1039-00004 · Torchlight Mining Corp · Transaction Documents

offer-to-purchase-agreement-execution.docx DOCUMENT M&A / Corporate

10 / 12 ← → ✕

Contract analysis Extract to table

OFFER-TO-PURCHASE AGREEMENT

by and between

TORCHLIGHT MINING CORP.

and

RIDGELINE COBALT INC.

Dated as of May 2, 2024

Execution Version

OFFER-TO-PURCHASE AGREEMENT

This OFFER-TO-PURCHASE AGREEMENT (this "Agreement") is made and entered into as of May 2, 2024, by and between TORCHLIGHT MINING CORP., a corporation organized under the laws of the Province of British Columbia, Canada, registered as a foreign private issuer with the U.S. Securities and Exchange Commission, with its principal executive offices at 1200 – 885 West Georgia Street, Vancouver, BC V6C 3E8, Canada (the "Purchaser" or "Torchlight"), and RIDGELINE COBALT INC., a corporation incorporated in the State of Delaware, with its principal executive offices at 44 Lakeshore Drive, Suite 300, Marquette, MI 49855 (the "Company" or "Ridgeline" or "RCI").

RECITALS

WHEREAS, Torchlight desires to acquire all of the outstanding shares of common stock, par value $0.001 per share (the "Company Common Stock" or "Shares"), of Ridgeline, of which 18,000,000 shares are issued and outstanding as of the date hereof;

WHEREAS, Torchlight proposes to make a cash tender offer (the "Offer") to acquire all outstanding Shares at a price of $2.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth herein and in the related Offer to Purchase and Letter of Transmittal;

WHEREAS, the aggregate consideration for all outstanding Shares equals $45,000,000 (the "Aggregate Offer Consideration");

WHEREAS, the Board of Directors of Ridgeline (the "Company Board"), acting upon the unanimous recommendation of a Special Committee of independent directors comprised of Samuel Kerensky (Chair), Priya Natarajan, and Claudette Duval (the "Special Committee"), has (i) determined that the Offer and the Merger (as defined below) are fair to and in the best interests of Ridgeline and its stockholders, (ii) approved this Agreement, the Offer, and the Merger, and (iii) resolved to recommend that holders of Shares accept the Offer and tender their Shares pursuant thereto (the "Company Board Recommendation"), as set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 (SEC Acc. No. 0001193125-24-088234) filed with the Securities and Exchange Commission on April 5, 2024;

WHEREAS, concurrently herewith, and as a condition and inducement to Torchlight's willingness to enter into this Agreement, Pinnacle Venture Resources Fund II, LP, a Delaware limited partnership ("Pinnacle"), the holder of 3,600,000 Shares (representing 20.0% of outstanding Company Common Stock) and $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026 issued pursuant to that certain Indenture dated as of June 30, 2022 (the "Convertible Notes"), has entered into a Tender and Support Agreement with Torchlight dated as of April 8, 2024 (the "Support Agreement"), pursuant to which Pinnacle has agreed, among other things, to tender all of its Shares into the Offer and to vote such Shares in favor of the Merger;

WHEREAS, following consummation of the Offer, Torchlight intends to effect a merger of Ridgeline with and into Torchlight (the "Merger") pursuant to Section 253 of the Delaware General Corporation Law (the "DGCL") if Torchlight acquires 90% or more of the outstanding Shares, or pursuant to Section 251 of the DGCL otherwise, in each case at the same per-share price as the Offer Price;

WHEREAS, Torchlight has filed a Tender Offer Statement on Schedule TO with the Securities and Exchange Commission (SEC Acc. No. 0001193125-24-072841) on March 14, 2024, commencing the Offer; and

WHEREAS, the parties desire to set forth their agreements regarding the Offer and the Merger on the terms and subject to the conditions set forth herein.

NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:

ARTICLE I — DEFINITIONS

Section 1.1 — Defined Terms

As used in this Agreement, the following terms shall have the meanings set forth below:

"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Torchlight or any of its Affiliates) relating to any (a) merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving Ridgeline, (b) acquisition by any Person or "group" (as defined in Section 13(d) of the Exchange Act) of beneficial ownership of twenty percent (20%) or more of the outstanding Shares or of the consolidated total assets (including equity securities of Subsidiaries) of Ridgeline, or (c) any other transaction the consummation of which would reasonably be expected to prevent or materially delay the consummation of the Offer or the Merger.

"Adverse Recommendation Change" has the meaning set forth in Section 2.3(c)(v).

"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.

"Aggregate Offer Consideration" means $45,000,000, being the product of 18,000,000 Shares multiplied by the Offer Price of $2.50 per Share.

"Agreement" means this Offer-to-Purchase Agreement, including all Exhibits and Schedules hereto, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof.

"Basket Amount" means $450,000, being one percent (1%) of the Aggregate Offer Consideration.

"Business Day" means any day other than a Saturday, Sunday, or any day on which commercial banks in New York, New York or Vancouver, British Columbia are authorized or required by applicable law to be closed.

"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit D.

"Clearmont" means Clearmont National Bank, N.A., located at 300 Delaware Avenue, Suite 700, Wilmington, DE 19801.

"Closing" has the meaning set forth in Section 2.5.

"Closing Date" means the date on which the Offer closes and Shares are first accepted for payment pursuant to the Offer.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder.

"Company" or "Ridgeline" means Ridgeline Cobalt Inc., a Delaware corporation.

"Company Board" means the Board of Directors of Ridgeline.

"Company Board Recommendation" has the meaning set forth in the Recitals.

"Company Common Stock" or "Shares" means the shares of common stock, par value $0.001 per share, of Ridgeline.

"Company Material Adverse Effect" means any change, event, occurrence, effect, condition, development, or state of facts that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), or results of operations of Ridgeline, taken as a whole, or (b) the ability of Ridgeline to timely consummate the transactions contemplated by this Agreement; provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or would be, a Company Material Adverse Effect: (i) changes in general economic, financial, or capital market conditions, including changes in prevailing interest rates, credit availability, currency exchange rates, or commodity prices (including cobalt and nickel prices), in each case, to the extent not disproportionately affecting Ridgeline relative to other participants in the industries in which it operates; (ii) changes in conditions generally affecting the mining, minerals exploration, or specialty chemicals industries, to the extent not disproportionately affecting Ridgeline; (iii) changes in applicable law or changes in GAAP or applicable accounting standards, or the interpretation or enforcement thereof, in each case, after the date hereof; (iv) changes arising from natural disasters, pandemics, epidemics, acts of war, sabotage, terrorism, military action, or any escalation or worsening thereof; (v) the announcement or pendency of this Agreement, the Offer, or the Merger, or the identity of Torchlight as the acquirer; (vi) changes in the market price or trading volume of the Shares (it being understood that the underlying causes thereof may be taken into account to the extent not otherwise excluded hereunder); or (vii) any failure by Ridgeline to meet any internal or published projections, forecasts, or estimates of revenue, earnings, or other financial or operating metrics (it being understood that the underlying causes thereof may be taken into account to the extent not otherwise excluded hereunder).

"Company SEC Documents" means all reports, schedules, registration statements, definitive proxy statements, forms, statements, and other documents (including exhibits and all other information incorporated by reference therein) filed by or on behalf of Ridgeline with the SEC since January 1, 2022, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company's Quarterly Reports on Form 10-Q, and all Current Reports on Form 8-K filed during such period.

"Convertible Notes" means the $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026, issued by Ridgeline to Pinnacle Venture Resources Fund II, LP pursuant to that certain Indenture dated as of June 30, 2022, by and between Ridgeline and Clearmont National Bank, N.A. (as trustee), which notes are convertible at a conversion price of $2.00 per share into an aggregate of 3,900,000 Shares of Company Common Stock.

"De Minimis Threshold" means $25,000 per individual claim.

"Depositary" means Hargrove Depositary Services, Inc., located at 55 Water Street, New York, NY 10041.

"DGCL" means the Delaware General Corporation Law, as amended from time to time.

"Dissenting Shares" has the meaning set forth in Section 3.7.

"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL (or such later time as may be specified in the Certificate of Merger).

"Environmental Laws" means all applicable federal, state, provincial, and local laws, statutes, regulations, ordinances, rules, orders, decrees, judgments, consent decrees, settlements, and permits relating to (a) the protection of the environment, human health, or safety as it relates to exposure to Hazardous Materials, (b) the handling, use, storage, treatment, transport, disposal, release, or threatened release of Hazardous Materials, or (c) the reclamation, remediation, or restoration of mining sites, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Ontario Environmental Protection Act (R.S.O. 1990, c. E.19), and the Ontario Mining Act (R.S.O. 1990, c. M.14), each as amended from time to time.

"Escrow Account" means Account No. 4410-7832-001 established and maintained at Clearmont National Bank, N.A. pursuant to the Escrow Agreement.

"Escrow Agent" means Clearmont National Bank, N.A., located at 300 Delaware Avenue, Suite 700, Wilmington, DE 19801.

"Escrow Agreement" means the Escrow Agreement to be entered into among Torchlight, the Shareholder Representative, and the Escrow Agent on or prior to the Closing Date, substantially in the form attached hereto as Exhibit C.

"Escrow Amount" means $9,000,000.

"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months after the Closing Date (i.e., expiring on January 16, 2026, assuming a Closing Date of July 16, 2024).

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

"Expiration Date" means initially June 14, 2024, at 12:00 midnight, New York City time, as such date and time may be extended pursuant to Section 2.2.

"Fully Diluted Shares" means 23,000,000 shares, consisting of (a) 18,000,000 outstanding Shares of Company Common Stock, plus (b) 3,900,000 Shares issuable upon conversion of the Convertible Notes, plus (c) 1,100,000 Shares issuable upon exercise of all outstanding Options/Warrants.

"Fundamental Representations" has the meaning set forth in Section 8.1(b).

"Fundamental Representations Cap" means $45,000,000, being one hundred percent (100%) of the Aggregate Offer Consideration.

"Governmental Authority" means any federal, state, provincial, local, municipal, foreign, or other governmental or quasi-governmental authority of any nature, including any governmental agency, branch, department, official, commission, court, tribunal, administrative body, or instrumentality, any self-regulatory organization, and any arbitrator or arbitral body.

"Hawk Ridge Project" means the 12,400-hectare cobalt-nickel exploration property located in the Timiskaming District, Ontario, Canada, covered by Ontario Mining Claims 4271883 through 4271947 (65 claims in total), with an NI 43-101 compliant indicated resource of 28,600 tonnes contained cobalt equivalent, as more fully described in Schedule 4.7.

"Hazardous Materials" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as "hazardous," "toxic," "pollutant," "contaminant," "radioactive," or words of similar meaning or effect, including petroleum and petroleum products, asbestos-containing materials, per- and polyfluoroalkyl substances (PFAS), polychlorinated biphenyls, and radon.

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.

"HSR Clearance" means the expiration or early termination of all applicable waiting periods (including any extension thereof) under the HSR Act with respect to the transactions contemplated by this Agreement.

"ICA" means the Investment Canada Act (R.S.C. 1985, c. 28 (1st Supp.)), as amended.

"ICA Clearance" means the receipt of clearance, approval, or a "no further action" letter from the responsible Minister under Part IV or Part IV.1 of the Investment Canada Act, or the expiration of the applicable review period without any order or notice that would prohibit consummation of the transactions contemplated hereby.

