SCHEDULE 14A
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. ¨)
Filed by the Registrant x
Filed by a Party other than the Registrant ¨
Check the Appropriate Box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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x
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material Under Rule 240.14a-12
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Augusta Gold Corp.
(Name of Registrant as Specified in Its Charter)
Payment of Filing Fee (Check the appropriate box):
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x
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No fee required
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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(1)Title of each class of securities to which transaction applies:
(2)Aggregate number of securities to which transaction applies:
(3)Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is calculated and state how it was determined):
(4)Proposed maximum aggregate value of transaction:
(5)Total fee paid:
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Fee paid previously with preliminary materials:
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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(1)Amount Previously paid:
(2)Form, Schedule or Registration Statement No.:
(3)Filing Party:
(4)Date Filed
NOTICE
OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO
BE HELD ON JULY 29, 2021
NOTICE
IS HEREBY GIVEN that the Annual General Meeting (the “Meeting”) of holders of common and preferred stock (collectively,
“Shareholders”) of Augusta Gold Corp. (the “Company”) will be held at Suite 555,
999 Canada Place, Vancouver, British Columbia, V6C 3E1, on Thursday, July 29, 2021, at 10:00 a.m. (Vancouver time), for the
following purposes:
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1.
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To elect directors of the Company for the ensuing year;
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2.
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To appoint Davidson & Company LLP as auditor of the Company until the next annual meeting, and
to authorize the directors to fix their remuneration;
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3.
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To approve the Company’s Stock Option Plan; and
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4.
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To transact such other business as many properly come before the Meeting or any adjournment thereof.
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Accompanying this Notice of Meeting is a Management
Information Circular and Proxy Statement, which provides additional information relating to the business to be conducted at the Meeting,
a form of proxy (the “Proxy”) or voting instruction form (the “VIF”), and a form whereby Shareholders
may request that the Company’s annual and/or interim financial statements and corresponding management’s discussion and analysis
be mailed to them.
Due to the ongoing COVID-19 pandemic and provincial
and federal guidance regarding public gatherings, Shareholders and proxyholders are encouraged not to attend the Meeting in person in
order to mitigate potential risks to the health and safety of Shareholders, employees, and the community. There will be strict limitations
on the number of persons permitted entry to the physical meeting location and guests will not be permitted entry. We strongly recommend
that all Shareholders vote by Proxy or VIF in advance of the Meeting date.
The
board of directors of the Company has fixed a record date as of the close of business on June 21, 2021 for the purpose of determining
the Shareholders of record that will be entitled to receive notice of and to vote at the Meeting or any adjournment or postponement thereof.
Proxies
are being solicited by the board of directors of the Company. Registered Shareholders who are unable to be present in person
at the Meeting are requested to date, complete and return the materials in accordance with the instructions provided in the Proxy.
If you are a non-registered Shareholder and
receive these materials through your broker or through another intermediary, please complete and return the materials in accordance with
the instructions provided to you by your broker or such other intermediary. If you do not complete and return the materials in accordance
with such instructions, you may lose your right to vote at the Meeting.
Dated as of June 24, 2021
BY ORDER OF THE BOARD OF DIRECTORS
“Donald
R. Taylor”
DONALD R. TAYLOR
President and Chief Executive Officer
The enclosed materials are being sent to
both registered and non-registered Shareholders. If you are a non-registered Shareholder and the Company or its agents have sent these
materials directly to you, your name and address and information about your holdings of Common Shares have been obtained in accordance
with applicable securities regulatory requirements from the intermediary holding your Common Shares on your behalf.
MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT
INFORMATION
PROVIDED AS AT JUNE 24, 2021 (unless otherwise stated)
FOR THE ANNUAL GENERAL MEETING OF SHAREHOLDERS
TO BE HELD ON JULY 29, 2021
PERSONS MAKING THE SOLICITATION
This Management Information Circular and Proxy
Statement (the “Circular”) is being furnished in connection with the solicitation of proxies being made by or on behalf
of the board of directors (the “Board of Directors” or “Board”) of Augusta Gold Corp. (the “Company”)
for use at the annual general meeting (the “Meeting”) of holders (the “Shareholders”) of the Company’s
shares of common stock (“Common Shares”) and preferred stock (“Preferred Shares”) to be held on
Thursday, July 29, 2021 at Suite 555, 999 Canada Place, Vancouver, British Columbia, V6C 3E1, on Thursday, July 29, 2021,
at 10:00 a.m. (Vancouver time) for the following purposes, as set forth in the accompanying notice of meeting (the “Notice
of Meeting”):
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1.
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To elect directors of the Company for the ensuing year;
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2.
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To appoint Davidson & Company LLP as auditor of the Company until the next annual meeting, and
to authorize the directors to fix their remuneration;
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3.
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To approve the Company’s Stock Option Plan; and
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4.
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To transact such other business as many properly come before the Meeting or any adjournment thereof.
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Due to the ongoing COVID-19 pandemic and provincial
and federal guidance regarding public gatherings, Shareholders and proxyholders are encouraged not to attend the Meeting in person in
order to mitigate potential risks to the health and safety of Shareholders, employees, and the community. There will be strict limitations
on the number of persons permitted entry to the physical meeting location and guests will not be permitted entry. We strongly recommend
that all Shareholders vote by proxy or voting instruction form in advance of the Meeting date.
While it is expected that the solicitation of
proxies will be made primarily by mail, proxies may also be solicited personally, by telephone or other means of communication by the
directors, officers, employees and agents of the Company. All costs of this solicitation will be borne by the Company.
Unless otherwise indicated, all dollar amounts
in this Circular are in United States dollars. The exchange rate of Canadian dollars into United States dollars based upon the exchange
rate reported by the Bank of Canada on December 31, 2020, was C$1.00 = US$0.7854.
APPOINTMENT OF PROXIES
The accompanying form of proxy (the “Proxy”)
names Mr. Richard Warke, Executive Chairman, or, failing him, Purni Parikh, Senior Vice President, Corporate Affairs, or, failing
her, Michael McClelland, Chief Financial Officer, as proxyholder for the Shareholders at the Meeting, each of whom are directors or officers
of the Company or both. A REGISTERED SHAREHOLDER WISHING TO APPOINT SOME OTHER PERSON (WHO NEED NOT BE A SHAREHOLDER) TO ATTEND AND
ACT FOR THE SHAREHOLDER OR ON THE SHAREHOLDER’S BEHALF AT THE MEETING, OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF, HAS THE RIGHT
TO DO SO, BY INSERTING THE DESIRED PERSON’S NAME IN THE BLANK SPACE PROVIDED IN THE FORM OF PROXY OR BY COMPLETING ANOTHER
VALID FORM OF PROXY. A proxy will not be valid unless the completed form of proxy is received by Endeavor Trust Corporation (the
“Transfer Agent”) in accordance with the instructions in the form of Proxy not less than 48 hours (excluding Saturdays, Sundays
and holidays) before the time for holding the Meeting or any adjournment or postponement thereof. Late proxies may be accepted or rejected
by the Chair of the Meeting at their discretion, and the Chair is under no obligation to accept or reject any particular late proxy.
IMPORTANT NOTICE REGARDING THE AVAILABILITY
OF PROXY MATERIALS FOR THE ANUAL MEETING OF STOCKHOLDERS TO BE HELD ON JULY 29, 2021
The Notice of Annual Meeting of Stockholders,
this Circular for the Meeting, the Company’s Annual Report and the form of Proxy are available at www.augustagold.com/investors/agm.
Information contained on or connected to the website is not incorporated by reference into this Circular and should not be considered
a part of this Circular or any other filing that we make with the Securities and Exchange Commission.
NON-REGISTERED
SHAREHOLDERS
Only
registered Shareholders (“Registered Shareholders”) or duly appointed proxyholders are permitted to vote at the Meeting. Most
Shareholders of the Company are “non-registered” Shareholders because the Common Shares they own are not registered in their
names but are instead registered in the names of a brokerage firm, bank or other intermediary or in the name of a clearing agency. Shareholders
who do not hold their Common Shares in their own name (referred to herein as “Beneficial Shareholders”) should note that only
Registered Shareholders (or duly appointed proxyholders) may complete a Proxy or vote at the Meeting in person. If Common Shares
are listed in an account statement provided to a Shareholder by a broker, then in almost all cases those Common Shares will not be registered
in such Shareholder’s name on the records of the Company. Such Common Shares will more likely be registered under the name of the
Shareholder’s broker or an agent of that broker. In Canada, the vast majority of such Common Shares are registered under the name
of CDS & Co. (the registration name for CDS Clearing and Depository Services Inc., which company acts as nominee for many Canadian
brokerage firms) or, in the United States, Shares registered in the name of “Cede & Co.”, the registration name of
The Depository Trust Company of which the Intermediary is a participant. Common Shares held by brokers (or their agents or nominees) on
behalf of a broker’s client can only be voted (for or against resolutions) at the direction of the Beneficial Shareholder. Without
specific instructions, brokers and their agents and nominees are prohibited from voting shares for the brokers’ clients.
This Circular and accompanying materials are being
sent to both Registered Shareholders and Beneficial Shareholders. Beneficial Shareholders fall into two categories – those who object
to their identity being known to the issuers of securities which they own (“Objecting Beneficial Owners”, or “OBOs”)
and those who do not object to their identity being made known to the issuers of the securities they own (“Non-Objecting Beneficial
Owners”, or “NOBOs”). Subject to the provision of Rule 14a-13 of the United States Exchange Act of 1934,
as amended (the “Exchange Act”) and National Instrument 54-101 – Communication with Beneficial Owners of Securities
of Reporting Issuers (“NI 54-101”), issuers may request and obtain a list of their NOBOs from intermediaries via
their transfer agents and other intermediaries and use this NOBO list for distribution of proxy-related materials directly to NOBOs.
The Company is taking advantage of those provisions
of Rule 14a-13(c) and NI 54-101 that permit the Company to deliver proxy-related materials to the Company’s NOBOs and
OBOs who have not waived the right to receive them (and is not sending proxy-related materials using notice-and-access). As a result,
NOBOs and OBOs can expect to receive a Voting Instruction Form (“VIF”) together with the Circular and related
documents through your broker or through another intermediary. These VIFs are to be completed and returned in line with the instructions
provided by your broker or other intermediary. NOBOs and OBOs should carefully follow the instructions provided, including those regarding
when and where to return the completed VIFs.
Should a NOBO or OBO wish to attend and vote at
the Meeting in person, the NOBO or OBO must insert the NOBO’s or OBOs name (or such other person as the NOBO or OBO wishes to attend
and vote on the NOBO’s or OBOs behalf) in the blank space provided for that purpose on the VIF and return the completed VIF in line
with the instructions provided by your broker or other intermediary. If a NOBO or OBO or a nominee of the NOBO or OBO is appointed
as a proxyholder pursuant to such request, the appointed proxyholder will need to attend the Meeting in person in order for their votes
to be counted.
NOBOs or OBOs that wish to change their vote
must contact their broker or other intermediary who provided the instructions to arrange to change their vote in sufficient time in advance
of the Meeting.
Only Registered Shareholders have the right
to revoke a Proxy. NOBOs and OBOs who wish to change their vote must, sufficiently in advance of the Meeting, arrange for their respective
intermediaries to change their vote and if necessary revoke their Proxy in accordance with the revocation procedures set out below.
All references to Shareholders in this Circular,
the accompanying Proxy and Notice of Meeting of Shareholders are to Registered Shareholders of record unless specifically stated otherwise.
BROKER
NON-VOTES
Brokers and other intermediaries, holding Common
Shares in street name for non-Registered Holders, are required to vote the Common Shares in the manner directed by the non-Registered
Holder (see discussion above). Under the rules of the New York Stock Exchange (the “NYSE”), brokers are prohibited
from giving proxies to vote on non-routine matters (including, but not limited to, non-contested director elections and approval of stock
option plans) unless the beneficial owner of such Shares has given voting instructions on the matter.
The absence of a vote on a matter where the broker
has not received written voting instructions from a Non-Registered Holder is referred to as a “broker non-vote”. Any Common
Shares represented at the Meeting but not voted (whether by abstention, broker non-vote or otherwise) will have no impact on any matters
to be acted upon at the Meeting.
REVOCATION OF PROXIES
A Shareholder who has delivered a Proxy for use
at the Meeting may revoke it by (a) going online and completing a new Proxy at www.eproxy.ca, (b) except to the extent otherwise
noted on such later Proxy, signing a new Proxy bearing a later date and depositing it at the place and within the time required for the
deposit of proxies as described below, (c) executing an instrument in writing by the Shareholder or by the Shareholder’s attorney
authorized in writing or, if the Shareholder is a corporation, by a duly authorized officer or attorney of the corporation, and delivering
it either (i) to the Corporate Secretary of the Company at Augusta Gold Corp., Suite 555-999 Canada Place, Vancouver, BC V6C
3E1, Attn: Corporate Secretary at any time up to and including the last business day preceding the day of the Meeting or any adjournment
or postponement thereof, or (ii) to the Chair of the Meeting on the day of the Meeting or any adjournment or postponement thereof
or (d) registering with the scrutineer at the Meeting as a registered Shareholder present in person, whereupon any Proxy executed
and deposited by such registered Shareholder will be deemed to have been revoked. A revocation of a Proxy does not affect any matter on
which a vote has been taken prior to the revocation.
VOTING OF PROXIES
The Common Shares or Preferred Shares represented
by a properly executed Proxy in favour of the individuals designated as management proxyholders in the enclosed form of Proxy will:
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a.
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be voted or withheld from voting in accordance with the instructions of the person appointing the management
proxyholder on any ballot that may be called for; and
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b.
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where a choice with respect to any matter to be acted upon has been specified in the form of Proxy, be
voted in accordance with the specification made in such Proxy.
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If, however, direction is not given in respect
of any matter, the Proxy will be voted as recommended by the Board.
The enclosed form of Proxy, when properly completed
and delivered and not revoked, confers discretionary authority upon the individuals appointed as management proxyholder thereunder to
vote with respect to amendments or variations of matters identified in the Notice of the Meeting, and in respect of other matters which
may properly come before the Meeting. In the event that amendments or variations to matters identified in the Notice of Meeting are properly
brought before the Meeting or any further or other business is properly brought before the Meeting, it is the intention of the individuals
designated by management as proxyholders in the enclosed form of Proxy to vote in accordance with their best judgment on such matters
or business. At the time of the printing of this Circular, management of the Company knows of no such amendment, variation or other matter
which may be presented to the Meeting.
Return the properly executed and completed form
of Proxy:
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a.
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by completing a Proxy at the following website www.eproxy.ca,
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b.
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by mailing it or delivering it by hand in the appropriate enclosed return envelope addressed to Endeavor
Trust Corporation, 702 – 777 Hornby Street, Vancouver, BC V6Z 1S4 to be received by 10:00 am (Pacific Time) on Tuesday, July 27,
2021, or no later than 48 hours before any adjournment or postponement of the Meeting, or
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c.
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by sending it by email to proxy@endeavortrust.com, to be received by 10:00 am (Pacific Time) on Tuesday,
July 27, 2021, or no later than 48 hours before any adjournment or postponement of the Meeting.
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VOTING SHARES AND PRINCIPAL HOLDERS THEREOF
The
Board has fixed a record date as of the close of business on June 21, 2021 (the “Record Date”) for the
purpose of determining the Shareholders of record that will be entitled to receive notice of and to vote at the Meeting or any adjournment
or postponement thereof.
As
at the Record Date, there were a total of 70,472,270 Common Shares outstanding. Except as may otherwise be set forth herein, each Common
Share entitles the holder thereof to one vote for each share shown as registered in the holder’s name as of the Record Date. Only
registered Shareholders at the close of business on the Record Date who either personally attend the Meeting or who have completed and
delivered a form of Proxy in the manner and subject to the provisions described above shall be entitled to vote or to have their Common
Shares voted at the Meeting.
To the knowledge of the directors and executive
officers of the Company, no person or company beneficially owns, controls or directs, directly or indirectly, 10% or more of the voting
rights attached to any Common Shares as of the Record Date, other than the following:
Name
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Number of Common Shares
Beneficially Owned
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Percentage of Issued Common
Shares
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Richard W. Warke(1)
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21,689,788
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30.78
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%
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Barrick Gold Corporation (“Barrick”)
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9,100,000
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12.91
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%
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(1)
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Richard Warke holds all of his Common Shares through Augusta Investments Inc., a company controlled by
Mr. Warke.
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To the knowledge of the directors and executive
officers of the Company, NPX Metals Inc. beneficially owns 100% of the issued and outstanding Preferred Shares, which are convertible
into 677,084 Common Shares and give such shareholder 677,084 votes as of the Record Date.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT
The following tables set forth certain information
as of the approximate date of this Circular regarding the beneficial ownership of our common stock by:
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each person or entity who, to our knowledge, owns more than 5% of our common stock;
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our executive officers;
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all of our executive officers and directors as a group.
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The percentages of common stock beneficially owned
are reported on the basis of regulations of the Securities and Exchange Commission governing the determination of beneficial ownership
of securities. Under the rules of the Securities and Exchange Commission, a person is deemed to be a beneficial owner of a security
if that person has or shares voting power, which includes the power to vote or to direct the voting of the security, or dispositive power,
which includes the power to dispose of or to direct the disposition of the security. Shares of common stock that a person purpose has
the right to acquire beneficial ownership of within 60 days of the date of this filing are deemed to be beneficially owned by the person
holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for
the purpose of computing the percentage ownership of any other person. Except as indicated in the footnotes to this table, each beneficial
owner named in the table below has sole voting and sole investment power with respect to all shares beneficially owned.
As
of the approximate date of this filing we had 70,472,270 Common Shares outstanding.
Executive Officers and Directors
Name and Address
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Shares Owned
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Percentage
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Richard Warke (1) Suite 555 – 999
Canada Place Vancouver, BC V6C 3E1
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40,555,515
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57.55
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Don Taylor (2) Suite 555 – 999 Canada Place Vancouver, BC V6C 3E1
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333,334
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0.47
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John Boehner Suite 555 – 999 Canada Place Vancouver, BC V6C 3E1
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0
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0
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Lenard Boggio (3) Suite 555 – 999 Canada Place
Vancouver, BC V6C 3E1
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53,333
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0.08
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Daniel Earle (4) Suite 2915, 181 Bay St Toronto, ON M5J 2T3
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995,834
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1.41
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Poonam Puri (5) Suite 555 – 999 Canada Place Vancouver, BC V6C 3E1
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66,000
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0.09
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Michael McClelland (6) Suite 555 – 999 Canada
Place Vancouver, BC V6C 3E1
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15,000
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0.02
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Purni Parikh (7) Suite 555 – 999 Canada Place Vancouver, BC V6C 3E1
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408,334
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0.58
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All executive officers and directors as a group (8 persons)
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42,428,016
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60.21
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Other 5% or Greater Stockholders (Common Stock)
Name and Address
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Shares Owned
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Percentage
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Barrick Gold Corporation (8) Brookfield Place
TD Canada Trust Tower 161 Bay Street, Suite 3700, Toronto, ON M5J 2S1
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18,200,000
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25.83
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(1) Includes the following (all of which
are held by Augusta Investments Inc., a company wholly owned by Mr. Warke): 21,689,788 shares of Common Stock and 18,865,727 shares
underlying warrants.
(2) Includes the following: 166,667 shares
of Common Stock and 166,667 shares underlying warrants.
(3) Includes the following: 42,222 shares
of Common Stock and 11,111 shares underlying warrants.
(4) Includes the following (all of which
are held by 2210637 Ontario Ltd., a company wholly owned by Mr. Earle): 525,000 shares of Common Stock and 470,834 shares underlying
warrants.
(5) Includes the following: 44,000 shares
of Common Stock and 22,000 shares underlying warrants.
(6) Includes the following: 10,000 shares
of Common Stock and 5,000 shares underlying warrants.
(7) Includes the following: 216,667 shares
of Common Stock and 191,667 shares underlying warrants (of which 166,667 shares of Common Stock and 166,667 shares underlying warrants
are held by Lions Gate Holdings Inc., a company wholly owned by Ms. Parikh).
(8) Includes the following: 9,100,000 shares
of Common Stock and 9,100,000 shares underlying warrants.
