-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RISMAlLxxnio3ta4Xd/MejXkxqEW+a8YcJpyNF+UeDv1RkXl6+AZxMc/sMfGBzeG u4m6IYjOg5pu+PSnRIzv2w== 0001193805-09-000194.txt : 20090202 0001193805-09-000194.hdr.sgml : 20090202 20090202113236 ACCESSION NUMBER: 0001193805-09-000194 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20090202 DATE AS OF CHANGE: 20090202 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: NOVAGOLD RESOURCES INC CENTRAL INDEX KEY: 0001173420 STANDARD INDUSTRIAL CLASSIFICATION: GOLD & SILVER ORES [1040] IRS NUMBER: 000000000 STATE OF INCORPORATION: A5 FISCAL YEAR END: 1130 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-80075 FILM NUMBER: 09560406 BUSINESS ADDRESS: STREET 1: PO BOX 24, SUITE 2300 STREET 2: 200 GRANVILLE STREET CITY: VANCOUVER STATE: A1 ZIP: V6C 1S4 BUSINESS PHONE: 604-669-6227 MAIL ADDRESS: STREET 1: PO BOX 24, SUITE 2300 STREET 2: 200 GRANVILLE STREET CITY: VANCOUVER STATE: A1 ZIP: V6C 1S4 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Electrum Strategic Resources LLC CENTRAL INDEX KEY: 0001454795 IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 1370 AVENUE OF THE AMERICAS, 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: (646) 365-1600 MAIL ADDRESS: STREET 1: 1370 AVENUE OF THE AMERICAS, 19TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10019 SC 13D 1 e604950_13d-novagold.txt UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. ) NovaGold Resources Inc. - -------------------------------------------------------------------------------- (Name of Issuer) Common Shares - -------------------------------------------------------------------------------- (Title of Class of Securities) 66987E206 - -------------------------------------------------------------------------------- (CUSIP Number) Electrum Strategic Resources LLC 1370 Avenue of the Americas, 19th Floor New York, NY 10019 Attn: William Natbony (646) 365-1600 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) January 22, 2009 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1 (b)(3) or (4), check the following box. |_| Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 (the "Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D CUSIP No. 66987E206 - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY) Electrum Strategic Resources LLC - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_| (b) |_| - -------------------------------------------------------------------------------- 3 SEC USE ONLY: - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e) |_| - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION: Delaware - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER: 98,070,259 shares ----------------------------------------------------------------- NUMBER OF 8 SHARED VOTING POWER: SHARES BENEFICIALLY 0 shares OWNED BY ----------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER: REPORTING PERSON 98,070,259 shares WITH ----------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER: 0 shares - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON: 98,070,259 - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_| - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11): 43.18% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* OO - -------------------------------------------------------------------------------- * SEE INSTRUCTIONS BEFORE FILLING OUT! Page 2 of 7 SCHEDULE 13D Item 1. Security and Issuer This Statement on Schedule 13D relates to the common shares (the "Common Shares") of NovaGold Resources Inc. (the "Issuer"), a company organized and existing under the laws of the province of Nova Scotia, Canada. The address of the Issuer's principal executive offices is Suite 2300-200 Granville Street, Vancouver, British Columbia, Canada V6C 1S4. Item 2. Identity and Background (a) This Statement is being filed by Electrum Strategic Resources LLC (the "Reporting Person"). Schedule A attached hereto sets forth information regarding persons referred to in Instruction C of Schedule 13D. (b) The principal business address of the Reporting Person is 1370 Avenue of the Americas, 19th Floor, New York, NY 10019. (c) The principal business of the Reporting Person is owning securities. (d) Neither the Reporting Person, nor any person named on Schedule A, has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) Neither the Reporting Person, nor any person named on Schedule A has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and, as a result of such proceeding, was or is subject to a judgment, decree or final order enjoining future violations of or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect thereto. (f) The Reporting Person is a limited liability company organized and existing in the State of Delaware. Item 3. Source and Amount of Funds or Other Consideration. The funds used to make the $69,681,110.30 of acquisitions described in Item 5(c) of this Schedule 13D were contributed to the Reporting Person by GRAT Holdings LLC, its sole member. Item 4. Purpose of Transaction. The Reporting Person acquired the Common Shares reported herein for investment purposes and the Reporting Person and/or one or more of its affiliates may, depending on market and other conditions, increase or decrease its beneficial ownership of Common Shares or other securities of the issuer whether in the open market, by privately negotiated agreement or otherwise. Page 3 of 7 Other than as set forth above, the Reporting Person, in its capacity as a holder of a security of the issuer, currently has no plan or proposal that relates to any of the matters described in subparagraphs (a) through (j) of Item 4 to Schedule 13D. Item 5. Interest in Securities of the Issuer. (a) As of the date hereof, the Reporting Person beneficially owns 98,070,259 Common Shares, consisting of 51,916,412 Common Shares and warrants exercisable within 60 days of the date hereof to acquire an additional 46,153,847 Common Shares. Based upon 180,973,089 Common Shares outstanding as of the date hereof, the Reporting Person beneficially owns 43.18% of the Issuer's Common Shares. (b) The Reporting Person has sole voting and dispositive power over the Common Shares described in Item 5(a) of this Schedule 13D. (c) On January 22, 2009, the Reporting Person acquired ownership of 46,153,847 units of the Issuer for the aggregate purchase price of US$60,000,001.10, representing a subscription price of US$1.30 per Unit. Each Unit consists of one Common Share and one transferable Common Share purchase warrant entitling the holder(s) thereof to purchase one additional Common Share at an exercise price of US$1.50 per Warrant Share at any time on or before 5:00 p.m. (Toronto time) on January 22, 2013. On January 23, 2009, pursuant to a purchase and sale agreement, the Reporting Person acquired ownership of 5,762,565 Common Shares for an aggregate purchase price of $9,681,109.20. (d) Not applicable. (e) Not applicable. Item 6. Contracts, Arrangements, Understandings or Relationships with respect to Securities of the Issuer. The warrants discussed herein are governed by the terms of a Warrant, dated January 22, 2009, between the Reporting Person and the Issuer. A copy of the Warrant Agreement is attached hereto as Exhibit 1 and is hereby incorporated by reference. The Reporting Person and the Issuer are parties to a Registration Rights Agreement, dated January 22, 2009, pursuant to which the Reporting Person (and/or its successors and assigns) shall be entitled to make up to three demands that the Issuer register Common Shares in the United States. A copy of the Registration Rights Agreement is attached hereto as Exhibit 2 and is hereby incorporated by reference. The Reporting Person and the Issuer are parties to a Qualification Rights Agreement, dated January 22, 2009, pursuant to which the Reporting Person (and/or its successors and assigns) shall be entitled to make up to three demands that the Issuer qualify Common Shares for resale by the Reporting Person in Canada. A copy of the Registration Rights Agreement is attached hereto as Exhibit 3 and is hereby incorporated by reference. Page 4 of 7 Item 7. Material to be Filed as Exhibits. Exhibit 99.1. Form of Warrant, dated January 22, 2009 Exhibit 99.2. Form of Registration Rights Agreement, dated January 22, 2009 Exhibit 99.3. Form of Qualification Rights Agreement, dated January 22, 2009 Page 5 of 7 SIGNATURES After reasonable inquiry and to the best of his knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: February 2, 2009 ELECTRUM STRATEGIC RESOURCES LLC /s/ William Natbony ------------------------------ By: William Natbony Title: Chief Executive Officer Page 6 of 7 Schedule A Officer of Electrum Strategic Resources LLC William Natbony is the Chief Executive Officer and sole officer of Electrum Strategic Resources LLC. Mr. Natbony's principal business address is 1370 Avenue of the Americas, 19th Floor, New York, NY 10019. Mr. Natbony's principal business is as a businessman. The members of the investment committee of Electrum Strategic Resources LLC are William Natbony, Robert M. Newman, Jr. and Michael Williams. The principal business address of each of the foregoing persons is 1370 Avenue of the Americas, 19th Floor, New York, NY 10019. Each of the foregoing persons is a United States citizen. The principal business of each of the foregoing persons is as a business person. Sole Member of Electrum Strategic Resources LLC GRAT Holdings LLC, a Delaware limited liability company with an address of 1370 Avenue of the Americas, 19th floor, New York, NY 10019, is the sole member of Electrum Strategic Resources LLC. William Natbony is the manager and sole officer of GRAT Holdings LLC. GRAT Holdings LLC is in the business of investing. Page 7 of 7 EX-99.1 2 e604950_ex99-1.txt THIS WARRANT AND THE COMMON SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, OR UNDER ANY STATE SECURITIES LAWS, AND THIS WARRANT MAY NOT BE EXERCISED UNLESS REGISTRATION IS NOT REQUIRED, AND THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL TO SUCH EFFECT IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY. THIS WARRANT AND THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, ASSIGNED OR TRANSFERRED, IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER SAID ACT OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL IN FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE COMPANY THAT REGISTRATION UNDER SAID ACT IS NOT REQUIRED. UNLESS PERMITTED UNDER CANADIAN SECURITIES LEGISLATION, THE HOLDER OF THESE SECURITIES SHALL NOT TRADE THE SECURITIES BEFORE MAY 22, 2009. COMMON STOCK PURCHASE WARRANT To Purchase 46,153,847 Common Shares of NovaGold Resources Inc. THIS IS TO CERTIFY THAT Electrum Strategic Resources LLC ("Electrum") of 1370 Avenue of the Americas, 19th Floor New York, NY 10019, or registered assigns, is entitled, during the Exercise Period (as hereinafter defined), to purchase from NovaGold Resources Inc., a corporation organized and existing under the laws of the province of Nova Scotia, Canada (the "Company"), the Warrant Shares (as hereinafter defined and subject to adjustment as provided herein), in whole or in part, at a purchase price of US$1.50 per share, all on and subject to the terms and conditions hereinafter set forth. 1. Definitions. As used in this Warrant, the following terms have the respective meanings set forth below: "Affiliate" means any Person that, directly or indirectly, through one or more intermediaries, controls or is controlled by, or is under common control with a Person. "Business Day" means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in the State of New York generally are authorized or required by law or other government actions to close. "Change of Control" means the (i) acquisition by an individual or legal entity or group (as set forth in Section 13(d) of the United States Securities Exchange Act of 1934, as amended) of more than one-half of the voting rights or equity interests in the Company; or (ii) sale, conveyance, or other disposition of all or substantially all of the assets, property or business of the Company or the merger into or consolidation with any other corporation (other than a wholly owned subsidiary corporation) or effectuation of any transaction or series of related transactions where holders of the Company's voting securities prior to such transaction or series of transactions fail to continue to hold at least 50% of the voting power of the Company. "Closing Date" means January 21, 2009. "Common Shares" means (except where the context otherwise indicates) the Common Shares of the Company as constituted on the Closing Date, and any capital stock into which such Common Shares may thereafter be changed or converted, and shall also include (i) capital stock of the Company of any other class (regardless of how denominated) issued to the holders of Common Shares upon any reclassification thereof which is also not preferred as to dividends or assets on liquidation over any other class of stock of the Company and which is not subject to redemption and (ii) common shares of any successor or acquiring corporation received by or distributed to the holders of Common Shares of the Company in the circumstances contemplated by Section 4.5. "Current Market Price" means, in respect of any Common Share on any date herein specified the average of the daily market prices for the 20 consecutive Trading Days immediately before such date. The daily market price for each such Trading Day shall be (i) the closing bid price on such day on the principal stock exchange (in terms of daily average volume of such 20 Trading Day period) on which such Common Shares are then listed or admitted to trading, or quoted, as applicable, (ii) if no sale takes place on such day on any such exchange, the last reported closing bid price on such day as officially quoted on any such exchange, (iii) if the Common Shares are not then listed or admitted to trading on any stock exchange, the last reported closing bid price on such day in the over-the-counter market, as furnished by the National Association of Securities Dealers Automatic Quotation System or the National Quotation Bureau, Inc., (iv) if neither such corporation at the time is engaged in the business of reporting such prices, as furnished by any similar firm then engaged in such business, or (v) if there is no such firm, as furnished by any member of FINRA selected mutually by the Holder and the Company or, if they cannot agree upon such selection, as selected by two such members of FINRA, one of which shall be selected by the Holder and one of which shall be selected by the Company. "Current Warrant Price" means, in respect of a Common Share at any date herein specified, the price at which a Common Share may be purchased pursuant to this Warrant on such date. Until the Current Warrant Price is adjusted pursuant to the terms herein, the initial Current Warrant Price shall be US$1.50 per Common Share. "Exercise Period" means the period during which this Warrant is exercisable pursuant to Section 2.1. "Expiration Date" means January 21, 2013. "FINRA" means the Financial Industry Regulatory Authority, or any successor thereto. "GAAP" means generally accepted accounting principles in Canada as from time to time in effect. "Holder" means, with respect to any Warrant representing Warrant Shares, the holder of such Warrant. For purposes of this Warrant, "Holder" shall mean Electrum. "Other Property" has the meaning set forth in Section 4.5. "Person" means any individual or corporation, partnership, trust, incorporated or unincorporated association, joint venture, limited liability company, joint stock company, government (or an agency or subdivision of any thereof) or any entity of any kind. "Purchase Agreement" means that certain Common Share and Warrant Purchase Agreement dated as of December 31, 2008 between the Company and Electrum. 