INTERIM PROJECT DEVELOPMENT AGREEMENT
BETWEEN
AQUILINE RESOURCES INC.
AND
MINERA AQUILINE ARGENTINA S.A.
AND
IMA EXPLORATION INC.
AND
IMA LATIN AMERICA INC.
AND
INVERSIONES MINERAS ARGENTINAS INC.
AND
INVERSIONES MINERAS ARGENTINAS S.A.
DATED: OCTOBER 18, 2006
INTERIM PROJECT DEVELOPMENT AGREEMENT
TABLE OF CONTENTS
ARTICLE 1 DEFINITIONS AND INTERPRETATION.......................................2
1.1 DEFINITIONS..................................................2
1.2 RULES OF INTERPRETATION......................................8
ARTICLE 2 TRANSFER OF SHARES AND CONTRACTS AND PAYMENT OF COSTS................9
2.1 TRANSFER OF SHARES AND CONTRACTS.............................9
2.2 TRANSITIONAL MATTERS........................................10
2.3 COSTS.......................................................10
2.4 DUE DILIGENCE...............................................11
2.5 ADDITIONAL ACKNOWLEDGEMENTS AND AGREEMENTS OF THE PARTIES...11
2.6 ADDITIONAL ACKNOWLEDGEMENTS AND AGREEMENTS OF IMA...........12
2.7 ADDITIONAL ACKNOWLEDGMENTS AND AGREEMENTS OF AQUILINE.......12
ARTICLE 3 DECLARATION OF TRUST................................................12
3.1 DECLARATION OF TRUST........................................12
3.2 TRUST CONDITIONS............................................13
3.3 AMENDMENT OF TRUST CONDITIONS...............................19
3.4 IMA SECURITY................................................19
3.5 AQUILINE SECURITY...........................................21
3.6 INDEMNITY...................................................23
ARTICLE 4 STANDSTILL..........................................................25
4.1 STANDSTILL..................................................25
ARTICLE 5 TERMINATION.........................................................25
5.1 TERMINATION.................................................25
ARTICLE 6 DISPUTE RESOLUTION..................................................26
6.1 DISPUTE RESOLUTION..........................................26
ARTICLE 7 MISCELLANEOUS.......................................................26
7.1 FURTHER ASSURANCES..........................................26
7.2 TIME OF ESSENCE.............................................26
7.3 AMENDMENTS AND WAIVERS......................................26
7.4 ASSIGNMENT..................................................27
7.5 NOTICES.....................................................27
7.6 EQUITABLE REMEDIES..........................................28
7.7 BENEFIT OF THE AGREEMENT....................................28
7.8 SEVERABILITY................................................28
7.9 GOVERNING LAW AND ATTORNMENT................................29
7.10 ENTIRE AGREEMENT............................................29
7.11 COUNTERPART AND FACSIMILE EXECUTION.........................29
SCHEDULE A CONTRACTS.........................................................A-1
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SCHEDULE B COSTS TRUST AGREEMENT.............................................B-1
SCHEDULE C [NOT USED]........................................................C-1
SCHEDULE D KEY CONTRACTS.....................................................D-1
SCHEDULE E NAVIDAD ASSETS....................................................E-1
SCHEDULE F NAVIDAD CLAIMS....................................................F-1
SCHEDULE G IRREVOCABLE POWER OF ATTORNEY.....................................G-1
SCHEDULE H PROVISIONS RELATING TO THE TRANSFER OF THE NAVIDAD ASSETS
AND THE NAVIDAD CLAIMS............................................H-1
INTERIM PROJECT DEVELOPMENT AGREEMENT
THIS AGREEMENT is made as of the 18th day of October, 2006
BETWEEN:
AQUILINE RESOURCES INC., a corporation continued under the
laws of Ontario with its registered office at 130 King Street
West, Suite 3680, PO. Box 99, Toronto, Ontario M5X 1B1;
("AQUILINE")
AND:
MINERA AQUILINE ARGENTINA S.A., a corporation incorporated
under the laws of Argentina, the issued and outstanding shares
of which are held by Aquiline as to 94.53% and by Messrs.
William Richard Brown and Martin Walter as to 5.47%
collectively;
("MINERA AQUILINE")
AND:
IMA EXPLORATION INC., a corporation incorporated under the
laws of British Columbia with its registered office at 709-837
West Hastings Street, Vancouver, British Columbia V6C 3N6;
("IMA")
AND:
IMA LATIN AMERICA INC., a corporation incorporated under the
laws of the British Virgin Islands, the entire issued and
outstanding share capital of which is held by IMA Holdings;
("IMA LATIN AMERICA")
AND:
INVERSIONES MINERAS ARGENTINAS INC., a corporation
incorporated under the laws of Barbados, the entire issued and
outstanding share capital of which is held by IMA Latin
America;
("IMA BARBADOS")
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AND:
INVERSIONES MINERAS ARGENTINAS S.A., a corporation
incorporated under the laws of Argentina, the issued and
outstanding shares of which are held by IMA Barbados as to
approximately 90% and by IMA Latin America as to approximately
10%;
("IMA ARGENTINA")
WHEREAS:
A. Pursuant to the Trial Decision, the BCSC made the Declaration and the
Order.
B. IMA commenced the Appeal on July 20, 2006.
C. The Parties wish to set out the manner in which, during the Appeal
Period, they will deal with (i) their respective rights and obligations
in light of the Order and (ii) certain other matters relating to the
Navidad Claims, upon and subject to the terms and conditions
hereinafter set forth.
D. As the ownership of the Navidad Claims is in question under the Appeal,
the main purpose of the trust created pursuant to this Agreement is to
provide interim arrangements to ensure the continued development of the
Project for the benefit of the Ultimate Owner pending determination of
the identity of the Ultimate Owner.
NOW, THEREFORE, THIS AGREEMENT WITNESSES THAT in consideration for the premises
and covenants contained herein and for other good and valuable consideration
(the receipt and sufficiency of which is hereby acknowledged) the Parties agree
as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 DEFINITIONS
The following words, phrases and expressions shall have the following meanings,
unless something in the subject matter or context is inconsistent therewith:
(a) "Affiliate" has the meaning ascribed to such term under the
Applicable Securities Laws;
(b) "Agreement" means this Interim Project Development Agreement,
including all Schedules attached hereto, and all amendments
made hereto by written agreement between the Parties;
(c) "Appeal" means the appeal by IMA and IMA Argentina from the
Order to the BCCA;
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(d) "Appeal Decision" means the judgment of the BCCA in respect of
the Appeal;
(e) "Appeal Period" means the period commencing on the date of
execution of this Agreement and ending on the earlier of:
(i) the date, if applicable, of the abandonment of the
Appeal; and
(ii) the later of:
A. the Further Appeal Application Deadline; and
B. to the extent that a Further Appeal
Application is filed by the Further Appeal
Application Deadline, the date that is the
earlier of:
(1) the date, if applicable, of the
abandonment of the Further Appeal;
(2) the date on which the SCC denies
the Further Appeal Application; and
(3) the date on which the SCC Decision
is rendered by the SCC;
(f) "Appeal Termination Date" means the date upon which the Appeal
Period ends;
(g) "Applicable Securities Laws" at any time means the applicable
securities laws of the Provinces of British Columbia, Alberta,
Ontario and Quebec and the respective rules and regulations
thereunder together with all applicable published policy
statements, instruments, orders, notices and rulings of the
British Columbia Securities Commission, the Alberta Securities
Commission, the Ontario Securities Commission and the Autorite
des marches financiers in effect at such time;
(h) "Aquiline Claim" has the meaning ascribed to such term in
Section 3.6(b);
(i) "Aquiline Disputed Amount" has the meaning ascribed to such
term in Section 3.2(d)(ii);
(j) "Aquiline Indemnified Party" has the meaning ascribed to such
term in Section 3.6(a);
(k) "Aquiline Management Meeting" has the meaning ascribed to such
term in Section 3.2(a)(vii)C;
(l) "Aquiline Liability" has the meaning ascribed to such term in
Section 3.6(b);
(m) "Aquiline Misrepresentation" has the meaning ascribed to such
term in Section 3.6(b);
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(n) "Aquiline Qualifying Costs" means the aggregate of all
reasonable amounts actually expended by Aquiline and/or its
Subsidiaries on the exploration and development of the Project
during the Trust Period which are either (i) agreed by IMA
pursuant to Section 3.2(d) or (ii) determined by the
Arbitrator to be properly reimbursable to Aquiline pursuant to
Article 6;
(o) "Arbitration Centre" has the meaning ascribed to such term in
Section 6.1;
(p) "Arbitration Rules" has the meaning ascribed to such term in
Section 6.1;
(q) "Arbitrator" has the meaning ascribed to such term in Section
6.1;
(r) "BCCA" means the Court of Appeal for British Columbia;
(s) "BCSC" means the Supreme Court for British Columbia;
(t) "Consolidated Release" means a release to be granted by
Aquiline and Minera Aquiline in favour of IMA in connection
with the Regalo Property Option in a form and upon terms
acceptable to IMA, acting reasonably;
(u) "Contracts" means the contracts listed in Schedule A;
(v) "Costs" means eighteen million five hundred thousand dollars
($18,500,000), representing the aggregate of the Minimum Trust
Amount and the Minimum Project Expenditure Amount;
(w) "Costs Trust Agreement" means the Costs Trust Agreement set
out in Schedule B;
(x) "Costs Trustee" means McCarthy Tetrault LLP;
(y) "Declaration" means a declaration that IMA Argentina holds the
Navidad Claims pursuant to a constructive trust in favour of
Minera Aquiline;
(z) "Due Diligence Period" has the meaning ascribed to such term
in Section 2.4;
(aa) "Election Notice" has the meaning ascribed to such term in
Section 2.4;
(bb) "Encumbrance" means mortgages, deeds of trust, security
interests, charges, pledges, liens, net profits interests,
royalties or overriding royalty interests, other payments out
of production, or other burdens of any nature;
(cc) "Further Appeal" means the appeal resulting from the SCC
having granted a Further Appeal Application;
(dd) "Further Appeal Application" means an application to the SCC
by any of the Parties for leave to appeal the Appeal Decision
to the SCC;
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(ee) "Further Appeal Application Deadline" means the date following
the Appeal Decision by which a Further Appeal Application must
be made pursuant to section 58 of the SUPREME COURT ACT,
R.S.C. 1985, c. S-26, as amended;
(ff) "IMA Claims" has the meaning ascribed to such term in Section
3.6(a);
(gg) "IMA Disputed Amount" has the meaning ascribed to such term in
Section 3.2(e)(ii);
(hh) "IMA Holdings" means IMA Holdings Corp., a corporation
incorporated under the laws of British Columbia and a
wholly-owned subsidiary of IMA;
(ii) "IMA Indemnified Party" has the meaning ascribed to such term
in Section 3.6(b);
(jj) "IMA Liability" has the meaning ascribed to such term in
Section 3.6(a);
(kk) "IMA Misrepresentation" has the meaning ascribed to such term
in Section 3.6(a);
(ll) "Key Contracts" means the contracts listed in Schedule D;
(mm) "Management Committee Meetings" has the meaning ascribed to
such term in Section 3.2(a)(vii)C;
(nn) "Minimum Project Expenditure Amount" means the amount of
eleven million dollars ($11,000,000);
(oo) "Minimum Trust Amount" means the amount of seven million five
hundred thousand dollars ($7,500,000);
(pp) "Navidad Assets" means the contracts, licences and permits
relating to the Navidad Claims, listed in Schedule E;
(qq) "Navidad Claims" means the claims listed in Schedule F;
(rr) "Order" means the order of Madam Justice Koenigsberg of the
BCSC made July 14, 2006 in Action No. S041353, as may be
varied from time to time;
(ss) "Non-Key Contracts" means the Contracts other than the Key
Contracts;
(tt) "Parties" means, collectively, the parties to this Agreement,
and "Party" means any of them;
(uu) "POA" means an irrevocable power of attorney in the form set
out in Schedule G whereby IMA Argentina appoints IMA as its
attorney in respect of the Appeal and, to the extent
applicable, any Further Appeal Application and Further Appeal;
(vv) "Project" means all exploration, development and mining
activities relating to the Project Assets and all activities
incidental thereto;
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(ww) "Project Assets" means:
(i) unless Aquiline delivers an Election Notice to IMA by
the end of the Due Diligence Period in accordance
with Section 2.4, the assets and businesses of IMA
Argentina and IMA Barbados from time to time,
including the Navidad Assets and the Navidad Claims;
or
(ii) in the event Aquiline delivers an Election Notice to
IMA by the end of the Due Diligence Period in
accordance with Section 2.4, the Navidad Assets and
the Navidad Claims;
(xx) "Regalo Option Agreement" means the Option Agreement dated
August 28, 2003 between IMA and Consolidated Pacific Bay
Minerals Ltd. in respect of the Regalo Property;
(yy) "Regalo Property" means the mineral claims listed in Schedule
F and described as relating to Consolidated Pacific Bay
Minerals;
(zz) "Rule" has the meaning ascribed to such term in Section
3.2(h);
(aaa) "SCC" means the Supreme Court of Canada;
