FORM 6-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
Report of Foreign Private Issuer
Pursuant to Rule 13a-16 or 15d-16
of the Securities Exchange Act of 1934
For September 26, 2006
International Uranium Corporation
(Translation of registrant's name into English)
Independence Plaza, Suite 950, 1050 Seventeenth Street, Denver, CO 80265
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports
under cover Form 20-F or Form 40-F.
Form 20-F X Form 40-F
Indicate by check mark whether the registrant by furnishing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.
Yes No X
If "Yes" is marked, indicate below the file number assigned to the registrant in
connection with Rule 12g3-2(b): 82- .
----------------
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
International Uranium Corporation
(Registrant)
Date: September 26, 2006 By: /s/ Ron F. Hochstein
------------------------ ---------------------
Ron F. Hochstein, President and CEO
EXHIBIT INDEX
Exhibit Number Description
-------------- -----------
1 Material Change Report for a press release dated
September 18, 2006
2 Arrangement Agreement among International Uranium
Corporation and 2113537 Ontario Inc. and
Denison Mines Inc.
FORM 51-102F3
MATERIAL CHANGE REPORT
ITEM 1: NAME AND ADDRESS OF COMPANY
International Uranium Corporation. ("International Uranium" or the
"Corporation")
2101 - 885 West Georgia Street
Vancouver, BC V6C 3E8
Telephone Number: (604) 689-7842
ITEM 2: DATE OF MATERIAL CHANGE
September 18, 2006
ITEM 3: NEWS RELEASE
The news release was disseminated in Canada on September 18, 2006
through the facilities of CCN Matthews and subsequently filed on
SEDAR and EDGAR.
ITEM 4: SUMMARY OF MATERIAL CHANGE
The Corporation and Denison Mines Inc. ("Denison") have entered into
an agreement to merge the two companies by way of a plan of
arrangement to create a mid-tier, North American-focused uranium
producer with the capability of increasing annual production to in
excess of 5.5 million lbs of U3O8 by 2010. The combined company will
be named Denison Mines Ltd. and will have a market capitalization of
approximately C$1 billion (based on the aggregate of the closing
prices of the Corporation's and Denison's Common Shares on September
18, 2006). The transaction is conditional upon the approval by
66-2/3% of Denison shareholders and option holders and a majority of
the Corporation shareholders as well as other customary conditions
and regulatory approvals, including the approval of the Toronto
Stock Exchange. Special shareholder meetings for each company to
vote on the transaction are expected to be held in mid-November
2006. The transaction is expected to close by the middle of December
2006.
ITEM 5: FULL DESCRIPTION OF MATERIAL CHANGE
The Corporation and Denison Mines Inc. ("Denison") have entered into
an agreement to merge the two companies by way of a plan of
arrangement to create a mid-tier, North American-focused uranium
producer with the capability of increasing annual production to in
excess of 5.5 million lbs of U3O8 by 2010. The combined company will
be named Denison Mines Ltd. and will have a market capitalization of
approximately C$1 billion (based on the aggregate of the closing
prices of the Corporation's and Denison's Common Shares on September
18, 2006).
INCREASED URANIUM PRODUCTION GROWTH
The combined company will own the White Mesa mill in Utah and 22.5%
of the McClean Lake mill in Saskatchewan. Both mills are fully
permitted, operating and undergoing expansion. The share of the
combined licensed annual milling capacity will be at 10 million lbs
U3O8, to be expanded to 10.7 million lbs in 2007. The company will
own an interest in one operating mine and four North American
development projects, all of which are scheduled to commence mining
prior to 2010.
FINANCIAL STRENGTH
As of June 30, 2006, the combined company's pro forma financial
highlights include:
- Cash and short-term investments of CDN $127 million
- No long-term debt
The strength of the pro forma balance sheet will allow the company
to pursue a development growth strategy and fund an aggressive
exploration program.
EXPLORATION AND EQUITY INVESTMENTS
The combined company will have a strong exploration position with
large land positions in the United States, the Athabasca Basin,
Mongolia and Australia. The company has 12 full-time professionals
dedicated to exploration. In addition, the combined company will
have further exposure to exploration through equity investments in
JNR Resources Inc., Energy Metals Limited of Australia and several
other exploration companies.
EXPERIENCED MANAGEMENT AND BOARD
Peter Farmer will become Chief Executive Officer of the combined
company and Ron Hochstein will become the President and Chief
Operating Officer. James Anderson will be the Chief Financial
Officer. Both the Corporation and Denison will be equally
represented on the Board of the combined company, with Lukas Lundin
as Chairman.
The combined company will continue to be manager of Uranium
Participation Corporation, a company created to invest in uranium.
TRANSACTION DETAILS
At the closing of the plan of arrangement, Denison will amalgamate
with a wholly owned subsidiary of the Corporation, and holders of
Denison Common Shares will exchange each of their Denison Common
Shares for the Corporation's Common Shares on the basis of 2.88 of
the Corporation's Common Shares for each one Denison Common Share.
The Corporation's shareholders will continue to hold their existing
Common Shares. The combined company will be named Denison Mines Ltd.
and will retain a primary listing on the Toronto Stock Exchange.
Under the terms of the arrangement, Denison's outstanding stock
options will, after the completion of the arrangement, represent
rights to receive options of Denison Mines Ltd., with appropriate
adjustments to reflect the exchange ratio between Denison's and the
Corporation's Common Shares and appropriate adjustments to the
option exercise price. Under the terms of Denison's two outstanding
series of warrants, upon completion of the arrangement, such
warrants will represent the right to purchase Common Shares of
Denison Mines Ltd., with appropriate adjustments to reflect the
exchange ratio between Denison's and the Corporation's Common
Shares, with appropriate adjustments to the warrant exercise prices.
The existing shareholders of the Corporation and Denison will each
own approximately 50% of the new company. The combined company will
have approximately 176 million Common Shares outstanding at the
completion of the merger.
The Boards of Directors of each company has received a fairness
opinion from its respective financial advisors with respect to the
transaction consideration. Both boards are unanimously recommending
approval of the transaction by their respective shareholders. The
transaction is conditional upon the approval by 66-2/3% of Denison's
shareholders and option holders and a majority of the Corporation's
shareholders as well as other customary conditions and regulatory
approvals, including the approval of the Toronto Stock Exchange.
Special shareholder meetings for each company to vote on the
transaction are expected to be held in mid-November 2006. The
transaction is expected to close by the middle of December 2006.
The definitive agreement between the two companies includes a
commitment by each company not to solicit alternative transactions
to the merger. Each company has agreed to pay a break fee to the
other party of C$16 million under certain circumstances. The
directors and senior officers of each company have entered into
agreements to vote their respective shareholdings in support of the
transaction and to refrain from disposing of their Common Shares
prior to the meeting. Lundin family interests, holders of 19.9% in
total of the Corporation, have also pledged their support of the
transaction.
ADVISORS AND COUNSEL
Denison's financial advisor is Sprott Securities Inc. and legal
counsel in Canada is Blake, Cassels & Graydon LLP and in the United
States is Dorsey & Whitney. The Corporation's financial advisor is
Dundee Securities Corp. and legal counsel in Canada is Cassels Brock
& Blackwell LLP and in the United States is Shearman & Sterling.
ABOUT DENISON MINES
Denison Mines Inc. is a uranium exploration, development and
production company whose principal assets are a 22.5% interest in
one of the world's largest uranium facilities at McClean Lake in
Northern Saskatchewan and its 25.17% interest in the Midwest Uranium
Project. It is actively engaged in exploration activities in
Canada's Athabasca Basin, in Mongolia and through its 12% interest
in Energy Metals of Australia. It is also engaged in mine
decommissioning and environmental services through its Denison
Environmental Services division and provides management services to
Uranium Participation Corporation. Additional information regarding
Denison is available on Denison's profile on the SEDAR website at
www.sedar.com.
ABOUT INTERNATIONAL URANIUM
The Corporation is engaged in uranium exploration and production. It
holds significant uranium and vanadium deposits in the U.S. and a
fully permitted 2,000 ton per day uranium/vanadium mill near
Blanding, Utah (the only operating uranium mill in the U.S.),
uranium deposits in Mongolia as well as uranium exploration
properties in the Athabasca Basin. The Corporation also processes
and recycles uranium-bearing waste materials as an environmentally
superior alternative to direct disposal. In addition, the
Corporation is a significant shareholder in Fortress Minerals Corp.,
a public company engaged in precious and base metal exploration.
ITEM 6: RELIANCE ON SUBSECTION 7.1(2) OR (3) OF NATIONAL INSTRUMENT 51-102
Not applicable.
ITEM 7: OMITTED INFORMATION
Not applicable.
ITEM 8: EXECUTIVE OFFICER
Ron F. Hochstein
President & CEO/Director
Tel: (604) 689-7842
Dated at Vancouver, British Columbia, this 26th day of September,
2006.
INTERNATIONAL URANIUM CORPORATION
By: /s/ Ron Hochstein
------------------------------
Ron F. Hochstein, President & CEO
EXECUTION COPY
ARRANGEMENT AGREEMENT
AMONG
INTERNATIONAL URANIUM CORPORATION
AND
2113537 ONTARIO INC.
AND
DENISON MINES INC.
SEPTEMBER 18, 2006
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS, INTERPRETATION AND SCHEDULES........................ 2
Section 1.01 Definitions.............................................. 2
Section 1.02 Interpretation Not Affected by Headings; References
to Agreement............................................. 13
Section 1.03 Number, Gender and Persons............................... 13
Section 1.04 Date for any Action...................................... 13
Section 1.05 Statutory References..................................... 13
Section 1.06 Currency................................................. 13
Section 1.07 Invalidity of Provisions................................. 13
Section 1.08 Accounting Matters....................................... 14
Section 1.09 Knowledge................................................ 14
Section 1.10 Meaning of Certain Phrase................................ 14
Section 1.11 Schedules................................................ 14
ARTICLE 2 THE ARRANGEMENT.................................................. 15
Section 2.01 Arrangement.............................................. 15
Section 2.02 Effective Date........................................... 15
Section 2.03 Board of Directors....................................... 15
Section 2.04 Consultation............................................. 15
Section 2.05 Court Proceedings........................................ 15
Section 2.06 Articles of Arrangement.................................. 16
Section 2.07 Closing.................................................. 16
Section 2.08 U.S. Tax Treatment....................................... 16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................................... 17
Section 3.01 Representations and Warranties of Denison................ 17
Section 3.02 Representations and Warranties of IUC and IUC
Subco.................................................... 32
Section 3.03 Survival of Representations and Warranties............... 48
ARTICLE 4 COVENANTS........................................................ 48
Section 4.01 Covenants of Denison..................................... 48
Section 4.02 Covenants of IUC and IUC Subco........................... 57
Section 4.03 Denison Options.......................................... 66
Section 4.04 Denison Warrants......................................... 66
Section 4.05 Indemnification and Insurance............................ 67
Section 4.06 Employee Service and Vesting............................. 67
ARTICLE 5 CONDITIONS....................................................... 67
Section 5.01 Mutual Conditions........................................ 67
Section 5.02 Denison Conditions....................................... 70
Section 5.03 IUC and IUC Subco Conditions............................. 71
Section 5.04 Notice and Cure Provisions............................... 73
ARTICLE 6 NON-SOLICITATION AND BREAK-UP FEE................................ 74
Section 6.01 Denison Covenant Regarding Non-Solicitation.............. 74
Section 6.02 Notice of Denison Superior Proposal Determination........ 76
Section 6.03 Denison Break Fee Event.................................. 77
Section 6.04 IUC Covenant Regarding Non-Solicitation.................. 78
ii
Section 6.05 Notice of IUC Superior Proposal Determination............ 80
Section 6.06 IUC Break Fee Event...................................... 81
ARTICLE 7 AMENDMENT AND TERMINATION........................................ 82
Section 7.01 Amendment................................................ 82
Section 7.02 Mutual Understanding Regarding Amendments................ 82
Section 7.03 Termination.............................................. 83
ARTICLE 8 GENERAL.......................................................... 85
Section 8.01 Notices.................................................. 85
Section 8.02 Remedies................................................. 86
Section 8.03 Expenses................................................. 87
Section 8.04 Obligations Regarding Personal Information............... 87
Section 8.05 Time of the Essence...................................... 88
Section 8.06 Entire Agreement......................................... 88
Section 8.07 Further Assurances....................................... 88
Section 8.08 Governing Law............................................ 88
Section 8.09 Execution in Counterparts................................ 89
Section 8.10 Waiver................................................... 89
Section 8.11 No Personal Liability.................................... 89
Section 8.12 Enurement and Assignment................................. 89
Section 8.13 Invalidity............................................... 89
Schedule A Plan of Arrangement
Schedule B Description of IUC Subsidiaries and IUC Material Subsidiaries
Schedule C Description of Denison Subsidiaries
ARRANGEMENT AGREEMENT
THIS AGREEMENT made as of the 18th day of September, 2006
AMONG:
INTERNATIONAL URANIUM CORPORATION
a corporation existing under the
Business Corporations Act (Ontario)
(hereinafter referred to as "IUC")
OF THE FIRST PART
- and -
2113537 ONTARIO INC.
a corporation existing under the
Business Corporations Act (Ontario)
(hereinafter referred to as "IUC Subco")
OF THE SECOND PART
- and -
DENISON MINES INC.
a corporation existing under the
Business Corporations Act (Ontario)
(hereinafter referred to as "Denison")
OF THE THIRD PART
WITNESSES THAT:
WHEREAS IUC Subco is a corporation wholly-owned by IUC;
AND WHEREAS IUC, IUC Subco and Denison propose to effect a business
combination to combine the business and assets of Denison with those of IUC;
2
AND WHEREAS the parties hereto intend to carry out the proposed
business combination by way of a plan of arrangement under the provisions of the
Business Corporations Act (Ontario);
AND WHEREAS the Arrangement is intended to qualify for U.S. federal
income tax purposes as a reorganization under the provisions of Section 368(a)
of the United States Internal Revenue Code of 1986, as amended, the Treasury
Regulations promulgated thereunder and other applicable U.S. federal income tax
law;
NOW THEREFORE in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties hereto, the
parties hereto hereby covenant and agree as follows:
ARTICLE 1
DEFINITIONS, INTERPRETATION AND SCHEDULES
SECTION 1.01 DEFINITIONS
In this Agreement, unless the context otherwise requires, the
following words and terms with the initial letter or letters thereof capitalized
shall have the meanings ascribed to them below:
(a) "1933 Act" means the Securities Act of 1933, as amended, of the United
States of America;
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended, of
the United States of America;
(c) "1940 Act" means the Investment Company Act of 1940, as amended, of
the United States of America;
(d) "Agreement" means this arrangement agreement, together with the
schedules attached hereto, as amended or supplemented from time to
time;
(e) "Amalgamating Corporations" means IUC Subco and Denison, collectively;
(f) "Arrangement" means the arrangement under the provisions of Section
182 of the OBCA on the terms and conditions set forth in the Plan of
Arrangement, subject to any amendment or supplement thereto made in
accordance therewith or made at the direction of the Court in the
Final Order;
(g) "Articles of Amendment" means the articles of amendment to be filed
under the OBCA to give effect to the change of name of IUC to
3
"Denison Mines Ltd." or such other name containing the word "Denison"
as may be approved by the directors of each of IUC and Denison;
(h) "Articles of Arrangement" means the articles of arrangement to be
filed under the OBCA to give effect to the Arrangement;
(i) "Business Day" means any day, other than a Saturday, a Sunday or a
statutory holiday in the city of Toronto, Ontario;
(j) "Canadian GAAP" means accounting principles generally accepted in
Canada;
(k) "Code" means the Internal Revenue Code of 1986, as amended, of the
United States of America;
(l) "Competition Act" means the Competition Act (Canada) as now in effect
and as may be amended from time to time prior to the Effective Date;
(m) "Competition Act Approval" means:
(a) the issuance of an advance ruling certificate by the Commissioner
under Subsection 102(1) of the Competition Act to the effect that
the Commissioner is satisfied that she would not have sufficient
grounds upon which to apply to the Competition Tribunal for an
order under section 92 of the Competition Act with respect to the
transactions contemplated by this Agreement; or
(b) that the waiting period under section 123 of the Competition Act
shall have expired or been earlier terminated or the obligation
to provide a pre-merger notification in accordance with Part IX
of the Competition Act has been waived in accordance with
paragraph 113(c) of the Competition Act, and IUC and Denison
shall have been advised in writing by the Commissioner that she
is of the view that there are not sufficient grounds to initiate
proceedings under the merger provisions of the Competition Act in
respect of the transactions contemplated by this Agreement;
(n) "Completion Deadline" means the date by which the transactions
contemplated by this Agreement are to be completed, which date shall
be February 1, 2007;
(o) "Confidentiality Agreement" means the confidentiality agreement dated
July 5, 2006 between IUC and Denison;
4
(p) "Court" means the Superior Court of Justice, Ontario;
(q) "de facto acquisition or change of control" means the acquisition by
any person or group of persons acting jointly or in concert, of
beneficial ownership of or control or direction over sufficient voting
securities of Denison or IUC, as the case may be, to permit such
person or persons to exercise, or to control or direct the voting of,
20% or more of the total number of votes attached to all outstanding
voting securities of Denison or IUC, as the case may be;
(r) "Denison" means Denison Mines Inc., a corporation existing under the
OBCA;
(s) "Denison Acquisition Proposal" means, in respect of Denison, any bona
fide inquiry, proposal or offer made by a party with whom Denison and
each of its officers and directors deals at arm's length regarding (i)
any merger, amalgamation, share exchange, business combination,
take-over bid, tender offer, sale or other disposition of all or
substantially all of the assets of Denison and the Denison
Subsidiaries, taken as a whole, in a single transaction or a series of
related transactions, (or any lease, long term supply agreement or
other arrangement having the same economic effect as a sale of all or
substantially all of the assets of Denison and the Denison
Subsidiaries, taken as a whole), (ii) any recapitalization,
reorganization, liquidation, material sale or issue of treasury
securities or rights therein or thereto or rights or options to
acquire any material number of treasury securities, (iii) any exchange
offer or secondary purchase, or (iv) any type of similar transaction
which would, or could, in any case, constitute a de facto acquisition
or change of control of Denison or would or could, in any case, result
in the sale or other disposition of all or substantially all of the
assets of Denison and the Denison Subsidiaries taken as a whole (other
than the Arrangement and all other transactions to be completed in
connection with the Arrangement contemplated in this Agreement);
(t) "Denison Common Shares" means the common shares in the capital of
Denison;
(u) "Denison Disclosure Letter" means the letter of even date herewith
delivered by Denison to IUC in a form accepted by and signed on behalf
of IUC with respect to certain matters in this Agreement;
(v) "Denison Documents" shall have the meaning ascribed thereto in Section
3.01(t);
5
(w) "Denison Material Contracts" shall have the meaning ascribed thereto
in Section 3.01(f);
(x) "Denison Meeting" means the special meeting, including any
adjournments or postponements thereof, of the Denison Securityholders
to be held, among other things, to consider and, if deemed advisable,
to approve the Arrangement;
(y) "Denison Optionholders" means, at any time, the holders of Denison
Options;
(z) "Denison Options" means those options to purchase Denison Common
Shares issued under the Denison Share Option Plan referred to in
paragraph 1.01(z) of the Denison Disclosure Letter, collectively;
(aa) "Denison Plans" shall have the meaning ascribed thereto in Section
3.01(r)(i);
(bb) "Denison Properties" means the properties of Denison set forth in
paragraph 1.01 (bb) of the Denison Disclosure Letter;
(cc) "Denison Proxy Circular" means the management information circular to
be prepared by Denison with the assistance of IUC to be provided to
Denison Securityholders in respect of the Denison Meeting;
(dd) "Denison Securityholders" means the Denison Shareholders and the
Denison Optionholders, collectively;
(ee) "Denison Share Option Plan" means the amended share option plan of
Denison approved by the Denison Shareholders on March 5, 2004;
(ff) "Denison Shareholders" means, at any time, the holders of Denison
Common Shares;
(gg) "Denison Subsidiaries" means the Subsidiaries of Denison listed in
Schedule B as the Denison Subsidiaries;
(hh) "Denison Superior Proposal" means a written Denison Acquisition
Proposal to acquire all or substantially all of the assets of Denison
(on a consolidated basis) or, directly or indirectly, more than 66
2/3% of the Denison Common Shares if the directors of Denison have
determined in good faith, after consultation with, and receiving
advice (which may include written opinions, a copy of any of which
shall have been provided to IUC) from, as appropriate, the financial,
legal and other advisors to Denison to the effect that such Denison
6
Acquisition Proposal would, if consummated in accordance with the
terms thereof, but without assuming away the risk of non-completion,
result in a transaction which: (a) is fully financed or is reasonably
capable of being fully financed and is not by its terms conditional
upon receipt of financing; (b) would be more favourable to Denison
Shareholders from a financial point of view than the terms of the
Arrangement (including any adjustment to such terms proposed by IUC);
and (c) is reasonably capable of completion in accordance with its
terms without undue delay, taking into account all legal, financial,
regulatory, financing and other aspects of such Denison Acquisition
Proposal and the person making the Denison Acquisition Proposal;
(ii) "Denison Warrants" means those warrants referred to in paragraph
1.01(ii) of the Denison Disclosure Letter, collectively;
(jj) "Director" means the director appointed under Section 278 of the OBCA;
(kk) "Effective Date" means the date on which the Final Order and all other
documents required to give effect to the Arrangement are accepted for
filing by the Director;
(ll) "Effective Time" means 12:01 a.m. (Toronto time) on the Effective
Date;
(mm) "Encumbrance" means any mortgage, pledge, assignment, charge, lien,
claim, security interest, adverse interest, other third person
interest or encumbrance of any kind, whether contingent or absolute,
and any agreement, option, right or privilege (whether by law,
contract or otherwise) capable of becoming any of the foregoing;
(nn) "Environmental Approvals" means all permits, certificates, licences,
authorizations, consents, instructions, registrations, directions or
approvals issued or required by any Governmental Entity pursuant to
any Environmental Law;
(oo) "Environmental Laws" means all applicable Laws, including applicable
common law, relating to the treatment of Hazardous Substances and the
protection of the environment and employee and public health and
safety;
(pp) "ERISA" and "ERISA Affiliates" shall have the meanings ascribed
thereto in Section 3.02(r);
(qq) "Final Order" means the final order of the Court approving the
Arrangement pursuant to the OBCA, as such order may be
7
amended at any time prior to the Effective Date or, if appealed, then
unless such appeal is withdrawn or denied, as affirmed;
(rr) "Governmental Entity" means any applicable (i) multinational, federal,
provincial, state, regional, municipal, local or other government,
governmental or public department, central bank, court, tribunal,
arbitral body, commission, board, bureau or agency, whether domestic
or foreign, (ii) any subdivision, agency, commission, board or
authority of any of the foregoing, or (iii) any quasi-governmental or
private body exercising any regulatory, expropriation or taxing
authority under or for the account of any of the foregoing;
(ss) "Hazardous Substance" means any chemical, material or substance in any
form, whether solid, liquid, gaseous, semisolid or any combination
thereof, whether waste material, raw material, finished product,
intermediate product, byproduct or any other material or article, that
is listed or regulated under any Environmental Laws as a hazardous
substance, toxic substance, waste or contaminant or is otherwise
listed or regulated under any Environmental Laws because it poses a
hazard to human health or the environment, including petroleum
products, asbestos, PCBs, urea formaldehyde foam insulation, uranium
and other radio nuclides, uranium mill tailings and other wastes and
lead-containing paints or coatings;
(tt) "IUC" means International Uranium Corporation, a corporation existing
under the OBCA;
(uu) "IUC Acquisition Proposal" means, in respect of IUC, any bona fide
inquiry, proposal or offer made by a party with whom IUC and each of
its officers and directors deals at arm's length regarding (i) any
merger, amalgamation, share exchange, business combination, take-over
bid, tender offer, sale or other disposition of all or substantially
all of its assets, in a single transaction or a series of related
transactions, (or any lease, long term supply agreement or other
arrangement having the same economic effect as a sale of all or
substantially all of IUC's assets), (ii) any recapitalization,
reorganization, liquidation, material sale or issue of treasury
securities or rights therein or thereto or rights or options to
acquire any material number of treasury securities, (iii) any exchange
offer or secondary purchase; or (iv) any type of similar transaction
which would, or could, in any case, constitute a de facto acquisition
or change of control of IUC or would or could, in any case, result in
the sale or other disposition of all or substantially all of the
assets of IUC (other than the Arrangement and all other transactions
to be
8
completed in connection with the Arrangement contemplated in this
Agreement);
(vv) "IUC Common Shares" means the common shares in the capital of IUC;
(ww) "IUC Disclosure Letter" means the letter of even date herewith
delivered by IUC to Denison in a form accepted by and signed on behalf
of Denison with respect to certain matters in this Agreement;
(xx) "IUC Documents" shall have the meaning ascribed thereto in Section
3.02(t)(i);
(yy) "IUC Material Contract" shall have the meaning ascribed thereto in
Section 3.01(f);
(zz) "IUC Material Subsidiaries" means, collectively, the corporations
listed in Schedule C as the IUC Material Subsidiaries;
(aaa) "IUC Meeting" means the special meeting, including any adjournments
or postponements thereof, of the IUC Shareholders to be held, among
other things, to consider and, if deemed advisable, to approve the
issuance of a maximum of 102,000,000 IUC Common Shares pursuant to the
Arrangement (on a fully diluted basis) and the filing of the Articles
of Amendment to change the name of IUC to "Denison Mines Ltd." or such
other name containing the word "Denison" as may be approved by the
directors of each of IUC and Denison;
(bbb) "IUC Options" means those options to purchase IUC Common Shares
issued under the IUC Share Option Plan referred to in paragraph
1.01(zz) of the IUC Disclosure Letter, collectively;
(ccc) "IUC Plans" shall have the meaning ascribed thereto in Section
3.02(r)(i);
(ddd) "IUC Properties" means the properties of IUC set forth in paragraph
1.01(ddd) of the IUC Disclosure Letter;
(eee) "IUC Proxy Circular" means the management information circular to be
prepared by IUC with the assistance of Denison in respect of the IUC
Meeting;
(fff) "IUC SEC Documents" shall have the meaning ascribed thereto in
Section 3.01(t)(ii);
(ggg) "IUC Share Option Plan" means the amended share option plan of IUC
approved by the IUC Shareholders on February 14, 1997 and
9
amended, as approved by shareholders on March 23, 1998 and March 22,
2005;
(hhh) "IUC Shareholder Approval Matters" shall have the meaning ascribed
thereto in Section 3.02(c);
(iii) "IUC Shareholders" means, at any time, the holders of IUC Common
Shares;
(jjj) "IUC Subco" means 2113537 Ontario Inc., a wholly-owned subsidiary of
IUC, existing under the OBCA;
(kkk) "IUC Subsidiaries" means the Subsidiaries of IUC, as listed in
Schedule C as the IUC Subsidiaries;
(lll) "IUC Superior Proposal" means a written IUC Acquisition Proposal to
acquire all or substantially all of the assets of IUC (on a
consolidated basis) or, directly or indirectly, more than 66 2/3% of
the IUC Common Shares if the directors of IUC have determined in good
faith, after consultation with, and receiving advice (which may
include written opinions, a copy of which shall have been provided to
Denison) from, as appropriate, any of the financial, legal and other
advisors to IUC to the effect that such IUC Acquisition Proposal
would, if consummated in accordance with the terms thereof, but
without assuming away the risk of non-completion, result in a
transaction which: (a) is fully financed or is reasonably capable of
being fully financed and is not by its terms conditional upon receipt
of financing; (b) is more favourable to IUC Shareholders from a
financial point of view than the terms of the Arrangement (including
any adjustment to such terms proposed by Denison); and (c) is
reasonably capable of completion in accordance with its terms without
undue delay, taking into account all legal, financial, regulatory,
financing and other aspects of such IUC Acquisition Proposal and the
person making the IUC Acquisition Proposal;
(mmm) "Interim Order" means the interim order of the Court, as such order
may be amended, made in connection with the Arrangement;
(nnn) "Investment Canada Act" means the Investment Canada Act as now in
effect and as may be amended from time to time prior to the Effective
Date;
(ooo) "Laws" means all laws, by-laws, rules, regulations, orders,
ordinances, protocols, codes, guidelines, instruments, policies,
notices, directions and judgments or other requirements of any
Governmental Entity or applicable stock exchange;
10
(ppp) "Liability" of any person means and includes: (i) any right against
such person to payment, whether or not such right is reduced to
judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured or
unsecured; (ii) any right against such person to an equitable remedy
for breach of performance if such breach gives rise to a right to
payment, whether or not such right to any equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed,
undisputed, secured or unsecured; and (iii) any obligation of such
person for the performance of any covenant or agreement (whether for
the payment of money or otherwise);
(qqq) "Material Adverse Change" means, in respect of IUC or Denison, as the
case may be, any one or more changes, events or occurrences, and
"Material Adverse Effect" means, in respect of IUC or Denison, as the
case may be, any state of facts, which, in either case, either
individually or in the aggregate, are, or would reasonably be expected
to be, material and adverse to the business, operations, results of
operations, prospects, assets, liabilities or financial condition of
IUC and the IUC Subsidiaries, or Denison and the Denison Subsidiaries,
respectively, on a consolidated basis, other than any change, effect,
event or occurrence: (i) relating to the global economy or securities
markets in general; (ii) affecting the worldwide uranium mining
industry in general and which does not have a materially
disproportionate effect on IUC and the IUC Subsidiaries on a
consolidated basis, or Denison and the Denison Subsidiaries on a
consolidated basis, respectively; (iii) resulting from changes in the
price of uranium; or (iv) relating to the rate at which Canadian
dollars can be exchanged for the currency of any other nation,
including the United States, or vice versa, and references in this
Agreement to dollar amounts are not intended to be, and shall not be
deemed to be, interpretive of the amount used for the purpose of
determining whether a "Material Adverse Change" has occurred or
whether a state of facts exists that has or could have a "Material
Adverse Effect" and such defined terms and all other references to
materiality in this Agreement shall be interpreted without reference
to any such amounts;
(rrr) "Misrepresentation" has the meaning given to such term in the
Securities Act (Ontario);
(sss) "OBCA" means the Business Corporations Act (Ontario), including the
regulation promulgated thereunder as is in effect on the date hereof;
(ttt) "Pending Denison Acquisition Proposal" shall have the meaning
ascribed thereto in Section 6.03(d);
11
(uuu) "Pending IUC Acquisition Proposal" shall have the meaning ascribed
thereto in Section 6.06(d);
(vvv) "Plan of Arrangement" means a plan of arrangement substantially in
the form and content of Schedule A attached hereto and any amendment
or variation thereto made in accordance with Section 7.01 of the Plan
of Arrangement or Section 7.01 hereof;
(www) "Release" means any release, spill, leak, discharge, abandonment,
disposal, pumping, pouring, emitting, emptying, injecting, leaching,
dumping, depositing, dispersing, passive migration, allowing to escape
or migrate into or through the environment (including ambient air,
surface water, ground water, land surface and subsurface strata or
within any building, structure, facility or fixture) of any Hazardous
Substance, including the abandonment or discarding of Hazardous
Substances in barrels, drums, tanks or other containers, regardless of
when discovered;
(xxx) "Remedial Action" means any investigation, feasibility study,
monitoring, testing, sampling, removal (including removal of
underground storage tanks), restoration, clean-up, remediation,
closure, site restoration, remedial response or remedial work;
(yyy) "Sarbanes-Oxley Act" means the Sarbanes Oxley Act of 2002 of the
United States of America;
(zzz) "SEC" means the United States Securities and Exchange Commission;
(aaaa) "Securities Authorities" means the Ontario Securities Commission and
the other securities regulatory authorities in the provinces and
territories of Canada and the SEC and applicable state regulatory
authorities in the United States of America, collectively;
(bbbb) "SEDAR" means the System for Electronic Document Analysis and
Retrieval;
(cccc) "Sprott" means Sprott Securities Inc., the financial advisors to the
board of directors of Denison;
(dddd) "Subsidiary" means, with respect to a specified body corporate, any
body corporate of which the specified body corporate is entitled to
elect a majority of the directors thereof and shall include any body
corporate, partnership, joint venture or other entity over which such
specified body corporate exercises direction or control or which is in
a like relation to such a body corporate, excluding any body corporate
in respect of which such direction or control is not exercised by the
specified body corporate as a result of any
12
existing contract, agreement or commitment, and, in the case of IUC,
includes the IUC Material Subsidiaries and the IUC Subsidiaries and,
in the case of Denison, includes the Denison Subsidiaries but does not
include Uranium Participation Corporation;
(eeee) "Tax Returns" means all returns, schedules, elections, declarations,
reports, information returns and statements required to be filed with
any taxing authority relating to Taxes;
(ffff) "Tax Act" means the Income Tax Act (Canada);
(gggg) "Tax" and "Taxes" means all taxes, assessments, charges, dues,
duties, rates, fees, imposts, levies and similar charges of any kind
lawfully levied, assessed or imposed by any Governmental Entity,
including all income taxes (including any tax on or based upon net
income, gross income, income as specially defined, earnings, profits
or selected items of income, earnings or profits) and all capital
taxes, gross receipts taxes, environmental taxes, sales taxes, use
taxes, ad valorem taxes, value added taxes, transfer taxes (including,
without limitation, taxes relating to the transfer of interests in
real property or entities holding interests therein), franchise taxes,
licence taxes, withholding taxes, payroll taxes, employment taxes,
Canada or Quebec Pension Plan premiums, as applicable, excise,
severance, social security, workers' compensation, employment
insurance or compensation taxes or premium, stamp taxes, occupation
taxes, premium taxes, property taxes, windfall profits taxes,
alternative or add-on minimum taxes, goods and services tax, customs
duties or other taxes, fees, imports, assessments or charges of any
kind whatsoever, together with any interest and any penalties or
additional amounts imposed by any taxing authority (domestic or
foreign) on such entity, and any interest, penalties, additional taxes
and additions to tax imposed with respect to the foregoing;
(hhhh) "Title IV Plan" shall have the meaning ascribed thereto in Section
3.02(r)(v); and
(iiii) "TSX" means the Toronto Stock Exchange.