"Indemnification Cap" means $9,000,000, being twenty percent (20%) of the Aggregate Offer Consideration.

"Iron Lake Project" means the 3,200-hectare nickel-cobalt property located in Baraga County, Michigan, covered by Michigan Department of Environment, Great Lakes, and Energy Lease Nos. ML-2021-0334 and ML-2021-0335, as more fully described in Schedule 4.7.

"Knowledge" means, with respect to the Company, the actual knowledge after reasonable inquiry of Gordon McTavish (Chief Executive Officer), Elena Vasquez (Chief Financial Officer), and Justin Theriault (Vice President, Exploration), and with respect to Torchlight, the actual knowledge after reasonable inquiry of Henrik Aldermann (Chief Executive Officer), Marguerite Soo-Chan (Chief Financial Officer), and Patricia Edevane (General Counsel).

"Letter of Transmittal" means the letter of transmittal to be used by holders of Shares to tender their Shares pursuant to the Offer, substantially in the form attached hereto as Exhibit B.

"Lien" means any mortgage, pledge, hypothecation, security interest, encumbrance, claim, lien (statutory or otherwise), charge, option, right of first refusal, easement, servitude, restriction on transfer, or other restriction or limitation of any nature whatsoever.

"Losses" means any and all losses, damages, liabilities, obligations, costs, fees, and expenses (including reasonable attorneys' fees and expenses of investigation), whether or not involving a Third-Party Claim.

"Merger" has the meaning set forth in the Recitals.

"Merger Consideration" means $2.50 per Share in cash, without interest, payable in connection with the Merger.

"Minimum Condition" has the meaning set forth in Section 2.3(a).

"Offer" means the cash tender offer by Torchlight for all outstanding Shares of Company Common Stock at the Offer Price, upon the terms and subject to the conditions set forth herein and in the Offer Documents.

"Offer Documents" means the Schedule TO, the Offer to Purchase, the Letter of Transmittal, and all amendments, supplements, and exhibits thereto.

"Offer Price" means $2.50 per Share, net to the seller in cash, without interest thereon.

"Options/Warrants" means all outstanding options and warrants to purchase Shares of Company Common Stock, which, as of the date hereof, are exercisable for an aggregate of up to 1,100,000 Shares, as more fully described in Schedule 4.2.

"Outside Date" means September 2, 2024.

"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', and other similar Liens arising or incurred in the ordinary course of business, (c) zoning, entitlement, building codes, and other land use regulations imposed by Governmental Authorities having jurisdiction over any real property, (d) Liens, encumbrances, and restrictions arising under applicable mining laws and regulations in the ordinary course, (e) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security legislation, (f) easements, covenants, conditions, restrictions, and other similar matters of record affecting title to real property that do not materially interfere with the current use thereof, and (g) Liens securing the Convertible Notes pursuant to the Indenture dated June 30, 2022.

"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, estate, unincorporated organization, association, Governmental Authority, or other entity.

"Pinnacle" means Pinnacle Venture Resources Fund II, LP, a Delaware limited partnership, whose general partner is Pinnacle Venture Resources GP II, LLC, and whose principal is Theodore ("Ted") Vanderhoek, with offices at 75 Ashbury Asset Advisors, Suite 1400, Boston, MA 02109.

"Purchaser" or "Torchlight" means Torchlight Mining Corp., a British Columbia corporation.

"R&W Insurance Policy" means the representations and warranties insurance policy issued by Northern Shield Specialty Insurance Co. (Policy No. NSW-RWI-2024-05117), with a policy limit of $9,000,000 in excess of a retention of $9,000,000, and a policy term of three (3) years from the Closing Date.

"Registered Agent (Company)" means National Corporate Filing Services, Inc., located at 1209 Orange Street, Wilmington, DE 19801.

"Registered Agent (Purchaser)" means Capitol Registered Agents, Inc., located at 850 New Burton Road, Suite 201, Dover, DE 19904.

"Reverse Termination Fee" means $2,250,000, being five percent (5.0%) of the Aggregate Offer Consideration.

"Revolving Credit Facility" means Torchlight's C$500,000,000 revolving credit facility, dated as of September 15, 2022, maturing September 15, 2027, with Meridian Commercial Bank, N.A. (383 Madison Avenue, New York, NY 10179) serving as administrative agent, and a syndicate of lenders party thereto, as amended, restated, supplemented, or otherwise modified from time to time.

"Schedule 14D-9" means the Solicitation/Recommendation Statement on Schedule 14D-9 filed by Ridgeline with the SEC (SEC Acc. No. 0001193125-24-088234).

"Schedule TO" means the Tender Offer Statement on Schedule TO filed by Torchlight with the SEC (SEC Acc. No. 0001193125-24-072841).

"SEC" means the U.S. Securities and Exchange Commission.

"Shareholder Representative" means the Person designated by Ridgeline prior to the Closing to serve as the representative of the former stockholders of Ridgeline in connection with the Escrow Agreement, indemnification claims, and other post-Closing matters contemplated by this Agreement.

"Short-Form Merger Threshold" means ninety percent (90%) of the outstanding Shares of Company Common Stock.

"Special Committee" has the meaning set forth in the Recitals.

"Superior Proposal" has the meaning set forth in Section 6.4(d).

"Support Agreement" has the meaning set forth in the Recitals.

"Surviving Entity" means Torchlight Mining Corp., as the surviving entity following the consummation of the Merger.

"Tax" or "Taxes" means (a) all federal, state, provincial, local, foreign, and other taxes, imposts, rates, levies, fees, and other governmental charges of any kind, including all income, gross receipts, capital, sales, use, ad valorem, value-added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property (real or personal), customs duties, alternative minimum, and estimated taxes, and (b) all interest, penalties, additions to tax, and additional amounts imposed with respect to any item described in clause (a).

"Termination Fee" means $1,575,000, being three and one-half percent (3.5%) of the Aggregate Offer Consideration.

"Transfer Agent" means Dominion Transfer & Trust Co., located at 1100 Centre Street, Suite 600, Wilmington, DE 19805.

"Treasury Cash" means cash and cash equivalents on hand and available to Torchlight.

Section 1.2 — Rules of Construction

(a) Unless the context otherwise requires, references in this Agreement to "Articles," "Sections," "Exhibits," and "Schedules" shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement.

(b) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.

(c) Unless the context otherwise requires, words importing the singular shall include the plural, and vice versa, and words importing any gender shall include all genders.

(d) The table of contents and the headings of Articles and Sections herein are for convenience of reference only, do not constitute part of this Agreement, and shall not affect in any way the meaning or interpretation of this Agreement.

(e) Any reference to a statute or statutory provision shall be construed as a reference to that statute or statutory provision as from time to time amended, modified, re-enacted, or consolidated and shall include reference to all statutory instruments, orders, or regulations made pursuant thereto, except to the extent that any amendment, modification, re-enactment, or consolidation made after the date of this Agreement would increase or alter the liability of a party hereto.

(f) The Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The disclosure of any fact or item in any Schedule shall, should the existence of such fact or item or its relevance to another Section be reasonably apparent on the face of such disclosure, be deemed to be disclosed with respect to every other Section to which such fact or item may be relevant.

(g) Dollar amounts are stated in United States dollars unless otherwise specifically indicated.

(h) References to "days" mean calendar days unless the term "Business Days" is used.

ARTICLE II — THE OFFER

Section 2.1 — The Offer

(a) Subject to the terms and conditions of this Agreement, Torchlight shall make a cash tender offer to acquire all outstanding Shares of Company Common Stock at the Offer Price of $2.50 per Share, net to the seller in cash, without interest thereon and subject to any applicable withholding of Taxes. The aggregate consideration to be paid by Torchlight for all 18,000,000 outstanding Shares equals the Aggregate Offer Consideration of $45,000,000. The Offer is not subject to any financing contingency.

(b) The Offer Price of $2.50 per Share represents (i) a premium of approximately 38.89% to the undisturbed closing price of $1.80 per Share of Company Common Stock on NYSE American on March 13, 2024, the last full trading day prior to the filing of the Schedule TO, and (ii) a premium of approximately 45.35% to the thirty (30)-day volume-weighted average price of $1.72 per Share for the period ending on March 13, 2024.

(c) Torchlight has filed the Schedule TO with the SEC on March 14, 2024 (SEC Acc. No. 0001193125-24-072841), commencing the Offer. The Schedule TO includes as exhibits the Offer to Purchase and the Letter of Transmittal, substantially in the forms attached hereto as Exhibit A and Exhibit B, respectively. Torchlight shall file with the SEC all amendments and supplements to the Schedule TO and the Offer Documents as may be required by the Exchange Act, the rules and regulations of the SEC, or by applicable law.

(d) Hargrove Depositary Services, Inc. (55 Water Street, New York, NY 10041) shall serve as the depositary and paying agent for the Offer. Dominion Transfer & Trust Co. (1100 Centre Street, Suite 600, Wilmington, DE 19805) shall serve as the transfer agent for the Shares in connection with the Offer and the Merger.

(e) The Offer shall be made upon the terms and subject to the conditions set forth in this Agreement and the Offer Documents. The obligations of Torchlight to accept for payment and pay for Shares validly tendered and not withdrawn pursuant to the Offer are subject to the satisfaction or waiver (where permissible) of the conditions set forth in Section 2.3.

Section 2.2 — Expiration and Extension of the Offer

(a) The Offer is initially scheduled to expire at 12:00 midnight, New York City time, on June 14, 2024 (the "Initial Expiration Date"). The term "Expiration Date" shall mean the Initial Expiration Date, as it may be extended pursuant to this Section 2.2.

(b) Torchlight may, in its sole discretion, extend the Offer in one or more successive periods of not more than ten (10) Business Days each if, as of the then-scheduled Expiration Date, any condition to the Offer set forth in Section 2.3 has not been satisfied or waived (where permissible). Torchlight shall extend the Offer for any period required by applicable law, any rule, regulation, interpretation, or position of the SEC, or the staff thereof.

(c) Notwithstanding the foregoing, Torchlight shall not be required or permitted to extend the Offer beyond September 2, 2024 (the "Outside Date"), unless otherwise agreed in writing by the parties hereto.

(d) Notice of any extension of the Offer shall be given by press release or other public announcement and by filing with the SEC no later than 9:00 a.m., New York City time, on the next Business Day after the previously scheduled Expiration Date, setting forth the new Expiration Date and any other material terms of the extension.

(e) As of the date of this Agreement, the parties acknowledge that the Expiration Date has been extended to July 10, 2024, to allow for receipt of HSR Clearance and ICA Clearance.

Section 2.3 — Conditions to the Offer

Notwithstanding any other provision of this Agreement, Torchlight shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, to pay for any Shares tendered pursuant to the Offer unless each of the following conditions shall have been satisfied or waived (where permissible) as of the Expiration Date:

(a) Minimum Condition

The number of Shares that have been validly tendered and not withdrawn pursuant to the Offer, together with any Shares already owned, directly or indirectly, by Torchlight or any of its Affiliates (if any), shall represent at least a majority (more than 50%) of the Fully Diluted Shares outstanding as of the Expiration Date (the "Minimum Condition"). As of the date hereof, the Fully Diluted Shares equal 23,000,000 shares, consisting of (i) 18,000,000 outstanding Shares of Company Common Stock, (ii) 3,900,000 Shares issuable upon conversion of the Convertible Notes, and (iii) 1,100,000 Shares issuable upon exercise of all outstanding Options/Warrants. Accordingly, the Minimum Condition threshold as of the date hereof is 11,500,001 Shares. As of the date hereof, Torchlight does not own, beneficially or of record, any Shares of Company Common Stock (0 shares, representing 0.0% of outstanding Shares).

