ASSET PURCHASE AGREEMENT BY AND AMONG MEDINA PROPERTY GROUP, LLC AND SIERRA RESOURCE GROUP, INC. Effective Date: April 23, 2010
EXHIBIT 10.01
CONFIDENTIAL
BY
AND AMONG
▇▇▇▇▇▇
PROPERTY GROUP, LLC
AND
SIERRA
RESOURCE GROUP, INC.
Effective
Date: April 23, 2010
CONFIDENTIAL
TABLE OF
CONTENTS
Page
|
ARTICLE I PURCHASE AND
SALE
|
1
|
|
1.1 Purchase of the
Assets
|
1
|
|
1.2 Purchase
Price
|
2
|
|
1.3 Excluded
Liabilities
|
2
|
|
1.4 Purchase Price
Allocation
|
2
|
|
1.5 Intentionally
Deleted
|
2
|
|
1.6 Third Party
Beneficiaries
|
3
|
| 1.7 NSR Obligations |
3
|
|
ARTICLE II
CLOSING
|
3
|
|
2.1
Closing
|
3
|
|
2.2 Seller Closing
Deliveries
|
3
|
|
2.3 Buyer Closing
Deliveries
|
3
|
|
2.4 Further
Assurances
|
4
|
|
ARTICLE III [INTENTIONALY
DELETED]
|
4
|
|
ARTICLE IV REPRESENTATIONS AND
WARRANTIES OF THE SELLER
|
4
|
| 4.1 Corporate Status | 4 |
| 4.2 Corporate Power and Authority | 4 |
| 4.3 Existing Condition | 4 |
| 4.4 Title to and Sufficiency of Properties | 5 |
| 4.5 Use of Assets | 5 |
| 4.6 Litigation | 5 |
| 4.7 Validity of Contemplated Transactions | 5 |
| 4.8 Consents | 6 |
| 4.9 Licenses and Permits | 6 |
| 4.10 Water Requirements | 6 |
| 4.11 Contracts and Commitments | 6 |
| 4.12 Environmental Matters | 6 |
| 4.13 Zoning | 7 |
| 4.14 Tax Liabilities | 7 |
| 4.15 Employee Benefit Matters | 8 |
| 4.16 Compliance with Applicable Laws | 8 |
| 4.17 Labor Matters | 8 |
| 4.18 Non-Foreign | 9 |
| 4.19 Patriot Act | 9 |
| 4.20 Non-Foreign Status | 9 |
| 4.21 No Undisclosed Liabilities | 9 |
| 4.22 Disclosure | 9 |
| ARTICLE V REPRESENTATIONS AND WARRANTIES OF THE BUYER | 9 |
|
5.1 Corporate
Existence
|
9
|
|
5.2 Corporate Power and
Authority
|
9
|
i
CONFIDENTIAL
TABLE OF
CONTENTS
(continued)
Page
|
5.3 Validity of Contemplated
Transactions
|
9
|
|
5.4 No
Conflicts
|
10
|
|
5.5 Ability to Close
|
10
|
|
5.6
Consents
|
10
|
|
5.7 Brokers' Fees
|
10
|
|
5.8 Patriot Act
|
10
|
|
5.9 Information on
Buyer
|
11
|
| ARTICLE VI CONDITIONS PRECEDENT TO THE CLOSING |
11
|
|
6.1 Conditions Precedent to
Buyer's Obligations
|
11
|
|
6.2 Conditions Precedent to
Seller's Obligations
|
12
|
|
ARTICLE VII COVENANTS OF THE
PARTIES
|
12
|
|
7.1 Confidentiality
|
12
|
|
7.2 Due
Diligence
|
12
|
|
7.3 Access to
Information
|
13
|
|
7.4 Capitalization of Buyer;
Protection of Shares Consideration
|
13
|
| 7.5 Reasonable Efforts and Cooperation; Accomplish Transaction | 13 |
| 7.6 General Conduct | 14 |
| 7.7 Other Restrictions | 14 |
| 7.8 Further Restrictions | 15 |
| ARTICLE VIII POST CLOSING MATTERS AND COVENANTS | 15 |
| 8.1 Access to Records and Persons | 15 |
| 8.2 Water Rights | 15 |
| 8.3 Recording Fees | 16 |
| 8.4 Merger in Agreement | 16 |
| ARTICLE IX TERMINATION | 16 |
| 9.1 Termination | 16 |
| ARTICLE X INDEMNIFICATION | 16 |
| 10.1 Indemnification Obligation of the Seller | 16 |
| 10.2 Indemnification Obligation of Buyer | 17 |
| 10.3 Claims Procedures for Indemnification | 18 |
| 10.4 Aggregate Liability | 19 |
| 10.5 Exclusivity | 19 |
| ARTICLE XI MISCELLANEOUS | 19 |
| 11.1 Expenses | 19 |
| 11.2 Contents of Agreement; Parties in Interest | 19 |
| 11.3 Assignment and Binding Effect | 20 |
| 11.4 Waiver | 20 |
| 11.5 Notices | 20 |
|
11.6 No Benefit to
Others
|
20
|
|
11.7 Schedules and
Exhibits
|
20
|
ii
CONFIDENTIAL
TABLE OF
CONTENTS
(continued)
Page
| 11.8 Severability | 20 |
| 11.9 Cooperation | 20 |
| 11.10Counterparts | 21 |
| 11.11 Governing Law; Venue | 21 |
| 11.12 Time is of the Essence | 21 |
|
11.13 Delivery by
Facsimile
|
21
|
|
11.14
Publicity
|
21
|
SCHEDULES AND
EXHIBITS
Schedules
Schedule 1.1a Mining Claims and Mill
Sites
Schedule 1.1b Machinery, Equipment,
Etc.
Exhibits
Exhibit A Form of Deed and ▇▇▇▇ of Sale
Exhibit B State of Arizona & Federal
Permits
Exhibit C Water Rights
Exhibit D Bylaws of Buyer
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CONFIDENTIAL
THIS ASSET PURCHASE AGREEMENT
(this “Agreement”) is
made and entered into on this 23th day of April 2010 (the “Effective Date”), by and
between ▇▇▇▇▇▇ Property Group, LLC, a Florida limited liability company (the
“Seller”) and Sierra
Resource Group, Inc., a Nevada corporation (the “Buyer”).
Preliminary
Statements
WHEREAS, the Chloride Copper
Project, located near Kingston, Arizona, is a former copper producer comprised
of a mineral deposit and some infrastructure, including (i) a small open pit
mine, (ii) an SX/EW plant, (iii) a ▇▇▇▇▇ pad with mineralized material for heap
leaching, (iv) a pad with tailings from previous mining and processing, (v)
three small low grade stockpiles, and (vi) mine infrastructure including some
buildings, office trailer and equipment, which may have to be repaired or
replaced (the “Mine”).
WHEREAS, the Seller is
conducting work to assess the economics of putting the Mine back into production and
is the owner of certain permits, rights and equipment with respect to the Mine
which the Buyer is interested in purchasing.
WHEREAS, the Buyer is a
publicly traded entity.
WHEREAS, the Buyer wishes to
purchase the Assets (as defined below) for the purchase price set forth herein
and upon and subject to the terms and conditions hereinafter set
forth.
WHEREAS, the Buyer shall
assume no trade obligations, indebtedness of any kind, bank drafts or other
liabilities of the Seller, contingent or otherwise, unless specified
herein.
WHEREAS, in consideration of
the mutual agreements, representations, warranties, covenants and agreements
herein contained, and for other good and valuable consideration, the receipt and
sufficiency of all of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE
I
PURCHASE
AND SALE
1.1 Purchase
of the Assets. At the
Closing (defined below), on the terms and subject to the conditions set forth in
this Agreement, the Seller will validly and effectively, grant, sell, convey,
transfer, assign and deliver to the Buyer, free and clear of all liens, pledges,
security interests, charges, claims, restrictions and other encumbrances or
defects of title of any nature whatsoever, and the Buyer will purchase and
acquire from the Seller, an undivided eighty percent (80%) of Seller’s right,
title and interest, as of theClosing Date (defined below), in and to all of the
Seller’s properties and assets including, but not be limited to, those assets
set forth below relating to the Mine (collectively, the “Assets”):
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CONFIDENTIAL
The 37
unpatented lode mining claims, the 14 unpatented mill sites, and the processing
equipment and other property, excluding the Retained Interest, described on
Schedules 1.1(a) and 1.1(b) all AS-IS and WHERE-IS, without express or implied
warranty of any kind, the permits and approvals described on Exhibit “B”,
excluding the Retained Interest (the “Permits”), and the water rights described
on Exhibit “C”, excluding the Retained Interest (the “Water Rights”). Buyer
acknowledges and agrees that the Assets do not include the remaining
non-dilutable, non-divisable twenty percent (20%) of Seller’s right, title and
interest (the “Retained Interest”), retained by Seller or its designee(s) or
assigns, which is specifically excluded from this Agreement.
