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For
the month of,
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October
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2009
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Commission
File Number
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000-13727
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Pan
American Silver Corp
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(Translation
of registrant’s name into English)
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1500-625
Howe Street, Vancouver BC Canada V6C 2T6
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(Address
of principal executive offices)
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Form
20-F
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Form 40-F
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X
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Yes
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No
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X
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Document
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1
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Support
Agreement, between Pan American Silver Corp. and Aquiline Resources Inc.,
dated October 14, 2009.
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2
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Disclosure
Letter, dated as of October 14,
2009.
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·
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should not in all instances be
treated as categorical statements of fact, but rather as a way of
allocating the risk to one of the parties if those statements prove to be
inaccurate;
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·
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have been qualified by
disclosures that were made to the other party in connection with the
negotiation of the applicable agreement, which disclosures are not
necessarily reflected in the
agreement;
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·
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may apply standards of
materiality in a way that is different from what may be viewed as material
to you or other investors;
and
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·
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were made only as of the date
of the applicable agreement or such other date or dates as may be
specified in the agreement and are subject to more recent
developments.
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THE
OFFERS
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2
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1.1
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The
Offers
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2
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1.2
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Company
Approval
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11
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1.3
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Company
Co-operation
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12
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1.4
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Post
Offer Covenants
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13
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1.5
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Outstanding
October 2008 Aquiline Warrants, November 2008 Aquiline Warrants and
Outstanding Stock Aquiline Options
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14
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1.6
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Indemnification
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16
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1.7
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Pre-Acquisition
Reorganization
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18
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Article 2
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REPRESENTATIONS
AND WARRANTIES
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19
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2.1
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Representations
and Warranties of the Offeror
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19
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2.2
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Representations
and Warranties of the Company
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19
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2.3
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Investigation
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19
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2.4
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Knowledge
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19
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2.5
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Disclosure
Letters
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20
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2.6
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Survival
of Representations and Warranties
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20
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Article 3
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CONDUCT
OF BUSINESS
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20
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3.1
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Negative
Covenants
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20
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3.2
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Positive
Covenants
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24
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3.3
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Non-Solicitation
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25
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3.4
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Access
to Information
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29
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Article 4
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NON-COMPLETION
PAYMENTS AND OTHER ARRANGEMENTS
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31
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4.1
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Non-Completion
Payment
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31
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4.2
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Financing
of Non-Completion Payment
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32
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4.3
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Expense
Reimbursement
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32
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4.4
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Effect
of Payments
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33
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4.5
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Right
to Match Superior Proposal
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33
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4.6
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Reconfirmation
of Approval
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34
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4.7
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Additional
Board Communications
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34
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Article 5
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MUTUAL
COVENANTS
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35
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5.1
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Consultation
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35
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5.2
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Further
Assurances
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35
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Article 6
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TERMINATION,
AMENDMENT & WAIVER
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36
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6.1
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Termination
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36
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6.2
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Effect
of Termination
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39
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6.3
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Amendment
or Waiver
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39
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Article 7
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MISCELLANEOUS
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39
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7.1
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Interpretation
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39
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7.2
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Number
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40
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7.3
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Notices
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40
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7.4
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Entire
Agreement
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42
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7.5
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Severability
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42
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7.6
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Assignment
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42
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7.7
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Expenses
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42
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7.8
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Remedies
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42
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7.9
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Choice
of Law
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43
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7.10
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Schedules
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43
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7.11
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Third
Parties
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44
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7.12
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Privacy
Issues
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44
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7.13
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No
Personal Liability
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46
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7.14
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Fiduciary
Duties
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46
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7.15
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Time
of Essence
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46
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7.16
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Counterparts
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46
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7.17
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Defined
Terms
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46
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PAN
AMERICAN SILVER CORP.
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a
corporation existing under the laws of British Columbia;
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(the
"Offeror")
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AQUILINE
RESOURCES INC.
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a
corporation existing under the laws of Ontario;
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(the
"Company")
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1.1
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The
Offers
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(a)
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Subject
to the terms and conditions of this Agreement, the Offeror agrees to
concurrently mail to the registered holders of Aquiline Shares (the "Shareholders"), the
registered holders of Aquiline Warrants (the "Warrantholders") and the
registered holder of the Aquiline Debenture (the "Debentureholder") as
soon as practicable after the date hereof and, in any event, no later than
the Latest Mailing Date, offers to
purchase:
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(i)
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all
of the outstanding Aquiline Shares, including Aquiline Shares issuable
(and that, prior to the Expiry Time, are actually issued or are
conditionally issued pursuant to Section 1.5) upon the conversion,
exchange or exercise of any securities of the Company that are convertible
into or exchangeable or exercisable for Aquiline Shares (the "Convertible
Securities"), but excluding Aquiline Shares owned by the Offeror
and its affiliates, for consideration consisting
of:
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(ii)
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each
of the outstanding February 2008 Aquiline Warrants, but excluding February
2008 Aquiline Warrants owned by the Offeror and its affiliates, for
consideration consisting of a replacement warrant (each, a "Pan American February 2008 Replacement
Warrant") to purchase from the Offeror the number of Pan American
Shares (rounded to the nearest whole share) equal to: (A) the Exchange
Ratio; multiplied by (B) the number of Aquiline Shares subject to such
February 2008 Aquiline Warrant immediately prior to the Expiry Time (as
such offer may be amended or extended from time to time as permitted under
this Agreement, the "February 2008 Warrant
Offer"). Each Pan American February 2008 Replacement
Warrant shall have an exercise price per Pan American Share (rounded up to
the nearest whole cent) equal to: (x) the exercise price per Aquiline
Share otherwise purchasable pursuant to such February 2008 Aquiline
Warrant; divided by (y) the Exchange Ratio. It is agreed that
all other terms and conditions of a Pan American February 2008 Replacement
Warrant, including the term to expiry, conditions to and manner of
exercising, will be the same as the February 2008 Aquiline Warrant for
which it was exchanged, and shall be governed by the terms of a
replacement certificate or agreement evidencing such Pan American February
2008 Replacement Warrant and any previously issued certificate
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or
agreement evidencing a February 2008 Aquiline Warrant shall be of no
further force and effect. Notwithstanding the foregoing, the
Pan American February 2008 Replacement Warrants may not be exercised by
any U.S. Person or by any person within the United States or for the
account or benefit of any U.S. Person or any person within the United
States unless and until the distribution of the Pan American Shares
issuable upon exercise of such warrants is registered under the 1933
Act.
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(iii)
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each
of the outstanding May 2008 Aquiline Warrants, but excluding May 2008
Aquiline Warrants owned by the Offeror and its affiliates, for
consideration consisting of a replacement warrant (each, a "Pan American May 2008
Replacement Warrant") to purchase from the Offeror the number of
Pan American Shares (rounded to the nearest whole share) equal to: (A) the
Exchange Ratio; multiplied by (B) the number of Aquiline Shares subject to
such May 2008 Aquiline Warrant immediately prior to the Expiry Time (as
such offer may be amended or extended from time to time as permitted under
this Agreement, the "May
2008 Warrant Offer"). Each Pan American May 2008
Replacement Warrant shall have an exercise price per Pan American Share
(rounded up to the nearest whole cent) equal to: (x) the exercise price
per Aquiline Share otherwise purchasable pursuant to such May 2008
Aquiline Warrant; divided by (y) the Exchange Ratio. It is
agreed that all other terms and conditions of a Pan American May 2008
Replacement Warrant, including the term to expiry, conditions to and
manner of exercising, will be the same as the May 2008 Aquiline Warrant
for which it was exchanged, and shall be governed by the terms of a
replacement certificate or agreement evidencing such Pan American May 2008
Replacement Warrant and any previously issued certificate or agreement
evidencing a May 2008 Aquiline Warrant shall be of no further force and
effect. Notwithstanding the foregoing, the Pan American May
2008 Replacement Warrants may not be exercised by any U.S. Person or by
any person within the United States or for the account or benefit of any
U.S. Person or any person within the United States unless and until the
distribution of the Pan American Shares issuable upon exercise of such
warrants is registered under the 1933
Act.
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(iv)
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each
of the outstanding October 2008 Aquiline Warrants, but excluding October
2008 Aquiline Warrants owned by the Offeror and its affiliates, for
consideration consisting of a replacement warrant (each, a "Pan American October 2008 Replacement
Warrant") to purchase from the Offeror the number of Pan American
Shares (rounded to the nearest whole share) equal to: (A) the Exchange
Ratio; multiplied by (B) the number of Aquiline Shares subject to such
October 2008 Aquiline Warrant immediately prior to the Expiry Time (as
such offer may be amended or extended from time to time as permitted under
this Agreement, the "October 2008 Warrant
Offer"). Each Pan American October 2008 Replacement
Warrant shall have an exercise price per Pan American Share
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(rounded
up to the nearest whole cent) equal to: (x) the exercise price per
Aquiline Share otherwise purchasable pursuant to such October 2008
Aquiline Warrant; divided by (y) the Exchange Ratio. It is
agreed that all other terms and conditions of a Pan American October 2008
Replacement Warrant, including the term to expiry, conditions to and
manner of exercising, will be the same as the October 2008 Aquiline
Warrant for which it was exchanged, and shall be governed by the terms of
a replacement certificate or agreement evidencing such Pan American
October 2008 Replacement Warrant and any previously issued certificate or
agreement evidencing an October 2008 Aquiline Warrant shall be of no
further force and effect. Notwithstanding the foregoing, the
Pan American October 2008 Replacement Warrants may not be exercised by any
U.S. Person or by any person within the United States or for the account
or benefit of any U.S. Person or any person within the United States
unless and until the distribution of the Pan American Shares issuable upon
exercise of such warrants is registered under the 1933
Act.
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(v)
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each
of the outstanding November 2008 Aquiline Warrants, but excluding November
2008 Aquiline Warrants owned by the Offeror and its affiliates, for
consideration consisting of a replacement warrant (each, a "Pan American November 2008 Replacement
Warrant") to purchase from the Offeror the number of Pan American
Shares (rounded to the nearest whole share) equal to: (A) the Exchange
Ratio; multiplied by (B) the number of Aquiline Shares subject to such
November 2008 Aquiline Warrant immediately prior to the Expiry Time (as
such offer may be amended or extended from time to time as permitted under
this Agreement, the "November 2008 Warrant
Offer"). Each Pan American November 2008 Replacement
Warrant shall have an exercise price per Pan American Share (rounded up to
the nearest whole cent) equal to: (x) the exercise price per Aquiline
Share otherwise purchasable pursuant to such November 2008 Aquiline
Warrant; divided by (y) the Exchange Ratio. It is agreed that
all other terms and conditions of a Pan American November 2008 Replacement
Warrant, including the term to expiry, conditions to and manner of
exercising, will be the same as the November 2008 Aquiline Warrant for
which it was exchanged, and shall be governed by the terms of a
replacement certificate or agreement evidencing such Pan American November
2008 Replacement Warrant and any previously issued certificate or
agreement evidencing a November 2008 Aquiline Warrant shall be of no
further force and effect. Notwithstanding the foregoing, the
Pan American November 2008 Replacement Warrants may not be exercised by
any U.S. Person or by any person within the United States or for the
account or benefit of any U.S. Person or any person within the United
States unless and until the distribution of the Pan American Shares
issuable upon exercise of such warrants is registered under the 1933
Act.
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(vi)
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the
outstanding Aquiline Debenture for consideration consisting of a
replacement convertible debenture (a "Pan American Replacement
Debenture") which may be converted into
either:
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(A)
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the
number of Pan American Shares (rounded to the nearest whole share) equal
to: (x) the Exchange Ratio; multiplied by (y) the number of Aquiline
Shares subject to such Aquiline Debenture immediately prior to the Expiry
Time; or
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(B)
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a
contract granting the Debentureholder the right to purchase 12.5% of the
life of mine from the Loma de La Plata zone of the Navidad
project,
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(b)
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The
Offers shall be subject only to the terms and conditions set out in
Schedule “B” to this Agreement, as such may be amended in accordance with
Section 1.1(f) hereof.
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(c)
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Fractional
Pan American Shares will not be issued in connection with the Share
Offer. Where, on any Take-Up Date the aggregate number of Pan
American Shares to be issued to any Shareholder pursuant to the Share
Offer would result in a fraction of a Pan American Share being issuable,
the number of Pan American Shares issuable to such Shareholder will be
rounded down to the next whole Pan American
Share.
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(d)
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Prior
to the Expiry Time, the Offeror shall take all corporate action necessary
to reserve for issuance a sufficient number of Pan American Shares for
delivery upon the exercise of the Pan American Replacement Warrants and
conversion of the Pan American Replacement Debenture into Pan American
Shares in accordance with Sections 1.1(a)(ii), 1.1(a)(iii),
1.1(a)(iv), 1.1(a)(v), and
1.1(a)(vi).
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(e)
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The
Offers will be made in all material respects in accordance with Securities
Laws and the OBCA and with applicable securities legislation in
jurisdictions
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other
than Canada and the United States where Securityholders are located in the
English language and, if necessary under the Securities Laws, the French
language; provided, however, that the Offeror shall not be required to
make the Offers in any jurisdiction (other than Canada and the United
States) where it would be illegal to do so. The Offers will be
open for acceptance until 9:00 p.m. (Toronto time) on the 36th
day after the day (the "Mailing Date") that the
Offers are mailed to Securityholders in Canada, or such later time and
date as may be required by Securities Laws and the OBCA, subject to the
right of the Offeror in its sole discretion to extend from time to time
the period during which Aquiline Securities may be deposited under the
Offers for successive periods of not less than ten (10) days and not more
than fifteen (15) days if the conditions set forth in the Share Offer are
not satisfied on the expiry date of the Offers (the time at which the
Offers, as they may be extended, expire being referred to as the "Expiry
Time"). Subject to the satisfaction or, where permitted,
waiver of the conditions set forth herein, the Offeror shall take up and
pay for all Aquiline Securities validly tendered (and not properly
withdrawn pursuant to the Offers) as soon as practicable and in any event
not later than three business days after the Expiry Time. The
Offeror shall use its commercially reasonable efforts to consummate the
Offers, subject only to the terms and conditions hereof. If the
Offeror takes up and pays for any Aquiline Shares, the Offeror shall
extend the Offers to provide Aquiline Securityholders that have not
tendered their Aquiline Securities at least one additional period of not
less than ten (10) days and not more than fifteen (15) days to permit such
holders to accept the Share Offer and tender their Aquiline Securities
(the “Mandatory
Extension”). For greater certainty, the Offeror shall
not take up any Aquiline Securities under any of the Offers unless the
Minimum Tender Condition shall have been satisfied at the Expiry
Time.
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(f)
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The
Offeror expressly reserves the right, in its sole discretion, to modify or
waive any term or condition of the Offers except that, without the prior
written consent of the Company which may be withheld in its sole
discretion, the Offeror shall not:
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(i)
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amend,
modify, change or waive the Minimum Tender Condition to permit it to
acquire less than 50.1% of the Aquiline Shares outstanding at the Expiry
Time calculated on a diluted basis;
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(ii)
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decrease
the consideration per Aquiline Share payable under the Share Offer or
amend, modify or change the terms of the Pan American Consideration
Warrants, Pan American Replacement Warrants or the Pan American
Replacement Debenture;
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(iii)
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decrease
the Exchange Ratio;
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(iv)
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change
the form of consideration payable under any of the Offers (other than to
increase the consideration per Aquiline Share, Aquiline Warrant or
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Aquiline
Debenture, increase the Exchange Ratio or add consideration
alternatives);
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(v)
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decrease
the number of Aquiline Shares, Aquiline Warrants or principal amount of
Aquiline Debenture in respect of which the Offers are being
made;
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(vi)
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amend,
modify, change or waive the conditions in (A) paragraph (a) of Schedule
"B" (except
as permitted pursuant to Section 1.1(f)(i)) or (B) paragraph (j) of
Schedule "B"; or
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(vii)
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amend,
modify or change any of the Offers (including any amendment, modification
or change to, or the addition of, any terms or conditions of the Offers)
in a manner that is adverse to the Company, the Shareholders, the
Warrantholders or the
Debentureholder.
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(g)
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The
Offeror shall prepare the Offers and Circular, the letter(s) of
transmittal, the notice(s) of guaranteed delivery and any other documents
to be mailed by the Offeror to the Securityholders in connection with the
Offers, and any supplements or amendments to such documents (such
documents, collectively, the "Offer Documents") as
well as the Registration Statements in compliance with all applicable
Securities Laws. Prior to the printing, filing or mailing of
the Offer Documents and the Registration Statements, the Offeror shall
provide the Company with drafts of such documents, on a confidential
basis, and provide the Company with a reasonable opportunity (to the
extent possible with respect to supplements and amendments) to review and
provide comments thereon, recognizing that, subject to compliance with
Sections 1.1(a) and (b), whether or not such comments are reflected in
such documents will be determined by the Offeror, acting
reasonably. The Company shall provide to the Offeror all
information pertaining to the Company and its Subsidiaries that is
reasonably requested by the Offeror and is necessary or desirable for the
preparation of the Circular and the Registration Statements, including, if
required under the 1933 Act, a reconciliation of the Company’s financial
statements to U.S. GAAP and a consent of the Company’s independent
auditors to the inclusion or incorporation by reference of the report of
such auditor into the Registration Statements. The Offeror
shall prepare and file with the U.S. Securities and Exchange Commission
(the “SEC”) no
later than a date which is sixty (60) days after the Expiry Time (subject
to the satisfaction or, where permitted, waiver of the conditions set
forth herein), a Registration Statement registering the issuance, offer
and sale of any Pan American Shares issued, from time to time, upon
exercise of the Pan American Replacement Warrants, Pan American
Consideration Warrants and Pan American Replacement
Options. The Offeror shall use its commercially reasonable best
efforts to cause such Registration Statement to be declared effective
under the 1933 Act no later than the date that is one hundred and twenty
(120) days after the Expiry Time (subject to the satisfaction or, where
permitted, waiver of the conditions set forth herein), and to keep such
Registration Statement continuously effective under the 1933 Act until the
expiration of the Pan American Replacement Warrants, Pan American
Consideration Warrants and Pan American Replacement Option or the earlier
exercise of all such Pan American Replacement Warrants, Pan American
Consideration Warrants and Pan American Replacement
Option.
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American
Replacement Warrants, Pan American Consideration Warrants and Pan American
Replacement Option or the earlier exercise of all such Pan American
Replacement Warrants, Pan American Consideration Warrants and Pan American
Replacement Option.
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(h)
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The
obligation of the Offeror to make the Offers is conditional on the prior
satisfaction of the following conditions, all of which conditions are
included for the sole benefit of the Offeror and any and all of which may
be waived by the Offeror in whole or in part in its sole discretion (other
than the condition in paragraph (vii) below, which may be waived only
with the prior written consent of the Company) without prejudice to any
other rights the Offeror may have under this Agreement, which conditions
shall be deemed to have been satisfied or waived upon the Offers being
made:
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(i)
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the
obligations of the Offeror hereunder shall not have been terminated
pursuant to Section 6.1;
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(ii)
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no
circumstance, fact, change, event or occurrence (other than any
circumstance, fact, change, event or occurrence resulting from any act or
failure to act by the Offeror) shall have occurred since the date of this
Agreement that would render it impossible for one or more of the
conditions set out in Schedule "B" to be
satisfied;
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(iii)
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the
Board of Directors shall have received the advice of its financial
advisors and the Board of Directors shall have unanimously resolved to
recommend that Shareholders accept the Share Offer and shall not have
withdrawn such recommendation or changed, modified or qualified such
recommendation in a manner adverse to the
Offeror;
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(iv)
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the
Board of Directors shall not have resolved to recommend that holders of
(a) February 2008 Aquiline Warrants, (b) May 2008 Aquiline Warrants, (c)
October 2008 Aquiline Warrants, (d) November 2008 Aquiline Warrants and
(e) the Aquiline Debenture reject the February 2008 Warrant Offer, May
2008 Warrant Offer, October 2008 Warrant Offer, November 2008 Warrant
Offer or Debenture Offer, as applicable and shall not have changed,
modified or qualified such recommendation in a manner adverse to the
Offeror, it being understood and agreed that if the Board of Directors is
unable to make or is not making a recommendation in respect of such Offers
shall not be adverse to the
Offeror;
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(v)
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the
representations and warranties of the
Company:
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(A)
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that
are qualified by reference to a Material Adverse Effect or materiality
shall be true and correct in all respects at the time of the making of the
Offers; and
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(B)
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that
are not qualified by reference to a Material Adverse Effect or materiality
shall be true and correct in all material respects at the time of the
making of the Offers;
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(vi)
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the
Company's financial advisor shall have delivered a written form of the
opinion described in Section
1.2(b);
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(vii)
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no
cease or stop trade order, injunction or other prohibition at law shall
exist against the Offeror making the Offers or taking up or paying for the
Aquiline Securities deposited under the Offers or against the Offeror
issuing and delivering the Pan American Shares, the Pan American
Replacement Warrants and the Pan American Replacement Debenture as
consideration for the Aquiline Shares, Aquiline Warrants and Aquiline
Debenture, respectively, deposited under the
Offers;
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(viii)
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following
the date hereof, there shall not have occurred any Material Adverse Effect
in respect of the Company;
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(ix)
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to
the extent that any covenants set forth herein are required to be
performed or complied with by the Company prior to the date of the Offers,
the Company shall have complied in all material respects with such
covenants;
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(x)
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the
Offeror shall have received from all applicable Government Authorities all
waivers, rulings, consents, approvals or orders, if any, required to
permit the making of the Offers and the mailing of the Offer Documents to
Securityholders;
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(xi)
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no
later than one (1) day prior to the Latest Mailing Date, the Company shall
have delivered to the depositary under the Offers, at its offices in
Toronto, Ontario, for mailing with the Offer Documents a sufficient
quantity of commercial copies of the Directors' Circular prepared in
accordance with the terms of this
Agreement;
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(xii)
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Lock-Up
Agreements shall have been duly executed and delivered by the Locked-Up
Shareholders, who shall hold an aggregate of not less
than 6,518,877 Aquiline Shares and such
Lock-Up Agreements shall not have been breached in any material respect by
any Locked-Up Shareholder or terminated as a result of any default by the
Locked-Up Shareholders; \
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(xiii)
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the
Company shall have caused its Argentine legal counsel, Cárdenas, Di Ció,
Romero, Tarsitano & Lucero Abogados, to deliver to the Offeror by not
later than October 23, 2009 a title opinion in respect of the Company's
Navidad project, such opinion to be in the same form as the title opinion
of Cárdenas, Di Ció, Romero, Tarsitano & Lucero Abogados dated October
13, 2009 and delivered to Pan American on such date (the "October 13 Opinion"), amended to
reflect the qualifications set out in Schedule D – Section (q)(v) of the
Company Disclosure Letter, to remove
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all
references to "as of October 5, 2009"in Sections 2(a) and (c) of the
October 13 Opinion, and to remove the final sentences in Section 2(a) and
(c) of the October 13 Opinion and to be dated one business day before the
actual date of delivery.
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(i)
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Each
beneficial owner of Aquiline Shares who is a Canadian Resident shall be
entitled to make an income tax election pursuant to subsection 85(1) of
the Tax Act or, if the beneficial owner is a partnership, subsection 85(2)
of the Tax Act (and in each case, where applicable, the corresponding
provisions of any applicable provincial income tax legislation) with
respect to the transfer of its Aquiline Shares to Pan American. In order
to make an election, the beneficial owner of Aquiline Shares must provide
the necessary information on or before ninety (90) days after the Expiry
Time in accordance with the procedures set out in a tax instruction letter
to be sent to beneficial owners that indicate an interest in making and
filing an election by checking the appropriate box on the letter of
transmittal forming part of the Offer Documents. The information will
include the number of Aquiline Shares transferred, the consideration
received and the applicable elected amount for purposes of such election.
Pan American will make an election under subsection 85(1) or 85(2) of the
Tax Act (and the corresponding provisions of any applicable provincial tax
legislation) only with a Canadian Resident, and at the amount selected by
the Canadian Resident subject to the limitations in the Tax Act (and any
applicable provincial legislation). Pan American will not be responsible
for the proper completion or filing of any election form and the Canadian
Resident will be solely responsible for the payment of any late filing
penalty. Pan American agrees only to execute any election form containing
information provided by the Canadian Resident which complies with the
provisions of the Tax Act (and any corresponding provincial legislation).
With the exception of execution of the election by Pan American,
compliance with the requirements for a valid election will be the sole
responsibility of the Canadian Resident making the election. Accordingly,
Pan American will not be responsible for any Taxes, interest, penalties,
damages or expenses resulting from the failure by a beneficial owner of
Aquiline Shares to properly complete or file the election form(s) in the
form and manner and within the time prescribed by the Tax Act (or any
applicable provincial income tax legislation). In its sole discretion, Pan
American may choose to sign and return an election form received by Pan
American more than ninety (90) days following the Expiry Time, but Pan
American will have no obligation to do so. References in this Section to
the Tax Act are to the Tax Act as of the date hereof and any modifications
thereof which are consistent with the general principle
thereof.
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(j)
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(i)
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The
Pan American Shares to be issued pursuant to the Share Offer will be at
the time of issue listed for trading on the TSX and Nasdaq and free of any
statutory hold or restricted period or any restrictions on transfer or
restrictive legend under applicable Securities
Laws.
