Document:

g6047823c.htm

  

  

 

  

Exhibit 10.1

 

MANAGEMENT AGREEMENT

 

AGREEMENT made as of the 30th day of November, 2010 among CERES MANAGED FUTURES LLC, a Delaware limited liability company (“CMF” or the “General Partner”), GLOBAL DIVERSIFIED FUTURES FUND L.P., a New York limited partnership (the “Partnership”) and SASCO ENERGY PARTNERS LLC, a Delaware limited liability company (“Sasco” or the “Advisor”).

 

W I T N E S S E T H :

 

WHEREAS, CMF is the general partner of the Partnership, a limited partnership organized for the purpose of speculative trading of commodity interests, including futures contracts, options and forward contracts with the objective of achieving substantial capital appreciation, such trading to be conducted directly or through investment in CMF Sasco Master Fund L.P., a New York limited partnership (the “Master Fund”) of which CMF is the general partner and Sasco is the advisor; and

 

WHEREAS, the Limited Partnership Agreement establishing the Partnership (the “Limited Partnership Agreement”) permits CMF to delegate to one or more commodity trading advisors CMF’s authority to make trading decisions for the Partnership; and

 

WHEREAS, the Advisor is registered as a commodity trading advisor with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”); and

 

WHEREAS, CMF is registered as a commodity pool operator with the CFTC and is a member of the NFA; and

 

WHEREAS, CMF, the Partnership and the Advisor wish to enter into this Agreement in order to set forth the terms and conditions upon which the Advisor will render and implement advisory services in connection with the conduct by the Partnership of its commodity trading activities during the term of this Agreement;

 

NOW, THEREFORE, the parties agree as follows:

 

1. DUTIES OF THE ADVISOR.  (a) For the period and on the terms and conditions of this Agreement, the Advisor shall have sole authority and responsibility, as one of the Partnership’s agents and attorneys-in-fact, for directing the investment and reinvestment of the assets and funds of the Partnership allocated to it from time to time by the General Partner in commodity interests, including commodity futures contracts, options, forward contracts, swaps and other derivative instruments.  All such trading on behalf of the Partnership shall be in accordance with the trading strategies and trading policies set forth in the Partnership’s Prospectus and Disclosure Document dated November 25, 1998, as supplemented (the “Prospectus”), as such trading policies may be changed from time to time upon receipt by the Advisor of prior written notice of such change, and pursuant to the trading strategy selected by CMF to be utilized by the Advisor in managing the Partnership’s assets.  CMF has initially selected the Advisor’s Energy Program (the “Program”), as described in Appendix A attached hereto, to manage the Partnership’s assets allocated to it.  Any open positions or other investments at the time of receipt of such notice of a change in trading policy shall not be deemed to violate the changed policy and shall be closed or sold in the ordinary course of trading.  The Advisor may not deviate from the trading policies set forth in the Prospectus without the prior written consent of the Partnership given by CMF.  The Advisor makes no representation or warranty that the trading to be directed by it for the Partnership will be profitable or will not result in losses.

 

  

  

  

 

(b) CMF acknowledges receipt of the description of the Program, attached hereto as Appendix A.  All trades made by the Advisor for the account of the Partnership, whether directly or indirectly through the Master Fund, shall be made through such commodity broker or brokers as CMF shall direct, and the Advisor shall have no authority or responsibility for selecting or supervising any such broker in connection with the execution, clearance or confirmation of transactions for the Partnership or for the negotiation of brokerage rates charged therefor.  However, the Advisor, with the prior written permission (by either original or fax copy) of CMF, may direct any and all trades in commodity futures and options to a futures commission merchant or independent floor broker it chooses for execution with instructions to give-up the trades to the broker designated by CMF, provided that the futures commission merchant or independent floor broker and any give-up or floor brokerage fees are approved in advance by CMF.  All give-up or similar fees relating to the foregoing shall be paid by the Partnership after all parties have executed the relevant give-up agreements (by either original or fax copy).

 

(c) The initial allocation of the Partnership’s assets to the Advisor will be made to the Program, as described in Appendix A attached hereto.  In the event the Advisor wishes to use a trading system or methodology other than or in addition to the Program in connection with its trading for the Partnership, either in whole or in part, it may not do so unless the Advisor gives CMF prior written notice of its intention to utilize such different trading system or methodology and CMF consents thereto in writing.  In addition, the Advisor will provide five days’ prior written notice to CMF of any change in the trading system or methodology to be utilized for the Partnership which the Advisor deems material.  If the Advisor deems such change in system or methodology or in markets traded to be material, the changed system or methodology or markets traded will not be utilized for the Partnership without the prior written consent of CMF.  In addition, the Advisor will notify CMF of any changes to the trading system or methodology that would cause the description of the trading strategy or methods described in Appendix A to be materially inaccurate.  Further, the Advisor will provide the Partnership with a current list of all commodity interests to be traded for the Partnership’s account and the Advisor will not trade any additional commodity interests for such account without providing notice thereof to CMF and receiving CMF’s written approval.  The Advisor also agrees to provide CMF, on a monthly basis, with a written report of the assets under the Advisor’s management together with all other matters deemed by the Advisor to be material changes to its business not previously reported to CMF.  The Advisor further agrees that it will convert foreign currency balances (not required to margin positions denominated in a foreign currency) to U.S. dollars no less frequently than monthly.  U.S. dollar equivalents in individual foreign currencies of more than $100,000 will be converted to U.S. dollars within one business day after such funds are no longer needed to margin foreign positions.

 

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(d) The Advisor agrees to make all material disclosures to the Partnership regarding itself and its principals as defined in Part 4 of the CFTC’s regulations (“principals”), members, directors, officers and employees, their trading performance and general trading methods, its customer accounts (but not the identities of or identifying information with respect to its customers) and otherwise as are required in the reasonable judgment of CMF to be made in any filings required by Federal or state law or NFA rule or order.  Notwithstanding Sections 1(d) and 4(d) of this Agreement, the Advisor is not required to disclose the actual trading results of proprietary accounts of the Advisor or its principals unless CMF reasonably determines that such disclosure is required in order to fulfill its fiduciary obligations to the Partnership or the reporting, filing or other obligations imposed on it by Federal or state law or NFA rule or order.  The Partnership and CMF acknowledge that the trading advice to be provided by the Advisor is a property right belonging to the Advisor and that they will keep all such advice confidential.  Further, CMF agrees to treat as confidential any results of proprietary accounts and/or proprietary information with respect to the Advisor’s trading systems obtained from the Advisor.

 

(e) The Advisor understands and agrees that CMF may designate other trading advisors for the Partnership and apportion or reapportion to such other trading advisors the management of an amount of Net Assets (as defined in Section 3(b) hereof) as it shall determine in its absolute discretion.  The designation of other trading advisors and the apportionment or reapportionment of Net Assets to any such trading advisors pursuant to this Section 1 shall neither terminate this Agreement nor modify in any regard the respective rights and obligations of the parties hereunder.

 

(f) CMF may, from time to time, in its absolute discretion, select additional trading advisors and reapportion funds among the trading advisors for the Partnership as it deems appropriate.  CMF shall use its best efforts to make reapportionments, if any, as of the first day of a month.  The Advisor agrees that it may be called upon at any time promptly to liquidate positions in CMF’s sole discretion so that CMF may reallocate the Partnership’s assets, meet margin calls on the Partnership’s account, fund redemptions, or for any other reason, except that CMF will not require the liquidation of specific positions by the Advisor.  CMF will use its best efforts to give two business days’ prior notice to the Advisor of any reallocations or liquidations.

 

(g) The Advisor will not be liable for trading losses in the Partnership’s account including losses caused by errors; provided, however, that (i) the Advisor will be liable to the Partnership with respect to losses incurred due to errors committed or caused by it or any of its principals or employees in communicating improper trading instructions or orders to any broker on behalf of the Partnership and (ii) the Advisor will be liable to the Partnership with respect to losses incurred due to errors committed or caused by any executing broker (other than any CMF affiliate) selected by the Advisor, it also being understood that CMF, with the assistance of the Advisor, will first attempt to recover such losses from the executing broker.

 

2. INDEPENDENCE OF THE ADVISOR.  For all purposes herein, the Advisor shall be deemed to be an independent contractor and, unless otherwise expressly provided or authorized, shall have no authority to act for or represent the Partnership in any way and shall not be deemed an agent, promoter or sponsor of the Partnership, CMF, or any other trading advisor.  The Advisor shall not be responsible to the Partnership, the General Partner, any trading advisor or any limited partners for any acts or omissions of any other trading advisor to the Partnership.

 

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3. COMPENSATION.  (a) In consideration of and as compensation for all of the services to be rendered by the Advisor to the Partnership under this Agreement, the Partnership shall pay the Advisor (i) an annual incentive fee equal to 20% of New Trading Profits (as such term is defined below) earned by the Advisor for the Partnership and (ii) a monthly fee for professional management services equal to 1/6 of 1% (2% per year) of the month-end Net Assets of the Partnership allocated to the Advisor.

 

(b) “Net Assets” shall have the meaning set forth in Section 7(d)(1) of the Limited Partnership Agreement dated as of June 15, 1998 and without regard to further amendments thereto, provided that in determining the Net Assets of the Partnership on any date, no adjustment shall be made to reflect any distributions, redemptions or incentive fees payable as of the date of such determination.

 

(c) “New Trading Profits” shall mean the excess, if any, of Net Assets managed by the Advisor at the end of the fiscal period over Net Assets managed by the Advisor at the end of the highest previous fiscal period or Net Assets allocated to the Advisor at the date trading commences, whichever is higher, and as further adjusted to eliminate the effect on Net Assets resulting from new capital contributions, redemptions, reallocations or capital distributions, if any, made during the fiscal period decreased by interest or other income, not directly related to trading activity, earned on the Partnership’s assets during the fiscal period, whether the assets are held separately or in margin accounts.  Ongoing expenses will be attributed to the Advisor based on the Advisor’s proportionate share of Net Assets.  Ongoing expenses will not include expenses of litigation not involving the activities of the Advisor on behalf of the Partnership.  No incentive fee shall be paid until after December 31, 2010, which fee shall be based on New Trading Profits earned by the Advisor on behalf of the Partnership.  Interest income earned, if any, will not be taken into account in computing New Trading Profits earned by the Advisor.  If Net Assets allocated to the Advisor are reduced due to redemptions, distributions or reallocations (net of additions), there will be a corresponding proportional reduction in the related loss carryforward amount that must be recouped before the Advisor is eligible to receive another incentive fee.

 

(d) Annual incentive fees and monthly management fees shall be paid within twenty (20) business days following the end of the period for which such fee is payable.  In the event of the termination of this Agreement as of any date which shall not be the end of a calendar year or month, as the case may be, the annual incentive fee shall be computed as if the effective date of termination were the last day of the then current year and the monthly management fee shall be prorated to the effective date of termination.  If, during any month, the Partnership does not conduct business operations or the Advisor is unable to provide the services contemplated herein for more than two successive business days, the monthly management fee shall be prorated by the ratio which the number of business days during which CMF conducted the Partnership’s business operations or utilized the Advisor’s services bears in the month to the total number of business days in such month.

 

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(e) The provisions of this Section 3 shall survive the termination of this Agreement.

 

4. RIGHT TO ENGAGE IN OTHER ACTIVITIES.  (a) The services provided by the Advisor hereunder are not to be deemed exclusive.  CMF on its own behalf and on behalf of the Partnership acknowledges that, subject to the terms of this Agreement, the Advisor and its officers, members, directors and employees, may render advisory, consulting and management services to other clients and accounts.  The Advisor and its officers, members, directors and employees shall be free to trade for their own accounts and to advise other investors and manage other commodity accounts during the term of this Agreement and to use the same information, computer programs and trading strategies, programs or formulas which they obtain, produce or utilize in the performance of services to CMF for the Partnership.  However, the Advisor represents, warrants and agrees that it believes the rendering of such consulting, advisory and management services to other accounts and entities will not require any material change in the Advisor’s basic trading strategies and will not affect the capacity of the Advisor to continue to render services to CMF for the Partnership of the quality and nature contemplated by this Agreement.