CHANGE IN CONTROL
On
October 26, 2020, the Company completed its acquisition (the “Acquisition Transaction”) of Bullfrog Mines LLC
(“BMLLC”), the successor by conversion of Barrick Bullfrog Inc., pursuant to the membership interest purchase agreement
(the “MIPA”) with Homestake Mining Company of California (“Homestake”), and Lac Minerals (USA) LLC
(“Lac Minerals” and together with Homestake, the “Barrick Parties”). Pursuant to the MIPA, the Company
purchased from the Barrick Parties all of the equity interests (the “Equity Interests”) in BMLLC for aggregate consideration
of (i) 54,600,000 units of the Company, each unit consisting of one share of common stock and one four-year warrant (the “Warrant”)
to purchase one share of common stock at an exercise price of C$0.30 (“Units”), (ii) a 2% net smelter returns
royalty granted on all minerals produced from the Patented Claims and the Unpatented Claims (each as defined in the MIPA), pursuant to
a royalty deed, dated October 26, 2020 by and among BMLLC and the Barrick Parties (the “Royalty Deed”), (iii) the
Company granting indemnification to the Barrick Parties pursuant to an indemnity deed, dated October 26, 2020 by and among the Company,
the Barrick Parties and BMLLC, and (iv) certain investor rights, including anti-dilution rights, pursuant to the investor rights
agreement, dated October 26, 2020, by and among the Company, Augusta Investments Inc. (“Augusta Investments”),
and Barrick (the “Investor Rights Agreement”). Pursuant to the Investor Rights Agreement, the Company granted Augusta
Investments and Barrick the right to designate one member of the Board of Directors of the Company, subject to the terms and conditions
set forth therein.
On October 26, 2020, in coordination with
the completion of the Acquisition Transaction, the Company closed a private placement of units with Augusta Investments and certain of
its associates pursuant to which Augusta Investments gained control of the Company (the “Private Placement”). As part
of the Acquisition Transaction and the Private Placement, in accordance with the negotiated terms between the parties thereof, including
Augusta Investments, the Company reconstituted its management and agreed to appoint, Daniel Earle and Donald Taylor as directors of the
Company and Michael McClelland, Johnny Pappas and Scott Burkett as officers of the Company. Subsequently, the reconstituted Board of Directors
also appointed Purni Parikh, Lynette Gould and Tom Ladner as officers of the Company and Mr. Warke as Executive Chairman of the Company.
Augusta Investments controls 21,689,788 shares of common stock with the right to acquire an additional 18,865,727 shares underlying warrants
representing 57.00% of the issued and outstanding voting shares (common and preferred) of the Company on a partially diluted basis as
of June 24, 2021. Augusta Investments purchased the units using its cash on hand and not pursuant to any loan or pledges from third
parties.
The Company is not aware of any arrangement that
might result in a change in control in the future. The Company has no knowledge of any arrangements, including any pledge by any person
of our securities, the operation of which may at a subsequent date result in a change in the Company’s control.
QUORUM
A quorum of Shareholders is necessary to hold
a valid meeting. A quorum will be present if a majority of the outstanding Common Shares and Preferred Shares (on an as-converted basis)
entitled to vote are present at the Meeting. Your shares are counted as present at the Meeting if you are present and vote in person at
the Meeting or you have properly submitted a Proxy. Your shares will be counted towards the quorum only if you submit a valid Proxy.
Abstentions and broker non-votes will be counted towards the quorum requirement. If there is no quorum, a majority of the votes present
at the Meeting may adjourn the Meeting to another date.
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE
ACTED UPON
Other than as set out herein, no person who has
been a director or executive officer of the Company at any time since the beginning of the last financial year, nor any proposed nominee
for election as a director of the Company, nor any associate or affiliate of any of the foregoing, has any material interest directly
or indirectly, by way of beneficial ownership of securities or otherwise, in any matter to be acted upon at the Meeting.
PROPOSAL ONE - ELECTION OF DIRECTORS
At the date of this Circular
there are six directors of the Company. The present term of office of each of these six directors will expire immediately prior to the
election of directors at the Meeting. The Board does not contemplate that any of the nominees will be unable to serve as directors. Each
director will hold office until the next annual meeting of the Company or until his or her earlier resignation or removal.
At the Meeting, the individuals
nominated for election as directors of the Company will be voted on individually and the voting results for each nominee will be publicly
disclosed in a news release.
Directors are elected
by a plurality of the votes represented by the Common Shares and Preferred Shares (on an as-converted basis) present at the Meeting in
person or by proxy. This means that the six director nominees with the most affirmative votes will be elected. The allowable votes with
respect to the election of directors are “For” and “Withhold”. Directors are elected individually, and cumulative
voting is not permitted in the election of directors. Broker non-votes will have no effect. Withheld votes will also have no effect, except
as set out under the Company’s majority voting policy (the “Majority Voting Policy”).
The Company’s Majority
Voting Policy stipulates that, in an uncontested election of directors, if a nominee receives a greater number of votes “withheld”
from his or her election than votes “for” such election, the nominee will immediately submit his or her resignation to the
Chair of the Board for consideration following the meeting (to take effect immediately upon acceptance by the Board). The Nominating and
Corporate Governance Committee will consider the offer of resignation and will make a recommendation to the Board of whether or not to
accept it. The Board shall review, consider and act on the Nominating and Corporate Governance Committee’s recommendation within
90 days following the applicable meeting of the shareholders of the Company. The Board shall accept the resignation absent exceptional
circumstances that would warrant the nominee to continue to serve on the Board. The Company will promptly issue a press release announcing
the Board’s decision, and a copy of that press release will be provided to the Toronto Stock Exchange (“TSX”).
If the Board declines to accept the resignation, the press release shall fully state the reasons for its decision. Any director who tenders
his or her resignation shall not participate in any Nominating and Corporate Governance Committee or Board meetings at which his or her
resignation is considered. The Majority Voting Policy does not apply in circumstances involving contested director elections.
Unless such authority is withheld by a Shareholder,
the management proxyholder named in the accompanying Proxy or VIF intend to vote “FOR” the election of the individuals whose
names are set out below.
The Board recommends
that Shareholders vote FOR each director nominee to the Board.
Directors
In the following table
and notes thereto is stated the name of each person proposed to be nominated by management for election as a director of the Company,
the country in which he or she is ordinarily resident of, all offices of the Company currently held by him or her, his or her principal
occupation, the business or employments of each proposed director within the preceding five years, the date he or she was first appointed
as a director of the Company and the number of Common Shares beneficially owned by him or her, directly or indirectly, or over which he
or she exercises control or direction, as at the Record Date.
Name of Proposed
Director
and Current
Position with the
Company and
location of residence
|
Principal Occupation, Business or Employment
During
the
Past Five Years(1)
|
Date First
Appointed as
Director of the
Company
|
Number of
Common Shares
beneficially
owned, controlled
or directed,
directly or
indirectly(1)
|
Richard W. Warke
Executive Chairman
West Vancouver, BC Canada
|
Executive Chairman of the Company; Executive Chairman of Solaris Resources Inc. since January 2020; Executive Chairman of Titan Mining Corporation since October 2012 and President and CEO from October 2012 to September 2018; Director of Armor Minerals Inc. since February 2015 and President and CEO since October 2, 2018; Executive Chairman of Tethyan Resource Corp. from January 2019 to March 2020; Executive Chairman of Arizona Mining from July 2008 to August 2018; Executive Chairman of NewCastle Gold from May 2016 to December 2017; President of Catalyst Copper Corp. from September 2014 to May 2016.
|
January 7, 2021
|
21,689,788(5)
|
Donald R. Taylor(3)(4)
CEO and Director
Oro Valley, AZ
USA
|
President and CEO of the Company; CEO of Titan Mining Corporation from September 2018 to present; Director and COO of Arizona Mining Inc. between February 2015 and January 2016 respectively to August 2018, President from May 2012 to January 2016.
|
October 26, 2020
|
166,667
|
Lenard Boggio(2)(3)
Lead Director
West Vancouver, BC Canada
|
Corporate director of several publicly listed corporations since his retirement in 2012 from PricewaterhouseCoopers LLP as Partner and senior member of the firm’s mining industry group in Vancouver.
|
January 19, 2021
|
42,222
|
John Boehner(4)
Director
Marco Island, FL
USA
|
Strategic Advisor for Squire Patton Boggs since November 2017; Speaker of the US House of Representatives from 2011 to 2015
|
January 7, 2021
|
Nil
|
Daniel Earle(2)(3)
Director
Toronto, ON
Canada
|
President and Chief Executive Officer of Solaris Resources Inc. since November 2019. Vice President and Director of TD Securities from June 2007 to October 2019.
|
October 26, 2020
|
525,000
|
Poonam Puri(2)(4)
Director
Toronto, ON
Canada
|
Tenured Professor of Law at Osgoode Hall Law School. Corporate lawyer and affiliated scholar at Davies, Ward, Phillips & Vineberg LLP.
|
January 7, 2021
|
44,444
|
|
(1)
|
This information has been furnished by the respective directors, individually. The directors listed may
be directors of other reporting issuers. Details with respect to other directorships are provided under the heading entitled “Statement
of Corporate Governance Practices”.
|
|
(2)
|
Member of the Audit Committee.
|
|
(3)
|
Member of the Compensation Committee.
|
|
(4)
|
Member of the Nominating and Corporate Governance Committee.
|
|
(5)
|
Richard Warke holds all of his Common Shares through Augusta Investments Inc., a company controlled by
Mr. Warke.
|
Richard Warke, 61 (appointed January 7,
2021)
Executive Chairman
Richard Warke is a Vancouver-based Canadian business
executive with more than 35 years of experience in the international resource sector. In 2005, Mr. Warke founded the Augusta
Group of Companies which has an unrivaled track record of value creation in the mining sector.
From 2006 and until 2018, the Augusta Group founded,
managed, and funded three world class mineral discoveries. Ventana Gold discovered the La Bodega gold deposit in Colombia, now reported
to host over 10Moz of gold. The Augusta Group sold the company for C$1.3B in 2011. Augusta Resource advanced the Rosemont copper project
in Arizona through drilling, feasibility and permitting to become one of the largest copper deposits in United States. It was sold for
C$667M in 2014. Arizona Mining discovered the Taylor deposit and grew the Hermosa-Taylor deposit into one of the top five primary zinc
deposits globally, and the largest in the United States, prior to its sale for C$2.1B in 2018.
Currently,
the Augusta Group is comprised of private businesses and public companies that currently includes Titan Mining Corporation, Augusta Gold
Corp. and Solaris Resources Inc. Titan Mining operates a zinc mine in New York State, Augusta Gold is exploring for a gold mine
in a prolific mining district in Nevada, and Solaris Resources is advancing a portfolio of copper and gold assets in the Americas, including
a high-grade, world-class resource at its copper and gold project Warintza in Ecuador.
In addition, in 2017 Mr. Warke co-founded
Equinox Gold which has now become a mid-tier gold producer and one of the fastest growing gold companies in the Americas growing to over
a C$3.0B market cap with mines in US, Mexico and Brazil.
During the course of his career, Mr. Warke
has established a reputation for building successful companies by generating pioneering transactions in the mining sector through prudent
investing in earlier stages of the mine cycle. His specialization is surfacing value through award-winning exploration efforts and rapidly
advancing projects with consistent access to low-cost capital through exploration, feasibility, and permitting to point of sale or into
production. His expertise, combined with his extensive relationships across the global mining sector, have resulted in rapid growth and
a proven track record of success making him a widely-recognized strategic partner and a sought after industry expert for commentary on
business, mining and related topics.
As determined by the Board, Mr. Warke’s
qualification to serve on our Board is based on, among many attributes, Mr. Warke’s significant experience leading and building
successful mining companies which is important to the Company and the Board because the Company and Board view this experience as crucial
to the Company achieving its vision.
John Boehner, 71 (appointed January 7,
2021)
Director
John Boehner served as the 53rd Speaker of the
United States House of Representatives from 2011 to 2015. A member of the Republican Party, Mr. Boehner was the U.S. Representative
from Ohio’s 8th congressional district, serving from 1991 to 2015. He previously served as the House Minority Leader from 2007 until
2011, and House Majority Leader from 2006 until 2007. Following his career in government service, Mr. Boehner joined Squire Patton
Boggs, a global law and public policy firm. He earned a Bachelor of Arts in business administration from Xavier University.
As determined by the Board, Mr. Boehner’s
qualification to serve on our Board is based on, among many attributes, Mr. Boehner’s significant experience with public policy,
governmental relations and regulatory matters which is important to the Company and the Board because the Company and Board view
this experience as crucial to the Company achieving its vision.
Daniel Earle, 40 (appointed October 26,
2020)
Director
Daniel Earle has over 17 years of experience in
the mining sector and capital markets, covering projects ranging from early stage exploration through feasibility and engineering to production.
Mr. Earle is currently the President and CEO of Solaris Resources and also serves on its Board of Directors. Prior to joining Solaris
in November 2019, he was a Vice President and Director at TD Securities where he covered the mining sector for over 12 years and
established himself as a thought leader in the space. Prior to joining TD Securities in 2007, Mr. Earle was a senior executive with
a number of Canadian and U.S. public mineral exploration and mining companies. He is a graduate and scholar of the Lassonde Mineral Engineering
Program at the University of Toronto.
As determined by the Board, Mr. Earle’s
qualification to serve on our Board is based on, among many attributes, Mr. Earle’s significant executive experience in the
mining sector and capital markets, which is important to the Company and Board because the Company and Board view this experience as crucial
to the Company achieving its vision.
Poonam Puri, 49 (appointed January 7,
2021)
Director
Poonam
Puri is an experienced corporate director and professor of business law at Osgoode Hall Law School in Toronto. She is also a practising
lawyer and affiliated scholar at Davies Ward Phillips & Vineberg LLP. Ms. Puri currently serves on the boards of Canadian
Apartment Properties Real Estate Investment Trust, the Canada Infrastructure Bank and Holland Bloorview Kids Rehabilitation Hospital.
Ms. Puri has been recognized as one of the top 25 most influential lawyers in Canada by Canadian Lawyer Magazine. She has been named
one of the 100 Most Powerful Women in Canada, and she is a past recipient of Canada’s Top 40 under 40 Award. Ms. Puri
earned her Bachelor of Laws degree from the University of Toronto, and she holds a Master of Laws degree from Harvard Law School.
As determined by the Board, Ms. Puri’s
qualification to serve on our Board is based on, among many attributes, Ms. Puri’s significant corporate governance experience,
which is important to the Company and Board because the Company and Board view this experience as crucial to the Company achieving its
vision.
Lenard Boggio, 66 (appointed January 20,
2021)
Director
Len Boggio was formerly a partner of PricewaterhouseCoopers
LLP (PwC) where he served for more than 30 years until his retirement in May 2012. During that time, he was Leader of the B.C. Mining
Group of PwC, a senior member of PwC's Global Mining Industry Practice and an auditor of Canadian, U.S. U.K. and other internationally-listed
mineral resource and energy clients. Mr. Boggio is a Fellow of the Chartered Professional Accountants of Canada (FCPA, FCA) and has
served as president of the British Columbia Institute of Chartered Accountants and chairman of the Canadian Institute of Chartered Accountants.
As determined by the Board, Mr. Boggio’s
qualification to serve on our Board is based on, among many attributes, Mr. Boggio’s significant accounting experience which
is important to the Company and Board because the Company and Board view this experience as crucial to the Company achieving its vision.
Donald R. Taylor, P.G., 64 (appointed CEO
April 13, 2021)
President, CEO and Director
Donald R. Taylor has 30 years of mineral exploration
experience with precious and base metals on five continents, taking projects from exploration to mine development. He is the recipient
of the Prospectors and Developers Association of Canada’s 2018 Thayer Lindsley Award for the 2014 discovery of the Taylor lead-zinc-silver
deposit in Arizona. Mr. Taylor has worked extensively for large and small cap companies, including Arizona Mining, BHP Minerals,
Bear Creek Mining, American Copper and Nickel, Doe Run Resources and Westmont Mining Company. He is a Licensed Professional Geologist
in several eastern and western states and a qualified person as defined by National Instrument 43-101. Mr. Taylor has a Bachelor
of Science degree in Geology from Southeast Missouri State University and a Master of Science degree from the University of Missouri at
Rolla.
As determined by the Board, Mr. Taylor’s
qualification to serve on our Board is based on, among many attributes, Mr. Taylor’s significant mineral exploration experience
which is important to the Company and Board because the Company and Board view this experience as crucial to the Company achieving its
vision.
Non-Director Executive Officers
Michael McClelland, CPA, CA, 43 (appointed
October 26, 2020)
CFO
Michael McClelland has over 15 years of experience
in accounting and finance. He was formerly the Chief Financial Officer of Bisha Mining Share Company, an operating subsidiary of Nevsun
Resources. Prior to that he worked for Goldcorp as the Mine General Manager at Wharf Resources (now owned by Coeur Mining), and prior
to that was Director of Finance, Canada and USA. Mr. McClelland started his career at KPMG LLP as a Senior Accountant with the mining
group. He is a Chartered Accountant and has a Bachelor of Arts in Economics from Simon Fraser University in British Columbia, Canada.
Purni Parikh, 51 (appointed November 13,
2020)
Senior Vice President, Corporate Affairs
Purni Parikh has over 25 years of public company
experience in the mining sector including corporate affairs and finance, legal and regulatory administration, and governance. Ms. Parikh
joined Augusta Gold in October 2020. She is President of the Augusta Group of Companies including Titan Mining Corporation, and Senior
Vice President, Corporate Affairs of Solaris Resources Inc. Ms. Parikh was previously Senior Vice President, Corporate Affairs and
Corporate Secretary of Arizona Mining Inc. and Newcastle Gold Ltd., and Vice President, Corporate Secretary Augusta Resource Corporation
and Ventana Gold Corp. prior to their acquisition. Ms. Parikh obtained a Certificate in Business from the University of Toronto and
a Gemology degree. She holds the ICD.D designation from the Institute of Corporate Directors, and has worked extensively with boards.
Arrangements between Officers and Directors
Except as set forth above under “Change
In Control”, to our knowledge, there is no arrangement or understanding between any of our directors or officers and any other person,
including directors and officers, pursuant to which the director or officer was selected to serve as an officer.
Family Relationships
None of our directors or executive officers are
related by blood, marriage, or adoption to any other director, executive officer, or other key employees.
Other Directorships
Other than John Boehner who is a director of Acreage
Holdings, Inc., and Lenard Boggio who is a director of Equinox Gold Corp., none of the directors of Augusta Gold are also directors
of issuers with a class of securities registered under Section 12 of the Exchange Act (or which otherwise are required to file periodic
reports under the Exchange Act).
At the date of this Circular, the Company’s
directors were directors of other Canadian reporting issuers as follows:
John Boehner
|
Titan Mining Corporation
|
Lenard Boggio
|
Three Valley Copper Inc., Pure Gold Mining and Titan Mining Corporation
|
Daniel Earle
|
Solaris Resources Inc.
|
Poonam Puri
|
Canadian Apartment Properties Real Estate Investment Trust
|
Donald R. Taylor
|
Solaris Resources Inc. and Titan Mining Corporation
|
Richard W. Warke
|
Solaris Resources Inc., Titan Mining Corporation, and Armor Minerals Inc.
|
Legal Proceedings
We are not aware of any of our directors or officers
being involved in any legal proceedings in the past ten years relating to any matters in bankruptcy, insolvency, criminal proceedings
(other than traffic and other minor offenses) or being subject to any of the items set forth under Item 401(f) of Regulation S-K.
Delinquent Section 16(a) Reports
Section 16(a) of the Exchange Act requires
the Company’s officers and directors, and persons who own more than 10% of the Shares, to file reports of ownership and changes
of ownership of such securities with the SEC.
Based solely on a review of the reports received
by the SEC, the Company believes that, during the fiscal year ended December 31, 2020, the Company’s officers, directors and
greater than 10% owners timely filed all reports they were required to file under Section 16(a), except as set forth below:
Name
|
|
Number of Late Reports
(Transactions)
|
|
Number of Missing Reports
(Transactions)
|
Thomas Ellard
|
|
One Form 3
|
|
--
|
William Morgan
|
|
One Form 3
|
|
--
|
John Hill
|
|
One Form 3
|
|
|
Alan Lindsay
|
|
One Form 4 (1 Transaction)
|
|
|
CORPORATE
GOVERNANCE
Schedule
14A under the Exchange Act and National Instrument 58-101 – Disclosure of Corporate Governance Practices requires all companies
to provide certain annual disclosure of their corporate governance practices. The Company’s approach to corporate governance is
set out below.
