STOCK EXCHANGE AGREEMENT

 

Among

 

INCEPTION MINING, INC.

 

and

 

CLAVO RICO, LTD

 

and

 

THE MAJORITY SHAREHOLDERS OF CLAVO RICO, LTD.

 

Dated February 3, 2015

 

 

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TABLE OF CONTENTS

 

 

Articles       Page           ARTICLE I   THE EXCHANGE   6               1.01
The Exchange   6     1.02 Effective Time         1.03 Closing   6     1.04
Directors and Officers of Clavo Rico         1.05 Effects of the Exchange   6  
        ARTICLE II   REPRESENTATIONS, COVENANTS, AND WARRANTIES OF CLAVO RICO  
                2.01 Organization and Qualification   8     2.02 Capital Stock  
9     2.03 Authority Relative to this Agreement   9     2.04 Approvals and
Consents   10     2.05 Financial Statements   11     2.06 Absence of Certain
Changes or Events   11     2.07 Absence of Undisclosed Liabilities   12     2.08
Legal Proceedings   12     2.09 Information Supplied   13     2.10 Compliance
with Laws and Regulations   13     2.11 Compliance with Agreements   13     2.12
Tax Matters   14     2.13 Environmental Matters   15     2.14 Employee benefit
Plans   16     2.15 Patent, Trademarks   16     2.16 Insurance   17     2.17
Labor Relations   17     2.18 Tangible Property & Assets   17     2.19
Shareholder Vote Required   17     2.20 Brokers   17     2.21 Agreements no to
Compete   17     2.22 Board Approval   18     2.23 Material Transactions or
Affiliations   18     2.24 Clavo Rico Schedules   18

 

 

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Articles       Page         ARTICLE III   REPRESENTATIONS, COVENANTS AND
WARRANTIES OF CLAVO RICO SHAREHOLDERS                 3.01 Ownership of Clavo
Rico Shares   20     3.02 Knowledge of Representations               ARTICLE IV
  REPRESENTATIONS, COVENANTS, AND WARRANTIES OF INCEPTION MINING INC.          
      4.01 Organization   21     4.02 Capitalization   21     4.03 Subsidiaries
  21     4.04 Financial Statements   21     4.05 Information   22     4.06
Options and Warrants   22     4.07 Absence of Certain Changes or Events   23    
4.08 Title and Related Matters   24     4.09 Litigation and Proceedings   24    
4.10 Contracts   24     4.11 No Conflict With Other Instruments   24     4.12
Governmental Authorizations   24     4.13 Compliance With Laws and Regulations  
24     4.14 Insurance   25     4.15 Approval of Agreement   25     4.16 Material
Transactions or Affiliations   25     4.17 Employment Matters   25          
ARTICLE V   PLAN OF EXCHANGE                   5.01 The Exchange   25     5.02
Closing   26     5.03 Closing Events   26           ARTICLE VI   SPECIAL
COVENANTS                   6.01 Access to Properties and Records   26     6.02
Delivery of Books and Records   26     6.03 Special Covenants and
Representations Regarding the Exchanged Stock   26     6.04 Third Party Consents
and Certificates   27     6.05 Sales Under Rules 144   27     6.06
Indemnification   27     6.07 Covenants Regarding Certain CERROS Assets   28    
6.08 Board Observation Rights   28

 

 

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Articles       Page           ARTICLE VII CONDITIONS                   7.01
Conditions to each Party’s Obligation to Effect The Exchange   29     7.02
Conditions to Obligation of INCEPTION to Effect The Exchange   29     7.03
Conditions to Obligation of CLAVO RICO to Effect The Exchange   31     7.04
Covenants of Razor Resources Subsequent to Closing   32           ARTICLE VIII  
TERMINATION; DEFAULT                   8.01 Termination   33     8.02 Subsequent
Default   33         ARTICLE IX   MISCELLANEOUS                   9.01 Brokers  
34     9.02 Governing Law   34     9.03 Notices   34     9.04 Attorneys’ Fees  
34     9.05 Schedules; Knowledge   34     9.06 Third Party Beneficiaries   35  
  9.07 Entire Agreement   35     9.08 Survival; Termination   35     9.09
Counterparts   35     9.10 Amendment or Waiver   35     9.11 Arbitration  

 

 

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STOCK EXCHANGE AGREEMENT

 

THIS STOCK EXCHANGE AGREEMENT (hereinafter referred to as this “Agreement”), is
entered into effective as of the 3rd day of February, 2015 by and among
INCEPTION MINING, INC, a Nevada corporation (hereinafter referred to as
“INCEPTION”); CLAVO RICO LTD, a Turks and Caicos company (hereinafter referred
to as “CLAVO RICO”), and the majority shareholders of CLAVO RICO (hereinafter
referred to as the “Shareholders”), upon the following premises:

 

Premises

 

This Agreement provides for the acquisition by INCEPTION of all of the common
shares of CLAVO RICO owned by the Shareholders, which constitute 100% of the
issued and outstanding shares of common stock of CLAVO RICO, solely in exchange
for shares of common stock of INCEPTION (the “Exchange”).

 

Pursuant to the terms of the Agreement, as hereinafter set forth, among other
things, 100% of the outstanding and reserved securities (common and preferred
stock) of CLAVO RICO will be exchanged for shares of INCEPTION common stock,
which will be issued to the Shareholders, in reliance on applicable exemptions
from the registration requirements of the Securities Act and Applicable Blue Sky
laws, as hereinafter described.

 

The Boards of Directors of INCEPTION and CLAVO RICO have each determined that it
is advisable and in the best interests of their respective stockholders to
consummate, and have approved, the business combination transaction provided for
herein in which CLAVO RICO will become a wholly owned subsidiary of INCEPTION
and the Shareholders will hold INCEPTION shares of common stock.

 

Agreement

 

NOW THEREFORE, on the stated premises and for and in consideration of the mutual
covenants and agreements hereinafter set forth and the mutual benefits to the
parties to be derived therefrom, it is hereby agreed as follows:

 

 

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ARTICLE I

 

THE EXCHANGE

 

Section 1.01 The Exchange. At the Effective Time (as defined in Section 1.02),
upon the terms and subject to the conditions of the Agreement, INCEPTION shall
acquire 100% of the issued and outstanding common of CLAVO RICO from the
Shareholders for and in consideration of the issuance to the Shareholders of an
aggregate of 66,391,160 shares of INCEPTION common stock. As a result of the
Exchange, CLAVO RICO shall become a wholly owned subsidiary of INCEPTION.

 

Section 1.02 Effective Time. Following the Closing (as defined in Section 1.03),
66,391,160 shares of INCEPTION common stock (“Exchange Stock”) shall be
delivered to the Shareholders and the Shareholders shall deliver to INCEPTION
all of the common shares of CLAVO RICO owned by the Shareholders, which shall
constitute 100% of the issued and outstanding common stock of CLAVO RICO in the
manner and as provided in Section 1.06 hereof. The Exchange shall become
effective on the Closing Date (such date being referred to herein as the
“Effective Time”).

 

Section 1.03 Closing. The closing of the Exchange (the “Closing”) will take
place at the principal executive offices of INCEPTION at 5320 S 900 E Suite 260,
Murray, Utah 84106, or at such other place as the parties hereto mutually agree,
on a date and at a time to be specified by the parties, which shall in no event
be later than 10:00 a.m., local time, on the next day following satisfaction of
all of the conditions Article VII or, if permissible, waived in accordance with
this Agreement, or on such other date as the parties hereto mutually agree (the
“Closing Date”). At the Closing there shall be delivered to INCEPTION and the
Shareholders the certificates and other documents and instruments required to be
delivered under Article VI.