1.2 Purchase
Price. In consideration for the purchase of the Assets set forth above,
the Buyer will pay Twelve Million Seven Hundred Fifty Thousand
(12,750,000) shares of common stock of Buyer issued to Seller or its
assignees (the “Shares Consideration” or the “Purchase Price”) as
follows:
(a) The
Shares Consideration shall be delivered at the Closing.
(b)
Notwithstanding anything to the contrary contained herein, the Parties recognize
that the sum of One Hundred Twenty Five Thousand Dollars ($125,000.00) is due
and owing to the original seller for the purchase of the equipment where the
Mine is located. This sum shall also be paid to Seller by Buyer at
Closing within 90 days, and is part of the Purchase Price.
1.3 Excluded
Liabilities. The
Buyer will assume no liabilities, obligations or commitments of the Seller,
including without limitation any trade obligations, bank debt, or claims of any
kind other than the NSR Obligations defined below. The Seller retains
all other liabilities that relate to the Mine or the Assets that result from or
arise out of any event, occurrence, transaction, action or inaction occurring
prior to the Closing, including without limitation liabilities under any
“employee pension benefit plan” or “employee welfare benefit plan” as those
terms are defined in Sections 3(1) and 3(2) of the Employee Retirement Income
Security Act of 1974 as amended, any product liability, warranty or other claims
arising out of or relating to any product manufactured, distributed or sold by
the Seller at any time before Closing, and any claims relating to patent or
trademark infringement, taxes, workers compensation, real estate or
environmental, health or safety matters.
1.4 Purchase Price
Allocation. The
Purchase Price shall be allocated among the equipment comprising the Assets in
accordance with an allocation schedule which will be prepared prior to the
Closing by the Buyer, subject to Seller approval and, which schedule will be
prepared in accordance with the United States Internal Revenue Code (the “Code”). In
connection with the determination of the foregoing allocation schedule, the
parties shall cooperate with each other and provide such information as any of
them shall reasonably request. The parties will each report the
federal, state and local and other tax consequences of the purchase and sale
contemplated hereby (including the filing of Internal Revenue Service Form 8594)
in a manner consistent with such allocation.
1.5 [Intentionally
Deleted]
2
CONFIDENTIAL
1.6 Third Party
Beneficiaries. This Agreement is
between the parties hereto only and nothing herein shall establish any
enforceable rights, legal or equitable, in any person other than the Buyer and
the Seller, including any employee of either such party.
1.7 NSR
Obligations. The following Net Smelter Return (“NSR”) obligations are
royalty payments made by a producer of metals based on gross metal production
from the property, less deduction of certain limited costs including and limited
to: smelting, refining, transportation and insurance costs, (if any), and is
paid Quarterly to the NSR recipients defined herein (copies of which have been
provided by Seller to Buyer and subject to which Buyer takes the Assets): (i)
Coach Capital LTD, 1% NSR on all ore for a period of 5 years (ii) MayLink (May
Lion, Inc., ▇▇▇▇-▇▇▇▇ ▇▇▇▇, ▇▇▇. ▇, #▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇) 7.5% NSR all
ore. Buyer shall assume all of the aforementioned payment obligations
upon the Closing.
ARTICLE
II
CLOSING
2.1 Closing. The
Closing (the “Closing”)
of the sale and purchase of the Assets shall occur no later than June 15, 2010
(such date, the “Closing
Date”) and shall take place at the offices of the Seller’s counsel,
▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, P. A., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇, ▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇, or at such other time and place as the parties may mutually
agree upon in writing. The Parties agree that the Assets shall be
transferred and conveyed by Seller to Buyer at Closing.
2.2 Seller Closing
Deliveries. At
the Closing and subject to the terms and conditions herein contained the Seller
shall deliver to the Buyer the following:
(i) its
executed counterpart to this Agreement;
(ii) an
executed general instrument of sale, and conveyance, assignment, transfer and
delivery with respect to all of the Assets, such instrument to be in the form of
Exhibit A
attached hereto (the “Deed and
▇▇▇▇ of Sale”). This does not include a transfer of real property or the
Retained Interest;
(iii) all of
the Assets;
(iv) releases
of all liens and other encumbrances on the Assets or bank payoffs letter with
respect thereto; and
(v) closing
documents as reasonably requested by the Buyer, including but not limited to a
Certificate of the President of the Seller certifying the accuracy of the
representations and warranties as of the Closing Date, board resolutions,
incumbency certificate, consents from any third parties or such other documents
as necessary and appropriate to consummate this transaction.
2.3 Buyer Closing
Deliveries.
(a) To the
Seller. At the Closing and subject to the terms and conditions
herein contained the Buyer shall deliver, or cause to be delivered, to the
Seller the following:
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CONFIDENTIAL
(i) its executed counterpart to this
Agreement;
(ii) stock certificate(s)
representing the Shares Consideration;
(iii) Any unpaid portion of the
Purchase Price and
(iv) closing documents as reasonably
requested by the Seller, including but not limited to a Certificate of the
President of the Buyer certifying the accuracy of the representations and
warranties as of the Closing Date, board resolutions, incumbency certificate,
consents from any third parties or such other documents as necessary and
appropriate to consummate this transaction..
2.4 Further
Assurances. The
Seller from time to time after the Closing, at the Buyer’s reasonable request
and at the Buyer’s expense, will execute, acknowledge and deliver to the Buyer
such other instruments of conveyance and transfer and will take such other
actions and execute and deliver such other documents, certifications and further
assurances as the Buyer may reasonably request in order to vest more effectively
in the Buyer, or to put the Buyer more fully in possession of any of the
Assets.
ARTICLE
III
[INTENTIONALLY
DELETED]
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF THE SELLER
Except as
disclosed to the Buyer in the disclosure schedules delivered by the Seller
simultaneously with the execution of this Agreement, the Seller hereby
represents and warrants to the Buyer as of the Effective Date and as of the
Closing as follows (with the understanding that the Buyer is relying on each
such representation and warranty in entering into and performing this
Agreement):
4.1 Corporate
Status. The
Seller is a limited liability company duly incorporated under the laws of
Florida and is in good standing. There are in existence no
outstanding options, contracts, commitments, warrants, agreements or rights of
any character or nature whatsoever affecting the issuance of the Seller’s
equity.
4.2 Corporate Power and
Authority. The
Seller has the full power, authority and legal right to execute, deliver and
perform this Agreement. This Agreement constitutes, and when executed
and delivered will constitute, legal, valid and binding agreements of the Seller
enforceable against the Seller in accordance with their respective terms, except
as may be limited by bankruptcy, insolvency and other similar laws affecting
creditors’ rights generally and by general equity principles.
4.3 Existing
Condition. Since
December 31, 2009, the Seller has not with respect to the Assets or
the Mine:
(a) sold,
assigned or transferred any of its assets or properties;
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CONFIDENTIAL
(b) suffered
any damage, destruction or loss, whether or not covered by insurance, materially
and adversely affecting its business, operations, assets, properties or
prospects;
(c) suffered
any material adverse change in its business, operations, assets,
properties;
(d) received
notice or had knowledge of any actual or threatened labor trouble, strike,
change in the economy or in the mining industry or other occurrence, event or
condition of any similar character which has had or might have a material
adverse effect on its business, operations, assets, properties or
prospects;
(e) made any
capital expenditure or capital addition or betterment except such as may be
involved in the ordinary course of business;
(f) entered
into any material transaction other than in the ordinary course of its business
consistent with past practice;
(g) operated
the Mine other than in the ordinary course consistent with past practice, and
granted no general or individual increase in compensation.
4.4 Title to and Sufficiency of
Properties. The
Seller has good, valid and marketable title to all of the Assets free and clear
of all liens, pledges, security interests, charges, claims, restrictions and
other encumbrances and defects of title of any nature whatsoever and have the
unrestricted right to sell the Assets as herein provided.
4.5 Use of
Assets. The
Assets being conveyed have been used only in the lawful conduct of the
Mine. Conveyance as contemplated by this Agreement will not violate
any federal statute or local law, ordinance, rule or regulation or any corporate
article of incorporation, bylaw, or resolution.
4.6 Litigation. Except
for the notice of violation dated July 17, 1997 received from the Arizona
Department of Environmental Quality, there is no litigation, arbitration,
investigation or other proceeding of or before any court, arbitrator or
governmental or regulatory official, body or authority pending or threatened
against the Seller which relates to any of the Assets, the Mine or the
transactions contemplated by this Agreement, nor does the Seller know of any
basis for such litigation, arbitration, investigation or other proceeding, which
if decided adversely would have a material adverse effect upon the financial
condition of the Seller. The Seller is not a party to any judgment,
order, writ, injunction, decree or award of any court, arbitrator or
governmental or regulatory official, body or authority which affects the Assets
or the Mine or the transactions contemplated by this Agreement.
