Document:

Exhibit
10.1

 

March 25, 2009

 

PacWest Bancorp

401 West “A” Street

San Diego, CA 92101

Attention: Victor R.
Santoro

 

Dear Vic:

 

This letter agreement (the “Agreement”) will confirm that, subject to the
terms and conditions contained herein, PacWest Bancorp (the “Company”) has
engaged Castle Creek Financial LLC (“Castle Creek”) as the exclusive financial
advisor to the Company in connection with the Company’s efforts to (a) acquire
or invest in other financial institutions, excepting therefrom the opening of individual
bank branches in the ordinary course of business or acquisition of deposit
bases, loan pools or failed institutions from the FDIC; (b) effect a sale
of the Company or a material amount of its assets; or (c) pursue a
financing or recapitalization transaction (collectively, the “Transaction”).  As the exclusive financial advisor to the
Company, Castle Creek will, in addition to providing services in connection
with a proposed Transaction provide other services pursuant to paragraph 9.  This Agreement amends and restates the letter
agreement between the Company and Castle Creek dated as of January 7,
2008.

 

1.                                      In
connection with a proposed Transaction, at the request of the Company, Castle
Creek will provide such services as the Company shall reasonably request
including: (i) assisting the Company in the structuring of the financial
aspects of a Transaction; (ii) identifying alternative potential parties
and contacting such parties as the Company may designate; (iii) assist the
Company in negotiating the terms of a Transaction with such parties; (iv) assisting
the Company in communicating the strategic implications of the Transaction to
the investment community; and (v) advising the Company in connection with
its efforts to raise any additional capital that may be required to facilitate
the Transaction.  Further, Castle Creek
and the Company expressly acknowledge that the fees provided for under
paragraph 3 for a completed Transaction were determined in light of the fact
that significant financial advisory services are rendered to the Company in
connection with potential Transactions that are not successfully
completed.  Thus, such fees earned
pursuant to paragraph 3 will serve as compensation for services rendered in
connection with a completed Transaction and in connection with potential
Transactions that are not successfully completed.  Further, such fees are in recognition of the
exclusive arrangement between Castle Creek and the Company, and Castle Creek’s
commitment to source and present opportunities in the Company’s geographic
market and niche for the Company’s sole consideration and decision before
presenting such opportunities to any third party.

 

2.                                      In
connection with a proposed Transaction, you will furnish Castle Creek with such
material regarding the business and financial condition of the Company as we
reasonably request, all of which will be accurate and complete in all material
respects at the time furnished in writing. 
The Company will also use its reasonable best efforts to assure that its
personnel, consultants, experts, attorneys and accountants are made available
to Castle Creek upon Castle Creek’s reasonable request in connection with
services provided or to be provided by Castle Creek.  While any proposed Transaction may be pending
that was

 

 

initiated during
the term of this Agreement, the Company shall promptly notify Castle Creek of (i) any
material changes in the business or financial condition of the Company from the
written information provided to Castle Creek, and (ii) any material events
or developments relating to the financial condition or business operations or
prospects of the Company and promptly make available for Castle Creek’s review
copies of all filings related to the Transaction made by the Company with any
regulatory agency and copies of all press releases related to the Transaction
issued by the Company.  We are relying,
without independent verification, on the accuracy and completeness of all
information furnished to us in writing by the Company or any other party or
potential party to any Transaction. 
Castle Creek agrees that all requests for information from the Company
will be directed only to the Chief Executive Officer, Chief Financial Officer
or General Counsel of the Company or such other persons as the Chief Executive
Officer shall specifically designate and that it will not treat information
obtained from any other person or source as having been provided by the
Company.

 

3.                                      In
consideration of the services to be provided hereunder, the Company agrees to pay
to Castle Creek the following cash fees:

 

(A)                             In
the event that a sale of the Company is completed, an amount equal to one
percent (1.0%) of the Transaction Value (as defined below) for the Transaction.

 

(B)                               In
the event that an acquisition of or investment in another financial institution
is completed by the Company, an amount based upon the following schedule will
be owed to Castle Creek upon the consummation of the acquisition or investment
based upon the Transaction Value for the Transaction, net of the cost of a “fairness
opinion” if such opinion is deemed necessary:

 

	
   

  	
   

  	
   

  	
   

  	
  Deal Value

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
  ($ in millions)

  	
   

  	
   

  	
   

  	
  Fees

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (1)

  	
   

  	
  If

  	
   

  	
  $0 < $20

  	
   

  	
  then

  	
   

  	
  1.0% of the Transaction Value

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  (2)

  	
   

  	
  If

  	
   

  	
  Over $20

  	
   

  	
  then

  	
   

  	
  $200,000, plus 0.65% of the amount of the
  Transaction Value in excess of $20 million.

  	
   

  

 

(C)                               In the event of a
financing or recapitalization, the fees will be determined in accordance with
paragraph 8 below.

 

(D)                              Fees
payable pursuant to paragraphs 3 (A), (B) and (C) shall be paid upon
and only upon the closing of the Transaction.

 

For purposes of
this Agreement, “Transaction Value” means the sum of (as applicable for the
particular Transaction): (i) with respect to each class of capital stock
of the Company in the event of a sale of the Company or of the financial
institution which is acquired by the Company or in which the Company invests,
the aggregate consideration paid or payable for all 

 

2

 

shares of such
capital stock and for all shares of such classes issuable upon exercise of
options, warrants or other rights, or conversion or exchange of securities to
the extent that such options are then exercisable; (ii) in the case of an
acquisition or sale, the aggregate liquidation value of any preferred stock or
other preferential interests redeemed or remaining outstanding; (iii) the
fair market value of any assets distributed to the shareholders of the Company
or such financial institution that is purchased, in connection with the
Transaction; and (iv) in the case of an asset purchase or sale, the
aggregate consideration paid or payable for the assets of the Company or the
assets of the financial institution.

 

The determination
of the “aggregate consideration paid or payable” for shares of any classes of
capital stock in connection with the Transaction shall include cash, securities
(valued in accordance with the following paragraph), or other assets or
consideration paid or payable by the purchaser or any of its affiliates, as the
case may be, determined without regard to any allocations between the Company
or its affiliates in the event of a sale of the Company or between the
financial institution or its affiliates in the event such financial institution
is acquired by the Company or the Company invests in such financial
institution, including but not limited to (i) assets (net of debt or
payables) of the Company or such financial institution retained by the Company
or such financial institution or their respective stockholders and affiliates,
as the case may be (ii) any deferred installments of the purchase price, (iii) any
portion of the purchase price held in escrow subsequent to closing which is
payable pursuant to the terms of the escrow arrangement, irrespective of whether
such amounts are in fact paid, (iv) any payments pursuant to earn-outs, royalties or other similar
arrangements, (v) any payments payable after closing upon the occurrence
of certain events or conditions or the satisfaction of certain earnings, sales
levels or other performance objectives which are agreed to on or before the
closing, irrespective of whether such amounts are in fact paid, (vii) the
amount of any extraordinary dividends or other extraordinary payments or
distributions to stockholders of the Company or the financial institution in
connection with or in anticipation of the Transaction, and (viii) consideration
paid by the purchaser or its affiliates as a deposit, reimbursement of
expenses, liquidated damages, walk-away fee or other arrangement.

 

In the event that all or any portion of the Transaction Value for a
Transaction is paid in stock or other securities, deferred installments or
other non-cash consideration, the amount of the fee payable with respect to
such items shall be determined on the basis of the fair market cash equivalent
value of such non-cash consideration as of the day preceding the closing date
of the Transaction as reasonably determined by Castle Creek and the Company,
provided that the value of securities (received as consideration) which have an
existing public trading market shall be determined by the closing sale (trade)
price on the closing date.

 

Any portion of the fee which is payable with respect to any earn-out,
royalty or similar arrangement where the amount payable is not a certain
amount, shall be calculated and paid at the closing based upon the estimated
net present value thereof as reasonably determined by Castle Creek and the
Company.

 

If a Transaction involves the acquisition of less than all of
outstanding securities of the Company, but securities representing more than
50% of the combined voting power of the then outstanding securities of the
Company, then the fee payable pursuant to Section 3(A) shall
nonetheless be calculated as though all such equity securities had been so
acquired by the purchaser.

 

3

 

4.                                      Regardless of whether a Transaction is
completed, the Company will reimburse Castle Creek, upon its demand, for all
reasonable out-of-pocket expenses (including travel expenses and fees and
disbursements of counsel retained by Castle Creek in connection with this
engagement).  In seeking such
reimbursement, Castle Creek shall provide an explanation of such charges.

 

5.                                      The Company agrees to indemnify and hold
Castle Creek harmless in accordance with the terms and conditions of Appendix A
attached hereto and made a part hereof as though fully set forth in this
Agreement.  No termination or
modification hereof, or completion of Castle Creek’s engagement hereunder,
shall limit or affect such indemnification.

 

6.                                      Castle Creek’s services hereunder may be
terminated by the Company or Castle Creek at any time upon 30 days written
notice, provided that Castle Creek shall be entitled to any fees payable
pursuant to Section 3 and Section 8 hereof in the event that the
Company completes a Transaction (i) on which Castle Creek provided advice
or participated in discussions with any of the investors in such Transaction or
(ii) with any of the parties as to which Castle Creek advised the Company
or with whom the Company engaged in discussions regarding a possible
Transaction prior to the termination of this Agreement, providing that such
Transaction is completed within eighteen months following the termination of
this Agreement.  In addition, Castle
Creek shall remain entitled to the reimbursement of fees and expenses under the
terms and conditions described in Section 4 hereof, to the extent the same
have been incurred on or prior to the date of such termination.  Furthermore, the provisions of this Section 6,
and Sections 5 (including Appendix A), 10, 11, 12, 13, 14 and 15 as well as the
Confidentiality Agreement, shall survive any termination of this Agreement.

 

7.                                      In order to coordinate our efforts with
respect to any Transaction for which the Company intends to engage a financial
advisor, during the period of our engagement hereunder if the Company or its
management receives an inquiry regarding a Transaction, they will promptly
advise Castle Creek of such inquiry in order that we can evaluate such
prospective party and its interest and assist the Company in any resulting
negotiations.

 

8.                                      Pursuant to section 3(C) hereinabove, it
is understood and agreed that if the Company decides to pursue a financing or
recapitalization Transaction for which Castle Creek is to provide any of the
financial advisory services described above in Section 1 hereof, the
Company and Castle Creek shall negotiate in good faith acceptable compensation
for Castle Creek in consideration of such services, which compensation will
take into account, among other things, the results obtained and the custom and
practice among investment bankers acting in similar situations.  The compensation owed to Castle Creek in accordance
with the fee structure agreed upon by the Company and Castle Creek in respect
of a financing or recapitalization Transaction shall be paid to Castle Creek in
cash upon the completion of any such Transaction.  It is understood that no separate fee will be
owed to Castle Creek in consideration of services in connection with a
financing or recapitalization Transaction if such Transaction is undertaken in
connection with a Transaction described in Section 3(B) above.

 

4

 

9.                                      It is understood and agreed that Castle Creek
will provide such other services that may from time to time be mutually agreed
upon by Castle Creek and the Company. 
Castle Creek expressly acknowledges that it will not be compensated
specifically for these services other than the reimbursement for all reasonable
out-of-pocket expenses, but that such fees earned from acting as a financial
advisor to the Company for a Transaction will serve as compensation to Castle
Creek for such non-Transaction services rendered.  Such services rendered to the Company not
directly related to a specific Transaction may include, but are not exclusive
to (i) the development and preparation of long term financial and
strategic plans, (ii) assistance with investor and public relations, and (iii) capital
management advisory services.

 

10.                                Except as expressly provided herein, no fee
paid or payable to Castle Creek or any of its affiliates shall be used as an
offset or credit against any other fee paid or payable to Castle Creek or any
of its affiliates.

 

11.                                This Agreement, along with the indemnity in
Appendix A and the Confidentiality Agreement attached hereto as Annex B, embody
the sole terms of the agreement between the Company and Castle Creek with
respect to the subject matter hereof and supersede all previous agreements,
whether oral or written, between the Company and Castle Creek with respect to
the subject matter hereof.  This
Agreement may not be altered, varied, revised or amended, except by an
instrument in writing signed by both the Company and Castle Creek after the
date first written above.  The Company
and Castle Creek have not made any other agreements or representations of any
kind with respect to such subject matter.

