Document:

Exhibit 10.10

 

INDEMNIFICATION AGREEMENT

 

THIS INDEMNIFICATION AGREEMENT (“Agreement”) is made and entered into as of the      day of                 , 20    , by and between SILVER BAY REALTY TRUST CORP., a Maryland corporation (the “Company”), and                                                  (“Indemnitee”).

 

WHEREAS, at the request of the Company, Indemnitee currently serves as a [director] [and] [officer] of the Company and may, therefore, be subjected to claims, suits or proceedings arising as a result of his service; and

 

WHEREAS, as an inducement to Indemnitee to continue to serve as such [director] [and] [officer], the Company has agreed to indemnify and to advance expenses and costs incurred by Indemnitee in connection with any such claims, suits or proceedings, to the maximum extent permitted by law; and

 

WHEREAS, the parties by this Agreement desire to set forth their agreement regarding indemnification and advance of expenses;

 

NOW, THEREFORE, in consideration of the premises and the covenants contained herein, the Company and Indemnitee do hereby covenant and agree as follows:

 

Section 1.                                           Definitions.  For purposes of this Agreement:

 

(a)                                 “Change in Control” means a change in control of the Company occurring after the Effective Date of a nature that would be required to be reported in response to Item 6(e) of Schedule 14A of Regulation 14A (or in response to any similar item on any similar schedule or form) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether or not the Company is then subject to such reporting requirement; provided, however, that, without limitation, such a Change in Control shall be deemed to have occurred if, after the Effective Date (i) any “person” (as such term is used in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing 15% or more of the combined voting power of all of the Company’s then-outstanding securities entitled to vote generally in the election of directors without the prior approval of at least two-thirds of the members of the Board of Directors in office immediately prior to such person’s attaining such percentage interest; (ii) there occurs a proxy contest, or the Company is a party to a merger, consolidation, sale of assets, plan of liquidation or other reorganization not approved by at least two-thirds of the members of the Board of Directors then in office, as a consequence of which members of the Board of Directors in office immediately prior to such transaction or event constitute less than a majority of the Board of Directors thereafter; or (iii) at any time, a majority of the members of the Board of Directors are not individuals (A) who were directors as of the Effective Date or (B) whose election by the Board of Directors or nomination for election by the Company’s stockholders was approved by the affirmative vote of at least two-thirds of the directors then in office who were directors as of the Effective Date or whose election or nomination for election was previously so approved.

 

 

(b)                                 “Corporate Status” means the status of a person as a present or former director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust or other enterprise that such person is or was serving in such capacity at the request of the Company.  As a clarification and without limiting the circumstances in which Indemnitee may be serving at the request of the Company, service by Indemnitee shall be deemed to be at the request of the Company (i) if Indemnitee serves or served as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any corporation, partnership, limited liability company, joint venture, trust or other enterprise (1) of which a majority of the voting power or equity interest was at the time of service owned directly or indirectly by the Company or (2) the management of which was at the time of service controlled directly or indirectly by the Company, or (ii) if, as a result of or in connection with Indemnitee’s service to the Company or any of its affiliated entities, Indemnitee is or was subject to duties by, or required to perform services for, an employee benefit plan or its participants or beneficiaries, including as a deemed fiduciary thereof.

 

(c)                                  “Disinterested Director” means a director of the Company who is not and was not a party to the Proceeding in respect of which indemnification and/or advance of Expenses is sought by Indemnitee.

 

(d)                                 “Effective Date” means the date set forth in the first paragraph of this Agreement.

 

(e)                                  “Expenses” means any and all reasonable and out-of-pocket attorneys’ fees and costs, retainers, court costs, transcript costs, fees of experts, witness fees, travel expenses, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees, federal, state, local or foreign taxes imposed on Indemnitee as a result of the actual or deemed receipt of any payments under this Agreement, ERISA excise taxes and penalties and any other disbursements or expenses incurred in connection with prosecuting, defending, preparing to prosecute or defend, investigating, being or preparing to be a witness in or otherwise participating in a Proceeding.  Expenses shall also include Expenses incurred in connection with any appeal resulting from any Proceeding including, without limitation, the premium for, security for and other costs relating to any cost bond, supersedeas bond or other appeal bond or its equivalent.

 

(f)                                   “Independent Counsel” means a law firm, or a member of a law firm, that is experienced in matters of corporation law and neither is, nor in the past five years has been, retained to represent:  (i) the Company or Indemnitee in any matter material to either such party (other than with respect to matters concerning Indemnitee under this Agreement or of other indemnitees under similar indemnification agreements), or (ii) any other party to or participant or witness in the Proceeding giving rise to a claim for indemnification or advance of Expenses hereunder.  Notwithstanding the foregoing, the term “Independent Counsel” shall not include any person who, under the applicable standards of professional conduct then prevailing, would have a conflict of interest in representing either the Company or Indemnitee in an action to determine Indemnitee’s rights under this Agreement.

 

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(g)                                  “Proceeding” means any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other proceeding, whether brought by or in the right of the Company or otherwise and whether of a civil (including intentional or unintentional tort claims), criminal, administrative or investigative (formal or informal) nature, including any appeal therefrom, except one pending or completed on or before the Effective Date, unless otherwise specifically agreed in writing by the Company and Indemnitee.  If Indemnitee reasonably believes that a given situation may lead to or culminate in the institution of a Proceeding, such situation shall also be considered a Proceeding.

 

Section 2.                                           Services by Indemnitee.  This Agreement shall not impose any independent obligation on Indemnitee or the Company to continue Indemnitee’s service to the Company.  This Agreement shall not be deemed an employment contract between the Company (or any other entity) and Indemnitee.

 

Section 3.                                           General.  The Company shall indemnify, and advance Expenses to, Indemnitee (a) as provided in this Agreement and (b) otherwise to the maximum extent permitted by Maryland law in effect on the Effective Date and as amended from time to time; provided, however, that no change in Maryland law shall have the effect of reducing the benefits available to Indemnitee hereunder based on Maryland law as in effect on the Effective Date.  The rights of Indemnitee provided in this Section 3 shall include, without limitation, the rights set forth in the other sections of this Agreement, including any additional indemnification permitted by Section 2-418(g) of the Maryland General Corporation Law (the “MGCL”).

 

Section 4.                                           Standard for Indemnification.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to any Proceeding, the Company shall indemnify Indemnitee against all judgments, penalties, fines, taxes and interest and amounts paid in settlement (if such settlement is approved in advance by the Company, which approval shall not be unreasonably withheld) (collectively, “Liabilities”) and all Expenses actually and reasonably incurred by him or on his behalf in connection with any such Proceeding unless it is established by clear and convincing evidence that (a) the act or omission of Indemnitee was material to the matter giving rise to the Proceeding and (i) was committed in bad faith or (ii) was the result of active and deliberate dishonesty, (b) Indemnitee actually received an improper personal benefit in money, property or services or (c) in the case of any criminal Proceeding, Indemnitee had reasonable cause to believe that his conduct was unlawful.

 

Section 5.                                           Certain Limits on Indemnification.  Notwithstanding any other provision of this Agreement (other than Section 6), Indemnitee shall not be entitled to:

 

(a)                                 indemnification hereunder if the Proceeding was one by or in the right of the Company and Indemnitee is adjudged to be liable to the Company;

 

(b)                                 indemnification hereunder if Indemnitee is adjudged to be liable on the basis that personal benefit was improperly received in any Proceeding charging improper personal benefit to Indemnitee, whether or not involving action in the Indemnitee’s Corporate Status;

 

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(c)                                  indemnification or advance of Expenses hereunder if the Proceeding was brought by Indemnitee unless: (i) the Proceeding was brought to enforce indemnification under this Agreement, and then only to the extent in accordance with and as authorized by Section 12 of this Agreement, or (ii) the Company’s charter or Bylaws, a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors or an agreement approved by the Board of Directors to which the Company is a party expressly provides otherwise; or

 

(d)                                 indemnification or advance of Expenses hereunder with respect to any settlement or judgment for disgorgement of profits pursuant to the short-swing profit recapture provisions of Section 16(b) of the Exchange Act.

 

Section 6.                                           Court-Ordered Indemnification.  Notwithstanding any other provision of this Agreement, a court of appropriate jurisdiction, upon application of Indemnitee and such notice as the court shall require, may order indemnification of Indemnitee by the Company in the following circumstances:

 

(a)                                 if such court determines that Indemnitee is entitled to reimbursement under Section 2-418(d)(1) of the MGCL, the court shall order indemnification, in which case Indemnitee shall be entitled to recover the Expenses of securing such reimbursement; or

 

(b)                                 if such court determines that Indemnitee is fairly and reasonably entitled to indemnification in view of all the relevant circumstances, whether or not Indemnitee (i) has met the standards of conduct set forth in Section 2-418(b) of the MGCL or (ii) has been adjudged liable for receipt of an improper personal benefit under Section 2-418(c) of the MGCL, the court may order such indemnification as the court shall deem proper.  However, indemnification with respect to any Proceeding by or in the right of the Company or in which liability shall have been adjudged in the circumstances described in Section 2-418(c) of the MGCL shall be limited to Expenses.

 

Section 7.                                           Indemnification for Expenses and Liabilities of an Indemnitee Who is Wholly or Partly Successful.  Notwithstanding any other provision of this Agreement, and without limiting any such provision, to the extent that Indemnitee was or is, by reason of his Corporate Status, made a party to (or otherwise becomes a participant in) any Proceeding and is successful, on the merits or otherwise, in the defense of such Proceeding, Indemnitee shall be indemnified for all Expenses and Liabilities actually and reasonably incurred by him or on his behalf in connection therewith.  If Indemnitee is not wholly successful in such Proceeding but is successful, on the merits or otherwise, as to one or more but less than all claims, issues or matters in such Proceeding, the Company shall indemnify Indemnitee under this Section 7 for all Expenses and Liabilities actually and reasonably incurred by him or on his behalf in connection with each successfully resolved claim, issue or matter, allocated on a reasonable and proportionate basis.  For purposes of this Section 7 and, without limitation, the termination of any claim, issue or matter in such a Proceeding by dismissal, with or without prejudice, shall be deemed to be a successful result as to such claim, issue or matter.

