Company), in which case the Change of Control shall be deemed to occur on the date of transfer of the assets representing one dollar more than 50% of the consolidated assets in the case of clause (i) or 50% of the consolidated operating income or cash flow in the case of clause (ii), as the case may be;
(C) the Company is to be dissolved and liquidated;
(D) any person, entity or group of persons or entities acting jointly or in concert acquires or gains ownership or control (including, without limitation, the power to vote) more than 50% of the Company's outstanding voting securities; or
(E) as a result of or in connection with: (i) the contested election of directors, or; (ii) a consolidation, merger, amalgamation, arrangement or other reorganization or acquisitions involving the Company or any of its Affiliates and another corporation or other entity in office immediately preceding such election or appointment, the nominees named in the most recent management information circular of the Company for election to the Board shall not constitute a majority of the Board (unless in the case of (ii) such election or appointment is approved by 50% or more of the Board prior to the completion of such transaction).
For the purposes of the foregoing, "voting securities" means Shares and any other shares entitled to vote for the election of directors and shall include any securities, whether or not issued by the Company, which are not shares entitled to vote for the election of directors but are convertible into or exchangeable for shares which are entitled to vote for the election of directors, including any options or rights to purchase such shares or securities.
(n) "Code" means the United States Internal Revenue Code of 1986, as amended, and any applicable United States Treasury Regulations and other binding guidance thereunder.
(o) "Committee" has the meaning attributed thereto in Section 8.1.
(p) "Company" means Lithium Americas Corp. (and from and after the completion of the Plan of Arrangement the same corporation as renamed pursuant to the Plan of Arrangement, if applicable), a company existing under the BCA and its successors.
(q) "Deferred Payment Date" for a Participant means the date after the Restricted Period which is the earlier of (i) the date which the Participant has elected to defer receipt of Shares underlying the Restricted Share Rights in accordance with Section 4.4 of this Plan; and (ii) the Participant's Separation Date.
(r) "Deferred Share Unit" means the agreement by the Company to pay, and the right of the Participant to receive, a Deferred Share Unit Payment for each Deferred Share Unit held, evidenced by way of book-keeping entry in the books of the Company and administered pursuant to this Plan.
(s) "Deferred Share Unit Grant Letter" has the meaning ascribed thereto in Section 5.2 of this Plan.
(t) "Deferred Share Unit Payment" means, subject to any adjustment in accordance with Section 5.5 of this Plan, the issuance to a Participant of one previously unissued Share for each whole Deferred Share Unit credited to such Participant.
(u) "Delegated Options" has the meaning ascribed thereto in Section 3.3 of this Plan.
(v) "Designated Affiliate" means affiliates of the Company designated by the Committee from time to time for purposes of this Plan.
(w) "Director Retirement" in respect of a Participant, means the Participant ceasing to hold any directorships with the Company, any Designated Affiliate and any entity related to the Company for purposes of the Income Tax Act (Canada) after attaining a stipulated age in accordance with the Company's normal retirement policy, or earlier with the Company's consent.
(x) "Director Separation Date" means the date that a Participant ceases to hold any directorships with the Company and any Designated Affiliate due to a Director Retirement or Director Termination and also ceases to serve as an employee or consultant with the Company, any Designated Affiliate and any entity related to the Company for the purposes of the Income Tax Act (Canada).
(y) "Director Termination" means the removal of, resignation or failure to re-elect the Eligible Director (excluding a Director Retirement) as a director of the Company, a Designated Affiliate and any entity related to the Company for purposes of the Income Tax Act (Canada).
(z) "Eligible Directors" means the directors of the Company or any Designated Affiliate who are, as such, eligible for participation in this Plan.
(aa) "Eligible Employees" means employees (including employees who are officers and directors) of the Company or any Designated Affiliate thereof, whether or not they have a written employment contract with Company, determined by the Committee as employees eligible for participation in this Plan. Eligible Employees shall include Service Providers eligible for participation in this Plan as determined by the Committee.
(bb) "Fair Market Value" means, with respect to a Share subject to an Award, the volume weighted average price of the Shares on the New York Stock Exchange (or the Toronto Stock Exchange if the Company is not then listed on the New York Stock Exchange) for the five (5) days on which Shares were traded immediately preceding the date in respect of which Fair Market Value is to be determined or, if the Shares are not, as at that date listed on the New York Stock Exchange or the Toronto Stock Exchange, on such other exchange or exchanges on which the Shares are listed on that date. If the Shares are not listed and posted for trading on an exchange on such day, the Fair Market Value shall be such price per Share as the Board, acting in good faith, may determine.
(cc) "Form S-8" means the Form S-8 registration statement promulgated under the U.S. Securities Act.
(dd) "Good Reason" in respect of an employee or officer of the Company or any of its Affiliates, means a material adverse change imposed by the Company or an Affiliate (as the case may be), without the consent of such employee or officer, as applicable, in position, responsibilities, salary, benefits, perquisites, as they exist immediately prior to the Change of Control, or a material diminution of title imposed by the Company or the Affiliate (as the case may be), as it exists immediately prior to the Change of Control, and includes other events defined as "Good Reason" under any employment agreement of such employee or officer with the Company or its Affiliate.
(ee) "Insider" has the meaning set out in the TSX Company Manual.
(ff) "Option" means an option to purchase Shares granted under the terms of this Plan.
(gg) "Option Period" means the period during which an Option is outstanding.
(hh) "Option Shares" has the meaning set forth in Section 3.5 of this Plan.
(ii) "Optionee" means an Eligible Employee or Eligible Director to whom an Option has been granted under the terms of this Plan.
(jj) "Outstanding Deferred Share Units" means Deferred Share Units outstanding immediately prior to the Arrangement Effective Time which, as part of the Plan of Arrangement, were exchanged for Arrangement Deferred Share Units and cancelled.
(kk) "Outstanding Restricted Share Rights" means Restricted Share Rights outstanding immediately prior to the Arrangement Effective Time which, as part of the Plan of Arrangement, were exchanged for Arrangement Restricted Share Rights and cancelled.
(ll) "Participant" means an Eligible Employee or Eligible Director who participates in this Plan.
(mm) "Performance Share Units" means Restricted Share Rights that are subject to performance conditions and/or multipliers and designated as such in accordance with Section 4.1 of this Plan.
(nn) "Plan" means this second amended and restated equity incentive plan, as it may be further amended and restated from time to time.
(oo) "Plan of Arrangement" means the plan of arrangement proposed under section 288 of the BCA which has become effective in accordance with the terms of an amended and restated arrangement agreement between the Company and Spinco dated June 14, 2023.
(pp) "Restricted Period" means any period of time that a Restricted Share Right is not vested and the Participant holding such Restricted Share Right remains ineligible to receive the relevant Shares, determined by the Board in its absolute discretion, however, such period of time may be reduced or eliminated from time to time and at any time and for any reason as determined by the Board, including, but not limited to, circumstances involving death or disability of a Participant.
(qq) "Restricted Share Right" or "Restricted Share Units" has such meaning as ascribed to such term at Section 4.1 of this Plan.
(rr) "Restricted Share Right Grant Letter" has the meaning ascribed to such term in Section 4.2 of this Plan.
(ss) "Retirement" in respect of an Eligible Employee, means the Eligible Employee ceasing to hold any employment with the Company or any Designated Affiliate after attaining a stipulated age in accordance with the Company's normal retirement policy, or earlier with the Company's consent.
(tt) "Separation Date" means the date that a Participant ceases to be an Eligible Director or Eligible Employee.
(uu) "Service Provider" means any person or company engaged by the Company or a Designated Affiliate to provide services for an initial, renewable or extended period of 12 months or more and that complies with the definition of "consultant" or "advisor" as set forth in Form S-8.
(vv) "Shares" means the common shares of the Company.
(ww) "Specified Employee" means a U.S. Taxpayer who meets the definition of "specified employee", as defined in Section 409A(a)(2)(B)(i) of the Internal Revenue Code.
(xx) "Spinco" means, prior to the completion of the Plan of Arrangement, 1397468 B.C. Ltd. (and from and after the completion of the Plan of Arrangement the same corporation as renamed pursuant to the Plan of Arrangement), a corporation incorporated under the BCA and its successors.
(yy) "Spinco Designated Affiliate" means affiliates of Spinco designated by the board of directors of Spinco or the committee of the board of directors of Spinco authorized to administer the Spinco Equity Incentive Plan in accordance with its terms.
(zz) "Spinco Equity Incentive Plan" has the meaning ascribed thereto in the Plan of Arrangement.
(aaa) "Spinco Service Provider" has such meaning as ascribed to such term at Section 9.2 of this Plan.
(bbb) "Termination" means the termination of the employment (or consulting services) of an Eligible Employee with or without cause by the Company or a Designated Affiliate or the cessation of employment (or consulting services) of the Eligible Employee with the Company or a Designated Affiliate as a result of resignation or otherwise, other than the Retirement of the Eligible Employee.
(ccc) "Triggering Event" means (i) in the case of a director of the Company, the Director Termination of such director; (ii) in the case of an employee of the Company or any of its Affiliates, the termination of the employment of the employee without cause, as the context requires by the Company or the Affiliate or in the case of an officer of the Company or any of its Affiliates, the removal of or failure to re-elect or re-appoint the individual without cause as an officer of the Company or an Affiliate thereof; (iii) in the case of an employee or an officer of the Company or any of its Affiliates, his or her resignation following the occurrence of a Good Reason; (iv) in the case of a Service Provider, the termination of the services of the Service Provider by the Company or any of its Affiliates.
(ddd) "U.S. Securities Act" means the United States Securities Act of 1933, as amended.
(eee) "US Taxpayer" means a Participant who is a US citizen, US permanent resident or other person who is subject to taxation on their income under the United States Internal Revenue Code of 1986.
2.2 Interpretation
(a) This Plan is created under and is to be governed, construed and administered in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein.
(b) Whenever the Board or Committee is to exercise discretion in the administration of the terms and conditions of this Plan, the term "discretion" means the sole and absolute discretion of the Board or Committee.
(c) As used herein, the terms "Part" or "Section" mean and refer to the specified Part or Section of this Plan, respectively.
(d) Where the word "including" or "includes" is used in this Plan, it means "including (or includes) without limitation".
(e) Words importing the singular include the plural and vice versa and words importing any gender include any other gender.
(f) Unless otherwise specified, all references to money amounts are to Canadian dollars.
PART 3
STOCK OPTIONS
3.1 Participation
The Company may from time to time grant Options to Participants pursuant to this Plan.
3.2 Price
The exercise price per Share of any Option shall be not less than one hundred per cent (100%) of the Fair Market Value of the Share on the date of grant.
3.3 Grant of Options
The Board, on the recommendation of the Committee, may at any time authorize the granting of Options to such Participants as it may select for the number of Shares that it shall designate, subject to the provisions of this Plan. The Board may also, by way of Board resolution, delegate to the CEO the authority to grant any of a designated number of Options (such number to be specified by the Board in the aforementioned resolution) to Eligible Employees, other than Eligible Employees who are officers or directors of the Company (such Options, the "Delegated Options"). The date of grant of an Option shall be (i) the date such grant was approved by the Committee for recommendation to the Board, provided the Board approves such grant; or (ii) for a grant of an Option not approved by the Committee for recommendation to the Board, the date such grant was approved by the Board; or (iii) in respect of Delegated Options, the date such grant is made by the CEO. Notwithstanding the foregoing, the Board may authorize the grant of Options at any time with such grant to be effective at a later date and the corresponding determination of the exercise price to be done at such date to accommodate any Blackout Period or such other circumstances where such delayed grant is deemed appropriate, and the date of grant of such Options shall then be the effective date of the grant.
Each Option granted to a Participant shall be evidenced by a stock option grant letter or agreement with terms and conditions consistent with this Plan and as approved by the Board on the recommendation of the Committee, or, in respect of Delegated Options, by the CEO (and in all cases which terms and conditions need not be the same in each case and may be changed from time to time, subject to Section 7.8 of this Plan, and the approval of any material changes by the Toronto Stock Exchange or such other exchange or exchanges on which the Shares are then traded).
3.4 Terms of Options
The Option Period shall be five (5) years from the date such Option is granted, or such greater or lesser duration as the Board, on the recommendation of the Committee, or in the case of Delegated Options, the CEO, may determine at the date of grant, and may thereafter be reduced with respect to any such Option as provided in Section 3.6 hereof covering termination of employment or death of the Optionee; provided, however, that at any time the expiry date of the Option Period in respect of any outstanding Option under this Plan should be determined to occur either during a Blackout Period or within ten (10) business days following the expiry of the Blackout Period, the expiry date of such Option Period shall be deemed to be the date that is the tenth (10th) business day following the expiry of the Blackout Period.
Unless otherwise determined from time to time by the Board, on the recommendation of the Committee, or, in respect of Delegated Options, by the CEO, Options shall vest and may be exercised (in each case to the nearest full Share) during the Option Period as follows:
(a) at any time during the first six (6) months of the Option Period, the Optionee may purchase up to 25% of the total number of Shares reserved for issuance pursuant to his or her Option; and
(b) at any time during each additional six (6) month period of the Option Period the Optionee may purchase an additional 25% of the total number of Shares reserved for issuance pursuant to his or her Option plus any Shares not purchased in accordance with the preceding subsection (a) and this subsection (b) until, after the 18th month of the Option Period, 100% of the Option will be exercisable.
Except as set forth in Section 3.6, no Option may be exercised unless the Optionee is at the time of such exercise:
(a) in the case of an Eligible Employee, in the employ (or retained as a Service Provider) of the Company or a Designated Affiliate and shall have been continuously so employed or retained since the grant of the Option; or
(b) in the case of an Eligible Director, a director of the Company or a Designated Affiliate and shall have been such a director continuously since the grant of the Option.
The exercise of any Option will be contingent upon the Optionee having entered into an Option agreement with the Company on such terms and conditions as have been approved by the Board, on the recommendation of the Committee, or, in respect of the Delegated Options, by the CEO, and which in any case incorporates by reference the terms of this Plan. The exercise of any Option will, subject to Section 3.5, also be contingent upon receipt by the Company of cash payment of the full purchase price of the Shares being purchased.
3.5 Cashless Surrender Right
Participants have the right (the "Cashless Surrender Right"), in lieu of the right to exercise an Option, to surrender such Option in whole or in part by notice in writing delivered by the Participant to the Company electing to exercise the Cashless Surrender Right, and, in lieu of receiving the full number of Shares (the "Option Shares") to which such surrendered Option (or portion thereof) relates, to receive the number of Shares, disregarding fractions, which is equal to the quotient obtained by:
(a) subtracting the applicable Option exercise price per Share from the Fair Market Value per Share on the business day immediately prior to the exercise of the Cashless Surrender Right and multiplying the remainder by the number of Option Shares; and
(b) dividing the product obtained under subsection 3.5(a) by the Fair Market Value per Share on the business day immediately prior to the exercise of the Cashless Surrender Right.
If a Participant exercises a Cashless Surrender Right in connection with an Option, it is exercisable only to the extent and on the same conditions that the related Option is exercisable under this Plan.
3.6 Effect of Termination of Employment or Death
If an Optionee:
(a) dies while employed by a Service Provider to, or while a director of, the Company or a Designated Affiliate, any Option held by him or her at the date of death shall become exercisable in whole or in part, but only by the person or persons to whom the Optionee's rights under the Option shall pass by the Optionee's will or applicable laws of descent and distribution. Unless otherwise determined by the Board, on the recommendation of the Committee, all such Options shall be exercisable only to the extent that the Optionee was entitled to exercise the Option at the date of his or her death and only for 12 months after the date of death or prior to the expiration of the Option Period in respect thereof, whichever is sooner; and
(b) ceases to be employed by a Service Provider to, or act as a director of, the Company or a Designated Affiliate for cause, no Option held by such Optionee will, unless otherwise determined by the Board, on the recommendation of the Committee, be exercisable following the date on which such Optionee ceases to be so engaged. If an Optionee ceases to be employed by, a Service Provider to, or act as a director of, the Company or a Designated Affiliate for any reason other than cause then, unless otherwise determined by the Board, on the recommendation of the Committee, any Option held by such Optionee at the effective date thereof shall become exercisable for a period of up to 12 months thereafter or prior to the expiration of the Option Period in respect thereof, whichever is sooner.
3.7 Effect of Change of Control
If a Triggering Event occurs within the 12-month period immediately following a Change of Control pursuant to the provisions of Section 2.1(m)(A), (B), (D) or (E), all outstanding Options shall vest immediately and become exercisable on the date of such Triggering Event.
In the event of a Change of Control pursuant to the provisions of Section 2.1(m)(C), all Options outstanding shall immediately vest and become exercisable on the date of such Change of Control.
The provisions of this Section 3.7 shall be subject to the terms of any employment agreement between the Participant and the Company.
3.8 Effect of Amalgamation or Merger
Subject to Section 3.7, if the Company amalgamates or otherwise completes a plan of arrangement or merges with or into another corporation, any Shares receivable on the exercise of an Option shall be converted into the securities, property or cash which the Participant would have received upon such amalgamation, arrangement or merger if the Participant had exercised his or her Option immediately prior to the record date applicable to such amalgamation, arrangement or merger, and the option price shall be adjusted appropriately by the Board and such adjustment shall be binding for all purposes of this Plan.
PART 4
RESTRICTED SHARE RIGHTS AND PERFORMANCE SHARE UNITS
4.1 Participants
The Board has the right to grant, in its sole and absolute discretion, to any Participant, rights to receive any number of fully paid and non-assessable Shares ("Restricted Share Rights" or "Restricted Share Units") as a discretionary payment in consideration of past services to the Company or as an incentive for future services, subject to this Plan and with such additional provisions and restrictions as the Board may determine. Restricted Share Rights may be granted subject to performance conditions and/or performance multipliers, in which case such Restricted Share Rights may be designated as "Performance Share Units".
4.2 Restricted Share Right Grant Letter
Each grant of a Restricted Share Right under this Plan shall be evidenced by a grant letter or agreement (a "Restricted Share Right Grant Letter") issued to the Participant by the Company. Such Restricted Share Right Grant Letter shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions which are not inconsistent with this Plan and which the Board, on the recommendation of the Committee, deems appropriate for inclusion in a Restricted Share Right Grant Letter. The provisions of the various Restricted Share Right Grant Letters issued under this Plan need not be identical.
4.3 Restricted Period
Concurrent with the determination to grant Restricted Share Rights to a Participant, the Board, on the recommendation of the Committee, shall determine the Restricted Period and vesting requirements applicable to such Restricted Share Rights. Vesting of a Restricted Share Right shall be determined at the sole discretion of the Board at the time of grant and shall be specified in the Restricted Share Right Grant Letter. Vesting requirements may be based upon the continued employment or other service of a Participant, and/or to performance conditions to be achieved by the Company or a class of Participants or by a particular Participant on an individual basis, within a Restricted Period, for such Restricted Share Rights to entitle the holder thereof to receive the underlying Shares (and the number of underlying Shares that may be received may be subject to performance multipliers). Upon expiry of the applicable Restricted Period (or on the Deferred Payment Date, as applicable), a Restricted Share Right shall be automatically settled, and without the payment of additional consideration or any other further action on the part of the holder of the Restricted Share Right, the underlying Shares shall be issued to the holder of such Restricted Share Rights, which Restricted Share Rights shall then be cancelled.