 

12.                                This Agreement shall be governed by and construed
in accordance with the laws of the State of California without regard to
principles of conflict of laws.  To the
extent legally permissible, any right to trial by jury with respect to any
claim or proceeding related to or arising out of this engagement or any
transaction or conduct in connection herewith, is waived.  Any claim or dispute arising out of this
Agreement or the alleged breach thereof shall be submitted by the parties to
binding and nonappealable arbitration by the American Arbitration Association (“AAA”)
in San Diego, California, under the commercial rules then in effect for
the AAA, except as provided herein.  The
AAA shall recommend three arbitrators who are knowledgeable in the field of
investment banking.  The parties shall
agree upon one of the three arbitrators or, if no arbitrator is mutually agreed
upon, the AAA shall appoint one of the three arbitrators within 30 days of such
failure.  The award rendered by the
arbitrator shall include costs of arbitration, reasonable attorneys’ fees and
fees of experts and other witnesses, but shall not include punitive damages
against either party.  Each party shall
have the right to request the arbitrator to order reasonable and limited
discovery.  Notwithstanding this
provision, either party may seek appropriate injunctive relief.

 

13.                                This Agreement may be executed in
counterparts, each of which shall be deemed an original and all of which shall
continue one and the same instrument. 
This Agreement may be executed by the exchange of facsimile signatures,
which shall have the same force and effect as if original signatures had been
exchanged.

 

5

 

14.                                The Company expressly acknowledges that
Castle Creek has been retained solely as an advisor to the Company, and not as
an advisor to or agent of any other person, and that the Company’s engagement
of Castle Creek is not intended to confer rights upon any persons not a party
hereto (including shareholders, employees or creditors of the Company) as against
Castle Creek, Castle Creek’s affiliates or their respective directors,
officers, agents and employees. Any advice provided to the Company by Castle
Creek pursuant to this Agreement is solely for the information and assistance
of the executive management and Board of Directors of the Company.  Such advice shall be treated as confidential
information and shall not be disclosed to any third party except in accordance
with the terms of the Confidentiality Agreement.  Any reference to Castle Creek or to any affiliate
of Castle Creek in any release or communication to any party outside the
Company is subject to Castle Creek’s prior written approval, which approval
shall not be unreasonably withheld or delayed. 
Castle Creek shall not refer to the Company in any written materials
(other than performance overviews and marketing materials related thereto that
may be distributed to both prospective and current investors and clients of
Castle Creek and its affiliates) without the Company’s prior written approval,
which approval shall not be unreasonably withheld or delayed.  If this Agreement is terminated prior to any
release or communication, no reference shall be made to Castle Creek without
Castle Creek’s prior written approval. 
Notwithstanding the foregoing, nothing herein is intended to prevent the
Company from complying with any disclosure obligations under applicable law,
without seeking Castle Creek’s consent.

 

15.                                Neither the Company nor Castle Creek may
assign, transfer, license, or sublicense its rights under this Agreement
without the other party’s prior written consent, which may be granted or
withheld in the other party’s sole and absolute discretion.  Subject to the limitation in this paragraph,
this Agreement will inure to the benefit of and be binding upon both the
Company and Castle Creek and their respective successors and assigns.

 

16.                                Castle Creek represents that it has the
necessary expertise to provide the services contemplated by this Agreement and
that the compensation provided for herein is fair and reasonable and comparable
to the compensation that would be charged by an independent provider of such
services with the same type, level and quality of expertise.  The Company acknowledges that the services contemplated
herein will meet legitimate needs of the Company and that it is in the best
interests of the Company to obtain such services.

 

17.                                After closing a Transaction, Castle Creek
shall have the right to place advertisements in financial and other newspapers
and other newspapers and journals at its own expense describing its services to
the Company under this Agreement, provided that Castle Creek shall have
submitted a copy of any such proposed advertisements to the Company for its
prior approval, which approval shall not be unreasonably withheld or delayed.

 

[Signature
Page Follows]

 

6

 

Please confirm that the foregoing is in accordance
with your understanding by signing and returning to us the duplicates of this
Agreement and the related indemnification agreement which shall thereupon
constitute binding agreements.

 

	
  Very
  truly yours,

  	
   

  
	
   

  	
   

  
	
  Castle Creek Financial
  LLC

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ William J. Ruh

  	
   

  
	
  Name:

  	
  William J. Ruh

  	
   

  
	
  Title:

  	
  Executive Vice
  President

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted and agreed:

  	
   

  
	
   

  	
   

  
	
  PacWest Bancorp

  	
   

  
	
   

  	
   

  
	
  on its behalf and on
  behalf of the Company,

  	
   

  
	
  as defined above.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By:

  	
  /s/ Victor R. Santoro

  	
   

  
	
  Name:

  	
  Victor R. Santoro

  	
   

  
	
  Title:

  	
  Executive Vice
  President and CFO

  	
   

  

 

7Exhibit
10.1

 

EXECUTION VERSION

 

 

San Cristóbal Mine

 

MANAGEMENT
SERVICES AGREEMENT

among

 

MINERA SAN
CRISTÓBAL, S.A.,

 

APEX METALS
MARKETING GmbH

 

and

 

APEX SILVER MINES
CORPORATION

 

 

Dated as of March 24,
2009

 

 

 

TABLE OF
CONTENTS

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE I

  
	
  DEFINITIONS

  
	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  1.1

  	
   

  	
  Definitions

  	
  1

  
	
   

  	
   

  	
   

  	
   

  
	
  1.2

  	
   

  	
  References

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE II

  
	
  APPOINTMENT OF MANAGER AND
  OPERATING COMMITTEE

  
	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  2.1

  	
   

  	
  Appointment of Manager

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  2.2

  	
   

  	
  Operating Committee

  	
  8

  
	
   

  	
   

  	
   

  	
   

  
	
  2.3

  	
   

  	
  Purpose and Authority

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  2.4

  	
   

  	
  Meetings

  	
  9

  
	
   

  	
   

  	
   

  	
   

  
	
  2.5

  	
   

  	
  Program and Budget

  	
  10

  
	
   

  	
   

  	
   

  	
   

  
	
  2.6

  	
   

  	
  Operational Matters

  	
  11

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE III

  
	
  DESCRIPTION OF SERVICES

  
	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.1

  	
   

  	
  Services

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.2

  	
   

  	
  Transition and Excluded Services

  	
  12

  
	
   

  	
   

  	
   

  	
   

  
	
  3.3

  	
   

  	
  Freedom of Action

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IV

  
	
  COMPENSATION

  
	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4.1

  	
   

  	
  Fees

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4.2

  	
   

  	
  Annual Fee

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4.3

  	
   

  	
  Reimbursable Expenses

  	
  13

  
	
   

  	
   

  	
   

  	
   

  
	
  4.4

  	
   

  	
  Annual Incentive Fee

  	
  14

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE V

  
	
  INTERRUPTION AND SUSPENSION

  
	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  5.1

  	
   

  	
  Notice Regarding Interruption in Operations

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  5.2

  	
   

  	
  Company-Ordered Suspensions

  	
  15

  
	
   

  	
   

  	
   

  	
   

  
	
  5.3

  	
   

  	
  Adjustments for Interruption in Operations and
  Company-Ordered Suspensions

  	
  16

  

 

i

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  5.4

  	
   

  	
  Compensation During Suspension

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  5.5

  	
   

  	
  Suspension of Work by Manager

  	
  16

  
	
   

  	
   

  	
   

  	
   

  
	
  5.6

  	
   

  	
  Right to Terminate for Extended Suspension

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VI

  
	
  CHANGES AND EMERGENCIES

  
	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  6.1

  	
   

  	
  Material Changes

  	
  17

  
	
   

  	
   

  	
   

  	
   

  
	
  6.2

  	
   

  	
  Emergencies

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VII

  
	
  FORCE MAJEURE

  
	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  7.1

  	
   

  	
  Events of Force Majeure

  	
  18

  
	
   

  	
   

  	
   

  	
   

  
	
  7.2

  	
   

  	
  Not Force Majeure

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  7.3

  	
   

  	
  Notice Requirement

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  7.4

  	
   

  	
  Performance Suspended

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  7.5

  	
   

  	
  Adjustments as a Result of Force Majeure

  	
  19

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  
	
  REPRESENTATIONS AND WARRANTIES

  
	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  8.1

  	
   

  	
  Parties’ Representations

  	
  20

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE IX

  
	
  OBLIGATIONS OF THE PARTIES

  
	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  9.1

  	
   

  	
  Covenants of Manager

  	
  21

  
	
   

  	
   

  	
   

  	
   

  
	
  9.2

  	
   

  	
  Covenants of Company and AMM

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE X

  
	
  SENIOR MANAGEMENT AND PERSONNEL

  
	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  10.1

  	
   

  	
  Senior Management

  	
  22

  
	
   

  	
   

  	
   

  	
   

  
	
  10.2

  	
   

  	
  Personnel

  	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XI

  
	
  INDEMNIFICATION AND LIMITATION
  OF LIABILITY

  
	
  23

  
	
   

  	
   

  	
   

  	
   

  
	
  11.1

  	
   

  	
  Indemnification

  	
  23

  

 

ii

 

TABLE OF
CONTENTS

(continued)

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  11.2

  	
   

  	
  Claims of Indemnification

  	
  24

  
	
   

  	
   

  	
   

  	
   

  
	
  11.3

  	
   

  	
  No Liability for Contractors’ Work

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  11.4

  	
   

  	
  Limitation of Liability

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XII

  
	
  INSURANCE

  
	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  12.1

  	
   

  	
  Required Coverage

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  12.2

  	
   

  	
  Term of Insurance

  	
  25

  
	
   

  	
   

  	
   

  	
   

  
	
  12.3

  	
   

  	
  Modification of Insurance

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  12.4

  	
   

  	
  Evidence of Insurance

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  12.5

  	
   

  	
  Manager Insurance

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIII

  
	
  TERM AND TERMINATION

  
	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.1

  	
   

  	
  Effectiveness

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.2

  	
   

  	
  Term

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.3

  	
   

  	
  Initial Period

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.4

  	
   

  	
  Termination by Company

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.5

  	
   

  	
  Termination by Manager

  	
  26

  
	
   

  	
   

  	
   

  	
   

  
	
  13.6

  	
   

  	
  Termination upon Sale Liquidity Event

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  13.7

  	
   

  	
  Effect of Termination

  	
  27

  
	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE XIV

  
	
  MISCELLANEOUS

  
	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  14.1

  	
   

  	
  Governing Law

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  14.2

  	
   

  	
  Submission to Jurisdiction; Waiver of Jury Trial;
  Service of Process

  	
  28

  
	
   

  	
   

  	
   

  	
   

  
	
  14.3

  	
   

  	
  Notices

  	
  29

  
	
   

  	
   

  	
   

  	
   

  
	
  14.4

  	
   

  	
  Assignment

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.5

  	
   

  	
  Further Assurances

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.6

  	
   

  	
  Entire Agreement; Severability

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.7

  	
   

  	
  No Waiver

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.8

  	
   

  	
  Binding Effect

  	
  30

  

 

iii

 

TABLE OF
CONTENTS

(continued)

 

 

	
   

  	
   

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  	
   

  
	
  14.9

  	
   

  	
  Headings and Titles

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.10

  	
   

  	
  No Partnership

  	
  30

  
	
   

  	
   

  	
   

  	
   

  
	
  14.11

  	
   

  	
  Amendment; Counterparts

  	
  30

  

 

iv

 

TABLE OF
CONTENTS

(continued)

 

	
  Schedule A:

  	
   

  	
  Sumitomo Representatives and Manager Representative

  
	
   

  	
   

  	
   

  
	
  Schedule B:

  	
   

  	
  Approval Authority

  
	
   

  	
   

  	
   

  
	
  Schedule C:

  	
   

  	
  Powers of Attorney

  
	
   

  	
   

  	
   

  
	
  Schedule D:

  	
   

  	
  Services

  
	
   

  	
   

  	
   

  
	
  Schedule E(1):

  	
   

  	
  Transition Services

  
	
   

  	
   

  	
   

  
	
  Schedule E(2):

  	
   

  	
  Excluded Services

  
	
   

  	
   

  	
   

  
	
  Schedule F:

  	
   

  	
  Air Transportation Expenses

  
	
   

  	
   

  	
   

  
	
  Schedule G:

  	
   

  	
  Annual Performance Targets

  
	
   

  	
   

  	
   

  
	
  Schedule H:

  	
   

  	
  Senior Management

  
	
   

  	
   

  	
   

  
	
  Exhibit A:

  	
   

  	
  Sumitomo Guarantee

  

 

v

 

MANAGEMENT
SERVICES AGREEMENT

 

THIS MANAGEMENT SERVICES AGREEMENT  is
made as of the 24th day of March 2009, by and among Minera San Cristóbal,
S.A., a Bolivian sociedad anónima
(the “Company”),
Apex Metals Marketing GmbH, a Gesellschaft
mit beschränkter Haftung organized and validly existing under the
Laws of Switzerland (“AMM”) and
Apex Silver Mines Corporation, a Delaware corporation (the “Manager”).  Company, Manager and AMM are each referred to
herein as a “Party” and,
collectively, as the “Parties.”