(b) Regulatory Conditions

(i) HSR Clearance. The waiting period (including any extension thereof) applicable to the consummation of the Offer under the HSR Act shall have expired or been terminated. The parties acknowledge that HSR notification was filed on March 21, 2024 (HSR Transaction No. 20241387), and the applicable filing fee of $111,000 was paid by Torchlight.

(ii) ICA Clearance. Clearance under the Investment Canada Act shall have been received, whether by way of an approval, a "no further action" letter, or expiration of the applicable review period without action. The parties acknowledge that ICA notification was filed on March 25, 2024.

(i) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any statute, law, ordinance, rule, regulation, executive order, decree, injunction, judgment, or other order (whether temporary, preliminary, or permanent) that is then in effect and has the effect of restraining, enjoining, making illegal, or otherwise prohibiting the consummation of the Offer or the Merger.

(ii) Accuracy of Representations and Warranties. The representations and warranties of the Company set forth in Article IV shall be true and correct in all material respects (or, in the case of any such representations and warranties that are qualified by materiality or Company Material Adverse Effect, true and correct in all respects) as of the date of this Agreement and as of the Expiration Date as though made on and as of such date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall be so true and correct as of such specific date).

(iii) Performance of Covenants. The Company shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by it under this Agreement on or prior to the Expiration Date.

(iv) No Company Material Adverse Effect. Since the date of this Agreement, no Company Material Adverse Effect shall have occurred and be continuing.

(v) No Adverse Recommendation Change. The Company Board shall not have (A) withdrawn, modified, qualified, or changed, or publicly proposed to withdraw, modify, qualify, or change, in a manner adverse to Torchlight, the Company Board Recommendation, (B) failed to include the Company Board Recommendation in the Schedule 14D-9 as filed with the SEC, or (C) approved, endorsed, or recommended to the stockholders of Ridgeline any Acquisition Proposal (any of the foregoing, an "Adverse Recommendation Change").

(vi) No Termination. This Agreement shall not have been terminated in accordance with Article IX hereof.

(d) Satisfaction and Waiver

The Minimum Condition set forth in Section 2.3(a) may not be waived by Torchlight without the prior written consent of Ridgeline. All other conditions to the Offer set forth in this Section 2.3 (other than the Minimum Condition and any regulatory conditions that are required by applicable law to be satisfied as a condition to consummation of the Offer) may be waived by Torchlight in its sole and absolute discretion, in whole or in part, at any time and from time to time.

Section 2.4 — Acceptance for Payment; Payment

(a) Promptly after the Expiration Date (and in any event within two (2) Business Days thereafter), subject to satisfaction or waiver (where permissible) of all conditions set forth in Section 2.3, Torchlight shall (i) accept for payment all Shares validly tendered and not properly withdrawn pursuant to the Offer and (ii) pay for such Shares by depositing the aggregate Offer Price therefor with the Depositary.

(b) The Depositary shall, promptly after receipt of such funds, distribute the applicable Offer Price to each tendering stockholder against the surrender of stock certificates (or the confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company) and the delivery of a duly executed and properly completed Letter of Transmittal and any other documents required by the Letter of Transmittal.

(c) The Transfer Agent shall cooperate with the Depositary in effecting the transfer of Shares tendered pursuant to the Offer.

Section 2.5 — Closing

(a) The closing of the Offer (the "Closing") shall take place on the date on which Shares are first accepted for payment pursuant to the Offer (the "Closing Date"), at the offices of Calderwood & Harkness LLP, 900 Third Avenue, 28th Floor, New York, NY 10022, or at such other place, date, and time as the parties may mutually agree in writing.

(b) Simultaneously with or promptly following the Closing, Torchlight shall fund the Escrow Amount of $9,000,000 by wire transfer of immediately available funds to the Escrow Account (Account No. 4410-7832-001 at Clearmont National Bank, N.A.) in accordance with the terms and conditions of the Escrow Agreement.

(c) At the Closing, each party shall deliver to the other party all documents, instruments, and certificates required to be delivered by such party pursuant to this Agreement.

Section 2.6 — Source of Funds

(a) Torchlight shall fund the Aggregate Offer Consideration ($45,000,000), the Convertible Note Payoff (as defined in Section 3.6, being $8,075,014), the Escrow Amount ($9,000,000), and all related transaction fees and expenses entirely from (i) Treasury Cash and (ii) a draw on the Revolving Credit Facility.

(b) The anticipated draw on the Revolving Credit Facility at or prior to the Closing is C$40,000,000 (approximately US$29,200,000, calculated at an exchange rate of C$1.00 = US$0.73). Torchlight represents and warrants that the Revolving Credit Facility is in full force and effect and that sufficient availability exists thereunder to fund such draw.

(c) The Offer is not subject to any financing contingency. Torchlight represents and warrants that it has, and at the Closing it will have, sufficient immediately available funds to consummate the Offer, the Merger, and all related transactions contemplated by this Agreement, including the payment of the Aggregate Offer Consideration, the Convertible Note Payoff, the Escrow Amount, and all fees and expenses related thereto.

Section 2.7 — Withdrawal Rights

Any stockholder of Ridgeline who has tendered Shares pursuant to the Offer may withdraw such tender at any time prior to the Expiration Date. All withdrawals shall be made in accordance with Rule 14d-7 promulgated under the Exchange Act and the procedures set forth in the Letter of Transmittal. Shares properly withdrawn shall not be deemed to have been validly tendered for purposes of determining whether the Minimum Condition has been satisfied. Any Shares withdrawn may be re-tendered at any time prior to the Expiration Date in accordance with the terms of the Offer.

Section 2.8 — Subsequent Offering Period

Following the acceptance for payment of Shares pursuant to the Offer, Torchlight may, but shall not be required to, provide a subsequent offering period of between three (3) and twenty (20) Business Days in accordance with Rule 14d-11 promulgated under the Exchange Act, during which additional Shares may be tendered. No withdrawal rights shall apply to Shares tendered during any such subsequent offering period. Torchlight shall accept for payment and pay for any Shares tendered during the subsequent offering period at the Offer Price, promptly after the tender thereof.

ARTICLE III — THE MERGER

Section 3.1 — The Merger

(a) Following the Closing, if Torchlight (together with its Affiliates) owns at least ninety percent (90%) of the outstanding Shares (the Short-Form Merger Threshold), Torchlight shall effect the Merger as a "short-form" merger pursuant to Section 253 of the DGCL, as promptly as practicable following the Closing, without a vote or approval of the stockholders of Ridgeline. In such event, the Company shall take all actions reasonably requested by Torchlight to facilitate the filing of the Certificate of Merger.

(b) If, following the Closing (including after giving effect to any subsequent offering period), Torchlight (together with its Affiliates) owns at least a majority, but less than ninety percent (90%), of the outstanding Shares, Torchlight shall cause a "long-form" merger to be effected pursuant to Section 251 of the DGCL, and Ridgeline shall, at the request of Torchlight, call and hold a meeting of its stockholders as promptly as practicable for the purpose of approving the Merger. Torchlight shall vote, or cause to be voted, all Shares then owned by it in favor of the Merger. Ridgeline shall use all reasonable efforts to solicit from stockholders of Ridgeline proxies in favor of the Merger, and shall include in any proxy statement distributed to stockholders in connection therewith the recommendation of the Company Board in favor of the Merger.

Section 3.2 — Certificate of Merger

(a) Torchlight shall cause the Certificate of Merger, substantially in the form attached hereto as Exhibit D, to be duly executed, verified, acknowledged, and filed with the Secretary of State of the State of Delaware on the Closing Date (or, if the Merger is to be effected as a long-form merger, on the date of stockholder approval thereof), or as soon as practicable thereafter.

(b) The Merger shall become effective at the time the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (or at such later time as the parties shall agree and specify in the Certificate of Merger) (the "Effective Time").

Section 3.3 — Effects of the Merger

(a) At the Effective Time, Ridgeline shall be merged with and into Torchlight in accordance with the DGCL. Ridgeline shall thereupon cease to exist as a separate entity. Torchlight shall be the Surviving Entity and shall continue to be governed by the laws of the Province of British Columbia, Canada. The Merger shall have the effects set forth in the DGCL.

(b) The articles of incorporation and bylaws (or equivalent organizational documents) of Torchlight in effect immediately prior to the Effective Time shall not be affected by the Merger and shall continue unchanged as the organizational documents of the Surviving Entity.

(c) The directors and officers of Torchlight immediately prior to the Effective Time shall continue as the directors and officers of the Surviving Entity.

Section 3.4 — Conversion of Shares

(a) At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares then owned by Torchlight, Ridgeline, or any wholly owned subsidiary of either Torchlight or Ridgeline, and (ii) Dissenting Shares) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration of $2.50 per Share in cash, without interest thereon, subject to any applicable withholding of Taxes. From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist.

(b) At the Effective Time, each Share owned by Torchlight (including all Shares acquired by Torchlight in the Offer and any Shares acquired by Torchlight after the Closing and prior to the Effective Time) and each Share owned by Ridgeline or any wholly owned subsidiary of either Torchlight or Ridgeline shall be cancelled and retired, and no consideration shall be delivered in exchange therefor.

(c) Each share of common stock of Torchlight issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and unaffected by the Merger.

Section 3.5 — Treatment of Options and Warrants

At the Effective Time, each outstanding and unexercised option and warrant to purchase Shares of Company Common Stock (1,100,000 in the aggregate as of the date hereof, as more fully described in Schedule 4.2) shall be cancelled. To the extent the per-share exercise price of any such option or warrant is less than $2.50, the holder thereof shall be entitled to receive, in consideration for such cancellation, a cash payment equal to the product of (a) the excess, if any, of $2.50 over the per-share exercise price of such option or warrant, multiplied by (b) the number of Shares subject to such option or warrant immediately prior to the Effective Time, less any applicable withholding Taxes. To the extent the per-share exercise price of any such option or warrant is equal to or greater than $2.50, such option or warrant shall be cancelled for no consideration. Such payment shall be made by the Surviving Entity as promptly as practicable following the Effective Time and in no event later than ten (10) Business Days after the Effective Time.

Section 3.6 — Treatment of Convertible Notes

(a) The Convertible Notes, consisting of $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026, issued by Ridgeline to Pinnacle Venture Resources Fund II, LP pursuant to the Indenture dated as of June 30, 2022, which are convertible at a conversion price of $2.00 per share into an aggregate of 3,900,000 Shares, shall be repaid in full at par plus accrued and unpaid interest on the Closing Date.

(b) Accrued and unpaid interest on the Convertible Notes shall be calculated from the last interest payment date of December 31, 2023, through and including the Closing Date (assumed for purposes hereof to be July 16, 2024, representing 198 days). The accrued interest calculation is as follows:

$7,800,000 × 6.5% × (198 ÷ 365) = $275,014 (rounded to the nearest dollar)

(c) The total Convertible Note Payoff shall therefore equal $7,800,000 (principal) plus $275,014 (accrued interest), or $8,075,014 in the aggregate.