2 "Securities Laws" means the securities laws (including, without limitation, "blue sky" laws) of the United States, Canada, any other nation, and states, provinces or localities of any of the foregoing, or any rules or regulations promulgated thereunder. "Trading Day" means any day on which the primary market (by volume) on which Common Shares are listed is open for trading. "Transfer" means any disposition of any Warrant or Warrant Shares or of any interest in either thereof. "US Securities Act" means the United States Securities Act of 1933, as amended. "Warrants" means this Warrant and all warrants issued upon Transfer, division or combination of, or in substitution for, any thereof. All Warrants shall at all times be identical as to terms and conditions and date, except as to the number of Common Shares for which they may be exercised. "Warrant Price" means an amount equal to (i) the number of Common Shares being purchased upon exercise of this Warrant pursuant to Section 2.1, multiplied by (ii) the Current Warrant Price. "Warrant Shares" means the 46,153,847 Common Shares to be purchased upon the exercise hereof, subject to adjustment as provided herein. 2. Exercise of Warrant. 2.1. Manner of Exercise. From and after the issuance hereof and until 5:00 P.M., New York time, on the Expiration Date (the "Exercise Period"), the Holder may exercise this Warrant, on any Business Day, for all or any part of the number of Warrant Shares purchasable hereunder. In order to exercise this Warrant, in whole or in part, the Holder shall deliver to the Company at its principal office or at the office or agency designated by the Company pursuant to Section 12, (i) a written notice of Holder's election to exercise this Warrant, which notice shall specify the number of Warrant Shares to be purchased, (ii) payment of the Warrant Price as provided herein, (iii) this Warrant, and (iv) an opinion of counsel in form and substance reasonably satisfactory to the Company that registration of the Warrant Shares under the US Securities Act or any state securities laws is not required. Such notice shall be substantially in the form of the subscription form appearing at the end of this Warrant as Exhibit A, duly executed by the Holder or its agent or attorney. Upon receipt thereof, the Company shall, as promptly as practicable, and in any event within three Business Days thereafter, execute or cause to be executed and deliver or cause to be delivered to the Holder a certificate or certificates representing the aggregate number of full Warrant Shares issuable upon such exercise, together with cash in lieu of any fraction of a share, as hereinafter provided. The stock certificate or certificates so delivered shall be, to the extent possible, in such denomination or denominations as the Holder shall request in the notice, shall be registered in the name of the Holder or such other name as shall be designated in the notice and shall bear a legend in the form provided for in Section 4.8 of the Purchase Agreement provided that, in the case of any exercise of this Warrant after May 22, 2009, the Canadian portion of such legend will not be required. This Warrant shall be deemed to have been exercised and such certificate or certificates shall be deemed to have been issued, and the Holder or any other Person so designated to be named therein shall be deemed to have become a Holder of record of such shares for all purposes, as of the date when the notice, together with the payment of the Warrant Price and this Warrant, is received by the Company as described above. If this Warrant shall have been exercised in part, the Company shall, at the time of delivery of the certificate or certificates representing Warrant Shares, deliver to the Holder a new Warrant evidencing the rights of the Holder to purchase the unpurchased Common Shares called for by this Warrant, which new Warrant shall in all other respects be identical with this Warrant, or at the request of the Holder, appropriate notation may be made on this Warrant and the same returned to the Holder. 3 Payment of the Warrant Price may be made at the option of the Holder by: (i) certified or official bank check payable to the order of the Company or (ii) wire transfer to the account of the Company. All Common Shares issuable upon the exercise of this Warrant pursuant to the terms hereof shall be validly issued and, upon payment of the Warrant Price, shall be fully paid and nonassessable and not subject to any pre-emptive rights. The exercise of the Warrants will be subject to compliance with applicable laws including, to the extent applicable, the Competition Act (Canada), the Investment Canada Act, and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. 2.2. Fractional Shares. The Company shall not be required to issue a fractional Common Share upon exercise of any Warrant. As to any fraction of a share which the Holder of one or more Warrants, the rights under which are exercised in the same transaction, would otherwise be entitled to purchase upon such exercise, the Company shall pay an amount in cash equal to the Current Market Price per Common Share on the date of exercise multiplied by such fraction. 2.3. Continued Validity. A holder of Warrant Shares, in whole or in part, shall continue to be entitled with respect to such shares to all rights to which it would have been entitled as the Holder under Sections 9 and 12 of this Warrant. 2.4. Restrictions on Exercise Amount. In the event the Company is prohibited from issuing Warrant Shares as a result of any restrictions or prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer quotation system or other self-regulatory organization, the Company shall as soon as possible seek the approval of its shareholders and take such other action to authorize the issuance of the full number of Common Shares issuable upon exercise of this Warrant. 3. Transfer, Division and Combination. 3.1. Transfer. The Warrants and the Warrant Shares shall be freely transferable, subject to compliance with all applicable Securities Laws and compliance with the legends set forth in this Warrant and on the certificates representing the Warrant Shares. Transfer of this Warrant and all rights hereunder, in whole or in part, in accordance with the foregoing provisions, shall be registered on the books of the Company to be maintained for such purpose, upon surrender of this Warrant at the principal office of the Company referred to in Section 2.1 or the office or agency designated by the Company pursuant to Section 12, together with a written assignment of this Warrant substantially in the form of Exhibit B hereto duly executed by the Holder or its agent or attorney and funds sufficient to pay any transfer taxes payable upon the making of such Transfer. Upon such surrender and, if required, such payment, the Company shall execute and deliver a new Warrant or Warrants in the name of the assignee or assignees and in the denomination specified in such instrument of assignment, and shall issue to the assignor a new Warrant evidencing the portion of this Warrant not so assigned, and this Warrant shall promptly be cancelled. Following a Transfer that complies with the requirements of this Section 3.1, the Warrant may be exercised by a new Holder for the purchase of Common Shares regardless of whether the Company issued or registered a new Warrant on the books of the Company. 4 3.2. Division and Combination; Expenses; Books. This Warrant may be divided or combined with other Warrants upon presentation hereof at the aforesaid office or agency of the Company, together with a written notice specifying the names and denominations in which new Warrants are to be issued, signed by the Holder or its agent or attorney. Subject to compliance with Section 3.1 as to any Transfer which may be involved in such division or combination, the Company shall execute and deliver a new Warrant or Warrants in exchange for the Warrant or Warrants to be divided or combined in accordance with such notice. The Company shall prepare, issue and deliver at its own expense the new Warrant or Warrants under this Section 3. 4. Adjustments. The number of Common Shares for which this Warrant is exercisable, and the price at which such shares may be purchased upon exercise of this Warrant, shall be subject to adjustment from time to time as set forth in this Section 4. The Company shall give the Holder notice of any event described below which requires an adjustment pursuant to this Section 4 in accordance with Sections 5.1 and 5.2. 4.1. Stock Dividends, Subdivisions and Combinations. If at any time while this Warrant is outstanding the Company shall: (i) declare a dividend or make a distribution of Common Shares on its outstanding Common Shares, (ii) subdivide its outstanding Common Shares into a larger number of Common Shares, or (iii) combine its outstanding Common Shares into a smaller number of Common Shares, then: (1) the number of Common Shares acquirable upon exercise of this Warrant immediately after the occurrence of any such event shall be adjusted to equal the number of Common Shares which a record holder of the same number of Common Shares that would have been acquirable under this Warrant immediately prior to the record date for such dividend or distribution or the effective date of such subdivision or combination would own or be entitled to receive after such record date or the effective date of such subdivision or combination, as applicable, and (2) the Warrant Price shall be adjusted to equal: (A) the Current Warrant Price in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision or combination, multiplied by the number of Common Shares into which this Warrant is exercisable immediately prior to the adjustment, divided by (B) the number of Common Shares into which this Warrant is exercisable immediately after such adjustment. Any adjustment made pursuant to clause (i) of this paragraph shall become effective immediately after the record date for the determination of shareholders entitled to receive such dividend or distribution, and any adjustment pursuant to clauses (ii) or (iii) of this paragraph shall become effective immediately after the effective date of such subdivision or combination. 5 4.2. Certain Other Distributions. If at any time while this Warrant is outstanding the Company shall cause the holders of Common Shares to be entitled to receive any dividend or other distribution of: (i) cash, (ii) any evidences of its indebtedness, any shares of stock of any class or any other securities or property or assets of any nature whatsoever (other than cash or additional Common Shares as provided in Section 4.1 hereof), or (iii) any warrants or other rights to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property or assets of any nature whatsoever, then: (1) the number of Common Shares acquirable upon exercise of this Warrant shall be adjusted to equal the product of the number of Common Shares acquirable upon exercise of this Warrant immediately prior to the record date for such dividend or distribution, multiplied by a fraction (x) the numerator of which shall be the Current Warrant Price per Common Share at the date of taking such record and (y) the denominator of which shall be such Current Warrant Price minus the amount allocable to one Common Share of any such cash so distributable and of the fair value (as determined in good faith by the board of directors of the Company) of any and all such evidences of indebtedness, shares of stock, other securities or property or warrants or other subscription or purchase rights so distributable; and (2) the Current Warrant Price in effect immediately prior to the record date fixed for determination of shareholders entitled to receive such distribution shall be adjusted to equal (x) the Current Warrant Price multiplied by the number of Common Shares acquirable upon exercise of this Warrant immediately prior to the adjustment, divided by (y) the number of Common Shares acquirable upon exercise of this Warrant immediately after such adjustment. A reclassification of Common Shares (other than a change in par value, or from par value to no par value or from no par value to par value) into Common Shares and shares of any other class of stock shall be deemed a distribution by the Company to the holders of its Common Shares of such shares of such other class of stock within the meaning of this Section 4.2 and, if the outstanding Common Shares shall be changed into a larger or smaller number of Common Shares as a part of such reclassification, such change shall be deemed a subdivision or combination, as the case may be, of the outstanding Common Shares within the meaning of Section 4.1. 4.3. Other Provisions Applicable to Adjustments. The following provisions shall be applicable to the making of adjustments of the number of Common Shares into which this Warrant is exercisable and the Current Warrant Price provided for in Section 4: (a) When Adjustments to Be Made. The adjustments required by Section 4 shall be made whenever and as often as any specified event requiring an adjustment shall occur, except that any that would otherwise be required may be postponed (except in the case of a subdivision or combination of shares of the Common Shares, as provided for in Section 4.1) up to, but not beyond the date of exercise if such adjustment either by itself or with other adjustments not previously made adds or subtracts less than 1% of the Common Shares into which this Warrant is exercisable immediately prior to the making of such adjustment. Any adjustment representing a change of less than such minimum amount (except as aforesaid) which is postponed shall be carried forward and made as soon as such adjustment, together with other adjustments required by this Section 4 and not previously made, would result in a minimum adjustment or on the date of exercise. For the purpose of any adjustment, any specified event shall be deemed to have occurred at the close of business on the date of its occurrence. (b) Fractional Interests. In computing adjustments under this Section 4, fractional interests in Common Shares shall be taken into account to the nearest 1/100th of a share. 6 (c) When Adjustment Not Required. If the Company undertakes a transaction contemplated under this Section 4 and as a result takes a record of the holders of its Common Shares for the purpose of entitling them to receive a dividend or distribution or subscription or purchase rights or other benefits contemplated under this Section 4 and shall, thereafter and before the distribution to shareholders thereof, legally abandon its plan to pay or deliver such dividend, distribution, subscription or purchase rights or other benefits contemplated under this Section 4, then thereafter no adjustment shall be required by reason of the taking of such record and any such adjustment previously made in respect thereof shall be rescinded and annulled. (d) Escrow of Common Shares. If after any property becomes distributable pursuant to Section 4 by reason of the taking of any record of the holders of Common Shares, but prior to the occurrence of the event for which such record is taken, the Holder exercises the Warrant during such time, then such Holder shall continue to be entitled to receive any Common Shares issuable upon exercise hereunder by reason of such adjustment and such shares or other property shall be held in escrow for the Holder by the Company to be issued to the Holder upon and to the extent that the event actually takes place. Notwithstanding any other provision to the contrary herein, if the event for which such record was taken fails to occur or is rescinded, then such escrowed shares shall be canceled by the Company and escrowed property returned to the Company. 