4.7 Validity of Contemplated
Transactions. The
execution, delivery and performance of this Agreement and the transactions
contemplated hereby by the Seller will not contravene or violate (a) any law,
rule or regulation to which the Seller is subject, (b) any judgment, order,
writ, injunction, decree or award of any court, arbitrator or governmental or
regulatory official, body or authority which is applicable to the Seller, or (c)
the charter documents of the Seller or any securities issued by the Seller; nor
will such execution, delivery or performance violate, be in conflict with or
result in the breach (with or without the giving of notice or lapse of time, or
both) of any term, condition or provision of, or require the consent of any
other party, to, any indenture, agreement, contract, commitment, lease, plan,
license, permit, authorization or other instrument, document or understanding,
oral or written, to which the Seller is a party, by which the Seller may have
rights or by which any of the Assets may be bound or affected, or give any party
with rights thereunder the right to terminate, modify, accelerate or otherwise
change the existing rights or obligations of the Seller thereunder except in
each case for any such item which would not have a material adverse
effect.
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CONFIDENTIAL
4.8 Consents. No
authorization, approval or consent, and no registration or filing with any
governmental or regulatory official, body or authority is required in connection
with the execution, delivery and performance of this Agreement by the
Seller.
4.9 Licenses and
Permits. The
Seller owns all certificates, licenses, permits, approvals, franchises,
registrations, accreditations and other authorizations listed on Exhibit B, as
are necessary or appropriate in order to enable the Seller to own and use the
Assets and to own and conduct the Mine. The Seller has complied in
all material respects, and the Seller is in compliance in all material respects,
with the terms and conditions of any such licenses and permits. No
additional license or permit is required from any government entity in
connection with the operation of the Mine. No claim has been made by
any government entity (and, to the knowledge of the Seller, no such claim has
been threatened) to the effect that a license or permit not possessed by the
Seller is necessary in respect of the Mine.
4.10 [Intentionally
Deleted]
4.11 Contracts and
Commitments. The
Seller is not a party to any undisclosed contract or any undisclosed commitment,
whether oral or written.
4.12 Environmental
Matters.
(a) The
Seller has not discharged or caused to be discharged, on, under or about any
facility of its business, including without limitation into the ambient air,
surface water, groundwater, land surface, or subsurface strata, any solvents,
pollutants, chemicals, flammables, contaminants, gasoline, petroleum products,
crude oil, explosives, radioactive materials, hazardous materials or other
hazardous or toxic materials, substances, or wastes, or polychlorinated
biphenyls or related or similar materials, asbestos or any material containing
asbestos, (collectively, the “Hazardous
Substances”).
(b) The
Seller has not used any facility owned or leased by it to generate, manufacture,
refine, transport, treat, store, handle, dispose, transfer, produce, process or
in any manner deal with Hazardous Substances, except in compliance with
applicable Environmental Laws, as defined herein, including, but not limited to
any applicable federal, state or local governmental law, rule, regulation or
ordinance, including, without limitation, the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended (42 U.S.C.
Sections 9601, et seq.), the Hazardous Materials Transportation Act, as amended
(49 U.S.C. Section 1801, et seq.), the Resource Conservation and Recovery Act,
as amended (42 U.S.C. Sections 6901 et seq.), the Federal Water Pollution
Control Act, as amended (33 U.S.C. Sections 1251 et seq.), the Clean Air Act, as
amended (42 U.S.C. Sections 7401 et seq.) the Toxic Substances Control Act, as
amended (15 U.S.C. Sections 2601 et. seq.), the Clean Water Act, as amended (33
U.S.C. Sections 1251 et. seq.) (collectively all such laws, rules, ordinances or
regulations called herein, “Environmental
Laws”);
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CONFIDENTIAL
(c) The
Seller has obtained all required registrations, permits, licenses,
and other authorizations which are required under federal, state and local laws
and regulations relating to pollution or protection of the environment,
including but not limited to all Environmental Laws and including all laws
relating to emissions, discharges, releases, or threatened releases of Hazardous
Substances or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of Hazardous
Substances;
(d) The
Seller is in compliance in all material respects with all terms and conditions
of such required registrations, permits, licenses and authorizations, and is
also in compliance with all other limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations, schedules and timetables
contained in the Environmental Laws or contained in any regulation, code, plan,
order, decree, judgment, injunction, notice or demand letter issued, entered,
promulgated or approved thereunder;
(e) There is
no civil, criminal, or administrative action, suit, demand, claim, hearing,
notice of violation, investigation, proceeding, notice or demand letter pending,
or threatened relating in any way to (i) the Environmental Laws or
any regulation, code, plan, order, decree, judgment, injunction, notice or
demand letter applicable to it issued, entered, promulgated, or approved
thereunder, or (ii) relating to the release into the environment by the Seller
of any Hazardous Substances whether or not occurring at or on a site owned,
leased or operated by the Seller; and
(f) The
Seller has timely filed all reports, obtained all required approvals, generated
and maintained all required data, documentation and records required by the
Environmental Laws or any regulation, code, plan, order, decree, judgment,
injunction, notice or demand letter issued, entered, promulgated, or approved
thereunder.
4.13 Zoning. The
Seller is currently in compliance with all applicable zoning regulations and the
current use, and the intended use by the Buyer, of the property on which the
Mine and the Assets are located is in compliance with all laws and does not
violate any local zoning ordinances.
4.14 Tax
Liabilities. The
Seller has properly completed and timely filed all federal, state, county, local
and foreign income, excise, property, sales and other tax returns relating to
the Mine and the Assets which are required to be filed up to and including the
Effective Date and has paid all taxes which have become due, or any assessment
which has become payable relating to the Mine or the Assets, except where the
failure to file or pay taxes would not have a material adverse effect on the
financial condition of the Seller. There are no taxes, liens or
governmental charges owed, pending or threatened which affect the Mine or the
Assets. The Seller shall be responsible for any transfer taxes which
are payable as a result of the sale of the Assets of the Seller to the
Buyer.
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CONFIDENTIAL
4.15 Employee Benefit
Matters. The
Seller has not been and currently is not a party to any “employee benefit plan”,
as defined in Section 3(3) of ERISA, personnel policy, collective
bargaining agreement, profit sharing, stock option, stock purchase, pension,
bonus, incentive, retirement, incentive award plan or arrangement, vacation
policy, severance pay policy or agreement, deferred compensation agreement or
arrangement, consulting agreement, employment contract, medical reimbursement,
life insurance or other benefit plan, agreement, arrangement, program, practice
or understanding.
4.16 Compliance with Applicable
Laws. To
the knowledge of the Seller, the Seller has complied with all laws, regulations,
injunctions, decrees and orders applicable to the Mine and the Assets and has
received no written notice of any alleged violation of any such law, regulation,
injunction, decree or order for which the failure to comply would, in any
individual case or in the aggregate, have an adverse effect on the Mine and the
Assets. Neither the ownership of the Assets or the use of the
Seller’s properties in the operation of the Mine conflicts with the rights of
any other person, firm or corporation or violates, with or without the giving of
notice or the passage of time, or both, or will violate, conflict with or result
in a default, right to accelerate or loss of rights under, any terms or
provisions of its Articles of Organization or Operating Agreement as presently
in effect, or any lien, encumbrance, mortgage, deed of trust, lease, license,
agreement, understanding, law, ordinance, rule or regulation, or any order,
judgment or decree to which the Seller is a party or by which the Seller may be
bound or affected. The Seller has not received any written notice
from any person alleging any violation by the Mine of any law, ordinance, code,
rule or regulation or requiring or calling attention to the necessity of any
work, repairs, new construction, installation or alteration in connection with
the Mine.
4.17 Labor
Matters.
(a) The
Seller has no incentive plans or policies, employment policies and handbooks,
employment agreements, collective bargaining agreements, union contracts or
similar types of agreements (including, without limitation, any side letters) by
which the Seller is bound or covered relating to the Mine or the
Assets. Accurate and complete copies of all such agreements and
contracts have been delivered to the Buyer prior to the Effective
Date.
(b) There is
no strike or union organizational activity or any allegation, charge or
complaint of employment discrimination, unfair labor practice or other similar
occurrence, pending or threatened against the Seller relating to the Mine or the
Assets, nor, has the Seller operated the Mine or used the Assets in such a way
which, to the best of its knowledge, would give rise to any such allegation,
charge, or complaint.
(c) All
employees of the Seller have been properly classified and no person is treated
as an independent contractor or third party agency employee who should be
treated as an employee under the laws of the country in which such individual
performs services.
4.18 Non-Foreign. The
Seller is not a “foreign person,” as defined under §1445(f) of the
Code.
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4.19 Patriot
Act. The
Seller is not on the Specially Designated National and Blocked Persons List (the
“List”) of the Office of
Foreign Assets Control (the “Office”) of the United States
Department of the Treasury and is not otherwise blocked or banned by any Office
rule or any other law or regulation, including but not limited to the USA
Patriot Act (the “Act”)
or Executive Order 13224 (the “Order”).
4.20 Non-Foreign
Status. The
Buyer is not a “foreign person,” as defined under §1445(f) of the
Code.