 

(b) If, at any time during the term of this Agreement, the Advisor is required to aggregate the Partnership’s commodity positions with the positions of any other person for purposes of applying CFTC- or exchange-imposed speculative position limits, the Advisor agrees that it will promptly notify CMF in writing if the Partnership’s positions are included in an aggregate amount which exceeds the applicable speculative position limit.  The Advisor agrees that, if its trading recommendations are altered because of the application of any speculative position limits, it will not modify the trading instructions with respect to the Partnership’s account in such manner as to affect the Partnership substantially disproportionately as compared with the Advisor’s other accounts.  The Advisor further represents, warrants and agrees that under no circumstances will it knowingly or deliberately use trading programs, strategies or methods for the Partnership that are inferior to strategies or methods employed for any other client or account and that it will not knowingly or deliberately favor any client or account managed by it over any other client or account in any manner, it being acknowledged, however, that different trading programs, strategies or methods may be utilized for differing sizes of accounts, accounts with different trading policies, accounts experiencing differing inflows or outflows of equity, accounts which commence trading at different times, accounts which have different portfolios or different fiscal years, accounts utilizing different executing brokers and accounts with other differences, and that such differences may cause divergent trading results.

 

(c) It is acknowledged that the Advisor and/or its officers, members, employees and directors presently act, and it is agreed that they may continue to act, as advisor for other accounts managed by them, and may continue to receive compensation with respect to services for such accounts in amounts which may be more or less than the amounts received from the Partnership.

 

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(d) The Advisor agrees that it shall make such information available to CMF respecting the performance of the Partnership’s account as compared to the performance of other accounts managed by the Advisor or its principals as shall be reasonably requested by CMF.  The Advisor presently believes and represents that existing speculative position limits will not materially adversely affect its ability to manage the Partnership’s account given the potential size of the Partnership’s account and the Advisor’s and its principals’ current accounts and all proposed accounts for which they have contracted to act as trading manager.

 

5. TERM.  (a) This Agreement shall continue in effect until June 30, 2011.  CMF may, in its sole discretion, renew this Agreement for additional one-year periods upon notice to the Advisor not less than 30 days prior to the expiration of the previous period.  At any time during the term of this Agreement, CMF may terminate this Agreement at any month-end upon 30 days’ notice to the Advisor.  At any time during the term of this Agreement, CMF may elect to immediately terminate this Agreement upon 30 days’ notice to the Advisor if (i) the net asset value per unit shall decline as of the close of business on any day to $400 or less; (ii) the Net Assets allocated to the Advisor (adjusted for redemptions, distributions, withdrawals or reallocations, if any) decline by 20% or more as of the end of a trading day from such Net Assets’ previous highest value; (iii) limited partners owning at least 50% of the outstanding units shall vote to require CMF to terminate this Agreement; (iv) the Advisor fails to comply with the terms of this Agreement; (v) CMF, in good faith, reasonably determines that the performance of the Advisor has been such that CMF’s fiduciary duties to the Partnership require CMF to terminate this Agreement; (vi) CMF reasonably believes that the application of speculative position limits will substantially affect the performance of the Partnership; or (vii) the Advisor fails to conform to the trading policies set forth in the Limited Partnership Agreement or the Prospectus as they may be changed from time to time.  At any time during the term of this Agreement, CMF may elect immediately to terminate this Agreement if (i) the Advisor merges, consolidates with another entity, sells a substantial portion of its assets, or becomes bankrupt or insolvent, (ii) Todd W. Esse dies, becomes incapacitated, leaves the employ of the Advisor, ceases to control the Advisor or is otherwise not managing the trading programs or systems of the Advisor, or (iii) the Advisor’s registration as a commodity trading advisor with the CFTC or its membership in the NFA or any other regulatory authority, is terminated or suspended.  This Agreement will immediately terminate upon dissolution of the Partnership or upon cessation of trading by the Partnership prior to dissolution.

 

(b) The Advisor may terminate this Agreement by giving not less than 30 days’ notice to CMF (i) in the event that the trading policies of the Partnership as established from time to time are changed in such manner that the Advisor reasonably believes will adversely affect the performance of its trading strategies; (ii) after June 30, 2011; or (iii) in the event that CMF or the Partnership fails to comply with the terms of this Agreement.  The Advisor may immediately terminate this Agreement if CMF’s registration as a commodity pool operator or its membership in the NFA is terminated or suspended.

 

(c) Except as otherwise provided in this Agreement, any termination of this Agreement in accordance with this Section 5 shall be without penalty or liability to any party, except for any fees due to the Advisor pursuant to Section 3 hereof.

 

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6. INDEMNIFICATION.  (a) (i) In any threatened, pending or completed action, suit, or proceeding to which the Advisor was or is a party or is threatened to be made a party arising out of or in connection with this Agreement or the management of the Partnership’s assets by the Advisor or the offering and sale of units in the Partnership, CMF shall, subject to subsection (a)(iii) of this Section 6, indemnify and hold harmless the Advisor against any loss, liability, damage, cost, expense (including, without limitation, attorneys’ and accountants’ fees), judgments and amounts paid in settlement actually and reasonably incurred by it in connection with such action, suit, or proceeding if the Advisor acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Partnership, and provided that its conduct did not constitute negligence, intentional misconduct, or a breach of its fiduciary obligations to the Partnership as a commodity trading advisor, unless and only to the extent that the court or administrative forum in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all circumstances of the case, the Advisor is fairly and reasonably entitled to indemnity for such expenses which such court or administrative forum shall deem proper; and further provided that no indemnification shall be available from the Partnership if such indemnification is prohibited by Section 16 of the Limited Partnership Agreement.  The termination of any action, suit or proceeding by judgment, order or settlement shall not, of itself, create a presumption that the Advisor did not act in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the Partnership.

 

(ii) Without limiting subsection (i) above, to the extent that the Advisor has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsection (i) above, or in defense of any claim, issue or matter therein, CMF shall indemnify the Advisor against the expenses (including, without limitation, attorneys’ and accountants’ fees) actually and reasonably incurred by it in connection therewith.

 

(iii) Any indemnification under subsection (i) above, unless ordered by a court or administrative forum, shall be made by CMF only as authorized in the specific case and only upon a determination by independent legal counsel in a written opinion that such indemnification is proper in the circumstances because the Advisor has met the applicable standard of conduct set forth in subsection (i) above.  Such independent legal counsel shall be selected by CMF in a timely manner, subject to the Advisor’s approval, which approval shall not be unreasonably withheld.  The Advisor will be deemed to have approved CMF’s selection unless the Advisor notifies CMF in writing, received by CMF within five days of CMF’s telecopying to the Advisor of the notice of CMF’s selection, that the Advisor does not approve the selection.

 

(iv) In the event the Advisor is made a party to any claim, dispute or litigation or otherwise incurs any loss or expense as a result of, or in connection with, the Partnership’s or CMF’s activities or claimed activities unrelated to the Advisor, CMF shall indemnify, defend and hold harmless the Advisor against any loss, liability, damage, cost or expense (including, without limitation, attorneys’ and accountants’ fees) incurred in connection therewith.

 

(v) As used in this Section 6(a), the term “Advisor” shall include the Advisor, its principals, officers, members, directors and employees and the term “CMF” shall include the Partnership.

 

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(b) (i) The Advisor agrees to indemnify, defend and hold harmless CMF, the Partnership and their affiliates against any loss, liability, damage, cost or expense (including, without limitation, attorneys’ and accountants’ fees), judgments and amounts paid in settlement actually and reasonably incurred by them (A) as a result of the material breach of any material representations and warranties made by the Advisor in this Agreement, or (B) as a result of any act or omission of the Advisor relating to the Partnership if there has been a final judicial or regulatory determination or, in the event of a settlement of any action or proceeding with the prior written consent of the Advisor, a written opinion of an arbitrator pursuant to Section 14 hereof, to the effect that such acts or omissions violated the terms of this Agreement in any material respect or involved negligence, bad faith, recklessness or intentional misconduct on the part of the Advisor (except as otherwise provided in Section 1(g)).

 

(ii) In the event CMF, the Partnership or any of their affiliates is made a party to any claim, dispute or litigation or otherwise incurs any loss or expense as a result of, or in connection with, the activities or claimed activities of the Advisor or its principals, officers, members, directors or employees unrelated to CMF’s or the Partnership’s business, the Advisor shall indemnify, defend and hold harmless CMF, the Partnership or any of their affiliates against any loss, liability, damage, cost or expense (including, without limitation, attorneys’ and accountants’ fees) incurred in connection therewith.

 

(c) In the event that a person entitled to indemnification under this Section 6 is made a party to an action, suit or proceeding alleging both matters for which indemnification can be made hereunder and matters for which indemnification may not be made hereunder, such person shall be indemnified only for that portion of the loss, liability, damage, cost or expense incurred in such action, suit or proceeding which relates to the matters for which indemnification can be made.

 

(d) None of the indemnifications contained in this Section 6 shall be applicable with respect to default judgments, confessions of judgment or settlements entered into by the party claiming indemnification without the prior written consent, which shall not be unreasonably withheld, of the party obligated to indemnify such party.

 

(e) The provisions of this Section 6 shall survive the termination of this Agreement.

 

7. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.

 

(a) The Advisor represents and warrants that:

 

(i) All information with respect to the Advisor and its principals and the trading performance of any of them that has been provided to CMF, including, without limitation, the description of the Program contained in Appendix A, is complete and accurate in all material respects and such information does not contain any untrue statement of a material fact or omit to state a material fact that is necessary to make such statements and information therein not misleading.  All references to the Advisor and its principals, if any, in any future prospectus will, after review and approval of such references by the Advisor prior to the use of such prospectus in connection with the offering of the Partnership’s units, be accurate in all material respects.

 

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(ii) The Advisor will be acting as a commodity trading advisor with respect to the Partnership and not as a securities investment adviser and is duly registered with the CFTC as a commodity trading advisor, is a member of the NFA, and is in compliance with such other registration and licensing requirements as shall be necessary to enable it to perform its obligations hereunder, and agrees to maintain and renew such registrations and licenses during the term of this Agreement.

 

(iii) The Advisor is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full limited liability company power and authority to enter into this Agreement and to provide the services required of it hereunder.

 

(iv) The Advisor will not, by acting as a commodity trading advisor to the Partnership, breach or cause to be breached any undertaking, agreement, contract, statute, rule or regulation to which it is a party or by which it is bound.

 

(v) This Agreement has been duly and validly authorized, executed and delivered by the Advisor and is a valid and binding agreement enforceable in accordance with its terms.

 

(vi) At any time during the term of this Agreement that an offering memorandum or a prospectus relating to the Partnership units is required to be delivered in connection with the offer and sale thereof, the Advisor agrees upon the request of CMF to provide the Partnership with such information as shall be necessary so that, as to the Advisor and its principals, such offering memorandum or prospectus is accurate.

 

(b) CMF represents and warrants for itself and the Partnership that:

 

(i) The Prospectus (as from time to time amended or supplemented, which amendment or supplement shall be approved by the Advisor as to descriptions, if any, of itself and its actual performance) does not contain any untrue statement of a material fact or omit to state a material fact which is necessary to make the statements therein not misleading, except that the foregoing representation does not apply to any statement or omission concerning the Advisor, if any, in the Prospectus, made in reliance upon, and in conformity with, information furnished to CMF by or on behalf of the Advisor expressly for use in the Prospectus (it being understood that any hypothetical and pro forma adjustments will not be furnished by the Advisor).

 

(ii) CMF is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware and has full limited liability company power and authority to perform its obligations under this Agreement.

 

(iii) CMF and the Partnership have the capacity and authority to enter into this Agreement on behalf of the Partnership.

 

(iv) This Agreement has been duly and validly authorized, executed and delivered on CMF’s and the Partnership’s behalf and is a valid and binding agreement of CMF and the Partnership enforceable in accordance with its terms.

 

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(v) CMF will not, by acting as General Partner to the Partnership and the Partnership will not, breach or cause to be breached any undertaking, agreement, contract, statute, rule or regulation to which it is a party or by which it is bound which would materially limit or affect the performance of its duties under this Agreement.