 

Section 1.04 Directors and Officers of CLAVO RICO. The directors of INCEPTION
immediately prior to the Effective Time, or such other individuals as the
directors of INCEPTION shall designate, shall, from and after the Effective
Time, be the directors of CLAVO RICO and such directors shall appoint the
officers of CLAVO RICO immediately prior to the Effective Time. The newly
appointed directors and officers of CLAVO RICO shall serve until their
successors shall have been duly elected or appointed and qualified or until
their earlier death, resignation, or removal in accordance with the CLAVO RICO
By-Laws. INCEPTION shall provide all needed information of the person or persons
who will serve in any capacity within CLAVO RICO. This information includes the
full legal name, date of birth, profession, passport and copies of all pages of
the current passport for each such individual, marital status, residence
including a current address, citizenship, title with the company, date and place
of the Board of Director meeting that authorized said person to represent
INCEPTION in the Turks and Caicos and any limitations to such representation or
power.

 

Section 1.05 Effects of the Exchange. Subject to the foregoing, the effects of
the Exchange shall be as provided in the applicable provisions of the laws of
the Turks and Caicos.

 

Section 1.06 Stock of CLAVO RICO.

 

 

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  A. Clavo Rico Common Stock. The common stock of Clavo Rico, Ltd issued and
outstanding at the Effective Time shall, by virtue of the Stock Exchange and
without any action on the part of the holders thereof, be exchanged on a pro
rata basis for 66,391,160 shares of Inception common stock.         B. Exchange
of CLAVO RICO Common Stock.

 

  (i) INCEPTION shall authorize one or more persons to act as exchange agent
hereunder (the “Exchange Agent”) pursuant to an agreement or agreements
satisfactory to Inception and CLAVO RICO. Promptly after Closing, Inception
shall deposit or cause to be deposited with the Exchange Agent the number of
certificates representing the shares of INCEPTION Common Stock payable to the
holders of CLAVO RICO Common Stock pursuant to Section 1.01 based on the number
of shares of INCEPTION common Stock to be issued to the Shareholders.        
(ii) As soon as practicable after the Effective Time, the Exchange Agent shall
mail to each holder of record of a certificate or certificates that immediately
prior to the Effective Time represented outstanding shares of CLAVO RICO Common
Stock (the “Certificates”), a form letter of transmittal (which shall specify
that delivery shall be effective, and risk of loss and title to the
Certificates(s) shall pass, only upon delivery of the Certificate(s) to the
Exchange Agent) and instructions for such holder’s use in effecting the
surrender of the Certificates in exchange for certificates representing shares
of INCEPTION Common Stock.         (iii) As soon as practicable after the
Effective Time, the Exchange Agent shall distribute to holders of shares of
CLAVO RICO Common Stock, upon surrender to the Exchange Agent of one or more
Certificates for cancellation, together with a duly executed letter of
transmittal one or more certificates representing the number of whole shares of
INCEPTION Common Stock into which the shares represented by the Certificate(s)
shall have been converted pursuant to Section 1.01 and the Certificates
surrendered shall be cancelled.         (iv) All shares of INCEPTION Common
Stock issued upon the surrender for exchange of CLAVO RICO Common Stock in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such shares of CLAVO RICO Common Stock.
        (v) As of the Effective Time, the holders of Certificates representing
shares of CLAVO RICO Common Stock shall cease to have any rights as shareholders
of CLAVO RICO, except such rights, if any, as they may have pursuant to the laws
of the Turks and Caicos. Except as provided above, until such time as the
Certificates are surrendered for exchange, each such Certificate shall, after
the Effective time, represent for all purposes only the right to receive the
number of whole shares of INCEPTION Common Stock into which the shares of CLAVO
RICO Common Stock have been converted by the Exchange as provided in Section
1.01.

 

 

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  (vi) No fractional shares of INCEPTION Common Stock and no certificates or
scrip therefor, or other evidence of ownership thereof, shall be issued upon the
surrender for exchange of Certificates, no dividend or distribution of INCEPTION
shall relate to any fractional share, and such fractional share interests shall
not entitle the owner thereof to vote or to any rights of a shareholder of
INCEPTION. All fractional shares of INCEPTION Common Stock to which a holder of
CLAVO RICO Common Stock immediately prior to the Effective Time would otherwise
be entitled, at the Effective Time, shall be aggregated and INCEPTION shall
issue the number of shares Inception Common Stock rounded up to the next whole
number.         (vii) In the event any Certificates shall have been lost, stolen
or destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificate, upon the making of an affidavit of that fact by the
holder thereof, such shares of INCEPTION Common Stock as may be required
pursuant to this Section 1.0; provided, however, that INCEPTION may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed Certificate to deliver a bond or
indemnification in such sum as it may direct as an indemnity against any claim
that may be made against Inception or the Exchange Agent with respect to the
Certificate alleged to have been lost, stolen or destroyed.

 

ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF CLAVO RICO

 

As an inducement to, and to obtain the reliance of INCEPTION, CLAVO RICO and the
CLAVO RICO Shareholders represent and warrant as follows:

 

Section 2.01 Organization and Qualification. CLAVO RICO is an Exempted company
duly organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation, Turks and Caicos Islands, and has the full
corporate power and authority to conduct its business as and to the extent now
conducted and to own, use, and lease its assets and properties. CLAVO RICO and
each of Compania Minera Cerros del Sur, S.A. and Minera Clavo Rico, S.A, its
wholly owned subsidiaries (individually, a “Subsidiary” and collectively, the
“Subsidiaries”) is duly qualified, licensed, or admitted to do business and is
in good standing in each jurisdiction in which the ownership, use, or leasing of
its assets and properties, or the conduct or nature of its businesses, makes
such qualification, licensing or admission necessary.

 

 

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CLAVO RICO was formed in the Turks and Caicos Islands and is not qualified,
licensed, or admitted to do business in any other jurisdiction. Except for the
Subsidiaries, , both companies formed and doing business in Honduras, CLAVO RICO
does not directly or indirectly own any equity or similar interest in, or any
interest convertible into or exchangeable or exercisable for, any equity or
similar interest in, any corporation, partnership, joint venture or other
business association or entity.

 

Section 2.02 Capital Stock.

 

(i) The authorized capital stock of CLAVO RICO consists solely of 250,000,000
shares of capital stock, par value $.01. As of December 31, 2014, 65,000,000
shares of Clavo Rico common stock were issued and outstanding. There has been no
change in the number of issued and outstanding shares of CLAVO RICO capital
stock since such date. 100% of the issued and outstanding shares of common stock
are owned by the Shareholders. All of the issued and outstanding shares of CLAVO
RICO common stock are, duly authorized, validly issued, fully paid, and
nonassessable. Except pursuant to this Agreement there are no outstanding
subscriptions, options, warrants, rights (including “phantom” stock rights),
preemptive rights or other contracts, commitments, understandings or
arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement, obligating CLAVO RICO to issue or
sell any shares of capital stock, bonds, or other securities of CLAVO RICO
(collectively, “Options”) or to grant, extend or enter into any option with
respect thereto.

 

(ii) There are no outstanding contractual obligations of CLAVO RICO to
repurchase, redeem, or otherwise acquire any shares of CLAVO RICO common stock
to provide funds to, or make any investment (in the form of a loan, capital
contribution or otherwise) in, any subsidiary or any other person.

 

(iii) The authorized capital stock of each of the Subsidiaries consists solely
of 500,000 shares of capital stock, no par value. As of January 1, 2015, 200,000
shares of common stock were issued and outstanding, 199,800 of which are held by
CLAVO RICO and the remaining shares are held by Gerardo Flores. There has been
no change in the number of issued and outstanding shares of capital stock since
such date. All of the issued and outstanding shares of the Subsidiaries’ common
stock are, duly authorized, validly issued, fully paid, and nonassessable. There
are no outstanding Options obligating CLAVO RICO or either of the Subsidiaries
to issue or sell any shares of capital stock of a Subsidiary or to grant, extend
or enter into any option with respect thereto.