Board of Directors
The
Board is nominating six individuals to the Company’s Board all of whom are current directors of the Company. The definition of “independent”
directors under NI 52-110 – Audit Committees provides that a director is independent if he or she has no direct or indirect
“material relationship” with the Company. Of the proposed nominees, Richard W. Warke, Executive Chairman of the Board, and
Donald R. Taylor, President and CEO of the Company, are considered to be “non-independent” within the meaning of NI 52-110
and within the meaning of the rules of the NYSE American stock exchange (the “NYSE American”). The other proposed
nominees, John Boehner, Lenard Boggio, Daniel Earle and Poonam Puri, are considered by the Board to be “independent” within
the meaning of NI 52-110 and the rules of the NYSE American.
Board
Leadership Structure
To
ensure the Board functions independently of management a Lead Director (Mr. Lenard Boggio) was appointed during fiscal 2021. The
Board believes that Mr. Boggio, by virtue of his extensive experience as an independent auditor is qualified to provide such leadership
to the Company as it builds shareholder value through exploration drilling, project advancement, and economic optimization. In addition,
the Board believes that its current composition, in which only two of the directors are members of management, also serves to ensure that
the Board can function independently of management. The independent directors exercise their responsibilities for independent oversight
of management through their majority position on the Board and ability to meet independently of management whenever deemed necessary by
the Lead Director or any independent director. All of the members of the Audit Committee, and the majority of the members of the Nominating
and Corporate Governance Committee and the Compensation Committee are independent directors. The Board has reviewed the Company’s
current Board leadership structure in light of the composition of the Board, the Company’s size, the nature of the Company’s
business, the regulatory framework under which the Company operates, the Company’s share base, the Company’s peer group and
other relevant factors, and has determined that having an executive Chair with an independent Lead Director is currently the most appropriate
leadership structure for the Company.
The independent directors of the Company may hold
scheduled meetings at which non-independent directors and members of management are not in attendance. During the calendar year ended
December 31, 2020, no physical meetings were held by the Board or the Board’s respective committees.
Meetings of the Board
The Board did not meet during the fiscal year
ended December 31, 2020.
Orientation and Continuing Education
The Nominating and Corporate Governance Committee
is responsible for ensuring that new directors are provided with an orientation including written information about the duties and obligations
of directors, the business and operations of the Company, documents from recent Board meetings as applicable, and opportunities for meetings
and discussion with senior management and other directors. Directors are expected to attend all scheduled Board and committee meetings
as applicable either by telephone conference or in person when possible.
The Board recognizes the importance of
ongoing director education and the need for each director to take personal responsibility for the process. To facilitate ongoing
education of the Company’s directors, the Company supports training or education in areas relating to their role as a director
of the Company; arranges visitation by directors to the Company’s facilities and operations; and encourages presentations by
outside experts to the Board or committees on matters of particular importance or emerging significance.
Ethical Business Conduct
The
Board has adopted a Code of Business Conduct and Ethics (the “Ethics Code”) for its directors, officers and employees.
The Company’s reporting contacts for the purposes of the Ethics Code, the Chairman of the Audit Committee and the Ethics Officer
of the Company, have the responsibility for monitoring compliance with the Ethics Code by ensuring all directors, officers and employees
receive and become thoroughly familiar with the Ethics Code and acknowledge their support and understanding of the Ethics Code. Any non-compliance
with the Ethics Code is to be reported to either the Chairman of the Audit Committee or the Ethics Officer, or other designated persons.
The CFO has been designated the Ethics Officer of the Company. A copy of the Ethics Code may be accessed on the Company’s website
at www.augustagold.com. We will post any amendments to, or waivers from, including an implicit waiver, the Ethics Code on that website.
The
Board ensures that directors, officers and employees are familiar with the Ethics Code to ensure that they exercise independent judgment
in considering transactions and agreements in respect of which a director or executive officer has a material interest. To encourage and
promote a culture of ethical business conduct, the Board has adopted a Corporate Disclosure Policy and a Whistleblower Policy. Both of
these policies are available on the Company’s website at www.augustagold.com. In addition, the Board requests from management
periodic reports relating to any fraud or unethical behavior.
Hedging Policy
The Company’s Corporate Disclosure Policy
prohibits directors, officers and other employees of the Company from engaging in hedging or monetization transactions, including, for
greater certainty, purchasing financial instruments such as variable forward contracts, equity swaps, collars, or units of exchange funds,
that are designed to hedge or offset a decrease in market value of the Company’s securities granted as compensation or held, directly
or indirectly, by such director, officer or employee. The policy notes that these types of transactions may permit continued ownership
of our securities obtained through the Company’s Stock Option Plan or otherwise without the full risks and rewards of ownership.
When that occurs, a person entering into this type of transaction may no longer have the same objectives as our other shareholders.
Diversity
The Board values the benefits that diversity can
bring and seeks to maintain a Board comprised of talented and dedicated directors with a diverse mix of experience, skills and backgrounds
collectively reflecting the strategic needs of the business and the nature of the environment in which the Company operates.
In
identifying qualified candidates for nomination to the Board, the Nominating and Corporate Governance Committee will consider prospective
candidates based on merit, having regard to those competencies, expertise, skills, background and other qualities identified from time
to time by the Board as being important in fostering a diverse and inclusive culture which solicits multiple perspectives and views and
is free of conscious or unconscious bias and discrimination.
The
Nominating and Corporate Governance Committee will give due consideration to characteristics, such as gender, age, ethnicity, disability,
sexual orientation and geographic representation, which contribute to board diversity. The Nominating and Corporate Governance Committee
may, in addition to conducting its own search, engage qualified independent advisors to assist in identifying prospective diverse director
candidates that meet the selection criteria established by the Board and that support its diversity objectives.
The
Company does not adhere to any specific targets or quotas in determining Board membership. The Nominating and Corporate Governance
Committee does not believe that implementing arbitrary targets for the composition of the Board will serve the Company’s best interests
in obtaining the highest calibre executives. The Nominating and Corporate Governance Committee strives to attract individuals who best
meet the Company’s needs at a given time point in time.
Communications with the Board of Directors
Shareholders
may send communications to the Board, the Chair or one or more of the non-management directors by using the contact information provided
on the Company’s website. Shareholders may also send communications by letter addressed to the Corporate Secretary of the Company
at Suite 555, 999 Canada Place, Vancouver, British Columbia, V6C 3E1.
All communications addressed to the Corporate Secretary will be received and reviewed by that officer. The receipt of concerns about the
Company’s accounting, internal controls, auditing matters or business practices will be reported to the Audit Committee. The receipt
of other concerns will be reported to the appropriate Committee(s) of the Board.
Board’s Role in Risk Oversight
The Board considers the understanding, identification
and management of risk as essential elements for the successful management of the Company. The Company faces a variety of risks, including
credit risk, liquidity risk and operational risk. The Board believes an effective risk management system will: (i) timely identify
the material risks that the Company faces; (ii) communicate necessary information with respect to material risks to senior executives
and, as appropriate, to the Board or relevant committees of the Board; (iii) implement appropriate and responsive risk management
strategies consistent with the Company’s risk profile; and (iv) integrate risk management into the Company’s decision-making.
Risk
oversight begins with the Board and the Audit Committee. The Audit Committee is chaired by Lenard Boggio and two other independent
directors sit on the Audit Committee.
The Audit Committee reviews and discusses policies
with respect to risk assessment and risk management. The Audit Committee also has oversight responsibility with respect to the integrity
of the Company’s financial reporting process and systems of internal control regarding finance and accounting, as well as its financial
statements. The Audit Committee makes periodic reports to the Board regarding briefings provided by management and advisors as well as
the committee’s own analysis and conclusions regarding the adequacy of the Company’s risk management processes.
At the management level, an internal audit provides
reliable and timely information to the Board and management regarding the Company’s effectiveness in identifying and appropriately
controlling risks.
The Company also has a comprehensive internal
risk framework, which facilitates performance of risk oversight by the Board and the Audit Committee. Our risk management framework is
designed to:
•
|
provide that risks are identified, monitored, reported and quantified properly;
|
•
|
define and communicate the types and amount of risk the Company is willing to take;
|
•
|
communicate to the appropriate management level the type and amount of risk taken;
|
•
|
maintain a risk management organization that is independent of the risk-taking activities; and
|
•
|
promote a strong risk management culture that encourages a focus on risk-adjusted performance.
|
In addition to the formal compliance program,
the Board encourages management to promote a corporate culture that incorporates risk management into the Company’s corporate strategy
and day-to-day business operations. The Board also continually works, with the input of the Company’s executive officers, to assess
and analyze the most likely areas of future risk for the Company.
Assessment
The
Board currently does not have a formal process in place to assess its committees and individual directors with respect to their effectiveness
and contribution. This matter has been discussed among the Board members and it was felt that the current size and constitution of the
Board allows for informal discussions regarding the contribution of each director. In addition, each individual director is significantly
qualified through their current or previous positions to fulfil their duties as a Board member. A formal process for evaluating the Board,
its committees and individual directors may be implemented in the future.
Board Committees
Audit Committee and Audit Committee Financial
Expert
The Company has a standing Audit Committee and
audit committee charter, which complies with Rule 10A-3 of the Exchange Act. The Audit Committee was established in accordance with
Section 3(a)(58)(A) of the Exchange Act. The Audit Committee is composed of three directors, Lenard Boggio, Daniel Earle and
Poonam Puri, each of whom, in the opinion of the Board, are independent (in accordance with Rule 10A-3 of the Exchange Act and the
requirements of Section 803A of the NYSE American Company Guide) and financially literate (pursuant to the requirements of Section 803B
of the NYSE American Company Guide).
No member of the Audit Committee has participated
in the preparation of the financial statements of the Company or any current subsidiary of the Company at any time during the past three
years. The Audit Committee, under the guidance of the Audit Committee Charter approved by the Board, assists the Board in fulfilling its
oversight responsibilities. The directors are responsible for monitoring (i) the Company’s accounting and financial reporting
processes; (ii) the integrity of the financial statements of the Company, (iii) compliance by the Company with legal and regulatory
requirement; (iv) the independent auditor’s qualifications, independence and performance; and (v) business practices and
ethical standards of the Company. A copy of the Audit Committee Charter is available on the Company’s website at www.augustagold.com.
The Audit Committee did not meet during the fiscal
year ended December 31, 2020.
Audit Committee Report
The Audit Committee of the Board is responsible
for providing independent, objective oversight of the Company’s accounting functions and internal controls. The Audit Committee
acts under a written charter adopted and approved by the Board which is reviewed annually. Each member of the Audit Committee is “independent”
within the meaning of Rule 10A-3 of the Exchange Act and Section 803A of the NYSE American Company Guide and “independent”
and “financially literate” within the meaning of such terms in NI 52-110. In accordance with Section 407 of the United
States Sarbanes-Oxley Act of 2002 and Item 407(d)(5)(ii) and (iii) of Regulation S-K, the Board has identified
Lenard Boggio as the “Audit Committee Financial Expert.”
The responsibilities of the Audit Committee include
recommending to the Board an accounting firm to be nominated for Shareholder approval as the Company’s independent auditor. The
Audit Committee is responsible for recommending to the Board that the Company’s financial statements and the related management’s
discussion and analysis be included in its annual report. The Audit Committee took a number of steps in making this recommendation for
fiscal year ended December 31, 2020.
First,
the Audit Committee discussed with Davidson & Company, LLP those matters required to be discussed by the applicable requirements
of the Public Company Accounting Oversight Board and the SEC, including information regarding the scope and results of the audit. These
communications and discussions are intended to assist the Audit Committee in overseeing the financial reporting and disclosure process.
Second,
the Audit Committee discussed with Davidson & Company, LLP the independence of Davidson & Company, LLP and received
from Davidson & Company, LLP the written disclosures and the letter required by applicable standards of the Public Company Accounting
Oversight Board for independent auditor communications with Audit Committees concerning independence as may be modified or supplemented,
concerning its independence as required under applicable independence standards for auditors of public companies. This discussion and
disclosure assisted the Audit Committee in evaluating such independence.
Finally, the Audit Committee reviewed and discussed,
with the Company’s management and Davidson & Company, LLP, the Company’s audited financial statements, including
the consolidated balance sheets at December 31, 2020, the consolidated statements of operations and comprehensive loss, cash flows
and changes in equity for the fiscal year ended December 31, 2020 and the notes thereto as at and for the year ended December 31,
2020.
Based
on the discussions with Davidson & Company, LLP concerning the audit, the independence, the financial statement review,
and such other matters deemed relevant and appropriate by the Audit Committee, the Audit Committee recommended to the Board that the Company’s
financial statements and the related management’s discussion and analysis be included in the Company’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2020.
Submitted by:
Audit Committee of the Board of Directors
/s/ Lenard Boggio
/s/ Daniel Earle
/s/ Poonam Puri
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee
is chaired by Poonam Puri. Its other members as of the date of this Circular are John Boehner and Donald Taylor. The role of the Nominating
and Corporate Governance Committee is to (1) develop and monitor the effectiveness of the Company’s system of corporate governance;
(2) establish procedures for the identification of new nominees to the Board and lead the candidate selection process; (3) develop
and implement orientation procedures for new directors; (4) assess the effectiveness of directors, the Board and the various committees
of the Board; (5) ensure appropriate corporate governance and the proper delineation of the roles, duties and responsibilities of
management, the Board and its committees; and (6) assist the Board in setting the objectives of the Chief Executive Officer and evaluating
the performance of the Chief Executive Officer. The Nominating and Corporate Governance Committee Charter is available on the Company’s
website at www.augustagold.com.
The Nominating and Corporate Governance Committee
did not meet during the fiscal year ended December 31, 2020.
Nominating Directors
The process by which the Board anticipates that
it will identify new candidates is by keeping itself informed of potential candidates in the industry. Any Board member may suggest a
director nominee. The Nominating and Corporate Governance Committee must formally review and consider the background, expertise, qualifications
and skill sets, to the needs of the Company and recommend the appointment of the potential candidate to the Board as a whole.
Nominations by a Shareholder
of candidates for election to the Board of Directors at a meeting of Shareholders may be made only if the Shareholder complies with the
procedures set forth in the Company’s Bylaws, and any candidate proposed by a Shareholder not nominated in accordance with such
provisions shall not be considered or acted upon.
A
proposal by a Shareholder for the nomination of a candidate for election may be made only by notice in writing, delivered to the Board
of Directors to the attention of the Corporate Secretary at: at Suite 555,
999 Canada Place, Vancouver, British Columbia, V6C 3E1.
In the case of an annual
meeting of Shareholders, any such written proposal of nomination must be received by the Board of Directors not less than sixty days nor
more than ninety days before the first anniversary of the date on which the Company held its annual meeting in the immediately
preceding year; provided, however, that in the case of an annual meeting of Shareholders (A) that is called for a date that is not
within thirty days before or after the first anniversary date of the annual meeting of Shareholders in the immediately preceding year,
or (B) in the event that the Company did not have an annual meeting of stockholders in the prior year any such written proposal of
nomination must be received by the Board of Directors not less than five days after the earlier of the date the Company shall have (w) mailed
notice to its Shareholders that an annual meeting of Shareholders will be held or (x) issued a press release, or (y) filed a
periodic report with the Securities and Exchange Commission or (z) otherwise publicly disseminated notice that an annual meeting
of Shareholders will be held.
Such written proposal
of nomination shall set forth: (A) the name and address of the Shareholder who intends to make the nomination, and the name and address
of the beneficial owner, if any, on whose behalf the proposal is made, (B) the name, age, business address and, if known, residence
address of each person so proposed, (C) the principal occupation or employment of each person so proposed for the past five years,
(D) the number of shares of capital stock of the Company beneficially owned within the meaning of Securities and Exchange Commission
Rule 13d-1 by each person so proposed and the earliest date of acquisition of any such capital stock and the class and number of
shares of the Company which are beneficially held by such Shareholder, any voting rights with respect to shares not beneficially owned
and other ownership or voting interest in shares of the Company, whether economic or otherwise, including derivatives and hedges, (E) a
description of any arrangement or understanding between each person so proposed and the Shareholder(s) making such nomination with
respect to such person's proposal for nomination and election as a director and actions to be proposed or taken by such person if elected
a director, (F) the written consent of each person so proposed to serve as a director if nominated and elected as a director and
(G) such other information regarding each such person as would be required under the proxy solicitation rules of the Securities
and Exchange Commission if proxies were to be solicited for the election as a director of each person so proposed.
Director Qualifications
The
Board believes that all directors should have the highest personal integrity and have a record of exceptional ability and judgment. The
Board also believes that directors should ideally reflect a mix of experience and other qualifications. There is no firm requirement
of minimum qualifications or skills that candidates must possess. The Nominating and Corporate Governance Committee evaluates
director candidates based on a number of qualifications, including their independence, judgment, leadership ability, expertise in the
industry, experience developing and analyzing business strategies, financial literacy, risk management skills, and, for incumbent directors,
his or her past performance. While neither the Board nor the Nominating and Corporate Governance Committee has adopted a formal policy
with regard to the consideration of diversity when evaluating candidates for election to the Board, it is our goal to have a balanced
Board, with members whose skills, background and experience are complimentary and, together, cover the variety of areas that impact our
business.
The
Nominating and Corporate Governance Committee initially evaluates a prospective nominee on the basis of his or her resume and other
background information that has been made available to the committee. A member of the Nominating and Corporate Governance Committee
will contact for further review those candidates who the committee believes are qualified, who may fulfill a specific board need and who
would otherwise best make a contribution to the Board. If, after further discussions with the candidate, and other further review
and consideration as necessary, the Nominating and Corporate Governance Committee believes that it has identified a qualified candidate,
it will make a recommendation to the Board.
The qualifications of each of the Company’s
directors are set forth in their respective biographies in this Circular.
Compensation Committee
The Compensation Committee is chaired by Lenard
Boggio. Its other members as of the date of this Circular are Daniel Earle and Donald Taylor. Compensation for the Company’s directors
and officers is determined by the Board based on the recommendations of the Compensation Committee. The Compensation Committee is entitled
to consult with external experts on the adequacy of the compensation paid to the Company’s directors. The Compensation Committee
has been established by the Board to review and recommend compensation policies and programs to the Company as well as salary and benefit
levels for its executives. The objective of the Committee is to assist in attracting, retaining and motivating executives and key personnel
in view of the Company’s goals. The Compensation Committee Charter is available on the Company’s website at www.augustagold.com.
The Compensation Committee did not meet during the fiscal year ended December 31, 2020.
Other Board Committees
The Board does not have standing committees outside
of the Audit Committee, the Compensation Committee, and the Nominating and Corporate Governance Committee.
EXECUTIVE
COMPENSATION
The table below sets forth, for the last two fiscal
years, the compensation earned by our named executive officers consisting of our chief executive officer and chief financial officer.
No other executive officer had annual compensation in excess of $100,000 during the last two fiscal years.
Summary Compensation Table
Name and
Principal
Position
|
|
Year
|
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards
($)(1)
|
|
|
Option
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
|
|
|
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
|
(i)
|
|
|
(j)
|
|
David Beling, President,
|
|
2019
|
|
|
|
100,000
|
|
|
--
|
|
|
$
|
85,000
|
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
$
|
185,000
|
|
Chief Executive Officer,Secretary, Treasurer and Director(2)
|
|
2020
|
|
|
|
100,000
|
|
|
--
|
|
|
$
|
90,000
|
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
$
|
190,000
|
|
Tyler Minnick,
|
|
2019
|
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
$
|
41,040
|
|
|
$
|
41,040
|
|
Chief Financial Officer(2)
|
|
2020
|
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
$
|
121,896
|
|
|
--
|
|
|
--
|
|
|
$
|
39,960
|
|
|
$
|
39,960
|
|
Maryse Belanger,
|
|
2019
|
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
Chief Executive Officer(3)
|
|
2020
|
|
|
|
47,968
|
|
|
--
|
|
|
|
--
|
|
|
|
--
|
|
|
--
|
|
|
--
|
|
|
|
--
|
|
|
|
47,968
|
|
(1) Represents the aggregate grant date
fair value computed in accordance with FASB 123.
(2) Resigned on October 26, 2020.
(3) Appointed CEO October 26,2020.
Ms. Belanger’s salary was paid in C$ and translated in to US$ at the average exchange rate for the fourth quarter of 2020
of 1.3030 per Bank of Canada. Ms. Belanger resigned from the Company April 13, 2021.
(4) Mr. Minnick’s Other Compensation
were consulting fees paid for his services as Chief Financial Officer.