(d) Payment of the Convertible Note Payoff shall be made by wire transfer of immediately available funds on the Closing Date, concurrently with the acceptance of Shares for payment, to the account designated by Pinnacle Venture Resources Fund II, LP (Employer Identification Number: 84-3317629), at its offices at 75 Ashbury Asset Advisors, Suite 1400, Boston, MA 02109, or to such other account as Pinnacle shall have designated in writing not less than three (3) Business Days prior to the Closing Date.

(e) Following such repayment in full, all Liens and security interests granted by Ridgeline or any of its subsidiaries under or in connection with the Convertible Notes and the related Indenture shall be released, discharged, and terminated, and the trustee under the Indenture shall execute and deliver, at Torchlight's expense, such instruments and documents as Torchlight may reasonably request to evidence and effectuate such release.

Section 3.7 — Dissenting Shares

(a) Shares held by stockholders of Ridgeline who have not tendered such Shares in the Offer and who have properly exercised and perfected their demand for appraisal of such Shares under Section 262 of the DGCL and who have not effectively withdrawn or lost such appraisal rights (collectively, "Dissenting Shares") shall not be converted into the right to receive the Merger Consideration at the Effective Time, but instead shall be entitled only to such rights as are granted under Section 262 of the DGCL.

(b) If any such stockholder fails to properly perfect, or effectively withdraws or otherwise loses, its right to appraisal under Section 262 of the DGCL, each such Share held by such stockholder shall thereupon be deemed to have been converted at the Effective Time into the right to receive the Merger Consideration of $2.50 per Share in cash, without interest thereon.

(c) Ridgeline shall give Torchlight prompt written notice of any demands for appraisal of Shares received by Ridgeline, and Torchlight shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. Ridgeline shall not, except with the prior written consent of Torchlight (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to, or settle or offer to settle, any such demand for appraisal.

Section 3.8 — Paying Agent

(a) Hargrove Depositary Services, Inc. (55 Water Street, New York, NY 10041) shall serve as paying agent for the Merger Consideration in connection with the Merger. Torchlight shall deposit, or cause to be deposited, with the Depositary, on or prior to the Effective Time, cash in an amount sufficient to pay the aggregate Merger Consideration payable to the holders of Shares entitled to receive the Merger Consideration pursuant to Section 3.4.

(b) The depositary agent fees payable to Hargrove Depositary Services, Inc. in connection with the Offer and the Merger shall be $18,500.

(c) Any portion of the funds deposited with the Depositary that remains unclaimed by former stockholders of Ridgeline for twelve (12) months after the Effective Time shall be returned to the Surviving Entity, upon demand. Thereafter, any former stockholders of Ridgeline who have not complied with the applicable procedures for payment shall look only to the Surviving Entity for payment of their claims, subject to applicable abandoned property, escheat, or similar laws.

ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY

Except as set forth in the Disclosure Schedules delivered by Ridgeline to Torchlight concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedules"), Ridgeline hereby represents and warrants to Torchlight as follows:

Section 4.1 — Organization, Good Standing, and Qualification

Ridgeline is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. Ridgeline's registered agent in the State of Delaware is National Corporate Filing Services, Inc., 1209 Orange Street, Wilmington, DE 19801. Ridgeline has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as currently conducted. Ridgeline is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or operation of its properties or the nature of its business activities requires it to be so qualified, including the State of Michigan and the Province of Ontario, Canada, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Ridgeline has delivered or made available to Torchlight true, complete, and correct copies of its certificate of incorporation and bylaws, each as currently in effect.

Section 4.2 — Capitalization

(a) The authorized capital stock of Ridgeline consists of 50,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share, of which no shares of preferred stock are issued and outstanding. As of the date hereof, there are 18,000,000 Shares of Company Common Stock issued and outstanding, all of which have been duly authorized, validly issued, and are fully paid and non-assessable.

(b) In addition to the outstanding Shares, 3,900,000 Shares are reserved for issuance upon conversion of the Convertible Notes (at a conversion price of $2.00 per share), and 1,100,000 Shares are reserved for issuance upon the exercise of outstanding Options/Warrants, as more fully set forth on Schedule 4.2.

(c) No other shares of capital stock or other equity securities of Ridgeline are authorized, issued, reserved for issuance, or outstanding. There are no outstanding bonds, debentures, notes, or other obligations of Ridgeline convertible into or exchangeable for, or that give any Person a right to subscribe for or acquire, any shares of capital stock of Ridgeline, other than the Convertible Notes and the Options/Warrants.

(d) The Fully Diluted Shares as of the date hereof equal 23,000,000 shares.

(e) Schedule 4.2 sets forth a true, complete, and correct list of all outstanding Options/Warrants, including the holder thereof, the number of Shares subject thereto, the exercise price per share, and the expiration date.

Section 4.3 — Authority; Binding Effect

(a) Ridgeline has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Ridgeline, and the consummation by Ridgeline of the transactions contemplated hereby, have been duly and validly authorized by the Company Board (upon the unanimous recommendation of the Special Committee), and no other corporate proceedings on the part of Ridgeline are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than, in the case of the Merger, the approval of the stockholders of Ridgeline to the extent required under the DGCL, which approval will not be required if the Merger is effected as a short-form merger pursuant to Section 253 of the DGCL).

(b) This Agreement has been duly executed and delivered by Ridgeline and, assuming due execution and delivery by Torchlight, constitutes a legal, valid, and binding obligation of Ridgeline, enforceable against Ridgeline in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).