4.4 Deferred Payment Date
Participants who are residents of Canada for the purposes of the Income Tax Act (Canada), or who are residents of Argentina, and not, in either case, a US Taxpayer, may elect to defer to receive all or any part of the Shares underlying Restricted Share Rights until one or more Deferred Payment Dates. Any other Participants may not elect a Deferred Payment Date.
4.5 Prior Notice of Deferred Payment Date
Participants who elect to set a Deferred Payment Date must, in respect of each such Deferred Payment Date, give the Company written notice of the Deferred Payment Date(s) not later than thirty (30) days prior to the expiration of the applicable Restricted Period. For certainty, Participants shall not be permitted to give any such notice after the day which is thirty (30) days prior to the expiration of the Restricted Period and a notice once given may not be changed or revoked. For the avoidance of doubt, the foregoing shall not prevent a Participant from electing an additional Deferred Payment Date, provided, however that notice of such election is given by the Participant to the Company not later than thirty (30) days prior to the expiration of the subject Restricted Period.
4.6 Retirement or Termination during Restricted Period
Subject to the terms of any employment agreement or Award agreement between the Company and the Participant, in the event and to the extent of the Retirement or Termination and/or, as applicable, the Director Retirement or Director Termination of a Participant from all such roles with the Company during the Restricted Period, any Restricted Share Rights held by the Participant shall immediately terminate and be of no further force or effect; provided, however, that the Board shall have the absolute discretion to modify the Restricted Share Rights, including to provide that the Restricted Period shall terminate immediately prior to the date of such occurrence or allow the Restricted Share Rights to continue in accordance with their original Restricted Periods.
4.7 Retirement or Termination after Restricted Period
In the event and to the extent of the Retirement or Termination and/or, as applicable, the Director Retirement or Director Termination of the Participant from all such roles with the Company following the Restricted Period and prior to a Deferred Payment Date, the Participant shall be entitled to receive, and the Company shall issue forthwith, Shares in satisfaction of the Restricted Share Rights then held by the Participant.
4.8 Death or Disability of Participant
In the event of the death or total disability of a Participant, any Shares represented by Restricted Share Rights held by the Participant shall be immediately issued by the Company to the Participant or legal representative of the Participant.
4.9 Payment of Dividends
Subject to the absolute discretion of the Board, in the event that a dividend (other than a stock dividend) is declared and paid by the Company on the Shares, a Participant may be credited with additional Restricted Share Rights. The number of such additional Restricted Share Rights, if any, will be calculated by dividing (a) the total amount of the dividends that would have been paid to the Participant if the Restricted Share Rights (including Restricted Share Rights in which the Restricted Period has expired but the Shares have not been issued due to a Deferred Payment Date) in the Participant's account on the dividend record date had been outstanding Shares (and the Participant held no other Shares) by (b) the Fair Market Value of the Shares on the date on which such dividends were paid. If the foregoing results in a fractional Restricted Share Right, the fraction shall be disregarded. Any additional Restricted Share Rights awarded pursuant to this Section will be subject to the same terms, including the time of settlement, as the Restricted Share Rights to which they relate.
4.10 Change of Control
If a Triggering Event occurs within the 12-month period immediately following a Change of Control pursuant to the provisions of Section 2.1(m)(A), (B), (D) or (E), all outstanding Restricted Share Right Rights shall vest immediately and be settled by the issuance of Shares notwithstanding the Restricted Period and any Deferred Payment Date.
In the event of a Change of Control pursuant to the provisions of Section 2.1(m)(C), all Restricted Shares Rights outstanding shall immediately vest and be settled by the issuance of Shares notwithstanding the Restricted Period and any Deferred Payment Date.
Notwithstanding any provision of this Plan, in the event of a Change of Control, all Arrangement Restricted Share Rights outstanding held by Arrangement Departing Participants shall vest immediately and be settled by the issuance of Shares notwithstanding the Restricted Period and any Deferred Payment Date.
The provisions of this Section 4.10 shall be subject to the terms of any employment agreement between the Participant and the Company.
4.11 Settlement Basis for Performance Share Units
In respect of Performance Share Units that are accelerated as a result of a Change of Control or the total disability or death of a Participant, unless the Board determines otherwise and subject to any employment agreement or Award agreement between the Company and the Participant, (i) in respect of any performance measurement periods that are completed on or prior to the Change of Control, total disability or death of a Participant, the proportion of Performance Share Units equivalent to the performance measurement periods completed shall be settled by applying a performance multiplier calculated based on the actual performance in respect to such completed periods, and (ii) in respect of any performance measurement periods that are not completed on or prior to the Change of Control, total disability or death of a Participant, the equivalent proportion of Performance Share Units in respect to such periods shall be settled by applying a performance multiplier of one Share for each Performance Share Unit.
PART 5
DEFERRED SHARE UNITS
5.1 Deferred Share Unit Grants
The Board may from time to time determine to grant Deferred Share Units to one or more Eligible Directors in a lump sum amount or on regular intervals, based on such formulas or criteria as the Board may from time to time determine. Deferred Share Units will be credited to the Eligible Director's account when designated by the Board.
5.2 Deferred Share Unit Grant Letter
Each grant of a Deferred Share Unit under this Plan shall be evidenced by a grant letter or agreement (a "Deferred Share Unit Grant Letter") issued to the Eligible Director by the Company. Such Deferred Share Unit Grant Letter shall be subject to all applicable terms and conditions of this Plan and may be subject to any other terms and conditions which are not inconsistent with this Plan and which the Board deems appropriate for inclusion in a Deferred Share Unit Grant Letter. The provisions of Deferred Share Unit Grant Letters issued under this Plan need not be identical.
5.3 Redemption of Deferred Share Units and Issuance of Deferred Shares
The Deferred Share Units held by each Eligible Director who is not a US Taxpayer shall be redeemed automatically and with no further action by the Eligible Director on the 20th business day following the Separation Date for that Eligible Director. For US Taxpayers, Deferred Share Units held by an Eligible Director who is a Specified Employee will be automatically redeemed with no further action by the Eligible Director on the date that is six (6) months following the Separation Date for the Eligible Director, or if earlier, upon such Eligible Director's death. Upon redemption, the former Eligible Director shall be entitled to receive and the Company shall issue, subject to the limitations set forth in Section 7.1 of this Plan, the number of Shares issued from treasury equal to the number of Deferred Share Units in the Eligible Director's account, subject to any applicable deductions and withholdings. In the event a Separation Date occurs during a year and Deferred Share Units have been granted to such Eligible Director for that entire year, the Eligible Director will only be entitled to a pro-rated Deferred Share Unit Payment in respect of such Deferred Share Units based on the number of days that he or she was an Eligible Director in such year.
No amount will be paid to, or in respect of, an Eligible Director under this Plan or pursuant to any other arrangement, and no other additional Deferred Share Units will be granted to compensate for a downward fluctuation in the value of the Shares of the Company nor will any other benefit be conferred upon, or in respect of, an Eligible Director for such purpose.
5.4 Death of Participant
In the event of the death of an Eligible Director, the Deferred Share Units shall be redeemed automatically and with no further action on the 20th business day following the death of an Eligible Director.
5.5 Payment of Dividends
Subject to the absolute discretion of the Board, in the event that a dividend (other than a stock dividend) is declared and paid by the Company on the Shares, an Eligible Director may be credited with additional Deferred Share Units. The number of such additional Deferred Share Units, if any, will be calculated by dividing (a) the total amount of the dividends that would have been paid to the Eligible Director if the Deferred Share Units in the Eligible Director's account on the dividend record date had been outstanding Shares (and the Eligible Director held no other Shares), by (b) the Fair Market Value of the Shares on the date on which such dividends were paid. If the foregoing results in a fractional Deferred Share Unit, the fraction shall be disregarded. Any additional Deferred Share Units awarded pursuant to this Section will be subject to the same terms, including the time of settlement, as the Deferred Share Units to which they relate.
PART 6
WITHHOLDING TAXES
6.1 Withholding Taxes
The Company or any Designated Affiliate may take such steps as are considered necessary or appropriate for the withholding of any taxes or other amounts which the Company or any Designated Affiliate is required by any law or regulation of any governmental authority whatsoever to withhold in connection with any Award including, without limiting the generality of the foregoing, the withholding of all or any portion of any payment or the withholding of the issue of any Shares to be issued under this Plan, until such time as the Participant has paid the Company or any Designated Affiliate for any amount which the Company or Designated Affiliate is required to withhold by law with respect to such taxes or other amounts. Without limitation to the foregoing, the Board may adopt administrative rules under this Plan, which provide for the automatic sale of Shares (or a portion thereof) in the market upon the issuance of such Shares under this Plan on behalf of the Participant to satisfy withholding obligations under an Award.
PART 7
GENERAL
7.1 Number of Shares
The aggregate number of Shares that may be issued under this Plan (together with any other securities-based compensation arrangements of the Company in effect from time to time) shall not exceed 14,400,737 Shares, such Shares to be allocated among Awards and Participants in amounts and at such times as may be determined by the Board from time to time. In addition, the aggregate number of Shares that may be issued and issuable under this Plan (when combined with all of the Company's other security-based compensation arrangements, as applicable),
(a) to Insiders shall not exceed 10% of the Company's outstanding issue from time to time;
(b) to Insiders within any one-year period shall not exceed 10% of the Company's outstanding issue from time to time; and
(c) to any one Insider and his or her associates or Affiliates within any one-year period shall not exceed 5% of the Company's outstanding issue from time to time.
In no event will the number of Shares that may be issued to any one Participant pursuant to Awards under this Plan (when combined with all of the Company's other security-based compensation arrangement, as applicable) exceed 5% of the Company's outstanding issue from time to time.
The aggregate number of Options that may be granted under this Plan to any one non-employee director of the Company within any one-year period shall not exceed a maximum value of C$100,000 worth of securities, and together with any Restricted Share Rights and Deferred Share Units granted under this Plan and any securities granted under all other securities-based compensation arrangements, such aggregate value shall not exceed C$150,000 in any on-year period. The calculation of this limitation shall not include however: (i) the initial securities granted under securities-based compensation arrangements to a person who was not previously a director of the Company, upon such person becoming or agreeing to become a director of the Company (however, the aggregate number of securities granted under all securities-based compensation arrangements in this initial grant to any one non-employee director shall not exceed the foregoing maximum values of securities); (ii) the securities granted under securities-based compensation arrangements to a director of the Company who was also an officer of the Company at the time of grant but who subsequently became a non-employee director; and (iii) any securities granted to a non-employee director that is granted in lieu of any director cash fee provided the value of the security awarded has the same value as the cash fee given up in exchange for such security. For greater clarity, in this Plan, securities-based compensation arrangements include securities issued under this Plan and any other compensation arrangements implemented by the Company including stock options, other stock option plans, employee stock purchase plans, stock appreciation right plans, deferred share unit plans, performance share unit plans, restricted share unit plans or any other compensation or incentive mechanism involving the issuance or potential issuance of Shares from treasury, but excludes any compensation arrangement that does not involve the issuance of Shares from treasury and any other compensation arrangements assumed or inherited by the Company in connection with the acquisition of another entity.
For the purposes of this Section 7.1, "outstanding issue" means the total number of Shares, on a non-diluted basis, that are issued and outstanding immediately prior to the date that any Shares are issued or reserved for issuance pursuant to an Award.
For greater clarity, the issuance of Arrangement Restricted Share Rights and Arrangement Deferred Share Units shall not be treated as a new grant of Restricted Share Rights and Deferred Share Units, respectively.
7.2 Lapsed Awards
If Awards are surrendered, terminated or expire without being exercised in whole or in part, new Awards may be granted covering the Shares not issued under such lapsed Awards, subject to any restrictions that may be imposed by the Toronto Stock Exchange.
7.3 Adjustment in Shares Subject to this Plan
If there is any change in the Shares through the declaration of stock dividends of Shares, through any consolidations, subdivisions or reclassification of Shares, or otherwise, the number of Shares available under this Plan, the Shares subject to any Award, and the exercise price of any Option shall be adjusted as determined to be appropriate by the Board, and such adjustment shall be effective and binding for all purposes of this Plan.
7.4 Transferability
Any Awards accruing to any Participant in accordance with the terms and conditions of this Plan shall not be transferable unless specifically provided herein. During the lifetime of a Participant all Awards may only be exercised by the Participant. Awards are non-transferable except by will or by the laws of descent and distribution.
7.5 Employment
Nothing contained in this Plan shall confer upon any Participant any right with respect to employment or continuance of employment with the Company or any Affiliate, or interfere in any way with the right of the Company or any Affiliate to terminate the Participant's employment at any time. Participation in this Plan by a Participant is voluntary.
7.6 Record Keeping
The Company shall maintain a register in which shall be recorded:
(a) the name and address of each Participant;
(b) the number of Awards granted to each Participant and relevant details regarding such Awards; and
(c) such other information as the Board may determine.
7.7 Necessary Approvals
This second amended and restated equity incentive plan of the Corporation continues to be in effect. The amendments adopted by the Board on May 15, 2023 shall become effective on such date, except for Part 9 which shall become effective on the Arrangement Effective Date as contemplated in the Plan of Arrangement, subject in all cases to the approval of (a) the Toronto Stock Exchange and (b) the New York Stock Exchange.
7.8 Amendments to Plan
The Board shall have the power to, at any time and from time to time, either prospectively or retrospectively, amend, suspend or terminate this Plan or any Award granted under this Plan without shareholder approval, including, without limiting the generality of the foregoing: changes of a clerical or grammatical nature, changes regarding the persons eligible to participate in this Plan, changes to the exercise price, vesting, term and termination provisions of the Award, changes to the Cashless Surrender Right provisions, changes to the authority and role of the Board under this Plan, and any other matter relating to this Plan and the Awards that may be granted hereunder, provided however that:
(a) such amendment, suspension or termination is in accordance with applicable laws and the rules of any stock exchange on which the Shares are listed;
(b) no amendment to this Plan or to an Award granted hereunder will have the effect of impairing, derogating from or otherwise adversely affecting the terms of an Award which is outstanding at the time of such amendment without the written consent of the holder of such Award;
(c) the expiry date of an Option Period in respect of an Option shall not be more than ten (10) years from the date of grant of an Option except as expressly provided in Section 3.4;
(d) the Directors shall obtain shareholder approval of:
(i) any amendment to the number of Shares specified in Section 7.1;
(ii) any amendment to the limitations on Shares that may be reserved for issuance, or issued, to Insiders, or remove participation limits on non-employee directors or increase the amounts of participation limits on non-employee directors;
(iii) any amendment that would reduce the exercise price of an outstanding Option other than pursuant to Section 7.3 or permits the cancellation and re-issuance of Options;
(iv) any amendment that would extend the expiry date of the Option Period in respect of any Option granted under this Plan except as expressly contemplated in Section 3.4;
(v) any amendment to permit Options to be transferred other than for normal estate settlement purposes; or
(vi) any amendment to reduce the range of amendments requiring shareholder approval contemplated in this Section.
If this Plan is terminated, the provisions of this Plan and any administrative guidelines and other rules and regulations adopted by the Board and in force on the date of termination will continue in effect as long as any Award or any rights pursuant thereto remain outstanding and, notwithstanding the termination of this Plan, the Board shall remain able to make such amendments to this Plan or the Award as they would have been entitled to make if this Plan were still in effect.
7.9 No Representation or Warranty
The Company makes no representation or warranty as to the future market value of any Shares issued in accordance with the provisions of this Plan.
7.10 Section 409A
It is intended that any payments under the Plan to US Taxpayers shall be exempt from or comply with Section 409A of the Code, and all provisions of the Plan shall be construed and interpreted in a manner consistent with the requirements for avoiding taxes and penalties under Section 409A of the Code.
7.11 Compliance with Applicable Law, etc.
If any provision of this Plan or any agreement entered into pursuant to this Plan contravenes any law or any order, policy, by-law or regulation of any regulatory body or stock exchange having authority over the Company or this Plan, then such provision shall be deemed to be amended to the extent required to bring such provision into compliance therewith.
All Awards and securities which may be acquired pursuant to the exercise of the Awards to be issued pursuant to the Plan will be issued pursuant to the registration requirements of the U.S. Securities Act and applicable state securities laws or an exemption or exclusion from such registration requirements.
7.12 Clawback and Recoupment
All Awards under this Plan shall be subject to forfeiture or other penalties pursuant to any Company clawback policy, as may be adopted or amended from time to time, and such forfeiture and/or penalty conditions or provisions as determined by the Committee.
7.13 Term of the Plan
This Plan shall remain in effect until it is terminated by the Board.
PART 8
ADMINISTRATION OF THIS PLAN
8.1 Administration by the Committee
(a) Unless otherwise determined by the Board, this Plan shall be administered by the Governance, Nomination, Compensation and Leadership Committee (the "Committee") or equivalent committee appointed by the Board and constituted in accordance with such Committee's charter.
(b) The Committee shall have the power, where consistent with the general purpose and intent of this Plan and subject to the specific provisions of this Plan, to:
(i) adopt and amend rules and regulations relating to the administration of this Plan and make all other determinations necessary or desirable for the administration of this Plan. The interpretation and construction of the provisions of this Plan and related agreements by the Committee shall be final and conclusive. The Committee may correct any defect or supply any omission or reconcile any inconsistency in this Plan or in any related agreement in the manner and to the extent it shall deem expedient to carry this Plan into effect and it shall be the sole and final judge of such expediency; and
(ii) otherwise exercise the powers delegated to the Committee by the Board and under this Plan as set forth herein.
8.2 Board Role
(a) The Board, on the recommendation of the Committee or of its own volition, shall determine and designate from time to time the individuals to whom Awards shall be made, the amounts of the Awards and the other terms and conditions of the Awards. The Board may delegate this authority as it sees fit, including as set forth in Section 3.3.
(b) The Board may delegate any of its responsibilities or powers under this Plan to (i) the Committee, or (ii) the CEO as set forth in Section 3.3.
(c) In the event the Committee or, in respect of the Delegated Options, the CEO, is unable or unwilling to act in respect of a matter involving this Plan, the Board shall fulfill the role of the Committee (or CEO, as the case may be) provided for herein.
PART 9
PLAN OF ARRANGEMENT
9.1 Plan of Arrangement
This second amended and restated equity incentive Plan has been amended to contemplate the Plan of Arrangement. To the extent applicable, it is intended that the Outstanding Restricted Share Rights and the Outstanding Deferred Share Units will be exchanged for Arrangement Restricted Share Rights and Arrangement Deferred Share Units, respectively, pursuant to the Plan of Arrangement on a tax-deferred basis under subsection 7(1.4) of the Income Tax Act (Canada).
9.2 Arrangement Restricted Share Rights
(a) For all purposes under the Plan, the date on which an Arrangement Restricted Share Right is granted for purposes of the Plan shall be deemed to be the date of the grant of the Outstanding Restricted Share Right for which such Arrangement Restricted Share Right was exchanged as part of the Plan of Arrangement and, except as set out herein or in the Plan of Arrangement and with such adjustments as the circumstances require, the Arrangement Restricted Share Right shall be deemed (unless otherwise determined by the Board) to have the same terms and conditions (including vesting and expiration) as the Outstanding Restricted Share Right for which such Arrangement Restricted Share Right was exchanged as part of the Plan of Arrangement.