 

(vi) CMF is registered as a commodity pool operator and is a member of the NFA, and it will maintain and renew such registration and membership during the term of this Agreement.

 

(vii) The Partnership is a limited partnership duly organized and validly existing under the laws of the State of New York and has full limited partnership power and authority to enter into this Agreement and to perform its obligations under this Agreement.

 

(viii) The Partnership is a qualified eligible person as defined in CFTC Rule 4.7.

 

8. COVENANTS OF THE ADVISOR, CMF AND THE PARTNERSHIP.

 

(a) The Advisor agrees as follows:

 

(i) In connection with its activities on behalf of the Partnership, the Advisor will comply with all applicable laws, including rules and regulations of the CFTC, NFA and/or the commodity exchange on which any particular transaction is executed.

 

(ii) The Advisor will promptly notify CMF of the commencement of any material suit, action or proceeding involving it, whether or not any such suit, action or proceeding also involves CMF.  The Advisor will provide CMF with copies of any correspondence from or to the CFTC, NFA or any commodity exchange in connection with an investigation or audit of the Advisor’s business activities.

 

(iii) In the placement of orders for the Partnership’s account and for the accounts of any other client, the Advisor will utilize a pre-determined, systematic, fair and reasonable order entry system, which shall, on an overall basis, be no less favorable to the Partnership than to any other account managed by the Advisor.  The Advisor acknowledges its obligation to review the Partnership’s positions, prices and equity in the account managed by the Advisor daily and within two business days to notify, in writing, the broker and CMF and the Partnership’s brokers of (A) any error committed by the Advisor or its principals or employees; (B) any trade which the Advisor believes was not executed in accordance with its instructions; and (C) any discrepancy with a value of $10,000 or more (due to differences in the positions, prices or equity in the account) between its records and the information reported on the account’s daily and monthly broker statements.

 

(iv) The Advisor will maintain a net worth of not less than $100,000 during the term of this Agreement.

 

(b) CMF agrees for itself and the Partnership that:

 

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(i) CMF and the Partnership will comply with all applicable laws, including rules and regulations of the CFTC, NFA and/or the commodity exchange on which any particular transaction is executed.

 

(ii) CMF will promptly notify the Advisor of the commencement of any material suit, action or proceeding involving it or the Partnership, whether or not such suit, action or proceeding also involves the Advisor.

 

(iii) CMF will be responsible for compliance with the USA PATRIOT Act and related anti-money-laundering regulations with respect to the Partnership and its limited partners.

 

9. COMPLETE AGREEMENT.  This Agreement constitutes the entire agreement between the parties pertaining to the subject matter hereof.

 

10. ASSIGNMENT.  This Agreement may not be assigned by any party without the express written consent of the other parties.

 

11. AMENDMENT.  This Agreement may not be amended except by the written consent of the parties.

 

12. NOTICES.  All notices, demands or requests required to be made or delivered under this Agreement shall be in writing and delivered personally or by registered or certified mail or expedited courier, return receipt requested, postage prepaid, to the addresses below or to such other addresses as may be designated by the party entitled to receive the same by notice similarly given:

 

If to CMF or the Partnership:

 

Ceres Managed Futures LLC

                                                522 Fifth Avenue, 14th Floor

                                                New York, New York 10036

                                               Attention:  Ms. Jennifer Magro

 

If to the Advisor:

 

Sasco Energy Partners LLC

                                                55 Greens Farms Road

                                                Westport, Connecticut 06880

                                                Attention:  Mr. Thomas K. Purdy

 

13. GOVERNING LAW.  This Agreement shall be governed by and construed in accordance with the laws of the State of New York, without giving effect to principles of conflicts of law.

 

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14. ARBITRATION.  The parties agree that any dispute or controversy arising out of or relating to this Agreement or the interpretation thereof, shall be settled by arbitration in accordance with the rules, then in effect, of the NFA or, if the NFA shall refuse jurisdiction, then in accordance with the rules, then in effect, of the American Arbitration Association; provided, however, that the power of the arbitrator shall be limited to interpreting this Agreement as written and the arbitrator shall state in writing his reasons for his award.  Judgment upon any award made by the arbitrator may be entered in any court of competent jurisdiction.

 

15. NO THIRD PARTY BENEFICIARIES.  There are no third party beneficiaries to this Agreement.

 

16. COUNTERPARTS.  This Agreement may be executed in any number of counterparts, including via facsimile, each of which is an original and all of which when taken together evidence the same agreement.

 

 

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PURSUANT TO AN EXEMPTION FROM THE COMMODITY FUTURES TRADING COMMISSION IN CONNECTION WITH ACCOUNTS OF QUALIFIED ELIGIBLE PERSONS, THIS ACCOUNT DOCUMENT IS NOT REQUIRED TO BE, AND HAS NOT BEEN, FILED WITH THE COMMISSION.  THE COMMODITY FUTURES TRADING COMMISSION DOES NOT PASS UPON THE MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF COMMODITY TRADING ADVISOR DISCLOSURE.  CONSEQUENTLY, THE COMMODITY FUTURES TRADING COMMISSION HAS NOT REVIEWED OR APPROVED THIS TRADING PROGRAM OR THIS ACCOUNT DOCUMENT.

 

IN WITNESS WHEREOF, this Agreement has been executed for and on behalf of the undersigned as of the day and year first above written.

 

CERES MANAGED FUTURES LLC

 

	
  

	
By

	
/s/ Walter Davis                                  

Walter Davis

President and Director

 

 

GLOBAL DIVERSIFIED FUTURES FUND L.P.

 

By:  Ceres Managed Futures LLC

                                                                                                (General Partner)

 

	
  

	
By

	
/s/ Walter Davis                              

Walter Davis

President and Director

 

 

SASCO ENERGY PARTNERS LLC

 

	
  

	
By

	
/s/ Thomas K. Purdy                      

Thomas K. Purdy

Managing Member

 

- 13 -

 

  

  

  

Appendix A

 

Energy Program

 

Types of Investments

 

The Advisor’s Energy Program will trade in energy related commodity interests primarily consisting of exchange-traded futures and options, exchange-cleared over-the-counter instruments and swaps.

 

Investment Strategy

 

The Advisor will utilize outright long and short positions, exchange-cleared over-the-counter instruments, time spreads, swaps and other trading strategies.  The Advisor intends to focus investments in long-term core positions while simultaneously managing short-term positions, based primarily on fundamental analysis and employing risk management principles.  The Advisor may also utilize options in an attempt either to reduce or define trading risks.

 

In making trading decisions on behalf of clients, the Advisor will also employ a technical analysis to help identify market trends.

 

Investment decisions will be based on an assessment of available facts and data.  The Advisor has sole discretion to trade certain markets or refrain from making certain trades.  The Advisor’s exercise of such discretion may result, at times, in a failure to identify price moves and a loss of profits.  The Advisor’s trading approach is dependent in part on the existence of certain fundamental indicators.  There have been periods in the past where no such market indicators were evident, and such periods may recur.

 

Effective risk management is an important aspect of the Advisor’s trading program.  Expectation and volatility of the markets traded, and the overall nature of client accounts, all are factors in determining the amount of equity committed to each trade.

 

 

Past performance of the Advisor and its affiliates is not necessarily indicative of future results, and investors must be prepared to lose all or substantially all of their investment.mm11-3010_ex101.htm

 

EXHIBIT 10.1

 

 

EXECUTION COPY

 

 

INMET MINING CORPORATION

 

- AND -

 

 

LEUCADIA NATIONAL CORPORATION

 

- AND -

 

 

MK RESOURCES LLC

 

 

 

 

SHARE PURCHASE AGREEMENT

 

 

 

 

November 29, 2010

 

  

  

  

 

 

TABLE OF CONTENTS

 

	
ARTICLE 1 - INTERPRETATION

	
1

	
1.1

	
Definitions

	
1

	
1.2

	
Headings

	
7

	
1.3

	
Extended Meanings

	
7

	
1.4

	
Currency

	
7

	  	  	  
	
ARTICLE 2 - PURCHASE AND SALE

	
8

	
2.1

	
Purchase and Sale

	
8

	
2.2

	
Closing

	
9

	  	  	  
	
ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

	
9

	
3.1

	
Representations and Warranties of the Seller Parties Pertaining to Leucadia and MK Resources.

	
9

	
3.2

	
Representations and Warranties of Inmet

	
12

	
3.3

	
Survival of the Representations, Warranties and Covenants

	
15

	  	  	  
	
ARTICLE 4 - CONDITIONS

	
15

	
4.1

	
Conditions for the Benefit of Inmet

	
15

	
4.2

	
Conditions for the Benefit of the Seller Parties

	
17

	
4.3

	
Procedure for Satisfaction of the Conditions

	
19

	
4.4

	
Termination; Effect of Termination

	
19

	
4.5

	
Specific Performance

	
19

	  	  	  
	
ARTICLE 5 - COVENANTS

	
20

	
5.1

	
Continued Securities Compliance

	
20

	
5.2

	
Tax Status

	
20

	  	  	  
	
ARTICLE 6 - INDEMNIFICATION

	
20

	
6.1

	
Seller Parties’ Indemnities

	
20

	
6.2

	
Indemnity of Inmet

	
20

	
6.3

	
Commissions

	
20

	
6.4

	
Exclusive Remedies

	
21

	
6.5

	
Limitation of Liability of the Seller Parties

	
21

	
6.6

	
Limitation of Liability of Inmet

	
21

	
6.7

	
Notice of and Defence of Third Party Claims

	
21

	
6.8

	
Calculation of Damages

	
23

	
6.9

	
Mitigation

	
24

	
6.10

	
No Duplication

	
24

	
6.11

	
Tax Treatment of Indemnity Payments

	
24

	  	  	  
	
ARTICLE 7 - GENERAL

	
24

	
7.1

	
Public Announcements and Confidential Information

	
24

 

  

  

  

- ii -

 

 

	
7.2

	
Information for Reporting Requirements

	
25

	
7.3

	
Further Assurances

	
25

	
7.4

	
Time of the Essence

	
25

	
7.5

	
Dispute Resolution

	
26

	
7.6

	
Fees and Expenses

	
26

	
7.7

	
Benefit of the Agreement

	
26

	
7.8

	
Invalidity of Provisions

	
26

	
7.9

	
Entire Agreement

	
26

	
7.10

	
Amendments and Waiver

	
26

	
7.11

	
Assignment

	
27

	
7.12

	
Notices

	
27

	
7.13

	
Governing Law

	
28

	
7.14

	
Attornment

	
28

	
7.15

	
Counterparts and Faxed Signatures

	
28

 

 

 

  

  

  

THIS AGREEMENT made the 29th day of November, 2010;

 

B E T W E E N:

 

INMET MINING CORPORATION, a corporation incorporated under the laws of Canada (“Inmet”),

 

- and -

 

LEUCADIA NATIONAL CORPORATION, a corporation incorporated under the laws of the State of New York, United States of America (“Leucadia”),

 

- and -

 

MK RESOURCES LLC (formerly MK Resources Company), a limited liability company incorporated under the laws of the State of Delaware, United States of America

 

(“MK Resources”),

 

WHEREAS MK Resources is the holder of 16,349,535 shares in BV I (as defined below);

 

AND WHEREAS MK Resources is a wholly-owned subsidiary of Leucadia;

 

AND WHEREAS MK Resources desires to sell and Inmet desires to purchase the Purchased Shares (as defined below), upon and subject to the terms and conditions hereinafter set forth;

 

NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and the covenants and agreements herein contained the Parties agree as follows:

 

ARTICLE 1 - INTERPRETATION

 

1.1                      Definitions

 

In this Agreement, unless something in the subject matter or context is inconsistent therewith:

 

“Affiliate” means as to any Person, any other Person which, directly or indirectly, Controls, is Controlled by, or is under common Control with, such Person;

 

  

1

  

“Agreement” means this agreement and all schedules attached to this agreement and all amendments, restatements or replacements made hereto by written agreement between the Parties;

 