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(ii)
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The
Pan American Consideration Warrants to be issued pursuant to the Share
Offer will be at the time of issue free of any statutory hold or
restricted period or any restrictions on transfer or restrictive legend
under applicable Securities Laws, except for legends providing notice that
the Pan American Consideration Warrants may not be exercised by any U.S.
Person or by any person within the United States or for the account or
benefit of any U.S. Person or any person within the United States unless
and until the distribution of the Pan American Shares issuable upon
exercise of such warrants is registered under the 1933
Act.
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(iii)
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The
Pan American Shares to be issued on the exercise or conversion of the Pan
American Consideration Warrants, the Pan American Replacement Warrants,
the Pan American Replacement Option and the Pan American Replacement
Debenture (the “Underlying Pan American
Shares”) to be issued pursuant to the Share Offer will be at the
time of issue free of any statutory hold or restricted period or any
restrictions on transfer or restrictive legend under applicable Securities
Laws and such Underlying Pan American Shares will at the time of issue of
the Pan American Consideration Warrants, the Pan American Replacement
Warrants, the Pan American Replacement Option and the Pan American
Replacement Debenture be approved for listing for trading on the TSX and
Nasdaq.
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1.2
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Company
Approval
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(a)
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The
Company represents and warrants to and in favour of the Offeror, and
acknowledges that the Offeror is relying upon such representations and
warranties in entering into this Agreement, that on the date hereof its
Board of Directors, upon the recommendation of a special committee of
independent members of the Board of Directors and upon consultation with
its financial and legal advisors, has determined
unanimously:
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(i)
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that
the Share Offer is fair to the Shareholders and is in the best interests
of the Company;
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(ii)
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that,
subject to the terms and conditions of this Agreement, the Board of
Directors will recommend that Shareholders accept the Share
Offer;
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(iii)
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that
it is in the best interests of the Company that it enter into this
Agreement; and
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(iv)
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to
approve the Company entering into this
Agreement.
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(b)
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The
Company represents that its Board of Directors has received an opinion
from BMO and Cormark, financial advisors to the Company, that as at the
date of such opinion the consideration offered pursuant to the Share Offer
is fair, from a financial point of view, to the Shareholders other than
the Offeror and its affiliates (the "Fairness
Opinions").
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(c)
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The
Company represents that, except as disclosed in the Company Disclosure
Letter, all of its directors and officers have advised it that as at the
date hereof they intend to deposit, or have agreed with the Offeror to
deposit, their Aquiline Shares and Aquiline Warrants to the Offers, and
all of their Aquiline Shares issuable upon the exercise of the Aquiline
Warrants, which intention will be disclosed in the Directors'
Circular.
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(d)
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Except
as explicitly contemplated in this Agreement, including Section 3.3, the
Company covenants and agrees not to, and shall cause each of the Company’s
and its Subsidiaries’ officers, directors, investment bankers, legal
advisors or other advisors, consultants, representatives or agents not to,
directly or indirectly:
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(i)
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(A)
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make
any public announcement;
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(B)
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deliver
any document;
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(C)
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provide
or furnish any non public information;
or
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(D)
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engage
in any discussions with persons (other than directors of the Company) that
would reasonably be expected to encourage an Acquisition
Proposal;
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(ii)
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with
respect to officers and directors
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(A)
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fail
to support any of the determinations described in Section
1.2(a);
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(B)
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publicly
disapprove of, or publicly oppose this Agreement, the Offers or any
transaction contemplated hereby; or
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(C)
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recommend
that Securityholders not accept the
Offers.
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1.3
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Company
Co-operation
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(a)
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As
soon as practicable following the execution and delivery of this Agreement
and in any event within three (3) business days following the execution
and delivery of this Agreement, the Company shall (i) cause its registrar
and transfer agent to provide the Offeror with a list of the registered
holders of Aquiline Shares, together with their addresses and respective
holdings of Aquiline Shares and such other information as the Offeror may
reasonably request in connection with communicating the Share Offer to
registered and beneficial owners of Aquiline Shares including lists of
participants in book-based nominee registrants such as CDS & Co. and
CEDE & Co., non-objecting beneficial owner lists and supplemental
lists, if any, in each case in electronic form, and (ii) provide the
Offeror with a list of the registered holders of Aquiline Warrants,
Aquiline
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Options,
and the Aquiline Debenture, together with their addresses and respective
holdings of applicable Aquiline
Securities.
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(b)
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The
Company shall prepare, approve in final form and make available for
distribution contemporaneously and together with the mailing of the Offer
Documents, in the English language and, if necessary under Securities
Laws, the French language, sufficient commercial copies of the Directors'
Circular, prepared in all material respects in accordance with all
Securities Laws. The Directors' Circular shall reflect the
determinations and recommendations referred to in Section 1.2(a) and shall
include the Fairness Opinions and the Company shall take all other
commercially reasonable action to support the Offers on the terms of this
Agreement. The Company agrees to provide the Offeror and its
counsel with a draft copy of any Directors' Circular prepared by the
Company, from time to time, prior to the filing or mailing thereof, on a
confidential basis, and to provide the Offeror with a reasonable
opportunity to review and provide comments thereon, recognizing that
whether or not such comments are reflected in the Directors' Circular will
be determined by the Company acting reasonably. The Company
shall file the Directors' Circular and any other documents required by
Securities Laws in connection with the Directors' Circular with all
applicable Government Authorities within the times and in the manner
required by Securities Laws.
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(c)
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Subject
to any obligations of confidentiality to which the Company is subject, the
Company shall from time to time furnish the Offeror with such additional
information, including updated or additional lists of holders of Aquiline
Securities and lists of securities positions, non-objecting beneficial
owners, and other assistance as the Offeror may reasonably request in
order for the Offeror to be able to communicate the Offers to the
Securityholders and to such other persons as are entitled to receive the
Offers under the Securities Laws and the
OBCA.
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1.4
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Post Offer
Covenants
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(a)
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Promptly
upon the purchase by the Offeror pursuant to the Share Offer of such
number of Aquiline Shares which, together with the Aquiline Shares held by
or on behalf of the Offeror and its affiliates, satisfies the Minimum
Tender Condition (the "Change of Control
Time"), and from time to time thereafter, and subject in each case
to (i) applicable Law, (ii) providing a release in favour of each
resigning member of the Board of Directors (subject to such resigning
members of the Board of Directors providing a release in their capacity as
director only in favour of the Company, which release shall for greater
certainty not include any release with respect to rights of such director
under this Agreement or the benefits to be received by such director
pursuant to this Agreement, rights of indemnification, payment of expenses
and payment of accrued and unpaid directors fees) and (iii) confirmation
that the insurance contemplated in Section 1.6 is in place, and all other
covenants therein have been complied with, the (A) Offeror shall be
entitled to and shall designate such number of directors of the Company
(rounded up to the next whole number of directors), as is proportionate
(determined after giving effect to the directors to be appointed or
elected under
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this
section) to the percentage of the outstanding Aquiline Shares owned by the
Offeror and its affiliates and (B) the Company shall, upon request by the
Offeror, promptly increase the number of directors that constitute the
Board of Directors or use its commercially reasonable efforts to secure
the resignations of such number of directors of the Company as is
necessary to enable the Offeror's designees to represent the proportion of
members of the Board of Directors determined in accordance with this
Section 1.4(a) and shall exercise its commercially reasonable efforts to
cause the Offeror's designees to be so elected or
appointed.
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(b)
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The
Offeror shall, if legally possible to do so under, and subject to
compliance with all Securities Laws and the OBCA, upon Aquiline Shares
being taken up and paid for under the Share Offer, utilize the compulsory
acquisition provisions of Part XV of the OBCA in respect of the
Aquiline Shares not tendered under the Share Offer. If the
Offeror is unable to use such compulsory acquisition provisions or if,
upon Aquiline Shares being taken up and paid for under the Offers, there
are Aquiline Warrants or Aquiline Debentures not tendered under the
Offers, the Offeror shall use all commercially reasonable efforts to
acquire as soon as practicable after completion of the Offers all Aquiline
Securities not acquired in the Offers by way of a statutory arrangement,
amalgamation, merger or other transaction or combination (such transaction
or compulsory acquisition hereinafter referred to as a "Second-Step
Transaction") of the Company with the Offeror or an affiliate of
the Offeror, subject to compliance with all Securities Laws and the
OBCA. The Offeror agrees that if any Second-Step Transaction is
effected it will provide that the holders of any Aquiline Shares, Aquiline
Warrants and the Aquiline Debenture, other than those held by the Offeror
or any of its affiliates, shall be offered consideration per Aquiline
Share, Aquiline Warrant or Aquiline Debenture, respectively, at least
equal to the amount paid per Aquiline Share, Aquiline Warrant or Aquiline
Debenture under the Offers and, in the case of Aquiline Warrants and
Aquiline Debentures, on the same terms and conditions. Nothing
herein shall be construed to prevent the Offeror from acquiring, directly
or indirectly, additional Aquiline Securities in the open market, in
privately negotiated transactions, in another take-over bid, tender offer
or exchange offer, or otherwise in accordance with the Securities Laws and
the OBCA, following the successful completion of the
Offers. For greater certainty, in any Second-Step Transaction,
each Pan American Share, Pan
American Replacement Warrant and Pan American Replacement Debenture shall
be deemed to be at least equivalent in value to each Pan American Share,
Pan American Replacement Warrant and Pan American Replacement Debenture
offered as part of the Offers.
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(c)
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The
Offeror acknowledges and agrees that the Company and each Subsidiary will,
and after the Effective Time the Offeror will cause the Company and each
Subsidiary and each of their respective successors to, honour and comply
with the terms of all existing employment, consulting, benefit and
severance agreements (including any change of control and retention plans
or policies) to which the Company is subject or by which it is bound as
set out in the Company Disclosure Letter (the "Employment
Arrangements"), as the same may be amended or modified prior to the
Effective Time as permitted
hereunder.
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1.5
|
Outstanding October
2008 Aquiline Warrants, November 2008 Aquiline Warrants and Outstanding Stock
Aquiline Options
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(a)
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The
Company covenants and agrees to use its commercially reasonable efforts to
facilitate all persons holding October 2008 Aquiline Warrants and November
2008 Aquiline Warrants to exercise all of their October 2008 Aquiline
Warrants and November 2008 Aquiline Warrants and tender all Aquiline
Shares issued in connection therewith under the Share
Offer.
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(b)
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Subject
to the receipt of all Government Authorizations the Board of Directors
will make such amendments to the Stock Option Plan and take all such steps
as may be necessary or desirable (including obtaining waivers and
consents) to allow any person holding Aquiline Options pursuant to the
Stock Option Plan, who may do so under Securities Laws, to exercise their
Aquiline In-Money Options on an accelerated vesting basis solely for the
purpose of tendering under the Share Offer all Aquiline Shares issued in
connection with such exercise prior to the expiry of the Mandatory
Extension, it being acknowledged and agreed that any such amendment shall
provide that if a holder fails to exercise the Aquiline In-Money Options
held by it prior to the expiry of the Mandatory Extension, such Aquiline
In-Money Options shall expire and be of no further force and effect and
the holder thereof shall have no further claim in respect
thereof.
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(c)
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The
Company will agree to use its commercially reasonable efforts to
facilitate all persons holding Aquiline In-Money Options to exercise all
of their Aquiline In-Money Options and tender all Aquiline Shares issued
in connection therewith under the Share Offer within ten days of the
initial Take-Up Date (or such longer period or periods of time Pan
American may extend the Share Offer pursuant to Section
1.1(e)).
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(d)
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Subject
to Section 1.5(b), the Company agrees to give notice promptly following
the mailing of the Offer Documents to all persons holding Aquiline Options
of: (A) the vesting of all unvested Aquiline Options; and (B) the
termination of all non-exercised Aquiline In-Money Options within ten days of the initial
Take-Up Date (or such longer period of time Pan American may extend the
Share Offer pursuant to Section 1.1(e)), in each case
conditional upon the Offeror taking up and paying for Aquiline Shares
under the Share Offer.
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(e)
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Upon
the Offeror being bound to take-up and pay for at least that number of
Aquiline Shares as is required to satisfy the Minimum Tender Condition
and having received all Government
Authorizations as are required to be obtained under any applicable Laws,
each Aquiline Out-Of-Money Option to purchase Aquiline Shares which is
outstanding and has not been duly exercised prior to the Expiry Time, will
be exchanged for a fully vested option (each, a “Pan American Replacement Option”) to purchase from Pan American the number of Pan
American Shares (rounded to the nearest whole share) equal to: (i) the
Exchange Ratio multiplied by (ii) the number of Aquiline Shares subject to
such Aquiline Out-Of-Money Option immediately prior to the Expiry Time.
Such Pan American
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Replacement Option shall provide for an exercise
price per Pan American Share (rounded up to the nearest whole cent) equal
to: (i) the exercise price per Aquiline Share otherwise purchasable
pursuant to such Aquiline Out-Of-Money Option; divided by (ii) the
Exchange Ratio. All other terms and conditions of the Pan
American Replacement Options, including the term to expiry, conditions to
and manner of exercising, will be the same as the Aquiline Out-Of-Money
Option for which it was exchanged, and shall be governed by the terms of
the Stock Option Plan, except for the provisions in the Stock Option Plan
that related to the early termination of an Aquiline Out-Of Money Option
as a result of the cessation of the optionee’s position as an director,
officer or employee of the Company shall be amended to provide that an
officer or employee whose employment is terminated (other than for cause
or by reason of death) or a director who ceases to be a director (other
than by reason of death) may exercise his or her Pan American Replacement
Option during the period ending on the expiry of the exercise period under
the Stock Option Plan.
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(f)
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The
Offeror will take all corporate action necessary to reserve for issuance a
sufficient number of Pan American Shares for delivery upon the exercise of
the Pan American Replacement Options that will be issued in accordance
with this Section 1.5.
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1.6
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Indemnification
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(a)
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The
Offeror covenants and agrees that from and after the Effective Time it
shall ensure that and shall cause the Company and each Subsidiary to
ensure that: (i) the by-laws of the Company and the constating documents
of the Company or any successor to the Company; and (ii) the constating
documents of the Subsidiaries of the Company or any successor to any such
Subsidiaries, shall contain provisions with respect to indemnification now
set forth in the by-laws of the Company and the constating documents of
the Company and the Subsidiaries of the Company (or equivalent
provisions), such that all rights to indemnification existing in favour of
the present and former directors and officers of the Company or of any of
the Subsidiaries of the Company and present and former directors and
officers of the Company or of any of the Subsidiaries of the Company
serving or who served at the request of the Company or any Subsidiaries of
the Company as a director, officer, employee, agent or representative of
another corporation, partnership joint venture, trust, employee benefit
plan or other entity or enterprise in which the Company has a direct or
indirect ownership interest or beneficial interest (each such present or
former director or officer of the Company or of any Subsidiaries of the
Company being herein referred to as an "Indemnified Party" and
such persons collectively being referred to as the "Indemnified Parties") as
provided in the by-laws of the Company or constating documents of any of
the Company or its Subsidiaries, or equivalent rights, shall survive and
continue in full force and effect and without modification, with respect
to actions or omissions of the Indemnified Parties occurring prior to the
Effective Time.
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(b)
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From
and after the Effective Time, without the consent of the Indemnified
Party, neither Offeror nor the Company nor any Subsidiary shall settle,
compromise or consent to the entry of any judgment in any claim, action,
suit, proceeding or investigation or threatened claim, action, suit,
proceeding or investigation (i) unless such settlement, compromise or
consent includes an unconditional release of the applicable Indemnified
Party (which release shall be in form and substance reasonably
satisfactory to such Indemnified Party) from all liability arising out of
such action, suit, proceeding, investigation or claim or such Indemnified
Party otherwise consents or (ii) that includes an admission of fault of
such Indemnified Party.
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(c)
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The
Company and Offeror agree that all rights to indemnification and
exculpation from liabilities and rights to advancement of expenses
relating thereto existing in favour
of the Indemnified Parties as provided in the articles of incorporation or
by-laws or constating documents of the Company or any Subsidiary or by
contracts or agreements between the Indemnified Parties and the Company or
its Subsidiaries and identified in the Company Disclosure Letter shall
survive the Effective Time and shall continue in full force and effect and
without modification, and the Offeror shall cause the Company, and any
successor to the Company, and its Subsidiaries (including any successors
thereto), to honour such rights of indemnification, exculpation and rights
to advancement of expenses with respect to acts or omissions of the
Indemnified Parties occurring prior to the Effective
Time.
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(d)
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Without
limiting the right of the Company to do so prior to the Effective Time,
the Offeror shall cause the Company to secure officers' and directors'
liability insurance from a reputable and financially sound insurance
carrier containing terms and conditions no less advantageous to the
Indemnified Parties than those contained in the Company's policy in effect
on the date hereof covering the Indemnified Parties on a six year
"trailing" or "run-off" basis with respect to any claim related to any
period of time at or prior to Effective Time and the Offeror shall, or
cause the Company and any successor to the Company (including any
surviving corporation) to, continue in effect such director and officer
liability insurance for the benefit of the Indemnified
Parties. If for any reason such trailing policy is not
available, then the Offeror agrees that for the entire period from the
Effective Time until six years after the Effective Time, the Offeror will
cause each of the Company and its Subsidiaries or any successor thereof to
maintain the current directors’ and officers’ liability insurance policy
of each of the Company and its Subsidiaries or equivalent insurance, in
either case from a reputable and financially sound insurance carrier and
containing terms and conditions no less advantageous to the directors and
officers of each of the Company and its Subsidiaries (with respect to
their acting as directors or officers thereof) than those contained in the
policy in effect on the date hereof, for all current and former directors
and officers of each of the Company and its Subsidiaries covering claims
made prior to or within six (6) years after the Effective
Time. Further, the Offeror agrees that, after the expiration of
that six-year period, if there is no material cost in doing so, the
Offeror shall use
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reasonable
commercial efforts to cause such directors and officers to be covered
under the Offeror’s then existing directors’ and officers’ liability
insurance policy.
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(e)
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If
the Company or any Subsidiary or any of their respective successors or
assigns shall (i) amalgamate, consolidate with or merge or wind-up into
any other person and such Company or Subsidiary shall not be the
continuing or surviving corporation or entity, or (ii) transfer all or
substantially all of their respective properties and assets to
any person, then, and in each such case, proper provisions shall be made
so that the successors and assigns of the Company or any Subsidiary, as
applicable, shall assume all of the obligations set forth in this Section
1.6.
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(f)
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The
provisions of this Section 1.6 are:
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(i)
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intended
to be for the benefit of, and shall be enforceable by, each Indemnified
Party, his or her heirs, executors, administrators and other legal
representatives; and
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(ii)
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are
in addition to, and not in substitution for, any other rights to
indemnification or contribution that any such person may have by Law,
contract, with the articles, by-laws, or other constating documents of the
Company or any Subsidiary as applicable or
otherwise,
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1.7
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Pre-Acquisition
Reorganization
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2.1
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Representations and
Warranties of the Offeror
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2.2
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Representations and
Warranties of the Company
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2.3
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Investigation
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2.4
|
Knowledge
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(a)
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Any
reference in this Agreement to the "knowledge" of the Company shall mean
to the best of the actual knowledge, (and not any constructive, implied or
imputed knowledge) information and belief of any of Marc C. Henderson,
Martin J. Walter, Dennis G. Gibson, Flora Wood, Damian Spring and John J.
Chulick after reasonable inquiry; provided that in each case reasonable
inquiry shall not require the inquiry of any third party (other than the
respective representatives, directors, officers, employees, agents and
advisors of the Company and its
Subsidiaries).
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(b)
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Any
reference in this Agreement to the "knowledge" of the Offeror shall mean
to the best of the actual knowledge, (and not any constructive, implied or
imputed knowledge) information and belief of any of Geoffrey Burns, Steven
Busby, Andres Dasso, Robert Doyle, Robert Pirooz and Delaney Fisher after
reasonable inquiry; provided that in each case reasonable inquiry shall
not require the inquiry of any third party (other than the respective
representatives, directors, officers, employees, agents and advisors of
the Offeror and its Subsidiaries).
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2.5
|
Disclosure
Letters
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2.6
|
Survival of
Representations and
Warranties
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3.1
|
Negative
Covenants
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(a)
|
alter
the articles of continuance or by-laws of the Company, the constating
documents of its Subsidiaries or the terms and conditions of any of its or
their outstanding securities;
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(b)
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split,
consolidate, reduce, reclassify or otherwise reorganize its share capital
in any way or repurchase, redeem or otherwise acquire any of its Aquiline
Shares or any securities of its Subsidiaries (other than pursuant to the
termination of Aquiline Options currently outstanding and which are
described in the Company Disclosure Letter in accordance with the terms
and conditions of the Stock Option
Plan);
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(c)
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reduce
the stated capital of the Aquiline Shares or the securities of any
Subsidiary;
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(d)
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issue,
allot, or grant an option, warrant, call, conversion or exchange privilege
or right of any kind to subscribe for, any Aquiline Shares or any
securities of its Subsidiaries, including any Aquiline Option or the right
to acquire Aquiline Shares or securities of its Subsidiaries except upon
the due exercise, conversion or exchange of outstanding Aquiline Warrants,
Aquiline Debentures or Aquiline Options as identified in
paragraph (b) of Schedule
"D";
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(e)
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make
any capital expenditure or purchase or otherwise acquire or sell,
transfer, lease, option, exchange or otherwise dispose of any interest in
or right to (i) any Material Property or (ii) any asset or property having
a value in excess of $500,000 for any single expenditure, asset or
property or $1,000,000 in the
aggregate;
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(f)
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enter
into, modify, amend or terminate any agreement, arrangement or
understanding under which the Company or any of its Subsidiaries (or any
of their assets) is bound or affected, including any Material Contract or
Government Authorization;
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(g)
|
abandon
or fail to diligently pursue on a commercially reasonable basis any
existing application for any Government
Authorization;
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(h)
|
incur
or commit to incur or assume any indebtedness for borrowed money or issue
any debt securities, or guarantee, endorse or otherwise become liable or
responsible for the liabilities, indemnities or obligations of any other
person, or make any loans or
advances;
|
|
|
(i)
|
pay,
discharge, settle or satisfy any claims, liabilities or obligations,
except claims, liabilities or obligations reflected or reserved against in
the Company's financial statements;
|
|
|
(j)
|
release
or relinquish any contractual rights, except in the ordinary course of
business consistent with past
practice;
|
|
|
(k)
|
enter
into any interest rate or currency swaps, hedges or other similar
financial derivative instruments;
|
|
|
(l)
|
mortgage,
pledge, lease, encumber or charge any Material
Property;
|
|
|
(m)
|
reorganize,
amalgamate or merge the Company or any Subsidiary with any other person or
resolve that the Company or any Subsidiary be wound
up;
|
|
|
(n)
|
without
limiting the covenant in Section 3.1(e), acquire or agree to acquire any
person, corporation, partnership, joint venture or other business
organization or division or securities thereof or agree to acquire any
material assets thereof except as provided in any agreement or commitment
of the Company or any of its Subsidiaries in existence on the date
hereof;
|
|
|
(o)
|
approve
or adopt a plan of liquidation or dissolution of the Company or its
Subsidiaries or appoint or permit the appointment of a liquidator,
receiver or trustee in bankruptcy for the Company or its Subsidiaries or
in respect of the assets of the Company or its
Subsidiaries;
|
|
|
(p)
|
permit
the making of an order by a court for the winding-up or dissolution of the
Company or its Subsidiaries;
|
|
|
(q)
|
declare,
set aside or pay any dividends or other distribution (whether in cash,
securities, property or any combination thereof) with respect to its
Aquiline Shares, including for the purpose of effecting a share
subdivision;
|
|
|
(r)
|
establish,
adopt, enter into, make or amend any employment, collective bargaining,
bonus, profit sharing, compensation, stock option, stock ownership, other
stock-based compensation, pension, retirement, deferred compensation,
termination, severance, change of control, insurance or other agreement,
plan, trust, fund, policy or arrangement for the benefit of any director,
officer or employee of the Company or its Subsidiaries or make any award
or payment (whether by way of bonus, salary increase, stock option,
security issuance,
|
|
|
|
pension
benefit, profit sharing, retirement allowance, deferred compensation,
incentive compensation, severance or termination pay or any other form of
compensation or profit sharing) to any director, officer or employee of
the Company or its Subsidiaries other than pursuant to the Employment
Arrangements or pursuant to Section 1.5 or Section 1.6 and,
notwithstanding the foregoing, neither the Company nor its Subsidiaries
shall make or amend, or become obligated to make or amend, any
discretionary payment to or for the benefit of any director (other than
payments approved by the Board of Directors to members of the special
committee formed to consider the Offers and disclosed in the Company
Disclosure Letter), officer or employee of the Company or its Subsidiaries
without the prior written consent of the Offeror; provided, however, that
the Company and its Subsidiaries shall not be restricted from making those
payments described in Sections
1.4(c);
|
|
|
(s)
|
implement
any change in the present business, affairs, capitalization, dividend
policy or financial condition of the Company and its Subsidiaries, taken
as a whole, or implement any other change that would have a Material
Adverse Effect with respect to the
Company;
|
|
|
(t)
|
enter
into any agreement, whether or not in the ordinary course of business
(excluding any confidentiality agreement contemplated in Section 3.3(d)):
(i) with a term of longer than sixty (60) days;
(ii) pursuant to which the Company or its Subsidiaries are or may
become obligated to make payments or incur liabilities, in the aggregate
over the term of such agreement, in excess of $500,000; or (iii) that
relates to long-term commodity sales or supply (including forward sales,
swaps or hedges), commodity off-take, commodity royalties or similar
agreements concerning the physical delivery or settlement of
commodities;
|
|
|
(u)
|
commence,
settle, abandon or assign any rights to or any interest in any claim,
litigation, action, suit, cause of action or other proceeding by or before
any domestic or foreign arbitrator or Government
Authority;
|
|
|
(v)
|
engage
in any transaction with any related parties that results in adverse tax
consequences to the Company or its
Subsidiaries;
|
|
|
(w)
|
enter
into any transaction or perform any act that would render, or would
reasonably be expected to render any of the Company's representations and
warranties set forth in this
Agreement:
|
|
|
(i)
|
that
are qualified by reference to a Material Adverse Effect or materiality,
untrue or inaccurate in any respect;
or
|
|
|
(ii)
|
that
are not qualified by reference to a Material Adverse Effect or
materiality, untrue or inaccurate in any material
respect;
|
|
|
(x)
|
enter
into, or resolve to enter into, any agreement: (i) which has the effect of
creating a joint venture or similar relationship between the Company or
any of its Subsidiaries and another person; or (ii) pursuant to which the
Company or any of
|
|
|
|
its
Subsidiaries would acquire an equity or voting interest in another person
or an earn-in or other right to acquire an equity or voting interest in
another person, except that the Company may make investments in short-term
government instruments consistent with past
practice;
|
|
|
(y)
|
adopt,
or resolve to adopt, any shareholder rights plan or similar arrangement;
nor
|
|
|
(z)
|
the
Company and each of its Subsidiaries
shall:
|
|
|
(i)
|
not
make or rescind any material express or deemed election relating to
Taxes;
|
|
|
(ii)
|
not
make a request for a Tax ruling or enter into any agreement with any
Government Authority or consent to any extension or waiver of any
limitation period with respect to Taxes;
and
|
|
|
(iii)
|
not
settle or compromise any claim, action, suit, litigation, proceeding,
arbitration, investigation, audit or controversy relating to
Taxes;
|
|
|
(aa)
|
the
Company shall not initiate any material discussions, negotiations or
filings with any Government Authority regarding any matter (including with
respect to the Offer or the transactions contemplated hereby or regarding
the status of its Concessions, Lands, other real property interests,
assets, mineral or proprietary rights or interests without the prior
consent of Offeror, and further agrees to provide the Offeror with prompt
notice of any material communication (whether oral or written) from a
Government Authority, including a copy of any written
communication;
|
|
|
(bb)
|
enter
into a definitive Silverstone Agreement;
and
|
|
|
(cc)
|
authorize,
announce publicly an intention to, enter into any formal or informal
agreement relating to, or otherwise make any commitment to do any of the
things prohibited by any of the foregoing
subsections.