(b) With respect to Arrangement Restricted Share Rights that replace Performance Share Units, all such Arrangement Restricted Share Rights shall (unless otherwise determined by the Board) be subject to the same time based vesting period as the Performance Share Unit they replace and upon vesting such Arrangement Restricted Share Rights shall be fully satisfied by the issuance of one Share (unless otherwise determined by the Board) irrespective of the applicable performance multiplier to which the Performance Share Unit was subject. Notwithstanding the foregoing, Arrangement Restricted Share Rights that replace Performance Share Units that were fully vested and outstanding prior to the Arrangement Effective Time may be settled by the Company in accordance with the performance multiplier applicable to the Performance Share Units replaced.
(c) In addition, notwithstanding anything contained herein to the contrary, in respect of each person that is a Participant immediately prior to the Arrangement Effective Time that, due to or in connection with the Arrangement, who ceases to be an Eligible Director or an Eligible Employee and becomes a director, officer or employee of Spinco or any Spinco Designated Affiliate, or provides ongoing services for Spinco or any Spinco Designated Affiliate and complies with the definition of "consultant" or "advisor" as set forth in Form S-8 (a "Spinco Service Provider") (each such director, officer, employee or Spinco Service Provider, an "Arrangement Departing Participant"), all Arrangement Restricted Share Rights (other than those issued pursuant to paragraph (b)) issued to such Arrangement Departing Participant that replace Outstanding Restricted Share Rights shall (unless otherwise determined by the Board) immediately vest and the underlying Shares shall be issued to the holder of such Arrangement Restricted Share Rights as soon as practicable by the Company following the Arrangement Effective Date (provided that the Company may establish a schedule for the settlement of Arrangement Restricted Share Rights to ensure the orderly sale of Shares in the markets to satisfy tax withholding obligations), which Arrangement Restricted Share Rights shall then be cancelled.
(d) With respect to Arrangement Restricted Share Rights issued to an Arrangement Departing Participant that are not immediately vested, upon such Arrangement Departing Participant ceasing to be a director, officer or employee of Spinco or any Spinco Designated Affiliates, or a Spinco Service Provider, as applicable, such Arrangement Departing Participant shall be treated for the purposes of this Plan as having ceased to be so employed with the Company and its Designated Affiliates and such Arrangement Departing Participant's Arrangement Restricted Share Rights shall be dealt with in accordance with Section 4.6 of this Plan.
9.3 Arrangement Deferred Share Units
(a) For all purposes under the Plan, the date on which an Arrangement Deferred Share Unit is granted for purposes of the Plan shall be deemed to be the date of the grant of the Outstanding Deferred Share Unit for which such Arrangement Deferred Share Unit was exchanged as part of the Plan of Arrangement and, except as set out herein or in the Plan of Arrangement and with such adjustments as the circumstances require, the Arrangement Deferred Share Unit shall be deemed (unless otherwise determined by the Board) to have the same terms and conditions (including vesting and expiration) as the Outstanding Deferred Share Unit for which such Arrangement Deferred Share Unit was exchanged as part of the Plan of Arrangement.
(b) Notwithstanding anything contained herein to the contrary, (unless otherwise determined by the Board) all Arrangement Deferred Share Units issued to Arrangement Departing Participants shall immediately vest and the underlying Shares shall be issued to the holder of such Arrangement Deferred Share Units as soon as practicable by the Company following the Arrangement Effective Date (provided that the Company may establish a schedule for the settlement of Arrangement Deferred Share Units to ensure the orderly sale of Shares in the markets to satisfy tax withholding obligations), which Arrangement Deferred Share Units shall then be cancelled.
Notice to Holders
LITHIUM AMERICAS (ARGENTINA) CORP.
1.75% Convertible Senior Notes due 2027
CUSIP Nos.: 53680QAA61
NOTE: THIS NOTICE CONTAINS IMPORTANT INFORMATION THAT IS OF INTEREST TO
THE REGISTERED AND BENEFICIAL OWNERS OF THE SUBJECT NOTES. IF
APPLICABLE, ALL DEPOSITORIES, CUSTODIANS, AND OTHER INTERMEDIARIES
RECEIVING THIS NOTICE ARE REQUESTED TO EXPEDITE RE-TRANSMITTAL TO
BENEFICIAL OWNERS OF THE NOTES IN A TIMELY MANNER.
Lithium Americas (Argentina) Corp. (formerly known as Lithium Americas Corp.) ("Corporation") is party to an Indenture dated December 6, 2021 (the "Indenture"), between the Company and Computershare Trust Company N.A., as trustee (the "Trustee"), pursuant to which the Company issued its 1.75% Convertible Senior Notes due 2027 (the "Notes"). Capitalized terms used herein but not otherwise defined shall have the respective meanings given such terms in the Indenture.
On October 3, 2023, the Company implemented by way of a plan of arrangement under the laws of British Columbia (the "Arrangement"), a reorganization resulting in the separation of its North American and Argentine business units into two independent public companies as follows:
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The Company became an Argentina focused lithium company owning the Company's interest in its Argentine lithium assets, including the near-production Caucharí-Olaroz lithium brine project in Jujuy, Argentina; and
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The Company created a new North America focused lithium company ("New LAC") owning the Thacker Pass lithium project in Humboldt County, Nevada and the Company's North American investments.
Under the Arrangement, the Company's shareholders retained their proportionate interest in shares of the Company, and received by way of distribution (the "Spin-Off"), newly issued shares of New LAC in proportion to their then-current ownership of the Company. The Spin-Off was also completed on October 3, 2023. As part of the Arrangement, the Company changed its name to Lithium Americas (Argentina) Corp.
As previously announced, the Arrangement constitutes a Make-Whole Fundamental Change under the Indenture. Pursuant to Section 14.03 of the Indenture, if a Holder elects to convert Notes from and including the effective date of the Make-Whole Fundamental Change (October 3, 2023) up to, and including, the 35th Trading Day immediately following the effective date of the Make-Whole Fundamental Change (November 21, 2023) (the "Make-Whole Fundamental Change Period"), the Company may be required to increase the Conversion Rate for the Notes so surrendered for conversion by a number of additional Common Shares of the Company. The number of additional Common Shares of the Company, if any, shall be determined based on the average of the Last Reported Sale Prices of the Company's Common Shares over the five Trading Day period ending on, and including, the Trading Day immediately preceding the effective date of the Make-Whole Fundamental Change.
________________________________
1 The CUSIP numbers appearing herein has been included solely for the convenience of the Holders. Neither the Company nor the Trustee assumes any responsibility for the selection or use of such CUSIP number and makes no representation as to the correctness of the CUSIP number.
Based on the average of the Last Reported Sale Prices of the Company's Common Shares over the five Trading Day period ending on, and including the Trading Day immediately preceding the effective date of the Make-Whole Fundamental Change (which average is $16.74), the Company will not be required to increase the Conversion Rate for the Notes surrendered for conversion during the Make-Whole Fundamental Change Period by any number of additional Common Shares of the Company. As provided in Section 14.03(e)(iii) of the Indenture, if such average is less than $34.89 per Common Share, no additional shares shall be added to the Conversion Rate. The Conversion Rate for the Notes remains 21.2307 Common Shares of the Company per $1,000 principal amount of Notes.
As previously announced, the Spin-Off will also result in an adjustment to the Conversion Rate for the Notes pursuant to Section 14.04(c) of the Indenture. Pursuant to Section 14.04(c) of the Indenture, the Conversion Rate is required to be adjusted as of the close of business on the last Trading Day of the 10-Trading Day period beginning on, and including, the Ex-Dividend Date for the Spin-Off (expected to be October 4, 2023) based on the Last Reported Sale Prices of the Company's Common Shares and New LAC's common shares during such 10-Trading Day period. Following such 10-Trading Day period, the Company will provide notice regarding the resulting adjustment to the Conversion Rate as a result of the Spin-Off.
Conversion rights with respect to the Notes are subject, in all respects, to the terms and conditions of the Indenture, the Notes, this notice and any related notice materials, as amended and supplemented from time to time.
For further information contact:
Investor Relations
Telephone: 778-656-5820
Email: ir@lithiumamericas.com
Website: www.lithiumamericas.com
Dated: October 3, 2023
By: Lithium Americas (Argentina) Corp.
cc: Computershare Trust Company N.A.
FIRST SUPPLEMENTAL INDENTURE
FIRST SUPPLEMENTAL INDENTURE dated as of October 3, 2023 (this "Supplemental Indenture") between LITHIUM AMERICAS (ARGENTINA) CORP. (formerly LITHIUM AMERICAS CORP.), a corporation organized and existing under the Business Corporations Act (British Columbia), as issuer (the "Company"), and COMPUTERSHARE TRUST COMPANY, N.A., as trustee (the "Trustee").
Reference is made to the Indenture dated as of December 6, 2021 between the Company and the Trustee (the "Original Indenture"). Capitalized terms used herein without definition shall have the respective meanings set forth or referred to in the Original Indenture. Except as otherwise specified herein, each reference herein to a "Section" or an "Article" is to such Section or Article of the Original Indenture.
RECITALS
WHEREAS, the Company has changed its name from "Lithium Americas Corp." to "Lithium Americas (Argentina) Corp." effective as of the date hereof;
WHEREAS, pursuant to Section 10.01(f) of the Original Indenture, the Company and the Trustee, at the Company's expense, may from time to time and at any time enter into a supplemental indenture without consent of Holders for the purpose of making any change that does not adversely affect the rights of any Holder.
WHEREAS, the Company wishes to enter into this Supplemental Indenture pursuant to Section 10.01(f) in order to reflect that the Company has changed its name;
WHEREAS, in connection with, and as required by, Sections 10.05 and 17.05 the Original Indenture, (i) Dorsey & Whitney LLP has delivered an Opinion of Counsel regarding this Supplemental Indenture to the effect that the execution of this Supplemental Indenture is authorized or permitted by the Original Indenture and all conditions precedent provided for in Article 10 of the Original Indenture with respect to such execution have been complied with; and
(ii) the Trustee has received an Officer's certificate delivered by the Company to the effect that the execution of this Supplemental Indenture is authorized or permitted by the Original Indenture and all conditions precedent provided for in Article 10 of the Original Indenture with respect to such execution have been complied with; and
NOW THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:
1. Name Change Amendment. The Original Indenture is hereby amended by replacing each instance of "Lithium Americas Corp." with "Lithium Americas (Argentina) Corp.".
2. Effective Date. The effective date of this Supplemental Indenture shall be the date first written above.
3. Reference to "Indenture". Upon the effectiveness of this Supplemental Indenture, all references in the Original Indenture and the other transaction documents to the "Indenture" (including correlative references such as "hereof") shall be deemed to refer to the Original Indenture as amended by this Supplemental Indenture.
4. Effect of this Supplemental Indenture. Except as otherwise specified in this Supplemental Indenture, the Original Indenture shall remain in all respects unchanged and in full force and effect. This Supplemental Indenture shall form a part of the Indenture for all purposes, and every Holder of Notes heretofore or hereafter authenticated and delivered shall be bound hereby.
5. Successors and Assigns. All covenants and agreements in this Supplemental Indenture by the parties hereto shall bind their respective successors and assigns, whether or not so expressed.
6. Execution in Counterparts. This instrument may be executed in any number of counterparts, each of which so executed shall be deemed to be an original, but all such counterparts shall together constitute but one and the same instrument. Delivery of an executed signature page of this Supplemental Indenture by email, facsimile or other electronic transmission, including in .pdf format, shall be effective as delivery of a manually executed counterpart hereof.
7. Acceptance by Trustee. The Trustee accepts the amendments to the Original Indenture as set forth in this Supplemental Indenture and agrees to perform the duties of the Trustee upon the terms and conditions set forth herein and in the Original Indenture (and as amended hereby upon the effectiveness hereof). Without limiting the generality of the foregoing, the Trustee assumes no responsibility for the correctness of the recitals contained herein, which shall be taken as the statements of the Company, and the Trustee is not responsible for the terms or content of this Supplemental Indenture or their sufficiency for any purpose. In entering into this Supplemental Indenture, the Trustee shall be entitled to the benefit of every applicable provision of the Original Indenture.
8. Execution, Delivery and Validity. The Company represents and warrants to the Trustee that this Supplemental Indenture has been duly and validly executed and delivered by the Company and is the legal, valid and binding obligation of the Company, enforceable against the Company in accordance with its terms.
9. Governing Law. THIS SUPPLEMENTAL INDENTURE, AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS SUPPLEMENTAL INDENTURE, SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
10. Effect of Headings. The Article and Section headings herein are for convenience only and shall not affect the construction hereof.
11. Severability. In the event any provision of this Supplemental Indenture shall be invalid, illegal or unenforceable, then (to the extent permitted by law) the validity, legality or enforceability of the remaining provisions shall not in any way be affected or impaired.
2
[Signature page follows]
3
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental Indenture to be duly executed and delivered by their respective proper and duly authorized signatories as of the date first written above.
| LITHIUM AMERICAS (ARGENTINA) CORP. as Issuer |
||
| By: |
/s/ John Kanellitsas |
|
| Name: John Kanellitsas | ||
| Title: President and Interim Chief Executive Officer | ||
| COMPUTERSHARE TRUST COMPANY, N.A., | ||
| as Trustee | ||
| By: | /s/ Jerry Urbanek | |
| Name Jerry Urbanek | ||
| Title: Trust Officer | ||
Certain identified information has been omitted from this exhibit because it is both not material and is the type that
the registrant treats as private or confidential. [Redacted] indicates that information has been omitted.
Execution Version
LOCK-UP AGREEMENT
THIS AGREEMENT is made as of October 2, 2023
BETWEEN:
LITHIUM AMERICAS CORP., a corporation existing under the laws of the Province of British Columbia, and to be named Lithium Americas (Argentina) Corp. as at the Effective Time ("LAC")
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1397468 B.C. LTD., a corporation existing under the laws of the Province of British Columbia, and to be named Lithium Americas Corp. as at the Effective Time ("Spinco")
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GFL INTERNATIONAL CO., LIMITED., a corporation existing under the laws of Hong Kong ("Ganfeng")
RECITALS:
A. WHEREAS, on February 28, 2022 LAC first publicly announced (the "Initial Announcement") that it had started the process of exploring the separation of its U.S. and Argentina operations and available alternatives and, subsequently, on November 3, 2022, LAC publicly announced that it intended to advance a reorganization that would result in the separation of its North American Business (as defined in the Arrangement Agreement) and its Argentinian Business (as defined in the Arrangement Agreement) into two independent public companies (the "Separation");
B. WHEREAS, in connection with the implementation of the Separation, LAC and Spinco have entered into an amended and restated arrangement agreement dated June 14, 2023 (as amended, supplemented or otherwise modified from time to time, being referred to herein as the "Arrangement Agreement") providing for an arrangement (being referred to herein as the "Arrangement") of LAC under section 288 of the Business Corporations Act (British Columbia), which was approved by LAC Shareholders at the Meeting (as defined below), pursuant to which, among other things:
(a) LAC will complete the Separation; and
(b) holders of the outstanding common shares of LAC (collectively, being referred to herein as the "LAC Common Shares") immediately prior to the Effective Time will be issued, through a series of transactions, common shares of Spinco (collectively, being referred to herein as the "Spinco Common Shares"),
all on the terms and subject to the conditions to be set out in the Arrangement Agreement;
C. WHEREAS, Ganfeng:
(a) is the registered holder and sole beneficial owner of, and together with its Affiliate and parent company Ganfeng Lithium Co. Ltd., has exclusive direction and control over, 15,000,000 LAC Common Shares (together with any substituted, reclassified or replacement shares, the "Subject Shares") and will, at the Effective Time (as defined herein), become the registered holder and sole beneficial owner, of, and have exclusive direction or control over, together with its Affiliate and parent company Ganfeng Lithium Co., Ltd., a specified number of Spinco Common Shares issuable to Ganfeng pursuant to the Arrangement (the Subject Shares and Spinco Common Shares, collectively, being referred to herein as the "Locked-up Shares");
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(b) except for the Subject Shares, has no ownership of, or any right to acquire or exercise any control or direction over, directly or indirectly, any securities of LAC or Spinco or any of their respective Affiliates; and
(c) except for this Agreement, has not entered into any open-market trade, put option, call option, or any other type of agreement, commitment or understanding with any person or entity, with respect to the acquisition, disposition or voting of any LAC Common Shares or any Spinco Common Shares;
D. WHEREAS, in connection with the Separation, the parties are executing and delivering this lock-up agreement (such agreement, including as it may be amended, supplemented or otherwise modified from time to time, being referred to herein as the "Agreement") setting out the terms and conditions upon which Ganfeng has agreed to, among other things: (i) not acquire any LAC Common Shares or transfer (including sell) the Subject Shares prior to the Effective Time, (ii) not acquire or transfer (including sell) any of the Locked-up Shares from and after the date hereof and for the 18 months following the Effective Date, except as expressly permitted by this Agreement, and (iii) abide by the other restrictions and covenants set forth herein; and
E. WHEREAS, each of LAC and Spinco will be relying on the covenants, representations and warranties of Ganfeng set forth in this Agreement in connection with the completion of the Separation.
NOW, THEREFORE, this Agreement witnesses that, in consideration of the premises and the covenants and agreements herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each party, the parties covenant and agree as follows:
1. Definitions
In this Agreement, unless the context otherwise requires, in addition to terms defined elsewhere in this Agreement, the following terms have the respective meanings set out below and grammatical variations of such terms have the corresponding meanings:
"Affiliate" has the meaning given to that term in National Instrument 45-106 Prospectus Exemptions;
"Arrangement Resolution" means the special resolution of the LAC Shareholders approving the Arrangement passed at the Meeting;
"Business Day" means any day other than a Saturday, Sunday or any other day on which major banks are closed for business in the City of Vancouver, British Columbia;
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"Circular" means the notice of Meeting and accompanying management information circular of LAC, including all schedules, appendices and exhibits thereto and all information incorporated by reference therein, prepared by LAC and sent to LAC Shareholders in connection with the Meeting, as amended, modified and/or supplemented from time to time;
"Effective Date" means the date on which the Arrangement becomes effective;
"Effective Time" means 12:01 a.m. (Vancouver time) on the Effective Date, or such other time as LAC and Spinco agree to in writing;
"LAC Shareholders" means all persons holding LAC Common Shares, whether registered or beneficial (unless otherwise specified) at the applicable time and "LAC Shareholder" means any one of them; and
"Meeting" means the meeting of LAC Shareholders held on July 31, 2023 to consider and to vote on, inter alia, the Arrangement Resolution and for any other purpose as set out in the Circular.