 

Section 2.03 Authority Relative to this Agreement. CLAVO RICO has full corporate
power and authority to enter into this Agreement and, subject to obtaining a
majority of the CLAVO RICO Shareholders’ approval, to perform its obligations
hereunder and to consummate the transactions contemplated hereby. The execution,
delivery, and performance of this Agreement by CLAVO RICO and the consummation
by CLAVO RICO of the transactions contemplated hereby have been duly and validly
approved by the Board of Directors and directed that this Agreement be submitted
to the Shareholders for their consideration, and no other proceedings on the
part of CLAVO RICO or its Shareholders are necessary to authorize the execution,
delivery and performance of the Agreement by CLAVO RICO and the consummation by
CLAVO RICO of the transactions contemplated hereby. This Agreement has been duly
and validly executed and delivered by CLAVO RICO and, subject to obtaining a
majority of the CLAVO RICO Shareholders’ approval, constitutes a legal, valid,
and binding obligation of CLAVO RICO enforceable against CLAVO RICO in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, or other similar laws
affecting the enforcement of creditors’ rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

 

 

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Section 2.04 Approvals and Consents.

 

(i)The execution and delivery of this Agreement by CLAVO RICO do not, and the
performance by CLAVO RICO of its obligation hereunder and the consummation of
the transactions contemplated hereby will not, conflict with, result in a
violation or breach of, constitute (with or without notice or lapse of time or
both) a default under, result in or give to any person any right of payment or
reimbursement, termination, cancellation, modification or acceleration of, or
result in the creation or imposition of any Lien upon any of the assets or
properties of CLAVO RICO or the Subsidiaries under, any of the terms, conditions
or provisions of (x) the By-Laws and its formation documents as recorded in the
Turks and Caicos, or (y) subject to obtaining a majority of the CLAVO RICO
Shareholders’ Approval and the taking of the actions described in paragraph (ii)
of this section 2.04. (A) any statute, law, rule, regulation, or ordinance
(collectively, “Laws”), or any judgment, decree, order, writ, permit, or license
(collectively, “Orders”), of any court, tribunal, arbitrator, authority, agency,
commission, official, or other instrumentality of the Turks and Caicos Islands,
Honduras, any foreign country, or any domestic or foreign state, country, city,
or other political subdivision (a “Governmental or Regulatory Authority”),
applicable to CLAVO RICO, the Subsidiaries or any of their assets or properties,
or (B) any note, bond, mortgage, security agreement, indenture, license,
franchise, permit, concession, contract, lease (capital or operating) or other
instrument, obligation or agreement of any kind (collectively, “Contracts”) to
which CLAVO RICO or a Subsidiary is a party or by which CLAVO RICO, the
Subsidiaries or any of their assets or properties are bound, excluding from the
foregoing clauses (A) and (B) conflicts, violations, breaches, defaults,
terminations, modifications, accelerations, and creations and impositions of
Liens which, individually or in the aggregate, could not be reasonably expected
to have a Material Adverse Effect on CLAVO RICO or on the ability of CLAVO RICO
to consummate the transactions contemplated by this agreement. For purposes of
this Agreement, a “Material Adverse Effect” shall mean a material adverse effect
on the businesses, properties, assets, liabilities, condition (financial or
otherwise), or results of operations of an entity (or group of entities taken as
a whole). Notwithstanding the forgoing, a Material Adverse Effect shall not
include any change in political or economic matters of general applicability.
    (ii)No consent, approval, or action of, filing with, or notice to any
Governmental or Regulatory Authority or other public or private third party is
necessary or required under any of the terms, conditions or provisions of any
Law or Order of any Government of Regulatory Authority or any contract to which
CLAVO RICO or a Subsidiary is a party or by which CLAVO RICO, the Subsidiaries
or any of their assets or properties are bound for the execution and delivery of
this Agreement by CLAVO RICO, the performance by CLAVO RICO of its obligations
hereunder or the consummation of the transactions contemplated hereby, except
for such consents, approvals, or actions of, filings with or notices to any
Governmental or Regulatory Authority or other public or private third party the
failure of which to make or obtain do not and will not have a Material Adverse
Effect on CLAVO RICO, a Subsidiary or on the ability of CLAVO RICO to consummate
the transactions contemplated by this Agreement.

 

 

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Section 2.05 Financial Statements. CLAVO RICO delivered to INCEPTION prior to
the execution of this Agreement a true, correct and complete copy of CLAVO RICO
audited financial statements of its Subsidiaries for the years ended December
31, 2011, 2012, and 2013, (including, in each case, the notes, if any, thereto)
(the “CLAVO RICO Financial Statements”). The CLAVO RICO Financial Statements
were audited in accordance with International Auditing Standards applied on a
consistent basis during the periods involved (except as may be indicated therein
or in the notes thereto) and fairly and accurately present the consolidated
financial position of CLAVO RICO and its Subsidiaries in all material respects
as at the respective dates thereof and the results of its operations and cash
flows for the respective periods then ended.

 

Section 2.06 Absence of Certain Changes or Events. Except as set forth in this
Agreement or the CLAVO RICO Schedules, since December 31, 2013:

 

(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of CLAVO RICO or a Subsidiary; or
(ii) any damage, destruction, or loss to CLAVO RICO or a Subsidiary (whether or
not covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of CLAVO RICO or its Subsidiaries;

 

(b) Neither CLAVO RICO nor the Subsidiaries have (i) amended their incorporation
documents or its By-Laws; (ii) declared or made, or agreed to declare or make,
any payment of dividends or distributions of any assets of any kind whatsoever
to stockholders or purchased or redeemed, or agreed to purchase or redeem, any
of its capital stock; (iii) waived any rights of value which in the aggregate
are extraordinary or material considering the business of CLAVO RICO and the
Subsidiaries; (iv) made any material change in its method of management,
operation, or accounting; (v) entered into any other material transaction; (vi)
made any accrual or arrangement for payment of bonuses or special compensation
of any kind or any severance or termination pay to any present or former officer
or employee; (vii) increased the rate of compensation payable or to become
payable by it to any of its officers or directors or any of its employees whose
monthly compensation exceeds $1,000; or (viii) made any increase in any profit
sharing, bonus, deferred compensation, insurance, pension, retirement, or other
employee benefit plan, payment, or arrangement made to, for, or with its
officers, directors, or employees;

 

 

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(c) Neither CLAVO RICO nor the Subsidiaries have (i) borrowed or agreed to
borrow any funds or incurred, or become subject to, any material obligation or
liability (absolute or contingent) except liabilities incurred in the ordinary
course of business; (ii) paid any material obligation or liability (absolute or
contingent) other than current liabilities reflected in or shown on the most
recent CLAVO RICO balance sheet, and current liabilities incurred since that
date in the ordinary course of business; (iii) sold or transferred, or agreed to
sell or transfer, any of its assets, properties, or rights (except assets,
properties, or rights not used or useful in its business which, in the aggregate
have a value of less than $1,000), or cancelled, or agreed to cancel, any debts
or claims (except debts or claims which in the aggregate are of a value of less
than $1,000); (iv) made or permitted any amendment or termination of any
contract, agreement, or license to which it is a party if such amendment or
termination is material, considering the business of CLAVO RICO and the
Subsidiaries; or (v) issued, delivered, or agreed to issue or deliver any stock,
bonds or other corporate securities including debentures (whether authorized and
unissued or held as treasury stock); and

 

(d) Neither CLAVO RICO nor the Subsidiaries have become subject to any law or
regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or condition of
CLAVO RICO.