4.4. Reorganization, Reclassification, Merger, Consolidation or Disposition of Assets. (a) If there shall occur a Change of Control and, pursuant to the terms of such Change of Control, common shares of the successor or acquiring corporation, or any cash, shares of stock or other securities or property of any nature whatsoever (including warrants or other subscription or purchase rights) in addition to or in lieu of common stock of the successor or acquiring corporation ("Other Property"), are to be received by or distributed to the holders of Common Shares of the Company, then the Holder of this Warrant shall have the right thereafter to receive, upon the exercise of the Warrant, the number of Common Shares of the successor or acquiring corporation or of the Company, if it is the surviving corporation, and the Other Property receivable upon or as a result of such Change of Control by a holder of the number of Common Shares into which this Warrant is exercisable immediately prior to such event. (B) In case of any such Change of Control described in Section 4.4(a) above where Other Property is received or distributed to holders of Common Shares of the Company, the successor or acquiring corporation (if other than the Company) shall expressly assume the due and punctual observance and performance of each and every covenant and condition of contained in this Warrant to be performed and observed by the Company and all the obligations and liabilities hereunder, subject to such modifications as may be deemed appropriate (as determined by resolution of the board of directors of the Company) in order to provide for adjustments of the Common Shares into which this Warrant is exercisable which shall be as nearly equivalent as practicable to the adjustments provided for in Section 4. For purposes of Section 4, common stock of the successor or acquiring corporation shall include stock of such corporation of any class which is not preferred as to dividends or assets on liquidation over any other class of stock of such corporation and which is not subject to redemption and shall also include any evidences of indebtedness, shares of stock or other securities which are convertible into or exchangeable for any such stock, either immediately or upon the arrival of a specified date or the happening of a specified event and any warrants or other rights to subscribe for or purchase any such stock. The foregoing provisions of this Section 4 shall similarly apply to successive Change of Control transactions. 7 4.5 Other Action Affecting Common Shares. In case at any time or from time to time the Company shall take any action in respect of its Common Shares, other than the payment of dividends permitted by Section 4 or any other action described in Section 4, then, unless such action will not have a materially adverse effect upon the rights of the Holder, the number of Common Shares or other stock into which this Warrant is exercisable and/or the purchase price thereof shall be adjusted in such manner as may be equitable in the circumstances. 4.6. Certain Limitations. Notwithstanding anything herein to the contrary, the Company agrees not to enter into any transaction which, by reason of any adjustment hereunder, would cause the Current Warrant Price to be less than the par value per Common Share. 4.7. Common Share Transfer Taxes. The issue of stock certificates upon exercise of this Warrant shall be made without charge to the Holder for any tax in respect of such issue. The Company shall not, however, be required to pay any tax which may be payable in respect of any Transfer involved in the issue and delivery of shares in any name other than that of the Holder, and the Company shall not be required to issue or deliver any such stock certificate unless and until the Person or Persons requesting the issue thereof shall have paid to the Company the amount of such tax or shall have established to the satisfaction of the Company that such tax has been paid. 5. Notices to Warrant Holders. 5.1. Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Current Warrant Price, the Company, at its expense, shall promptly compute such adjustment or readjustment in accordance with the terms hereof and prepare and furnish to the Holder of this Warrant a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request at any time of the Holder of this Warrant, furnish or cause to be furnished to such Holder a like certificate setting forth (i) such adjustments and readjustments, (ii) the Current Warrant Price at the time in effect and (iii) the number of Common Shares and the amount, if any, or other property which at the time would be received upon the exercise of Warrants owned by such Holder. 5.2. Notice of Corporate Action. If at any time: (a) the Company shall take a record of the holders of its Common Shares for the purpose of entitling them to receive a dividend (other than a cash dividend payable out of earnings or earned surplus legally available for the payment of dividends under the laws of the jurisdiction of incorporation of the Company) or other distribution, or any right to subscribe for or purchase any evidences of its indebtedness, any shares of stock of any class or any other securities or property, or to receive any other right, or (b) there shall be any capital reorganization of the Company, any reclassification or recapitalization of the capital stock of the Company or any consolidation or merger of the Company with, or any sale, transfer or other disposition of all or substantially all the property, assets or business of the Company to, another corporation, or (c) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; 8 then, in any one or more of such cases, the Company shall give to the Holder (i) at least 20 days' prior written notice of the date on which a record date shall be selected for such dividend, distribution or right or for determining rights to vote in respect of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, and (ii) in the case of any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up, at least 20 days' prior written notice of the date when the same shall take place. Such notice in accordance with the foregoing clause also shall specify (i) the date on which any such record is to be taken for the purpose of such dividend, distribution or right, the date on which the holders of Common Shares shall be entitled to any such dividend, distribution or right, and the amount and character thereof, and (ii) the date on which any such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up is to take place and the time, if any such time is to be fixed, as of which the holders of Common Shares shall be entitled to exchange their Common Shares for securities or other property deliverable upon such reorganization, reclassification, merger, consolidation, sale, transfer, disposition, dissolution, liquidation or winding up. Each such written notice shall be sufficiently given if addressed to the Holder at the last address of the Holder appearing on the books of the Company and delivered in accordance with Section 15.2. 5.3. No Rights as Shareholder. This Warrant does not entitle the Holder to any voting or other rights as a shareholder of the Company prior to exercise and payment for the Warrant Price in accordance with the terms hereof. 6. No Impairment. The Company shall not by any action, including, without limitation, amending its constating documents or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms of this Warrant, but will at all times in good faith assist in the carrying out of all such terms and in the taking of all such actions as may be necessary or appropriate to protect the rights of the Holder against impairment. Without limiting the generality of the foregoing, the Company will (a) not increase the par value of any Common Shares receivable upon the exercise of this Warrant above the amount payable therefor upon such exercise immediately prior to such increase in par value, (b) take all such action as may be necessary or appropriate in order that the Company may validly and legally issue fully paid and nonassessable Common Shares upon the exercise of this Warrant, and (c) use its best efforts to obtain all such authorizations, exemptions or consents from any public regulatory body having jurisdiction thereof as may be necessary to enable the Company to perform its obligations under this Warrant. Upon the request of the Holder, the Company will at any time during the period this Warrant is outstanding acknowledge in writing, in form satisfactory to the Holder, the continuing validity of this Warrant and the obligations of the Company hereunder. 7. Reservation and Authorization of Common Shares; Registration With Approval of Any Governmental Authority. From and after the Closing Date, the Company shall at all times reserve and keep available for issue upon the exercise of Warrants such number of its authorized but unissued Common Shares as will be sufficient to permit the exercise in full of all outstanding Warrants. All Common Shares which shall be so issuable, when issued upon exercise of any Warrant and payment therefor in accordance with the terms of such Warrant, shall be duly and validly issued and fully paid and nonassessable, and not subject to pre-emptive rights. Before taking any action which would cause an adjustment reducing the Current Warrant Price below the then par value, if any, of the Common Shares issuable upon exercise of the Warrants, the Company shall take any corporate action which may be necessary in order that the Company may validly and legally issue fully paid and non-assessable shares of such Common Shares at such adjusted Current Warrant Price. Before taking any action which would result in an adjustment in the number of Common Shares for which this Warrant is exercisable or in the Current Warrant Price, the Company shall obtain all such authorizations or exemptions thereof, or consents thereto, as may be necessary from any public regulatory body or bodies having jurisdiction thereof. If any Common Shares required to be reserved for issuance upon exercise of Warrants require registration or qualification with any governmental authority under any federal or state law before such shares may be so issued (other than as a result of a prior or contemplated distribution by the Holder of this Warrant), the Company will in good faith and as expeditiously as possible and at its expense endeavor to cause such shares to be duly registered. 9 8. Taking of Record; Common Share and Warrant Transfer Books. In the case of all dividends or other distributions by the Company to the holders of its Common Shares with respect to which any provision of Section 4 refers to the taking of a record of such holders, the Company will in each such case take such a record and will take such record as of the close of business on a Business Day. The Company will not at any time, except upon dissolution, liquidation or winding up of the Company, close its stock transfer books or Warrant transfer books so as to result in preventing or delaying the exercise or Transfer of any Warrant. 9. Supplying Information. Upon any default by the Company of its obligations hereunder or under the Registration Rights Agreement, the Company shall cooperate with the Holder in supplying such information as may be reasonably necessary for such Holder to complete and file any information reporting forms presently or hereafter required by applicable Securities Laws as a condition to the availability of an exemption from such Securities Laws for the sale of any Warrant or Common Shares issued upon exercise of a Warrant. 10. Loss or Mutilation. Upon receipt by the Company from the Holder of evidence reasonably satisfactory to it of the ownership of and the loss, theft, destruction or mutilation of this Warrant and indemnity or security reasonably satisfactory to it and reimbursement to the Company of all reasonable expenses incidental thereto and in case of mutilation upon surrender and cancellation hereof, the Company will execute and deliver in lieu hereof a new Warrant of like tenor to the Holder; provided, however, that in the case of mutilation, no indemnity shall be required if this Warrant in identifiable form is surrendered to the Company for cancellation. 11. Office of the Company. As long as any of the Warrants remain outstanding, the Company shall maintain an office or agency (which may be the principal executive offices of the Company) where the Warrants may be presented for exercise, registration of Transfer, division or combination as provided in this Warrant. 12. Financial and Business Information. 12.1. Quarterly Information. The Company will deliver to the Holder, as soon as available and in any event within 45 days after the end of each of the first three quarters of each fiscal year of the Company, one copy of an unaudited consolidated balance sheet of the Company and its subsidiaries as at the end of such quarter, and the related unaudited consolidated statements of operations and deficit, income, cash flows and changes in shareholders' equity of the Company and its subsidiaries for such quarter and, in the case of the second and third quarters, for the portion of the fiscal year ending with such quarter, setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year. Such financial statements shall be prepared by the Company in accordance with GAAP and accompanied by such certificates of the Chief Executive Officer and Chief Financial Officer as are required to be filed under applicable Securities Laws, however, that the Company shall have no obligation to deliver such quarterly information under this Section 12.1 to the extent it is publicly available. 10 12.2. Annual Information. The Company will deliver to the Holder as soon as available and in any event within 90 days after the end of each fiscal year of the Company, one copy of an audited consolidated balance sheet of the Company and its subsidiaries as at the end of such year, and audited consolidated statements of operations and deficit, income, cash flows and changes in shareholders' equity of the Company and its subsidiaries for such year; setting forth in each case in comparative form the figures for the corresponding periods in the previous fiscal year; all prepared in accordance with GAAP, and which audited financial statements shall be accompanied by an opinion thereon of the independent certified public accountants regularly retained by the Company, or any other firm of independent certified public accountants of recognized national standing selected by the Company; provided, however, that the Company shall have no obligation to deliver such annual information under this Section 12.2 to the extent it is publicly available. 12.3. Filings. The Company will use its commercially reasonable efforts to file on or before the required date all regular or periodic reports (pursuant to applicable Securities Laws) with the applicable securities commissions. 13. Limitation of Liability. No provision hereof, in the absence of affirmative action by the Holder to purchase Common Shares, and no enumeration herein of the rights or privileges of the Holder hereof, shall give rise to any liability of the Holder for the purchase price of any Common Shares, whether such liability is asserted by the Company or by creditors of the Company. 14. Miscellaneous. 14.1 Nonwaiver and Expenses. No course of dealing or any delay or failure to exercise any right hereunder on the part of the Holder shall operate as a waiver of such right or otherwise prejudice Holder's rights, powers or remedies. If the Company fails to make, when due, any payments provided for hereunder, or fails to comply with any other provision of this Warrant, the Company shall pay to the Holder such amounts as shall be sufficient to cover any third party costs and expenses including, but not limited to, reasonable attorneys' fees, including those of appellate proceedings, incurred by the Holder in collecting any amounts due pursuant hereto or in otherwise enforcing any of its rights, powers or remedies hereunder. 14.2 Notice Generally. All notices, requests, demands or other communications provided for herein shall be in writing and shall be given in the manner and to the addresses set forth in the Purchase Agreement. 14.3 Successors and Assigns. Subject to compliance with the provisions of Section 3.1, this Warrant and the rights evidenced hereby shall inure to the benefit of and be binding upon the successors of the Company and the successors and assigns of the Holder. The provisions of this Warrant are intended to be for the benefit of all Holders from time to time of this Warrant, and shall be enforceable by any such Holder. 