(bbb) "SCC Decision" means the judgment of the SCC, if any, in
respect of the Further Appeal, if any;
(ccc) "Shares" means, collectively:
(i) the entire issued share capital of IMA Barbados; and
(ii) the 1,069 shares of IMA Argentina held by IMA Latin
America (representing approximately 8.9% of IMA
Argentina's 12,000 issued and outstanding share
capital);
(ddd) "Subsidiaries" means:
(i) with respect to IMA prior to the Transfer Date, IMA
Argentina, IMA Barbados, IMA Holdings and IMA Latin
America;
(ii) with respect to IMA on or after the Transfer Date,
IMA Holdings and IMA Latin America;
(iii) with respect to Aquiline prior to the Transfer Date,
Minera Aquiline; and
(iv) with respect to Aquiline on or after the Transfer
Date, Minera Aquiline, IMA Argentina and IMA
Barbados;
(eee) "Transfer" means to sell, grant, assign, create an
Encumbrance, pledge, co-tenancy, co-ownership, partnership or
joint venture, or otherwise convey, or dispose of or commit to
do any of the foregoing, or to arrange for substitute
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performance by an Affiliate or third party, either directly or
indirectly, save for any Encumbrance or transfer in accordance
with Sections 3.4 or 3.5;
(fff) "Transfer Date" means the date on which the transfer of the
Shares and the Contracts to Aquiline in accordance with
Section 2.1 is completed, being the soonest date that is
reasonably practicable following the end of the Due Diligence
Period and in any event no later than five (5) business days
following the end of the Due Diligence Period;
(ggg) "Trial" means the trial of Action No. S041353 at the BCSC
resulting in the Order and the Trial Decision;
(hhh) "Trial Decision" means the reasons for judgment of Madam
Justice Koenigsberg issued in respect of the Order;
(iii) "Trust" has the meaning ascribed to such term in Section
3.1(a);
(jjj) "Trust Assets" means:
(i) in the event that a transfer of the Shares and the
Contracts to Aquiline in accordance with Section 2.1
is completed, the Shares and the Contracts, including
the control exercised (by virtue of holding the
Shares and Contracts), over the Project Assets; or
(ii) in the event that Aquiline delivers an Election
Notice to IMA by the end of the Due Diligence Period
in accordance with Section 2.4 and a transfer of the
Navidad Assets and the Navidad Claims in accordance
with Section 2.4 is completed, the Project Assets;
(kkk) "Trust Conditions" means the covenants, acknowledgments and
agreement of the Parties set forth in Section 3.2;
(lll) "Trust Liabilities" has the meaning ascribed to such term in
Section 3.2(j);
(mmm) "Trust Period" means the period commencing on the Transfer
Date and ending on the later of the dates referred to in
Section 5.1(b);
(nnn) "Trustee" means Aquiline, acting in its capacity as such in
accordance with Article 3; and
(ooo) "Ultimate Owner" means, subject to Sections 3.2(f) and 3.2(g),
the Party (including its successors and permitted assigns)
that is determined to be the rightful sole beneficial owner of
the Navidad Claims and/or is awarded sole beneficial ownership
of the Shares pursuant to the Appeal Decision; provided that
to the extent that there is a Further Appeal, the "Ultimate
Owner" means the Party (including its successors and permitted
assigns) that is determined to be the rightful sole beneficial
owner of the Navidad Claims and/or is awarded sole beneficial
ownership of the Shares pursuant to the SCC Decision.
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1.2 RULES OF INTERPRETATION
(a) The following rules of interpretation shall apply in this
Agreement unless something in the subject matter or context is
inconsistent therewith:
(i) the headings in this Agreement form no part of this
Agreement and are deemed to have been inserted for
convenience only;
(ii) all references in this Agreement shall be read with
such changes in number and gender that the context
may require;
(iii) references to "Articles", "Sections", "Recitals" and
"Schedule" refer to Articles, Sections, Recitals and
Schedules of this Agreement;
(iv) the use of the word "including" or "includes"
followed by a specific example or examples shall not
be construed as limiting the meaning of the general
wording preceding it and the EIUSDEM GENERIS rule
shall not be applied in the interpretation of such
general wording or such specific example or examples;
(v) the rule of construction that, in the event of
ambiguity, the contract shall be interpreted against
the Party responsible for the drafting or preparation
of the Agreement, shall not apply;
(vi) the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement
as a whole and not to any particular section or other
subdivision;
(vii) any reference to a statute is a reference to the
applicable statute and to any regulations made
pursuant thereto and includes all amendments made
thereto and in force, from time to time, and any
statute or regulation that has the effect of
supplementing or superseding such statute or
regulation;
(viii) the words "written" or "in writing" include printing,
typewriting or any electronic means of communication
capable of being visibly reproduced at the point of
reception including telex, telegraph or telecopy; and
(ix) a reference to currency means Canadian currency,
unless otherwise indicated.
(b) In this Agreement, unless something in the subject matter or
context is inconsistent therewith, a "day" shall refer to a
calendar day and in calculating all time periods the first
(1st) day of a period is not included and the last day is
included and references to a "business day" shall refer to
days other than Saturday and Sunday on which banks are
ordinarily open for business in Vancouver, British Columbia,
but if a period ends on a day on which the banks are not open
for business in Vancouver, British Columbia, the period will
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be deemed to expire at 4:00 p.m. (Vancouver time) on the next
calendar day on which banks are open for business in
Vancouver, British Columbia.
ARTICLE 2
TRANSFER OF SHARES AND CONTRACTS AND PAYMENT OF COSTS
2.1 TRANSFER OF SHARES AND CONTRACTS
Subject to Aquiline not having delivered an Election Notice to IMA by the end of
the Due Diligence Period in accordance with Section 2.4, the payment by Aquiline
to the Costs Trustee of the Minimum Trust Amount pursuant to Section 2.3(b), the
execution and delivery to IMA of the Consolidated Release and the other terms
and conditions of this Agreement, on the Transfer Date, IMA Latin America will
transfer the Shares, and IMA will transfer, or cause its relevant Subsidiaries
to transfer, the Contracts, to Aquiline on an "as is, where is" basis (such that
neither IMA nor any of its Subsidiaries makes any representations or warranties
in respect of the Trust Assets or the Project Assets) and, in connection
therewith, IMA will deliver, or cause its relevant Subsidiaries to deliver, to
Aquiline:
(a) a certificate or certificates in respect of the Shares
registered in the name of Aquiline together with an instrument
or instruments of transfer in relation thereto;
(b) the written resignation of all IMA current directors and
officers of IMA Barbados and IMA Argentina;
(c) a certified copy of a resolution of the board of directors of
IMA Barbados:
(i) approving the transfer of the Shares and those of the
Contracts to which it is a party to Aquiline; and
(ii) appointing the nominees of Aquiline as directors of
IMA Barbados;
(d) the record or minute books (or their equivalents) of IMA
Barbados and IMA Argentina;
(e) original copies of other books, documents, financial records
and other records of IMA Barbados and IMA Argentina in the
possession of IMA or any of its Subsidiaries, other than any
privileged material;
(f) copies of geological mapping studies, geological modelling
studies, assay results, core samples, proposed drilling
programs, geological reports, scoping studies, metallurgical
studies, reports and studies prepared by third parties with
respect to the Project, reports and studies prepared by IMA
with respect to the Project and any other documents relating
to the Project; and
(g) copies of the Contracts.
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2.2 TRANSITIONAL MATTERS
Notwithstanding anything else to the contrary in this Agreement, Aquiline hereby
acknowledges and agrees that:
(a) IMA will retain ownership of:
(i) all intellectual property in the name "Inversiones
Mineras Argentinas Inc."; and
(ii) all intellectual property in the name "Inversiones
Mineras Argentinas S.A.";
(b) forthwith following the Transfer Date, Aquiline will procure
that the names of IMA Argentina and IMA Barbados be changed to
names that do not include the phrase "Inversiones Mineras
Argentinas" or any word or phrase that is reasonably likely to
cause IMA Argentina and IMA Barbados to be confused with IMA;
and
(c) To the extent that any audit is required of IMA Barbados and
IMA Argentina in respect of any financial periods prior to the
Transfer Date or any financial periods within which the
Transfer Date falls, IMA and Aquiline shall cooperate in
respect of such audit, which shall be conducted by IMA's
auditors and at the cost of IMA.
2.3 COSTS
Each of the Parties acknowledges and agrees as follows:
(a) the Costs constitute all reasonable amounts expended by IMA
and its Subsidiaries for the acquisition and development of
the Navidad Claims prior to the Transfer Date for which IMA
and its Subsidiaries are entitled to recover payment pursuant
to the Order; for greater certainty, such Costs shall
constitute the aggregate of the Minimum Trust Amount and the
Minimum Project Expenditure;
(b) on the Transfer Date, Aquiline will pay the Minimum Trust
Amount to the Costs Trustee to be dealt with in accordance
with the Costs Trust Agreement; and
(c) Aquiline shall expend the Minimum Project Expenditures Amount
on the Project during the Trust Period, provided that if
Aquiline determines, in its sole discretion but acting
reasonably, that the development of the Project does not
warrant further work, it shall have the right to elect to
deliver the amount of any unspent Minimum Project Expenditures
Amount to the Costs Trustee to be dealt with in accordance
with the Costs Trust Agreement.
2.4 DUE DILIGENCE
Each of the Parties acknowledges and agrees that, for a period of 21 days from
and including the date of execution of this Agreement (the "DUE DILIGENCE
PERIOD"), Aquiline will be entitled to perform due diligence investigations in
respect of IMA Barbados, IMA Argentina, the Project, the Project Assets and the
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Contracts. At any time during the Due Diligence Period, Aquiline may deliver
written notice (the "ELECTION NOTICE") to IMA that it elects to receive from IMA
a transfer of the Navidad Assets and the Navidad Claims instead of a transfer of
the Shares and the Contracts in accordance with Section 2.1. If Aquiline
delivers such Election Notice to IMA within such Due Diligence Period, this
Agreement will be deemed to be automatically amended in accordance with the
provisions contained in Schedule H. Should Aquiline not deliver such Election
Notice to IMA by the end of the Due Diligence Period, it will be deemed to have
elected to receive a transfer of the Shares and the Contracts in accordance with
Section 2.1 and the provisions contained in Schedule H shall have no
application.
2.5 ADDITIONAL ACKNOWLEDGEMENTS AND AGREEMENTS OF THE PARTIES
Each of the Parties acknowledges and agrees that:
(a) this Agreement and the transactions contemplated hereby are
intended by the Parties to constitute due compliance by IMA,
IMA Argentina and Minera Aquiline with the Order;
(b) to the extent any Party, acting reasonably, considers it to be
appropriate or necessary to seek a variation of the Order or
the Declaration as a result of the entering into of this
Agreement, the Parties will cooperate in seeking such
variation of the Order or the Declaration necessary to give
effect to this Agreement;
(c) the Parties will, as part of the Appeal and, to the extent
applicable, any Further Appeal Application and Further Appeal,
seek an order from the BCCA and, to the extent applicable, the
SCC, determining the identity of the Ultimate Owner;
(d) in respect of all legal costs as ordered in the Appeal
Decision and, if applicable, the SCC Decision to be payable in
respect of the Trial and the Appeal (including all reasonable
costs incurred with respect to the drafting and signature of
this Agreement) and, to the extent applicable, any Further
Appeal Application and Further Appeal (the quantum of such
legal costs to be determined by agreement or taxation), the
Party that is ultimately determined to be the Ultimate Owner
may set-off all such legal costs to which it is entitled
against, in the case of Aquiline, its obligation to pay the
Minimum Project Expenditure Amount to IMA or, in the case of
IMA, its obligation to pay Aquiline Qualifying Costs to
Aquiline;
(e) it will, for the term of this Agreement and thereafter,
maintain the confidentiality, and will not, without the prior
written consent of the other Party, unless required by law,
disclose the contents of any confidential documents or
information received by it from the other Party in accordance
with this Agreement or during the Trust Period;
(f) it will enter into the Costs Trust Agreement; and
(g) the POA is being granted on the basis that it is coupled with
IMA's interest in the Trust Assets in accordance with the
Trust Conditions.