In addition, words and phrases used herein and defined in the OBCA
shall have the same meaning herein as in the OBCA unless the context otherwise
requires.
13
SECTION 1.02 INTERPRETATION NOT AFFECTED BY HEADINGS; REFERENCES TO AGREEMENT
The division of this Agreement into articles, sections, subsections,
paragraphs and subparagraphs and the insertion of headings herein are for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement. The terms "this Agreement", "hereof",
"herein", "hereto", "hereunder" and similar expressions refer to this Agreement
and the schedules attached hereto and not to any particular article, section or
other portion hereof and include any agreement, schedule or instrument
supplementary or ancillary hereto or thereto.
SECTION 1.03 NUMBER, GENDER AND PERSONS
In this Agreement, unless the context otherwise requires, words
importing the singular only shall include the plural and vice versa, words
importing the use of either gender shall include both genders and neuter, and
the word person and all words importing persons shall include a natural person,
firm, trust, partnership, association, corporation, joint venture or government
(including any Governmental Entity, political subdivision or instrumentality
thereof) and any other entity of any kind or nature whatsoever.
SECTION 1.04 DATE FOR ANY ACTION
If the date on which any action is required to be taken hereunder by
any party hereto is not a Business Day, such action shall be required to be
taken on the next succeeding day which is a Business Day.
SECTION 1.05 STATUTORY REFERENCES
Any reference in this Agreement to a statute includes all regulations
and rules made thereunder, all amendments to such statute or regulation in force
from time to time and any statute or regulation that supplements or supersedes
such statute or regulation.
SECTION 1.06 CURRENCY
Unless otherwise stated, all references in this Agreement to amounts
of money are expressed in lawful money of Canada.
SECTION 1.07 INVALIDITY OF PROVISIONS
Each of the provisions contained in this Agreement is distinct and
severable and a declaration of invalidity or unenforceability of any such
provision or part thereof by a court of competent jurisdiction shall not affect
the validity or enforceability of any other provision hereof. To the extent
permitted by applicable Law, the parties hereto waive any provision of Law which
renders any provision of this Agreement or any part thereof invalid or
unenforceable in any respect. The parties hereto will engage in
14
good faith negotiations to replace any provision hereof or any part thereof
which is declared invalid or unenforceable with a valid and enforceable
provision or part thereof, the economic effect of which approximates as much as
possible the invalid or unenforceable provision or part thereof which it
replaces.
SECTION 1.08 ACCOUNTING MATTERS
Unless otherwise stated, all accounting terms used in this Agreement
shall have the meanings attributable thereto under Canadian GAAP and all
determinations of an accounting nature required to be made hereunder shall be
made in a manner consistent with Canadian GAAP.
SECTION 1.09 KNOWLEDGE
Where the phrases "to the knowledge of IUC" is used in respect of IUC,
the IUC Material Subsidiaries or the IUC Subsidiaries or "to the knowledge of
Denison" in respect of Denison or the Denison Subsidiaries, such phrase shall
mean, in respect of each representation and warranty or other statement which is
qualified by such phrase, that such representation and warranty or other
statement is being made based upon: (i) in the case of IUC, the IUC Subsidiaries
and the IUC Material Subsidiaries, the collective actual knowledge of the senior
officers of IUC, being the President and Chief Executive Officer, Ron Hochstein,
the Chief Financial Officer, Mark Katsumata and the Vice-President and General
Counsel, David C. Frydenlund, and (ii) in the case of Denison and the Denison
Subsidiaries, the collective actual knowledge of the senior officers of Denison,
being the President and Chief Executive Officer, E. Peter Farmer, the Executive
Vice President Finance and Chief Financial Officer, James Anderson and the
General Counsel and Corporate Secretary, Sheila Colman and shall not in either
case include any deemed or imputed knowledge of any such officer or require the
making of any additional inquiries.
SECTION 1.10 MEANING OF CERTAIN PHRASE
In this Agreement the phrase "in the ordinary and regular course of
business" shall mean and refer to those activities that are normally conducted
by corporations engaged in uranium exploration, development and production.
SECTION 1.11 SCHEDULES
The following schedules are attached to, and are deemed to be
incorporated into and form part of, this Agreement:
15
SCHEDULE MATTER
-------- ------
A Plan of Arrangement
B Description of Denison Subsidiaries
C Description of IUC Subsidiaries and IUC Material Subsidiaries
ARTICLE 2
THE ARRANGEMENT
SECTION 2.01 ARRANGEMENT
The parties agree to carry out the Arrangement substantially on the
terms as set out in the Plan of Arrangement, subject to such changes as may be
mutually agreed to by the parties. The Amalgamating Corporations shall
amalgamate by way of arrangement pursuant to Section 182 of the OBCA on the
terms and subject to the conditions contained in this Agreement and the Plan of
Arrangement.
SECTION 2.02 EFFECTIVE DATE
The Arrangement shall become effective at the Effective Time.
SECTION 2.03 BOARD OF DIRECTORS
On the Effective Date, the board of directors of IUC shall be
reconstituted such that it will consist of ten directors, five of which shall be
nominated by IUC and five of which will be nominated by Denison.
SECTION 2.04 CONSULTATION
No press release or other public disclosure with respect to the
existence or details of this Agreement or the transactions contemplated hereby
shall be made by either party without the prior written consent of the other
party hereto except to the extent required by applicable Law. The initial press
release concerning the Arrangement shall be a joint press release and thereafter
each of IUC and Denison will provide a draft press release, public statement or
filing to the other in issuing any press release or otherwise making any public
statement with respect to this Agreement or the Arrangement and in making any
filing with any Governmental Entity, Securities Authority or stock exchange with
respect thereto. Each of IUC and Denison shall use its commercially reasonable
best efforts to enable the other of them to review and comment on all such press
releases, public statements and filings prior to the release or filing,
respectively, thereof, provided that nothing in this Section 2.04 shall prevent
a party from complying with its obligations under applicable Laws.
SECTION 2.05 COURT PROCEEDINGS
As soon as is reasonably practicable, pursuant to Section 182 of the
OBCA, Denison and IUC Subco shall:
16
(a) file, proceed with and diligently prosecute an application to the
Court for the Interim Order providing for, among other things, the
calling and holding of the Denison Meeting for the purpose of
considering and, if deemed advisable, approving the Arrangement; and
(b) subject to obtaining the approvals as contemplated by the Interim
Order and as may be directed by the Court in the Interim Order, take
all steps necessary or desirable to submit the Arrangement to the
Court and to apply for the Final Order.
The notices of motion and related materials for the applications
referred to in this section shall be in a form satisfactory to Denison and IUC
Subco, each acting reasonably, and, in the case of the application to the Court
for the Interim Order, shall request that the Interim Order provide, among other
things:
(i) for the persons to whom notice is to be provided in respect of the
Arrangement for the Denison Meeting and for the manner in which such
notice is to be provided; and
(ii) that the requisite approval of the Denison Securityholders for the
Arrangement shall be two-thirds of the votes cast thereon by Denison
Securityholders (voting together as a single class) present in person
or represented by proxy at the Denison Meeting.
SECTION 2.06 ARTICLES OF ARRANGEMENT
Subject to the rights of termination contained in Article 7 hereof,
upon the Denison Shareholders approving the Arrangement in accordance with the
Interim Order, the Amalgamating Corporations obtaining the Final Order and the
other conditions contained in Article 5 hereof being complied with or waived,
the Amalgamating Corporations shall jointly file the Final Order with the
Director together with the Articles of Arrangement and such other documents as
may be required in order to effect the Arrangement.
SECTION 2.07 CLOSING
The closing of the Arrangement will take place at the offices of
Cassels Brock & Blackwell LLP, counsel to IUC at 9:00 a.m. (Toronto time) on the
Effective Date or such other time on the Effective Date as agreed by Denison and
IUC.
SECTION 2.08 U.S. TAX TREATMENT
The Arrangement is intended to qualify as a reorganization within the
meaning of Section 368(a) of the Code and this Agreement is intended to be a
"plan of reorganization" within the meaning of the Treasury Regulations
promulgated under Section 368 of the Code. Each party hereto agrees to treat the
Arrangement as a
17
reorganization within the meaning of Section 368(a) of the Code for all U.S.
federal income tax purposes, and agrees to treat this Agreement as a "plan of
reorganization" within the meaning of the Treasury Regulations promulgated under
Section 368 of the Code, and to not take any position on any Tax Return or
otherwise take any Tax reporting position inconsistent with such treatment,
unless otherwise required by a "determination" within the meaning of Section
1313 of the Code that such treatment is not correct. Each party hereto agrees to
act in a manner that is consistent with the parties' intention that the
Arrangement be treated as a reorganization within the meaning of Section 368(a)
of the Code for all U.S. federal income tax purposes.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 REPRESENTATIONS AND WARRANTIES OF DENISON
Denison hereby represents and warrants to IUC and IUC Subco, and
hereby acknowledges that each of IUC and IUC Subco is relying upon such
representations and warranties in connection with entering into this Agreement
and agreeing to complete the Arrangement, as follows:
(a) Organization. Denison and each of the Denison Subsidiaries has been
incorporated, is validly subsisting and has full corporate or legal
power and authority to own its property and assets and to conduct its
business as currently owned and conducted. Denison and each of the
Denison Subsidiaries is registered, licensed or otherwise qualified as
an extra-provincial corporation or a foreign corporation in each
jurisdiction where the nature of the business or the location or
character of the property and assets owned or leased by it requires it
to be so registered, licensed or otherwise qualified except where the
lack of such registration, licensing or qualification would not have a
Material Adverse Effect on Denison. All of the outstanding shares of
the Denison Subsidiaries are validly issued, fully paid and
non-assessable. Except as otherwise disclosed in paragraph 3.01(a) of
the Denison Disclosure Letter, all of the outstanding shares of the
Denison Subsidiaries are owned, directly or indirectly, by Denison.
Except as otherwise disclosed in paragraph 3.01(a) of the Denison
Disclosure Letter or pursuant to restrictions on transfer contained in
the articles or by-laws (or their equivalent) of the applicable
Denison Subsidiary, the outstanding shares of each of the Denison
Subsidiaries are owned free and clear of all Encumbrances and neither
Denison nor any of the Denison Subsidiaries is liable to any creditor
in respect thereof. Except pursuant to this Agreement and the
transactions contemplated hereby and as disclosed in paragraph 3.01(a)
of the Denison Disclosure Letter, there are no outstanding options,
rights, entitlements, understandings or commitments (contingent or
18
otherwise) regarding the right to acquire any issued or unissued
securities of any of the Denison Subsidiaries from either Denison or
any of the Denison Subsidiaries.
(b) Capitalization. Denison is authorized to issue an unlimited number of
Denison Common Shares and an unlimited number of preferred shares,
issuable in series. As at September 15, 2006, there were 30,462,887
Denison Common Shares outstanding, 1,306,780 Denison Options
outstanding and an aggregate of 2,606,530 Denison Common Shares were
set aside for issue under the Denison Share Option Plan and an
aggregate of 3,324,151 Denison Common Shares were set aside for issue
under outstanding Denison Warrants. The Denison Options and the
Denison Warrants are described in paragraph1.01(z) and 1.01(ii) of the
Denison Disclosure Letter, respectively. Except for the Denison
Options and the Denison Warrants, and except pursuant to this
Agreement and the transactions contemplated hereby, as of the date
hereof, there are no options, warrants, conversion privileges or other
rights, agreements, arrangements or commitments (pre-emptive,
contingent or otherwise) obligating Denison or any of the Denison
Subsidiaries to issue or sell any shares of Denison or any of the
Denison Subsidiaries or any securities or obligations of any kind
convertible into or exchangeable for any shares of Denison or any of
the Denison Subsidiaries. All outstanding Denison Common Shares have
been duly authorized and are validly issued and outstanding as fully
paid and non-assessable shares, free of pre-emptive rights. There are
no outstanding bonds, debentures or other evidences of indebtedness of
Denison or any of the Denison Subsidiaries having the right to vote
with the Denison Shareholders on any matter. There are no outstanding
contractual obligations of Denison or of any of the Denison
Subsidiaries to repurchase, redeem or otherwise acquire any
outstanding Denison Common Shares or with respect to the voting or
disposition of any outstanding Denison Common Shares.
(c) Authority, Enforceability and No Conflicts. Denison has all necessary
power, authority and capacity to enter into this Agreement and all
other agreements and instruments to be executed by Denison as
contemplated by this Agreement, and to perform its obligations
hereunder and under such other agreements and instruments. The
execution and delivery of this Agreement by Denison and the completion
by Denison of the transactions contemplated by this Agreement have
been authorized by the directors of Denison and, subject to the
approval by the Denison Shareholders in the manner contemplated herein
and the approval by the directors of Denison of the Denison Proxy
Circular, no other corporate proceedings on the part of Denison are
necessary to
19
authorize this Agreement or to complete the transactions contemplated
hereby. This Agreement has been executed and delivered by Denison and
constitutes a legal, valid and binding obligation of Denison,
enforceable against Denison in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium and other applicable Laws relating to or affecting
creditors' rights generally, and to general principles of equity.
Other than as set forth in paragraph 3.01(c) of the Denison Disclosure
Letter, the execution and delivery by Denison of this Agreement and
the performance by Denison of its obligations hereunder and the
completion of the transactions contemplated hereby, do not and will
not:
(i) result in a violation, contravention or breach of, require any
consent to be obtained under or give rise to any termination
rights under any provision of,
(A) the articles or by-laws (or their equivalent) of Denison or
any of the Denison Subsidiaries,
(B) any Law applicable to Denison or any of the Denison
Subsidiaries, or
(C) any contract, agreement, licence or permit to which Denison
or any of the Denison Subsidiaries is bound or is subject or
of which Denison or any of the Denison Subsidiaries is the
beneficiary;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness owing by Denison or any
of the Denison Subsidiaries, to come due before its stated
maturity or cause any of its available credit to cease to be
available;
(iii) result in the imposition of any Encumbrance upon any of the
property or assets of Denison or any of the Denison Subsidiaries
or restrict, hinder, impair or limit the ability of Denison or
any of the Denison Subsidiaries to conduct the business of
Denison or any of the Denison Subsidiaries as and where it is now
being conducted; or
(iv) result in any payment (including severance, unemployment
compensation, "golden parachute", bonus or otherwise) becoming
due to any director or officer of Denison or any Denison
Subsidiary or increase any benefits otherwise payable under any
pension or benefits plan of Denison or
20
any Denison Subsidiary or result in the acceleration of the time
of payment or vesting of any such benefits;
which would, individually or in the aggregate, have a Material Adverse
Effect on Denison. Other than as disclosed in paragraph 3.01(c) of the
Denison Disclosure Letter, no consent, approval, order or
authorization of, or declaration or filing with, any Governmental
Entity or other person is required to be obtained by Denison or any of
the Denison Subsidiaries in connection with the execution and delivery
of this Agreement or the consummation by Denison of the transactions
contemplated hereby other than (i) any approvals required by the
Interim Order, (ii) any approvals required by the Final Order, (iii)
filings required under the OBCA and filings with and approvals
required by Securities Authorities and stock exchanges, (iv)
Competition Act Approval, if required; (v) approval of the Canadian
Nuclear Safety Commission; and (vi) any other consents, approvals,
orders, authorizations, declarations or filings which, if not
obtained, would not, individually or in the aggregate, have a Material
Adverse Effect on Denison.
(d) Directors' Approvals. The board of directors of Denison has received
an opinion from Sprott that the consideration to be received by
Denison Shareholders in the Arrangement and related transactions, is
fair, from a financial point of view, to the Denison Shareholders and
the board of directors of Denison has unanimously:
(i) determined that the exchange ratio of Denison Common Shares for
IUC Common Shares is fair to the Denison Shareholders and the
Arrangement is in the best interests of Denison;
(ii) recommended that the Denison Securityholders vote in favour of
the Arrangement; and
(iii) authorized the entering into of this Agreement, and the
performance of its provisions, by Denison.
(e) Denison Subsidiaries. As of the date hereof, there are no Subsidiaries
of Denison that are material to the conduct of business of Denison and
the Denison Subsidiaries and Denison does not own a direct or indirect
interest in any other corporation or entity other than as disclosed in
paragraphs 3.01 (a) and (e) of the Denison Disclosure Letter.
(f) No Defaults. Paragraph 3.01(f) of the Denison Disclosure Letter
provides a list of, and IUC has been provided with a true and
21
complete copy of, all contracts, agreements and licences material to
the conduct of the business of Denison and the Denison Subsidiaries
(taken as a whole) that if breached or in default would or could
reasonably be expected to have a Material Adverse Effect on Denison
(collectively, the "Denison Material Contracts") and there are no
current or pending negotiations with respect to the renewal,
termination or amendment of any such Denison Material Contracts,
agreements or licences. Neither Denison nor any of the Denison
Subsidiaries is in default under, and there exists no event, condition
or occurrence which, after notice or lapse of time or both, would
constitute such a default by Denison or the Denison Subsidiaries or,
to the knowledge of Denison, or any other party thereto, under any
Denison Material Contract.
(g) Absence of Changes. Since December 31, 2005 except as disclosed by
Denison in the Denison Documents as of the date hereof:
(i) Denison and each of the Denison Subsidiaries has conducted its
business only in the ordinary and regular course of business
consistent with past practice;
(ii) neither Denison nor any of the Denison Subsidiaries has incurred
or suffered an event that would be a Material Adverse Change to
Denison;
(iii) there has not been any acquisition or sale by Denison or any of
the Denison Subsidiaries of any material property or assets
thereof;
(iv) other than in the ordinary course of business consistent with
past practice, there has not been any incurrence, assumption or
guarantee by Denison or any of the Denison Subsidiaries of any
debt for borrowed money, any creation or assumption by Denison or
any of the Denison Subsidiaries of any Encumbrance, any making by
Denison or any of the Denison Subsidiaries, of any loan, advance
or capital contribution to or investment in any other person
(other than (a) loans and advances in an aggregate amount which
does not exceed $500,000 outstanding at any time, and (b) loans
made to other Denison Subsidiaries) or any entering into,
amendment of, relinquishment, termination or non-renewal by
Denison or any of the Denison Subsidiaries of any contract,
agreement, licence, lease transaction, commitment or other right
or obligation which would, individually or in the aggregate, have
a Material Adverse Effect on Denison;
22
(v) Denison has not declared or paid any dividends or made any other
distribution on any of the Denison Common Shares;
(vi) Denison has not effected or passed any resolution to approve a
split, consolidation or reclassification of any of the
outstanding Denison Common Shares;
(vii) other than in the ordinary and regular course of business
consistent with past practice, there has not been any material
increase in or modification of the compensation payable to or to
become payable by Denison or any of the Denison Subsidiaries to
any of their respective directors, officers, employees or
consultants or any grant to any such director, officer, employee
or consultant of any increase in severance or termination pay or
any increase or modification of any bonus, pension, insurance or
benefit arrangement (including without limitation, the granting
of Denison Options pursuant to the Denison Share Option Plan)
made to, for or with any of such directors or officers;
(viii) Denison has not effected any material change in its accounting
methods, principles or practices; and
(ix) Denison has not adopted any, or materially amended any,
collective bargaining agreement, bonus, pension, profit sharing,
stock purchase, stock option or other benefit plan or shareholder
rights plan.