Employment Agreements
David Beling
On September 30, 2011, the Company entered
into an employment agreement with David Beling pursuant to which Mr. Beling would serve as the Company’s President and Chief
Executive Officer for a period of two years (with an automatic one-year extension each anniversary date) in consideration for an annual
salary of $200,000.
Upon termination of Mr. Beling’s employment
prior to expiration of the employment period (unless Mr. Beling’s employment is terminated for Cause or Mr. Beling terminates
his employment without Good Reason) (as such terms are defined in Mr. Beling’s employment agreement), Mr. Beling shall
be entitled to receive any and all reasonable expenses paid or incurred by Mr. Beling in connection with and related to the performance
of his duties and responsibilities for the Company during the period ending on the termination date, any accrued but unused vacation time
through the termination date in accordance with Company policy and an amount equal to Mr. Beling’s base salary and annual bonus
during the prior 12 months.
Tyler Minnick
Tyler Minnick does not have an employment agreement
with the Company. Mr. Minnick received stock option grants in relation to his services to the Company as Chief Financial Officer.
Maryse Belanger
On October 1, 2020, the Company entered into
an employment letter agreement with Maryse Belanger pursuant to which Ms. Belanger would serve as the Company’s Chief Executive
Officer in consideration for an annual salary of C$250,000. For the first 18 months from the Start Date of her employment with the Company,
if employment is terminated without cause by the Company or for good reason by her, she shall be compensated with a lump sum cash amount
equal to 6 months of her Annual Salary. After 18 months of employment with the Company, if employment is terminated without cause by the
Company or for good reason by her, she shall be compensated with a lump sum cash amount equal to one-and -one half times her Annual Salary.
She shall be entitled to exercise any vested options she holds in accordance with the Company’s stock option plan.
If the Company receives an offer that results
in a change of control of the Company and she resigns for good reason or is terminated by the Company without cause within six months
after a change of control (as defined in the employment agreement) she shall be compensated with a lump sum cash amount equal to two times
her Annual Salary and maximum target bonus of 70% plus all non-vested securities shall vest.
Outstanding
equity awards at year end December 31, 2020
The following
table sets forth the stock options granted to our named executive officers, as of December 31, 2020. No stock appreciation rights
have been awarded.
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
|
|
|
Number of
Securities
Underlying
Unexercised
Options:
(#)
Exercisable
|
|
|
|
Number of
Securities
Underlying
Unexercised
Options:
(#)
Unexercisable
|
|
|
|
Option
Exercise
Price ($)
|
|
|
Name Option
Expiration
Date
|
|
|
Number of
Shares
or Units
of Stock
that Have
Not
Vested (#)
|
|
David Beling
|
|
|
295,833
|
|
|
|
--
|
|
|
$
|
0.150
|
|
|
03/30/2025
|
|
|
--
|
|
David Beling
|
|
|
333,333
|
|
|
|
--
|
|
|
$
|
0.816
|
|
|
12/01/2027
|
|
|
--
|
|
Tyler Minnick
|
|
|
59,167
|
|
|
|
--
|
|
|
$
|
0.150
|
|
|
03/30/2025
|
|
|
--
|
|
Tyler Minnick
|
|
|
83,333
|
|
|
|
--
|
|
|
$
|
0.816
|
|
|
12/01/2027
|
|
|
--
|
|
Tyler Minnick
|
|
|
58,333
|
|
|
|
--
|
|
|
$
|
0.660
|
|
|
12/01/2027
|
|
|
--
|
|
Tyler Minnick
|
|
|
83,333
|
|
|
|
--
|
|
|
$
|
1.080
|
|
|
12/01/2027
|
|
|
--
|
|
Director Compensation
The following table shows compensation paid to
our directors (excluding compensation included under our summary compensation table above) for service as directors during the year ended
December 31, 2020.
Name
|
|
Fees
Earned or
Paid in
Cash
($)
|
|
|
Stock
Awards
($)*
|
|
|
Option
Awards
($)
|
|
|
All Other
Compensation
($)
|
|
|
Total
($)
|
|
Alan Lindsay**
|
|
|
-
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
Kjeld Thygesen**
|
|
|
-
|
|
|
|
90,000
|
|
|
|
-
|
|
|
|
-
|
|
|
|
90,000
|
|
David Beling, discussed above
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
* Represents the aggregate grant date fair value
computed in accordance with FASB 123.
**Resigned on October 26, 2020.
Compensation of Directors
Directors that were also
executive officers received no monetary compensation for serving as a Director. Non-executive directors are granted non-qualified stock
options as compensation. Such stock option awards are determined at the sole discretion of the Company’s Compensation Committee.
PROPOSAL
TWO - APPOINTMENT OF AUDITORS
The
Audit Committee has recommended to the Board that the Company propose Davidson & Company, LLP, the incumbent auditors,
to the Shareholders for re-election as the Company’s auditors for the financial year ending December 31, 2021. Davidson &
Company, LLP was first appointed auditors of the Company on June 5, 2019. Representatives of Davidson & Company, LLP are
not expected to be present at the Meeting or be available to respond to questions from persons present at the Meeting. If representatives
of Davidson & Company, LLP are present at the Meeting, the Chair of the Meeting will provide such representatives with the opportunity
to make a statement if they so desire.
To
be approved, the approvalof the selection of Davidson & Company LLP as our independent auditors for our 2020 fiscal year, must
receive “For” votes from the holders of a majority of Common Shares and Preferred Shares (on an as-converted basis) cast for
this proposal. You may vote “For”, “Against” or “Abstain” on this proposal. Abstentions will have
no effect on the outcome of this proposal. Such proposal is a “routine” matter on which brokers and nominees can vote on behalf
of their clients if clients do not furnish voting instructions.
Audit
Fees
For the fiscal year ended December 31, 2020,
the fees billed by Davidson & Company LLP, to us for services rendered for the review of the financial statements included in
the quarterly reports on Form 10-Q filed with the SEC were $15,000 and $37,500 for the 2020 audit of the annual financial statements.
Audit-Related Fees
For the fiscal years ended December 31, 2020
and 2019, there were no fees billed to us by our principal accountant for the audit or review of the financial statements that are not
reported above under Audit Fees.
Tax Fees
For the fiscal years ended December 31, 2020
and 2019, there were no fees billed to us by Davidson & Company LLP.
All Other Fees
For the fiscal years ended December 31, 2020
and 2019, there were no fees billed to us by our principal accountant for services other than services described above.
Policy on Audit Committee Pre-Approval of Audit
and Permissible Non-Audit Services of Independent Auditors
The policy of our Audit Committee is to pre-approve
all audit and permissible non-audit services provided by the independent auditors. These services may include audit services, audit-related
services, tax services and other services. Pre-approval is generally provided for up to one year and any pre-approval is detailed as to
the particular service or category of services and is generally subject to a specific budget. The independent auditors and management
are required to periodically report to our Board of Directors regarding the extent of services provided by the independent auditors in
accordance with this pre-approval, and the fees for the services performed to date. The Audit Committee may also pre-approve particular
services on a case-by-case basis. Our Audit Committee approved all services that our independent accountants provided to us in the past
two fiscal years.
Unless
otherwise instructed by the Shareholder, the persons named in the form of Proxy shall vote the Shares represented by the Proxy in favour
of the reappointment of Davidson & Company, LLP, as auditors of the Company and to authorize the Board to fix their remuneration
through the Audit Committee.
The
Board recommends a vote FOR the appointment of Davidson & Company LLP as auditors of the Company and to authorize the
Board to fix their remuneration through the Audit Committee.
PROPOSAL
THREE - STOCK OPTION PLAN
Approval of Stock Option Plan
At
the Meeting, management is seeking Shareholder approval of the Company’s Option Plan. The Option Plan was originally approved by
the Board on February 22, 2021. A copy of the Option Plan is attached as Appendix “B” to this Circular. For a
detailed description of the Option Plan see “Stock Option Plan – Summary of Option Plan” below.
In order to comply with
the rules of the TSX, the Option Plan must be approved by ordinary resolution of the Shareholders of the Company once instituted
and subsequently every three years.
The Option Plan will permit the award of stock
options to U.S. taxpayers that can be either non-qualified stock options that do not meet the requirements of Section 422 of the
United States Internal Revenue Code (“NQSOs”) or incentive stock options (referred to herein as “ISOs”)
that are qualified under Section 422 of the United States Internal Revenue Code.
ISOs allow more favorable U.S. federal income
tax treatment, in some circumstances, for participants in the Option Plan who are subject to United States federal income tax. However,
the Company may not be entitled to a compensation expense deduction when ISOs are exercised for purposes of the Company’s United
States corporate income taxes. The Option Plan does not require that stock options awarded to United States participants in the Plan be
ISOs; the Company has discretion to award either ISOs or NQSOs.
For purposes of granting ISOs, United States federal
income tax laws require that the Company’s Shareholders approve the Option Plan within 12 months before or after the date the Option
Plan was adopted by the Board.
Accordingly, at the Meeting,
Shareholders will be asked to pass the following ordinary resolution:
“RESOLVED THAT:
|
1.
|
the Option Plan of the Company
in the form attached as Appendix “B” to the Management Information Circular and Proxy Statement of the Company dated
June 24, 2021 (the “Circular”) and as summarized and described in the Circular, is hereby ratified, confirmed
and approved;
|
|
2.
|
all Options previously granted under the Option Plan and all unallocated Options under the Option Plan
are hereby ratified, confirmed and approved;
|
|
3.
|
the Company be and shall have the authority to grant Options pursuant to and subject to the terms and
conditions of the Option Plan until July 29, 2024, that is until the date that is three years from the date of the meeting Shareholder
approval is currently being sought unless the Option Plan is terminated earlier;
|
|
4.
|
the Company be and shall have authority to grant incentive stock options that are qualified under Section 422
of the United States Internal Revenue Code for up to 3,000,000 shares of common stock of the Company;
|
|
5.
|
any one director or officer of the Company be and is hereby authorized and directed, for and in the name
of and on behalf of the Company, to execute and to deliver all such agreements, instruments, amendments, certificates and other documents
and to perform all such acts or things as such director or officer may determine to be necessary or advisable for the purpose of giving
full force and effect to the provisions of this resolution, the execution by such director or officer and delivery of any such agreement,
instrument, amendment, certificate or other document or the performance of any such other act or thing being conclusive evidence of such
determination.”
|
If Shareholder approval is not obtained at the
Meeting, the Option Plan will continue to be in full force and effect and all Options issued thereunder will continue unaffected. However,
pursuant to the rules of the TSX, all unallocated Options under the Option Plan will be cancelled as of June 29, 2021 and the
Company will not be able to issue any additional Options under the Option Plan. Further, if the Option Plan is not approved by Shareholders
by February 22, 2022, the Company will not be able to issue ISOs under the Option Plan and any previously granted ISOs will cease
to ISOs and will be treated as NQSOs.
To
be approved, the approval of the Option Plan must receive “For” votes from the holders of a majority of Common Shares and
Preferred Shares (on an as-converted basis) present at the Meeting and cast for this proposal. You may vote “For”, “Against”
or “Abstain” on this proposal. Abstentions and Broker non-votes will have no effect on the outcome of this proposal.
Unless
otherwise directed, the management proxy nominees named in the accompanying form of Proxy to this Circular intend to vote the Common Shares
represented thereby FOR the approval of the resolution set forth above.
The Board recommends that Shareholders vote
FOR the approval of the Option Plan.
Stock Option Plan
The
Company’s current stock option plan, as amended (the “Option Plan”) was adopted by the Board on February 22,
2021. Pursuant to the policies of the TSX, all unallocated options, rights or other entitlements under a security-based compensation
arrangement that do not have a fixed maximum number of securities issuable must be approved by the listed issuer’s securityholders
when instituted and then every three years after the institution of such compensation arrangement.
The summary of the Option Plan set out below is
intended to be a brief description and is subject to and qualified in its entirety by the full text of the Option Plan. Capitalized terms
used in the following section “Summary of the Option Plan” but not otherwise defined in this Circular have the meanings given
to them in the Option Plan.
Summary of the Option Plan
The purpose of the Option Plan is to secure for
the Company and the Shareholders the benefits of the incentives inherent to Common Share ownership by officers, directors and other eligible
persons who, in the judgment of the Board, will have a sufficient role in the Company’s growth and success.
Directors, officers and employees of, and consultants
to, the Company or any of its subsidiaries, as well as employees of companies providing management services or support to the Company
or any of its subsidiaries (each, an “Eligible Person”), are eligible to receive Option grants under the Option Plan.
The Option Plan includes the following significant terms and restrictions:
|
·
|
The aggregate number of Common Shares that may be reserved for issuance pursuant to the Option Plan and
all other share Compensation Arrangements may not exceed 10% of the number of Common Shares issued and outstanding from time to time.
Of this number, a maximum of 10% Common Shares may be granted as Incentive Stock Options.
|
|
·
|
Any Common Shares subject to an Option that expires or terminates without having been fully exercised
may be made the subject of a further Option.
|
|
·
|
Upon the partial or full exercise of an Option, the Common Shares issued upon such exercise will automatically
become available to be made the subject of a new Option, provided that the total number of Common Shares reserved for issuance under the
Option Plan does not exceed 10% of the number of Common Shares then issued and outstanding.
|
|
·
|
The aggregate number of Common Shares reserved for issuance pursuant to the Option Plan or any other share
Compensation Arrangement to any one Participant may not exceed 5% of the number of Common Shares issued and outstanding at any time.
|
|
·
|
The aggregate number of Common Shares issuable pursuant to the Option Plan or any other share Compensation
Arrangement to Insiders may not exceed 10% of the number of Common Shares issued and outstanding at any time.
|
|
·
|
The aggregate number of Common Shares issued to Insiders pursuant to the Option Plan or any other share
Compensation Arrangement in any one-year period may not exceed 10% of the number of Common Shares then issued and outstanding.
|
Subject to the terms of the Option Plan, the Exercise
Price for each Common Share subject to an Option will be determined by the Board at the time of the Option grant, and may not be lower
than the last closing price of a common share on the TSX preceding the time of the Option grant, rounded up to the nearest whole cent.
Options will vest and become exercisable at such
time or times as may be determined by the Board on the date of the Option grant.
Unless the Board determines otherwise and subject
to any accelerated termination in accordance with the Option Plan, each Option will expire on the fifth anniversary of the date on which
it was granted. In no event may an Option expire later than the tenth anniversary of the date on which it was granted. If the date on
which an Option is scheduled to expire occurs during, or within ten business days after the last day of, a Black Out Period applicable
to the Optionee, then the date on which the Option will expire will be extended to the last day of such ten business day period.
Options are non-assignable and non-transferable,
with the exception of an assignment by testate succession or by the laws of descent and distribution upon the death of an Optionee.
If an Optionee ceases to be an Eligible Person
(other than by reason of death, permanent disability or termination for cause), the Optionee may exercise any vested Options for a period
of 30 days after the Optionee ceases to provide services to the Company or any of its subsidiaries, subject to the earlier expiry of the
Options. If an Optionee ceases to be an Eligible Person by reason of death, the Optionee’s heir may exercise any vested Options
for one-year following the date of the Optionee’s death, subject to the earlier expiry of the Options. If an Optionee ceases to
be an Eligible Person while on permanent disability, the Optionee or his legal representatives may exercise any vested Options until the
one-year anniversary of the Optionee ceasing to be an Eligible Person due to the disability of the Optionee or the expiry date of the
Option, whichever is earlier. If an Optionee is dismissed for cause, any Options (whether vested or unvested) held by such Optionee shall
terminate immediately upon receipt by the Optionee of notice of such dismissal.
If a “Change of Control” (as defined
below) occurs, the Board may, in its discretion, (a) amend, abridge or otherwise eliminate any vesting schedule so that notwithstanding
the other terms of any outstanding Option or the Option Plan, any outstanding Option may be exercised in whole or in part by the Optionee
and/or (b) determine that all holders of outstanding Options with an exercise price equal to or greater than the price per Common
Share provided for in the transaction giving rise to such Change of Control shall be entitled to receive and shall accept, immediately
prior to or concurrently with the transaction giving rise to such Change of Control, in consideration for the surrender of such Options,
the value of such Options determined in accordance with the Black and Scholes Option Pricing Model, as determined by the Board.
The Board may from time to time, subject to applicable
law and any required approval of the TSX, any other regulatory authority, or the Shareholders, suspend, terminate or discontinue the Option
Plan at any time, or amend or revise the terms of the Option Plan or of any Option granted thereunder; provided that no such amendment,
revision, suspension, termination or discontinuance can adversely affect the rights of an Optionee under any previously granted Option
except with the consent of that Optionee.
Shareholder approval shall not be required for
the following amendments, subject to any regulatory approvals, including, where required, the approval of the TSX:
|
1.
|
amendments to the Option Plan to ensure continuing compliance with applicable laws, regulations, requirements,
rules or policies of any governmental or regulatory authority or any stock exchange;
|
|
2.
|
amendments of a “housekeeping”, clerical, technical or stylistic nature, which include amendments
relating to the administration of the Option Plan or to eliminate any ambiguity or correct or supplement any provision herein which may
be incorrect or incompatible with any other provision hereof;
|
|
3.
|
changing the terms and conditions governing any Option(s) granted under the Option Plan, including
the vesting terms, the exercise and payment method, the Exercise Price and the effect of the Optionee’s death or permanent disability,
the termination of the Optionee’s employment, term of office or consulting engagement or the Optionee ceasing to be an Eligible
Person;
|
|
4.
|
determining that any of the provisions of the Option Plan concerning the effect of the Optionee’s
death or permanent disability, the termination of the Optionee’s employment, term of office or consulting engagement or the Optionee
ceasing to be an Eligible Person shall not apply for any reason acceptable to the Board;
|
|
5.
|
amendments to the definition of Eligible Person;
|
|
6.
|
changing the termination provisions of the Plan or any Option which, in the case of an Option, does not
entail an extension beyond an Option’s originally scheduled expiry date;
|
|
7.
|
changing the terms and conditions of any financial assistance which may be provided by the Company to
Optionees to facilitate the purchase of Common Shares under the Option Plan, or adding or removing any provisions providing for such financial
assistance;
|
|
8.
|
amendments to the cashless exercise feature set out in Section 2.8 of the Option Plan;
|
|
9.
|
the addition of or amendments to any provisions necessary for Options to qualify for favourable tax treatment
to Optionees or the Company under applicable tax laws or otherwise address changes in applicable tax laws;
|
|
10.
|
amendments relating to the administration of the Option Plan; and
|
|
11.
|
any other amendment, whether fundamental or otherwise, not requiring Shareholder approval under applicable
law or the rules or policies of any stock exchange upon which the Common Shares trade from time to time.
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Notwithstanding anything contained in the Option
Plan to the contrary, no amendment requiring the approval of the Shareholders under applicable law or the rules or policies of any
stock exchange upon which the Common Shares trade from time to time shall become effective until such approval is obtained. In addition
to the foregoing, approval by the Shareholders by ordinary resolution shall be required for:
|
1.
|
any amendment to the provisions of Section 3.9 of the Option Plan that is not an amendment within
the nature of Sections 3.9(a)(i) and 3.9(a)(ii) of the Option Plan;
|
|
2.
|
any increase in the maximum number of Common Shares that can be issued under the Option Plan, except in
connection with an adjustment made in accordance with the Adjustment Provisions;
|
|
3.
|
any reduction in the Exercise Price of an Option granted under the Option Plan (including the cancellation
and re-grant of an Option, constituting a reduction of the Exercise Price of an Option), except in connection with an adjustment made
in accordance with the Adjustment Provisions;
|
|
4.
|
any amendment to extend the expiry of an Option beyond its original Expiry Date;
|
|
5.
|
any amendment to Section 3.1(e) or Section 3.1(f) of the Option Plan to increase participation
by Insiders; and
|
|
6.
|
any amendment to the provisions of the Option Plan that would permit Options to be transferred or assigned
other than for normal estate settlement purposes, provided further that, in the case of any amendment or variance referred to (I) in
clause (v) of Section 3.9(b) of the Option Plan, Insiders are not eligible to vote their Common Shares in respect
of the required approval of the Shareholders, and (II) in clauses (iii), (iv) or (vi) of Section 3.9(b) of the
Option Plan, Insiders who shall benefit from such amendment or variance are not eligible to vote their Common Shares in respect of
the required approval of the Shareholders.
|
For the purposes of the Option Plan, “Change
of Control” means the occurrence of any of the following events:
|
1.
|
any one person holds a sufficient number of voting shares of the Company or resulting company to affect
materially the control of the Company or resulting company;
|
|
2.
|
any combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding,
hold in total a sufficient number of voting shares of the Company or its successor to affect materially the control of the Company or
its successor; or
|
|
3.
|
the Board adopts a resolution to the effect that the circumstances in clause (1) or (2) of this
definition have occurred or are imminent,
|
where such person or combination of persons referred
to in clause (1) or (2) of this definition did not previously hold a sufficient number of voting shares to affect materially
control of the Company or its successor. In the absence of evidence to the contrary, any person or combination of persons acting in concert
by virtue of an agreement, arrangement, commitment or understanding holding more than 20% of the voting shares of the Company or its successor
is deemed to materially affect control of the Company or its successor.