|
|
3.2
|
Positive
Covenants
|
|
|
(a)
|
carry
on its business only in, and not take any action except in, the ordinary
course of business consistent with past
practice;
|
|
|
(b)
|
use
its and their commercially reasonable efforts to preserve intact its
present business organization and goodwill, to keep available the services
of their respective officers and employees as a group and to maintain
satisfactory relationships with suppliers, distributors, customers and
others with whom they have business relationships and inform the Offeror
orally and in writing if any officer or director submits a
resignation;
|
|
|
(c)
|
confer
on a regular basis with the Offeror with respect to operational matters
and other matters identified in this Section 3.2 and promptly advise the
Offeror, orally and in writing of: (i) any material change (within the
meaning of the Securities Act
(Ontario)) in relation to the Company or any of its Subsidiaries; (ii) any
governmental or third party complaints, investigations or hearings (or
communications indicating that the same may be contemplated); and (iii)
the occurrence, or failure to occur, of any event or state of facts which
occurrence or failure would or would be reasonably likely to: (x) cause
any of the representations or warranties of the Company contained herein
to be untrue or inaccurate; or (y) result in the failure of the
Company to comply with or satisfy any covenant or condition to be complied
with or satisfied pursuant to this Agreement prior to the Effective
Time;
|
|
|
(d)
|
use
its commercially reasonable efforts to maintain its current insurance (or
re-insurance) policies and not allow the same to be cancelled or
terminated or any other coverage thereunder to lapse, unless
simultaneously with such termination, cancellation or lapse, replacement
policies underwritten by insurance and re-insurance companies of
nationally recognized standing providing coverage equal to or greater than
the coverage under the cancelled, terminated or lapsed policies for
substantially similar premiums are in full force and
effect;
|
|
|
(e)
|
use
its and their commercially reasonable efforts to maintain and preserve
intact its Concessions, Lands, other real property interests, assets,
mineral or proprietary rights or interests and Government Authorizations
and maintain its current community relations
policy;
|
|
|
(f)
|
use
its commercially reasonable efforts to preserve and maintain, and promptly
comply with all terms and conditions of its agreements, arrangements and
understanding with third parties in existence at the date hereof,
including any Material Contract;
|
|
|
(g)
|
use
its commercially reasonable efforts to promptly comply with the
requirements of all applicable Laws and Government
Authorizations;
|
|
|
(h)
|
timely
withhold, collect, remit and pay all Taxes which are to be withheld,
collected, remitted or paid by it to the extent due and payable, except
for any Taxes contested in good faith pursuant to applicable
Laws;
|
|
|
(i)
|
duly
and timely file all Tax returns required to be filed by it and all such
Tax returns shall be true, complete and correct in all material respects;
and
|
|
|
(j)
|
furnish
the Offeror with a copy of all information and reports (including
financial statements, officer's certificates, operating statements,
reports of operations and operating plans) prepared by the Company and
provided to directors and management of the Company after the date
hereof.
|
|
3.3
|
Non-Solicitation
|
|
|
(a)
|
On
and after the date hereof, except as expressly contemplated by this
Agreement, the Company shall not, and shall cause its Subsidiaries not to,
directly or indirectly, through any officer, director, employee,
investment banker, legal advisor or agent (collectively “Representatives”) of the
Company or its Subsidiaries:
|
|
|
(i)
|
solicit,
initiate, or knowingly encourage or facilitate (including by way of
furnishing any non-public information, permitting any visit to any
facilities or properties of the Company or any of its Subsidiaries, or
entering into any form of agreement, arrangement or understanding) any
inquiries, proposals, offers or public announcements by any third party
(other than the Offeror and its affiliates) regarding
any:
|
|
|
(A)
|
merger,
amalgamation, reorganization, consolidation, arrangement, business
combination, recapitalization, take-over bid, dividend, distribution,
re-purchase of securities, liquidation, dissolution or winding-up directly
or indirectly involving the Company or any of its Subsidiaries which would
result in the acquisition by a person (other than the Offeror and its
affiliates) of beneficial ownership of all or a material portion of the
Aquiline Shares or all or a material portion of the assets of the Company
and its Subsidiaries on a consolidated
basis;
|
|
|
(B)
|
alliance,
joint venture, earn-in right or sale involving all or a material portion
of the assets of the Company or its Subsidiaries on a consolidated basis
(or any lease, long term supply or off-take agreement or other transaction
having the same economic effect as a sale of such
assets);
|
|
|
(C)
|
allotment,
issuance or sale of Aquiline Shares, or the creation, grant, issuance or
sale of any option, warrant, conversion privilege, calls or other right,
agreement, commitment or obligation of any kind convertible, exercisable
or exchangeable for Aquiline Shares or other securities of the Company or
its Subsidiaries from any
|
|
|
|
person
other than the Offeror, except in each case pursuant to commitments or
agreements existing as of the date of this
Agreement;
|
|
|
(D)
|
similar
transactions involving the Company or its Subsidiaries with any person
other than the Offeror or its Affiliates, the consummation of which would,
if completed, materially impede or prevent the consummation of the
Offers;
|
|
|
(E)
|
inquiry,
proposal, offer or public announcement of an intention to do any of the
foregoing,
|
|
|
(ii)
|
engage
in any discussions which would reasonably be expected to encourage a
person to make an Acquisition Proposal or negotiations concerning, or
provide any non-public information with respect to, or otherwise cooperate
with, any person relating to an Acquisition Proposal, or otherwise assist,
facilitate or knowingly encourage any effort or attempt to make or
implement an Acquisition Proposal;
|
|
|
(iii)
|
withdraw
the Board of Directors' approval or recommendation of the Offers or
change, modify or qualify such approval or recommendation in a manner
adverse to the Offeror;
|
|
|
(iv)
|
approve
or recommend any Acquisition Proposal or remain neutral with respect to
any Acquisition Proposal which the Board of Directors has determined
neither is nor may reasonably be expected to result in a Superior Proposal
(for greater certainty, the Parties acknowledge and agree that publicly
taking no position or a neutral position with respect to any Acquisition
Proposal until fifteen (15) calendar days following the public
announcement of such Acquisition Proposal shall not be considered a
violation of this Section 3.3(a)(iv)) or enter into any agreement related
to any Acquisition Proposal; or
|
|
|
(v)
|
propose
publicly to do any of the foregoing in (i) to
(iv),
|
|
|
(b)
|
The
Company shall immediately cease, cause its Representatives to cease and
cause to be terminated any solicitations, discussions or negotiations
conducted before the date of this Agreement with any persons (other than
the Offeror or any Representative of the Offeror) with respect to any
Acquisition Proposal or any potential Acquisition Proposal. The
Company shall immediately cease to provide any persons, other than the
Offeror and its Representatives, with access to confidential information
concerning the Company or its Subsidiaries with respect to any Acquisition
Proposal or potential Acquisition Proposal, and discontinue access to any
data or information rooms (virtual or otherwise) regarding the Company,
its Subsidiaries or any of their respective properties or assets to anyone
other than the Offeror and its Representatives. Within five business days
from the date hereof, the Company shall request the return or destruction
of all confidential information provided to any third parties who have
obtained such information in relation to an Acquisition Proposal or a
potential Acquisition Proposal and shall use commercially reasonable
efforts to ensure that such requests are honoured in accordance with the
terms of any applicable confidentiality
agreements. Notwithstanding anything contained in this
Agreement, the Company agrees not to waive, release any third party from,
provide any consent in respect of or fail to enforce on a timely basis
upon actual knowledge of a breach of, any confidentiality or standstill
agreement to which the Company or any of its Subsidiaries and any person
(other than the Offeror) are a party as a disclosing party (provided that
the Offeror acknowledges that the automatic release of the standstill
provisions of any such agreement as a result of the entering into or
announcement of this Agreement or the Offers shall not be in violation of
this Section 3.3(b)).
|
|
|
(c)
|
The
Company shall notify the Offeror orally and in writing promptly (but in no
event later than 24 hours) if:
|
|
|
(i)
|
any
bona fide Acquisition Proposal is received by the Company or any of its
Subsidiaries or any of their
Representatives;
|
|
|
(ii)
|
a
request for access for non-public information related to the Company or
any of its Subsidiaries, any of their mineral properties or contractual or
legal rights or for access to the properties, books or records of the
Company or any Subsidiaries thereof or for a list of Securityholders by
any person is made, that in each case could reasonably be considered to be
in furtherance of an Acquisition Proposal;
or
|
|
|
(iii)
|
the
Company or any of its Subsidiaries or Representatives is contacted by any
person to engage or participate in any negotiations or discussions
concerning any bona fide Acquisition
Proposal.
|
|
|
(d)
|
In
the event that the Board of Directors receives a request for non-public
information from a party that has made or proposes to make a bona fide
Acquisition Proposal to the Board of Directors that did not result from a
breach of Section 3.3 by the Company and the Board of Directors in good
faith determines that such Acquisition Proposal, if made, is or may
reasonably be expected to result in a Superior Proposal and the Board of
Directors, after consultation with outside legal counsel, determines in
good faith that the failure to provide such party with access to such
information would be inconsistent with their fiduciary duties, then, and
only in such case, the Company may, subject to the execution of a
confidentiality and standstill agreement which is no less favourable to
the Company and no more favourable to the counterparty than the
Confidentiality Agreement (provided that the standstill provision shall
permit the making and consummation of a Superior Proposal and provided
further that the requirement to execute a confidentiality and standstill
agreement shall not be apply if the person making or proposing to make the
Acquisition Proposal is already party to a confidentiality agreement with
the Company), provide such party with access to any information regarding
the Company and its Subsidiaries for a period of (i) ten (10) business
days from the date access to any non-public information regarding the
Company and its Subsidiaries is first granted by the Company to such
party, provided that such party did not access the Data Room prior to the
date of this Agreement or (ii) five (5) business days from the date access
to any non-public information regarding the Company and its Subsidiaries
is first granted by the Company to such party pursuant to the provisions
hereof, if such party accessed the Data Room prior to the date of this
Agreement. The Company shall provide the Offeror immediately
with a list of, and in the case of information that was not previously
made available to the Offeror, copies of or access to any information that
is being provided to such person.
|
|
|
(e)
|
The
Company shall notify the Representatives of the Company and its
Subsidiaries of the provisions of this Section 3.3, and the Company shall
be responsible for any breach of this Section 3.3 by any of such
Representatives.
|
|
3.4
|
Access to
Information
|
|
|
(a)
|
From
the date hereof until the earlier of the Expiry Time and the time this
Agreement is terminated, and subject to the existing confidentiality
agreement between the Company and the Offeror dated August 6, 2009, as
supplemented by letter agreement dated August 6, 2009 (together
the "Confidentiality
Agreement"), upon reasonable notice, the Company shall (and shall
cause its Subsidiaries to) afford the Offeror and its Representatives
during normal business hours access to information, confidential or
otherwise, with respect to the Company and its Subsidiaries and their
respective businesses, assets and properties, including books, contracts
and records as well as reasonable access to management personnel and
employees and reasonable access to the properties of the Company and its
Subsidiaries, subject in each case to compliance with applicable Laws and
to the Company receiving any consents or waivers with respect to the
provision of confidential information or with respect to access required
under any applicable agreements with third parties, subject to such access
not interfering with the ordinary conduct of the business of the Company
and its Subsidiaries. The Offeror and its Representatives will
not contact or engage in any discussion or correspondence related to the
Company or its Subsidiaries with any Government Authority, any employees
of the Company or its Subsidiaries, any supplier of the Company or its
Subsidiaries, or any third party who is a party to any agreement,
arrangement or understanding under which the Company or its Subsidiaries
(or any of their assets) is bound or affected, without the prior written
consent of the Company, which consent shall not be unreasonably delayed or
withheld, and the Company shall (and shall cause its Subsidiaries to)
furnish promptly to the Offeror all information concerning its business,
assets, properties and personnel as the Offeror may reasonably request,
subject to any obligation of confidentiality to which the Company or any
of its Subsidiaries is subject, contractual or
otherwise.
|
|
|
(b)
|
Without
limiting the generality of the provisions of the Confidentiality Agreement
and subject to Section 3.4(c), the Parties acknowledge and agree that all
information provided under Section 2.5, Section 3.4(a) or otherwise
pursuant to this Agreement or in connection with the transactions
contemplated hereby, is subject to the Confidentiality Agreement, which
shall remain in full force and effect, notwithstanding any other provision
of this Agreement or any termination of this Agreement. If any
provision of this Agreement conflicts or is inconsistent with any
provision of the Confidentiality Agreement, the provisions of this
Agreement will supersede those of the Confidentiality Agreement but only
to the extent of the conflict or inconsistency and all other provisions of
the Confidentiality Agreement will remain in full force and
effect.
|
|
|
(c)
|
The
Company hereby waives from the date of this Agreement until the earlier of
(i) the Expiry Time and (ii) the date of termination of this Agreement the
prohibitions in the Confidentiality Agreement which would prevent:
(A) the transactions contemplated hereby; (B) market purchases by the
Offeror or its affiliates of Aquiline Shares, so long as such purchases
are not in
excess, in
|
|
|
|
aggregate,
of 5% of the total outstanding Aquiline Shares, in accordance with
Securities Laws; (C) discussions undertaken by the Offeror or its
affiliates with any Government Authority in respect of the transactions
contemplated hereby, which shall be, subject to the consent of the Company
as provided in Section 3.4(a); (D) discussions by the Offeror or its
affiliates, together with the Company, with third parties in respect of
the possible disposition of assets of the Company or its Subsidiaries
following or contemporaneous with the completion of any of the
transactions contemplated hereby, subject to the consent of the Company as
provided in Section 3.4(a); or (E) communications by the Offeror or
its affiliates regarding the entering into of any support, lock-up or
similar agreement with any Securityholders in respect of the transactions
contemplated hereby.
|
|
4.1
|
Non-Completion
Payment
|
|
|
(a)
|
the
Board of Directors:
|
|
|
(i)
|
withdraws,
qualifies, changes or modifies in a manner adverse to the Offeror any of
its recommendations or determinations referred to in Section 1.2 (unless
as a result of Pan American having suffered a Pan American Material
Adverse Change);
|
|
|
(ii)
|
recommends,
approves, publicly proposes to recommend or approve an Acquisition
Proposal, causes the Company to enter into any letter of intent, agreement
or undertaking related to any Acquisition Proposal, other than a
confidentiality and standstill agreement permitted by
Section 3.3(d) or resolves to do
any of the foregoing; or
|
|
|
(iii)
|
fails
to reaffirm its recommendation of the Offers in accordance with Section
4.6;
|
|
|
(b)
|
the
Offeror terminates this Agreement pursuant to Section 6.1(d);
or
|
|
|
(c)
|
the
Company terminates this Agreement pursuant to Section 6.1(h);
or
|
|
|
(d)
|
the
Minimum Tender Condition in paragraph (a) of Schedule "B" has not been
satisfied or waived at the Expiry Time (other than as a result of a
failure by the Offeror to comply with its covenants and obligations under
this Agreement or if a Pan American Material Adverse Change has occurred),
the Offeror terminates this Agreement, an Acquisition Proposal has been
publicly announced by any person
|
|
|
|
prior
to the Expiry Time and not withdrawn at least one (1) business day prior
to the Expiry Time, and:
|
|
|
(i)
|
such
Acquisition Proposal is consummated prior to the expiration of six
(6) months following the termination of this Agreement;
or
|
|
|
(ii)
|
the
Board of Directors approves the entering into of a definitive agreement
with respect to such Acquisition Proposal prior to the expiration of six
(6) months following the termination of this
Agreement;
|
|
4.2
|
Financing of
Non-Completion Payment
|
|
|
(a)
|
engaging
in discussions or negotiations with any person during the Right to Match
Period with respect to potential transactions to raise the funds necessary
to pay the Non-Completion Payment;
or
|
|
|
(b)
|
entering
into any agreement with respect to funding payment of the Non-Completion
Payment,
|
|
4.3
|
Expense
Reimbursement
|
|
4.4
|
Effect of
Payments
|
|
4.5
|
Right to Match
Superior Proposal
|
|
|
(a)
|
If,
before the Expiry Time or termination of the Offers, the Board of
Directors determines that an Acquisition Proposal constitutes a Superior
Proposal, the Company shall promptly notify the Offeror in writing thereof
and provide to the Offeror a notice (the "Notice of Superior
Proposal") containing: (i) a copy of the document evidencing such
Superior Proposal; (ii) the identity of the person making the Superior
Proposal and a copy of such confidentiality agreement and (iii) a written
notice from the Board of Directors regarding the value in financial terms
and the underlying material assumptions that the Board of Directors has,
in consultation with the Company's financial advisor, determined should be
ascribed to any non-cash consideration offered under such Superior
Proposal). The Company shall provide additional details of the
material terms of the Superior Proposal as the Offeror may reasonably
request. The Company shall keep the Offeror promptly informed
of the status, including of any change to the
material
|
|
|
|
terms
of, the Superior Proposal and will respond promptly to all reasonable
inquiries by the Offeror with respect
thereto.
|
|
|
(b)
|
Until
the expiration of the Right to Match Period, the Board of Directors shall
not take any action to withdraw, modify, qualify or change its
recommendation with respect to the Offers as a result of the Superior
Proposal or to approve or implement or enter into, or resolve to enter
into, any agreement related to such Superior Proposal, other than a
confidentiality and standstill agreement permitted by Section
3.3(d).
|
|
|
(c)
|
The
Company acknowledges and agrees that during the period (the "Right to Match Period")
ending on the 5th
business day following the date of receipt of the Notice of Superior
Proposal by the Offeror, the Offeror shall have the opportunity, but not
the obligation, to propose written amendments to the terms of the Offers
and this Agreement, and the Company shall co-operate with the Offeror with
respect thereto, including negotiating in good faith with the Offeror with
respect to the proposed written amendments until the expiry of the Right
to Match Period. The Board of Directors shall review any such
written offer by the Offeror to amend the terms of the Offers and this
Agreement in order to determine, in good faith and in accordance with its
fiduciary duties, whether the Offers and this Agreement, as amended by the
proposed written amendments, would result in the Acquisition Proposal not
being a Superior Proposal compared to Offers and this Agreement, as so
amended. If the Board of Directors so determines, the Company
and the Offeror shall amend this Agreement to reflect such proposed
written amendments and only to reflect such proposed written amendments
and the Company shall not take any action to withdraw, modify, qualify or
change its recommendation with respect to the Offers, as amended, or to
approve or implement or enter into any agreement related to such
Acquisition Proposal, other than a confidentiality and standstill
agreement permitted by Section 3.3(d). If the Offeror does not
propose written amendments to the terms of the Offers and this Agreement
or the Board of Directors does not make the determination referred to
above, the Company shall be entitled to terminate this Agreement and enter
into an agreement in respect of the Superior Proposal and/or withdraw,
modify, qualify or change its recommendation concerning the Offers and
recommend the Superior Proposal, as applicable, provided that it shall
have prior thereto paid to the Offeror the Non-Completion Payment
contemplated by Section 4.1 and further provided that the Company is not
in breach in any material respect of any of its covenants or obligations
under Section 3.3 and Section
1.2(d).
|
|
|
(d)
|
Each
successive modification to the material terms of any Acquisition Proposal
shall constitute a new Acquisition Proposal for the purposes of Section
4.5.
|
|
4.6
|
Reconfirmation of
Approval
|
|
4.7
|
Additional Board
Communications
|
|
5.1
|
Consultation
|
|
|
(a)
|
The
Parties shall jointly issue a press release following the execution of
this Agreement relating to the terms of the Offers and this
Agreement. Thereafter, the Parties agree to consult with each
other in issuing any subsequent press releases or otherwise making public
statements with respect to the Offers and in making any filings with any
Government Authority with respect thereto. Subject to the
requirements of applicable Laws, each Party shall use its commercially
reasonable efforts to enable the other Party to review and consent to all
such press releases prior to release
thereof.
|
|
|
(b)
|
The
Company shall co-operate with the Offeror and take all reasonable actions
to support and facilitate the Offeror's announcement strategy and public
relations efforts relating to the transactions contemplated
hereby.
|
|
|
(c)
|
Each
of the Parties shall promptly notify the other if at any time before the
Expiry Time it becomes aware that the Offer Documents, the Directors’
Circular, any application for an order in connection with the transactions
contemplated hereby, or any other filing under applicable Law in
connection with the transactions contemplated hereby contains an untrue
statement of a material fact or omits to state a material fact required to
be stated therein or necessary to make the statements contained therein
not misleading in the light of the circumstances in which they are made,
or that otherwise requires an amendment or supplement to the Offer
Documents, the Directors’ Circular, such application or such other filing,
and the Parties shall cooperate in the preparation of any amendment or
|
|
|
|
supplement
to the Offer Documents, the Directors’ Circular, application or filing, as
required.
|
|
5.2
|
Further
Assurances
|
|
|
(a)
|
Subject
to the terms and conditions herein and the fiduciary duties of the Board
of Directors, the Parties agree to use their respective commercially
reasonable efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper or advisable under
applicable Laws, to consummate the transactions contemplated by this
Agreement, including: (i) the execution and delivery of such documents as
the other Party may reasonably require; and (ii) using commercially
reasonable efforts to effect all necessary registrations, filings and
submissions requested or required by Government
Authorities. Each of the Offeror and the Company shall,
and shall cause their respective Subsidiaries, to effect any such
registrations, filings or submissions only after the prior review thereof
and concurrence thereto by the other Party
hereto.
|
|
|
(b)
|
Each
of the Offeror and the Company will, and the Company will cause its
Subsidiaries to, use their commercially reasonable efforts to:
(i) obtain all necessary waivers, consents and approvals from other
parties to loan agreements, leases and other contracts or agreements
(including, in particular, the agreement of any persons as may be required
pursuant to any agreement, arrangement or understanding relating to the
Company's or its Subsidiaries' operations with respect to the transactions
contemplated hereby); (ii) obtain all necessary consents, approvals
and authorizations as are required to be obtained under any applicable
Laws with respect to the transactions contemplated hereby (including any
regulatory waiver, consent or approval referred to in the definition of
“Latest Mailing Date”); (iii) cause to be lifted or rescinded any
injunction or restraining order or other order adversely affecting the
ability of the Parties to consummate the transactions contemplated hereby
(including any injunction or order referred to in the definition of
“Latest Mailing Date”); and (iv) to fulfil all conditions and satisfy
all provisions of this Agreement and the
Offers.