(h) Employment Agreements. Other than as disclosed in paragraph 3.01(h) of
the Denison Disclosure Letter:
(i) neither Denison nor any of the Denison Subsidiaries is a party to
any written or oral policy, agreement, obligation or
understanding providing for severance or termination payments to,
or any employment agreement with, any director or officer of
Denison or any of the Denison Subsidiaries which cannot be
terminated without payment of a maximum of six times such
individuals' monthly salary;
(ii) neither Denison nor any of the Denison Subsidiaries has any
employee or consultant whose employment or contract with Denison
or one of the Denison Subsidiaries, respectively, that cannot be
terminated without payment upon a maximum of six months' notice
as calculated pursuant to the Employment Standards Act (Ontario);
and
(iii) neither Denison nor any of the Denison Subsidiaries (a) is a
party to any collective bargaining agreement, (b) is, to the
23
knowledge of Denison, subject to any application for
certification or threatened or apparent union-organizing
campaigns for employees not covered under a collective bargaining
agreement, or (c) is subject to any current, or to the knowledge
of Denison, pending or threatened strike or lockout.
(i) Financial Matters. The audited consolidated balance sheets, audited
consolidated statements of earnings, divisional equity and retained
earnings and cash flows of Denison for the financial years ended
December 31, 2005 and December 31, 2004 and the six month (unaudited)
period ended June 30, 2006 were prepared in accordance with Canadian
GAAP, consistently applied, and fairly present in all material
respects the consolidated financial condition of Denison at the
respective dates indicated and the results of operations of Denison
for the periods covered on a consolidated basis and reflect adequate
provision for the liabilities of Denison on a consolidated basis in
accordance with Canadian GAAP. Except as disclosed in the Denison
Documents, as at the date hereof, neither Denison nor any of the
Denison Subsidiaries has any liability or obligation (including
without limitation, liabilities or obligations to fund any operations
or work or exploration program other than in the ordinary course of
business, to give any guarantees or for Taxes), whether accrued,
absolute, contingent or otherwise, not reflected in the unaudited
consolidated financial statements of Denison for the six month period
ended June 30, 2006, except liabilities and obligations incurred in
the ordinary and regular course of business since June 30, 2006 or
which liabilities or obligations do not in the aggregate exceed
$500,000. There are reasonable grounds for believing that, based upon
the representations of IUC and IUC Subco contained herein, (i) Denison
is, and the corporation resulting from the amalgamation of Denison and
IUC Subco pursuant to the Arrangement will be, able to pay its
liabilities as they become due, (ii) the realizable value of the
assets of the corporation formed pursuant to the Arrangement will not
be less than the aggregate of the liabilities thereof and the stated
capital of all classes of shares thereof, and (iii) no creditor of
Denison will be prejudiced by the Arrangement.
(j) Books and Records. The corporate records and minute books of Denison
and, other than as disclosed in paragraph 3.01(j) of the Denison
Disclosure Letter, the Denison Subsidiaries, have been maintained in
accordance with all applicable Laws and are complete and accurate in
all material respects. Financial books and records and accounts of
Denison and, other than as disclosed in paragraph 3.01(j) of the
Denison Disclosure Letter, the Denison Subsidiaries, (i) have been
maintained in accordance with good
24
business practices on a basis consistent with prior years, (ii) are
stated in reasonable detail and accurately and fairly reflect the
transactions and acquisitions and dispositions of assets of Denison
and the Denison Subsidiaries, and (iii) accurately and fairly reflect
the basis for the consolidated financial statements of Denison.
Denison has devised and maintains a system of internal accounting
controls sufficient to provide reasonable assurances that, in all
material respects (a) transactions are executed in accordance with the
general or specific authorization of the management of Denison, and
(b) transactions are recorded as necessary (i) to permit preparation
of consolidated financial statements in conformity with Canadian GAAP
or any criteria applicable to such consolidated financial statements
and (ii) to maintain accountability for assets and liabilities.
(k) Litigation. Except as disclosed in paragraph 3.01(k) of the Denison
Disclosure Letter, there is no claim, action, proceeding or
investigation pending or in progress or, to the knowledge of Denison,
threatened against or relating to Denison or any of the Denison
Subsidiaries or affecting any of their respective properties or assets
before any Governmental Entity, which individually or in the aggregate
has, or would have, a Material Adverse Effect on Denison. There is no
bankruptcy, liquidation, winding-up or other similar proceeding
pending or in progress, or, to the knowledge of Denison, threatened
against or relating to Denison or any of the Denison Subsidiaries
before any Governmental Entity. Neither Denison nor any of the Denison
Subsidiaries, nor any of their respective properties or assets is
subject to any outstanding judgment, order, writ, injunction or decree
that involves or may involve, or restricts or may restrict, or
requires or may require, the expenditure of an amount of money in the
aggregate in excess of $500,000 as a condition to or a necessity for
the right or ability of Denison or the Denison Subsidiaries, as the
case may be, to conduct its respective business in all material
respects as it has been carried on prior to the date hereof, or that
would materially impede the consummation of the transactions
contemplated by this Agreement.
(l) Title to Properties and Condition of Assets. Except as set forth in
paragraph 3.01(l) of the Denison Disclosure Letter, applying customary
standards in the mining industry, each of Denison and the Denison
Subsidiaries has sufficient title to or valid leasehold interests in
its respective property interests or properties to own or operate such
property interests or properties in the ordinary course and consistent
with past practices, free and clear of any title defect or
Encumbrance, such properties being described in paragraph 3.01(l) of
the Denison Disclosure Letter except for such defects in
25
title or Encumbrances that, individually or in the aggregate, do not
have, and would not have a Material Adverse Effect on Denison. Each
lease and agreement granting rights to the property interests and
properties is in full force and effect and constitutes a legal, valid
and binding agreement of Denison and the Denison Subsidiaries, and
neither Denison nor the Denison Subsidiaries as parties to each such
lease or agreement is in violation or breach of or default under any
such lease or agreement except such violations, breaches or defaults
which, individually, or in the aggregate, do not and would not have a
Material Adverse Effect on Denison. Furthermore, all real and tangible
personal property of each of Denison and the Denison Subsidiaries is
in generally good repair and is operational and usable in the manner
in which it is currently being utilized, subject to normal wear and
tear and technical obsolescence, repair or replacement.
(m) Insurance. Denison maintains policies of insurance in amounts and in
respect of such risks as are normal and usual for companies of a
similar size operating in the mining industry and such policies are in
full force and effect as of the date hereof and are listed in
paragraph 3.01(m) of the Denison Disclosure Letter.
(n) Environmental. Other than as disclosed in paragraph 3.01(n) of the
Denison Disclosure Letter:
(i) each of Denison and the Denison Subsidiaries is and has been in
compliance with all applicable Environmental Laws, except to the
extent that a failure to be in such compliance would not be
reasonably likely to have a Material Adverse Effect on Denison;
(ii) the Denison Properties have not been used to generate,
manufacture, refine, treat, recycle, transport, store, handle,
dispose, transfer, produce or process Hazardous Substances,
except in compliance in all material respects with all
Environmental Laws and except to the extent that such
non-compliance would not have a Material Adverse Effect on
Denison. None of Denison, the Denison Subsidiaries or, to the
knowledge of Denison, any other person in control of any Denison
Property has caused or permitted the Release of any Hazardous
Substances at, in, on, under or from any Denison Property, except
in material compliance, individually or in the aggregate, with
all Environmental Laws, and except to the extent that a failure
to be in such compliance would not have a Material Adverse Effect
on Denison. All Hazardous Substances handled, recycled, disposed
of, treated or stored on or off site of the
26
Denison Properties have been handled, recycled, disposed of,
treated and stored in material compliance with all Environmental
Laws except to the extent that same would not be reasonably
likely to have a Material Adverse Effect on Denison. To the
knowledge of Denison, there are no Hazardous Substances at, in,
on, under or migrating from the Denison Properties, except in
material compliance with all Environmental Laws, and except to
the extent that any failures to be in compliance does not and
would not have a Material Adverse Effect on Denison;
(iii) To the knowledge of Denison, none of Denison, the Denison
Subsidiaries or any other person for whose actions Denison or a
Denison Subsidiary may be partially or wholly liable, has treated
or disposed, or arranged for the treatment or disposal, of any
Hazardous Substances at any location: (i) listed on any list of
hazardous sites or sites requiring Remedial Action issued by any
Governmental Entity; (ii) to the knowledge of Denison, proposed
for listing on any list issued by any Governmental Entity of
hazardous sites or sites requiring Remedial Action, or any
similar federal, state or provincial lists; or (iii) that is the
subject of enforcement actions by any Governmental Entity that
creates the reasonable potential for any proceeding, action, or
other claim against Denison or any of the Denison Subsidiaries.
No site or facility now or, to the knowledge of Denison,
previously owned, operated or leased by Denison or any of the
Denison Subsidiaries is listed or, to the knowledge of Denison,
proposed for listing on any list issued by any Governmental
Entity of hazardous sites or sites requiring Remedial Action or
is the subject of Remedial Action;
(iv) To the knowledge of Denison, none of Denison, the Denison
Subsidiaries or any other person for whose actions Denison or a
Denison Subsidiary may be partially or wholly liable has caused
or permitted the Release of any Hazardous Substances on or to any
of the Denison Properties in such a manner as: (i) would be
reasonably likely to impose Liability for cleanup, natural
resource damages, loss of life, personal injury, nuisance or
damage to other property, except to the extent that such
Liability does not and would not have a Material Adverse Effect
on Denison; or (ii) would be reasonably likely to result in
imposition of an Encumbrance or the expropriation of any of the
Denison Properties or the assets of any of Denison or the Denison
Subsidiaries;
27
(v) none of the Denison Properties has or is required to have any
deed notices or restrictions, institutional controls, covenants
that run with the land or other restrictive covenants or notices
arising under any Environmental Laws, except as required by
license or permit;
(vi) none of Denison or the Denison Subsidiaries has received any
notice, formal or informal, of any proceeding, action or other
claim, Liability or potential Liability arising under any
Environmental Laws, from any person or Governmental Entity
related to any of the Denison Properties which is pending as of
the date hereof, except to the extent same does not and would not
have a Material Adverse Effect on Denison; and
(vii) Denison has made available to IUC a copy of all material
environmental or occupational health and safety audits, orders,
prosecutions, evaluations, assessments, tests, reports and
studies prepared by third parties that are related to any of the
Denison Properties which are in the possession of Denison or any
of the Denison Subsidiaries.
(o) Operational Matters. Except as does not or would not have a Material
Adverse Effect on Denison:
(i) All rentals, royalties, overriding royalty interests, production
payments, net profits, interest burdens and other payments due
and payable, and obligations (including maintenance obligations
for unpatented mining claims) performable, on or prior to the
date hereof under or with respect to the direct or indirect
assets of Denison or the Denison Subsidiaries have been properly
and duly paid, performed or provided for;
(ii) All mines and mining related activities where Denison or a
Denison Subsidiary is operator at the relevant time have been
developed and operated in accordance with good mining practices
and in compliance with all applicable Laws;
(iii) All mines located in or on the lands of Denison or any Denison
Subsidiary or lands pooled or unitized therewith, which have been
abandoned by Denison or any Denison Subsidiary have been
developed, managed and abandoned in accordance with good mining
practices and in compliance with all applicable Laws; and
(iv) All future abandonment, remediation and reclamation obligations
have been accurately disclosed publicly by
28
Denison without omission of information that would result in a
Misrepresentation.
(p) Tax Matters. Denison and the Denison Subsidiaries, have filed or
caused to be filed, in a timely manner all Tax Returns required to be
filed by them (all of which Tax Returns were correct and complete in
all material respects) and have paid, collected, withheld or remitted,
or caused to be paid, collected, withheld or remitted, all Taxes that
are due and payable, collectible and remittable, except, in either
case where such failure to file or to pay, collect, withhold or remit
is disclosed in paragraph 3.01(p) of the Denison Disclosure Letter and
would not have a Material Adverse Effect on Denison. Denison has
provided adequate accruals in accordance with Canadian GAAP in its
most recently published consolidated financial statements for any
Taxes for the period covered by such financial statements which have
not been paid, whether or not shown as being due on any Tax Returns.
Since such publication date, no material liability for Taxes not
reflected in such consolidated financial statements or otherwise
provided for has been assessed, proposed to be assessed, incurred or
accrued other than in the ordinary course of business. To the
knowledge of Denison, there are no material proposed (but unassessed)
additional Taxes and none have been asserted by the Canada Revenue
Agency or any other taxing authority, including without limitation,
any sales tax authority, in connection with any of the Tax Returns
referred to above, and no waiver of any statute of limitations has
been given or requested with respect to Denison or any of the Denison
Subsidiaries. No lien for Taxes has been filed or exists other than
for Taxes not yet due and payable. Neither Denison nor any affiliate
of Denison has taken or agreed to take any action (without regard to
any action taken or agreed to be taken by IUC or any affiliate of IUC)
or knows of any circumstances that would prevent the Arrangement from
qualifying as a reorganization within the meaning of Section 368(a) of
the Code.
(q) Intellectual Property. Neither Denison nor the Denison Subsidiaries
own or license any patents, patent rights, trademarks, trade names,
service marks, copyrights, know how or other proprietary intellectual
property rights that are material to the conduct of the business of
Denison and the Denison Subsidiaries other than such trade names,
service marks and/or copyrights as may exist at law or by usage in
respect of their use in the context of the business of Denison.
29
(r) Pension and Employee Benefits.
(i) Denison and the Denison Subsidiaries have complied, in all
material respects, with all of the terms of the pension and other
employee compensation and benefit obligations of Denison and the
Denison Subsidiaries, as the case may be, including the
provisions of any collective agreements, funding and investment
contracts or obligations applicable thereto, arising under or
relating to each of the pension or retirement income plans or
other employee compensation or benefit plans, agreements,
policies, programs, arrangements or practices, whether written or
oral, which are maintained by or binding upon Denison or the
Denison Subsidiaries, as the case may be (collectively referred
to in this subsection as the "Denison Plans") and all Denison
Plans maintained by or binding upon Denison or any of the Denison
Subsidiaries are fully funded and in good standing with such
regulatory authorities as may be applicable and no notice of
underfunding, non-compliance, failure to be in good standing or
otherwise has been received by Denison or any of the Denison
Subsidiaries from any such regulatory authority.
(ii) No action has been taken, no event has occurred and no condition
or circumstance exists that has resulted in or could reasonably
be expected to result in any Denison Plan maintained by or
binding upon Denison or any of the Denison Subsidiaries, being
ordered or required to be terminated or wound up in whole or in
part or having its registration under applicable legislation
refused or revoked, or being placed under the administration of
any trustee or receiver or regulatory authority.
(s) Reporting Status. Denison is a reporting issuer or its equivalent in
each of the provinces of Canada. The Denison Common Shares are listed
on the TSX.
(t) Reports. Since March 8, 2004, Denison has filed with the Securities
Authorities in each of the provinces of Canada, the TSX, and all
applicable self-regulatory authorities, all forms, reports, schedules,
statements, certifications, material change reports and other
documents required to be filed by it (such forms, reports, schedules,
statements, certifications and other documents, including any
financial statements or other documents, including any schedules
included therein, are referred to in this subsection as the "Denison
Documents"). The Denison Documents, at the time filed or, if amended,
as of the date of such amendment (a) did not contain any
Misrepresentation and did not contain an untrue
30
statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, and (b)
complied in all material respects with the requirements of applicable
securities legislation and the rules, policies and instruments of all
Securities Authorities having jurisdiction over Denison, except where
such non-compliance has not and would not reasonably be expected to
have a Material Adverse Effect on Denison. Denison has not filed any
confidential material change or other report or other document with
any Securities Authorities or stock exchange or other self-regulatory
authority which at the date hereof remains confidential.
(u) Compliance with Laws. Denison and the Denison Subsidiaries have
complied with all applicable Laws in all material respects and are not
in material violation of any applicable Law.
(v) No Cease Trade. Denison is not subject to any cease trade or other
order of any applicable stock exchange or Securities Authority and, to
the knowledge of Denison, no investigation or other proceedings
involving Denison which may operate to prevent or restrict trading of
any securities of Denison or affect the ability of the parties hereto
to complete the Arrangement are currently in progress or pending
before any applicable stock exchange or Securities Authority.
(w) No Option on Assets. No person has any agreement or option or any
right or privilege capable of becoming an agreement or option for the
purchase from Denison or the Denison Subsidiaries of any of the
material assets of Denison or any of the Denison Subsidiaries, other
than as described in paragraph 3.01(w) of the Denison Disclosure
Letter.
(x) Certain Contracts. Other than as set out in paragraph 3.01(x) of the
Denison Disclosure Letter, neither Denison nor any of the Denison
Subsidiaries is a party to or bound by any non-competition agreement
or any other agreement, obligation, judgment, injunction, order or
decree which purports to (i) limit the manner or the localities in
which all or any material portion of the business of Denison or the
Denison Subsidiaries are conducted, (ii) limit any business practice
of Denison or any Denison Subsidiary in any material respect, or (iii)
restrict any acquisition or disposition of any property by Denison or
any Denison Subsidiary in any material respect.
(y) Place of Principal Offices. The principal offices of Denison are not
located within the United States.
31
(z) Foreign Private Issuer. As of the date hereof, Denison is a "foreign
private issuer" as defined in Rule 405 under the 1933 Act and 3b-4
under the 1934 Act. Denison has no class of securities registered
under Section 12 of the 1934 Act, is not required to register any of
its securities under the 1934 Act (other than as disclosed in
paragraph 3.01(z) of the Denison Disclosure Letter) and is not
required to file reports with the SEC under Section 15(d) of the 1934
Act.
(aa) Investment Company Status. Denison is not an "investment company" and
is not "controlled" by an investment company, with the meaning of the
1940 Act.
(bb) Full Disclosure. Denison has made available to IUC all material
information, including financial, operational and other information,
in respect of Denison and the Denison Subsidiaries and all such
information as made available to IUC and IUC Subco is true and correct
in all material respects and no material fact or facts have been
omitted therefrom which would make such information misleading.
(cc) No Broker's Commission. Denison has not entered into any agreement
that would entitle any person to any valid claim against Denison for a
broker's commission, finder's fee or any like payment in respect of
the Arrangement or any other matter contemplated by this Agreement,
except for the fees disclosed in paragraph 3.01(cc) of the Denison
Disclosure Letter.
(dd) Investment Canada. Denison is not a "non-Canadian" within the meaning
of the Investment Canada Act (Canada).
(ee) Location of Assets and U.S. Sales. Denison, together with all entities
controlled (as defined in 16 C.F.R. Section 801.1(b)) by it (a) did
not for the fiscal year ended December 31, 2005 have aggregate sales
in or into the United States of US$56.7 million or more, or (b) does
not, as as of the Effective Time will not hold assets located in the
United States having an aggregate total value of US$56.7 million (this
representation and warranty being made solely for the purpose of
determining the applicability of the notification provisions of the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, of
the United States of America to the transactions contemplated by this
Agreement).
SECTION 3.02 REPRESENTATIONS AND WARRANTIES OF IUC AND IUC SUBCO
Each of IUC and IUC Subco hereby represents and warrants to Denison,
and hereby acknowledges that Denison is relying upon such representations
32
and warranties in connection with entering into this Agreement and agreeing to
complete the Arrangement, as follows:
(a) Organization. IUC and each of the IUC Subsidiaries has been
incorporated or formed, is validly subsisting and has full corporate
and legal power and authority to own its property and assets and to
conduct its business as currently owned and conducted. IUC and each of
the IUC Subsidiaries is registered, licensed or otherwise qualified as
an extra-provincial corporation or a foreign corporation in each
jurisdiction where the nature of the business or the location or
character of the property and assets owned or leased by it requires it
to be so registered, licensed or otherwise qualified, except where the
lack of such registration, licensing or qualification would not have a
Material Adverse Effect on IUC. All of the outstanding shares or
ownership interests of the IUC Subsidiaries are validly issued, fully
paid and non-assessable. All of the outstanding shares or ownership
interests of the IUC Subsidiaries are owned directly or indirectly by
IUC. Except pursuant to restrictions on transfer contained in the
articles or by-laws (or their equivalent) of the applicable IUC
Subsidiary, the outstanding shares or ownership interests of each IUC
Subsidiary owned by IUC or an IUC Subsidiary are owned free and clear
of all Encumbrances and neither IUC nor any of the IUC Subsidiaries is
liable to any creditor in respect thereof. There are no outstanding
options, rights, entitlements, understandings or commitments
(contingent or otherwise) regarding the right to acquire any issued or
unissued securities of any of the IUC Subsidiaries from either IUC or
any of the IUC Subsidiaries. IUC Subco was incorporated for the
purpose of completing the Arrangement and has carried on no other
business.
(b) Capitalization. IUC is authorized to issue an unlimited number of IUC
Common Shares. As at September 18, 2006 there were 88,472,066 IUC
Common Shares and an aggregate of 2,158,000 IUC Common Shares were set
aside for issue under the IUC Options. The IUC Options are disclosed
in paragraph 3.02(b) of the IUC Disclosure Letter. Except for the IUC
Options and except pursuant to this Agreement and the transactions
contemplated hereby and as set out in paragraph 3.02(b) of the IUC
Disclosure Letter, as of the date hereof, there are no options,
warrants, conversion privileges or other rights, agreements,
arrangements or commitments (pre-emptive, contingent or otherwise)
obligating IUC or any of the IUC Subsidiaries to issue or sell any
shares of IUC or any of the IUC Subsidiaries or any securities or
obligations of any kind convertible into or exchangeable for any
shares of IUC or any of the IUC Subsidiaries. All outstanding IUC
Common Shares have been duly authorized and are validly issued and
outstanding as fully
33
paid and non-assessable shares, free of pre-emptive rights. There are
no outstanding bonds, debentures or other evidences of indebtedness of
IUC or any of the IUC Subsidiaries having the right to vote with the
IUC Shareholders on any matter. There are no outstanding contractual
obligations of IUC or of any of the IUC Subsidiaries to repurchase,
redeem or otherwise acquire any outstanding IUC Common Shares or with
respect to the voting or disposition of any outstanding IUC Common
Shares.
(c) Authority, Enforceability and No Conflicts. Each of IUC and IUC Subco
has the necessary power, authority and capacity to enter into this
Agreement and all other agreements and instruments to be executed by
IUC and IUC Subco as contemplated by this Agreement, and to perform
its obligations hereunder and under such other agreements and
instruments. The execution and delivery of this Agreement by IUC and
IUC Subco and the completion by IUC and IUC Subco of the transactions
contemplated by this Agreement have been authorized by the directors
of IUC and IUC Subco, respectively, and no other corporate proceedings
on the part of IUC or IUC Subco are necessary to authorize this
Agreement or to complete the transactions contemplated hereby save and
except that IUC shall be seeking shareholder approval in respect of
the issuance of a maximum of 102,000,000 IUC Common Shares pursuant to
the Arrangement and the change of name of IUC to "Denison Mines Ltd."
or such other name containing the word "Denison" as may be approved by
the directors of each of IUC and Denison (the "IUC Shareholder
Approval Matters"). This Agreement has been executed and delivered by
each of IUC and IUC Subco and constitutes a legal, valid and binding
obligation of each of IUC and IUC Subco, enforceable against IUC and
IUC Subco in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, fraudulent transfer, moratorium and other
applicable Laws relating to or affecting creditors' rights generally,
and to general principles of equity. The execution and delivery by IUC
and IUC Subco of this Agreement and the performance by them of their
respective obligations hereunder and the completion of the
transactions contemplated hereby, do not and will not:
(i) result in a violation, contravention or breach of, require any
consent to be obtained under or give rise to any termination
rights under any provision of,
(A) the articles or by-laws (or their equivalent) of IUC or any
of the IUC Subsidiaries,
34
(B) any Law applicable to IUC or any of the IUC Subsidiaries, or
(C) any contract, agreement, licence or permit to which IUC or
any of the IUC Subsidiaries is bound or is subject or of
which IUC or any IUC Subsidiary is the beneficiary;
(ii) give rise to any right of termination or acceleration of
indebtedness, or cause any indebtedness owing by IUC or any of
the IUC Subsidiaries to come due before its stated maturity or
cause any of its available credit to cease to be available;
(iii) result in the imposition of any Encumbrance upon any of the
property or assets of IUC or any of the IUC Subsidiaries or
restrict, hinder, impair or limit the ability of IUC or any of
the IUC Subsidiaries to conduct the business of IUC or any of the
IUC Subsidiaries as and where it is now being conducted; or
(iv) result in any payment (including severance, unemployment
compensation, golden parachute, bonus or otherwise) becoming due
to any director or officer of IUC or any IUC Material Subsidiary
or increase any benefits otherwise payable under any pension or
benefits plan of IUC or any IUC Subsidiary or result in the
acceleration of the time of payment or vesting of any such
benefits;
which would, individually or in the aggregate, have a Material Adverse
Effect on IUC. Other than as disclosed in paragraph 3.02(c) of the IUC
Disclosure Letter, no consent, approval, order or authorization of, or
declaration or filing with, any Governmental Entity or other person is
required to be obtained by IUC or any of the IUC Subsidiaries in
connection with the execution and delivery of this Agreement or the
consummation by IUC and IUC Subco of the transactions contemplated
hereby other than (i) any approvals required by the Interim Order,
(ii) the approval of the IUC Shareholder Approval Matters; (iii) any
approvals required by the Final Order, (iv) filings required under the
OBCA, in the case of IUC Subco and IUC in connection with the change
of name of IUC to change the name of IUC to "Denison Mines Ltd." or
such other name containing the word "Denison" as may be approved by
the directors of each of IUC and Denison, and filings with and
approvals required by the Securities Authorities and stock exchanges,
(iv) Competition Act Approval, if required, (v) all allowances or
approvals or deemed allowances or approvals by the
35
responsible Minister under the Investment Canada Act to the extent
such allowances or approvals are required, (vi) any filings or
approvals required under the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, of the United States of America, if required,
(vii) any notices that may be given by IUC on a voluntary basis under
the Exon Florio provision of the Defense Production Act, of the United
States of America; and (viii) any other consents, approvals, orders,
authorizations, declarations or filings which, if not obtained, would
not, individually or in the aggregate, have a Material Adverse Effect
on IUC.
(d) Directors' Approvals. The board of directors of IUC have unanimously:
(i) recommended that the IUC Shareholders vote in favour of the IUC
Shareholder Approval Matters; and
(ii) authorized the entering into of this Agreement and the
performance of its provisions, by IUC;
(e) IUC Material Subsidiaries. As of the date hereof, the only
Subsidiaries of IUC that are material to the conduct of business of
IUC and the IUC Subsidiaries (taken as a whole) are the IUC Material
Subsidiaries and IUC does not own a direct or indirect interest in any
other corporation or entity other than as disclosed in paragraph
3.02(e) of the IUC Disclosure Letter.