Securities Available for Grant Under the
Option Plan
As part of listing on the TSX, the Company adopted
its new TSX-approved Option Plan on February 22, 2021, which is being submitted to Shareholders for approval at the Meeting. The
Company’s historic incentive plan is the Company’s 2017 Equity Incentive Plan (the “2017 Plan”). The Company
is not authorized to make further grants under the 2017 Plan.
The Option Plan is “rolling” such
that the aggregate number of Common Shares that may be reserved for issuance pursuant to the Option Plan and all other share compensation
arrangements is 10% of the Common Shares outstanding, and such aggregate number of Common Shares issuable under the Option Plan shall
increase or decrease as the number of issued and outstanding Common Shares changes.
Under
the terms of the Option Plan, the aggregate number of Common Shares that may be reserved for issuance pursuant to the Option Plan and
all other share compensation arrangements as of the Record Date is 7,047,227, representing 10% of the Common Shares outstanding. As
of the Record Date, the Company had 5,025,000 Options outstanding under its Option Plan, representing 7.13% of the Company’s issued
and outstanding Common Shares and 225,002 Options outstanding under the 2017 Plan, representing 0.32% of the Company’s issued and
outstanding Common Shares. The Company has a further 1,797,225 remaining Options available for grant under its Option Plan representing
approximately 2.55% of the Common Shares outstanding.
Participation in the Option Plan
The Company’s directors, executive officers
and employees can all participate in the Option Plan at the discretion of the Board or the Compensation Committee. None of the unallocated
Common Shares under the Option Plan are currently designated to be issued to any of the Company’s executive officers, directors
or employees. As the granting of Options is at the discretion of the Compensation Committee as approved by the Board, it is not currently
possible to determine the number or amount of Option grants that may be made to the Company’s executive officers, directors or employees
or estimate the number of Options that would have been granted had the Option Plan been effective for the last completed fiscal year.
Annual Burn Rate
No Options had been granted under the Company’s
Option Plan as of December 31, 2020. The following table sets forth the annual “burn rate” of the 2017 Plan for each
of the three most recently completed fiscal years, calculated using the TSX’s prescribed methodology pursuant to Section 613(d) of
the TSX Company Manual.
Annual Burn Rate(1)
|
|
2020
|
|
|
2019
|
|
|
2018
|
|
2017 Plan
|
|
|
0.45
|
%
|
|
|
0.00
|
%
|
|
|
0.00
|
%
|
|
(1)
|
The burn rate is the number of awards granted in a fiscal year, expressed as a percentage of the weighted
average number of Common Shares outstanding for the applicable fiscal year calculated in accordance with the CPA Canada Handbook.
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Certain United States Federal Income Tax
Considerations for U.S. Holders
The following is a brief summary of certain United
States federal income tax consequences with respect to the issuance and exercise of options granted under the Option Plan. This summary
does not describe all federal tax consequences, including the consequences of owning and selling the Common Shares, nor does it describe
state, local or foreign tax consequences.
Scope of This Disclosure
This summary does not address the U.S. federal
income tax consequences of participation in the Option Plan by a non-U.S. Participant. For purposes of this summary, a “U.S.
Participant” is a participant in the Option Plan who is either a citizen of the U.S. or a resident alien of the U.S. for purposes
of the Internal Revenue Code of 1986, as amended (the “Code”), and the Canada-U.S. Tax Convention. For purposes of
this summary, a “non-U.S. Participant” is a participant in the Option Plan who is not a U.S. Participant.
Tax Consequences With Respect to Options
It is intended that the Options granted under
the Plan will be exempt from Code Section 409A and to that end will comply with statute and the underlying agency guidance interpreting
that section for purposes of such exemption, or will otherwise comply with Section 409A. The tax consequences described below are
based on the assumption that the Options will be exempt from or comply with Code Section 409A. If it is determined that the Options
are subject to Code Section 409A and do not comply with Code Section 409A, different tax consequences and penalties may result,
including immediate taxation in the year of vesting (whether or not the Option is exercised) and a 20% penalty tax on the U.S. Participant.
The following is a summary of certain anticipated
material U.S. federal income tax consequences with respect to options granted pursuant to Option Plan. This summary is based on the Code,
Treasury Regulations, published IRS rulings, published administrative positions of the IRS. In general, the following tax consequences
will apply to U.S. Participants.
Incentive Stock Options (ISOs)
If an Option granted pursuant to the Option Plan
qualifies as an ISO, the following tax consequences will apply to such ISOs held by U.S. Participants:
|
·
|
Grant. U.S. Participants will not recognize any taxable income at the time an ISO is granted.
|
|
·
|
Exercise. Upon the exercise of an ISO, the U.S. Participant will not recognize any income for purposes
of the regular income tax. However, the difference between the exercise price and the fair market value of such shares as of the date
of exercise generally will be an adjustment for the purpose of calculating alternative minimum taxable income. The alternative minimum
tax (“AMT”) is payable only to the extent that it exceeds the regular income tax.
|
|
·
|
Tax Deduction for the Company. If a U.S. Participants sells or otherwise disposes of the Common
Shares acquired upon the exercise of an ISO more than two years from the date the option was granted and more than one year after the
Option was exercised, then the Company will not be allowed a deduction for federal income tax purposes in connection with the grant or
exercise of the Option. However, if a U.S. Participant sells or otherwise disposes of such Common Shares before the holding period described
above is satisfied, then the Company will be allowed a tax deduction in the amount that, and for its taxable year in which, the U.S. Participant
recognizes ordinary income, if and to the extent the amount satisfies the general rules concerning deductibility of compensation,
subject to limitations imposed by Section 162(m) of the Code. Under current law, this income is not subject to income or payroll
tax withholding.
|
|
·
|
Tax Basis of the Acquired Common Shares. If a U.S. Participant pays the exercise price for an ISO
in cash, the original tax basis in the Common Shares received upon exercise will equal to the cash paid. If a U.S. Participant pays the
exercise price for an ISO by tendering other shares of the Company’s common stock already owned by the U.S. Participant, and the
U.S. Participant acquired those tendered shares through any means other than by exercising one or more ISOs, the U.S. Participant will
not recognize gain or loss on the tendered shares, but the original tax basis for an equal number of shares acquired upon exercise of
the ISO will be the same as the adjusted tax basis for the tendered shares. The remaining acquired shares will have an original tax basis
equal to the amount of the exercise price paid in cash, if any. If a U.S. Participant pays the exercise price solely by tendering other
shares of the Company’s common stock, then the original tax basis of the remaining acquired shares will be zero. If a U.S. Participant
pays the exercise price for an ISO by tendering shares of the Company’s common stock already owned by the U.S. Participant, and
the U.S. Participant acquired those tendered shares by exercising another ISO, Section 1036 of the Code generally provides that the
U.S. Participant will recognize no gain or loss with respect to the tendered shares (except possibly for purposes of the AMT as described
above), as long as the U.S. Participant has held the tendered shares for a period of time ending at least two years after the date the
ISO for the tendered shares was granted and at least one year after the U.S. Participant acquired the tendered shares upon exercise of
the ISO.
|
|
·
|
Sale of Shares and Characterization of Capital Gain or Loss. If a U.S. Participant sells or otherwise
disposes of Common Shares acquired upon exercise of an ISO at a time more than two years from the date the ISO was granted and more than
one year after the ISO was exercised, and if, as usually is the case, the common stock is a capital asset in the U.S. Participant’s
hands, then the U.S. Participant will recognize long-term capital gain or loss in an amount equal to the difference between the sale price
of the shares and the exercise price paid for the shares. If a U.S. Participant sells or otherwise disposes of Common Shares acquired
upon exercise of an ISO before the holding period described above is satisfied (a “Disqualifying Disposition”), then the U.S.
Participant will recognize ordinary income at the time of the disposition in an amount equal to the lesser of (1) the difference
between the exercise price and the fair market value of the shares at the time the ISO was exercised or (2) the difference between
the exercise price and the amount realized upon disposition of the shares, and the U.S. Participant will recognize long-term or short-term
capital gain or loss (depending on whether the U.S. Participant has held the shares for more than 12 months or for 12 months or less)
in an amount equal to the difference between the sale price of the shares and the fair market value of the shares on the date the ISO
was exercised.
|
Non-qualified Stock Options (NQSOs)
If an Option granted pursuant to the Plan does
not qualify as an ISO it will be a NQSO, the following tax consequences will apply to such NQSOs held by U.S. Participants:
|
·
|
Grant. U.S. Participants will not recognize any taxable income at the time an NQSO is granted.
|
|
·
|
|
Exercise. Upon the exercise of an NQSO, exercising U.S. Participants will recognize ordinary income in the amount by which the fair market value of the Common Shares at the time of exercise exceeds the option exercise price, and Company generally will be entitled at that time to an income tax deduction for the same amount. If a U.S. Participant is an employee or former employee this income may be subject to income and payroll tax withholding.
|
|
·
|
Tax Basis of the Acquired Common Shares. If a U.S. Participant pays the exercise price in cash, the U.S. Participant's original tax basis in the Common Shares received upon exercise will equal the sum of (1) the option exercise price plus (2) the amount such a U.S. Participant is required to recognize as income as a result of the exercise. If the U.S. Participant pays the exercise price by tendering other Common Shares, the U.S. Participant will not recognize gain or loss on the tendered Common Shares, but the original tax basis for an equal number of Common Shares acquired upon exercise of the option will be the same as the adjusted tax basis for the tendered Common Shares. The remaining acquired Common Shares will have an original tax basis equal to (a) the sum of the amount of the exercise price paid in cash, if any, plus (b) any amount the U.S. Participant is required to recognize as income as a result of the option exercise.
|
|
·
|
Holding
Period. The holding period for Common Shares acquired upon exercise of a NQSO, for purposes of determining whether any capital
gain or loss on a holder's subsequent sale is long-term or short-term, shall begin at the time of the exercise of the option (or, in
the case of an officer or director who does not make the Section 83(b) election described below, on the date up to six months
later when ordinary income is recognized).
|
Special Rules for Executive Officers
Subject to Section 16 of the Exchange Act.
Special rules may apply to individuals who
are subject to Section 16 of the Exchange Act. In some circumstances, unless a special election is made pursuant to the Code, shares
received through exercise of an Option may be treated as restricted as to transferability and subject to a substantial risk of forfeiture
for a period of up to six months after the date of exercise. Accordingly, the amount of ordinary income recognized and the amount of the
Company’s income tax deduction will be determined as of the end of that period.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY
COMPENSATION PLANS
Option Plan
The
following table sets forth information concerning securities outstanding as at the Record Date.
Plan Category
|
|
Number of Common Shares to be issued
upon exercise of
outstanding options
|
|
|
Weighted-average exercise price
of outstanding options
(C$)(1)
|
|
|
Number of securities remaining
available for future issuance
under equity compensation
plans(2)
|
|
Equity compensation plans approved by securityholders
|
|
|
N/A
|
|
|
|
N/A
|
|
|
|
N/A
|
|
Equity compensation plans not approved by securityholders
|
|
|
5,250,002
|
|
|
|
2.92
|
|
|
|
1,797,225
|
|
(1) Exercise
prices priced in US$ were converted to C$ at a rate of US$1:C$1.2377, the conversion rate as of the Record Date.
(2) Based
on 10% of the Company’s issued and outstanding Common Shares at the Record Date less stock options outstanding at the Record Date.
|
CORPORATE CEASE TRADE
ORDERS OR BANKRUPTCIES
Except
as provided below, no proposed director of the Company is, as at the date of this Circular, or was within 10 years before the date
of this Circular, a director, chief executive officer or chief financial officer of any company (including the Company), that (i) was
subject to a cease trade or similar order or an order that denied such company access to any exemption under securities legislation (that
was in effect for a period of more than 30 days) that was issued while the proposed director was acting in the capacity as director, chief
executive officer or chief financial officer, or (ii) was subject to any such order that was issued after the proposed director ceased
to be a director, chief executive officer or chief financial officer and which resulted from an event that occurred while that person
was acting in the capacity as director, chief executive officer or chief financial officer:
Mr. Boggio
was a director of Great Western Minerals Group Ltd. (“GWMG”) from January 2013 until his resignation together
with all the then current directors in July 2015. On April 30, 2015, GWMG announced that a support agreement was entered
into with the holders of a majority of GWMG’s secured convertible bonds and GWMG was granted protection from its creditors under
the Companies Creditors Arrangements Act upon receiving an initial order from the Court. On May 11, 2015, an order was issued
by the Financial and Consumers Affairs Authority of the Province of Saskatchewan that all trading in the securities of GWMG be ceased
due to its failure to file financial statements for the year ended December 31, 2014. In December 2015 GWMG entered bankruptcy
proceedings.
No
proposed director of the Company is or has within the 10 years before the date of this Circular, become bankrupt, made a proposal under
any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with
creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the proposed director.
Penalties
or Sanctions
No
proposed director of the Company has been subject to (a) any penalties or sanctions imposed by a court relating to securities legislation
or by a securities regulatory authority or has entered into a settlement agreement, with a securities regulatory authority, or (b) any
other penalties or sanctions imposed by a court or regulatory body that would likely be considered important to a reasonable securityholder
in deciding whether to vote for a proposed director.
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS
During the Company’s
past fiscal year, no director, executive officer or senior officer of the Company, proposed management nominee for election as a director
of the Company or associate or affiliate of any such director, executive or senior officer or proposed nominee is or has been indebted
to the Company or any of its subsidiaries or is or has been indebted to another entity where such indebtedness is or has been the subject
of a guarantee, support agreement, letter of credit or other similar arrangement or understanding provided by the Company or any of its
subsidiaries, other than routine indebtedness.
INTEREST OF INFORMED
PERSONS IN MATERIAL TRANSACTIONS
Other than as set forth
below or elsewhere in this Circular and other than transactions carried out in the ordinary course of business of the Company or any of
its subsidiaries, no informed person or proposed director of the Company and no associate or affiliate of the foregoing persons has or
has had any material interest, direct or indirect, in any transaction since the commencement of the Company’s most recently completed
financial year or in any proposed transaction which in either of such cases has materially affected or would materially affect the Company
or any of its subsidiaries.
On
October 26, 2020, the Company acquired certain subsidiaries of Barrick and concurrently closed a private placement of units (“Units”)
with Augusta Investments Inc. and certain of its associates at a price of C$1.20 per Unit pursuant to which Augusta Investments Inc. gained
control of the Company (the “Private Placement”). Each Unit was comprised of one Common Share and one Common Share
purchase warrant, with each warrant entitling the holder to purchase one Common Share at a price of C$1.80 until October 26, 2024.
The Company issued 9,100,000 Units to Barrick for the acquired subsidiaries. Barrick is a greater than 10% shareholder of the Company
and has an address at Brookfield Place, TD Canada Trust Tower, Suite 3700, 161 Bay Street, P.O. Box Toronto, Ontario, M5J 2S1.
Under the Private Placement, the Company issued 17,375,000 Units to Augusta Investments Inc., 208,334 Units to Maryse Belanger, 416,667
Units to 2210637 Ontario Ltd. (a company owned by Daniel Earle), 166,667 Units to Donald R. Taylor, and 166,667 Units to Lions Gate Holdings
Inc. (a company owned by Purni Parikh). All of the participants in the Private Placement are current or former directors or officers of
the Company or investment companies owned by such persons and have an address at Suite 555 – 999 Canada Place, Vancouver,
British Columbia V6C 3E1. All of the above figures are stated after giving effect to the Company’s 6:1 share consolidation that
was effected on January 26, 2021.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On August 4, 2020, the Board of Directors
approved and issued a stock compensation distribution to board members Alan Lindsay, Chairman; Kjeld Thygesen, board member; and David
Beling, CEO, President and board member. The Company issued 83,333 shares of common stock to each for a total of 250,000 shares with the
fair market value of $1.08 per share.
Related Person Transactions Policy and Procedure
The Company’s Code of Ethics states that
our directors, employees and consultants should not be involved in any activity that creates or gives the appearance of a conflict of
interest between their personal interests and the interests of the Company. In particular, without the specific permission of our Chairman
of the Audit Committee, ethics officer or our Board (including contracts approved by our Board), no director, employee or consultant,
or a member of his or her family shall, unless disclosed to us, engage in the list of conflict of interest transactions set forth in the
Code of Ethics. Our directors, employees and consultants must immediately notify the Chairman of the Audit Committee or our ethics officer
of the existence of any actual or potential conflict of interest so that the circumstances can be reviewed for a decision on whether a
conflict of interest is present, and if so, what course of action is to be taken.
Our Audit Committee, pursuant to its written charter,
is responsible for reviewing and approving related-party transactions to the extent we enter into such transactions. The Audit Committee
will consider all relevant factors when determining whether to approve a related party transaction, including whether the related party
transaction is on terms no less favorable to us than terms generally available from an unaffiliated third-party under the same or similar
circumstances and the extent of the related party’s interest in the transaction.
SHAREHOLDER PROPOSALS
Under the Exchange Act, the deadline for submitting
shareholder proposals for inclusion in the management information circular and proxy statement for an annual general meeting of the Company
is calculated in accordance with Rule 14a-8(e) of Regulation 14A to the Exchange Act. If the proposal is submitted for a regularly
scheduled annual general meeting, the proposal must be received at the Company’s principal executive offices not less than 120 calendar
days before the anniversary date of the Company’s management information circular and proxy statement released to the Shareholders
in connection with the previous year’s annual general meeting. However, if the Company did not hold an annual general meeting the
previous year, or if the date of the current year’s annual and special meeting has been changed by more than 30 days from the date
of the previous year’s meeting, then the deadline is a reasonable time before the Company begins to print and mail its proxy materials.
Accordingly, unless the date of the next annual general meeting is changed by more than 30 days from the date of this year’s meeting
the deadline for submitting shareholder proposals for inclusion in the management information circular and proxy statement for the next
annual general meeting of the Company will be February 24, 2022.
In addition, our Bylaws provide notice procedures
for stockholders to nominate a person as a director and to propose business to be considered by stockholders at a meeting. Notice of a
nomination or proposal must be delivered to us not less than 60 days and not more than 90 days before the first anniversary of the date
on which the Company held its annual meeting in the immediately preceding year; provided, however, that in the case of an annual meeting
of Shareholders (A) that is called for a date that is not within thirty (30) days before or after the first anniversary date of the
annual meeting of Shareholders in the immediately preceding year, or (B) in the event that the Company did not have an annual meeting
of Shareholders in the prior year any such written proposal of nomination must be received by the Board of Directors not less than five
days after the earlier of the date the Company shall have (w) mailed notice to its Shareholders that an annual meeting of Shareholders
will be held or (x) issued a press release, or (y) filed a periodic report with the Securities and Exchange Commission or (z) otherwise
publicly disseminated notice that an annual meeting of Shareholders will be held. Accordingly, for our 2022 annual meeting, notice of
a nomination or proposal must be delivered to us no later than May 30, 2022 and no earlier than April 30, 2022. Nominations
and proposals also must satisfy other requirements set forth in the Bylaws. If a stockholder fails to comply with the foregoing notice
provision or with certain additional procedural requirements under SEC rules, the Company will have authority to vote shares under proxies
we solicit when and if the nomination or proposal is raised at the annual meeting of Shareholders and, to the extent permitted by law,
on any other business that may properly come before the annual meeting of Shareholders and any adjournments or postponements.
MULTIPLE SHAREHOLDERS SHARING THE SAME ADDRESS
The
regulations regarding the delivery of copies of proxy materials and annual reports to Shareholders permit the Company and brokerage firms
to send one annual report and proxy statement to multiple Shareholders who share the same address under certain circumstances. Shareholders
who hold their Common Shares through a broker may have consented to reducing the number of copies of materials delivered to their address.