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2.6 ADDITIONAL ACKNOWLEDGEMENTS AND AGREEMENTS OF IMA
(a) IMA will use reasonable commercial efforts to assist Aquiline
with the orderly transition of control of the Project Assets
to Aquiline on the terms and conditions of this Agreement.
Without limiting the generality of the foregoing, such
assistance shall include endeavouring to obtain any consents
as may reasonably be required from the authors of any
technical reports prepared in accordance with National
Instrument 43-101 - STANDARDS OF DISCLOSURE FOR MINERAL
PROJECTS to allow for such technical reports to be reissued in
the name of Aquiline, and/or its Subsidiaries.
(b) During the Trust Period, Aquiline shall have the right to
issue press releases in respect of the Project, the Navidad
Claims, the Navidad Assets or the Contracts as Aquiline, in
its sole discretion, may determine necessary or advisable.
2.7 ADDITIONAL ACKNOWLEDGMENTS AND AGREEMENTS OF AQUILINE
(a) Aquiline will reimburse IMA for its reasonable costs
associated with any assistance given by IMA pursuant to
Section 2.6(a).
(b) Aquiline hereby acknowledges and agrees that:
(i) IMA Argentina will sign the POA on or prior to the
Transfer Date and that such POA shall remain
effective notwithstanding the transfer of the Shares
and the Contracts to Aquiline in accordance with
Section 2.1;
(ii) it will execute and deliver to IMA the Consolidated
Release prior to the Transfer Date;
(iii) any costs or expenses incurred in connection with the
termination or Transfer of any Non-Key Contract on or
after the Transfer Date shall be for the account of
Aquiline; and
(iv) IMA shall be entitled to retain copies of any
documents delivered to Aquiline pursuant to Section
2.1.
ARTICLE 3
DECLARATION OF TRUST
3.1 DECLARATION OF TRUST
(a) The Trustee hereby declares and agrees, whether itself or
through any of its Subsidiaries, to act as trustee of the
Trust Assets and to hold and administer the Trust Assets in
trust for the use and benefit of the Ultimate Owner, its
successors and permitted assigns, subject to the terms and
conditions of this Agreement, such trust to constitute the
trust (the "TRUST") hereunder. The appointment of the Trustee
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hereunder shall be conditional upon the completion of the
transfer of the Shares and the Contracts to the Trustee in
accordance with Section 2.1 and effective upon the Transfer
Date.
(b) Subject to the Trust Conditions, the Parties intend that
during the Trust Period the Trustee shall have all authority,
power and discretion required to participate, whether directly
or through its Subsidiaries, in the Project as the Trustee, in
the exercise of its discretion, determines from time to time
to be appropriate in all applicable circumstances. Subject to
the Trust Conditions, each of the Parties accordingly declares
that in addition to all powers conferred by law, the Trustee
shall have, in carrying out the administration of this Trust,
the power, whether itself or through any of its Subsidiaries,
to exercise and perform all acts of ownership with respect to
the Trust Assets and the Project Assets from time to time and
with the same effect as if the Trustee was the absolute owner
of the Trust Assets and the Project Assets, without the
consent or intervention of the Parties or any judicial
authority.
3.2 TRUST CONDITIONS
(a) The Trustee hereby acknowledges and agrees that during the
Trust Period:
(i) it, or its Subsidiaries, will hold the legal title to
the Trust Assets and the Project Assets as Trustee
for the sole benefit of the Ultimate Owner as
beneficial owner, and the equitable and beneficial
interest in the Trust Assets and the Project Assets
will be vested solely and exclusively in the Ultimate
Owner;
(ii) any benefit, interest, profit or advantage arising
out of or accruing from the Trust Assets and the
Project Assets is and will continue to be a benefit,
interest, profit or advantage of the Ultimate Owner
and if received by the Trustee will be received and
held by the Trustee for the sole use, benefit and
advantage of the Ultimate Owner, and the Trustee will
account to the Ultimate Owner for any money or other
consideration paid to or to the order of the Trustee
in connection with the Trust Assets and the Project
Assets;
(iii) it will deal with Trust Assets and the Project Assets
and do all acts and things in respect of the Trust
Assets and the Project Assets at its sole expense,
subject to Section 3.2(d);
(iv) IMA will fund and have sole control over any
proceeding related to the IMA Claims and of the
Appeal, any Further Appeal Application and Further
Appeal on behalf of both itself and, pursuant to the
POA, IMA Argentina, as if the transfer of the Shares
and the Contracts to the Trustee in accordance with
Section 2.1 had not occurred;
(v) it will not, and will procure that its Subsidiaries
will not, take any steps, without the express prior
written consent of IMA, to:
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A. discontinue, terminate or settle the Appeal
or, to the extent applicable, any Further
Appeal Application and Further Appeal, on
behalf of IMA Argentina;
B. instruct counsel on behalf of IMA Argentina,
waive privilege or seek to obtain any
documents subject to privilege in the
possession of or subject to the control of
IMA Argentina or its counsel or former
counsel;
C. fetter the discretion of IMA to control the
Appeal and, to the extent applicable, any
Further Appeal Application and Further
Appeal, on behalf of both IMA and IMA
Argentina pursuant to Section 3.2(a)(iv) and
the POA;
D. act, either directly or indirectly, through
IMA Argentina in respect of the Appeal or,
to the extent applicable, any Further Appeal
Application and Further Appeal; or
E. add any of IMA Barbados, IMA Latin America
or IMA Holdings as a party to the Appeal or,
to the extent applicable, any Further Appeal
Application or Further Appeal;
(vi) it will not, and will procure that its Subsidiaries
will not, without the prior express written consent
of IMA:
A. Transfer any of the Trust Assets or the
Project Assets other than the Non-Key
Contracts;
B. receive any remuneration in respect of the
Trust Assets or the Project Assets for
acting as Trustee under this Agreement; or
C. terminate any of the Key Contracts;
(vii) it will, and will procure that its Subsidiaries will
manage the Project as a reasonable commercial
operator would do in accordance with general industry
practice, which shall include obligations to:
A. use reasonably commercial endeavours to
maintain good relations with applicable
surface owners and applicable communities in
relation to the Project Assets;
B. maintain in good standing the Project Assets
by the doing and filing of assessment work
or the making of payments in lieu thereof,
and the performance of all other actions
which may be necessary in that regard and in
order to keep such Project Assets free and
clear of all Encumbrances arising from its
or any of its Subsidiaries' activities
thereon except those at the time contested
in good faith by it;
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C. hold meetings of the management committee of
IMA Argentina ("MANAGEMENT COMMITTEE
MEETINGS") to consider proposed work
programs, budgets, drilling and other costs
regarding the advancement of the Project;
provided that a representative of IMA shall
be entitled to receive not less than ten
(10) business days written notice of any
Management Committee Meeting, together with
copies of any work programs and/or budgets
to be discussed at such Management Committee
Meeting, and shall have the right to attend
such Management Committee Meetings in the
capacity of an observer, either in person or
by telephone; provided further that if the
management of Aquiline holds a meeting (an
"AQUILINE MANAGEMENT MEETING") to consider
proposed work programs, budgets, drilling
and other costs regarding the advancement of
the Project, a representative of IMA shall
be entitled to receive not less than ten
(10) business days written notice of such
Aquiline Management Meeting, together with
copies of any work programs and/or budgets
to be discussed at such Aquiline Management
Meeting, and shall have the right to attend
such Aquiline Management Meeting in the
capacity of an observer, either in person or
by telephone. Following any such Management
Committee Meeting or Aquiline Management
Meeting IMA shall be promptly provided with
written minutes of such meetings reflecting
all decisions taken at such meeting;
D. keep the Project Assets free and clear of
all Encumbrances arising from its operation
hereunder (except for Encumbrances for taxes
not then due, other inchoate Encumbrances
and Encumbrances contested in good faith by
it), and proceed with all reasonable
diligence to contest or discharge any
Encumbrance that is filed;
E. pay, when due and payable, all wages or
salaries for services rendered in connection
with the Project Assets and all accounts for
materials supplied on or in respect of any
work or operation performed on such Project
Assets; and
F. do or cause to be done all work on the
Project Assets in a good and workmanlike
fashion and in accordance with all
applicable laws, regulations, orders and
ordinances of any governmental authority.
(b) Provided that IMA has received written notice of and minutes
from a particular Management Committee Meeting or a particular
Aquiline Management Meeting, as the case may be, in accordance
with Section 3.2(a)(vii)C and in the event that IMA's
representative at such Management Committee Meeting or at such
Aquiline Management Meeting, as the case may be, does not
provide written notice disputing expenditures proposed to be
incurred by Aquiline and/or its Subsidiaries in respect of the
Project within five (5) business days following receipt of the
minutes of such Management Committee Meeting or such Aquiline
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Management Committee Meeting, as the case may be, IMA will be
deemed to have agreed that such expenditures constitute
Aquiline Qualifying Costs. Non-attendance by IMA's
representative at a Management Committee Meeting or at a
Aquiline Management Meeting, as the case may be, shall not
prevent IMA's representative from disputing expenditures
proposed to be incurred by Aquiline and/or its Subsidiaries in
respect of the Project.
(c) In the event that IMA, acting reasonably, provides written
notice disputing proposed expenditures within the permitted
time period, the matter shall be referred to an independent
geological consultant (the "TECHNICAL CONSULTANT") selected by
agreement between the Parties or, failing agreement within
five Business Days from the dispute notice, selected by the
President for the time being of CIM. The Technical Consultant
will be authorized to review and approve or disapprove any
disputed proposed expenditures and its decision shall be final
and binding upon the Parties. The costs of retaining the
Technical Consultant shall be borne equally by Aquiline and
IMA.
(d) In the event that Aquiline (including its successors and
permitted assigns) is determined not to be the Ultimate Owner
and the Appeal Termination Date is reached:
(i) the Parties will cause the Costs Trustee to deliver
to Aquiline, as soon as reasonably practicable
following the Appeal Termination Date and in any
event no later than five (5) business days following
the Appeal Termination Date, the Minimum Trust Amount
(plus any interest accrued thereon) and any unspent
Minimum Project Expenditures Amount delivered to the
Costs Trustee in accordance with Section 2.3(c) (plus
any interest accrued thereon);
(ii) subject to Section 2.5(d), IMA will pay to Aquiline
(by way of a certified cheque or bank draft payable
to Aquiline), as soon as reasonably practicable
following the Appeal Termination Date and in any
event no later than twenty (20) business days
following the Appeal Termination Date, the amount of
the Aquiline Qualifying Costs; provided that if
Aquiline, acting reasonably, disputes the correctness
of the amount so paid, IMA shall deliver to the Costs
Trustee an amount (the "AQUILINE DISPUTED AMOUNT")
equal to the difference between the amount so paid
and the amount of Aquiline Qualifying Costs that
Aquiline notifies IMA in writing to be the correct
Aquiline Qualifying Costs payable and the Parties
shall cause the Costs Trustee to deliver such
Aquiline Disputed Amount to Aquiline and/or IMA, as
the case may be, as agreed in writing by the Parties
following resolution of such dispute between them or
as soon as reasonably practicable following the
conclusion of any arbitration to settle such dispute;
and
(iii) the Trustee will, as soon as reasonably practicable
following payment to Aquiline in accordance with
Sections 3.2(d)(i) and (ii) and/or to the Costs
Trustee in accordance with 3.2(d)(ii) (as the case
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may be), re-transfer the Trust Assets (save for any
Non-Key Contracts that may have been assigned,
disposed of or terminated), together with all loan
claims against IMA Barbados or IMA Argentina to IMA
or its nominees MUTATIS MUTANDIS on the same basis as
is set out in Section 2.1, whereupon the Trust shall
be terminated and IMA or its nominees shall then hold
sole legal and beneficial title to the Trust Assets.