(f) No Defaults. Paragraph 3.02(f) of the IUC Disclosure Letter provides a
list of, and Denison has been provided with a true and complete copy
of, all contracts, agreements and licences material to the conduct of
the business of IUC or any of the IUC Subsidiaries (taken as a whole)
that if breached or in default would or could reasonably be expected
to have a Material Adverse Effect on IUC (collectively, the "IUC
Material Contracts") and there are no current or pending negotiations
with respect to the renewal, termination or amendment of any such IUC
Material Contracts. Neither IUC nor any of the IUC Subsidiaries is in
default under, and there exists no event, condition or occurrence
which, after notice or lapse of time or both, would constitute such a
default by IUC or the IUC Subsidiaries or to the knowledge of IUC, any
other party thereto, under any IUC Material Contract.
(g) Absence of Changes. Since September 30, 2005 except as disclosed by
IUC in the IUC Documents as of the date hereof or in paragraph 3.02(g)
of the IUC Disclosure Letter:
36
(i) IUC and each of the IUC Subsidiaries has conducted its business
only in the ordinary and regular course of business consistent
with past practice;
(ii) neither IUC nor any of the IUC Subsidiaries has incurred or
suffered an event that would be a Material Adverse Change to IUC;
(iii) there has not been any acquisition or sale by IUC or any of the
IUC Subsidiaries of any material property or assets thereof;
(iv) other than as disclosed in paragraph 3.02(g)(iv) of the IUC
Disclosure Letter, there has not been any incurrence, assumption
or guarantee by IUC or any of the IUC Subsidiaries of any debt
for borrowed money, any creation or assumption by IUC or any of
the IUC Subsidiaries of any Encumbrance, any making by IUC or any
of the IUC Subsidiaries, of any loan, advance or capital
contribution to or investment in any other person (other than (a)
loans and advances in an aggregate amount which does not exceed
$500,000 outstanding at any time, and (b) loans made to other IUC
Subsidiaries) or any entering into, amendment of, relinquishment,
termination or non-renewal by IUC or any of the IUC Subsidiaries
of any contract, agreement, licence, lease transaction,
commitment or other right or obligation which would, individually
or in the aggregate, have a Material Adverse Effect on IUC;
(v) IUC has not declared or paid any dividends or made any other
distribution on any of the IUC Common Shares;
(vi) IUC has not effected or passed any resolution to approve a split,
consolidation or reclassification of any of the outstanding IUC
Common Shares;
(vii) other than in the ordinary and regular course of business
consistent with past practice, there has not been any material
increase in or modification of the compensation payable to or to
become payable by IUC or any of the IUC Subsidiaries to any of
their respective directors, officers, employees or consultants or
any grant to any such director, officer, employee or consultant
of any increase in severance or termination pay or any increase
or modification of any bonus, pension, insurance or benefit
arrangement (including without limitation, the granting of IUC
Options pursuant to
37
the IUC Share Option Plan) made to, for or with any of such
directors or officers;
(viii) IUC has not effected any material change in its accounting
methods, principles or practices; and
(ix) IUC has not adopted any, or materially amended any, collective
bargaining agreement, bonus, pension, profit sharing, stock
purchase, stock option or other benefit plan or shareholder
rights plan.
(h) Employment Agreements. Other than as disclosed in paragraph 3.02(h) of
the IUC Disclosure Letter:
(i) neither IUC nor any of the IUC Subsidiaries is a party to any
written or oral policy, agreement, obligation or understanding
providing for severance or termination payments to, or any
employment agreement with, any director or officer of IUC or any
of the IUC Subsidiaries which cannot be terminated without
payment of a maximum of six times such individuals' monthly
salary;
(ii) neither IUC nor any of the IUC Subsidiaries has any employee or
consultant whose employment or contract with IUC or the IUC
Subsidiary, respectively, cannot be terminated without payment
upon a maximum of six months' notice; and
(iii) neither IUC nor any of the IUC Subsidiaries (a) is a party to
any collective bargaining agreement, (b) is, to the knowledge of
IUC, subject to any application for certification or threatened
or apparent union-organizing campaigns for employees not covered
under a collective bargaining agreement, or (c) is subject to any
current, or to the knowledge of IUC, pending or threatened strike
or lockout.
(i) Financial Matters. The audited consolidated balance sheets, audited
consolidated statements of operations, deficit and cash flows of IUC
for the financial years ended September 30, 2005 and September 30,
2004 and the nine month (unaudited) period ended June 30, 2006 were
prepared in accordance with Canadian GAAP consistently applied, and
fairly present in all material respects the consolidated financial
condition of IUC at the respective dates indicated and the results of
operations of IUC for the periods covered on a consolidated basis and
reflect adequate provision for the liabilities of IUC on a
consolidated basis in accordance with Canadian GAAP. As of the date
hereof, neither IUC nor any of the
38
IUC Subsidiaries has any liability or obligation (including without
limitation, liabilities or obligations to fund any operations or work
or exploration program to give any guarantees or for Taxes), whether
accrued, absolute, contingent or otherwise, not reflected in the
unaudited consolidated financial statements of IUC for the nine month
period ended June 30, 2006, except liabilities and obligations
incurred in the ordinary and regular course of business since June 30,
2006 or which liabilities or obligations do not in the aggregate
exceed $500,000. There are reasonable grounds for believing that,
based upon the representations of Denison contained herein (i) IUC is,
and the corporation resulting from the amalgamation of Denison and IUC
Subco pursuant to the Arrangement will be, able to pay its liabilities
as they become due, and (ii) the realizable value of the assets of the
corporation formed pursuant to the Arrangement will not be less than
the aggregate of the liabilities thereof and the stated capital of all
classes of shares thereof.
(j) Books and Records. The corporate records and minute books of IUC and
other than as disclosed in paragraph 3.02(j) of the IUC Disclosure
Letter, the IUC Subsidiaries, have been maintained in accordance with
all applicable Laws and are complete and accurate in all material
respects. Financial books and records and accounts of IUC and the IUC
Material Subsidiaries in all material respects (i) have been
maintained in accordance with good business practices on a basis
consistent with prior years, (ii) are stated in reasonable detail and
accurately and fairly reflect the transactions and acquisitions and
dispositions of assets of IUC and the IUC Material Subsidiaries, and
(iii) accurately and fairly reflect the basis for the consolidated
financial statements of IUC. IUC has devised and maintains a system of
internal accounting controls sufficient to provide reasonable
assurances that, in all material respects (a) transactions are
executed in accordance with the general or specific authorization of
the management of IUC and (b) transactions are recorded as necessary
(i) to permit preparation of consolidated financial statements in
conformity with Canadian GAAP or any criteria applicable to such
consolidated financial statements and (ii) to maintain accountability
for assets and liabilities.
(k) Litigation. Other than as disclosed in paragraph 3.02(k) of the IUC
Disclosure Letter, there is no claim, action, proceeding or
investigation pending or in progress or, to the knowledge of IUC,
threatened against or relating to IUC or any of the IUC Subsidiaries
or affecting any of their respective properties or assets before any
Governmental Entity which, individually or in the aggregate, has, or
would have, a Material Adverse Effect on IUC. There is no
39
bankruptcy, liquidation, winding-up or other similar proceeding
pending or in progress, or, to the knowledge of IUC, threatened
against or relating to IUC or any of the IUC Subsidiaries before any
Governmental Entity. Neither IUC nor any of the IUC Subsidiaries, nor
any of their respective properties or assets is subject to any
outstanding judgment, order, writ, injunction or decree that involves
or may involve, or restricts or may restrict, or requires or may
require, the expenditure of an amount of money in the aggregate in
excess of $500,000 as a condition to or a necessity for the right or
ability of IUC or the IUC Subsidiaries, as the case may be, to conduct
its respective business in all material respects as it has been
carried on prior to the date hereof, or that would materially impede
the consummation of the transactions contemplated by this Agreement.
(l) Title to Properties and Condition of Assets. Except as set forth in
paragraph 3.02 (l) of the IUC Disclosure Letter, applying customary
standards in the mining industry, each of IUC and the IUC Material
Subsidiaries has sufficient title to or valid leasehold interests in
its respective property interests or properties to own or operate such
property interests or properties in the ordinary course and consistent
with past practices, free and clear of any title defect or
Encumbrance, such properties being disclosed in paragraph 3.02(l) of
the IUC Disclosure Letter except for such defects in title or
Encumbrances that, individually or in the aggregate, do not have, and
would not have, a Material Adverse Effect on IUC. Each lease and
agreement granting rights to the property interests and properties is
in full force and effect and constitutes a legal, valid and binding
agreement of IUC and the IUC Material Subsidiaries, and neither IUC
nor the IUC Material Subsidiaries as parties to each such lease or
agreement is in violation or breach of or default under any such lease
or agreement except such violations, breaches or defaults which,
individually, or in the aggregate, do not and would not have a
Material Adverse Effect on IUC. Furthermore, all real and tangible
personal property of each of IUC and the IUC Subsidiaries is in
generally good repair and is operational and usable in the manner in
which it is currently being utilized, subject to normal wear and tear
and technical obsolescence, repair or replacement.
(m) Insurance. IUC maintains policies of insurance in amounts and in
respect of such risks as are normal and usual for companies of a
similar size operating in the mining industry and such policies are in
full force and effect as of the date hereof and are listed in
paragraph 3.02(m) of the IUC Disclosure Letter.
(n) Environmental.
40
Other than as disclosed in paragraph 3.02(n) of the IUC Disclosure
Letter:
(i) each of IUC and the IUC Subsidiaries has operated in material
compliance with all applicable Environmental Laws, except to the
extent that a failure to be in such compliance would not be
reasonably likely to have a Material Adverse Effect on IUC;
(ii) the IUC Properties have not been used to generate, manufacture,
refine, treat, recycle, transport, store, handle, dispose,
transfer, produce or process Hazardous Substances, except in
compliance in all material respects with all Environmental Laws
and except to the extent that such non-compliance would not have
a Material Adverse Effect on IUC. None of IUC, the IUC
Subsidiaries or, to the knowledge of IUC, any other person in
control of any IUC Property has caused or permitted the Release
of any Hazardous Substances at, in, on, under or from any IUC
Property, except in material compliance, individually or in the
aggregate, with all Environmental Laws and except to the extent
that such failure would not have a Material Adverse Effect on
IUC. All Hazardous Substances handled, recycled, disposed of,
treated or stored on or off site of the IUC Properties have been
handled, recycled, disposed of, treated and stored in material
compliance with all Environmental Laws, except to the extent that
same would not be reasonably likely to have a Material Adverse
Effect on IUC. To the knowledge of IUC, there are no Hazardous
Substances at, in, on, under or migrating from the IUC
Properties, except in material compliance with all Environmental
Laws and except to the extent that any failures to be in
compliance does not and would not have a Material Adverse Effect
on IUC;
(iii) to the knowledge of IUC, none of IUC, the IUC Subsidiaries or
any other person for whose actions IUC or an IUC Subsidiary may
be partially or wholly liable has caused or permitted the Release
of any Hazardous Substances on or to any of the IUC Properties in
such a manner as: (i) would be reasonably likely to impose
Liability for cleanup, natural resource damages, loss of life,
personal injury, nuisance or damage to other property, except to
the extent that such Liability would not have a Material Adverse
Effect on IUC; or (ii) would be reasonably likely to result in
imposition of a lien, charge or other encumbrance or the
expropriation of any of
41
the IUC Properties or the assets of any of IUC or the IUC
Subsidiaries;
(iv) to the knowledge of IUC, none of IUC, the IUC Subsidiaries or any
other person for whose actions IUC or an IUC Subsidiary may be
partially or wholly liable, has caused or permitted the Release
of any Hazardous Substances on or to any of the IUC Properties in
such a manner as (i) would be reasonably likely to impose
Liability for clean up, natural resource damages, loss of life,
personal injury, nuisance or damage to other property, except to
the extent that such Liability does not and would not have a
Material Adverse Effect on IUC; or (ii) would be reasonably
likely to result in imposition of an Encumbrance or the
expropriation of any of the Icelane Properties or the assets of
any of IUC or the IUC Subsidiaries;
(v) none of the IUC Properties has or is required to have any deed
notices or restrictions, institutional controls, covenants that
run with the land or other restrictive covenants or notices
arising under any Environmental Laws, except as required by
license or permit;
(vi) none of IUC or the IUC Subsidiaries has received any notice,
formal or informal, of any proceeding, action or other claim,
Liability or potential Liability arising under any Environmental
Laws, from any person or Governmental Entity related to any of
the IUC Properties which is pending as of the date hereof, except
to the extent same, individually or in the aggregate, does not
and would not have a Material Adverse Effect on IUC;
(vii) IUC has made available to Denison a copy of all material
environmental or occupational health and safety audits, orders,
prosecutions, evaluations, assessments, tests, reports and
studies prepared by third parties that are related to any of the
IUC Properties which are in the possession of IUC or any of the
IUC Subsidiaries.
(o) Operational Matters. Except as does not and would not have a Material
Adverse Effect on IUC:
(i) All rentals, royalties, overriding royalty interests, production
payments net profits, interest burdens and other payments due and
payable, and obligations (including maintenance obligations for
unpatented mining claims) performable, on or prior to the date
hereof under or with respect to the direct or
42
indirect assets of IUC or the IUC Subsidiaries have been properly
and duly paid, performed or provided for;
(ii) All mines and mining related activities where IUC or an IUC
Subsidiary is operator at the relevant time have been developed
and operated in accordance with good mining practices and in
compliance with all applicable Laws;
(iii) All mines located in or on the lands of IUC or any IUC
Subsidiary or lands pooled or unitized therewith, which have been
abandoned by IUC or any IUC Subsidiary have been developed,
managed and abandoned in accordance with good mining practices
and in compliance with all applicable Laws; and
(iv) All future abandonment, remediation and reclamation obligations
have been accurately disclosed publicly by IUC without omission
of information that would result in a Misrepresentation.
(p) Tax Matters. IUC and the IUC Material Subsidiaries have filed or
caused to be filed, in a timely manner all Tax Returns required to be
filed by them (all of which Tax Returns were correct and complete in
all material respects) and have paid, collected, withheld or remitted,
or caused to be paid, collected, withheld or remitted, all Taxes that
are due and payable, collectible and remittable, except, in either
case where such failure to file or to pay, collect, withhold or remit
would not have a Material Adverse Effect on IUC. IUC has provided
adequate accruals in accordance with Canadian GAAP in its most
recently published consolidated financial statements for any Taxes for
the period covered by such financial statements which have not been
paid, whether or not shown as being due on any Tax Returns. Since such
publication date, no material liability for Taxes not reflected in
such consolidated financial statements or otherwise provided for has
been assessed, proposed to be assessed, incurred or accrued other than
in the ordinary course of business. To the knowledge of IUC, there are
no material proposed (but unassessed) additional Taxes and none have
been asserted by the Canada Revenue Agency or any other taxing
authority, including, without limitation, any sales tax authority, in
connection with any of the Tax Returns referred to above, and no
waiver of any statute of limitations has been given or requested with
respect to IUC or any of the IUC Subsidiaries. No lien for Taxes has
been filed or exists other than for Taxes not yet due and payable.
Neither IUC nor any affiliate of IUC has taken or agreed to take any
action (without regard to any action taken or agreed to be taken by
43
Denison or any affiliate of Denison) or knows of any circumstances
that would prevent the Arrangement from qualifying as a reorganization
within the meaning of Section 368(a) of the Code.
(q) Intellectual Property. Neither IUC nor the IUC Subsidiaries own or
license any patents, patent rights, trademarks, trade names, service
marks, copyrights, know how or other proprietary intellectual property
rights that are material to the conduct of the business of IUC and the
IUC Subsidiaries other than such trade names, service marks and/or
copyrights as may exist at law or by usage in respect of their use in
the context of the business of IUC.
(r) Pension and Employee Benefits.
(i) IUC and the IUC Subsidiaries have complied, in all material
respects, with all of the terms of the pension and other employee
compensation and benefit obligations of IUC and the IUC
Subsidiaries, as the case may be, including the provisions of any
collective agreements, funding and investment contracts or
obligations applicable thereto, arising under or relating to each
of the pension or retirement income plans or other employee
compensation or benefit plans, agreements, policies, programs,
arrangements or practices, whether written or oral, which are
maintained by or binding upon IUC or the IUC Subsidiaries, as the
case may be (collectively referred to in this subsection as the
"IUC Plans") and all IUC Plans maintained by or binding upon IUC
or any of the IUC Subsidiaries are fully funded and in good
standing with such regulatory authorities as may be applicable
and no notice of underfunding, non-compliance, failure to be in
good standing or otherwise has been received by IUC or any of the
IUC Subsidiaries from any such regulatory authority.
(ii) No action has been taken, no event has occurred and no condition
or circumstance exists that has resulted in or could reasonably
be expected to result in any IUC Plan maintained by or binding
upon IUC or any of the IUC Subsidiaries, being ordered or
required to be terminated or wound up in whole or in part or
having its registration under applicable legislation refused or
revoked, or being placed under the administration of any trustee
or receiver or regulatory authority.
(iii) IUC and the IUC Subsidiaries have complied, and currently are in
compliance with, the applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA"), the
Code and all other applicable laws
44
with respect to each IUC Plan (whether or not subject to ERISA)
maintained by IUC or any of the IUC Subsidiaries for the benefit
of any United States employee, former employee, independent
contractor or director of IUC or any of the IUC Subsidiaries
(including, without limitation, any employment agreements or any
pension, savings, profit-sharing, bonus, medical, insurance,
disability, severance, executive compensation, fringe benefit,
incentive, stock option, performance pay, loan or loan guarantee,
plant closing, change of control, equity-based or deferred
compensation plans), except where such non-compliance has not
given and would not give rise to a Material Adverse Effect.
(iv) Each IUC Plan intended to qualify under Section 401 of the Code
has received a determination letter from the IRS to the effect
that it is so qualified and each trust maintained pursuant
thereto is exempt from federal income taxation under Section 501
of the Code, and nothing has occurred with respect to the
operation of such IUC Plans that would cause the loss of such
qualification or exemption or the imposition of any liability,
penalty or tax under ERISA or the Code,
(v) Neither IUC nor any of the IUC Subsidiaries, nor any ERISA
Affiliate of IUC has maintained, adopted or established,
contributed or been required to contribute to, or otherwise
participated in or been required to participate in, any employee
benefit plan or other program or arrangement subject to Title IV
of ERISA (including without limitation, a Multi-Employer Plan) or
any plan otherwise subject to the minimum funding standards of
Section 302 of ERISA or Section 412 of the Code (a "Title IV
Plan"). "ERISA Affiliate" shall mean any other entity that,
together with IUC would be treated as a single employer under
Section 414 of the Code. Neither IUC nor any of the IUC
Affiliates has any liability (contingent or otherwise) under
Section 4069 of ERISA by reason of a transfer of an underfunded
Title IV Plan.
(s) Reporting Status. IUC is a reporting issuer in the province of
Ontario. The IUC Common Shares are listed on the TSX.
(t) Reports. (i) Since January 1, 2004, IUC has filed with the Securities
Authorities in Ontario, the TSX, and all applicable self-regulatory
authorities, all forms, reports, schedules, statements,
certifications, material change reports and other documents required
to be filed by it (such forms, reports, schedules, statements,
certifications and other documents, including any
45
financial statements or other documents, including any schedules
included therein, are referred to in this subsection as the "IUC
Documents"). The IUC Documents, at the time filed or, if amended, as
of the date of such amendment (a) did not contain any
Misrepresentation and did not contain an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements made, in light of the circumstances under which
they were made, not misleading, and (b) complied in all material
respects with the requirements of applicable securities legislation
and the rules, policies and instruments of all Securities Authorities
having jurisdiction over IUC, except where such non-compliance has not
and would not reasonably be expected to have a Material Adverse Effect
on IUC. IUC has not filed any confidential material change or other
report or other document with any Securities Authorities or stock
exchange or other self-regulatory authority which at the date hereof
remains confidential.
(ii) The IUC Common Shares are registered under Section 12(g) of the
1934 Act, and IUC has filed with the SEC all of its reports and other
documents required to be filed by IUC with or furnished by IUC to the
SEC pursuant to the 1934 Act since October 1, 2003 (collectively, the
"IUC SEC Documents"). Each of the IUC SEC Documents, at the time filed
or furnished or, if amended, as of the date of such amendment,
complied in all material respects with the requirements of the 1934
Act and the rules and regulations of the SEC thereunder and did not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
(u) Compliance with Laws. IUC and the IUC Material Subsidiaries have
complied with all applicable Laws in all material respects and are not
in material violation of any applicable Law.
(v) No Cease Trade. IUC is not subject to any cease trade or other order
of any applicable stock exchange or Securities Authority and, to the
knowledge of IUC, no investigation or other proceedings involving IUC
which may operate to prevent or restrict trading of any securities of
IUC or affect the ability of the parties hereto to complete the
Arrangement are currently in progress or pending before any applicable
stock exchange or Securities Authority.
(w) No Option on Assets. No person has any agreement or option or any
right or privilege capable of becoming an agreement or option for the
purchase from IUC or the IUC Material Subsidiaries of any of the
material assets of IUC or any of the IUC Material Subsidiaries.
46
(x) Certain Contracts. Other than as set out in paragraph 3.02(x) of the
IUC Disclosure Letter, neither IUC nor any of the IUC Subsidiaries is
a party to or bound by any non-competition agreement or any other
agreement, obligation, judgment, injunction, order or decree which
purports to (i) limit the manner or the localities in which all or any
material portion of the business of IUC or the IUC Subsidiaries are
conducted, (ii) limit any business practice of IUC or any IUC
Subsidiary in any material respect, or (iii) restrict any acquisition
or disposition of any property by IUC or any IUC Subsidiary in any
material respect.
(y) Location of Assets and U.S. Sales. IUC is its own "ultimate parent
entity" (as defined in 16 C.F.R. Section 801.1(a)(3)) and IUC,
together with all entities controlled (as defined in 16 C.F.R. Section
801.1(b)) by it (a) did not for the fiscal year ended September 30,
2005 have aggregate sales in or into the United States of US$56.7
million or more, or (b) does not, and as of the Effective Time will
not, hold assets located in the United States having an aggregate
total value of US$56.7 million, (this representation and warranty
being made solely for the purpose of determining the applicability of
the notification provisions of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended, of the United States of America
to the transactions contemplated by this Agreement).
(z) Foreign Private Issuer. As of the date hereof, IUC is a "foreign
private issuer" as defined in Rule 405 under the 1933 Act and Rule
3b-4 under the 1934 Act.
(aa) Investment Company Status. IUC is not an "investment company" and is
not "controlled" by an investment company, within the meaning of the
1940 Act.
(bb) Full Disclosure. IUC has made available to Denison all material
information, including financial, operational and other information,
in respect of IUC and the IUC Subsidiaries and all such information as
made available to IUC and IUC Subco is true and correct in all
material respects and no material fact or facts have been omitted
therefrom which would make such information misleading.
(cc) No Broker's Commission. IUC has not entered into any agreement that
would entitle any person to any valid claim against IUC for a broker's
commission, finder's fee or any like payment in respect of the
Arrangement or any other matter contemplated by this Agreement, except
for the fees disclosed in paragraph 3.02(cc) of the IUC Disclosure
Letter.
47
(dd) Investment Canada. IUC is not a "non-Canadian" within the meaning of
the Investment Canada Act (Canada).
(ee) Shares. The IUC Common Shares to be issued pursuant to the Arrangement
will, upon issue, be issued as fully paid and non-assessable shares.
(ff) IUC Subco. Since the date of its incorporation, IUC Subco has carried
on no business, acquired no properties, entered into no agreements
other than this Agreement and has assumed or become subject to no
obligations or Liabilities other than those obligations and
Liabilities relating to this Agreement.
(gg) Internal Control Procedures. IUC maintains a system of internal
controls over financial reporting that complies with the requirements
therefor set forth under the 1934 Act and the regulation of the SEC
thereunder. IUC has established and maintains disclosure controls and
procedures (as defined in Rule 13(a)-15(c) under the 1934 Act). IUC
has disclosed in its annual report on Form 20-F for the fiscal year
ended September 30, 2005 any change in IUC's internal control over
financial reporting that occurred during the fiscal year ended
September 30, 2005 that materially affected, or was reasonably likely
to materially affect, IUC's internal control over financial reporting
for the fiscal year ended September 30, 2005. IUC's principal
executive officer and principal financial officer have disclosed,
based on their evaluation of internal control over financial reporting
for the fiscal year ended September 30, 2005, to IUC's auditors and
the audit committee of IUC's board of directors; (A) all significant
deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which were reasonably likely
to adversely affect IUC's ability to record, process, summarize and
report financial information; and (B) any fraud, whether or not
material, that involved management or other employees who had a
significant role in IUC's internal control over financial reporting.
(hh) Sarbanes Oxley Act. IUC is in compliance in all material respects with
all of the provisions of the Sarbanes Oxley Act that are currently
applicable to IUC and has no reason to believe that it will not be
able to comply with the requirements of Section 404 under the Sarbanes
Oxley Act and the related rules and regulations thereunder ("Section
404") as of the date by which it is required to comply with Section
404.
SECTION 3.03 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in this Agreement
48
shall survive the execution and delivery of this Agreement and shall expire and
be terminated and extinguished on the Effective Date. Any investigation by IUC,
IUC Subco or Denison and their respective advisors shall not mitigate, diminish
or affect the representations and warranties contained in this Agreement.
ARTICLE 4
COVENANTS
SECTION 4.01 COVENANTS OF DENISON
Subject to Section 6.01, Denison hereby covenants and agrees with IUC
and IUC Subco as follows:
(a) Interim Order. As soon as practicable, Denison jointly with IUC Subco
shall file, proceed with and diligently prosecute an application to
the Court for the Interim Order as provided in Section 2.05 hereof on
terms and conditions acceptable to Denison, IUC and IUC Subco, acting
reasonably.
(b) Proceedings. In a timely and expeditious manner, Denison shall take
all such actions and do all such acts and things as are specified in
the Interim Order, the Plan of Arrangement and the Final Order to be
taken or done by Denison.