In the event that a Shareholder wishes to revoke such a consent previously provided to a broker, the Shareholder must contact the broker
to revoke the consent. In any event, if a Shareholder wishes to receive a separate Circular and accompanying materials for the Meeting,
or the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, the Shareholder may receive copies by
contacting the Corporate Secretary at Suite 555, 999 Canada Place, Vancouver,
British Columbia, V6C 3E1. Shareholders receiving multiple copies of these documents at the same address can request delivery of
a single copy of these documents by contacting the Company in the same manner. Persons holding Common Shares through a broker can request
a single copy by contacting the broker.
OTHER MATTERS
Management of the Company
knows of no matters to come before the Meeting other than the matters referred to in the Notice of Meeting accompanying this Circular.
However, if any other matters that are not known to management should properly come before the Meeting, it is the intention of the persons
named in the form of Proxy accompanying this Circular to vote upon such matters in accordance with their best judgement.
ADDITIONAL INFORMATION
Additional information concerning the Company
is available on SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml. Financial information relating to the Company is provided
in the Company’s comparative financial statements and management’s discussion and analysis for its most recently completed
financial year which are contained in its Annual Report on Form 10-K. Shareholders wishing to obtain a copy of the Company’s
Annual Report on Form 10-K may contact the Company at the following:
Augusta Gold Corp.
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Telephone: (604) 687-1717
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Suite 555 – 999 Canada Place
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Email: info@augustagold.com
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Vancouver, British Columbia V6C 3E1
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APPENDICES
Appendix A – Form of Proxy
Appendix B – Stock Option Plan
SIGNATURE
The undersigned hereby certifies that the contents
and sending of this Circular to the Shareholders of the Company have been approved by the Board.
Dated effective as of
June 24, 2021.
BY ORDER OF THE BOARD OF DIRECTORS
“Donald R. Taylor”
Donald R. Taylor
President and Chief Executive
Officer
APPENDIX “A”
FORM OF PROXY
[Attached.]
FORM OF PROXY
Annual General Meeting to be held on Thursday
July 29, 2021
This Form of Proxy is solicited by and on behalf of the Board
of Directors.
Notes to proxy
Every holder has the right to appoint some
other person or company of their choice, who need not be a holder, to attend and act on their behalf at the meeting or any adjournment
or postponement thereof. If you wish to appoint a person or company other than the persons whose names are printed herein, please insert
the name of your chosen proxyholder in the space provided.
If the securities are registered in the name of
more than one owner (for example, joint ownership, trustees, executors, etc.), then all those registered should sign this proxy.
If you are voting on behalf of a corporation or another individual you must sign this proxy with signing capacity stated, and you may
be required to provide documentation evidencing your power to sign this proxy.
This proxy should be signed in the exact manner
as the name(s) appear(s) on the proxy.
If this proxy is not dated, it will be deemed
to bear the date on which it is mailed by the Board of Directors to the holder.
If you appoint the Board of Directors Nominees
to vote your securities, they will vote in accordance with your instructions or, if no instructions are given, in accordance with the
Board Voting Recommendations highlighted for each Resolution overleaf. If you appoint someone else to vote your securities, they will
also vote in accordance with your instructions or, if no instructions are given, as they in their discretion choose.
This proxy confers discretionary authority in
respect of amendments or variations to matters identified in the Notice of Meeting or other matters that may properly come before the
meeting or any adjournment or postponement thereof, except as may be limited by applicable law.
This proxy should be read in conjunction with
the accompanying documentation provided by the Board of Directors.
Proxies submitted must be received by 10:00
am (Pacific Time) on Tuesday, July 27, 2021, or in the case of any adjournment or postponement of the Meeting not less than 48 hours
(Saturdays, Sundays and holidays excepted) before the time of the adjourned or postponed meeting.
VOTING METHODS
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MAIL or HAND DELIVERY
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Endeavor Trust Corporation
702 – 777 Hornby Street
Vancouver, BC V6Z 1S4
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EMAIL
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proxy@endeavortrust.com
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ONLINE
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As listed on Form of Proxy or Voter Information Card
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If you vote by EMAIL or Online, DO NOT mail back this proxy.
Voting by mail or by email are the only
methods by which a holder may appoint a person as proxyholder other than the Board of Directors Nominees named on the reverse of this
proxy.
Appointment of Proxyholder
I/We, being holder(s) of AUGUSTA GOLD CORP. (the “Company”) hereby appoint: Mr. Richard Warke, Executive Chairman, or, failing him, Purni Parikh, Senior Vice President, Corporate Affairs, or, failing her, Michael McClelland, Chief Financial Officer
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OR
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Print the name of the person you are appointing if this person is someone other than the Board of Director Nominee listed herein.
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as my/our proxyholder with full power of substitution
and to attend, act and to vote for and on behalf of the shareholder in accordance with the following direction (or if no directions have
been given, as the proxyholder sees fit) and all other matters that may properly come before the Annual General Meeting of stockholders
of the Company to be held at Suite 555 - 999 Canada Place, Vancouver, BC V6C 3E1 on Thursday July 29, 2021 at 10:00 am (Pacific
Time), and at any adjournment or postponement thereof.
VOTING RECOMMENDATIONS OF THE BOARD OF DIRECTORS ARE INDICATED BY
HIGHLIGHTED TEXT OVER THE BOXES.
1. Election of Directors
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For
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Withheld
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i) Richard Warke
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¨
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¨
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ii) Donald R. Taylor
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¨
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¨
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iii) Lenard Boggio
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¨
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¨
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iv) John Boehner
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¨
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¨
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v) Daniel Earle
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¨
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¨
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vi) Poonam Puri
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¨
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¨
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2. Appointment of Auditor
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For
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Against
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Abstain
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To appoint Davidson & Company LLP as auditor
of the Company until the next annual meeting, and to authorize the directors to fix their remuneration;
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¨
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¨
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¨
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3. Stock Option Plan
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For
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Against
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Abstain
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To approve the Company’s Stock
Option Plan
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¨
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¨
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¨
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Authorized Signature(s) – This section must be completed for your instructions to be executed.
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Signature(s)
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I/We authorize you to act in accordance with my/our instructions set out above. I/We hereby revoke any proxy previously given with respect to the Meeting. If no voting instructions are indicated above, this Proxy will be voted as recommended by the Board of Directors as indicated above.
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Print Name(s) & Signing Capacity(ies), if applicable
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Date (MM-DD-YY)
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THIS PROXY MUST BE DATED
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APPENDIX “B”
STOCK OPTION PLAN
[Attached.]
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Security Class: Common and
Preferred Shares
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STOCK OPTION PLAN
AUGUSTA GOLD CORP.
(the “Company”)
Effective as of February 22, 2021
Amended to: June 25, 2021
ARTICLE 1
INTRODUCTION
The purpose of the
Plan is to secure for the Company and its shareholders the benefits of the incentives inherent to share ownership by directors, officers,
key employees and consultants of the Company and its Subsidiaries who, in the judgment of the Board, will be largely responsible for Company's
future growth and success.
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(a)
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“Adjustment Provisions” has the meaning set out in Section 2.20.
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(b)
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“Associate” has the meaning ascribed thereto in the Securities Act.
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(c)
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“Black Out Period” means any period during which a policy of the Company prevents an Optionee from trading in the Company's
securities.
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(d)
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“Board” means the board of directors of the Company, or any committee of the board of directors composed of two or more
non-Employee directors of the Company to which administration of the Plan has been delegated.
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(e)
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“Business Day” means any day, other than a Saturday, Sunday or statutory holiday in the Province
of British Columbia or the State of Delaware, on which commercial banks in the City of Vancouver are open for business;
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(f)
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“Change of Control” means the occurrence of any of the following events:
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(i)
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any one person holds a sufficient number of voting shares of the Company or resulting company to affect
materially the control of the Company or resulting company;
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(ii)
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any combination of persons, acting in concert by virtue of an agreement, arrangement, commitment or understanding,
hold in total a sufficient number of voting shares of the Company or its successor to affect materially the control of the Company or
its successor; or
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(iii)
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the Board adopts a resolution to the effect that the circumstances in clause (i) or (ii) of
this definition have occurred or are imminent,
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where such person or combination of
persons referred to in clause (i) or (ii) of this definition did not previously hold a sufficient number of voting shares to
affect materially control of the Company or its successor. In the absence of evidence to the contrary, any person or combination of persons
acting in concert by virtue of an agreement, arrangement, commitment or understanding holding more than 20% of the voting shares of the
Company or its successor is deemed to materially affect control of the Company or its successor.
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(g)
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“Company” means Augusta Gold Corp., a corporation duly incorporated under the laws of the State of Delaware, and includes
any successor corporation thereto.
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(h)
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“Consultant” means a "consultant" (as such term is defined in NI 45-106) that is
a natural person, has been engaged to provide services to the Company or any of its Subsidiaries for an initial, renewable or extended
period of 12 months or more, is providing bona fide services to the Company that are not in connection with the offeror sale of securities
in a capital-raising transaction, and do not directly or indirectly promote or maintain a market for the Company’s securities.
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(i)
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“Director” means a director of the Company or any of its Subsidiaries.
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(j)
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“Eligible Person” means any Director, Officer, Employee, Management Company Employee or Consultant,
and includes a company that is wholly-owned by such persons.
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(k)
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“Employee” means an individual who is a bona fide employee of the Company or any Subsidiary
of the Company and includes a bona fide permanent part-time employee of the Company or any Subsidiary of the Company.
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(l)
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“Exchange” means the either the Canadian Securities Exchange, the TSX Venture Exchange, or
the Toronto Stock Exchange on which the Shares are listed for trading, or, if the Board in its discretion so determines, any other stock
exchange or quotation system on which the Shares are, at the relevant time, listed or quoted for trading;
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(m)
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“Exercise Price” in respect of an Option, means the price per share at which Shares may be
purchased under such Option, as the same may be adjusted from time to time in accordance with the Adjustment Provisions.
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(n)
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“Expiry Date” in respect of an Option, means the date determined by the Board at the time
of grant on which the Option will expire.
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(o)
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“Heir” has the meaning set out in Section 3.2.
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(p)
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“Insider” has the meaning ascribed thereto in the TSX Company Manual.
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(q)
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“Management Company Employee” means an individual who (i) is a bona fide employee of
a company that has been engaged to provide management services or support to the Company or any of its Subsidiaries under a written contract
for an initial, renewable or extended period of 12 months or more and (ii) spends or will spend a significant amount of time and
attention on the affairs and business of the Company or any of its Subsidiaries.
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(r)
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“NI 45-106” means National Instrument 45-106 - Prospectus Exemptions of the Canadian
Securities Administrators, as amended from time to time, or such other successor and/or additional regulatory rules, instruments or policies
from time to time of Canadian provincial securities regulatory authorities which may govern the trades of securities pursuant to the Plan.
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(s)
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“Notice of Cashless Exercise” means a notice, substantially in the form set out in Exhibit “C”
hereto, or in such other form as may be approved by the Board from time to time, delivered by an Optionee to the Company providing notice
of the cashless exercise of an Option previously granted to the Optionee pursuant to Section 2.8 of the Plan.
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(t)
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“Notice of Exercise” means a notice, substantially in the form set out in Exhibit “B”
hereto, or in such other form as may be approved by the Board from time to time, delivered by an Optionee to the Company providing notice
of the exercise or partial exercise of an Option previously granted to the Optionee.
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(u)
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“Offer” has the meaning set out in Section 2.16.
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(v)
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“Officer” means a senior officer of the Company or any of its Subsidiaries.
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(w)
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“Option” means an option to purchase Shares granted under the Plan.
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(x)
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“Optioned Shares” has the meaning set out in Section 2.16.
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(y)
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“Optionee” means a Participant to whom an Option has been granted under the Plan.
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(z)
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“Participant” means an Eligible Person who elects to participate in the Plan.
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(aa)
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“Plan” means this amended and restated stock option plan, as the same may be further amended,
restated, modified or supplemented from time to time.
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(bb)
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“Securities Act” means the Securities Act (British Columbia), R.S.B.C., 1996 c.418, as amended
from time to time.
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(cc)
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“Share Compensation Arrangement” means the Plan and any other stock option, stock option plan,
employee stock purchase plan, share distribution plan or any other compensation or incentive mechanism involving the issuance or potential
issuance of Shares to one or more Eligible Persons.
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(dd)
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“Shareholders” means the holders of Shares.
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(ee)
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“Shares” means the shares of common stock of the
Company, par value $0.0001.
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(ff)
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“Stock Option Plan Certificate” means the option certificate delivered by the Company to an
Optionee, substantially in the form set out in Exhibit “A” hereto or in such other form as may be approved from time
to time by the Board.
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(gg)
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“Subsidiary” has the meaning ascribed thereto in
the Securities Act.
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(hh)
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“TSX” means The Toronto Stock Exchange.
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(ii)
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“TSX Company Manual” means the Company Manual of the TSX, as amended from time to time, including
such Staff Notices of the TSX from time to time which may supplement the same.
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(jj)
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“U.S. Securities Act” means the United States Securities
Act of 1933, as amended. (kk) “Withholding Tax Amount” has the meaning set out in Section 3.8.
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In the Plan, unless otherwise expressly stated or if the
context otherwise requires:
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(a)
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the division of the Plan into articles and sections and the insertion of headings are for convenience of reference only and shall
not affect the construction or interpretation of the Plan;
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(b)
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the terms "the Plan", "herein", "hereby", "hereof" and "hereunder" and similar expressions
refer to the Plan in its entirety and not to any particular provision hereof;
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(c)
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references to Articles and Sections followed by a number or letter refer to the specified articles and sections of the Plan;
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(d)
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words importing the singular number only shall include the plural and vice versa and words importing the use of any gender shall include
all genders;
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(e)
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the word "including" is deemed to mean "including without limitation"; and
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(f)
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whenever the Board 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.
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ARTICLE 2
STOCK OPTION PLAN
The Board may, from time to time, in its
discretion, subject to the provisions of the Plan, grant Options to Eligible Persons.
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2.2
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Determination of Option Recipients
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The Board shall make
all necessary or desirable determinations regarding the granting of Options to such Eligible Persons as the Board deems appropriate and
may take into consideration the present and potential contributions of a particular Eligible Person to the success of the Company and
any other factors which it may deem proper and relevant.
The Exercise Price
for each Share subject to an Option shall be determined by the Board, in its discretion, at the time of the Option grant, which Exercise
Price will not be lower than the last closing price of a Share on the Exchange preceding the time of the Option grant, rounded up to the
nearest whole cent. If the Shares are not traded on an Exchange, the Board will determine the fair market value of the Shares in accordance
with valuation principles under 409A of the Code (as defined below). If the Exercise Price of an Option is expressed in a different currency
than the closing price of a Share on the Exchange, the closing price will be converted into the currency of the Exercise Price using the
Bank of Canada average rate of exchange on the trading day immediately preceding the date of the Option grant.
While the Company
is listed on the Canadian Securities Exchange, it will not grant Options with an Exercise Price lower than the greater of the closing
market prices of the Shares on (a) the trading day prior to the date of grant of the Options; and (b) the date of grant of the
Options.
The Board may at
any time authorize the granting of Options to such Eligible Persons as it may select for the number of Shares that it shall designate,
subject to the provisions of the Plan. The date of each grant of Options shall be determined by the Board when the grant is authorized.
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2.5
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Stock Option Plan Certificate
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Each Option granted
to an Optionee shall be evidenced by a Stock Option Plan Certificate detailing the terms of the Option. Upon the delivery of a Stock Option
Plan Certificate to an Optionee by the Company, the Optionee shall have the right to purchase the Shares underlying the Option at the
Exercise Price set out therein, subject to any provisions with respect to the vesting of the Option and the provisions of the Plan.
The periods during
which Options may be exercised and the number of Options which may be exercised in any given period shall be determined by the Board at
the time of granting Options. Unless the Board determines otherwise and subject to any accelerated termination in accordance with the
Plan, each Option shall expire on the fifth anniversary of the date on which it was granted. In no event may an Option expire later than
the tenth anniversary of the date on which it was granted.
Subject to the provisions
of the Plan and any vesting provisions to which the Option may be subject, an Option that has vested may be exercised from time to time
by delivery to the Company of a completed Notice of Exercise, specifying the number of Shares with respect to which the Option is being
exercised and accompanied by payment in full of the aggregate Exercise Price for such Shares and any amount required by the Company pursuant
to Section 3.8 as a condition to the exercise of the Option. Certificates for such Shares shall be issued and delivered to the Optionee
within a reasonable time following the receipt of such Notice of Exercise and payment.
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2.8
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Cashless Exercise of Option
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In lieu of paying
the aggregate Exercise Price to purchase Shares as set forth in Section 2.7, but subject to Section 3.8, the Optionee may elect
to receive, without payment of cash, in consideration for the surrender of the applicable portion of a then vested and exercisable Option
to the Company, a number of Shares determined in accordance with the following formula:
A = B (C – D)/C,
where:
A = the number of Shares to be issued to the Optionee pursuant
to this Section 2.8;
B = the number of Shares otherwise issuable upon the exercise
of the Option or the portion of the Option being exercised;
C = the closing price of a Share on
the Exchange on the trading day immediately preceding the date of delivery of a Notice of Cashless Exercise by the Optionee to the Company,
rounded up to the nearest whole cent.
D = the Exercise Price.
If the Exercise Price of an Option
is expressed in a different currency than the closing price of a Share on the Exchange, the closing price will be converted into the currency
of the Exercise Price using the Bank of Canada average rate of exchange on the trading day immediately preceding the date of the Option
grant.
Shares issued upon
the exercise of an Option may be subject to a hold period imposed by the TSX or under applicable securities laws, in which case the certificates
representing such Shares shall be legended accordingly.
Options
granted pursuant to the Plan shall vest and become exercisable by an Optionee at such time or times as may be determined by the Board
on the date of the Option grant, and as indicated in the Stock Option Plan Certificate. The Board in its discretion may accelerate the
date upon which any Option vests and becomes exercisable. No unvested Options may be exercised by an Optionee. An Optionee has
no entitlement to compensation in respect of unvested, non-exercised and/or terminated Options, nor any claim for damages in lieu thereof,
except as otherwise expressly required by minimum standards legislation, if applicable.
If the date on which
an Option held by an Optionee is scheduled to expire occurs during, or within 10 Business Days after the last day of, a Black Out Period
applicable to such Optionee, then the date on which such Option will expire shall be extended to the last day of such 10 Business Day
period.
If an Optionee ceases
to be an Eligible Person by reason of death, any Options held by such Optionee on the date of his death shall only be exercisable by the
Heir of such Optionee. All such Options shall be exercisable only (i) to the extent that the Optionee was entitled to exercise such
Options on the date of his death and (ii) until the one-year anniversary of the death of the Optionee or the Expiry Date of the Option,
whichever is earlier.
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2.13
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Permanent Disability of Optionee
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If
an Optionee ceases to be an Eligible Person while on permanent disability (which determination shall be made by the Board in its discretion,
subject to the duty to accommodate in accordance with human rights legislation if applicable), any Options held by such Optionee shall
be exercisable by the Optionee or his legal representatives. Such Optionee's Options shall be exercisable only (i) to the extent
that the Optionee was entitled to exercise such Option on the date the Optionee ceases to be an Eligible Person due to disability and
(ii) until the one-year anniversary of the Optionee ceasing to be an Eligible Person due to the disability of the Optionee or the
Expiry Date of the Option, whichever is earlier.
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2.14
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Termination for Cause
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If
an Employee, Management Company Employee or Officer is dismissed for cause (for this purpose, as determined by the Board in its discretion,
or if applicable, as defined in the applicable person's employment agreement) or a consulting agreement or arrangement is terminated by
the Company or any of its Subsidiaries as a result of a breach or default committed thereunder by a Consultant (as determined by the Board
in its discretion, and whether or not such termination is effected in compliance with any termination provisions contained in the applicable
consulting agreement or arrangement), any Options (whether vested or unvested) held by the Employee, Management Company Employee, Officer
or applicable Consultant, as the case may be, shall terminate immediately upon receipt by the Optionee (or consulting firm, if applicable)
of notice of such dismissal or termination and shall no longer be exercisable as of the date of such notice (or, if applicable, such other
period set out in the Optionee's employment or consulting agreement or arrangement or prescribed by law). In all such cases, where
the cause asserted does not disqualify the Optionee from statutory notice in accordance with minimum standards legislation, if applicable,
the exercisable date shall instead cease at the end of the required statutory notice period.
