Poison Pill from this Years AGM - to prevent unfair takeoverHave a read - Very Good Chance that a company may want to take us over, during the last AGM about a month ago, the following was adopted to prevent an unfair takeover attempt.
ADOPTION OF SHAREHOLDER RIGHTS PLAN On December 2, 2020 the Board adopted a Shareholder Rights Plan Agreement (the “Shareholder Rights Plan” or “Rights Plan”) as summarized below. The Rights Plan currently includes the following definition that would, without the adoption of proposed Rights Plan herein, result in the termination of the Rights Plan following the Meeting of the Company (also referred to as the “Corporation” in this section): “Expiration Time” means the earlier of: (i) the Termination Time, and (ii) the close of business on the date immediately following the date of the Corporation’s annual meeting of shareholders to be held in 2021.” In order to extend the life of the Rights Plan Shareholders are being asked to approve the Rights Plan (the “Rights Plan”) by deleting the current definition of Expiration Time and replacing it with the following: “Expiration Time” means the earlier of: (i) the Termination Time, and (ii) the close of business on the date immediately following the date of the Corporation’s annual meeting of shareholders to be held in 2024.” The Rights Plan will be contained in an agreement to be entered into between the Company and TSX Trust Company of Canada, subject to approval of the Rights Plan by the Shareholders (the “Rights Plan Agreement”). The Rights Plan Agreement will also be subject to the approval of the Exchange. Rights Plan The Rights Plan has the following objectives: a. to prevent creeping acquisitions of control; b. to give adequate time for the Board and Shareholders to properly assess a take-over bid without undue pressure; 14 c. to provide the Board and Shareholders adequate time to consider the value of all assets of the Company and for the Company to undertake a value recognition program if necessary to demonstrate the value of one or more assets; d. to provide the Board time to consider value-enhancing alternatives to a take-over bid and to possibly allow competing bids to emerge; and e. to ensure that Shareholders of the Company are provided equal treatment under a take-over bid. The Rights Plan is not intended to prevent take-over bids that treat Shareholders fairly and has not been adopted in response to any proposal to acquire control of the Company. The summary of the Rights Plan below is qualified in its entirety by reference to the text of the Rights Plan, which is available upon request from the Secretary of the Company at 1400, 1040 West Georgia Street, Vancouver, British Columbia, V6E 4H1, Telephone 604.689.1280 or Fax 604.689.1288. Capitalized terms used in the summary without express definition have the meanings ascribed thereto in the Rights Plan. It is intended that all proxies received will be voted in favour of the approval of the Rights Plan, unless a proxy contains instructions to vote against the Rights Plan. The Rights Plan will become effective only if it is approved by greater than 50% of the votes cast by shareholders present in person or by proxy at the Meeting. The text of the resolution approving the Rights Plan (the “Rights Plan Resolution”) is set forth below under the heading “Text of Ordinary Resolution to Approve the Rights Plan”. Recommendation of the Board of Directors The Board has determined that the Rights Plan pursuant is in the best interests of the Company and the holders of its common shares. The Board unanimously recommends that Shareholders vote IN FAVOUR of the approval of the Rights Plan Resolution. The Company has been advised that the directors and senior officers of the Company intend to vote all common shares held by them in favour of the approval of the Rights Plan Resolution. The text of the ordinary resolution to approve the Rights Plan is as follows: BE IT RESOLVED THAT: 1 The Rights Plan adopted by the Company’s Board of Directors on December 2, 2020, on the terms set out in the Shareholder Rights Plan Agreement dated December 2, 2020, between the Company and TMX Trust Company of Canada, as Rights Agent approved; and 2 Any director or officer of the Company is authorized and directed, on behalf of the Company, to do all acts and to sign, whether under the corporate seal of the Company or otherwise, and deliver all documents that the Company considers necessary or desirable to give effect to this resolution.” If the Shareholders do not pass the Rights Plan Resolution at the Meeting, the Rights Plan will terminate. Background and Objectives of the Rights Plan The Rights Plan: (a) provides the Company’s directors and Shareholders with more time to fully consider any unsolicited takeover bid for the Company without undue pressure; (b) allows the directors to explore and develop, if appropriate, other alternatives to maximize shareholder value; and (c) allows additional time for competing bids to emerge. 