4.21 No Undisclosed
Liabilities. To
the knowledge of the Seller, the Mine has no undisclosed liability of any
nature.
4.22 Disclosure. No
representation or warranty by the Seller contained in this Agreement, nor any
statement or certificate furnished or to be furnished by the Seller to the Buyer
or its representatives in connection herewith or pursuant hereto, contains or
will contain any untrue statement of material fact, or omits to state any
material fact required to make the statements herein or therein contained not
misleading or necessary in order to provide a prospective buyer of the Assets
with adequate information as to the Seller and its condition (financial and
otherwise), properties, assets, liabilities, and business, and the Seller has
disclosed to the Buyer in writing all material adverse facts known to them
relating to the same.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF THE BUYER
The Buyer
hereby represents and warrants to the Seller as of the Effective Date and as of
the Closing as follows (with the understanding that the Seller is relying on
each such representation and warranty in entering into and performing this
Agreement):
5.1 Corporate
Existence. The
Buyer is a corporation duly organized, validly existing and in good standing
under the laws of the State of Nevada.
5.2 Corporate Power and
Authority. The
Buyer has the power, authority and legal right to execute, deliver and perform
this Agreement. The execution, delivery and performance of this
Agreement by the Buyer and any document to be delivered at the
Closing have been duly authorized by all necessary corporate
action. This Agreement has been, and any document to be delivered at
the Closing will be, duly executed and delivered by the Buyer and constitutes
the legal, valid and binding agreement of the Buyer enforceable against it in
accordance with its terms, except as may be limited by bankruptcy, insolvency
and other similar laws affecting creditors’ rights generally and by general
equity principles.
5.3 Validity of Contemplated
Transactions. The
execution, delivery and performance of this Agreement by the Buyer will not
contravene or violate (a) any law, rule or regulation to which the Buyer is
subject, (b) any judgment, order, writ, injunction, decree or award of any
court, arbitrator or governmental or regulatory official, body or authority
which is applicable to the Buyer, or (c) the Operating Agreement of the Buyer or
any securities issued by the Buyer; nor will such execution, delivery or
performance violate, be in conflict with or result in the breach (with or
without the giving of notice or lapse of time, or both) of any term, condition
or provision of, or require the consent of any other party, to, any indenture,
agreement, contract, commitment, lease, plan, license, permit, authorization or
other instrument, document or understanding, oral or written, to which the Buyer
is a party, by which the Buyer may have rights or by which any of the Assets may
be bound or affected, or give any party with rights thereunder the right to
terminate, modify, accelerate or otherwise change the existing rights or
obligations of the Buyer thereunder. No authorization, approval or
consent, and no registration or filing with any governmental or regulatory
official, body or authority is required in connection with the execution,
delivery and performance of this Agreement by the Buyer except in each case for
any item which would not have a material adverse effect.
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CONFIDENTIAL
5.4 No
Conflicts. The execution, delivery
and performance by the Buyer of this Agreement and the consummation of the
transactions contemplated hereby will not (a) conflict with or result in a
breach or violation of any term or provision of, or constitute a default under
(with or without notice or passage of time, or both), or otherwise give any
person a basis for accelerated or increased rights or termination or
nonperformance under, any indenture, mortgage, deed of trust, loan or credit
agreement, lease, license or other agreement or instrument of which the Buyer is
a party or by which the Buyer is bound or affected (b) result in the
violation of the provisions of the operating agreement of the Buyer or
(c) otherwise adversely affect the contractual or other legal rights or
privileges of the Buyer as it relates to its ability to consummate the
transactions contemplated by this Agreement.
5.5 Ability to
Close. The Buyer has the
ability and financial wherewithal to close the transactions contemplated by this
Agreement and shall pay the Purchase Price on the Closing Date.
5.6 Consents. All consents,
authorizations and approvals of any person or entity to or as a result of the
consummation of the transactions contemplated hereby, that are necessary or
advisable in connection with the operations and business of the Buyer as
currently conducted and as proposed to be conducted, or for which the failure to
obtain the same might have, individually or in the aggregate, a material adverse
effect on the Buyer, have been lawfully and validly obtained by the
Buyer. The Seller shall fully cooperate with and assist the Buyer in
obtaining any consents necessary or advisable hereunder.
5.7 Brokers’
Fees. No broker, finder or
similar agent has been employed by or on behalf of the Buyer in connection with
this Agreement or the transactions contemplated hereby, and the Buyer has not
entered into any agreement or understanding of any kind with any person or
entity for the payment of any brokerage commission, finder’s fee or any similar
compensation in connection with this Agreement or the transactions contemplated
hereby.
5.8
Patriot
Act. The Buyer is not on the
List and is not otherwise blocked or banned by any Office rule or any other law
or regulation, including but not limited to the Act or the Order.
5.9 Information
on Buyer. The Information furnished by Buyer to Seller,
including but not limited to Buyer’s bylaws, a copy of which is attached hereto
as Exhibit D, shall be complete and true and correct in all material
aspects.
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ARTICLE
VI
CONDITIONS
PRECEDENT TO THE CLOSING
6.1 Conditions Precedent to
Buyer’s Obligations. All
obligations of the Buyer under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) Compliance with this
Agreement. The Seller shall have performed and complied in all
material respects, with all agreements and conditions required by this Agreement
to be performed by it prior to or at the Closing.
(b) No Threatened or Pending
Litigation. On the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be
threatened or be pending before any court or governmental or regulatory
official, body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation that
might result in any such suit, action or proceeding shall be pending or
threatened.
(c) No Material
Damage. The Assets shall not have been damaged or destroyed
(other than sales of inventory in the ordinary course of business).
(d) Certificates. The
Seller shall have furnished the Buyer with such certificates of its officers and
others to evidence compliance with the conditions set forth in this Section
6.1 as may be
reasonably requested by the Buyer.
(e) Seller
Deliveries. The Seller shall have delivered all items as
required by Section
2.2.
(f) Accuracy of Representations
and Warranties. Except for changes contemplated or permitted
by this Agreement, the representations and warranties of the Seller included in
this Agreement, the Schedules to this Agreement and any Exhibit or other
document delivered by the Seller pursuant to this Agreement, shall be true and
correct in all material respects on and as of the Closing with the same effect
as though such representations and warranties are being been made on as of the
Closing Date. The Buyer in its sole discretion, shall have the right
to waive or defer compliance by the Seller at Closing with any representation or
warranty.
(g) Performance of Covenants and
Agreements. Each agreement, covenant or obligation of the
Seller to be performed at or before Closing under the terms hereof shall have
been duly performed in all material respects or waived by the Buyer in its sole
and absolute discretion.
(h) No Material Adverse
Change. Between the Effective Date and the Closing Date, there
has been no material adverse change affecting the Assets or the Mine , its
financial condition or prospects.
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(i) Consents. The
Seller shall have received all consents, authorizations, approvals, filings,
exemptions and waivers from government entities and all material consents,
authorizations, approvals, filings, exemptions and waivers from other persons
necessary or advisable to permit the Seller to consummate the transaction
contemplated hereunder and/or convey the Assets.
The Buyer
may waive any condition specified in this Section
6.1 if it
executes a writing so stating at or prior to the Closing.
6.2 Conditions Precedent to
Seller’s Obligations. All
obligations of the Seller under this Agreement are subject to the fulfillment or
satisfaction, prior to or at the Closing, of each of the following conditions
precedent:
(a) Compliance with this
Agreement. The Buyer shall have performed and complied in all
material respects, with all agreements and conditions required by this Agreement
to be performed by it prior to or at the Closing.
(b) No Threatened or Pending
Litigation. On the Closing Date, no suit, action or other
proceeding, or injunction or final judgment relating thereto, shall be
threatened or be pending before any court or governmental or regulatory
official, body or authority in which it is sought to restrain or prohibit or to
obtain damages or other relief in connection with this Agreement or the
consummation of the transactions contemplated hereby, and no investigation that
might result in any such suit, action or proceeding shall be pending or
threatened.
(c) Accuracy of Representations
and Warranties. The representations, warranties and agreements
made by the Buyer herein shall be true in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
are being made or given on and as of the Closing Date, except as affected by
transactions contemplated hereby.
(d) Performance of Covenants and
Agreements. Each agreement, covenant or obligation of the
Buyer to be performed at or before Closing under the terms hereof shall have
been duly performed in all material respects or waived by the Seller in its sole
discretion.
(e) Buyer
Deliveries. The Buyer shall have delivered all items as
required by Section
2.3.
The
Seller may waive any condition specified in this Section
6.2 if they
execute a writing so stating at or prior to the Closing.