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2.15
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Termination of Employment, Term of Office or Agreement
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If
an Optionee ceases to be an Eligible Person (including upon the expiry of a consulting or management services agreement or arrangement),
other than in the circumstances described in Section 2.12, 2.13 or 2.14, any Options held by such Optionee on the date the Optionee
ceases to provide services to the Company or any of its Subsidiaries shall be exercisable only (i) to the extent that the Optionee
is entitled to exercise such Options as of such date, which date shall be adjusted to reflect the end of the statutory notice period
where required under minimum standards legislation, if applicable, and (ii) until the 30th day after such date (or such other period
as may be determined by the Board in its discretion, set out in the Optionee's employment or consulting agreement or arrangement, if applicable,
or prescribed by law) or the Expiry Date of the Option, whichever is earlier.
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2.16
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Effect of Take-Over Bid
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If a bona fide take-over
bid (as such term is defined in the Securities Act, and referred to herein as an “Offer”) for Shares is made, which Offer,
if successful, would result in a Change of Control, then the Company shall, immediately upon receipt of notice of the Offer, notify each
Optionee of the full particulars of the Offer. The Board may, in its discretion, amend, abridge or otherwise eliminate any vesting schedule
so that notwithstanding the other terms of any outstanding Option or the Plan, each outstanding Option may be exercised in whole or in
part by the Optionee so as to permit the Optionee to tender the Shares received upon such exercise (the “Optioned Shares”)
pursuant to the Offer. If:
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(a)
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the Offer expires or is withdrawn and no Shares are taken up pursuant to the Offer;
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(b)
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the Optionee does not tender the Optioned Shares pursuant to the Offer; or
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(c)
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all of the Optioned Shares tendered by the Optionee pursuant to the Offer are not taken up and paid for by the offeror in respect
of the Offer;
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then at the discretion of the Board,
the Optioned Shares or, in the case of clause (c) above, the Optioned Shares that are not taken up and paid for, shall, subject to
applicable laws, be returned by the Optionee to the Company and reinstated as authorized but unissued Shares and the terms of such Option
as set forth in the Plan and the applicable Stock Option Plan Certificate shall again apply to the Option. If any Optioned Shares are
returned to the Company under this Section, the Company shall refund the Exercise Price paid for such Optioned Shares without interest
or deduction.
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2.17
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Effect of Reorganization, Amalgamation or Merger
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If the Company is
reorganized, amalgamated or merges or combines with or into another person or completes a plan of arrangement, then, at the discretion
of the Board, the Optionee shall be entitled to receive upon the subsequent exercise of his Option in accordance with the terms thereof,
and shall accept in lieu of the number of Shares to which he was theretofore entitled upon such exercise, but for the same aggregate consideration
payable therefor, the aggregate number or amount of securities, property, cash and/or any other consideration the Optionee would have
been entitled to receive as a result of such transaction if, on the record date of such transaction, the Optionee had been the registered
holder of the number of Shares to which he was theretofore entitled upon the exercise of his Option, and such adjustment shall be binding
for all purposes of the Plan.
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2.18
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Effect of Change of Control
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If a Change of Control
occurs the Board may in its discretion, (a) amend, abridge or otherwise eliminate any vesting schedule so that notwithstanding the
other terms of any outstanding Option or the Plan, such that any outstanding Option may be exercised in whole or in part by the Optionee
and/or (b) determine that all holders of outstanding Options with an exercise price equal to or greater than the price per Share
provided for in the transaction giving rise to such Change of Control shall be entitled to receive and shall accept, immediately prior
to or concurrently with the transaction giving rise to such Change of Control, in consideration for the surrender of such Options, the
value of such Options determined in accordance with the Black and Scholes Option Pricing Model, as determined by the Board.
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2.19
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Adjustment in Shares
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If there is any change
in the Shares resulting from or by means of a declaration of stock dividends, or any consolidation, subdivision or reclassification of
the Shares, or otherwise, the number of Shares subject to any Option, the Exercise Price thereof and the maximum number of Shares which
may be issued under the Plan in accordance with Section 3.1(a) shall be adjusted appropriately by the Board in its discretion
and such adjustment shall be effective and binding for all purposes of the Plan.
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2.20
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Effect of an Adjustment
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Any adjustment under
Section 2.17 or Section 2.19 (collectively, the “Adjustment Provisions”) will take effect at the time of the event
giving rise to such adjustment. The Adjustment Provisions are cumulative. The Company will not be required to issue fractional Shares
in satisfaction of its obligations under the Plan. Any fractional interest in a Share that would, except for this provision, be deliverable
upon the exercise of an Option will be cancelled and not be deliverable by the Company. If any questions arise at any time with respect
to the Exercise Price or number of Shares deliverable upon the exercise of an Option as a result of any of the events set out in Section 2.16,
2.17, 2.18, 2.19 or 2.20 such questions will be conclusively determined by the Company’s auditors, or, if they decline to so act,
any other firm of chartered accountants that the Board may designate and who will have access to all appropriate records of the Company,
and such determination will be binding upon the Company and all Optionees.
ARTICLE 3
GENERAL
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3.1
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Maximum Number of Shares
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(a)
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The aggregate number of Shares that may be reserved for issuance pursuant to the Plan and all other Share
Compensation Arrangements shall not exceed 10% of the number of Shares issued and outstanding from time to time.
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(b)
|
Any Shares subject to an Option that expires or terminates without having been fully exercised may be
made the subject of a further Option. No fractional Shares may be issued under the Plan.
|
|
(c)
|
Upon the partial or full exercise of an Option, the Shares issued upon such exercise automatically become
available to be made the subject of a new Option, provided that the total number of Shares reserved for issuance under the Plan does not
exceed 10% of the number of Shares then issued and outstanding.
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|
(d)
|
The aggregate number of Shares reserved for issuance pursuant to the Plan or any other Share Compensation
Arrangement to any one Participant shall not exceed 5% of the number of Shares issued and outstanding at any time.
|
|
(e)
|
The aggregate number of Shares issuable pursuant to the Plan or any other Share Compensation Arrangement
to Insiders shall not exceed 10% of the number of Shares issued and outstanding at any time.
|
|
(f)
|
The aggregate number of Shares issued to Insiders pursuant to the Plan or any other Share Compensation
Arrangement, within any one-year period, shall not exceed 10% of the number of Shares then issued and outstanding.
|
Options are non-assignable
and non-transferable. During the lifetime of the Optionee, an Option granted to the Optionee shall be exercisable only by the Optionee
and, upon the death of an Optionee, by the legal representative of the estate or the person to whom the Optionee's rights shall have
passed by testate succession or by the laws of descent and distribution (the "Heir") may exercise any Option in accordance with
the provisions of Section 2.12, as applicable. Any attempt to otherwise assign or transfer an Option (or any interest therein) shall
be null and void.
Nothing contained
in the Plan shall confer upon any Optionee any right with respect to employment or continuance of employment with the Company or any of
its Subsidiaries or interfere in any way with the right of the Company or any of its Subsidiaries, to terminate the Optionee’s employment
at any time. Participation in the Plan by an Optionee is voluntary.
|
3.4
|
No Shareholder Rights
|
An Optionee shall
not have any of the rights or privileges of a Shareholder with respect to any of the Shares covered by an Option until the Optionee exercises
such Option in accordance with the terms thereof and the Plan (including tendering payment in full of the aggregate Exercise Price for
the Shares in respect of which the Option is being exercised) and the issuance of the Shares by the Company.
The Company shall
maintain a register in which shall be recorded the name and address of each Optionee, the number of Options granted to each Optionee,
the details of each Option granted and the number of Options outstanding.
Notwithstanding any of the provisions
contained in the Plan or in any Option, the Company's obligation to issue Shares to an Optionee upon the exercise of an Option shall be
subject to the following:
|
(a)
|
completion of such registration or other qualification of such Shares and the receipt of any approvals
of governmental authority or stock exchange as the Company shall determine to be necessary or advisable in connection with the authorization,
issuance or sale thereof;
|
|
(b)
|
the admission of such Shares to listing on the TSX or any other stock exchange on which the Shares may
then be listed for trading; and
|
|
(c)
|
the receipt from the Optionee of such representations, agreements and undertakings, including as to future
dealings in such Shares, as the Company or its counsel determines to be necessary or advisable in order to safeguard against the violation
of the securities laws of any jurisdiction.
|
In connection with
the foregoing, the Company shall, to the extent necessary, take all steps determined by the Board in its discretion to be reasonable to
obtain such approvals, registrations and qualifications as may be necessary for the issuance of such Shares in compliance with applicable
securities laws and for the listing of such Shares on the TSX or any other stock exchange on which the Shares are then listed for trading.
If any Shares cannot be issued to an Optionee for any reason, including the failure to obtain the aforementioned approvals, registrations
and qualifications, then the obligation of the Company to issue such Shares shall terminate (without penalty or payment of any compensation
or damages) and any Exercise Price paid by an Optionee to the Company shall be returned to the Optionee without interest or deduction.
|
3.7
|
Administration of the Plan
|
The Board is authorized
to administer and interpret the Plan and to from time to time adopt, amend and rescind rules and regulations relating to the Plan;
provided that the Board shall be entitled to delegate such administration to a committee of the Board. The interpretation and construction
of any provision of the Plan by the Board shall be conclusive and binding on the Company and other persons. Day-to-day administration
of the Plan shall be the responsibility of the appropriate Officers and all costs in respect thereof shall be paid by the Company.
Upon the exercise
of an Option, the Optionee shall make arrangements satisfactory to the Company regarding the payment of any taxes required by any applicable
law to be paid in connection with the exercise of the Option. In order to satisfy the Company's or any Subsidiaries' obligation, if any,
to remit an amount to a taxation authority on account of the Optionee's taxes in respect of the exercise or other disposition of an Option
(the “Withholding Tax Amount”), each of the Company and applicable Subsidiary shall have the right, in its discretion, to:
|
(a)
|
withhold amounts from any amount or amounts owing to the Optionee, whether under this Plan or otherwise;
|
(b) require
the Optionee to pay to the Company the Withholding Tax Amount as a condition to the exercise of the Option by the Optionee; or
(c) withhold
from the Shares otherwise deliverable to the Optionee upon the exercise of the Option such number of Shares as have a market value not
less than the Withholding Tax Amount and cause such withheld Shares to be sold on the Optionee's behalf to fund the Withholding Tax Amount,
provided that any proceeds from such sale in excess of the Withholding Tax Amount shall be promptly paid over to the Optionee.
Notwithstanding the
foregoing, nothing shall preclude the Company and the Optionee from agreeing to use a combination of the methods described in this Section 3.8
or some other method to fund the Withholding Tax Amount.
|
3.9
|
Amendment or Discontinuance of the Plan
|
The Board may from
time to time, subject to applicable law and any required approval of the TSX, any other stock exchange on which the Shares are then listed
for trading or any other regulatory authority having authority over the Company or the Plan, suspend, terminate or discontinue the Plan
at any time, or amend or revise the terms of the Plan or of any Option granted thereunder and the Stock Option Plan Certificate relating
thereto; provided, however, that no such amendment, revision, suspension, termination or discontinuance shall in any manner adversely
affect the rights of an Optionee under any Option previously granted under the Plan without the consent of that Optionee.
|
(a)
|
For greater certainty and without limiting the generality of the foregoing, Shareholder approval shall
not be required for the following amendments, subject to any regulatory approvals, including, where required, the approval of the TSX:
|
|
(i)
|
amendments to the Plan to ensure continuing compliance with applicable laws, regulations, requirements,
rules or policies of any governmental or regulatory authority or any stock exchange;
|
|
(ii)
|
amendments of a "housekeeping", clerical, technical or stylistic nature, which include amendments
relating to the administration of the Plan or to eliminate any ambiguity or correct or supplement any provision herein which may be incorrect
or incompatible with any other provision hereof;
|
|
(iii)
|
changing the terms and conditions governing any Option(s) granted under the Plan, including the vesting
terms, the exercise and payment method, the Exercise Price and the effect of the Optionee's death or permanent disability, the termination
of the Optionee's employment, term of office or consulting engagement or the Optionee ceasing to be an Eligible Person;
|
|
(iv)
|
determining that any of the provisions of the Plan concerning the effect of the Optionee's death or permanent
disability, the termination of the Optionee's employment, term of office or consulting engagement or the Optionee ceasing to be an Eligible
Person shall not apply for any reason acceptable to the Board;
|
|
(v)
|
amendments to the definition of Eligible Person;
|
|
(vi)
|
changing the termination provisions of the Plan or any Option which, in the case of an Option, does not
entail an extension beyond an Option's originally scheduled expiry date;
|
|
(vii)
|
changing the terms and conditions of any financial assistance which may be provided by the Company to
Optionees to facilitate the purchase of Shares under the Plan, or adding or removing any provisions providing for such financial assistance;
|
|
(viii)
|
amendments to the cashless exercise feature set out in Section 2.8;
|
|
(ix)
|
the addition of or amendments to any provisions necessary for Options to qualify for favourable tax treatment
to Optionees or the Company under applicable tax laws or otherwise address changes in applicable tax laws;
|
|
(x)
|
amendments relating to the administration of the Plan; and
|
|
(xi)
|
any other amendment, whether fundamental or otherwise, not requiring Shareholder approval under applicable
law or the rules or policies of any stock exchange upon which the Shares trade from time to time.
|
|
(b)
|
Notwithstanding anything contained in the Plan to the contrary, no amendment requiring the approval of
the Shareholders under applicable law or the rules or policies of any stock exchange upon which the Shares trade from time to time
shall become effective until such approval is obtained. In addition to the foregoing, the approval of Shareholders by ordinary resolution
shall be required for:
|
|
(i)
|
any amendment to the provisions this Section 3.9 that is not an amendment within the nature of Sections
3.9(a)(i) and 3.9(a)(ii);
|
|
(ii)
|
any increase in the maximum number of Shares that can be issued under the Plan, except in connection with
an adjustment made in accordance with the Adjustment Provisions;
|
|
(iii)
|
any reduction in the Exercise Price of an Option granted under the Plan (including the cancellation and
re-grant of an Option, constituting a reduction of the Exercise Price of an Option), except in connection with an adjustment made in accordance
with the Adjustment Provisions;
|
|
(iv)
|
any amendment to extend the expiry of an Option beyond its original Expiry Date;
|
|
(v)
|
any amendment to Section 3.1(e) or Section 3.1(f) to increase participation by Insiders;
and
|
|
(vi)
|
any amendment to the provisions of the Plan that would permit Options to be transferred or assigned other
than for normal estate settlement purposes,
|
provided further that, in the case
of any amendment or variance referred to (I) in clause (v) of this Section 3.9(b), Insiders are not eligible to vote
their Shares in respect of the required approval of the Shareholders, and (II) in clauses (iii), (iv) or (vi) of this Section 3.9(b), Insiders
who shall benefit from such amendment or variance are not eligible to vote their Shares in respect of the required approval of the Shareholders.
|
3.10
|
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 the Plan.
The Plan and all
other agreements entered into pursuant to the Plan shall be governed by and construed in accordance with the laws of the Province of British
Columbia and the federal laws of Canada applicable therein.
|
3.12
|
Compliance with Applicable Law
|
If any provision
of the Plan or any agreement entered into pursuant to the 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 the Plan then such provision shall be deemed to be amended to the extent required
to bring such provision into compliance therewith.
The Plan (as amended
and restated) shall only become effective upon the approval of the Board by ordinary resolution.
|
3.14
|
Application of U.S. Securities Laws
|
Unless a registration
statement on Form S-8 under the U.S. Securities Act has been filed by the Company and brought effective by the United States Securities
and Exchange Commission registering the Plan and the Shares issuable upon exercise of the Options (the “Registration Statement”),
neither the Options which may be granted pursuant to the provisions of the Plan nor the Shares which may be purchased pursuant to the
exercise of Options have been registered under the U.S. Securities Act or under any securities law of any state of the United States of
America. Accordingly, every Participant shall by acceptance of the Options be deemed to represent, warrant, acknowledge
and agree that:
|
(a)
|
the Participant is acquiring the Options and any Shares acquired upon the exercise of such Options as
principal and for the account of the Participant for investment purposes only;
|
|
(b)
|
in granting the Options and issuing the Shares to the Participant upon the exercise of such Options, the
Company is relying on the representations and warranties of the Participant contained in this Plan relating to the Options to support
the conclusion of the Company that the granting of the Options and the issue of Shares upon the exercise of such Options do not require
registration under the U.S. Securities Act or to be qualified under the securities laws of any state of the United States of America;
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|
(c)
|
unless a Registration Statement is effective under the U.S. Securities Act registering the exercise of
the Options and the issuance of the Shares, each certificate representing Shares issued upon the exercise of such Options to such Participant
shall bear the following legends:
|
“THE SECURITIES REPRESENTED
HEREBY HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”).
THESE SECURITIES MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE
UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE LOCAL LAWS
AND REGULATIONS, (C) IN COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED
BY RULE 144 THEREUNDER, IF AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN A TRANSACTION THAT
DOES NOT REQUIRE REGISTRATION UNDER THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND
SALE OF SECURITIES OR (E) IN ACCORDANCE WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, AND THE HOLDER
HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE
REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS IN THE SECURITIES ARE PROHIBITED UNLESS IN COMPLIANCE WITH COMPANY
POLICY AND THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT
OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
|
(d)
|
prior to making any disposition of any Shares acquired pursuant to the exercise of such Options, the Participant
shall give written notice to the Company describing the manner of the proposed disposition and containing such other information as is
necessary to enable counsel for the Company to determine whether registration under the U.S. Securities Act or qualification under any
securities laws of any state of the United States of America is required in connection with the proposed disposition and whether the proposed
disposition is otherwise in compliance with such legislation and the regulations thereto;
|
|
(e)
|
the Participant will not attempt to effect any disposition of the Shares owned by the Participant and
acquired pursuant to the exercise of such Options or of any interest therein which might be subject to the requirements of the U.S. Securities
Act in the absence of an effective registration statement relating thereto under the U.S. Securities Act or an opinion of counsel satisfactory
in form and substance to counsel for the Company that such disposition would not constitute a violation of the U.S. Securities Act or
any securities laws of any state of the United States of America and then will only dispose of such Shares in the manner so proposed;
|
|
(f)
|
the Company may place a notation on the records of the Company to the effect that none of the Shares acquired
by the Participant pursuant to the exercise of such Options shall be transferred unless the provisions of the Plan have been complied
with; and
|
|
(g)
|
the effect of these restrictions on the disposition of the Shares acquired by the Participant pursuant
to the exercise of such Options is such that the Participant may not be able to sell or otherwise dispose of such Shares for a considerable
length of time in a transaction which is subject to the provisions of the U.S. Securities Act.
|
ARTICLE 4
OPTIONS GRANTED TO U.S. PARTICIPANTS
|
(a)
|
The following definitions will apply solely for purposes of this Article 4.
|
|
(b)
|
“Code” means the U.S. Internal Revenue Code of 1986, as amended.
|
|
(c)
|
“Disability” means, with respect to any U.S. Participant, that such U.S. Participant is unable
to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment that can be expected
to result in death or that has lasted, or can be expected to last, for a continuous period of not less than twelve (12) months. The preceding
definition of the term “Disability” is intended to comply with, and will be interpreted consistently with, sections 22(e)(3) and
422(c)(6) of the Code.
|
|
(d)
|
“ISO Employee” means a person who is an employee of the Company (or of any Parent or Subsidiary)
for purposes of section 422 of the Code.
|
|
(e)
|
“Fair Market Value” means, with respect to any property (including, without limitation, any
Share), the fair market value, as of a given date, of such property, determined by such methods or procedures as are established from
time to time by the Board. Unless otherwise determined by the Board, the fair market value of a Share as of a given date will be the closing
price of the Company’s Shares traded through the facilities of the Exchange (or, if the Shares are no longer listed for trading
on the Exchange, then such other exchange or quotation system on which the Shares are listed or quoted for trading) on the day preceding
the date the Shares are to be valued.
|
|
(f)
|
“Grant Date” means, with respect to any Option, the date on which the Board makes the determination
to grant such Option or any later date specified by the Board.
|
|
(g)
|
“Incentive Stock Option” means an Option that is intended to qualify as an “incentive
stock option” pursuant to section 422 of the Code.
|
|
(h)
|
“Nonqualified Stock Option” means an Option that is not an Incentive Stock Option.
|
|
(i)
|
“Parent” means any corporation (other than the Company) in an unbroken chain of corporations
ending with the Company, if each corporation in such chain (other than the Company) owns stock possessing fifty percent (50%) or more
of the total combined voting power of all classes of stock in one of the other corporations in such chain. The preceding definition of
the term “Parent” is intended to comply with, and will be interpreted consistently with, section 424(e) of the Code.
|
|
(j)
|
“Subsidiary” means any corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company, if each corporation (other than the last corporation) in such chain owns stock possessing fifty percent (50%)
or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. The preceding definition
of the term “Subsidiary” is intended to comply with, and will be interpreted consistently with, section 424(f) of the
Code.
|
|
(k)
|
“U.S. Participant” means a Participant who is a citizen of the United States or a resident
of the United States, in each case as defined in section 7701(a)(30)(A) and section 7701(b)(1) of the Code.
|
|
(l)
|
“10% Shareholder” means any person who owns, taking into account the constructive ownership
rules set forth in section 424(d) of the Code, more than ten percent (10%) of the total combined voting power of all classes
of stock of the Company (or of any Parent or Subsidiary).
|
|
4.2
|
Terms and Conditions of Options Granted to U.S. Participants
|
In addition to the
other provisions of this Plan (and notwithstanding any other provision of this Plan to the contrary), the following limitations and requirements
will apply to Options granted to a U.S. Participant.
|
(a)
|
The number of Shares available for granting Incentive Stock Options under the Plan may not exceed 3,000,000.