“Applicable Law” in respect of any Person, property, transaction or event, means all laws, statutes, regulations, common law, judgments, notices, approvals, orders and decrees applicable to that Person, property, transaction or event and, whether or not having the force of law, all applicable official directives, rules, consents, approvals, authorizations, guidelines, orders and policies of any Governmental Body having or purporting to have authority over that Person, property, transaction or event (and (i) where used in respect of a representation or warranty, as in effect as of the date of the representation or warranty and (ii) where used in respect of a covenant, as in effect from time to time, in each case unless otherwise noted);

 

“Assets” means all assets (including Confidential Information), property interests, or rights of, held by or owned by any of the Las Cruces Companies (including all personal property, whether tangible or intangible, and real property, including chattels and fixtures);

 

“Books and Records” means all technical, financial, business, tax and employee books, records, files, papers, regulatory filings and returns and other books, records, files, papers and regulatory filings of the Las Cruces Companies in any form whatsoever (including written, printed, electronic or computer printout form), including lists of present customers, suppliers, consultants and employees, financial books and records of account, actuarial, tax and accounting information, recordings of geological and metallurgical data, reports, files, lists, drawings, plans, logs, briefs, customer and agency records, computer program documentation, medical records, data bases, employee data and records, deeds, certificates, contracts, surveys, title and legal opinions, records of payment, loan histories, investment asset documentation, evidences of mortgage insurance, written employment manuals and employment policies;

 

“Business Day” means a day other than a Saturday, Sunday or statutory holiday in Toronto, Canada; New York, New York; Amsterdam, the Netherlands, or Salt Lake City, Utah;

 

“BV I” means CLC Copper I B.V., a besloten vennootschap met beperkte aansprakelijkheid under the laws of the Netherlands;

 

“Canadian GAAP” means the accounting principles generally accepted in Canada, including, for all principles stated in the Handbook of the Canadian Institute of Chartered Accountants, such principles so stated;

 

“Canadian Securities Laws” means the applicable securities laws of each of the provinces and territories of Canada, the respective regulations and rules made under those securities laws and the published policy statements of the Canadian securities regulatory authorities;

 

  

2

  

“CFC” means a controlled foreign corporation within the meaning of Section 957 of the Code;

 

“Claim” means any claim for money damages or equitable relief arising out of a legal proceeding, and includes any cause of action, suit, proceeding, judgment, award, assessment, reassessment or notice of determination of loss;

 

“CLC” means Cobre Las Cruces, S.A., a company incorporated under the laws of Spain;

 

“Closing” means the completion of the Transaction in accordance with this Agreement at the Time of Closing;

 

“Closing Date” means the fifth Business Day immediately following the date on which a Condition Satisfaction Period commences, provided that if that Condition Satisfaction Period terminates prior to such fifth Business Day, then the Closing Date shall be determined with reference to the Condition Satisfaction Period next occurring, or such earlier or later date as may be agreed upon in writing by the Parties;

 

“Code” means the Internal Revenue Code of 1986;

 

“Condition Satisfaction Period” means any period of time commencing on the date on which each of the conditions set out in Sections 4.1 or 4.2 of this Agreement has been and continues to remain satisfied or, if not satisfied, has been waived by the Party or Parties for whose benefit such unsatisfied condition exists, and terminating on the date on which any of such conditions not so waived ceases to be satisfied (unless prior to the time such condition ceases to be satisfied, it has been waived by the Party benefiting therefrom);

 

“Confidential Information” means all information, regardless of its form, relating to the Project, the Las Cruces Companies or the Assets, including reports, results, maps, charts, strategic plans and other data, whether in oral, written or electronic form and whether or not stated or noted to be confidential, other than information which is or becomes available to the public without breach of the provisions of this Agreement;

 

“Contract” means any written or oral contract, agreement, lease, arrangement or commitment, including any benefit plan, to which any of the Las Cruces Companies is a party or by which any of them is or their respective assets are bound;

 

“Control” means:

 

	
  

	
(a)

	
when applied to the relationship between a Person and a Corporation, the beneficial ownership by such Person at the relevant time of shares of such Corporation carrying either at least 50% of the voting rights ordinarily exercisable at meetings of shareholders of such Corporation or the percentage of voting rights ordinarily exercisable at meetings of shareholders of such Corporation that are sufficient to elect a majority of the directors of such Corporation; and

 

  

3

  

	
  

	
(b)

	
when applied to the relationship between a Person and a partnership or joint venture, the beneficial ownership by such Person at the relevant time of more than 50% of the ownership interests of the partnership or joint venture in circumstances where it can reasonably be expected that such Person directs the affairs of the partnership or joint venture;

 

and the words “Controlled by”, “Controlling” and similar words have corresponding meanings; provided that a Person (the “first-mentioned Person”) who Controls a Corporation, partnership or joint venture (the “second-mentioned Person”) shall be deemed to Control:  (i) a Corporation, partnership or a joint venture (the “third-mentioned Person”) which is Controlled by the second-mentioned Person, (ii) a Corporation, partnership or joint venture which is controlled by the third-mentioned Person and (iii) so on;

 

“Corporation” means a corporation, an incorporated company, a limited liability company, a besloten vennootschap met beperkte aansprakelijkheid or naamloze vennootschap under Dutch law, or a Sociedad Anónima,  Sociedad Limitada or asociación under Spanish law;

 

“Governmental Body” means the European Union or any agency thereof, or any national, state, regional, municipal or local governmental department, commission, board, bureau, agency, authority or instrumentality of Spain, the Netherlands, Canada, the United States or any political subdivision thereof, and any Person exercising or purporting to exercise executive, legislative, judicial, regulatory or administrative functions of or pertaining to any of the foregoing entities, including all tribunals, commissions, boards, bureaus, arbitrators and arbitration panels, and any authority or other Person controlled by any of the foregoing;

 

“IFC” means Inmet Finance Company Sàrl, a limited liability company existing under the laws of Luxembourg, formerly IMUS LLC, a Delaware limited liability company;

 

“Inmet Common Share Reorganization” has the meaning attributed to such term in Section 2.1(3);

 

“Inmet Consideration Shares” has the meaning attributed to such term in Section 2.1(2);

 

“Inmet Public Record” on any date, means all documents filed by Inmet with the Ontario Securities Commission or any other Canadian securities regulatory authorities which would be required to be incorporated by reference in a short-form prospectus of Inmet filed on that date pursuant to National Instrument 44-101 of the Canadian securities regulatory authorities;

 

“Knowledge of Inmet” means the knowledge, after due inquiry, of the officers and senior management of Inmet;

 

“Knowledge of the Seller Parties” means the knowledge, after due inquiry, of any of: (i) the officers and directors (other than independent directors) of MK Resources, and (ii)

 

  

4

  

“Las Cruces Companies” means BV I, CLC Copper II B.V. and CLC;

 

“Leucadia Guarantee” means the guarantee dated as of July 30, 2009 by Leucadia as guarantor in favour of IFC as lender;

 

“Leucadia Note” means the CLC Copper I B.V. Second Amended and Restated Promissory Note dated June 1, 2010 in favour of Leucadia in an outstanding principal amount of €130,790,718.18 (US$ 172,970,724.79) as at the date hereof;

 

“Leucadia Note Purchase Agreement” means the agreement to be entered into on the date hereof between Inmet, Leucadia and IFC providing for the purchase by IFC of the Leucadia Note;

 

“Lien” means (i) any security interest, mortgage, pledge, prohibition, injunction, lien, charge or other encumbrance of any kind, or any prior assignment, option, claim, promise to contract, or interest of any kind, upon any property or assets, or upon the income or profits therefrom; (ii) any acquisition of or option to acquire any property or assets upon conditional sale or other title retention agreement, device or arrangement (including any capital lease); or (iii) any sale, assignment, pledge or other transfer for security of any accounts, general intangibles or chattel paper, with or without recourse;

 

“Loss” means any loss, liability, damage, cost or expense suffered or incurred, including the costs and expenses of any assessment, judgment, settlement or compromise relating thereto and, fees and expenses of lawyers and other professionals acting on behalf of the Party recovering its Loss, net of recoveries and associated tax benefits, and excluding any incidental, indirect, special or punitive damages;

 

“Loss Payment” means the amount of any Loss required to be paid by an Indemnifying Party under this Agreement;

 

“Material Adverse Change” means a material adverse change in, or a material adverse effect upon, the business, operations, prospects, assets, liabilities or financial condition of Inmet on a consolidated basis, as the case may be, excluding any change or effect caused by or resulting from or attributable to (i) conditions in the global economy or securities markets in general; (ii) developments affecting the worldwide base metal mining industry in general which do not have a materially disproportionate effect on Inmet on a consolidated basis, as the case may be; (iii) changes in the price of copper; or (iv) changes in currency exchange rates;

 

“Members of the Inmet Group” means Inmet and its Affiliates from time to time;

 

“Members of the Leucadia Group” means Leucadia and its Affiliates from time to time;

 

“Parties” means the parties to this Agreement and “Party” means any one of them;

 

“Party Group” means, respectively, Inmet and the Seller Parties;

 

  

5

  

“Person” means an individual, a partnership, a limited partnership, a joint venture, a syndicate, a Corporation, a Governmental Body, a trustee, any unincorporated organization and the heirs, executors, administrators or other legal representatives of an individual and words importing “Person” have similar meaning;

 

“PFIC” means a passive foreign investment company within the meaning of Section 1297 of the Code;

 

 “Project” means the Las Cruces high-grade copper deposit identified by “Las Cruces” mining concession No. 7532-A and located in the autonomous region of Andalusia, Spain;

 

“Purchased Shares” means 16,349,535 shares of €1 in the share capital of BV I;

 

“Registration Rights Agreement” means the registration rights agreement dated August 22, 2005 by and among Inmet, Leucadia and MK Resources;

 

“SEC” means the U.S. Securities and Exchange Commission;

 

“Seller Parties” means Leucadia and MK Resources;

 

“Shareholders Agreement” means the third amended and restated Las Cruces Project Shareholders Agreement dated July 22, 2009 between Inmet, Inmet Finland OY, Inmet Cobre España, S.A., IFC, Leucadia, MK Resources, BV I and CLC Copper II B.V.;

 

“Subscription Agreement” means the subscription agreement dated March 31, 2010 providing for the subscription for and issue of subscription receipts between Inmet, Ellington Investments Pte Ltd. as subscriber and CIBC Mellon Trust Company as subscription receipt agent;

 

“Taxes” means (i) all taxes, levies, duties, imposts, mining licenses, fees, deductions, charges or withholdings of any kind whatsoever including national and municipal patents, sales, gross or net income, receipts, value added, use, ad valorem, transfer, franchise, payroll, capital, excise, goods and services, property or windfall profit taxes, stamp or similar documentary charges, customs duties, health and social security contributions, employment insurance premiums and any other withholdings or deductions relating to employees and all liabilities with respect thereto, including any interest, fines, penalties, surtaxes, charges, additions to tax or additional amounts and loss of relief in respect of any of the foregoing, imposed by any taxing or social security authority, body or instrumentality (whether Spanish, Dutch or foreign) upon the Las Cruces Companies or Inmet, as the case may be, and/or (ii) any liability of the Las Cruces Companies or Inmet, as the case may be, for the payment of any amounts of the type described in the immediately preceding clause (i) as a result of being a member of an affiliated or combined tax group;

 

“Termination Date” means January 31, 2011, subject to the right of either Party to postpone the Termination Date on no more than two occasions by a period of 30 days if (A) the Toronto Stock Exchange has not approved the listing of the Inmet Consideration

 

  

6

  

Shares or (B) the transfer of the Purchased Shares is delayed, provided that the Party seeking to postpone the Termination Date is not the cause of such delay;

 

“Third Party” means any Person other than a Party and its Affiliates;

 

“Third Party Claim” means any Claim asserted by a Third Party against Inmet or the Seller Parties, as the case may be;

 

“Time of Closing” means 10:00 a.m. (Eastern Standard Time) on the Closing Date or such other time as shall be mutually agreed to among the Parties;

 

“Transaction” means the sale of the Purchased Shares by MK Resources to Inmet in exchange for the Inmet Consideration Shares pursuant to the terms of this Agreement;

 

“Transaction Documents” means: (i) this Agreement, (ii) the Leucadia Note Purchase Agreement, (iii) all agreements and instruments entered into or to be entered into pursuant to this Agreement and the Leucadia Note Purchase Agreement, and (iv) all agreements and instruments entered into or to be entered into by one or more of the Parties with any Member of the Inmet Group or any Member of the Leucadia Group relating to the transactions contemplated by this Agreement;

 

“U.S. Dollars” and the symbol “$” means lawful money of the United States of America;

 

“U.S. Securities Act” means the United States Securities Act of 1933, as amended;

 

“U.S. Securities Laws” means United States federal securities laws;

 

1.2                      Headings

 

The division of this Agreement into Articles and Sections and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “hereunder” and similar expressions refer to this Agreement and not to any particular Article, Section or other portion hereof and include any agreement supplemental hereto.  Unless something in the subject matter or context is inconsistent therewith, references herein to Articles and Sections are to Articles and Sections of this Agreement.