(e) In the event that Aquiline (including its successors and
permitted assigns) is determined to be the Ultimate Owner and
the Appeal Termination Date is reached:
(i) the Parties will cause the Costs Trustee to deliver,
as soon as reasonably practicable following the
Appeal Termination Date and in any event no later
than five (5) business days following the Appeal
Termination Date, to IMA the Minimum Trust Amount
(plus any interest accrued thereon);
(ii) subject to Section 2.5(d), Aquiline will pay to IMA
(by way of a certified cheque or bank draft payable
to the IMA), as soon as reasonably practicable
following the Appeal Termination Date and in any
event no later than twenty (20) business days
following the Appeal Termination Date, the Minimum
Project Expenditure Amount; and
(iii) on the date upon which the last of the payments
contemplated by Sections 3.2(e)(i) and 3.2(e)(ii) is
made, the Trust shall terminate and Aquiline shall
then hold sole legal and beneficial title to the
Trust Assets.
(f) In the event that the Appeal Decision does not determine the
sole beneficial ownership of the Navidad Assets and the
Navidad Claims and does not award sole beneficial ownership of
the Shares to any Party (including its successors and
permitted assigns) such that the Ultimate Owner cannot be
determined based on the Appeal Decision, and the Appeal
Termination Date is reached, then in such case the Trust shall
terminate and the Trustee will re-transfer the Trust Assets
(save for any Non-Key Contracts that may have been assigned,
disposed of or terminated) to IMA or its nominees MUTATIS
MUTANDIS on the same basis as is set out in Section 3.2(d),
save to the extent otherwise provided in accordance with such
Appeal Decision. For greater certainty, the Trustee shall
comply strictly with the terms of any such Appeal Decision
and, if applicable, the SCC Decision.
(g) In the event that the Appeal Decision does not determine that
sole beneficial ownership of the Navidad Assets and the
Navidad Claims be, and/or does not award sole beneficial
ownership of the Shares to be, vested in Aquiline (including
its successors and permitted assigns) and there is a Further
Appeal but the SCC Decision does not determine the sole
beneficial ownership of the Navidad Claims and does not award
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sole beneficial ownership of the Shares to any Party
(including its successors and permitted assigns) such that the
Ultimate Owner cannot be determined based on the SCC Decision,
then in such case the Trust shall terminate and the Trustee
will re-transfer the Trust Assets (save for any Non-Key
Contracts that may have been assigned, disposed of or
terminated) to IMA or its nominees MUTATIS MUTANDIS on the
same basis as is set out in Section 3.2(d), save to the extent
otherwise provided in accordance with such Appeal Decision.
For greater certainty, the Trustee shall comply strictly with
the terms of any such Appeal Decision and, if applicable, the
SCC Decision.
(h) The Parties do not intend that there shall be any violation of
the rule against perpetuities, the rule against unreasonable
restraints on the alienation of property, or any similar rule
(the "RULE"). Accordingly, it is intended that all rights and
interests in the Trust Assets under this Agreement vest within
the Appeal Period and if for any reason the Appeal Period is
longer than permitted by the Rule, the Parties hereby agree
that a court shall reform that provision in such a way as to
approximate most closely the intent of the Parties within the
limits permissible under the Rule.
(i) The Trust and the Parties are not, shall not be deemed to be
and shall not be treated as, a general partnership, limited
partnership, society, syndicate, association or joint venture,
nor shall the Trustee or the Parties or any of them or any
person be, or be deemed to be, treated in any way whatsoever
as liable or responsible hereunder as partners or joint
venturers. The Trustee is not and shall not be, or be deemed
to be, an agent of the Parties except as expressly set out
herein. The relationship of IMA to the Trustee shall be solely
that of a potential beneficiary of the Trust and their rights
shall be limited to those conferred upon them by this
Agreement.
(j) Neither IMA and IMA Argentina, in its capacity as a Party,
shall incur or be subject to any liability, direct or
indirect, absolute or contingent, in contract or in tort or of
any other kind to any person in connection with:
(i) the Trust or the ownership, use, operation,
acquisition or disposition thereof or exercise or
enjoyment of the rights, privileges, conditions or
benefits attached thereto, associated therewith or
derived therefrom;
(ii) the obligations or the activities or affairs of the
Trust;
(iii) any actual or alleged act or omission of the Trustee
or by any other person in respect of the activities
or affairs of the Trust (whether or not authorized by
or pursuant to this Agreement);
(iv) any actual or alleged act or omission of the Trustee
or of any other person in the performance or
exercise, or purported or attempted performance or
exercise, of any obligation, power, discretion or
authority conferred upon the Trustee or such other
person in respect of the activities or affairs of the
Trust (whether or not authorized by or pursuant to
this Agreement);
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(v) any transaction entered into by the Trustee or by any
other person in respect of the activities or affairs
of the Trust (whether or not authorized by or
pursuant to this Agreement); or
(vi) except as provided in Section 3.2(d), any taxes,
levies, imposts or charges or fines, penalties or
interest in respect thereof payable by the Trust or
by the Trustee or by any other person (except the
Party to the extent required by applicable tax laws)
on behalf of or in connection with the activities or
affairs of the Trust (collectively, "TRUST
LIABILITIES").
(k) In the event of transfer to IMA in accordance with the
provision of this Section 3.2(j) of any Trust Assets
comprising Shares, the Trustee shall ensure that, prior to
such transfer, all loan claims against the Subsidiaries to
which such Shares relate shall have been capitalized.
(l) Neither IMA nor IMA Argentina in its capacity as a Party shall
be liable to indemnify the Trustee or any other person with
respect to any Trust Liabilities.
(m) To the extent that, notwithstanding the provisions of Section
3.2(j), any person makes a claim in respect of Trust
Liabilities against IMA and IMA Argentina, Aquiline shall
indemnify and hold harmless such Party in respect of such
claim and any liability thereunder.
3.3 AMENDMENT OF TRUST CONDITIONS
The Trust Conditions may be amended by mutual written agreement of IMA and
Aquiline. For greater certainty, in the event that the Appeal is settled, IMA
and Aquiline shall agree on the terms of the termination of the Trust.
3.4 IMA SECURITY
(a) IMA (hereinafter in this Section 3.4 referred to as the
"PLEDGOR") hereby grants a security interest in and pledges,
assigns and transfers to Aquiline (hereinafter referred to in
this Section 3.4 as the "SECURED PARTY") all of the Pledgor's
interest in and to the Shares together with all renewals
thereof, substitutions therefor and accretions thereto and all
income and other proceeds therefrom (all such Shares renewals
thereof, substitutions therefor, accretions thereto and income
therefrom herein collectively referred to in this Section 3.4
as the "COLLATERAL") and agrees that such Collateral and any
further Collateral which is hereafter deposited in pledge with
the Trustee as the nominee of the Secured Party (referred to
in this Section 3.4 as the "NOMINEE") shall be held for the
benefit of the Secured Party as continuing collateral security
for the due payment and performance of the Obligations (as
defined below).
(b) Upon the deposit of any Shares in pledge pursuant to this
pledge, the Pledgor shall be deemed to have deposited with the
Nominee all certificates, if any, representing such Shares.
All certificates deposited pursuant to this Section 3.4 shall,
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unless all necessary consents and approvals are obtained, not
contain any reference to restrictions on the transfer of the
Shares represented thereby and shall be in bearer form or duly
endorsed in blank for transfer or shall be attached to duly
executed powers of attorney or forms of transfer. The Nominee
shall hold the Collateral as agent of the Secured Party for
all purposes whatsoever in accordance with the terms of this
Section 3.4 and shall hold the Collateral for and on behalf of
the Secured Party in the same manner and with the same effect
as if the Secured Party held the Collateral itself in
accordance with the Interim Project Development Agreement.
Without derogating from the Trust Conditions, it is hereby
understood and agreed that the responsibility of the Nominee
hereunder is limited to exercising with regard to the
Collateral the same degree of care which the Secured Party
gives to its valuable property of the same value and kind.
(c) The Pledgor and the Secured Party hereby acknowledge their
mutual intention that the security interest created by this
Section 3.4 is to attach upon the execution of this Agreement
by the Pledgor and that value has been given and that the
Pledgor has rights in the Collateral as of the date hereof.
(d) In the event that the Pledgor fails to direct the Costs
Trustee to pay to the Secured Party the amount referred to in
Section 3.2(d)(i) or the Pledgor fails to pay to the Secured
Party an amount equal to the Aquiline Qualifying Costs, or
fails to pay the Aquiline Disputed Amount to the Costs Trustee
(all such amounts collectively referred to in this Section 3.4
as the "OBLIGATIONS") within the respective specified time
periods for such payments provided in Section 3.2(e), then
immediately on the expiration of such time periods, the
security hereby constituted in respect of the Collateral shall
become immediately enforceable.
(e) Upon the security hereby constituted becoming enforceable, the
Secured Party, in addition to exercising all other rights and
remedies to which it may be entitled at law or hereunder, and
without restricting the generality thereof, is authorized to
realize on the Collateral, subject to applicable law, without
further notice to any party whomsoever and the Secured Party
may also sell the Collateral by private sale or otherwise.
(f) At any sale pursuant to this Section 3.4, the Secured Party is
authorized, if it deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution
or resale of any of the Collateral. The Secured Party shall
have the right to deliver, assign and transfer to the
purchaser, or purchasers, the Collateral or any part thereof
and the Collateral may be sold in one lot or in separate
units, in the discretion of the Secured Party. The Secured
Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale,
and such sale may without further notice be made at any time
or place to which the same may be so adjourned.
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(g) Before realizing on the Collateral, the Secured Party shall
not be required to realize any other security.
(h) Any sum collected by the Secured Party on the Collateral or
the proceeds of its realization may be held as additional
collateral security for or may be applied, on the terms set
out in the Interim Project Development Agreement, to the
payment of any of the Obligations. The reasonable costs of the
Secured Party incurred in protecting and realizing the
Collateral shall be added to and included in the Obligations.
(i) The Secured Party may grant discharges, settle by compromise,
renounce rights or grant extensions with respect to the
Collateral. The Secured Party may also settle by compromise
and grant extensions without affecting its other rights
hereunder.
(j) In realizing upon the Collateral, the Secured Party shall not
be responsible for any loss occasioned by any sale or other
realization thereof or for the failure to sell or otherwise
dispose of the Collateral, provided such realization was
conducted in a commercially reasonable manner.
3.5 AQUILINE SECURITY
(a) Aquiline (hereinafter in this Section 3.5 referred to as the
"PLEDGOR") hereby grants a security interest in and pledges,
assigns and transfers to IMA (hereinafter referred to in this
Section 3.5 as the "SECURED PARTY") all of the Pledgor's
interest in and to the Shares together with all renewals
thereof, substitutions therefor and accretions thereto and all
income and other proceeds therefrom (all such Shares renewals
thereof, substitutions therefor, accretions thereto and income
therefrom herein collectively referred to in this Section 3.5
as the "COLLATERAL") and agrees that such Collateral and any
further Collateral which is hereafter deposited in pledge with
the Trustee as the nominee of the Secured Party (referred to
in this Section 3.5 as the "NOMINEE") shall be held for the
benefit of the Secured Party as continuing collateral security
for the due payment and performance of the Obligations (as
defined below).
(b) Upon the deposit of any Shares in pledge pursuant to this
pledge, the Pledgor shall be deemed to have deposited with the
Nominee all certificates, if any, representing such Shares.
All certificates deposited pursuant to this Section 3.5 shall,
unless all necessary consents and approvals are obtained, not
contain any reference to restrictions on the transfer of the
Shares represented thereby and shall be in bearer form or duly
endorsed in blank for transfer or shall be attached to duly
executed powers of attorney or forms of transfer. The Nominee
shall hold the Collateral as agent of the Secured Party for
all purposes whatsoever in accordance with the terms of this
Section 3.5 and shall hold the Collateral for and on behalf of
the Secured Party in the same manner and with the same effect
as if the Secured Party held the Collateral itself in
accordance with the Interim Project Development Agreement.
Without derogating from the Trust Conditions, it is hereby
understood and agreed that the responsibility of the Nominee
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hereunder is limited to exercising with regard to the
Collateral the same degree of care which the Secured Party
gives to its valuable property of the same value and kind.
(c) The Pledgor and the Secured Party hereby acknowledge their
mutual intention that the security interest created by this
Section 3.5 is to attach upon the execution of this Agreement
by the Pledgor and that value has been given and that the
Pledgor has rights in the Collateral as of the date hereof.