ARTICLE
VII
COVENANTS
OF THE PARTIES
7.1 Confidentiality. THE EXECUTION AND
DELIVERY OF, AND THE RESPECTIVE TERMS OF, ANY LETTERS OF INTENT, TERM SHEETS AND
OF THIS AGREEMENT BY AND BETWEEN THE PARTIES AND/OR THEIR AFFILIATES ON BEHALF
OF THE PARTIES; THE IDENTITIES OF THE RELEVANT PARTIES, THEIR RESPECTIVE
PRINCIPALS AND PRIOR OWNERS, AS WELL AS THE TITLE HISTORY OF THE ASSETS ARE
CONFIDENTIAL AND SHALL NOT BE DISCLOSED TO ANY THIRD PARTY. IF A PARTY IS
NOTIFIED OR IS OTHERWISE BEING COMPELLED TO DISCLOSE ANY INFORMATION COVERED
UNDER THIS SECTION 7.1, EACH PARTY AGREES WITH RESPECT TO ANY SUCH NOTICE OR
REQUIRED DISCLOSURE TO IMMEDIATELY INFORM THE OTHER PARTY IN WRITING OF THE
CONTENTS OF ANY PROPOSED OR POTENTIAL DISCLOSURE SUFFICIENTLY IN ADVANCE OF ITS
RELEASE TO PERMIT THE OTHER PARTY, IN ITS DISCRETION, TO COMMENT THEREON, FILE
FOR A PROTECTIVE ORDER (WHEREUPON THE OTHER PARTY SHALL ASSIST) AND/OR
SUBSEQUENTLY TO JOINTLY OR SIMULTANEOUSLY MAKE A
DISCLOSURE. THIS COVENANT SHALL SURVIVE THE CLOSING FOR TEN
(10) YEARS, OR THE LONGEST PERIOD ALLOWED UNDER LAW.
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CONFIDENTIAL
7.2 Due
Diligence. The
Buyer and Seller each respectively warrant to the other that each has
satisfactorily performed its due diligence investigations on the other Party and
has made the independent decision to proceed to closing the transaction
contemplated by this Agreement.
7.3 Access to
Information. The
Buyer and Seller each respectively warrant to the other that each has been
provided with full material access to such information required by each Party to
satisfactorily conduct its due diligence investigation.
7.4 Capitalization of
Buyer;
Protection of Shares Consideration. The
Buyer hereby covenants and agrees that on the date the Shares Consideration are
issued, the capitalization of Buyer shall consist of only one class of stock, no
issued or outstanding options, warrants or other rights and Eighteen Million Two
Hundred Fourty Two Thousand (18,242,000) issued and outstanding shares of common
stock comprised of (i) the Shares Consideration; (ii) One Million Nine Hundred
Seventeen Thousand (1,917,000) shares in the name of Black Diamond Realty Trust,
Inc; and (iii) Three Million Five Hundred Seventy Five Thousand (3,575,000)
shares held by thirty two (32) other shareholders. Buyer represents and warrants
and shall re-affirm at Closing to Seller that prior to the Closing, prior to
issuance of the Shares Consideration and the ownership of the Shares vesting in
Seller, Buyer has not and shall not (i) incur any indebtedness or take any
action relating to the incurring of indebtedness; (iii) in any other way dilute
the value of the shares represented by the Shares Consideration, including but
not limited to promising or providing options, warrants or other current or
future related rights; or (iv) made a representations, press releases,
registrations, filings or other commitments to any non-party or the public at
large.
7.5 Reasonable Efforts and
Cooperation; Accomplish Transaction. The
Seller shall use commercially reasonable efforts to take, or cause to be taken,
all appropriate actions, and to do, or cause to be done, all things necessary,
proper or advisable under applicable laws and to consummate the transactions
contemplated hereunder, including, without limitation, (i) cooperating with the
Buyer in the preparation and filing of all forms, notifications, reports and
information, if any, required or reasonably deemed advisable pursuant to any
law, statute, rule or regulation, including the stock exchange rules; (ii) using
commercially reasonable efforts to obtain all licenses, permits, consents,
approvals, authorizations, qualifications and orders of any government entity or
other persons, (iii) making on a prompt and timely basis all governmental or
regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereunder, (iv) defending all
legal proceedings challenging this Agreement and to lift or rescind any
injunction or restraining order or other order adversely affecting the ability
of the parties to consummate the transactions contemplated hereunder, and (v)
executing and delivering such additional instruments and other documents and
shall take such further actions as may be necessary or appropriate to
effectuate, carry out and comply with all of the terms of this Agreement and the
transactions contemplated hereunder.
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7.6 General
Conduct. Prior
to the Closing Date, the Seller will use the Assets in the normal course and
will use reasonable efforts to preserve the Mine, the Assets and the business
organization of the Seller intact and retain the services of its present
officers, employees and agents to the end that it may retain its goodwill and
preserve its business relationships with customers, suppliers and
others.
7.7 Other
Restrictions. In
addition, the Seller covenants that, from the Effective Date until the
Closing:
(a) the
Seller’s business will be conducted only in the ordinary course, and none of its
properties or any of the Assets will be sold or otherwise disposed of,
mortgaged, pledged or otherwise hypothecated, except in the ordinary course of
business;
(b) no
general increase or individual increase will be made in the compensation payable
or to become payable by the Seller to any of its officers, employees or agents,
and no reimbursement of expenses unrelated to the Seller’s business in its
ordinary course shall be made;
(c) no
contract, obligation or commitment will be entered into or assumed by or on
behalf of the Seller, which affects the Assets, extending beyond the Closing,
except normal commitments for the purchase of materials, supplies, licenses and
other assets used in the ordinary course of business, and for commitments to
customers incurred in the ordinary course of business;
(d) no
change, other than those required in the ordinary course of business, will be
made affecting the Seller’s personnel or agents;
(e) the
Seller will maintain its equipment in the same operating condition and repair as
of the Effective Date, using its customary standards of maintenance, reasonable
wear and tear excepted;
(f)
the Seller will continue to carry insurance in the forms and in the amounts now
carried;
(g) upon
prior reasonable notice, the Seller will permit the Buyer to have access to its
books and records with respect to the Assets and its business;
(h) upon
prior reasonable notice, the Seller will make the Assets available for
observation by the Buyer during normal working hours;
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CONFIDENTIAL
(i) the Seller will not enter into or terminate any lease, agreement, contract
or other commitments in connection with the Mine or the Assets or otherwise
cancel or waive any claim or right with respect to the Mine or the Assets;
and
(j) the
Seller will not create or incur any indebtedness, liability or obligation in
connection with the Mine or the Assets, other than in the ordinary
course.
7.8 Further
Restrictions. Between
the Effective Date and the Closing Date, the Seller shall:
(a) Do
nothing, and permit nothing to be done (which is within its control), which will
or might cause the Seller to use the Assets in an improper or illegal
manner;
(b) Not cause
a default in any the terms, conditions and obligations of any of the contracts
and other agreements of the Seller;
(c) To the
extent permissible by law, maintain its corporate existence in good standing,
and its licenses and permits and comply fully with all laws respecting its
formation, existence, activities and operations; and
(d) Seek the
advice of the Buyer on all new material contracts, agreements, commitments or
bids, the hiring and firing of employees, all litigation and arbitration
matters, and such other general matters relevant to the operations of the Mine
and Assets. Nothing herein shall be interpreted to require the Buyer’s consent;
however, it is the intent that the Seller shall review and consult with the
Buyer prior to taking action on any of the foregoing matters and that the Buyer
and the Seller shall work together in a cooperative fashion in connection with
any of the foregoing.
ARTICLE
VIII
POST
CLOSING MATTERS AND COVENANTS
8.1 Access to Records and
Persons. The
Seller and the Buyer agree that, both before and after the Closing, each will
have access, upon prior reasonable written request and at any reasonable time
during normal business hours, to the other’s officers and employees and to its
books and records relating to the assets, properties and operations of the
Seller, and each shall have the right to make copies of such books and records;
provided, however, that such access shall be solely for the purpose of enabling
such party to prepare financial statements and tax returns, and any litigation,
claims, collection or arbitration matters and for such other business purposes
as the Seller and the Buyer may agree. No party to this Agreement
shall destroy or discard its books and records for a period of five (5) years
after the Closing Date without first providing the other parties adequate
opportunity to retrieve such books and records.
8.2 Water
Rights. Seller
has informed Buyer and Buyer acknowledges that there is pending an auction for
water rights associated with a well referred to generally as the Santa Claus
Well and that the estimated costs of the Water Rights is Forty Two Thousand
Dollars ($42,000.00). Payment of the fees, costs and expenses
relating to any of the rights with respect to the Water Requirements or other
water rights shall be the obligation of the Buyer.
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8.3 Recording
Fees. The Buyer shall
pay all fees and charges required in connection with filing and recording the
Deed and ▇▇▇▇ of Sale.
8.4 Merger in
Agreement. All other
agreements, covenants, representations and warranties by any party relating to
the Assets, including, but not limited to, any letters of intent or term sheets,
are merged in this Agreement, in the Exhibits and in the other documents
specifically provided for herein. This Agreement shall prevail. No agreements,
covenants, representations or warranties relating to the Assets or the
transaction contemplated hereby that are not expressly set forth in this
Agreement have been made by any party hereto.