 

Section 2.07 Absence of Undisclosed Liabilities. Except for matters reflected or
reserved against in the balance sheet for the period ended December 31, 2013
included in CLAVO RICO Financial Statements or as disclosed in Schedule 2.07
hereto, neither CLAVO RICO nor the Subsidiaries have at such dates, or have
incurred since that date, any liabilities or obligations (whether absolute,
accrued, contingent, fixed or otherwise, or whether due or to become due) of any
nature that would be required by generally accepted accounting principles to be
reflected on a consolidated balance sheet of CLAVO RICO and the Subsidiaries
(including the notes thereto). Except as set forth in Schedules 2.07, the Clavo
Rico Financial Statements or the notes thereto, neither Clavo Rico nor the
Subsidiaries have any material contingent liabilities, direct or indirect,
matured or unmatured.

 

Section 2.08 Legal Proceedings. Except as set forth on schedule 2.08, there are
no actions, suits, arbitrations or proceedings pending or, to the knowledge of
CLAVO RICO are there any Government or Regulatory Authority investigations or
audits pending or threatened or claims or actions threatened by third parties
against, relating to or affecting, CLAVO RICO, the Subsidiaries or any of their
assets and properties, and (ii) neither CLAVO RICO nor the Subsidiaries are
subject to any judgment, decree, order, or writ, injunction, award, rule or
regulation of any Governmental or Regulatory Authority.

 

 

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Section 2.09 Information Supplied. All information furnished by CLAVO RICO to
INCEPTION in this Agreement, the CLAVO RICO Schedules and otherwise in
connection with the transactions contemplated hereby and on which INCEPTION
shall rely in making its disclosures and filings pursuant to the Securities Act
and the Exchange Act, including the CLAVO RICO Financial Statements, will comply
as to form in all material respects with the requirements of the Exchange Act
and the Securities Act, respectively, and will not, on the date hereof and at
the Effective Time, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading.

 

Section 2.10 Compliance with Laws and Orders. CLAVO RICO and the Subsidiaries
hold all permits, licenses, variances, exemptions, orders and approvals of all
Governmental and Regulatory Authorities necessary for the lawful conduct of its
business (the “CLAVO RICO Permits”), except for failures to hold such permits,
licenses, variances, exemptions, orders and approvals which, individually or in
the aggregate, are not having and could not be reasonably expected to have a
Material Adverse Effect on CLAVO RICO or the Subsidiaries. CLAVO RICO is in
compliance with the terms of the CLAVO RICO Permits, except failures so to
comply which, individually or in the aggregate, are not having and could not be
reasonably expected to have a Material Adverse Effect on CLAVO RICO or the
Subsidiaries. CLAVO RICO is not in violation of or default under any Law or
Order of any Government or Regulatory Authority, except for violations which,
individually or in the aggregate, are not having and could not be reasonably
expected to have a Material Adverse Effect on CLAVO RICO or the Subsidiaries.

 

Section 2.11 Compliance with Agreements; Certain Agreements.

 

(i)Neither CLAVO RICO, the Subsidiaries nor, to the knowledge of CLAVO RICO, any
other party thereto is in breach or violation of, or in default in the
performance or observance of any term or provision of, and no event has occurred
which, with notice or lapse of time or both, could be reasonably expected to
result in a default under, (x) the formation documents or the By-Laws (or other
comparable charter documents) of CLAVO RICO or a Subsidiary or (y) any Contract
to which CLAVO RICO or a Subsidiary is a party or by which CLAVO RICO, a
Subsidiary or any of their assets or properties are bound.     (ii)Except as
disclosed in Schedule 2.11 (ii), as of the date hereof, neither CLAVO RICO nor
either of the Subsidiaries is a party to any oral or written (u) capital or
operating leases providing for the payment of more than $50,000 per annum, (v)
consulting agreement involving the payment of more than $25,000 per annum, (w)
union or collective bargaining agreement which covers more than 15 employees,
(x) agreement with any executive officer or other key employee the benefits of
which are contingent or vest, or the terms of which are materially altered, upon
the occurrence of a transaction involving CLAVO RICO or a Subsidiary or (y)
agreement or plan, including any stock option, stock appreciation right,
restricted stock or stock purchase plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any
transactions contemplated by this Agreement.

 

 

Page | 14

 

Section 2.12 Tax Matters.

 

For purposes of this Section 2.12 the terms “Tax” and “Taxes” include without
limitation all liabilities for federal, state, local, foreign or other taxes,
whether based on, or related to income, profits, capital, premiums, sales, use,
gross receipts, property, ad valorem, franchise, employment, excise, patrol
import and other taxes, duties, leases and assessments, and include all related
penalties, interest, additions to tax and liabilities for taxes related to
contractual obligations with customers and suppliers.

 

  (i) Except as set forth in Schedule 2.12 hereto, CLAVO RICO and each of the
Subsidiaries has filed all material Tax returns required to be filed by
applicable law prior to the Closing Date. All material Tax returns were (and, as
to Tax returns not filed as of the date hereof, will be) true, complete, and
correct and filed on a timely basis. CLAVO RICO and each of the Subsidiaries (i)
has paid all material Taxes due, or claimed or asserted by any taxing authority
to be due, for the periods covered by such Tax returns or (ii) has duly and
fully provided reserves (in accordance with applicable accounting principles)
adequate to pay all such Taxes.         (ii) Except as set forth in Schedule
2.12 hereto, CLAVO RICO and each of its Subsidiaries has established (and until
the Closing Date will maintain) on its books and records reserves adequate to
pay all material Taxes not yet due and payable. CLAVO RICO has made available to
INCEPTION the complete and accurate copies of all work papers associated with
the calculation of CLAVO RICO’s and the Subsidiaries’ Tax reserves.        
(iii) There are no Tax Liens upon the assets of CLAVO RICO or either of the
Subsidiaries except Liens for Taxes not yet due.         (iv) Neither CLAVO RICO
nor a Subsidiary has requested (and no request has been made on its behalf) any
extension of time within which to file any material Tax return.         (v)  (A)
the statute of limitations for the assessment of all Taxes has expired for all
applicable Tax returns of CLAVO RICO and the Subsidiaries through December 31,
2008; (B) no state or federal income tax returns have been examined by the
appropriate taxing authorities for any periods; and (C) no deficiency for any
material Taxes has been suggested, proposed, asserted or assessed against CLAVO
RICO or a Subsidiary that has not been resolved and paid in full. Neither CLAVO
RICO nor a Subsidiary has executed a written consent extending the applicable
statute of limitations for federal, state or local tax purposes.      

 

Page | 15

 

  (vi) No audits or other administrative proceedings or court proceedings are
presently pending with regard to any Taxes or Tax returns of CLAVO RICO or a
Subsidiary.         (vii) Neither CLAVO RICO nor a Subsidiary has received a
written ruling of a taxing authority relating to Taxes or entered into a written
and legally binding agreement with any taxing authority relating to taxes.      
  (viii) To the extent requested by INCEPTION, CLAVO RICO has made available to
INCEPTION (or, in the case of Tax returns to be filed on or before the Closing
Date, will make available) complete and accurate copies of all Tax returns and
associated work papers filed by or on behalf of CLAVO RICO and the Subsidiaries
for all taxable years since 2011 ending on or prior to the Closing Date.        
(ix) No agreements relating to allocating or sharing of any material Taxes have
been entered into by CLAVO RICO or a Subsidiary.         (x) All transactions
that could give rise to a material understatement of income taxes by CLAVO RICO
or a Subsidiary have been adequately disclosed (or, with respect to Tax returns
filed following the Closing will be adequately disclosed) on CLAVO RICO’s and
each Subsidiary’s Tax returns.

 

Section 2.13 Environmental Matters.