 

Section 8.                                           Advance of Expenses for Indemnitee.  If, by reason of Indemnitee’s Corporate Status, Indemnitee is, or is threatened to be, made a party to (or

 

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otherwise becomes a participant in) any Proceeding, the Company shall, without requiring a preliminary determination of Indemnitee’s ultimate entitlement to indemnification hereunder, advance all reasonable Expenses incurred by or on behalf of Indemnitee in connection with such Proceeding.  Such advance or advances shall be made within ten days after the receipt by the Company of a statement or statements requesting such advance or advances from time to time, whether prior to or after final disposition of such Proceeding, and may be in the form of, in the reasonable discretion of Indemnitee (but without duplication) (a) payment of such Expenses directly to third parties on behalf of Indemnitee, (b) advancement to Indemnitee of funds in an amount sufficient to pay such Expenses or (c) reimbursement to Indemnitee for Indemnitee’s payment of such Expenses.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee and shall include or be preceded or accompanied by a written affirmation by Indemnitee of Indemnitee’s good faith belief that the standard of conduct necessary for indemnification by the Company as authorized by law and by this Agreement has been met and a written undertaking by or on behalf of Indemnitee, in substantially the form attached hereto as Exhibit A or in such form as may be required under applicable law as in effect at the time of the execution thereof, to reimburse the portion of any Expenses advanced to Indemnitee relating to claims, issues or matters in the Proceeding as to which it shall ultimately be established, by clear and convincing evidence, that the standard of conduct has not been met by Indemnitee and which have not been successfully resolved as described in Section 7 of this Agreement.  To the extent that Expenses advanced to Indemnitee do not relate to a specific claim, issue or matter in the Proceeding, such Expenses shall be allocated on a reasonable and proportionate basis.  The undertaking required by this Section 8 shall be an unlimited general obligation by or on behalf of Indemnitee and shall be accepted without reference to Indemnitee’s financial ability to repay such advanced Expenses and without any requirement to post security therefor.

 

Section 9.                                           Indemnification and Advance of Expenses as a Witness or Other Participant.  Notwithstanding any other provision of this Agreement, to the extent that Indemnitee is or may be, by reason of his Corporate Status, made a witness or otherwise asked to participate in any Proceeding, whether instituted by the Company or any other party, and to which Indemnitee is not a party, he shall be advanced all reasonable Expenses and indemnified against all Expenses actually and reasonably incurred by him or on his behalf in connection therewith within ten days after the receipt by the Company of a statement or statements requesting such advance or indemnification from time to time, whether prior to or after final disposition of such Proceeding.  Such statement or statements shall reasonably evidence the Expenses incurred by Indemnitee.

 

Section 10.                                    Procedure for Determination of Entitlement to Indemnification.

 

(a)                                 To obtain indemnification under this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification.  Indemnitee may submit one or more such requests from time to time and at such time(s) as Indemnitee deems appropriate in his sole discretion.  The officer of the Company receiving any such request from Indemnitee shall, promptly upon receipt of such a request for indemnification, advise the Board of Directors that Indemnitee has requested indemnification.

 

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(b)                                 Upon written request by Indemnitee for indemnification pursuant to Section 10(a) above, a determination, if required by applicable law, with respect to Indemnitee’s entitlement thereto shall promptly be made in the specific case: (i) if a Change in Control shall have occurred, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee, which Independent Counsel shall be selected by the Indemnitee and approved by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL, which approval will not be unreasonably withheld; or (ii) if a Change in Control shall not have occurred, (A) by the Board of Directors by a majority vote of a quorum consisting of Disinterested Directors or, if such a quorum cannot be obtained, then by a majority vote of a duly authorized committee of the Board of Directors consisting solely of one or more Disinterested Directors, (B) if Independent Counsel has been selected by the Board of Directors in accordance with Section 2-418(e)(2)(ii) of the MGCL and approved by the Indemnitee, which approval shall not be unreasonably withheld, by Independent Counsel, in a written opinion to the Board of Directors, a copy of which shall be delivered to Indemnitee or (C) if so directed by a majority of the members of the Board of Directors, by the stockholders of the Company.  If it is so determined that Indemnitee is entitled to indemnification, payment to Indemnitee shall be made within ten days after such determination.  Indemnitee shall cooperate with the person, persons or entity making such determination with respect to Indemnitee’s entitlement to indemnification, including providing to such person, persons or entity upon reasonable advance request any documentation or information which is not privileged or otherwise protected from disclosure and which is reasonably available to Indemnitee and reasonably necessary to such determination in the discretion of the Board of Directors or Independent Counsel if retained pursuant to clause (ii)(B) of this Section 10(b).  Any Expenses incurred by Indemnitee in so cooperating with the person, persons or entity making such determination shall be borne by the Company (irrespective of the determination as to Indemnitee’s entitlement to indemnification) and the Company shall indemnify and hold Indemnitee harmless therefrom.

 

(c)                                  The Company shall pay the reasonable fees and expenses of Independent Counsel, if one is appointed. Notwithstanding any other provision of this Agreement, the Company shall not be required to pay expenses of more than one Independent Counsel in connection with all matters concerning a single Indemnitee, and such Independent Counsel shall be the Independent Counsel for any or all other Indemnitees unless (i) the Company otherwise determines or (ii) any Indemnitee shall provide a written statement setting forth in detail a reasonable objection to such Independent Counsel representing other indemnitees under agreements similar to this Agreement.

 

Section 11.                                    Presumptions and Effect of Certain Proceedings.

 

(a)                                 In making any determination with respect to entitlement to indemnification hereunder, the person or persons or entity making such determination shall presume that Indemnitee is entitled to indemnification under this Agreement if Indemnitee has submitted a request for indemnification in accordance with Section 10(a) of this Agreement, and the Company shall have the burden of proof to overcome that presumption in connection with the making of any determination contrary to that presumption.

 

(b)                                 The termination of any Proceeding or of any claim, issue or matter therein, by judgment, order, settlement or conviction, upon a plea of nolo contendere or its equivalent, or

 

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entry of an order of probation prior to judgment, does not create a presumption that Indemnitee did not meet the requisite standard of conduct described herein for indemnification.

 

(c)                                  The knowledge and/or actions, or failure to act, of any other director, officer, employee or agent of the Company or any other director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise shall not be imputed to Indemnitee for purposes of determining any other right to indemnification under this Agreement.

 

(d)                                 For purposes of any determination of whether any act or omission of the Indemnitee met the requisite standard of conduct described herein for indemnification, each act of the Indemnitee shall be deemed to have met such standard if the Indemnittee’s action is based on the records or books of accounts of the Company, including financial statements, or on information supplied to the Indemnitee by the officers of the Company in the course of their duties, or on the advice of legal counsel for the Company or on information or records given or reports made to the Company by an independent certified public accountant or by an appraiser or other expert selected with reasonable care by the Company.  The provisions of this Section 11(d) shall not be deemed to be exclusive or to limit in any way the other circumstances in which the Indemnitee may be deemed to have met the applicable standard of conduct set forth in this Agreement or under applicable law.

 

Section 12.                                    Remedies of Indemnitee.

 

(a)                                 If (i) a determination is made pursuant to Section 10(b) of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (ii) advance of Expenses is not timely made pursuant to Section 8 or Section 9 of this Agreement, (iii) no determination of entitlement to indemnification shall have been made pursuant to Section 10(b) of this Agreement within 60 days after receipt by the Company of the request for indemnification, (iv) payment of indemnification is not made pursuant to Section 7 or Section 9 of this Agreement within ten days after receipt by the Company of a written request therefor, or (v) payment of indemnification pursuant to any other section of this Agreement or the charter or Bylaws of the Company is not made within ten days after a determination has been made that Indemnitee is entitled to indemnification, Indemnitee shall be entitled to an adjudication in an appropriate court located in the State of Maryland, or in any other court of competent jurisdiction, of his entitlement to such indemnification or advance of Expenses.  Alternatively, Indemnitee, at his option, may seek an award in arbitration to be conducted by a single arbitrator pursuant to the Commercial Arbitration Rules of the American Arbitration Association.  Indemnitee shall commence a proceeding seeking an adjudication or an award in arbitration within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 12(a); provided, however, that the foregoing clause shall not apply to a proceeding brought by Indemnitee to enforce his rights under Section 7 of this Agreement.  Except as set forth herein, the provisions of Maryland law (without regard to its conflicts of laws rules) shall apply to any such arbitration.  The Company shall not oppose Indemnitee’s right to seek any such adjudication or award in arbitration.

 

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(b)                                 In any judicial proceeding or arbitration commenced pursuant to this Section 12, Indemnitee shall be presumed to be entitled to indemnification or advance of Expenses, as the case may be, under this Agreement and the Company shall have the burden of proving by clear and convincing evidence that Indemnitee is not entitled to indemnification or advance of Expenses, as the case may be.  If Indemnitee commences a judicial proceeding or arbitration pursuant to this Section 12, Indemnitee shall not be required to reimburse the Company for any advances pursuant to Section 8 of this Agreement until a final determination is made with respect to Indemnitee’s entitlement to indemnification (as to which all rights of appeal have been exhausted or lapsed).  The Company shall, to the fullest extent not prohibited by law, be precluded from asserting in any judicial proceeding or arbitration commenced pursuant to this Section 12 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court or before any such arbitrator that the Company is bound by all of the provisions of this Agreement.

 

(c)                                  If a determination shall have been made pursuant to Section 10(b) of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding or arbitration commenced pursuant to this Section 12, absent a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification.

 

(d)                                 In the event that Indemnitee is successful in seeking, pursuant to this Section 12, a judicial adjudication of or an award in arbitration to enforce his rights under, or to recover damages for breach of, this Agreement, Indemnitee shall be entitled to recover from the Company, and shall be indemnified by the Company for, any and all Expenses and Liabilities actually and reasonably incurred by him in such judicial adjudication or arbitration.  If it shall be determined in such judicial adjudication or arbitration that Indemnitee is entitled to receive part but not all of the indemnification or advance of Expenses sought, the Expenses incurred by Indemnitee in connection with such judicial adjudication or arbitration shall be appropriately prorated.

 

(e)                                  Interest shall be paid by the Company to Indemnitee at the maximum rate allowed to be charged for judgments under the Courts and Judicial Proceedings Article of the Annotated Code of Maryland for amounts which the Company pays or is obligated to pay for the period (i) commencing with either the tenth day after the date on which the Company was requested to advance Expenses in accordance with Section 8 or Section 9 of this Agreement or the 60th day after the date on which the Company was requested to make the determination of entitlement to indemnification under Section 10(b) of this Agreement, as applicable, and (ii) ending on the date such payment is made to Indemnitee by the Company.