 

Recitals

 

WHEREAS, Company owns and operates a silver, zinc and lead mine, known
as the San Cristóbal Mine (the “Mine”),
located in the San Cristóbal district, Potosí department, Bolivia, and related
assets and infrastructure;

 

WHEREAS, Company is an indirect wholly-owned subsidiary of Sumitomo
Corporation, a Japanese Corporation (“Sumitomo”),
and Sumitomo shall be concurrently executing a parent guarantee with respect to
Company’s and AMM’s obligations under this Agreement as a condition of the
Parties to enter into this Agreement (the “Sumitomo
Guarantee”) substantially in the form of Exhibit A
hereto;

 

WHEREAS, Manager maintains a staff of highly skilled and experienced
mining industry personnel;

 

WHEREAS, AMM is a metals marketing company affiliated with Company; and

 

WHEREAS, Company desires to avail itself of the expertise of Manager
and its personnel in the management of the Project (as defined below) and in
other areas related to the business of Company.

 

Agreement

 

NOW, THEREFORE, in consideration of the mutual covenants and conditions
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Parties, intending to be
legally bound, agree as follows:

 

Article I

 

Definitions

 

1.1           Definitions.  Unless otherwise defined herein, all
capitalized terms shall have the meanings ascribed to them in this Section 1.1.

 

“Affiliate” means, with
respect to any Person, any other Person that directly, or indirectly through
one or more intermediaries, Controls, is Controlled by, or is under common
Control with, the Person in question.

 

 

“Agreement”  means this Management Services Agreement
together with the Schedules attached hereto, as the same may be amended,
restated or modified from time to time.

 

“AMM”  has the meaning ascribed thereto in the
preamble hereof.

 

“Annual Incentive Fee”
has the meaning ascribed thereto in Section 4.4(a).

 

“Annual Performance Targets”
has the meaning ascribed thereto in Section 4.4(b).

 

“Bolivia”  means the Republic of Bolivia.

 

“Business Day” means any
day other than Saturday, Sunday, and a day on which banks in New York, New
York, U.S.A. or Tokyo, Japan, are required or permitted to close.

 

“Closing Date” has the
meaning ascribed thereto in the Purchase and Sale Agreement.

 

“Commodity Hedge Instrument”
means any forward purchase, forward sale, put option, synthetic put option,
call option, collar, or any other arrangement relating to commodities entered
into by a Person to hedge such Person’s exposure to or to speculate on
commodity prices.

 

“Company” has the meaning
ascribed thereto in the preamble hereof.

 

“Company Controller”  means the individual enumerated in Schedule
A hereto.

 

“Company Indemnified Party” has the meaning ascribed thereto in Section 11.1(b).

 

“Contract”  means any note, bond, indenture,
debenture, security agreement, trust agreement, mortgage, lease, contract,
license, franchise, permit, guaranty, joint venture agreement, or other
agreement, instrument, commitment, or obligation, whether oral or written.

 

“Contract Year” means a
consecutive twelve-month period during the Term from January 1 through December 31;
provided, however that the first Contract Year shall commence on
the Closing Date and end on December 31, 2009.

 

“Control” means the
ability to direct or cause the direction (whether through the ownership of
voting securities, by contract, or otherwise) of the management and policies of
a Person or to control (whether affirmatively or negatively and whether through
the ownership of voting securities, by contract, or otherwise) the decision of
such Person to engage in the particular conduct at issue.  A Person shall be rebuttably presumed to
control an Entity if such Person owns, directly or indirectly through one or
more intermediaries, (a) sufficient shares of stock or other equity
interests of such Entity to allow such Person, under ordinary circumstances, to
elect or direct the election of a majority of the members of the board of
directors or other governing body of such Entity or (b) shares of stock or
other equity interests of such Entity representing, in the aggregate, more than
50% of the aggregate outstanding economic interests in such Entity.  The term “Controlled”
has a meaning correlative to that of Control.

 

“Dispute Notice”  has
the meaning ascribed thereto in Section 4.4(e).

 

2

 

“End Date” means the end
of seventy-eight (78) months after the Closing Date.

 

“Entity” means any sociedad anónima, sociedad de responsabilidad
limitada, Aktiengesellshchaft, Gesellschaft mit beschränkter Haftung, privat
aktiebolag, société à responsabilité limitée, corporation, exempted
company limited by shares, general or limited partnership, limited liability
company, joint venture, trust, association, unincorporated entity of any kind,
or Governmental Authority.

 

“Equity Securities” means
outstanding shares of capital stock of Company and shall not include either (x) loans
or other securities which by their terms are convertible into shares of capital
stock of Company or (y) loans or other securities which by their terms are
not convertible into shares of capital stock of Company.

 

“Estatutos” means the estatutos sociales of Company, as hereafter amended,
modified, supplemented, and restated.

 

“Excluded Services” has
the meaning ascribed thereto in Section 3.2.

 

“Extended Program and Budget”  means the Program and Budget for the prior Contract Year,
adjusted for inflation.

 

“Fee” has the meaning
ascribed thereto in Section 4.2.

 

“Force Majeure” has the
meaning ascribed thereto in Section 7.1.

 

“Governmental Authority”
means any domestic or foreign national, regional, or local, court, governmental
department, commission, authority, central bank, board, bureau, agency,
official, or other instrumentality exercising executive, legislative, judicial,
taxing, regulatory, or administrative powers or functions of or pertaining to
government.

 

“Hedge Instrument”  means (a) any currency swap
agreement, option contract, future contract, option on futures contract, spot
or forward contract, or other agreements to purchase or sell currency or any
other arrangement entered into by a Person to hedge such Person’s exposure or
to speculate on movements in rates of exchange of currencies; (b) any
interest rate swap, option contract, futures contract, options on futures
contract, cap, floor, collar, or any other similar hedging arrangements entered
into by a Person to hedge such Person’s exposure to or to speculate on
movements in interest rates; (c) Commodity Hedge Instrument; and (d) any
other derivative transaction or hedging arrangement of any type or nature
whatsoever that is the subject at any time of trading in the over-the-counter
derivatives market.

 

“Indebtedness”  means, without duplication, (a) all
obligations created, issued, or incurred for borrowed money (whether by Loan,
the issuance and sale of debt securities, or the sale of property to another
Person subject to an understanding or agreement, contingent or otherwise, to
repurchase such property from such other Person); (b) all obligations to
pay the deferred purchase price or acquisition price of property or services
(other than accrued expenses and trade accounts payable incurred in the
ordinary course of business that are not more than 90 days past due); (c) all
obligations to pay money evidenced by a note, bond, debenture, or similar
instrument; (d) the principal amount of all obligations under or in
respect of leases capitalized in 

 

3

 

accordance with generally accepted accounting
principles as used in the U.S.; (e) all reimbursement obligations in
respect of letters of credit or similar instruments issued or accepted by banks
and other financial institutions; (f) all payment obligations under any
Hedge Instrument to the extent constituting a liability under generally
accepted accounting principles as used in the U.S.; and (g) all
obligations of another Person of the type listed in clauses (a) through (f) of
this definition, payment of which is guaranteed by or secured by Liens on the
property of such Person (with respect to Liens, to the extent of the value of
property pledged pursuant to such Liens if less than the amount of such
obligations).

 

“Indemnified
Party” has the meaning ascribed thereto in Section 11.1(b).

 

“Indemnifying Party” means any Party
required to provide indemnification pursuant to Article XI hereof.

 

“Initial Period” has the
meaning ascribed thereto in Section 13.3.

 

“Initial Program and Budget”
means that certain San Cristóbal Program and Budget, dated November 1,
2008, concerning the operation of the Project for the calendar year beginning January 1,
2009, and in effect until the subsequent Program and Budget becomes effective
at the start of the Contract Year, as amended in accordance with this Agreement.

 

“Judgment”  means any judgment, writ, order, decree,
injunction, award, restraining order, or ruling of or by any court, judge,
justice, arbitrator, or magistrate, including any bankruptcy court or judge,
and any writ, order, decree, or ruling of or by any Governmental Authority.

 

“Law”  means any national, regional, or local,
or any foreign, statute, law, code, ordinance, rule, regulation, resolution,
Judgment, regulatory agreement with a Governmental Authority, or general
principle of common or civil law or equity.

 

“Lead Company Representative”  has the meaning ascribed thereto in Section 2.2(d).  When reference is made in this Agreement to
decisions or actions to be undertaken by Company, such reference should be
understood to be to the Lead Company Representative.

 

“Lead Manager Representative”  has the meaning ascribed thereto in Section 2.2(e).

 

“Legal Proceeding” means
any private or governmental action, suit, complaint, claim, demand,
arbitration, legal, or judicial or administrative proceeding or investigation,
whether civil, criminal, or of any other nature.

 

“Lien”  means any (a) security agreement,
conditional sale agreement, or other title retention agreement; (b) lease,
consignment, or bailment given for security purposes; and (c) lien,
charge, restrictive agreement, prohibition against transfer, mortgage, pledge,
legal privilege, option, encumbrance, adverse interest, security interest,
claim, attachment, exception to or defect in title, or other ownership interest
(including reservations, rights of entry, possibilities of reverter,
encroachments, easements, rights of way, restrictive covenants, leases, and
Licenses granted to other Persons) of any kind, but excluding any of the
foregoing created or imposed by or pursuant to this Agreement.

 

4

 

“Loan”  means any lending of money, extending credit, or making
advances to any Person by Company.

 

“Manager” has the meaning
ascribed thereto in the preamble hereof.

 

“Manager  Indemnified Party” has the meaning ascribed
thereto in Section 11.1(a).

 

“Manager Representatives”
has the meaning ascribed thereto in Section 2.2(a).

 

“Materials”  means the materials, apparatus, parts and
equipment that are by this Agreement to be procured, erected, installed or
placed, or otherwise incorporated into the Project or regularly consumed during
performance of the Project.

 

“Material Change” has the meaning
ascribed thereto in Section 6.1(b)(i).

 

“Mine” has the meaning
ascribed thereto in the recitals.

 

“Mining Contract”  means that certain Open Pit Contract
Mining Services Agreement, dated as of January 7, 2005, as amended by that
certain First Amendment Open Pit Contract Mining Services Agreement, dated as
of June 2, 2005, between Company and Washington Group Bolivia S.R.L and as
further amended, restated or modified from time to time.

 

“MSC Board” means the
Board of Directors of Company.

 

“Operating Committee” has
the meaning ascribed thereto in Section 2.2(a).

 

“Operating Committee Chairman”
has the meaning ascribed thereto in Section 2.2(c).

 

“Parties” or “Party” have the meanings ascribed thereto
in the preamble hereof.

 

“Permitted Liens” means,
with respect to any Person, the following: (a) Liens for taxes,
assessments, or other governmental charges or levies not yet due and payable or
that are being contested in good faith through appropriate proceedings
diligently conducted and for which adequate reserves (as determined on the
basis of generally accepted accounting principles as used in the U.S.) have
been established; (b) Liens of carriers, warehousemen, mechanics,
materialmen, and landlords incurred in the ordinary course of business; (c) Liens
incurred in the ordinary course of business in connection with workmen’s
compensation, unemployment insurance, or other forms of governmental insurance
or benefits, or to secure performance of tenders, statutory obligations, legal
privileges, leases, bank guarantees, letters of credit, and contracts (other
than for borrowed money) entered into in the ordinary course of business or to
secure obligations on surety or appeal bonds; and (d) purchase money
security interests or Liens on property acquired or held by the applicable
Person in the ordinary course of business to secure the purchase price of such
property or to secure Indebtedness incurred solely for the purpose of financing
the acquisition of such property.

 

“Person”  means any natural person or Entity.

 

5

 

“Port Agreement” means
that certain Construction and Port Services Agreement, dated as of September 1,
2003, as amended by that certain First Amendment to the Construction and Port
Services Agreement, dated as of March 31, 2005, as further amended by that
certain Second Amendment to the Construction Port Services Agreement, dated as
of December 16, 2005, between Company and Puerto de Mejillones, S.A. and
as further amended, restated or modified from time to time.

 

“Power Purchase Agreement”
means that certain Power Purchase Agreement, dated March 14, 2008, between
Company and Empresa Eléctrica Valle Hermoso S.A. and as amended, restated or
modified from time to time, and that certain Power Purchase Agreement, dated March 14,
2008, between Company and Compañia Boliviana de Energía Eléctrica S.A. Bolivian
Power Company Limited and as further amended, restated or modified from time to
time.