(d) In the event that the Pledgor fails to direct the Costs
Trustee to pay to the Secured Party the amount referred to in
Section 3.2(e)(i) or the Pledgor fails to pay to the Secured
Party the amounts referred to in Section 3.2(e)(ii) (all such
amounts collectively referred to in this Section 3.5 as the
"OBLIGATIONS") within the respective specified time periods
for such payments provided in Section 3.2(d), then immediately
on the expiration of such time periods, the security hereby
constituted in respect of the Collateral shall become
immediately enforceable.
(e) Upon the security hereby constituted becoming enforceable, the
Secured Party, in addition to exercising all other rights and
remedies to which it may be entitled at law or hereunder, and
without restricting the generality thereof, is authorized to:
(i) direct the Nominee to forthwith transfer the
Collateral to the Secured Party or a party nominated
by it; and
(ii) realize on the Collateral, subject to applicable law,
without further notice to any party whomsoever and
the Secured Party may also sell the Collateral by
private sale or otherwise.
(f) At any sale pursuant to this Section 3.5, the Secured Party is
authorized, if it deems it advisable to do so, to restrict the
prospective bidders or purchasers to persons who will
represent and agree that they are purchasing for their own
account for investment and not with a view to the distribution
or resale of any of the Collateral. The Secured Party shall
have the right to deliver, assign and transfer to the
purchaser, or purchasers, the Collateral or any part thereof
and the Collateral may be sold in one lot or in separate
units, in the discretion of the Secured Party. The Secured
Party may, without notice or publication, adjourn any public
or private sale or cause the same to be adjourned from time to
time by announcement at the time and place fixed for the sale,
and such sale may without further notice be made at any time
or place to which the same may be so adjourned.
(g) Before realizing on the Collateral, the Secured Party shall
not be required to realize any other security.
(h) Any sum collected by the Secured Party on the Collateral or
the proceeds of its realization may be held as additional
collateral security for or may be applied, on the terms set
out in the Interim Project Development Agreement, to the
payment of any of the Obligations. The reasonable costs of the
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Secured Party incurred in protecting and realizing the
Collateral shall be added to and included in the Obligations.
(i) The Secured Party may grant discharges, settle by compromise,
renounce rights or grant extensions with respect to the
Collateral. The Secured Party may also settle by compromise
and grant extensions without affecting its other rights
hereunder.
(j) In realizing upon the Collateral, the Secured Party shall not
be responsible for any loss occasioned by any sale or other
realization thereof or for the failure to sell or otherwise
dispose of the Collateral, provided such realization was
conducted in a commercially reasonable manner.
3.6 INDEMNITY
(a) IMA agrees to indemnify and hold harmless Aquiline, IMA
Barbados, IMA Argentina and each of the directors and officers
which Aquiline appoints to the board of directors and/or the
management of IMA Barbados and IMA Argentina (collectively,
the "AQUILINE INDEMNIFIED PARTIES" and individually, an
"AQUILINE INDEMNIFIED PARTY"), from and against any and all
losses, expenses, claims (including shareholder actions,
derivative or otherwise), actions, damages and liabilities,
joint or several, including the aggregate amount paid in
reasonable settlement of any actions, suits, proceedings,
investigations or claims and the reasonable fees and expenses
of their counsel that may be incurred in advising with respect
to and/or defending any action, suit, proceeding,
investigation or claim that may be made or threatened against
any Aquiline Indemnified Party or in enforcing this indemnity
(collectively, the "IMA CLAIMS") to which any Aquiline
Indemnified Party may become subject or otherwise involved in
any capacity insofar as the IMA Claims relate to, are caused
by, result from, arise out of or are based upon, directly or
indirectly:
(i) any misrepresentation contained in the public
disclosure documents of IMA dated either prior to or
after the date of this Agreement (an "IMA
MISREPRESENTATION"); or
(ii) any liability to persons other than Aquiline or its
Affiliates (whether accrued, absolute, contingent or
otherwise) of IMA Barbados or IMA Argentina which
arose on or prior to the Transfer Date (an "IMA
LIABILITY").
IMA also agrees that no Aquiline Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort
or otherwise) to IMA or any person asserting claims on behalf
of or in right of IMA for or in connection with an IMA
Misrepresentation or an IMA Liability, save for liability
arising from fraud or gross negligence on the part of such
Aquiline Indemnified Party. IMA will not, without Aquiline's
prior written consent, settle, compromise, consent to the
entry of any judgement in or otherwise seek to terminate any
action, suit, proceeding, investigation or claim in respect of
which indemnification may be sought hereunder (whether or not
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any Aquiline Indemnified Party is a party thereto) unless such
settlement, compromise, consent or termination includes a
release of each Aquiline Indemnified Party from any
liabilities arising out of such action, suit, proceeding,
investigation or claim.
(b) In the event that Aquiline (including its successors and
permitted assigns) is determined not to be the Ultimate Owner
and the Appeal Termination Date is reached, Aquiline agrees to
indemnify and hold harmless IMA, IMA Barbados, IMA Argentina
and each of the directors and officers which IMA appoints to
the board of directors and/or the management of IMA Barbados
and IMA Argentina following the re-transfer of the Trust Assts
in accordance with Section 3.2(d)(iii) (collectively, the "IMA
INDEMNIFIED PARTIES" and individually, an "IMA INDEMNIFIED
PARTY"), from and against any and all losses, expenses, claims
(including shareholder actions, derivative or otherwise),
actions, damages and liabilities, joint or several, including
the aggregate amount paid in reasonable settlement of any
actions, suits, proceedings, investigations or claims and the
reasonable fees and expenses of their counsel that may be
incurred in advising with respect to and/or defending any
action, suit, proceeding, investigation or claim that may be
made or threatened against any IMA Indemnified Party or in
enforcing this indemnity (collectively, the "AQUILINE CLAIMS")
to which any IMA Indemnified Party may become subject or
otherwise involved in any capacity insofar as the Aquiline
Claims relate to, are caused by, result from, arise out of or
are based upon, directly or indirectly,
(i) any misrepresentation contained in the public
disclosure documents of Aquiline dated prior to or
after the date of this Agreement (an "AQUILINE
MISREPRESENTATION"); or
(ii) any liability to persons other than IMA or its
Affiliates (whether accrued, absolute, contingent or
otherwise) of IMA Barbados or IMA Argentina which
arose during the Trust Period (an "AQUILINE
LIABILITY").
Aquiline also agrees that no IMA Indemnified Party shall have
any liability (whether direct or indirect, in contract or tort
or otherwise) to Aquiline or any person asserting claims on
behalf of or in right of Aquiline for or in connection with an
Aquiline Misrepresentation or an Aquiline Liability, save for
liability arising from fraud or gross negligence on the part
of such IMA Indemnified Party. Aquiline will not, without
IMA's prior written consent, settle, compromise, consent to
the entry of any judgement in or otherwise seek to terminate
any action, suit, proceeding, investigation or claim in
respect of which indemnification may be sought hereunder
(whether or not any IMA Indemnified Party is a party thereto)
unless such settlement, compromise, consent or termination
includes a release of each IMA Indemnified Party from any
liabilities arising out of such action, suit, proceeding,
investigation or claim.
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ARTICLE 4
STANDSTILL
4.1 STANDSTILL
Each of IMA and Aquiline acknowledges and agrees that for the duration of the
Appeal Period, it shall not, directly or indirectly, except with the prior
written consent of the other Party:
(a) acquire or agree to acquire, or make any proposal to acquire,
in any manner, either directly or indirectly, any securities
or property of the other Party or its Affiliates and
Subsidiaries;
(b) commence an offer of any nature or kind whatsoever for any
securities of the other Party or its Affiliates and
Subsidiaries, including a tender or exchange offer;
(c) solicit proxies from one or more holders of securities of the
other Party or its Affiliates and Subsidiaries or form, join
or in any way participate in a proxy contest with respect to
the securities of the other Party or its Affiliates and
Subsidiaries;
(d) conclude any understandings or enter into any agreement, or
otherwise act in concert with any third party to propose or
effect any business combination or other similar transaction
of any nature or kind with respect to the other Party or its
Affiliates and Subsidiaries, provided that the aforesaid shall
not prevent the board of directors of a Party making a
recommendation to its shareholders regarding any unsolicited
proposal by a third party relating to a business combination
or other similar transaction with such Party itself; or
(e) advise, assist or encourage any person or party in connection
with any of the foregoing.
ARTICLE 5
TERMINATION
5.1 TERMINATION
(a) Save as provided in Sections 5.1(b), this Agreement shall
terminate and the Parties shall be released from all
obligations hereunder upon written agreement between the
Parties, provided such agreement expressly determines the
terms upon which the Trust will be terminated.
(b) Unless terminated earlier, this Agreement shall terminate and
the Parties shall be released from all obligations hereunder
on the date that is the later of:
(i) the Appeal Termination Date;
(ii) in the event that Section 3.2(d), 3.2(f) or 3.2(g) is
applicable, the date of re-transfer of the Trust
Assets (save for any Non-Key Contracts that may have
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been assigned, disposed of or terminated) to IMA or
its nominees pursuant to such applicable Section; and
(iii) in the event that Section 3.2(e) is applicable, the
date of upon which the last of the payments is made
in accordance with Section 3.2(e)(iii).
ARTICLE 6
DISPUTE RESOLUTION
6.1 DISPUTE RESOLUTION
Any dispute arising under or in connection with this Agreement which has not
been resolved by the Parties within twenty (20) days after the date on which
either Party delivers written notice to the other Party of such dispute, which
notice shall specify in reasonable detail the matter or matters in dispute,
shall be referred to arbitration under the International Commercial Arbitration
Rules of Procedure (the "ARBITRATION RULES") of the British Columbia
International Commercial Arbitration Centre (the "ARBITRATION CENTRE") then in
effect. The appointing authority shall be the Arbitration Centre. The case shall
be administered by the Arbitration Centre in accordance with the Arbitration
Rules before a single arbitrator (the "ARBITRATOR"). The place of arbitration
shall be Vancouver, British Columbia. Any Party shall have the right to appeal
to the BCSC on any question of law arising out of the Arbitrator's award. The
Arbitrator must have appropriate experience in dealing with mineral exploration
and development matters. In the event that the Arbitrator makes a determination
regarding the costs incurred by a Party and the principles for such
determination are provided to the Parties in a written decision of the
Arbitrator, similar principles shall be applicable to any subsequent
determination of costs. In order to facilitate any such appeal by a Party, all
other Parties shall grant the consents to such appeal contemplated by paragraph
31(1)(a) of the Commercial Arbitration Act, R.S.B.C. 1996, c. 55.
ARTICLE 7
MISCELLANEOUS
7.1 FURTHER ASSURANCES
The Parties shall execute such further and other documents and do such further
and other things as may be reasonably necessary or convenient to carry out and
give effect to the intent of this Agreement.
7.2 TIME OF ESSENCE
Time will be of the essence in the performance of this Agreement.
7.3 AMENDMENTS AND WAIVERS
No amendment to this Agreement shall be valid or binding unless set forth in
writing and duly executed by the Parties. No waiver of any breach of any
provision of this Agreement shall be effective or binding unless made in writing
and signed by the Party purporting to give the same and, unless otherwise
provided, shall be limited to the specific breach waived.
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7.4 ASSIGNMENT
To the greatest degree permitted by law, this Agreement may not be assigned,
either directly or through amalgamation or operation of law, by either Party
without the express prior written consent of the other Party.
7.5 NOTICES
(a) Any notice, direction or other instrument required or
permitted to be given under this Agreement shall be in writing
and may be given by the delivery of the same or by mailing the
same by prepaid registered or certified mail or by sending the
same by telegram, telex, telecommunication, facsimile or other
similar form of communication, in each case addressed as
follows:
(i) If to Aquiline or Minera Aquiline at:
P.O. Box 99 3
680-130 King Street West
Toronto, Ontario
Canada, M5X 1X1
Attention: Marc Henderson, President and
Chief Executive Officer
Facsimile No.: 416-599-4959
with a copy to Fogler, Rubinoff LLP at:
1200-95 Wellington Street West
Toronto Dominion Centre
Toronto, Ontario
Canada, M5J 2Z9
Attention: G. Michael Hobart
Facsimile No.: 416-941-8852
(ii) If to IMA, IMA Latin America, IMA Barbados and IMA
Argentina at:
709-837 West Hastings Street
Vancouver, British Columbia
Canada, V6C 3N6
Attention: Art Lang
Facsimile No.: 604-687-1858
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with a copy to McCarthy Tetrault LLP at:
P.O. Box 10424
1300-777 Dunsmuir Street
Vancouver, British Columbia
Canada V7Y 1K2
Attention: Roger Taplin
Facsimile No.: 604-622-5723
(b) Any notice, direction or other instrument shall:
(i) if delivered, be deemed to have been given and
received on the day it was delivered; and
(ii) if sent by telecommunication, facsimile or other
similar form of communication, be deemed to have been
given and received on the business day following the
day it was so sent.