15 Take-over bid contests for corporate control provide a singular opportunity for shareholders to obtain a one-time gain. After acquisition of effective control, the opportunity for this one-time gain normally does not re-occur. As with most public companies, a person could probably secure control of the Company through the ownership of much less than 50% of the Company’s shares. Without a shareholder rights plan, a bidder could acquire effective control of the Company over a relatively short period of time, through open market and private purchases and using various techniques permitted under Canadian securities legislation, all without making a bid available to all shareholders. This acquisition of control would probably be an effective deterrent to other potential offerors. The person acquiring control might also be able to consolidate and increase its control, over a period of time, without the price for control ever being tested through an open market auction. Shareholder rights plans are designed to prevent this occurrence by forcing all acquisitions of control into a public offer mode. A public offer will not necessarily achieve all of the objectives of ensuring the maximum value to shareholders. Canadian securities legislation requires a take-over bid to remain open for only 35 days. The Board of Directors does not believe that 35 days would give it enough time to determine whether there are alternatives available to maximize shareholder value or whether there are other potential bidders prepared to pay more than the offeror for the Company’s shares. The Rights Plan is intended to provide the Board with sufficient time to pursue alternatives and to provide shareholders with sufficient time to properly assess any takeover bid. The securities commissions have concluded in decisions relating to rights plans that a target company’s directors will not be permitted to maintain a rights plan solely to prevent a successful take-over bid. The directors must actively seek alternatives to a take-over bid and there must be a real possibility that they will be able to increase shareholder choice and maximize shareholder value. The Company is not proposing the Rights Plan in response to or in anticipation of any acquisition or take-over bid. The Rights Plan is not intended to prevent a take-over of the Company, to secure continuance of current management or the directors in office, or to deter fair offers for the Company’s common shares. The Rights Plan does not inhibit or prevent any Shareholder from using the proxy mechanism set out in the British Columbia Business Corporations Act to promote a change in the management or direction of the Company. The Rights Plan may, however, increase the price paid by a potential offeror to obtain control of the Company and may discourage certain transactions. The Rights Plan does not affect in any way the Company’s financial condition. The initial issuance of the Rights will not dilute the Company’s shares and will not affect reported earnings or cash flow per share until the Rights separate from the underlying common shares and become exercisable. The adoption of the Rights Plan will not lessen or affect the duty of the Company’s directors to act honestly, in good faith, and in the Company’s best interests. The Rights Plan is designed to provide the directors with the means to negotiate with an offeror and with sufficient time to seek out and identify alternative transactions on behalf of the Company’s shareholders. Terms of the Rights Plan The following is a summary of the terms of the Rights Plan. This summary is qualified in its entirety by the Shareholder Rights Plan Agreement. Summary of the Plan A summary of the principal terms of the Rights Plan is set forth below. (a) Effective Date. The effective date of the Rights Plan is December 2, 2020 (the “Effective Date”). (b) Shareholder Approval. For the Rights Plan to continue in effect following the Meeting, the Rights Plan Resolution must be approved by a majority of the votes cast at the Meeting by shareholders voting in person and by proxy. (c) Issue of Rights. On the Effective Date, one right (a “Right”) is issued and attached to each Common share outstanding and will attach to each Common share subsequently issued. (d) Rights Exercise Privilege. The Rights will separate from the Common shares and will be exercisable eight business days (or such later business day as may be determined by the board of directors) (the “Separation Time”) after a person has acquired, or commences or publicly announces or discloses its intention to commence a take-over bid to acquire, 20% or 16 more of the Common shares, other than by an acquisition pursuant to a take-over bid permitted by the Rights Plan (a “Permitted Bid”). The acquisition