EXHIBIT 4.59
FINANCIAL ADVISORY SERVICES AGREEMENT WITH
ENDEAVOUR FINANCIAL LTD.
[ENDEAVOUR FINANCIAL LETTERHEAD]
VANCOUVER TORONTO XXXXXX TOWN LONDON
November 10, 2003
Xx. Xxxxxx Xxxxxx PRIVATE AND CONFIDENTIAL
IMA Exploration Inc.
Suite 000 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX
Xxxxxx X0X 0X0
Dear Xxx,
RE: PROPOSAL FOR FINANCIAL ADVISORY SERVICES
Following our recent discussions, I am pleased to provide the following terms
under IMA Exploration Inc. ("IMA") will retain Endeavour Financial Ltd.
("Endeavour") to provide general corporate financial advice with respect to its
strategic direction and corporate development.
During the course of this engagement, Endeavour will work closely with IMA
management to identify and implement various Transactions, which may include,
but are not limited to:
o Conventional equity/debt finance; and/or
o Convertible debt; and/or
o Subordinated / Mezzanine Finance; and/or
o Project acquisitions or divestitures; and/or
o Corporate mergers and acquisitions, or similar business combinations
involving IMA or a subsidiary or division thereof.
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DUTIES
Endeavour will act as financial advisor to IMA and as such will provide IMA with
advice and assistance regarding the solicitation, structuring, negotiating and
closing of a Transaction(s). It is understood that the specific duties may vary
with the type of Transaction undertaken, but in general Endeavour expects to
provide the following progression of services:
1. Assisting IMA in sourcing and evaluating potential sources of debt and
equity, or other financing as required to permit IMA to continue its
mineral property acquisition and exploration activities;
2. Assist IMA with undertaking detailed technical evaluation of any
assets to be acquired, whether in-house or on-site, including a
comprehensive review of operating histories and any geological
material and reserve/resource estimates.
3. If appropriate, review relevant corporate material of the
assets/company to be acquired, including the status of relevant
corporate agreements and all available financial data.
4. Based on the foregoing review, prepare financial models for the
businesses and assess the debt capacity of IMA under various scenarios
(including proforma post-acquisition scenarios). Identify alternate
debt scenarios and examine various corporate strategies opposite each
debt scenario to determine the impact on future corporate cash flows.
5. Based on a review of the projected cashflows and discussions with
management, identify strategic options and recommend to IMA a course
of action and financing strategy.
6. Advise IMA management on payment structure, particularly with respect
to the timing of payments, repatriation of funds, and repatriation
regulations and procedures.
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7. In terms of a debt financing Transaction, determine prospective
lenders that currently have both the lending and risk profile capacity
to provide funds for the particular Transaction contemplated and
manage and lead the solicitation process.
8. Assist IMA with preparing the appropriate marketing document (i.e. an
Information Memorandum/Financing Plan), which will be used to solicit
interest from potential lenders, investors, acquirers or merger
partners.
9. In conjunction with IMA management, review the most favoured
candidates and evaluate each as a component of XXX's overall business
strategy. Select the candidate(s) or lenders that would produce the
most optimal business Transaction.
10. Initiate discussions with the qualified candidate(s) and co-ordinate
all subsequent contacts, including arrangement for signature of
Confidentiality Agreements, co-ordinate the dissemination of
information memoranda and other materials.
11. If appropriate, assist IMA with preliminary due diligence it will need
to undertake on a counter-party.
12. In concert with IMA management, negotiate the initial terms of the
proposed Transaction(s) and assist in the drafting of a Letter of
Intent with a view to progressing to a Definitive Agreement, or, in
the case of a debt finance transaction, negotiate and progress the
signing of a Commitment Letter from the preferred lender.
13. Establish a detailed timetable and work schedule with IMA and the
selected candidate(s) and/or financial institution. This work schedule
will include a comprehensive schedule of tasks, required documentation
and related Transaction(s) duties, as well as the delegation of
responsibility to all parties involved.
14. As appropriate, assist IMA and its lawyers with completing a detailed
review of various drafts of legal agreements, loan documentation and
ancillary
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agreements to ensure the agreed Transaction structure is accurately
reflected in the documentation and to ensure IMA's future corporate
flexibility is not compromised or constrained by these agreements.
15. As appropriate, provide assistance with negotiating and closing the
selected Transaction(s).
COVENANTS
Endeavour covenants with IMA that at all times Endeavour will act on a basis
that is fair and reasonable and exercise its powers and discharge its duties
under this agreement honestly, in good faith and in what reasonably appears to
Endeavour to be the best interests of IMA and, in connection therewith, shall
exercise the degree of care, diligence and skill that a reasonably prudent
financial advisor would exercise in comparable circumstances. Further, Endeavour
will comply with applicable securities laws and regulations in the jurisdictions
in which it is representing IMA; provided that IMA, on its part, provides all
information and takes such other action as shall not otherwise be available to,
or in the control of, Endeavour, which is required for such compliance.