Section 4.4 — No Conflicts; Consents

OFFER-TO-PURCHASE AGREEMENT
by and between
TORCHLIGHT MINING CORP.
and
RIDGELINE COBALT INC.
Dated as of May 2, 2024
Execution Version
OFFER-TO-PURCHASE AGREEMENT
This OFFER-TO-PURCHASE AGREEMENT (this "Agreement") is made and entered into as of May 2, 2024, by and between TORCHLIGHT MINING CORP., a corporation organized under the laws of the Province of British Columbia, Canada, registered as a foreign private issuer with the U.S. Securities and Exchange Commission, with its principal executive offices at 1200 – 885 West Georgia Street, Vancouver, BC V6C 3E8, Canada (the "Purchaser" or "Torchlight"), and RIDGELINE COBALT INC., a corporation incorporated in the State of Delaware, with its principal executive offices at 44 Lakeshore Drive, Suite 300, Marquette, MI 49855 (the "Company" or "Ridgeline" or "RCI").
RECITALS
WHEREAS, Torchlight desires to acquire all of the outstanding shares of common stock, par value $0.001 per share (the "Company Common Stock" or "Shares"), of Ridgeline, of which 18,000,000 shares are issued and outstanding as of the date hereof;
WHEREAS, Torchlight proposes to make a cash tender offer (the "Offer") to acquire all outstanding Shares at a price of $2.50 per Share, net to the seller in cash, without interest thereon (the "Offer Price"), upon the terms and subject to the conditions set forth herein and in the related Offer to Purchase and Letter of Transmittal;
WHEREAS, the aggregate consideration for all outstanding Shares equals $45,000,000 (the "Aggregate Offer Consideration");
WHEREAS, the Board of Directors of Ridgeline (the "Company Board"), acting upon the unanimous recommendation of a Special Committee of independent directors comprised of Samuel Kerensky (Chair), Priya Natarajan, and Claudette Duval (the "Special Committee"), has (i) determined that the Offer and the Merger (as defined below) are fair to and in the best interests of Ridgeline and its stockholders, (ii) approved this Agreement, the Offer, and the Merger, and (iii) resolved to recommend that holders of Shares accept the Offer and tender their Shares pursuant thereto (the "Company Board Recommendation"), as set forth in the Solicitation/Recommendation Statement on Schedule 14D-9 (SEC Acc. No. 0001193125-24-088234) filed with the Securities and Exchange Commission on April 5, 2024;
WHEREAS, concurrently herewith, and as a condition and inducement to Torchlight's willingness to enter into this Agreement, Pinnacle Venture Resources Fund II, LP, a Delaware limited partnership ("Pinnacle"), the holder of 3,600,000 Shares (representing 20.0% of outstanding Company Common Stock) and $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026 issued pursuant to that certain Indenture dated as of June 30, 2022 (the "Convertible Notes"), has entered into a Tender and Support Agreement with Torchlight dated as of April 8, 2024 (the "Support Agreement"), pursuant to which Pinnacle has agreed, among other things, to tender all of its Shares into the Offer and to vote such Shares in favor of the Merger;
WHEREAS, following consummation of the Offer, Torchlight intends to effect a merger of Ridgeline with and into Torchlight (the "Merger") pursuant to Section 253 of the Delaware General Corporation Law (the "DGCL") if Torchlight acquires 90% or more of the outstanding Shares, or pursuant to Section 251 of the DGCL otherwise, in each case at the same per-share price as the Offer Price;
WHEREAS, Torchlight has filed a Tender Offer Statement on Schedule TO with the Securities and Exchange Commission (SEC Acc. No. 0001193125-24-072841) on March 14, 2024, commencing the Offer; and
WHEREAS, the parties desire to set forth their agreements regarding the Offer and the Merger on the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises and the respective representations, warranties, covenants, and agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, hereby agree as follows:
ARTICLE I — DEFINITIONS
Section 1.1 — Defined Terms
As used in this Agreement, the following terms shall have the meanings set forth below:
"Acquisition Proposal" means any inquiry, proposal, or offer from any Person (other than Torchlight or any of its Affiliates) relating to any (a) merger, consolidation, business combination, recapitalization, liquidation, dissolution, or similar transaction involving Ridgeline, (b) acquisition by any Person or "group" (as defined in Section 13(d) of the Exchange Act) of beneficial ownership of twenty percent (20%) or more of the outstanding Shares or of the consolidated total assets (including equity securities of Subsidiaries) of Ridgeline, or (c) any other transaction the consummation of which would reasonably be expected to prevent or materially delay the consummation of the Offer or the Merger.
"Adverse Recommendation Change" has the meaning set forth in Section 2.3(c)(v).
"Affiliate" means, with respect to any Person, any other Person that directly or indirectly controls, is controlled by, or is under common control with, such Person. For purposes of this definition, "control" (including, with correlative meanings, "controlled by" and "under common control with") means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a Person, whether through the ownership of voting securities, by contract, or otherwise.
"Aggregate Offer Consideration" means $45,000,000, being the product of 18,000,000 Shares multiplied by the Offer Price of $2.50 per Share.
"Agreement" means this Offer-to-Purchase Agreement, including all Exhibits and Schedules hereto, as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms hereof.
"Basket Amount" means $450,000, being one percent (1%) of the Aggregate Offer Consideration.
"Business Day" means any day other than a Saturday, Sunday, or any day on which commercial banks in New York, New York or Vancouver, British Columbia are authorized or required by applicable law to be closed.
"Certificate of Merger" means the certificate of merger to be filed with the Secretary of State of the State of Delaware in connection with the Merger, substantially in the form attached hereto as Exhibit D.
"Clearmont" means Clearmont National Bank, N.A., located at 300 Delaware Avenue, Suite 700, Wilmington, DE 19801.
"Closing" has the meaning set forth in Section 2.5.
"Closing Date" means the date on which the Offer closes and Shares are first accepted for payment pursuant to the Offer.
"Code" means the Internal Revenue Code of 1986, as amended from time to time, and the rules and regulations promulgated thereunder.
"Company" or "Ridgeline" means Ridgeline Cobalt Inc., a Delaware corporation.
"Company Board" means the Board of Directors of Ridgeline.
"Company Board Recommendation" has the meaning set forth in the Recitals.
"Company Common Stock" or "Shares" means the shares of common stock, par value $0.001 per share, of Ridgeline.
"Company Material Adverse Effect" means any change, event, occurrence, effect, condition, development, or state of facts that, individually or in the aggregate, has had or would reasonably be expected to have a material adverse effect on (a) the business, assets, liabilities, condition (financial or otherwise), or results of operations of Ridgeline, taken as a whole, or (b) the ability of Ridgeline to timely consummate the transactions contemplated by this Agreement; provided, however, that in no event shall any of the following, alone or in combination, be deemed to constitute, or be taken into account in determining whether there has been or would be, a Company Material Adverse Effect: (i) changes in general economic, financial, or capital market conditions, including changes in prevailing interest rates, credit availability, currency exchange rates, or commodity prices (including cobalt and nickel prices), in each case, to the extent not disproportionately affecting Ridgeline relative to other participants in the industries in which it operates; (ii) changes in conditions generally affecting the mining, minerals exploration, or specialty chemicals industries, to the extent not disproportionately affecting Ridgeline; (iii) changes in applicable law or changes in GAAP or applicable accounting standards, or the interpretation or enforcement thereof, in each case, after the date hereof; (iv) changes arising from natural disasters, pandemics, epidemics, acts of war, sabotage, terrorism, military action, or any escalation or worsening thereof; (v) the announcement or pendency of this Agreement, the Offer, or the Merger, or the identity of Torchlight as the acquirer; (vi) changes in the market price or trading volume of the Shares (it being understood that the underlying causes thereof may be taken into account to the extent not otherwise excluded hereunder); or (vii) any failure by Ridgeline to meet any internal or published projections, forecasts, or estimates of revenue, earnings, or other financial or operating metrics (it being understood that the underlying causes thereof may be taken into account to the extent not otherwise excluded hereunder).
"Company SEC Documents" means all reports, schedules, registration statements, definitive proxy statements, forms, statements, and other documents (including exhibits and all other information incorporated by reference therein) filed by or on behalf of Ridgeline with the SEC since January 1, 2022, including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2023, the Company's Quarterly Reports on Form 10-Q, and all Current Reports on Form 8-K filed during such period.
"Convertible Notes" means the $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026, issued by Ridgeline to Pinnacle Venture Resources Fund II, LP pursuant to that certain Indenture dated as of June 30, 2022, by and between Ridgeline and Clearmont National Bank, N.A. (as trustee), which notes are convertible at a conversion price of $2.00 per share into an aggregate of 3,900,000 Shares of Company Common Stock.
"De Minimis Threshold" means $25,000 per individual claim.
"Depositary" means Hargrove Depositary Services, Inc., located at 55 Water Street, New York, NY 10041.
"DGCL" means the Delaware General Corporation Law, as amended from time to time.
"Dissenting Shares" has the meaning set forth in Section 3.7.
"Effective Time" means the time at which the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware in accordance with the DGCL (or such later time as may be specified in the Certificate of Merger).
"Environmental Laws" means all applicable federal, state, provincial, and local laws, statutes, regulations, ordinances, rules, orders, decrees, judgments, consent decrees, settlements, and permits relating to (a) the protection of the environment, human health, or safety as it relates to exposure to Hazardous Materials, (b) the handling, use, storage, treatment, transport, disposal, release, or threatened release of Hazardous Materials, or (c) the reclamation, remediation, or restoration of mining sites, including the Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. § 6901 et seq.), the Clean Air Act (42 U.S.C. § 7401 et seq.), the Clean Water Act (33 U.S.C. § 1251 et seq.), the Toxic Substances Control Act (15 U.S.C. § 2601 et seq.), the Ontario Environmental Protection Act (R.S.O. 1990, c. E.19), and the Ontario Mining Act (R.S.O. 1990, c. M.14), each as amended from time to time.
"Escrow Account" means Account No. 4410-7832-001 established and maintained at Clearmont National Bank, N.A. pursuant to the Escrow Agreement.
"Escrow Agent" means Clearmont National Bank, N.A., located at 300 Delaware Avenue, Suite 700, Wilmington, DE 19801.
"Escrow Agreement" means the Escrow Agreement to be entered into among Torchlight, the Shareholder Representative, and the Escrow Agent on or prior to the Closing Date, substantially in the form attached hereto as Exhibit C.
"Escrow Amount" means $9,000,000.
"Escrow Period" means the period commencing on the Closing Date and ending on the date that is eighteen (18) months after the Closing Date (i.e., expiring on January 16, 2026, assuming a Closing Date of July 16, 2024).
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder.
"Expiration Date" means initially June 14, 2024, at 12:00 midnight, New York City time, as such date and time may be extended pursuant to Section 2.2.
"Fully Diluted Shares" means 23,000,000 shares, consisting of (a) 18,000,000 outstanding Shares of Company Common Stock, plus (b) 3,900,000 Shares issuable upon conversion of the Convertible Notes, plus (c) 1,100,000 Shares issuable upon exercise of all outstanding Options/Warrants.
"Fundamental Representations" has the meaning set forth in Section 8.1(b).
"Fundamental Representations Cap" means $45,000,000, being one hundred percent (100%) of the Aggregate Offer Consideration.
"Governmental Authority" means any federal, state, provincial, local, municipal, foreign, or other governmental or quasi-governmental authority of any nature, including any governmental agency, branch, department, official, commission, court, tribunal, administrative body, or instrumentality, any self-regulatory organization, and any arbitrator or arbitral body.
"Hawk Ridge Project" means the 12,400-hectare cobalt-nickel exploration property located in the Timiskaming District, Ontario, Canada, covered by Ontario Mining Claims 4271883 through 4271947 (65 claims in total), with an NI 43-101 compliant indicated resource of 28,600 tonnes contained cobalt equivalent, as more fully described in Schedule 4.7.
"Hazardous Materials" means any substance, material, or waste that is regulated, classified, or otherwise characterized under any Environmental Law as "hazardous," "toxic," "pollutant," "contaminant," "radioactive," or words of similar meaning or effect, including petroleum and petroleum products, asbestos-containing materials, per- and polyfluoroalkyl substances (PFAS), polychlorinated biphenyls, and radon.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder.
"HSR Clearance" means the expiration or early termination of all applicable waiting periods (including any extension thereof) under the HSR Act with respect to the transactions contemplated by this Agreement.
"ICA" means the Investment Canada Act (R.S.C. 1985, c. 28 (1st Supp.)), as amended.
"ICA Clearance" means the receipt of clearance, approval, or a "no further action" letter from the responsible Minister under Part IV or Part IV.1 of the Investment Canada Act, or the expiration of the applicable review period without any order or notice that would prohibit consummation of the transactions contemplated hereby.
"Indemnification Cap" means $9,000,000, being twenty percent (20%) of the Aggregate Offer Consideration.