 

“Program and Budget” has
the meaning ascribed thereto in Section 2.5.

 

“Project”  means the operation by MSC of the San
Cristóbal open pit silver, zinc and lead mine and processing facilities located
in the Potosí Department, Bolivia, the mining and processing of silver bearing
zinc and lead ores to recover silver, zinc and lead concentrates and related
infrastructure (including, but not limited to, rail transportation, power
transmission, and port facilities), the exploration and development activities
related thereto, and the transportation, marketing, and sale of the products
thereof and other activities reasonably ancillary thereto.

 

“Project Area” means the
concessions and other properties on which the Services are to be executed or
carried out as identified in Item 3 on Section 3.3 of the Apex Disclosure
Schedule to the Purchase and Sale Agreement.

 

“Project Contracts” means
the Mining Contract, the Rail Contract, the Port Agreement, the Transmission
Line Agreement, the Power Purchase Agreements, the Tire Contract and any other
such agreement entered into by Company with respect to the Project.

 

“Project Contractor”
means the counterparties to the Project Contracts.

 

“Purchase and Sale Agreement”
means that certain Purchase and Sale Agreement entered into as of January 12,
2009, by and among Apex Silver Mines Limited, Apex Luxembourg S.Á.R.L., Apex
Silver Mines Sweden AB, Manager, ASC Bolivia LDC, Sumitomo and SC Minerals
Aketiebolag, as amended, restated or modified from time to time.

 

“Rail Contract” means
that certain Transportation Agreement, dated as of March 15, 2005, between
Company and Antofagasta Railway Company PLC, as amended, restated or modified
from time to time.

 

“Reimbursable Expenses”
has the meaning ascribed thereto in Section 4.3(a).

 

“Reviewing Accountant”  has the meaning ascribed thereto in Section 4.4(g).

 

“Sale Liquidity Event”  means any transaction or series of
transactions resulting in the sale or transfer, whether direct or indirect, by
Sumitomo and/or any Sumitomo Affiliate to any Person or Persons that is or are
not a Sumitomo Affiliate (x) of an aggregate amount of Equity Securities 

 

6

 

of Company that results in Sumitomo’s Percentage of
all Equity Securities immediately after such sale or transfer being less than
eighty percent (80%) or (y) that results in such Person or Persons
obtaining the power (whether or not exercised) to elect a majority of the board
of directors (or similar governing body) of Company.

 

“Secretary” has the
meaning ascribed thereto in Section 2.2(f).

 

“Senior Management” has
the meaning ascribed thereto in Section 10.1(a).

 

“Services” has the
meaning ascribed thereto in Section 3.1.

 

“Significant Operational Matter”
has the meaning ascribed thereto in Section 2.6(c).

 

“Subcontractor” means any
Person or Entity, including, but limited to, suppliers of Materials and, that
provides services or Materials for part of the Project under a contractual
agreement with a Project Contractor.

 

“Sumitomo” has the
meaning ascribed thereto in the recitals.

 

“Sumitomo Affiliate”
means any Entity Controlled by Sumitomo.

 

“Sumitomo Guarantee” has
the meaning ascribed thereto in the recitals.

 

“Sumitomo Representatives”
has the meaning ascribed thereto in Section 2.2(a).

 

“Sumitomo’s Percentage”
means the percentage of Company’s outstanding Equity Securities, based on the
voting power thereof, owned by Sumitomo and its Affiliates on (or immediately
before or after, as applicable) the date of a Sale Liquidity Event or the End
Date, as applicable.

 

“Term” has the meaning
ascribed thereto in Section 13.2.

 

“Tire Contract” means
that certain Tire Supply Agreement, dated as of July 7, 2008, between
Company and Prove SRL, as amended, restated or modified, from time to time.

 

“Transmission Line Agreement”
means that certain Power Line Construction and Transmission Agreement, dated as
of January 14, 2005, as amended by that certain First Amendment to Power Line Construction and Transmission
Agreement, dated as of March 14, 2005, as further amended by that
certain Second Amendment to Power Line
Construction and Transmission Agreement, dated as of August 29, 2005,
among Company, Ingelec S.A., Ingelec Transportadora de Electricidad S.A., Ingelec
Electricity Transportation Investments, Corp., and San Cristóbal Transportadora
de Electricidad, S.A. and as further amended, restated or modified from time to
time.

 

“Transition Phase”  has the meaning ascribed thereto in Section 3.2.

 

“Transition Services” has
the meaning ascribed thereto in Section 3.2.

 

“VAT” has the meaning
ascribed thereto in Section 4.1.

 

7

 

“VPGM” has the meaning
ascribed thereto in Section 10.1(a)

 

1.2           References.  (a)  All references in this Agreement to
Exhibits, Schedules, Articles, Sections, Subsections, and other subdivisions
refer to the Exhibits, Schedules, Articles, Sections, Subsections, and other
subdivisions of this Agreement unless expressly provided otherwise.

 

(b)           The words “this
Agreement,” “herein,” “hereby,” “hereunder” and words of similar import refer
to this Agreement as a whole and not to any particular subdivision unless
expressly so limited.  The phrases “this
Section” and “this Subsection” and similar phrases refer only to the Sections
or Subsections in which the phrase occurs. 
The use herein of the words “include” or “including” when following any
general statement, term or matter should not be construed to limit such
statement, term or matter to the specific items or matters set forth
immediately following such word or to similar items or matters, whether or not
limiting language is used with reference thereto, but rather should be deemed
to refer to all other matters that fall within the broadest scope of the
general statement, term or matter.  The
word “or” is not exclusive.  Pronouns in
masculine, feminine, and neuter gender shall be construed to include any other
gender.  Words in the singular form shall
be construed to include the plural, and words in the plural form shall be
construed to include the singular, unless the context otherwise requires.

 

Article II

 

Appointment of
Manager and Operating Committee

 

2.1           Appointment
of Manager.  On the terms and
conditions herein stated, Company engages Manager to provide the Services
described in this Agreement in connection with the organization, management,
coordination and operation of the Project. 
Manager accepts such engagement pursuant and subject to the terms and conditions
of this Agreement.

 

2.2           Operating
Committee.  (a) Establishment.  Company shall establish an operating
committee for the Project (the “Operating
Committee”), which shall operate under the supervision of the MSC
Board.  The Operating Committee shall
consist of one or more representatives of Sumitomo (and one or more alternates
therefor selected from time to time by written notice) (the “Sumitomo Representatives”) and one or more
representatives of Manager (and one or more alternates therefor selected from
time to time by written notice) (the “Manager
Representatives”).  The Sumitomo Representatives shall include
the Operating Committee Chairman. 
The Manager Representatives
shall include the Lead Manager Representative and other members consisting of
the VPGM and the Company Controller.  The
Parties further acknowledge and agree that the Sumitomo Representatives and
Manager Representatives as of the Closing Date shall be as listed on Schedule
A hereto; provided that each of Sumitomo and Manager shall have the
right in its sole discretion to change its respective representatives from time
to time and whenever it believes such change is necessary or appropriate.

 

(b)           Voting.  The Sumitomo Representatives have full voting
authority and the Manager Representatives have none.  However, the Manager Representatives shall be
entitled to state their agreement with or objection to Operating Committee
decisions and, if so stated, such agreement or objection shall be included in
the minutes of the meetings of the Operating Committee.

 

8

 

(c)           Operating
Committee Chairman.  The chairperson
of the Operating Committee (the “Operating
Committee Chairman”) shall be appointed by Sumitomo from the
Sumitomo Representatives and shall have duties as shall be determined by the
Operating Committee.  The initial
Operating Committee Chairman shall be as set forth on Schedule A.

 

(d)           Lead
Company Representative.  The lead
representative of Company (the “Lead Company
Representative”) shall be the direct contact between Company and
Manager and the Lead Manager Representative on all issues relating to the
performance of the Services for the Project and any related issues pursuant to
the terms of this Agreement through which Company must communicate with Manager
or related to any matter by which Manager needs to communicate with
Company.  The initial Lead Company
Representative shall be as set forth on Schedule A and may be changed at
the sole discretion of Company from time to time upon written notice to
Manager.

 

(e)           Lead
Manager Representative.  The lead
representative of Manager  (the “Lead Manager Representative”) shall be the
direct contact with the Lead Company Representative on all issues relating to
the performance of the Services for the Project and any related issue pursuant
to the terms of this Agreement through which Company must communicate with
Manager or related to any matter by which Manager needs to communicate with
Company.  The initial Lead Manager
Representative appointed by Manager shall be Mr. Terry Owen and may be
changed at the sole discretion of Manager from time to time upon written notice
to Company.

 

(f)            Secretary.  The secretary of the Operating Committee (the
“Secretary”) shall be designated
by the Manager Representatives from time to time and the Secretary’s powers
shall be limited to promptly and clearly recording and entering into the
records of Company the minutes of the meetings of the Operating Committee.

 

2.3           Purpose
and Authority.  The Operating
Committee shall review and adopt Programs and Budgets and shall recommend such
Programs and Budgets to Company for its consideration and approval.  Except as set forth in the preceding
sentence, the sole purpose of the Operating Committee shall be to provide a
forum for the Sumitomo Representatives and the Manager Representatives to meet
and communicate, in accordance with Section 2.4(a) and (b) below,
in order to discuss and exchange information, ideas and opinions with respect
to the operation and management of the Project.

 

2.4           Meetings.  (a)  Regular meetings of the Operating
Committee shall be held at least once every calendar quarter in person, at such
times and places as the Operating Committee Chairman and the Lead Manager
Representative agree.  Regular meetings
shall be held in a location reasonably convenient to all the representatives on
such Committee in any of Denver, Colorado, U.S.A., New York, New York, U.S.A.,
La Paz, Bolivia or Tokyo, Japan, unless the Operating Committee Chairman and
Lead Manager Representative otherwise agree. 
The Operating Committee Chairman or his designee shall give at least
fourteen (14) days advance notice of regular meetings by facsimile, email or
telephone unless otherwise agreed or waived by the Operating Committee Chairman
and the Lead Manager Representative.  Delivery of notice by electronic transmission
via email with a notation in the subject line “MSC Operating Committee – Formal
Notice” shall be effective.

 

9

 

(b)           Special
meetings of the Operating Committee may be called by the Operating Committee
Chairman on his or her own initiative and shall be called if requested by the
Lead Manager Representative.  The
Operating Committee Chairman or his designee shall give at least three (3) Business
Days advance notice of special meetings unless otherwise agreed by the
Operating Committee Chairman and the Lead Manager Representative, provided
that in the case of emergency the Operating Committee shall meet as soon as
practicable.  Notice of special meetings
shall be given by facsimile, email or telephone.  Delivery
of notice by telephone or by electronic transmission via email with a notation
in the subject line “MSC Operating Committee — Formal Notice” shall be
effective.

 

(c)           Representatives
on the Operating Committee and alternate representatives may participate in the
Operating Committee’s regular and special meetings through telephone conference
calls, videoconferences, or any other technological means available.  One or more individuals and other necessary
personnel may accompany any representative to any meetings of the Operating
Committee.  The Secretary shall cause
minutes of such meetings to be recorded promptly and clearly and entered into
the records of Company.

 

(d)           Any
action required or permitted to be taken at any meeting of the Operating
Committee may be taken without a meeting, if prior to such action a written
consent thereto is signed by at least one Sumitomo Representative and notice of
such consent is promptly provided to a Manager Representative, and such written
consent is filed with the minutes of proceedings of the Operating Committee.

 

(e)           The
establishment of the Operating Committee and the appointment of Manager to
perform the Services hereunder shall in no way limit the right of Company or
the MSC Board to be the sole arbiter of Company’s affairs and have sole
authority to appoint Company’s officers.

 

2.5           Program
and Budget.

 

(a)           Initial
Program and Budget.  The Initial
Program and Budget for the calendar year commencing January 1, 2009, has
been approved by Company.  The Initial
Program and Budget may be amended, modified, and revised from time to time by
Manager, subject to consideration and approval by Company.

 

(b)           Subsequent
Programs and Budgets.  (i)  For
each Contract Year beginning with the Contract Year commencing on January 1,
2010, a proposed program and budget (the “Program
and Budget”) shall be prepared by Manager and submitted to the
Operating Committee at least forty five (45) days  prior to the start of such Contract
Year.  Unless otherwise agreed by the
Operating Committee, each such proposed Program and Budget shall cover a
five-year period, with the first year of such Program and Budget containing
monthly projections and the subsequent four years of such Program and Budget
containing annual projections.