by any person (an “Acquiring Person”) of 20% or more of the Common shares, other than by way of a Permitted Bid, is referred to as a “Flip-in Event”. Any Rights held by an Acquiring Person will become void upon the occurrence of a Flip-in Event. From and after the Separation Time, each Right (other than those held by the Acquiring Person), will permit the purchase of CDN$100 worth of Common shares (at the market price on the date of the Flip-in Event) for CDN$50 (i.e., at a 50% discount). The issue of the Rights is not initially dilutive; however, upon a Flip-in Event occurring and the Rights separating from the Common shares, reported earnings per Common share on a fully diluted or non-diluted basis may be affected. Holders of Rights not exercising their Rights upon the occurrence of a Flip-in Event may suffer substantial dilution. (e) Certificates and Transferability. Prior to the Separation Time, the Rights will be evidenced by a legend imprinted on certificates for Common shares issued from and after the Effective Date and will not be transferable separately from the Common shares. From and after the Separation Time, the Rights will be evidenced by Rights certificates which will be transferable and traded separately from the Common shares. (f) Permitted Bid Requirements. The requirements for a Permitted Bid include the following: (i) the take-over bid must be made by way of a take-over bid circular; (ii) the take-over bid must be made to all holders of Common shares; (iii) the take-over bid must be outstanding for a minimum period of 60 days and Common shares tendered pursuant to the take-over bid may not be taken up and paid for prior to the expiry of such 60-day period and only if at such time more than 50% of the Common shares held by shareholders other than the bidder, its affiliates and persons acting jointly or in concert with the bidder (collectively, the “Independent Shareholders”) have been tendered to the take-over bid and not withdrawn; (iv) the Common shares deposited pursuant to the take-over bid may be withdrawn until taken up and paid for; and (v) if more than 50% of the Common shares held by Independent Shareholders are tendered to the take-over bid within such 60-day period, then the bidder must make a public announcement of that fact and the take-over bid must remain open for deposits of Common shares for an additional 10 business days from the date of such public announcement. The Rights Plan allows for a competing Permitted Bid (a “Competing Permitted Bid”) to be made while a Permitted Bid is in existence. A Competing Permitted Bid must satisfy all of the requirements of a Permitted Bid except that it may expire on the same date as the Permitted Bid. (g) Waiver and Redemption. The board of directors may, prior to the Flip-in Event, waive the dilutive effects of the Shareholder Rights Plan in respect of a particular Flip-in Event resulting from a takeover bid made by way of a take-over bid circular to all holders of Common shares, or to waive one or more of the requirements of a Permitted Bid, or a Competing Permitted Bid, in which event such waiver would be deemed also to be a waiver in respect of any other Flip-in Event, and any such requirement, occurring under a take-over bid made by way of a take-over bid circular to all holders of Common shares. The board of directors may also waive the Shareholder Rights Plan in respect of a particular Flip-in Event that has occurred through inadvertence, provided that the Acquiring Person that inadvertently triggered such Flip-in Event reduces its beneficial holdings to less than 20% of the outstanding voting shares of the Company within 14 days or such later date as may be specified by the board of directors. With the majority consent of shareholders or Rights holders at any time prior to the later of a Flip-in Event and the Separation time, the board of directors may at its option redeem all, but not less than all, of the outstanding Rights at a price of CDN$0.00001 each. (h) Exemptions for Investment Advisors. Investment advisors (for client accounts), trust companies (acting in their capacities as trustees and administrators), statutory bodies managing investment funds (for employee benefit plans, pension plans, insurance plans or various public bodies) and administrators or trustees of registered pension funds or plans acquiring greater than 20% of the Common shares are exempted from triggering a Flip-in Event, provided that they are not making, or are not part of a group making, or proposing to make or participate in, or has not announced a current intention to make, a take-over bid. 17 (i) Exemptions for Lock-up Agreements. A person is deemed not to be the beneficial owner of Common shares if the holder of such Common shares has agreed to deposit or tender its Common shares pursuant to a “Permitted Lock-up Agreement” to a take-over bid (the “Lock-up