2. Lock-up
In order to ensure that subsection 55(2) of the Income Tax Act (Canada) will not apply to the series of transactions and events forming part of the Arrangement, Ganfeng hereby irrevocably and unconditionally covenants, undertakes and agrees as follows:
(a) except as expressly permitted by Section 2(c), from the date hereof until the Effective Time, none of Ganfeng or any of its Affiliates shall, directly or indirectly, purchase or acquire any LAC Common Shares (being referred to herein as, a "Purchase"), or assign, sell, transfer, offer, contract to sell, accept an offer to purchase, gift, pledge, encumber, hypothecate, provide a security interest in respect of, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, whether by actual disposition or effective economic disposition pursuant to any swap or other arrangement that transfers to another, in whole or in part, any interest in, or economic consequences of ownership of any of the Subject Shares (being referred to herein as, a "Transfer");
(b) except as expressly permitted by Section 2(c), from the Effective Time until 12:00 p.m. (Vancouver time) on the date that is 18 months following the Effective Date, Ganfeng shall not, directly or indirectly (i) Purchase or Transfer any of the Locked-up Shares, (ii) Purchase or Transfer any property acquired in substitution for any Locked-up Shares, (iii) Purchase or Transfer any property 10% or more of the fair market value of which is or may be derived from any Locked-up Shares (or any property acquired in substitution for such property), or (iv) commence, participate in or in any way support any transaction or series of transactions (other than the Arrangement) pursuant to which control of LAC or Spinco is acquired by any person or group of persons;
(c) the restrictions and limitations in Sections 2(a) and 2(b) shall not apply to:
(i) any Purchase or Transfer of any securities pursuant to the Arrangement;
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(ii) any Purchase or Transfer from or to any Affiliate of Ganfeng that is controlled by Ganfeng from and after the Initial Announcement and for the 18 months following the Effective Date, provided that such Affiliate first agrees in writing with LAC and Spinco to be bound by the terms of this Agreement;
(iii) any Transfer pursuant to a bona fide third party "take-over bid" (as defined in National Instrument 62-104 Take-over Bids and Issuer Bids) provided that (A) such take-over bid is made to all shareholders of LAC or Spinco, as the case may be, (B) the take-over bid is recommended for acceptance by the board of directors of LAC or Spinco, as the case may be, and (C) in the event that the take-over bid is not completed in accordance with the terms recommended to shareholders by the board of directors of LAC or Spinco, as the case may be, the Locked-up Shares will remain subject to the restrictions and limitations contained in Sections 2(a) and 2(b);
(iv) any Transfer pursuant to or in accordance with any amalgamation, arrangement, amendment to the terms of a class of equity securities or any other transaction involving LAC or Spinco, as the case may be, as a consequence of which the interest of a holder of an equity security of the issuer may be terminated without the holder's consent, regardless of wther the equity security is replaced with another security (any such transaction being referred to herein as a "business combination"), provided that
(A) such business combination is recommended for acceptance by the board of directors of LAC or Spinco, as the case may be and (B) in the event that the business combination is not completed in accordance with the terms recommended to shareholders by the board of directors of LAC or Spinco, as the case may be, the Locked-up Shares will remain subject to the restrictions and limitations contained in Sections 2(a) and 2(b); and
(v) any Transfer in connection with Ganfeng pledging or hypothecating any Locked-up Shares in favour of a third party lender (being referred to herein as, a "Lender") as security for a bona fide loan (being referred to herein as, a "Loan"), provided that, any such Transfer shall be on terms and conditions acceptable to the board of directors of LAC or Spinco, as the case may be, acting reasonably, and without limitation, it will be deemed to be reasonable for the board of directors of LAC or Spinco, as the case may be, to require, as conditions of providing consent to any such Transfer, that (i) the Lender first agrees in writing with LAC and Spinco to be bound by the terms of this Agreement, (ii) the security interest of the Lender over the Locked-up Shares may not be enforced and the Lock-up Shares may not be otherwise transferred prior to the date that is 18 months following the Effective Date, without the written consent of LAC and Spinco, and (iii) upon the repayment of the Loan, the Locked-up Shares will remain subject to the restrictions and limitations contained in Sections 2(a) and 2(b).
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3. Further Assurances
Each of LAC and Ganfeng shall, from time to time and at all times hereafter at the reasonable request of the other parties but without any further consideration, do and perform all such further acts, matters and things and execute and deliver all such further documents, deeds, assignments, agreements, notices and writings and give such further assurances as shall be reasonably required for the purpose of giving effect to this Agreement.
4. Representations and Warranties of Ganfeng
Ganfeng hereby represents and warrants to LAC and Spinco as follows and acknowledges that each of LAC and Spinco is relying on such representations and warranties in connection with entering into this Agreement and completing the transactions contemplated hereby and thereby:
(a) Ganfeng is the registered holder and sole beneficial owner of the Subject Shares, with good and marketable title thereto, free and clear of all claims, liens, charges, encumbrances, restrictions (other than resale and similar restrictions), security interests and rights of others and no person or entity has any agreement, option, or any right or privilege capable of becoming an agreement or option (whether by law, pre-emptive or contractual), for the Transfer of any Subject Shares, or any interest therein or right thereto, except pursuant to the Arrangement Agreement and this Agreement;
(b) the only securities of LAC held of record or beneficially owned, directly or indirectly, or over which control or direction is exercised by Ganfeng and its Affiliates are the Subject Shares;
(c) since the Initial Announcement, none of Ganfeng or any of its Affiliates has Purchased or Transferred any LAC Common Shares;
(d) except pursuant to the Arrangement, none of Ganfeng or any of its Affiliates has a current intention to Transfer any of the Locked-up Shares;
(e) none of Ganfeng or any of its Affiliates has any agreement, options, warrants or securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any securities of LAC (whether by law, pre-emptive or contractual) or any rights or privileges capable of becoming an agreement or option, for the purchase or acquisition by Ganfeng (or any Affiliate thereof) or transfer to Ganfeng (or any Affiliate thereof) of additional securities of LAC or any interest therein;
(f) except pursuant to the Arrangement, none of Ganfeng or any of its Affiliates has any agreement, options, warrants or securities convertible into, or exchangeable or exercisable for, or otherwise evidencing a right to acquire, any securities of Spinco (whether by law, pre-emptive or contractual) or any rights or privileges capable of becoming an agreement or option, for the purchase or acquisition by Ganfeng (or any Affiliate thereof) or transfer to Ganfeng (or any Affiliate thereof) of additional securities of Spinco or any interest therein that would result in an acquisition of control of Spinco;
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(g) Ganfeng has the sole right to vote (or cause to vote) all of its Subject Shares (which have a right to vote) now held and none of the Subject Shares is subject to any power of attorney, proxy, voting trust, vote pooling or other agreement with respect to the voting or right to vote, call meetings of any of the LAC Shareholders or give consents or approvals of any kind with respect to any Subject Shares;
(h) none of Ganfeng or any of its Affiliates is aware of any "take-over bid" (as defined in National Instrument 62-104 Take-over Bids and Issuer Bids, or similar transaction under the applicable laws of any foreign jurisdiction), whether actual, anticipated, contemplated or threatened, in respect of any securities of Ganfeng;
(i) none of Ganfeng or any of its Affiliates has a current intention to undertake a "business combination" (as defined in Multilateral Instrument 61-101 Protection of Minority Security Holders in Special Transactions, or similar transaction under the applicable laws of any foreign jurisdiction) that would, or would reasonably be expected to, result in an acquisition of control, directly or indirectly, of Ganfeng; and
(j) Ganfeng is duly authorized to execute and deliver this Agreement and perform its obligations hereunder and this Agreement has been duly executed and delivered by Ganfeng and constitutes a legal, valid and binding agreement, enforceable against Ganfeng in accordance with its terms, except as may be limited by bankruptcy, insolvency and other applicable laws affecting the enforcement of creditors' rights generally and subject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction, and the performance by Ganfeng of its obligations hereunder will not constitute a violation or breach of or default under, or conflict with: (i) any contract, commitment, agreement, understanding or arrangement of any kind to which Ganfeng is or will be a party and by which Ganfeng is or will be bound at the time of such consummation; and (ii) to its knowledge, any applicable law, including any judgement, decree, order or award of any government, court, governmental or regulatory body, arbitrator or similar body applicable to Ganfeng or its business.
5. Representations and Warranties of LAC and Spinco
Each of LAC and Spinco, severally and not jointly, hereby represents and warrants to Ganfeng as follows and acknowledges that Ganfeng is relying on such representations and warranties in connection with entering into this Agreement and completing the transactions contemplated hereby:
(a) Each of LAC and Spinco validly exists under the laws of the Province of British Columbia and has all requisite corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder; and
(b) Each of LAC and Spinco is duly authorized to execute and deliver this Agreement and perform its obligations hereunder and no other internal proceeding on its part is necessary to authorize this Agreement and this Agreement has been duly executed and delivered by each of LAC and Spinco and constitutes a legal, valid and binding agreement, enforceable against each of LAC and Spinco in accordance with its terms, except as may be limited by bankruptcy, insolvency and other applicable laws affecting the enforcement of creditors' rights generally andsubject to the qualification that equitable remedies may only be granted in the discretion of a court of competent jurisdiction, and the performance by each of LAC and Spinco of its obligations hereunder will not constitute a violation or breach of or default under, or conflict with: (i) any contract, commitment, agreement, understanding or arrangement of any kind to which any of LAC and Spinco is or will be a party and by which any of LAC and Spinco is or will be bound at the time of such consummation; and (ii) to its knowledge, any applicable law, including any judgement, decree, order or award of any government, court, governmental or regulatory body, arbitrator or similar body applicable to LAC and Spinco or their respective businesses.
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6. Non-Dilution
LAC covenants and agrees with Ganfeng that, prior to the Effective Date, it shall not, without the prior written consent of Ganfeng, such consent not to be unreasonably withheld or delayed, issue any LAC Common Shares or securities convertible into LAC Common Shares; provided, however, that such restriction shall not apply to securities issued in connection with: (i) the Arrangement, (ii) the grant, vesting, exercise or settlement of any options, restricted share rights, performance share units, deferred share units and other similar issuances pursuant to LAC's share compensation arrangements (existing or to be adopted in the future), (iii) acquisitions (including claims acquisitions or other mining interests), (iv) the exercise of any outstanding warrants, rights or other convertible securities, (v) the issuance of LAC Common Shares under its outstanding Convertible Notes (as defined in the Arrangement Agreement) in accordance with their terms; and (vi) satisfying existing contractual obligations (including without limitation the participation and top up rights of General Motors Holdings LLC under its investor rights agreement with LAC).
7. Assignment and Amendment
(a) None of LAC, Spinco or Ganfeng may assign any of its rights or obligations under this Agreement without the prior written consent of the other parties, provided that each of LAC and Spinco may, at any time, assign all or any part of its rights and obligations under this Agreement without any such consent to any Affiliate of any of LAC and Spinco, as applicable, and provided further that neither LAC nor Spinco shall be relieved of its obligations hereunder and shall continue to be jointly and severally liable with such Affiliate for all of its obligations hereunder.
(b) This Agreement shall be binding upon, enure to the benefit of and be enforceable by each of LAC and Spinco, Ganfeng and their respective successors and permitted assigns. Nothing in this Agreement, express or implied, is intended to confer on any person or entity other than LAC and Ganfeng and their respective successors or permitted assigns, any rights, remedies, obligations or liabilities under or by reason of this Agreement.
(c) Except as expressly set forth herein, this Agreement (together with all other documents and instruments referred to herein) constitutes the entire agreement between LAC, Spinco and Ganfeng with respect to the subject matter hereof and shall not be modified, amended or supplemented except upon the execution and delivery of a written agreement by LAC, Spinco and Ganfeng.
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8. Notice
Any notice or other communication required or permitted to be given hereunder shall be sufficiently given if delivered in person, or sent by email:
(a) in the case of Ganfeng, to:
GFL International Co., Limited.
Xingyue Financial Bay BLDG 26,
No. 4088 Luoshan Road, Pudong District
Shanghai, China
Attention: Xiaoshen Wang
Email: [Redacted]
with a copy (which shall not constitute notice) to: Attention: Samuel Pigott
Email: [Redacted]
with a copy (which shall not constitute notice):
Gowling WLG
Suite 2300, 550 Burrard St.
Vancouver BC
V6C 2B5
Attention: Linda Hogg
Email: [Redacted]
(b) in the case of LAC (prior to the Effective Date):
Lithium Americas Corp.
300-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: Jonathan Evans
e-mail: [Redacted]
(c) in the case of Spinco (prior to the Effective Date):
1397468 B.C. Ltd.
c/o Lithium Americas Corp.
300-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: Alexi Zawadzki
e-mail: [Redacted]
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(d) in the case of LAC (on and after the Effective Date):
Lithium Americas (Argentina) Corp.
300-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: John Kanellitsas
e-mail: [Redacted]
Copy to: Alex Shulga
e-mail: [Redacted]
(e) in the case of Spinco (on and after the Effective Date):
Lithium Americas Corp.
400-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: Jonathan Evans
e-mail: [Redacted]
(f) with a copy to in the case of any notice to Spinco or LAC (which shall not constitute notice):
Cassels Brock & Blackwell LLP
Suite 2200, HSBC Building,
885 West Georgia St.
Vancouver BC
V6C 3E8
|
Attention: |
David Redford |
|
Email: |
[Redacted] |
or to such other address as the party to which such notice or other communication is to be given has last notified the party giving the same in the manner provided in this Section 8. Any notice or other communication given or made is deemed to have been duly given or made as at the date delivered or sent if delivered personally or sent by email at the address provided herein during normal business hours on a Business Day, or otherwise on the next Business Day.
9. Governing Law
This Agreement will be governed by and interpreted and enforced in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein. Each party irrevocably attorns and submits to the exclusive jurisdiction of the British Columbia courts situated in the City of Vancouver and waives objection to the venue of any proceeding in such court or that such court provides an inconvenient forum. Any legal proceedings arising out of this Agreement will be conducted in the English language only.
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10. Termination
This Agreement shall automatically terminate and be of no further force or effect upon the earliest to occur of: (i) the mutual written agreement of LAC, Spinco and Ganfeng; and (ii) the date that is the 18 months following the Effective Date.
11. Enforcement
Ganfeng agrees that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached and that monetary damages or other legal remedies would not be an adequate remedy. It is accordingly agreed that in the event of a breach or threatened breach by Ganfeng of any of its covenants or obligations under this Agreement, LAC and Spinco shall be entitled to equitable relief by way of an injunction or injunctions or otherwise to prevent or restrain breaches or threatened breaches of this Agreement and to enforce specifically the terms and provisions hereof, on a non-exclusive basis, in any court of the Province of British Columbia having jurisdiction, this being in addition to any other remedy to which LAC and Spinco is entitled at law or in equity. LAC and Spinco shall not be required to obtain or furnish any bond or similar instrument in connection with or as a condition to obtaining or seeking any such equitable remedy.
12. Disclosure
Ganfeng hereby consents to: (a) the disclosure of the substance of this Agreement in any press release and any other public disclosure made by LAC and Spinco in connection with the Arrangement as may be required by applicable law; (b) the filing of this Agreement on SEDAR and EDGAR; and (c) a copy of this Agreement being provided to LAC and Spinco. Except as set forth above or as required by applicable law, by any government, court, governmental or regulatory body, arbitrator or similar body, or the Arrangement Agreement, the parties shall not make any public announcement or statement with respect to this Agreement, the transactions contemplated herein or in connection with the Arrangement without the prior written approval of the other parties hereto, which shall not be unreasonably withheld or delayed.
13. Interpretation
(a) The division of this Agreement into Sections and the insertion of headings are for convenient reference only and do not affect the construction or interpretation of this Agreement. Any reference to gender includes all genders, including the neuter gender. Words importing the singular number only shall include the plural and vice versa. Any reference to a person or entity includes its heirs, administrators, executors, legal personal representatives, successors and permitted assigns. Any reference to a law or statute refers to such law or statute and all rules and regulations made under it, as it or they may have been or may from time to time be amended, supplemented, re-enacted or superseded, unless stated otherwise.
(b) If any provision of this Agreement or the application thereof to LAC, Spinco or Ganfeng or circumstance is invalid or unenforceable to any extent then the remainder of this Agreement or application of such provision to LAC, Spinco or Ganfeng or circumstance (other than those to which it is held invalid or unenforceable) is not affected thereby and each remaining provision of this Agreement is valid and is enforceable to the fullest extent permitted by applicable law.
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(c) The words: (i) "including", "includes" and "include" mean "including (or includes or include) without limitation"; and (ii) "Section" followed by a number mean and refer to the specified Section of this Agreement.
(d) LAC, Spinco and Ganfeng waive the application of any rule of applicable law which otherwise would be applicable in connection with the construction of this Agreement that ambiguous or conflicting terms or provisions should be construed against the party (or counsel of which) that prepared the executed agreement or any earlier draft of the same.
(e) No waiver of any provision of this Agreement will constitute a waiver of any other provision (whether or not similar). No waiver will be binding unless executed in writing by the party to be bound by the waiver. A party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a party from any other or further exercise of that right or the exercise of any other right.
(f) Time is of the essence of this Agreement.
(g) A period of time is to be computed as beginning on the day following the event that began the period and ending at 5:00 p.m. (Vancouver time) on the last day of the period, if the last day of the period is a Business Day, or at 5:00 p.m. (Vancouver time) on the next Business Day if the last day of the period is not a Business Day. Months are counted in the manner provided in section 28 of the Interpretation Act (Canada).
14. Counterpart Execution
This Agreement may be executed in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same original instrument. The parties shall be entitled to rely upon delivery of an executed electronic copy of this Agreement, and such executed electronic copy shall be legally effective to create a valid and binding agreement between the parties.
15. Language
The parties expressly acknowledge that they have requested that this Agreement and all ancillary and related documents thereto be drafted in the English language only. Les parties aux présentes reconnaissent avoir exigé que la présente convention et tous les documents qui y sont accessoires soient rédigés en anglais seulement.
[Remainder of page intentionally left blank; signature pages follow.]
IN WITNESS WHEREOF the parties have executed this Lock-up Agreement as of the date first written above.
Yours truly,
LITHIUM AMERICAS CORP.
|
By: |
(signed) "Jonathan Evans" |
| Name: | Jonathan Evans |
|
Title: |
President & Chief Executive Officer |
|
|
|
1397468 B.C. LTD.
|
By: |
(signed) "Alexi Zawadzki" |
| Name: | Alexi Zawadzki |
| Title: | Vice President |
GFL INTERNATIONAL CO., LIMITED
|
By: |
(signed) "Wang Xiaoshen" |
| Name: | Wang Xiaoshen |
| Title: | Director |
Certain identified information has been omitted from this exhibit because it is both not material and is the type that
the registrant treats as private or confidential. [Redacted] indicates that information has been omitted.
TAX INDEMNITY AND COOPERATION AGREEMENT
LITHIUM AMERICAS (ARGENTINA) CORP.
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LITHIUM AMERICAS CORP.
October 3, 2023
TABLE OF CONTENTS
| 7.12 | Governing Law; Attornment | 23 |
| 7.13 | No Third Party Beneficiaries | 23 |
| 7.14 | Dispute Resolution | 24 |
| 7.15 | Counterparts | 25 |
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TAX INDEMNITY AND COOPERATION AGREEMENT
This Tax Indemnity and Cooperation Agreement (the "Agreement") made as of the 3rd day of October, 2023.