 

1.3                      Extended Meanings

 

In this Agreement words importing the singular number only shall include the plural and vice versa, words importing the masculine gender shall include the feminine and neuter genders and vice versa.  The term “including” as used herein means “including without limiting the generality of the foregoing”.

 

1.4                      Currency

 

Unless otherwise indicated, all references to currency herein are to U.S. Dollars.

 

  

7

  

ARTICLE 2 - PURCHASE AND SALE

 

2.1                      Purchase and Sale

 

(1)           MK Resources agrees to sell and Inmet agrees to purchase the Purchased Shares at the Time of Closing, free and clear of all Liens.

 

(2)           In consideration for the Purchased Shares, Inmet shall issue from treasury to MK Resources 5,063,576 previously unissued Inmet common shares (as such amount may be adjusted pursuant to Section 2.1(4)), the “Inmet Consideration Shares”).

 

(3)           If at any time prior to the Time of Closing, Inmet shall:

 

	
  

	
(a)

	
subdivide the Inmet common shares into a greater number of shares;

 

	
  

	
(b)

	
consolidate the Inmet common shares into a lesser number of shares;

 

	
  

	
(c)

	
make a distribution to the holders of all or substantially all of the Inmet common shares of additional Inmet common shares or securities exchangeable for or convertible into Inmet common shares (excluding shares issued in the ordinary course pursuant to employment compensation plans);

 

	
  

	
(d)

	
otherwise change the number of Inmet common shares outstanding by reason of a reclassification, recapitalization, exchange of shares or similar event;

 

	
  

	
(any such event being herein called an “Inmet Common Share Reorganization”), the number of Inmet Consideration Shares shall be adjusted in accordance with Section 2.1(4).

 

(4)           If an Inmet Common Share Reorganization occurs, and each time an Inmet Common Share Reorganization occurs, the number of Inmet Consideration Shares provided for by this Agreement immediately prior to giving effect to the Inmet Common Share Reorganization shall be multiplied by a fraction of which:

 

	
  

	
(a)

	
the numerator shall be the number of Inmet common shares that are (or will be) outstanding immediately after giving effect to the Inmet Common Share Reorganization (ignoring for this purpose the Inmet Consideration Shares), including in the case of a distribution of securities exchangeable for or convertible into Inmet common shares, the number of Inmet common shares that would be outstanding if such securities had been exchanged or converted into Inmet common shares; and

 

	
  

	
(b)

	
the denominator shall be the number of Inmet common shares outstanding immediately prior to giving effect to the Inmet Common Share Reorganization.

 

  

8

  

 

2.2                      Closing

 

(1)           Except as provided in Section 2.2(2)(i) below, the sale and purchase of the Purchased Shares shall be completed at the Time of Closing at the offices of Torys LLP in Toronto, Ontario.

 

(2)           At Closing, MK Resources shall transfer the Purchased Shares to Inmet by means of a notarial deed executed in the Netherlands before a Dutch civil law notary, and Inmet shall deliver to MK Resources share certificates representing the Inmet Consideration Shares registered in the name of MK Resources or as MK Resources may direct.

 

ARTICLE 3 - REPRESENTATIONS AND WARRANTIES

 

	
3.1

	
Representations and Warranties of the Seller Parties Pertaining to Leucadia and MK Resources.

 

In order to induce Inmet to enter into this Agreement, each of the Seller Parties jointly and severally represents and warrants to Inmet (and acknowledges that Inmet is relying on these representations and warranties in connection with the execution of this Agreement and the transactions contemplated hereby) that:

 

(1)           Due Incorporation.  Each of the Seller Parties has been duly incorporated and organized under the laws of the respective jurisdictions in which it is incorporated, validly exists thereunder and is in good standing, if applicable, under the Applicable Law governing its existence.

 

(2)           Due Authorization.  Each of the Seller Parties has the necessary corporate power and authority to execute and deliver the Transaction Documents to which it is or will be a party and to perform its obligations thereunder.  The execution and delivery of the Transaction Documents to which it is a party by each of the Seller Parties and the performance of its obligations thereunder have been duly authorized by all necessary corporate actions on its part.  Such execution, delivery and performance by each of the Seller Parties do not require any consent of, or notification to, any Person, or any action, consent or notification under any Applicable Law which has not already been, or will not by the Time of Closing have been, obtained or made.

 

(3)           Enforceability.  The Transaction Documents have been, or will be on or prior to the Time of Closing, duly executed and delivered by each of the Seller Parties and, assuming due authorization, execution and delivery thereof by the other parties thereto other than any Seller Party, constitute, or will constitute, valid and binding obligations of each of the Seller Parties enforceable against each of the Seller Parties (to the extent that they are, respectively, parties thereto) in accordance with their respective terms, except as such enforceability (i) may be limited by bankruptcy, insolvency, reorganization or other Applicable Law, now or later in effect, affecting the enforcement of creditors’ rights generally and (ii) is

 

  

9

  

subject to general principles of equity, whether considered in a proceeding at law or in equity.

 

(4)          No Bankruptcy.  There has not been any petition or application filed by a Seller Party or, to the Knowledge of the Seller Parties, a Third Party, or any proceeding commenced which has not been discharged, by or, to the Knowledge of the Seller Parties, against the Seller Parties or with respect to or affecting any assets of MK Resources under any Applicable Law, relating to bankruptcy, insolvency, readjustment of debt or creditors’ rights; none of the Seller Parties is unable to meet its obligations as they generally become due, and no assignment has been made by any of such companies for the benefit of creditors.

 

(5)          No Dissolution.  No meeting has been convened or resolution or petition proposed or order made for any of the Seller Parties to be wound up or dissolved.

 

(6)          Right to Transfer Purchased Shares.  MK Resources is the sole holder of all of the Purchased Shares and has good and marketable title thereto.  The Purchased Shares are not subject to any Lien, and at the Time of Closing will not be subject to any Lien.  There are no agreements or restrictions which in any way limit the transfer to Inmet of the Purchased Shares (other than the Shareholders Agreement).  At the Time of Closing, MK Resources will have full legal right, power and authority to transfer the Purchased Shares to Inmet free of Liens.

 

(7)          No Options.  Other than the Shareholders Agreement, there is no:

 

	
  

	
(a)

	
outstanding subscription, right, option, warrant, call, commitment or agreement (other than this Agreement) which obliges Leucadia or MK Resources to sell, transfer, assign, pledge, charge, mortgage or in any other way dispose of or encumber any of the Purchased Shares or any interest therein;

 

	
  

	
(b)

	
right of pre-emption, right or obligation to acquire, redeem or convert, over or affecting the Purchased Shares; or

 

	
  

	
(c)

	
shareholders’ agreement, voting trust, voting agreement, pooling agreement, proxy or other arrangement relating to the voting or other rights attached to any of the Purchased Shares,

 

and the Seller Parties have not agreed to give, create or enter into any of the foregoing.

 

(8)          Non-Violation.  The execution and delivery by each of the Seller Parties of the Transaction Documents to which they are a party and the consummation of the transactions contemplated by the Transaction Documents do not or will not, as applicable, (i) conflict with, violate, result in a breach of, or constitute a default under any provision of the certificate of incorporation or articles, by-laws or other organizational documents of the Seller Parties, (ii) violate, conflict with or result in the breach, termination or modification of, or otherwise give any other Person

 

  

10

  

the right to terminate, or constitute a default under, with or without notice, the lapse of time or both, or cause the acceleration of any obligation under, the terms of any agreement or instrument to which any of the Seller Parties is a party or by which any of them or any of their respective properties or other assets may be bound, (iii) result in the creation of any Lien upon the Purchased Shares, (iv) violate any Applicable Law applicable to the Seller Parties or the Purchased Shares.

 

(9)          Litigation.  To the Knowledge of the Seller Parties, there are (i) no outstanding judgments, orders, decrees, writs, injunctions, decisions, rulings or awards against, with respect to, or in any manner affecting the Purchased Shares.

 

(10)        Acquisition of Inmet Consideration Shares.  Each of the Seller Parties understands and acknowledges that the issuance and sale of the Inmet Consideration Shares has not been registered under the U.S. Securities Act and, unless an exemption from registration is available, none of the Inmet Consideration Shares may be offered or sold within the United States.  MK Resources is an Accredited Investor (as that term is defined in Rule 501(a)(3) of Regulation D of the U.S. Securities Act) and is acquiring the Inmet Consideration Shares as principal for its own account, not for the benefit of any other person, for investment purposes only and not with any current view to any resale, distribution, or other disposition thereof in violation of any U.S. Securities Laws or Canadian Securities Laws.  Each of the Seller Parties agrees that it will not offer, sell or otherwise transfer or pledge any of the Inmet Consideration Shares (other than pursuant to an effective registration statement under the U.S. Securities Act) unless (i) the sale is to Inmet, (ii) the sale is made outside the United States in accordance with the requirements of Rule 904 of Regulation S under the U.S. Securities Act and in compliance with applicable local laws and regulations, or (iii) the sale is made pursuant to the exemption from registration under the U.S. Securities Act provided by Rule 144 thereunder or is otherwise exempt from U.S. registration (and in such case the applicable Seller Parties shall provide Inmet with an opinion of counsel reasonably acceptable to Inmet). Each of the Seller Parties understands and acknowledges that the Inmet Consideration Shares are “restricted securities” as defined in Rule 144 of the U.S. Securities Act.  Each of the Seller Parties acknowledges that (a) it has reviewed the Inmet Public Record and has been afforded the opportunity (i) to ask such questions as it has deemed necessary of, and to receive answers from, representatives of Inmet concerning the terms and conditions of the offering of the Inmet Consideration Shares and (ii) to obtain such additional information which Inmet possesses or can acquire without unreasonable effort or expense that is necessary to verify the accuracy and completeness of the information contained in the Inmet Public Record and that it has considered necessary in connection with its decision to acquire the Inmet Consideration Shares (and for that purpose has requested and received the representations and warranties of Inmet provided in this Agreement) and (b) it is not acquiring the Inmet Consideration Shares as a result of any general solicitation or general advertising, as those terms are used in Regulation D under the U.S. Securities Act including, without limitation, advertisements,

 

  

11

  

articles, notices and other communications published in any newspaper, magazine or similar media or broadcast over television or radio or any seminar or meeting whose attendees have been invited by general solicitation or general advertising.

 

3.2                      Representations and Warranties of Inmet

 

In order to induce the Seller Parties to enter into this Agreement Inmet represents and warrants to the Seller Parties (and acknowledges that each of the Seller Parties is relying on these representations and warranties in connection with the execution of this Agreement and the transactions contemplated hereby) that:

 

(1)          Due Incorporation.  Inmet is duly incorporated and organized under the laws of Canada and validly exists thereunder.  Inmet is duly qualified to carry on its business and is in good standing, if applicable, in each jurisdiction in which the conduct of its business or the ownership, leasing or operation of its property and assets requires such qualification, except where the failure to be so qualified individually or in the aggregate, has not resulted in, and would not reasonably be expected to result in, a Material Adverse Change, and has all requisite power and authority to carry on its business and to own, lease and operate its property and assets.

