NovaGold Resources Enters Into Definitive Agreement With Paulson Advisers for Strategic Acquisition Transaction

Transaction Structure and Shareholding Exchange

Under the terms of the Arrangement Agreement, New NovaGold Corporation, a Delaware corporation, will acquire all issued and outstanding common shares of NovaGold Resources Inc. by way of an arrangement under British Columbia's Business Corporations Act. The transaction contemplates a share-for-share exchange whereby each NovaGold shareholder (excluding any shares held by New NovaGold itself and any shares for which valid dissent rights have been exercised) will receive one share of voting common stock of New NovaGold, with a par value of $0.001 per share, in exchange for each NovaGold share currently held.

The board of directors of NovaGold has unanimously approved the transaction structure and has determined that the arrangement serves the best interests of the company and its shareholders. The board has formally resolved to recommend that shareholders vote in favor of the Arrangement Resolution at the NovaGold shareholder meeting. The transaction is designed to maintain existing equity ownership on a one-for-one basis while transferring the issuing entity from a British Columbia corporation to a Delaware corporation.

Treatment of Employee and Investor Stock-Based Awards

The Arrangement Agreement provides comprehensive treatment of NovaGold's existing equity incentive programs. All outstanding options to purchase NovaGold shares will be assumed by New NovaGold and converted into options to purchase New NovaGold voting common stock on identical terms, including vesting schedules, exercise provisions, and expiration dates. The number of shares subject to each assumed option and the per-share exercise price will remain unchanged in the conversion process, ensuring that option holders experience no dilution or modification of their existing contractual arrangements.

Performance share units and deferred share units held by employees and other equity award holders will undergo similar treatment. Outstanding NovaGold PSUs will convert into restricted stock units with respect to New NovaGold voting common stock, maintaining the same performance-based vesting conditions that applied prior to the effective time of the transaction. Deferred share units will become deferred share units with respect to New NovaGold shares, preserving all termination-related provisions. New NovaGold will assume all of NovaGold's equity incentive plans, employee share purchase plan, and related obligations, with the number and kind of shares available for issuance adjusted to reflect New NovaGold voting shares in accordance with plan provisions.

Warrant and Derivative Security Adjustments

The Arrangement Agreement acknowledges that outstanding warrants to purchase NovaGold shares will be subject to contractual adjustment provisions contained within the individual warrant instruments. Following the effective time of the transaction, each NovaGold warrant will automatically become exercisable for New NovaGold voting shares on the adjusted terms specified in the applicable warrant instrument. This treatment ensures that warrant holders maintain consistent economic rights and conversion capabilities across the organizational restructuring without requiring separate amendments to existing warrant agreements.

The automatic adjustment mechanism built into warrant documentation provides warrant holders with protection against dilution or material modification of their contractual rights during the transaction process. The filing states that these adjustments will occur in accordance with the terms already contained in the warrant instruments themselves, eliminating the need for renegotiation or consent from individual warrant holders.

Representations, Warranties and Operational Covenants

The Arrangement Agreement contains customary representations, warranties, and covenants from NovaGold, New NovaGold, and Paulson Advisers. The company has committed to conducting its business in the ordinary course consistent with past practice during the period between the agreement's execution and the effective time of the arrangement. NovaGold has further agreed that it will not take certain specified actions without the prior written consent of Paulson Advisers, provided that such consent will not be unreasonably withheld, conditioned, or delayed.

NovaGold has undertaken to honor existing exculpation, indemnification, and expense-advancement rights of the company's current and former directors and officers regarding matters occurring prior to and up to the effective time of the arrangement. The company will also be required to purchase customary "tail" directors' and officers' liability insurance coverage to protect its leadership from potential claims arising from their service to the company.

