Non-Employee Directors de Ferred Share Unit Plan
LEGAL_46653821.4
NORTHERN DYNASTY MINERALS LTD.
NON-EMPLOYEE DIRECTORS DE FERRED SHARE UNIT PLAN
As amended and restated effective June 19, 2025
1. PURPOSE OF THE PLAN
1.1 This Plan has been established by the Corporation to promote the interests of the
Corporation by attracting and retaining qualified persons to serve on the Board and to
promote a greater alignment of long term interests between such Participants and the
shareholders of the Corporation.
2. PLAN DEFINITIONS AND INTERPRETATIONS
2.1 In this Plan, the following terms have the following meanings:
(a) “Account” means an account maintained for each Participant on the books of the
Corporation which will be credited with Deferred Share Units, in accordance with
the terms of the Plan.
(b) “Applicable Law” means any applicable provision of law, domestic or foreign,
including, without limitation, applicable securities legislation, together with all
regulations, rules, policy statements, rulings, notices, orders or other instruments
promulgated thereunder and Stock Exchange Rules.
(c) “Board” means the Board of Directors of the Corporation.
(d) Change of Control” means:
(i) the acquisition whether directly or indirectly, by a person or company, or
any persons or companies acting jointly or in concert (as determined in
accordance with the Securities Act (British Columbia) and the rules and
regulations thereunder) of voting securities of the Corporation which,
together with any other voting securities of the Corporation held by such
person or company or persons or companies, constitute, in the aggregate,
more than 50% of all outstanding voting securities of the Corporation;
(ii) an amalgamation, arrangement or other form of business combination of
the Corporation with another company which results in the holders of voting
securities of that other company holding, in the aggregate, 50% or more of
all outstanding voting securities of the Corporation (including a merged or
successor company) resulting from the business combination; or
(iii) the sale, lease or exchange of all or substantially all of the property of the
Corporation to another person, other than a subsidiary of the Corporation
or other than in the ordinary course of business of the Corporation;
(e) “Committee” means the Compensation Committee of the Board.
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(f) “Common Shares” means common shares of the Corporation and includes any
securities of the Corporation into which such Common Shares may be converted,
reclassified, redesignated, subdivided, consolidated, exchanged or otherwise
changed, pursuant to a Reorganization or otherwise.
(g) “Corporation” means Northern Dynasty Minerals Ltd. and its respective
successors and assigns, and any reference in the Plan to action by the Corporation
means action by or under the authority of the Board or any person or committee
that has been designated for the purpose by the Board including, without limitation,
the Committee.
(h) “DSU” or “Deferred Share Unit” means a unit credited to a Participant by way of
a bookkeeping entry in the books of the Corporation pursuant to this Plan, the
value of which is equivalent in value to a Common Share.
(i) “Grant” means any Deferred Share Unit credited to the Account of a Participant.
(j) “Insider” has the meaning provided for purposes of the TSX relating to Security
Based Compensation Arrangements.
(k) “Notice of Redemption” means written notice, on a prescribed form, by the
Participant, or the administrator or liquidator of the estate of the Participant, to the
Corporation of the Participant’s wish to redeem his or her Deferred Share Units.
(l) “Participant” means a non-employee director of the Corporation who is
designated by the Committee as eligible to participate in the Plan.
(m) “Plan” means this Non-Employee Directors Deferred Share Unit Plan, as
amended and restated.
(n) “Redemption Date” means the date that a Notice of Redemption is received by
the Corporation; provided in the case of a U.S. Eligible Participant, however, the
Redemption Date will be made the earlier of (i) “separation from service” within the
meaning of Section 409A of the Code, or (ii) within 90 days of the U.S. Eligible
Participant’s death.
(o) “Reorganization” means any (i) capital reorganization, (ii) merger, (iii)
amalgamation, or (iv) arrangement or other scheme of reorganization.
(p) “Section 409A” means Section 409A of the U.S. Internal Revenue Code of 1986,
as amended, and the Treasury Regulations promulgated thereunder as in effect
from time to time.
(q) “ Security Based Compensation Arrangement ” has the meaning defined in the
provisions of the TSX Company Manual relating to security based compensation
arrangements.