 

(2)          Due Authorization.  Inmet has the necessary corporate power and authority to execute and deliver the Transaction Documents to which it is or will be a party and to perform its obligations thereunder.  The execution and delivery of the Transaction Documents to which it is a party by Inmet and the performance of its obligations thereunder has been duly authorized by all necessary corporate actions on its part.  Such execution, delivery and performance by Inmet do not require any consent of, or notification to, any Person, or any action, consent or notification under any Applicable Law which has not already been, or will not by the Time of Closing have been, obtained or made.

 

(3)          Enforceability.  The Transaction Documents to which Inmet is a party have been or will be, as applicable, duly executed and delivered by Inmet and constitute, or will constitute when executed and delivered by Inmet and by the other parties thereto, valid and binding obligations of Inmet enforceable against Inmet in accordance with their respective terms, except as enforceability (i) may be limited by bankruptcy, insolvency, reorganization or other Applicable Law, now or later in effect, affecting the enforcement of creditors’ rights generally and (ii) is subject to general principles of equity, whether considered in a proceeding at law or in equity.

 

(4)          No Bankruptcy.  There has not been any petition or application filed by Inmet or any proceeding commenced which has not been discharged, by Inmet  or, to the Knowledge of Inmet, against Inmet, or with respect to or affecting any assets of Inmet under any Applicable Law relating to bankruptcy, insolvency, reorganization, fraudulent transfer, compromise, arrangements, insolvency,

 

  

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readjustment of debt or creditors’ rights, and no assignment has been made by Inmet for the benefit of creditors.

 

(5)          No Dissolution.  No meeting has been convened or resolution proposed or petition proposed or order made for Inmet to be wound up or dissolved.

 

(6)          Non-Violation.  The execution and delivery by Inmet of the Transaction Documents to which it is a party and the consummation of the transactions contemplated thereby do not or will not, as applicable, (i) conflict with, violate, result in a breach of, or constitute a default under any provision of the articles or by-laws of Inmet, (ii) violate, conflict with or result in the breach or termination of or modification, or otherwise give any other Person the right to terminate, or constitute a default, with or without notice, the lapse of time or both, or cause the acceleration of any obligation, under the terms of any agreement or instrument to which Inmet is a party or by which its properties or other assets may be bound, or give any Person the right to increase the obligations of Inmet or (iii) violate any Applicable Law, other than, in the cases of clauses (ii) or (iii), any such violations, conflicts, breaches, terminations, modifications, defaults, accelerations or obligations that individually or in the aggregate have not, and would not reasonably be expected to, result in a Material Adverse Change.

 

(7)          Capital.  The authorized capital of Inmet consists of an unlimited number of common shares, an unlimited number of preference shares and an unlimited number of subordinate voting participating shares, of which 56,106,642 common shares (and no preference shares or subordinate voting participating shares) were issued and outstanding as fully paid and non-assessable on November 26, 2010.

 

(8)          No Obligations to Issue Securities.  No Person has any agreement, option, right or privilege (whether pre-emptive, contractual or otherwise) capable of becoming an agreement for the purchase, acquisition, subscription for or issuance of any of the unissued shares or other securities of Inmet, other than conditionally pursuant to the Subscription Agreement and other than stock options, deferred share units, or other rights granted pursuant to employment compensation plans.

 

(9)          No Material Adverse Change.  Except as disclosed in the Inmet Public Record as of the date of this Agreement, there has been no Material Adverse Change since December 31, 2009.

 

(10)        Inmet Consideration Shares.

 

	
  

	
(a)

	
All necessary corporate action and other necessary steps and proceedings have been taken or will have been taken at or prior to the Time of Closing by Inmet so as to validly issue the Inmet Consideration Shares to MK Resources at the Time of Closing.

 

	
  

	
(b)

	
Upon issue, the Inmet Consideration Shares will be validly issued and outstanding as fully paid and non-assessable shares registered in the name

 

  

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of MK Resources, free and clear of all trading restrictions in Canada (except for the four-month hold period imposed by the operation of Canadian Securities Laws).  MK Resources will have good and registrable title to the Inmet Consideration Shares, free of Liens.

 

	
  

	
(c)

	
Assuming the truth of the representations set forth in Section 3.1(10), the offer and sale of the Inmet Consideration Shares under this Agreement are exempt from registration under U.S. Securities Laws and exempt from the prospectus and registration requirements under Canadian Securities Laws.

 

(11)        Inmet Public Disclosure and Regulatory Compliance.

 

	
  

	
(a)

	
Inmet is, and for more than four months preceding the date hereof, it has been, a reporting issuer in good standing within the meaning of the Securities Act (Ontario) and the other applicable Canadian Securities Laws and, and Inmet is not, and for more than four months preceding the date hereof, it has not been, in default of any requirement of the Securities Act (Ontario) or the regulations thereunder and the other applicable Canadian Securities Laws.  Without limiting the foregoing, Inmet has filed with the Canadian securities regulatory authorities on a timely basis all forms, reports and documents required to be filed by it under Canadian Securities Laws.

 

	
  

	
(b)

	
The Inmet Public Record documents filed by Inmet with the Ontario Securities Commission and the other Canadian securities regulatory authorities complied, at the time of their filing, with the requirements of the Securities Act (Ontario) and all other Canadian Securities Laws and all the information and statements contained therein were at the respective times of filing thereof true and correct and contained no misrepresentation (as defined in the Securities Act (Ontario).  There is no disclosure required by Canadian Securities Laws with respect to Inmet which has not been made, and no confidential disclosure has been made by or on behalf of Inmet under any Canadian Securities Laws.

 

	
  

	
(c)

	
Inmet is in full compliance with all material requirements of the Toronto Stock Exchange applicable to listed companies.

 

	
  

	
(d)

	
The consolidated audited financial statements of Inmet contained in its 2009 Annual Report including the notes thereto, were prepared in accordance with Canadian GAAP consistently applied throughout the periods covered thereby and, subject to annual year end adjustments in the case of the unaudited interim financial statements, present fairly in all material respects the financial position of Inmet as at the date thereof and the results of its operations and cash flow for the periods covered thereby.

 

	
  

	
(e)

	
No order suspending trading of Inmet securities has been issued or is pending or, to the Knowledge of Inmet, threatened.

 

  

14

  

(12)        Absence of Undisclosed Liabilities.  Inmet has no liabilities or obligations of any nature or kind (whether accrued, absolute, contingent or otherwise), other than (i) those reflected in the Inmet Public Record, and (ii) those incurred since December 31, 2009 in the ordinary course of business.

 

(13)        Tax Status.  Inmet has not been advised and is not aware that it is either a PFIC or a CFC.

 

3.3                      Survival of the Representations, Warranties and Covenants

 

(1)           The representations and warranties set forth in Sections 3.1 and 3.2 shall each, from the Closing Date, survive the transactions herein provided for as follows:

 

	
  

	
(a)

	
the representations and warranties set out in Sections 3.1(1) to 3.1(7), 3.2(1) to 3.2(5), 3.2(7), 3.2(8) and 3.2(10) shall survive indefinitely and shall be of unlimited duration;

 

	
  

	
(b)

	
any representations or warranties that prove to be false as a result of any fraudulent misrepresentation made by the Person giving such representation or warranty shall survive indefinitely and shall be of unlimited duration; and

 

	
  

	
(c)

	
the remaining representations and warranties set forth in Sections 3.1 and 3.2 shall continue in full force and effect for a period of eighteen months from the Closing Date.

 

(2)          The covenants of the Seller Parties and Inmet set out in this Agreement shall survive the transactions herein provided for and notwithstanding such completion shall continue in full force and effect in accordance with the terms thereof to the extent necessary to give commercial effect thereto.

 

ARTICLE 4 - CONDITIONS

 

4.1                      Conditions for the Benefit of Inmet

 

(1)          The sale by the Seller Parties and the purchase by Inmet of the Purchased Shares is subject to the following conditions which are for the exclusive benefit of Inmet to be performed or complied with at or prior to the Time of Closing:

 

	
  

	
(a)

	
no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the transactions contemplated by this Agreement;

 

	
  

	
(b)

	
each of the representations and warranties of the Seller Parties in this Agreement shall be true and correct in all material respects (except those representations and warranties set out in Sections 3.1(1), 3.1(4), 3.1(5),

 

  

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3.1(6) and 3.1(7), which shall be true and correct without qualification) as of the Time of Closing as though made at and as of the Time of Closing (except to the extent such representations and warranties speak as of an earlier date);

 

	
  

	
(c)

	
The Seller Parties shall have performed or complied with, in all material respects, all of the terms, covenants and conditions of this Agreement to be performed or complied with by them at or prior to the Time of Closing;

 

	
  

	
(d)

	
Inmet shall be furnished with such certificates or other instruments of the Seller Parties or of officers of any of such as Inmet or its counsel may reasonably think necessary in order to establish that the conditions in Sections 4.1(b) and 4.1(c) have been satisfied;

 

	
  

	
(e)

	
each of the Seller Parties and other applicable Members of the Leucadia Group shall have provided full releases releasing each of the applicable Las Cruces Companies from all claims arising from any cause, matter or thing arising in respect of any of the Las Cruces Companies at or prior to the Time of Closing and terminating all Contracts between any of the Las Cruces Companies and any Member of the Leucadia Group;

 

	
  

	
(f)

	
the purchase of the Leucadia Note shall be completed at the Closing Time in accordance with the terms of the Leucadia Note Purchase Agreement;

 

	
  

	
(g)

	
the Shareholders Agreement shall be terminated by all parties thereto effective as of the Closing Time and the Members of the Inmet Group shall be relieved of all liability thereunder;

 

	
  

	
(h)

	
all necessary steps and proceedings shall have been taken to permit the Purchased Shares to be duly and regularly transferred to and registered in the name of Inmet;

 

	
  

	
(i)

	
Members of the Leucadia Group shall, at their option, either (i) have delivered to the office of Inmet or as directed by it, all copies of Books and Records and all data, in each case, of the Las Cruces Companies (or of the Seller Parties relating to the Project to the extent the Seller Parties have records or data not also in the possession of the Las Cruces Companies) relating to the Project, in written or electronic form, in their possession or control consisting of, or based on, Confidential Information (other than information generated by the Seller Parties or received by the Seller Parties with respect to evaluations of offers relating to the Project or the Las Cruces Companies) and a senior officer of Leucadia shall have provided to Inmet a certificate to this effect, or (ii) have undertaken in writing and made arrangements satisfactory to Inmet, acting in a commercially reasonable manner, to complete such deliveries no later than thirty (30) days after the Closing Date; provided that the Seller Parties may retain copies of any such information provided to the members of the

 

  

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Board of Directors of Inmet or reasonably necessary to support Leucadia’s accounting for its investment in the Project.

 

(2)          If any term, covenant or condition to be performed, satisfied or complied with by the Seller Parties for the benefit of Inmet shall not have been performed, satisfied or complied with in all material respects by the Termination Date, and such failure to perform, satisfy or comply would give rise to the failure of any of the conditions set forth in Section 4.1(1). Inmet may, without limiting any other right that it may have, at its sole option:

 

	
  

	
(a)

	
terminate this Agreement by notice to the Seller Parties and, in such event, Inmet shall be released from all obligations hereunder; or

 

	
  

	
(b)

	
waive compliance with any such term, covenant or condition in whole or in part on such terms as may be agreed upon without prejudice to any of its rights of termination in the event of non-performance of any other term, covenant or condition in whole or in part.