(c) A Party may at any time give to the Party notice in writing of
any change of address of the Party giving such notice and from
and after the giving of such notice the address or addresses
therein specified shall be deemed to be the address of such
Party for the purposes of giving notice hereunder.
7.6 EQUITABLE REMEDIES
The Parties acknowledge and agree that a breach by either Party of any of the
binding covenants contained in this Agreement could cause the other Party to
incur irreparable injury, for which the other Party would not have an adequate
remedy in damages. Accordingly, each Party agrees that in the event of any such
breach, the non-breaching Party shall be entitled to specific performance of
such covenants and preliminary and permanent injunctive and other equitable
relief in addition to any other remedy to which the non-breaching Party may be
entitled at law or in equity.
7.7 BENEFIT OF THE AGREEMENT
This Agreement shall enure to the benefit of and be binding upon the Parties and
their respective successors and permitted assigns.
7.8 SEVERABILITY
If any provision of this Agreement is or becomes illegal, invalid or
unenforceable, in whole or in part, in any jurisdiction:
(a) the remaining provisions shall nevertheless be and remain
valid and subsisting in that jurisdiction and the said
remaining provisions shall be construed as if this Agreement
had been executed without the illegal, invalid or
unenforceable portion; and
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(b) that provision shall nevertheless be and remain valid and
subsisting in other jurisdictions.
7.9 GOVERNING LAW AND ATTORNMENT
This Agreement shall be governed by and construed according to the laws of the
Province of British Columbia and the federal laws of Canada applicable therein
and the Parties irrevocably submit to the exclusive jurisdiction of the courts
of the Province of British Columbia.
7.10 ENTIRE AGREEMENT
This Agreement represents the entire agreement of the Parties hereto relating to
the subject matter hereof and there are no representations, covenants or other
agreements relating to the subject matter hereof except as stated or referred to
herein.
7.11 COUNTERPART AND FACSIMILE EXECUTION
This Agreement may be executed in any number of counterparts and all such
counterparts, taken together, shall be deemed to constitute one and the same
instrument. This Agreement may be signed and accepted by facsimile.
IN WITNESS WHEREOF the Parties have executed this Agreement under the hand of
their duly authorized representatives.
AQUILINE RESOURCES INC.
By: /s/ Mark C Henderson
---------------------------------
Name: Mark C Henderson
Title: President & CEO
MINERA AQUILINE ARGENTINA S.A.
By: /s/ William Richard Brown
---------------------------------
Name: William Richard Brown
Title: President
IMA EXPLORATION INC.
By: /s/ Joseph Grosso
---------------------------------
Name: Joseph Grosso
Title: President and CEO
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IMA LATIN AMERICA INC.
By: /s/ Art Lang
---------------------------------
Name: Art Lang
Title: CFO
INVERSIONES MINERAS ARGENTINAS INC.
By: /s/ Art Lang
---------------------------------
Name: Art Lang
Title: CFO
INVERSIONES MINERAS ARGENTINAS S.A.
By: /s/ Joseph Grosso
---------------------------------
Name: Joseph Grosso
Title: Director
SCHEDULE A
CONTRACTS
DOCUMENTED RELATIONSHIPS
o Lease Agreement between Marcatre S.A. and IMA Argentina for the
property located at Avenida Alicia Moreau de Justo 846 de esta Capital
Federal
o Professional Service Agreement with Maria del Carmen De Luca
o Professional Service Agreement with Gustavo Ferreyra and Silvana
Hubinsky
o Employment Agreement with Guillermo Salvatierra
o Communications Services Agreement with IPlan Networks
o Communications Services Agreement with CTI
o Waste Management Agreement with Serpei s.r.l.
o Spagnolo Hernamos Retroexcavadora Agreement
o Truck Rental Agreement with Gemmasa
o Trelew Office Rental Agreement with Ana Maria Flores
o Mining Easement Agreement with Santana
o Mining Easement Agreement with Montenegro
o Mining Easement Agreement with Llanquetreu
o Agreement with Connors
o Regalo Option Agreement dated August 28, 2003 between IMA and
Consolidated Pacific Bay Minerals Ltd. in respect of the Regalo
Property
UNDOCUMENTED RELATIONSHIPS
o Agreement re radio use
o Agreement with Rehuna (environmental and socio economic consultant)
o Agreement with industrial safety consultant
o Leases re Gastre and Gan Gan Houses
o Lease re Gastre Warehouse
o Agreement re Mendoza Sample Storage
A-1
SCHEDULE B
COSTS TRUST AGREEMENT
THIS AGREEMENT made the 18th day of October, 2006.
BETWEEN:
AQUILINE RESOURCES INC., a corporation continued under the
laws of Ontario with its registered office at 130 King Street
West, Suite 3680, PO. Box 99, Toronto, Ontario M5X 1B1
("AQUILINE"),
AND:
MINERA AQUILINE ARGENTINA S.A., a corporation incorporated
under the laws of Argentina;
("MINERA AQUILINE")
AND:
IMA EXPLORATION INC., a corporation incorporated under the
laws of British Columbia with its registered office at 709-837
West Hastings Street, Vancouver, British Columbia V6C 3N6;
("IMA")
AND:
INVERSIONES MINERAS ARGENTINAS S.A., a corporation
incorporated under the laws of Argentina;
("IMA ARGENTINA")
AND:
INVERSIONES MINERAS ARGENTINAS INC., a corporation
incorporated under the laws of Barbados, the entire issued and
outstanding share capital of which is held by IMA Latin
America;
("IMA BARBADOS")
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AND:
MCCARTHY TETRAULT LLP, of 1300 - 777 Dunsmuir Street,
Vancouver, British Columbia, V7Y 1K2
(the "COSTS TRUSTEE").
WHEREAS:
A. The parties to this Agreement other than the Costs Trustee (the
"PARTIES") have entered into an interim project development agreement
dated October 18, 2006 (the "INTERIM PROJECT DEVELOPMENT AGREEMENT")
whereby the Parties wish to put in place interim arrangements to ensure
the continued development of the Project for the benefit of the
Ultimate Owner pending determination of the Ultimate Owner; and
B. Pursuant to Sections 2.3(b) and 3.2(d) of the Interim Project
Development Agreement, the Parties agreed that certain payments in
relation to the Project should be paid by Aquiline or may be made by
IMA to the Costs Trustee to be dealt with as herein provided.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the mutual
covenants and agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto mutually covenant and agree as follows:
DEFINITIONS
1. In this Agreement:
(a) "BUSINESS DAY" means any day other than a Saturday or Sunday
on which the main branch of HSBC Bank Canada in Vancouver,
British Columbia, is open for business;
(b) "COSTS TRUSTEE" means McCarthy Tetrault LLP acting in the
capacity of costs trustee hereunder or any other person that
replaces McCarthy Tetrault LLP as costs trustee hereunder
pursuant to the provisions of this Agreement;
Any other capitalized term used herein which is defined in the Interim
Project Development Agreement shall have the meaning assigned to it in
the Interim Project Development Agreement.
INTERPRETATION
2. In this Agreement:
(a) "this Agreement" means this agreement as from time to time
supplemented or amended by one or more agreements entered into
pursuant to the applicable provisions of this Agreement;
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(b) headings are solely for convenience of reference and are not
intended to be complete or accurate descriptions of content or
to be guides to interpretation of this Agreement or any part
of it;
(c) the word "including", when following a general statement or
term, is not to be construed as limiting the general statement
or term to any specific item or matter set forth thereafter or
to similar items or matters, but rather as permitting the
general statement or term to refer also to all other items or
matters that could reasonably fall within its broadest
possible scope;
(d) an expression or term used herein that is defined in section
29 of the INTERPRETATION ACT (British Columbia) in effect on
the date hereof and is not otherwise defined herein, will have
the meaning assigned to it in that Act;
(e) an accounting term not otherwise defined herein has the
meaning assigned to it, and every calculation to be made
hereunder is to be made, in accordance with accounting
principles generally accepted in Canada applied on a
consistent basis;
(f) a reference to currency means Canadian currency, unless
otherwise indicated;
(g) a reference to a statute includes all regulations made
thereunder, all amendments to the statute or regulations in
force from time to time, and every statute or regulation that
supplements or supersedes such statute or regulations;
(h) a reference to an entity includes any successor to that
entity; and
(i) a word importing the masculine gender will include the
feminine or neuter, words in the singular include the plural,
words importing a corporate entity include individuals and
vice versa.
APPOINTMENT OF COSTS TRUSTEE
3. The Parties hereby appoint the Costs Trustee to act as costs trustee in
accordance with the terms and subject solely to the conditions of this
Agreement, and the Costs Trustee hereby accepts such appointment and
agrees to act in that capacity in accordance with the terms and subject
to the conditions of this Agreement.
PAYMENT OF COSTS TRUST AMOUNT TO COSTS TRUSTEE
4. Upon the Transfer Date, Aquiline will deliver the Minimum Trust Amount
to the Costs Trustee which amount, together with (to the extent
applicable and to be delivered in accordance with the Interim Project
Development Agreement) any unspent Minimum Project Expenditures Amount
which Aquiline elects to deliver to the Costs Trustee pursuant to
Section 2.3(c) of the Interim Project Development Agreement
(collectively, the "COSTS TRUST AMOUNT"), will constitute funds to be
held by the Costs Trustee in accordance with the terms of this
Agreement.
B-3
PAYMENT OF AQUILINE DISPUTED AMOUNT TO COSTS TRUSTEE
5. In the event that IMA delivers the Aquiline Disputed Amount to the
Costs Trustee pursuant to Section 3.2(d)(ii) of the Interim Project
Development Agreement, such amount will constitute funds to be held by
the Costs Trustee in accordance with the terms of this Agreement.
INVESTMENT OF COSTS TRUST AMOUNT AND/OR THE AQUILINE DISPUTED AMOUNT
6. The Costs Trustee shall invest the Costs Trust Amount and, if
applicable, the Aquiline Disputed Amount (each, a "TRUST Amount") in
trust in an interest bearing trust account at a Canadian chartered bank
or trust company until release of the respective Trust Amount from
escrow in accordance with this Agreement. If any interest is earned on
the Trust Amount which is credited to such account, the interest shall
be paid upon release of the respective Trust Amount to the party
receiving such Trust Amount or, if only part of the Trust Amount is
released, to the party receiving such part in proportion to such part.
The Costs Trustee hereby assumes no responsibility for and will have no
liability with respect to such investment.
RELEASE OF TRUST AMOUNTS
7. The Costs Trustee will hold any Trust Amount in escrow in accordance
with Section 6 until the Costs Trustee is authorized to deliver such
Trust Amount out of escrow as set forth in this Agreement, in which
case the Costs Trustee will comply with such authorization.
8. The Costs Trustee is authorized to deliver the Costs Trust Amount out
of escrow:
(a) to Aquiline, in the event that the Costs Trustee receives
written confirmation from IMA and Aquiline that the Trust
Assets have been transferred to IMA pursuant to Section
3.2(d), (f) or (g), as the case may be, of the Interim Project
Development Agreement; or
(b) to IMA, in the event that the Costs Trustee receives written
confirmation from IMA and Aquiline that the Trust has
terminated in accordance with Section 3.2(e) of the Interim
Project Development Agreement.
9. The Costs Trustee is authorized to deliver the Aquiline Disputed Amount
out of escrow to Aquiline or IMA, as the case may be, on receipt of and
in accordance with a written direction signed by the Parties pursuant
to Section 3.2(d)(ii) of the Interim Project Development Agreement.
10. Aquiline and IMA agree to act honestly and in good faith and in as
expeditious a manner as may be reasonably necessary to fulfil their
respective obligations respecting the signing of the written
confirmation contemplated in Section 8(a) and Section 8(b) and, if
applicable, the written direction contemplated by Section 9, of this
Agreement.