 

Section 13.                                    Defense of the Underlying Proceeding.

 

(a)                                 Indemnitee shall notify the Company promptly in writing upon being served with or receiving any summons, citation, subpoena, complaint, indictment, notice, request or other document relating to any Proceeding which may result in the right to indemnification or the advance of Expenses hereunder and shall include with such notice a description of the nature of the Proceeding and a summary of the facts underlying the Proceeding.  The failure to give any

 

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such notice shall not disqualify Indemnitee from the right, or otherwise affect in any manner any right of Indemnitee, to indemnification or the advance of Expenses under this Agreement unless the Company’s ability to defend in such Proceeding or to obtain proceeds under any insurance policy is adversely prejudiced thereby, and then only to the extent the Company is thereby actually so prejudiced.

 

(b)                                 Subject to the provisions of the last sentence of this Section 13(b) and of Section 13(c) below, the Company shall have the right to defend Indemnitee in any Proceeding which may give rise to indemnification hereunder; provided, however, that the Company shall notify Indemnitee of any such decision to defend within 15 calendar days following receipt of notice of any such Proceeding under Section 13(a) above.  The Company shall not, without the prior written consent of Indemnitee, which shall not be unreasonably withheld or delayed, consent to the entry of any judgment against Indemnitee or enter into any settlement or compromise of a claim against Indemnitee which (i) includes an admission of fault of Indemnitee, (ii) does not include, as an unconditional term thereof, the full release of Indemnitee from all liability in respect of such Proceeding, which release shall be in form and substance reasonably satisfactory to Indemnitee or (iii) would impose any Expense, Liability or limitation on Indemnitee.  This Section 13(b) shall not apply to a Proceeding brought by Indemnitee under Section 12 of this Agreement.

 

(c)                                  Notwithstanding the provisions of Section 13(b) above, if in a Proceeding to which Indemnitee is a party by reason of Indemnitee’s Corporate Status, (i) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that he may have separate defenses or counterclaims to assert with respect to any issue which may not be consistent with other defendants in such Proceeding, (ii) Indemnitee reasonably concludes, based upon an opinion of counsel approved by the Company, which approval shall not be unreasonably withheld, that an actual or apparent conflict of interest or potential conflict of interest exists between Indemnitee and the Company, or (iii) if the Company fails to assume the defense of such Proceeding in a timely manner, Indemnitee shall be entitled to be represented by separate legal counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company.  In addition, if the Company fails to comply with any of its obligations under this Agreement or in the event that the Company or any other person takes any action to declare this Agreement void or unenforceable, or institutes any Proceeding to deny or to recover from Indemnitee the benefits intended to be provided to Indemnitee hereunder, Indemnitee shall have the right to retain counsel of Indemnitee’s choice, subject to the prior approval of the Company, which approval shall not be unreasonably withheld, at the expense of the Company (subject to Section 12(d) of this Agreement), to represent Indemnitee in connection with any such matter.

 

Section 14.                                    Non-Exclusivity; Survival of Rights; Subrogation.

 

(a)                                 The rights of indemnification and advance of Expenses as provided by this Agreement shall not be deemed exclusive of any other rights to which Indemnitee may at any time be entitled under applicable law, the charter or Bylaws of the Company, any agreement or a resolution of the stockholders entitled to vote generally in the election of directors or of the Board of Directors, or otherwise.  Unless consented to in writing by Indemnitee, no amendment,

 

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alteration or repeal of this Agreement or of any provision hereof shall limit or restrict any right of Indemnitee under this Agreement in respect of any action taken or omitted by such Indemnitee in his Corporate Status prior to such amendment, alteration or repeal, regardless of whether a claim with respect to such action or inaction is raised prior or subsequent to such amendment, alteration or repeal.  No right or remedy herein conferred is intended to be exclusive of any other right or remedy, and every other right or remedy shall be cumulative and in addition to every other right or remedy given hereunder or now or hereafter existing at law or in equity or otherwise.  The assertion of any right or remedy hereunder, or otherwise, shall not prohibit the concurrent assertion or employment of any other right or remedy.

 

(b)                                 In the event of any payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and take all action necessary to secure such rights, including execution of such documents as are necessary to enable the Company to bring suit to enforce such rights.

 

Section 15.                                    Insurance.  The Company will use its reasonable best efforts to acquire directors and officers liability insurance, on terms and conditions deemed appropriate by the Board of Directors, with the advice of counsel, covering Indemnitee or any claim made against Indemnitee by reason of his Corporate Status and covering the Company for any indemnification or advance of Expenses made by the Company to Indemnitee for any claims made against Indemnitee by reason of his Corporate Status.  Without in any way limiting any other obligation under this Agreement, the Company shall indemnify Indemnitee for any payment by Indemnitee arising out of the amount of any deductible or retention and the amount of any excess of the aggregate of all Liabilities and Expenses incurred by Indemnitee in connection with a Proceeding over the coverage of any insurance referred to in the previous sentence.  The purchase, establishment and maintenance of any such insurance shall not in any way limit or affect the rights or obligations of the Company or Indemnitee under this Agreement except as expressly provided herein, and the execution and delivery of this Agreement by the Company and the Indemnitee shall not in any way limit or affect the rights or obligations of the Company under any such insurance policies.  If, at the time the Company receives notice from any source of a Proceeding to which Indemnitee is a party or a participant (as a witness or otherwise), the Company has director and officer liability insurance in effect, the Company shall give prompt notice of such Proceeding to the insurers in accordance with the procedures set forth in the respective policies.

 

Section 16.                                    Coordination of Payments.  The Company shall not be liable under this Agreement to make any payment of amounts otherwise indemnifiable or payable or reimbursable as Expenses hereunder if and to the extent that Indemnitee has otherwise actually received such payment under any insurance policy, contract, agreement or otherwise.

 

Section 17.                                    Reports to Stockholders.  To the extent required by the MGCL, the Company shall report in writing to its stockholders the payment of any amounts for indemnification of, or advance of Expenses to, Indemnitee under this Agreement arising out of a Proceeding by or in the right of the Company with the notice of the meeting of stockholders of the Company next following the date of the payment of any such indemnification or advance of Expenses or prior to such meeting.

 

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Section 18.                                    Duration of Agreement; Binding Effect.

 

(a)                                 This Agreement shall continue until and terminate on the later of (i) the date that Indemnitee shall have ceased to serve as a director, officer, employee or agent of the Company or as a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, real estate investment trust, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company and (ii) the date that Indemnitee is no longer subject to any actual or possible Proceeding (including any rights of appeal thereto and any Proceeding commenced by Indemnitee pursuant to Section 12 of this Agreement).

 

(b)                                 The indemnification and advance of Expenses provided by, or granted pursuant to, this Agreement shall be binding upon and be enforceable by the parties hereto and their respective successors and assigns (including any direct or indirect successor by purchase, merger, consolidation or otherwise to all or substantially all of the business or assets of the Company), shall continue as to an Indemnitee who has ceased to be a director, officer, employee or agent of the Company or a director, trustee, officer, partner, manager, managing member, fiduciary, employee or agent of any other foreign or domestic corporation, partnership, limited liability company, joint venture, trust, employee benefit plan or other enterprise that such person is or was serving in such capacity at the request of the Company, and shall inure to the benefit of Indemnitee and his spouse, assigns, heirs, devisees, executors and administrators and other legal representatives.

 

(c)                                  The Company shall require and cause any successor (whether direct or indirect by purchase, merger, consolidation or otherwise) to all, substantially all or a substantial part, of the business and/or assets of the Company, by written agreement in form and substance satisfactory to Indemnitee, expressly to assume and agree to perform this Agreement in the same manner and to the same extent that the Company would be required to perform if no such succession had taken place.

 

(d)                                 The Company and Indemnitee agree herein that a monetary remedy for breach of this Agreement, at some later date, may be inadequate, impracticable and difficult of proof, and further agree that such breach may cause Indemnitee irreparable harm.  Accordingly, the parties hereto agree that Indemnitee may enforce this Agreement by seeking injunctive relief and/or specific performance hereof, without any necessity of showing actual damage or irreparable harm and that by seeking injunctive relief and/or specific performance, Indemnitee shall not be precluded from seeking or obtaining any other relief to which he may be entitled.  Indemnitee shall further be entitled to such specific performance and injunctive relief, including temporary restraining orders, preliminary injunctions and permanent injunctions, without the necessity of posting bonds or other undertakings in connection therewith.  The Company acknowledges that, in the absence of a waiver, a bond or undertaking may be required of Indemnitee by a court, and the Company hereby waives any such requirement of such a bond or undertaking.

 

Section 19.                                    Severability.  If any provision or provisions of this Agreement shall be held to be invalid, illegal or unenforceable for any reason whatsoever: (a) the validity,

 

11

 

legality and enforceability of the remaining provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable that is not itself invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and shall remain enforceable to the fullest extent permitted by law; (b) such provision or provisions shall be deemed reformed to the extent necessary to conform to applicable law and to give the maximum effect to the intent of the parties hereto; and (c) to the fullest extent possible, the provisions of this Agreement (including, without limitation, each portion of any Section, paragraph or sentence of this Agreement containing any such provision held to be invalid, illegal or unenforceable, that is not itself invalid, illegal or unenforceable) shall be construed so as to give effect to the intent manifested thereby.

 

Section 20.                                    Identical Counterparts.  This Agreement may be executed in one or more counterparts, each of which shall for all purposes be deemed to be an original but all of which together shall constitute one and the same Agreement.  One such counterpart signed by the party against whom enforceability is sought shall be sufficient to evidence the existence of this Agreement.

 

Section 21.                                    Headings.  The headings of the paragraphs of this Agreement are inserted for convenience only and shall not be deemed to constitute part of this Agreement or to affect the construction thereof.

 

Section 22.                                    Modification and Waiver.  No supplement, modification or amendment of this Agreement shall be binding unless executed in writing by both of the parties hereto.  No waiver of any of the provisions of this Agreement shall be deemed or shall constitute a waiver of any other provisions hereof (whether or not similar) nor shall such waiver constitute a continuing waiver.

 

Section 23.                                    Notices.  All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given if (i) delivered by hand and receipted for by the party to whom said notice or other communication shall have been directed or (ii) mailed by certified or registered mail with postage prepaid, on the third business day after the date on which it is so mailed:

 

(a)                                 If to Indemnitee, to the address set forth on the signature page hereto.