|
|
6.1
|
Termination
|
|
|
(a)
|
by
agreement in writing executed by the Offeror and the
Company;
|
|
|
(b)
|
by
the Company at any time by written notice to the Offeror,
if:
|
|
|
(i)
|
the
Offeror is in material default of any covenant or obligation under this
Agreement; or
|
|
|
(ii)
|
any
representation or warranty made by the Offeror under this
Agreement:
|
|
|
(A)
|
that
is qualified by reference to a Material Adverse Effect or materiality
having been at the date hereof untrue or incorrect in all respects or
having become at any time prior to the Expiry Time untrue or incorrect in
all respects; or
|
|
|
(B)
|
that
is not qualified by reference to a Material Adverse Effect or materiality
having been at the date hereof untrue or incorrect in all material
respects or having become at any time prior to the Expiry Time untrue or
incorrect in all material respects,
|
|
|
(c)
|
by
the Offeror at any time by written notice to the Company,
if:
|
|
|
(i)
|
the
Company is in material default of any covenant or obligation under this
Agreement (excluding Section 3.3 and Section 1.2(d)),
or
|
|
|
(ii)
|
any
representation or warranty made by the Company under this
Agreement:
|
|
|
(A)
|
that
is qualified by reference to a Material Adverse Effect or materiality
having been at the date hereof untrue or incorrect in all respects or
having become at any time prior to the Expiry Time untrue or incorrect in
all respects; or
|
|
|
(B)
|
that
is not qualified by reference to a Material Adverse Effect or materiality
having been at the date hereof untrue or incorrect in all material
respects or having become at any time prior to the Expiry Time untrue or
incorrect in all material respects,
|
|
|
(d)
|
by
the Offeror at any time by written notice to the Company, if the Company
is in default in any material respect of any covenant or obligation under
Section 3.3 or Section 1.2(d);
|
|
|
(e)
|
by
either Party after the 90th
day after the date the Offers are mailed to the Securityholders (the
“Outside Date”) by
written notice to the other Party if the
|
|
|
|
Offeror
has not taken up and paid for any Aquiline Shares pursuant to the Share
Offer; provided that the right to terminate this Agreement pursuant to
this Section 6.1(e) shall not be available to: (x) the Offeror as a result
of an event that has triggered the right of the Company to terminate this
Agreement pursuant to Section 6.1(b); or (y) the Company as a result of an
event that has triggered the right of the Offeror to terminate this
Agreement pursuant to Sections 6.1(c) or 6.1(d); and provided further
that if the taking up and payment by the Offeror for Aquiline Shares
deposited under the Share Offer is delayed
by:
|
|
|
(i)
|
an
injunction or order made by a court or regulatory authority of competent
jurisdiction; or
|
|
|
(ii)
|
the
Offeror not having obtained any regulatory waiver, consent or approval
which is necessary to permit the Offeror to take up and pay for the
Aquiline Securities deposited under the
Offers,
|
|
|
(iii)
|
the
120th
day after the date the Offers are mailed to the Securityholders;
and
|
|
|
(iv)
|
the
fifth business day following the date on which such injunction or order
ceases to be in effect or such waiver, consent or approval is obtained, as
applicable,
|
|
|
(f)
|
by
the Offeror, if any condition of the Share Offer set forth in Schedule “B”
has not been satisfied or waived at the Expiry Time (other than as a
result of the Offeror's default hereunder) and, where permitted, the
Offeror has not elected to waive such condition or extend the
Offers;
|
|
|
(g)
|
by
the Offeror upon the occurrence of a Non-Completion Event specified in
Section 4.1(a);
|
|
|
(h)
|
by
the Company pursuant to Section
4.5(c);
|
|
|
(i)
|
by
the Company on the day following the Latest Mailing Date if the Offeror
has not mailed the Offer Documents (other than as a result of the
Company’s default hereunder);
|
|
|
(j)
|
by
the Company if:
|
|
|
(i)
|
the
terms or conditions of the Offers do not conform in all material respects
with, or are amended or waived so as to conflict with, the provisions of
this Agreement, including Section 1.1(f);
or
|
|
|
(ii)
|
the
Share Offer having expired and all of the conditions thereto having been
satisfied or waived, the Offeror has not purchased or taken up and paid
for Aquiline Shares deposited and not withdrawn under the Share Offer as
required under the terms of the Share Offer, Securities Laws or the OBCA;
or
|
|
|
(k)
|
by
the Offeror if the conditions in Section 1.1(h) are not satisfied or
waived on or prior to the Latest Mailing Date other than as a result of
the Offeror's default hereunder.
|
|
6.2
|
Effect of
Termination
|
|
6.3
|
Amendment or
Waiver
|
|
7.1
|
Interpretation
|
|
|
(a)
|
In
this Agreement:
|
|
|
(i)
|
unless
the context otherwise clearly requires, (A) references to the plural
include the singular, and references to the singular include the plural;
(B) the words “include,” “includes,” and “including” do not limit
the preceding terms or words and shall be deemed to be followed by the
words “without
limitation”; (C) the terms “hereof,” “herein,” “hereunder,” “hereto,” and similar
terms refer to this entire Agreement and not to any particular provision
of this Agreement; (D) if a word or phrase is defined, then its other
grammatical or derivative forms have a
|
|
|
|
corresponding
meaning; (E) unless otherwise specified, any references to time are to
local time, Toronto, Ontario; (F) unless otherwise specified, the terms
“day” and “days” mean and refer to
calendar day(s); and (G) if any action, including a payment hereunder, is
required to be taken pursuant to this Agreement on or by a specified date
that is not a business day, the action is valid if taken on or by the next
business day;
|
|
|
(ii)
|
unless
otherwise specified, all references to articles, sections, subsections and
schedules are to the Articles, Sections, Subsections and Schedules of this
Agreement;
|
|
|
(iii)
|
the
headings of the Sections and Subsections of this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement;
and
|
|
|
(iv)
|
except
where otherwise expressly provided, all monetary amounts are stated and
shall be paid in the currency of Canadian
dollars.
|
|
|
(b)
|
This
Agreement shall be construed according to its fair meaning, taken as a
whole, as if the Parties had prepared it jointly, not as if prepared by
one of the Parties. No rule of strict construction shall be
applied against any Party.
|
|
7.2
|
Number
|
|
7.3
|
Notices
|
|
|
(a)
|
All
notices or other communications which are permitted or required hereunder
shall be communicated in writing and shall be sufficient if delivered
personally, or sent by confidential facsimile addressed as
follows:
|
|
To
the Offeror:
|
|
|
Pan
American Silver Corp.
625
Howe Street, Suite 1500
Vancouver,
British Columbia
V6C
2T6 Canada
|
|
|
Facsimile:
(604) 684-0147
Attention: Robert
Priooz, General Counsel
|
|
With
a copy (which shall not itself constitute notice) to:
|
|
|
Borden
Ladner Gervais LLP
1200
Waterfront Centre
200
Burrard Street, P.O. Box 48600
Vancouver,
BC
V7X
1T2
|
|
|
Facsimile: (604)
687-1415
Attention: Fred
R. Pletcher
|
|
|
To
the Company:
|
|
|
Aquiline
Resources Inc.
The
Exchange Tower, 130 King Street West
Suite
3680, Box 99
Toronto,
Ontario
M5X
1B1
|
|
|
Facsimile:
(416) 599-4959
Attention: Marc
Henderson, Chief Executive Officer
|
|
|
With
a copy (which shall not itself constitute notice) to:
|
|
|
Fogler,
Rubinoff LLP
Barristers
& Solicitors
95
Wellington Street West, Suite 1200
Toronto-Dominion
Centre
Toronto,
ON M5J 2Z9
|
|
|
Facsimile:
(416) 941-8852
Attention: G.
Michael Hobart
|
|
|
With
a copy (which shall not itself constitute notice) to:
|
|
|
Fasken
Martineau DuMoulin LLP
Barristers
& Solicitors
66
Wellington Street West
Suite
4200, Toronto Dominion Bank Tower
Toronto-Dominion
Centre
Toronto,
ON M5K 1N6
|
|
|
Facsimile:
(416) 364-7813
Attention: John
S.M. Turner
|
|
|
(b)
|
All
notices and other communications delivered to the Offeror pursuant to
Section 7.3(a) shall be deemed to have been given and received on the date
in Vancouver, British Columbia on which: (i) the notice or communication
was physically
|
|
|
|
delivered
to, and actually received at, the address provided herein; or (ii) if sent
by facsimile, the notice or communication was actually received prior to
4:30 p.m. (Vancouver time) on such date, in either case, if such date is
not a business day, the next succeeding business
day.
|
|
|
(c)
|
All
notices and other communications delivered to the Company pursuant to
Section 7.3(a) shall be deemed to have been given and received on the date
in Toronto, Ontario on which: (i) the notice or communication was
physically delivered to, and actually received at, the address provided
herein; or (ii) if sent by facsimile, the notice or communication was
actually received prior to 4:30 p.m. (Toronto time) on such date, in
either case, if such date is not a business day, the next succeeding
business day.
|
|
|
(d)
|
Any
period of business days referred to in this Agreement shall be calculated
as follows: (i) the first business day of such period shall be the first
business day following the date on which the applicable notice or
communication that initiates such period was deemed to be received as
determined in Section 7.3(b) or Section 7.3(c), as applicable;
and (ii) the period shall end at 11:59 p.m. on the last business day of
such period in the city in which such notice or communication was
received.
|
|
7.4
|
Entire
Agreement
|
|
7.5
|
Severability
|
|
7.6
|
Assignment
|
|
7.7
|
Expenses
|
|
7.8
|
Remedies
|
|
7.9
|
Choice of
Law
|
|
7.10
|
Schedules
|
|
Schedule
“A”
|
-
|
Definitions
|
|
|
Schedule
“B”
|
-
|
Conditions
of the Offers
|
|
|
Schedule
“C”
|
-
|
Representations
and Warranties of the Offeror
|
|
|
Schedule
“D”
|
-
|
Representations
and Warranties of the Company
|
|
|
Schedule
“E”
|
-
|
Offeror
Subsidiaries
|
|
|
Schedule
“F”
|
-
|
Company
Subsidiaries
|
|
7.11
|
Third
Parties
|
|
7.12
|
Privacy
Issues
|
|
|
(a)
|
For
the purposes of this Section 7.12, the following definitions shall
apply:
|
|
|
(i)
|
“applicable law” means,
in relation to any person, transaction or event, all applicable Laws by
which such person is bound or having application to the transaction or
event in question, including applicable privacy
laws;
|
|
|
(ii)
|
“applicable privacy laws”
means any and all applicable Laws relating to privacy and the collection,
use and disclosure of Personal Information in all applicable
jurisdictions, including but not limited to the Personal Information
Protection and Electronic Documents Act (Canada) and/or any
comparable provincial law;
|
|
|
(iii)
|
“authorized authority”
means, in relation to any person, transaction or event, any: (A) federal,
provincial, municipal or local governmental body (whether administrative,
legislative, executive or otherwise), both domestic and foreign; (B)
agency, authority, commission, instrumentality, regulatory body, court,
central bank or other entity exercising executive,
|
|
|
|
legislative,
judicial, taxing, regulatory or administrative powers or functions of or
pertaining to government; (C) court, arbitrator, commission or body
exercising judicial, quasi-judicial, administrative or similar functions;
and (D) other body or entity created under the authority of or otherwise
subject to the jurisdiction of any of the foregoing, including any stock
or other securities exchange, in each case having jurisdiction over such
person, transaction or event; and
|
|
|
(iv)
|
“Personal Information”
means information (other than business contact information when used or
disclosed for the purpose of contacting such individual in that
individual’s capacity as an employee or an official of an organization and
for no other purpose) about an identifiable individual disclosed or
transferred to Pan American by the Company in accordance with this
Agreement and/or as a condition of any of the
Offers;
|
|
|
(b)
|
The
Parties hereto acknowledge that they are responsible for compliance at all
times with applicable privacy laws which govern the collection, use or
disclosure of Personal Information disclosed to either Party pursuant to
or in connection with this Agreement (the “Disclosed Personal
Information”);
|
|
|
(c)
|
Prior
to the completion of the Offers, neither Party shall use or disclose the
Disclosed Personal Information for any purposes other than those related
to the performance of this Agreement and the completion of the Offer.
After the completion of the transactions contemplated herein, a Party may
only collect, use and disclose the Disclosed Personal Information for the
purposes for which the Disclosed Personal Information was initially
collected from or in respect of the individual to which such Disclosed
Personal Information relates or for the completion of the transactions
contemplated herein, unless: (i) either Party shall have first notified
such individual of such additional purpose, and where required by
applicable law, obtained the consent of such individual to such additional
purpose; or (ii) such use or disclosure is permitted or authorized by
applicable law, without notice to, or consent from, such individual. The
Company shall notify Pan American of the purposes for which the Disclosed
Personal Information was initially collected prior to the Take-up
Date;
|
|
|
(d)
|
Each
Party acknowledges and confirms that the disclosure of the Disclosed
Personal Information is necessary for the purposes of determining if the
Parties shall proceed with the Offer, and that the Disclosed Personal
Information relates solely to the carrying on of the business or the
completion of the Offers;
|
|
|
(e)
|
Each
Party acknowledges and confirms that it has taken and shall continue to
take reasonable steps to, in accordance with applicable law, prevent
accidental loss or corruption of the Disclosed Personal Information,
unauthorized input or access to the Disclosed Personal Information, or
unauthorized or unlawful collection, storage, disclosure, recording,
copying, alteration, removal, deletion, use or other processing of such
Disclosed Personal Information;
|
|
|
(f)
|
Subject
to the following provisions, each Party shall at all times keep strictly
confidential all Disclosed Personal Information provided to it, and shall
instruct those employees or advisors responsible for processing such
Disclosed Personal Information to protect the confidentiality of such
information in a manner consistent with the Parties’ obligations
hereunder. Prior to the completion of the Offers, each Party shall take
reasonable steps to ensure that access to the Disclosed Personal
Information shall be restricted to those employees or advisors of the
respective Party who have a bona fide need to access such information in
order to complete the Offers;
|
|
|
(g)
|
Where
authorized by applicable law, each Party shall promptly notify the other
Party to this Agreement of all inquiries, complaints, requests for access,
variations or withdrawals of consent and claims of which the Party is made
aware in connection with the Disclosed Personal Information. To the extent
permitted by applicable law, the Parties shall fully co-operate with one
another, with the persons to whom the Personal Information relates, and
any authorized authority charged with enforcement of applicable privacy
laws, in responding to such inquiries, complaints, requests for access,
variations or withdrawals of consent and claims;
and
|
|
|
(h)
|
Upon
the expiry or termination of this Agreement, or otherwise upon the
reasonable request of either Party, the other Party shall forthwith cease
all use of the Disclosed Personal Information acquired by it in connection
with this Agreement and will return to the requesting Party or, at the
requesting Party’s request, destroy in a secure manner, the Disclosed
Personal Information (and any copies thereof) in its
possession.
|
|
7.13
|
No Personal
Liability
|
|
|
(a)
|
No
director, officer or employee of the Company shall have any personal
liability to the Offeror under this
Agreement.
|
|
|
(b)
|
No
director, officer or employee of the Offeror shall have any personal
liability to the Company under this
Agreement.
|
|
|
(c)
|
Nothing
herein shall relieve or have the effect of relieving any director, officer
or employee of the Company or the Offeror from any liability for damages
incurred or suffered by a Party as a result of fraudulent
misrepresentation.
|
|
7.14
|
Fiduciary
Duties
|
|
7.15
|
Time of
Essence
|
|
7.16
|
Counterparts
|
|
7.17
|
Defined
Terms
|
|
PAN
AMERICAN SILVER CORP.
|
||||
|
By:
|
/s/
Geoffrey A. Burns
|
|||
|
Name: Geoffrey A.
Burns
|
||||
|
Title: President
and Chief Executive Officer
|
||||
|
AQUILINE
RESOURCES INC.
|
||||
|
By:
|
/s/
Marc C. Henderson
|
|||
|
Name: Marc
C. Henderson
|
||||
|
Title: President
and Chief Executive Officer
|
||||
|
(i)
|
economic,
business, regulatory or political conditions in general, or credit,
financial or currency markets in
general;
|
|
(ii)
|
any
change affecting the global mining industry
generally;
|
|
(iii)
|
any
acts of terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening
thereof;
|
|
(iv)
|
the
state of securities markets in general, including any reduction in market
indices;
|
|
(v)
|
the
markets for silver, zinc, lead and
copper;
|
|
(vi)
|
Canadian
generally accepted accounting principles or regulatory accounting
requirements;
|
|
(vii)
|
a
change in the market trading price of the Aquiline
Shares;
|
|
(viii)
|
the
execution, announcement, existence or performance of this Agreement or the
consummation of the transactions contemplated
hereby;
|
|
(ix)
|
any
action or inaction taken by the Company or any of its Subsidiaries to
which the Offeror has expressly consented to in writing or as expressly
permitted by this Agreement;
|
|
(x)
|
any
change or proposed change in Laws or in the interpretation, application or
non-application of Laws by any Government
Authority;
|
|
(xi)
|
any
expropriation or other proceedings alleging illegality or irregularity of
any material contract or license undertaken by any Government Authority or
suspension or revocation, or proposed or alleged suspension or revocation
or allegation of illegality, of any authorization, consent, approval,
license or material contract with any Government Authority;
or
|
|
(xii)
|
any
matters disclosed in this Agreement or disclosed in the Company Disclosure
Letter;
|
|
|
(a)
|
the
Company not having provided to the
Offeror:
|
|
|
(i)
|
the
Directors' Circular in accordance with Section 1.3(a);
or
|
|
|
(ii)
|
any
information pertaining to the Company that is required to be included
under applicable Securities Laws for the completion of the Circular or the Registration Statements by the
Offeror;
|
|
|
(b)
|
the
Company not having provided the lists of registered securityholders
referred to in Section 1.3(a),
|
|
|
(x)
|
an
injunction or order made by a court or regulatory authority of competent
jurisdiction; or
|
|
|
(y)
|
the
Offeror not having obtained any regulatory waiver, consent or approval
which is necessary to permit the Offeror to mail the Offer Documents under
applicable Securities Laws,
|
|
(i)
|
economic,
business, regulatory or political conditions in general, or credit,
financial or currency markets in
general;
|
|
(ii)
|
any
change affecting the global mining industry
generally;
|
|
(iii)
|
any
acts of terrorism, sabotage, military action or war (whether or not
declared) or any escalation or worsening
thereof;
|
|
(iv)
|
the
state of securities markets in general, including any reduction in market
indices;
|
|
(v)
|
the
markets for silver, gold, zinc, lead and
copper;
|
|
(vi)
|
Canadian
generally accepted accounting principles or regulatory accounting
requirements;
|
|
(vii)
|
a
change in the market trading price of the Pan American
Shares;
|
|
(viii)
|
the
execution, announcement, existence or performance of this Agreement or the
consummation of the transactions contemplated
hereby;
|
|
(ix)
|
any
action or inaction taken by Pan American or any of its Subsidiaries to
which the Company has expressly consented to in writing or as expressly
permitted by this Agreement;
|
|
(x)
|
any
change or proposed change in Laws or in the interpretation, application or
non-application of Laws by any Government
Authority;
|
|
(xi)
|
any
expropriation or other proceedings alleging illegality or irregularity of
any material contract or license undertaken by any Government Authority or
suspension or revocation, or proposed or alleged suspension or revocation
or allegation of illegality, of any authorization, consent, approval,
license or material contract with any Government Authority;
or
|
|
(xii)
|
any
matters disclosed in this
Agreement;
|
|
(i)
|
that
is made after September 24, 2009;
|
|
(ii)
|
that
did not result from a breach of Section
3.3;
|
|
(iii)
|
that
complies in all material respects with all applicable Securities Laws and
the OBCA;
|
|
(iv)
|
that
is not subject to a financing condition and in respect of which any
required financing to complete such Acquisition Proposal has been
demonstrated, to the satisfaction of the Board of Directors, acting in
good faith (after receipt of advice from its financial advisors and
outside legal counsel), will be
obtained;
|
|
(v)
|
that,
if the Acquisition Proposal is structured as a take-over bid, contains a
minimum tender condition of not less than 662/3% of
the outstanding Aquiline Shares (provided that, for greater certainty,
such minimum tender condition may be waived to a minimum tender condition
of not less than 50.1% of the outstanding Aquiline Shares immediately upon
the Offeror waiving the Minimum Tender Condition as provided in this
Agreement);
|
|
(vi)
|
that
is not subject to any due diligence and/or access
condition;
|
|
(vii)
|
in
respect of which the Board of Directors has determined in good faith,
after receipt of advice from its outside legal counsel, that failure to
recommend such Acquisition Proposal to Shareholders would be inconsistent
with its fiduciary duties;
|
|
(viii)
|
that
the Board of Directors has determined in good faith after receipt of
advice from its financial advisors and its outside legal
counsel,
|
|
|
(A)
|
is
reasonably capable of completion taking into account all legal, financial,
regulatory and other aspects of such Acquisition Proposal and the person
making such Acquisition Proposal;
and
|
|
|
(B)
|
would,
if consummated in accordance with its terms (but not assuming away any
risk of non-completion), result in a transaction more favourable to the
Shareholders from a financial point of view than the Share Offer, taking
into account any written amendment to the terms and conditions of the
Offers proposed by the Offeror pursuant to Section 4.5;
and
|
|
(ix)
|
that,
if the Acquisition Proposal is structured as a take-over bid, is made for
all of the Aquiline Shares.
|
|
|
(a)
|
there
shall have been validly deposited under the Share Offer and not withdrawn
at the Expiry Time that number of Aquiline Shares that, together with the
Aquiline Shares directly or indirectly owned by the Offeror and its
affiliates, constitute not less than 66⅔% of the Aquiline Shares on a
diluted basis at the Expiry Time (the "Minimum Tender
Condition");
|
|
|
(b)
|
all
approvals, waiting or suspensory periods (and any extensions thereof),
waivers, permits, consents, reviews, sanctions, orders, rulings,
decisions, declarations, certificates and exemptions of (i) any Government
Authority in Canada, Argentina, or the United States that are necessary to
complete the Share Offer, shall have been obtained or, in the case of
waiting or suspensory periods, expired or been terminated, each on terms
and conditions that are not adverse to the Offeror, or (ii) any third
party with respect to the Share Offer, which if not obtained at or prior
to the Expiry Time would have a Material Adverse Effect with respect to
the Company;
|
|
|
(c)
|
no
bona fide act, action, suit or proceeding shall have been threatened in
writing or taken by any Government Authority or by any elected or
appointed public official or by any private person, in each case in
Canada, Argentina, or the United States, whether or not having the force
of law and no Law of Canada, Argentina or the United States shall have
been proposed, enacted, promulgated or applied (excluding any act, action,
suit or proceeding by any Government Authority threatened in writing or
taken as of the date hereof of which the Offeror knows or ought to have
known of or which was disclosed by the Company to Offeror or its
Representatives and except for Laws of Canada, Argentina, or the United
States that are proposed, enacted, promulgated or applied as of the date
hereof):
|
|
|
(i)
|
which
has the effect, or may reasonably be expected to have the effect to cease
trade, enjoin, prohibit or impose material limitations or conditions on
the purchase by or the sale to the Offeror of any of the Aquiline Shares
or the right of the Offeror to own or exercise full rights of ownership of
the Aquiline Shares; or
|
|
|
(ii)
|
which,
if the Share Offer were consummated, would have a Material Adverse Effect
in respect of the Offeror;
|
|
|
(iii)
|
which
would materially and adversely affect, prevent, or materially delay the
ability of the Offeror to proceed with the Share Offer and/or take-up and
pay for any of the Aquiline Shares pursuant to the Share Offer or
completing a Second-Step
Transaction;
|
|
|
(iv)
|
which
seeks to: (A) prohibit or limit the ownership or operation by the Offeror
of any material portion of the business or assets of the Company on a
consolidated basis; or (B) compel the Offeror or its Subsidiaries to
dispose of or hold separate any material portion of the business or assets
of the Company or any of its
Subsidiaries;
|
|
|
(d)
|
there
shall not exist any prohibition at law in Canada or the United States
against the Offeror making the Offers, taking up and paying for any
Aquiline Shares deposited under the Share Offer, or completing a
Second-Step Transaction;
|
|
|
(e)
|
all
of the holders of outstanding Aquiline In-Money Options (which options
shall be subject to accelerated vesting as provided in the Agreement)
shall have entered into an agreement with the Company pursuant to which
such holders shall have agreed to exercise their Aquiline In-Money Options
for the purpose of tendering under the Share Offer all Aquiline Shares
issued in connection with such exercise prior to the expiry of the
Mandatory Extension and each such holder shall have agreed that if the
holder fails to exercise the Aquiline In-Money Options held by it prior to
the expiry of the Mandatory Extension, such Aquiline In-Money Options
shall expire and be of no further force and effect and the holder thereof
shall have no further claim in respect
thereof;
|
|
|
(f)
|
all
necessary orders, authorizations or consents which are required under all
applicable Laws and the rules and policies of the TSX and the Nasdaq for
the listing of the Pan American Shares and Underlying Pan American Shares
on the exercise of the Pan American Consideration Warrants, in each case
to be issued under the Share Offer shall have been
obtained;
|
|
|
(g)
|
the
Offeror shall have determined, acting reasonably, and after consultation
with legal counsel, that there shall not exist a Material Adverse Effect
in respect of the Company;
|
|
|
(h)
|
the
Offeror shall have determined, acting reasonably, that there shall not
have been any breach of any covenant under this Agreement by the Company,
except for any breaches which, individually or in the aggregate, would not
have a Material Adverse Effect in respect of the Company and the Offeror
shall have received not more than seven (7) hours before the Expiry Time,
a certificate of the Company signed by two (2) senior officers
satisfactory to the Offeror, acting reasonably, certifying the foregoing
after due inquiry;
|
|
|
(i)
|
any
representation or warranty made by the Company under this
Agreement:
|
|
|
(i)
|
that
is qualified by reference to a Material Adverse Effect or materiality
shall be true and correct in all respects at and as of the Expiry Time as
if made at and as of such time (except for those expressly stated to speak
at or as of an earlier time); or
|
|
|
(ii)
|
that
is not qualified by reference to a Material Adverse Effect or materiality
shall be true and correct in all material respects at and as of the Expiry
Time as if
|
|
|
|
made
at and as of such time (except for those expressly stated to speak at or
as of an earlier time),
|
|
|
(j)
|
this
Agreement shall not have been terminated by the Offeror or the Company in
accordance with its terms nor shall the Offeror or the Company have
provided notice terminating this Agreement in accordance with its terms;
or
|
|
|
(k)
|
no
Locked-Up Shareholder shall be in breach in any material respect of its
Lock-Up Agreement nor shall such Lock-Up Agreement been terminated by the
Offeror as a result of any default by the Locked-Up Shareholder
thereunder.