 

4.2                      Conditions for the Benefit of the Seller Parties

 

(1)          The sale by MK Resources and the purchase by Inmet of the Purchased Shares is subject to the following conditions which are for the exclusive benefit of the Seller Parties to be performed or complied with at or prior to the Time of Closing:

 

	
  

	
(a)

	
no temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the transactions contemplated by this Agreement;

 

	
  

	
(b)

	
the Toronto Stock Exchange shall have approved the listing of the Inmet Consideration Shares, and at the Time of Closing, the Inmet Consideration Shares shall be listed and posted for trading on the Toronto Stock Exchange;

 

	
  

	
(c)

	
no Material Adverse Change shall have occurred since December 31, 2009;

 

	
  

	
(d)

	
each of the representations and warranties of Inmet forth in this Agreement shall be true and correct in all material respects (except those representations and warranties set out in Sections 3.2(1), 3.2(4), 3.2(5) and 3.2(10), which shall be true and correct without qualification) as of the Time of Closing as though made at and as of the Time of Closing (except to the extent such representations and warranties speak as of an earlier date);

 

  

17

  

	
  

	
(e)

	
Inmet shall have performed or complied with, in all material respects, all of the terms, covenants and conditions of this Agreement to be performed or complied with by it at or prior to the Time of Closing;

 

	
  

	
(f)

	
Inmet shall have provided to the Seller Parties such certificates, affidavits or statutory declarations of Inmet or of officers of Inmet as the Seller Parties or their counsel may reasonably think necessary in order to establish that the conditions in Sections 4.2(1)(d) and 4.2(1)(e) have been satisfied;

 

	
  

	
(g)

	
the applicable Las Cruces Companies and Inmet in respect of the Las Cruces Companies shall have provided full releases releasing each applicable Member of the Leucadia Group from all claims arising from any cause, matter or thing arising in respect of any of the Las Cruces Companies at or prior to the Time of Closing and terminating all Contracts between any of the Las Cruces Companies and any Member of the Leucadia Group;

 

	
  

	
(h)

	
the purchase of the Leucadia Note shall be completed at the Closing Time in accordance with the terms of the Leucadia Note Purchase Agreement;

 

	
  

	
(i)

	
the Registration Rights Agreement shall be amended effective as of the Closing Time to provide that the Inmet Consideration Shares shall be Eligible Securities as defined therein;

 

	
  

	
(j)

	
the Leucadia Guarantee shall be terminated effective as of the Closing Time and Leucadia shall be relieved of all liability thereunder;

 

	
  

	
(k)

	
the Shareholders Agreement shall be terminated by all parties thereto effective as of the Closing Time and the Members of the Leucadia Group shall be relieved of all liability thereunder;

 

	
  

	
(l)

	
all necessary steps and proceedings shall have been taken to permit the Inmet Consideration Shares to be duly issued to and registered in the name of MK Resources; and

 

	
  

	
(m)

	
Inmet shall have delivered to the Seller Parties a favourable opinion of counsel to Inmet as to matters governed by the laws of Canada (including, without limitation, as to the free tradability of the Inmet Consideration Shares after the four-month hold period) and in form and substance acceptable to the Seller Parties, acting reasonably and in good faith;

 

(2)          If any term, covenant or condition to be performed, satisfied or complied with by Inmet for the benefit of the Seller Parties shall not have been performed or complied with in all material respects by the Termination Date, and such failure to perform, satisfy or comply would give rise to the failure of any of the conditions set forth in Section 4.1(1), the Seller Parties may, without limiting any other right that they may have, at their sole option, either:

 

  

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(a)

	
terminate this Agreement by notice to Inmet and, in such event, each of the Seller Parties shall be released from all obligations hereunder; or

 

	
  

	
(b)

	
waive compliance with any such term, covenant or condition in whole or in part on such terms as may be agreed upon without prejudice to any of their rights of termination in the event of non-performance of any other term, covenant or condition in whole or in part.

 

4.3                      Procedure for Satisfaction of the Conditions

 

                           Each of the Parties undertakes to use all commercially reasonable endeavours to ensure the satisfaction of the conditions set out in Sections 4.1 and 4.2 over which it has control as promptly as possible.

 

4.4                      Termination; Effect of Termination

 

(1)           If the Closing Date does not occur on or before the Termination Date this Agreement shall automatically terminate at 11:59 p.m. (Eastern Standard Time) on the Termination Date.

 

(2)           If Inmet enters into, or agrees to enter into any amalgamation, merger, plan of arrangement, or other business combination or similar transaction which would reasonably be expected to result in a Material Adverse Change, the Seller Parties may, without limiting any other right that they may have, at their sole option, terminate this Agreement by notice to Inmet and, in such event, each of the Seller Parties shall be released from all obligations hereunder.

 

(3)           In the event of the termination of this Agreement as provided under this Section 4.4, Sections 4.1(2)(a) or 4.2(2)(a), this Agreement shall forthwith become null and void, except for Sections 7.1 (other than 7.1(1)) and 7.6 of this Agreement, which shall survive after the termination.

 

4.5                      Specific Performance

 

   In the event of any actual or threatened breach by any of the Parties of any of the covenants or agreements in this Agreement, the Party who is or is to be thereby aggrieved shall have the right to seek specific performance and injunctive relief giving effect to its rights under this Agreement, in addition to any other rights and remedies at law or in equity, subject to Section 6.4. The Parties agree that any such breach or threatened breach would cause irreparable injury, that the remedies at law for any such breach or threatened breach, including monetary damages, are inadequate compensation for any loss and that any defense in any action for specific performance that a remedy at law would be adequate is waived.

 

  

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ARTICLE 5 - COVENANTS

 

5.1                      Continued Securities Compliance

 

   Inmet will use its commercially reasonable efforts to maintain its status as a reporting issuer in good standing and not in default within the meaning of the Securities Act (Ontario) and other applicable Canadian Securities Laws, and to maintain the listing of the Inmet common shares on the Toronto Stock Exchange, until Leucadia ceases to own, directly or indirectly, at least 5% of the Inmet common shares.  (Nothing in this Section shall prohibit Inmet from entering into a merger, reorganization, or other transaction which has been approved by the Inmet Board in the exercise of its fiduciary duties.)

 

5.2                      Tax Status

 

   For as long as Leucadia or an Affiliate is a shareholder of Inmet, if Inmet becomes aware that it is a PFIC or a CFC, Inmet shall promptly notify Leucadia.  Inmet shall provide all information reasonably requested by Leucadia from time to time in order to determine whether Inmet is a PFIC or a CFC.

 

ARTICLE 6 - INDEMNIFICATION

 

6.1                      Seller Parties’ Indemnities

 

Subject to the limitations set out in Sections 6.4 and 6.5, each of the Seller Parties shall jointly and severally indemnify and save harmless Inmet from and against all Losses directly or indirectly suffered by it resulting from any breach of any covenant of the Seller Parties contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Sections 3.1 at any time that such covenant, representation or warranty, as the case may be, is in effect hereunder provided that the claim for indemnification is asserted by written notice during such period.

 

6.2                      Indemnity of Inmet

 

   Subject to the limitations set out in Sections 6.4 and 6.6, Inmet shall indemnify and save harmless the Seller Parties from and against all Losses directly or indirectly suffered by either of them resulting from any breach of any covenant of Inmet contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Section 3.2 at any time that such covenant, representation or warranty, as the case may be, is in effect hereunder, provided that the claim for indemnification is asserted by written notice during such period.

 

6.3                      Commissions

 

   The Seller Parties shall indemnify and save harmless Inmet from and against any Claims whatsoever for any commission or other remuneration payable or alleged to be payable to any Person in respect of the sale and purchase of the Purchased

 

  

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Shares where such Person purports to act or has acted for either of the Seller Parties in connection with the sale of the Purchased Shares.  Inmet shall indemnify and save harmless the Seller Parties from and against any Claims whatsoever for any commission or other remuneration payable or alleged to be payable to any Person in respect of the sale and purchase of the Purchased Shares, where such Person purports to act or has acted for Inmet in connection with the sale of the Purchased Shares.

 

6.4                      Exclusive Remedies

 

   Following the Closing, the rights of indemnification set out in this Article 6  and Section 4.5 shall be the sole and exclusive remedies of the Parties under or in connection with this Agreement and shall be exclusive of all other remedies to which such parties would otherwise be entitled at law or in equity.  (For greater certainty, only the remedies set out in Article 4 and Article 7  will be available, to the extent they apply, if the Closing does not occur.)

 

6.5                      Limitation of Liability of the Seller Parties

 

(1)           Neither of the Seller Parties shall have any liability in respect of any Claim made by Inmet arising out of any breach of any covenant of the Seller Parties contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Sections 3.1 or any Claim for indemnification hereunder unless and until the liability of the Seller Parties in respect of that Claim, when aggregated with the liability of the Seller Parties in respect of all other such Claims exceeds $2,000,000, in which event the Seller Parties shall be liable for the full amount of such Claims.

 

(2)           The aggregate liability of the Seller Parties in respect of all Claims under this Agreement shall not in any circumstances exceed $120,000,000.

 

6.6                      Limitation of Liability of Inmet

 

(1)           Inmet shall not have any liability in respect of any Claim made by the Seller Parties arising out of any breach of any covenant of Inmet contained in this Agreement or from any inaccuracy or misrepresentation in any representation or warranty set forth in Section 3.2 or any Claim for indemnification hereunder unless and until the liability of Inmet in respect of that Claim, when aggregated with the liability of Inmet in respect of all other such Claims, exceeds $2,000,000, in which event Inmet shall be liable for the full amount of such Claims.

 

(2)           The aggregate liability of Inmet in respect of all Claims under this Agreement shall not in any circumstances exceed $120,000,000.

 

6.7                      Notice of and Defence of Third Party Claims

 

(1)           If an Indemnified Party receives written notice of the commencement or assertion of any Third Party Claim in respect of which the Indemnified Party believes the Indemnifying Party has liability under this Agreement, the

 

  

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Indemnified Party shall give the Indemnifying Party reasonably prompt written notice thereof, but in any event no later than thirty (30) days after receipt of the initial notice of such Third Party Claim, unless a shorter procedural period applies in respect of such Third Party Claim, in which case notice shall be given before the expiry of one half of such period.  To the extent reasonable and practical given the information readily available to the Indemnified Party, such notice to the Indemnifying Party shall describe the Third Party Claim in reasonable detail and shall indicate (without prejudice to the Indemnified Party’s rights) the estimated amount of the Loss that has been or may be sustained by the Indemnified Party in respect thereof, provided that the failure to give such notice within such time period shall not reduce the Indemnified Party’s rights hereunder, except to the extent of any actual prejudice suffered as a result of such failure.

 

(2)           The Indemnifying Party shall have the right, by giving notice to that effect to the Indemnified Party not later than thirty (30) days after receipt of such notice of such Third Party Claim and subject to the rights of any insurer or other Third Party having potential liability therefor, to elect to assume the defence of any Third Party Claim at the Indemnifying Party’s own expense and by the Indemnifying Party’s own counsel, provided that the Indemnifying Party shall not be entitled to assume the defence of any Third Party Claim: (i) alleging any criminal or quasi-criminal wrongdoing (including fraud), (ii) which impugns the reputation of the Indemnified Party or (iii) where the Third Party making the Third Party Claim is a Governmental Body.

 

(3)           Prior to settling or compromising any Third Party Claim in respect of which the Indemnifying Party has the right to assume the defence, the Indemnifying Party shall obtain the consent of the Indemnified Party regarding such settlement or compromise, which consent shall not be unreasonably withheld or delayed by the Indemnified Party.  In addition, the Indemnified Party shall be entitled to participate in (but not control) the defence of any Third Party Claim (and in so doing may retain its own counsel) at the cost and expense of the Indemnified Party.  If the Indemnified Party does not consent to a settlement or compromise in respect of a Third Party Claim proposed by the Indemnifying Party, and the Losses in respect of such Third Party Claim, as determined by a final, non-appealable order or judgment, exceed the amount of Losses under the proposed settlement or compromise (the “Settlement Amount”), then the indemnification to which the Indemnified Party is entitled under this Article 6 in respect of such Third Party Claim shall equal the Settlement Amount.

 

(4)           With respect to any Third Party Claim in respect of which the Indemnified Party has given notice to the Indemnifying Party pursuant to this Section 6.7 and in respect of which the Indemnifying Party is not entitled to assume the defence or has not elected to do so, the Indemnifying Party may participate in (but not control) such defence assisted by counsel of its own choosing at the Indemnifying Party’s sole cost and expense and, prior to settling or compromising any such Third Party Claim, the Indemnified Party shall obtain the consent of the

 

  

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Indemnifying Party regarding such settlement or compromise, which consent shall not be unreasonably withheld or delayed by the Indemnifying Party.