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(r) “Share Price” means the closing price of a Common Share on the TSX averaged
over the five (5) consecutive trading days immediately preceding (a) in the case of
a Grant, the last day of the fiscal quarter preceding the date of Grant in respect of
a director, or (b) in the case of a redemption, the Redemption Date, as applicable,
or in the event such shares are not traded on the TSX, the fair market value of
such shares as determined by the Committee acting in good faith.
(s) “ Stock Exchange Rules” means the applicable rules of any stock exchange upon
which the Common Shares are listed.
(t) “Termination Date” means the date of a Participant’s death, or retirement from,
or loss of office or employment with the Corporation, within the meaning of
paragraph 6801(d) of the regulations under the Income Tax Act (Canada),
including the Participant’s resignation, retirement, removal from the Board, death
or otherwise.
(u) “TSX” means the Toronto Stock Exchange.
(v) “ U.S. Eligible Participant ” refers to a Participant who, at any time during the
period from the date Deferred Share Units are granted to the Participant to the
date such Deferred Share Units are redeemed by the Participant, is subject to
income taxation in the United States on the income received for his or her services
as a director of the Corporation and who is not otherwise exempt from U.S. income
taxation under the relevant provisions of the U.S. Internal Revenue Code of 1986,
as amended, or the Canada-U.S. Income Tax Convention, as amended from time
to time.
3. NON-EMPLOYEE DIRECTOR COMPENSATION
3.1 Establishment of Annual Base Compensation
An annual compensation amount (the " Annual Base Compensation ") payable to non-
employee Directors (hereafter "Directors") of the Corporation shall be established from time-to-
time by the Board. The amount of Annual Base Compensation will be reported annually in the
Corporation’s management information circular.
3.2 Payment of Annual Base Compensation
(a) The Annual Base Compensation shall be payable in quarterly installments, with
each installment payable as promptly as practicable following the last business
day of the fiscal quarter to which it applies. Quarterly payments shall be pro rated
if Board service commences or terminates during a fiscal quarter. The number of
DSUs to be paid and the terms of the DSUs shall be determined as provided in the
following sections of this Plan.
(b) Subject to the limits set forth in Section 6 of this Plan, each Director may elect to
receive in DSUs up to 100% of his or her Annual Base Compensation by
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completing and delivering a written election to the Corporation on or before
November 15th of the calendar year ending immediately before the calendar year
with respect to which the election is made. Such election will be effective with
respect to compensation payable for fiscal quarters beginning during the calendar
year following the date of such election. Further, where an individual becomes a
Director for the first time during a fiscal year and such individual has not previously
participated in a plan that is required to be aggregated with this Plan for purposes
of Section 409A, such individual may elect to participate in the Plan with respect
to fiscal quarters of the Corporation commencing after the Corporation receives
such individual’s written election, which election must be received by the
Corporation no later than 30 days after such individual’s appointment as a
Director. For greater certainty, new Directors will not be entitled to receive DSUs
pursuant to an election for the quarter in which they submit their first election to the
Corporation or any previous quarter. Elections hereunder shall be irrevocable with
respect to compensation earned during the period to which such election relates.
(c) All DSUs granted with respect to Annual Base Compensation will be credited to
the Director's Account when such Annual Base Compensation is payable (the
"Grant Date").
(d) The Director's Account will be credited with the number of DSUs calculated to the
nearest thousandths of a DSU, determined by dividing the dollar amount of
compensation payable in DSUs on the Grant Date by the Share Price. Fractional
Common Shares will not be issued and any fractional entitlements will be rounded
down to the nearest whole number.