 

(ii)           Manager
may revise, clarify or amend the proposed Program and Budget, subject to
consideration and approval by Company.

 

10

 

(iii)          Company shall approve each proposed Program
and Budget, with any approved revisions, clarifications or amendments, no later
than thirty (30) days  prior
to the period to which such proposed Program and Budget applies.

 

(iv)          In
the event that the Program and Budget is not approved by Company within the
timeframe set forth in Subsection (iii) above, Manager shall operate the
Project and perform its obligations hereunder pursuant to the Extended Program
and Budget until a new Program and Budget is so approved.

 

(c)           Company
Modifications.  Company (in
consultation with Manager) may amend, modify or revise the Initial Program and
Budget or any subsequent Program and Budget to reflect such changes that in
Company’s reasonable judgment may be necessary for the Project.

 

2.6           Operational
Matters.  (a)  Manager shall have
the authority, subject to the limitations and in the manner set forth herein,
to operate the Project and perform its obligations hereunder substantially in
accordance with the then-current Program and Budget approved by Company, and
senior employees of Manager shall have the authority to commit Company to incur
authorized expenditures in respect of the operation of the Project and
performance of the obligations hereunder subject to monetary limitations in
accordance with Schedule B hereto as specified by Sumitomo in
consultation with Manager prior to the Closing Date, provided that
Manager and its senior employees shall be granted sufficient authority for the
execution of the Programs and Budgets as approved by Company, including
operations and production, procurement, general and personnel management and
contract execution and for the performance of the Services for the Project in
accordance with the terms and conditions of this Agreement.  Company shall have the right in its sole
discretion to modify or amend Schedule B or otherwise limit or place
conditions upon the discretionary powers and authority granted to Manager under
this Agreement at any time and from time to time; provided  that all such modifications or amendments
shall be done in consultation with Manager; and provided  further
that upon the effectiveness of such modification or amendment, Manager and its
employees shall continue to have sufficient authority for the execution of the
Programs and Budgets as approved by Company and Manager’s performance of the
Services hereunder.

 

(b)           To
perform its duties under this Agreement, Company shall grant and maintain
certain powers of attorney specified in Schedule C hereto as specified
by Sumitomo in consultation with Manager prior to the Closing Date, provided
that the powers of attorney shall be sufficient for the execution of the
Programs and Budgets as approved by the Company, including operations and
production, procurement, general and personnel management and contract
execution and for the performance of the Services for the Project in accordance
with the terms and conditions of this Agreement.  Company retains the right to revoke any power
of attorney granted hereunder, provided that in the event that a power
of attorney is revoked by Company, Manager shall cause each attorney in fact to
continue to perform its functions and duties pursuant and subject to the terms
of this Agreement, except for those functions or duties which Company may have
notified each attorney in fact in writing are not to be exercised upon the
adoption of the revocation resolution by Company pursuant to Company’s
Estatutos.  Unless this Agreement has
been terminated pursuant to Article XIII, Company shall consult with
Manager to provide substitute powers of attorney promptly such that Manager
shall have sufficient authority for the execution of the Programs and Budgets
for the performance of the 

 

11

 

Services hereunder. 
Any substitute powers of attorney granted by Company are subject to the
terms and conditions of this Agreement.

 

(c)           Prior to the Closing Date, Sumitomo, in
consultation with Manager, shall determine the criteria for certain important
acts, expenditures, decisions, and
obligations made or incurred by or on behalf of Company (each, a “Significant Operational Matter”)
for which Manager must
obtain the prior written approval of
Company,
including but not limited to: (i) entering into any Contract that
exceeds an amount as to be agreed upon by the Parties prior to the Closing Date
or is not contemplated by the then-applicable Program and Budget; (ii) incurring
any operating expenditure or series of related operating expenditures in any
calendar year that exceeds an amount as to be agreed upon by the Parties prior
to the Closing Date or is not contemplated by the then-applicable Program and
Budget; (iii) incurring any capital expenditure or series of related
capital expenditures in any calendar year that exceeds an amount as to be
agreed upon by the Parties prior to the Closing Date or is not contemplated by
the then-applicable Program and Budget; (iv) incurring any expenditure or
series of expenditures relating to exploration by Company in any calendar year
that exceeds an amount as to be agreed upon by the Parties prior to the Closing
Date not otherwise included in the Program and Budget for that year; (v) commencing
legal action with respect to any litigation or arbitration matter or claim
pursuant to the terms as to be agreed upon by the Parties prior to the Closing
Date and (vi) entering into any formal collective bargaining agreement
with a labor union.  Such criteria shall be
amended or modified from time to time by Company in its sole discretion, provided
that the authority granted to Manager shall always be sufficient for the
execution of the Programs and Budgets as approved by Company, including
operations and production, procurement, general and personnel management and
contract execution for the performance of the Services for the Project in
accordance with the terms and conditions of this Agreement.

 

Article III

 

Description of
Services

 

3.1           Services.  Manager shall provide management, technical,
operating, administrative and support services reasonably required for the
operation of the Project during the term of this Agreement, as described in Schedule
D to this Agreement, including but not limited to (a) Project Area
management, (b) accounting and tax services and reports, (c) information
technology support services, (d) technical support services, (e) environmental,
health and safety and water support services, (f) commercial contract
management and (g) local community relations (collectively, the “Services”). 
The Services shall be for, contracted by and conducted in the name of
and for the benefit of Company.

 

3.2           Transition
and Excluded Services.  For the three
(3) month period following the Closing Date (the “Transition Phase”), Manager shall provide
the additional services (the “Transition Services”),
as described in Schedule E(1) to this Agreement. The Services and
the Transition Services shall not include the services listed on Schedule E(2) (the
“Excluded Services”), and Manager
shall not be under any duty to provide or have any liability for the Excluded
Services.

 

12

 

 

3.3           Freedom
of Action.  This Agreement shall in
no way prohibit Manager or any of its partners or Affiliates or any director,
officer, partner, agent or employee of Manager or any of its partners or
Affiliates from engaging in other activities, whether or not directly or
indirectly in competition with any business of Company or any of its respective
subsidiaries or Affiliates.

 

Article IV

 

Compensation

 

4.1           Fees.  In consideration for Manager’s performance of
the Services and Transition Services, Company shall pay to Manager for the
performance of the Services a Fee, of which a portion shall be paid by AMM for
the Transition Services, and an Annual Incentive Fee and shall reimburse
Manager for Reimbursable Expenses as set forth below.  The Fee, Annual Incentive Fee and
Reimbursable Expenses are exclusive of any and all value-added taxes (“VAT”), import and/or customs taxes, duties
or fees and any other withholding taxes. 
Therefore, unless otherwise agreed by the Parties, Company shall pay
directly to the Bolivian Governmental Authorities any and all VAT, import
and/or custom taxes, duties and fees and any other withholding taxes assessed
in connection with the Services.  Company
shall promptly reimburse Manager for the amount of any VAT, import and/or
custom taxes, duties and fees paid to Bolivian Governmental Authorities and any
other withholding taxes in accordance with the invoicing and reimbursement
procedures set forth in Section 4.2.

 

4.2           Annual
Fee.  (a)  Company shall pay
Manager an annual fee equal to US$9,500,000 (the “Fee”).

 

(b)           The
Fee shall accrue from and after the Closing Date.  Manager shall invoice Company for the Fee
fifteen (15) days before the beginning of each quarter  and such Fee shall
be payable by Company quarterly, on the first day of such quarter; provided,
however, that the first installment of such quarterly payment shall not
require an invoice and shall be paid by Company on the later of (i) the
Closing Date and (ii) April 6, 2009. 
The Fee payable for any period of less than a full calendar quarter
shall be the prorated portion thereof for the actual number of days elapsed in
such partial calendar quarter.

 

4.3           Reimbursable
Expenses.

 

(a)           Company
or AMM  shall
reimburse Manager for the following expenses incurred by Manager in connection
with the performance of the Services (collectively, the “Reimbursable
Expenses”) as described below:

 

(i)            Company
shall reimburse Manager for any Project or operating cost paid on behalf of
Company and which payment has been approved by Company in advance or is made in
accordance with the current Program and Budget.

 

(ii)           AMM
shall reimburse Manager for (A) reasonable out-of-pocket third party
expenses incurred with respect to Transition Services and (B) the
reasonably allocable cost (without markup) of Manager employees providing
Transition Services that are paid by Manager.

 

13

 

(iii)          Company shall reimburse such other expenses
as may be agreed upon from time to time by Manager and Company.

 

(iv)          Company
shall reimburse certain expenses relating to air transportation as identified
on Schedule F to this Agreement as specified by Sumitomo and Manager
prior to the Closing Date.

 

(b)           Manager shall invoice Company or AMM as
relevant in advance for an estimate of Reimbursable Expenses for each month and
will include in such invoice any adjustments for Reimbursable Expenses not
included in a previous month’s invoice or to correct Reimbursable Expenses
included in a previous month’s invoice to actual amounts.  On the first business day of each month,
Manager shall present Company or AMM as relevant with an invoice in reasonable
detail that contains the following: (i) an estimate of Reimbursable
Expenses for the current month (subject to the limitation described in the
previous sentence), (ii) actual Reimbursable Expenses from preceding
months that were not included as estimates in the invoices for any preceding
month and (iii) positive or negative adjustments, as the case may be, for
estimated Reimbursable Expenses from any previous month to reflect actual
amounts incurred.  The invoice for
Reimbursable Expenses will be payable by Company or AMM within thirty (30) days
following receipt.

 

(c)           Manager
shall establish and maintain adequate accounting, management information, and
cost accounting systems that identify all Reimbursable Expenses.

 

4.4           Annual
Incentive Fee.  (a)  At the end
of each Contract Year, Manager shall be entitled to receive an incentive (the “Annual Incentive Fee”) from Company based
on performance factors.

 

(b)           The
annual performance targets for the initial Contract Year are as set forth in
and calculated in accordance with Schedule G of this Agreement, as
specified by Sumitomo in consultation with Manager prior to the Closing Date
(the “Annual Performance Targets”).  For each subsequent Contract Year, Manager
shall propose Annual Performance Targets in conjunction with the Program and
Budget in accordance with Section 2.5(b), to be approved by Company at the
time that the Program and Budget for such year is approved.

 

(c)           The
Annual Incentive Fee for any Contract Year shall not exceed US$1,500,000; provided,
however, that the Annual Incentive Fee for the first Contract Year,
which period ends on December 31, 2009, shall not exceed  US$1,125,000.

 

(d)           Within
forty-five (45)  days
after the end of each Contract Year, Manager shall present to Company its
calculation of the Annual Incentive Fee. 
Company shall have
thirty (30)
days to respond to Manager after it has received Manager’s
calculation of the Annual Incentive Fee. 
Delivery of the Annual Incentive
Fee calculation by Manager and response by Company to Manager may be made by
electronic transmission via email with a notation in the subject line “MSC
Annual Incentive Fee — Formal Notice of Calculation” and shall be effective, provided
that such communication be followed by facsimile transmission within three (3) Business
Days after the delivery of such electronic communication.

 

14

 

(e)           Unless
within thirty (30) days after the delivery to Company of the Annual Incentive
Fee calculation, Company delivers to Manager a notice setting forth, in
reasonable detail, any dispute as to the Annual Incentive Fee and the basis for
such dispute (a “Dispute Notice”), the Annual
Incentive Fee shall be deemed accepted by Company.

 

(f)            All
undisputed amounts to be paid pursuant to this Section 4.4 shall be paid
by Company within thirty (30) days after delivery by Manager to Company of its
calculation of the Annual Incentive Fee in accordance with the current Annual
Performance Targets.

 

(g)           For
fifteen (15) days after delivery of a Dispute Notice, Company and Manager shall
endeavor in good faith to resolve by mutual agreement all matters in the
Dispute Notice. If the Parties are unable to resolve any matter in the Dispute
Notice within such fifteen (15) day period, Company and Manager shall engage
Deloitte & Touche, an independent registered public accounting firm,
as the “Reviewing Accountant” (if such accounting firm is unable or unwilling
to serve as the Reviewing Accountant, the parties shall, within ten (10) days
after the end of such thirty-day period, agree on an alternate internationally
recognized independent accounting firm) (the “Reviewing
Accountant”) for resolution of the disputed matter(s).