(c) Denison Meeting. In a timely and expeditious manner, Denison shall:
(i) forthwith carry out such terms of the Interim Order as are
required under the terms thereof to be carried out by Denison;
(ii) prepare with the assistance of IUC, and file the Denison Proxy
Circular (which shall be in a form satisfactory to IUC, acting
reasonably), together with any other documents required by
applicable Laws, in all jurisdictions where the Denison Proxy
Circular is required to be filed and mail the Denison Proxy
Circular, as ordered by the Interim Order and in accordance with
all applicable Laws, in and to all jurisdictions where the
Denison Proxy Circular is required to be mailed, complying in all
material respects with all applicable Laws on the date of the
mailing thereof and shall ensure that the Denison Proxy Circular
does not contain any Misrepresentation or any untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which
they are made (other than with respect to any information
relating to
49
and provided by IUC or IUC Subco). Without limiting the
generality of the foregoing, Denison shall ensure that the
Denison Proxy Circular complies with National Instrument 51-102
"Continuous Disclosure Requirements" and Form 51-102F5 thereunder
adopted by the Canadian Securities Administrators and provides
Denison Securityholders with information in sufficient detail to
permit them to form a reasoned judgment concerning the matters to
be placed before them at the Denison Meeting;
(iii) convene the Denison Meeting as soon as practicable, and use its
commercially reasonable efforts to convene the Denison Meeting no
later than November 30, 2006 or such later date as may be
mutually agreed upon with IUC, as provided in the Interim Order
and solicit proxies to be voted at the Denison Meeting in favour
of the Arrangement;
(iv) with the assistance of IUC and IUC Subco, diligently do all such
acts and things as may be necessary to comply, in all material
respects, with National Instrument 54-101 of the Canadian
Securities Administrators in relation to the Denison Meeting;
(v) provide notice to IUC of the Denison Meeting and allow
representatives of IUC to attend the Denison Meeting;
(vi) conduct the Denison Meeting in accordance with the Interim Order,
the OBCA, the by-laws of Denison and as otherwise required by
applicable Laws; and
(vii) take all such actions as may be required under the OBCA in
connection with the transactions contemplated by this Agreement
and the Plan of Arrangement.
(d) Adjournment. Denison shall not adjourn, postpone or cancel the Denison
Meeting (or propose to do so), except (i) if a quorum is not present
at the Denison Meeting, (ii) if required by applicable Laws, (iii) if
required by the Denison Securityholders, or (iv) except as
contemplated by Section 5.04 hereof.
(e) Amendments to Denison Proxy Circular. In a timely and expeditious
manner, Denison shall prepare (in consultation with IUC) and file
amendments or supplements to the Denison Proxy Circular (which
amendments or supplements shall be in a form satisfactory to IUC,
acting reasonably) required by applicable Laws or as otherwise agreed
between Denison and IUC with respect to the Denison Meeting and mail
such amendments or supplements,
50
as required by the Interim Order and in accordance with all applicable
Laws, in and to all jurisdictions where such amendments or supplements
are required to be mailed, complying in all material respects with all
applicable Laws on the date of the mailing thereof.
(f) Final Order. Subject to the approval of the Arrangement at the Denison
Meeting in accordance with the provisions of the Interim Order, the
approval of the IUC Shareholder Approval Matters at the IUC Meeting
and the receipt of all other necessary approvals of Governmental
Entities and third parties, Denison shall jointly with IUC Subco
forthwith file, proceed with and diligently prosecute an application
for the Final Order as provided in Section 2.05 hereof, which
application shall be in form and substance satisfactory to the parties
hereto, acting reasonably.
(g) Filing Final Order. Denison shall forthwith carry out the terms of the
Interim Order and the Final Order and, following the issue of the
Final Order and the satisfaction, fulfillment or waiver of the
conditions in favour of Denison, IUC and IUC Subco set forth herein,
at a time and on a date to be agreed by IUC and Denison, file the
Final Order and any other required documents with the Director in
order for the Arrangement to become effective.
(h) Information for IUC Proxy Circular. In a timely and expeditious
manner, Denison shall provide to IUC all information as may be
reasonably requested by IUC or applicable Laws with respect to Denison
and its businesses and properties for inclusion in the IUC Proxy
Circular or in any amendment or supplement to the IUC Proxy Circular
which complies in all material respects with all applicable Laws on
the date of the mailing thereof and containing all material facts
relating to Denison required to be disclosed in the IUC Proxy Circular
and not containing any Misrepresentation with respect thereto. Denison
shall fully cooperate with IUC in the preparation of the IUC Proxy
Circular and shall provide such assistance as IUC may reasonably
request in connection therewith.
(i) Amendments. In a timely and expeditious manner, Denison shall provide
IUC with information as requested by IUC in order to prepare any
amendments or supplements to the IUC Proxy Circular (which amendments
or supplements shall be in a form satisfactory to Denison, acting
reasonably) with respect to the IUC Meeting.
(j) Copy of Documents. Except for proxies and other non-substantive
communications, Denison shall furnish promptly to IUC a copy of each
notice, report, schedule or other document or communication delivered,
filed or received by Denison in connection with this Agreement, the
Arrangement, the Interim Order or the Denison
51
Meeting or any other meeting at which all Denison Shareholders are
entitled to attend relating to special business, any filings made
under any applicable Law and any dealings or communications with any
Governmental Entity, Securities Authority or stock exchange in
connection with, or in any way affecting, the transactions
contemplated by this Agreement.
(k) Usual Business. Other than in contemplation of or as required to give
effect to the transactions contemplated by this Agreement, and other
than as disclosed in paragraph 4.01(k) of the Denison Disclosure
Letter, Denison shall, and shall cause the Denison Subsidiaries to,
conduct business only in, and not take any action except in, the
ordinary course of business and consistent with past practice.
(l) Certain Actions Prohibited. Other than as disclosed in paragraph
4.01(l) of the Denison Disclosure Letter, or in contemplation of or as
required to give effect to the transactions contemplated by this
Agreement, Denison shall not, without the prior written consent of
IUC, which consent shall not be unreasonably withheld or delayed,
directly or indirectly do or permit to occur any of the following:
(i) issue, sell, pledge, lease, dispose of, encumber or create any
Encumbrance on or agree to issue, sell, pledge, lease, dispose
of, or encumber or create any Encumbrance on, or permit a Denison
Subsidiary to issue, sell, pledge, lease, dispose of, encumber or
create any Encumbrance on or agree to issue, sell, pledge, lease,
dispose of, or encumber or create any Encumbrance on, any shares
of, or any options, warrants, calls, conversion privileges or
rights of any kind to acquire any shares of, Denison or any of
the Denison Subsidiaries, other than the issue of Denison Common
Shares pursuant to the exercise of the Denison Options or the
Denison Warrants issued and outstanding on the date hereof in
accordance with their terms as of the date hereof;
(ii) other than pursuant to obligations or rights under existing
contracts, agreements and commitments (to the extent such rights
are exercised or initiated by other persons), sell, lease or
otherwise dispose of, or permit any of the Denison Subsidiaries
to sell, lease or otherwise dispose of, any property or assets or
enter into any agreement or commitment in respect of any of the
foregoing;
(iii) amend or propose to amend the articles or by-laws (or their
equivalent) of Denison or any of the Denison Subsidiaries or any
of the terms of the Denison Options other than as
52
provided herein or the Denison Warrants as they exist at the date
of this Agreement;
(iv) split, combine or reclassify any of the Denison Common Shares or
any of the shares of the Denison Subsidiaries, or declare, set
aside or pay any dividend or other distribution payable in cash,
securities, property or otherwise with respect to the Denison
Common Shares;
(v) redeem, purchase or offer to purchase, or permit any of the
Denison Subsidiaries to redeem, purchase or offer to purchase,
any Denison Common Shares and, other than pursuant to the Denison
Warrants or the Denison Share Option Plan, any options or
obligations or rights under existing contracts, agreements and
commitments;
(vi) reorganize, amalgamate or merge Denison or any of the Denison
Subsidiaries with any other person;
(vii) acquire or agree to acquire any corporation or other entity (or
material interest therein) or division of any corporation or
other entity, or permit any of the Denison Subsidiaries to
acquire or agree to acquire any corporation or other entity (or
material interest therein) or division of any corporation or
other entity;
(viii) in the case of Denison and the Denison Subsidiaries: (A)
satisfy or settle any claim or dispute, except such as have been
included in the consolidated financial statements of Denison
delivered to IUC and IUC Subco, which are, individually or in the
aggregate, in an amount in excess of $500,000 or which
constitutes a claim between Denison and a Denison Subsidiary or
between Denison Subsidiaries; (B) relinquish any contractual
rights which are, individually or in the aggregate, in an amount
in excess of $500,000; or (C) enter into any interest rate,
currency or commodity swaps, hedges, caps, collars, forward sales
or other similar financial instruments other than in the ordinary
and regular course of business and not for speculative purposes;
(ix) incur, authorize, agree or otherwise become committed to provide
guarantees for borrowed money or incur, authorize, agree or
otherwise become committed for any indebtedness for borrowed
money, or permit any of the Denison Subsidiaries to incur,
authorize, agree or otherwise become committed to provide
guarantees for borrowed money or incur, authorize, agree or
otherwise become committed for
53
any indebtedness for borrowed money which, are, individually or
in the aggregate, in an amount in excess of $500,000;
(x) except as required by Canadian GAAP, any other generally accepted
accounting principle to which any Denison Subsidiary may be
subject or any applicable Law, make any changes to the existing
accounting practices of Denison or make any material tax election
inconsistent with past practice; or
(xi) enter into, or cause any Denison Subsidiaries to enter into, new
commitments of a capital expenditure nature or incur any new
contingent liabilities other than (A) ordinary course
expenditures; and (B) expenditures required by law; and (C)
expenditures made in connection with transactions contemplated in
this Agreement.
(m) Employment Arrangements. Without the prior written consent of IUC,
such consent not to be unreasonably withheld or delayed Denison shall
not, and shall cause the Denison Subsidiaries not to, enter into or
modify any employment, consulting, severance, collective bargaining or
similar agreement, policy or arrangement with, or grant any bonus,
salary increase, option to purchase shares, pension or supplemental
pension benefit, profit sharing, retirement allowance, deferred
compensation, incentive compensation, severance, change of control or
termination pay to, or make any loan to, any officer, director,
employee or consultant of Denison or any of the Denison Subsidiaries.
(n) Insurance. Denison shall use its commercially reasonable best efforts,
and shall cause the Denison Subsidiaries to use their commercially
reasonable best efforts, to cause their respective current insurance
(or reinsurance) policies not to be cancelled or terminated or any of
the coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies underwritten
by insurance and re-insurance companies of internationally recognized
standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
(o) Certain Actions. Denison shall:
(i) subject to the rights of Denison and Denison's directors under
Article 6, not take any action, or refrain from taking any action
(subject to commercially reasonable best efforts),
54
or permit any action to be taken or not taken, inconsistent with
the provisions of this Agreement or which would reasonably be
expected to materially impede the completion of the transactions
contemplated hereby or which would or could have a Material
Adverse Effect on Denison, provided that Denison may take any
such action or refrain from taking such action (subject to
commercially reasonable best efforts) in order to comply with and
carry out the transactions contemplated by this Agreement,
provided Denison immediately notifies IUC in writing of such
circumstances; and
(ii) promptly notify IUC of (A) any Material Adverse Change or
Material Adverse Effect, or any change, event, occurrence or
state of facts which could reasonably be expected to become a
Material Adverse Change or to have a Material Adverse Effect, in
respect of the business or in the conduct of the business of
Denison, (B) any material Governmental Entity or third person
complaints, investigations or hearings (or communications
indicating that the same may be contemplated), (C) any breach by
Denison of any covenant or agreement contained in this Agreement,
(D) any event occurring subsequent to the date hereof that would
render any representation or warranty of Denison contained in
this Agreement, if made on or as of the date of such event or the
Effective Date, to be untrue or inaccurate in any material
respect, and (E) Dension shall promptly notify IUC if at any time
before or after the Effective Date it becomes aware that either
the Denison Proxy Circular or the IUC Proxy Circular, or any
application for an order hereunder contains any Misrepresentation
or any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the
circumstances in which they are made, or that otherwise requires
an amendment or supplement to the applicable proxy circular or
such application.
(p) No Compromise. Denison shall not, and shall cause the Denison
Subsidiaries not to, settle or compromise any claim brought by any
present, former or purported holder of any securities of Denison in
connection with the transactions contemplated by this Agreement prior
to the Effective Time without the prior written consent of IUC, such
consent not to be unreasonably withheld or delayed.
(q) Contractual Obligations. Denison shall not, and shall cause the
Denison Subsidiaries not to, enter into or modify in any respect any
55
Denison Material Contract, except insofar as may be necessary to
permit or provide for the completion of the Arrangement.
(r) Satisfaction of Conditions. Subject to Section 6.01 hereof, Denison
shall use all commercially reasonable best efforts to satisfy, or
cause to be satisfied, all conditions precedent to its obligations
hereunder to the extent that the same is within its control and to
take, or cause to be taken, all other action and to do, or cause to be
done, all other things necessary, proper or advisable under all
applicable Laws to complete the transactions contemplated by this
Agreement, including using its commercially reasonable best efforts
to:
(i) subject to the fiduciary obligations of the directors of Denison,
obtain the approval of Denison Securityholders for the
Arrangement in accordance with the provisions of the OBCA, the
Interim Order and the requirements of any applicable regulatory
authority;
(ii) obtain the Competition Act Approval, if required and all other
consents, approvals and authorizations as are required to be
obtained by Denison or any of the Denison Subsidiaries under any
applicable Law or from any Governmental Entity which would, if
not obtained, materially impede the completion of the
transactions contemplated by this Agreement or have a Material
Adverse Effect on Denison, all as contemplated in Section
3.01(c);
(iii) effect all necessary registrations, filings and submissions of
information requested by Governmental Entities required to be
effected by it in connection with the transactions contemplated
by this Agreement and participate and appear in any proceedings
of any party hereto before any Governmental Entity;
(iv) oppose, lift or rescind any injunction or restraining order or
other order or action challenging or affecting this Agreement,
the transactions contemplated hereby or seeking to stop, or
otherwise adversely affecting the ability of the parties hereto
to consummate, the transactions contemplated hereby;
(v) obtain all other waivers, consents and approvals from other
parties to agreements, leases or other contracts required to be
obtained by Denison or a Denison Subsidiary to consummate the
transactions contemplated hereby which would, if not obtained,
materially impede the completion of
56
the transactions contemplated by this Agreement or have a
Material Adverse Effect on Denison;
(vi) fulfill all conditions and satisfy all provisions of this
Agreement and the Plan of Arrangement required to be fulfilled or
satisfied by Denison; and
(vii) cooperate with IUC and IUC Subco in connection with the
performance by each of them of their respective obligations
hereunder, provided however that the foregoing shall not be
construed to obligate Denison to pay or cause to be paid any
monies to cause such performance to occur.
(s) Keep Fully Informed. Denison shall use commercially reasonable best
efforts to conduct itself so as to keep IUC fully informed as to the
material decisions or actions required or required to be made with
respect to the operation of its business.
(t) Cooperation. Denison shall make, or cooperate as necessary in the
making of, all necessary filings and applications under all applicable
Laws required in connection with the transactions contemplated hereby
and take all reasonable action necessary to be in compliance with such
Laws.
(u) Representations. Denison shall use its commercially reasonable best
efforts to conduct its affairs and to cause the Denison Subsidiaries
to conduct their affairs so that all of the representations and
warranties of Denison contained herein shall be true and correct on
and as of the Effective Date as if made on and as of such date.
(v) Denison Options and Denison Warrants. Denison shall take all corporate
action necessary to ensure that on the Effective Date all of the
outstanding Denison Options and Denison Warrants provide only for the
issuance of IUC Common Shares upon the due exercise thereof, on the
basis of 2.88 IUC Common Shares for each one Denison Common Share to
which a holder of a Denison Option or Denison Warrant was previously
entitled on the Effective Date, together with any adjustments to the
exercise price necessary or advisable under the terms of the Denison
Share Option Plan and the indentures governing the Denison Warrants.
(w) Closing Documents. Denison shall execute and deliver, or cause to be
executed and delivered, at the closing of the transactions
contemplated hereby, such customary agreements, certificates,
resolutions, opinions and other closing documents as may be
57
required by the other parties hereto, all in form satisfactory to the
other parties hereto, acting reasonably.
(x) U.S. Tax Matters. Denison shall not, and shall cause its affiliates to
not, knowingly take any action that (without regard to any action
taken or agreed to be taken by IUC or any affiliate of IUC) would
prevent the Arrangement from qualifying as a reorganization within the
meaning of Section 368(a) of the Code.
Notwithstanding the foregoing provisions of this Section 4.01, Denison
and its board of directors shall be permitted to take such actions and refrain
from taking such actions as they see fit to fulfill the fiduciary obligations of
the board of directors in respect of any Denison Superior Proposal.
SECTION 4.02 COVENANTS OF IUC AND IUC SUBCO
Subject to Section 6.04, each of IUC and IUC Subco hereby covenants
and agrees with Denison as follows:
(a) Interim Order. As soon as practicable, IUC Subco jointly with Denison
shall file, proceed with and diligently prosecute an application to
the Court for the Interim Order as provided in Section 2.05 on terms
and conditions acceptable to Denison, IUC and IUC Subco, acting
reasonably.
(b) Proceedings. In a timely and expeditious manner, IUC and IUC Subco
shall take all such actions and do all such acts and things as are
specified in the Interim Order, the Plan of Arrangement (including
issuing the IUC Common Shares contemplated pursuant to Section 3.01 of
the Plan of Arrangement) and the Final Order to be taken or done by
IUC and IUC Subco, as applicable.
(c) IUC Meeting. In a timely and expeditious manner, IUC shall:
(i) forthwith carry out such terms of the Interim Order as are
required under the terms thereof to be carried out by IUC;
(ii) prepare with the assistance of Denison, and file the IUC Proxy
Circular (which shall be in a form satisfactory to Denison,
acting reasonably), together with any other documents required by
applicable Laws, in all jurisdictions where the IUC Proxy
Circular is required to be filed and mail the IUC Proxy Circular
in accordance with all applicable Laws, in and to all
jurisdictions where the IUC Proxy Circular is required to be
mailed, complying in all material respects with all applicable
Laws on the date of the mailing thereof and shall ensure that the
IUC Proxy Circular does not contain any Misrepresentation or any
untrue statement of a
58
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements contained
therein not misleading in light of the circumstances in which
they are made (other than with respect to any information
relating to and provided by Denison). Without limiting the
generality of the foregoing, IUC shall ensure that the IUC Proxy
Circular complies with National Instrument 51-102 "Continuous
Disclosure Requirements" and Form 51-102F5 thereunder adopted by
the Canadian Securities Administrators and provides IUC
Shareholders with information in sufficient detail to permit them
to form a reasoned judgment concerning the matters to be placed
before them at the IUC Meeting;
(iii) convene the IUC Meeting as soon as practicable, and use its
commercially reasonable efforts to convene the IUC Meeting no
later than November 30, 2006 or such later date as may be
mutually agreed upon with Denison and solicit proxies to be voted
at the IUC Meeting in favour of the IUC Shareholder Approval
Matters;
(iv) with the assistance of Denison, IUC shall diligently do all such
acts and things as may be necessary to comply, in all material
respects, with National Instrument 54-101 of the Canadian
Securities Administrators in relation to the IUC Meeting;
(v) provide notice to Denison of the IUC Meeting and allow
representatives of Denison to attend the IUC Meeting;
(vi) conduct the IUC Meeting in accordance with the OBCA, the by-laws
of IUC and as otherwise required by applicable Laws; and
(vii) take all such actions as may be required under the OBCA in
connection with the transactions contemplated by this Agreement.
(d) Adjournment. IUC shall not adjourn, postpone or cancel the IUC Meeting
(or propose to do so), except (i) if a quorum is not present at the
IUC Meeting, (ii) if required by applicable Laws, (iii) if required by
the IUC Shareholders, or (iv) except as contemplated by Section 5.04
hereof.
(e) Amendments to IUC Proxy Circular. In a timely and expeditious manner,
IUC shall prepare, (in consultation with Denison), and file amendments
or supplements to the IUC Proxy Circular (which
59
amendments or supplements shall be in a form satisfactory to Denison,
acting reasonably) required by applicable Laws or as otherwise agreed
between IUC and Denison with respect to the IUC Meeting and mail such
amendments or supplements, as required in accordance with all
applicable Laws, in and to all jurisdictions where such amendments or
supplements are required to be mailed, complying in all material
respects with all applicable Laws on the date of the mailing thereof.
(f) Information for Denison Proxy Circular. In a timely and expeditious
manner, IUC and IUC Subco shall provide to Denison all information as
may be reasonably requested by Denison or as required by the Interim
Order or applicable Laws with respect to IUC and IUC Subco and their
respective businesses and properties for inclusion in the Denison
Proxy Circular or in any amendment or supplement to the Denison Proxy
Circular which complies in all material respects with all applicable
Laws on the date of the mailing thereof and containing all material
facts relating to IUC and IUC Subco required to be disclosed in the
Denison Proxy Circular and not containing any Misrepresentation with
respect thereto. IUC shall fully cooperate with Denison in the
preparation of the Denison Proxy Circular and shall provide such
assistance as Denison may reasonably request in connection therewith.
(g) Amendments. In a timely and expeditious manner, IUC and IUC Subco
shall provide Denison with information as requested by Denison in
order to prepare any amendments or supplements to the Denison Proxy
Circular (which amendments or supplements shall be in a form
satisfactory to IUC, acting reasonably) with respect to the Denison
Meeting in accordance with the Interim Order of the Court.
(h) Final Order. Subject to the approval of the Arrangement at the Denison
Meeting in accordance with the provisions of the Interim Order, the
approval of the IUC Shareholder Approval Matters and the receipt of
all other necessary approvals of Governmental Entities and third
parties, IUC Subco shall jointly with Denison forthwith file, proceed
with and diligently prosecute an application for the Final Order,
which application shall be in a form and substance satisfactory to the
parties hereto, acting reasonably, as provided in Section 2.05.
(i) Copy of Documents. Except for proxies and other non-substantive
communications, IUC and IUC Subco shall furnish promptly to Denison a
copy of each notice, report, schedule or other document or
communication delivered, filed or received by IUC or IUC Subco in
connection with the Arrangement or the Interim Order, any filing
60
under any applicable Law and any dealings or communications with any
Governmental Entity, Securities Authority or stock exchange in
connection with, or in any way affecting, the transactions
contemplated by this Agreement.
(j) Usual Business. Other than in contemplation of or as required to give
effect to the transactions contemplated by this Agreement, IUC shall,
and shall cause the IUC Material Subsidiaries to, conduct business
only in, and not take any action except in, the ordinary course of
business and consistent with past practice.
(k) Certain Actions Prohibited. Other than in contemplation of or as
required to give effect to the transactions contemplated by this
Agreement, IUC shall not, without the prior written consent of
Denison, which consent shall not be unreasonably withheld or delayed,
directly or indirectly do or permit to occur any of the following:
(i) other than as disclosed in paragraph 4.02(k) of the IUC
Disclosure Letter, issue, sell, pledge, lease, dispose of,
encumber or create any Encumbrance on or agree to issue, sell,
pledge, lease, dispose of, or encumber or create any Encumbrance
on, or permit an IUC Material Subsidiary to issue, sell, pledge,
lease, dispose of, encumber or create any Encumbrance on or agree
to issue, sell, pledge, lease, dispose of, or encumber or create
any Encumbrance on, any shares of, or any options, warrants,
calls, conversion privileges or rights of any kind to acquire any
shares of, IUC or any of the IUC Material Subsidiaries, other
than the issue of IUC Common Shares pursuant to the exercise of
the IUC Options issued and outstanding on the date hereof in
accordance with their terms as of the date hereof;
(ii) other than pursuant to obligations or rights under existing
contracts, agreements and commitments (to the extent such rights
are exercised or initiated by other persons), sell, lease or
otherwise dispose of, or permit any of the IUC Material
Subsidiaries to sell, lease or otherwise dispose of, any property
or assets or enter into any agreement or commitment in respect of
any of the foregoing;
(iii) amend or propose to amend the articles or by-laws (or their
equivalent) of IUC or any of the IUC Material Subsidiaries or any
of the terms of the IUC Options as they exist at the date of this
Agreement;
61
(iv) split, combine or reclassify any of the shares of IUC or any of
the IUC Material Subsidiaries, or declare, set aside or pay any
dividend or other distribution payable in cash, securities,
property or otherwise with respect to the shares of IUC;
(v) redeem, purchase or offer to purchase, or permit any of the IUC
Material Subsidiaries to redeem, purchase or offer to purchase,
any IUC Common Shares and, other than pursuant to the IUC Share
Option Plan or any options or obligations or rights under
existing contracts, agreements and commitments;
(vi) reorganize, amalgamate or merge IUC or any of the IUC Material
Subsidiaries with any other person;
(vii) acquire or agree to acquire any corporation or other entity (or
material interest therein) or division of any corporation or
other entity, or permit any of the IUC Material Subsidiaries to
acquire or agree to acquire any corporation or other entity (or
material interest therein) or division of any corporation or
other entity;
(viii) in the case of IUC and the IUC Subsidiaries: (A) satisfy or
settle any claim or dispute, except such as have been included in
the consolidated financial statements of IUC delivered to
Denison, which are, individually or in the aggregate, in an
amount in excess of $500,000 or which constitutes a claim between
IUC and an IUC Subsidiary or between IUC Subsidiaries; (B)
relinquish any contractual rights which are, individually or in
the aggregate, in an amount in excess of $500,000; or (C) enter
into any interest rate, currency or commodity swaps, hedges,
caps, collars, forward sales or other similar financial
instruments other than in the ordinary and regular course of
business and not for speculative purposes;
(ix) incur, authorize, agree or otherwise become committed to provide
guarantees for borrowed money or incur, authorize, agree or
otherwise become committed for any indebtedness for borrowed
money, or permit any of the IUC Subsidiaries to incur, authorize,
agree or otherwise become committed to provide guarantees for
borrowed money or incur, authorize, agree or otherwise become
committed for any indebtedness for borrowed money which, are,
individually or in the aggregate, in an amount in excess of
$500,000;
62
(x) except as required by Canadian GAAP, any other generally accepted
accounting principle to which any IUC Subsidiary may be subject
or any applicable Law, make any changes to the existing
accounting practices of IUC or make any material tax election
inconsistent with past practice; or
(xi) other than as disclosed in paragraph 4.02(k)(xi) of the IUC
Disclosure Letter, enter into, or cause any IUC Subsidiaries to
enter into, new commitments of a capital expenditure nature or
incur any new contingent liabilities other than (A) ordinary
course expenditures; (B) expenditures required by law; and (C)
expenditures made in connection with transactions contemplated in
this Agreement or as otherwise disclosed in the IUC Disclosure
Letter.
(l) Employment Arrangements. Without the prior written consent of Denison,
such consent not to be unreasonably, withheld or delayed, IUC shall
not, and shall cause the IUC Subsidiaries not to, enter into or modify
any employment, consulting, severance, collective bargaining or
similar agreement, policy or arrangement with, or grant any bonus,
salary increase, option to purchase shares, pension or supplemental
pension benefit, profit sharing, retirement allowance, deferred
compensation, incentive compensation, severance, change of control or
termination pay to, or make any loan to, any officer, director,
employee or consultant of IUC or any of the IUC Subsidiaries.