|
|
|
(a)
|
there
shall not exist any prohibition at Law in Canada or the United States
against the Offeror making the applicable Offer for the relevant Aquiline
Warrant or Aquiline Debenture, taking up and paying for the for the
relevant Aquiline Warrant or Aquiline Debenture subject to such Offer
deposited under the relevant Offer, or completing a Second-Step
Transaction;
|
|
|
(b)
|
all
necessary orders, authorizations or consents which are required under all
applicable Laws and the rules and policies of the TSX and the Nasdaq for
the creation and issuance of the Pan American Replacement Warrants and the
Replacement Debenture and the allotment and reservation for issuance of
the Pan American Shares issuable upon the exercise of the Pan American
Replacement Warrants or the conversion of the Pan American Replacement
Debenture shall have been obtained.
|
|
|
(a)
|
Organization and
Qualification.
|
|
|
(i)
|
The
Offeror validly exists as a corporation under the laws of the Province of
British Columbia and has the requisite corporate power and capacity to own
its assets and property and conduct its business as currently owned and
conducted.
|
|
|
(ii)
|
Each
Subsidiary of the Offeror validly exists as a corporation, partnership,
limited liability company or other similar entity under the laws of its
respective jurisdiction of organization and has the requisite power and
capacity to own its assets and property and conduct its business as
currently owned and conducted.
|
|
|
(iii)
|
The
copies of the Offeror's articles and by-laws provided to the Company or
made available to the Company are accurate and complete and have not been
amended or superseded since such documents were provided or made
available, and the Offeror has not taken any action to amend or supersede
such documents since such documents were provided or made
available.
|
|
|
(iv)
|
The
Offeror Material Subsidiaries and their respective jurisdictions of
incorporation are set out in Schedule “F” hereto. All of the
outstanding shares and other ownership interests of the Offeror Material
Subsidiaries are validly issued, fully paid and non-assessable and all
securities and other ownership interests owned directly or indirectly by
the Offeror are owned free and clear of all Encumbrances, except as
disclosed in the Offeror's Disclosure
Documents.
|
|
|
(b)
|
Capitalization
and Listing.
|
|
|
(i)
|
The
authorized share capital of the Offeror is 200,000,000 common shares. The
Pan American Shares to be issued in connection with the Offers will be
validly authorized and allotted and when issued under the Offers, all such
Pan American Shares will be: (A) validly issued as fully paid and
non-assessable; (B) listed for trading on the TSX and the Nasdaq; and (C)
registered pursuant to Section 12(b) of the Exchange
Act.
|
|
|
(ii)
|
As
at the date hereof:
|
|
|
(A)
|
87,225,673
Pan American Shares are issued and outstanding as fully paid and
non-assessable shares in the capital of the Offeror;
and
|
|
|
(B)
|
there
are 951,417 outstanding Pan American options issued under the Pan American
stock option plan, providing for the issuance of 951,417 Pan American
Shares upon the exercise thereof.
|
|
|
(iii)
|
Except
for the Pan American options, and the securities issuable pursuant to the
Offeror's stock option plan or similar employee/officer incentive plan and
except as disclosed in the Offeror's Disclosure Documents, there are no
options, warrants, conversion privileges, calls or other rights,
agreements, arrangements, commitments or obligations of the Offeror to
issue, sell or acquire any securities of the Offeror (including any
pre-emptive or similar rights granted by the Offeror) or securities or
obligations of any kind convertible into or exchangeable for any
securities of the Offeror or any other person, nor are there outstanding
any stock appreciation rights, phantom equity or similar rights,
agreements, arrangements or commitments based upon the share price, book
value, income or any other attribute of the
Offeror.
|
|
|
(iv)
|
The
Pan American Replacement Warrants, the Pan American Consideration
Warrants, the Pan American Replacement Options and the Pan American
Replacement Debenture will be validly authorized and created and when
issued under the Offers, all such Pan American Replacement Warrants, the
Pan American Consideration Warrants, Pan American Replacement Options and
the Pan American Replacement Debenture will be: (A) validly issued; and
(B) any Pan American Shares issuable upon exercise of the Pan American
Replacement Warrants, the Pan American Consideration Warrants or the Pan
American Replacement Options or issuable upon the conversion of the Pan
American Replacement Debenture will be: (1) validly authorized, allotted
and reserved for issuance, and will, upon the valid exercise of the Pan
American Replacement Warrants, the Pan American Consideration Warrants or
the Pan American Replacement Options, or the valid conversion of the Pan
American Replacement Debenture be issued as fully paid and non-assessable
Pan American Shares; and (2) listed for trading on the TSX and
Nasdaq.
|
|
|
(v)
|
The
issued and outstanding Pan American Shares are listed for trading on the
TSX and the Nasdaq and are registered pursuant to Section 12(b) of the
Exchange Act. The Offeror has taken no action designed to, or likely to
have the effect of, de-listing the Pan American Shares from the TSX or the
Nasdaq or terminating the registration of the Pan American Shares under
Section 12(b) of the Exchange Act, nor has the Offeror received any
notification that the TSX or the Nasdaq is contemplating terminating such
listing or that the U.S. Securities and Exchange Commission is considering
terminating such registration.
|
|
|
(c)
|
Authority Relative to
this Agreement. The Offeror has the requisite corporate
power and capacity to enter into this Agreement and all documents and
|
|
|
|
agreements
contemplated herein to which it is or will be a party and to perform its
obligations hereunder and thereunder. The execution and
delivery of this Agreement by the Offeror has been duly authorized by all
requisite corporate action on the part of the Offeror and no other
corporate proceeding on the part of the Offeror is necessary to authorize
such execution and delivery. At or prior to the time at which
the Offers are made, the Offeror will have taken all corporate proceedings
necessary to make and complete the Offers including, without limitation,
the taking up of and payment for the Aquiline Securities thereunder
through the issuance of the Pan American Shares, the Pan American
Replacement Warrants, and the Pan American Replacement
Debenture. This Agreement has been duly executed and delivered
by the Offeror and constitutes a legal, valid and binding obligation of
the Offeror, enforceable against the Offeror in accordance with its terms,
subject to the availability of equitable remedies and the enforcement of
creditors' rights generally.
|
|
|
(d)
|
No
Conflict. The execution and delivery by the Offeror of
this Agreement and the performance by the Offeror of its obligations
hereunder and the transactions contemplated hereby, including, without
limitation, the making of the Offers and the taking up of and payment for
the Aquiline Securities thereunder, will not result in a violation,
conflict or breach of any provision of or constitute a default (or an
event that with notice or lapse of time or both would become a default)
under, or require a consent to be obtained under any provision
of:
|
|
|
(i)
|
the
Offeror’s constating documents or any resolutions of the Offeror’s
directors or shareholders;
|
|
|
(ii)
|
any
Law, or, to the Offeror’s knowledge, any regulation, order, judgment or
decree (subject to obtaining the consents referred to in paragraph (e)
applicable to the Offeror; or
|
|
|
(iii)
|
any
agreement, arrangement or understanding to which the Offeror or its
Subsidiaries is a party or by which any of them or their properties and
assets is bound or affected,
|
|
|
(e)
|
Approvals. No
authorization, consent or approval of, or filing with, any Government
Authority is required to be obtained by the Offeror for the consummation
by the Offeror of its obligations under this Agreement, including, without
limitation, the making of the Offers and the taking up of and payment for
the Aquiline Securities thereunder, except for such authorizations,
consents, approvals and filings:
|
|
|
(i)
|
specifically
contemplated in this Agreement including without limitation any
authorizations, consents, approvals, and filings which constitute
|
|
|
|
conditions
to the Offers as described in Schedule “B” to this Agreement, which for
greater certainty includes any authorizations, consents, and approvals of,
notifications to and filings with the Comisión Nacional de Defensa de la
Competencia (CNDC); or
|
|
|
(ii)
|
the
failure by any party to obtain or make which would not, individually or in
the aggregate, prevent or materially delay the consummation of the
transactions contemplated hereby or result in a Material Adverse Effect in
respect of the Offeror.
|
|
|
(f)
|
Financial Statements
and Disclosure Documents.
|
|
|
(i)
|
The
audited financial statements of the Offeror (including any related notes
thereto) prepared on a consolidated basis, for and as at the year ended
December 31, 2008 and all unaudited financial statements of the Offeror
(including any related notes thereto) for subsequent periods, have been
prepared in accordance with Canadian generally accepted accounting
principles including those recommended in the handbook of the Canadian
Institute of Chartered Accountants applied on a consistent basis with
prior periods and fairly present the consolidated financial position of
the Offeror and its Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and the changes in their
financial position for the periods indicated therein. Since
December 31, 2008, except as has been disclosed in the Offeror’s
Disclosure Documents filed prior to the date of this Agreement, the
Offeror has not effected any change in its accounting methods, principles,
practices or internal controls over financial reporting. The
Offeror has filed with the appropriate Government Authority true and
complete copies of all forms, reports, schedules, statements and other
documents required to be filed by it under Securities Laws. The
Offeror’s Disclosure Documents were, as of their respective dates, in
compliance in all material respects with Securities Laws and did not, when
filed, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
|
|
|
(ii)
|
To
the Offeror's knowledge, there is currently no effect, event, occurrence
or state of facts that would, or would reasonably be expected to prevent
the chief executive officer and/or the chief financial officer from
properly providing the certifications required under Multilateral
Instrument 52-109 “Certification of Disclosure in Issuers’ Annual and
Interim Filings” under Form 52-109F1 “Certification of Annual Filings”
with respect to the Offeror's annual filings for its fiscal year ended
December 31, 2009, without taking into account any transactions
contemplated by this Agreement.
|
|
|
(g)
|
Absence of Certain
Changes or Events. Since December 31, 2008, except as
contemplated by this Agreement and except as has been disclosed in the
Offeror’s Disclosure Documents filed prior to the date of this
Agreement:
|
|
|
(i)
|
each
of the Offeror and its Subsidiaries has conducted its business only in the
ordinary course of business consistent with past
practice;
|
|
|
(ii)
|
no
liability or obligation of any nature (whether absolute, accrued,
contingent or otherwise) material to the Offeror and its Subsidiaries,
taken as a whole, has been incurred other than in the ordinary course of
business consistent with past
practice;
|
|
|
(iii)
|
there
has not been any Pan American Material Adverse
Change;
|
|
|
(iv)
|
there
has not been any event, circumstance or action taken or failed to be
taken, within the knowledge of the Offeror, which could reasonably be
expected to or would have a Material Adverse Effect in respect to the
Offeror; and
|
|
|
(v)
|
there
are no material change reports filed on a confidential basis with any
Government Authority which remain
confidential.
|
|
|
(h)
|
Compliance.
|
|
|
(i)
|
the
operations of the Offeror and its Subsidiaries have been, and are now,
conducted in compliance with all Laws of each jurisdiction applicable to
the business or operations of the Offeror or any of its Subsidiaries,
except for non-compliance which does not, individually or in the
aggregate, have a Material Adverse Effect in respect of the
Offeror. There is no complaint, investigation, proceeding or
action pending or, to the Offeror's knowledge, threatened which involve
allegations of non-compliance with, or violation of, any Laws applicable
to it, except for non-compliance or violations which do not, individually
or in the aggregate, have a Material Adverse Effect in respect of the
Offeror; and
|
|
|
(ii)
|
neither
the Offeror nor any of its Subsidiaries is in conflict with, or in default
(including cross defaults) under or in violation
of:
|
|
|
(A)
|
its
constating documents or any resolutions of its directors or shareholders;
or
|
|
|
(B)
|
any
note, bond, mortgage, indenture, contract, agreement, arrangement or
understanding to which it is a party or by which any of its properties or
assets is bound or affected,
|
|
|
(i)
|
Government
Authorizations.
|
|
|
(i)
|
each
of the Offeror and its Subsidiaries have obtained all Government
Authorizations necessary for the ownership, operation, development,
maintenance, or use of any of its assets or otherwise in connection with
the current status of its business or operations and such Government
Authorizations are in full force and effect, except where the failure to
obtain such Government Authorizations, individually or in the aggregate,
would not have a Material Adverse Effect in respect of the
Offeror;
|
|
|
(ii)
|
each
of the Offeror and its Subsidiaries has fully complied with, and is in
compliance with, all such Government Authorizations, except, in each case,
for such non-compliance which, individually or in the aggregate, would not
have a Material Adverse Effect in respect of the
Offeror;
|
|
|
(iii)
|
none
of such Government Authorizations contain any burdensome term, provision,
condition or limitation which is of a nature that is not generally
applicable to corporations or other entities engaged in the business of
mineral exploration, development and production in the same jurisdictions
as the Offeror and which has a Material Adverse Effect in respect of the
Offeror;
|
|
|
(iv)
|
except
as disclosed in the Offeror's Disclosure Documents, there is no action,
investigation or proceeding pending or, to the knowledge of the Offeror,
threatened regarding any of such Government Authorizations which would
have a Material Adverse Effect in respect of the Offeror;
and
|
|
|
(v)
|
except
as disclosed in the Offeror's Disclosure Documents, none of the Offeror or
any of the Offeror Material Subsidiaries has received any notice, whether
written or oral, of revocation or non-renewal of any such Government
Authorizations, or of any intention of any Government Authority to revoke
or refuse to renew any of such Government Authorizations, except in each
case, for revocations or non-renewals which, individually or in the
aggregate, would not have a Material Adverse Effect in respect of the
Offeror and, to the knowledge of the Offeror, all such Government
Authorizations shall continue to be effective in order for the Offeror and
the Offeror Material Subsidiaries to continue to conduct their respective
businesses as they are currently being
conducted.
|
|
|
(j)
|
Compliance with
Laws. The Offeror has complied with all Laws applicable
to it in connection with this Agreement and the transactions contemplated
hereby.
|
|
|
(k)
|
Litigation.
|
|
|
(i)
|
There
are no claims, actions, proceedings, suits, investigations or reviews
currently existing, pending or, to the knowledge of the Offeror,
threatened against or relating to the Offeror or its Subsidiaries, the
business of the
|
|
|
|
Offeror
or any of its Subsidiaries or affecting any of its or their properties or
assets by or before any Government Authority which, if adversely
determined, would have a Material Adverse Effect in respect of the Offeror
or prevent or materially delay the consummation of the transactions
contemplated hereby, including, without limitation, the making of the
Offers and the taking up of and payment for Aquiline Securities
thereunder, nor to the Offeror’s knowledge are there any events or
circumstances which could reasonably be expected to give rise to any such
claim, action, proceeding, suit, investigation or review (provided that
the representation in this paragraph (l)(i) shall not apply to claims,
actions, proceedings, suits, investigations or reviews which may arise
after the date of this Agreement which do not have a reasonable prospect
of succeeding or, if successful, would not give rise to a Material Adverse
Effect in respect of the Offeror).
|
|
|
(ii)
|
Neither
the Offeror nor its Subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree which would have a Material Adverse
Effect in respect of the Offeror.
|
|
|
(l)
|
Property and
Assets. Except as disclosed in the Offeror’s Disclosure
Documents, each of the Offeror and the Offeror Material Subsidiaries has
good and sufficient right and title to or is entitled to the benefits of
all of its properties and assets (real and personal, tangible and
intangible, including leasehold interests) necessary to carry on the
Offeror's and the Offeror Material Subsidiaries' business in the ordinary
course including all the properties and assets reflected in the balance
sheet forming part of the financial statements referred to in paragraph
(f) above, together with all additions thereto and less all dispositions
thereof in the ordinary course of business consistent with past practice,
and except as disclosed in the Offeror's Disclosure Documents such
properties and assets are not subject to any Encumbrance or defect in
title of any kind, except where the failure to have such title, or the
existence of such Encumbrance or defects in title, individually or in the
aggregate, would not have a Material Adverse Effect in respect of the
Offeror. Except as disclosed in the Offeror's Disclosure
Documents, each of the Offeror and the Offeror Material Subsidiaries may
enter into and upon and hold and enjoy the material properties owned or
leased by them for the residue of such material properties' respective
terms for their own use and benefit without any lawful interruption of or
by any other person.
|
|
|
(m)
|
Mineral Reserves and
Resources. The estimated proven and probable mineral
reserves and indicated, inferred and measured mineral resources for the
mineral properties in which the Offeror and the Offeror Material
Subsidiaries hold an interest, as set forth in the Offeror's Disclosure
Documents, were established and disclosed in accordance with sound mining,
engineering, geoscience and other applicable industry standards and
practices, and in accordance with requirements of National Instrument
43-101 - Standards of Disclosure for Mineral Projects and were, at such
date, true and correct in all material respects. Except in
respect of reduction in the ordinary course in connection with mining
operations, there has
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been
no reduction in the aggregate amount of estimated mineral reserves and
estimated mineral resources of the Offeror and the Offeror Material
Subsidiaries, taken as a whole, from the amounts disclosed in the
Offeror's Disclosure Documents.
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(n)
|
Insurance.
Policies of insurance in force as of the date hereof naming the Offeror
and its Subsidiaries as insureds, adequately cover all risk reasonably and
prudently foreseeable in the operation and conduct of their respective
businesses for which, having regard to the nature of such risk and the
relative cost of obtaining insurance, it is in the opinion of the Offeror,
acting reasonably, prudent to seek insurance rather than provide for self
insurance. All such policies of insurance remain in force and
effect.
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(o)
|
Labour
Relations. No labour disturbance by the employees of the Offeror or
any Subsidiary exists or, to the best of the Offeror’s knowledge, is
imminent and the Offeror is not aware of any existing or imminent labor
disturbances by the employees of any of its or any Subsidiary’s principal
suppliers, manufacturers, customers or contractors, which, in either case,
would reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect in respect of the
Offeror.
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(p)
|
Environmental.
There has been no disposal, discharge, emission contamination or other
release of any kind at, onto or from any property now owned, operated,
used or leased by the Offeror or any Subsidiary or into the environment
surrounding any such property of any kind of hazardous, toxic or other
wastes, pollutants, contaminants, petroleum products or other hazardous or
toxic substances, chemicals or materials with respect to which the Offeror
or any Subsidiary has knowledge, except as would not, individually or in
the aggregate, have a Material Adverse Effect in respect of the
Offeror.
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(q)
|
Information in the
Offer Documents. The Offer Documents will comply in all
material respects with the provisions of Securities Laws and the OBCA and,
on the date first published or sent or given to the Securityholders, will
not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements made therein, in the light of the circumstances under which
they were made, not misleading, except that the Offeror makes no
representation or warranty with respect to information furnished by the
Company expressly for inclusion in the Offer
Documents.
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(r)
|
Reporting Issuer
Status. The Offeror is a reporting issuer or the
equivalent thereof of each of the provinces and territories of Canada and
is not in default in any material respect under any applicable Securities
Laws.
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(s)
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Stock Exchange
Compliance. The Offeror is in compliance in all material
respects with the applicable listing and corporate governance rules and
regulations of the TSX and the
Nasdaq.
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(t)
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Certain Securities Law
Matters. The Pan American Shares, the Pan American
Replacement Warrants, the Pan American Consideration Warrants, the Pan
American Replacement Options and the Pan American Replacement Debenture to
be issued in connection with the transactions contemplated hereby,
including the Pan American Shares to be issued upon the valid exercise of
the Pan American Replacement Warrants, the Pan American Consideration
Warrants, or Pan American Replacement Options or the Pan American Shares
to be issued upon the valid conversion of the Pan American Replacement
Debenture, will not be subject to (i) any statutory hold or restricted
period under the Securities Laws of any province or territory of Canada
and, subject to restrictions under Securities Laws in respect of “control
distributions”, will be freely tradable within Canada by the holders
thereof or (ii) any restrictions on transfer or restrictive legend under
the Securities Laws of the United States or any state thereof, other than
(a) by virtue of the holder’s affiliate status or (b) legends providing
notice that the Pan American Replacement Warrants may not be exercised by
or on behalf of a U.S. Person or a person within the United States until a
registration statement covering such exercises has become effective under
the 1933 Act.
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(u)
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Compliance with
Foreign Corrupt Practices Legislation. There have been
no actions taken or omissions made by the Offeror or, any of its
Subsidiaries or any of their affiliates which are in violation of the
Corruption of Foreign
Public Officials Act (Canada), the Foreign Corrupt Practices Act
of 1977 (United States), or any other similar
Law.
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(a)
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Organization and
Qualification. The Company validly exists as a
corporation under the laws of the Province of Ontario and has the
requisite corporate power and capacity to own its assets and property and
conduct its business as currently owned and conducted. Each of
the Company and its Subsidiaries is duly qualified to carry on its
respective business, and is in good-standing, in each jurisdiction in
which the character of its assets or properties, owned or leased, or the
nature of its activities makes such qualification necessary. The copies of
the Company's articles, by-laws and all of the constating documents of the
Company's Subsidiaries provided to the Offeror or made available to the
Offeror are accurate and complete and have not been amended or superseded
since such documents were provided or made available, and neither the
Company nor the Company's Subsidiaries has taken any action to amend or
supersede such documents since such documents were provided or made
available.
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(b)
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Capitalization and
Listing.
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(i)
|
The
authorized capital of the Company consists of an unlimited number of
Aquiline Shares and as at the date
hereof:
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(A)
|
76,288,707 Aquiline Shares are issued and
outstanding as fully paid and non-assessable shares in the capital of the
Company;
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(B)
|
there
are 4,266,665 outstanding Aquiline Options issued under the
Stock Option Plan (at the prices and to the persons identified in a
schedule contained in the Company Disclosure Letter), providing for the
issuance of 4,266,665 Aquiline Shares upon the exercise
thereof;
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(C)
|
there
are 7,365,682 outstanding Aquiline Warrants (at the prices and to the
persons identified in a schedule contained in the Company Disclosure
Letter), providing for the issuance of 7,365,682 Aquiline
Shares upon the exercise thereof;
and
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(D)
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there
is an outstanding Aquiline Debenture, which may be converted into either:
(A) 1,458,333 Aquiline Shares upon the conversion thereof at a conversion
price of $12.00 per Aquiline Share; or (B) a contract granting the holder
thereof the right to purchase 12.5% of the life of mine payable silver
from the Loma de La Plata zone of the Navidad
project.
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(ii)
|
All
of the issued and outstanding Aquiline Shares of the Company are validly
issued, fully paid and non-assessable Aquiline Shares and each of the
issued and outstanding Aquiline Options, Aquiline Warrants, and the
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Aquiline
Debenture have been validly created and issued and all Aquiline Shares
issuable upon exercise of the Aquiline Options, and the Aquiline Warrants,
respectively or issuable upon the conversion of the Aquiline Debenture
have been validly authorized, allotted and reserved for issuance, and
will, upon the valid exercise of the Aquiline Options, and the Aquiline
Warrants, respectively, or the valid conversion of the Aquiline Debenture,
be issued as fully paid and non-assessable Aquiline
Shares.
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(iii)
|
Except
for the Aquiline Options, Aquiline Warrants, and the Aquiline Debenture
identified in paragraph (b)(i) above and as disclosed in the Company
Disclosure Letter, there are no options, warrants, conversion privileges,
calls or other rights, agreements, arrangements, commitments or
obligations of the Company to issue, sell or acquire any securities of the
Company (including any pre-emptive or similar rights granted by the
Company) or securities or obligations of any kind convertible into or
exchangeable for any securities of the Company or any other person, nor
are there outstanding any stock appreciation rights, phantom equity or
similar rights, agreements, arrangements or commitments based upon the
share price, book value, income or any other attribute of the
Company.
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(iv)
|
No
holder of securities issued by the Company or any of its Subsidiaries has
any right to compel the Company to register or otherwise qualify
securities for public sale.