Regulatory and Court Approval Requirements

The completion of the arrangement is contingent upon satisfaction or waiver of multiple conditions set forth in the Arrangement Agreement. The transaction requires approval and adoption of the Arrangement Resolution by NovaGold shareholders at the NovaGold shareholder meeting, conducted in accordance with an Interim Order issued by the British Columbia court system. Additionally, the Supreme Court of British Columbia must issue both an Interim Order and a Final Order to permit the transaction to proceed lawfully under provincial corporate law.

NovaGold must obtain absent any legal restraint prohibiting, enjoining, or making illegal the transaction consummation. The transaction also requires demonstration that no legal restraint will reasonably result in a prohibition or restriction on New NovaGold's acquisition of NovaGold shares, a person obtaining material damages from NovaGold in connection with the arrangement, a prohibition or material limit on New NovaGold's ownership of NovaGold or material portions of its businesses, or limitations on New NovaGold's ability to acquire, hold, or exercise full ownership rights of NovaGold shares.

Securities Regulatory and Stock Exchange Clearances

The arrangement contemplates issuance of consideration shares by New NovaGold to existing NovaGold shareholders. These consideration shares must either be exempt from U.S. Securities Act registration requirements under Section 3(a)(10) or registered pursuant to an effective registration statement under the U.S. Securities Act. The transaction expressly requires evidence of approval from the New York Stock Exchange for listing and posting for trading of the consideration shares upon completion of the arrangement, in form satisfactory to both NovaGold and New NovaGold.

Completing the transaction further depends on receipt of all requisite approvals from the Toronto Stock Exchange, New York Stock Exchange, and NYSE American for the arrangement and related transactions contemplated by the transaction agreements. These stock exchange clearances represent a critical regulatory pathway that must be satisfied before the transaction can conclude. The filing does not disclose the specific timeline for obtaining these regulatory approvals or any estimated closing date for the transaction.

Business Operations During Transition Period

NovaGold has committed to maintaining business operations in the ordinary course consistent with past practice throughout the period between execution of the Arrangement Agreement and the effective time of the arrangement. This operational commitment ensures business continuity and prevents material deterioration of company assets, market position, or financial condition pending completion of the transaction. The company has restricted its ability to take certain categories of action during this interim period without obtaining prior written consent from Paulson Advisers.

The interim period operational covenants reflect customary transaction practice designed to preserve shareholder value and business going-concern status while the arrangement proceeds through required approvals and closing conditions. The specific scope and nature of actions requiring Paulson Advisers' consent are detailed in the Arrangement Agreement itself, though the general framework emphasizes maintaining existing business practices and asset integrity during the transition.

Shareholder and Director Indemnification Protections

The Arrangement Agreement establishes comprehensive protections for NovaGold's current and former directors and officers. The company will honor all existing exculpation, indemnification, and expense-advancement rights of its directors and officers with respect to matters arising prior to and up to the effective time of the arrangement. These contractual protections ensure that leadership does not face personal financial exposure for actions taken in their corporate capacities before the transaction closes.

To further safeguard director and officer interests, NovaGold will purchase customary tail directors' and officers' liability insurance coverage. This insurance extends protection beyond the arrangement's effective time, providing coverage for claims that may be asserted against directors and officers following the transaction's completion based on their pre-closing conduct and decision-making. The tail insurance requirement reflects market-standard practice in significant corporate transactions involving changes of control.

Company Background and Business Operations

NovaGold Resources Inc. is a company incorporated in British Columbia, Canada, with principal executive offices located in Salt Lake City, Utah. The company is registered as a public reporting company with the U.S. Securities and Exchange Commission under Commission File Number 001-31913. NovaGold's common shares trade on both NYSE American and the Toronto Stock Exchange under the ticker symbol NG, providing liquidity to both U.S. and Canadian investors.

The company operates as a mineral resources development entity, though the filing does not provide specific details regarding NovaGold's current project portfolio, development stage assets, geographic focus areas, or revenue generation model. Investors seeking comprehensive information regarding NovaGold's business operations, mineral assets, exploration activities, and financial condition should review the company's full periodic and current reports on file with the Securities and Exchange Commission for detailed operational and financial disclosures.