 

(h)           Company
and Manager shall instruct the Reviewing Accountant to resolve the disputed
matters as promptly as practicable. 
Company and Manager shall cooperate with each other and the Reviewing
Accountant in connection with the matters set forth in this Section 4.4(h),
including by furnishing such information as may be reasonably requested and
shall afford the other Parties the opportunity to participate in all
communications with the Reviewing Accountant. 
The Reviewing Accountant’s determination shall be final and binding on
both Company and Manager, and judgment on such determination may be entered in
any court of competent jurisdiction.  The
costs and expenses of the Reviewing Accountant will be shared equally by Company
and Manager.

 

Article V

 

Interruption and
Suspension

 

5.1           Notice
Regarding Interruption in Operations. 
It shall be Manager’s responsibility to anticipate, wherever reasonably
possible, all potential sources of interruption to operations at the Mine and
to advise Company in respect thereto and to take appropriate action to limit
such interruptions, where reasonably possible.

 

5.2           Company-Ordered
Suspensions.  Company may, at its
sole option, by providing reasonable prior written notice to Manager, suspend
at any time all or a portion of the operations of the Project.  Such suspension order shall designate the
amount and type of activities to be suspended. 
Company may provide verbal notice of the suspension order to Manager in
an urgent situation; provided that Company shall deliver a written
notice of such suspension to Manager within twenty-four (24) hours
thereafter.  Upon receipt of any such
suspension order, Manager shall, unless the notice requires otherwise:

 

15

 

(i)            order
discontinuation of activities at the Project on the date and to the extent
specified in the notice;

 

(ii)           place
no further orders with respect to activities of the Project, other than to the
extent required in the notice;

 

(iii)          promptly make every reasonable effort to
obtain suspension upon reasonable terms satisfactory to Company of all orders,
contracts, subcontracts and rental or lease agreements entered into by Manager
or otherwise supervised or managed by Manager to the extent required in the
notice;

 

(iv)          confer
with Company regarding measures to mitigate the effects of the suspension; and

 

(v)           use
its reasonable commercial efforts to minimize costs associated with suspension.

 

5.3           Adjustments
for Interruption in Operations and Company-Ordered Suspensions.  Upon the occurrence of any interruption in
operations or Company-ordered suspension, the Program and Budget shall be
appropriately adjusted based on amendments prepared by Manager and approved by
Company.

 

5.4           Compensation
During Suspension.  During any
interruption in operations or Company-ordered suspension or other suspension or
delay, Manager shall continue to be paid the Fee and reimbursed for
Reimbursable Expenses, as applicable, in accordance with Article IV hereof
for a period of ninety (90) days following such interruption, suspension or
delay, without regard to whether any interruption, suspension or delay is a
result of Company’s decision, Force Majeure, strike or other labor disturbance
not contemplated under Article VII, temporary shutdown or any and all
other cause of such interruption or suspension. 
After a period of ninety (90) days following such interruption,
suspension or delay, either Company or Manager may request an equitable
increase or decrease in the Fee by providing written notice of such request to
the other party.  In the case of any
dispute related to the adjustment of the Fee, the objecting party shall deliver
to the other party a Dispute Notice with such detail as described in Section 4.4(e) and
shall follow the procedures to resolve such dispute in good faith as described
above in Sections 4.4(g) and 4.4(h). 
For the avoidance of doubt, Manager shall not be entitled to be paid an
Annual Incentive Fee or any portion thereof with respect to such interruption
period.

 

5.5           Suspension
of Work by Manager.

 

(a)           Right
to Suspend or Terminate for Failure to Pay. 
If Company fails to pay Manager any undisputed amount due under this
Agreement within ten (10) Business Days after the expiration of the time
within which payment is to be made, Manager may terminate this Agreement, in
each instance after giving not less than seven (7) days prior notice to
Company.  Such action shall not prejudice
Manager’s rights to payment under Article IV hereof.

 

(b)           Resumption
Upon Cure.  If Manager suspends or
reduces the Services and Company subsequently pays the entire undisputed amount
due (prior to Manager’s termination of the Agreement in accordance with Section 5.5(a) above),
Manager’s right to terminate this 

 

16

 

Agreement shall lapse in respect of such delayed
payments, and Manager shall resume normal working as soon as is reasonably
possible.

 

5.6           Right
to Terminate for Extended Suspension. 
In the event of a suspension ordered by Company lasting more than ninety
(90) consecutive days, Manager shall have the right to terminate this
Agreement, provided that such termination shall not prejudice Manager’s
rights to payment under Section 13.7(i) (but subject to Section 5.4
above) and (ii) hereof.

 

Article VI

 

Changes and
Emergencies

 

6.1           Material
Changes.  (a)  Manager and
Company acknowledge that the stated scope of work is descriptive and not
necessarily definitive, and that the prudent management of the Project may
require changes of a major or minor scope to the Services otherwise described
herein.

 

(b)           Either
Manager or Company, in its sole discretion, shall have the right to request
changes to the Services.

 

(i)            A
change shall not be deemed a material change unless such change involves a
significant change in operations from those currently envisioned, which could
include, but not be limited to, an expansion of the plant, an interruption of
the Project, a Company-ordered suspension or the removal of a Project
Contractor (each, a “Material Change”).

 

(ii)           In
the event that a change is not a Material Change, no adjustment shall be made
to the Fee and the change in Services shall be deemed to be automatically
included in the scope of work.

 

(iii)          In the event that a
change is a Material Change, such change shall be deemed a change in the scope
of the Services and the Fee and Reimbursable Expenses shall be increased
accordingly, if Company determines an increase to be appropriate in accordance
with Section 6.1(c) below.

 

(c)           Manager
shall make requests for adjustments to the Fee as follows:

 

(i)            As soon as possible
but not more than fifteen (15) days after becoming aware of the necessity of a
Material Change, Manager shall give notice to Company of the nature of Material
Change and the anticipated ramifications of such Material Change;

 

(ii)           Within
fifteen (15) days of giving notice of the Material Change, if Manager is of the
opinion that a claim for an adjustment of the Fee is justified, it shall make
such a claim in writing to Company giving details of the proposed adjustment
and all other relevant facts;

 

17

 

(iii)          Manager and Company
shall discuss the claim in good faith as soon as possible and may seek further
evidence as may be required to confirm the details of the claim; and

 

(iv)          Within
ten (10) days after the receipt of all the information that is reasonably
necessary, Company shall notify Manager of any adjustment it agrees to be
appropriate under the provisions of this Article VI.  In determining the appropriate adjustment,
Company is authorized to take into consideration any reasonable alterations in
the method or manner of performance of the Services.

 

(d)           Unless
Manager has applied for an adjustment within the period and in the aforesaid
manner and unless and until Company has adjusted the Fee, as applicable,
Manager shall not be entitled to additional compensation.

 

(e)           In
the case of any dispute related to the adjustment of the Fee, Manager shall
deliver to Company a Dispute Notice with such detail as described in Section 4.4(e),
and shall follow the procedures in good faith described above in Sections 4.4(g) and
4.4(h).

 

6.2           Emergencies.  (a)  Notwithstanding anything to the
contrary under this Agreement, in case of emergency or to comply with
applicable Law or any requirement of a Governmental Authority, Manager may take
any action and make any expenditures it deems necessary to protect life, limb,
or property, or to protect and maintain the business and assets of Company from
imminent material economic loss.

 

(b)           Manager
shall notify Company promptly of any emergency of the type set forth in
Subsection (a) above and advise of the actions taken or proposed to be
taken and its best current estimate of the expenses incurred or to be incurred
to address such emergency.

 

Article VII

 

Force Majeure

 

7.1           Events
of Force Majeure.  For purposes of
this Agreement, “Force Majeure”
shall mean any of the following acts, events or causes occurring without the
fault or negligence of the Party claiming it:

 

(a)           acts
of God, perils of the sea, accidents of navigation, war, sabotage, acts of
terrorism, riot, insurrection, civil commotion, national emergency (whether in
fact or law), martial law or blockade;

 

(b)           expropriation,
prohibition, intervention, requisition or embargo by legislation, regulation,
decree or other legally enforceable order of any competent authority (including
any court of competent jurisdiction);

 

(c)           earthquakes,
floods, fire, volcanic activity, drought, entrapped gases or other physical
disasters, and unusually adverse weather conditions outside of those that can
reasonably be anticipated;

 

18

 

(d)           loss
of essential services or utilities supplied by third parties;

 

(e)           strikes
or labor actions that are caused by or related to political disputes or
disputes, including labor disputes regarding employees of any Project
Contractors or other Subcontractors; or

 

(f)            any
other action that presents immediate physical danger to Manager’s employees.

 

7.2           Not
Force Majeure.  Financial inability
of Company, Manager, AMM or Sumitomo shall not be considered Force Majeure.

 

7.3           Notice
Requirement.  If any of the Parties
is or reasonably expects to be prevented from performing any of its obligations
under this Agreement as a result of Force Majeure, it shall promptly notify the
other Parties of the nature of the Force Majeure and likely duration of the
disability resulting therefrom.

 

7.4           Performance
Suspended.  (a)  Upon giving the
above notice of the nature of the Force Majeure and the likely duration of the
resulting disability, each of Manager and Company may immediately request a
consultation with the other party in order to reach agreement as to the best
way to deal with the situation.  Manager
shall be excused from its obligations hereunder to the extent prevented by
Force Majeure, provided that:

 

(i)            the
suspension of performance is of no greater scope and of no longer duration than
is required by the condition or event of Force Majeure;

 

(ii)           Manager
proceeds with reasonable diligence to remedy its inability to perform and
provides weekly progress reports to the other Parties describing actions taken
to end the non-performance due to the condition or event of Force Majeure;

 

(iii)          Manager shall use its commercially reasonable
efforts to continue to perform its obligations under this Agreement and to
minimize any adverse effects of such event of Force Majeure; and

 

(iv)          as
soon as Manager is able to resume performance of its obligations under this
Agreement, Manager shall give Company written notice to that effect,

 

provided that, this provision shall
not excuse or release Manager from obligations due or performable, or
compliance required, under this Agreement prior to the occurrence of Force
Majeure or obligations not affected by the event of Force Majeure.

 

(b)           Unless
any agreement is reached to the contrary, the Parties shall bear their own
costs arising out of any Force Majeure.

 

7.5           Adjustments
as a Result of Force Majeure. 
Nothing in this Article VII shall excuse a Party from any of its
payment obligations hereunder.  However,
if the event of Force Majeure materially alters the scope of Services to be
performed, requires a Material Change to the Services or materially alters
Manager’s costs to perform the Services, Manager and Company 

 

19

 

shall equitably increase or decrease the Fee to
account for such changes in accordance with Section 6.1.

 

Article VIII

 

Representations
and Warranties

 

8.1           Parties’
Representations.  Each of the Parties
represents and warrants to each other Party that as of the Closing Date:

 

(a)           it
is duly incorporated or registered and validly existing under the Laws of the
jurisdiction in which it was formed;

 

(b)           it
has full power and authority and possesses all licenses, permits and
authorizations necessary to conduct its business, to own its properties and
perform its obligations under this Agreement;

 

(c)           it
has financial capabilities and the means to perform its obligations under this
Agreement and under any agreement or instrument entered into by it pursuant to
or in connection with this Agreement;

 

(d)           the
execution, delivery and performance of its respective obligations under this
Agreement has been duly authorized, executed and delivered by all necessary
corporate action and is a valid, legal and binding obligation of the Party,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, moratorium or other laws of general
application affecting the rights of creditors;

 

(e)           neither
the execution nor the delivery by such Party of this Agreement nor the
performance by that Party if its obligations hereunder:

 

(i)            conflicts
with, violates, or results in a breach of any Law applicable to such Party;

 

(ii)           conflicts
with, violates or results in a breach of any term or condition of any judgment,
decree, agreement or instrument to which the Party is a party or by which that
Party or any of its properties or assets are bound, or constitutes a default
under any such judgment, decree, agreement or instrument; or

 

(iii)          violate any provision of its organizational
documents.

 

(f)            no
approval, authorization, order or consent of, or declarations, registration or
filing with, any Governmental Authority is required for the valid execution,
delivery and performance by that Party of this Agreement, except such as have
been duly obtained or made; and

 

(g)           there
is no action, suit or proceeding before or by any court or Governmental Authority
or, to the best of the Party’s knowledge, threatened against that Party, or its
Affiliates, which is likely to result in an unfavorable decision, ruling or
finding that would 

 

20

 

materially and adversely affect the validity or
enforceability of this Agreement, or would materially and adversely affect the
performance by the Party of its obligations hereunder.