ARTICLE
IX
TERMINATION
9.1 Termination. This
Agreement may be terminated at any time:
(a) by mutual
consent of the parties;
(b) by either
party if the Closing shall not have occurred in accordance with Section
2.1, and the
party seeking termination is ready, willing and able to close and not in
material default of its obligations under this Agreement;
(c) by either
party if there shall have been a material misrepresentation or breach of
warranty or a breach of a material covenant on the part of the other party in
the representations and warranties or covenants set forth herein or in any
Schedule, Exhibit or other instrument delivered in connection herewith, which
misrepresentation or breach is not cured prior to the Closing.
ARTICLE
X
INDEMNIFICATION
10.1 Indemnification Obligation
of the Seller. The
Seller shall reimburse, indemnify and hold harmless the Buyer, and its officers,
directors and members, (each such person is referred to herein as a “Seller Indemnified Party”)
against and in respect of:
(a) any and
all actions, suits and claims, or legal, administrative, arbitral, governmental
or other proceedings or investigations against any Seller Indemnified Party,
that relate to the Seller the Mine or the Assets and which result from or arise
out of any event, occurrence, action, inaction or transaction occurring on or
prior to the Closing Date;
(b)any and
all liabilities and obligations of any nature whatsoever of or relating to the
Seller or to the Mine or the Assets on or prior to the Closing, including any
employee severance or similar benefits and liabilities and obligations arising
out of occurrences or actions on or prior to the Closing Date under any
“employee pension benefit plan” or “employee welfare benefit plan” as those
terms are defined in Sections 3(1) and 3(2) of the Employee Retirement Income
Security Act of 1974, as amended, any product liability, warranty or other
claims arising out of or relating to any product manufactured, distributed or
sold by the Seller at any time before Closing, and any claims relating to patent
or trademark infringement, taxes, workers compensation, real estate or
environmental, health or safety matters;
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CONFIDENTIAL
(c) any and
all damages, losses, settlement payments, deficiencies, liabilities, costs and
expenses suffered, sustained, incurred or required to be paid by any Seller
Indemnified Party because of or that result from, relate to or arise out of the
material untruth, inaccuracy or breach of, or the failure to fulfill, any
representation, warranty, agreement, covenant or statement (i) of the Seller
contained in this Agreement or (ii) contained in any certificate, or schedule,
document or instrument furnished to the Seller Indemnified Party by or on behalf
of the Seller at the Closing;
(d) any and
all actions, suits, claims or legal, administrative, arbitral, governmental or
other proceedings involving the Seller Indemnified Party that relate to
environmental, safety or health matters arising from the Seller’s ownership,
use, operation, or occupancy of any real property or improvements at any time,
except as caused by the Seller Indemnified Party, directly or indirectly, after
the Closing Date; and
(e) any and
all actions, suits, claims, proceedings, assessments, fines, judgments, costs
and other expenses (including, without limitation, reasonable legal fees and
expenses) incident to any of the foregoing or to the enforcement of this Section
10.1 to the
extent the Seller Indemnified Party prevails in such action. The
Seller Indemnified Party shall promptly notify the Seller of the existence of
any matter to which the obligations set forth in this paragraph shall apply, and
shall give the Seller reasonable opportunity to defend any claim or litigation
at its own expense, with counsel of its own selection approved by the Seller
Indemnified Party (which shall not be unreasonably withheld); provided that the
Seller Indemnified Party shall also at all times have the right fully to
participate in such defense at its own expense. If the Seller shall
fail, within a reasonable time after such notice, to defend such claim or
litigation, the Seller Indemnified Party or any successor to the business and
assets of the Seller Indemnified Party shall have the right, but not the
obligation, to defend, compromise or settle any such claim or
litigation.
10.2 Indemnification Obligation
of Buyer. Except
to the extent the Seller has agreed to be liable to a Buyer Indemnified
Party, the Buyer will indemnify and hold harmless the Seller, and its
officers, directors, and shareholders, (each such person is referred to herein
as a “Buyer Indemnified
Party”) against and in respect of:
(a) any and
all actions, suits, claims or legal, administrative, arbitration, governmental
or other proceedings or investigations, against any Buyer Indemnified Party that
relate to the Buyer, the Mine or the Assets and which result from or arise out
of any event, occurrence, action, inaction or transaction occurring after the
Closing Date;
(b)any and
all damages, losses, settlement payments, deficiencies, liabilities, costs and
expenses suffered, sustained, incurred or required to be paid by any Buyer
Indemnified Party because of or that result from, relate to or arise out of the
material untruth, inaccuracy or breach of, or the failure to fulfill, any
representation, warranty, agreement, covenant or statement (i) of the Buyer
contained in this Agreement or (ii) contained in any certificate, schedule,
statement, document or instrument furnished to the Buyer Indemnified Party by or
on behalf of the Buyer at the Closing; and
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CONFIDENTIAL
(c) any and
all actions, suits, claims, proceedings, investigation, demands, assessments,
audits, fines, judgments, costs and other expenses (including, without
limitation, reasonable legal fees and expenses) incident to any of the foregoing
or to the enforcement of this Section
10.2 to the
extent the Buyer Indemnified Party prevails in such action. The Buyer
Indemnified Party shall promptly notify the Buyer of the existence of any matter
to which the obligations set forth in this paragraph shall apply, and shall give
the Buyer reasonable opportunity to defend any claim or litigation at its own
expense, with counsel of its own selection approved by the Buyer Indemnified
Party; provided that the Buyer Indemnified Party shall also at all times have
the right fully to participate in such defense at its own expense. If
the Buyer shall fail, within a reasonable time after such notice, to defend such
claim or litigation, the Buyer Indemnified Party, or any successor to the
business and assets of the Buyer, shall have the right, but not the obligation,
to defend, compromise or settle any such claim or litigation.
10.3 Claims Procedures for
Indemnification.
(a) Notice. If
following the Closing a party to this Agreement (a “Claimant”) wishes to make a
claim for indemnity (the “Claim”) against another party
(the “Indemnitor”), the
Claimant shall promptly give the Indemnitor written notice of the basis for and
existence of the Claim (“Claim
Notice”), setting forth all specifics of the Claim then known by the
Claimant.
(b) Response. If
the Claim derives from a third-party claim or action against the Claimant, the
Indemnitor may, within ten (10) days of receiving the Claim Notice, stipulate in
writing that he/she/it is obligated to indemnify for the Claim, and, if
he/she/it does so, may thereafter promptly defend against the Claim in
Claimant’s name and on his/her/it’s behalf, at Indemnitor’s own cost and
expense, with counsel reasonably satisfactory to the Claimant.
(c) Assumption of
Claim. If Indemnitor assumes the Claim, Claimant may at
his/her/its sole cost and expense retain counsel of its own choosing, and
(subject to negotiation of a joint defense agreement) Indemnitor will share
relevant information with Claimant’s counsel and consult with it as to
disposition of the Claim. However, Indemnitor will retain ultimate control over
the defense or settlement of the Claim (in which the Claimant will cooperate),
with the proviso that Indemnitor may not without Claimant’s consent agree to the
entry of any order for non-monetary relief which will be binding on Claimant,
its assets or operations. Each party as a potential Claimant agrees that it will
make available to any Indemnitor all of his/her/its relevant books and records
and will, at the Indemnitor’s request and expense, reasonably cooperate (and
cause his/her/its officers, directors and employees to cooperate) with the
Indemnitor in the defense of the Claim.
(d) Rejection of
Claim. If Indemnitor fails to respond affirmatively within ten
(10) days of receipt of a Claim Notice, it will be deemed to have denied
responsibility for the Claim. If Indemnitor denies responsibility for the Claim
(or if it assumes the defense of the Claim, but subsequently fails to pursue the
defense in good faith) the Claimant may assume the defense of the Claim with
counsel of his/her/its own choosing, and the cost of counsel will then be
subject to possible indemnity pursuant to this
Article
X. If Claimant assumes the defense of a Claim, it shall
have the sole right and authority to conduct the defense and/or settle the Claim
on such terms as it deems appropriate, but (subject to negotiation of a joint
defense agreement) shall share information concerning the Claim with Indemnitor
or his/her/its counsel.
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CONFIDENTIAL
(e) Settlement of
Claims. Unless otherwise agreed to by the parties in writing,
an Indemnitor shall not be obligated to settle a Claim, nor shall a Claimant be
entitled to its settlement (whether from the escrow, by set-off against
contingent payments or directly from the Indemnitor) prior to the Determination
Date. For purposes of this Agreement, the “Determination Date” shall mean
the first date on which a court order, arbitration award or settlement
stipulation that an event has occurred for which the Claimant is entitled to
indemnity hereunder becomes final, binding and
non-appealable.
10.4 Aggregate
Liability. Notwithstanding
anything to the contrary contained herein, the aggregate liability of any
Indemnitor under this
Article X shall
not exceed the aggregate of the Purchase Price.