Bid”) made by such person. In order for an agreement to constitute a Permitted Lockup Agreement, certain conditions must be met including, among other things, (i) any “break-up” fees payable by the tendering shareholder, cannot exceed in the aggregate the greater of the cash equivalent of 2.5% of the price or value of the consideration payable under the Lock-up Bid and 50% of the amount by which the price or value of the consideration payable under another take-over bid or transaction exceeds the price or value of the consideration that would have been received under the Lock-up Bid and (ii) the terms of such agreement are publicly disclosed and a copy of which is made available to the public (including to the Company) and the Permitted Lock-up Agreement permits the tendering shareholder to withdraw its Common shares in order to deposit or tender the Common shares to another take-over bid or support another transaction where the price or value offered under such other bid is at least 7% higher than the price or value offered under the Lockup Bid or the number of Common shares to be purchased under another take-over bid or transaction is at least 7% more than the number proposed to be purchased under the Lock-up Bid. (j) Supplements and Amendments. The Company is authorized to make amendments to the Shareholder Rights Plan to correct any clerical or typographical error or to maintain the validity of the Shareholder Rights Plan as a result of changes in law, regulation or rules. Prior to the Meeting, the Company is authorized to amend or supplement the Shareholder Rights Plan as the board of directors may in good faith deem necessary or desirable. No such amendments have been made to date. The Company will issue a press release relating to any significant amendment made to the Shareholder Rights Plan prior to the Meeting and will advise the shareholders of any such amendment at the Meeting. Other amendments or supplements to the Shareholder Rights Plan may be made with the prior approval of shareholders or Rights holders. Canadian Federal Income Tax Consequences of the Shareholder Rights Plan Under the Income Tax Act (Canada) (the “Tax Act”), the issue of the Rights under the Shareholder Rights Plan should not be a taxable benefit because the Rights are provided to all shareholders and the Rights are identical. The Company considers that the Rights, when issued, will have negligible monetary value, there being only a remote possibility that the Rights will ever be exercised. The Rights should be considered to be issued at no cost and, as a result, the holder of Rights may have income tax or be subject to withholding tax under the Tax Act if the holder of the Rights disposes of the Rights or disposes of the Common shares granted upon exercise of the Rights. This statement is of a general nature only and is not intended to constitute nor should it be construed as legal or tax advice to any particular holder of Common shares. Such holders are advised to consult their own tax advisors regarding the consequences of acquiring, holding, exercising or otherwise disposing of their Rights, taking into account their own particular circumstances and applicable federal, provincial, territorial, state or foreign legislation. The Board has determined that the Shareholder Rights Plan is in the best interests of the Company and the Shareholders. The board of directors unanimously recommends that the Shareholders vote in favour of the Rights Resolution in the form set out in this section. 18 BOARD APPROVAL The contents of this Circular have been approved and its mailing authorized by the directors of the Company. CERTIFICATE The foregoing contains no untrue statement of a material fact and does not omit to state a material fact that is required to be stated or that is necessary to make a statement not misleading in the light of the circumstances in which it was made. DATED at Vancouver, British Columbia this 11th day of January, 2021 ON BEHALF OF THE BOARD OF DIRECTORS “Timothy Froude” Timothy Froude CEO SCHEDULE “A” AUDIT COMMITTEE CHARTER FOR SOKOMAN MINERALS CORP. PURPOSE OF THE COMMITTEE The purpose of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of the Company is to provide an open avenue of communication between management, the Company’s independent auditor and the Board and to assist the Board in its oversight of: • the integrity, adequacy and timeliness of the Company’s financial reporting and disclosure practices; • the Company’s compliance with legal and regulatory requirements related to financial reporting; and • the independence and performance of the Company’s independent auditor. The Committee shall also perform any other activities consistent with this Charter, the Company’s articles and governing laws as the Committee or Board deems necessary or appropriate. The Committee shall consist of at least three directors.