 

(b)                                 If to the Company, to:

 

Silver Bay Realty Trust Corp.
 601 Carlson Parkway, Suite 250
 Minnetonka, MN 55305
 Attn: General Counsel

 

or to such other address as may have been furnished in writing to Indemnitee by the Company or to the Company by Indemnitee, as the case may be.

 

12

 

Section 24.                                    Governing Law.  The parties agree that this Agreement shall be governed by, and construed and enforced in accordance with, the laws of the State of Maryland, without regard to its conflicts of laws rules.

 

Section 25.                                    Miscellaneous.  Use of the masculine pronoun shall be deemed to include usage of the feminine pronoun where appropriate.

 

Section 26.                                    Contribution.  If the indemnification provided in this Agreement is unavailable in whole or in part and may not be paid to Indemnitee for any reason, other than for failure to satisfy the standard of conduct set forth in Section 4 or due to the provisions of Section 5, then, with respect to any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), to the fullest extent permissible under applicable law, the Company, in lieu of indemnifying and holding harmless Indemnitee, shall pay, in the first instance, the entire amount incurred by Indemnitee, whether for Expenses or Liabilities, in connection with any Proceeding without requiring Indemnitee to contribute to such payment, and the Company hereby waives and relinquishes any right of contribution it may have at any time against Indemnitee.

 

[SIGNATURE PAGE FOLLOWS]

 

13

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written.

 

	
 
    	
COMPANY:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
SILVER   BAY REALTY TRUST CORP.
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
 
    
	
 
    	
Name:
    
	
 
    	
Title:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
INDEMNITEE:
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
Name:
    
	
 
    	
Address:
    

 

14

 

EXHIBIT A

 

FORM OF AFFIRMATION AND UNDERTAKING TO REPAY EXPENSES ADVANCED

 

To:  The Board of Directors of Silver Bay Realty Trust Corp.

 

Re:  Undertaking to Repay Expenses Advanced

 

Ladies and Gentlemen:

 

This Affirmation and Undertaking is being provided pursuant to that certain Indemnification Agreement dated the            day of                             , 20        , by and between Silver Bay Realty Trust Corp., a Maryland corporation (the “Company”), and the undersigned Indemnitee (the “Indemnification Agreement”), pursuant to which I am entitled to advance of Expenses in connection with [Description of Proceeding] (the “Proceeding”).

 

Terms used herein and not otherwise defined shall have the meanings specified in the Indemnification Agreement.

 

I am subject to the Proceeding by reason of my Corporate Status or by reason of alleged actions or omissions by me in such capacity.  I hereby affirm my good faith belief that at all times, insofar as I was involved as [a director] [an officer] of the Company, in any of the facts or events giving rise to the Proceeding, I (1) did not act with bad faith or active or deliberate dishonesty, (2) did not receive any improper personal benefit in money, property or services and (3) in the case of any criminal proceeding, had no reasonable cause to believe that any act or omission by me was unlawful.

 

In consideration of the advance of Expenses by the Company for reasonable attorneys’ fees and related Expenses incurred by me in connection with the Proceeding (the “Advanced Expenses”), I hereby agree that if, in connection with the Proceeding, it is established that (1) an act or omission by me was material to the matter giving rise to the Proceeding and (a) was committed in bad faith or (b) was the result of active and deliberate dishonesty or (2) I actually received an improper personal benefit in money, property or services or (3) in the case of any criminal proceeding, I had reasonable cause to believe that the act or omission was unlawful, then I shall promptly reimburse the portion of the Advanced Expenses relating to the claims, issues or matters in the Proceeding as to which the foregoing findings have been established.

 

[Signatures appear on the following page.]

 

15

 

IN WITNESS WHEREOF, I have executed this Affirmation and Undertaking on this        day of                                         , 20        .

 

 

	
 
    	
 
    
	
 
    	
Name:
    

 

 

16Passport Potash Inc - Exhibit 10.1 - Filed by newsfilecorp.com

JOINT EXPLORATION AGREEMENT 

          THIS
AGREEMENT (this “Agreement”) is by and between The Hopi Tribe, a
federally recognized Indian tribe, with an address and contact for purposes of
this Agreement, until further notice from the Tribe’s Chairman, c/o Thayne Lowe,
Osborn Maledon PA, 2929 N. Central Ave., Suite 2100, Phoenix, Arizona 85012,
telephone 602.640.9391, email tlowe@omlaw.com (the
“Tribe”), on the one hand, and Passport Potash Inc., a Canadian
corporation, and PPI Holding Corp., its wholly owned subsidiary (collectively,
and together with its/their Affiliates, if any, “Licensee”), with
an address and contact for purposes of this Agreement, until further notice from
Licensee, c/o John H. Eckersley, 3346 W. Guadalupe Road, Apache Junction, AZ
85120, telephone 480.288.6530, email jeckersley@passportpotash.com, on
the other hand, and is effective as of the date set forth above the Parties’
signatures below (“Effective Date”). 

          FOR
VALUABLE CONSIDERATION, including the mutual covenants contained herein, the
Parties hereto stipulate and agree as follows: 

1.       
DEFINITIONS 

          “Affiliate”
means any entity directly or indirectly controlling, controlled by or under
common control with a Party. As used in this definition, “control” means the
possession, directly or indirectly, of the power to direct, or cause the
direction of, the management and policies of a company, through ownership,
contract or otherwise, and “controlled” and “controlling” shall have correlative
meanings. 

          “ERCOSPLAN”
means ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH. 

          “Exploration
Program” means Licensee’s and Licensee’s Contractors’
exploration, drilling, testing, analysis, interpretation, reporting and other
activity to explore, characterize and/or delineate the extent and grade of
potash and other deposits underlying the Licensee Property and/or the Hopi
Property and/or adjacent property (collectively, the “Combined
Properties”), to otherwise evaluate geologic, stratigraphic and
structural information for the Licensee Property and/or the Hopi Property and/or
adjacent property including (without limitation) to assess the predictability,
thickness, and continuity of the potash and other mineral horizons and map
possible faults and other geologic structures, to explore for the presence of
other valuable minerals, and to prepare and/or update any reports necessary to
determine the economic viability of developing a potash mine on the Combined
Properties (the “Project”), including, but not
limited to: National Instrument (NI) 43-101 Technical Report; Preliminary
Economic Assessment; Pre-Feasibility Reports; and Bankable Feasibility Reports.

          “Exploration
Program Results” means all data (processed and raw unprocessed), samples
(including without limitation cuttings and core samples), analyses and tests
performed and the results of any such analyses and tests, logs, interpretations
and reports written or otherwise made or presented, and any other information
obtained, generated or created, relating to the Exploration Program, including without limitation: (i)
core and cutting samples; (ii) borehole, drilling, mud, geophysical or
electrical, sonic or other logs; (iii) geological characterizations; (iv)
analyses and reports, including without limitation those relating to potash
depth, volume, grade and other characteristics; (v) an interpreted copy of any
seismic line; (vi) NI 43-101 Technical Reports; (vii) 3-D geological models;
(viii) resource block models; (ix) estimates of in-place resources; and (x) any
economic and feasibility analyses relating to the development of potash or other
underground resources underlying the Hopi Property and/or the Licensee Property
and/or adjacent property, including without limitation Preliminary Economic
Assessment, Pre-Feasibility Reports, and Bankable Feasibility Reports. 

1 

          “Hopi
Property” means the land described in Schedule A. 

          “Licensee
Contractor” means any Licensee employee or contractor (including without
limitation ERCOSPLAN) involved in the Exploration Program, including without
limitation any employee or contractor that performs any (1) drilling, (2)
coring, (3) borehole, drilling, mud, geophysical or electrical, sonic or other
logging, (4) examination, sampling or bagging of cuttings or core samples, (5)
geological analysis, (6) assaying, (7) chemical testing, (8) seismic testing,
(9) report writing (including without limitation completion of or updating an NI
43-101 technical report, preliminary economic assessment; pre-feasibility
reports; and bankable feasibility reports) and/or (10) any other or related
work, analysis or interpretation, in connection with the Exploration Program.

          “Licensee
Property” means the land described in Schedule B. 

          “Party”
means either of the Tribe or Licensee, and “Parties” refers to
both of the Tribe and Licensee. 

2.       
SCOPE AND PURPOSE OF AGREEMENT 

          Reference
is made to that certain letter of intent dated September 26, 2012 signed by the
Tribe and Licensee (the “Letter of Intent”). A copy
of the Letter of Intent is attached hereto as Exhibit 1. This Agreement
is a definitive agreement contemplated by the Letter of Intent to implement the
“JEP” (as defined in the Letter of Intent). The JEP
is more specifically defined herein as, and the Exploration Program shall
conform to, the two phase drilling campaign on Hopi Land generally described in
the ERCOSPLAN Memo attached hereto as Exhibit 2. The Tribe and Licensee
acknowledge and agree that phase two of the Exploration Program generally
described in the ERCOSPLAN Memo attached hereto as Exhibit 2 shall be
specified and may change based on ERCOSPLAN’s continuing evaluation of data and
ERCOSPLAN’s recommendations. 

3.       
ERCOSPLAN’S ROLE 

          The
Tribe and Licensee acknowledge and agree that ERCOSPLAN, for the joint benefit
of the Tribe and Licensee, will provide geological supervision and report
authorship during all aspects of the Exploration Program, including without
limitation (i) location of drill holes, (ii) identification of drill hole
objectives, (iii) geological supervision of the drilling activities, (iv) advice
regarding drilling fluids applied for best coring results, (v) lithological core
description, (vi) core sampling for assaying at site, (vii)
responsibility for appropriate sample packaging, (viii) supervision of assaying,
(ix) QA/QC matters, (x) authorship and Qualified Person role in connection with
National Instrument (NI) 43-101 Technical Reports, Preliminary Economic
Assessment, Pre-Feasibility Reports, and Bankable Feasibility Reports, and (xi)
such other aspects of the Exploration Program as ERCOSPLAN shall determine
necessary or appropriate. ERCOSPLAN’s geological supervision shall be
accomplished as ERCOSPLAN determines appropriate, but will at a minimum include
the presence of one exploration geologist while evaporate sections are being
cored, and stand-by back-office capacity on hold to support the site geologist. 