For greater certainty, such number of Shares is a subset of, and not in addition to, the maximum number of Shares reserved for issuance
pursuant to Section 3.1(a).
|
|
(b)
|
The stock option agreement relating to any Option granted to a U.S. Participant shall specify whether
such Option is an Incentive Stock Option or a Nonqualified Stock Option. If no such specification is made, the Option will be (a) an
Incentive Stock Option if all of the requirements under the Code are satisfied or (b) in all other cases, a Nonqualified Stock Option.
|
|
(c)
|
In addition to the other provisions of this Plan, the following limitations and requirements will apply
to an Incentive Stock Option:
|
|
(i)
|
An Incentive Stock Option may be granted only to an ISO Employee (including a director or officer who
is also an ISO Employee) of the Company (or any Subsidiary of the Company).
|
|
(ii)
|
The extent that the aggregate Fair Market Value of the Shares with respect to which Incentive Stock Options
are exercisable for the first time by any U.S. Participant during any calendar year (under this Plan and all other plans of the Company
and of any parent or subsidiary of the Company) exceeds US$100,000 or any limitation subsequently set forth in section 422(d) of
the Code, such excess shall be considered Nonqualified Stock Options.
|
|
(iii)
|
The exercise price payable per Share upon exercise of an Incentive Stock Option will not be less than
100% of the Fair Market Value of a Share on the Grant Date of such Incentive Stock Option; provided, however, that, in the case of the
grant of an Incentive Stock Option to a U.S. Participant who, at the time such Incentive Stock Option is granted, is a 10% Shareholder,
the exercise price payable per Share upon exercise of such Incentive Stock Option will be not less than 110% of the Fair Market Value
of a Share on the Grant Date of such Incentive Stock Option. For greater certainty, the minimum Exercise Price set forth in Section 2.3
will also apply to each Incentive Stock Option.
|
|
(iv)
|
Notwithstanding any other provision of this Plan to the contrary, an Incentive Stock Option will terminate
and no longer be exercisable no later than ten years after the date of grant of such Incentive Stock Option; provided, however, that in
the case of a grant of an Incentive Stock Option to a U.S. Participant who, at the time such Incentive Stock Option is granted, is a 10%
Shareholder, such Incentive Stock Option will terminate and no longer be exercisable no later than five years after the date of grant
of such Incentive Stock Option;
|
|
(v)
|
To the extent that an Incentive Stock Option is not exercised on or prior to the date that is three (3) months
following the date on which the Participant ceases to be employed by the Company (or by any Parent or Subsidiary of the Company), such
Option will no longer qualify as an Incentive Stock Option. Notwithstanding the foregoing, if a Participant’s termination of employment
is due to Disability, to the extent that an Incentive Stock Option is not exercised on or prior to the date that is one year following
the date on which the Participant ceases to be employed by the Company (or by any subsidiary of the Company), such Option will no longer
qualify as an Incentive Stock Option. For greater certainty, the limitations in this paragraph govern the U.S. federal income tax treatment
of an outstanding Option and whether it will continue to qualify as an ISO. Nothing in this paragraph shall have the effect of extending
the period during which an Option otherwise may be exercised pursuant to its terms. For purposes of this Section 4.2(c)(v), the employment
of a U.S. Participant who has been granted and Incentive Stock Option will not be considered interrupted or terminated upon (a) sick
leave, military leave or any other leave of absence approved by the Administrator that does not exceed ninety (90) days in the aggregate;
provided, however, that if reemployment upon the expiration of any such leave is guaranteed by contract or applicable law, such ninety
(90) day limitation will not apply, or (b) a transfer from one office of the Company (or of any Parent or Subsidiary) to another
office of the Company (or of any Parent or Subsidiary) or a transfer between the Company and any Parent or Subsidiary.
|
|
(vi)
|
Notwithstanding any other provision of this Plan to the contrary, an Incentive Stock Option granted to
a U.S. Participant may be exercised during such U.S. Participant's lifetime only by such U.S. Participant;
|
|
(vii)
|
Notwithstanding any other provision of this Plan to the contrary, an Incentive Stock Option granted to
a U.S. Participant may not be transferred, assigned, pledged or hypothecated or otherwise disposed of by such U.S. Participant,
except by will or by the laws of descent and distribution; and
|
|
(viii)
|
No Incentive Stock Option will be granted more than ten years after the earlier of the date this Plan
is adopted by the Board or the date this Plan is approved by the shareholders of the Company.
|
|
(d)
|
The Company intends that any Stock Options be structured in compliance with, or to satisfy an exemption
from, Section 409A of the Code, such that there are no adverse tax consequences, interest, or penalties pursuant to Section 409A
of the Code as a result of the Stock Options. Notwithstanding the Company’s intention, in the event any award is subject to Section 409A
of the Code, the Committee may, in its sole discretion and without a participant’s prior consent, amend this Plan and/or outstanding
Stock Option Plan Certificates, adopt policies and procedures, or take any other actions (including amendments, policies, procedures and
actions with retroactive effect) as are necessary or appropriate to (i) exempt this Plan and/or any award from the application of
Section 409A of the Code, (ii) preserve the intended tax treatment of any such Stock Option, or (iii) comply with the requirements
of Section 409A of the Code, including without limitation any such regulations guidance, compliance programs and other interpretive
authority that may be issued after the date of grant of a Stock Option. This Plan shall be interpreted at all times in such a manner that
the terms and provisions of the Plan and the Stock Options are exempt from or comply with Section 409A of the Code.
|
|
(e)
|
The Company shall have no liability to any U.S. Participant or any other person if a Stock Option designated
as an Incentive Stock Option fails to qualify as such at any time or if a Stock Option is determined to constitute “nonqualified
deferred compensation” within the meaning of Section 409A of the Code and the terms of such Stock Option do not satisfy the
requirements of Section 409A of the Code.
|
[the remainder of this page is intentionally left blank]
EXHIBIT “A”
AUGUSTA GOLD CORP.
STOCK OPTION PLAN CERTIFICATE
This Certificate is issued pursuant
to the provisions of the Stock Option Plan dated as of February 22, 2021 (the “Plan”) of Augusta Gold Corp. (the “Company”)
and evidences that ____________________ (the “Optionee”) is the holder of an option (the “Option”) to purchase
up to _________________________ shares of common stock, par value $0.0001 (“Shares”), in the capital stock of the Company
at a purchase price of [Cdn/U.S.]$____________________________________________________________________per Share.
Subject to the provisions of the Plan:
|
(a)
|
the Option was awarded to the Optionee as of______________________(the “Award Date”); and
|
|
(b)
|
the Option shall expire on_________________________(the “Expiry Date”).
|
[For U.S. Participants:] This Option ___ is an Incentive
Stock Option OR _____ is a Non-Qualified Stock Option.
The right to purchase Shares under the Option shall vest
in increments over the term of the Option as follows:
Date
|
Number of Shares which may be Purchased
|
|
|
|
|
|
|
The Option may be exercised in accordance
with its terms, subject to the provisions of the Plan, at any time and from time to time from and including the Award Date through to
and including up to 5:00 pm local time in Vancouver, British Columbia on the Expiry Date, by delivery to the Company a Notice of Exercise
or a Notice of Cashless Exercise (as each such term is defined in the Plan), in the form provided in the Plan, together with this Certificate
and a certified cheque or bank draft payable to “Augusta Gold Corp.” in an amount equal to the aggregate exercise price of
the Shares in respect of which the Option is being exercised. No unvested Options can be exercised.
This Certificate and the Option evidenced
hereby are not assignable or transferable and are subject to the terms and conditions contained in the Plan. This Certificate is issued
for convenience only and in the case of any dispute with regard to any matter in respect hereof, the provisions of the Plan and the records
of the Company shall prevail.
The foregoing Option has been awarded as of Award Date.
By signing this Certificate, the Optionee acknowledges that:
|
1.
|
the Optionee has read and understands the Plan and agrees to the terms and conditions of both the Plan
and this Certificate;
|
|
2.
|
the Optionee is a bona fide Director, Officer, Employee, Management Company Employee or Consultant (as
each such term is defined in the Plan), as the case may be, and is participating in the Plan voluntarily;
|
|
3.
|
in order to satisfy the Company's obligation, if any, to remit a Withholding Tax Amount (as such term
is defined in the Plan), the Company has the right to, among other things:
|
|
(a)
|
withhold amounts from any amount or amounts owing to the Optionee, whether under the Plan or otherwise;
|
|
(b)
|
require the Optionee to pay to the Company the Withholding Tax Amount as a condition to the exercise of
the Option by the Optionee; and
|
|
(c)
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withhold from the Shares otherwise deliverable to the Optionee upon the exercise of the Option such number
of Shares as have a market value not less than the Withholding Tax Amount and cause such withheld Shares to be sold on the Optionee's
behalf to fund the Withholding Tax Amount, provided that any proceeds from such sale in excess of the Withholding Tax Amount shall be
promptly paid over to the Optionee;
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4.
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the Optionee consents to the disclosure by the Company of personal information regarding the Optionee
to the Toronto Stock Exchange (the “TSX”) (or any other stock exchange or quotation system on which the Shares are listed
or quoted for trading) and to the collection, use and disclosure of such information by the TSX, as the TSX (or any other stock exchange
or quotation system on which the Shares are listed or quoted for trading) may determine; and
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5.
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the Optionee has prepared, executed and delivered herewith the supplemental Acknowledgment and Agreement
in relation to U.S. securities laws substantially in the form provided by the Company (attached hereto as Schedule A), which is true and
correct in every material respect as of the date hereof.
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The certificate for the Shares shall bear any legend required
under applicable securities laws or by the Toronto Stock Exchange (or any other stock exchange or quotation system on which the Shares
are listed or quoted for trading).
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AUGUSTA GOLD CORP.
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by
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Name:
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Title:
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Witness
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Signature of Optionee
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Name of Witness (Print)
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Name of Optionee (Print)
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SCHEDULE A TO EXHIBIT A
STOCK OPTION PLAN
SUPPLEMENTAL ACKNOWLEDGMENT AND AGREEMENT
(ALL
OPTION HOLDERS)
Notice is hereby given that, effective
this day of ,
20 (the “Effective Date”) Augusta Gold Corp. (the “Company”)
has granted to (the “Option Holder”)
an option (the “Option”) to acquire common shares (“Shares”)
up to 5:00 p.m., Vancouver Time, on the day of ,
20 (the “Expiry Date”) at a purchase price of [Cdn/U.S.]$ per
share (the “Exercise Price”).
The Shares may be acquired as follows:
The grant of the Option evidence hereby
is made subject to the terms and conditions of the Stock Option Plan dated as of February 22, 2021 (the “Plan”) of the
Company, the terms and conditions of which are hereby incorporated herein.
Unless otherwise notified by the Company,
neither the Option nor the Shares have been registered under the United States Securities Act of 1933, as amended (the “U.S. Securities
Act”), or any securities laws of any state of the United States. The Option may not be exercised unless registered under the U.S.
Securities Act or an exemption or exclusion from such registration requirement is available. Any Shares issued to the Option Holder that
have not been registered under the U.S. Securities Act will be deemed “restricted securities” (as defined in Rule 144(a)(3) of
the U.S. Securities Act) and bear a restrictive legend to such effect.
If the Option Holder is a U.S. Participant,
the Option Holder acknowledges that the Option is [not] intended to qualify as “incentive stock options” in accordance
with the terms of Section 422 of Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder.
The Option Holder acknowledges that the Company may have federal, state, provincial or local tax withholding and reporting obligations
and consents to such actions by the Company as may reasonably be required to comply with such obligations in connection with the exercise
of the Option. The acceptance and exercise of the Option and the sale of Shares issued pursuant to exercise of the Option may have consequences
under federal, provincial and other tax and securities laws which may vary depending on the individual circumstances of the Option Holder.
Accordingly, the Option Holder acknowledges that the Option Holder has been advised to consult the Option Holder’s personal legal
and tax advisors in connection with this Agreement and the Option Holder’s dealings with respect to the Option or the Shares.
To exercise your Option, deliver a
written Exercise Notice in the form attached as Exhibit B to the Company’s Stock Option Plan, specifying the number of Shares
you wish to acquire, together with a certified cheque or bank draft payable to “Augusta Gold Corp.” in an amount equal to
the aggregate of the Exercise Price of the Shares in respect of which the Option is being exercised or deliver a written Exercise Notice
in the form attached as Exhibit C to the Company’s Stock Option Plan, specifying the number of Shares you wish to acquire.
A certificate for the Shares so acquired will be issued by the transfer agent as soon as possible thereafter.
AUGUSTA GOLD CORP.
Per:
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Authorized Signatory
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Employee Signature
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EXHIBIT “B”
NOTICE
OF EXERCISE
TO:
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Augusta Gold Corp.
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555 – 999 Canada Place
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Vancouver, British Columbia
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V6C 3E1
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The undersigned hereby irrevocably
gives notice pursuant the Stock Option Plan dated as of February 22, 2021, as amended (the “Plan”) of Augusta Gold Corp.
(the “Company”) of the exercise of an option (the “Option”) to purchase common shares (“Shares”) in
the capital stock of the Company at a purchase price of $ per Share (the “Exercise Price”),
and hereby subscribes for (cross out inapplicable item):
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(a)
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all of the Shares; or
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which are the subject of the option certificate attached
hereto.
Calculation aggregate Exercise Price for the Shares:
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(a)
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number of Shares to be acquired on exercise of the Option:
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Shares
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(b)
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times the Exercise Price:
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$
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Aggregate Exercise Price, as enclosed herewith:
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$
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The undersigned tenders herewith a
cheque or bank draft (circle one) in the amount of $ , payable to “Augusta Gold Corp.”
in an amount equal to the aggregate Exercise Price, as calculated above, and directs the Company to issue a share certificate evidencing
the Shares so purchased in the name of the undersigned to be mailed to the undersigned at the following address:
In connection with such exercise, the undersigned represents,
warrants and covenants to the Company (and acknowledges that the Company is relying thereon) that:
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(a)
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the undersigned understands and agrees that:
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(i) the
Shares have not been registered under the U.S. Securities Act and the Shares are being offered and sold by the Company in reliance upon
an exemption or exclusion from registration under the U.S. Securities Act; or
(ii) the
Shares have been registered under the U.S. Securities Act and paragraph (c) below does not apply;
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(b)
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the undersigned confirms that the representations and warranties of the undersigned set forth in the Acknowledgement
and Agreement for Option Holders remain true and correct as of the date hereof; and
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(c)
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unless the shares have been registered under the U.S. Securities Act, the undersigned understands that
upon the issuance of the Shares, and until such time as the same is no longer required under the applicable requirements of the U.S. Securities
Act or applicable U.S. state laws and regulations, the certificates representing the Shares will bear a legend in substantially the following
form:
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“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THESE SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN
COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER
THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES OR (E) IN ACCORDANCE
WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY
AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS
IN THE SECURITIES ARE PROHIBITED UNLESS IN COMPLIANCE WITH COMPANY POLICY AND THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
DATED the day of .
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Witness
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Signature of Optionee
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Name of Witness (Print)
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Name of Optionee (Print)
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EXHIBIT “C”
NOTICE OF CASHLESS EXERCISE
TO:
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Augusta Gold Corp.
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555 – 999 Canada Place
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Vancouver, British Columbia
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V6C 3E1
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1.
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Cashless Exercise of Option
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The undersigned hereby irrevocably gives notice
pursuant the Stock Option Plan dated as of February 22, 2021 (the “Plan”) of Augusta Gold Corp. (the “Company”)
of the exercise of an option (the “Option”) to purchase common shares (“Shares”) in the capital stock of the Company
at a purchase price of $ per Share (the “Exercise Price”), and hereby elects to receive
such number of Shares determined pursuant to the formula set out in Section 2.8 of the Plan, based on the following information:
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(a)
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The number of Shares issuable upon the exercise of
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the Option or the portion of the Option being exercised:
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Shares
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(b)
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The Exercise Price:
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$
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In connection with such cashless exercise, the undersigned represents,
warrants and covenants to the Company (and acknowledges that the Company is relying thereon) that (check one):
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1.
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The Options have been vested for more than six months, the Company is current in its reports with the United States Securities and Exchange Commission and no consideration has been paid on exercise of the Options.
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(a)
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The undersigned understands and agrees that:
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(i) the
Shares have not been and will not be registered under the United States Securities Act of 1933, as amended (the “U.S. Securities
Act) and the Shares are being offered and sold by the Company in reliance upon an exemption from registration under the U.S. Securities
Act; or
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(ii) the
Shares have been registered under the U.S. Securities Act; and
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(b)
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The undersigned confirms that the representations and warranties of the undersigned set forth in the Acknowledgement and Agreement for Option Holders remain true and correct as of the date hereof.
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2.
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If the options have been vested for less than six months or the Company is not current in its reports with the United States Securities
and Exchange Commission and the Shares have not been registered under the U.S. Securities Act, the undersigned represents, warrants and
covenants to the Company that:
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(a)
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the undersigned understands and agrees that the Shares are being offered and sold by the Company in reliance
upon an exemption from registration under the U.S. Securities Act;
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(b)
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the undersigned confirms that the representations and warranties of the undersigned set forth in the Acknowledgement
and Agreement for Option Holders remain true and correct as of the date hereof; and
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(c)
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the undersigned understands that until such time as the same is no longer required under the applicable
requirements of the U.S. Securities Act or applicable U.S. state laws and regulations, the certificates representing the Shares will bear
a legend in substantially the following form:
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“THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “U.S. SECURITIES ACT”). THESE SECURITIES
MAY BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (A) TO THE COMPANY, (B) OUTSIDE THE UNITED STATES IN COMPLIANCE
WITH RULE 904 OF REGULATION S UNDER THE U.S. SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE LOCAL LAWS AND REGULATIONS, (C) IN
COMPLIANCE WITH THE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE U.S. SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER, IF
AVAILABLE, AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS, (D) IN A TRANSACTION THAT DOES NOT REQUIRE REGISTRATION UNDER
THE U.S. SECURITIES ACT OR ANY APPLICABLE STATE LAWS AND REGULATIONS GOVERNING THE OFFER AND SALE OF SECURITIES OR (E) IN ACCORDANCE
WITH AN EFFECTIVE REGISTRATION STATEMENT UNDER THE U.S. SECURITIES ACT, AND THE HOLDER HAS, PRIOR TO SUCH SALE, FURNISHED TO THE COMPANY
AN OPINION OF COUNSEL OR OTHER EVIDENCE OF EXEMPTION, IN EITHER CASE REASONABLY SATISFACTORY TO THE COMPANY. HEDGING TRANSACTIONS
IN THE SECURITIES ARE PROHIBITED UNLESS IN COMPLIANCE WITH COMPANY POLICY AND THE U.S. SECURITIES ACT. DELIVERY OF THIS CERTIFICATE MAY NOT
CONSTITUTE “GOOD DELIVERY” IN SETTLEMENT OF TRANSACTIONS ON STOCK EXCHANGES IN CANADA.”
DATED the day of .
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Witness
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Signature of Optionee
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Name of Witness (Print)
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Name of Optionee (Print)
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Augusta Gold (QB) (USOTC:AUGG)
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De May 2024 a Jun 2024
Augusta Gold (QB) (USOTC:AUGG)
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De Jun 2023 a Jun 2024