BETWEEN:
LITHIUM AMERICAS (ARGENTINA) CORP., a corporation existing under the laws of British Columbia,
(hereinafter referred to as "Lithium Argentina")
AND:
LITHIUM AMERICAS CORP., a corporation existing under the laws of British Columbia,
(hereinafter referred to as "Spinco")
WHEREAS Lithium Argentina (formerly known as Lithium Americas Corp. before being renamed pursuant to the Plan of Arrangement (as defined herein)) and Spinco (formerly known as 1397468 B.C. Ltd. before being renamed pursuant to the Plan of Arrangement) entered into the Arrangement Agreement (as defined herein) providing for the Arrangement (as defined herein) of Lithium Argentina (when known as Lithium Americas Corp.) under section 288 of the BCBCA (as defined herein), pursuant to which, commencing at the Effective Time on the Effective Date (as each such term is defined herein), among other things, (i) Spinco acquired the Distribution Property (as defined herein) from Lithium Argentina, and (ii) newly issued no par value common shares of Spinco were acquired by the holders of the Common Shares (as defined in the Plan of Arrangement);
AND WHEREAS Lithium Argentina and Spinco have agreed on the anticipated Canadian tax consequences of the Arrangement including, among other things, the transactions under the Arrangement qualifying for the exception in paragraph 55(3)(b) of the Tax Act (as defined herein) to the application of subsection 55(2) of the Tax Act such that no gain shall be realized by either Lithium Argentina or Spinco as a result of such transactions (the "Intended Canadian Tax Treatment");
AND WHEREAS Lithium Argentina and Spinco have agreed on the anticipated United States ("U.S.") federal income tax consequences of the Arrangement including, among other things, that certain of the transactions pursuant to the Arrangement will be treated as an integrated series of steps constituting a reorganization within the meaning of section 368 of the U.S. Internal Revenue Code of 1986 (the "Code"), and a distribution by Lithium Argentina of the stock of Spinco (constituting "control" of Spinco, within the meaning of section 368(c) of the Code) that, together with the other members of the Spinco "separate affiliated group" (within the meaning of section 355(b)(3) of the Code), conducts the North American Business (as defined herein), to which section 355(a) of the Code applies, and that the Plan of Arrangement and Arrangement Agreement are intended to be, and was adopted as, a "plan of reorganization" within the meaning of Treasury Regulations section 1.368-2(g) (the "Intended U.S. Tax Treatment", and together with the Intended Canadian Tax Treatment, the "Intended Tax Treatment"); and
AND WHEREAS as a result of the Arrangement, the Parties hereto desire to enter into this Agreement to provide for and agree upon the Parties' respective rights, responsibilities and obligations with respect to Taxes (as defined herein) and indemnities arising from, and in connection with, the Arrangement and as specified herein.
NOW THEREFORE THIS AGREEMENT WITNESSES that, in consideration of the mutual covenants and agreements hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by each Party, the Parties hereby covenant and agree as follows:
ARTICLE 1
INTERPRETATION
1.1 Definitions
In this Agreement, unless otherwise stated and unless there is something in the subject matter or context inconsistent therewith, terms used but not otherwise defined herein have the respective meanings given to them in the Arrangement Agreement and the following terms have the respective meanings set out below and grammatical variations of such terms have the corresponding meanings.
"Affiliate" has the meaning given to that term in the BCBCA.
"Affected Party" has the meaning given to that term in Section 2.3(b).
"Agreement" has the meaning ascribed thereto in the preamble.
"Applicable Law" means, with respect to any Person, any domestic or foreign federal, national, state, provincial or local law (statutory, common or otherwise), statute, constitution, treaty, convention, ordinance, code, rule, regulation, order, injunction, judgment, bylaw, decree, ruling or other similar requirement enacted, adopted, promulgated or applied by a Governmental Authority that is binding upon or applicable to such Person or its business, undertaking, property or securities and, to the extent they have the force of law, policies, guidelines, notices and protocols of any Governmental Authority, unless expressly specified otherwise.
"Argentinian Business" means, except as specified below, all of the businesses carried on by Lithium Argentina and its Affiliates, including its interest and business operations in the Caucharí-Olaroz Project and the Pastos Grandes Project and the Sal de la Puna project, its interest in Exar Capital B.V., 2265866 Ontario Inc., Millennial Lithium Corp, and Arena Minerals Inc., and the subsidiaries thereof, and includes all the assets and liabilities pertaining to the foregoing or otherwise held by any of them immediately prior to the Effective Time (including workforce and working capital); provided, however, that the term "Argentinian Business" shall not include the North American Business or any portion thereof.
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"Arrangement" means the arrangement of Lithium Argentina (formerly known as Lithium Americas Corp. before being renamed pursuant to the Plan of Arrangement) under section 288 of the BCBCA, on the terms and subject to the conditions set forth in the Plan of Arrangement.
"Arrangement Agreement" means the amended and restated arrangement agreement dated as of June 14, 2023 between Lithium Argentina and Spinco, including all schedules and appendices attached thereto, as amended, modified and/or supplemented from time to time in accordance with its terms.
"Arrangement Equity Awards" means, collectively, the Lithium Argentina Equity Awards and the Spinco Equity Awards (each as defined in the Plan of Arrangement) granted pursuant to section 2.3(c) of the Plan of Arrangement.
"Arrangement Departing Participant" has the meaning ascribed thereto in the Arrangement Agreement.
"BCBCA" means the Business Corporations Act (British Columbia).
"Board of Directors" means the Board of Directors of Lithium Argentina.
"Business Day" means any day other than a Saturday, Sunday or any other day on which major banks are closed for business in the City of Vancouver, British Columbia.
"Claim" means any act, omission or state of facts, or any demand, action, suit, proceeding, claim, assessment, reassessment, judgment, settlement or other compromise relating thereto, which may give rise to a right of indemnification under Article 3.
"Code" has the meaning ascribed thereto in the recitals.
"CRA" means the Canada Revenue Agency.
"Dispute" has the meaning ascribed thereto in Section 7.14.
"Distribution Property" means (i) all of Lithium Argentina's shares of Thacker Pass Co, (ii) Lithium Argentina's receivable from Thacker Pass Co, (iii) all of Lithium Argentina's shares of Green Technology Metals Limited; (iv) all of Lithium Argentina's shares of Ascend Elements, Inc., (v) the portion of Lithium Argentina's workforce in-place that will become directors, officers and employees of Spinco, (vi) the "Lithium Americas" business name, all intellectual property rights related thereto, and all associated stationery, logos, signage and domain names, (vii) the Offtake Agreement, (viii) the balance of the net proceeds of the Tranche 1 Subscription Price, and (ix) U.S.$75,000,000 of cash to establish sufficient working capital of Spinco (such amount subject to adjustment by the Board of Directors if the Effective Date is later than September 1, 2023).
"Effective Date" means the date on which the Arrangement became effective.
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"Effective Time" means the time on the Effective Date that the Arrangement became effective.
"Employer" has the meaning ascribed thereto in Section 6.1(e).
"Equity Incentive Plan" means the LAC Equity Incentive Plan or the Spinco Equity Incentive Plan, as the context requires (each as defined in the Plan of Arrangement).
"Final Determination" means with respect to any issue (a) a decision, judgment, decree or other order by any court of competent jurisdiction, which decision, judgment, decree or other order has become final and is not subject to further appeal, (b) a closing agreement or any other binding settlement agreement entered into in connection with or in contemplation of an administrative or judicial proceeding by the relevant taxation authority, (c) the completion of the highest level of administrative proceedings if a judicial contest is not or is no longer available, (d) the expiry of time for objecting to the assessment or reassessment of Taxes, if no objection is made, (e) any allowance of a refund or credit in respect of an overpayment of a Tax, but only after the expiration of all periods during which such refund may be recovered (including by way of offset) by the jurisdiction imposing such Tax, (f) a final settlement resulting from a treaty-based competent authority determination, or (g) any other final disposition, including by reason of the expiration of the applicable statute of limitations, the execution of a pre-filing agreement with a Tax Authority, or by mutual agreement of the Parties.
"Ganfeng" means Ganfeng Lithium Co., Ltd., and includes its successors and permitted assigns.
"GM" means General Motor Holdings LLC, and includes its successors and permitted assigns.
"Governmental Authority" has the meaning ascribed thereto in the Arrangement Agreement, and includes, for greater certainty, any Tax Authority.
"Group" means the Lithium Argentina Group or the Spinco Group, as the context requires.
"Indemnified Party" has the meaning ascribed thereto in Section 5.1(a).
"Indemnifier" means any Party who is obligated to provide indemnification under Article 6 of the Arrangement Agreement.
"Indemnitor" has the meaning ascribed thereto in Section 5.1(a).
"Issuer" has the meaning ascribed thereto in Section 6.1(e).
"Intended Tax Treatment" has the meaning ascribed thereto in the recitals.
"Intended Canadian Tax Treatment" has the meaning ascribed thereto in the recitals.
"Intended U.S. Tax Treatment" has the meaning ascribed thereto in the recitals.
"IRS" means the United States Internal Revenue Service.
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"Lithium Argentina Equity Awards" means, collectively, the Lithium Argentina DSUs, the Lithium Argentina PSUs and the Lithium Argentina RSUs (each as defined in the Plan of Arrangement).
"Lithium Argentina Group" means Lithium Argentina and its Affiliates, whether held directly or indirectly; for greater certainty, in all circumstances "Lithium Argentina Group" excludes the Spinco Group.
"Lithium Argentina Indemnified Parties" has the meaning ascribed thereto in Section 4.2.
"Liabilities" means all Taxes and reasonable out-of-pocket costs and expenses (including reasonable legal fees (on a solicitor and its own client basis)) of any action, suit, proceeding, demand, assessment, reassessment, judgment, settlement or compromise relating thereto; interest, fines and penalties imposed or assessed in connection therewith; and any additional expenses incurred in connection therewith.
"North American Business" means all of the businesses carried on by Thacker Pass Co and its Affiliates with respect to the exploration and development of the Thacker Pass Project and includes all the assets and liabilities pertaining to the foregoing or otherwise held by any of them immediately prior to the Effective Time (including workforce and working capital) and Spinco's interest in Green Technology Metals Limited and Ascend Elements, Inc.
"Offtake Agreement" means the offtake agreement between Lithium Argentina and GM dated February 16, 2023.
"Party" means a party to this Agreement and "Parties" means all of the parties to this Agreement.
"Past Practices" has the meaning ascribed thereto in Section 2.4(a).
"Pastos Grandes Project" means the lithium project property located in the Province of Salta, Argentina, as described in the technical report titled "NI 43-101 Technical Report: Lithium Resource Update Pastos Grandes Project, Salta Province, Argentina" with an effective date of April 30, 2023" filed by Lithium Argentina at www.sedar.com.
"Person" includes any individual, sole proprietorship, partnership, unincorporated association, unincorporated syndicate, unincorporated organization, trust, body corporate, company, corporation, trustee, executor, administrator, legal representative, government (including any applicable taxation authority) or any other entity, whether or not having legal status.
"Plan of Arrangement" means the plan of arrangement under section 288 of the BCBCA, including all exhibits attached thereto, and any amendments, supplements or variations thereto made in accordance with the Arrangement Agreement, the terms thereof or at the direction of the Court in the Final Order (with the consent of Lithium Argentina, acting reasonably).
"Post-Arrangement Period" means any taxable period (or portion thereof) beginning after the Effective Date.
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"Pre-Arrangement Period" means any taxable period (or portion thereof) ending on or before the Effective Date.
"Relevant Tax Period" means any taxable year or other tax period that (i) ends on or before the Effective Date or (ii) begins before and ends after the Effective Date.
"Ruling" means a subsequent ruling issued by the IRS (or other Governmental Authority), pursuant to a ruling request filed by, or on behalf of, Lithium Argentina or Spinco (or any of their respective Affiliates), as applicable.
"Satisfactory Guidance" means either a Ruling or a Subsequent Tax Opinion, in either case, reasonably acceptable to the Party to whom it is delivered as described in Section 3.2(d), in both form and substance, including with respect to any underlying assumptions or representations and any legal analysis contained therein, and concluding that the proposed action, omission or transaction prompting the Ruling or Subsequent Tax Opinion should not cause any applicable step or aspect of the Arrangement and/or certain other transactions occurring in conjunction therewith to fail or cease to qualify for its Intended U.S. Tax Treatment.
"Separate Tax Return" means (i) any Tax Return of, or including, any member of the Lithium Argentina Group that does not include any member of the Spinco Group and (ii) any Tax Return of, or including, any member of the Spinco Group that does not include any member of the Lithium Argentina Group.
"Specified Action" has the meaning ascribed thereto in Section 3.2(a).
"Spinco Equity Awards" means, collectively, the Spinco DSUs, the Spinco PSUs and the Spinco RSUs (each as defined in the Plan of Arrangement).
"Spinco Group" means Spinco and its Affiliates, whether held directly or indirectly; for greater certainty, in all circumstances, "Spinco Group" excludes the Lithium Argentina Group.
"Spinco Indemnified Parties" has the meaning ascribed thereto in Section 4.1.
"Subsequent Tax Opinion" means an opinion of Tax Counsel which permits the Party to whom such opinion is provided pursuant to Section 3.2(d) to rely on such opinion; provided that Tax Counsel, in issuing its opinion, shall (i) be permitted to rely on the validity and correctness, as of the date given, of the applicable U.S. Tax Ruling and any other issued tax opinions or tax rulings, unless such reliance would be unreasonable under the circumstances, and (ii) assume the Arrangement and/or certain other transactions occurring in conjunction therewith would have qualified for the Intended U.S. Tax Treatment if the proposed action, omission or transaction prompting the Subsequent Tax Opinion did or did not occur, as applicable.
"Tax Act" means the Income Tax Act (Canada).
"Tax Arbiter" has the meaning ascribed thereto in Section 7.14.
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"Tax Authority" means any multinational, federal, provincial, territorial, state, regional, municipal, local or other government, governmental or quasi-governmental entity or municipality, or political or other subdivision thereof, department, commission, board, self-regulating authority, regulatory body, bureau, branch, or authority, or any agency or instrumentality of any such government, governmental or quasi-governmental entity or municipality, or political or other subdivision thereof, or any federal, provincial, territorial, state, local or foreign court, commission, board, agency, arbitrator or other tribunal, and any official of any of the foregoing having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS and CRA).
"Taxes" means all income taxes, capital taxes, stamp taxes, charges to tax, withholdings, sales and use taxes, value added taxes, goods and services taxes, and all penalties, interest and other payments thereon or in respect thereof, including a payment under the Tax Act, the Code, or any other federal, provincial, territorial, state, municipal, local or foreign tax law, in each case, as amended.
"Tax Contest" means any pending or threatened audit, review, examination, assessment, reassessment or any other administrative or judicial proceeding with the purpose or effect of redetermining Taxes (including any administrative or judicial review of any claim for refund).
"Tax Counsel" means a nationally recognized law firm or accounting firm.
"Tax Returns" means all reports, returns, information statements, questionnaires or other documents or data (whether in printed, electronic or other form) required to be filed or that may be filed for any period in connection with any Tax or Taxes.
"Tax Rulings" means the advance income tax rulings from each of the CRA (with respect to such tax ruling, the "Canadian Tax Ruling") and the IRS (with respect to such tax ruling, the "U.S. Tax Ruling"), in the form requested in the applications made on behalf of Lithium Argentina (collectively, the "Tax Ruling Applications"), as the same may be amended, modified and/or supplemented from time to time at the request of the CRA or the IRS, as applicable, or at the request of Lithium Argentina, in each case, confirming the applicable Canadian and U.S. federal income tax consequences of the spin-off by Lithium Argentina of the North American Business under the Arrangement and certain other transactions.
"Thacker Pass Co" means 1339480 B.C. Ltd., and includes its successors and permitted assigns.
"Thacker Pass Project" means the lithium project property located in Humboldt County, Nevada, as described in the technical report titled "Feasibility Study National Instrument 43-101 Technical Report for the Thacker Pass Project, Humboldt County, Nevada, USA" with an effective date of November 2, 2022 filed by Lithium Americas Corp. at www.sedar.com.
"Third Party Beneficiaries" has the meaning ascribed thereto in Section 7.13.
"Transfer Tax" means any sale, use, value-added, goods and services, consumption, excise, transfer, stamp, documentary, filing, recordation Tax or similar Tax, in each case imposed or payable as a result of the Arrangement or certain related transactions thereto. "Treasury Regulations" means the final, temporary or proposed U.S. federal income tax regulations promulgated under the Code, as such tax regulations may be amended from time to time.
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1.2 Interpretation Not Affected by Headings, etc.
The division of this Agreement into Articles, Sections, and other portions and the insertion of headings are for convenience of reference only and will not affect the construction or interpretation hereof. Unless otherwise indicated, all references to an "Article" and "Section" followed by a number and/or a letter refer to the specified Article or Section of this Agreement. The terms "hereof", "herein" and "hereunder" and similar expressions refer to this Agreement and not to any particular Article, Section, or other portion hereof.
1.3 Rules of Construction
In this Agreement, unless the context otherwise requires, (a) words importing the singular number include the plural and vice versa, (b) words importing any gender include all genders, including the neuter gender, and (c) the words "include", "includes" and "including" will be deemed to be followed by the words "without limitation" and the words "the aggregate of", "the total of", "the sum of" or a phrase of similar meaning means "the aggregate (or total or sum), without duplication, of".
1.4 Currency
Unless otherwise stated, all references in this Agreement to sums of money are expressed in lawful money of Canada and "$" refers to Canadian dollars. In the event that any amounts are required to be converted from a foreign currency to Canadian dollars or vice versa, such amounts shall be converted using the most recent closing exchange rate of the Bank of Canada available before the relevant calculation date.
1.5 Date for Action and Computation of Time
If the date on which any action is required or permitted to be taken hereunder by a Person is not a Business Day, such action will be required or permitted to be taken on the next succeeding day which is a Business Day. Unless otherwise specified, a period of time is to be computed as beginning on the day following the event that began the period and ending at 5:00 p.m. on the last day of the period, if the last day of the period is a Business Day, or at 5:00 p.m. on the next Business Day if the last day of the period is not a Business Day.
1.6 References to Days, Statutes, etc.
(a) In this Agreement, references to days means calendar days, unless otherwise specified.
(b) In this Agreement, unless something in the subject matter or context is inconsistent therewith or unless otherwise herein provided, a reference to any law, statute, regulation, direction, code or instrument is to that law, statute, regulation, direction, code or instrument as now enacted or as the same may from time to time be amended, re-enacted or replaced, and in the case of a reference to a law, statute or code, includes any regulations, rules, policies or directions made thereunder. Any reference in this Agreement to a Person includes its heirs, administrators, executors, legal personal representatives, predecessors, successors and permitted assigns. References to any agreement, contract or document (including this Agreement) are to that agreement, contract or document as amended, modified or supplemented from time to time in accordance with its terms.
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1.7 Time
Time will be of the essence in every matter or action contemplated hereunder. All times expressed herein are to local Vancouver, British Columbia time, unless otherwise specified.