"Iron Lake Project" means the 3,200-hectare nickel-cobalt property located in Baraga County, Michigan, covered by Michigan Department of Environment, Great Lakes, and Energy Lease Nos. ML-2021-0334 and ML-2021-0335, as more fully described in Schedule 4.7.
"Knowledge" means, with respect to the Company, the actual knowledge after reasonable inquiry of Gordon McTavish (Chief Executive Officer), Elena Vasquez (Chief Financial Officer), and Justin Theriault (Vice President, Exploration), and with respect to Torchlight, the actual knowledge after reasonable inquiry of Henrik Aldermann (Chief Executive Officer), Marguerite Soo-Chan (Chief Financial Officer), and Patricia Edevane (General Counsel).
"Letter of Transmittal" means the letter of transmittal to be used by holders of Shares to tender their Shares pursuant to the Offer, substantially in the form attached hereto as Exhibit B.
"Lien" means any mortgage, pledge, hypothecation, security interest, encumbrance, claim, lien (statutory or otherwise), charge, option, right of first refusal, easement, servitude, restriction on transfer, or other restriction or limitation of any nature whatsoever.
"Losses" means any and all losses, damages, liabilities, obligations, costs, fees, and expenses (including reasonable attorneys' fees and expenses of investigation), whether or not involving a Third-Party Claim.
"Merger" has the meaning set forth in the Recitals.
"Merger Consideration" means $2.50 per Share in cash, without interest, payable in connection with the Merger.
"Minimum Condition" has the meaning set forth in Section 2.3(a).
"Offer" means the cash tender offer by Torchlight for all outstanding Shares of Company Common Stock at the Offer Price, upon the terms and subject to the conditions set forth herein and in the Offer Documents.
"Offer Documents" means the Schedule TO, the Offer to Purchase, the Letter of Transmittal, and all amendments, supplements, and exhibits thereto.
"Offer Price" means $2.50 per Share, net to the seller in cash, without interest thereon.
"Options/Warrants" means all outstanding options and warrants to purchase Shares of Company Common Stock, which, as of the date hereof, are exercisable for an aggregate of up to 1,100,000 Shares, as more fully described in Schedule 4.2.
"Outside Date" means September 2, 2024.
"Permitted Liens" means (a) Liens for Taxes not yet due and payable or being contested in good faith by appropriate proceedings for which adequate reserves have been established in accordance with GAAP, (b) mechanics', carriers', workers', repairers', and other similar Liens arising or incurred in the ordinary course of business, (c) zoning, entitlement, building codes, and other land use regulations imposed by Governmental Authorities having jurisdiction over any real property, (d) Liens, encumbrances, and restrictions arising under applicable mining laws and regulations in the ordinary course, (e) pledges or deposits in connection with workers' compensation, unemployment insurance, and other social security legislation, (f) easements, covenants, conditions, restrictions, and other similar matters of record affecting title to real property that do not materially interfere with the current use thereof, and (g) Liens securing the Convertible Notes pursuant to the Indenture dated June 30, 2022.
"Person" means any individual, corporation, partnership, limited liability company, joint venture, trust, estate, unincorporated organization, association, Governmental Authority, or other entity.
"Pinnacle" means Pinnacle Venture Resources Fund II, LP, a Delaware limited partnership, whose general partner is Pinnacle Venture Resources GP II, LLC, and whose principal is Theodore ("Ted") Vanderhoek, with offices at 75 Ashbury Asset Advisors, Suite 1400, Boston, MA 02109.
"Purchaser" or "Torchlight" means Torchlight Mining Corp., a British Columbia corporation.
"R&W Insurance Policy" means the representations and warranties insurance policy issued by Northern Shield Specialty Insurance Co. (Policy No. NSW-RWI-2024-05117), with a policy limit of $9,000,000 in excess of a retention of $9,000,000, and a policy term of three (3) years from the Closing Date.
"Registered Agent (Company)" means National Corporate Filing Services, Inc., located at 1209 Orange Street, Wilmington, DE 19801.
"Registered Agent (Purchaser)" means Capitol Registered Agents, Inc., located at 850 New Burton Road, Suite 201, Dover, DE 19904.
"Reverse Termination Fee" means $2,250,000, being five percent (5.0%) of the Aggregate Offer Consideration.
"Revolving Credit Facility" means Torchlight's C$500,000,000 revolving credit facility, dated as of September 15, 2022, maturing September 15, 2027, with Meridian Commercial Bank, N.A. (383 Madison Avenue, New York, NY 10179) serving as administrative agent, and a syndicate of lenders party thereto, as amended, restated, supplemented, or otherwise modified from time to time.
"Schedule 14D-9" means the Solicitation/Recommendation Statement on Schedule 14D-9 filed by Ridgeline with the SEC (SEC Acc. No. 0001193125-24-088234).
"Schedule TO" means the Tender Offer Statement on Schedule TO filed by Torchlight with the SEC (SEC Acc. No. 0001193125-24-072841).
"SEC" means the U.S. Securities and Exchange Commission.
"Shareholder Representative" means the Person designated by Ridgeline prior to the Closing to serve as the representative of the former stockholders of Ridgeline in connection with the Escrow Agreement, indemnification claims, and other post-Closing matters contemplated by this Agreement.
"Short-Form Merger Threshold" means ninety percent (90%) of the outstanding Shares of Company Common Stock.
"Special Committee" has the meaning set forth in the Recitals.
"Superior Proposal" has the meaning set forth in Section 6.4(d).
"Support Agreement" has the meaning set forth in the Recitals.
"Surviving Entity" means Torchlight Mining Corp., as the surviving entity following the consummation of the Merger.
"Tax" or "Taxes" means (a) all federal, state, provincial, local, foreign, and other taxes, imposts, rates, levies, fees, and other governmental charges of any kind, including all income, gross receipts, capital, sales, use, ad valorem, value-added, transfer, franchise, profits, inventory, capital stock, license, withholding, payroll, employment, social security, unemployment, excise, severance, stamp, occupation, property (real or personal), customs duties, alternative minimum, and estimated taxes, and (b) all interest, penalties, additions to tax, and additional amounts imposed with respect to any item described in clause (a).
"Termination Fee" means $1,575,000, being three and one-half percent (3.5%) of the Aggregate Offer Consideration.
"Transfer Agent" means Dominion Transfer & Trust Co., located at 1100 Centre Street, Suite 600, Wilmington, DE 19805.
"Treasury Cash" means cash and cash equivalents on hand and available to Torchlight.
Section 1.2 — Rules of Construction
(a) Unless the context otherwise requires, references in this Agreement to "Articles," "Sections," "Exhibits," and "Schedules" shall be deemed references to Articles and Sections of, and Exhibits and Schedules to, this Agreement.
(b) The words "include," "includes," and "including" shall be deemed to be followed by the phrase "without limitation." The words "hereof," "herein," "hereby," "hereunder," and similar terms in this Agreement shall refer to this Agreement as a whole and not to any particular provision of this Agreement.
(c) Unless the context otherwise requires, words importing the singular shall include the plural, and vice versa, and words importing any gender shall include all genders.
(d) The table of contents and the headings of Articles and Sections herein are for convenience of reference only, do not constitute part of this Agreement, and shall not affect in any way the meaning or interpretation of this Agreement.
(e) Any reference to a statute or statutory provision shall be construed as a reference to that statute or statutory provision as from time to time amended, modified, re-enacted, or consolidated and shall include reference to all statutory instruments, orders, or regulations made pursuant thereto, except to the extent that any amendment, modification, re-enactment, or consolidation made after the date of this Agreement would increase or alter the liability of a party hereto.
(f) The Schedules and Exhibits referred to herein shall be construed with, and as an integral part of, this Agreement to the same extent as if they were set forth verbatim herein. The disclosure of any fact or item in any Schedule shall, should the existence of such fact or item or its relevance to another Section be reasonably apparent on the face of such disclosure, be deemed to be disclosed with respect to every other Section to which such fact or item may be relevant.
(g) Dollar amounts are stated in United States dollars unless otherwise specifically indicated.
(h) References to "days" mean calendar days unless the term "Business Days" is used.
ARTICLE II — THE OFFER
Section 2.1 — The Offer
(a) Subject to the terms and conditions of this Agreement, Torchlight shall make a cash tender offer to acquire all outstanding Shares of Company Common Stock at the Offer Price of $2.50 per Share, net to the seller in cash, without interest thereon and subject to any applicable withholding of Taxes. The aggregate consideration to be paid by Torchlight for all 18,000,000 outstanding Shares equals the Aggregate Offer Consideration of $45,000,000. The Offer is not subject to any financing contingency.
(b) The Offer Price of $2.50 per Share represents (i) a premium of approximately 38.89% to the undisturbed closing price of $1.80 per Share of Company Common Stock on NYSE American on March 13, 2024, the last full trading day prior to the filing of the Schedule TO, and (ii) a premium of approximately 45.35% to the thirty (30)-day volume-weighted average price of $1.72 per Share for the period ending on March 13, 2024.
(c) Torchlight has filed the Schedule TO with the SEC on March 14, 2024 (SEC Acc. No. 0001193125-24-072841), commencing the Offer. The Schedule TO includes as exhibits the Offer to Purchase and the Letter of Transmittal, substantially in the forms attached hereto as Exhibit A and Exhibit B, respectively. Torchlight shall file with the SEC all amendments and supplements to the Schedule TO and the Offer Documents as may be required by the Exchange Act, the rules and regulations of the SEC, or by applicable law.
(d) Hargrove Depositary Services, Inc. (55 Water Street, New York, NY 10041) shall serve as the depositary and paying agent for the Offer. Dominion Transfer & Trust Co. (1100 Centre Street, Suite 600, Wilmington, DE 19805) shall serve as the transfer agent for the Shares in connection with the Offer and the Merger.
(e) The Offer shall be made upon the terms and subject to the conditions set forth in this Agreement and the Offer Documents. The obligations of Torchlight to accept for payment and pay for Shares validly tendered and not withdrawn pursuant to the Offer are subject to the satisfaction or waiver (where permissible) of the conditions set forth in Section 2.3.
Section 2.2 — Expiration and Extension of the Offer
(a) The Offer is initially scheduled to expire at 12:00 midnight, New York City time, on June 14, 2024 (the "Initial Expiration Date"). The term "Expiration Date" shall mean the Initial Expiration Date, as it may be extended pursuant to this Section 2.2.
(b) Torchlight may, in its sole discretion, extend the Offer in one or more successive periods of not more than ten (10) Business Days each if, as of the then-scheduled Expiration Date, any condition to the Offer set forth in Section 2.3 has not been satisfied or waived (where permissible). Torchlight shall extend the Offer for any period required by applicable law, any rule, regulation, interpretation, or position of the SEC, or the staff thereof.
(c) Notwithstanding the foregoing, Torchlight shall not be required or permitted to extend the Offer beyond September 2, 2024 (the "Outside Date"), unless otherwise agreed in writing by the parties hereto.
(d) Notice of any extension of the Offer shall be given by press release or other public announcement and by filing with the SEC no later than 9:00 a.m., New York City time, on the next Business Day after the previously scheduled Expiration Date, setting forth the new Expiration Date and any other material terms of the extension.
(e) As of the date of this Agreement, the parties acknowledge that the Expiration Date has been extended to July 10, 2024, to allow for receipt of HSR Clearance and ICA Clearance.
Section 2.3 — Conditions to the Offer
Notwithstanding any other provision of this Agreement, Torchlight shall not be required to accept for payment or, subject to any applicable rules and regulations of the SEC, to pay for any Shares tendered pursuant to the Offer unless each of the following conditions shall have been satisfied or waived (where permissible) as of the Expiration Date:
(a) Minimum Condition
The number of Shares that have been validly tendered and not withdrawn pursuant to the Offer, together with any Shares already owned, directly or indirectly, by Torchlight or any of its Affiliates (if any), shall represent at least a majority (more than 50%) of the Fully Diluted Shares outstanding as of the Expiration Date (the "Minimum Condition"). As of the date hereof, the Fully Diluted Shares equal 23,000,000 shares, consisting of (i) 18,000,000 outstanding Shares of Company Common Stock, (ii) 3,900,000 Shares issuable upon conversion of the Convertible Notes, and (iii) 1,100,000 Shares issuable upon exercise of all outstanding Options/Warrants. Accordingly, the Minimum Condition threshold as of the date hereof is 11,500,001 Shares. As of the date hereof, Torchlight does not own, beneficially or of record, any Shares of Company Common Stock (0 shares, representing 0.0% of outstanding Shares).
(b) Regulatory Conditions
(i) HSR Clearance. The waiting period (including any extension thereof) applicable to the consummation of the Offer under the HSR Act shall have expired or been terminated. The parties acknowledge that HSR notification was filed on March 21, 2024 (HSR Transaction No. 20241387), and the applicable filing fee of $111,000 was paid by Torchlight.
(ii) ICA Clearance. Clearance under the Investment Canada Act shall have been received, whether by way of an approval, a "no further action" letter, or expiration of the applicable review period without action. The parties acknowledge that ICA notification was filed on March 25, 2024.
(c) Other Conditions