(m) Insurance. IUC shall use its commercially reasonable best efforts, and
shall cause the IUC Subsidiaries to use their commercially reasonable
best efforts, to cause their respective current insurance (or
reinsurance) policies not to be cancelled or terminated or any of the
coverage thereunder to lapse, unless simultaneously with such
termination, cancellation or lapse, replacement policies underwritten
by insurance and re-insurance companies of internationally recognized
standing providing coverage equal to or greater than the coverage
under the cancelled, terminated or lapsed policies for substantially
similar premiums are in full force and effect.
(n) Certain Actions. IUC and IUC Subco shall:
(i) not take any action, or refrain from taking any action (subject
to commercially reasonable best efforts), or permit any action to
be taken or not taken, inconsistent with the provisions of this
Agreement or which would reasonably be expected to materially
impede the completion of the transactions contemplated hereby or
which would or could
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have a Material Adverse Effect on IUC, provided that IUC or IUC
Subco may take any such action or refrain from taking such action
(subject to commercially reasonable best efforts) in order to
comply with and carry out the transactions contemplated by this
Agreement, provided they immediately notify Denison in writing of
such circumstances; and
(ii) promptly notify Denison of (A) any Material Adverse Change or
Material Adverse Effect, or any change, event, occurrence or
state of facts which could reasonably be expected to become a
Material Adverse Change or to have a Material Adverse Effect, in
respect of the business or in the conduct of the business of IUC,
(B) any material Governmental Entity or third person complaints,
investigations or hearings (or communications indicating that the
same may be contemplated), (C) any breach by IUC or IUC Subco of
any covenant or agreement contained in this Agreement, (D) any
event occurring subsequent to the date hereof that would render
any representation or warranty of IUC or IUC Subco contained in
this Agreement, if made on or as of the date of such event or the
Effective Date, to be untrue or inaccurate in any material
respect, and (E) IUC shall promptly notify Denison if at any time
before or after the Effective Date it becomes aware that either
the IUC Proxy Circular or the Denison Proxy Circular, or any
application for an order hereunder contains any Misrepresentation
or any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make
the statements contained therein not misleading in light of the
circumstances in which they are made, or that otherwise requires
an amendment or supplement to the applicable proxy circular or
such application.
(o) No Compromise. IUC shall not, and shall cause the IUC Material
Subsidiaries not to, settle or compromise any claim brought by any
present, former or purported holder of any securities of IUC in
connection with the transactions contemplated by this Agreement prior
to the Effective Time without the prior written consent of Denison.
(p) Contractual Obligations. IUC shall not, and shall cause the IUC
Subsidiaries not to, enter into or modify in any respect any IUC
Material Contract, except insofar as may be necessary to permit or
provide for the completion of the Arrangement.
(q) Satisfaction of Conditions. Subject to Section 6.01 hereof, IUC and
IUC Subco shall use all commercially reasonable best efforts to
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satisfy, or cause to be satisfied, all of the conditions precedent to
their obligations hereunder to the extent the same is within their
control and to take, or cause to be taken, all other actions and to
do, or cause to be done, all other things necessary, proper or
advisable under all applicable Laws to complete the transactions
contemplated by this Agreement, including using their commercially
reasonable best efforts to:
(i) subject to the fiduciary obligations of the directors of IUC,
obtain the approval of IUC Shareholders for the IUC Shareholder
Approval Matters;
(ii) obtain the Competition Act Approval, if required, any allowances
or approvals or deemed allowances or approvals by the responsible
Minister under the Investment Canada Act, as applicable and all
consents, approvals and authorizations as are required to be
obtained by IUC or any of the IUC Subsidiaries under any
applicable Law or from any Governmental Entity which would, if
not obtained, materially impede the completion of the
transactions contemplated hereby or have a Material Adverse
Effect on IUC, all as contemplated in Section 3.02(d);
(iii) effect all necessary registrations, filings and submissions of
information requested by Governmental Entities required to be
effected by them in connection with the transactions contemplated
by this Agreement and participate, and appear in any proceedings
of, any party hereto before any Governmental Entity;
(iv) oppose, lift or rescind any injunction or restraining order or
other order or action challenging or affecting this Agreement,
the transactions contemplated hereby or seeking to stop, or
otherwise adversely affecting the ability of the parties hereto
to consummate, the transactions contemplated hereby;
(v) obtain all other waivers, consents and approvals from other
parties to agreements, leases or other contracts required to be
obtained by IUC, an IUC Subsidiary or IUC Subco to consummate the
transactions contemplated hereby which would, if not obtained,
materially impede the completion of the transactions contemplated
by this Agreement or have a Material Adverse Effect on IUC;
(vi) fulfill all conditions and satisfy all provisions of this
Agreement and the Plan of Arrangement required to be fulfilled or
satisfied by them; and
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(vii) cooperate with Denison in connection with the performance by
Denison of its obligations hereunder, provided however that the
foregoing shall not be construed to obligate IUC to pay or cause
to be paid any monies to cause such performance to occur.
(r) Keep Fully Informed. IUC shall use commercially reasonable best
efforts to conduct itself so as to keep Denison fully informed as to
the material decisions or actions required or required to be made with
respect to the operation of its business.
(s) Cooperation. IUC and IUC Subco shall make, or cooperate as necessary
in the making of, all necessary filings and applications under all
applicable Laws required in connection with the transactions
contemplated hereby and take all reasonable action necessary to be in
compliance with such Laws.
(t) Representations. IUC and IUC Subco shall use commercially reasonable
best efforts to conduct their affairs and to cause the IUC Material
Subsidiaries to conduct their affairs so that all of the
representations and warranties of IUC and IUC Subco contained herein
shall be true and correct on and as of the Effective Date as if made
on and as of such date.
(u) Closing Documents. IUC and IUC Subco shall execute and deliver, or
cause to be executed and delivered at the closing of the transactions
contemplated hereby such customary agreements, certificates, opinions,
resolutions and other closing documents as may be required by Denison,
all in form satisfactory to Denison, acting reasonably.
(v) U.S. Tax Matters. Neither IUC nor any affiliate of IUC shall knowingly
take any action that (without regard to any action taken or agreed to
be taken by Denison or any affiliate of Denison) would prevent the
Arrangement from qualifying as a reorganization within the meaning of
Section 368(a) of the Code.
(w) PFIC. With respect to each year, if any, that IUC is a "passive
foreign investment company" under Section 1297 of the Code, IUC shall
provide to all U.S. shareholders all information that a U.S.
shareholder making a "qualified electing fund" election (as defined in
the Code) is required to obtain for U.S. federal income tax purposes
and a "PFIC Annual Information Statement" as described in U.S.
Treasury Regulation Section 1.1295-1 (or any successor U.S. Treasury
Regulation) including all representations and statements required by
such statement, and will take any other
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steps necessary to facilitate such election by U.S. shareholders of
IUC.
Notwithstanding the foregoing provisions of this 4.02, IUC and its
board of directors shall be permitted to take such actions and refrain from
taking such actions as they see fit to fulfill the fiduciary obligations of the
board of directors in respect of any IUC Superior Proposal.
SECTION 4.03 DENISON OPTIONS
(a) IUC covenants and agrees that the Denison Share Option Plan and
agreements thereunder pursuant to which the Denison Options have been
granted, shall continue in effect on the same terms and conditions
(subject to the adjustments required after giving effect to the
Arrangement including without limitation, that such Denison Options
shall in accordance with the Plan of Arrangement be exercisable for
IUC Common Shares on the basis of 2.88 IUC Shares for each one Denison
Share, together with an adjustment to the exercise price).
(b) IUC shall take all corporate action necessary to reserve for issuance
a sufficient number of IUC Common Shares for delivery upon the
exercise of the Denison Options assumed in accordance with this
section.
SECTION 4.04 DENISON WARRANTS
IUC covenants and agrees that it will execute, if, as and when and to
the extent applicable, agreements by which it will, on the Effective Date,
assume the obligations of Denison to perform and observe the Denison Warrants in
accordance with their respective terms and shall take all corporate action
necessary to reserve for issuance a sufficient number of IUC Common Shares for
delivery upon exercise of the Denison Warrants referred to therein (subject to
the adjustments required after giving effect to the Arrangement on the basis of
2.88 IUC Shares for each one Denison Share, together with an adjustment to the
exercise price, if required).
SECTION 4.05 INDEMNIFICATION AND INSURANCE
(a) IUC hereby covenants and agrees that all rights to indemnification or
exculpation in favour of the current and former directors and officers
of Denison and the other Denison Subsidiaries provided in the current
articles or by-laws of Denison or any Denison Subsidiaries, or in any
agreement, and any directors' and officers' insurance now existing in
favour of the directors or officers of Denison and any other Denison
Subsidiary shall survive the completion of the Arrangement (or be
replaced with substantially equivalent coverage from another provider)
and shall continue in
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full force and effect (either directly or via run-off insurance or
insurance provided by an alternative provider) for a period of not
less than six years from the Effective Date and IUC undertakes to
ensure that this covenant shall remain binding upon its successor and
assigns.
(b) IUC shall act as agent and trustee of the benefits of the foregoing
for its directors and officers and those of the IUC Subsidiaries for
the purpose of this Section 4.05 and this Section 4.05 shall survive
the execution and delivery of this Agreement and the completion of the
Arrangement and shall be enforceable against IUC by the persons
described in subsection (a) hereof.
SECTION 4.06 EMPLOYEE SERVICE AND VESTING
With respect to any benefit plans or stock option plans maintained by
IUC for which service and/or vesting are a factor, IUC agrees to recognize each
Affected Employee's credited service of vesting period under similar plans of
Denison or its Subsidiaries. "Affected Employees" mean individuals who are
actively employed by Denison or any of its Subsidiaries as of the Effective Time
and who remain employed with Denison immediately following the Effective Time.
ARTICLE 5
CONDITIONS
SECTION 5.01 MUTUAL CONDITIONS
The respective obligations of Denison, IUC and IUC Subco to complete
the transactions contemplated herein are subject to the fulfillment of the
following conditions at or before the Effective Time or such other time as is
specified below:
(a) the Interim Order shall have been granted in form and substance
satisfactory to the parties hereto, acting reasonably, and shall not
have been set aside or modified in a manner unacceptable to the
parties hereto, acting reasonably, on appeal or otherwise;
(b) the Arrangement and, if required, all other material transactions
contemplated herein or necessary to complete the Arrangement, with or
without amendment, shall have been approved at the Denison Meeting by
the Denison Securityholders and IUC Shareholder Approval Matters shall
have been approved at the IUC Meeting by the IUC Shareholders in
accordance with the provisions of the OBCA, the Interim Order and the
requirements of any applicable regulatory authority, as the case may
be;
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(c) the Final Order shall have been granted in form and substance
satisfactory to the parties hereto, acting reasonably, and shall not
have been set aside or modified in a manner unacceptable to such
parties, acting reasonably, on appeal or otherwise;
(d) the Articles of Arrangement shall be in form and substance
satisfactory to the parties hereto, acting reasonably;
(e) the Articles of Amendment of IUC to change the name of IUC to "Denison
Mines Ltd." or such other name containing the word "Denison" as may be
approved by the directors of each of IUC and Denison shall be in form
and substance to the parties hereto, acting reasonably;
(f) there shall not be in force any Law, ruling, order or decree, and
there shall not have been any action taken under any Law or by any
Governmental Entity or other regulatory authority, that makes it
illegal or otherwise directly or indirectly restrains, enjoins or
prohibits the consummation of the Arrangement in accordance with the
terms hereof or results or could reasonably be expected to result in a
judgment, order, decree or assessment of damages, directly or
indirectly, relating to the Arrangement which has, or would have a
Material Adverse Effect on Denison or IUC;
(g) (A) the TSX shall have conditionally approved the listing thereon,
subject to official notice of issuance, of the IUC Common Shares to be
issued pursuant to the Arrangement (including the IUC Common Shares
which, as a result of the Arrangement, are issuable upon the exercise
of the Denison Options and the Denison Warrants) as of the Effective
Date, or as soon as possible thereafter, and (B) the TSX shall have,
if required, accepted notice for filing of all transactions of Denison
contemplated herein or necessary to complete the Arrangement, subject
only to compliance with the usual requirements of the TSX;
(h) (A) all consents, waivers, permits, exemptions, orders and approvals
of, and any registrations and filings with, any Governmental Entity
and the expiry of any waiting periods, in connection with, or required
to permit, the completion of the Arrangement, and (B) all third person
and other consents, waivers, permits, exemptions, orders, approvals,
agreements and amendments and modifications to agreements, indentures
or arrangements (including those contemplated in paragraph 5.01 of the
Denison Disclosure Letter), the failure of which to obtain or the
non-expiry of which would have a Material Adverse Effect on Denison,
IUC or IUC Subco or materially impede the completion of
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the Arrangement, shall have been obtained or received on terms that
are reasonably satisfactory to each party hereto;
(i) all actions shall have been taken to provide that, upon the
effectiveness of the Arrangement, the board of IUC shall be composed
of five of the current directors of IUC and five persons designated by
Denison,
(j) the IUC Common Shares to be issued in the United States pursuant to
the Arrangement shall be exempt from registration requirements under
Section 3(a)(10) of the 1933 Act (as well as any IUC Common Shares to
be issued as contemplated in Sections 4.03 and 4.04) and the IUC
Common Shares to be distributed in the United States pursuant to the
Arrangement (as well as any IUC Common Shares to be distributed as
contemplated in Sections 4.03 and 4.04) and shall not be subject to
resale restrictions in the United States under the 1933 Act other than
as may be prescribed by Rule 144 and Rule 145 under the 1933 Act);
(k) the IUC Common shares to be issued pursuant to the Arrangement shall
be exempt from the prospectus and registration requirements of
applicable Canadian securities laws and shall not be subject to a
statutory hold period; and
(l) this Agreement shall not have been terminated pursuant to Article 7
hereof.
The foregoing conditions are for the mutual benefit of the parties
hereto and may be waived by mutual consent of IUC, IUC Subco and Denison in
writing at any time. If any of such conditions shall not be complied with or
waived as aforesaid on or before the Completion Deadline or, if earlier, the
date required for the performance thereof, then, subject to Section 5.04 hereof,
any party hereto may terminate this Agreement by written notice to the others of
them in circumstances where the failure to satisfy any such condition is not the
result, directly or indirectly, of a breach of this Agreement by such rescinding
party hereto.
SECTION 5.02 DENISON CONDITIONS
The obligation of Denison to complete the transactions contemplated
herein is subject to the fulfillment of the following additional conditions at
or before the Effective Date or such other time as is specified below:
(a) the representations and warranties made by IUC and IUC Subco in this
Agreement which are qualified by the expression "Material Adverse
Change" or "Material Adverse Effect" shall be true and correct as of
the Effective Date as if made on and as of such date (except to the
extent that such representations and warranties
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speak as of an earlier date, in which event such representations and
warranties shall be true and correct as of such earlier date), and all
other representations and warranties made by IUC and IUC Subco in this
Agreement shall be true and correct in all material respects as of the
Effective Date as if made on and as of such date (except to the extent
that such representations and warranties speak as of an earlier date,
in which event such representations and warranties shall be true and
correct as of such earlier date), in either case, except where any
failures or breaches of representations and warranties would not
either individually or in the aggregate, in the reasonable judgment of
Denison, have a Material Adverse Effect on IUC, and IUC shall have
provided to Denison a certificate of two officers thereof, and IUC
Subco shall have provided to Denison a certificate of an officer
thereof, certifying such accuracy or lack of Material Adverse Effect
on the Effective Date. No representation or warranty made by IUC
hereunder shall be deemed not to be true and correct if the facts or
circumstances which make such representation or warranty untrue or
incorrect are disclosed or referred to in the IUC Disclosure Letter,
or provided for or stated to be exceptions under this Agreement;
(b) from the date of this Agreement to the Effective Date, there shall not
have occurred, and IUC or any of the IUC Subsidiaries shall not have
incurred or suffered, any one or more changes, effects, events,
occurrences or states of facts that, either individually or in the
aggregate, have, or would have a Material Adverse Effect on IUC;
(c) each of IUC and IUC Subco shall have complied in all material respects
with their covenants herein and IUC shall have provided to Denison a
certificate of two officers thereof, and IUC Subco shall have provided
to Denison a certificate of an officer thereof, certifying that, as of
the Effective Date, they have so complied with their covenants herein;
(d) Denison Shareholders holding no more than 5% of the outstanding
Denison Common Shares shall have exercised the right to dissent
contemplated by Section 5.01 of the Plan of Arrangement (and not
withdrawn such exercise);
(e) the directors of IUC and IUC Subco shall have adopted all necessary
resolutions and all other necessary corporate action shall have been
taken by IUC and IUC Subco to permit the consummation of the
Arrangement and the issuance of a maximum 102,000,000 IUC Common
Shares pursuant to the Arrangement and the change of name of IUC to
"Denison Mines Ltd." or such
71
other name containing the word "Denison" as may be approved by the
directors of each of IUC and Denison; and
(f) the directors of IUC shall not have withdrawn or modified in a manner
adverse to Denison their approval or recommendation to IUC
Shareholders of the transaction contemplated hereby.
The foregoing conditions are for the benefit of Denison and may be
waived, in whole or in part, by Denison in writing at any time. If any of such
conditions shall not be complied with or waived by Denison on or before the
Completion Deadline or, if earlier, the date required for the performance
thereof, then, subject to Section 5.04 hereof, Denison may terminate this
Agreement by written notice to IUC and IUC Subco in circumstances where the
failure to satisfy any such condition is not the result, directly or indirectly,
of a breach of this Agreement by Denison.
SECTION 5.03 IUC AND IUC SUBCO CONDITIONS
The obligation of IUC and IUC Subco to complete the transactions
contemplated herein is subject to the fulfillment of the following additional
conditions at or before the Effective Date or such other time as is specified
below:
(a) the representations and warranties made by Denison in this Agreement
which are qualified by the expression "Material Adverse Change" or
"Material Adverse Effect" shall be true and correct as of the
Effective Date as if made on and as of such date (except to the extent
that such representations and warranties speak as of an earlier date,
in which event such representations and warranties shall be true and
correct as of such earlier date), and all other representations and
warranties made by Denison in this Agreement which are not so
qualified shall be true and correct in all material respects as of the
Effective Date as if made on and as of such date (except to the extent
that such representations and warranties speak as of an earlier date,
in which event such representations and warranties shall be true and
correct as of such earlier date), in either case, except where any
failures or breaches of representations and warranties would not
either individually or in the aggregate, in the reasonable judgment of
IUC, have a Material Adverse Effect on Denison, and Denison shall have
provided to each of IUC and IUC Subco a certificate of two officers
thereof certifying such accuracy or lack of Material Adverse Effect on
the Effective Date. No representation or warranty made by Denison
hereunder shall be deemed not to be true and correct if the facts or
circumstances which make such representation or warranty untrue or
incorrect are disclosed or referred to in the Denison Disclosure
Letter, or provided for or stated to be exceptions under this
Agreement;
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(b) from the date of this Agreement to the Effective Date, there shall not
have occurred, and Denison or any of the Denison Subsidiaries shall
not have incurred or suffered, any one or more changes, effects,
events, occurrences or states of facts that, either individually or in
the aggregate, have, or would have a Material Adverse Effect on
Denison;
(c) Denison shall have complied in all material respects with its
covenants herein and Denison shall have provided to each of IUC and
IUC Subco a certificate of two officers thereof certifying that, as of
the Effective Date, Denison has so complied with its covenants herein;
(d) Denison Shareholders holding no more than 5% of the outstanding
Denison Common Shares shall have exercised the right to dissent
contemplated by Section 5.01 of the Plan of Arrangement (and not
withdrawn such exercise) and IUC shall have received a certificate
dated the day immediately preceding the Effective Date of two officers
of Denison to such effect, provided that the officers may rely upon
representations of Denison's transfer agent or other scrutineer of the
Denison Meeting in making such certification;
(e) the directors of Denison and each of the Denison Subsidiaries shall
have adopted all necessary resolutions and all other necessary
corporate action shall have been taken by Denison and the Denison
Subsidiaries to permit the consummation of the Arrangement; and
(f) the directors of Denison shall not have withdrawn or modified in a
manner adverse to IUC their approval or recommendation to Denison
Securityholders of the transaction contemplated hereby.
The foregoing conditions are for the benefit of IUC and IUC Subco and may be
waived, in whole or in part, by IUC and IUC Subco in writing at any time. If any
of such conditions shall not be complied with or waived by IUC and IUC Subco on
or before the Completion Deadline or, if earlier, the date required for the
performance thereof, then, subject to Section 5.04 hereof, IUC and IUC Subco may
terminate this Agreement by written notice to Denison in circumstances where the
failure to satisfy any such condition is not the result, directly or indirectly,
of a breach of this Agreement by IUC or IUC Subco.
SECTION 5.04 NOTICE AND CURE PROVISIONS
Each party hereto shall give prompt notice to the others of them of
the occurrence, or failure to occur, at any time from the date hereof until the
Effective Date, of any event or state of facts which occurrence or failure would
be likely to or could:
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(a) cause any of the representations or warranties of such party hereto
contained herein to be untrue or inaccurate in any respect on the date
hereof or on the Effective Date;
(b) result in the failure to comply with or satisfy any covenant or
agreement to be complied with or satisfied by such party hereto on or
prior to the Effective Date; or
(c) result in the failure to satisfy any of the conditions precedent in
favour of the other parties hereto contained in Section 5.01, Section
5.02 or Section 5.03 hereof, as the case may be.
Subject as herein provided, a party hereto may (a) elect not to complete the
transactions contemplated hereby by virtue of the conditions contained in
Section 5.01, Section 5.02 or Section 5.03 hereof not being satisfied or waived
or (b) exercise any termination right arising therefrom; provided, however, that
(i) promptly and in any event prior to the filing of the Articles of Arrangement
and/or the Articles of Amendment with the Director, the party hereto intending
to rely thereon has delivered a written notice to the other parties hereto
specifying in reasonable detail the breaches of covenants or untruthfulness or
inaccuracy of representations and warranties or other matters which the party
hereto delivering such notice is asserting as the basis for the exercise of the
termination right, as the case may be, and (ii) if any such notice is delivered,
and a party hereto is proceeding diligently, at its own expense, to cure such
matter, if such matter is susceptible of being cured, the party hereto which has
delivered such notice may not terminate this Agreement until the earlier of the
Completion Deadline and the expiration of a period of 15 days from date of
delivery of such notice. If such notice has been delivered prior to the date of
the Denison Meeting, the Denison Meeting shall be adjourned or postponed until
the expiry of such period. If such notice has been delivered prior to the date
of the IUC Meeting, the IUC Meeting shall be adjourned or postponed until the
expiry of such period.
ARTICLE 6
NON-SOLICITATION AND BREAK-UP FEE
SECTION 6.01 DENISON COVENANT REGARDING NON-SOLICITATION
(a) Denison shall not, directly or indirectly, through any officer,
director, employee, representative, advisor or agent of Denison or any
of the Denison Subsidiaries, or otherwise:
(i) make, solicit, initiate, facilitate, entertain, encourage or
promote (including by way of furnishing information or entering
into any form of agreement, arrangement or understanding) any
inquiries or proposals regarding, constituting or that may
reasonably be expected to lead to a Denison Acquisition Proposal;
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(ii) participate, directly or indirectly, in any discussions or
negotiations regarding, or furnish to any person any information
or otherwise co-operate with, respond to, assist or participate
in, any Denison Acquisition Proposal;
(iii) agree to, approve or recommend, or propose publicly to agree to,
approve or recommend any Denison Acquisition Proposal;
(iv) accept, enter into, or propose publicly to accept or enter into,
any agreement, understanding or arrangement related to any
Denison Acquisition Proposal;
(v) make any public announcement or take any other action
inconsistent with, or which could reasonably be likely to be
regarded as detracting from, the recommendation of the directors
of Denison to approve the Arrangement contemplated hereby,
provided, however, that, notwithstanding the preceding part of this
Section 6.01(a), but subject to the following provisions of Article 6
of this Agreement, nothing shall prevent or restrict the directors of
Denison from, prior to the approval of the Arrangement by Denison
Shareholders, considering or negotiating any unsolicited bona fide
Denison Acquisition Proposal that would be a Denison Superior Proposal
or, in the event of a bona fide Denison Acquisition Proposal that
would be a Denison Superior Proposal, from withdrawing, modifying,
qualifying or changing its recommendation to the Denison Shareholders
in respect of the Arrangement contemplated hereby or from approving,
recommending to the Denison Shareholders or entering into an agreement
in respect of a Denison Superior Proposal from any person in
accordance with the provisions of the following subsections of this
Article 6 but in each case only if (A) the Denison Acquisition
Proposal did not result from a breach of this Agreement by Denison,
(B) the directors of Denison determine in good faith after consulting
with outside counsel (which may include written opinions or advice,
copies of which shall have been provided to IUC) that such action is
required for such directors to comply with their fiduciary duties
under applicable Law.
(b) Other than as disclosed in paragraph 6.01(b) of the Denison Disclosure
Letter, Denison shall immediately cease and cause to be terminated any
solicitation, encouragement, activity, discussion or negotiation with
any parties that may be ongoing with respect to any proposal that
constitutes, or may reasonably be expected to constitute, a Denison
Acquisition Proposal whether or not initiated
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by Denison and in connection therewith, Denison shall request (and
exercise all rights it has to require) the return of information
regarding Denison and the Denison Subsidiaries previously provided to
such parties and shall request (and exercise all rights it has to
require) the destruction of all materials including or incorporating
any confidential information regarding Denison and the Denison
Subsidiaries. Denison agrees not to release any third party from any
confidentiality agreement relating to a potential Denison Acquisition
Proposal to which such third party is a party. Denison further agrees
not to release any third party from any standstill agreement or
provision to which such third party is a party.
(c) Within 24 hours of the receipt by any director or officer of Denison
of any Denison Acquisition Proposal, or any amendment to the
foregoing, or any request for non-public information relating to
Denison or any of the Denison Subsidiaries in connection with any
potential Denison Acquisition Proposal or for access to the
properties, books or records of Denison or any of the Denison
Subsidiaries by any person that informs Denison or any of the Denison
Subsidiaries that it is considering making, or has made, a Denison
Acquisition Proposal, Denison shall notify IUC thereof, at first
orally and then, as soon as possible thereafter, in writing. Such
written notice shall include the identity of the person(s) making such
proposal and all material terms and conditions of the Denison
Acquisition Proposal and provide such other details of the Denison
Acquisition Proposal, inquiry or contact as IUC may reasonably
request. Denison shall keep IUC fully informed on a prompt basis of
the status, including any change to the material terms, or any such
proposal or request.