ARTICLE 2
PREPARATION, FILING OF TAX RETURNS AND PAYMENT OF TAXES
2.1 Separate Tax Returns
(a) Lithium Argentina shall be responsible for preparing and timely filing, or causing any Lithium Argentina Group member to prepare and timely file, any Pre- Arrangement Period or Post-Arrangement Period Separate Tax Return that is required to be filed pursuant to Applicable Law by, or with respect to, Lithium Argentina or any member of the Lithium Argentina Group.
(b) Spinco shall be responsible for preparing and timely filing, or causing any Spinco Group member to prepare and timely file, any Pre-Arrangement Period or Post- Arrangement Period Separate Tax Return that is required to be filed pursuant to Applicable Law by, or with respect to, Spinco or any member of the Spinco Group.
2.2 Transfer Tax Returns and Other Tax Filings
The Party required under Applicable Law to file any Tax Returns in respect of Transfer Taxes or any other Tax Returns (or related filings) in respect of any other Tax matters (excluding any amended Tax Returns covered by Section 2.3) shall prepare and file (or cause to be prepared and filed) such Tax Returns. Subject to the provisions provided in Section 6.3 hereof, if required by Applicable Law, Lithium Argentina and Spinco shall, and shall cause their respective Group members to, cooperate in preparing and filing, and join the execution of, any such Tax Returns.
2.3 Amended Tax Returns and Other Actions
(a) Any amended Tax Return or claim for a Tax refund (or any other similar benefits) with respect to any Party may be made by the Party responsible for filing the original Tax Return as set forth in this Article 2. To the extent that any Tax benefits (or any other similar benefits arising from such amended Tax Return) are derived from the filing of an amended Tax Return (including with the consent of an Affected Party obtained pursuant to Section 2.3(b)), the Party responsible for filing such Tax Return shall be entitled to receive any such Tax Benefits, except to the extent otherwise agreed to by the Parties in writing.
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(b) No Party shall file an amended Tax Return, amend or revoke any Tax election or apply to any Tax Authority for any binding or non-binding opinion, ruling or other determination with respect a Tax Return if such action could reasonably be expected to increase the Tax liability of, or give rise to a payment under Section 2.5 of this Agreement by, any other Party (with respect to such party, an "Affected Party") without the prior written consent of any such Affected Party (which consent shall not be unreasonably withheld, delayed or conditioned).
2.4 Preparation and Filing Procedures
(a) Except as provided in Section 2.4(b), or in any other provision of this Agreement, Lithium Argentina and Spinco shall prepare, or cause their respective Group members to prepare, any Tax Return, which such Party has (under this Article 2) the obligation and right to prepare, using past practices, accounting methods, elections or conventions ("Past Practices") used with respect to the Tax Returns in question (unless there is no reasonable basis for the use of such Past Practices), and to the extent any items are not covered by Past Practices (or in the event that there is no reasonable basis for the use of such Past Practices), in accordance with reasonable Tax accounting practices and, in all cases, that are consistent with Applicable Law.
(b) Unless and until there has been a Final Determination to the contrary, each Party (together with such Party's Group members) shall not take any position on any Tax Return or in connection with any Tax Contest with respect to any Tax Return that is inconsistent with the Intended Tax Treatment associated with the Arrangement and certain other transactions occurring in conjunction therewith as described and set forth in the Tax Rulings, taking into account the jurisdiction in which such Tax Return is filed.
2.5 Payment of Taxes
(a) Lithium Argentina shall pay (or cause the applicable member of the Lithium Argentina Group to pay) to the proper Tax Authority the Tax shown as due on any Tax Return for which Lithium Argentina (or the applicable member of the Lithium Argentina Group) is responsible under Article 2.
(b) Spinco shall pay (or cause the applicable member of the Spinco Group to pay) to the proper Tax Authority the Tax shown as due on any Tax Return for which Spinco (or the applicable member of the Spinco Group) is responsible under Article 2.
(c) For the avoidance of doubt, Lithium Argentina and Spinco shall also pay (or cause the applicable member of their respective Group to pay) any amounts arising from any Tax Contest in respect of a Tax Return that such Party (or the applicable member of such Party's Group) is responsible for under this Agreement.
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2.6 Employment Taxes
Notwithstanding anything contained herein to the contrary, this Agreement, including this Article 2, shall not apply with respect to employment Taxes. Except as set out in Section 6.1(e), all matters pertaining to employment Taxes or any other employment matter (e.g., allocation of costs, deductibility, provision of award grants) are, or will be, addressed in certain other agreements including the Plan of Arrangement and Arrangement Agreement, as well as certain other ancillary agreements entered into by the Parties pertaining to either Lithium Argentina's or Spinco's Arrangement Equity Awards, and any other employee incentive plans provided by the Parties.
ARTICLE 3
COVENANTS
3.1 Canadian Tax-Related Covenants
(a) Covenants of Lithium Argentina in Favour of Spinco
i. Lithium Argentina covenants and agrees that it shall not, and that it shall cause each other member of the Lithium Argentina Group to not, propose, approve or enter into any transaction or permit any transaction within its control to occur that would cause Lithium Argentina or any other member of the Lithium Argentina Group that is a corporation to cease to be a "specified corporation" (within the meaning of the Tax Act) as at the Effective Date, except as contemplated in the Canadian Tax Ruling;
ii. Lithium Argentina covenants and agrees that it shall not, and that it shall cause each other member of the Lithium Argentina Group to not, take or support any action, omit to take any action or propose, approve or enter into any transaction that could result in subsection 55(2) of the Tax Act applying to cause either Lithium Argentina and/or Spinco to realize or be deemed to realize a gain as a result of the transactions undertaken pursuant to the Arrangement, except as contemplated in the Canadian Tax Ruling;
iii. Lithium Argentina covenants and agrees that it shall not, and that it shall cause each other member of the Lithium Argentina Group to not, take any action, omit to take any action or propose, approve or enter into any transaction that could cause the Arrangement or any related transactions to be treated in a manner inconsistent with the Canadian Tax Ruling;
iv. Lithium Argentina covenants and agrees that it shall, and that it shall cause each other member of the Lithium Argentina Group to, timely file any and all Tax Returns that are required to be filed by the applicable entity under Article 2 hereof, under the Tax Act or any other Applicable Law in respect of Taxes (including, for greater certainty, any election forms under section 85 of the Tax Act) in accordance with the terms of this Agreement, the Arrangement Agreement, the Plan of Arrangement and the Canadian Tax Ruling; and
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v Lithium Argentina covenants and agrees that it shall, and that it shall cause each other member of the Lithium Argentina Group to, fully cooperate and consult in good faith with Spinco and the relevant other members of the Spinco Group in the timely preparation and filing of all elections under the Tax Act as contemplated by the Canadian Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and this Agreement except that, where an agreed amount is to be included in any such election, such amount will be within the range contemplated by the Tax Act and will be the amount contemplated by the Canadian Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and this Agreement, where such amount is specified therein and, in any other case, will be the amount determined by Lithium Argentina in its reasonable discretion.
(b) Covenants of Spinco in Favour of Lithium Argentina
i. Spinco covenants and agrees that it shall not, and that it shall cause each other member of the Spinco Group to not, propose, approve or enter into any transaction or permit any transaction within its control to occur that would cause Lithium Argentina or any other member of the Lithium Argentina Group that is a corporation to cease to be a "specified corporation" (within the meaning of the Tax Act) as at the Effective Date, except as contemplated in the Canadian Tax Ruling;
ii. Spinco covenants and agrees that it shall not, and that it shall cause each other member of the Spinco Group to not, take or support any action, omit to take any action or enter into any transaction that could result in subsection 55(2) of the Tax Act applying to cause either Lithium Argentina and/or Spinco to realize or be deemed to realize a gain as a result of the transactions undertaken pursuant to the Arrangement, except as contemplated in the Canadian Tax Ruling;
iii. Spinco covenants and agrees that it shall not, and that it shall cause each other member of the Spinco Group to not, take any action, omit to take any action or propose, approve or enter into any transaction that could cause the Arrangement or any related transactions to be treated in a manner inconsistent with the Canadian Tax Ruling;
iv. Spinco covenants and agrees that it shall, and that it shall cause each other member of the Spinco Group to, timely file any and all Tax Returns that are required to be filed by the applicable entity under Article 2 hereof, under the Tax Act or any other Applicable Law in respect of Taxes (including, for greater certainty, any election forms under section 85 of the Tax Act) in accordance with the terms of this Agreement, the Arrangement Agreement, the Plan of Arrangement and the Canadian Tax Ruling; and
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v. Spinco covenants and agrees that it shall, and that it shall cause each other member of the Spinco Group to, fully cooperate and consult in good faith with Lithium Argentina and the relevant other members of the Lithium Argentina Group in the timely preparation and filing of all elections under the Tax Act as contemplated by the Canadian Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and this Agreement except that, where an agreed amount is to be included in any such election, such amount will be within the range contemplated by the Tax Act and will be the amount contemplated by the Canadian Tax Ruling, the Arrangement Agreement, the Plan of Arrangement and this Agreement, where such amount is specified therein and, in any other case, will be the amount determined by Lithium Argentina in its reasonable discretion.
3.2 U.S. Tax-Related Covenants
(a) Except as otherwise permitted pursuant to Section 3.2(d), Lithium Argentina and Spinco covenant and agree that during the period specified in Section 3.4, neither Party nor any of their respective Affiliates (or any officers, directors, or authorized Persons acting on behalf of Lithium Argentina or Spinco, as applicable), shall (a) take or plan to take any action or approve, negotiate, arrange or formulate any plan during such period to take any such action after the lapse of such period that would be inconsistent with the information, representations or conclusions set forth in the U.S. Tax Ruling or any other tax opinions issued in conjunction therewith, and (b) refrain from taking or planning to take, any of the actions specified in Section 3.2(b) and Section 3.2(c) (all such actions, individually, are referred to as a "Specified Action").
(b) Covenants of Lithium Argentina in Favour of Spinco
i. Lithium Argentina shall (x) maintain its status as a company engaged in the Pastos Grandes Project portion of the Argentinian Business for purposes of section 355(b)(2) of the Code and the Treasury Regulations promulgated thereunder and (y) not engage in any transaction or enter into or amend any agreement that could cause, or could be reasonably expected to cause, Lithium Argentina (or any of the Lithium Argentina Group members, as applicable) to cease to be a company engaged in the Pastos Grandes Project portion of the Argentinian Business for purposes of section 355(b)(2) of the Code, taking into account section 355(b)(3) of the Code and the Treasury Regulations promulgated thereunder and any other administrative authority issued by the IRS, including any applicable IRS notices, revenue procedures and revenue rulings for purposes of each of clauses (x) and (y) hereof. For purposes of this Section 3.2(b)(i), this includes the following conditions:
A. Lithium Argentina and its Affiliates shall continue in the uninterrupted conduct of the Pastos Grandes Project portion of the Argentinian Business (including as related to the further research, development, construction and/or financing of such business), and shall cause the Lithium Argentina Group's officers and employees to continue to be actively engaged in the managerial and operational conduct of the Pastos Grandes Project portion of the Argentinian Business, including decision-making regarding the operations of the business, asset acquisitions and dispositions, strategic planning, marketing, budgeting and finance, and hiring, assignment, and release of key employees.
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B. Neither Lithium Argentina nor its Affiliates shall discontinue, sell, transfer or cease its operations associated with the Pastos Grandes Project portion of the Argentinian Business (including taking any action, or omitting to take any action, that could cause, or would be reasonably expected to cause, either Lithium Argentina or any of its Affiliates to cease to be engaged in the Pastos Grandes Project portion of the Argentinian Business).
ii. Lithium Argentina shall not take or plan to take, and it shall cause its Affiliates to refrain from taking or planning to take, any actions that would, or would reasonably be expected to, be inconsistent with the corporate business purposes motivating the Arrangement and as described in the U.S. Tax Ruling.
iii. In addition to the restrictions set forth above, Lithium Argentina shall agree (and that it will cause its respective Affiliates to agree) to not take any other action, omit to take any other action or enter into any other transaction or agreement that could cause, or would be reasonably expected to cause, the Arrangement and certain related transactions to be taxed in a manner inconsistent with the information, representations or conclusions set forth in the U.S. Tax Ruling or any other tax opinions issued in conjunction therewith.
(c) Covenants of Spinco in Favour of Lithium Argentina
i. Spinco shall (x) maintain its status as a company engaged in the North American Business for purposes of section 355(b)(2) of the Code and the Treasury Regulations promulgated thereunder and (y) not engage in any transaction or enter into or amend any agreement that could cause, or could be reasonably expected to cause, Spinco (or any of its Affiliates) to cease to be a company engaged in the North American Business for purposes of section 355(b)(2) of the Code, taking into account section 355(b)(3) of the Code and the Treasury Regulations promulgated thereunder and any other administrative authority issued by the IRS, including any applicable IRS notices, revenue procedures and revenue rulings for purposes of each of clauses (x) and (y) hereof. For purposes of this Section 3.2(c)(i), this includes the following conditions:
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A. Spinco and its Affiliates shall continue in the uninterrupted conduct of the North American Business (including as related to the further research, development, construction and/or financing of such business), and shall cause the Spinco Group's officers and employees to continue to be actively engaged in the managerial and operational conduct of North American Business, including decision-making regarding the operations of the business, asset acquisitions and dispositions, strategic planning, marketing, budgeting and finance, and hiring, assignment, and release of key employees.
B. Neither Spinco nor its Affiliates shall discontinue, sell, transfer or cease its operations associated with the North American Business (including taking any action, or omitting to take any action, that could cause, or would be reasonably expected to cause, either Spinco or any of its Affiliates to cease to be engaged in the North American Business).
ii. Spinco shall not take or plan to take, and it shall cause its Subsidiaries to refrain from taking or planning to take, any actions that would, or would be reasonably expected to, be inconsistent with the corporate business purposes motivating the Arrangement and as described in the U.S. Tax Ruling.
iii. In addition to the restrictions set forth above, Spinco shall agree (and that it will cause its respective Affiliates to agree) to not take any other action, omit to take any other action or enter into any other transaction or agreement that could cause, or would be reasonably expected to cause, the Arrangement and certain related transactions to be taxed in a manner inconsistent with the information, representations or conclusions set forth in the U.S. Tax Ruling or any other tax opinions issued in conjunction therewith.
(d) Notwithstanding the provisions of Section 3.2(a) through Section 3.2(c), each of Lithium Argentina, Spinco and their respective Affiliates may take any action that would reasonably be expected to be inconsistent with the covenants and restrictions contained in this Section 3.2, if, prior to taking any such actions, Lithium Argentina or Spinco delivers Satisfactory Guidance to the other with respect to any such action and such other Party provides written consent with respect to such action (which consent shall not be unreasonably withheld, delayed or conditioned).
3.3 Limitation of Covenants
Notwithstanding anything in this Agreement, the Parties agree and acknowledge that
neither Lithium Argentina nor Spinco shall be considered to have breached or defaulted under a covenant in this Article 3 as a result of any action or inaction by any member of the Lithium Argentina Group or the Spinco Group with respect to the shares of Lithium Argentina and Spinco under the ownership, control or direction (either directly or indirectly) of Ganfeng, GM or any of their respective successors, other than any action or inaction by which such Party directly (or indirectly through its Affiliates or its or their agents or representatives) and knowingly solicits, promotes or encourages the sale or purchase of such shares of Lithium Argentina and Spinco, as applicable, by Ganfeng, GM or any of their respective successors (except where such sale is a result of a Party purchasing such shares pursuant to a normal course issuer bid or a substantial issuer bid).
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3.4 Survival of Covenants
The covenants under this Article 3 shall survive the Effective Date for a period of three (3) years following the Effective Date; provided, however, that the respective obligations of the Parties to indemnify one another under Article 3 in respect of any breach by it of or default by it under such covenants shall survive the Effective Date until ninety (90) days after the last date on which an applicable Tax Authority would be entitled to assess liability for Taxes (giving effect to any waiver or extension thereof) under the Tax Act, the Code or any other Applicable Law with respect to Taxes against the relevant member of the Lithium Argentina Group or the Spinco Group for any Relevant Tax Period.
ARTICLE 4
INDEMNIFICATION
4.1 Indemnification by Lithium Argentina
Lithium Argentina shall indemnify, defend and hold harmless Spinco and each other member of the Spinco Group and each of its and their respective directors, officers and employees, and each of the heirs, personal or legal representatives, executors, trustees, administrators, successors and permitted assigns of any of the foregoing (collectively, the "Spinco Indemnified Parties"), from and against any and all Liabilities of the Spinco Indemnified Parties relating to, arising out of or resulting from a breach of or default under a covenant of Lithium Argentina in this Agreement.
4.2 Indemnification by Spinco
Spinco shall indemnify, defend and hold harmless Lithium Argentina and each other member of the Lithium Argentina Group and each of its and their respective directors, officers and employees, and each of the heirs, personal or legal representatives, executors, trustees, administrators, successors and permitted assigns of any of the foregoing (collectively, the "Lithium Argentina Indemnified Parties"), from and against any and all Liabilities of the Lithium Argentina Indemnified Parties relating to, arising out of or resulting from a breach of or default under a covenant of Spinco in this Agreement.
4.3 Indemnification in the Event of Mutual Breach
Notwithstanding Sections 4.1 and 4.2 of this Agreement, Lithium Argentina shall not be liable to indemnify any Spinco Indemnified Party under Section 4.1, and Spinco shall not be liable to indemnify any Lithium Argentina Indemnified Party under Section 4.2, from and against a Liability, if such Liability is caused by the combined and simultaneous action of both (i) one or more members of the Lithium Argentina Group and (ii) one or more members of the Spinco Group.
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ARTICLE 5
CONTROL OF TAX CHALLENGES
5.1 Control of Challenge of Tax Claims
(a) If a member of the Lithium Argentina Group or a member of the Spinco Group (the "Indemnified Party") receives notice or becomes aware of the commencement or assertion of a Claim that could give rise to a right to indemnification under this Agreement, the Indemnified Party, if a member of the Lithium Argentina Group, shall promptly notify Spinco and, if a member of the Spinco Group, shall promptly notify Lithium Argentina (in each case the recipient of the notification being the "Indemnitor").
(b) The Indemnified Party agrees to contest any Claim and not to settle any Claim without the prior written consent of the Indemnitor, provided that within thirty (30) days after receipt of notice of a Claim provided by the Indemnified Party to the Indemnitor pursuant to Section 5.1(a):
(i) the Indemnitor requests in writing that such Claim be contested by the Indemnified Party;
(ii) the Indemnitor agrees in writing to pay on demand and pays all out-of- pocket costs, losses and expenses (including legal and accounting fees) paid or incurred by the Indemnified Party in connection with contesting such Claim; and
(iii) the Indemnitor pays or agrees to pay any Liabilities for which the Indemnitor has an indemnification obligation under this Agreement that must be paid as a result of an audit, assessment or reassessment within the period for which such Taxes are due.
(c) The Indemnitor shall be entitled to participate in contesting any such Claim at its own expense. To the extent the Indemnitor is not participating, the Indemnified Party shall keep the Indemnitor and, upon written request by the Indemnitor, its counsel, informed on a timely basis as to the progress of the contest and provide copies of all material correspondence and all documents, filings, agreements or other materials relating thereto.