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(v)
|
The
Company is not currently a party to a shareholder rights plan or any
agreement that relates to a shareholder rights
plan.
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(vi)
|
The
Company is not a party to or bound by any shareholder, pooling, voting
trust or other similar agreement relating to the issued and outstanding
shares in the capital of the Company or any of its Subsidiaries which are
not directly or indirectly wholly owned by the
Company.
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(vii)
|
The
issued and outstanding Aquiline Shares are listed for trading on the
TSX.
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(c)
|
Subsidiaries.
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(i)
|
The
only Subsidiaries of the Company and their respective jurisdictions of
incorporation are set out in Schedule “E” hereto. Each such
Subsidiary validly exists under applicable Laws and has the requisite
power and capacity to own its assets and property and conduct its
businesses as currently owned and
conducted.
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(ii)
|
All
of the outstanding shares and other ownership interests of the Company's
Subsidiaries described in Schedule “E” are validly issued,
fully paid and non-assessable and all securities and other ownership
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interests
owned directly or indirectly by the Company are owned free and clear of
all Encumbrances, except as set out in Schedule “E”
.
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(iii)
|
There
are no options, warrants, conversion privileges, calls or other rights,
agreements, arrangements, commitments on obligations of the Company or any
of its Subsidiaries to issue, sell or acquire any securities of such
Subsidiary (including any pre-emptive or similar rights granted by the
Company or any of its Subsidiaries) or securities or obligations of any
kind convertible into or exchangeable for securities or other ownership
interests of that Subsidiaries or any other person. There are
no outstanding stock appreciation rights, phantom equity or similar
rights, agreements, arrangements or commitments based on the book value,
income or any other attribute of the Company's
Subsidiaries. The Company does not hold any equity interest, or
right to acquire an equity interest, in any person, other than its
interests in its Subsidiaries.
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(d)
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Authority Relative to
this Agreement. The Company has the requisite corporate
power and capacity to enter into this Agreement and all documents and
agreements contemplated herein to which it is or will be a party and to
perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement by the Company has been duly authorized by
the Board of Directors and no other corporate proceeding on the part of
the Company or the Shareholders is necessary to authorize this Agreement
and the transactions contemplated hereby (other than any Second-Step
Transaction). This Agreement has been duly executed and
delivered by the Company and constitutes a legal, valid and binding
obligation of the Company enforceable by the Offeror against the Company
in accordance with its terms, subject to the availability of equitable
remedies and the enforcement of creditors' rights
generally.
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(e)
|
No
Conflict. Except as disclosed in the Company Disclosure
Letter, the execution and delivery by the Company of this Agreement and
the performance by the Company of its obligations hereunder and the
transactions contemplated hereby, including, but not limited to, the
making of the Offers by the Offeror, the taking up and payment for
Aquiline Shares, Aquiline Warrants and the Aquiline Debenture deposited
thereunder and any subsequent Second-Step Transaction carried out and
consummated in accordance with the Securities Laws and the OBCA, will not
result in:
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(i)
|
a
violation, conflict or breach of any provision of or constitute a default
(or an event that with notice or lapse of time or both would become a
default) under, require any consent to be obtained under or give rise to
any third party rights of termination, amendment, first refusal, shot-gun,
acceleration, cancellation or penalty or payment obligation or right of
purchase or sale under any provision
of:
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(A)
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the
Company’s or its Subsidiaries’ constating documents or any resolution of
the Company’s or any of its Subsidiaries’ directors or
Shareholders;
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(B)
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any
Law or any Government Authorization (subject to obtaining the
authorizations, consents and approvals referred to in paragraph (f)
applicable to the Company or any of its Subsidiaries or by which any of
their properties or assets is bound or affected;
or
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(C)
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any
note, bond, mortgage, indenture, contract, agreement, arrangement or
understanding to which the Company or any of its Subsidiaries is a party
or by which any of their properties or assets is bound or affected that,
individually or in the aggregate, could reasonably be expected to result
in a Material Adverse Effect in respect of the
Company;
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(ii)
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the
imposition of any Encumbrance upon any of the Company’s or its
Subsidiaries’ properties or assets that, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect in
respect of the Company; or
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(iii)
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the
obligation on the Company or any of its Subsidiaries to make any “change
of control” payment or other similar
obligation.
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(f)
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Approvals. Except
as disclosed in the Company Disclosure Letter, no authorization, consent
or approval of, or filing with, any Government Authority is required to be
obtained by the Company or its Subsidiaries for the consummation by the
Company of its obligations under this Agreement, except for such
authorizations, consents, approvals and filings the failure by any party
to obtain or make which would not, individually or in the aggregate,
prevent or materially delay the consummation of the transactions
contemplated hereby or result in a Material Adverse Effect in respect of
the Company.
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(g)
|
Financial Statements
and Disclosure Documents.
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(i)
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The
audited financial statements of the Company (including any related notes
thereto) prepared on a consolidated basis, for and as at the year ended
December 31, 2008 and all unaudited financial statements of the Company
(including any related notes thereto) for subsequent periods, have been
prepared in accordance with Canadian generally accepted accounting
principles including those recommended in the handbook of the Canadian
Institute of Chartered Accountants applied on a consistent basis with
prior periods and fairly present the consolidated financial position of
the Company and its Subsidiaries as at the respective dates thereof and
the consolidated results of their operations and the changes in their
financial position for the periods indicated therein. Such
financial statements reflect appropriate and adequate reserves in
accordance with
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Canadian
GAAP in respect of contingent liabilities of the Company, if any, of the
Company and its Subsidiaries on a consolidated
basis.
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(ii)
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The
management of the Company has established and maintained a system of
disclosure controls and procedures designed to provide reasonable
assurance that information required to be disclosed by the Company in its
annual filings, interim filings or other reports filed or submitted by it
under the Securities Laws is recorded, processed, summarized and reported
within the time periods specified in the Securities Laws. Such
disclosure controls and procedures include controls and procedures
designed to ensure that information required to be disclosed by the
Company in its annual filings, interim filings or other reports filed or
submitted under the Securities Laws is accumulated and communicated to the
Company’s management, including its chief executive officers and chief
financial officers (or persons performing similar functions), as
appropriate to allow timely decisions regarding required
disclosure.
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(iii)
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To
the Company’s knowledge, there is currently no effect, event, occurrence
or state of facts that would, or would reasonably be expected to prevent
the chief executive officer and/or the chief financial officer from
properly providing the certifications required under Multilateral
Instrument 52-109 “Certification of Disclosure in Issuers’ Annual and
Interim Filings” under Form 52-109F1 “Certification of Annual Filings”
with respect to the Company's annual filings for its fiscal year ended
December 31, 2009, without taking into account any transactions
contemplated by this Agreement.
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(iv)
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Except
as disclosed in the Company Disclosure Letter, neither the Company nor any
of its Subsidiaries nor, to the Company’s knowledge, any director,
officer, employee, auditor, accountant or representative of the Company or
any of its Subsidiaries has received or otherwise had or obtained
knowledge of any complaint, allegation, assertion, or claim, whether
written or oral, regarding the accounting or auditing practices,
procedures, methodologies or methods of the Company or any of its
Subsidiaries or their respective internal accounting controls, including
any complaint, allegation, assertion or claim that the Company or any of
its Subsidiaries has engaged in questionable accounting or auditing
practices, which has not been resolved to the satisfaction of the audit
committee of the Board of
Directors.
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(v)
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Since
December 31, 2008, except as has been disclosed in the Company's
Disclosure Documents, the Company has not effected any change in its
accounting methods, principles or
practices.
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(vi)
|
The
Company has filed with the appropriate Government Authority true and
complete copies of all forms, reports, schedules, statements and other
documents required to be filed by it under Securities Laws. The
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Company's
Disclosure Documents were, as of their respective dates, in compliance in
all material respects with Securities Laws and did not, when filed,
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading.
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(h)
|
Liabilities. Except
as disclosed in the Company Disclosure Letter, the Company and its
Subsidiaries have no indebtedness outstanding, other than trade payables
incurred in the ordinary course of business. The Company and
its Subsidiaries have no liabilities or obligations of any nature (whether
accrued, absolute, contingent, determined, determinable or otherwise), and
there is no existing condition, situation or set of circumstances which
could be expected to result in such a liability or obligation, other than
liabilities disclosed, reflected or provided for in the Company's audited
financial statements as at and for the year ended December 31, 2008 and in
the Company's unaudited financial statements as at and for the three and
six months period ended June 30, 2009 or disclosed in the Company
Disclosure Letter.
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(i)
|
Absence of Certain
Changes or Events. Since December 31, 2008, except as
contemplated by this Agreement and except as has been disclosed in the
Company's Disclosure Documents filed prior to the date of this Agreement
or disclosed in the Company Disclosure
Letter:
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(i)
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each
of the Company and its Subsidiaries has conducted its business only in the
ordinary course of business consistent with past
practice;
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(ii)
|
no
liability or obligation of any nature (whether absolute, accrued,
contingent or otherwise) material to the Company and its Subsidiaries,
taken as a whole, has been incurred other than in the ordinary course of
business consistent with past
practice;
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(iii)
|
there
has not been any Company Material Adverse
Change;
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(iv)
|
there
has not been any event, circumstance or action taken or failed to be
taken, within the knowledge of the Company, which could reasonably be
expected to or would have a Material Adverse Effect in respect to the
Company; and
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(v)
|
there
are no material change reports filed on a confidential basis with any
Government Authority which remain
confidential.
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(j)
|
Compliance. Except
as disclosed in the Company Disclosure
Letter:
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(i)
|
the
operations of the Company and its Subsidiaries have been, and are now,
conducted in compliance with all Laws of each jurisdiction applicable to
the business or operations of the Company or any of its Subsidiaries,
except for non-compliance which does not, individually or in
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the
aggregate, have a Material Adverse Effect in respect of the
Company. There is no complaint, investigation, proceeding or
action pending or, to the Company's knowledge, threatened which involve
allegations of non-compliance with, or violation of, any such Laws;
and
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(ii)
|
neither
the Company nor any of its Subsidiaries is in conflict with, or in default
(including cross defaults) under or in violation
of:
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(A)
|
its
constating documents or any resolutions of its directors or shareholders;
or
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(B)
|
any
note, bond, mortgage, indenture, contract, agreement, arrangement or
understanding to which it is a party or by which any of its properties or
assets is bound or affected,
|
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(k)
|
Government
Authorizations. Except as disclosed in the Company
Disclosure Letter:
|
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(i)
|
each
of the Company and its Subsidiaries have obtained all Government
Authorizations necessary for the ownership, operation, development,
maintenance, or use of any of its assets or otherwise in connection with
the current status of its business or operations and such Government
Authorizations are in full force and
effect;
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(ii)
|
each
of the Company and its Subsidiaries has fully complied with, and is in
compliance with, all such Government Authorizations, except, in each case,
for such non-compliance which, individually or in the aggregate, would not
have a Material Adverse Effect in respect of the
Company;
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(iii)
|
(none
of such Government Authorizations contain any burdensome term, provision,
condition or limitation which is of a nature that is not generally
applicable to corporations or other entities engaged in the business of
mineral exploration, development and production in the same jurisdictions
as the Company and which has or would reasonably be expected to have a
Material Adverse Effect in respect of the
Company;
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(iv)
|
there
is no action, investigation or proceeding pending or, to the knowledge of
the Company, threatened regarding any of such Government Authorizations;
and
|
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|
(v)
|
none
of the Company or any of its Subsidiaries has received any notice, whether
written or oral, of revocation or non-renewal of any such Government
Authorizations, or of any intention of any Government Authority to revoke
or refuse to renew any of such Government Authorizations, except in each
case, for revocations or nonrenewals which,
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|
individually
or in the aggregate, would not have a Material Adverse Effect in respect
of the Company and, to the knowledge of the Company, all such Government
Authorizations shall continue to be effective in order for the Company and
its Subsidiaries to continue to conduct their respective businesses as
they are currently being conducted.
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(l)
|
Compliance with
Laws. The Company and its Subsidiaries have complied
with, and are in compliance with, all Laws applicable to them in
connection with this Agreement and the transactions contemplated
hereby.
|
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(m)
|
Litigation.
|
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|
(i)
|
There
are no claims, actions, proceedings, suits, investigations or reviews
currently existing, pending or, to the knowledge of the Company,
threatened against or relating to the Company or its Subsidiaries, the
business or operations of the Company or any of its Subsidiaries or
affecting any of its or their properties or assets by or before any
Government Authority which, if adversely determined, would have, or
reasonably could be expected to have, a Material Adverse Effect in respect
of the Company or prevent or materially delay the consummation of the
transactions contemplated hereby, nor to the Company’s knowledge are there
any events or circumstances which could reasonably be expected to give
rise to any such claim, action, proceeding, suit, investigation or review
(provided that the representation in this paragraph (m)(i) shall not apply
to claims, actions, proceedings, suits, investigations or reviews which
may arise after the date of this Agreement which do not have a reasonable
prospect of succeeding or, if successful, would not give rise to, nor
reasonably be expected to give rise to a Material Adverse Effect in
respect of the Company).
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(ii)
|
Neither
the Company nor its Subsidiaries is subject to any outstanding judgment,
order, writ, injunction or decree which would reasonably be expected to
have a Material Adverse Effect in respect of the
Company.
|
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(n)
|
Property and
Assets. Except as disclosed in the Company's Disclosure
Letter, each of the Company and its Subsidiaries has good and sufficient
right and title to or is entitled to the benefits of all of its properties
and assets (real and personal, tangible and intangible, including
leasehold interests, but excluding for greater certainty Concessions and
Lands) necessary to carry on the Company’s and its Subsidiaries’ business
in the ordinary course including all the properties and assets reflected
in the balance sheet forming part of the financial statements referred to
in paragraph (g) above, together with all additions thereto and less all
dispositions thereof in the ordinary course of business consistent with
past practice, and except as disclosed in the Company's Disclosure Letter,
such properties and assets are not subject to any Encumbrance or defect in
title of any kind, except where the failure to have such title, or the
existence of such Encumbrance or defects in title, individually or in the
aggregate, would not have a
|
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|
Material
Adverse Effect in respect of the Company. Each of the Company
and its Subsidiaries may enter into and upon and hold and enjoy the
properties owned or leased by them for the residue of such properties'
respective terms for their own use and benefit without any lawful
interruption of or by any other
person.
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(o)
|
Condition of Property
and Assets. Except as disclosed in the Company
Disclosure Letter, all of the property and assets described in paragraph
(n) are, in all material respects:
|
|
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(i)
|
in
good operating condition;
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|
(ii)
|
in
a state of good maintenance and repair having regard to the use to which
such property and assets are put and the age thereof;
and
|
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|
(iii)
|
usable
in the ordinary course of business.
|
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|
(p)
|
Mineral Reserves and
Resources. The proven and probable mineral reserves and
indicated, inferred and measured mineral resources for the mineral
properties in which the Company or its Subsidiaries hold an interest, as
set forth in the Company's Disclosure Documents, were established and
disclosed in accordance with sound mining, engineering, geoscience and
other applicable industry standards and practices, and in accordance with
requirements of National Instrument 43-101 - Standards of Disclosure for
Mineral Projects and were, at such date, true and correct in all material
respects. There has been no reduction in the aggregate amount
of estimated mineral reserves or estimated mineral resources of the
Company and its Subsidiaries, taken as a whole, from the amounts disclosed
in the Company's Disclosure
Documents.
|
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|
(q)
|
Mining Concessions and
Lands.
|
|
|
(i)
|
The
Company and its Subsidiaries are the legal and/or beneficial owner of all
right, title and interest in and to each mining concession, claim, lease,
licence, permit or other right to explore for, exploit, develop, mine or
produce minerals or any interest therein identified in the Company
Disclosure Letter (“Concessions”) and all
interests in real property, including licenses, leases, rights of way,
surface rights, easements or other real property interests (but excluding
Concessions) identified in the Company Disclosure Letter (“Lands”). Except
as disclosed in the Company Disclosure Letter, each Concession is in good
standing and each Concession and all of the Lands are held by the Company
or its Subsidiaries free and clear of all Encumbrances or defects in
title. The Company Disclosure Letter sets out an up-to-date, true and
accurate map and lists all material details in respect of: (A) the
interests of the Company and its Subsidiaries in each of the Concessions
and Lands; and (B) the agreement or other document pursuant to which such
Concessions and Lands were acquired by the Company or its Subsidiaries, as
the case may be. The Company and each of its Subsidiaries set out in
Schedule “E”, is
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lawfully
authorized to hold the interests in the Concessions and the Lands set out
in the Company Disclosure Record.
|
|
|
(ii)
|
Except
as disclosed in the Company Disclosure Letter, and applying generally
accepted standards in the mining industry in Argentina and Peru, as
applicable:
|
|
|
(A)
|
each
Concession has been properly located and recorded in compliance with
applicable Laws and is comprised of valid and subsisting mineral claims in
each case;
|
|
|
(B)
|
the
Company or its Subsidiaries has the exclusive right to deal with the
Concessions and the Lands;
|
|
|
(C)
|
no
person other than the Company or its Subsidiaries has any material
interest in the Concessions or the Lands or any right to acquire any such
interest;
|
|
|
(D)
|
there
are no earn-in rights, rights of first refusal, royalty rights or similar
provisions which would affect the Company's or its Subsidiaries' interests
in the Concessions or the Lands;
|
|
|
(E)
|
neither
the Company nor its Subsidiaries has received any notice, whether written
or oral, from any Government Authority or any person with jurisdiction or
applicable authority of any revocation or intention to revoke the
Company's or its Subsidiaries' interests in the Concessions or the
Lands;
|
|
|
(F)
|
the
Concessions and Lands are in good standing under applicable Law and all
work required to be performed has been performed and all Taxes, fees,
expenditures and other payments in respect thereof have been paid or
incurred and all filings in respect thereof have been
made.
|
|
|
(iii)
|
The
Company has provided the Offeror with access to full and complete copies
of all exploration information and data within the possession or control
of the Company and its Subsidiaries, including, without limitation, all
geological, geophysical and geochemical information and data (including
all drill, sample and assay results and all maps) and all material
technical reports, feasibility studies and other similar reports and
studies concerning the Concessions and the Lands, and the Company or its
Subsidiaries has the sole right, title, ownership and right to use all
such information, data reports and
studies.
|
|
|
(iv)
|
Except
as disclosed in the Company Disclosure Letter, there are no adverse
claims, actions, suits or proceedings that have been commenced or, to the
knowledge of the Company and its Subsidiaries, that are pending or
threatened, against or affecting or which could affect the Company’s or
|
|
|
|
its
Subsidiaries ownership, title to or right to explore or develop the
Concessions or the Lands.
|
|
|
(v)
|
All
work and activities carried out in connection with the Concessions and on
the Lands by the Company or its Subsidiaries or, to the knowledge of the
Company and its Subsidiaries, by any other person have been carried out in
all material respects in compliance with all applicable Laws, and neither
the Company nor its Subsidiaries, nor, to the knowledge of the Company and
its Subsidiaries, any other person, has received any notice of any breach
of any such applicable Laws.
|
|
|
(vi)
|
The
Company and its Subsidiaries have made full disclosure to the Offeror of
all material facts of which each of Company and its Subsidiaries has
knowledge relating to the Concessions and the
Lands.
|
|
|
(r)
|
Tax
Matters.
|
|
|
(i)
|
The
Company and each of its Subsidiaries has filed all tax returns required to
be filed by it (and such returns are true, complete and correct in all
material respects), has paid in full on a timely basis all Taxes that are
imposed under any Laws or by any relevant taxing authority that are due
and payable and has made adequate provision in the financial statements
referred to in paragraph (g) above for the payment of all Taxes not then
due and payable including all Taxes shown to be payable on the returns or
on subsequent assessments with respect thereto and no other Taxes are
payable by the Company or its Subsidiaries with respect to the items or
time periods covered by the returns. Each of the Company and
its Subsidiaries has made adequate and timely payment of instalments of
the Taxes for the taxation period ending on or immediately before the
Expiry Time. With respect to any taxation period up to and
including the Expiry Time for which tax returns have not yet been filed or
for which Taxes are not yet due and payable, each of the Company and its
Subsidiaries, has only incurred liabilities for Taxes in the ordinary
course of its business consistent with past practice. Except as
disclosed in the Company Disclosure Letter, there are no outstanding
waivers of any limitation periods or agreements providing for an extension
of time for the filing of any tax return or the payment of any
Taxes. No deficiencies exist or have been asserted with respect
to Taxes of the Company or its Subsidiaries, neither the Company nor any
Subsidiaries is a party to any action, proceeding or assessment in respect
of the collection of Taxes, nor has any such event been asserted or
threatened against the Company or its Subsidiaries or any of their
respective properties and assets and, to the best of the Company's
knowledge, as of the date of this Agreement none of the Company or its
Subsidiaries is subject to any assessments, penalties or levies with
respect to Taxes that will result in any liability on its part in respect
of any period ending on or before the Expiry Time in excess of the amount
provided for in the financial statements referred to in paragraph (g)
|
|
|
|
above. Except
as disclosed in the Company Disclosure Letter, to the knowledge of the
Company and its Subsidiaries, no audit, investigation, assessment or
reassessment of Taxes is reasonably anticipated or
imminent.
|
|
|
(ii)
|
The
Company and each of its Subsidiaries has withheld from each payment made
to each of its current or former officers, directors and employees, and
from each other payment of any nature made to any person, the amount of
all Taxes, including income tax, and all other deductions required to be
withheld therefrom and has paid the same to the applicable Government
Authority within the time required under applicable
Laws.
|
|
|
(s)
|
Environmental
Laws. Except as disclosed in the Company Disclosure
Letter, the Company and its Subsidiaries (and their respective businesses
and operations):
|
|
|
(i)
|
are
in compliance with all applicable Laws and Government Authorizations
relating human health, occupational health and safety, natural resources,
the processing, use, treatment, storage disposal, discharge, transport or
handling of any pollutants, contaminants, chemicals, industrial, toxic or
hazardous substances or wastes or the environment in Argentina and Peru
and in other applicable foreign jurisdictions with regulatory jurisdiction
over the Company or its Subsidiaries (the “Environmental Laws”) and
all planning and development related to the Navidad project is being
undertaken in accordance with the Equator Principles, World Bank
guidelines and International Finance Corporation Performance Standards
(the “International
Standards”); and
|
|
|
(ii)
|
have
obtained all Government Authorizations that are required to carry on their
respective businesses and operations under all applicable Environmental
Laws and have no reason to believe that all other required Government
Authorizations will not be issued in a timely
manner;
|
|
|
(t)
|
Environmental
Liability. Except as disclosed in the Company Disclosure
Letter, neither the Company nor its Subsidiaries has, with respect to its
businesses and operations, at any time received any written notice,
written notice of default, order, summons, or notice of judgment or
commencement of proceedings of any nature related to any breach, liability
or remedial action (or alleged breach, liability or remedial action)
arising under the Environmental Laws, with respect to matters
environmental permits, the International Standards or with respect to
environmental matters that could reasonably be expected to have,
individually or
|
|
|
|
in
the aggregate, a Materially Adverse Effect in respect of the Company, and
neither the Company nor its Subsidiaries have (with respect to their
respective businesses and operations) any obligation, nor have they at any
time undertaken to remedy, nor are they aware of, any breach of, or
liability under, Environmental Laws, which breach or liability could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect in respect of the
Company.
|
|
|
(u)
|
Determinations by the
Board. The Board of Directors (after receiving advice
from its legal and financial advisors) has unanimously (other than
directors abstaining from voting by reason of conflict of interest)
determined at its meeting held on September 24, 2009 that the Offers and
the performance by the Company of its obligations under this Agreement are
in the best interests of the Company and its
Securityholders.
|
|
|
(v)
|
Books and
Records. The corporate records and minute books of the
Company and its Subsidiaries have been maintained substantially in
accordance with all applicable Laws and are complete and accurate in all
material respects.
|
|
|
(w)
|
Insurance. Policies
of insurance in force as of the date hereof naming the Company and its
Subsidiaries as insureds, adequately cover all risk reasonably and
prudently foreseeable in the operation and conduct of their respective
businesses for which, having regard to the nature of such risk and the
relative cost of obtaining insurance, it is in the opinion of the Company,
acting reasonably, prudent to seek insurance rather than provide for self
insurance. All such policies of insurance remain in force and
effect and shall not be cancelled or otherwise terminated as a result of
the transactions contemplated
hereby.
|
|
|
(x)
|
Employment
Agreements.
|
|
|
(i)
|
Except
as disclosed in the Company Disclosure Letter, neither the Company nor any
Subsidiaries has any written or oral employment, service or consulting
agreement relating to any one or more individuals, except for oral
employment agreements which are of indefinite term and without any special
arrangements or commitments with respect to the continuation of employment
or payment of any particular amount upon termination of employment or
change of control of the Company. Set forth in the Company
Disclosure Letter is a complete list setting out the name of each
director, officer, employee and consultant of the Company and its
Subsidiaries who is a party to or a participant in any written or oral
agreement, arrangement, plan, obligation or understanding providing for
severance or termination or other payments in connection with the
termination of the employment or engagement of, or resignation of, any
such person following a change of control of the Company and a description
and calculation of the entitlements of each such
person.
|
|
|
(ii)
|
Except
as set forth in the Company Disclosure Letter, the Company has not
declared or paid, or committed to declare or pay, any amount to any person
in respect of a performance or incentive or other bonus or in connection
with the completion of the Offers or any other transaction contemplated
hereby, that in each case has not been
paid.
|
|
|
(y)
|
Pension and Employee
Benefits. Except as disclosed in the Company Disclosure
Letter, neither the Company nor any of its Subsidiaries has, or is subject
to any present or future obligation or liability under, any pension plan,
deferred compensation plan, retirement income plan, stock option or stock
purchase plan, profit sharing plan, bonus plan or policy, employee group
insurance plan, program policy or practice, formal or informal, with
respect to its employees. All material accruals for unpaid
vacation pay, premiums for unemployment insurance, health premiums,
federal, provincial or state pension plan premiums, accrued wages,
salaries and commissions and employee benefit plan payments have been
reflected on the books and records of the
Company.
|
|
|
(z)
|
Material
Contracts. The Company Disclosure Letter sets out all
Contracts material to the business, the operations, the property, the
assets or the capital of the Company and its Subsidiaries (the “Material Contracts”) to
which the Company or any of its Subsidiaries is a party or by which any
property or asset of the Company or its Subsidiaries is bound and each
such Material Contract is in full force and effect, and the Company and
such Subsidiaries are entitled to all rights and benefits thereunder in
accordance with the terms thereof. The Company has made available to the
Offeror for inspection true and complete copies of all Material Contracts.