2 

4.       
COSTS AND EXPENSES 

          4.1      All
costs, charges and expenses incurred in connection with the Exploration Program
shall be Licensee’s sole responsibility, and shall be promptly paid as they come
due. The Tribe shall have no obligation to reimburse or pay any portion of, or
amount on account of, costs, charges and expenses incurred in connection with
the Exploration Program. Without limiting the generality of other indemnities
set forth in this Agreement, Licensee shall indemnify, defend, release, and hold
harmless the Tribe and the “Indemnitees” (as defined below), for,
against and from any claim, damage, lien, loss, cost, charge, expense (including
attorneys’ fees and expenses) or liability (collectively,
“Losses”) resulting from, or caused by, or incurred in connection
with, or alleged to have resulted from, or been caused by, or been incurred in
connection with, in whole or in part, directly or indirectly, the Exploration
Program. Licensee shall cause each agreement with a Licensee Contractor to
include a written term or addendum whereby the Licensee Contractor waives any
claim against the Tribe or lien right against the Hopi Property on account of
such Losses. Licensee’s payment and indemnity obligations under this Section
shall survive the termination of this Agreement. 

5.   
    LICENSE TO ENTER HOPI PROPERTY 

          5.1      License.
The Tribe hereby grants Licensee and the Licensee Contractors a limited license
on the terms and conditions, and during the term, of this Agreement to (a) enter
and cross existing ranch roads on the Hopi Property for ingress and egress
purposes related to the Exploration Program, (b) blade new roads (over routes
and in accordance with criteria approved by the Tribe in advance, which approval
shall not be unreasonably withheld, conditioned or delayed) to drill sites on
the Hopi Property designated by ERCOSPLAN, (c) drill exploratory holes on the
Hopi Property at drill sites designated by ERCOSPLAN, (d) lay cables across the
Hopi Property for purposes of seismic studies that are part of the Exploration
Program, (e) drive a vibrator truck along seismic lines, and (f) blade existing
ranch roads on the Hopi Property. Licensee and the Licensee Contractors shall
not use the Hopi Property for any other purpose without the prior written
approval of the Tribe; provided, that with respect to use of the Hopi Property
identified by ERCOSPLAN in writing as necessary or desirable for purposes of the
Exploration Program, the Tribe’s approval shall not be unreasonably withheld,
conditioned or delayed. Licensee acknowledges that, but for the license hereby
granted, it has, and the Licensee Contractors have, no rights to enter, cross,
use or occupy the Hopi Property, and represents that neither it nor they make
any claim to such rights. The license hereby granted to Licensee by the Tribe
shall automatically terminate and be revoked immediately upon termination of
this Agreement. 

3 

          5.2     
Limitations. Except as expressly provided in Section 5.1, no
other use of the Hopi Property by Licensee or any Licensee Contractor or any
other third party is allowed or shall be permitted by Licensee or any Licensee
Contractor. Without limiting the generality of the foregoing, nothing in this
Agreement shall be construed as establishing (i) any right, title or interest in
the Hopi Property, or (ii) a general right of public access on and over the Hopi
Property, and Licensee (for itself and each Licensee Contractor) expressly
disclaims any such right, title or interest or general right. The foregoing
disclaimer shall survive the termination of this Agreement. 

          5.3     
Maintenance and Care. The Tribe shall have no obligation to
maintain or repair existing ranch roads on the Hopi Property, and the Tribe
shall have no obligation or liability whatsoever on account of Licensee’s or the
Licensee Contractors’ entry upon and use of the Hopi Property. Licensee and the
Licensee Contractors shall exercise reasonable care (which shall include, in the
case of specialized trades or contractors, and engineers and other
professionals, the highest standard of care generally applicable within the
relevant trade, business or profession for the particular undertaking involved),
in entering upon and using the Hopi Property to avoid causing damage to the Hopi
Property, the subsurface thereof, its potash or groundwater resources, or
improvements thereon, or interference with the Tribe’s and the Tribe’s lessee’s
use of the Hopi Property. Licensee and the Licensee Contractors shall cooperate
with the Tribe to preclude any entry by the public onto the Hopi Property. 

          5.4      Tribal
Observer; Employment; Notice of Adverse Occurrences. At the Tribe’s
election, and at the Tribe’s sole cost and expense, the Tribe shall be entitled
to have an observer present for all or any portion of the Exploration Program
activity on the Hopi Property. Any such observer shall comply with job site
safety requirements and shall avoid interfering with Exploration Activity. At
the Tribe’s request, the Tribe shall be given notice of employment opportunities
in connection with the Exploration Program. The Tribe shall be notified
immediately in the event of an occurrence in connection with the Exploration
Program that materially damages, or creates a risk of material damage to, the
Hopi Property, the subsurface thereof, its potash or its groundwater resources,
or the prospects of successfully developing and mining the potash resources in
the Hopi Property, or that otherwise poses a manifest risk of loss, damage,
injury or liability. 

          5.5      Compliance
With Laws. Licensee shall, and shall cause all Licensee Contractors to,
comply with all applicable federal, state, local and other laws and regulations
in connection with any and all actions that take place on the Hopi Property and
otherwise in connection with the Exploration Program. Licensee shall cause all
drilling and other surface work sites on the Hopi Property to be restored and
reclaimed to their former condition. Restoration and rehabilitation, including
the removal of all stockpiles, equipment and materials, shall be completed
within 90 days after completion of work at the site. The subject land shall be
reseeded during the appropriate planting season with flora that approximates the
preexisting flora. The foregoing restoration and reclamation obligation shall
survive the termination of this Agreement. 

          5.6     
Insurance. License and the Licensee Contractors shall maintain
insurance of types, in amounts, with coverages and with carriers that are
industry standard or otherwise acceptable to the Tribe in the Tribe’s reasonable
discretion from time to time. Licensee and the Licensee Contractors shall provide a certificate or certificates thereof
to the Tribe prior to first entry onto the Hopi Property and evidence of all
renewals of the same not less than ten (10) days prior to the expiration date of
such policy. Each such policy shall name the Tribe as an additional insured.

4 

6.       
ASSAYING 

          Chemical
and mineralogical analysis of material obtained in the course of the Exploration
Program will be managed by ERCOSPLAN and performed by a certified laboratory
selected by ERCOSPLAN with proven experience in the analysis of potash salt
rocks. 

7.       
WORK SCHEDULE 

          Licensee
covenants to initiate and achieve completion of the eight (8) drill holes and
related Exploration Program work that are the first phase of the Exploration
Program within the time frames set forth in Schedule C (the “Work
Schedule”). The Work Schedule for the second phase
of the Exploration Program will be based on ERCOSPLAN’s continuing evaluation of
data, ERCOSPLAN’s recommendations, and project requirements. In the event that
Licensee or any Licensee Contractor shall be delayed or hindered in, or
prevented from, the performance of any work, service, or other act required
under this Agreement to be performed in order to achieve compliance with the
Work Schedule and such delay or hindrance is due to causes beyond the control of
the party so delayed or hindered, then performance of such work, service, or
other act shall be excused for the shorter of (1) the period of such delay or
(2) thirty (30) days, and the period for the performance of such work, service,
or other act shall be extended for the shorter of (1) a period equivalent to the
period of such delay or (2) thirty (30) days. The provisions of this Section 7
shall not operate to excuse Licensee from the prompt payment of amounts required
to be paid by Licensee under any provision hereof. 

8.       
INDEMNIFICATION 

          Licensee
shall indemnify, defend, release, and hold harmless the Tribe and the Tribe’s
elected officials, advisors and contractors, employees, agents, lessees,
insurers, successors and assigns
(“Indemnitees”), for, against and from
any Losses resulting from, or caused by, or incurred in connection with, or
alleged to have resulted from, or been caused by, or been incurred in connection
with, in whole or in part, directly or indirectly: (a) any act, omission or
negligence of Licensee or any Licensee Contractor; (b) Licensee’s or any
Licensee Contractor’s entry or presence upon or use of the Hopi Property; (c)
Licensee’s or any Licensee Contractor’s failure to comply with or perform its
obligations under this Agreement; or (d) the Exploration Program or any activity
related to the Exploration Program. The Tribe shall have the right, at its sole
discretion, on its own behalf or on behalf of any Indemnitee, to participate in
or take over the defense of any claim to whatever extent the Tribe deems
necessary to protect its own interest or that of other Indemnitees, and Licensee
shall cooperate fully with the Tribe if the Tribe chooses to participate or take over. The indemnification obligations of this Section
shall survive the termination of this Agreement. 

5 

9.       
EXPLORATION PROGRAM RESULTS 

          9.1      Sharing
of Exploration Program Results. Except as otherwise expressly set forth
herein, Licensee and the Tribe shall each separately have the right to possess
and use all Exploration Program Results for any purpose. Licensee shall
preserve, or shall cause the Licensee Contractors to preserve, and make
available to the Tribe on demand, all Exploration Program Results for a period
of at least five (5) years from the Effective Date. The Tribe acknowledges and
agrees that all Exploration Program Results provided by Licensee or any Licensee
Contractor to the Tribe under this Agreement are provided AS IS and without any
express or implied warranties of any sort, other than Licensee’s warranty that
it is entitled to provide the Tribe with such Exploration Program Results and
that such Exploration Program Results provided to the Tribe truly, correctly and
completely reflect the Exploration Program Results provided or available to
Licensee. Any use of Exploration Program Results by the Tribe or any of its
agents shall be entirely at the Tribe’s own risk. 

          9.2     
Licensee Contractors. Licensee shall cause each of its
agreements with a Licensee Contractor to include a written term or addendum that
allows the Tribe to possess and use for any purpose, and allows Licensee to
discuss, Exploration Program Results with the Tribe, and provides for
preservation of Exploration Program Results as required by this Section 9.
Licensee shall not maintain or enter into any agreement with a Licensee
Contractor that is inconsistent with Licensee’s obligations, or the Tribe’s
rights, under this Section 9. If requested by Licensee or a Licensee Contractor,
the Tribe agrees that it will execute any commercially reasonable release or
certificate of non-reliance with respect to the Exploration Program Results that
is not inconsistent with the Tribe’s rights described in this Agreement. Without
limiting the foregoing, Licensee hereby irrevocably authorizes and instructs
each of the Licensee Contractors to share Exploration Program Results with
ERCOSPLAN for the Tribe’s benefit and to make itself available to the Tribe’s
representatives to answer questions about or discuss the Exploration Program
Results. Licensee consents to the Tribe’s engagement of any Licensee Contractor
to perform additional or related work for the Tribe, at the Tribe’s expense.
Notwithstanding the foregoing provisions of this Section 9.2, (1) Licensee shall
be notified in advance and have the opportunity to be present and participate in
any consultations between the Tribe’s representatives and a Licensee Contractor
pursuant to the foregoing described obligation of the Licensee Contractors to
make themselves available to the Tribe’s representatives to answer questions
about or discuss the Exploration Program Results, and (2) any reasonable
incremental Licensee Contractor charges for such consultations, at rates not
exceeding the rates charged Licensee for similar consultations, shall be borne
by the Tribe; provided, that Licensee acknowledges and agrees that ERCOSPLAN is
separately engaged by the Tribe and is free to discuss alone or otherwise share
with the Tribe, on a confidential basis between ERCOSPLAN and the Tribe at the
Tribe’s expense, any Exploration Program Results. 