(d) If the Indemnitor requests that the Indemnified Party accept a settlement of a Claim offered by the relevant Tax Authority, the Indemnified Party shall either:
(i) accept such settlement offer; or
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(ii) agree with the Indemnitor that the Indemnitor's liability with respect to such Claim shall be limited to the lesser of (A) an amount calculated on the basis of such settlement offer plus interest owed to the relevant Tax Authority on the date of eventual payment, or (B) the amount calculated on the basis of a Final Determination.
(e) Except as expressly provided in this Section 5.1(e), the Indemnified Party shall not settle a Claim that the Indemnitor is entitled to require the Indemnified Party to contest under Section 5.1(b), without the prior written consent of the Indemnitor. At any time, whether before or after commencement of any action pursuant to this Section 5.1 with respect to any Claim, the Indemnified Party may decline to take action with respect to such Claim and may settle such Claim without the prior written consent of the Indemnitor by notifying the Indemnitor in writing that the Indemnitor is irrevocably released from its obligations to indemnify the Indemnified Party with respect to such Claim (which notification shall release the Indemnitor from all such obligations except to the extent the Indemnitor has previously agreed in writing that it would be willing to have its liability calculated on the basis of a settlement offer in accordance with Section 5.1(d) with respect to such Claim or based on the outcome of such Claim). If the Indemnified Party settles any Claim or otherwise takes or fails to take any action pursuant to Section 5.1(e), the Indemnified Party shall pay to the Indemnitor any amounts paid or advanced by the Indemnitor with respect to such Claim (other than amounts payable by the Indemnitor in connection with a settlement offer pursuant to Section 5.1(d)), plus interest attributable to such amounts.
ARTICLE 6
COOPERATION AND RECORD RETENTION
6.1 Cooperation and Record Retention
(a) Lithium Argentina shall and shall cause each other member of the Lithium Argentina Group to, and Spinco shall and shall cause each other member of the Spinco Group to, cooperate with any member of the other Group in the conduct of any audit or other proceedings in respect of Taxes and related Liabilities for a Relevant Tax Period. Lithium Argentina shall and shall cause each other member of the Lithium Argentina Group to, and Spinco shall and shall cause each other member of the Spinco Group to, execute and deliver such powers of attorney and make available such other documents as are reasonably necessary to carry out the intent of this Agreement. Lithium Argentina shall and shall cause each other member of the Lithium Argentina Group to notify Spinco in writing, and Spinco shall and shall cause each other member of the Spinco Group to notify Lithium Argentina in writing, of any audit, assessment or reassessment adjustments which do not result in Tax liability but can be reasonably expected to affect Tax Returns of a member of the other Group for any taxable year or other tax period.
(b) Lithium Argentina shall and shall cause each other member of the Lithium Argentina Group to, and Spinco shall and shall cause each other member of the Spinco Group to retain records, documents, accounting data and other information (including computer data) necessary for the preparation, filing, review or audit of any Tax Returns in respect of any Relevant Tax Period in accordance with their respective record retention policies and all Applicable Law (or in the absence of which, until the tenth (10th) anniversary of the Effective Date).
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(c) Lithium Argentina shall and shall cause each other member of the Lithium Argentina Group to, and Spinco shall and shall cause each other member of the Spinco Group to, provide to any member of the other Group reasonable access to such records, documents, data and information and to personnel and premises and ensure the reasonable cooperation of such personnel during normal business hours for the purpose of the review or audit of any Tax Returns in respect of any Relevant Tax Period.
(d) Spinco shall, and shall cause each other member of the Spinco Group to, provide to Lithium Argentina access to such records, documents, data, information, personnel and premises of Spinco and of the other relevant members of the Spinco Group as may be required by Lithium Argentina to comply with the provisions in the Tax Act relating to foreign affiliates or to transfer pricing. Without limiting the generality of the foregoing, Spinco shall cause each other member of the Spinco Group that was a foreign affiliate (as defined in the Tax Act) of Lithium Argentina on or before the Effective Date, upon request by Lithium Argentina, to:
(i) respond in full to inquiries of the CRA concerning foreign affiliates within one (1) month of the receipt thereof;
(ii) provide Lithium Argentina with complete financial statements;
(iii) respond to questions concerning Form T106 within fifteen (15) Business Days of receipt; and
(iv) respond promptly to other relevant questions for the purposes of the foreign affiliate regime or the transfer-pricing regime in all cases for any Relevant Tax Period.
(e) Each of Lithium Argentina and Spinco (each the "Employer") shall cooperate with the other Party (each the "Issuer") and provide any information reasonably requested by the Issuer for purposes of the administration of and performance of the Issuer's obligations under any Arrangement Equity Awards granted by the Issuer under the Issuer's Equity Incentive Plan to each Arrangement Departing Participant who becomes, at any time on or after the Effective Time, a director, officer or employee of the Employer or any of its Affiliates. Without limiting the generality of the foregoing, but subject to Applicable Law, the Employer will notify the Issuer as soon as practicable after any Arrangement Departing Participant ceases to be a director, officer or employee of the Employer or any of its Affiliates. Such notice shall specify the relevant termination provisions of the Equity Incentive Plan to be applied to the Arrangement Equity Awards of the applicable Arrangement Departing Participant. To the extent not obtained prior to the Effective Date, the Employer will use commercially reasonable efforts to obtain, as soon as practicable after the Effective Time, each Arrangement Departing Participant's consent to such cooperation, information sharing and notification process, which consent shall be in writing in a form and substance satisfactory to the Issuer (acting reasonably) and duly executed by the applicable Arrangement Departing Participant.
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6.2 Limitation on Access to Records
(a) Unless specifically set forth herein, nothing contained in this Agreement shall be construed as granting or conferring rights of ownership, license or otherwise in any records, documents, data or information contained in or disclosed by a Party to another Party pursuant to this Agreement.
(b) A Party providing access to records, documents, data and information and to personnel and premises hereunder shall be entitled to be reimbursed by the requesting Party for all reasonable out-of-pocket costs and expenses incurred in connection with creating, gathering and copying such records or providing such access.
(c) The rights and obligations granted under this Article 6 are subject to any restrictions and obligations imposed by any Governmental Authority or Applicable Law.
(d) In no event will a Party providing cooperation or providing access to or making available records, documents, data or information or its premises or personnel to the other Party, be responsible for any losses, damages, fees, costs or expenses incurred by such other Party directly as a result of such cooperation or access.
6.3 Transfer Taxes
The Parties shall cooperate with each other in good faith and shall use reasonable commercial efforts to mitigate all Transfer Taxes arising in connection with the Arrangement, including, if applicable, executing any and all elections, in the prescribed form within the prescribed time.
ARTICLE 7
MISCELLANEOUS
7.1 Inconsistencies with Arrangement Agreement
Where any inconsistency between a provision of this Agreement and a provision of the Arrangement Agreement arises as regards to taxation matters, the provisions of this Agreement shall prevail.
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7.2 After-Tax Liability
The amount of any Liability for which indemnification is provided under this Agreement or under the Arrangement Agreement and which is payable to an Indemnified Party by the Indemnitor pursuant to this Agreement or by the Indemnifier pursuant to the Arrangement Agreement shall be adjusted to take into account any Tax benefit realized by the Indemnified Party or any of its Affiliates by reason of the Liability for which indemnification is so provided or the circumstances giving rise to such Liability. For purposes of this Section 7.2, any Tax benefit shall be taken into account at such time as it is received by the Indemnified Party or its Affiliate. Conversely, if any such indemnity payment received by an Indemnified Party pursuant to this Agreement or pursuant to the Arrangement Agreement would constitute income for Tax purposes to such Indemnified Party, the Indemnitor or the Indemnifier, as applicable, shall pay to the Indemnified Party such additional amount as is necessary to place the Indemnified Party in the same after-Tax position as it would have been in had the Liability out of which such indemnity payment arose not occurred, provided that the Parties shall consider ways in which to mitigate any such consequence including, if available, making an election under subsection 12(2.2) of the Tax Act.
7.3 Severability
If any provision of this Agreement or the application thereof to any Person or circumstance is determined by a court of competent jurisdiction to be invalid, void or unenforceable, the remaining provisions hereof, or the application of such provision to Persons or circumstances or in jurisdictions other than those as to which it has been held invalid or unenforceable, shall remain in full force and effect and shall in no way be affected, impaired or invalidated thereby, so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any Party. Upon such determination, the Parties shall negotiate in good faith in an effort to agree upon such a suitable and equitable provision to effect the original intent of the Parties.
7.4 Deadlines
Where in this Agreement a Person is required to send a notice, make a decision or take any other action within a certain period of time or before a certain date or deadline, Lithium Argentina and Spinco may, by mutual agreement to be evidenced in writing, decide to extend or shorten such period of time or forestall or postpone such date or deadline.
7.5 Amendments
No provisions of this Agreement shall be amended, supplemented or modified by any Party, unless such amendment, supplement or modification is in writing and signed by the authorized representatives of each of the Parties.
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7.6 Notices
Any demand, notice or other communication to be given in connection with this Agreement must be given in writing and delivered personally or by courier or by email addressed to the recipient as follows:
(a) To Lithium Argentina:
Lithium Americas (Argentina) Corp.
300-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: John Kanellitsas
Email: [Redacted]
Copy to: Alex Shulga
Email: [Redacted]
(b) To Spinco:
Lithium Americas Corp.
400-900 West Hastings Street
Vancouver, British Columbia
V6C 1E5
Attention: Jonathan Evans
Email: [Redacted]
or other such address that a Party may, from time to time, advise the other Parties hereto by notice in writing given in accordance with the foregoing. Date of receipt of any such notice will be deemed to be the date of actual delivery thereof or, if given by email, on the day of transmittal thereof if given during the normal business hours of the recipient with confirmation of receipt of the same and on the next Business Day, if not given during such hours.
7.7 Further Assurances
Each of the Parties will from time to time execute and deliver all such further documents and instruments and do all acts and things as any other Party may reasonably require or request to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.
7.8 Assignment
No Party may assign its rights or obligations under this Agreement or the Arrangement without the prior written consent of the other Parties, provided that no such consent will be required for any Party to assign its rights and obligations under this Agreement and the Arrangement to a corporate successor to such Party or to a purchaser of all or substantially all of the assets of such Party, provided further that any such successor or purchaser will have executed and delivered to the other Party an agreement in writing to be bound by and to perform, satisfy and assume all of the provisions of this Agreement as if an original party hereto, in form and substance satisfactory to the other Party, acting reasonably.
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7.9 Binding Effect
This Agreement will be binding upon and enure to the benefit of the Parties hereto and their respective successors and permitted assigns and specific references to "successors" elsewhere in this Agreement will not be construed to be in derogation of the foregoing. Nothing in this Agreement, express or implied, is intended or will be construed to confer upon any Person other than the Parties and other Indemnified Parties and their successors and permitted assigns any right, remedy or claim under or by reason of this Agreement.
7.10 Waiver
Any waiver or release of any of the provisions of this Agreement, to be effective, must be in writing executed by the Party granting the same. No waiver of any of the provisions of this Agreement will constitute a waiver of any other provision (whether or not similar). A Party's failure or delay in exercising any right under this Agreement will not operate as a waiver of that right. A single or partial exercise of any right will not preclude a Party from any other or further exercise of that right or the exercise of any other right.
7.11 Entire Agreement
This Agreement together with the agreements and other documents herein or therein referred to constitute the entire agreement between the Parties with respect to the subject matter hereof and supersede all prior agreements, understandings, negotiations and discussions, whether oral or written, between the Parties with respect thereto. There are no representations, warranties, covenants, conditions or other agreements, express or implied, collateral, statutory or otherwise, between the Parties in connection with the subject matter of this Agreement, except as set forth herein and therein.
7.12 Governing Law; Attornment
This Agreement will be governed by and construed in accordance with the laws of the Province of British Columbia and the laws of Canada applicable therein and will be treated in all respects as an British Columbia contract. For the purpose of all legal proceedings this Agreement will be deemed to have been performed in the Province of British Columbia and, except as set out in Section 7.14, the courts of the Province of British Columbia will have non-exclusive jurisdiction to entertain any action arising under this Agreement. Subject to Section 7.14, each Party hereby irrevocably attorns and submits to the non-exclusive jurisdiction of the courts of the Province of British Columbia.
7.13 No Third Party Beneficiaries
Except as provided for in this Section 7.13, this Agreement is not intended to confer any rights or remedies on any Person other than the Parties. The provisions of Sections 4.1 and 4.2 are intended for the benefit of the Spinco Indemnified Parties and the Lithium Argentina Indemnified Parties as and to the extent applicable in accordance with their terms, and shall be enforceable by each of such Persons (collectively, the "Third Party Beneficiaries"). Spinco, to the extent applicable, shall hold the rights and benefits of Section 4.1 in trust for and on behalf of the applicable Third Party Beneficiaries and Lithium Argentina, to the extent applicable, shall hold the rights and benefits of Section 4.2 in trust for and on behalf of the applicable Third Party Beneficiaries. Each of Lithium Argentina and Spinco hereby accepts such trust and agrees to hold the benefit of and enforce performance of such covenants on behalf of the Third Party Beneficiaries as directed by such Third Party Beneficiaries.
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7.14 Dispute Resolution
In the event of any dispute, claim, question or disagreement (each, a "Dispute") relating to this Agreement, the Parties shall work together in good faith to resolve such Dispute within thirty (30) days. In the event that such Dispute is not resolved, upon written notice by a Party after such thirty (30)-day period, the matter shall be referred to, as applicable, a Canadian or U.S. Tax counsel or other Canadian or U.S. Tax advisor of recognized national standing (the "Tax Arbiter") that will be jointly chosen by Lithium Argentina and Spinco; provided, however, that, if Lithium Argentina and Spinco do not agree on the selection of the Tax Arbiter after five (5) days of good faith negotiation, the Tax Arbiter shall consist of a panel of, as applicable, three Canadian or U.S. Tax counsel or other Canadian or U.S. Tax advisors of recognized national standing with one member chosen by Lithium Argentina, one member chosen by Spinco, and a third member chosen by mutual agreement of the other members within the following ten (10)-day period. Each decision of a panel Tax Arbiter shall be made by majority vote of the members. The Tax Arbiter may, in its discretion, obtain the services of any third party necessary to assist it in resolving the dispute. The Tax Arbiter shall furnish written notice to the Parties to the dispute of its resolution of the dispute as soon as practicable, but in any event no later than ninety (90) days after acceptance of the matter for resolution. Any such resolution by the Tax Arbiter shall be binding on and enforceable against the Parties and shall not be subject to appeal, and the Parties shall take, or cause to be taken, any action necessary to implement such resolution. Unless the Parties agree to share the fees and expenses incurred in connection with any proceedings pursuant to this Section 7.14 (including each Party's and the Tax Arbiter's respective fees and expenses), the Tax Arbiter shall determine what portion of the fees and expenses incurred in connection with this Section 7.14 shall be borne by each Party. The Parties agree to use commercially reasonable efforts to keep their respective fees and expenses incurred in connection with any proceedings pursuant to this Section 7.14 reasonable. In the case of any dispute involving the Tax laws of a jurisdiction other than Canada or the United States, the provisions of this Section 7.14 shall apply to such dispute mutatis mutandis. Notwithstanding the foregoing, either Party may seek injunctive or other equitable relief from a court of competent jurisdiction to enforce their rights or protect their interests prior to or during any proceedings contemplated by this Section 7.14.
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7.15 Counterparts
This Agreement and any document contemplated by or delivered under or in connection with this Agreement and any amendment, supplement or restatement hereof or thereof may be executed in one or more counterparts (including in electronic form or with electronic signatures), each of which will be deemed to be an original and all of which taken together will be deemed to constitute the same instrument. Delivery of an executed signature page to this Agreement by any Party by electronic transmission will be as effective as delivery of a manually executed copy of the Agreement by such Party.
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IN WITNESS WHEREOF the Parties have executed this Agreement.
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LITHIUM AMERICAS CORP.
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| by | (signed) "John Kanellitsas" |
| Name: | John Kanellitsas |
| Title: | Executive Director, President &Interim Chief Executive Officer |
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LITHIUM AMERICAS (ARGENTINA) CORP.
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| by | (signed) "Jonathan Evans" |
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Name: |
Jonathan Evans |
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Title: |
President & Chief Executive Officer |
I. Objective and Scope
This code of business conduct ethics ("Code") applies to all Company personnel at Lithium Americas (Argentina) Corp. ("Lithium Argentina" or the "Company"), including executive management, employees, interns, consultants and board of directors ("Board") regardless of their position at the Company, at all times and everywhere we do business.
This Code reflects our commitment to a culture of honesty, integrity and accountability and outlines the basic principles and policies which everyone at the Company is expected to comply with.
We require the highest standards of professional and ethical conduct from our employees, officers and directors and consultants who work regularly with the Company (hereinafter referred to as "consultants"). Our reputation for honesty and integrity is important for the success of our business. No one at the Company will be permitted to achieve results through violations of laws or regulations, or through unscrupulous dealings.
We aim for our business practices to be compatible with, and sensitive to, the economic and social priorities of each location in which we operate. Although customs vary in different jurisdictions and standards of ethics may vary in different business environments, honesty and integrity must always characterize our business activity.
In addition to following this Code, you are expected to seek guidance in any case where there is a question about compliance with both the letter and spirit of our policies and any applicable laws. This Code is not a complete code of conduct, rather it sets forth general principles and does not supersede the specific policies and procedures that are in effect, such as the Company's Disclosure Policy, Securities Trading Policy or other policies that are in effect from time to time.
II. Guiding Principles
We expect our Company personnel as described above to:
A. Comply with applicable laws, rules and regulations.
B. Act honestly and ethically.
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C. Use their best judgement.
D. Understand the legal requirements and other standards applicable to their work, and seek advice from the Management, internal counsel or externally if you are uncertain on how to proceed.
E. Act with integrity and treat people with respect.
F. Promote diversity and inclusion within all workplaces, and do not engage in bullying, harassment, or discrimination of any kind.
G. Avoid conflicts of interest and do not use Company opportunities for personal gain.
H. Keep information confidential.
I. Comply with environmental, social, health and safety requirements.
J. Protect Company assets and use them efficiently.
K. Report unethical or illegal behavior, and concerns about our business or financial disclosure.
L. Individuals who fail to comply with this Code and applicable laws will be subject to disciplinary measures, up to and including discharge from the Company.
III. Definitions
"Board" means the Board of Directors.
"Company" means the Company and all of its subsidiaries, wholly and partially owned.
"Director" means a member of the Board.
"Employees" means any individual hired directly by the Company or one of its subsidiaries.
"Financial Executive" means the Chief Financial Officer ("CFO") and their direct reports responsible for financial or internal audit functions of the Company, holding the title of Executive Vice President, Senior Vice President and Vice President.
"Management" means Company employees who directly report to the Chief Executive Officer ("CEO") or CFO, have an Executive Vice President or Senior Vice President title, or other Officers of the Company.
"Officer" means a Company employee appointed by the Board or CEO in accordance with the Company's Articles.
"Senior Executive Officer" means the CEO or CFO.