 

(5)           At their own cost and expense, the Indemnifying Party and Indemnified Parties shall use all reasonable efforts to make available to the Party which is undertaking and controlling the defence of any Third Party Claim:

 

	
  

	
(a)

	
those employees whose assistance, testimony or presence is necessary to assist such Party in evaluating and in defending any Third Party Claim; and

 

	
  

	
(b)

	
all documents, records and other materials in the possession of such Party reasonably required by such Party for its use in defending any Third Party Claim,

 

and shall otherwise co-operate with the Party defending such Third Party Claim.

 

(6)           If the Indemnifying Party elects to assume the defence of any Third Party Claim as provided in Section 6.7(2) and fails to take reasonable steps necessary to defend diligently such Third Party Claim within 30 days after receiving notice from the Indemnified Party that the Indemnified Party bona fide believes on reasonable grounds that the Indemnifying Party has failed to take such steps, the Indemnified Party may, at its option, elect to assume the defence of and to compromise or settle the Third Party Claim assisted by counsel of its own choosing and the Indemnifying Party shall be liable for all reasonable costs and expenses paid or incurred in connection therewith; provided, that prior to settling or compromising any such Third Party Claim, the Indemnified Party shall have obtained the consent of the Indemnifying Party regarding such settlement or compromise, which consent shall not be unreasonably withheld  or delayed by the Indemnifying Party.

 

(7)           Upon making a full Loss Payment, the Indemnifying Party shall, subject to the rights of any insurers and to the extent of such Loss Payment, be subrogated to all rights of the Indemnified Party against any third party in respect of the Loss to which the Loss Payment relates.

 

(8)           Any Person providing indemnification pursuant to the provisions of this Article 6 is referred to herein as an “Indemnifying Party”, and any Person entitled to be indemnified pursuant to the provisions of this Article 6 is referred to herein as an “Indemnified Party”.

 

6.8                      Calculation of Damages

 

   The Losses suffered by any Party hereto shall be calculated after giving effect to the receipt by the Indemnified Party of any recoveries from third parties, including insurance recoveries (it being understood and agreed that the Indemnified Parties shall not be required to seek insurance recoveries in respect of Losses to be indemnified hereunder), and shall take into account any Tax effects.  In the event any

 

  

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insurance proceeds are actually realized by an Indemnified Party subsequent to the receipt by such Indemnified Party of a Loss Payment hereunder in respect of the Claims to which such insurance proceeds relate, appropriate refunds shall be made promptly to the Indemnifying Party regarding the amount of such Loss Payment.

 

6.9                      Mitigation

 

   The Seller Parties and Inmet shall cooperate with each other with respect to resolving any Claim or Loss with respect to which one Party is obligated to indemnify the other Party hereunder, including by making commercially reasonable efforts to mitigate or resolve any such Claim or Loss.

 

6.10                      No Duplication

 

   Notwithstanding anything in this Agreement, any amounts payable pursuant to the indemnification obligations under this Article 6 shall be paid without duplication, and in no event shall any Party be indemnified under different provisions of this Agreement for the same Losses.

 

6.11                      Tax Treatment of Indemnity Payments

 

   The Seller Parties and Inmet agree to treat any indemnity payment made pursuant to this Article 6 as an adjustment to the purchase price for all income tax purposes.

 

ARTICLE 7 - GENERAL

 

7.1                      Public Announcements and Confidential Information

 

(1)           No public announcement or press release concerning the sale and purchase of the Purchased Shares shall be made by any of the Seller Parties or Inmet except as may be required by Applicable Law or the rules of any stock exchange on which their respective shares are listed.  Each Party Group will advise and consult with the other prior to any such required announcement or disclosure.

 

(2)           The Seller Parties shall, and shall procure that each Member of the Leucadia Group shall, keep all Confidential Information confidential and will not, without the prior written consent of Inmet (subject to Section 7.1(3)), disclose in any manner, in whole or in part, or use, directly or indirectly, any Confidential Information for any purpose except in connection with the transactions contemplated by this Agreement. The Seller Parties shall advise the shareholders, directors, officer, employees, agents, advisors and other representatives of the Members of the Leucadia Group who possess Confidential Information of the obligation to keep such Confidential Information confidential.

 

(3)           The Seller Parties may disclose Confidential Information if required by Applicable Law or requested by legal process or regulatory authority to do so. If any of the Seller Parties is required by Applicable Law or requested by legal

 

  

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process or regulatory authority to disclose any Confidential Information, such Party will give prompt notice to Inmet of that fact so that Inmet may seek a protective order or other remedy or waive compliance with this Agreement and, further, such Party will co-operate in any efforts to obtain a protective order or other remedy at the expense of the Party or Parties such protective order or remedy.  If a protective order or other remedy is not obtained or compliance with this Agreement is waived, such Party will disclose only that portion of the Confidential Information which is required or requested.

 

(4)           Each of the Seller Parties and Inmet acknowledges that the other Party Group may not have an adequate remedy at law for damages and would be irreparably harmed if the covenants contained in this Section 7.1 are not performed.  Accordingly, the Parties agree that, in addition to any other remedies they may have in law or equity, the other Party Group is entitled to injunctive relief to prevent breaches of, and to specifically enforce, this Section 7.1.

 

7.2                      Information for Reporting Requirements

 

   Following the Closing Inmet shall use reasonable commercial effects to provide any information with respect to Inmet that may be reasonably required by Leucadia to enable it to comply with the accounting and disclosure requirements of the SEC as in effect from time to time, which information shall be provided to Leucadia promptly upon request therefor (such information shall be provided without charge if it is information prepared by Inmet in the ordinary course, and at Leucadia’s cost, if such information is not normally prepared by Inmet, including reasonable compensation for management time).  Inmet will advise Leucadia prior to taking any changes to its capitalization which reasonably could be expected to raise Leucadia’s interest in Inmet to 20% or more (or such lower percentage such that Leucadia would be required to provide information as to Inmet in order for Leucadia to be in compliance with the SEC requirements under Applicable Law at the relevant time), and, prior to effecting or agreeing to effect any such changes to Inmet’s capitalization, Inmet will permit Leucadia to reduce its interest in Inmet below the relevant threshold or, to the extent such reduction is not possible at the relevant time, delay the proposed change in Inmet’s capitalization until such time as the reduction of Leucadia’s interest can be completed.

 

7.3                      Further Assurances

 

   Each of the Parties shall from time to time execute and deliver all such further documents and instruments and do all acts and things as any other Party may, either before or after the Closing Date, reasonably require to effectively carry out or better evidence or perfect the full intent and meaning of this Agreement.

 

7.4                      Time of the Essence

 

   Time shall be of the essence of this Agreement.

 

  

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7.5                      Dispute Resolution

 

   When any dispute arises, management of each of the Parties shall meet and confer in a good faith effort to resolve the same.  If the dispute cannot be resolved within two weeks,  the Chief Executive Officer of each of the Parties shall meet and confer in a good faith effort to resolve the dispute.  If the dispute cannot be resolved within two weeks from the time it is referred to the Chief Executive Officers, the Parties agree to try in good faith to settle the dispute by mediation administered by the American Arbitration Association under its Commercial Mediation Procedures before resorting to arbitration, litigation or some other dispute resolution procedure.

 

7.6                      Fees and Expenses

 

   Each of the Parties shall pay their respective legal, accounting and other costs and expenses incurred in connection with the preparation, execution and delivery of this Agreement and all documents and instruments executed pursuant hereto and any other costs and expenses whatsoever and howsoever incurred.

 

7.7                      Benefit of the Agreement

 

   This Agreement shall enure to the benefit of and be binding upon the respective successors and permitted assigns of the Parties.

 

7.8                      Invalidity of Provisions

 

   Each of the provisions contained in this Agreement is distinct and severable and a declaration of invalidity or unenforceability of any such provision or part thereof by a court of competent jurisdiction shall not affect the validity or enforceability of any other provision hereof.  To the extent permitted by Applicable Law, the Parties waive any provision of law which renders any provision of this Agreement invalid or unenforceable in any respect.

 

7.9                      Entire Agreement

 

   This Agreement, together with the Transaction Documents and the Registration Rights Agreement, constitute the entire agreement between the Parties with respect to the subject matter hereof and cancel and supersede any prior understandings and agreements between the Parties with respect thereto.  There are no representations, warranties, terms, conditions, undertakings or collateral agreements, express, implied or statutory, between the Parties other than as expressly set forth in this Agreement.

 

7.10                    Amendments and Waiver

 

   No modification of or amendment to this Agreement shall be valid or binding unless set forth in writing and duly executed by the Parties and no waiver of any breach of any term or provision of this Agreement shall be effective or binding unless made in writing and signed by the Party purporting to give the same and, unless otherwise provided, shall be limited to the specific breach waived.

 

  

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7.11                    Assignment

 

   This Agreement may not be assigned by a Party without the written consent of the other Parties, except to an Affiliate of the assigning Party, provided that such Affiliate enters into a written agreement with the other Parties to be bound by the provisions of this Agreement in all respects and to the same extent as the assigning Party is bound and provided that the assigning Party shall continue to be bound by all the obligations hereunder as if such assignment had not occurred and perform such obligations to the extent that such Affiliate fails to do so.  Notwithstanding the foregoing, Inmet shall not be relieved of its obligation to issue the Inmet Consideration Shares following any permitted assignment by Inmet hereunder.

 

7.12                    Notices

 

   Any demand, notice or other communication to be given in connection with this Agreement shall be given in writing and shall be given by personal delivery or by facsimile addressed to the recipient as follows:

 

To Leucadia or MK Resources:

 

Leucadia National Corporation

315 Park Avenue South

New York, New York, 10010

Attention:      President

Facsimile:      (212) 598-3245

 

with a copy to:

 

Weil, Gotshal & Manges LLP

767 5th Avenue

New York, New York  10153

Attention:      Andrea A. Bernstein

Facsimile:      (212) 310-8007

 

To Inmet:

 

Inmet Mining Corporation

330 Bay Street, Suite 1000

Toronto, Ontario

M5H 2S8

Attention:      Steve Astritis

         Vice-President, General Counsel

Facsimile:      (416) 368-4692

 

  

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with a copy to:

 

Torys LLP

Suite 3000

79 Wellington Street West

Toronto, Ontario

M5K 1N2

Attention:      Chris Fowles

Facsimile:      (416) 865-7380

 

or to such other address, individual or facsimile number as may be designated by notice given by one Party to another.  Any demand, notice or other communication given by personal delivery shall be conclusively deemed to have been given on the day of actual delivery thereof and, if given by electronic communication, on the day of transmittal thereof if given during the normal business hours of the recipient and on the Business Day during which such normal business hours next occur if not given during such hours.

 

7.13                   Governing Law

 

  This Agreement shall be governed by and construed in accordance with the laws of the State of New York.

 

7.14                   Attornment

 

  The federal courts sitting in New York County shall have jurisdiction to entertain any action arising under this Agreement and each of the Parties to this Agreement hereby attorns to the jurisdiction of the federal courts sitting in New York County.

 

7.15                    Counterparts and Faxed Signatures

 

  This Agreement may be executed in two or more counterparts, all of which, taken together, shall be regarded as one and the same Agreement.  Counterparts may be executed in faxed form and the Parties adopt any signatures received by a receiving fax machine as original signatures of the Parties, provided, however, that any Party providing its signature in such a manner shall promptly forward to the other Parties an original of the signed signature page of this Agreement which was so faxed.

 

  

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IN WITNESS WHEREOF the parties have executed this Agreement.

 

	  	
INMET MINING CORPORATION

	  	  
	
Per:

	
“Steve Astritis”

	  	
Steve Astritis, Vice-President, General Counsel and Secretary

	  	  
	  	  
	  	
LEUCADIA NATIONAL CORPORATION

	  	  
	
Per:

	
“Thomas E. Mara”

	  	
Thomas E. Mara, Executive Vice-President

	  	  
	  	  
	
MK RESOURCES LLC

	  	  
	
Per:

	
“Thomas E. Mara”

	  	
Thomas E. Mara, President

	  	  
	  	  

	  	
INMET FINANCE COMPANY SARL

	  	  
	
Per:

	
“Emmanuel Reviellaud”

	  	
Emmanuel Reviellaud, Manager

	  	  
	  	  

 

  

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