14.4 Amendment. This Warrant may be modified or amended or the provisions of this Warrant waived only with the written consent of both the Company and the Holder. 14.5 Severability. Wherever possible, each provision of this Warrant shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Warrant shall be prohibited by or invalid under applicable law, such provision shall be modified to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Warrant. 14.6 Headings. The headings used in this Warrant are for the convenience of reference only and shall not, for any purpose, be deemed a part of this Warrant. 11 14.7 Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and enforced in accordance with the laws of the State of New York without reference to the conflicts of laws principles thereof. 14.8 Jurisdiction and Venue. The Company hereby irrevocably submits to the exclusive jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York, in connection with any action or proceeding arising out of or relating to this Warrant. The Company hereby agrees that any breach of any term or condition of this Warrant by the Company shall be deemed to be a breach occurring in the State of New York by virtue of a failure to perform an act required to be performed in the State of New York and irrevocably and expressly agrees to submit to the jurisdiction of the Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York for the purpose of resolving any disputes relating to this Warrant or the transactions contemplated hereby. The Company irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Warrant, or any judgment entered by any court in respect hereof brought in New York County, New York, and further irrevocably waives any claim that any suit, action or proceeding brought in Federal District Court, Southern District of New York and if such court does not have proper jurisdiction, the State Courts of New York County, New York has been brought in an inconvenient forum. The Company hereto consents to process being served in any such suit, action or proceeding by the Holder, by mailing a copy thereof to the Company at the address in effect for notices to it under the Purchase Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing in this Section 14.8 shall affect or limit any right to serve process in any other manner permitted by law. 12 IN WITNESS WHEREOF, NovaGold Resources Inc. has caused this Warrant to be executed by its duly authorized officer and attested by its Secretary. Dated: January ___, 2009 NOVAGOLD RESOURCES INC. By: ______________________________ Name: Robert J. (Don) MacDonald Title: Senior Vice President and Chief Financial Officer Attest: By:______________________________ Name: Elaine Sanders Title: Corporate Secretary 13 EXHIBIT A SUBSCRIPTION FORM [To be executed only upon exercise of Warrant] To: NovaGold Resources Inc. The undersigned registered owner of this Warrant exercises this Warrant for the purchase of ________________ Common Shares of NovaGold Resources Inc. ("Common Shares"), and herewith makes payment therefor, all at the price and on the terms and conditions specified in this Warrant and requests that certificates for the Common Shares hereby purchased (and any securities or other property issuable upon such exercise) be issued in the name of and delivered to ____________________________________________________ and whose address is ___________________________________________________________, and, if such Common Shares shall not include all of the Common Shares issuable as provided in this Warrant, that a new Warrant of like tenor and date for the balance of the Common Shares issuable hereunder be delivered to the undersigned. _____________________________________ (Name of Registered Owner) _____________________________________ (Signature of Registered Owner) _____________________________________ (Street Address) _____________________________________ (State) (Zip Code) NOTICE: The signature on this subscription must correspond with the name as written upon the face of the Warrant in every particular, without alteration or enlargement or any change whatsoever. 14 EXHIBIT B ASSIGNMENT FORM FOR VALUE RECEIVED the undersigned registered owner of this Warrant for the purchase of Common Shares of NovaGold Resources Inc. hereby sells, assigns and transfers unto the Assignee named below all of the rights of the undersigned under this Warrant, with respect to the number of Common Shares set forth below: _______________________________________ _______________________________________ _______________________________________ (Name and Address of Assignee) _______________________________________ (Number of Common Shares) and does hereby irrevocably constitute and appoint ____________ attorney-in-fact to register such transfer on the books of the Company, maintained for the purpose, with full power of substitution in the premises. Dated:_________________________________ ______________________________________ (Print Name and Title) ______________________________________ (Signature) ______________________________________ (Witness) NOTICE: The signature on this assignment must correspond with the name as written upon the face of the Warrant in every particular, without alteration or enlargement or any change whatsoever. 15 EX-99.2 3 e604950_ex99-2.txt EXECUTION COPY REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of January 21, 2009 between NovaGold Resources Inc. (the "Company") and Electrum Strategic Resources LLC (the "Purchaser"). WHEREAS, the Company and the Purchaser are parties to the Unit Purchase Agreement (the "Purchase Agreement"), dated December 31, 2008, pursuant to which the Purchaser purchased Units comprised of common shares in the capital of the Company and warrants to purchase additional common shares of the Company and received certain registration rights in connection therewith. NOW, THEREFORE, in consideration of the premises and of the mutual provisions, agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Demand Registration. At any time after the Closing Date (as defined in the Purchase Agreement), upon the written request of Investors (as defined below) holding at least an aggregate of twenty-five percent (25%) of the Registrable Securities (as defined below) then outstanding (the "Requesting Holders"), the Company shall use its reasonable best efforts to register under the Securities Act of 1933, as amended (the "Securities Act") all or any portion (as required by the Requesting Holders) of the Registrable Securities held by the Requesting Holders having an aggregate offering or sale price of at least $5,000,000, for sale in the manner specified in such notice (a "Demand Registration"). The Company shall not be required to effect more than three Demand Registrations or Qualifications (as defined in the Canadian qualification agreement entered into at Closing), in the aggregate; provided, however, that in the event the Purchaser acquires Warrant Shares upon the exercise of Warrants (as defined in the Purchase Agreement) within 30 days following a request by the Company that the Purchaser exercise Warrants, the Purchaser may make a request for a Demand Registration of some or all the Warrant Shares so acquired (notwithstanding that such Warrant Shares may have an aggregate offering or sale price of less than US$5,000,000), and such Demand Registration will not count as one of the three Demand Registrations otherwise allowed by this Agreement. a. For the purposes of this Agreement, "Registrable Securities" shall mean (i) common shares in the capital of the Company purchased by the Purchaser pursuant to the Purchase Agreement ("Common Shares") and (ii) common shares issuable upon exercise of Warrants (as defined in the Purchase Agreement) ("Warrant Shares" and together with the Common Shares, the "Shares"); provided that such securities shall cease to be Registrable Securities when (i) a registration statement registering all such Registrable Securities under the Securities Act has been declared or becomes effective and such Registrable Securities have been sold or otherwise transferred by the holder thereof pursuant to such effective registration statement; (ii) such Registrable Securities are sold pursuant to Rule 144 under circumstances in which any legend borne by such Registrable Securities relating to restrictions on the transferability thereof, under the Securities Act or otherwise, is removed by the Company in accordance with applicable law; or (iii) such Registrable Securities can be sold without any restriction by the volume limitations of Rule 144(e) of the Securities Act; or (iv) such Registrable Securities are transferred to a person that does not become an Investor within 10 business days of acquiring Registrable Securities. b. For purposes of this Agreement, "Investor" means the Purchaser, any transferee(s) or assignee(s) to whom the Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 13 and any transferee(s) or assignee(s) to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 13. c. Following receipt of any notice by Requesting Holders, the Company shall immediately notify Investors holding Registrable Securities from whom notice has not been received and such Investors shall then be entitled within ten (10) days thereafter to request the Company to include in the requested registration all or any portion of their Registrable Securities. The Company may also register for sale for its own account or that of other security holders having the contractual right to include such securities in such registration statement such additional shares of the Company's capital stock as it shall desire, subject to paragraph (e) below. For purposes of this Agreement, Investors that elect to have such securities registered in accordance with the terms of this Agreement shall be referred to individually as a "Selling Holder" and collectively as the "Selling Holders". d. In connection with any registration pursuant to this Section 1, the Company shall: i. subject to receipt of necessary information from the Selling Holders after prompt request from the Company to such holders to provide such information (provided that failure on the part of one or more of the Selling Holders to provide the necessary information requested shall not relieve the Company from its obligation to use reasonable best efforts with respect to complying Selling Holders), prepare and file with the United States Securities and Exchange Commission ("SEC"), within thirty (30) days after the end of the notice period set forth in (c) above, a registration statement to enable the resale of the Registrable Securities by the Selling Holders (a "Demand Registration Statement"); provided, that if the terms of the underwriting agreement executed in connection with any registration pursuant to Section 1 or 2 of this Agreement prohibit the Company from filing any Demand Registration Statement, the Company shall have the right to delay such filing for the required period, which period shall not exceed forty-five (45) days; 2 ii. use its reasonable best efforts (provided that failure on the part of one or more of the Selling Holders to provide the necessary information requested shall not relieve the Company from its obligation to use reasonable best efforts with respect to complying Selling Holders), to cause the Demand Registration Statement to become effective as promptly as practicable after the initial filing thereof with the SEC (the date such registration statement is initially declared effective by the SEC, the "Effective Date"), such efforts to include, without limiting the generality of the foregoing, preparing and filing with the SEC in such period any financial statements that are required to be filed prior to the effectiveness of such registration statement; iii. use its reasonable best efforts to prepare and file with the SEC such amendments and supplements to such Demand Registration Statement and the prospectus used in connection therewith as may be necessary to keep such Demand Registration Statement current, effective and free from any material misstatement or omission to state a material fact for a period not exceeding, with respect to each Selling Holder's Registrable Securities to be sold thereunder, the earliest of (a) the date on which such Selling Holder may sell all such Registrable Securities without restriction by the volume limitations of Rule 144(e) of the Securities Act, (b) the second anniversary of the effective date of such Demand Registration Statement, or (c) until the date on which there shall cease to be any Registrable Securities registered by such Demand Registration Statement; iv. If, in the good faith judgment of the Company's board of directors it would be seriously detrimental to the Company or its shareholders to file a Registration Statement, or an amendment or supplement to a Registration Statement in the near future (and the Company provides the Investors with a certificate from its Chief Executive Officer or Chief Financial Officer stating as such), the Company may defer taking action to comply with this Section 1, provided that the Company shall not defer actions pursuant to such notices for more than 60 days in the aggregate in any 12 month period; and v. The Company shall not be required to file a Demand Registration Statement pursuant to this Section 1 if within 10 days of receipt of a request for registration, it notifies the Requesting Holders that it intends to conduct a public offering of securities for the account of the Company within the next 60 days, provided that the Company shall not exercise its rights under this subsection more than twice in any 12 month period. If the Company determines not to conduct such public offering, the Company shall provide prompt notice to the Investors of such determination. 3 e. In connection with any registration pursuant to this Section 1, the Requesting Holders may elect to sell Registrable Securities in an underwritten offering in accordance with the conditions set forth in this paragraph. In any such underwritten offering, the investment bank that will manage the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Requesting Holders holding a majority of the Registrable Securities to be sold pursuant to such offering by such Requesting Holders, subject, in each case, to the consent of the Company, which consent will not be unreasonably withheld, it being acknowledged that if such offering is being made under the multijurisdictional disclosure system at least one of such underwriters will be a Canadian registrant. No Investor may participate in any underwritten offering hereunder unless such Investor (A) agrees to sell such Investor's Registrable Securities to be sold thereunder on the basis provided in any underwriting arrangements approved pursuant hereto and (B) completes and executes all other customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. In the case of any such underwritten offering, if the managing underwriter for such offering advises the Company in writing that in their good faith opinion the amount of securities requested to be included therein exceeds the amount of securities that can be sold in such offering such that the inclusion of such Registrable Securities would adversely affect marketing of the securities to be sold pursuant to the offering, the Company shall not exclude any Registrable Securities unless the Company has first excluded, all outstanding securities, the holders of which are not entitled by contract to inclusion of such securities in such registration statement or are not entitled to pro rata inclusion with the Registrable Securities, provided, that after giving effect to the foregoing, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the contractual right to include such securities in the registration statement other than holders of securities entitled to inclusion of their securities in such registration statement by reason of demand registration rights. 