11. If the Costs Trustee receives any other notice in writing (a "RELEASE
NOTICE") signed by all of the Parties, directing the Costs Trustee to
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deliver any Trust Amount or part thereof to either Aquiline or IMA, the
Costs Trustee will comply with such Release Notice within five (5)
Business Days after receipt of such Release Notice or such later date,
if any, as is specified in such Release Notice. If, on or before the
third anniversary of the Transfer Date, the Costs Trustee has not
received a Release Notice or a notice in writing (a "DISPUTE NOTICE")
signed by either Aquiline or IMA, or both, advising the Costs Trustee
that there is a dispute between Aquiline and IMA with respect to the
custody, release or delivery of any Trust Amount, or part thereof, the
Costs Trustee will deliver all Trust Amounts and any interest earned
thereon to IMA. For the purposes of this Section 11, the bank account
details of Aquiline and IMA for receiving a Trust Amount, or part
thereof, are as follows:
Aquiline: Royal Bank of Canada
20 King Street West
Toronto, Ontario
Swift Code ROYCCAT 2
Bank Code 003
Transit Number 06012
Account Number 1061522
IMA: Bank of Montreal
Vancouver Main Branch
Bank Code 001
Transit Number 00040
Account Number: 1636 304
DETAILS RE TRUST AMOUNT
12. Upon written request, the Costs Trustee will furnish to IMA and
Aquiline reasonable details regarding the accounts and investments in
which a Trust Amount is being held, interest or other receipts on such
Trust Amount, and transactions involving, and distributions of, such
Trust Amount.
NATURE OF COSTS TRUSTEE RESPONSIBILITIES
13. The duties of the Costs Trustee hereunder are entirely administrative
in nature. The Costs Trustee will have no duties or obligations except
those which are expressly set forth in this Agreement and, in respect
of such duties, the Costs Trustee:
(a) will have no discretion as to the performance of such duties
and satisfaction of such obligations; and
(b) will not be bound by any notice of claim or demand with
respect to such duties and obligations, or any waiver,
modification, amendment, termination or rescission of this
Agreement, unless received by the Costs Trustee in writing and
signed by each other party hereto and unless the Costs Trustee
has given its written consent thereto if its duties or
obligations hereunder are affected.
14. The Costs Trustee will not be responsible to investigate or determine
the genuineness or validity of any notice given pursuant to Section 8
or 9, and the Costs Trustee is hereby authorized and directed to follow
B-5
the directions contained therein. The Costs Trustee will not in any
event incur any liability as a result of complying with such
directions.
15. Notwithstanding any other provision of this Agreement, the Costs
Trustee is hereby authorized and directed to comply with and obey any
order, judgement, decree or award of the Supreme Court of British
Columbia and, in the case of such compliance, the Costs Trustee will
not be liable by reason thereof to any person even if thereafter such
order, judgement, decree or award is appealed, reversed, modified,
annulled, set aside or vacated.
16. Notwithstanding any other provision of this Agreement, if for any
reason the Costs Trustee determines in good faith that it is unable to
identify clearly the person or persons entitled to receive all or any
portion of a Trust Amount, the Costs Trustee may refuse to make any
payment of such Trust Amount and may retain the Trust Amount in its
possession or control subject to receipt of further directions in
accordance with this Agreement.
17. The Costs Trustee will not by reason hereof be required to initiate,
defend or otherwise prosecute any legal proceeding in respect of any
matter arising out of or in connection with this Agreement unless and
until jointly and severally indemnified (including indemnity by way of
advance deposit with the Costs Trustee of amounts estimated by the
Costs Trustee of the costs (including legal costs on a solicitor and
his own client basis), expenses, awards, judgements, amounts paid in
settlement of claims or otherwise that the Costs Trustee determines
might be incurred or suffered in or as a result of such legal
proceedings) to the complete and unfettered satisfaction of the Costs
Trustee.
18. The Costs Trustee may act relative hereto upon the advice of legal
counsel, chartered accountants or other professional advisors in
reference to any matter pertaining hereto and will incur no liability
in respect of any action taken, omitted or suffered by it in good faith
in accordance with the advice of any such counsel or other advisor.
19. The Costs Trustee will not be liable for any act or failure to act by
any representative, legal counsel, accountant, banker, agent or other
person appointed to act in any matter pertaining to a Trust Amount or
be bound to supervise the conduct of any such person.
LIMITATION OF COSTS TRUSTEE'S LIABILITY
20. Notwithstanding any other provision in this Agreement, the Costs
Trustee will not be liable for any error of judgement, fact or law, or
for any act done or omitted to be done (including any negligence on the
part of the Costs Trustee), except for the Costs Trustee's own wilful
misconduct or gross negligence.
FEES AND EXPENSES OF COSTS TRUSTEE
21. IMA will pay the fees of and expenses incurred by the Costs Trustee in
connection with the performance of its duties hereunder and in
connection with any proceedings in which it is involved as a result of
its acting as and being the costs trustee hereunder.
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22. The Costs Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liabilities in the performance of any of
its duties, or in the exercise of any of its rights and powers,
hereunder.
INDEMNIFICATION OF COSTS TRUSTEE
23. Aquiline and IMA covenant and agree to indemnify and save harmless the
Costs Trustee, its partners, employees, independent contractors and
agents and their respective heirs, executors, administrators, personal
representatives and assigns, as the case may be (collectively, the
"INDEMNIFIED PARTIES"), from and against, on a full indemnity basis,
all claims, demands, damages, losses, liabilities, amounts paid in
settlement of claims, costs and expenses and other amounts paid in
respect of any civil, criminal or administrative action, proceeding or
investigation to which the Indemnified Parties, or any of them, as the
case may be, is made a party or is subject by reason of the Costs
Trustee performing its duties as costs trustee hereunder or otherwise
arising out of or connected with this Agreement except for the Costs
Trustee's own wilful misconduct or gross negligence. Aquiline's and
IMA's obligations under this section are joint and several and shall
survive the resignation or replacement of the Costs Trustee and the
termination of this Agreement.
RESIGNATION AND SUCCESSORSHIP
24. The Costs Trustee may resign as costs trustee hereunder at any time
upon giving 30 days' advance written notice of such resignation to each
other party to this Agreement, provided that such resignation will not
be effective until a successor costs trustee has been appointed by
agreement of IMA and Aquiline. If a successor costs trustee has not
been appointed or has not accepted such appointment within 20 days
after the Costs Trustee gives notice of resignation, the Costs Trustee
may apply to the Supreme Court of British Columbia for the appointment
of a successor costs trustee and the expenses incurred by the Costs
Trustee in so doing will be paid by IMA in accordance with Section 21.
25. IMA and Aquiline, acting together, may remove the Costs Trustee at any
time by giving the Costs Trustee 30 days' advance written notice,
jointly signed by them, which notice will include the name and contact
details of the replacement costs trustee.
26. Any new costs trustee appointed hereunder will execute an instrument
accepting such appointment and deliver one counterpart thereof to each
of IMA, Aquiline and the existing Costs Trustee, and thereupon such
newly appointed Costs Trustee, without further act or notice, will
become vested in all rights, powers and obligations of its predecessor
for execution of the mandate hereunder, with like effect as if
originally named as the Costs Trustee herein, and the predecessor Costs
Trustee will forthwith deliver any Trust Amount in its possession
pursuant to this Agreement to the new costs trustee, for the purposes
and uses of this Agreement.
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TERMINATION OF OBLIGATIONS
27. Upon payment out of escrow by the Costs Trustee of all of the Trust
Amounts in accordance with this Agreement, the obligations of the Costs
Trustee hereunder will terminate and the Costs Trustee will be released
and discharged from all further obligations hereunder.
28. Upon due and proper delivery of notice of resignation or replacement,
as the case may be, of a Costs Trustee pursuant to Section 24 or 25,
and upon delivery by such Costs Trustee of a Trust Amount in accordance
with Section 26 to the successor costs trustee, the Costs Trustee,
without further act or notice, will be forever released and discharged
from all of its duties and obligations as costs trustee hereunder.
DISPUTE AND INTERPLEADER
29. If the Costs Trustee receives a Dispute Notice or if the Costs Trustee
otherwise becomes aware that a dispute has arisen among any of the
parties to this Agreement with respect to the custody, release or
delivery of any part of a Trust Amount, the Costs Trustee may at any
time, in its unfettered discretion, interplead such Trust Amount or
portion thereof remaining into the Supreme Court of British Columbia,
in which event the Costs Trustee will not be required to act in respect
of the dispute and the Costs Trustee's duties, responsibilities and
liabilities with respect to such Trust Amount will thereupon terminate.
GENERAL
30. Any notice or other communication (each for the purposes of this
provision a "notice") to be given pursuant to this Agreement shall be
in writing and shall be given by personal delivery, by overnight or
registered mail or by electronic means of communication, in each case
addressed as applicable as follows:
(i) If to Aquiline or Minera Aquiline at:
P.O. Box 99
3680 - 130 King Street West
Toronto, Ontario
M5X 1B1
Canada
Fax No.: 416-599-4959
Attention: Marc Henderson,
President and Chief Executive Officer
with a copy to Fogler, Rubinoff LLP at:
1200 - 95 Wellington Street West
Toronto Dominion Centre
Toronto, Ontario
M5J 2Z9
Canada
Fax No.: 416-941-8852
Attention: G. Michael Hobart
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(ii) If to IMA, IMA Argentina or IMA Barbados at:
709 - 837 West Hastings Street
Vancouver, BC
V6C 3N6
Canada
Fax No.: 604-687-1858
Attention: Art Lang
(iii) If to the Costs Trustee at:
McCarthy Tetrault LLP
1300 - 777 Dunsmuir Street
Vancouver, British Columbia
V7Y 1K2
Canada
Fax: (604) 622-5723
Attention: Roger Taplin
or to such other address or telecopy number as is specified by the
addressee by notice to the other parties.
31. In case at any time any further action is necessary or desirable to
carry out the purposes of this Agreement, each of the parties hereto
will take such further action (including the execution and delivery of
such further instruments and documents) as may be reasonably requested
by another party, at the sole cost and expense of the requesting party
(except that any expense of the Costs Trustee under this section will
be paid in accordance with Section 21).
32. This Agreement is and will be deemed to have been made in the Province
of British Columbia, for all purposes will be governed exclusively by
and construed in accordance with the laws prevailing in British
Columbia and the laws of Canada applicable therein, and the rights and
remedies of the parties hereto will be determined in accordance with
those laws.
33. The parties hereto irrevocably attorn to the non-exclusive jurisdiction
of the courts of British Columbia and all courts having appellate
jurisdiction thereover.
B-9
34. No party may assign any of its rights under this Agreement without the
written consent of the other parties.
35. This Agreement will enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
36. This Agreement may be executed by any party hereto and delivered, in
original form or by electronic facsimile, in one or more counterparts,
each of which together will be read and construed and will constitute
one and the same instrument as if all of the parties hereto executed
the same document.
37. Aquiline acknowledges and agrees that: (i) the Costs Trustee has acted
as legal counsel for IMA in respect of the Interim Project Development
Agreement and the transactions contemplated therein and is acting for
IMA or its affiliates on other matters and may act for IMA or its
affiliates in future matters, (ii) in acting in the capacity of the
costs trustee under this Agreement, the Costs Trustee is not
representing Aquiline or IMA; and (iii) as a result of acting in the
capacity of the costs trustee under this Agreement, the Costs Trustee
is not prevented or limited in its ability to represent IMA in respect
of any matter or dispute in relation to the Interim Project Development
Agreement, the transactions contemplated in the Interim Project
Development Agreement, this Agreement or any Trust Amount, or in any
other matter whatsoever, including matters in which Aquiline is adverse
in interest to IMA, and Aquiline hereby consents to the Costs Trustee
representing IMA in respect thereof.
IN WITNESS WHEREOF the parties have executed and delivered this Agreement on the
day and year first above written.
AQUILINE RESOURCES INC.
By: /s/ Marc C. Henderson
---------------------------------
Name: Marc C. Hendserson
Title: President & CEO
MINERA AQUILINE ARGENTINA S.A.
By: /s/ William Richard Brown
---------------------------------
Name: William Richard Brown
Title: President
IMA EXPLORATION INC.
By: /s/ Joseph Grosso
---------------------------------
Name: Joseph Grosso
Title: President & CEO
B-10
INVERSIONES MINERAS ARGENTINAS S.A.