 

Article IX

 

Obligations of the
Parties

 

9.1           Covenants of Manager.  (a) 
Manager shall perform, or cause its consultants or subcontractors to perform,
the Services at all times:

 

(i)            in
full conformity with this Agreement, the applicable approved Program and Budget
and such other written directives and guidelines as may be furnished to Manager
by Company from time to time;

 

(ii)           in
a good and workmanlike manner, in good faith, and observing prudent industry
practices;

 

(iii)          in material compliance with all applicable
Laws; and

 

(iv)          with
the degree of care and skill ordinarily exercised by members of the
international mining profession prevailing in the open pit mine operation
industry as of the date such Services are provided, for managing projects of
the size and complexity of the Project including without limitation production
of multiple products, the national, regional and local political issues, the
limited education and experience of the workforce, the relationships between
the workforce and the communities, the cultural history and developments in the
part of Bolivia in which the Project is located and the absence of effective
civil authority.

 

(b)           Manager
shall not, without the prior approval of Company or unless permitted under the
authorities set forth in Schedule B, do or permit to occur or to continue any
of the following:

 

(i)            create,
incur, or assume any security interest or encumbrance upon the Project, Company
or its properties other than Permitted Liens;

 

(ii)           cause
Company to assume any debt or extend any credit, other than prepayments for
operating supplies, not included in the applicable Program and Budget and
exceeding US$1,000,000 in amount;

 

(iii)          enter into any Materials Contract or material
amendment or modification thereof;

 

(iv)          enter
into a binding commitment to sell, transfer, finance, pledge, or hypothecate
any property or beneficial interest of Company, other than in the ordinary
course or pursuant to the applicable Program and Budget;

 

(v)           act
on behalf of, or hold itself out as having the authority to act on behalf of,
Company in any manner beyond the scope of the terms of this Agreement;

 

21

 

(vi)          take
any action (or inaction) that pursuant to the provisions of this Agreement
requires the prior approval or consent of Company;

 

(vii)         engage in any other Significant Operational
Matters, except for as provided in Schedule B hereto; and

 

(viii)        terminate or materially alter the terms of
employment of the VPGM.

 

(c)           Manager
shall take all appropriate measures in order that all records and accounts
pertaining to Services performed by Manager under this Agreement are maintained
for such periods of time as may be required in order to comply with applicable
Law.

 

9.2           Covenants of Company and AMM.  (a) 
Company shall maintain the powers of attorney as specified in Section 2.6
hereof.

 

(b)           Company
shall, upon reasonable request, promptly provide to any third party any
necessary evidence of Manager’s authority to act pursuant to this Agreement or
any power of attorney granted pursuant to this Section 9.2.

 

(c)           Company
and AMM shall make prompt payment of all undisputed amounts in accordance with
the terms of this Agreement.

 

Article X

 

Senior Management
and Personnel

 

10.1         Senior
Management.  (a)  Manager shall
appoint, subject to the consideration and approval of Company, Mr. Michael
John Bunch  for
the position of Vice President and General Manager (the “VPGM”) of the Project.  Manager shall appoint appropriately qualified
and experienced personnel of Manager to be seconded to Company to act as senior
management for Company (collectively, “Senior
Management”).  The positions
of Senior Management include the VPGM, Assistant General Manager, the
Operations Manager, the General Services Manager, Company Controller and the
Vice President, Corporate.  The
negotiation of related salary and benefits for the VPGM and Senior Management
shall be the responsibility of Manager in consultation with Company.  Company and Manager agree that the persons
identified on Schedule H hereto shall hold the positions of VPGM and
Senior Management on the Closing Date.

 

(b)           Company
shall be responsible for and indemnify Manager and hold it harmless from all
penalties or interest for failure to properly calculate and pay any
withholding, payroll, unemployment, and any and all other Bolivian taxes and
social security contributions required under Bolivian law to be paid by
employers relating to the employment of all employees including the VPGM and
Senior Management.  Company shall
maintain all necessary records with respect to payment of such taxes and
contributions.

 

22

 

(c)                                  Manager
shall cause VPGM and Senior Management to devote substantially all of their
time to performing for Company the Services in accordance with the terms and
conditions of this Agreement.

 

10.2                           Personnel.  (a)  Other than the VPGM and Senior
Management, Manager shall provide and make available as necessary all other
professional, supervisory, managerial, administrative, and other personnel as
are necessary to perform the Services, which personnel will be employed by
Manager or its Affiliates, at its cost and under its sole responsibility for
all purposes.  Such personnel shall
devote such time as is necessary to enable them to competently and
professionally perform such obligations, as required hereunder.

 

(b)                                 From
time to time Manager shall provide Company with such information as is
reasonably requested by Company relating to Manager’s:  (i) guidelines for hiring of personnel
who may be engaged in the performance of Services hereunder and (ii) employment
policies and standards.

 

(c)                                  Except
as set forth in Section 10.1 and subject to applicable Laws, the working
hours and all other matters relating to the employment of individuals acting
for Manager or its Affiliates hereunder in the performance of the Services
shall be determined solely by Manager or its respective Affiliates.

 

Article XI

 

Indemnification and
Limitation of Liability

 

11.1                           Indemnification.  (a)  Company shall indemnify and hold
harmless Manager, VPGM, Senior Management and Manager’s officers, directors,
and employees (each, a “Manager  Indemnified Party”)
absent gross negligence, willful misconduct or bad faith, from and against any
and all claims, liabilities, damages, losses, costs, and expenses (including,
but not limited to, amounts paid in satisfaction of judgments, in compromises and
settlements, as fines and penalties and reasonable attorneys’ fees for
defending against any claim or alleged claim, except for and excluding any
liabilities for taxes and social security contributions of any Manager
Indemnified Party), which are incurred by such Manager Indemnified Party and
arise out of or in connection with the business of Company or the performance
by such Manager Indemnified Party of its responsibilities hereunder.

 

(b)                                 Manager
shall indemnify and hold harmless Company, and its officers, directors, “síndicos”,
employees and Affiliates (each, a “Company  Indemnified Party”,
together with Manager Indemnified Parties, an “Indemnified
Party”) from and against any and all claims, liabilities, damages,
losses, costs, and expenses (including, but not limited to, amounts paid in
satisfaction of judgments, in compromises and settlements, as fines and
penalties and reasonable attorneys’ fees for defending against any claim or
alleged claim but excluding any liabilities for taxes and social contributions
of any Manager Indemnified Party), which are incurred by such Company
Indemnified Party as described below.

 

(i)                                     Manager
shall not be liable for any loss, damage, liability, injury, claim or expense
attributable to the provision of the Services, whether claimed to result from 

 

23

 

breach of contract, warranty, tort, negligence, strict
liability, delay, error or omission, indemnity or otherwise, except that
Manager shall be liable for losses that arise or is alleged to have arisen from
its, Senior Management’s or its employees’ gross negligence, willful misconduct
or bad faith in the performance of its obligations or obligations of Senior
Management or Manager’s employees under this Agreement.

 

(ii)                                  In
no event shall the total and cumulative aggregate liability of Manager, whether
in contract, warranty, tort, negligence, strict liability, delay, error or
omission, indemnity or otherwise for the performance or breach of this
Agreement exceed the greater of (A) US$ 1.5 million or (B) an amount
equal to the aggregate amount of Fees actually paid to Manager hereunder at
such time.

 

11.2                           Claims
of Indemnification.  An Indemnified
Party shall not be entitled to indemnification hereunder to the extent such claim
arises from such Indemnified Party’s gross negligence, willful misconduct or
bad faith.  The termination of any
proceeding by settlement, judgment, order, or upon a plea of nolo contendre or its equivalent shall
not, of itself, create a presumption that an Indemnified Party was grossly
negligent or engaged in willful misconduct or bad faith.  Any person or entity entitled to
indemnification from the Indemnifying Party hereunder shall obtain the written
consent of the Indemnifying Party (which consent shall not be unreasonably
withheld) prior to entering into any agreement or settlement that would result
in an obligation of the Indemnifying Party to indemnify such person or entity.

 

(a)                                  Expenses
incurred by an Indemnified Party in defense or settlement of any claim that may
be subject to a right of indemnification hereunder may be advanced by the
Indemnifying Party prior to the final disposition thereof upon receipt of an
undertaking by or on behalf of the Indemnified Party to repay such amount to
the extent that it shall be determined ultimately that such Indemnified Party
is not entitled to be indemnified hereunder. 
The right of any Indemnified Party to the indemnification provided
herein shall be cumulative of, and in addition to, any and all rights to which
such Indemnified Party may otherwise be entitled by contract or as a matter of
law or equity and shall be extended to such Indemnified Party’s successors,
assigns, and legal representatives.

 

(b)                                 Promptly
after receipt by an Indemnified Party of notice of the commencement of any
action or proceeding or threatened action or proceeding in connection with any
claim, such Indemnified Party shall give written notice thereof to the
Indemnifying Party; provided that the failure of an Indemnified Party to
give such notice shall not relieve the Indemnifying Party of its obligations
pursuant to this Section 11.1, except to the extent that the Indemnifying
Party is actually prejudiced by such failure to give notice.

 

(c)                                  In
case any action or proceeding is commenced against any Indemnified Party which
may be subject to indemnification pursuant to this Section 11.2, the
Indemnifying Party shall have the right to assume the defense thereof, with
counsel reasonably satisfactory to such Indemnified Party.  After notice from the Indemnifying Party to
such Indemnified Party of the Indemnifying Party’s election to assume the
defense thereof, the Indemnifying Party will be liable for the expenses
subsequently incurred by such Indemnified Party in connection with the defense
thereof.  The Indemnifying Party will not
consent to the entry of any judgment or enter 

 

24

 

into any settlement that does not include as an
unconditional term the giving to such Indemnified Party a release from all
liability in respect of such claim.

 

(d)                                 If
it is determined pursuant to subsequent judicial appeal that an Indemnified
Party was not entitled to claim indemnification under this Article XI, the
Indemnified Party shall reimburse the Indemnifying Party promptly upon demand
therefor for all expenses incurred or payment made by such Indemnifying Party
in connection with such claim.

 

11.3                           No
Liability for Contractors’ Work.  (a) 
Company and Sumitomo acknowledge that a significant portion of the Services
will be carried out by Project Contractors under the Project Contracts.

 

(b)                                 Manager
shall use commercially reasonable efforts to monitor each Project Contractor’s
compliance with such Project Contractor’s Project Contract; provided, however,
that Manager shall not be liable for any damages arising under any Project
Contract, whether such liability is based, or asserted to be based, on any
breach of any obligations to, of or by any Project Contractor under any Project
Contract, or whether such liability is based, or asserted to be based, upon any
negligent act or omission of any Project Contractor, its personnel, agents,
appointed representatives or Subcontractors or whether such liability is based,
or asserted to be based, on any other legal ground.

 

11.4                           Limitation
of Liability.  An Indemnifying Party
shall not be liable for any incidental, consequential, special, indirect or
punitive damages, including but not limited to, loss of profit, loss of use,
loss of opportunity, loss of production or products, regardless of the theory
upon which the liability is premised.

 

Article XII

 

Insurance

 

12.1                           Required
Coverage.  During the term of this
Agreement, Company shall maintain insurance coverage with insurers of good
repute selected by it against such risks, with such coverage (including
deductibles and exclusions) and in such form and amounts as are customary and
reasonable for mines and mining facilities of similar type, location and
scale.  All policies shall be written
with financially sound and reputable insurance companies.  All policies shall contain specific
provisions that Company’s policy shall be primary in all instances regardless
of like coverage, if any, carried by Manager.

 

12.2                           Term
of Insurance.  All insurance required
under this Agreement shall cover occurrences during the performance of Services
by Manager pursuant to this Agreement and for a period of at least ten years
after the Term of this Agreement.  In the event that any insurance as
required herein is available only on a “claims-made” basis, such insurance
shall provide for a retroactive date not later than the date of this Agreement
and such insurance shall be maintained by
Company, with a retroactive date not later than the retroactive date required above, for a minimum of ten years after
the Term of this Agreement.

 

25

 

12.3                           Modification
of Insurance.  Manager shall have the
right, at times deemed appropriate to Manager during the Term of this
Agreement, to request that Company modify the insurance minimum limits in order
to maintain reasonable coverage amounts, all at Company’s account, provided
that this Section 12.3 shall not be construed to require Manager to
determine appropriate insurance coverage for Company.

 

12.4                           Evidence
of Insurance.  On the Closing Date
and annually thereafter, Company shall provide Manager with two copies of
insurance certificates acceptable to Manager evidencing the insurance coverage
required to be maintained hereunder. 
Such certificates shall (a) name Manager as additional insured; (b) provide
that Manager shall receive thirty (30) days prior written notice of nonrenewal,
cancellation of, or significant modification to any of the above policies
(except that such notice shall be ten (10) days
for nonpayment of premiums); and (c) provide a waiver of any rights of subrogation against
Manager, its Affiliates and their officers, directors, agents, consultants,
subcontractors, and employees.