All of the Material Contracts are valid and binding obligations of the
Company enforceable in accordance with their respective terms, except as
may be limited by bankruptcy, insolvency, fraudulent transfer and similar
laws affecting the creditors’ rights generally and subject to the
qualification that equitable remedies may only be granted in the
discretion of a court of competent jurisdiction. The Company
and its Subsidiaries have complied in all material respects with all terms
of such Material Contracts, have paid all amounts due thereunder, have not
waived any rights thereunder and no default or breach exists in respect
thereof on the part of the Company or any of its
Subsidiaries. As at the date hereof, the Company has not
received written notice that any party to a Material Contract intends to
cancel, terminate or otherwise modify or not renew such Material Contract,
and to the knowledge of the Company, no such action has been threatened.
Except as disclosed in the Company Disclosure Letter, neither the Company
nor any of its Subsidiaries is a party to any Material Contract that
contains any non-competition obligation or otherwise restricts in any
material way the business or operations of the Company or any of its
Subsidiaries. There are no third party consents required under any of the
Material Contracts of the Company and its Subsidiaries required for the
completion of the transactions contemplated
hereby.
|
|
|
(aa)
|
Non-Arm's Length
Agreements. Other than set forth in the Company
Disclosure Letter, there are no agreements entered into by the Company or
its Subsidiaries
|
|
|
|
with
any person (other than the Company or its Subsidiaries) that is not at
“arm's length” with the Company (within the meaning of that expression in
the Tax Act).
|
|
|
(bb)
|
Relationships with
Customers, Suppliers, Distributors and Sales
Representatives. The Company has not received any
written (or to the knowledge of the Company other) notice that any
customer, supplier, distributor or sales representative intends to cancel,
terminate or otherwise modify or not renew a material relationship with
the Company or any of its Subsidiaries, and, to the knowledge of the
Company, no such action has been threatened, which, in either case,
individually or in the aggregate, would have a Material Adverse Effect in
respect of the Company.
|
|
|
(cc)
|
United States
Applicable Laws.
|
|
|
(i)
|
The
Company is not an investment company registered or required to be
registered under the U.S. Investment Company Act of 1940, as
amended.
|
|
|
(ii)
|
The
Company is a “foreign private issuer” (as such term is defined in Rule
3b-4 under the Exchange Act).
|
|
|
(iii)
|
To
the knowledge of the Company, U.S. holders for purposes of Form F-80 under
the 1933 Act hold no more than 40% of any class of the Aquiline
Securities.
|
|
|
(dd)
|
Brokers. Except
as disclosed in the Company Disclosure Letter, neither the Company nor any
of its Subsidiaries or any of their respective officers, directors or
employees has employed any broker or finder or incurred any liability for
any brokerage fees, commissions or finder’s fees in connection with the
transactions contemplated hereby.
|
|
|
(ee)
|
Reporting Issuer
Status. The Company is a reporting issuer or the
equivalent thereof in British Columbia, Alberta, Saskatchewan, Manitoba,
Ontario, New Brunswick, Nova Scotia, Prince Edward Island, and
Newfoundland and is not in default in any material respect under any
applicable Securities Laws.
|
|
|
(ff)
|
Stock Exchange
Compliance. The Company is in compliance in all material
respects with the applicable listing and corporate governance rules and
regulations of the TSX.
|
|
Subsidiaries
|
Jurisdiction
of Incorporation
|
Number
and
Class of Shares |
Percentage
Ownership of
Voting and Equity Shares |
|
Aquiline
Holdings Inc.
|
Barbados
|
3,500,000
common
|
100%
|
|
Minera
Argenta S.A.
|
Argentina
|
154,975,401
common
|
100%
81.5%
- AQI
18.5%
- Aquiline Holdings Inc.
|
|
Minera
Aquiline Argentina S.A.
|
Argentina
|
64,204,017
common
|
100%
98.22%
- AQI
1.78%
- Martin Walter, in trust
|
|
Minera
Calipuy S.A.C.
|
Peru
|
8,673,044
common
|
100%
|
|
Minera
Aquilón S.A de C.V.
|
Mexico
|
100%
|
|
|
Minera
San Isidro S.A. de C.V.
|
Mexico
|
100%
|
|
|
Absolut
Resources Inc.
|
Yukon
|
100
common
|
100%
|
|
Offeror
Material Subsidiaries
|
Jurisdiction
of
Incorporation |
Percentage
Ownership
(rounded to the nearest whole %) |
|
Pan
American Silver S.A. Mina Quiruvilca
|
Peru
|
100%
|
|
Pan
American Silver Peru S.A.C.
|
Peru
|
100%
|
|
Compania
Minera Argentum S.A.
|
Peru
|
92%
|
|
Plata
Panamericana S.A. de C.V.
|
Mexico
|
100%
|
|
Minera
Corner Bay S.A. de C.V.
|
Mexico
|
100%
|
|
Compania
Minera Alto Valle S.A.
|
Argentina
|
100%
|
|
Minera
Triton Argentina S.A.
|
Argentina
|
100%
|
|
Pan
American Silver (Bolivia) S.A.
|
Bolivia
|
95%
|
|
DELIVERED
PRIVATE
AND CONFIDENTIAL
|
As
of October 14, 2009
|
|
AQUILINE
RESOURCES INC.
|
||
|
Per:
|
/s/
Marc
C. Henderson
|
|
|
Authorized
Signing Officer
|
||
|
PAN
AMERICAN SILVER CORP.
|
||
|
Per:
|
/s/
Robert
Pirooz
|
|
|
Authorized
Signing Officer
|
||
|
1.
|
Consultancy
Agreement between the Company and Ironbark International Inc. dated
December 11, 2008 (unsigned).
|
|
2.
|
An
employment letter from the Company to [name of employee],
dated October 29, 2008.
|
|
3.
|
Employment
Agreement between the Company and Dennis Gibson, dated April 6,
2006.
|
|
4.
|
Employment
Agreement (in Spanish) between Minera Calipuy S.A.C. ("Calipuy") and Daniel
Noone, dated April 15, 2008.
|
|
5.
|
Employment
Agreement between the Company and [name of employee],
dated May 1, 2008.
|
|
6.
|
Employment
Agreement between Minera Argenta S.A. ("MASA") and [name of employee],
dated May 1, 2008.
|
|
7.
|
Agreement
between Inversiones Mineras Argentinas S.A. and Dean Williams, dated April
11, 2007, and adjustments.
|
|
8.
|
Employment
Agreement between the Company and Flora Wood, dated May 1, 2007, and
adjustments.
|
|
9.
|
Employment
Agreement between the Company and John Chulick, dated March
9, 2007, and adjustments.
|
|
10.
|
Employment
Letter from Minera Aquiline Argentina S.A. ("MAA") on behalf of MAA
and the Company to [name
of employee], dated November 1, 2007.
|
|
11.
|
Employment
Agreement between the Company and Marc Henderson, dated June 1, 2006, and
adjustments.
|
|
12.
|
Employment
Agreement between the Company and Martin Walter, dated June 1, 2006, and
adjustments.
|
|
13.
|
Change
of control severance agreement between [name of employee] and
the Company.
|
|
14.
|
Employee
Benefits Plan [Policy
Number].
|
|
1.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Harry Burgess.
|
|
2.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and John Chulick.
|
|
3.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and David Constable.
|
|
4.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Dennis Gibson.
|
|
5.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Marc Henderson.
|
|
6.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Darren Maupin.
|
|
7.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Daniel Noone.
|
|
8.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and John Sutherland.
|
|
9.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Kenneth Thomas.
|
|
10.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Martin Walter.
|
|
11.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Flora Wood.
|
|
12.
|
Indemnification
Agreement in the form provided in the electronic data room between the
Company and Blaise Yerly.
|
|
1.
|
The
Company (as guarantor), Absolut Resources Inc. ("Absolut"), a wholly
owned subsidiary of the Company, Monterrico Metals plc ("Monterrico"), a
subsidiary of Xiamen Zijin Tonguuan Investment Development Co. Ltd., a
consortium of three Chinese companies, Intercontinental Resources Inc.
("Intercontinental"), a
subsidiary of Monterrico, and Pico Machay Cayman Limited ("PMCL") entered into a
share and mining concessions purchase agreement dated October 2, 2009 (the
"Monterrico
Agreement") with respect to the purchase of the Pico Machay gold
property in Peru. Pursuant to the terms of the Monterrico Agreement,
Absolut purchased from Intercontinental all of the issued and outstanding
shares in PMCL. PMCL holds all but one share in Minera Pico Machay S.A.C
("Minera Pico").
Calipuy, an indirect subsidiary of the Company, purchased from Minera
Coripacha S.A.C. ("Minera
Coripacha"), an indirect subsidiary of Monterrico, the remaining
one share of Minera Pico. Minera Pico holds the registered title to the
mining concessions comprising of the Pico Machay gold project. As a result
of these purchases, the Company now holds all of the issued and
outstanding shares in Minera Pico. The total purchase price was US$7.8
million, of which US$1.2 million has been already paid, and US$6.6 million
was satisfied by the issuance by Absolut of a promissory note by Absolut
in favour of Intercontinental. The note has a two year term, and is
payable in eight quarterly installments of US$825,000
each.
|
|
2.
|
Possible
settlement of litigation with [name of
individual].
|
|
3.
|
An
agreement between MASA and [name of individual]
dated March 10, 2008 (the "[name of
individual]
Agreement") related to the swap deed whereby MASA acquired from
[name of
individual] the [description of land],
dated February 26, 2008. The [name of individual]
Agreement provides for the construction of a house in [name of individual]
land, which value would not be more than 20% in excess of the previous
[name of
individual] house (excluding the value of the land). In order to
satisfy this obligation, the Company may incur an expense of up to
US$100,000.
|
|
4.
|
Pursuant
to the term of the sponsorship agreement between the Company and Alpine
Canada Alpin ("ACA") dated June 8, 2007
(the "Sponsorship
Agreement") for the term of three years (June 1, 2007 to May 31,
2010 with an option to renew for a further term of two years), the Company
is obligated to pay ACA a sponsorship fee of $225,000 for the first year,
$235,000 for the second year and $245,000 for the third year. As of the
date hereof, the amount owing in fulfilment of the Sponsorship Agreement
is $100,000.
|
|
AQUILINE
RESOURCES
|
|||||||||||||
|
Stock
Option Schedule
|
September
30, 2009
|
||||||||||||
|
Option Plan
Ceiling
Ceiling
under Plan:
|
Rolling
10% Plan
|
Available Under
Plan
Total
Shares lss & Out
Shares
Available (10%)
|
78,288,707
7,628,871
|
(as
at Sept 30, 2009)
|
|||||||||
|
Name
|
Date
Granted
|
Exercise
Price
|
Vesting
Details
|
O/S
Options
01-Jan-09
|
Granted
During
Period
|
Exercised
During
Period
|
Natural
Expiry
|
Cancelled
Ceased
to be a service provider
|
Forfeiture
Options Cancelled During Period
|
Outstanding
Options
Year
to
31-Dec-09
|
Expiry
Date
|
||
|
Marc
Henderson
|
Mar
19/04
|
$1.35
|
175,000
|
(175,000)
|
0
|
Mar
19/09
|
|||||||
|
(Director)
|
Feb
15/08
|
$12.00
|
1
|
250,000
|
250,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
275,000
|
275,000
|
Dec
04/11
|
||||||||
|
525,000
|
|||||||||||||
|
Blaise
F. Yerly
|
Mar
19/04
|
$1.35
|
125,000
|
(125,000)
|
0
|
Mar
19/09
|
|||||||
|
(Director)
|
Feb
15/08
|
$12.00
|
1
|
150,000
|
150,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
150,000
|
150,000
|
Dec
04/11
|
||||||||
|
300,000
|
|||||||||||||
|
Martin
Walter
|
Feb
15/08
|
$12.00
|
1
|
200,000
|
200,000
|
Feb
15/11
|
|||||||
|
(Director)
|
Dec
04/08
|
$2.00
|
1
|
200,000
|
200,000
|
Dec
04/11
|
|||||||
|
400,000
|
|||||||||||||
|
David
Constable
|
Mar
19/04
|
$1.35
|
75,000
|
(75,000)
|
0
|
Mar
19/09
|
|||||||
|
(Director)
|
Feb
15/08
|
$12.00
|
1
|
125,000
|
125,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
125,000
|
125,000
|
Dec
04/11
|
||||||||
|
250,000
|
|||||||||||||
|
John
J. Sutherland
|
Feb
15/08
|
$12.00
|
1
|
125,000
|
125,000
|
Feb
15/11
|
|||||||
|
(Director)
|
Dec
04/08
|
$2.00
|
1
|
125,000
|
125,000
|
Dec
04/11
|
|||||||
|
250,000
|
|||||||||||||
|
G.
Michael Hobart
|
Mar
19/04
|
$1.35
|
25,000
|
(25,000)
|
0
|
Mar
19/09
|
|||||||
|
(Consultant)
|
Feb 15/08
|
$12.00
|
2
|
25,000
|
25,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
09/11
|
||||||||
|
50,000
|
|||||||||||||
|
[name
of individual]
|
Mar
19/04
|
$1.35
|
25,000
|
(25,000)
|
0
|
Mar
19/09
|
|||||||
|
(Consultant)
|
0
|
||||||||||||
|
[name
of individual]
|
Mar
19/04
|
$1.35
|
15,000
|
(15,000)
|
0
|
Mar
19/09
|
|||||||
|
(Consultant)
|
0
|
||||||||||||
|
[name
of individual]
|
Jan
03/07
|
$8.00
|
8,000
|
(8,000)
|
0
|
Jan
03/09
|
|||||||
|
(Employee)
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
10,000
|
Dec
09/11
|
||||||||
|
20,000
|
|||||||||||||
|
[name
of individual]
|
Mar
19/04
|
$1.35
|
40,000
|
(40,000)
|
0
|
Mar
19/09
|
|||||||
|
(Employee)
|
Jan
03/07
|
$8.00
|
30,000
|
(30,000)
|
0
|
Jan
03/09
|
|||||||
|
Feb
15/08
|
$12.00
|
2
|
30,000
|
30,000
|
Feb
15/11
|
||||||||
|
Apr
01/08
|
$5.40
|
1
|
2,778
|
(2,778)
|
0
|
May
12/09
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
09/11
|
||||||||
|
55,000
|
|||||||||||||
|
[name
of individual]
|
Mar 19/04
|
$1.35
|
20,000
|
(20,000)
|
0
|
Mar
19/09
|
|||||||
|
(Consultant)
|
Apr
01/08
|
$5.40
|
2,778
|
(2,778)
|
0
|
May
12/09
|
|||||||
|
0
|
|||||||||||||
|
John
Chulick
|
Feb
15/08
|
$12.00
|
2
|
200,000
|
200,000
|
Feb
15/11
|
|||||||
|
(Officer)
|
Dec
04/08
|
$2.00
|
1
|
175,000
|
175,000
|
Dec
09/11
|
|||||||
|
375,000
|
|||||||||||||
|
[name
of individual]
|
Jan 03/07
|
$8.00
|
18,000
|
(18,000)
|
0
|
Jan
03/09
|
|||||||
|
(Employee)
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
10,000
|
Dec
09/11
|
||||||||
|
20,000
|
|||||||||||||
|
Dennis
Gibson
|
Feb
15/08
|
$12.00
|
2
|
100,000
|
100,000
|
Feb
15/11
|
|||||||
|
(Officer)
|
Dec
04/08
|
$2.00
|
1
|
100,000
|
100,000
|
Dec09/11
|
|||||||
|
200,000
|
|||||||||||||
|
[name
of indrvidual]
|
Jan
03/07
|
$8.00
|
25,000
|
(25,000)
|
0
|
Jan
03/09
|
|||||||
|
(Consultant)
|
0
|
||||||||||||
|
[name
of employee]
|
Jan
03/07
|
$8.00
|
20,000
|
(20,000)
|
0
|
Jan
03/09
|
|||||
|
Feb
15/08
|
$12.00
|
2
|
25,000
|
25,000
|
Feb
15/11
|
||||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
10,000
|
Dec
09/11
|
||||||
|
35,000
|
|||||||||||
|
[name
of employee]
|
Jan
03/07
|
$8.00
|
25,000
|
(25,000)
|
0
|
Jan
03/09
|
|||||
|
Feb
15/08
|
$12.00
|
2
|
25,000
|
25,000
|
Feb
15111
|
||||||
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
04/11
|
||||||
|
50,000
|
|||||||||||
|
[name
of employee]
|
Jan
03/07
|
$8.00
|
20,000
|
(20.000)
|
0
|
Jan
03/09
|
|||||
|
Feb
15/08
|
$12.00
|
2
|
60,000
|
60,000
|
Feb
15/11
|
||||||
|
Dec
04/08
|
$2.00
|
1
|
60,000
|
60,000
|
Dec
04/11
|
||||||
|
120,000
|
|||||||||||
|
[name
of employee]
|
Jan
03/07
|
$8.00
|
10.000
|
(10,000)
|
0
|
Jan
03/09
|
|||||
|
Feb
15/08
|
$12.00
|
2
|
20,000
|
(20,000)
|
0
|
Feb
15/11
|
|||||
|
0
|
|||||||||||
|
Flora
Wood
|
Apr
20/07
|
$8.92
|
100,000
|
(100,000)
|
0
|
Apr
20/09
|
|||||
|
(Officer)
|
Feb
15/08
|
$12.00
|
2
|
100,000
|
100,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
100,000
|
100,000
|
Dec
04/11
|
||||||
|
200,000
|
|||||||||||
|
[name
of individual]
|
Apr
20/07
|
$8.92
|
50,000
|
(50.000)
|
0
|
Apr
20/09
|
|||||
|
(Employee)
|
Feb
15/08
|
$12.00
|
2
|
60,000
|
60,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
60,000
|
60,000
|
Dec
04/11
|
||||||
|
120,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
50,000
|
50,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
50,000
|
50,000
|
Dec
04/11
|
||||||
|
100,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
15,000
|
15,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
10,000
|
Dec
04/11
|
||||||
|
25,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
25,000
|
(25,000)
|
0
|
Feb
15/11
|
||||
|
0
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
(10,000)
|
0
|
Feb
15/11
|
||||
|
0
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||
|
10,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||
|
10,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||
|
10,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
20,000
|
(20,000)
|
0
|
Feb
15/11
|
||||
|
0
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
50,000
|
(50,000)
|
0
|
Feb
15/11
|
||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
(10,000)
|
0
|
Dec
04/11
|
|||||
|
0
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
50,000
|
50,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
75,000
|
75,000
|
Dec
04/11
|
||||||
|
125,000
|
|||||||||||
|
[name
of employee)
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||
|
10,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
(10,000)
|
0
|
Feb
15/11
|
||||
|
0
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
10,000
|
10,000
|
Feb
15/11
|
|||||
|
10,000
|
|||||||||||
|
[name
of employee]
|
Feb 15/08
|
$12.00
|
2
|
20,000
|
20,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
04/11
|
||||||
|
45,000
|
|||||||||||
|
[name
of employee]
|
Feb
15/08
|
$12.00
|
2
|
20.000
|
20,000
|
Feb
15/11
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
10,000
|
10,000
|
Dec
04/11
|
||||||
|
30,000
|
|||||||||||
|
Daniel
Noone
|
Apr
01/08
|
$12.00
|
3
|
50,000
|
50,000
|
Apr
01/11
|
|||||
|
(Officer)
|
Apr
01/08
|
$6.30
|
1
|
11,111
|
11,111
|
Jul
23/12
|
|||||
|
Dec
04/08
|
$2.00
|
1
|
75,000
|
75,000
|
Dec
04/11
|
||||||
|
136,111
|
|||||||||||
|
Harry
Burgess
|
Apr
01/08
|
$12
00
|
1
|
50,000
|
50,000
|
Apr
01/11
|
|||||
|
(Director)
|
Apr
01/08
|
$9.00
|
1
|
16,667
|
(16,667)
|
0
|
Sep
09/09
|
||||
|
Apr
01/08
|
$6.30
|
1
|
22,222
|
22,222
|
Jul
23/12
|
||||||
|
Jun
14/08
|
$8.25
|
5
|
125,000
|
125,000
|
Jun
14/11
|
||||||
|
Dec
04/08
|
$2.00
|
1
|
125,000
|
125,000
|
Dec
04/11
|
||||||
|
322,222
|
|||||||||||
|
[name
of employee]
|
Apr
01/08
|
$5.40
|
1
|
2,778
|
(2,778)
|
0
|
May
12/09
|
||||
|
Apr
01/08
|
$6.30
|
1
|
3,333
|
3,333
|
Jul
23/12
|
||||||
|
3,333
|
|||||||||||
|
[name
of employee]
|
Apr
01/08
|
$5.40
|
1
|
2,778
|
(2,778)
|
0
|
May
12/09
|
||||
|
Apr
01/08
|
$6.30
|
1
|
3,333
|
3,333
|
Jul
23/12
|
||||||
|
3,333
|
|||||||||||
|
[name
of employee]
|
Apr
01/08
|
$5.58
|
1
|
3,333
|
3,333
|
Oct
06/10
|
|||||
|
Apr
01/08
|
1
|
3,333
|
3,333
|
Jul
23/12
|
|||||||
|
6,666
|
|||||||||||
|
Ken
Thomas
|
Jun
09/08
|
$8.25
|
4
|
150,000
|
150,000
|
Jun 09/11
|
|||||
|
(Director)
|
Dec
04/08
|
$2.00
|
1
|
125,000
|
125,000
|
Dec
04/11
|
|||||
|
275,000
|
|||||||||||
|
[name
of employee]
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
04/11
|
|||||
|
25,000
|
|||||||||||
|
[name
of employee]
|
Dec
04/08
|
$2.00
|
1
|
25,000
|
25,000
|
Dec
04/11
|
|||||
|
25,000
|
|||||||||||
|
Darren
Maupin
|
Dec
09/08
|
$2.00
|
1
|
125,000
|
125,000
|
Dec
04/11
|
|||||
|
(Director)
|
125,000
|
||||||||||
| Shares Outstanding |
5,245,444
|
-
|
(500,000)
|
(478,779)
|
-
|
- | 4,266,666 |
Shares
Outstanding
|
|||
|
Ceiling
Per Plan or 10%
|
7,628,871
|
||||||||||
|
Shares
Available
|
3,362,206
|
|
Vesting
details
|
|
1 Options
vest immediately.
|
|
2 50%
vest on August 15, 2008 and 50% vest on February 15,
2009.
|
|
3 50%
vest on October 1, 2008 and 50% vest on April 1, 2009.
|
|
4 50%
vest on December 10, 2008 and 50% vest on June 9, 2009.
|
|
5 50%
vest on December 14, 2008 and 50% vest on June 14,
2009.
|
|
Exercised
|
Funds
received
|
||||||||||
|
[name of
individual]
|
[number
of options]
|
$
|
|||||||||
|
Cert.