3.3 Additional Deferred Share Units
In addition to DSUs granted pursuant to Section 3.2, the Board may award such number
of DSUs to a Participant as the Board deems advisable to provide the Participant with
appropriate equity-based compensation for the services he or she renders to the
Corporation. The Board shall determine the date on which such DSUs may be granted
and the date as of which such DSUs shall be credited to a Participant’s Account. The
Corporation and a Participant who receives an award of DSUs pursuant to this Section
3.3 shall enter into a DSU award agreement to evidence the award and the terms
applicable thereto
4. ADMINISTRATION OF DSU ACCOUNTS
4.1 Administration of Plan
The Committee shall have the power, where consistent with the general purpose and
intent of the Plan and subject to the specific provisions of the Plan:
(a) to establish policies and to adopt rules and regulations for carrying out the
purposes, provisions and administration of the Plan and to amend and rescind
such rules and regulations from time to time;
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(b) to interpret and construe the Plan and to determine all questions arising out of the
Plan and any such interpretation, construction or determination made by the
Committee shall be final, binding and conclusive for all purposes;
(c) to prescribe the form of the instruments used in conjunction with the Plan; and
(d) to determine which members of the Board are eligible to participate in the Plan.
4.2 Redemption of Deferred Share Units
(a) Each Participant shall be entitled to redeem his or her Deferred Share Units during
the period commencing on the business day immediately following the Termination
Date and ending on the 90th day following the Termination Date by providing a
written Notice of Redemption to the Corporation. In the event of death of a
Participant, the Notice of Redemption shall be filed by the legal representative of
the Participant. In the case of a U.S. Eligible Participant, however, the redemption
will be deemed to be made on the earlier of (i) “separation from service” within the
meaning of Section 409A, or (ii) within 90 days of the U.S. Eligible Participant’s
death.
(b) Upon redemption, the Participant shall be entitled to receive, and the Corporation
shall issue or provide:
(i) subject to shareholder approval of this Plan and the limitations set forth in
Section 6.2 below, a number of Common Shares issued from treasury
equal to the number of DSUs in the Participant’s Account, net of any
applicable deductions and withholdings;
(ii) subject to and in accordance with any Applicable Law, a number of
Common Shares purchased by an independent administrator of the Plan
in the open market for the purposes of providing Common Shares to
Participants under the Plan equal in number to the DSUs in the
Participant’s Account, net of any applicable deductions and withholdings;
(iii) the payment of a cash amount to a Participant equal to the number of DSUs
multiplied by the Share Price, net of any applicable deductions and
withholdings; or
(iv) any combination of the foregoing,
as determined by the Corporation, in its sole discretion.
4.3 Payment Notwithstanding
Notwithstanding any other provision of this Plan, all amounts payable to, or in respect of,
a Participant hereunder shall be paid on or before December 31 of the calendar year commencing
immediately after the Participant’s Termination Date.
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5. ALTERATION OF NUMBER OF SHARES SUBJECT TO THE PLAN
5.1 Subdivisions or Consolidations
In the event that the Common Shares shall be subdivided or consolidated into a different
number of Common Shares or a distribution shall be declared upon the Common Shares payable
in Common Shares, the number of DSUs then recorded in the Director’s Account shall be adjusted
by replacing such number by a number equal to the number of Common Shares which would be
held by the Director immediately after the distribution, subdivision or consolidation, should the
Director have held a number of Common Shares equal to the number of DSUs recorded in the
Director’s Account on the record date fixed for such distribution, subdivision or consolidation.
5.2 Reorganizations
In the event there shall be any change, other than as specified in Section 5.1, in the
number or kind of outstanding Common Shares or of any shares or other securities into which
such Common Shares shall have been changed or for which they shall have been exchanged,
pursuant to a Reorganization or otherwise, then there shall be substituted for each Common
Share referred to in the Plan or for each share into which such Common Share shall have been
so changed or exchanged, the kind of securities into which each outstanding Common Share
shall be so changed or exchanged and an equitable adjustment shall be made, if required, in the
number of DSUs then recorded in the Director’s Account, such adjustment, if any, to be
reasonably determined by the Committee and to be effective and binding for all purposes.
5.3 Adjustments
In the case of any such substitution, change or adjustment as provided for in this Section 5, the
variation shall generally require that the number of DSUs then recorded in the Director’s Account
prior to such substitution, change or adjustment will be proportionately and appropriately varied.
6. RESTRICTIONS ON ISSUANCES
6.1 Maximum Number of Common Shares Subject to DSU’s
The aggregate number of Common Shares that are subject to outstanding DSUs granted
pursuant to this Plan from time to time shall not exceed 1.0% of the number of issued and
outstanding Common Shares from time to time. The maximum number of Shares issuable
pursuant to all Security Based Compensation Arrangements, at any time, including all Shares,
options or other rights to purchase or otherwise acquire Shares that are granted shall not exceed
8% of the total number of outstanding Shares.