 

  (i) To the knowledge of CLAVO RICO and its Subsidiaries, as of the date hereof
no material amount of any substance that has been designated by any governmental
entity or by applicable federal, state, or local law to be radioactive, toxic,
hazardous or otherwise a danger to health or other environment, including,
without limitation, PCBs, asbestos, petroleum, or urea-formaldehyde, a
(Hazardous Material”), but excluding chemicals used by CLAVO RICO Subsidiaries
in mining operations and office and janitorial supplies, is present, as a result
of the actions of CLAVO RICO or the Subsidiaries in, on or under any property,
including the land and the improvements, ground water and surface water, that
CLAVO RICO and the Subsidiaries have at any time owned, operated, occupied or
leased.         (ii) At no time has CLAVO RICO or its Subsidiaries transported,
stored, used, manufactured, disposed of, released or exposed its employees or
others to Hazardous Materials in violation of any Law in effect on or before the
Effective Time, which has had or is reasonably likely to have a Material Adverse
Effect on CLAVO RICO or the Subsidiaries, nor has CLAVO RICO or the Subsidiaries
disposed of, transported, sold, or manufactured any product containing a
Hazardous Material (collectively), “Hazardous Material Activities”) in violation
of any Law or Order promulgated by any Governmental or Regulating Authority to
prohibit, regulate or control Hazardous Materials or any Hazardous Material
Activity, which has or is reasonably likely to have a Material Adverse Effect on
CLAVO RICO or the Subsidiaries.

 

 

Page | 16

 

  (iii) The Subsidiaries currently have been approved for an environmental
license for its Clavo Rico mining project (the “Environmental Permit”) necessary
for the conduct of its mining operations and other businesses of the
Subsidiaries as such activities and businesses are currently being conducted,
the absence of which would be reasonably likely to have a Material Adverse
Effect on CLAVO RICO and the Subsidiaries.         (iv) No action, proceeding,
revocation proceeding, amendment procedure, writ, injunction, or claim is
pending or, to the knowledge of CLAVO RICO as of the date hereof, threatened
concerning any Environmental Permit or any Hazardous Material Activity of CLAVO
RICO or the Subsidiaries. CLAVO RICO is not aware of any fact or circumstance
which could involve CLAVO RICO or the Subsidiaries in any environmental
litigation or impose upon CLAVO RICO or the Subsidiaries any environmental
liability.

 

Section 2.14 Employee Benefit Plans.

 

  (i)Neither CLAVO RICO nor the Subsidiaries have or contribute to, any pension,
profit-sharing, option, other incentive plan, or any other type of Employee
Benefit Plan, or have any obligation to or customary arrangement with employees
for bonuses, incentives, compensation, vacations, severance, pay, sick pay, sick
leave, insurance, service award, relocation, disability, tuition refund, or
other benefits, whether oral or written, except as set forth in Honduran law.
Schedule 2.14 sets forth a complete and accurate list of each such Employee
Benefit Plan, Honduran employee benefits including accrued liabilities, and
other arrangements. CLAVO RICO has furnished to INCEPTION true, correct, and
complete copies, of all documents evidencing plans, obligations, or arrangements
referred to in Schedule 2.14 (or true, correct, and complete written summaries
of such plans, obligations, or arrangements to the extent not evidenced by
documents) and true, correct, and complete copies of all documents evidencing
trusts, summary plan descriptions.        (ii)Neither CLAVO RICO nor the
Subsidiaries have any employee benefit plans other than those required under
Honduran law.

 

Section 2.15 Patents, Trademarks, Et Cetera. CLAVO RICO and each Subsidiary has
all right, title and interest in, or a valid and binding license to use all
patents, patent applications, trademarks, trademark applications, trade names,
service marks, copyrights, copyright applications, franchises, trade secrets,
computer programs (in object or source code form), or other intangible property
or asset (collectively, “Intangibles”) which are individually or in the
aggregate material to the conduct of the business of CLAVO RICO and the
Subsidiaries. Neither CLAVO RICO nor the Subsidiaries are in default (or with
the giving of notice or lapse of time or both, would be in default) in a
material respect under any license to use such Intangible, such Intangible is
not being infringed by any third party. Neither CLAVO RICO nor the Subsidiaries
are infringing in a material respect any Intangible of any third party.

 

 

Page | 17

 

Section 2.16 Insurance. Except as set forth on Schedule 2.16, neither CLAVO RICO
nor the Subsidiaries have any liability, property, workers’ compensation,
directors’ and officers’ liability and other insurance policies currently in
effect that insure the business, operations, properties, assets, or employees of
CLAVO RICO or the Subsidiaries.

 

Section 2.17 Labor Matters. There are no material controversies pending or, to
the knowledge of CLAVO RICO, threatened between CLAVO RICO or the Subsidiaries
and any representatives of its employees, and, to the knowledge of CLAVO RICO,
there are no material organizational efforts presently being made involving any
of the now unorganized employees of CLAVO RICO or the Subsidiaries. There has
been no work stoppage, strike or similar concerted action by employees of CLAVO
RICO or the Subsidiaries.

 

Section 2.18 Tangible Property and Assets. CLAVO RICO and each of the
Subsidiaries have good and marketable title to all of its properties, interest
in properties, and assets, real and personal, which are reflected in the CLAVO
RICO Financial Statements or acquired after that date (except properties,
interest in properties, and assets sold or otherwise disposed of since such date
in the ordinary course of business), free and clear of all liens, pledges,
charges, or encumbrances except (a) statutory liens or claims not yet
delinquent; (b) such imperfections of title and easements as do not and will not
materially detract from or interfere with the present or proposed use of the
properties subject thereto or affected thereby or otherwise materially impair
present business operations on such properties; and (c) as described in the
CLAVO RICO Schedules. .

 

Section 2.19 Shareholder Vote Required. The consent of a majority of the
Shareholders on the CLAVO RICO Exchange proposal is the only vote of the holders
of any class or series of the capital stock of CLAVO RICO required to adopt this
Agreement and approve the Exchange and the other transactions contemplated
hereby.

 

Section 2.20 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by CLAVO RICO directly
with INCEPTION without the intervention of any person on behalf of CLAVO RICO in
such a manner as to give rise to any valid claim by any person against CLAVO
RICO or INCEPTION for a finder’s fee, brokerage commission or similar payment.

 

Section 2.21 Agreements Not to Compete. There are no contracts between CLAVO
RICO or the Subsidiaries and their directors, officers, employees, agents
(including sales agents), dealers or distributors which prevent or restrict any
such person from competing with CLAVO RICO or the Subsidiaries in any manner.

 

 

Page | 18

 

 

Section 2.22 Board Approval of Agreement. The board of directors of CLAVO RICO
has authorized the execution and delivery of this Agreement by CLAVO RICO and
has approved the transactions contemplated hereby.

 

Section 2.23 Material Transactions or Affiliations. Set forth in the CLAVO RICO
Schedules is a description of every material contract, agreement, or arrangement
to which CLAVO RICO, the Subsidiaries or any predecessor thereof and any person
who was at the time of such contract, agreement, or arrangement an officer,
director, or person owning of record, or known by CLAVO RICO to own
beneficially, five percent (5%) or more of the issued and outstanding common
stock of CLAVO RICO and which is to be performed in whole or in part after the
date hereof or which was entered into not more than three years prior to the
date hereof. In all of such transactions, the amount paid or received, whether
in cash, in services, or in kind, is, had been during the full term thereof, and
is required to be during the unexpired portion of the term thereof, no less
favorable to CLAVO RICO and the Subsidiaries than terms available from otherwise
unrelated parties in arm’s length transactions. Except as disclosed in the CLAVO
RICO Schedules or otherwise disclosed herein, no officer, director, or five
percent (5%) shareholder of CLAVO RICO or the Subsidiaries has, or has had since
inception of CLAVO RICO, any interest, direct or indirect, in any material
transaction with CLAVO RICO or a Subsidiary. There are no commitments by CLAVO
RICO or a Subsidiary, whether written or oral, to lend any funds to, borrow any
money from, or enter into any other material transaction with, any such
affiliated person.