 

12.5                           Manager
Insurance.  Except as expressly set
forth in the Program and Budget, Manager shall maintain insurance coverage with
insurers of good repute selected by it against such risks, with such coverage
(including deductibles and exclusions) and in such form and amounts as are
customary and reasonable for companies in the exploration, development and mine
consulting services businesses of similar type and scale.  The premium for all insurance required to be
maintained by Manager hereunder shall be at Manager’s own expense.  Manager
shall furnish to Company certificates evidencing the aforesaid coverages, which
shall include provisions to the effect that Company shall be given at least
thirty (30) days’ prior written notice of cancellation of or any reduction in
coverage in any of the aforesaid policies. 
Company shall be named as an additional insured with respect to Manager’s
commercial general liability policies.

 

Article XIII

 

Term and Termination

 

13.1                           Effectiveness.  This Agreement shall be effective as of the
Closing Date.

 

13.2                           Term.  This Agreement shall remain in full force and
effect for the life of the Project (“Term”),
unless otherwise terminated in accordance with this Article XIII.

 

13.3                           Initial
Period.  Notwithstanding any other
provision of this Agreement, the Parties may not terminate this agreement
before the expiration of a period of twelve (12) months from the Closing Date
(the “Initial Period”).

 

13.4                           Termination
by Company.  After the Initial
Period, Company shall be permitted to terminate this Agreement at any time,
with or without cause, upon 180 days’ written notice (or such shorter period
pursuant to Section 13.6(a)) to Manager delivered after the expiration of
the Initial Period and in accordance with Section 14.3 hereof.

 

13.5                           Termination
by Manager.  After the Initial
Period, Manager shall be permitted to terminate this Agreement at any time,
with or without cause, upon twelve (12) months’ written 

 

26

 

notice (or such shorter period pursuant to Section 13.6(b))
to Company delivered after the expiration of the Initial Period and in
accordance with Section 14.3 hereof.

 

13.6                           Termination
upon Sale Liquidity Event.  (a) 
After the Initial Period and at its sole discretion, Company shall be permitted
to terminate this Agreement upon three (3) months’ written notice
delivered within six (6) months of the occurrence of a Sale Liquidity
Event.

 

(b)                                 After
the Initial Period and at its sole discretion, Manager shall be permitted to
terminate this Agreement upon three (3) months’ written notice delivered
within six (6) months
of the occurrence of a Sale Liquidity Event.

 

(c)                                  Notwithstanding
the occurrence of a Sale Liquidity Event described in Section 13.6(b) above,
Company shall continue to make payments of the Fee in accordance with this
Agreement pending the final termination of this Agreement.

 

13.7                           Effect
of Termination.  (a)  Upon
termination of this Agreement, Company shall have the right to employ any other
Person to perform the Services by whatever method Company may deem
expedient.  Manager shall have no further
rights under this Agreement and shall not be entitled to receive any further
payments under this Agreement, except for:

 

(i)                                     the
ratable portion of the Fee for the calendar quarter during which this Agreement
was terminated for Services rendered by Manager through such termination date;
and

 

(ii)                                  any
documented and unpaid Reimbursable Expenses;

 

(iii)                               in respect of Manager’s
employees under the Company’s payroll, any and all applicable accrued social
benefits under the laws of Bolivia, which payments shall be made directly to
the individual beneficiaries thereof; and

 

(iv)                              Company
shall, subject to the applicable laws and confidentiality obligations, provide
any new mine operator with relevant information concerning then existing
Manager employees so such mine operator may consider continuing to employ such
individuals in mine operations;

 

provided,
however, that if this Agreement is terminated by Company, Company shall
pay a US$1,000,000 fee in cash to Manager at termination.   In addition, Company’s and Manager’s
obligations under Section 11.1 hereof shall survive termination of this
Agreement.

 

(b)                                 At
the request of Company, Manager shall prepare records and documentation for
transfer to a new manager.  Manager shall
be compensated for such preparation in accordance with Sections 4.2 and 4.3
hereof.

 

27

 

Article XIV

 

Miscellaneous

 

14.1                           Governing
Law.  THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
INCLUDING SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW, WITHOUT
REGARD TO ANY CHOICE OR CONFLICTS OF LAW PROVISION OR RULE THAT WOULD CAUSE THE
APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.

 

14.2                           Submission
to Jurisdiction; Waiver of Jury Trial; Service of Process.

 

(a)                                  Each
Party hereby (i) submits to the exclusive
jurisdiction of any New York State or United States federal court located in
the Borough of Manhattan, The City of New York, for the purpose of any Legal
Proceeding arising out of or relating to this Agreement, (ii) agrees
that all claims in respect of any such Legal Proceeding may be heard and
determined in such courts, and (iii) irrevocably
waives (to the extent permitted by applicable Law) any objection which it now
or hereafter may have to the laying of venue of any such Legal Proceeding
brought in any of the foregoing courts, and any objection on the ground that
any such Legal Proceeding in any such court has been brought in an inconvenient
forum.

 

(b)                                 EACH
PARTY HERETO HEREBY AGREES TO WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY
OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY IN ANY LEGAL PROCEEDING OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR PARTIES,
WHETHER WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE.  EACH PARTY AGREES THAT ANY SUCH CLAIM OR
CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A JURY.  WITHOUT IN ANY WAY LIMITING THE FOREGOING,
THE PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS
WAIVED BY OPERATION OF THIS SECTION 14.2(B) AS TO ANY ACTION,
COUNTERCLAIM, OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO
CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR ANY PROVISION
HEREOF.  THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS
AGREEMENT.  A COPY OF THIS SECTION 14.2(B) MAY BE
FILED WITH ANY COURT AS WRITTEN EVIDENCE OF THE WAIVER OF THE RIGHT TO TRIAL BY
JURY AND CONSENT TO TRIAL BY COURT.

 

(c)                                  Each
of Company and Manager, by the execution and delivery of this Agreement,
designates and appoints CT Corporation System for a period of no less than
seven (7) years as the authorized agent of each such Person upon whom
process may be served in any Legal Proceeding against such Person instituted by
any other such Person and based upon or arising out of this Agreement, in any
New York State or United States federal court located in the Borough of
Manhattan, in The City of New York.  Such
designations and appointments shall 

 

28

 

be irrevocable, unless and until a successor
authorized agent in the County and State of New York reasonably acceptable to
Manager in connection with any successor appointed by Company, and to Company
in connection with any successor appointed by Manager, shall have been
appointed, such successor shall have accepted such appointment, and written
notice thereof shall have been given to all Parties. Company and Manager
further agree that service of process upon its authorized agent or successor
shall be deemed in every respect personal service of process upon such Person
in any action, suit or proceeding.  Upon
the execution and delivery of this Agreement, Company and Manager have
furnished to all Parties evidence of its appointment of CT Corporation System
as such agent and evidence of full payment to CT Corporation System for its
charges in respect thereof.

 

14.3                           Notices.  Unless otherwise provided herein, all
notices, requests, consents or other communications which either Party may
desire or be required to give hereunder shall be in writing in the English
language and shall be delivered by hand or overnight courier service, mailed by
registered or certified mail, or sent by facsimile transmission, as follows:

 

	
  To Company

  	
   

  	
  Minera San Cristóbal, S.A.

  
	
  and AMM:

  	
   

  	
  Calle 15, Calacoto

  
	
   

  	
   

  	
  Torre Ketal, Piso 5

  
	
   

  	
   

  	
  La Paz, 15

  
	
   

  	
   

  	
  Bolivia

  
	
   

  	
   

  	
  Attention: President

  
	
   

  	
   

  	
  Tel: +591-2-243-3800

  
	
   

  	
   

  	
  Fax: +591-2-243-3737

  
	
   

  	
   

  	
  Email: [TBD]

  
	
   

  	
   

  	
   

  
	
  With a copy to:

  	
   

  	
  Sumitomo Corporation

  
	
   

  	
   

  	
  8 11, Harumi, 1 chome,

  
	
   

  	
   

  	
  Chuo ku, Tokyo, 104 8610 Japan

  
	
   

  	
   

  	
  Attention: General Manager of the San Cristóbal
  Project Department

  
	
   

  	
   

  	
  Fax: +81 3 5166 6423

  
	
   

  	
   

  	
  Email: haruo.matsuzaki@sumitomocorp.co.jp

  
	
   

  	
   

  	
   

  
	
  To Manager:

  	
   

  	
  Apex Silver Mines Corporation

  
	
   

  	
   

  	
  1700 Lincoln Street, Suite 3050

  
	
   

  	
   

  	
  Denver, Colorado 80203

  
	
   

  	
   

  	
  U.S.A.

  
	
   

  	
   

  	
  Attention: Senior Vice President

  
	
   

  	
   

  	
  Tel: (303) 839-5060

  
	
   

  	
   

  	
  Fax: (303) 839-5907

  
	
   

  	
   

  	
  Email: terry.owen@apexsilver.com

  

 

Any
notice given as provided in this Agreement shall be in writing and may be
personally served, telexed or sent by telefacsimile or United States mail or
courier service and shall be deemed to have been given when delivered in person
or by courier service and signed for against 

 

29

 

receipt
thereof, upon receipt of telefacsimile or telex with evidence of proper
transmission to and of receipt by the addressee.

 

Notwithstanding
anything to the contrary, delivery
of notice by electronic transmission via email with a notation in the subject
line “MSC Management Services Agreement — Formal Notice” shall be effective, provided
that such notice be followed by facsimile transmission within three (3) Business
Days after the delivery of such electronic notice.

 

14.4                           Assignment.  This Agreement may not be assigned by any
Party hereto without the other Parties’ prior written consent.

 

14.5                           Further
Assurances.  Each Party, upon the
request of the other, agrees to perform such further acts and execute and
deliver such further documents as may be reasonably necessary to carry out the
terms and intent of this Agreement.

 

14.6                           Entire
Agreement; Severability.  This
Agreement constitutes the entire understanding between the Parties hereto with
respect to the subject matter hereof and supercedes in its entirety any prior
agreements between the Parties with respect to the subject matter hereof
whether written or oral including, but not limited to, the Management and
Services Agreement between Manager and Company, dated September 25,
2006.  No waiver or amendment or
modification of the terms hereof shall be valid unless signed in writing by the
Parties hereto and only to the extent therein set forth.  If any term or provision of this Agreement or
any portion of a term or provision hereof or the application thereof to any
Person or circumstance shall, to any extent, be invalid or unenforceable, the
remainder of this Agreement, or the application of such term or provision or
portion thereof to Persons or circumstances other than those as to which it is
held invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement and each portion thereof shall be valid and
enforced to the fullest extent permitted by law.

 

14.7                           No
Waiver.  The failure of either Party
to enforce at any time or for any period of time any other provision of this
Agreement shall not be construed as their waiver of such provision or the right
of a Party to subsequently enforce each and every provision.

 

14.8                           Binding
Effect.  This Agreement shall be
binding upon and inure to the benefit of the Parties hereto and their
respective legal successors and permitted assigns.

 

14.9                           Headings
and Titles.  Titles and headings appearing
at the beginning of any subdivision are for convenience only and for not
constitute any part of any such subdivision and shall be disregarded in
construing the language contained in this Agreement.

 

14.10                     No Partnership.  Nothing contained herein shall create, or
shall be construed as creating, a partnership or joint venture of any kind or
as imposing upon any Party any partnership duty, obligation, or liability to
any other Party.  Each Party shall be an
independent contractor hereunder and neither shall be the agent of any other
Party.

 

14.11                     Amendment; Counterparts.  This Agreement may be amended only in writing
signed by all of the Parties.  This
Agreement may not be executed separate counterparts.

 

30

 

IN WITNESS WHEREOF,
this Agreement has been executed by the Parties hereto as of the date first
written above.

 

	
   

  	
  MINERA SAN CRISTÓBAL, S.A.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey G. Clevenger

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey G. Clevenger

  
	
   

  	
   

  	
  Title:

  	
  President

  

 

S-1

 

	
   

  	
  APEX METALS MARKETING GMBH

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Gerald J. Malys

  
	
   

  	
   

  	
  Name:

  	
  Gerald J. Malys

  
	
   

  	
   

  	
  Title:

  	
  Vice President

  

 

S-2

 

	
   

  	
  APEX
  SILVER MINES CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Jeffrey G. Clevenger

  
	
   

  	
   

  	
  Name:

  	
  Jeffrey G. Clevenger

  
	
   

  	
   

  	
  Title:

  	
  President and Chief Executive Officer

  

 

S-3

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