6.2 Maximum Annual Value of DSUs
The aggregate annual value of Common Shares issuable pursuant to DSU’s granted to
individual non-employee directors of the Company, together with the annual value of all other
Common Shares issuable to such individual non-employee directors pursuant to grants under the
Company’s Security Based Compensation Arrangements, may not exceed $150,000.
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6.3 Maximum Number of Common Shares Subject to DSU’s
The aggregate number of Common Shares that are subject to outstanding DSUs granted
pursuant to this Plan from time to time shall not exceed 1.0% of the number of issued and
outstanding Common Shares from time to time. The maximum number of Shares issuable
pursuant to all Security Based Compensation Arrangements, at any time, including all Shares,
options or other rights to purchase or otherwise acquire Shares that are granted shall not exceed
8% of the total number of outstanding Shares.
6.4 Insider Participation Limits
a. the maximum number of Shares that may be issued to Insiders as a group pursuant
to the Plan, when combined with any Shares that may be issued to Insiders
pursuant to all of the Company’s other Security Based Compensation
Arrangements, may not exceed 8% of the issued Common Shares within any 12
month period;
b. the number of Shares issuable to Insiders as a group under the Plan, when
combined with Shares issuable to Insiders under all the Company’s other security
based compensation plans, may not exceed 8% of the Company’s issued Shares;
c. the aggregate annual value of Shares issuable pursuant to grants of DSUs to
directors who are non-employee directors of the Company may not exceed the
following limits for each individual director:
a. $100,000 in any twelve-month period in the form of DSUs granted under
this Plan, and
b. $150,000 in any twelve-month period when combined with the value of
Shares issuable to the individual non-employee director pursuant to all
grants under all of the Company’s other Share Compensation
Arrangements during the twelve-month period.
7. AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN
7.1 Amendment to the Plan
Until such time as the Corporation receives shareholder approval of the issuances from
treasury contemplated in Section 4.2(b)(i), the Plan may be amended, suspended or terminated
at any time by the Board in whole or in part. No amendment of the Plan shall, without the consent
of the Participants affected by the amendment, or unless required by Applicable Law, adversely
affect the rights accrued to such Participants with respect to DSUs granted prior to the date of the
amendment.
Following shareholder approval of any issuances from treasury as contemplated in
Section 4.2(b)(i), the Board may at any time, and from time to time, and without shareholder
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approval, amend any provision of the Plan, subject to any regulatory or stock exchange
requirement at the time of such amendment, including, without limitation:
(a) for the purposes of making formal minor or technical modifications to any of the
provisions of the Plan including amendments of a “clerical” or “housekeeping”
nature;
(b) to correct any ambiguity, defective provision, error or omission in the provisions of
the Plan;
(c) amendments to the termination provisions of Section 7.2;
(d) amendments necessary or advisable because of any change in Applicable Laws;
(e) amendments to the transferability of Deferred Share Units provided for in Sections
8.2 and 8.10;
(f) amendments to Section 4.1 relating to the administration of the Plan; and
(g) any other amendment, fundamental or otherwise, not requiring shareholder
approval under Applicable Laws;
provided, however, that:
(h) no such amendment of the Plan may be made without the consent of each affected
Participant in the Plan if such amendment would adversely affect the rights of such
affected Participant(s) under the Plan; and
(i) shareholder approval shall be obtained in accordance with the requirements of the
TSX for any amendment:
(i) to Section 6.1 in order to increase the maximum number of Deferred Share
Units which may be issued under this Plan (other than pursuant to Section
5);
(ii) to either Section 6.2 or Section 6.4(c);
(iii) to Section 7.1; or
(iv) to the definition of “Participant”.
7.2 Plan Termination
The Committee may decide to discontinue granting awards under the Plan at any time in
which case no further Deferred Share Units shall be awarded or credited under the Plan. Any
Deferred Share Units which remain outstanding in a Participant’s Account at that time shall
continue to be dealt with according to the terms of the Plan. The Plan shall terminate when all