(d) If Denison receives a request for material non-public information from
a person who is considering making or has made a bona fide Denison
Acquisition Proposal (the existence and content of which have been
disclosed to IUC), and the directors of Denison determine that such
proposal would be, if consummated in accordance with its terms, a
Denison Superior Proposal or does constitute a Denison Superior
Proposal and Denison is permitted, subject to and as contemplated
under this Section 6.01 then, and only in such case, the directors of
Denison may, subject to the execution of a confidentiality agreement
on terms which are not more favourable to the person making or
considering making the Denison Acquisition Proposal than those set
forth in the Confidentiality Agreement and providing for a standstill
agreement other than to effect a Denison Superior Proposal, provide
such person with access to information regarding Denison; provided,
however, that the person who is considering making the Denison
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Acquisition Proposal shall not be precluded thereunder from making the
Denison Acquisition Proposal, and provided further that Denison sends
a copy of any such confidentiality agreement to IUC immediately upon
the execution thereof and IUC is provided with a list of or a copy of
the information, if any, provided to such person that was not
previously provided to IUC and IUC is immediately provided with access
to similar information.
(e) Denison shall ensure that its officers, directors and employees and
any financial advisors or other advisors or representatives retained
by Denison are aware of the provisions of this Section 6.01, and
Denison shall be responsible for any material breach of this Section
6.01 by its financial advisors or other advisors or representatives.
(f) Nothing in the Agreement shall be interpreted to extend to acts or
omissions of any person acting in his capacity as a director of
Denison or otherwise to fetter the proper exercise of discretion by
such person. Without limitation nothing in this Section 6.01 shall
preclude Denison from providing information or otherwise responding to
an unsolicited proposal with respect to a Denison Acquisition Proposal
if to do so would, in the opinion of the board of directors of
Denison, acting reasonably, be a proper exercise of the directors'
fiduciary duties.
SECTION 6.02 NOTICE OF DENISON SUPERIOR PROPOSAL DETERMINATION
Denison and the directors of Denison shall not accept, approve,
recommend or enter into any agreement in respect of a Denison Acquisition
Proposal (other than a confidentiality agreement and a standstill agreement
contemplated by Section 6.01(d) hereof) on the basis that it would constitute a
Denison Superior Proposal, unless (i) Denison has complied with its obligations
under Section 6.01 and the other provisions of this Article 6, (ii) it has
provided IUC with the information about such Denison Acquisition Proposal as
required under Section 6.01(b) which the directors of Denison have determined
would be a Denison Superior Proposal pursuant to Section 6.01(a) hereof; and
(iii) two Business Days shall have elapsed from the later of the date IUC
received notification of the determination of the directors of Denison to
accept, approve, recommend or enter into an agreement in respect of such Denison
Superior Proposal and the date IUC received the documents pursuant to Section
6.01(b) hereof.
SECTION 6.03 DENISON BREAK FEE EVENT
In the event that any of the following occurs:
(a) this Agreement is terminated by IUC and IUC Subco pursuant to Section
7.03(d);
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(b) this Agreement is terminated by IUC pursuant to Section 7.03(b)
including without limitation, due to Denison having breached its
obligations under Section 6.01 or Section 6.02; and/or
(c) this Agreement is terminated by Denison pursuant to Section 7.03(i);
or
(d) a Denison Acquisition Proposal shall have been made to Denison and
made known to Denison Shareholders generally or shall have been made
directly to Denison Shareholders generally or any person shall have
publicly announced an intention to make a Denison Acquisition Proposal
in respect of Denison (a "Pending Denison Acquisition Proposal") and
such Pending Denison Acquisition Proposal or announced intention shall
not have been publicly withdrawn prior to the Denison Meeting and,
thereafter, the Denison Shareholders do not approve the Arrangement at
the Denison Meeting, this Agreement is terminated by either IUC or
Denison pursuant to Section 7.03(e) hereof and Denison completes a
Denison Acquisition Proposal with the party or parties who announced
the Pending Denison Acquisition Proposal within nine months following
the termination of this Agreement,
then Denison shall pay to IUC in the circumstances set forth in Section
6.03(a), (b) or (c) above, at the time of the termination of this
Agreement, and, in the circumstances set forth in Section 6.03(d) above,
within five days following the completion of such Pending Denison
Acquisition Proposal, an amount in cash equal to $16.0 million, in
immediately available funds. Denison shall not be obligated to make more
than one payment pursuant to this Section 6.03. Denison hereby acknowledges
that the payment amount set out in this section is a payment of liquidated
damages which are a genuine pre-estimate of the damages which IUC will
suffer or incur as a result of the event giving rise to such damages and
the resultant non-completion of the Arrangement and are not penalties.
Denison hereby irrevocably waives any right it may have to raise as a
defence that any such liquidated damages are excessive or punitive. Upon
receipt of payment of the amount set out in this subsection by IUC, IUC
shall have no further claim against Denison in respect of the failure to
complete the Arrangement, provided that nothing herein shall preclude IUC
from seeking injunctive relief to restrain any breach or threatened breach
by Denison of any of its obligations hereunder or otherwise to obtain
specific performance without the necessity of posting a bond or security in
connection therewith.
SECTION 6.04 IUC COVENANT REGARDING NON-SOLICITATION
(a) IUC shall not, directly or indirectly, through any officer, director,
employee, representative, advisor or agent of IUC or any of the IUC
Material Subsidiaries, or otherwise:
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(i) make, solicit, initiate, facilitate, entertain, encourage or
promote (including by way of furnishing information or entering
into any form of agreement, arrangement or understanding) any
inquiries or proposals regarding, constituting or that may
reasonably be expected to lead to an IUC Acquisition Proposal;
(ii) participate, directly or indirectly, in any discussions or
negotiations regarding, or furnish to any person any information
or otherwise co-operate with, respond to, assist or participate
in, any IUC Acquisition Proposal;
(iii) agree to, approve or recommend, or propose publicly to agree to,
approve or recommend any IUC Acquisition Proposal;
(iv) accept, enter into, or propose publicly to accept or enter into,
any agreement, understanding or arrangement related to any IUC
Acquisition Proposal;
(v) make any public announcement or take any other action
inconsistent with, or which could reasonably be likely to be
regarded as detracting from, the recommendation of the directors
of IUC to approve the transactions contemplated hereto in Article
6,
provided, however, that, notwithstanding the preceding part of this
Section 6.04(a), but subject to the following provisions of Article 6
of this Agreement, nothing shall prevent or restrict the directors of
IUC from, prior to the approval of the Arrangement by IUC
Shareholders, considering or negotiating any unsolicited bona fide IUC
Acquisition Proposal that would be an IUC Superior Proposal or, in the
event of a bona fide IUC Acquisition Proposal that would be an IUC
Superior Proposal, from withdrawing, modifying, qualifying or changing
its recommendation to the IUC Shareholders in respect of the
Arrangement contemplated hereby, or from approving, recommending to
the IUC Shareholders or entering into an agreement in respect of an
IUC Superior Proposal from any person in accordance with the
provisions of the following subsections of this Article 6 but in each
case only if the IUC Acquisition Proposal did not result from a breach
of this Agreement by IUC and if the directors of IUC determine in good
faith after consulting with outside counsel (which may include written
opinions or advice, copies of which shall have been provided to
Denison) that such action is required for such directors to comply
with fiduciary duties under applicable law.
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(b) IUC represents and warrants that it has not entered into any
confidentiality agreements with any third parties since September 30,
2005 and it is not currently engaged in any discussions or
negotiations with any parties (other than Denison) in connection with
any proposal that constitutes, or may reasonably be expected to
constitute, an IUC Acquisition Proposal and it shall, and shall cause
the officers, directors, employees, representatives and agents of IUC
and the IUC Material Subsidiaries to, continue to not have discussions
or negotiations with any parties (other than Denison) with respect to
any proposal that constitutes, or may reasonably be expected to
constitute, an IUC Acquisition Proposal. IUC agrees not to release any
third party from any confidentiality agreement relating to a potential
IUC Acquisition Proposal to which such third party is a party. IUC
further agrees not to release any third party from any standstill
agreement or provision to which such third party is a party.
(c) Within 24 hours of the receipt by any director or officer of IUC of
any IUC Acquisition Proposal, or any amendment to the foregoing, or
any request for non-public information relating to IUC or any of the
IUC Material Subsidiaries in connection with any potential IUC
Acquisition Proposal or for access to the properties, books or records
of IUC or any of the IUC Material Subsidiaries by any person that
informs IUC or any of the IUC Material Subsidiaries that it is
considering making, or has made, an IUC Acquisition Proposal, IUC
shall notify Denison thereof, at first orally and then, as soon as
possible thereafter, in writing. Such written notice shall include the
identity of the person(s) making such proposal and all material terms
and conditions of the IUC Acquisition Proposal and provide such other
details of the IUC Acquisition Proposal, inquiry or contact as Denison
may reasonably request.
(d) If IUC receives a request for material non-public information from a
person who is considering making or has made a bona fide IUC
Acquisition Proposal (the existence and content of which have been
disclosed to Denison), and the directors of IUC determine that such
proposal would be, if consummated in accordance with its terms, an IUC
Superior Proposal or does constitute an IUC Superior Proposal and IUC
is permitted, subject to and as contemplated under this Section 6.04
then, and only in such case, the directors of IUC may, subject to the
execution of a confidentiality agreement on terms which are not more
favourable to the person making or considering making the IUC
Acquisition Proposal than those set forth in the Confidentiality
Agreement and providing for a standstill agreement other than to
effect an IUC Superior Proposal, provide such person with access to
information regarding IUC; provided, however, that the person who is
considering making the IUC
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Acquisition Proposal shall not be precluded thereunder from making the
IUC Acquisition Proposal, and provided further that IUC sends a copy
of any such confidentiality agreement to Denison immediately upon the
execution thereof and Denison is provided with a list of or a copy of
the information, if any, provided to such person that was not
previously provided to Denison and Denison is immediately provided
with access to similar information.
(e) IUC shall ensure that its officers, directors and employees and any
financial advisors or other advisors or representatives retained by
IUC are aware of the provisions of this Section 6.04, and IUC shall be
responsible for any material breach of this Section 6.04 by its
financial advisors or other advisors or representatives.
(f) Nothing in this Agreement shall be interpreted to extend to acts or
omissions of any person acting in his capacity as a director of IUC or
otherwise to fetter the proper exercise of discretion by such person.
Without limitation nothing in this Section 6.01 shall preclude IUC
from providing information or otherwise responding to an unsolicited
proposal with respect to an IUC Acquisition Proposal if to do so
would, in the opinion of the board of directors of IUC, acting
reasonably, be a proper exercise of the director's fiduciary duties.
SECTION 6.05 NOTICE OF IUC SUPERIOR PROPOSAL DETERMINATION
IUC and the directors of IUC shall not accept, approve, recommend or
enter into any agreement in respect of an IUC Acquisition Proposal
(other than a confidentiality agreement and a standstill agreement
contemplated by Section 6.04(d) hereof) on the basis that it would
constitute an IUC Superior Proposal, unless (i) IUC has complied with
its obligations under Section 6.04 and the other provisions of this
Article 6, (ii) it has provided Denison with the information about
such IUC Acquisition Proposal as required under Section 6.04(b) which
the directors of IUC have determined would be an IUC Superior Proposal
pursuant to Section 6.04(a) hereof; and (iii) two Business Days shall
have elapsed from the later of the date Denison received notification
of the determination of the directors of IUC to accept, approve,
recommend or enter into an agreement in respect of such IUC Superior
Proposal and the date Denison received the documents pursuant to
Section 6.04(b) hereof.
SECTION 6.06 IUC BREAK FEE EVENT
In the event that any of the following occurs:
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(a) this Agreement is terminated by Denison pursuant to Section 7.03(f);
(b) this Agreement is terminated by Denison pursuant to Section 7.03(b)
including without limitation, due to IUC having breached its
obligations under Section 6.03 or Section 6.04; and/or
(c) this Agreement is terminated by IUC pursuant to Section 7.03(j); or
(d) an IUC Acquisition Proposal shall have been made to IUC and made known
to IUC Shareholders generally or shall have been made directly to IUC
Shareholders generally or any person shall have publicly announced an
intention to make an IUC Acquisition Proposal in respect of IUC (a
"Pending IUC Acquisition Proposal") and such Pending IUC Acquisition
Proposal or announced intention shall not have been publicly withdrawn
prior to the IUC Meeting and, thereafter, the IUC Shareholders do not
approve the Arrangement at the IUC Meeting, this Agreement is
terminated by either Denison or IUC pursuant to Section 7.03(g) hereof
and IUC completes an IUC Acquisition Proposal with the party or
parties who announced the Pending IUC Acquisition Proposal within nine
months following the termination of this Agreement,
then IUC shall pay to Denison in the circumstances set forth in Section
6.06(a) or (b) above, at the time of the termination of this Agreement,
and, in the circumstances set forth in Section 6.06(c) above, within five
days following the completion of such Pending IUC Acquisition Proposal, an
amount in cash equal to $16.0 million, in immediately available funds. IUC
shall not be obligated to make more than one payment pursuant to this
Section 6.06. IUC hereby acknowledges that the payment amount set out in
this section is a payment of liquidated damages which are a genuine
pre-estimate of the damages which Denison will suffer or incur as a result
of the event giving rise to such damages and the resultant non-completion
of the Arrangement and are not penalties. IUC hereby irrevocably waives any
right it may have to raise as a defence that any such liquidated damages
are excessive or punitive. Upon receipt of payment of the amount set out in
this subsection by Denison, Denison shall have no further claim against IUC
in respect of the failure to complete the Arrangement, provided that
nothing herein shall preclude Denison from seeking injunctive relief to
restrain any breach or threatened breach by IUC of any of its obligations
hereunder or otherwise to obtain specific performance without the necessity
of posting a bond or security in connection therewith.
ARTICLE 7
AMENDMENT AND TERMINATION
SECTION 7.01 AMENDMENT
This Agreement may, at any time and from time to time before or
after the holding of the Denison Meeting or the IUC Meeting be amended by mutual
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written agreement of the parties hereto without, subject to applicable Law,
further notice to or authorization on the part of the Denison Shareholders or
the IUC Shareholders and any such amendment may, without limitation:
(a) change the time for the performance of any of the obligations or acts
of any of the parties hereto;
(b) waive any inaccuracies in or modify any representation or warranty
contained herein or in any document delivered pursuant hereto;
(c) waive compliance with or modify any of the covenants herein contained
and waive or modify the performance of any of the obligations of any
of the parties hereto; and
(d) waive compliance with or modify any condition herein contained,
provided, however, that notwithstanding the foregoing, the terms of Section
3.01(d) of the Plan of Arrangement shall not be amended without the approval of
the Denison Securityholders given in the same manner as required for the
approval of the Arrangement or as may be ordered by the Court. This Agreement
and the Plan of Arrangement may be amended in accordance with the Final Order,
but in the event that the terms of the Final Order require any such amendment,
the rights of the parties hereto under Section 5.01, Section 5.02, Section 5.03,
Section 6.03, Section 6.06 and Article 7 hereof shall remain unaffected.
SECTION 7.02 MUTUAL UNDERSTANDING REGARDING AMENDMENTS
(a) In addition to the transactions contemplated hereby or at the request
of a party hereto, the parties hereto will continue from and after the
date hereof and through and including the Effective Date to use their
respective commercially reasonable best efforts to maximize present
and future planning opportunities for Denison, the Denison
Shareholders, the Denison Subsidiaries, IUC and the IUC Subsidiaries
as and to the extent that the same shall not prejudice any party
hereto or the shareholders thereof. The parties hereto will ensure
that such planning activities do not impede the progress of the
Arrangement in any material way.
(b) The parties hereto mutually agree that if a party hereto proposes any
other amendment or amendments to this Agreement or to the Plan of
Arrangement, Denison on the one hand, and IUC and IUC Subco on the
other hand, will act reasonably in considering such amendment and if
the other of them and the shareholders thereof are not prejudiced by
reason of any such amendment they will co-operate in a reasonable
fashion with the party hereto proposing the amendment so that such
amendment can be effected subject to applicable Laws and the rights of
the Denison Securityholders.
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SECTION 7.03 TERMINATION
This Agreement may be terminated at any time prior to the
Effective Date:
(a) by the mutual written consent of the parties hereto;
(b) by either Denison or IUC if at any time the other has committed a
material breach of any provision of this Agreement, subject to Section
5.04;
(c) if any of the conditions in Section 5.01, Section 5.02 or Section 5.03
hereof for the benefit of the terminating party is not satisfied or
waived in accordance with those sections, subject to Section 5.04;
(d) by IUC and IUC Subco if there is a Denison Superior Proposal in
respect of Denison and the directors of Denison (i) shall have
withdrawn or modified in a manner adverse to IUC and IUC Subco their
approval or recommendation of the Arrangement, (ii) shall have failed,
after being requested by IUC in writing, to reaffirm its approval or
recommendation of the Arrangement and the transactions contemplated
herein as promptly as possible (but in any event within two Business
Days) after receipt of such written request from IUC, or (iii) shall
have accepted, approved, recommended or entered into an agreement in
respect of any Denison Superior Proposal;
(e) by IUC and IUC Subco or by Denison if the Denison Meeting shall have
been held and completed and the Arrangement or, where required, any
other material matter contemplated herein or necessary to complete the
Arrangement, is not approved by the requisite majority of the Denison
Securityholders;
(f) by Denison if there is an IUC Superior Proposal in respect of IUC and
the directors of IUC (i) shall have withdrawn or modified in a manner
adverse to Denison their approval or recommendation of the IUC
Shareholder Approval Matters, (ii) shall have failed, after being
requested by Denison in writing, to reaffirm its approval or
recommendation of the IUC Shareholder Approval Matters and the
transactions contemplated herein as promptly as possible (but in any
event within two Business Days) after receipt of such written request
from Denison, or (iii) shall have accepted, approved, recommended or
entered into an agreement in respect of any IUC Superior Proposal;
84
(g) by Denison or by IUC if the IUC Meeting shall have been held and
completed and the IUC Shareholder Approval Matters are not approved by
the requisite majority of the IUC Shareholders;
(h) by: (i) IUC if Denison shall have failed to hold the Denison Meeting
on or before November 30, 2006 unless such failure results from: (A)
an adjournment of the Denison Meeting for not less than four Business
Days due to its obligation to adjourn the Denison Meeting in the
circumstances described in Section 4.01(d) or an adjournment required
pursuant to Section 5.04; or (B) for reasons beyond the control of
Denison (including any order or ruling of a Governmental Entity or the
TSX) so long as Denison is in compliance with the terms and conditions
of this Agreement and it has been and continues to be using all
reasonable best efforts to hold the Denison Meeting as soon as
practicable after November 30, 2006; or (ii) Denison if IUC shall have
failed to hold the IUC Meeting on or before November 30, 2006 unless
such failure results from: (A) an adjournment of the Denison Meeting
for not less than four Business Days due to its obligation to adjourn
the IUC Meeting in the circumstances described in Section 4.02(d) or
an adjournment required pursuant to Section 5.04; or (B) for reasons
beyond the control of IUC (including any order or ruling of a
Governmental Entity or the TSX) so long as IUC is in compliance with
the terms and conditions of this Agreement and it has been and
continues to be using all reasonable best efforts to hold the IUC
Meeting as soon as practicable after November 30, 2006;
(i) by Denison in order to enter into a definitive written agreement with
respect to a Denison Superior Proposal, subject to compliance with
Sections 6.01 and 6.02 and the payment of any fee required to be paid
pursuant to Section 6.03; or
(j) by IUC in order to enter into a definitive written agreement with
respect to an IUC Superior Proposal, subject to compliance with
Sections 6.04 and 6.05 and the payment of any fee required to be paid
pursuant to Section 6.06,
provided that any termination by a party hereto in accordance with paragraphs
(b) to (i) above shall be made by such party delivering written notice thereof
to the other party or parties hereto prior to the Effective Date and specifying
therein in reasonable detail the matter or matters giving rise to such
termination right. If the completion of the Arrangement does not occur on or
prior to end of business on the Completion Deadline, then this Agreement shall
terminate. In the event of any such termination, subject to the obligations of
Denison and IUC contained in Article 6 hereof, including the payment required by
Section 6.03 or Section 6.06, as the case may be, each party hereto shall be
deemed to have released, remised and forever discharged the other parties hereto
in
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respect of any and all claims arising in respect of this Agreement, except as
otherwise provided herein.
ARTICLE 8
GENERAL
SECTION 8.01 NOTICES
Any notice, consent, waiver, direction or other communication
required or permitted to be given under this Agreement by a party hereto shall
be in writing and shall be delivered by hand to the party hereto to which the
notice is to be given at the following address or sent by facsimile to the
following numbers or to such other address or facsimile number as shall be
specified by a party hereto by like notice. Any notice, consent, waiver,
direction or other communication aforesaid shall, if delivered, be deemed to
have been given and received on the date on which it was delivered to the
address provided herein (if a Business Day or, if not, then the next succeeding
Business Day) and if sent by facsimile be deemed to have been given and received
at the time of receipt (if a Business Day or, if not, then the next succeeding
Business Day) unless actually received after 4:00 p.m. (Toronto time) at the
point of delivery in which case it shall be deemed to have been given and
received on the next Business Day.
The address for service of each of the parties hereto shall be as
follows:
(a) if to Denison:
595 Bay Street
Suite 402
Toronto, Ontario M5G 2C2
Attention: E. Peter Farmer
Facsimile: (416) 979-5893
with a copy (which shall not constitute notice) to:
Blake, Cassels & Graydon LLP
3500 855 - 2nd Street S.W.
Calgary, Alberta T2P 4J8
Attention: Daniel J. McLeod
Facsimile: (403) 260-9700
(b) if to IUC or IUC Subco:
885 West Georgia Street
Suite 2101
86
Vancouver, B.C. V6C 3E8
Attention: Ronald Hochstein
Facsimile: (604) 689-4250
with a copy (which shall not constitute notice) to:
Cassels Brock & Blackwell LLP
2100 Scotia Plaza
40 King Street West
Toronto, Ontario M5H 3C2
Attention: John H. Craig
Facsimile: (416) 360-8877
SECTION 8.02 REMEDIES
The parties hereto acknowledge and agree that an award of money
damages may be inadequate for any breach of this Agreement by any party hereto
or its representatives and advisors and that such breach may cause the
non-breaching party hereto irreparable harm. Accordingly, the parties hereto
agree that, in the event of any such breach or threatened breach of this
Agreement by one of the parties hereto, Denison (if either IUC or IUC Subco is
the breaching party) or IUC and IUC Subco (if Denison is the breaching party)
will be entitled, without the requirement of posting a bond or other security,
to seek equitable relief, including injunctive relief and specific performance.
Subject to any other provision hereof including without limitation, Section 6.03
and Section 6.06 hereof, such remedies will not be the exclusive remedies for
any breach of this Agreement but will be in addition to all other remedies
available hereunder or at law or in equity to each of the parties hereto.
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SECTION 8.03 EXPENSES
The parties hereto agree that all out-of-pocket expenses incurred
in connection with this Agreement and the transactions contemplated hereby, the
Denison Meeting, the IUC Meeting, and the preparation and mailing of the Denison
Proxy Circular and the IUC Proxy Circular, including legal and accounting fees,
printing costs, financial advisor fees and all disbursements by advisors, shall
be paid by the party hereto incurring such expense and that nothing in this
Agreement shall be construed so as to prevent the payment of such expenses. The
provisions of this Section 8.03 shall survive the termination of this Agreement.
Notwithstanding the foregoing: (i) in the event that (a) this Agreement is
terminated prior to the Completion Deadline as a result of the Denison
Securityholders having voted not to approve the Arrangement at the Denison
Meeting; or (b) IUC has terminated the Agreement under Section 7.03(h)(i), then
in either case Denison shall pay to IUC the sum of $2.0 million as and by way of
liquidated damages representing a reasonable pre-estimate of IUC's expenses
incurred in respect of the transactions contemplated by this Agreement and not
by way of a penalty; and (ii) in the event that (a) this Agreement is terminated
prior to the Completion Deadline as a result of the IUC Shareholders having
voted not to approve the IUC Shareholder Approval Matters; or (b) Denison has
terminated the Agreement under Section 7.03(h)(ii), then in either case IUC
shall pay to Denison the sum of $2.0 million as and by way of liquidated damages
representing a reasonable pre-estimate of Denison expenses incurred in respect
of the the transactions contemplated by this Agreement and not by way of a
penalty. Any amount paid by a party to the other party pursuant to this Section
8.03 shall be deducted from the amount which may become payable pursuant to
Section 6.03 or Section 6.06.
SECTION 8.04 OBLIGATIONS REGARDING PERSONAL INFORMATION
(a) Each of Denison and IUC shall ensure that, unless otherwise exempted
by law, it has the consent of its employees to the collection, use and
disclosure of all personal information required for any reasonable and
necessary purpose related to this Agreement.
(b) For the purpose of this Section 8.04, "Personal Information" means
information about an identifiable individual collected or created as a
result of this Agreement, but does not include the name, title or
business address or telephone number of an employee.
(c) Unless this Agreement or the law otherwise specifies, each party shall
only collect, create, use and disclose Personal Information in respect
of its own employees or in respect of the employees of contractors
which is necessary for the due performance of this Agreement.
(d) Unless this Agreement or the law otherwise specifies, each party shall
not collect, use or disclose Personal Information about an
88
individual without the consent of the individual to whom the
information relates.
(e) Each party agrees to protect all Personal Information collected or
stored by it pursuant to paragraph (c) above by taking reasonable
security measures, in accordance with the sensitivity of the
information in question, to protect the Personal Information against
loss, unauthorized access thereto, theft, and any unauthorized
collection, use, disclosure, copying, modification or disposal
thereof.
(f) Each party further agrees to comply with all applicable laws that
relate to the collection, use, disclosure, storage and disposal of
Personal Information.
SECTION 8.05 TIME OF THE ESSENCE
Time shall be of the essence of this Agreement.
SECTION 8.06 ENTIRE AGREEMENT
This Agreement, together with the agreements and other documents
herein or therein referred to, constitute the entire agreement between the
parties hereto pertaining to the subject matter hereof and supersede all prior
agreements, understandings, negotiations and discussions, whether oral or
written, between the parties hereto with respect to the subject matter hereof.
There are no representations, warranties, covenants or conditions with respect
to the subject matter hereof except as contained herein.
SECTION 8.07 FURTHER ASSURANCES
Each party hereto shall, from time to time, and at all times
hereafter, at the request of the other of them, but without further
consideration, do, or cause to be done, all such other acts and execute and
deliver, or cause to be executed and delivered, all such further agreements,
transfers, assurances, instruments or documents as shall be reasonably required
in order to fully perform and carry out the terms and intent hereof including
without limitation, the Plan of Arrangement.
SECTION 8.08 GOVERNING LAW
This Agreement shall be governed by, and be construed in
accordance with, the laws of the Province of Ontario and the laws of Canada
applicable therein but the reference to such laws shall not, by conflict of laws
rules or otherwise, require the application of the law of any jurisdiction other
than the Province of Ontario.