6 

          9.3      Use
of Exploration Program Results. The Tribe and Licensee, and their respective
successors and assigns, may use and freely disclose Exploration Program Results
received under this Agreement without prior approval of the other for its or
such successors’ or assigns’ internal use, and for review and use by geologists
and other outside advisors engaged by it (including ERCOSPLAN) or its successors
or assigns, lenders and prospective lenders, venture partners and prospective
venture partners, and others who are subject to confidentiality agreements
consistent with the disclosing Party’s obligations under this Agreement;
provided, no Exploration Program Results shall be shared with venture partners or prospective
venture partners by the Tribe other than Licensee or persons approved in writing
by Licensee in its discretion prior to the earlier of (1) expiration or
termination of one or more of Licensee’s mineral exploration permits from the
Arizona State Land Department pertaining to the Licensee Property, or (2)
October 15, 2014 (such earlier date, the “Automatic Termination
Date”). Aside from the use rights set forth above, and except for
required public disclosure of new or updated NI 43-101 technical reports,
preliminary economic assessments or feasibility studies prepared by ERCOSPLAN,
the Parties shall keep the Exploration Program Results strictly confidential and
shall make no disclosures of Exploration Program Results to third parties,
except for Exploration Program Results which (i) are or become generally
available to the public other than as a result of a disclosure by a Party or
others in violation of the provisions of this Section 9.3, (ii) were or become
available on a non-confidential basis to a Party from a source other than the
other Party or a Licensee Contractor, provided that, to the
disclosing Party’s knowledge, such source is not prohibited from disclosing such
information by a contractual, legal or fiduciary obligation, or (iii) disclosure
as required by applicable Canadian or US securities laws or Exchange
regulations, or (iv) were already in the possession of the disclosing Party or
third parties to whom the disclosing Party provides the Exploration Program
Results consistent with this Section prior to the date hereof and was not
obtained directly or indirectly from the other Party or a Licensee Contractor.
In the event that a Party or third parties to whom a Party provides the
Exploration Program Results consistent with this Section 9.3 receives a request
or is required (by law or regulation, deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process) to disclose
all or any part of the Exploration Program Results, the Party or such third
party, as the case may be, agrees to promptly notify the other Party, unless
prohibited under applicable law, rule or regulation, of the existence, terms and
circumstances surrounding such request or requirement. In such a case, (1) the
disclosing Party or such third parties to whom the disclosing Party provides the
Exploration Program Results consistent with this Section 9.3, as the case may
be, may disclose only that portion of the Exploration Program Results which the
disclosing Party or such third party, as the case may be, is advised by its
counsel is legally required to be disclosed and (2) the disclosing Party or such
third party, as the case may be, shall not be liable for such disclosure unless
disclosure was caused by or resulted from a previous disclosure by the
disclosing Party or such third party not permitted by this Section 9.3. The
Tribe’s obligations under this Section 9.3 as to any particular Exploration
Program Results shall expire on the Automatic Termination Date. 

          9.4      Survival.
The Parties’ respective rights to possess and use, and obligations to share and
preserve and hold confidential, Exploration Program Results shall survive the
termination of this Agreement. 

10.      EXCLUSIVITY

          10.1     
Exclusive Negotiations. For a period commencing on the Effective
Date and ending on the date this Agreement terminates in accordance with Section
11 (the “Exclusivity Period”), the Tribe will negotiate
exclusively with Licensee with respect to the subject matter of the Letter of
Intent, and it will not (nor will it permit any of its officers, agents,
employees or representatives to), directly or indirectly, take any of the
following actions with any party other than Licensee: 

7 

          10.1.1
Solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, participate in any negotiations or discussions
concerning, or cooperate in any manner relating to the subject matter of the
Letter of Intent (a “Transaction”); or

          10.1.2
Enter into any agreement or understanding with any person or entity
providing for a Transaction. 

          10.2     
Competing Projects. During the Exclusivity Period (including any
extension of the Exclusivity Period pursuant to Section 10.3), Licensee will not
(nor will it permit any of its officers, agents, employees or representatives
to), directly or indirectly, take any of the following actions: 

          10.2.1
Solicit or encourage inquiries or proposals with respect to, furnish any
information relating to, participate in any negotiations or discussions
concerning, or cooperate in any manner relating to or in furtherance of
development of potash resources in Township 17 North, Range 25 East, Township 17
North, Range 26 East, Township 18 North, Range 26 East and/or Township 19 North,
Range 26 East, Gila and Salt River Base and Meridian, Apache County, Arizona (a
“Competing Transaction”); or 

          10.2.2
Enter into any agreement or understanding with any person or entity
providing for a Competing Transaction. 

          10.2.3
Notwithstanding the foregoing provisions of this Section 10, Licensee may
elect, by written notice to the Tribe, to terminate the obligations,
restrictions and other undertakings memorialized in Sections 10.1 and 10.2, in
which event Sections 10.1, 10.2 and 10.3 of this Agreement shall be of no
further force or effect. 

          10.3      Extension
of Exclusivity Period. If on the date the Exclusivity Period would otherwise
expire (1) this Agreement has not been superseded by a definitive MDA or other
agreement between the Parties concerning exclusivity, (2) the Exploration
Program as defined in Section 1 has been completed to ERCOSPLAN’s satisfaction
and the Tribe is entitled to use, own and possess, and in fact possesses, the
Exploration Program Results in accordance with this Agreement, (3) the
Exploration Program Results and all other material information then available to
the Parties (including without limitation communications with major mining
companies and banks) indicate that the Project risks are acceptable and the
Project is viable on a standalone project finance basis, and (4) no third party
has gained control of the mineral rights on the Licensee Property, then the
Exclusivity Period will be extended until October 15, 2015. 

          10.4     
Further Assurance. The Tribe represents and warrants to Licensee
that the Tribe has discontinued any negotiations or discussions concerning any
Transaction with any person or entity other than Licensee, that the Tribe is
authorized to enter into this Agreement with Licensee and that entering into
this Agreement does not violate any other agreements to which the Tribe is a
party. Licensee represents and warrants to the Tribe that Licensee has
discontinued any negotiations or discussions concerning any Competing
Transaction, that Licensee is authorized to enter into this Agreement with the
Tribe and that entering into this Agreement does not violate any other
agreements to which Licensee is a party. 

8 

          10.5      Non-Binding.
Notwithstanding any provision of this Agreement or the Letter of Intent to the
contrary, the Parties do not intend to be bound to take any action with respect
to the subject matter of the Letter of Intent, other than as expressly set forth
in this Agreement, unless they enter into a definitive MDA or other agreement
regarding the subject matter of the Letter of Intent, and either Party may, at
any time after the earlier of October 15, 2014 or the termination of this
Agreement pursuant to Section 11, and prior to execution of an MDA, if any, but
subject to the exclusive negotiation provisions of this Agreement, unilaterally
terminate all negotiations without any liability to the other Party. 

11.     
TERMINATION 

          11.1     
Automatic Termination. Unless earlier terminated in accordance
with this Agreement or superseded by another agreement between the Parties, this
Agreement shall terminate automatically, without further act, at 5:00 PM Arizona
time on the Automatic Termination Date. 

          11.2     
Termination by the Tribe. This Agreement is terminable by the
Tribe only as follows: 

          11.2.1     
Upon thirty (30) days prior written notice from the Tribe in the event
of default by Licensee in the performance of any covenant of Licensee hereunder,
which default is not cured within said thirty (30) day notice period, unless the
default is of a nature that cannot reasonably be cured within thirty (30) days
and (a) Licensee gives written notice to the Tribe within ten days after the
Tribe’s notice of default that the default is of a nature that cannot reasonably
be cured within thirty (30) days and outlines to the Tribe the actions that
Licensee has taken, is taking, will take, and the estimated time period for it
to achieve the cure, and (b) Licensee proceeds diligently to cure the default,
and (c) the default is cured in all events within 120 days after delivery of the
Tribe’s notice of default. In the event that Licensee disputes that it has
defaulted as described by the Tribe, or otherwise, Licensee shall proceed to
Dispute Resolution as provided in Section 12 of this Agreement. 

          11.2.2     
Immediately upon written notice from the Tribe in the event of an
occurrence in connection with the Exploration Program that in the professional
opinion of ERCOSPLAN or other reputable geotechnical consultants occurred as a
result of Licensee or Licensee Contractors failing to operate in a prudent
manner in accordance with industry standards, which has caused or is causing
material damages, or which creates a credible risk of substantial and material
damage to, the Hopi Property, the subsurface thereof, its potash or its
groundwater resources, or the prospects of successfully developing and mining
the potash resources in the Hopi Property. 

          11.2.3     
Upon thirty (30) days prior written notice in the event Licensee fails
to initiate and complete Exploration Program work within the Work Schedule,
unless prior to expiration of the thirty (30) day notice period Licensee
achieves compliance with the Work Schedule. 

9 

          11.2.4
As otherwise expressly provided in this Agreement. However, no such
termination shall be prosecuted by the Tribe or understood to have occurred if
Licensee has (i) timely completed at least the first eight (8) drill holes of
the JEP to ERCOSPLAN’s satisfaction, and (ii) has otherwise diligently
prosecuted the Exploration Program subject only to limitations caused by Acts of
God and weather (Licensee acknowledging and agreeing that lack of funds shall in
no event be considered caused by Acts of God or weather), and (iii) any alleged
damages are compensable and the Parties agree on compensation and Licensee pays
the agreed compensation to the Tribe, or the amount of damages is referred to
dispute resolution pursuant to Section 12 of this Agreement and Licensee
provides a bond reasonably acceptable to the Tribe assuring the availability of
funds to pay any arbitration award. If the conditions of the immediately
preceding sentence are satisfied, Licensee may continue the Exploration Program
without termination, provided that it modifies the conduct of its operations so
as to avoid further or additional damages. 