 

Section 2.24 CLAVO RICO Schedules. CLAVO RICO has delivered to INCEPTION. the
following schedules, which are collectively referred to as the “CLAVO RICO
Schedules” and which consist of separate schedules dated as of the date of
execution of this Agreement and instruments and data as of such date, all
certified by the chief executive officer of CLAVO RICO as complete, true, and
correct:

 

(a) a schedule identifying the formation documents, By-Laws and minutes of Board
of Director meetings and resolutions of CLAVO RICO and each Subsidiary in effect
as of the date of this Agreement, complete and correct copies of which have been
provided by CLAVO RICO to INCEPTION;

 

(b) a schedule containing the Financial Statements of CLAVO RICO identified in
paragraph 2.05;

 

(c) a statement indicating that all required income tax returns have been filed
on behalf of CLAVO RICO and the Subsidiaries, copies of which have been provided
to INCEPTION by CLAVO RICO.

 

(d) a schedule identifying the name and address of each shareholder of CLAVO
RICO and each Subsidiary together with the number of shares owned by the such
shareholder;

 

 

Page | 19

 

 

(e) a schedule containing a description of all real property owned or leased by
CLAVO RICO;

 

(f) a schedule identifying the title, date, and parties of all contracts,
agreements, or other instruments to which CLAVO RICO and the Subsidiaries are a
party or by which they or their properties are bound, specifically including all
contracts, agreements, or arrangements referred to in section 2.18, and a true
and correct copy of each such contract, agreement and instrument CLAVO RICO
represents have been provided to INCEPTION;

 

(g) a schedule identifying all licenses, permits, and other governmental
authorizations (or requests or applications therefor) pursuant to which CLAVO
RICO or the Subsidiaries carry on or propose to carry on their businesses,
copies of which have been provided to INCEPTION by CLAVO RICO;

 

(h) a schedule listing the accounts receivable and notes and other obligations
receivable of CLAVO RICO and the Subsidiaries as of December 31, 2014, or that
arose thereafter, indicating the debtor and amount, and classifying the accounts
to show in reasonable detail the length of time, if any, overdue, and stating
the nature and amount of any refunds, set offs, reimbursements, discounts, or
other adjustments which are in the aggregate material and due to or claimed by
such creditor;

 

(i) a schedule listing the accounts payable and notes and other obligations
payable by CLAVO RICO and the Subsidiaries as of December 31, 2014 or that arose
thereafter other than in the ordinary course of the business of CLAVO RICO,
indicating the creditor and amount, classifying the accounts to show in
reasonable detail the length of time, if any, overdue, and stating the nature
and amount of any refunds, setoffs, reimbursements, discounts, or other
adjustments, which in the aggregate are material and due or payable to CLAVO
RICO or the Subsidiaries respecting such obligations;

 

(j) a schedule setting forth a description of any material adverse change in the
business, operations, property, inventory, assets, or condition of CLAVO RICO or
a Subsidiary since December 31, 2014;

 

(k) a schedule containing a copy of the board of directors’ and shareholders’
minutes of CLAVO RICO and each of the Subsidiaries since inception; and

 

(l) a schedule setting forth any other information, together with any required
copies of documents, required to be disclosed in the CLAVO RICO Schedules by
Sections 2.01 through 2.23.

 

 

Page | 20

 

ARTICLE III

 

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF THE SHAREHOLDERS

 

As an inducement to, and to obtain reliance of INCEPTION, CLAVO RICO
Shareholders holding a majority of the issued and outstanding shares represent
and warrant as follows:

 

Section 3.01 Ownership of CLAVO RICO Shares.

 

(a) The CLAVO RICO Shareholders making this representation own greater than 50%
of the issued and outstanding shares of Common Stock of CLAVO RICO, free and
clear of any claims, charges, equities, liens, security interests, and
encumbrances whatsoever, and that the Shareholders have full right, power, and
authority to transfer, assign, convey, and deliver their CLAVO RICO shares; and
delivery of such shares at the closing will convey to INCEPTION good and
marketable title to such shares free and clear of any claims, charges, equities,
liens, security interests, and encumbrances whatsoever, except as set forth
herein. Further, the Shareholders making this representation represent that
their affirmative vote for this Exchange Agreement is binding upon Clavo Rico
and the other Shareholders.

 

(b) The Shareholders further warrant and certify by affixing their signatures to
the consent to the Exchange Agreement that they are an “Accredited Investor”
within the meaning of that term as defined in Regulation D of the Securities Act
of 1933.

 

(c) The CLAVO RICO Shareholders have been advised that:

 

(1) The securities to be issued by INCEPTION in exchange for CLAVO RICO common
stock have not been registered under the Securities Act, the Exchange Act or any
comparable state securities laws, but rather, are being issued in reliance on
the exemption from registration under the Securities Act provided by Section
4(2), Section 4(6) and/or Regulation S thereof.

 

(2) The certificates for the shares of INCEPTION’s common stock will bear a
legend restricting any transactions therein, directly or indirectly, unless it
is first registered under applicable federal and state securities laws or the
proposed transaction is exempt from such registration requirements, and if such
facts are demonstrated to the satisfaction of INCEPTION and its legal counsel,
based on such third party legal opinions, affidavits, and transfer agency
procedures as INCEPTION will reasonably require or have in place. INCEPTION will
not unreasonably withhold its consent to such registration;

 

(3) INCEPTION’s transfer agent has been instructed to decline transfer of the
certificate for the shares of INCEPTION’s common stock to be issued pursuant to
this Agreement unless the foregoing requirements have been met and have been
confirmed as having been met by a duly authorized officer of INCEPTION.

 

(d) Each CLAVO RICO Shareholder has independently determined through their own
legal counsel that all requirements of CLAVO RICO’s country of domicile for the
issuance of the shares of INCEPTION’s common stock called for by this Agreement
have been met, or will have been met, prior to Closing.

 

 

Page | 21

 

 

ARTICLE IV

 

REPRESENTATIONS, COVENANTS, AND WARRANTIES OF INCEPTION

 

As an inducement to, and to obtain the reliance of CLAVO RICO and the
Shareholders INCEPTION represents and warrants as follows:

 

Section 4.01 Organization. INCEPTION is a corporation duly organized, validly
existing, and in good standing under the laws of the state of Nevada, and has
the corporate power and is duly authorized, qualified, franchised, and licensed
under all applicable laws, regulations, ordinances, and orders of public
authorities to own all of its properties and assets and to carry on its business
in all material respects as it is now being conducted, and there is no
jurisdiction in which it is not qualified in which the character and location of
the assets owned by it or the nature of the business transacted by it requires
qualification. The execution and delivery of this Agreement does not, and the
consummation of the transactions contemplated hereby will not, violate any
provision of INCEPTION’s articles of incorporation or bylaws. INCEPTION has
taken all action required by law, its articles of incorporation, its bylaws, or
otherwise to authorize the execution and delivery of this Agreement, and
INCEPTION has full power, authority, and legal right and has taken all action
required by law, its articles of incorporation, bylaws, or otherwise to
consummate the transactions herein contemplated.

 

Section 4.02 Capitalization. INCEPTION authorized capitalization consists of
10,000,000 shares of Preferred Shares, $.00001 par value, none of which are
issued and outstanding, and 500,000,000 shares of common stock, par value
$.00001, of which 16,597,790 shares are issued and outstanding. All issued and
outstanding shares are legally issued, fully paid, and non-assessable and not
issued in violation of the pre-emptive or other rights of any person. Further,
INCEPTION has granted no options, warrants or issued other convertible
instruments, which when exercised or converted would result in the issuance of
additional shares of Common or Preferred Shares.

 

Section 4.03 Subsidiaries. INCEPTION has no operating subsidiaries.

 

Section 4.04 Financial Statements.