ACKNOWLEDGEMENT
IMA acknowledges that:
(i) Endeavour has, or is likely to have, individual, corporate or
institutional clients who are shareholders of IMA (the "Clients");
(ii) Endeavour acts, and will act, as consultant or financial advisor to
other companies ("Competitors") in the same business as IMA; and
(iii)The interests of the Clients or the Competitors may come into conflict
with those of IMA.
Endeavour shall be under no liability to IMA for, or as a result of, its acting
as consultant or financial advisor to Competitors and Clients, or the manner in
which it resolves and
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conflicts of interest deriving therefrom, unless Endeavour has acted in any
manner which is dishonest or grossly negligent.
COMMERCIAL TERMS
Endeavour's remuneration for the above services is as follows:
1. A monthly Work Fee in the amount of US$5,000 invoiced in advance,
payable to Endeavour by IMA in cash commencing on the date of execution of
this mandate.
2. A Milestone Fee of US$100,000 payable to Endeavour by IMA in cash or
free trading shares upon XXX's execution of a Commitment Letter, Letter of
Intent, or other notice of formal commitment from a prospective lender or
counter-party to conclude a significant Transaction.
3. A Success Fee payable by IMA to Endeavour, in cash or free trading
shares, at the time of closing the Transaction(s), payable as follows:
(i) In the event of an acquisition of an asset or company (in whole or
in part), two percent (2%) of the counter party's Enterprise Value defined
as the cash equivalent value of any shares exchanged (priced at the average
of the 10 day price prior to the Transaction closing date) plus the cash
equivalent value of any short or long term debt, less cash; and any upfront
or committed payment made by IMA or a subsidiary thereof, and/or any
investment made or committed to be made over any future period by IMA or a
subsidiary thereof, and/or any guarantee made or subsequently committed to
be made by IMA or a subsidiary thereof within twelve (12) months of closing
a Transaction(s).
(ii) In the event of a divestiture of an asset or company (in whole or
in part), two percent (2%) of the Enterprise Value and any up-front or
committed payment made by the acquirer, and/or any investment made or
committed to be made over any future period by the acquirer, and/or any
guarantee made or subsequently committed to be made by the acquirer within
twelve (12) months of closing a Transaction(s).
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(iii) In the event of a merger or similar business combination, two
percent (2%) of the Enterprise Value of IMA or the relevant subsidiary.
(iv) In the event of an equity financing, one percent (1%) of the
gross proceeds of any equity offering provided to IMA and/or its
subsidiaries or affiliated companies
(v) In the event of a debt financing, two and one half percent (2.5%)
of the principal amount of any debt provided or committed to be provided to
IMA and/or its subsidiaries, which shall include any amounts provided as
part of an overrun facility and the refinancing or assumption of any
existing debt.
All or part of the amounts payable to Endeavour pursuant to this agreement may
be subject to tax (including goods and services tax and applicable provincial
sales taxes). Where such taxes are applicable, an additional amount equal to the
amount of such taxes owing will be charged to and be paid by IMA. Any amounts
due and payable hereunder and outstanding for in excess of forty-five (45)
calendar days shall accrue at the prevailing LIBOR one month fixing rate for
CDN$ plus six percent (6%), compounding on a monthly basis, both before and
after judgment.
SEAT ON THE IMA BOARD OF DIRECTORS
During the term of this agreement, IMA will cause one nominee of Endeavour to be
nominated for election as a director of IMA in all management information
circulars prepared and circulated by management of IMA, and will solicit proxies
for the election of such nominee.
EXPENSES
Endeavour requires that all reasonable out of pocket costs, charges and
expenses, including travel, incurred by it in the performance of its obligations
under this mandate be reimbursed. Prior approval will be obtained before
incurring any expenses in excess of US$5,000.
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REPORTING REQUIREMENTS
Endeavour will report to IMA on a regular basis in such detail as IMA may
reasonably request in connection with Xxxxxxxxx's performance of its services
hereunder. IMA will provide to Endeavour such information, documents, data,
advice, opinions and representations as Endeavour may reasonably request
relating to any Transaction that is the subject of this agreement. IMA
represents and warrants that any information furnished to Endeavour will not
knowingly contain any untrue statement of a material fact, or knowingly omit a
material fact. IMA shall ensure that Endeavour is advised on a timely basis of
any material change that may be reasonably considered relevant to this
agreement.
CONFIDENTIALITY
Endeavour acknowledges that the business carried on by IMA and it subsidiaries
is an extremely competitive business and that disclosure of any confidential
information about the business or financial affairs of IMA and its subsidiaries
would place them at a competitive disadvantage. Endeavour shall use its
reasonable commercial efforts to preserve and protect the confidential nature of
any information concerning the business or financial affairs of IMA or any of
its dealings, transactions or affairs which may be disclosed to Endeavour by
employees, officers or agents of IMA during the duration of this agreement.