10.5 Exclusivity. Except
in the case of fraud, willful misconduct or criminal conduct, the remedies
provided in this
Article X shall
be exclusive of any other rights or remedies which might be available to a party
upon the occurrence of any event described in Section
9.1, either under
this Agreement or at law or in equity. Nothing contained herein, however, shall
preclude a party from seeking injunctive or other equitable relief under
circumstances where such relief is available, with the proviso that the moving
party shall not be entitled to ancillary relief in the nature of damages or fee
awards unless specifically provided for in this Agreement.
ARTICLE
XI
MISCELLANEOUS
11.1 Expenses. The
parties hereto shall pay their own expenses, including without limitation their
legal fees and expenses, incidental to the preparation of this Agreement, the
carrying out of the provisions of this Agreement and the consummation of the
transactions contemplated hereby.
11.2 Contents of Agreement;
Parties in Interest. This
Agreement, the Schedules, the Exhibits, and such other documents which may be
delivered pursuant to this Agreement, set forth the entire understanding of the
parties hereto with respect to the transactions contemplated
hereby. This Agreement shall not be amended or modified except by
written instrument duly executed by each of the parties hereto. Any
and all previous agreements and understandings between or among the parties
regarding the subject matter hereof, whether written or oral, are superseded by
this Agreement.
11.3 Assignment and Binding
Effect. All
of the terms and provisions of this Agreement shall be binding upon and inure to
the benefit of and be enforceable by the successors and assigns of the Seller
and the Buyer.
11.4 Waiver. Any
term or provision of this Agreement may be waived at any time by the party or
parties entitled to the benefit thereof but only by a written instrument duly
executed by such party or parties.
11.5 Notices. Any
notice, request, demand, waiver, consent, approval or other communication which
is required or permitted hereunder shall be in writing and shall be deemed given
only if delivered personally or sent by overnight mail, postage prepaid, to the
address of the parties set forth below or to such other address as the addressee
may have specified in a notice duly given to the sender as provided
herein. Such notice, request, demand, waiver, consent, approval or
other communication will be deemed to have been given as of the date so
delivered, facsimiled or mailed.
19
CONFIDENTIAL
If to the Buyer:
Sierra
Resource Group, Inc.
▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Fax:
(▇▇▇)▇▇▇-▇▇▇▇
If to the Seller:
▇▇▇▇▇▇
Property Group, LLC
Address ▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ #▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇ ▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇▇▇
& ▇▇▇▇▇, PA
▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇
▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇
▇. ▇▇▇▇▇▇▇▇▇▇
Fax:
(▇▇▇) ▇▇▇-▇▇▇▇
11.6 No Benefit to
Others. The
representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto and their successors
and assigns, and they shall not be construed as conferring any rights on any
other persons.
11.7 Schedules and
Exhibits. All
Exhibits and Schedules referred to herein are intended to be and hereby are
specifically made a part of this Agreement. If a document or matter
is disclosed in any Exhibit or Schedule of this Agreement, it shall be deemed to
be disclosed for all purposes of this Agreement without the necessity of
specific repetition or cross-reference.
11.8 Severability. Any
provision of this Agreement which is invalid or unenforceable in any
jurisdiction shall be ineffective to the extent of such invalidity or
unenforceability without invalidating or rendering unenforceable the remaining
provisions hereof, and any such invalidity or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
11.9 Cooperation. Each
party to this Agreement shall cooperate and take such action as may be
reasonably requested by any other party in order to carry out the provisions and
purposes of this Agreement.
20
CONFIDENTIAL
11.10 Counterparts. This
Agreement may be executed in any number of counterparts, any party hereto may
execute any such counterpart, each of which when executed and delivered shall be
deemed to be an original and all of which counterparts taken together shall
constitute but one and the same instrument. This Agreement shall
become binding when one or more counterparts taken together shall been executed
and delivered by the parties. It shall not be necessary in making
proof of this Agreement or any counterpart hereof to produce or account for any
of the other counterparts. Signatures delivered by facsimile for this
Agreement or any document delivered at Closing shall be binding to the same
extent as an original.
11.11 Governing Law; Venue. This
Agreement shall be governed by the laws of the State of Florida, without
reference to its conflict of laws provisions. Proper venue for any dispute
resolution proceeding shall be Broward County, Florida, to which each Party
irrevocably consents to personal jurisdiction. The prevailing party in any
dispute resolution proceeding shall be entitled to an award of its attorney’s
fees. EACH PARTY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVES ITS
RIGHT TO TRIAL BY JURY IN ANY PROCEEDING INVOLVING THIS AGREEMENT OR THE
UNDERLYING BUSINESS RELATIONSHIP BETWEEN THE PARTIES.
11.12 Time is of the
Essence. Time
shall be of the essence in this transaction with regard to every date or time
period set forth herein.
11.13 Delivery by
Facsimile. This Agreement and any
signed agreement or instrument entered into in connection herewith or
contemplated hereby, and any amendments hereto or thereto, to the extent signed
and delivered by means of a facsimile machine, shall be treated in all manner
and respects as an original agreement or instrument and shall be considered to
have the same binding legal effects as if it were the original signed version
thereof delivered in person. At the request of any party hereto or to
any such other agreement or instrument, each other party hereto or thereto shall
re-execute original forms thereof and deliver them to all other
parties. No party hereto or to any such agreement or instrument shall
raise the use of a facsimile machine to deliver a signature or the fact that any
signature or agreement or instrument was transmitted or communicated through the
use of facsimile machine as a defense to the formation of a contract and each
such party forever waives any such defense.
11.14 Publicity. Neither the Buyer nor
the Seller shall, without the approval of the other, make any press release or
other public announcement concerning the transactions contemplated by this
Agreement prior to Closing, except as and to the extent that any such party
shall be so obligated by law, in which case the other party shall be advised and
the parties shall use their best efforts to cause a mutually agreeable release
or announcement to be issued.
[signature
page to follow]
21
CONFIDENTIAL
IN WITNESS WHEREOF, the
parties hereto have duly executed this Agreement on the date first
written.
BUYER:
SIERRA
RESOURCE GROUP, INC.
BY:
/s/ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇
Title: President
and CFO
SELLER:
▇▇▇▇▇▇ PROPERTY GROUP, LLC
By: /s/ ▇▇▇▇▇
▇▇▇▇▇▇
Name: ▇▇▇▇▇
▇▇▇▇▇▇
Title: Director
22
CONFIDENTIAL
EXHIBIT
A
FORM
OF DEED AND ▇▇▇▇ OF SALE