 

(a) INCEPTION’S annual audited for the year ended July 31, 2014 and quarterly
unaudited statements are a matter of public record and filed of record with the
Securities and Exchange Commission on forms 10K and 10Q and all such forms 10K
and 10Q currently due have been filed with the SEC.

 

 

Page | 22

  

(b) All such financial statements have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved. The INCEPTION balance sheets present fairly as of their
respective dates the financial condition of INCEPTION. INCEPTION did not have as
of the date of any such INCEPTION balance sheet, except as and to the extent
reflected or reserved against therein, any liabilities or obligations (absolute
or contingent) which should be reflected in a balance sheet or the notes thereto
prepared in accordance with generally accepted accounting principles, and all
assets reflected therein are properly reported and present fairly the value of
the assets of INCEPTION, in accordance with generally accepted accounting
principles. The statements of operations, stockholders’ equity, and changes in
financial position reflect fairly the information required to be set forth
therein by generally accepted accounting principles.

 

(c) INCEPTION has no liabilities with respect to the payment of any federal,
state, county, local, or other taxes (including any deficiencies, interest, or
penalties), except for taxes accrued but not yet due and payable.

 

(d) INCEPTION has filed all state, federal, or local income or sales or use tax
returns required to be filed by it from inception to the date hereof. No such
federal or state tax returns have been audited by any state or the Internal
Revenue Service. Each of such tax returns reflects the taxes due for the period
covered thereby, except for amounts which, individually or in the aggregate, are
immaterial.

 

(e) The books and records, financial and otherwise, of INCEPTION are in all
material respects complete and correct and have been maintained in accordance
with good business and accounting practices.

 

(f) INCEPTION has good and marketable title to its assets and, except as set
forth in the INCEPTION Schedules or the Financial Statements of INCEPTION or the
notes thereto, has no material contingent liabilities, direct or indirect,
matured or unmatured.

  

Section 4.05 Information. The information concerning INCEPTION set forth in this
Agreement and the INCEPTION Schedules is complete and accurate in all material
respects and does not contain any untrue statement of a material fact or omit to
state a material fact required to make the statements made, in light of the
circumstances under which they were made, not misleading.

 

Section 4.06 Options or Warrants. Except as set forth in the INCEPTION financial
statements or as required to be issued pursuant to this Agreement, there are no
existing convertible instruments, options, warrants, calls, or commitments of
any character relating to authorized and unissued stock of INCEPTION, except
options, warrants, calls, or commitments, if any, to which INCEPTION is not a
party and by which it is not bound.

 

 

Page | 23

  

Section 4.07 Absence of Certain Changes or Events. Except as described herein or
in the INCEPTION Schedules, since the date of the most recent INCEPTION balance
sheet:

 

(a) there has not been (i) any material adverse change in the business,
operations, properties, assets, or condition of INCEPTION (whether or not
covered by insurance) materially and adversely affecting the business,
operations, properties, assets, or condition of INCEPTION;

 

(b) INCEPTION has not (i) amended its articles of incorporation or bylaws; (ii)
declared or made, or agreed to declare or make any payment of dividends or
distributions of any assets of any kind whatsoever to stockholders or purchased
or redeemed, or agreed to purchase or redeem, any of its capital stock; (iii)
waived any rights of value which in the aggregate are extraordinary or material
considering the business of INCEPTION; (iv) made any material change in its
method of management, operation, or accounting; (v) entered into any other
material transactions; (vi) made any accrual or arrangement for or payment of
bonuses or special compensation of any kind or any severance or termination pay
to any present or former officer or employee; (vii) increased the rate of
compensation payable or to become payable by it to any of its officers or
directors or any of its employees whose monthly compensation exceeds $1,000; or
(viii) made any increase in any profit sharing, bonus, deferred compensation,
insurance, pension, retirement, or other employee benefit plan, payment, or
arrangement, made to, for, or with its officers, directors, or employees;

 

(c) INCEPTION has not, except as provided under this Agreement (i) granted or
agreed to grant any options, warrants, or other rights for its stocks, bonds, or
other corporate securities calling for the issuance thereof; (ii) borrowed or
agreed to borrow any funds or incurred, or become subject to, any material
obligation or liability (absolute or contingent) except liabilities incurred in
the ordinary course of business; (iii) paid or agreed to pay any material
obligation or liability (absolute or contingent) other than current liabilities
reflected in or shown on the most recent INCEPTION balance sheet and current
liabilities incurred since that date in the ordinary course of business and
professional and other fees and expenses incurred in connection with the
preparation of this Agreement and the consummation of the transactions
contemplated hereby; (iv) sold or transferred, or agreed to sell or transfer,
any of its assets, property, or rights (except assets, property, or rights not
used or useful in its business which, in the aggregate have a value of less than
$1,000), or cancelled, or agreed to cancel, any debts or claims (except debts or
claims which in the aggregate are of a value of less than $1,000); (v) made or
permitted any amendment or termination of any contract, agreement, or license to
which it is a party if such amendment or termination is material, considering
the business of INCEPTION; or (vi) issued, delivered, or agreed to issue or
deliver any stock, bonds, or other corporate securities including debentures
(whether authorized and unissued or held as treasury stock), except in
connection with this Agreement; and

 

(d) to the best knowledge of INCEPTION, it has not become subject to any law or
regulation which materially and adversely affects, or in the future may
adversely affect, the business, operations, properties, assets, or condition of
INCEPTION.

 

 

Page | 24

  

Section 4.08 Title and Related Matters. INCEPTION has good and marketable title
to all of its properties, interest in properties, and assets, real and personal,
which are reflected in the INCEPTION balance sheet or acquired after that date
(except properties, interest in properties, and assets sold or otherwise
disposed of since such date in the ordinary course of business), free and clear
of all liens, pledges, charges, or encumbrances except (a) statutory liens or
claims not yet delinquent; (b) such imperfections of title and easements as do
not and will not materially detract from or interfere with the present or
proposed use of the properties subject thereto or affected thereby or otherwise
materially impair present business operations on such properties; and (c) as
described in the INCEPTION Schedules.

 

Section 4.09 Litigation and Proceedings. There are no actions, suits, or
proceedings pending or, to the knowledge of INCEPTION, threatened by or against
or affecting INCEPTION, at law or in equity, before any court or other
governmental agency or instrumentality, domestic or foreign, or before any
arbitrator of any kind. INCEPTION does not have any knowledge of any default on
its part with respect to any judgment, order, writs, injunction, decree, award,
rule, or regulation of any court, arbitrator, or governmental agency or
instrumentality.

 

Section 4.10 Contracts. Except for contracts entered into in the ordinary course
of business, all of INCEPTION’s material contracts, agreements, and other
commitments have been disclosed in INCEPTION’S SEC filings.

 

Section 4.11 No Conflict With Other Instruments. The consummation of the
transactions contemplated by this Agreement will not result in the material
breach of any term or provision of, or constitute a material default under, any
indenture, mortgage, deed of trust, or other material agreement or instrument to
which INCEPTION is a party or to which it or any of its assets or operations are
subject.

 

Section 4.12 Governmental Authorizations. INCEPTION has all licenses,
franchises, permits, and other government authorizations, that are legally
required to enable it to conduct its business operations in all material
respects as conducted on the date hereof. Except for compliance with federal and
state securities or corporation laws, as hereinafter provided, no authorization,
approval, consent, or order of, or registration, declaration, or filing with,
any court or other governmental body is required in connection with the
execution and delivery by INCEPTION of this Agreement and the consummation by
INCEPTION of the transactions contemplated hereby.

 

Section 4.13 Compliance With Laws and Regulations. To the best of its knowledge,
INCEPTION has complied with all applicable statutes and regulations of any
federal, state, or other applicable governmental entity or agency thereof,
except to the extent that noncompliance would not materially and adversely
affect the business, operations, properties, assets, or conditions of INCEPTION
or except to the extent that noncompliance would not result in the incurrence of
any material liability. This compliance includes, but is not limited to, the
filing of all reports to date with federal and state securities authorities in
connection with INCEPTION’s filing, approval and completion of its recent
offering of securities pursuant to Rule 504 of Regulation C and subsequent
reports required by the U.S. Securities and Exchange Commission.