Without restricting the generality of the foregoing, Endeavour shall not:
(i) Disclose any of the aforesaid information to third parties without the
prior written consent of IMA, provided that such consent shall not be
required where the information is disclosed:
a). To the employees, officers, representatives, agents or professional
advisors of Endeavour to enable such persons to assist Endeavour in
providing consulting services to IMA hereunder;
b). To the employees, officers, agents or professional advisors of IMA or
such other persons as IMA management may designate;
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c). Pursuant to any law, statute or regulation, ordinance or
administrative, regulatory or judicial order; or
(ii) Use any of the aforesaid information for its own purpose or benefit or to
the detriment or intended probable detriment of IMA.
The foregoing covenants of Endeavour shall not apply to information which:
(i) Through no act or omission of Endeavour is or becomes generally known or
part of the public domain; (ii) Is furnished to others by IMA without
restriction on disclosure; or (iii) Is lawfully furnished to Endeavour by
a third party without Endeavour's knowledge of a breach of any restriction
on disclosure owed to IMA.
INDEMNITIES
Please see Schedule A attached hereto.
TERMINATION
If accepted, this agreement between Endeavour and IMA will be in effect for a
minimum period of twelve (12) months, and shall continue in force on a
month-to-month basis, subject to termination on thirty (30) days written notice.
However, IMA may terminate this agreement without prior notice for just cause,
which shall include:
(i) Endeavour committing an act of bankruptcy or becoming involved in any
fraud or dishonest or serious misconduct in circumstances that would, in
the reasonable opinion of IMA, make Endeavour unsuitable to act on behalf
of IMA; and
(ii) Endeavour failing to comply with any terms of this agreement with such
failure not being rectified within fifteen (15) days of receipt of notice
thereof from IMA.
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Endeavour may terminate this agreement without prior notice for just cause,
which shall include:
(i) IMA committing an act of bankruptcy or becoming involved in any fraud or
dishonest or serious misconduct in circumstances that would, in the
opinion of Endeavour, make representation of IMA by Endeavour unsuitable;
(ii) IMA failing to comply with the terms of this agreement with such failure
not being rectified within fifteen (15) days of receipt of notice from
Endeavour; and If this agreement is terminated for any reason, Endeavour
shall be entitled to receive, and IMA shall pay, Endeavour's fees and
reimbursable expenses to the date of termination.
TRANSACTIONS AFTER TERMINATION
In the event that, within eighteen (18) months of termination, a Transaction is
concluded with:
1. A party contacted by Endeavour or IMA, or one who has contacted Endeavour
or IMA during the term of this Agreement; or
2. Any party who is an affiliate of the foregoing; then Endeavour will be
entitled to the Success Fee as though no such termination had occurred.
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BINDING AGREEMENT
If you are in agreement with the terms of this proposal as outlined herein,
please indicate your agreement by signature below, at which time this proposal
shall become a binding agreement between the parties and shall be governed by
and construed in accordance with the laws of England.
Yours very truly,
ENDEAVOUR FINANCIAL LTD.
XXXXXX KEEP
Managing Director - Corporate Finance
AGREED AND ACCEPTED dated this 16 day of December, 2003 on behalf of:
IMA EXPLORATION INC.
/s/ XXXXXXX XXX /s/ XXXXXXXX XXXXX
-------------------------------------------
Name
CFO Director
-------------------------------------------
Title
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SCHEDULE A - INDEMNITY
IMA hereby agrees to indemnify and save Endeavour, its affiliates and their
respective directors, officers, employees and agents (collectively, the
"Indemnified Parties" and individually, an "Indemnified Party") harmless from
and against any and all losses, claims, actions, suits, proceedings, damages,
liabilities or expenses of whatsoever nature or kind, including any
investigation expenses incurred by any Indemnified Party, to which any
Indemnified Party may become subject by reason of the performance of
professional services rendered to IMA hereunder.
This indemnity will not apply in the event and to the extent that a court of
competent jurisdiction in a final judgment shall determine that the Indemnified
Party was negligent, guilty of willful misconduct or was in breach of this
agreement.
In case any action is brought against an Indemnified Party in respect of which
indemnity may be sought against IMA, the Indemnified Party will give IMA prompt
written notice of any such action of which the Indemnified Party has knowledge
and IMA will undertake the investigation and defense thereof on behalf of the
Indemnified Party, including employment of counsel acceptable to such
Indemnified Party and make payment of all expenses.
No admission of liability and no settlement of any action shall be made without
the consent of IMA and the Indemnified Parties affected, such consent not to be
unreasonably withheld.
Notwithstanding that IMA will undertake the investigation and defense of any
action, an Indemnified Party will have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel will be at the expense of the Indemnified Party unless:
(a) Employment of such counsel has been authorized by IMA; or
(b) IMA has not assumed the defence of the action within a reasonable
period of time after receiving notice of the action; or
(c) The named parties to any such action include both IMA and the
Indemnified Party and the Indemnified Party shall have been advised by
counsel that there may be a conflict of interest between IMA and the
Indemnified Party; or
(d) There are one or more legal defences available to the Indemnified
Party which are different from or in addition to those available to
IMA.
IMA hereby constitutes Endeavour as trustee for each other Indemnified Party and
IMA under this paragraph with respect to such other Indemnified Parties and
Endeavour agrees to accept such trust and to hold and enforce such covenants on
behalf of such Indemnified Parties.
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