CONFIDENTIAL
Schedule
1.1a
Mining
Claims and Mill Sites
|
Claim
Name
|
Approx
Area (ha)
|
Mohave
County Recorder’s Book/Page
|
AMC
Number
|
Remark
|
|
Copper
Hill Mill No. 1
|
1.4
|
84/399-400
|
105792
|
|
|
Copper
Hill Mill No. 2
|
1.4
|
84/401-402
|
105793
|
|
|
Copper
Hill Mill No. 3
|
1.4
|
84/403-404
|
105794
|
|
|
Copper
Hill Mill No. 4
|
1.4
|
84/405-406
|
105795
|
|
|
Copper
Hill Mill No. 5
|
1.4
|
84/407-408
|
105796
|
|
|
Copper
Hill Mill No. 6
|
1.4
|
84/409-410
|
105797
|
|
|
Copper
Hill Mill No. 7
|
1.4
|
84/411-412
|
105798
|
|
|
Copper
Hill Mill No. 8
|
1.4
|
84/413-414
|
105799
|
|
|
Copper
Hill Mill No. 10
|
1.4
|
84/417-418
|
105801
|
|
|
Copper
Hill Mill No. 11
|
1.4
|
105802
|
||
|
Copper
Hill Mill No. 12
|
1.4
|
105803
|
||
|
Copper
Hill Mill No. 13
|
1.4
|
84/425-426
|
105804
|
|
|
Copper
Hill Mill No. 14
|
1.4
|
84/425-426
|
105805
|
|
|
Copper
Hill Mill No. 15
|
1.4
|
84/427-428
|
105806
|
|
|
Copper
Hill No. 2
|
5.6
|
WW/149-151(Amended
6A/55-56)
|
105785
|
|
|
Hermes
|
5.6
|
Y/463
(Amended 6A/63-64)
|
105786
|
|
|
Hermes
No. 2
|
5.6
|
AA/191-193
(Amended 6A/63-64)
|
105787
|
|
|
Jimtown
Copper No. 1
|
5.5
|
6A/57-58
|
105788
|
|
|
Valley
Copper No. 1
|
4.2
|
6A/50
|
105789
|
Overstaked
|
|
Valley
Copper No. 2
|
5.6
|
6I/25
|
105790
|
|
|
Valley
Copper No. 3
|
5.6
|
6C/118-119
|
105791
|
|
|
Emerald
No. 1
|
2.8
|
2706/457-458
|
339597
|
Overstaked
|
|
Emerald
No. 2
|
5.6
|
2706/459-460
|
339598
|
|
|
FDR
|
5.6
|
386617
|
||
|
Subtotal
Old Claims
|
71.3
|
|||
|
Emerald
#1A
|
5.6
|
5282/269-270
|
364261
|
|
|
Emerald
#2A
|
5.6
|
5282/271
|
364262
|
|
|
Emerald
#3
|
5.6
|
5282/272
|
364263
|
|
|
Emerald
#4
|
5.6
|
5282/273
|
364264
|
|
|
Emerald
#5
|
5.6
|
5282/274
|
364265
|
|
|
Emerald
#6
|
5.6
|
5282/275
|
364266
|
|
|
Emerald
#7
|
5.6
|
5282/276
|
364267
|
|
|
Emerald
#8
|
5.5
|
5282/277
|
364268
|
|
|
Emerald
#9
|
5.6
|
5282/278
|
364269
|
|
|
Emerald
#10
|
2.0
|
5282/279
|
364270
|
Overstaked
|
|
Emerald
#11
|
4.9
|
5282/280
|
364271
|
Overstaked
|
|
Emerald
#12
|
0.1
|
5282/281
|
364272
|
Overstaked
|
|
Emerald
#13
|
5.5
|
5282/282
|
364273
|
Overstaked
|
|
Emerald
#14
|
2.2
|
5282/283
|
364274
|
Overstaked
|
|
Emerald
#15
|
5.6
|
5282/284
|
364275
|
|
|
Emerald
#16
|
4.2
|
5282/285
|
364276
|
Overstaked
|
|
Emerald
#17
|
5.6
|
5282/286
|
364277
|
|
|
Emerald
#18
|
2.8
|
5282/287
|
364278
|
Overstaked
|
|
Emerald
#19
|
5.6
|
5282/288
|
364279
|
Overstaked
|
|
Emerald
#20
|
2.7
|
5282/289
|
364280
|
Overstaked
|
|
Emerald
#21
|
5.5
|
5349/445-446
|
364620
|
Overstaked
|
|
Emerald
#22
|
3.0
|
5349/447-448
|
364621
|
Overstaked
|
|
Emerald
#30
|
0.1
|
5349/463-464
|
364622
|
Overstaked
|
|
Emerald
#19
|
5.6
|
5282/288
|
364279
|
Overstaked
|
|
Emerald
#31
|
5.0
|
5349/465-466
|
364632
|
Overstaked
|
|
Emerald
#43
|
1.4
|
5349/489-490
|
364624
|
Overstaked
|
|
Emerald
#44
|
0
|
5349/491-492
|
364625
|
Overstaked
|
|
Emerald
#45
|
0
|
5349/493-494
|
364626
|
Overstaked
|
|
Subtotal
New Claims
|
106.9
|
|||
|
Total
|
177.9
|
CONFIDENTIAL
Schedule
1.1b
Machinery, Equipment,
Etc.
|
SX/EW Equipment and
Components
|
Quantity
|
|
|
Motor
load control boxes
|
22
|
|
|
Acme
Transformer 480 to 208/120 volt 112.5 KVA
|
1
|
|
|
Acme
Transformer 480 to 208/120 volt 45 KVA
|
1
|
|
|
Ramco
Metal Bandsaw Model RS90P
|
1
|
|
|
110
volt pallet ▇▇▇▇ Atlas 4500 pound capacity
|
1
|
|
|
Miscellaneous
Caution and Danger signs
|
10
|
|
|
Miscellaneous
lab parts and pieces
|
1
|
|
|
Miscellaneous
nails, screws, nuts, bolts, and washers
|
1
|
|
|
Drill
press / Ohio Forge Model #510459, Serial #104313
|
1
|
|
|
▇▇▇▇▇▇▇
Pit Bull Fusion Welder
|
1
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇ 5000 Atomic Absorption Spectophotometer
|
1
|
|
|
Model
5000, Serial #127934
|
||
|
▇▇▇▇▇▇
▇▇▇▇▇ 500 automatic burner control
|
1
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇ HGA 500 programmer
|
1
|
|
|
▇▇▇▇▇▇
▇▇▇▇▇ Type Zeeman 5000, Serial #5267
|
1
|
|
|
IEC
HN-SII Centrifuge Model HNS, Serial #AC7825
|
1
|
|
|
Speedaire
Compressor 480 volt 3-phase
|
1
|
|
|
IngersollRand
Compressor 480 volt 3-phase Model 3000E30 Serial #790233
|
1
|
|
|
Caterpillar
Forklift Model R80, Serial #49A00924
|
1
|
|
|
▇▇▇▇▇▇▇▇
Hydraulic Conduit ▇▇▇▇▇▇ Model 777
|
1
|
|
|
30
KW Generator Set 480 volt 3-phase Model MEP005A M20
|
1
|
|
|
480
volt E7218 Serial #JC79183
|
1
|
|
|
220/120
volt ▇▇▇▇▇▇▇ Generator Set (light plant)
|
1
|
|
|
Dayton
5 KW 220/120 Generator Set Model 4W113 Serial #0884740
|
1
|
|
|
Model
E5222 HI Serial #185B70
|
1
|
|
|
Miscellaneous
stainless steel pumps
|
4
|
|
|
HDPE
4" pipe
|
12,000
feet
|
|
|
HDPE
3" pipe
|
1,000
feet
|
|
|
HDPE
6" pipe
|
1,000
feet
|
|
|
Forklift
man lift tower
|
1
|
|
|
Miscellaneous
office equipment
|
1
|
|
|
Crane
load lifter 5-ton 480 volt 3-phase Serial #17467
|
1
|
|
|
Overhead
crane 10-ton
|
1
|
|
|
Storage
facility
|
1
|
|
|
Tank
and warehouse complex
|
1
|
|
|
4/0
copper wire
|
1,500
feet
|
|
|
2/0
copper wire
|
1,000
feet
|
|
|
2"
Honda trash pump
|
1
|
|
|
3"
Tsurumi trash pump with fittings
|
1
|
|
|
5,000
gallon kerosene tank
|
1
|
|
|
5,000
gallon acid tank
|
1
|
|
|
250
gallon used oil tank
|
1
|
|
|
500
gallon diesel tank
|
1
|
|
|
Tank
house, stainless steel lined
|
1
|
|
|
3x3
fiberglass composite pumps (2 of which reconditioned)
|
3
|
|
|
Reconditioned
17 KW Generator
|
1
|
|
|
Complete
total station, level gear
|
1
|
|
|
Well
monitoring equipment
|
1
|
|
|
Welding
trailer
|
1
|
|
|
4-inch
well pump
|
1
|
|
|
MIP
steel strap tensioner
|
1
|
|
|
Hydraulic
crimp tool
|
1
|
|
|
Handheld
pipe threading tool
|
1
|
|
|
Electowinning
cells
|
16
|
|
|
Anodes
|
Note
1
|
|
|
Cathodes
|
Note
1
|
|
|
Rectifier
15,000 amp
|
1
|
|
|
Tankhouse
structure
|
1
|
|
|
Mixer
tanks 9' x 9' x 7.5' SS
|
3
|
|
|
SX
steel structures
|
3
|
Note
1: includes all Anodes and Cathodes related to installed
Electrowinning Cells.
CONFIDENTIAL
Exhibit
B
State
of Arizona & Federal Permits
|
·
|
Aquifer Protection
Permit: Issued June 9, 1993 by Arizona Department of
Environmental Quality, (ADEQ). A new application for this
permit will likely be required.
|
|
·
|
Air Quality
Permit: ADEQ determined on March 28, 2005 that no Air
Quality Permit is required for the 2500 tons per day run-of-mine operation
using 16 electro-winning cells.
|
|
·
|
Plan of Operations:
Revision issued October 2, 1992 by Bureau of Land Management,
(BLM). The Plan of Operations was modified on June 28, 2005 and
submitted to the BLM. Currently, the Plan of Operations is
being modified and will be submitted post-Closing. A reclamation bond will
need to be posted.
|
|
·
|
National Pollutant Discharge
Elimination System Permit: Arizona Department of Environmental
Quality, (ADEQ) or US Environmental Protection Agency. A
Multi-Sector General Permit was issued in 2000 with a five year life. The
Permit expired in 2005. A renewal application will be
required.
|
CONFIDENTIAL
Exhibit
C
Water
Rights
|
·
|
Seller
currently owns no water rights applicable to operation of the mine and/or
processing facilities of the
Property.
|
|
·
|
Past
operations have utilized water from three ▇▇▇▇▇ located to the north of
the Property. These ▇▇▇▇▇ are owned b y the BLM, which has
acknowledged that the associated water may be used for mining-related
activities on the Property. The BLM has granted a right-of-way
from these ▇▇▇▇▇ to the Property.
|
|
·
|
Seller
has applied for the transfer of a pipeline right-of-way from the site of
the Santa Claus Well to the
Property.
|
|
·
|
Seller
has paid the survey fees for the water
rights.
|
CONFIDENTIAL
Exhibit
D
Bylaws
of Buyer