By: /s/ Joseph Grosso
---------------------------------
Name: Joseph Grosso
Title: Director
INVERSIONES MINERAS ARGENTINAS INC.
By: Art Lang
---------------------------------
Name: Art Lang
Title: CFO
B-11
COSTS TRUSTEE
MCCARTHY TETRAULT LLP
Per:
---------------------------------
Authorized Signatory
B-12
SCHEDULE C
[NOT USED]
C-1
SCHEDULE D
KEY CONTRACTS
CONTRACTS
o Mining Easement Agreement with Santana
o Mining Easement Agreement with Montenegro
o Mining Easement Agreement with Llanquetreu
o Regalo Option Agreement dated August 28, 2003 between IMA and
Consolidated Pacific Bay Minerals Ltd. in respect of the Regalo
Property
SHARES
o 900,000 common shares of Consolidated Pacific Bay Minerals Ltd.
o 300,000 common shares of Tinka Resources Ltd.
D-1
SCHEDULE E
NAVIDAD ASSETS
CONTRACTS
o Mining Easement Agreement with Santana
o Mining Easement Agreement with Montenegro
o Mining Easement Agreement with Llanquetreu
o The contracts listed in Schedule A
LICENSES AND PERMITS
o Chubut Environmental Report Approval File 13984/02 (updated 2005/2006)
o Easement registration file 14775/05
o Mining Investment Law Registration
SHARES
o 900,000 common shares of Consolidated Pacific Bay Minerals Ltd.
o 300,000 common shares of Tinka Resources Ltd.
E-1
SCHEDULE F
NAVIDAD CLAIMS
--------------------------------------------------------------------------------
MINING FILE DESCRIPTION
NUMBER
--------------------------------------------------------------------------------
13984/02 (v)
--------------------------------------------------------------------------------
14003/03
--------------------------------------------------------------------------------
14004/03
--------------------------------------------------------------------------------
14005/03 (iii)
--------------------------------------------------------------------------------
14006/03 (iv)
--------------------------------------------------------------------------------
14007/03 (i)
--------------------------------------------------------------------------------
14008/03 (ii)
--------------------------------------------------------------------------------
14014/03
--------------------------------------------------------------------------------
14015/03
--------------------------------------------------------------------------------
14016/03 Bahia Atlantica/Consolidated Pacific Bay Minerals
--------------------------------------------------------------------------------
14017/03
--------------------------------------------------------------------------------
14018/03
--------------------------------------------------------------------------------
14032/03
--------------------------------------------------------------------------------
14033/03
--------------------------------------------------------------------------------
14034/03
--------------------------------------------------------------------------------
14035/03
--------------------------------------------------------------------------------
14036/03
--------------------------------------------------------------------------------
14100/03
--------------------------------------------------------------------------------
14293/04
--------------------------------------------------------------------------------
14302/04
--------------------------------------------------------------------------------
14303/04
--------------------------------------------------------------------------------
14304/04
--------------------------------------------------------------------------------
14340/03
--------------------------------------------------------------------------------
14341/03
--------------------------------------------------------------------------------
14352/03
--------------------------------------------------------------------------------
14367/04
--------------------------------------------------------------------------------
14368/04
--------------------------------------------------------------------------------
14369/04
--------------------------------------------------------------------------------
14370/04
--------------------------------------------------------------------------------
14446/04
--------------------------------------------------------------------------------
14616/05 Bahia Atlantica/Consolidated Pacific Bay Minerals
--------------------------------------------------------------------------------
14616/06 Bahia Atlantica/Consolidated Pacific Bay Minerals
--------------------------------------------------------------------------------
14669/05 Cateo 13982/03 12/03/2002
--------------------------------------------------------------------------------
14731/05
--------------------------------------------------------------------------------
14732/05
--------------------------------------------------------------------------------
14738/05 Cateo 14017/03 02/10/2003
--------------------------------------------------------------------------------
14739/05 Cateo 14017/03 02/10/2003
--------------------------------------------------------------------------------
14740/05 Cateo 14033/03 03/11/2003
--------------------------------------------------------------------------------
F-1
--------------------------------------------------------------------------------
MINING FILE DESCRIPTION
NUMBER
--------------------------------------------------------------------------------
14741/05 Cateo 14033/03 03/11/2003
--------------------------------------------------------------------------------
14742/05 Cateo 14034/03 03/11/2003
--------------------------------------------------------------------------------
14743/05 Cateo 14034/03 03/11/2003
--------------------------------------------------------------------------------
14830/06 (i)
--------------------------------------------------------------------------------
14831/06 (ii)
--------------------------------------------------------------------------------
14832/06 (iii)
--------------------------------------------------------------------------------
17833/06 (iii)
--------------------------------------------------------------------------------
14834/06 (iv)
--------------------------------------------------------------------------------
14902/06 (v)
--------------------------------------------------------------------------------
14903/06 (v)
--------------------------------------------------------------------------------
(i) - (v) indicate relationship between original filing and updates (same claim
and a new number)
F-2
SCHEDULE G
IRREVOCABLE POWER OF ATTORNEY
The undersigned Inversiones Mineras Argentinas S.A. ("IMA
Argentina") hereby irrevocably nominates, constitutes and appoints under seal
IMA Exploration Inc. ("IMA"), with full power of substitution, as its agent and
true and lawful attorney to act on behalf of the undersigned with full power and
authority in its name, place and stead in relation to:
(a) the appeal by IMA and IMA Argentina from the order of Madam
Justice Koenigsberg of the Supreme Court of British Columbia
made July 14, 2006 in Action No. S041353, as may be varied
from time to time, to the Court of Appeal for British Columbia
(the "Appeal");
(b) any application to the Supreme Court of Canada for leave to
appeal from the judgment of the Court of Appeal for British
Columbia in respect of the Appeal;
(c) any appeal to the Supreme Court of Canada from the judgment of
the Court of Appeal for British Columbia in respect of the
Appeal; and
(d) any IMA Claims;
including, in relation to such matters, to make all representations and conduct
all negotiations or settlements on behalf of the undersigned, to initiate,
prosecute, defend, abandon, compromise, arbitrate or otherwise dispose of any
legal, equitable or administrative claim, action, suit, attachment, arrest or
other litigation, specifically including, but not limited to, the power to
demand and collect all sums of money, debts, dues, accounts, deposits, legacies,
bequests, devises, interest, dividends, stock certificates, awards and proceeds.
The power of attorney granted hereby by the undersigned to IMA
is granted pursuant to the interim project development agreement made on October
18, 2006 between Aquiline Resources Inc., Minera Aquiline Argentina S.A., IMA,
IMA Latin America, IMA Barbados and IMA Argentina (the "Interim Project
Development Agreement") on the basis that it is coupled with IMA's interest in
the Trust Assets in accordance with the Trust Conditions in contemplation of the
transfer in trust of ownership of the undersigned to Aquiline Resources Inc., is
irrevocable and will survive the transfer in trust of ownership, the disability
or legal incapacity of the undersigned and extends to and is binding upon the
administrators and other legal representatives and successors of the
undersigned.
The undersigned agrees to be bound by any representation or
action made or taken by IMA pursuant to this power of attorney and hereby waives
any and all defences which may be available to contest, negate or disaffirm the
action of IMA taken in good faith under this power of attorney.
All capitalized terms in this power of attorney which are not
defined herein will have the meanings assigned to them in the Interim Project
Development Agreement.
G-1
This power of attorney will be governed by and construed in
accordance with the laws of the Province of British Columbia. The undersigned
submits to the exclusive jurisdiction of the courts of the Province of British
Columbia to determine any disputes in relation to this power of attorney.
IN WITNESS WHEREOF the undersigned has executed and delivered
this power of attorney under seal as of this ________ day of ________________,
________.
WITNESS: )
)
)
Signature: )
) _____________________________________
Address: )
)
)
)
Occupation: )
G-2
SCHEDULE H
PROVISIONS RELATING TO THE TRANSFER OF THE NAVIDAD ASSETS AND
THE NAVIDAD CLAIMS
Capitalized terms used but not otherwise defined in this Schedule have the
meanings ascribed thereto in the Interim Project Development Agreement (the
"AGREEMENT") dated October 17, 2006 between Aquiline Resources Inc., Minera
Aquiline Argentina S.A., IMA Exploration Inc., Inversiones Mineras Argentinas
S.A. and Inversiones Mineras Argentinas Inc.
In the event Aquiline delivers an Election Notice to IMA in accordance with
Section 2.4 of the Agreement:
1. Section 1.1(fff) will be deleted in its entirety and will be replaced
with the following language:
(tt) "Transfer Date" means the date on which the transfer
of the Navidad Assets and the Navidad Claims to
Aquiline in accordance with Section 2.1 is completed,
being the soonest date that is reasonably practicable
following the end of the Due Diligence Period and in
any event no later than five (5) business days
following the end of the Due Diligence Period;
2. Section 2.1 of the Agreement will be deleted in its entirety and will
be replaced with the following language:
2.1 TRANSFER OF NAVIDAD ASSETS AND NAVIDAD CLAIMS
Subject to the payment by Aquiline to the Costs Trustee of the
Minimum Trust Amount pursuant to Section 2.3(b), the execution
and delivery to IMA of the Consolidated Release and the other
terms and conditions of this Agreement, on the Transfer Date,
IMA will transfer (subject to any required third party
consents , approvals or filings, which IMA shall employ its
reasonable commercial endeavours to obtain in a timely
manner), or cause its relevant Subsidiaries to transfer, the
Navidad Assets and the Navidad Claims, to Aquiline on an "as
is, where is" basis (such that neither IMA nor any of its
Subsidiaries makes any representations or warranties in
respect of the Trust Assets or the Project Assets) and, in
connection therewith, will deliver, or cause its relevant
Subsidiaries to deliver, to Aquiline:
(a) a certified copy of a resolution of the board of
directors of IMA Barbados approving the transfer of
the Navidad Assets and the Navidad Claims to
Aquiline;
(b) copies of geological mapping studies, geological
modelling studies, assay results, core samples,
proposed drilling programs, geological reports,
scoping studies, metallurgical studies, reports and
H-1
studies prepared by third parties with respect to the
Project, reports and studies prepared by IMA with
respect to the Project and any other documents
relating to the Project; and
(c) copies of any documents of title evidencing the
Navidad Assets.
3. Section 2.2 will be deleted in its entirety and will be replaced with
the following language:
2.2 TRANSITIONAL MATTERS
Notwithstanding anything else to the contrary in this
Agreement, Aquiline hereby acknowledges and agrees that IMA,
and/or its Subsidiaries, will retain ownership of:
(a) all intellectual property in the name "Inversiones
Mineras Argentinas Inc.";
(b) all intellectual property in the name "Inversiones
Mineras Argentinas S.A."; and
(c) the Shares.
4. Section 2.7(b)(i) will be deleted in its entirety and will be replaced
with the following language:
(b) IMA Argentina will sign the POA on or prior to the
Transfer Date and that such POA shall remain
effective notwithstanding the transfer of the Navidad
Assets and the Navidad Claims to Aquiline in
accordance with Section 2.1;
5. Section 3.1(a) will be deleted in its entirety and will be replaced
with the following language:
(a) The Trustee hereby declares and agrees, whether
itself or through any of its Subsidiaries, to act as
trustee of the Trust Assets and to hold and
administer the Trust Assets in trust for the use and
benefit of the Ultimate Owner, its successors and
permitted assigns, subject to the terms and
conditions of this Agreement, such trust to
constitute the trust (the "TRUST") hereunder. The
appointment of the Trustee hereunder shall be
conditional upon the completion of the transfer of
the Navidad Assets and the Navidad Claims to the
Trustee in accordance with Section 2.1 and effective
upon the Transfer Date.
6. Section 3.2(a)(iv) will be deleted in its entirety and will be replaced
with the following language:
H-2
(iv) IMA will fund and have sole control of the Appeal,
any Further Appeal Application and Further Appeal on
behalf of both itself and, pursuant to the POA, IMA
Argentina;
7. References to "Shares" in Sections 3.4 and 3.5 will be replaced by
"Navidad Assets and Navidad Claims" and the security interests granted
therein in accordance with such Sections shall be amended MUTATIS
MUTANDIS to take account of the different nature of such Collateral,
including a covenant by the Parties to register all such mortgages or
charges as may be required in order to perfect such security interests.
8. Section 3.5 will be deleted in its entirety.
H-3