          11.3     
Termination by Licensee. This Agreement is terminable by
Licensee by written notice to the Tribe; provided, those provisions of this
Agreement that are expressly identified as surviving termination of this
Agreement shall survive termination of this Agreement by Licensee pursuant to
this Section 11.3. 

12.      DISPUTE
RESOLUTION 

          12.1      Limited
Waiver of Sovereign Immunity. The Tribe waives its sovereign immunity solely
for the limited purpose of (a) commencing arbitration, (b) enforcing arbitration
and (c) enforcing arbitration decisions or awards in accordance with the dispute
resolution provisions herein, and solely to Licensee. This limited waiver of
sovereign immunity is solely to permit Licensee to seek and obtain injunctive
relief in order to enforce its rights hereunder, and does not extend to (i) any
person or entity other than the Licensee or (ii) any claims for monetary
damages, including without limitation consequential or punitive damages.
Licensee shall not under any circumstances hold or be entitled to any interest
in the Hopi Property. Unless otherwise specified herein, nothing in this
Agreement, or in any related agreement, exhibit, document or undertaking, or any
amendments, modifications, extensions or renewals thereof: shall be construed as
modifying, diminishing, qualifying or otherwise impairing the sovereign immunity
of the Tribe, or any of its entities, enterprises, Affiliates or subdivisions.
Further, unless otherwise specified herein, nothing in this Agreement, or in any
related agreement, exhibit, document or undertaking, or any amendments,
modifications, extensions or renewals thereof: shall be construed as a waiver of
such sovereign immunity or as consent to the jurisdiction of any state or
municipal court. 

          12.2      Arbitration.
Any controversy or claim arising out of this Agreement (a
“Dispute”), will be settled by binding arbitration pursuant to
United States Arbitration Act, 9 U.S.C. § 1, et seq. (“Title
9”), and in accordance with this Section 12. Any (a) refusal to submit
to arbitration, (b) exercise of a right under Title 9, or (c) enforcement of an
arbitration award or decision under this Section 12 is solely within the
jurisdiction of the United States District Court, District of Arizona (the
“District Court”). An arbitration award under this Section 12 is
final unless a party files a motion to vacate or modify the award pursuant to 9
U.S.C. § 12 in the District Court within 30 days of the date of the award.
Judgment upon the award under this Section 12 may be confirmed in the United
States District Court for the District of Arizona, pursuant to 9 U.S.C. § 9.

10 

The Parties acknowledge that this Agreement involves interstate
commerce and therefore either Party may avail itself of federal jurisdiction
under Title 9. 

          12.3      Arbitration
Rules. Binding arbitration under this Section 12 will be conducted in
accordance with the Commercial Dispute Resolution Procedures of the American
Arbitration Association (“AAA Rules”) as modified by this Section
12. The AAA Rules are modified as follows: 

          12.3.1
The arbitrators must render their award in strict conformity with the
modified AAA Rules and have no power to depart from or change any of provisions
of this Agreement or the modified AAA Rules; 

          12.3.2
The arbitrator’s power, jurisdiction, decisions and award allowed under the
AAA Rules are limited by Sections 12.1 and 12.4 hereof; 

          12.3.3
Any consent to jurisdiction under the AAA Rules 1s limited to the District
Court and excludes jurisdiction in any state court; and 

          12.3.4
The arbitration hearing will be conducted in Phoenix, Arizona, before three
(3) arbitrators. Each Party shall select an arbitrator. The two (2) arbitrators
selected by the Parties shall discuss and select the third arbitrator. Unless
the Parties agree otherwise, at least two (2) of the selected arbitrators shall
be attorneys or retired judges knowledgeable about federal Indian law. In the
alternative, the Parties may mutually agree in writing to submit the Dispute(s)
for consideration by a single arbitrator that is mutually agreed upon by the
Parties. 

          12.4      Governing
Law. Unless otherwise specified herein, the Parties agree that the
interpretation and enforcement of this Agreement is governed by and will be
construed in accordance with Arizona law, except that Arizona law shall not
under any circumstances govern the application of the dispute resolute
provisions herein, including the entry or enforcement of arbitration awards
hereunder. 

13.     
MISCELLANEOUS 

          13.1     
Notices and Communications. All notices, reports and other
communications regarding this Agreement sent from Licensee to the Tribe shall be
addressed to the Tribe at the address identified at the beginning of this
Agreement, and sent from the Tribe to Licensee shall be addressed to Licensee at
the address identified at the beginning of this Agreement. All written notices
or deliverables required or permitted to be given under the terms of this
Agreement shall be deemed duly delivered upon receipt if (1) delivered in
person, or (2) sent via FedEx, UPS or other reputable overnight courier, in all
cases with an email copy (to the extent reasonably practical) to the email
address identified at the beginning of this Agreement. Notwithstanding the
foregoing, routine communications may be sent by regular or electronic mail.

          13.2      Assignment
Prohibited. This Agreement may not be assigned by a Party except with the
prior written consent of the other Party; provided, the Tribe may assign this
Agreement to any successor to any interest in the Hopi Property. 

11 

          13.3     
Amendments in Writing. This Agreement may be amended or modified
only by a written instrument duly executed by an appropriate representative of
each Party. 

          13.4     
Independent Contractors. Nothing in this Agreement is intended
or shall be deemed to constitute a partnership, agency, employer employee or a
joint venture relationship between the Parties. 

          13.5     
Severability. If any provision of this Agreement is declared
void or unenforceable, such provision shall be deemed severed from this
Agreement, which shall otherwise remain in full force and effect. 

          13.6     
Additional Acts and Documents. Each Party hereto agrees to do
all such things and take all such actions and to refrain from such actions, and
to make, execute and deliver such other documents and instruments, in any such
case as shall be reasonably requested from time to time to carry out the
provisions, intent and purpose of this Agreement. 

          13.7     
Counterparts. This Agreement may be executed in any number of
counterparts, all such counterparts shall be deemed to constitute one and the
same instrument, and each of said counterparts shall be deemed an original
hereof. 

          13.8     
Time. Time is of the essence of this Agreement and each and
every provision hereof. Any extension of time granted for the performance of any
duty under this Agreement shall not be considered an extension of time for the
performance of any other duty under this Agreement. 

          13.9      Waiver.
Failure of any Party to exercise any right or option arising out of a breach of
this Agreement shall not be deemed a waiver of any right or option with respect
to any subsequent or different breach, or the continuance of any existing
breach. 

Remainder of Page Intentionally Blank 
Signature Page(s) and
Schedules Follow 

12 

IN WITNESS WHEREOF, the Parties hereto caused this Agreement to
be du1y executed by their duly authorized representatives. 

Effective Date: as of November 1, 2012 

The Hopi Tribe, a federally recognized Indian tribe 

By: /s/ LeRoy
Shingoitewa                                                                
 

       LeRoy Shingoitewa, Chairman 

Passport Potash Inc., a Canadian corporation 

By: /s/ Joshua
Bleak                                                                            
 
Name: Joshua Bleak, President/CEO 
Title: 

 

ACKNOWLEDGED GENERALLY, AND AGREED WITH RESPECT TO SECTIONS 3
AND 4 

ERCOSPLAN Ingenieurgesellschaft Geotechnik und Bergbau mbH 

By: ______________________________________________

  Name:

Title: 

13 

Schedules A, B and C 

to Joint Exploration Agreement between 

the Hopi Tribe and 

Passport Potash Inc. 

Schedule A 

Township 16 North, Range 23 East 
SW4 Section 14.

All of Sections 13, 17, 19, 21, 23, 25, 27, 29, 31, 33 and 35. 

Township 16 North, Range 24 East 
That portion of
Section 17 lying South and West of SR 260. 
That portion of Section 21lying
South and West of US Highway 180.
All of Sections 19, 29, 31 and 33. 

Township 15 North, Range 23 East 
E2 Section 3.

All of Sections 1, 2, 4 and 12. 

Schedule B

Township 16 North, Range 23 East 
N2; SE4 Section 14;

All of Sections 16, 18, 20, 22, 24, 26, 28, 30, 32,
34 and 36. 

Township 16 North, Range 24 East 
Sections 20, 30 and
32. 

Schedule C

	Drill Hole 
and Related 
Exploration
      
Program Work 
	Commencement Date 

	Completion Date 

	1 (aka A) 	November 12,2012 	November 24, 2012 
	2 (aka B) 	November 16, 2012 	November 30, 2012 
	3 (aka F) 	November 27, 2012 	December 7, 2012 
	4 (aka C) 	December 3, 2012 	December 14, 2012 
	5 (aka D) 	December 7, 2012 	December 21,2012 
	6 (aka E) 	December 13, 2012 	January 8, 2012 
	7 (aka G) 	December 19, 2012 	January 13, 2012 
	8 (aka H) 	January 3, 2013 	January 18,2012 
	9* 	  	  
	10* 	  	  
	11* 	  	  
	12* 	  	  
	13* 	  	  
	14* 	  	  
	15* 	  	  
	16* 	  	  
	17* 	  	  
	18* 	  	  

*subject to specification and change based on ERCOSPLAN’s
continuing evaluation of data and ERCOSPLAN’s recommendations 

15 

Exhibit 1 

Letter of Intent Attached 

 

 

 

 

16 

 

September 26, 2012 

Passport Potash, Inc. 
608, 1199 West Pender St.

  Vancouver, British Columbia V6E 2Rl 

Dear Passport Potash: 

          We
are pleased to submit this letter (this “LOI”) on behalf of the Hopi Tribe
(“Hopi” or the “Tribe”), which outlines our understandings and intent concerning
a proposed joint effort by the Tribe and you (hereafter, ‘‘PPI”) to investigate
opportunities to jointly explore, evaluate and, if justified seek mining permits
with the State of Arizona to develop and mine the potash resources in the “Area
of Interest” (defined below). This letter sets forth our general understandings
and intent with respect to the proposed joint effort, and only fully executed
definitive documentation will create any obligation between PPI and the Tribe.
Until such definitive documentation is fully executed, neither PPI nor the Tribe
shall have any obligations or liabilities or rights with respect to or on
account of the proposed joint effort except only as set forth under the
Preliminary Economic Assessment and Confidentiality headings below. 

CONTACT INFORMATION 

          PPI’s
address and contact for purposes of this LOI, until further notice from PPI, is
608, 1199 West Pender St., Vancouver, British Columbia V6E 2Rl, Attention John
Eckersley. The Tribe’s address and contact for purposes of this LOI, until
further notice from the Tribe, is c/o Thayne Lowe, Osborn Maledon PA, 2929 N.
Central Ave., Suite 2100, Phoenix, Arizona 85012. 