2. Piggyback Registration. a. If the Company at any time proposes to register any of its equity securities under the Securities Act for sale to the public for cash, whether for its own account or for the account of other security holders or both on any registration form (other than Forms F-4, F-8, F-80, F-10 (in connection with a business combination or exchange offer), S-4, S-8 or another form not available for registering the Registrable Securities for sale to the public) which permits the inclusion of Registrable Securities held by any Investor (a "Piggyback Registration"), then each such time the Company will give written notice to all Investors that then hold Registrable Securities of its intention so to do. Upon the written request of any Investor received by the Company within ten (10) days after the giving of any such notice by the Company and subject to receipt of necessary information from such Investor in accordance with the terms of this Agreement, to register any of such Investor's Registrable Securities, the Company will cause the Registrable Securities as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent requisite to permit the sale or other disposition by such Investor. 4 b. The Company shall have the right to select the managing underwriter(s) for any underwritten Piggyback Registration. All Investors proposing to sell their Registrable Securities in such underwritten offering shall (together with the Company) enter into an underwriting agreement in customary form. If such proposed Piggyback Registration is an underwritten offering and the managing underwriter for such offering advises the Company that the securities requested to be included therein exceed the amount of securities that can be sold in such offering such that the inclusion of such Registrable Securities would adversely affect marketing of the securities to be sold by the Company, the Company shall not exclude any Registrable Securities unless the Company has first excluded, all outstanding securities, the holders of which are not entitled by contract to inclusion of such securities in such registration statement or are not entitled to pro rata inclusion with the Registrable Securities, provided, that after giving effect to the foregoing, any exclusion of Registrable Securities shall be made pro rata with holders of other securities having the contractual rights right to include such securities in the registration statement other than holders of securities entitled to inclusion of their securities in such registration statement by reason of piggyback registration rights. 3. Registration Procedures and Other Matters. If and when the Company is required by the provisions of Section 1 or 2 to register Registrable Securities, the Company shall: a. furnish to the Selling Holders with respect to the Registrable Securities registered under any registration statement filed by the Company pursuant to Sections 1 or 2 hereof (a "Registration Statement") such number of copies of the Registration Statement, prospectuses and preliminary prospectuses in conformity with the requirements of the Securities Act and such other documents as the Selling Holders may reasonably request, in order to facilitate the public sale or other disposition of all or any of the Registrable Securities by the Selling Holders; b. file documents required for compliance with blue sky laws in states specified in writing by any Selling Holder and use its reasonable best efforts to maintain such blue sky qualifications until the date on which there ceases to be any Registrable Securities outstanding; provided, however, that the Company shall not be required to qualify to do business or consent to service of process in any jurisdiction in which it is not now so qualified or has not so consented; c. bear all reasonable expenses in connection with the procedures in Section 1 or 2 hereof and the registration of the Registrable Securities pursuant to the Registration Statement, including the fees of one legal counsel for all of the Selling Holders not to exceed US$25,000 for each Registration Statement; d. advise the Selling Holders promptly after it shall receive notice or obtain knowledge of the issuance of any stop order by the SEC delaying or suspending the effectiveness of the Registration Statement or of the initiation or threat of any proceeding for that purpose; and promptly use its reasonable best efforts to prevent the issuance of any stop order or to obtain its withdrawal at the earliest possible moment if such stop order should be issued; and 5 e. provide a "Plan of Distribution" section of the Registration Statement substantially in a form reasonably acceptable to the Selling Holders (subject to the comments of the SEC). f. Promptly following the effective date of the Registration Statement, the Company shall advise its transfer agent that the Registrable Securities covered by such Registration Statement are subject to an effective registration statement and can be reissued free of restrictive legend upon notice of a sale by a Selling Holder and confirmation by such Selling Holder that it has complied with the plan of distribution set forth in the Registration Statement and the prospectus delivery requirements of applicable securities laws; provided that the Company has not advised the transfer agent orally or in writing that such Registration Statement has been suspended; provided, further, that in the event the Company's transfer agent requires an opinion of counsel to the Company for any such reissuance, the Company shall use its reasonable best efforts to cause its counsel to issue an opinion to the transfer agent stating the foregoing within three business days after any such request for an opinion by the transfer agent. 4. Transfer of Shares After Registration; Suspension. a. The Company shall (A) prepare and file from time to time with the SEC a post-effective amendment to the Registration Statement or a supplement to the related prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document so that such Registration Statement will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and so that, as thereafter delivered to purchasers of the Registrable Securities being sold thereunder, such prospectus will not contain any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; (B) provide the Selling Holders copies of any documents filed pursuant to clause (A) above; and (C) inform each Selling Holder that the Company has complied with its obligations in clause (A) above (or that, if the Company has filed a post effective amendment to the Registration Statement which has not yet been declared effective, the Company will notify the Selling Holder to that effect, will use its reasonable best efforts to secure the effectiveness of such post-effective amendment as promptly as possible and will promptly notify the Selling Holder pursuant to clause (A) above when the amendment has become effective). At least three (3) business days prior to the first anticipated filing of a post-effective amendment to the Registration Statement or a supplement to the related prospectus or a supplement or amendment to any document incorporated therein by reference or file any other required document pursuant to this Section 4(a), the Company shall provide copies of such post-effective amendment, supplement or required document(s) to each Selling Holder and its respective counsel. 6 b. In the event (A) of any request by the SEC or any other federal or state governmental authority during the period of effectiveness of the Registration Statement for amendments or supplements to a Registration Statement or related prospectus or for additional information; (B) of the issuance by the SEC or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation of any proceedings for that purpose; (C) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceeding for such purpose; or (D) of any event or circumstance which, in the good faith judgment of the Company's Chief Executive Officer and Chief Financial Officer, makes it advisable to make any changes in the Registration Statement or prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that, in the case of the Registration Statement, it will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein not misleading, and that in the case of the prospectus, it will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; then the Company shall deliver a notice in writing to each Investor (the "Suspension Notice") to the effect of the foregoing and, upon receipt of such Suspension Notice, each Investor will refrain from selling any Shares pursuant to the Registration Statement (a "Suspension") and will keep confidential the fact that a Suspension Notice has been issued and the content thereof until the Investor's receipt of copies of a supplemented or amended prospectus prepared and filed by the Company, or until the Investor is advised in writing by the Company that the current prospectus may be used, and the Investor has received copies of any additional or supplemental filings that are incorporated or deemed incorporated by reference in any such prospectus. The Company shall use its reasonable best efforts to prevent the issuance of any Suspension, and, if any such Suspension is issued, to take such action as may be necessary to cause the withdrawal or termination of such Suspension at the earliest possible moment and to notify the Investor who holds Registrable Securities being sold (or, in the event of an underwritten offering, the managing underwriters) of the issuance of such Suspension and the resolution thereof. Notwithstanding Section 4(a) or the foregoing sentence, for an aggregate period of no more than 60 days over any 12 month period, the Company shall not be required to file any document or make any public disclosure necessary to end a Suspension, if at such time, the board of directors of the Company determines in good faith that taking such action would be seriously detrimental to the Company and its shareholders (and the Company provides to the Investors a certificate of the Chief Executive Officer or Chief Financial Officer of the Company as to such). In addition to and without limiting any other remedies (including, without limitation, remedies available under applicable law or in equity) available to the Selling Holders, each Selling Holder shall be entitled to specific performance in the event that the Company fails to comply with the provisions of this Section 4(b). 7 c. The Company may require each Investor participating in any registration to furnish to the Company such information regarding such Investor as required under applicable law and such Investor's intended method of distribution of such Registrable Securities as the Company may from time to time reasonably request in writing. At least five (5) business days prior to the first anticipated filing date of a registration statement, the Company shall notify each Investor of the information the Company requires from each Investor. d. Provided that a Suspension is not then in effect, any Investor may sell Registrable Securities registered under the Registration Statement, provided that it arranges for delivery of a current prospectus to the transferee of such Registrable Securities in compliance with applicable law. Upon receipt of a request therefor, the Company agrees to provide an adequate number of current prospectuses to the Selling Holders and to supply copies to any other parties requiring such prospectuses. 5. Indemnification. For the purpose of this Section 5, the term "Selling Stockholder" shall include each Investor, the directors, officers, partners, mangers, members, employees, agents, each person who controls any Investor within the meaning of the Securities Act or Securities Exchange Act of 1934, as amended (the "Exchange Act") and any affiliate of such Investor; the term "Registration Statement" shall include the prospectus in the form filed as part of a Registration Statement at the time of effectiveness (or, in the case of an underwritten offering, at the time immediately prior to the pricing of the offering), and each exhibit, supplement (including any free writing prospectus as defined under Rule 405 of the Securities Act) or amendment included in or relating to such Registration Statement; and the term "untrue statement" shall include any untrue statement or alleged untrue statement of a material fact, or any omission or alleged omission to state in the Registration Statement a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. a. The Company agrees to indemnify and hold harmless each Selling Stockholder from and against any joint or several losses, claims, damages, expenses or liabilities to which such Selling Stockholder may become subject (under the Securities Act or otherwise) insofar as such losses, claims, damages, expenses or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (A) any breach of the representations or warranties of the Company contained in this Agreement; (B) any untrue statement or alleged untrue statement contained in the Registration Statement, as amended at the time of effectiveness, (C) any failure by the Company to fulfill any undertaking included in the Registration Statement, as amended at the time of effectiveness or (D) any violation or alleged violation by the Company of the Securities Act, Exchange Act, any other law, including, without limitation, any state securities law, or any rule or regulation thereunder relating to the offer or sale 8 of the Registrable Securities. The Company will reimburse such Selling Stockholder for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, any untrue statement made in such Registration Statement in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Selling Stockholder specifically for use in preparation of the Registration Statement or the failure of such Selling Stockholder to comply with its covenants and agreements contained in this Agreement respecting the sale of the Registrable Securities or any untrue statement in any prospectus that is corrected in any subsequent prospectus that was delivered to the Selling Stockholder prior to the pertinent sale or sales by the Selling Stockholder. The Company shall reimburse each Selling Stockholder for the amounts provided for herein on demand as such expenses are incurred. b. Each Investor, severally but not jointly, agrees to indemnify and hold harmless the Company (and each person, if any, who controls the Company within the meaning of Section 15 of the Securities Act, each officer of the Company who signs the Registration Statement and each director of the Company) from and against any losses, claims, damages or liabilities to which the Company (or any such officer, director or controlling person) may become subject (under the Securities Act or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (A) any failure by such Investor to comply with the covenants and agreements contained in this Agreement respecting sale of the Registrable Securities, or (B) any untrue statement contained in the Registration Statement if such untrue statement was made in reliance upon and in conformity with written information furnished by or on behalf of such Investor specifically for use in preparation of the Registration Statement. Such Investor will reimburse the Company (or such officer, director or controlling person, as the case may be) for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided that such Investor's obligation to indemnify the Company shall be limited to the amount received by such Investor from the sale of the Registrable Securities giving rise to such obligation. c. Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 5, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying person will not relieve such indemnifying person from any liability which it may have to any indemnified person under this Section 5, except to the extent that such omission materially and adversely affects the indemnifying person's ability to defend such action. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall 9 elect by written notice delivered to the indemnified person promptly after receiving the aforesaid notice from such indemnified person, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the reasonable expense of such indemnifying person; provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding. d. If the indemnification provided for in this Section 5 is unavailable to or insufficient to hold harmless an indemnified person under subsection (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying person shall contribute to the amount paid or payable by such indemnified person as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and the applicable Investor, as well as any other Selling Stockholders under such Registration Statement, on the other, in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company, on the one hand, or an Investor or other Selling Stockholder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and each Investor, severally but not jointly, agree that it would not be just and equitable if contribution pursuant to this subsection (d) were determined by pro rata allocation (even if the Investor and other Selling Stockholders were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable 10 considerations referred to above in this subsection (d). The amount paid or payable by an indemnified person as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this subsection (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this subsection (d), each Investor shall not be required to contribute any amount in excess of the amount by which the amount received by such Investor from the sale of the Registrable Securities to which such loss relates exceeds the amount of any damages which such Investor has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each Investor's obligations in this subsection to contribute shall be in proportion to its sale of Registrable Securities to which such loss relates and shall not be joint with any other Selling Stockholders. 6. Information Available. So long as the Registration Statement is effective covering the resale of Registrable Securities owned by any Selling Holders, the Company will furnish to such Selling Holders, upon the reasonable request of any Selling Holder, an adequate number of copies of the prospectuses to supply to any other party requiring such prospectuses; and upon the reasonable request of such Selling Holder, the President or the Chief Financial Officer of the Company (or an appropriate designee thereof) will meet with such Selling Holder or a representative thereof at the Company's headquarters to discuss all information relevant for disclosure in the Registration Statement covering the Registrable Securities and will otherwise cooperate with any Selling Holder conducting an investigation for the purpose of reducing or eliminating such Selling Holder's exposure to liability under the Securities Act, including, the reasonable production of information at the Company's headquarters; provided, that the Company shall not be required to disclose any confidential information to or meet at its headquarters with any Selling Holder until and unless the Selling Holder shall have entered into a confidentiality agreement in form and substance reasonably satisfactory to the Company with the Company with respect thereto. 11 7. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (a) if within the United States by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (b) if delivered from outside the United States, by International Federal Express or facsimile, and shall be deemed given and received (i) if delivered by first-class registered or certified mail, three business days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one business day after so mailed, (iii) if delivered by International Federal Express, two business days after so mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed as follows: a. if to the Company, to: NovaGold Resources Inc. Suite 2300-200 Granville Street Vancouver, British Columbia Canada V6C 1S4 Attn: Rick Van Nieuwenhuyse Fax: 604-669-6272 b. if to the Investor, at the address set forth below, or at such other address or addresses as may have been furnished to the Company in writing: Electrum Strategic Resources LLC 1370 Avenue of the Americas, 19th Floor New York, NY 10019 Attn: William Natbony Fax: 646-365-1601 8. Governing Law; Consent to Jurisdiction; Waiver of Jury Trial; Currency. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State of New York, without regard to the choice of law principles thereof. Each of the parties hereto irrevocably submits to the exclusive jurisdiction of the courts of the State of New York located in New York County and the United States District Court for the Southern District of New York for the purpose of any suit, action, proceeding or judgment relating to or arising out of this Agreement and the transactions contemplated hereby. Each of the parties hereto irrevocably consents to the jurisdiction of any such court in any such suit, action or proceeding and to the laying of venue in such court. Each party hereto irrevocably waives any objection to the laying of venue of any such suit, action or proceeding brought in such courts and irrevocably waives any claim that any such suit, action or proceeding brought in any such court has been brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER. 9. Changes. This Agreement may not be modified, waived or amended except pursuant to an instrument in writing signed by the Company and Investors holding the majority of the Registrable Securities, and any such modification, waiver or amendment shall bind all Investors. 12 10. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 11. Prior Agreements. This Agreement constitutes the entire agreement between the parties and supersedes any prior understandings or agreements (including without limitation oral agreements) concerning the registration rights described herein. 12. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 13. Transfer of Rights. All covenants and agreements contained in this Agreement by or on behalf of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including without limitation transferees of any Shares), whether so expressed or not; provided, however, that rights conferred to the Purchaser may be transferred to a transferee of Shares only if the Company has been given written notice thereof, such transfer complies with the requirements of applicable law, rules and regulations of the SEC, such transferee agrees to be bound by all of the provisions of this Agreement applicable to Purchaser or an Investor and such transferee is a recipient of Shares from a holder of Registrable Securities representing at least ten percent (10%) of the Shares issued pursuant to the Purchase Agreement in the aggregate. 14. Independent Nature of Investor's Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any other document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other related documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. 15. Counterparts. This Agreement and any modification, waiver or amendment to this Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. [SIGNATURE PAGE FOLLOWS] 13 IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NOVAGOLD RESOURCES INC. By: _____________________________________________ Name: Robert J. (Don) MacDonald Title: Senior Vice President and Chief Financial Officer ELECTRUM STRATEGIC RESOURCES LLC By: _____________________________________________ Name: Title: 14 EX-99.3 4 e604950_ex99-3.txt QUALIFICATION RIGHTS AGREEMENT THIS QUALIFICATION RIGHTS AGREEMENT (the "Agreement") is made as of January 21, 2009 between NovaGold Resources Inc. (the "Company") and Electrum Strategic Resources LLC (the "Purchaser"). WHEREAS, the Company and the Purchaser are parties to the Unit Purchase Agreement (the "Purchase Agreement"), dated December 31, 2008, pursuant to which the Purchaser purchased Units comprised of common shares in the capital of the Company and warrants to purchase additional common shares of the Company and received certain registration rights in connection therewith. NOW, THEREFORE, in consideration of the premises and of the mutual provisions, agreements and covenants contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Demand Qualification. At any time after the Closing Date (as defined in the Purchase Agreement), upon the written request of Investors (as defined below) holding at least an aggregate of twenty-five percent (25%) of the Qualifiable Shares (as defined below) then outstanding (the "Requesting Holders"), the Company shall use its reasonable best efforts to prepare and file, or to cause to be prepared and filed, all necessary documents, including a prospectus, for one or more equity securities offerings under Applicable Securities Laws in some or all of the provinces or territories of Canada (or federally, if applicable) in which the Company is a "reporting issuer" under the Applicable Securities Laws of such provinces or territories other than the Province of Quebec (for the purposes of this Section 1, the "Qualification Provinces") of all or any portion (as required by the Requesting Holders) of the Qualifiable Shares held by the Requesting Holders having an aggregate offering or sale price of at least US$5,000,000 (a "Demand Qualification"). The Company shall not be required to effect more than three Demand Qualifications or Demand Registrations (as defined in the United States registration rights agreement entered into on the date hereof (the "US Registration Rights Agreement")) in the aggregate; provided, however, that in the event the Purchaser acquires Warrant Shares upon the exercise of Warrants (as defined in the Purchase Agreement) within thirty (30) days following a request by the Company that the Purchaser exercise Warrants, the Purchaser may make a request for a demand qualification of some or all of the Warrant Shares so acquired (notwithstanding that such Warrant Shares may have an aggregate offering or sale price of less than US$5,000,000), and such demand qualification will not count as one of the three Demand Qualifications or Demand Registrations (as defined in the US Registration Rights Agreement) otherwise allowed by this Agreement or the US Registration Rights Agreement. a. For the purposes of this Agreement, "Applicable Securities Laws" of a province or territory of Canada or federally, if applicable, means, all applicable securities laws in such jurisdiction and the respective regulations and rules under such laws together with applicable published policy statements, notices and orders of the Securities Commission in such jurisdiction as well as the applicable by-laws, rules and regulations of any stock exchange on which the common shares in the capital of the Company are then listed and posted for trading; - 2 - b. For the purposes of this Agreement, "Securities Commission" means a securities commission or similar regulatory authority in a province or territory of Canada or federally, as applicable; c. For the purposes of this Agreement, "Qualifiable Shares" shall mean (i) common shares in the capital of the Company purchased by the Purchaser pursuant to the Purchase Agreement ("Common Shares") and (ii) common shares issuable upon exercise of Warrants (as defined in the Purchase Agreement) ("Warrant Shares" and together with the Common Shares, the "Shares"); provided that such securities shall cease to be Qualifiable Shares when (i) a receipt for a prospectus qualifying the distribution of all such Qualifiable Shares has been obtained from the applicable Securities Commission under Applicable Securities Laws and such Qualifiable Shares have been sold or otherwise transferred by the holder thereof pursuant to such prospectus; (ii) such Qualifiable Shares are transferred to a person that is not a permitted assign of the Purchaser pursuant to this Agreement; or (iii) such Qualifiable Shares are sold in the circumstances described in subparagraph 1(a)(ii) or are sold or, except where the Investor is a member of a control block of the Company, can be sold in the circumstances described in subparagraph 1(a)(iii) of the US Registration Rights Agreement. d. For purposes of this Agreement, "Investor" means the Purchaser, any transferee(s) or assignee(s) to whom the Purchaser assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 12 and any transferee(s) or assignee(s) to whom a transferee or assignee assigns its rights under this Agreement and who agrees to become bound by the provisions of this Agreement in accordance with Section 12. e. Following receipt of any notice by Requesting Holders, the Company shall immediately notify Investors holding Qualifiable Shares from whom notice has not been received and such Investors shall then be entitled within ten (10) days thereafter to request the Company to include in the requested registration all or any portion of their Qualifiable Shares. The Company may also register for sale for its own account or that of other security holders having the contractual right to include such securities in such registration statement such additional shares of the Company's capital stock as it shall desire, subject to paragraph (g) below. For purposes of this Agreement, Investors that elect to have such securities registered in accordance with the terms of this Agreement shall be referred to individually as a "Selling Holder" and collectively as the "Selling Holders". f. In connection with any qualification of distribution of Qualifiable Shares pursuant to this Section 1, the Company shall: - 3 - i. subject to receipt of necessary information from the Selling Holders after prompt request from the Company to such holders to provide such information (provided that failure on the part of one or more of the Selling Holders to provide the necessary information requested shall not relieve the Company from its obligation to use reasonable best efforts with respect to complying Selling Holders), prepare and file with the Securities Commissions in the Qualification Provinces, within thirty (30) days after the end of the notice period set forth in paragraph (e) above, a preliminary prospectus and as soon as reasonably practical following the settlement of any comments received from a Securities Commission in any Qualification Province, a prospectus to qualify the distribution of the Qualifiable Shares by the Selling Holders (a "Demand Prospectus"); provided, that if the terms of the underwriting agreement executed in connection with any qualification pursuant to Section 1 or 2 of this Agreement prohibit the Company from filing any Demand Prospectus, the Company shall have the right to delay such filing for the required period, which period shall not exceed forty-five (45) days; ii. If, in the good faith judgment of the Company's board of directors it would be seriously detrimental to the Company or its shareholders to file a preliminary prospectus or a prospectus in connection with a Demand Qualification, or an amendment or supplement to such a preliminary prospectus or prospectus in the near future (and the Company provides the Investors with a certificate from its Chief Executive Officer or Chief Financial Officer stating as such), the Company may defer taking action to comply with this Section 1, provided that the Company shall not defer actions pursuant to such notices for more than sixty (60) days in the aggregate in any twelve (12) month period; and iii. The Company shall not be required to file a preliminary prospectus in connection with a Demand Qualification pursuant to this Section 1 if within ten (10) days of receipt of a Demand Qualification, it notifies the Requesting Holders that it intends to conduct a public offering of equity securities for the account of the Company within the next sixty (60) days, provided that the Company shall not exercise its rights under this subsection more than twice in any 12 month period. If the Company determines not to conduct such public offering, the Company shall provide prompt notice to the Investors of such determination. g. In connection with any qualification of the distribution of Qualifiable Shares pursuant to this Section 1, the Requesting Holders may elect to sell Qualifiable Shares in an underwritten offering in accordance with the conditions set forth in this paragraph. In any such underwritten offering, the investment bank that will manage the offering will be selected by, and the underwriting arrangements with respect thereto will be approved by, the Requesting Holders holding a majority of the Qualifiable Shares to be sold pursuant to such offering by such Requesting Holders, subject, in each case, to the consent of the Company, which consent - 4 - will not be unreasonably withheld. No Investor may participate in any underwritten offering hereunder unless such Investor (A) agrees to sell such Investor's Qualifiable Shares to be sold thereunder on the basis provided in any underwriting arrangements approved pursuant hereto and (B) completes and executes all other customary questionnaires, powers of attorney, indemnities, underwriting agreements and other documents required under the terms of such underwriting arrangements. In the case of any such underwritten offering, if the managing underwriter for such offering advises the Company in writing that in their good faith opinion the amount of securities requested to be included therein exceeds the amount of securities that can be sold in such offering such that the inclusion of such Qualifiable Shares would adversely affect marketing of the securities to be sold pursuant to the offering, the Company shall not exclude any Qualifiable Shares unless the Company has first excluded, all outstanding securities, the holders of which are not entitled by contract to inclusion of such securities in such preliminary prospectus and prospectus or are not entitled to pro rata inclusion with the Qualifiable Shares, provided, that after giving effect to the foregoing, any exclusion of Qualifiable Shares shall be made pro rata with holders of other securities having the contractual right to include such securities in the preliminary prospectus and the prospectus other than holders of securities entitled to inclusion of their securities in such preliminary prospectus and prospectus by reason of a demand qualification right or demand registration rights. 