(i) No Injunction. No Governmental Authority of competent jurisdiction shall have enacted, issued, promulgated, enforced, or entered any statute, law, ordinance, rule, regulation, executive order, decree, injunction, judgment, or other order (whether temporary, preliminary, or permanent) that is then in effect and has the effect of restraining, enjoining, making illegal, or otherwise prohibiting the consummation of the Offer or the Merger.
(ii) Accuracy of Representations and Warranties. The representations and warranties of the Company set forth in Article IV shall be true and correct in all material respects (or, in the case of any such representations and warranties that are qualified by materiality or Company Material Adverse Effect, true and correct in all respects) as of the date of this Agreement and as of the Expiration Date as though made on and as of such date (except to the extent any such representation or warranty expressly speaks as of a specific date, in which case such representation or warranty shall be so true and correct as of such specific date).
(iii) Performance of Covenants. The Company shall have performed and complied in all material respects with all covenants and agreements required to be performed or complied with by it under this Agreement on or prior to the Expiration Date.
(iv) No Company Material Adverse Effect. Since the date of this Agreement, no Company Material Adverse Effect shall have occurred and be continuing.
(v) No Adverse Recommendation Change. The Company Board shall not have (A) withdrawn, modified, qualified, or changed, or publicly proposed to withdraw, modify, qualify, or change, in a manner adverse to Torchlight, the Company Board Recommendation, (B) failed to include the Company Board Recommendation in the Schedule 14D-9 as filed with the SEC, or (C) approved, endorsed, or recommended to the stockholders of Ridgeline any Acquisition Proposal (any of the foregoing, an "Adverse Recommendation Change").
(vi) No Termination. This Agreement shall not have been terminated in accordance with Article IX hereof.
(d) Satisfaction and Waiver
The Minimum Condition set forth in Section 2.3(a) may not be waived by Torchlight without the prior written consent of Ridgeline. All other conditions to the Offer set forth in this Section 2.3 (other than the Minimum Condition and any regulatory conditions that are required by applicable law to be satisfied as a condition to consummation of the Offer) may be waived by Torchlight in its sole and absolute discretion, in whole or in part, at any time and from time to time.
Section 2.4 — Acceptance for Payment; Payment
(a) Promptly after the Expiration Date (and in any event within two (2) Business Days thereafter), subject to satisfaction or waiver (where permissible) of all conditions set forth in Section 2.3, Torchlight shall (i) accept for payment all Shares validly tendered and not properly withdrawn pursuant to the Offer and (ii) pay for such Shares by depositing the aggregate Offer Price therefor with the Depositary.
(b) The Depositary shall, promptly after receipt of such funds, distribute the applicable Offer Price to each tendering stockholder against the surrender of stock certificates (or the confirmation of a book-entry transfer of such Shares into the Depositary's account at The Depository Trust Company) and the delivery of a duly executed and properly completed Letter of Transmittal and any other documents required by the Letter of Transmittal.
(c) The Transfer Agent shall cooperate with the Depositary in effecting the transfer of Shares tendered pursuant to the Offer.
Section 2.5 — Closing
(a) The closing of the Offer (the "Closing") shall take place on the date on which Shares are first accepted for payment pursuant to the Offer (the "Closing Date"), at the offices of Calderwood & Harkness LLP, 900 Third Avenue, 28th Floor, New York, NY 10022, or at such other place, date, and time as the parties may mutually agree in writing.
(b) Simultaneously with or promptly following the Closing, Torchlight shall fund the Escrow Amount of $9,000,000 by wire transfer of immediately available funds to the Escrow Account (Account No. 4410-7832-001 at Clearmont National Bank, N.A.) in accordance with the terms and conditions of the Escrow Agreement.
(c) At the Closing, each party shall deliver to the other party all documents, instruments, and certificates required to be delivered by such party pursuant to this Agreement.
Section 2.6 — Source of Funds
(a) Torchlight shall fund the Aggregate Offer Consideration ($45,000,000), the Convertible Note Payoff (as defined in Section 3.6, being $8,075,014), the Escrow Amount ($9,000,000), and all related transaction fees and expenses entirely from (i) Treasury Cash and (ii) a draw on the Revolving Credit Facility.
(b) The anticipated draw on the Revolving Credit Facility at or prior to the Closing is C$40,000,000 (approximately US$29,200,000, calculated at an exchange rate of C$1.00 = US$0.73). Torchlight represents and warrants that the Revolving Credit Facility is in full force and effect and that sufficient availability exists thereunder to fund such draw.
(c) The Offer is not subject to any financing contingency. Torchlight represents and warrants that it has, and at the Closing it will have, sufficient immediately available funds to consummate the Offer, the Merger, and all related transactions contemplated by this Agreement, including the payment of the Aggregate Offer Consideration, the Convertible Note Payoff, the Escrow Amount, and all fees and expenses related thereto.
Section 2.7 — Withdrawal Rights
Any stockholder of Ridgeline who has tendered Shares pursuant to the Offer may withdraw such tender at any time prior to the Expiration Date. All withdrawals shall be made in accordance with Rule 14d-7 promulgated under the Exchange Act and the procedures set forth in the Letter of Transmittal. Shares properly withdrawn shall not be deemed to have been validly tendered for purposes of determining whether the Minimum Condition has been satisfied. Any Shares withdrawn may be re-tendered at any time prior to the Expiration Date in accordance with the terms of the Offer.
Section 2.8 — Subsequent Offering Period
Following the acceptance for payment of Shares pursuant to the Offer, Torchlight may, but shall not be required to, provide a subsequent offering period of between three (3) and twenty (20) Business Days in accordance with Rule 14d-11 promulgated under the Exchange Act, during which additional Shares may be tendered. No withdrawal rights shall apply to Shares tendered during any such subsequent offering period. Torchlight shall accept for payment and pay for any Shares tendered during the subsequent offering period at the Offer Price, promptly after the tender thereof.
ARTICLE III — THE MERGER
Section 3.1 — The Merger
(a) Following the Closing, if Torchlight (together with its Affiliates) owns at least ninety percent (90%) of the outstanding Shares (the Short-Form Merger Threshold), Torchlight shall effect the Merger as a "short-form" merger pursuant to Section 253 of the DGCL, as promptly as practicable following the Closing, without a vote or approval of the stockholders of Ridgeline. In such event, the Company shall take all actions reasonably requested by Torchlight to facilitate the filing of the Certificate of Merger.
(b) If, following the Closing (including after giving effect to any subsequent offering period), Torchlight (together with its Affiliates) owns at least a majority, but less than ninety percent (90%), of the outstanding Shares, Torchlight shall cause a "long-form" merger to be effected pursuant to Section 251 of the DGCL, and Ridgeline shall, at the request of Torchlight, call and hold a meeting of its stockholders as promptly as practicable for the purpose of approving the Merger. Torchlight shall vote, or cause to be voted, all Shares then owned by it in favor of the Merger. Ridgeline shall use all reasonable efforts to solicit from stockholders of Ridgeline proxies in favor of the Merger, and shall include in any proxy statement distributed to stockholders in connection therewith the recommendation of the Company Board in favor of the Merger.
Section 3.2 — Certificate of Merger
(a) Torchlight shall cause the Certificate of Merger, substantially in the form attached hereto as Exhibit D, to be duly executed, verified, acknowledged, and filed with the Secretary of State of the State of Delaware on the Closing Date (or, if the Merger is to be effected as a long-form merger, on the date of stockholder approval thereof), or as soon as practicable thereafter.
(b) The Merger shall become effective at the time the Certificate of Merger is duly filed with the Secretary of State of the State of Delaware (or at such later time as the parties shall agree and specify in the Certificate of Merger) (the "Effective Time").
Section 3.3 — Effects of the Merger
(a) At the Effective Time, Ridgeline shall be merged with and into Torchlight in accordance with the DGCL. Ridgeline shall thereupon cease to exist as a separate entity. Torchlight shall be the Surviving Entity and shall continue to be governed by the laws of the Province of British Columbia, Canada. The Merger shall have the effects set forth in the DGCL.
(b) The articles of incorporation and bylaws (or equivalent organizational documents) of Torchlight in effect immediately prior to the Effective Time shall not be affected by the Merger and shall continue unchanged as the organizational documents of the Surviving Entity.
(c) The directors and officers of Torchlight immediately prior to the Effective Time shall continue as the directors and officers of the Surviving Entity.
Section 3.4 — Conversion of Shares
(a) At the Effective Time, each Share issued and outstanding immediately prior to the Effective Time (other than (i) Shares then owned by Torchlight, Ridgeline, or any wholly owned subsidiary of either Torchlight or Ridgeline, and (ii) Dissenting Shares) shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive the Merger Consideration of $2.50 per Share in cash, without interest thereon, subject to any applicable withholding of Taxes. From and after the Effective Time, all such Shares shall no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist.
(b) At the Effective Time, each Share owned by Torchlight (including all Shares acquired by Torchlight in the Offer and any Shares acquired by Torchlight after the Closing and prior to the Effective Time) and each Share owned by Ridgeline or any wholly owned subsidiary of either Torchlight or Ridgeline shall be cancelled and retired, and no consideration shall be delivered in exchange therefor.
(c) Each share of common stock of Torchlight issued and outstanding immediately prior to the Effective Time shall remain issued and outstanding and unaffected by the Merger.
Section 3.5 — Treatment of Options and Warrants
At the Effective Time, each outstanding and unexercised option and warrant to purchase Shares of Company Common Stock (1,100,000 in the aggregate as of the date hereof, as more fully described in Schedule 4.2) shall be cancelled. To the extent the per-share exercise price of any such option or warrant is less than $2.50, the holder thereof shall be entitled to receive, in consideration for such cancellation, a cash payment equal to the product of (a) the excess, if any, of $2.50 over the per-share exercise price of such option or warrant, multiplied by (b) the number of Shares subject to such option or warrant immediately prior to the Effective Time, less any applicable withholding Taxes. To the extent the per-share exercise price of any such option or warrant is equal to or greater than $2.50, such option or warrant shall be cancelled for no consideration. Such payment shall be made by the Surviving Entity as promptly as practicable following the Effective Time and in no event later than ten (10) Business Days after the Effective Time.
Section 3.6 — Treatment of Convertible Notes
(a) The Convertible Notes, consisting of $7,800,000 aggregate principal amount of 6.5% Senior Secured Convertible Notes due June 30, 2026, issued by Ridgeline to Pinnacle Venture Resources Fund II, LP pursuant to the Indenture dated as of June 30, 2022, which are convertible at a conversion price of $2.00 per share into an aggregate of 3,900,000 Shares, shall be repaid in full at par plus accrued and unpaid interest on the Closing Date.
(b) Accrued and unpaid interest on the Convertible Notes shall be calculated from the last interest payment date of December 31, 2023, through and including the Closing Date (assumed for purposes hereof to be July 16, 2024, representing 198 days). The accrued interest calculation is as follows:
$7,800,000 × 6.5% × (198 ÷ 365) = $275,014 (rounded to the nearest dollar)
(c) The total Convertible Note Payoff shall therefore equal $7,800,000 (principal) plus $275,014 (accrued interest), or $8,075,014 in the aggregate.
(d) Payment of the Convertible Note Payoff shall be made by wire transfer of immediately available funds on the Closing Date, concurrently with the acceptance of Shares for payment, to the account designated by Pinnacle Venture Resources Fund II, LP (Employer Identification Number: 84-3317629), at its offices at 75 Ashbury Asset Advisors, Suite 1400, Boston, MA 02109, or to such other account as Pinnacle shall have designated in writing not less than three (3) Business Days prior to the Closing Date.
(e) Following such repayment in full, all Liens and security interests granted by Ridgeline or any of its subsidiaries under or in connection with the Convertible Notes and the related Indenture shall be released, discharged, and terminated, and the trustee under the Indenture shall execute and deliver, at Torchlight's expense, such instruments and documents as Torchlight may reasonably request to evidence and effectuate such release.
Section 3.7 — Dissenting Shares
(a) Shares held by stockholders of Ridgeline who have not tendered such Shares in the Offer and who have properly exercised and perfected their demand for appraisal of such Shares under Section 262 of the DGCL and who have not effectively withdrawn or lost such appraisal rights (collectively, "Dissenting Shares") shall not be converted into the right to receive the Merger Consideration at the Effective Time, but instead shall be entitled only to such rights as are granted under Section 262 of the DGCL.
(b) If any such stockholder fails to properly perfect, or effectively withdraws or otherwise loses, its right to appraisal under Section 262 of the DGCL, each such Share held by such stockholder shall thereupon be deemed to have been converted at the Effective Time into the right to receive the Merger Consideration of $2.50 per Share in cash, without interest thereon.