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SECTION 8.09 EXECUTION IN COUNTERPARTS
This Agreement may be executed in one or more counterparts, each
of which shall conclusively be deemed to be an original and all such
counterparts collectively shall be conclusively deemed to be one and the same.
Delivery of an executed counterpart of the signature page to this Agreement by
facsimile shall be effective as delivery of a manually executed counterpart of
this Agreement, and any party delivering an executed counterpart of the
signature page to this Agreement by facsimile to any other party shall
thereafter also promptly deliver a manually executed original counterpart of
this Agreement to such other party, but the failure to deliver such manually
executed original counterpart shall not affect the validity, enforceability or
binding effect of this Agreement.
SECTION 8.10 WAIVER
No waiver or release by any party hereto shall be effective
unless in writing and executed by the party granting such waiver or release and
any waiver or release shall affect only the matter, and the occurrence thereof,
specifically identified and shall not extend to any other matter or occurrence.
Waivers may only be granted upon compliance with the provisions governing
amendments set forth in Section 7.01 hereof.
SECTION 8.11 NO PERSONAL LIABILITY
No director or officer of Denison shall have any personal
liability whatsoever (other than in the case of fraud, negligence or willful
misconduct) to IUC or IUC Subco under this Agreement or any other document
delivered in connection with this Agreement or the Arrangement by or on behalf
of Denison. No director or officer of IUC or IUC Subco shall have any personal
liability whatsoever (other than in the case of fraud, negligence or willful
misconduct) to Denison under this Agreement or any other document delivered in
connection with this Agreement or the Arrangement by or on behalf of IUC or IUC
Subco.
SECTION 8.12 ENUREMENT AND ASSIGNMENT
This Agreement shall enure to the benefit of the parties hereto
and their respective successors and permitted assigns and shall be binding upon
the parties hereto and their respective successors. This Agreement may not be
assigned by any party hereto without the prior written consent of each of the
other parties hereto.
SECTION 8.13 INVALIDITY
If any provision of this Agreement is determined to be invalid or
unenforceable by a court of competent jurisdiction from which no further appeal
lies or is taken, that provision shall be deemed to be severed herefrom, and the
remaining provisions of this Agreement shall not be affected thereby and shall
remain valid and enforceable.
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IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date first above written.
INTERNATIONAL URANIUM CORPORATION
Per:
Name: Ronald Hochstein
Title: President and Chief Executive
Officer
2113537 ONTARIO INC.
Per:
----------------------------------------
Name: Ronald Hochstein
Title: President
DENISON MINES INC.
Per:
----------------------------------------
Name: E. Peter Farmer
Title: President and Chief Executive
Officer
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SCHEDULE A
PLAN OF ARRANGEMENT
UNDER SECTION 182 OF THE
ONTARIO BUSINESS CORPORATIONS ACT
ARTICLE ONE
DEFINITIONS AND INTERPRETATION
Section 1.01 Definitions
In this Plan of Arrangement, unless the context otherwise requires,
the following words and terms with the initial letter or letters thereof
capitalized shall have the meanings ascribed to them below:
(a) "affiliate" shall have the meaning ascribed to such term under the
OBCA but shall not include IUC Subco;
(b) "Amalgamating Corporations" means IUC Subco and Denison collectively
and "Amalgamating Corporation" means either one of them;
(c) "Amalgamation" has the meaning ascribed thereto in 3.01(b) of this
Plan of Arrangement;
(d) "Arrangement" means the arrangement under the provisions of Section
182 of the OBCA on the terms and subject to the conditions set forth
in this Plan of Arrangement, subject to any amendment or supplement
hereto made in accordance with the provisions hereof or at the
direction of the Court in the Final Order;
(e) "Arrangement Agreement" means the arrangement agreement dated as of
September 18, 2006 between IUC, IUC Subco and Denison, as amended or
supplemented prior to the Effective Date, entered into in connection
with the Arrangement;
(f) "Business Day" means any day, other than a Saturday, a Sunday or a
statutory holiday in Toronto, Ontario;
(g) "Common Shares" means the common shares which the Corporation is
authorized to issue and having the rights, privileges, restrictions
and conditions set forth in Section 4.04 hereof;
(h) "Corporation" means the corporation continuing from the Amalgamation;
(i) "Court" means the Superior Court of Justice of Ontario;
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(j) "Denison" means Denison, a corporation existing under the OBCA;
(k) "Denison Common Shares" means the common shares in the capital of
Denison;
(l) "Denison Meeting" means the special meeting, including any
adjournments or postponements thereof, of the holders of Denison
Common Shares held, among other things, to consider and, if deemed
advisable, approve the Arrangement;
(m) "Denison Options" means the outstanding options to purchase Denison
Common Shares issued pursuant to the Denison Share Option Plan and
otherwise;
(n) "Denison Proxy Circular" means the management information circular
prepared by Denison with the assistance of IUC in respect of the
Denison Meeting;
(o) "Denison Share Option Plan" means the share option plan of Denison
adopted on March 5, 2004;
(p) "Depositary" means the depositary which shall be appointed by IUC for
the purpose of, among other things, exchanging certificates
representing Denison Common Shares for IUC Common Shares in connection
with the Arrangement;
(q) "Director" means the Director appointed under Section 278 of the OBCA;
(r) "Dissent Procedures" means the procedures set forth in Section 185 of
the OBCA required to be taken by a registered holder of Denison Common
Shares to exercise the right of dissent in respect of such Denison
Common Shares in connection with the Arrangement;
(s) "Dissenting Optionholders" means the holders of Denison Options who
dissent in respect of the Arrangement in strict compliance with the
Dissent Procedures;
(t) "Dissenting Shareholders" means the registered holders of Denison
Common Shares who dissent in respect of the Arrangement in strict
compliance with the Dissent Procedures;
(u) "Effective Date" means the date on which the Final Order and all other
required documents are accepted for filing by the Registrar;
(v) "Effective Time" means 12:01 a.m. (Toronto time) on the Effective
Date;
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(w) "Final Order" means the order of the Court approving the Arrangement
pursuant to the OBCA, as such order may be amended at any time prior
to the Effective Date or, if appealed, then unless such appeal is
withdrawn or denied, as affirmed;
(x) "Former Denison Shareholders" means the holders of Denison Common
Shares immediately prior to the Effective Time;
(y) "IUC" means IUC, a corporation existing under the CBCA;
(z) "IUC Common Shares" means the common shares in the capital of IUC; and
(aa) "IUC Subco" means 2113537 Ontario Inc., a wholly-owned subsidiary of
IUC existing under the OBCA.
(bb) "Interim Order" means the interim order of the Court, as such order
may be amended in connection with the Arrangement;
(cc) "Meeting Date" means the date of the Denison Meeting;
(dd) "OBCA" means the Business Corporations Act (Ontario);
(ee) "Plan of Arrangement" means this plan of arrangement, as amended,
modified or supplemented from time to time in accordance herewith and
with any order of the Court;
(ff) "Subject Shares" means the Denison Common Shares held, directly or
indirectly, by or for the benefit of IUC or its affiliates immediately
prior to the Effective Time, together with the Denison Common Shares
deemed to be transferred to IUC in subsection 3.01(a) hereof;
In addition, words and phrases used herein and defined in the OBCA shall have
the same meaning herein as in the OBCA unless the context otherwise requires.
Section 1.02 Interpretation Not Affected by Headings
The division of this Plan of Arrangement into articles, sections,
paragraphs and subparagraphs and the insertion of headings herein are for
convenience of reference only and shall not affect the construction or
interpretation of this Plan of Arrangement. The terms "this Plan of
Arrangement", "hereof", "herein", "hereto", "hereunder" and similar expressions
refer to this Plan of Arrangement and not to any particular article, section or
other portion hereof and include any instrument supplementary or ancillary
hereto.
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Section 1.03 Number, Gender and Persons
In this Plan of Arrangement, unless the context otherwise requires,
words importing the singular shall include the plural and vice versa, words
importing the use of either gender shall include both genders and neuter and the
word person and words importing persons shall include a natural person, firm,
trust, partnership, association, corporation, joint venture or government
(including any governmental agency, political subdivision or instrumentality
thereof) and any other entity of any kind or nature whatsoever.
Section 1.04 Date for any Action
If the date on which any action is required to be taken hereunder is
not a Business Day, such action shall be required to be taken on the next
succeeding day which is a Business Day.
Section 1.05 Statutory References
Any reference in this Plan of Arrangement to a statute includes all
regulations made thereunder, all amendments to such statute or regulation in
force from time to time and any statute or regulation that supplements or
supersedes such statute or regulation.
ARTICLE TWO
ARRANGEMENT AGREEMENT
Section 2.01 Arrangement Agreement
This Plan of Arrangement is made pursuant to, and is subject to the
provisions of, the Arrangement Agreement.
ARTICLE THREE
ARRANGEMENT
Section 3.01 Arrangement
At the Effective Time, the following shall occur, and shall be deemed
to occur in the following order, without any further act or formality:
(a) each Denison Common Share and Denison Option in respect of which
Dissent Procedures have been exercised shall be deemed to be
transferred by the holder thereof, without any further act or
formality on its part, free and clear of all liens, claims and
encumbrances, to IUC, with IUC being obliged to pay therefor the
amount determined and payable in accordance with Section 5 hereof, and
the name of such holder will be removed from the register of holders
of Denison Common Shares or Denison Options,
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as the case may be, and IUC will be recorded as the registered holder
of the Denison Common Shares and Denison Options so transferred and
will be deemed to be the legal and beneficial owner of such Denison
Common Shares and Denison Options;
(b) the Amalgamating Corporations shall be amalgamated to form the
Corporation and continue as one corporation under the OBCA on the
terms prescribed in this Plan of Arrangement (the "Amalgamation") and:
(i) the Corporation shall have the characteristics set forth in
Article Four of this Plan of Arrangement and shall possess all of
the property, rights, privileges and franchises and shall be
subject to all of the liabilities, including civil, criminal and
quasi-criminal, and all contracts, disabilities and debts of each
of the Amalgamating Corporations;
(ii) a conviction against, or ruling, order or judgment in favour of
or against an Amalgamating Corporation may be enforced by or
against the Corporation;
(iii) the Articles of Arrangement shall be deemed to be the articles
of incorporation of the Corporation and, except for the purposes
of subsection 104(1) of the OBCA, the Certificate shall be deemed
to be the certificate of incorporation of the Corporation; and
(iv) the Corporation shall be deemed to be the party plaintiff or the
party defendant, as the case may be, in any civil action
commenced by or against an Amalgamating Corporation before the
Effective Time;
(c) immediately upon the Amalgamation as set forth in subsection (b), all
Denison Common Shares held by IUC Subco shall be cancelled without any
repayment of capital in respect thereof;
(d) immediately upon the Amalgamation as set forth in subsection (b), all
Denison Common Shares (other than the Subject Shares) held by Former
Denison Shareholders (other than Dissenting Shareholders) shall be
exchanged with IUC for IUC Common Shares on the basis of 2.88 IUC
Common Shares for each one Denison Common Share, subject to Sections
3.03 and 5.01 hereof, and shall thereafter be cancelled without any
repayment of capital in respect thereof;
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(e) immediately upon the Amalgamation as set forth in subsection (b), each
Subject Share shall be cancelled and the holders thereof shall
receive, for each Subject Share, 2.88 IUC Common Shares;
(f) immediately upon the Amalgamation as set forth in subsection (b), (i)
each Denison Option shall entitle the holder thereof to receive (and
such holder shall accept) upon the exercise thereof, in lieu of the
number of Denison Common Shares otherwise issuable upon the exercise
thereof, the number of IUC Common Shares which the holder would have
been entitled to receive as a result of the transactions contemplated
by this Plan of Arrangement if, immediately prior to the Effective
Time, such holder had been the registered holder of the number of
Denison Common Shares to which such holder was theretofore entitled
upon such exercise, subject to necessary adjustments to the option
exercise price, and (ii) such Denison Option shall otherwise continue
to be governed by and be subject to the terms of the Denison Share
Option Plan and applicable agreement thereunder; and
(g) immediately upon the Amalgamation as set forth in subsection (b), each
common share of IUC Subco shall be exchanged for one Common Share.
Section 3.02 Post-Effective Time Procedures
(a) On or promptly after the Effective Date, IUC shall deliver or arrange
to be delivered to the Depositary certificates representing the IUC
Common Shares required to be issued to Former Denison Shareholders in
accordance with the provisions of Section 3.01 hereof, which
certificates shall be held by the Depositary as agent and nominee for
such Former Denison Shareholders for distribution to such Former
Denison Shareholders in accordance with the provisions of Article 6
hereof.
(b) Subject to the provisions of Article 6 hereof, Former Denison
Shareholders shall be entitled to receive delivery of the certificates
representing the IUC Common Shares to which they are entitled pursuant
to subsection 3.01(d) hereof.
(c) IUC and its affiliates shall be entitled to receive delivery of the
certificates representing the IUC Common Shares to which they are
entitled pursuant to subsection 3.01(e) hereof.
Section 3.03 No Fractional IUC Common Shares
No fractional IUC Common Shares shall be issued to Former
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Denison Shareholders. Any fractional number of IUC Common Shares shall be
rounded up or down to the nearest whole number.
ARTICLE FOUR
THE CORPORATION
Section 4.01 Name
The name of the Corporation shall be "Denison Mines Inc." or such
other name containing the word "Denison" as may be approved by the directors of
each of IUC and Denison or such other number company name as may be assigned to
the Corporation.
Section 4.02 Registered Office
The registered office of the Corporation shall be located in the City
of Toronto in the Province of Ontario and the address of the registered office
of the Corporation shall be 595 Bay Street, Suite 402, Toronto, Ontario, M5G
2C2.
Section 4.03 Authorized Capital
The Corporation shall be authorized to issue an unlimited number of
common shares (being the Common Shares).
Section 4.04 Share Provisions
The rights, privileges, restrictions and conditions attaching to the
Common Shares shall be as follows:
(a) Voting. Holders of Common Shares shall be entitled to receive notice
of and to attend any meeting of the shareholders of the Corporation
and shall be entitled to one vote in respect of each Common Share held
at such meeting, except a meeting of holders of a particular class or
series of shares other than Common Shares who are entitled to vote
separately as a class or series at such meeting.
(b) Dividends. Subject to the rights, privileges, restrictions and
conditions attaching to any other class of shares of the Corporation
ranking in priority to or rateably with the Common Shares, holders of
Common Shares shall be entitled to receive dividends if, as and when
declared by the directors of the Corporation out of the assets of the
Corporation properly applicable to the payment of dividends in such
amounts and payable in such manner as the directors of the Corporation
may from time to time determine.
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(c) Liquidation. In the event of the liquidation, dissolution or winding
up of the Corporation or any other distribution of the property or
assets of the Corporation among its shareholders for the purpose of
winding up its affairs, holders of Common Shares shall, subject to the
rights of the holders of any other class of shares of the Corporation
entitled to receive the property or assets of the Corporation upon
such a liquidation, dissolution, winding up or other distribution in
priority to or rateably with holders of Common Shares, be entitled to
receive the remaining property and assets of the Corporation.
Section 4.05 Restrictions on Transfer
There shall be restrictions upon the right to transfer Common Shares
approval of either the board of directors of the Corporation or the shareholders
of the Corporation (by resolution passed at a meeting or by signed resolution)
shall be required in respect of each transfer.
Section 4.06 Stated Capital
At the Effective Time, the stated capital account maintained by the
Corporation for the Common Shares shall be an amount equal to the aggregate of
the stated capital account maintained by IUC Subco in respect of the common
shares of IUC Subco immediately prior to the Effective Time and the stated
capital account maintained by Denison in respect of the Denison Common Shares
immediately prior to the Effective Time.
Section 4.07 Directors and Officers
(a) Minimum and Maximum. The directors of the Corporation shall, until
otherwise changed in accordance with the OBCA, consist of a minimum
number of one and a maximum number of ten directors.
(b) Initial Directors. The number of directors on the board of directors
shall initially be set at two. The initial directors of the
Corporation immediately following the Amalgamation shall be the
persons whose names and residential addresses appear below:
NAME MUNICIPALITY OF RESIDENCE
---- -------------------------
E. Peter Farmer Toronto, Ontario
Ronald Hochstein Vancouver, British Columbia
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The initial directors shall hold office until the next annual meeting of the
shareholders of the Corporation or until their successors are elected or
appointed.
(c) Initial Officers. The initial officers of the Corporation shall be as
follows:
NAME TITLE
---- -----
E. Peter Farmer Chief Executive Officer
Ronald Hochstein President
James Anderson Treasurer
Sheila Colman Secretary
Section 4.08 Business and Powers
There shall be no restriction on the business which the Corporation is
authorized to carry on or on the powers which the Corporation may exercise.
Section 4.09 By-Laws
The by-laws of the Corporation, until repealed, amended or altered,
shall be the by-laws of IUC Subco.
Section 4.10 Quebec Charging Power
Without restricting any of the powers and capacities of the
Corporation, whether under the OBCA or otherwise, the Corporation may mortgage,
hypothecate, pledge or otherwise create a security interest in all or any
present or future, real or personal, movable or immovable, legal or equitable
property of the Corporation (including without limitation, its book debts,
rights, powers, franchises and undertaking) for any purpose whatsoever.
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ARTICLE FIVE
DISSENT PROCEDURES
Section 5.01 Dissent Procedures
Holders of Denison Common Shares and Denison Options may exercise
Dissent Procedures with respect to Denison Common Shares and Denison Options,
respectively, in connection with the Arrangement, provided that, notwithstanding
the provisions of subsection 185 of the OBCA, the written objection to the
special resolution to approve the Arrangement contemplated by section 185 of the
OBCA must be received by Denison not later than 5:00 p.m. (Toronto time) on the
Business Day immediately prior to the date of the Denison Meeting and provided
further that holders who exercise such rights of dissent and who:
(a) are ultimately entitled to be paid fair value for their Denison Common
Shares or Denison Options, as the case may be, which fair value,
notwithstanding anything to the contrary contained in section 185 of
the OBCA, shall be determined as of the close of business on the day
before the Final Order becomes effective, shall be paid an amount
equal to such fair value by Denison; and
(b) are ultimately not entitled, for any reason, to be paid fair value for
their Denison Common Shares or Denison Options, as the case may be,
shall be deemed to have participated in the Arrangement, as of the
Effective Time, on the same basis as a non-dissenting holder of
Denison Common Shares or Denison Options, as the case may be, and
shall be entitled to receive only the consideration contemplated in
subsection 3.01(d) or subsection 3.01(f) hereof, as applicable, which
such holder would have received pursuant to the Arrangement if such
holder had not exercised Dissent Procedures,
but further provided that in no case shall Denison, IUC Subco, IUC or any other
person be required to recognize Dissenting Shareholders as holders of Denison
Common Shares after the Effective Time or Dissenting Optionholders as holders of
Denison Options after the Effective Time, and the names of such Dissenting
Shareholders and Dissenting Optionholders shall be deleted from the registers of
holders of Denison Common Shares and Denison Options, respectively, at the
Effective Time.
ARTICLE SIX
DELIVERY OF IUC COMMON SHARES
Section 6.01 Delivery of IUC Common Shares
(a) Upon surrender to the Depositary for cancellation of a certificate
which immediately prior to the Effective Time represented one or more
outstanding Denison Common Shares which were exchanged for IUC Common
Shares in accordance with Section 3.01(d) or (e)
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hereof, together with such other documents and instruments as would
have been required to effect the transfer of the Denison Common Shares
formerly represented by such certificate under the OBCA and the
by-laws of Denison and such additional documents and instruments as
the Depositary may reasonably require, the holder of such surrendered
certificate shall be entitled to receive in exchange therefor, and the
Depositary shall deliver to such holder following the Effective Time,
a certificate representing the IUC Common Shares which such holder is
entitled to receive in accordance with Section 3.02 hereof.
(b) After the Effective Time and until surrendered for cancellation as
contemplated by subsection 6.01(a) hereof, each certificate which
immediately prior to the Effective Time represented one or more
Denison Common Shares shall be deemed at all times to represent only
the right to receive in exchange therefor a certificate representing
the IUC Common Shares which the holder of such certificate is entitled
to receive in accordance with Section 6.01(a) hereof.
Section 6.02 Lost Certificates
In the event that any certificate which immediately prior to the
Effective Time represented one or more outstanding Denison Common Shares which
were exchanged for IUC Common Shares in accordance with Section 3.01(d) or (e)
hereof shall have been lost, stolen or destroyed, upon the making of an
affidavit of that fact by the holder claiming such certificate to be lost,
stolen or destroyed, the Depositary shall deliver in exchange for such lost,
stolen or destroyed certificate, a certificate representing the IUC Common
Shares which such holder is entitled to receive in accordance with Section 3.02
hereof. When authorizing such delivery of a certificate representing the IUC
Common Shares which such holder is entitled to receive in exchange for such
lost, stolen or destroyed certificate, the holder to whom a certificate
representing such IUC Common Shares is to be delivered shall, as a condition
precedent to the delivery of such IUC Common Shares, give a bond satisfactory to
IUC and the Depositary in such amount as IUC and the Depositary may direct, or
otherwise indemnify IUC, IUC Subco and the Depositary in a manner satisfactory
to IUC and the Depositary, against any claim that may be made against IUC, IUC
Subco or the Depositary with respect to the certificate alleged to have been
lost, stolen or destroyed and shall otherwise take such actions as may be
required by the by-laws of the Corporation.
Section 6.03 Distributions with Respect to Unsurrendered Certificates
No dividend or other distribution declared or made after the Effective
Time with respect to IUC Common Shares with a record date after the Effective
Time shall be delivered to the holder of any unsurrendered certificate which,
immediately prior to the Effective Time, represented outstanding Denison Common
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Shares unless and until the holder of such certificate shall have complied with
the provisions of Section 6.01 or Section 6.02 hereof. Subject to applicable law
and to Section 6.04 hereof, at the time of such compliance, there shall, in
addition to the delivery of a certificate representing the IUC Common Shares to
which such holder is thereby entitled, be delivered to such holder, without
interest, the amount of the dividend or other distribution with a record date
after the Effective Time theretofore paid with respect such IUC Common Shares.
Section 6.04 Withholding Rights
IUC, IUC Subco and the Depositary shall be entitled to deduct and
withhold from all dividends or other distributions otherwise payable to any
Former Denison Shareholder such amounts as IUC, IUC Subco or the Depositary is
required or permitted to deduct and withhold with respect to such payment under
the Income Tax Act (Canada), the United States Internal Revenue Code of 1986 or
any provision of any applicable federal, provincial, state, local or foreign tax
law, in each case, as amended. To the extent that amounts are so withheld, such
withheld amounts shall be treated for all purposes hereof as having been paid to
the Former Denison Shareholder in respect of which such deduction and
withholding was made, provided that such withheld amounts are actually remitted
to the appropriate taxing authority.
Section 6.05 Limitation and Proscription
To the extent that a Former Denison Shareholder shall not have
complied with the provisions of Section 6.01 or Section 6.02 hereof on or before
the date which is six years after the Effective Date (the "final proscription
date"), then the IUC Common Shares which such Former Denison Shareholder was
entitled to receive shall be automatically cancelled without any repayment of
capital in respect thereof and the certificates representing such IUC Common
Shares shall be delivered to IUC by the Depositary for cancellation and shall be
cancelled by IUC, and the interest of the Former Denison Shareholder in such IUC
Common Shares shall be terminated as of such final proscription date.
ARTICLE SEVEN
AMENDMENTS
Section 7.01 Amendments to Plan of Arrangement
(a) IUC and Denison reserve the right to amend, modify or supplement this
Plan of Arrangement at any time and from time to time, provided that
each such amendment, modification or supplement must be (i) set out in
writing, (ii) agreed to in writing by IUC and Denison, (iii) filed
with the Court and, if made following the Denison Meeting, approved by
the Court, and (iv) communicated to Denison Optionholders and Former
Denison Shareholders if and as required by the Court.
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(b) Any amendment, modification or supplement to this Plan of Arrangement
may be proposed by Denison at any time prior to the Denison Meeting
provided that IUC shall have consented thereto in writing, with or
without any other prior notice or communication, and, if so proposed
and accepted by the persons voting at the Denison Meeting (other than
as may be required under the Interim Order), shall become part of this
Plan of Arrangement for all purposes.
(c) Any amendment, modification or supplement to this Plan of Arrangement
that is approved by the Court following the Denison Meeting shall be
effective only if (i) it is consented to in writing by each of IUC and
Denison, and (ii) if required by the Court, it is consented to by
holders of the Denison Common Shares and Denison Options voting in the
manner directed by the Court.
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SCHEDULE B
DESCRIPTION OF DENISON SUBSIDIARIES
As of the date of the Arrangement Agreement to which this Schedule B is
attached, the following are the Denison Subsidiaries.
Denison Subsidiaries
COMPANY JURISDICTION PERCENTAGE OWNERSHIP(%)
------- ------------ -----------------------
Dengold Corporation Delaware 100%
DML Broadcasting Limited Ontario 100%
Stanatomic Uranium Mines Limited Ontario 69.52%
SCHEDULE C
DESCRIPTION OF IUC SUBSIDIARIES AND IUC MATERIAL SUBSIDIARIES
As of the date of the Arrangement Agreement to which this Schedule C is
attached, the following are the IUC Subsidiaries and the IUC Material
Subsidiaries:
IUC Subsidiaries
COMPANY JURISDICTION PERCENTAGE OWNERSHIP(%)
------- ------------ -----------------------
International Uranium Alberta Corporation Federal 100%
International Uranium (Sask) Corporation Ontario 100%
IUC Reno Creek LLC Colorado 100%
IUC Rim Mine LLC Colorado 100%
Rio Frio Holdings Inc. Federal 100%
El Capitan Holdings Inc. Federal 100%
Mongolia Resources Inc. Ontario 100%
Concours Resources Inc. Ontario 100%
Together with the IUC Material Subsidiaries
IUC Material Subsidiaries
COMPANY JURISDICTION PERCENTAGE OWNERSHIP(%)
------- ------------ -----------------------
International Uranium Holdings Corporation Delaware 100%
International Uranium (USA) Corporation Delaware 100%
International Uranium Recovery Corporation Delaware 100%
IUC White Mesa LLC Colorado 100%
IUC Sunday Mine LLC Colorado 100%
IUC Colorado Plateau LLC Colorado 100%
IUC Henry Mountains LLC Colorado 100%
IUC Arizona Strip LLC Colorado 100%
IUC Recovery LLC Colorado 100%
IUC Properties LLC Colorado 100%
International Uranium (Bermuda) I Ltd. Bermuda 100%
International Uranium Company (Mongolia) Ltd. Bermuda 100%
International Uranium Mongolia, XXK Mongolia 100%
Gurvan Salhan XXK Mongolia 100%