2. Incidental Qualification. If, at any time, the Company proposes to qualify for distribution any equity securities of the Company by way of prospectus under any Applicable Securities Laws of any province or territory in Canada or federally, if applicable (for the purposes of this Section 2, the "Qualification Provinces"), or any other jurisdiction in Canada in which securities of the Company may be qualified (including, without limitation, securities distributed from treasury by the Company or distributed by way of secondary offering by any other shareholder), the Company will serve written notice (a "Notice") of such proposed distribution on each Investor prior to the anticipated date of filing of a preliminary prospectus under such Applicable Securities Laws. A Notice shall include reasonable details of such proposed distribution. Subject to the restrictions and in accordance with the procedures set forth below, the Company will use its reasonable best efforts to include in any such distribution to which a Notice relates, all Qualifiable Shares with respect to which the Company has received from an Investor a written request for inclusion therein within: (i) two (2) Business Days following receipt of the Notice in respect of a "bought deal" financing pursuant to National Instrument 44-101 Short Form Prospectus Distributions of the Canadian Securities Administrators ("NI 44-101") or any successor thereto; and (ii) ten (10) days, in any other case, provided that: A. notwithstanding that an Investor shall have provided a written request for inclusion in any such distribution of certain Qualifiable Shares, such Investor shall not be required to include such shares in any such distribution if the price at which such Qualifiable Shares are to be sold is determined not to be acceptable by such Investor; - 5 - B. each Investor must sell its Qualifiable Shares at the same price as the Company in respect of identical securities; and C. if, at any time after giving a Notice and prior to the date a receipt is issued by the applicable Securities Commission under Applicable Securities Laws in respect of the prospectus to be filed in connection with such proposed distribution, the Company shall be unable to or shall determine for any reason not to proceed with the proposed distribution, the Company may, at its election, give written notice of such determination to the Investors and thereupon the Company shall be relieved of its obligation hereunder to effect the proposed distribution and any qualification of any such Qualifiable Shares (without prejudice to the rights of the Investors in respect of any subsequent distribution). For the purposes of this Agreement, "Business Day" means a day that is not a Saturday, Sunday or a statutory holiday in Vancouver, British Columbia or New York, New York. The Company shall have the right to select the managing underwriter(s) for any underwritten distribution made pursuant to this Section 2. All Investors proposing to sell their Qualifiable Shares in such underwritten offering shall (together with the Company) enter into an underwriting agreement in customary form. If such proposed distribution is an underwritten offering and the managing underwriter for such offering advises the Company that the securities requested to be included therein exceed the amount of securities that can be sold in such offering such that the inclusion of such Qualifiable Shares would adversely affect marketing of the securities to be sold by the Company, the Company shall not exclude any Qualifiable Shares unless the Company has first excluded, all outstanding securities, the holders of which are not entitled by contract to inclusion of such securities in such preliminary prospectus and prospectus or are not entitled to pro rata inclusion with the Qualifiable Shares, provided, that after giving effect to the foregoing, any exclusion of Qualifiable Shares shall be made pro rata with holders of other securities having the contractual rights right to include such securities in the preliminary prospectus and the prospectus other than holders of securities entitled to inclusion of their securities in such preliminary prospectus and the prospectus by reason of an incidental qualification right or piggyback registration rights. 3. Registration Procedures and Other Matters. If and when the Company is required by the provisions of Section 1 or 2 to qualify the distribution of Qualifiable Shares by prospectus, the Company shall: a. furnish to the Selling Holders' legal counsel, copies of the preliminary prospectus, prospectus, or any amendments or supplements thereto, which documents will be subject to the comment and review of the Selling Holders and one legal counsel for all of the Selling Holders; - 6 - b. prepare and file such amendments to the prospectus or other qualification document used in connection with such secondary offering as may be necessary to enable the distribution by way of secondary offering for a period of not less than one hundred and twenty (120) days (in the case of a qualification referred to in Section 2) or such period of time, not exceeding one hundred and eighty (180) days, as requested by the Selling Holders (in the case of a qualification referred to in Section 1) (or in any case such shorter period as shall be necessary under applicable securities laws to permit the Selling Holders to complete the distribution of the Qualifiable Shares to which such prospectus or other qualification document relates in accordance with its intended methods of distribution) and to comply with the provisions of Applicable Securities Laws of the Qualification Provinces with respect to the disposition of all Qualifiable Shares covered by the prospectus or other qualification document for the period required to effect the distribution thereof, but in no event shall the Company be required to do so for a period of more than one hundred and twenty (120) days (in the case of a qualification referred to in Section 2) or one hundred and eighty (180) days (in the case of a qualification referred to in Section 1) following the effective date of such prospectus or other qualification document; c. furnish to the Selling Holders and the underwriter(s), if any, and to one legal counsel for all of the Selling Holders and the underwriter(s), such number of conformed copies of the prospectus (including each preliminary prospectus) and any amendments or supplements thereto, and any documents incorporated by reference therein, as the Selling Holders or such underwriter(s) may reasonably request in order to facilitate the disposition of the Qualifiable Shares being sold by the Selling Holders (it being understood that the Company consents to the use of the preliminary prospectus, the prospectus and any amendment or supplement thereto (including any documents incorporated by reference therein) by the Selling Holders and the underwriter(s), if any, in connection with the offering and sale of the Qualifiable Shares covered by the prospectus or any amendment or supplement thereto); d. at any time when a prospectus relating to an offering of Qualifiable Shares is required to be delivered under Applicable Securities Laws of any province or territory of Canada, notify the Selling Holders and the underwriter(s), if any, when the Company becomes aware of the happening of any event as a result of which any prospectus or other qualification document (as then in effect) contains an untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading and, thereafter, prepare and file pursuant to such Applicable Securities Laws and furnish a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Qualifiable Shares, such prospectus will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. Notwithstanding the foregoing sentence, for an aggregate period of no more than sixty (60) days over a twelve (12) month period, the Company shall not be required to file any supplement or amendment to a prospectus, if at such time, the board of directors of the Company determines in good faith that taking such action would be seriously detrimental to the Company and its shareholders (and the Company provides to the Selling Holders a certificate of the Chief Executive Officer or Chief Financial Officer of the Company as to such). No Investor will, until a receipt for such supplement or amendment to such prospectus is obtained from the applicable Securities Commission under Applicable Securities Laws, effect sales of Qualifiable Shares or deliver any prospectus in respect of such sale; - 7 - e. subject to paragraph (b) above and subparagraph 1(f)(i), do all such acts and things necessary to enable the distribution in all such jurisdictions of the Qualifiable Shares covered by the applicable prospectus or other qualification document for such period of time as is required to complete the distribution contemplated by the offering contemplated by the prospectus or other qualification document; f. cooperate with the Selling Holders and the lead underwriter or underwriters, if any, to facilitate the timely preparation and delivery of certificates (not bearing any restrictive legends except to the extent required by law) representing securities to be sold pursuant to the prospectus or other qualification document, and to enable such securities to be in such denominations and registered in such names as the lead underwriter or underwriters, if any, or any Investor may request; g. enter into such customary agreements (including an underwriting or similar such agreement in customary form, including customary standstill provisions), and take all such other actions (including, without limitation, delivery of customary legal opinions and officers' certificates) as the Selling Holders or the underwriters reasonably request in order to expedite or facilitate the disposition of such Qualifiable Shares; h. make available for inspection by the Selling Holders and any underwriter participating in any distribution pursuant to such prospectus or other qualification document, and any one law firm, accountant or other agent retained by all of the Selling Holders or any such underwriter, all financial and other records, pertinent corporate documents and properties of the Company, as shall be reasonably necessary to enable it to exercise its due diligence responsibility provided such parties, if requested, have entered into a confidentiality agreement with the Company, as applicable; i. use its reasonable best efforts to obtain a long-form comfort letter from the Company's independent auditor and legal opinion of the Company's counsel in customary form and covering such matters of the type customarily covered by such comfort letters and opinions as the Selling Holders or the underwriter reasonably request; - 8 - j. in the event of the issuance of any order or ruling suspending the effectiveness of a prospectus receipt or of any order suspending or preventing the use of any prospectus or suspending the qualification of any securities qualified by such prospectus for sale in any jurisdiction, including, where the offering is being made, under the multijurisdictional disclosure system or any replacement thereof ("MJDS"), in the United States, or any event or circumstance which, in the good faith judgment of the Company's Chief Executive Officer and Chief Financial Officer, makes it advisable to make any changes in a prospectus, or any document incorporated or deemed to be incorporated therein by reference, so that the prospectus will not contain any untrue statement of a material fact or any omission to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading, the Company will notify the Selling Holders of such event and use all reasonable commercial efforts promptly to obtain the withdrawal of such order or ruling. Notwithstanding the foregoing sentence, for an aggregate period of no more than 60 days over any 12 month period, the Company shall not be required to file any document or make any public disclosure necessary to end such an event, if at such time, the board of directors of the Company determines in good faith that taking such action would be seriously detrimental to the Company and its shareholders (and the Company provides to the Selling Holders a certificate of the Chief Executive Officer or Chief Financial Officer of the Company as to such). No Investor will (until further notice) effect sales thereof or deliver any prospectus in respect of such sale after notification by the Company to the Selling Holders under this paragraph (j); and k. bear all reasonable expenses in connection with the procedures in Section 1 or 2 hereof and to qualify the distribution of the Qualifiable Shares pursuant to the prospectus, including the fees of one legal counsel for all of the Selling Holders not to exceed US$25,000 in the aggregate for each prospectus and Registration Statement (as defined in the US Registration Rights Agreement). 