IV. Specifics of the Code
1. Compliance with Laws, Rules and Regulations
We have a responsibility to monitor all legal boundaries and to comply with all applicable laws and regulations in all of our activities worldwide. Compliance with both the letter and spirit of all laws, rules, and regulations applicable to our business is important for our Company's reputation and continued success. We must respect and obey the laws of the cities, states, and countries in which we operate and avoid even the appearance of impropriety.
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2. Diversity, equity and inclusion
We recognize the benefits of having a diverse and inclusive workforce. This provides the Company with a multitude of perspectives, skillsets, talents, and knowledge to draw from. As a result, we give due consideration to diversity in all aspects of engaging employees, officers, directors and consultants and are committed to providing equal opportunity in all aspects of employment. We will treat all employees, officers, directors and consultants with equality and respect during their time with the Company, without regard to their religion, race, skin color, gender identity or expression, sexual orientation, family or marital status, political beliefs, ethnicity, nationality, physical or mental ability, age or any other protected grounds (collectively, "Protected Grounds"), in all employment matters including selection, recruitment, hiring, promotion, compensation, termination, training and development, subject to bona fide occupational requirements.
3. Respectful Workplace - Discrimination, Bullying and Harassment are Prohibited
We strive to provide a respectful workplace. Every employee, officer, director, and consultant must comply with the Company's Respectful Workplace Policy, which requires that everyone treat all other employees, officers, directors, and consultants of the Company in a fair and non-discriminatory manner in all Company-related dealings. You must not subject another officer, director, employee, or consultant to:
A. Discrimination based on any Protected Grounds;
B. Harassment or bullying of any kind, including conduct or comments (implicit or explicit) that are inappropriate or could cause humiliation or intimidation, including verbal abuse, insults, derogatory names, aggressive gesturing, spreading malicious rumours, threats, intimidation and violence; or
C. sexual harassment, including requests for sexual favours, unwelcome physical contact, unwelcome sexual advances, remarks, questions, jokes, innuendos or threats of a sexual nature, leering, staring, making sexual gestures, and offensive graffiti, drawings and sayings.
If you have experienced or witnessed an incident involving what you believe to be discrimination based on any Protected Grounds, harassment, bullying or sexual harassment, we ask that you report it as soon as possible. Reporting can be done through the whistleblower line as per the Company's Whistleblower Policy, or to your immediate supervisor, the Vice President ("VP") of Human Resources, Executive VP of Latin America, or the Chief Financial Officer ("CFO") of the Company (unless any of them were involved in the incident, then please report it only to those persons previously listed who were not involved). Any report of alleged discrimination, harassment, sexual harassment, or bullying will be fully investigated and documented, and the Company will take appropriate action. The Company will use its best efforts to keep the identity of those involved confidential without the permission of those who were the target of or who witnessed the incident, and only then if the Company determines there is a bona fide business or other purpose for doing so.
4. Health, Safety and Well-Being
We are all responsible for maintaining a safe workplace by following the health and safety rules, policies and practices. This extends not only to physical health but also to mental health and well-being. The Company is committed to providing a safe and healthy workplace and working environment for its employees, officers, directors, and consultants. This includes keeping its workplaces free from hazards. Please report any accidents, injuries, unsafe equipment, practices, or conditions immediately to a supervisor or other designated person. In order to protect the health and safety of all employees, officers and consultants, employees, officers, and consultants must report to work free from the influence of alcohol, illegal drugs, cannabis, or any other substance that could prevent you from conducting work activities safely and effectively. All employees, officers, directors, and consultants within Company property or while carrying out duties on the Company's behalf, are prohibited from possessing or using weapons or firearms unless required to do so pursuant to your job description and responsibilities.
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5. Environment and Corporate Social Responsibility
The Company aims to minimize the environmental impacts of its operations to the extent possible. The Company's policy is to comply with all applicable environmental laws and regulations within all jurisdictions in which it operates. If any employee, officer, director, or consultant has any doubt as to the applicability or meaning of a particular environmental, health or safety regulation, the individual should immediately discuss the matter with their supervisor or with a member of Management.
Respectfully engaging with local communities and local Indigenous groups in the areas surrounding our projects is important to the Company. We strive to proactively work with local communities and local Indigenous groups to build and maintain collaborative relationships throughout the lifecycle of the Company's projects.
6. Confidentiality
Directors, officers, employees and consultants of the Company must preserve and protect the confidentiality of information entrusted to them by the Company or that otherwise comes into their possession over the course of their employment, except when disclosure is expressly authorized or legally mandated.
The obligation to preserve the Company's confidential information continues even after you leave the Company. The Company's Disclosure Policy sets forth certain specific obligations in respect of confidentiality.
Confidential information includes all non-public information that may be of use to competitors, or harmful to the Company or its customers, if disclosed. It also includes information that suppliers and customers have entrusted to us.
Nothing contained in this Code shall limit the ability of directors, officers, employees and consultants of the Company to file a charge or complaint with a relevant governmental agency and communicate with such agency or otherwise participate in any investigation or proceedings that may be conducted by any such agency, including providing documents or other information in connection therewith, without notice to the Company.
7. Conflicts of Interest
Directors, officers, employees and consultants must avoid situations where their personal interests or relationships could conflict with or appear to be in conflict with the interests of the Company and its stakeholders, or where their personal interests have an effect on their ability to act in the best interests of the Company. This is commonly known as a "conflict of interest".
A conflict of interest could arise where:
A. An individual takes action for their direct or indirect benefit or the direct or indirect benefit of a third party that is inconsistent with the interests of the Company; or
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B. an individual, or a member of their family or any other personal relationship, receives improper personal benefits or preferential treatment as a result of the individual's position in the Company.
Activities that could give rise to conflicts of interest are prohibited unless specifically approved in advance by the Board of Directors. Where a conflict involves a Board member (i.e., where a Board member has an interest in a material contract or material transaction involving the Company), the Board member involved will be required to disclose their interest to the Board and refrain from voting on or consenting to Board resolutions considering such contract or transaction in accordance with applicable law.
It is not always easy to determine whether a conflict of interest exists, so any potential conflicts of interest should be reported immediately to a member of Management who is independent of the potential conflict and who will assess the issue with the advice of legal counsel. For unresolved potential conflicts involving any employee, officer, director or consultant, the issue should be referred to the Board of Directors (with assistance from legal counsel as necessary).
Working Relationships
Employees, officers, directors and consultants of the Company and individuals who are direct relatives or who permanently reside together may not be employed on a permanent or contract basis, or hold office if:
A. A reporting relationship exists whereby an employee, officer or director has influence, input or decision-making power over the relative or cohabitant's performance evaluation, salary, conditions of work or similar matters; and
B. The working relationship provides the individuals with an opportunity for collusion that could have a detrimental effect on the Company's interests.
This restriction may be waived if the Governance, Nomination, Compensation and Leadership Committee ("GNCL Committee"), or any successor or equivalent committee thereto, is satisfied that sufficient safeguards are in place to ensure that the interests of the Company are not compromised.
8. Corporate Opportunities
Directors, officers, employees and consultants owe a duty to the Company to advance the Company's legitimate interests when the opportunity to do so arises and are prohibited from taking, for themselves personally, opportunities that arise through the use of corporate property, information or position and from using corporate property, information or position for personal gain, except where the Board, after receiving the necessary information concerning such opportunity and receiving the advice of legal counsel, has elected not to avail itself of the opportunity in compliance with applicable corporate law. Any director interested in a corporate opportunity under consideration by the Board shall refrain from voting on or consenting to Board resolutions considering such opportunity.
If an employee, officer, director or consultant has any doubt as to the whether any activity they are contemplating violates this requirement, they must refer the issue to a member of the Management team who is independent of the potential conflict and who will assess the issue with the advice of legal counsel.
9. Protection and Proper Use of Company Assets
We should all endeavor to protect the Company's assets and ensure their efficient use. Theft, carelessness and waste have a direct impact on the Company's profitability. Any suspected incidents of fraud or theft should be immediately reported to an individual's supervisor or to a member of Management for investigation. Company assets, includes but is not limited to funds, products, computers and equipment, may only be used for legitimate business purposes or other purposes approved by the Management. Company assets must never be used for illegal purposes.
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The obligation to protect Company assets includes proprietary information. Proprietary information includes any information that is not generally known to the public or would be helpful to our competitors. Examples of proprietary information includes but is not limited to intellectual property, business and marketing plans, engineering and technical processes, and employee information. The obligation to preserve proprietary information continues even after you leave the Company.
10. Anti-trust and Free Competition
We are committed to doing business fairly everywhere we operate. Anti-competitive behavior, anti-trust, and monopoly practices can affect consumer choice, pricing, and other factors that are essential to efficient markets.
Anti-competitive behavior refers to actions of an organization or its employees that can result in collusion with potential competitors, with the purpose of limiting the effects of market competition. This can include fixing prices or coordinating bids, creating market or output restrictions, imposing geographic quotas, and allocating customers, suppliers, geographic areas, or product lines.
Anti-trust and monopoly practices are actions of an organization that can result in collusion to erect barriers for entry to the sector, or to otherwise prevent competition. This can include unfair business practices, abuse of market position, cartels, anti-competitive mergers, and price-fixing. Anti-trust laws seek to establish a competitive marketplace and protect consumers from abusive practices. Many countries have antitrust laws prohibiting companies from gaining an unfair advantage in the market. The following practices are banned under the antitrust laws:
A. Cartels.
B. Anticompetitive agreements with competitors.
C. Anticompetitive dealings with customers or suppliers.
D. Monopolization
E. Anticompetitive corporate transactions.
Violations can have serious consequences for an individual or the Company. If you witness conduct that violates fair competition laws, remove yourself from the situation and a member of Management immediately.
Directors, officers, employees and consultants, are expected to understand and respect applicable anti-trust laws.
11. Fair Dealing, and Dealings with Suppliers and Contractors
We should all endeavor to deal fairly with the Company's customers, suppliers, competitors and all the other employees, officers, directors and consultants of the Company. No one at the Company should take unfair advantage of anyone through illegal conduct, concealment, manipulation, abuse of privileged information, misrepresentation of material facts or any other unfair dealing or practice.
Suppliers of goods and services who are seeking to do business with the Company, or continue to do business with the Company, should understand that all purchases will be made based exclusively on competitive considerations, such as price, quality, service, suitability to the Company's needs, along with ethical standards concerning labor, health and safety, environment, and sustainability. Supplier selection should never be based on the personal interests of any employee, officer, director or consultant of the Company or of any employee's, officer's, director's or consultant's family or friends.
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12. Insider Trading
Insider trading is unethical and illegal. We are not allowed to trade in securities of any company while in possession of material non-public information regarding that company. This includes Lithium Argentina, the Company or any other third-party company. It is also illegal to "tip" or pass on inside information to any other person who might make an investment decision based on that information or pass the information on further. The Company's Securities Trading Policy sets out obligations with respect to trading in securities issued by the Company.
13. Financial and Business Disclosure and Accuracy of Company Records and Reporting
Honest and accurate recording and reporting of information is critical to our ability to make responsible business decisions and to meet reporting obligations of our stakeholders. This includes both the Company's financial reporting and ongoing disclosure requirements under applicable securities and stock exchange requirements. The Company's accounting and other records are relied upon to produce reports for the Company's Management, shareholders, creditors, governmental agencies, and others. Full, fair, accurate, timely and understandable disclosure in the reports and other documents that we file with, or submit to, securities regulators and stock exchanges and in our other public communications is critical for us to maintain our good reputation, to comply with our obligations under securities laws and to meet the expectations of our shareholders and other members of the investment community. In preparing such reports, documents and other public communications, the following guidelines should be adhered to:
A. All accounting records, and the reports produced from such records, must be in accordance with all applicable laws;
B. All accounting records must fairly and accurately reflect transactions or occurrences to which they relate;
C. All accounting records must fairly and accurately reflect in reasonable detail the Company's assets, liabilities, revenues, and expenses;
D. No accounting records should contain any false or intentionally misleading entries;
E. No transactions should be intentionally misclassified as to accounts, departments, or accounting periods;
F. All transactions must be supported by accurate documentation in reasonable detail and recorded in the proper account and in the proper accounting period;
G. No information should be concealed from internal auditors or independent auditors; and
H. compliance with the Company's system of internal controls is required at all times.
If any employee, officer, director or consultant of the Company has concerns or complaints regarding accounting or auditing issues, they are encouraged to submit those concerns to a member of the Audit and Risk Committee of the Board or to report it through our whistleblower reporting hotline. See our Whistleblower Policy for information on how to report using this process.
Business records and communications often become public through legal or regulatory investigations or the media. We should avoid exaggeration, derogatory remarks, legal conclusions or inappropriate characterizations of people and companies. This applies to communications of all kinds, including email and informal notes or interoffice memos.
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Records should be retained and destroyed in accordance with any records retention policy of the Company in effect from time to time.
14. Use of Company Systems, Email and Internet Services
Company systems, email, messaging apps and internet services are provided for Company business purposes and should be used in accordance with the Company's Information Technology and Cybersecurity Policy. Incidental and occasional personal use is permitted, but never for personal gain or any improper purpose.
Your messages (including voice mail) and computer information are considered the property of the Company. You should not have any expectation of privacy when using Company devices or systems. Unless prohibited by law, the Company reserves the right to access and disclose information on any Company device or system as necessary for business purposes.
You should not access, retain, send or download any information that could be unethical, illegal, insulting or offensive to another person, including but not limited to sexually explicit messages, ethnic or racial slurs, or messages that could be viewed as harassment.
You should not share usernames and passwords or other authentication information with anyone, including co-workers, except as authorized or for business continuity purposes. Do not leave login information where others could easily find or access it.
Violation of these policies may result in disciplinary actions up to and including discharge from the Company.
15. Social Media
Employees, officers, directors and consultants should exercise judgement and care when posting on social media sites, as the lines between professional and personal content and between public and private content are often blurred. Employees, officers, directors and consultants should follow the same behavioral standards online that they would while engaging in other professional interactions. Ultimately each person is solely responsible for what they post online. Before creating online content, use common sense and consider the risks and rewards of what you are posting or responding to.
Employees, officers, directors and consultants must not use social media to harass, bully or intimidate other employees, officers, directors or consultants, or third parties. The Company's policies prohibiting harassment, bullying and other inappropriate content also apply to an employee's, officer's, director's or consultant's online activities.
Employees, officers, directors and consultants should also not respond to any person posting negative reviews or comments about the Company online. Please let your immediate supervisor know if you become aware of any negative content about the Company or any of its subsidiaries or joint venture operations. Your supervisor will alert Management at the Company who will determine how to respond to the negative feedback.
16. Gifts and Entertainment
Business gifts and entertainment are customary courtesies designed to build goodwill among business partners. These courtesies can include but are not limited to such things as meals and beverages, tickets to sporting or cultural events, discounts not available to the general public, travel, accommodation and other merchandise or services. In some cultures, they play an important role in business relationships. However, a problem may arise when such courtesies compromise, or appear to compromise, our ability to make objective and fair business decisions. The same rules apply to employees, officers, directors and consultants offering gifts and entertainment to our business associates.
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Offering or receiving any gift, gratuity, or entertainment that influences, or might be perceived to unfairly influence a business relationship, should be avoided.
The value of any gifts you accept should be nominal, both with respect to frequency and amount. Gifts that are repetitive (no matter how small) may be perceived as a bribe or an attempt to create an obligation to the giver and are therefore inappropriate. Likewise, business entertainment should be moderately scaled and intended only to facilitate business goals. If you are having difficulty determining whether a specific gift or entertainment item lies within the bounds of acceptable business practice, consult your supervisor or a member of the Management team and ask yourself whether or not the gift or item is legal, business related, moderate and reasonable, whether or not public disclosure that such a gift was made would embarrass the Company, and whether or not there is any pressure to reciprocate or grant special favors.
17. Payments to Domestic and Foreign Officials and Money Laundering
Directors, Officers, and the Workforce must comply with all applicable laws prohibiting improper payments to domestic and foreign officials, including the Corruption of Foreign Public Officials Act (Canada) (the "Act") and the Foreign Corrupt Practices Act of 1977 (United States) (collectively, the "Acts"), and similar legislation, rules or requirements in other jurisdictions where the Company does business.
The Acts make it illegal for any person, in order to obtain or retain an advantage in the course of business, directly or indirectly, to offer or agree to give or offer a loan, reward, advantage or benefit of any kind to a public official to secure any contract, concession or other improper advantages for the Company. Public officials include persons holding a legislative, administrative, or judicial position of a foreign state, persons who perform public duties or functions for a foreign state (such as persons employed by board, commissions, or government corporations), officials and agents of international organizations, political parties, and candidates for office.
Although "facilitated payments" or certain other transactions may be exempted or not illegal under applicable law, the Company's policy is to avoid them. If any employee, officer, director or consultant has any questions about the application of this policy to a particular situation, please report to the Chair of the Board, the Executive VP of Latin America or such other senior officer as may be designated by the Company from time to time who, with the advice of counsel as necessary, will determine acceptability from both a legal and a corporate policy point of view, and any appropriate accounting treatment and disclosures which are applicable to the particular situation.
The Company prohibits money laundering of any form in connection with its business. Money laundering is the concealment of an illegal source of income, or the disguise of illegal income to make it appear legitimate.
A violation of either of the Acts is a criminal offence, subjecting the Company to substantial fines and penalties and any officer, director, employee or consultant acting on behalf of the Company to imprisonment and fines. Violation of this policy may result in disciplinary actions up to and including discharge from the Company.
18. Reporting Illegal or Unethical behavior
We have a strong commitment to conduct our business in a lawful and ethical manner. Directors, Officers and the Workforce are encouraged to report violations of laws, rules, regulations or this Code to their supervisor or member of Management, or per the Whistleblower Policy. We prohibit retaliatory action against any person who, in good faith, reports a possible violation; however, it is unacceptable to file a report knowing it to be false.
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V. Compliance Procedures
This Code cannot, and is not intended to, address all of the situations you may encounter. There will be occasions where you are confronted by circumstances not covered by policy or procedure and where you must make a judgment as to the appropriate course of action. In those circumstances or if you have any questions concerning your obligations under this Code, we encourage you to use your best judgement and common sense, and to contact your supervisor or a member of Management for guidance if you are uncertain about how to proceed. Management or Directors are encouraged to consult with the Chair of the Audit and Risk Committee, the Chair of the Governance, Nomination, Compensation and Leadership Committee, or such other senior officer of the Company as may be designated from time to time.
If you fail to comply with this Code or applicable laws, rules, or regulations you will be subject to disciplinary measures, up to and including discharge from the Company. Violations of this Code may also constitute violations of law and may result in civil or criminal penalties for you, your supervisors and/or the Company.
VI. Amendment, Modification and Waivers to the Code
This policy will be reviewed annually by Management and Audit and Risk Committee and submitted to the Board of Directors for its approval. The Code may be replaced, amended, or modified by the Board of Directors or a vote of the independent Directors of the Board of the Company, subject to disclosure and other provisions of applicable securities legislation and stock exchange requirements. Any minor changes that do not impact the objectives of this policy may be updated by Management as necessary.
Effective Date: October 4, 2023
Approved by: Board of Directors of the Company