(c) Ridgeline shall give Torchlight prompt written notice of any demands for appraisal of Shares received by Ridgeline, and Torchlight shall have the right to participate in and direct all negotiations and proceedings with respect to such demands. Ridgeline shall not, except with the prior written consent of Torchlight (which consent shall not be unreasonably withheld, conditioned, or delayed), voluntarily make any payment with respect to, or settle or offer to settle, any such demand for appraisal.
Section 3.8 — Paying Agent
(a) Hargrove Depositary Services, Inc. (55 Water Street, New York, NY 10041) shall serve as paying agent for the Merger Consideration in connection with the Merger. Torchlight shall deposit, or cause to be deposited, with the Depositary, on or prior to the Effective Time, cash in an amount sufficient to pay the aggregate Merger Consideration payable to the holders of Shares entitled to receive the Merger Consideration pursuant to Section 3.4.
(b) The depositary agent fees payable to Hargrove Depositary Services, Inc. in connection with the Offer and the Merger shall be $18,500.
(c) Any portion of the funds deposited with the Depositary that remains unclaimed by former stockholders of Ridgeline for twelve (12) months after the Effective Time shall be returned to the Surviving Entity, upon demand. Thereafter, any former stockholders of Ridgeline who have not complied with the applicable procedures for payment shall look only to the Surviving Entity for payment of their claims, subject to applicable abandoned property, escheat, or similar laws.
ARTICLE IV — REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Except as set forth in the Disclosure Schedules delivered by Ridgeline to Torchlight concurrently with the execution and delivery of this Agreement (the "Company Disclosure Schedules"), Ridgeline hereby represents and warrants to Torchlight as follows:
Section 4.1 — Organization, Good Standing, and Qualification
Ridgeline is a corporation duly organized, validly existing, and in good standing under the laws of the State of Delaware. Ridgeline's registered agent in the State of Delaware is National Corporate Filing Services, Inc., 1209 Orange Street, Wilmington, DE 19801. Ridgeline has all requisite corporate power and authority to own, lease, and operate its properties and assets and to carry on its business as currently conducted. Ridgeline is duly qualified or licensed to do business as a foreign corporation and is in good standing in each jurisdiction in which the ownership or operation of its properties or the nature of its business activities requires it to be so qualified, including the State of Michigan and the Province of Ontario, Canada, except where the failure to be so qualified or in good standing would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect. Ridgeline has delivered or made available to Torchlight true, complete, and correct copies of its certificate of incorporation and bylaws, each as currently in effect.
Section 4.2 — Capitalization
(a) The authorized capital stock of Ridgeline consists of 50,000,000 shares of common stock, par value $0.001 per share, and 5,000,000 shares of preferred stock, par value $0.001 per share, of which no shares of preferred stock are issued and outstanding. As of the date hereof, there are 18,000,000 Shares of Company Common Stock issued and outstanding, all of which have been duly authorized, validly issued, and are fully paid and non-assessable.
(b) In addition to the outstanding Shares, 3,900,000 Shares are reserved for issuance upon conversion of the Convertible Notes (at a conversion price of $2.00 per share), and 1,100,000 Shares are reserved for issuance upon the exercise of outstanding Options/Warrants, as more fully set forth on Schedule 4.2.
(c) No other shares of capital stock or other equity securities of Ridgeline are authorized, issued, reserved for issuance, or outstanding. There are no outstanding bonds, debentures, notes, or other obligations of Ridgeline convertible into or exchangeable for, or that give any Person a right to subscribe for or acquire, any shares of capital stock of Ridgeline, other than the Convertible Notes and the Options/Warrants.
(d) The Fully Diluted Shares as of the date hereof equal 23,000,000 shares.
(e) Schedule 4.2 sets forth a true, complete, and correct list of all outstanding Options/Warrants, including the holder thereof, the number of Shares subject thereto, the exercise price per share, and the expiration date.
Section 4.3 — Authority; Binding Effect
(a) Ridgeline has all necessary corporate power and authority to execute and deliver this Agreement and to consummate the transactions contemplated hereby. The execution and delivery of this Agreement by Ridgeline, and the consummation by Ridgeline of the transactions contemplated hereby, have been duly and validly authorized by the Company Board (upon the unanimous recommendation of the Special Committee), and no other corporate proceedings on the part of Ridgeline are necessary to authorize this Agreement or to consummate the transactions contemplated hereby (other than, in the case of the Merger, the approval of the stockholders of Ridgeline to the extent required under the DGCL, which approval will not be required if the Merger is effected as a short-form merger pursuant to Section 253 of the DGCL).
(b) This Agreement has been duly executed and delivered by Ridgeline and, assuming due execution and delivery by Torchlight, constitutes a legal, valid, and binding obligation of Ridgeline, enforceable against Ridgeline in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, and other similar laws relating to or affecting creditors' rights generally and general equitable principles (whether considered in a proceeding in equity or at law).
Section 4.4 — No Conflicts; Consents
(a) The execution and delivery of this Agreement by Ridgeline does not, and the performance by Ridgeline of its obligations hereunder and the consummation of the transactions contemplated hereby will not, (i) conflict with or violate the certificate of incorporation or bylaws of Ridgeline, (ii) assuming receipt of all required regulatory approvals and the making of all required SEC filings, conflict with or violate in any material respect any applicable law, rule, regulation, order, judgment, or decree applicable to Ridgeline or by which any property or asset of Ridgeline is bound or affected, or (iii) result in any material breach of or constitute a default (or an event that, with notice or lapse of time or both, would become a default) under, or give to others any right of termination, amendment, acceleration, or cancellation of, or result in the creation of any Lien (other than a Permitted Lien) on any property or asset of Ridgeline pursuant to, any material contract, agreement, lease, license, instrument, note, bond, mortgage, indenture, or other obligation to which Ridgeline is a party or by which Ridgeline or any property or asset of Ridgeline is bound or affected.
(b) No consent, approval, authorization, or permit of, or filing with or notification to, any Governmental Authority is required by or with respect to Ridgeline in connection with the execution and delivery of this Agreement or the consummation of the transactions contemplated hereby, except for (i) filings with the SEC in compliance with the Exchange Act (including the Schedule 14D-9), (ii) the filing of the Certificate of Merger with the Secretary of State of the State of Delaware, (iii) the HSR Clearance, (iv) the ICA Clearance, and (v) such other consents, approvals, authorizations, permits, filings, or notifications the failure of which to obtain or make would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 4.5 — SEC Filings and Financial Statements
(a) Ridgeline has timely filed (or furnished, as applicable) with the SEC all Company SEC Documents required to be filed (or furnished) since January 1, 2022. Each Company SEC Document, at the time of its filing (or, if amended or superseded by a subsequent filing, at the time of such subsequent filing), complied in all material respects with the applicable requirements of the Exchange Act, the Securities Act of 1933, as amended, and the rules and regulations of the SEC promulgated thereunder, and did not, as of its date (or, if amended or superseded, as of the date of such amendment or superseding filing), contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
(b) The consolidated financial statements of Ridgeline included in the Company SEC Documents, together with the related notes and schedules, were prepared in accordance with United States generally accepted accounting principles ("GAAP") applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto or, in the case of unaudited statements, as permitted by Form 10-Q of the SEC), and fairly present in all material respects the consolidated financial position, results of operations, and cash flows of Ridgeline as of the dates and for the periods indicated therein, subject, in the case of unaudited interim financial statements, to normal year-end adjustments that are not individually or in the aggregate material in amount.
(c) For the fiscal year ended December 31, 2023, Ridgeline reported revenue of approximately $1.2 million derived primarily from toll-processing arrangements and pilot production operations. As of December 31, 2023, Ridgeline had cash and cash equivalents on hand of approximately $4.6 million and total indebtedness of $7,800,000 (consisting entirely of the Convertible Notes).
(d) Ridgeline's independent registered public accounting firm is Aldgate Pryor LLP, CPA, located at 211 West Fort Street, Suite 500, Detroit, MI 48226 (engagement partner: Dennis Pryor). Aldgate Pryor LLP has issued an unqualified opinion on the consolidated financial statements of Ridgeline for the fiscal year ended December 31, 2023.
Section 4.6 — Absence of Certain Changes
Since December 31, 2023, through the date of this Agreement, (a) Ridgeline has conducted its business in all material respects in the ordinary course of business consistent with past practice, and (b) there has not been any event, occurrence, change, development, condition, or state of facts that has had or would reasonably be expected to have, individually or in the aggregate, a Company Material Adverse Effect.
Section 4.7 — Title to Properties; Mining Rights
(a) Hawk Ridge Project. Ridgeline holds good and valid title to sixty-five (65) mining claims registered with the Ontario Ministry of Mines (Ontario Mining Claims 4271883 through 4271947, inclusive) comprising approximately 12,400 hectares in the Timiskaming District, Ontario, Canada. The Hawk Ridge Project has an NI 43-101 compliant indicated mineral resource of 28,600 tonnes of contained cobalt equivalent, as set forth in the technical report entitled "NI 43-101 Technical Report and Resource Estimate, Hawk Ridge Cobalt-Nickel Project, Timiskaming District, Ontario" dated January 15, 2023 (effective date: December 1, 2022), prepared by Mercer Geological Consulting Ltd. All assessment work requirements and mining claim maintenance payments are current. All such mining claims are validly held, in good standing, and free and clear of all Liens other than Permitted Liens.
(b) Iron Lake Project. Ridgeline holds valid mineral lease interests under Michigan Department of Environment, Great Lakes, and Energy Lease Nos. ML-2021-0334 and ML-2021-0335, comprising approximately 3,200 hectares in Baraga County, Michigan. The Iron Lake Project is at an early stage of exploration, and no NI 43-101 or SEC-compliant mineral resource has been defined. All rental payments and lease maintenance obligations are current. All such leases are in good standing, free and clear of all Liens other than Permitted Liens.
(c) Schedule 4.7 sets forth a complete and accurate description of the Hawk Ridge Project and the Iron Lake Project, including all material permits, licenses, and approvals held by Ridgeline with respect thereto.
Section 4.8 — Environmental Matters
(a) Ridgeline is, and since January 1, 2020 has been, in compliance in all material respects with all applicable Environmental Laws.
(b) Ridgeline has obtained, and is in compliance in all material respects with, all permits, licenses, approvals, registrations, and authorizations required under Environmental Laws for the operation of its business as currently conducted.
(c) There are no pending or, to the Knowledge of the Company, threatened claims, actions, suits, proceedings, or investigations by or before any Governmental Authority against Ridgeline under any Environmental Law that would, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
(d) Ridgeline has not entered into any consent decree, order, or settlement relating to compliance with Environmental Laws or the remediation of Hazardous Materials that remains outstanding.
Section 4.9 — Material Contracts
(a) Schedule 4.9 sets forth a true, complete, and correct list of all contracts, agreements, and arrangements to which Ridgeline is a party or by which it or its properties are bound that are material to the business, operations, or financial condition of Ridgeline, including (i) the Convertible Note Indenture dated June 30, 2022, by and between Ridgeline and Clearmont National Bank, N.A. (as trustee), and all amendments thereto, (ii) all mineral leases (including Michigan DEQ Lease Nos. ML-2021-0334 and ML-2021-0335), (iii) all toll-processing and pilot production agreements, (iv) all executive employment agreements and consulting agreements involving aggregate payments in excess of $100,000 per annum, (v) all joint venture, joint exploration, or partnership agreements, and (vi) all agreements involving aggregate payments or receipts in excess of $250,000.
(b) Each material contract listed on Schedule 4.9 is valid, binding, and enforceable in accordance with its terms and is in full force and effect. Ridgeline is not in default, and no event has occurred that, with notice or lapse of time or both, would constitute a default by Ridgeline, under any such material contract, except for defaults that would not, individually or in the aggregate, reasonably be expected to have a Company Material Adverse Effect.
Section 4.10 — Litigation
(a) There is no action, suit, proceeding, arbitration, investigation, or claim pending, or, to the Knowledge of the Company, threatened against Ridgeline or

OFFER-TO-PURCHASE AGREEMENT

TORCHLIGHT MINING CORP.

RIDGELINE COBALT INC.

OFFER-TO-PURCHASE AGREEMENT

RECITALS

Record

Parties

Dates

Amounts