4. Indemnification. For the purpose of this Section 4, the term "Selling Stockholder" shall include each Investor, the directors, officers, partners, mangers, members, employees, agents, each person who controls (within the meaning of Applicable Securities Laws) any Investor and any affiliate (within the meaning of Applicable Securities Laws) of such Investor; the term "prospectus" shall include the preliminary prospectus and the prospectus and each amendment or supplement thereto; and the term "untrue statement" shall include any untrue statement or alleged untrue statement of a material fact, or any omission or alleged omission to state in the prospectus a material fact required to be stated therein or necessary to prevent a statement that is made from being false or misleading in the circumstances in which it was made. a. The Company agrees to indemnify and hold harmless each Selling Stockholder from and against any joint or several losses, claims, damages, expenses or liabilities to which such Selling Stockholder may become subject (under Applicable Securities Laws or otherwise) insofar as such losses, claims, damages, expenses or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (A) any breach of the representations or warranties of the Company contained in this Agreement; (B) any untrue statement or alleged untrue statement contained in the prospectus, as amended at the time of effectiveness, (C) any failure by the Company to fulfill - 9 - any undertaking included in the prospectus or (D) any violation or alleged violation by the Company of Applicable Securities Laws, any other law, or any rule or regulation thereunder relating to the offer or sale of the Qualifiable Shares. The Company will reimburse such Selling Stockholder for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided, however, that the Company shall not be liable in any such case to the extent that such loss, claim, damage or liability arises out of, or is based upon, any untrue statement made in such prospectus in reliance upon and in conformity with written information furnished to the Company by or on behalf of any Selling Stockholder specifically for use in preparation of the prospectus or the failure of such Selling Stockholder to comply with its covenants and agreements contained in this Agreement respecting the sale of the Qualifiable Shares or any untrue statement in any prospectus that is corrected in any subsequent prospectus that was delivered to the Selling Stockholder prior to the pertinent sale or sales by the Selling Stockholder or the Selling Stockholder's failure to deliver to a purchaser of securities a copy of the prospectus or other qualification document or any amendments thereof or supplements thereto at a time when the Selling Stockholder is required under Applicable Securities Laws to do so after the Company has furnished such Selling Stockholder with a sufficient number of copies of the same. The Company shall reimburse each Selling Stockholder for the amounts provided for herein on demand as such expenses are incurred. b. Each Investor, severally but not jointly, agrees to indemnify and hold harmless the Company (and each person, if any, who controls (within the meaning of Applicable Securities Laws) the Company, each officer of the Company who signs the prospectus and each director of the Company) from and against any losses, claims, damages or liabilities to which the Company (or any such officer, director or controlling person) may become subject (under Applicable Securities Laws or otherwise), insofar as such losses, claims, damages or liabilities (or actions or proceedings in respect thereof) arise out of, or are based upon, (A) any failure by such Investor to comply with the covenants and agreements contained in this Agreement respecting sale of the Qualifiable Shares, (B) any untrue statement contained in the prospectus if such untrue statement was made in reliance upon and in conformity with written information furnished by or on behalf of such Investor specifically for use in preparation of the prospectus, or (C) such Investor's failure to deliver to a purchaser of securities a copy of the prospectus or other qualification document or any amendments thereof or supplements thereto at a time when the Investor is required under Applicable Securities Laws to do so after the Company has furnished such Investor with a sufficient number of copies of the same. Such Investor will reimburse the Company (or such officer, director or controlling person, as the case may be) for any reasonable legal or other expenses reasonably incurred in investigating, defending or preparing to defend any such action, proceeding or claim; provided that such Investor's obligation to indemnify the Company shall be limited to the amount received by such Investor from the sale of the Qualifiable Shares giving rise to such obligation. - 10 - c. Promptly after receipt by any indemnified person of a notice of a claim or the beginning of any action in respect of which indemnity is to be sought against an indemnifying person pursuant to this Section 4, such indemnified person shall notify the indemnifying person in writing of such claim or of the commencement of such action, but the omission to so notify the indemnifying person will not relieve such indemnifying person from any liability which it may have to any indemnified person under this Section 4, except to the extent that such omission materially and adversely affects the indemnifying person's ability to defend such action. Subject to the provisions hereinafter stated, in case any such action shall be brought against an indemnified person, the indemnifying person shall be entitled to participate therein, and, to the extent that it shall elect by written notice delivered to the indemnified person promptly after receiving the aforesaid notice from such indemnified person, shall be entitled to assume the defense thereof, with counsel reasonably satisfactory to such indemnified person. After notice from the indemnifying person to such indemnified person of its election to assume the defense thereof, such indemnifying person shall not be liable to such indemnified person for any legal expenses subsequently incurred by such indemnified person in connection with the defense thereof; provided, however, that if there exists or shall exist a conflict of interest that would make it inappropriate, in the opinion of counsel to the indemnified person, for the same counsel to represent both the indemnified person and such indemnifying person or any affiliate or associate thereof, the indemnified person shall be entitled to retain its own counsel at the reasonable expense of such indemnifying person; provided, however, that no indemnifying person shall be responsible for the fees and expenses of more than one separate counsel (together with appropriate local counsel) for all indemnified parties. In no event shall any indemnifying person be liable in respect of any amounts paid in settlement of any action unless the indemnifying person shall have approved the terms of such settlement; provided that such consent shall not be unreasonably withheld. No indemnifying person shall, without the prior written consent of the indemnified person, effect any settlement of any pending or threatened proceeding in respect of which any indemnified person is or could have been a party and indemnification could have been sought hereunder by such indemnified person, unless such settlement includes an unconditional release of such indemnified person from all liability on claims that are the subject matter of such proceeding. d. If the indemnification provided for in this Section 4 is unavailable to or insufficient to hold harmless an indemnified person under paragraph (a) or (b) above in respect of any losses, claims, damages or liabilities (or actions or proceedings in respect thereof) referred to therein, then each indemnifying person shall contribute to the amount paid or payable by such indemnified person as a result of such losses, claims, damages or liabilities (or actions in respect thereof) in such proportion as is appropriate to reflect the relative fault of the Company, on the one hand, and the applicable Investor, as well as any other Selling Stockholders under such - 11 - prospectus, on the other, in connection with the statements or omissions or other matters which resulted in such losses, claims, damages or liabilities (or actions in respect thereof), as well as any other relevant equitable considerations. The relative fault shall be determined by reference to, among other things, in the case of an untrue statement, whether the untrue statement relates to information supplied by the Company, on the one hand, or an Investor or other Selling Stockholder, on the other hand, and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such untrue statement. The Company and each Investor, severally but not jointly, agree that it would not be just and equitable if contribution pursuant to this paragraph (d) were determined by pro rata allocation (even if the Investor and other Selling Stockholders were treated as one entity for such purpose) or by any other method of allocation which does not take into account the equitable considerations referred to above in this paragraph (d). The amount paid or payable by an indemnified person as a result of the losses, claims, damages or liabilities (or actions in respect thereof) referred to above in this paragraph (d) shall be deemed to include any legal or other expenses reasonably incurred by such indemnified person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this paragraph (d), each Investor shall not be required to contribute any amount in excess of the amount by which the amount received by such Investor from the sale of the Qualifiable Shares to which such loss relates exceeds the amount of any damages which such Investor has otherwise been required to pay by reason of such untrue statement. No person guilty of fraudulent misrepresentation shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. Each Investor's obligations in this paragraph to contribute shall be in proportion to its sale of Qualifiable Shares to which such loss relates and shall not be joint with any other Selling Stockholders. e. The parties agree that if the offering is being made pursuant to MJDS, and indemnity is to be sought against an indemnifying person, the indemnified person's right to indemnification pursuant to this Section 4 is not applicable if such indemnified person has already sought or will seek an indemnity for the same claim pursuant to Section 5 of the US Registration Rights Agreement. 5. Information Available. During the period of distribution by way of secondary offering, the Company will furnish to such Selling Holders, upon the reasonable request of any Investor, an adequate number of copies of the prospectuses to supply to any other party requiring such prospectuses; and upon the reasonable request of such Investor, the President or the Chief Financial Officer of the Company (or an appropriate designee thereof) will meet with such Investor or a representative thereof at the Company's headquarters to discuss all information relevant for disclosure in the prospectus qualifying the distribution of the Qualifiable Shares and will otherwise cooperate with any Investor conducting an investigation for the purpose of reducing or eliminating such Investor's exposure to liability under the Applicable Securities Laws, including, the reasonable production of information at the Company's headquarters; provided, that the Company shall not be required to disclose any confidential information to or meet at its headquarters with any Investor until and unless the Investor shall have entered into a confidentiality agreement in form and substance reasonably satisfactory to the Company with the Company with respect thereto. - 12 - 6. Notices. All notices, requests, consents and other communications hereunder shall be in writing, shall be mailed (a) if within Canada by first-class registered or certified airmail, or nationally recognized overnight express courier, postage prepaid, or by facsimile, or (b) if delivered from outside Canada, by International Federal Express or facsimile, and shall be deemed given and received (i) if delivered by first-class registered or certified mail, three (3) Business Days after so mailed, (ii) if delivered by nationally recognized overnight carrier, one (1) Business Day after so mailed, (iii) if delivered by International Federal Express, two (2) Business Days after so mailed, (iv) if delivered by facsimile, upon electronic confirmation of receipt and shall be delivered as addressed as follows: a. if to the Company, to: NovaGold Resources Inc. Suite 2300-200 Granville Street Vancouver, British Columbia Canada V6C 1S4 Attn: Rick Van Nieuwenhuyse Fax: 604-669-6272 b. if to the Investor, at the address set forth below, or at such other address or addresses as may have been furnished to the Company in writing: Electrum Strategic Resources LLC 1370 Avenue of the Americas, 19th Floor New York, NY 10019 Attn: William Natbony Fax: 646-365-1601 7. Governing Law and Attornment. This Agreement shall be governed by and construed in accordance with the laws of the Province of British Columbia. The parties hereto hereby irrevocably attorn to the jurisdiction of the courts of the Province of British Columbia. 8. Changes. This Agreement may not be modified, waived or amended except pursuant to an instrument in writing signed by the Company and Investors holding the majority of the Qualifiable Shares, and any such modification, waiver or amendment shall bind all Investors. 9. Severability. In case any provision contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby. 10. Prior Agreements. This Agreement constitutes the entire agreement between the parties and supersedes any prior understandings or agreements (including without limitation oral agreements) concerning the registration rights described herein. - 13 - 11. Headings. The headings of the various sections of this Agreement have been inserted for convenience of reference only and shall not be deemed to be part of this Agreement. 12. Transfer of Rights. All covenants and agreements contained in this Agreement by or on behalf of the parties hereto shall bind and inure to the benefit of the respective successors and assigns of the parties hereto (including without limitation transferees of any Shares), whether so expressed or not; provided, however, that rights conferred to the Purchaser may be transferred to a transferee of Shares only if the Company has been given written notice thereof, such transfer complies with the requirements of applicable law, such transferee agrees to be bound by all of the provisions of this Agreement applicable to Purchaser or an Investor and such transferee is a recipient of Shares from a holder of Qualifiable Shares representing at least ten percent (10%) of the Shares issued pursuant to the Purchase Agreement in the aggregate. 13. Independent Nature of Investor's Obligations and Rights. The obligations of each Investor under this Agreement are several and not joint with the obligations of any other Investor, and no Investor shall be responsible in any way for the performance of the obligations of any other Investor under this Agreement. Nothing contained herein or in any other document, and no action taken by any Investor pursuant thereto, shall be deemed to constitute the Investors as a partnership, an association, a joint venture or any other kind of entity, or create a presumption that the Investors are in any way acting in concert or as a group with respect to such obligations or the transactions contemplated by this Agreement. Each Investor shall be entitled to independently protect and enforce its rights, including without limitation, the rights arising out of this Agreement or out of the other related documents, and it shall not be necessary for any other Investor to be joined as an additional party in any proceeding for such purpose. 14. Counterparts. This Agreement and any modification, waiver or amendment to this Agreement may be executed in two or more counterparts, each of which shall constitute an original, but all of which, when taken together, shall constitute but one instrument, and shall become effective when one or more counterparts have been signed by each party hereto and delivered to the other parties. 15. Further Assurances. Each party hereto shall, from time to time, and at all times hereafter, at the request of the other party hereto, but without further consideration, do all such further acts and execute and deliver all such further documents and instruments as shall be reasonably required in order to fully perform and carry out the terms and intent hereof. 16. Time. Time shall be of the essence in this Agreement. [SIGNATURE PAGE FOLLOWS] - 14 - IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written. NOVAGOLD RESOURCES INC. By: _______________________________ Name: Title: ELECTRUM STRATEGIC RESOURCES LLC By: _______________________________ Name: Title: -----END PRIVACY-ENHANCED MESSAGE-----