RECITALS 

          A.      PPI,
through its wholly owned subsidiary, PPI Holding Corp., holds certain mineral
exploration permits for State of Arizona trust lands, and holds the exclusive
right to purchase certain other fee lands within an area known as the Holbrook
Potash Basin within Navajo and Apache counties in Arizona. 

          B.      Hopi
owns certain fee lands within Navajo and Apache counties in Arizona that are
contiguous with PPI lands (“Area of Interest”). 

          C.      PPI
and Hopi wish to investigate opportunities to jointly explore, evaluate and, if
justified seek mining permits with the State of Arizona to develop and mine the
potash resources in the Area of Interest. 

	September 27, 2012 
Page 2 of 4 	

GENERAL 

          1.1      Purposes.
This LOI is entered into for the following purposes and for no others, and shall
serve as the means by which each of the parties accomplishes such purposes
during the term of this LOI. 

          1.2      Legal
Framework. This LOI provides a non-binding framework for the Tribe and PPI
to engage in an on-going relationship to explore, develop and mine the potash
resources in the Area of interest (the “Potash Project’’). 

          1.3     
Nature of Hopi Properties. The Tribe represents that the Hopi properties
within the Area of Interest are not held in trust by the United States of
America and are not subject to an application to be placed into trust. 

PRELIMINARY ECONOMIC ASSESSMENT (“PEA”) 

          2.1      Preliminary
Economic Assessment. For the purpose of evaluating the economic potential of
its potash properties, PPI has engaged an engineering firm, ERCOSPLAN, to
produce a National Instrument 43-101 compliant Preliminary Economic Assessment
(“PEA”) report for its Holbrook Basin potash properties. ERCOSPLAN has also been
engaged by Hopi to evaluate the potash resource potential on its lands. Based
upon exploration work performed by PPI in the Area of Interest, and its review
of the Hopi property, ERCOSPLAN has recommended that PPI and Hopi combine their
properties in a PEA. 

          2.2      Authorization.
By entering into this LOI, Hopi authorizes the use of its lands within the Area
of Interest, for use in the upcoming PEA commissioned by PPI. The PEA will be
addressed to and owned by both PPI and the Tribe, who shall each be entitled to
use and rely on the PEA for both their joint and individual purposes. 

          2.3     
Costs. The costs for the PEA will be the responsibility of PPI. 

JOINT EXPLORATION PROGRAM (“JEP”) 

          3.1
Joint Exploration. The Parties intend to jointly explore the lands within
the Area of Interest to determine their economic potential as a commercial mine
consistent with this LOI. The Parties intend to implement a timely exploration
procedure to be guided by the recommendations of ERCOSPLAN to prove the
viability of the project. 

FUTURE AGREEMENTS 

          4.1      Mine
Development Agreement (“MDA”). PPI and the Tribe enter into this LOI with
the understanding that each intends in good faith to cooperate in the JEP to
develop information appropriate for inclusion within any studies, including PEA,
Pre-feasibility studies and feasibility studies, and intended to ultimately determine
whether a mining unit within the Area of Interest incorporating both PPI and
Hopi lands will support a commercial potash mine. The parties agree that the
composition of the mining unit will be defined in consultation with ERCOSPLAN
and based upon the geology of the properties. The Parties further agree to
proceed in good faith to negotiate a definitive MDA for developing the agreed
upon lands for a potash mine. 

 

 

	September 27, 2012 

      Page 3 of 4 	

          4.2     
MDA Approval. The parties acknowledge that final approval of an MDA by
the Tribe will include consultations, support and ratification, as determined by
the Tribe’s own processes, and the approval of PPI’s Board of Directors. No
provision of this LOI shall be construed as creating an obligation or a firm
undertaking by either PPI or the Tribe to enter into a definitive MDA or other
definitive agreements. The parties intend that this LOI shall not give rise to
any legal obligations to consummate a transaction other than the duty to
cooperate in good faith during the term of the LOI toward the objectives
identified herein, and they recognize that such cooperation may or may not
result in the consummation of formal binding definitive agreements. 

          4.3      Good
Faith. The Parties agree to conduct the MDA Negotiations in good faith, with
mutual respect for one another, and with an understanding that time is of the
essence in that the Potash Project is competing with other potash developers in
the Holbrook Basin and with other potash projects competing for capital. 

OTHER PROVISIONS 

          5.1      Non-Derogation.
This LOI is not in derogation or abrogation of any inherent treaty, aboriginal
title or other sovereign right or immunity of the Tribe. 

          5.2      Dispute
Resolution. If the Parties choose to retain a mediator to resolve disputes
arising during the term of this LOI or to help them effect a final agreement,
the Parties agree to equally pay the mediator’s reasonable fees and
disbursements. The selection of any mediator will be agreed upon by the Parties.

          5.3      Confidentiality.
The Parties agree that while the signing and existence of this LOI may be shared
widely by either Party without consultation with the other Party, the
provisions, terms and conditions of this LOI shall be kept confidential unless
required to be disclosed by law, compliance with securities regulations or
accounting requirements or on consent of the Parties. Any effort by a third
party to compel the disclosure of this LOI shall be resisted unless all Parties
to the LOI concur or unless compelled by a tribunal having jurisdiction over the
matter. 

          5.4      Press
Releases. Save as required by law or by the rules of any stock exchange,
neither Party shall issue any press release or make any other public statement
or announcement relating to or connected with or arising out of this LOI or the
matters contained herein apart from the results and status of PPI’s Exploration
Activities, without obtaining the prior approval of the other Party to the
contents thereof. If disclosure is required by law or by any stock exchange, the
disclosing Party shall consult in advance with the other Party
and attempt in good faith to reflect such other Party’s concerns in the required
disclosure. The Parties may also issue a joint press release upon execution of
this LOI and may issue such other joint press releases as they deem appropriate. 

 

 

	September 27, 2012 

      Page 4 of 4 	

          5.5      Time
of the Essence. Time shall be of the essence regarding the execution and
implementation of this LOI. 

          5.6     
Entire Agreement. The provisions of this LOI represent the entire
agreement between the Tribe and PPI concerning the subject matter hereof. 

          5.7     
Assignment. Neither Party may assign its interest herein without the
written consent of the other Party. 

          5.8      Governing
Law. This LOI shall, in all respects, be subject to, interpreted construed
and enforced in accordance with and under the laws of the Arizona if
applicable.

          5.9     
Mutual Assurances. The Tribe and PPI will do such further acts and things
as reasonably required to fulfill the terms and spirit of this LOI. 

          5.10      Term.
This LOI will continue in full force and effect until such time as the Parties
conclude an MDA or either Party advises the other that it wishes to terminate
this LOI. In such event, the Parties shall have no further obligation hereunder
except only that each Party shall maintain the confidentiality of the
information described in and consistent with Section 5.3. 

          If
this LOI accurately reflects your understandings and intent with respect to the
proposed joint effort, please so indicate by executing a copy of this LOI in the
space provided below, and returning the executed copy to the Tribe. Upon your
acceptance of this LOI, the Tribe is prepared to proceed consistent with the
intent and understandings described in this LOI. We look forward to your
affirmative response. 

The Hopi Tribe 

 

/s/LeRoy N.
Shingoitewa                                                   
LeRoy
N. Shingoitewa, Chairman 

Agreed to this ____ day of _____________, 2012 

Passport Potash, Inc. 

/s/Joshua Bleak                                                                
   

  Joshua Bleak, President and CEO 

Exhibit 2 

Exploration Program 

 

 

 

 

17 

 

	 	
	 
	MEMO 
	 
	CONFIDENTIAL BUSINESS INFORMATION 
	 
	To           
       John Eckersley, Passport Potash Inc 
	 
	cc 
	
       

	
      From       
      Andreas Wolke 

	
       

	
      Project     EGB
      11-043.N01     
      Date      09.10.12 

	
       
	 
	
      Subject     Drilling Suggestions for the Joint
    Exploration of the Hopi Land 
	 
	
       
	 
	
      PASSPORT Potash Inc. (PASSPORT) is exploring the potash
      resources of its mineral property in the Holbrook Basin, Arizona, US. The
      southern portions of the land holdings form a checkerboard with properties
      owned by the Hopi Tribe (HOPI). To create an economic viable mining area
      both parties agreed on a letter of intend to move forward in a joint
      exploration program. 
	
	
       
	 
	
      This memo gives suggestions for a two phase drilling
      campaign on HOPI land aiming on an optimal resource coverage of the
      combined area (HOPI+ PASSPORT). 
	
	
       
	 
	
      On the base of the current database the first phase of
      drilling is de- signed to fill in gaps between Indicated Resource areas in
      the central part, which is relatively well explored and for which no low
      mineralization zones are expected. 
	
	
       
	 
	
      The second phase of drilling aims to conduct exploration
      mostly at the edge of areas currently covered by recent drill hole data
      with a higher level of uncertainty. 
	
	
       
	 
	
      In total 18 drill holes are recommended and listed in the
      following table. 
	 

	Drillhole 	Phase 	Easting 	Northing 
	Drill Hole 1 	  	599447 	3848300 
	Drill Hole 2 	1 	601320 	3846520 
	Drill Hole 3 	1
	602622 	3848430 

 

	Drillhole 	Phase 	Easting 	Northing 
	Drill Hole4 	1
	602955 	3845400 
	Drill Hole 5 	1 	604273 	3843560 
	Drill Hole 6 	1
	604298 	3849870 
	Drill Hole 7 	1 	604559 	3846570 
	Drill Hole 8 	1
	606035 	3845130 
	Drill Hole9 	2 	596050 	3848430 
	Drill Hole 10
	2
	596066 	3844750 
	Drill Hole 11 	2 	597748 	3849810 
	Drill Hole 12
	2
	597812 	3846620 
	Drill Hole 13 	2 	599622 	3844920 
	Drill Hole 14
	2
	602495 	3843570 
	Drill Hole 15 	2 	604479 	3841750 
	Drill Hole 16
	2
	605955 	3848340 
	Drill Hole 17 	2 	607695 	3846720 
	Drill Hole 18
	2
	609254 	3845320 

The locations are given in WGS 84 UTM Zone 12N and represent an
optimal position for a maximum coverage of Indicated Resources (see Attachment).
Depending on local conditions like accessibility the positions of the drill hole
locations may be adapted. Further changes regarding location or number of drill
holes will depend on the results of the ongoing drilling campaign.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00210-of-00352.parquet"}]]