No.
|
Warrants
|
Registration
|
Issue
Date
|
Expiry
Date
|
Exercise
Price
|
Transfer
|
|
2008-001
|
150,000
|
[information
regarding the registered holder]
|
08-Feb-08
|
"Conversion Deadline"
which is the 30th
day following the earlier of (i) the Maturity Date and (ii) the date that
is twenty-three (23) months after February 8, 2008. "Maturity Date" means the
date that is the later of: (a) the Corporation completing a feasibility
study on the Property, (b) the Corporation making, and publicly
announcing, a decision to proceed with the construction of a mine on the
Property, and (c) the Corporation receiving all necessary permits to
proceed with the construction of a mine on the Property.
|
$ 13.00
|
|
|
2008-002
|
87,500
|
[information
regarding the registered holder]
|
08-Feb-08
|
"Conversion Deadline"
which is the 30th
day following the earlier of (i) the Maturity Date and (ii) the date that
is twenty-three (23) months after February 8, 2008. "Maturity Date" means the
date that is the later of (a) the Corporation completing a feasibility
study on the Property, (b) the Corporation making, and publicly
announcing, a decision to proceed with the construction of a mine on the
Property, and (c) the Corporation receiving all necessary permits to
proceed with the construction of a mine on the Property.
|
$ 13.00
|
|
|
2008-001
|
1,818,182
|
[information
regarding the registered holder]
|
07-May-08
|
31-Dec-09
|
$ 10.00
|
|
|
2008-002
|
25,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Re-registered
under the same warrant number in the name of [information regarding the
registered holder] with no change of beneficial ownership November
24, 2008
|
|
2008-003
|
10,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-004
|
40,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-005
|
100,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Re-registered
under the same warrant number in the name of [information regarding the
registered holder] with no change of beneficial ownership November
26, 2008
|
|
2008-006
|
8,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Re-registered
under the same warrant no. in the name of [information regarding the
registered holder] with no change of beneficial ownership April 27,
2009
|
|
2008-007
|
8,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-008
|
400,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-009
|
11,500
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Re-registered
under the same warrant no. in the name of [information regarding
the
|
|
registered holder] with
no change of beneficial ownership April 27, 2009
|
||||||
|
2008-010
|
1,050,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-011
|
1,500,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-012
|
62,500
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-013
|
-
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Cancelled
and replaced by 2008-016
|
|
2008-013
|
20,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008-014
|
10,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
|
|
2008--016
|
450,000
|
[information
regarding the registered holder]
|
22-Oct-08
|
22-Oct-11
|
$ 2.50
|
Replacing
old 2008-013 to [information regarding the
registered holder]
|
|
2008-017
|
100,000
|
[information
regarding the registered holder]
|
05-Nov-08
|
05-Nov-11
|
$ 2.50
|
|
|
2008-018
|
10,000
|
[information
regarding the registered holder]
|
05-Nov-08
|
05-Nov-11
|
$ 2.50
|
|
|
2008-019
|
5,000
|
[information
regarding the registered holder]
|
05-Nov-08
|
05-Nov-11
|
$ 2.50
|
|
|
2008-020
|
1,500,000
|
[information
regarding the registered holder]
|
05-Nov-08
|
05-Nov-11
|
$ 2.50
|
|
|
7,365,6822
|
|
1.
|
[name
of employee]:
|
|
2.
|
[name
of employee]:
|
|
3.
|
[name
of employee]
|
|
Salary
|
Start
Date
|
Severence
|
||||||||
|
Entitlement
|
per
contract
|
estimated
|
||||||||
|
CEO
- Mark Henderson
|
$
|
180,000
|
18
months
|
$
|
270,000
|
|||||
|
EVP
- Martin Walter
|
$
|
210,000
|
18
months
|
$
|
315,000
|
|||||
|
CFO
- Dennis Gibson
|
$
|
80,000
|
April
6, 2006
|
Note
1
|
$
|
73,333
|
||||
|
VP
Investor Relations - Flora Wood
|
$
|
165,000
|
May
1, 2007
|
Note
1
|
$
|
137,500
|
||||
|
VP
Explorations - John Chulick
|
-
regular
|
US
$
|
200,000
|
March
9, 2007
|
Note
1
|
$
|
166,667
|
|||
|
-
temporary
|
US
$
|
60,000
|
$
|
50,000
|
||||||
|
VP
Peruvian Operations - Dan Noone
|
-
from Canada
|
$
|
60,000
|
13
months
|
$
|
65,000
|
||||
|
-
from Peru
|
$
|
60,000
|
$
|
65,000
|
||||||
|
[position]
- [name of individual]
|
$
|
85,000
|
October
9, 2008
|
4
months
|
$
|
28,333
|
||||
|
[position]
- [name of individual]
|
$
|
60,000
|
March
1, 2004
|
$
|
20,000
|
|||||
|
[position]
- [name of individual]
|
$
|
38,500
|
January
14, 2004
|
$
|
13,000
|
|||||
|
[position]
- [name of individual]
|
$
|
33,000
|
March
24, 2004
|
$
|
11,000
|
|||||
|
[position]
- [name of individual]
|
$
|
31,920
|
March
21, 2007
|
$
|
7,000
|
|||||
|
$
|
1,170,834
|
$
|
51,000
|
|||||||
|
1.
|
As
disclosed in the Company's financial statements as of June 30,
2009.
|
|
2.
|
Purchase
payments payable to Montericco with respect to the purchase by the
affiliates of the Company, from the affiliates of Monterrico of the Pico
Machay gold property in Peru.
|
|
3.
|
A
liability of up to US$100,000 related to the [name of individual]
Agreement.
|
|
4.
|
Pursuant
to the term of the Sponsorship Agreement between the Company and ACA dated
June 8, 2007, the Company is obligated to pay ACA a sponsorship fee of
$225,000 for the first year, $235,000 for the second year and $245,000 for
the third year. As of the date hereof, the amount owing in fulfilment of
the Sponsorship Agreement is
$100,000.
|
|
1.
|
On
July 13, 2009, the Company signed the Monterrico LOI with Monterrico to
acquire all of Monterrico's right, title, and interest in and to, certain
mining concessions associated with the Pico Machay gold project in
Peru.
|
|
2.
|
On
October 2, 2009, the Company and its affiliates signed the Montericco
Agreement.
|
|
3.
|
On
September 25, 2009, the Company filed a material change report (the "MCR")
on a confidential basis with the regulatory authorities in Canada pursuant
to subsection 7.1(2) of National Instrument 51-102 – Continuous Disclosure
Obligations in connection with the transactions contemplated in the
Support Agreement.
|
|
4.
|
On
October 5, 2009, the Company filed for extension of the
MCR.
|
|
1.
|
Recurso
jerárquico against the disposición minera nº [number of disposición
minera]. Copies of recursos were provided in the electronic data
room.
|
|
2.
|
Recurso
jerárquico against the disposición minera [number of disposición
minera] that declares the forfeiture of [number of MD and certain
information regarding the MD]. The recurso must be resolved by the
secretario de hidrocarburos y minería. A copy the of recurso was provided
in the electronic data room.
|
|
3.
|
Recursos
de reconsideración against the decision of the escribanía de minas not to
sign the evidence of reception of the MDs over areas covered by the cateos
involved in disposición [number of disposición].
Copies of recursos were provided in the electronic data
room.
|
|
4.
|
[certain information regarding
the Navidad property]
|
|
1.
|
MASA
[name of
individual] Labour Claim.
|
|
2.
|
[name of individual] c/
[name of
individual] y Mineria Argentina S.A. y/o Inversiones Mineras
Argentinas S.A. y/o quien resulte titular y/o responsible del los
establecimientos rurales "El Buey" y "La Rosanda" s/diferencia de haberes
e indemnizaciones de ley".
|
|
This
claim is pending before the Juzgado Letrado de Primera Instancia en lo
Laboral de la Circunscripción Judicial del Noreste de la Provincia del
Chubut, located at Trelew. [name of individual],
plaintiff, claims AR$ 156,947.20 plus interests, fines and expenses.
According to the plaintiff MASA, as purchaser of a piece of land where
[name of
individual] was an employee, is joint and severally liable with
[name of
individual] (who sold the land to MASA) for his severance payment
and other amounts. The Company has filed a motion to have the notification
of the claim annulled.
|
|
|
If
a settlement with the plaintiff is not reached before, the case may be
judicially resolved in about two years. Although the result of the case is
uncertain we believe that there are reasonable grounds for the judge to
consider the claim against MASA dismissed. [name of individual] has
signed an indemnity agreement with MASA, but we can not ensure that he
will honor that commitment nor that he's got goods that we can attach to
revoke the payments to [name of
individual].
|
|
|
3.
|
"[name of individual] c/
Minera Aquiline Argentina S.A. y otra s/ conciliacion
extrajudicial".
|
|
[name of individual]
commenced an out-of-court conciliation process against MAA (its former
employer) and MASA. That process is in charge of Dr. Julio Biglieri in San
Carlos de Bariloche, Rio Negro Province. On February 13, 2009 a hearing
took place but no the claim was not settled. He claimed AR$ 197,444.77 for
severance payment. There have not been news since that hearing. We cannot
assess the timeframe of possibility of success as a formal, judicial claim
has not been filed yet.
|
|
|
4.
|
A
complaint e-mail sent by [name of individual] in
June 2009 to the Department of Environment of the Legislature of the
Province of Chubut, Argentina.
|
|
1.
|
Guarantee
of the Company to Intercontinental dated October 2, 2009 related to the
Monterrico Agreement.
|
|
2.
|
Pledge
and Security Deed granted by Absolut to Intercontinental dated October 2,
2009 related to the Monterrico Agreement.
|
|
3.
|
Pledge
and Security Deed dated October 2, 2009 granted by PMCL to
Intercontinental.
|
|
4.
|
Pledge
and Security Deed dated October 2, 2009 granted by Calipuy to
Intercontinental.
|
|
5.
|
Shareholders
agreement between Calipuy and PMCL dated October 2, 2009, which provides
for restrictions on the transfer or disposal of shares in Minera
Pico.
|
|
1.
|
The
Pico Machay Project is subject to a 2% net smelter
return.
|
|
2.
|
Mining
Mortgage granted by Minera Pico to Intercontinental encumbering all of the
concessions comprising the Pico Machay
Project.
|
|
Claim
Number
|
Name
|
Type
|
Area_Has
|
Company
|
|
22.119-97
|
Nabel
|
Mina
|
Aquiline
Argentina
|
300
|
|
23.017-98
|
Nabel
4
|
Mina
|
Aquiline
Argentina
|
250
|
|
23.019-98
|
Rebeca
|
Mina
|
Aquiline
Argentina
|
500
|
|
26.055-01
|
Cerro
Mojón
|
MD
|
Aquiline
Argentina
|
400
|
|
27.032-02
|
La
Incognita
|
MD
|
Aquiline
Argentina
|
2200
|
|
27.072-02
|
Nabel
I Bis
|
MD
|
Aquiline
Argentina
|
4552
|
|
28.071-03
|
Nabel
2
|
MD
|
Aquiline
Argentina
|
2080
|
|
28.127-03
|
Aguadita
|
MD
|
Aquiline
Argentina
|
6769
|
|
28.128-03
|
Chivito
|
MD
|
Aquiline
Argentina
|
6676
|
|
28.130-03
|
Rebequita
|
MD
|
Aquiline
Argentina
|
4731
|
|
28.131-03
|
Pampita
|
MD
|
Aquiline
Argentina
|
4858
|
|
28.132-03
|
Trinity
|
MD
|
Aquiline
Argentina
|
4147
|
|
28.135-03
|
Doradito
2
|
MD
|
Aquiline
Argentina
|
6355
|
|
28.137-03
|
Carnerito
|
MD
|
Aquiline
Argentina
|
4972
|
|
29.015-04
|
Pilahue
Este
|
CA
|
Aquiline
Argentina
|
6928
|
|
29.016-04
|
Pilahue
Oeste
|
CA
|
Aquiline
Argentina
|
6907
|
|
29.018-04
|
Nenabel
|
CA
|
Aquiline
Argentina
|
9877
|
|
29.019-04
|
Onabel
|
CA
|
Aquiline
Argentina
|
10000
|
|
29.020-04
|
Senabel
|
CA
|
Aquiline
Argentina
|
9875
|
|
29.021-04
|
Trirebe
|
CA
|
Aquiline
Argentina
|
10000
|
|
29.022-04
|
Porlas
Dudas
|
CA
|
Aquiline
Argentina
|
9678
|
|
29.023-04
|
Nabelquetrenorte
|
CA
|
Aquiline
Argentina
|
9806
|
|
29.024-04
|
Nabelquetresur
|
CA
|
Aquiline
Argentina
|
9588
|
|
29.030-04
|
Nabelquetreoeste
|
CA
|
Aquiline
Argentina
|
9588
|
|
33063-M-08
|
Viuda
de Castro
|
MD
|
Aquiline
Argentina
|
1265
|
|
1.
|
Swap
deed whereby MASA acquired from [name of individual]
[description of
land], dated February 26, 2008. [description of land]
comprise a joint exploitation and its independent transference shall
require a declaration of new destination. A restriction on both Lotes is
established in favour of A.V.P. for future broadening of Provincial route
[route number];
no buildings or permanent installations are allowed within 50 meters from
each side of the axis.
|
|
2.
|
Deed
of purchase by MASA of [description of land]
from [name of
individual], dated June 9, 2008 (subject to
swap).
|
|
3.
|
Deed
of purchase by MASA of [description of land]
from [name of
individual], dated May 13, 2008.
|
|
4.
|
Deed
of purchase by MASA of [description of land]
from [name of
individual], dated August 6, 2009. Subject to the benefits and
restrictions of art. 10 and 11, Law 3,247. [description of land]
are subject to the obligation to do the measurement prior to its onerous
transfer.
|
|
5.
|
Purchase
agreement whereby the sale of approximately 325 hectares to MASA was
committed by [name of
individual], dated April 11, 2008.
|
|
6.
|
Agreement
dated 2008 whereby MASA and [name of individual]
committed the swap of the land identified in item 3- above for another
piece of land of approximately 1,875 hectares. [certain details regarding the
agreement].
|
|
7.
|
Easement
agreement with [name of individual] dated May 24, 2006.
|
|
8.
|
Easement
agreement with [name of
individual] dated December 6, 2007.
|
|
9.
|
Easement
agreement with [name of
individual] dated January 23, 2008.
|
|
10.
|
Easement
agreement with [name of
individual] dated February 21,
2008.
|
|
11.
|
Easement
agreement with [name of
individual] dated March 13,
2008.
|
|
Claim
Number
|
Name
|
Type
|
Company
|
ha
|
|
14340/04
|
Navidad
Este
|
MD
|
Minera
Argenta S.A.
|
2500
|
|
14341/04
|
Navidad
Oeste
|
MD
|
Minera
Argenta S.A.
|
2500
|
|
14352/04
|
Pampa
1
|
MD
|
Minera
Argenta S.A.
|
2975
|
|
14367/04
|
Colonia
Este
|
MD
|
Minera
Argenta S.A.
|
1596
|
|
14369/04
|
Sierra
|
MD
|
Minera
Argenta S.A.
|
3469
|
|
14370/04
|
Sierra
I
|
MD
|
Minera
Argenta S.A.
|
2840
|
|
14729/05
|
Calquitas
4
|
MD
|
Minera
Aquiline Argentina S.A.
|
4111
|
|
14830/06
|
Sierra
Cacique III
|
MD
|
Minera
Argenta S.A.
|
3484
|
|
14831/06
|
Sierra
Oeste
|
MD
|
Minera
Argenta S.A.
|
3106
|
|
14834/06
|
Sierra
Sur 1
|
MD
|
Minera
Argenta S.A.
|
2841
|
|
14902/06
|
Navidad
Este 1
|
MD
|
Minera
Argenta S.A.
|
2500
|
|
14903/06
|
Navidad
Oeste 1
|
MD
|
Minera
Argenta S.A.
|
2500
|
|
15302/07
|
Trucha
A
|
MD
|
Minera
Argenta S.A.
|
2926
|
|
15303/07
|
Alamo
A
|
MD
|
Minera
Argenta S.A.
|
3049
|
|
15304/07
|
Mara
A
|
MD
|
Minera
Argenta S.A.
|
2480
|
|
15305/07
|
Mara
B
|
MD
|
Minera
Argenta S.A.
|
2486
|
|
15306/07
|
Condor
C
|
MD
|
Minera
Argenta S.A.
|
2024
|
|
15307/07
|
Condor
D
|
MD
|
Minera
Argenta S.A.
|
1891
|
|
15323/07
|
Trucha
B
|
MD
|
Minera
Argenta S.A.
|
3001
|
|
15426/08
|
Alamo
B
|
MD
|
Minera
Argenta S.A.
|
4752
|
|
15439/08
|
Mara
C
|
MD
|
Minera
Argenta S.A.
|
2486
|
|
15455/08
|
Puente
1
|
MD
|
Minera
Argenta S.A.
|
2499
|
|
15456/08
|
Puente
2
|
MD
|
Minera
Argenta S.A.
|
2499
|
|
15488/08
|
Carlota
3
|
MD
|
Minera
Argenta S.A.
|
3449
|
|
15493/08
|
Nina
3
|
MD
|
Minera
Argenta S.A.
|
3448
|
|
15525/08
|
Noelita
|
MDA
|
Minera
Argenta S.A.
|
7000
|
|
15527/08
|
Flamingo
|
MDA
|
Minera
Aquiline Argentina S.A.
|
5635
|
|
15528/08
|
Julie
|
MDA
|
Minera
Argenta S.A.
|
3579
|
|
15529/08
|
Navidad
3
|
MDA
|
Minera
Argenta S.A.
|
3457
|
|
15530/08
|
Navidad
II Oeste
|
MDA
|
Minera
Argenta S.A.
|
2748
|
|
15531/08
|
Navidad
II Este
|
MDA
|
Minera
Argenta S.A.
|
2365
|
|
15532/08
|
Puente
3
|
MDA
|
Minera
Argenta S.A.
|
6624
|
|
15545/09
|
Navidad
4
|
MDA
|
Minera
Argenta S.A.
|
7000
|
|
15550/09
|
Nuevo
Condor
|
MDA
|
Minera
Argenta S.A.
|
4800
|
|
15555/08
|
Los
Loros
|
CAA
|
Minera
Argenta S.A.
|
8470
|
|
15656/09
|
Colonia
Sur
|
MDA
|
Minera
Argenta S.A.
|
3271
|
|
15655/09
|
Colonia
Norte
|
MDA
|
Minera
Argenta S.A.
|
2207
|
|
15654/09
|
Sierrita
2
|
MDA
|
Minera
Argenta S.A.
|
1763
|
|
15653/09
|
Sierrita
1
|
MDA
|
Minera
Argenta S.A.
|
1763
|
|
Claim
|
Code
Inacc
|
Date
Acquired
|
Ha
|
|
El
Alcatraz 4
(Subject
to a 2% Royalty)
|
01-01385-94
|
04/16/1996
|
968
09
|
|
Pico
Chico Tres
|
01-03572-04
|
08/07/2003
|
800.00
|
|
El
Alcatraz 5
(Subject
to a 2% Royalty)
|
01-01386-94
|
04/16/1996
|
575.90
|
|
IRI
219
|
01-01945-98
|
03/17/1999
|
700.00
|
|
IRI
221
|
01-01947-98
|
04/22/1999
|
672.19
|
|
IRI
238
|
01-00195-03
|
08/07/2003
|
8.00
|
|
IRI
239
|
01-00196-03
|
08/07/2003
|
15.00
|
|
IRI
240
|
01-00200-03
|
08/07/2003
|
2.00
|
|
IRI
241
|
01-00197-03
|
08/07/2003
|
24.00
|
|
IRI
242
|
01-00198-03
|
08/07/2003
|
15.00
|
|
IRI
243
|
01-00199-03
|
08/07/2003
|
2.00
|
|
IRI
244
|
01-00201-03
|
08/07/2003
|
225.00
|
|
IRI
245
|
01-02375-04
|
01/24/2005
|
460.83
|
|
Pico
Chico Uno
|
01-02712-04
|
01/24/2005
|
11.99
|
|
Pico
Chico Dos Cornplementario
|
01-02897-04
|
04/08/2005
|
20.00
|
|
MONEDA
001-
|
CONCEPTO
001-
|
||||
|
CODIGO
DE
|
PERIODO
|
SOLES
002-
|
VIGENCIA
002-
|
||
|
DERECHO
MINERO
|
DERECHO
MINERO
|
DE
PAGO
|
DOLARES
|
PENALIDAD
|
IMPORTE
|
|
10031106
|
LUCILA
MAXIMILIANA DOS
|
2008
|
002
|
001
|
2400.00
|
|
10121202
|
COLORADO
DOS
|
2009
|
002
|
001
|
3000.00
|
|
10034502
|
DON
NATHAN
|
2009
|
002
|
001
|
816.91
|
|
10310296
|
EUREKA
DOS
|
2009
|
002
|
001
|
770.69
|
|
10310396
|
EUREKA
TRES
|
2009
|
002
|
001
|
1847:41
|
|
10310496
|
EUREKA
CUATRO
|
2009
|
002
|
001
|
249.73
|
|
10176600
|
EUREKA
CINCO
|
2008
|
002
|
001
|
31.29
|
|
10176600
|
'.
EUREKA CINCO
|
2009
|
002
|
001
|
31.29
|
|
10054901
|
EUREKA
SIETE
|
2009
|
002
|
001
|
2640.01
|
|
10037502
|
EUREKA
OCHO
|
2009
|
002
|
001
|
50.05
|
|
10269903
|
LA
CURVA SP
|
2009
|
002
|
001
|
7.59
|
|
10011022x01
|
LAS
BRAVAS NO 1
|
2009
|
002
|
001
|
1528.85
|
|
10011273X01
|
LAS
BRAVAS NO 2
|
2009
|
002
|
001
|
1620.01
|
|
10121202
|
COLORADO
DOS
|
2008
|
002
|
002
|
20000.03
|
|
10034502
|
DON
NATHAN
|
2008
|
002
|
002
|
5446.06
|
|
10310296
|
EUREKA
DOS
|
2008
|
002
|
002
|
5137.95
|
|
10310396
|
EUREKA
TRES
|
2008
|
002
|
002
|
12316.04
|
|
10310496
|
EUREKA
CUATRO
|
2008
|
002
|
002
|
1664.89
|
|
10176600
|
EUREKA
CINCO
|
2008
|
002
|
002
|
208.61
|
|
10054901
|
EUREKA
SIETE
|
2008
|
002
|
002
|
17600.04
|
|
10269903
|
LA
CURVA SP
|
2008
|
002
|
002
|
50.61
|
|
10011022X01
|
LAS
BRAVAS NO 1
|
2008
|
002
|
002
|
10192.31
|
|
10011273X01
|
LAS
BRAVAS NO 2
|
2008
|
002
|
002
|
10800.03
|
|
98410.40
|
|
Claim
Number
|
Name
|
Type
|
Company
|
ha
|
|
14195/04
|
Regalo
II
|
CA
|
PacBay
(J.V.)
|
10000
|
|
14399/04
|
Regalo
III
|
CA
|
PacBay
(J.V.)
|
7670
|
|
14616/05
|
Regalito
1
|
MD
|
PacBay(J.V.)
|
2500
|
|
14617/05
|
Regalito
2
|
MD
|
PacBay
(J.V.)
|
2500
|
|
14642/05
|
Regalo
IV
|
CA
|
PacBay
(J.V.)
|
2350
|
|
14643/05
|
Regalo
V
|
CA
|
PacBay
(J.V.)
|
4000
|
|
14644/05
|
Regalo
VI
|
CA
|
PacBay
(J.V.)
|
4200
|
|
15053/06
|
Regalito
3
|
MD
|
PacBay
(J.V.)
|
2500
|
|
15054/06
|
Regalito
4
|
MD
|
PacBay
(J.V.)
|
2500
|
|
1.
|
Items
listed in Schedule "D" – Section (k)-Government Authorizations of this
Company Disclosure Letter
|
|
1.
|
Letter
Agreement dated January 28, 2003 among the Company, Newmont Mining Corp.
et al. in respect of the Company's Calcatreu property.
|
|
|
2.
|
Franco-Nevada
Corporation royalty re the Calcatreu property.
|
|
|
3.
|
Employment
agreements entered into between the Company and the following
parties:
|
|
|
·
|
Dennis
Gibson dated April 6, 2006
|
|
|
·
|
Marc
Henderson dated June 1, 2006
|
|
|
·
|
Martin
Walter dated June 1, 2006
|
|
|
·
|
John
Chulick dated March 9, 2007
|
|
|
·
|
Flora
Wood dated May 1, 2007
|
|
|
·
|
[name of employee] dated
May 1, 2008
|
|
|
·
|
[name of
employee]
|
|
|
4.
|
Convertible
debenture in the principal amount of C$17,500,000 dated February 8, 2008
issued by the Company in favour of Silverstone Resources (Barbados)
Corp.
|
|
|
5.
|
Option
and joint venture agreement dated March 4, 2008 between the Company and
Consolidated Pacific Bay Minerals Ltd.
|
|
|
6.
|
The
Monterrico Agreement dated October 2, 2009 among the Company (as
guarantor), Absolut, Monterrico, Intercontinental and Pico Machay with
respect to the Pico Machay project.
|
|
|
7.
|
Net
Smelter Return Royalty Agreement between Intercontinental and James D.
Mancuso, Robert M. Miller, Floyd Sabins Trust, Jamie A. Varela and
Jonathan M. January dated November 10, 1995 re the Pico Machay
Project.
|
|
8.
|
The
Sponsorship Agreement between the Company and ACA dated June 8, 2007,
pursuant to which the Company is obligated to pay ACA a sponsorship fee of
$225,000 for the first year, $235,000 for the second year and $245,000 for
the third year. As of the date hereof, the amount owing in fulfilment of
the Sponsorship Agreement is
$100,000.
|
|
PAN
AMERICAN SILVER CORP
|
|||||
|
(Registrant)
|
|||||
|
Date:
|
October
23, 2009
|
By:
|
/s/
Robert Pirooz
|
||
|
Name: Robert
Pirooz
Title: General Counsel, Secretary and
Director
|
|||||