  

 

Page | 25

 

 Section 4.14 Insurance. Except as set forth on Schedule 4.14, INCEPTION has no
liability, property, workers’ compensation, directors’ and officers’ liability
or other insurance policies currently in effect that insure the business,
operations, properties, assets, or employees of INCEPTION.

 

Section 4.15 Approval of Agreement. The board of directors of INCEPTION has
authorized the execution and delivery of this Agreement by INCEPTION and has
approved this Agreement and the transactions contemplated hereby.

 

Section 4.16 Material Transactions of Affiliations. Except as disclosed herein
and in the INCEPTION Schedules, there exists no material contract, agreement, or
arrangement between INCEPTION and any person who was at the time of such
contract, agreement, or arrangement an officer, director, or person owning of
record or known by INCEPTION to own beneficially, 5% or more of the issued and
outstanding common stock of INCEPTION and which is to be performed in whole or
in part after the date hereof or was entered into not more than three years
prior to the date hereof. Neither any officer, director, nor 5% shareholder of
INCEPTION has, or has had during the last preceding full fiscal year, any known
interest in any material transaction with INCEPTION which was material to the
business of INCEPTION. INCEPTION has no commitment, whether written or oral, to
lend any funds to, borrow any money from, or enter into any other material
transaction with any such affiliated person.

 

Section 4.17 Employment Matters. INCEPTION has no employees other than its
directors and officers. There are no material controversies pending or, to the
knowledge of INCEPTION, threatened between INCEPTION and any representatives of
its former employees.

 

ARTICLE V

 

CONSIDERATION AND PLAN OF EXCHANGE

 

Section 5.01 The Exchange. On the terms and subject to the conditions set forth
in this Agreement, on the Closing Date (as defined in Section 1.03), the
Shareholders hereby agree to assign, transfer, and deliver to INCEPTION, free
and clear of all liens, pledges, encumbrances, charges, restrictions, or known
claims of any kind, nature, or description shares of common stock of CLAVO RICO,
in the aggregate constituting 100% of the issued and outstanding shares of
common and preferred stock of CLAVO RICO, and INCEPTION agrees to acquire such
shares on such date by issuing and delivering to the Shareholders in exchange
therefore an aggregate of 66,391,160 shares of INCEPTION restricted common
stock, par value $0.00001. The shares shall be distributed to the Shareholders
in the amounts set forth opposite each such Shareholder’s name on the
shareholder list delivered electronically to INCEPTION attached hereto and
incorporated herein by this reference.

 

 

Page | 26

  

As of the Closing, the effect of the Exchange will be that CLAVO RICO will have
become a wholly owned subsidiary of INCEPTION and the Shareholders will have
become shareholders of INCEPTION, and the Shareholders will have no further
rights, title or interest in CLAVO RICO stock, other than (i) to receive the
shares of INCEPTION restricted common stock set forth on Exhibit A and (ii)
indirectly as a shareholder of INCEPTION and as may be set forth hereafter.

 

Section 5.02 Closing. The closing (“Closing”) of the transactions contemplated
by this Agreement shall be on a date and at such time as the parties may agree
(“Closing Date”). Such Closing shall take place at a mutually agreeable time and
place.

 

Section 5.03 Closing Events. At the Closing, each of the respective parties
hereto shall execute, acknowledge, and deliver (or shall cause to be executed,
acknowledged, and delivered) any and all certificates, opinions, financial
statements, schedules, agreements, resolutions, rulings, or other instruments
required by this Agreement to be so delivered at or prior to the Closing,
together with such other items as may be reasonably requested by the parties
hereto and their respective legal counsel in order to effectuate or evidence the
transactions contemplated hereby.

 

ARTICLE VI

 

SPECIAL COVENANTS

 

Section 6.01 Access to Properties and Records. INCEPTION and CLAVO RICO will
each afford to the officers and authorized representatives of the other full
access to the properties, books, and records of INCEPTION or CLAVO RICO as the
case may be, in order that each may have full opportunity to make such
reasonable investigation as it shall desire to make of the affairs of the other,
and each will furnish the other with such additional financial and operating
data and other information as to the business and properties of INCEPTION or
CLAVO RICO, as the case may be, as the other shall from time to time reasonably
request.

 

Section 6.02 Delivery of Books and Records. At the Closing, CLAVO RICO shall
deliver to INCEPTION the originals of the corporate minute books, books of
account, contracts, records, and all other books or documents of CLAVO RICO now
in the possession of CLAVO RICO or its representatives.

 

Section 6.03 Special Covenants and Representations Regarding the Exchanged
Stock. The consummation of this Agreement and the transactions herein
contemplated, including the issuance of the INCEPTION common Stock to the
Shareholders as contemplated hereby, constitutes the offer and sale of
securities under the Securities Act and applicable state statutes. Such
transaction shall be consummated in reliance on exemptions from the registration
and prospectus delivery requirements of such statutes which depend, inter alia,
upon the circumstances under which the Shareholders acquire such securities. In
connection with reliance upon exemptions from the registration and prospectus
delivery requirements for such transactions, at the Closing, the Shareholders
shall cause to be delivered, and the Shareholders shall deliver to INCEPTION,
letters of representation in the appropriate form.

 

 

Page | 27

  

Section 6.04 Third Party Consents and Certificates. INCEPTION and CLAVO RICO
agree to cooperate with each other in order to obtain any required third party
consents to this Agreement and the transactions herein and therein contemplated.

 

Section 6.05 Sales Under Rules 144, If Applicable.

 

(a) INCEPTION will use its best efforts to at all times comply with the
reporting requirements of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), including timely filing all periodic reports required under the
provisions of the Exchange Act and the rules and regulations promulgated
thereunder.

 

(b) Upon being informed in writing by any of the Shareholders that any such
Shareholder intends to sell any shares under Rule 144 promulgated under the
Securities Act (including any rule adopted in substitution or replacement
thereof), INCEPTION will certify in writing to the Shareholder that it has filed
all of the reports required to be filed by it under the Exchange Act to enable
the shareholder to sell the shareholder’s restricted stock under Rule 144, or
will inform the shareholder in writing that it has not filed any such report or
reports.

 

(c) If any Shareholder presents to INCEPTION’s transfer agent for registration
of transfer in connection with any sale theretofore made under Rule 144,
provided such certificate is duly endorsed for transfer by the appropriate
person(s) or accompanied by a separate stock power duly executed by the
appropriate person(s) in each case with reasonable assurances that such
endorsements are genuine and effective, and is accompanied by an opinion of
counsel satisfactory to INCEPTION and its counsel that such transfer has
complied with the requirements of Rule 144 or other applicable exemption,
INCEPTION will promptly instruct its transfer agent to register such transfer
and to issue one or more new certificates representing such shares to the
transferee and, if appropriate under the provisions of Rule 144, free of any
stop transfer order or restrictive legend. The provisions of this Section 6.05
shall survive the Closing and the consummation of the transactions contemplated
by this Agreement.

 

Section 6.06 Indemnification.

 

(a) CLAVO RICO hereby agrees to indemnify INCEPTION and each of the officers,
agents and directors of INCEPTION as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever), to which it or they may become subject arising out of or
based on (i) any inaccuracy appearing in or misrepresentation made under
Articles II and/or III of this Agreement or (ii) an uncured subsequent default
under Section 8.02 of this Agreement. The indemnification provided for in this
paragraph shall survive the Closing and consummation of the transactions
contemplated hereby and termination of this Agreement.

 

 

Page | 28

  

(b) INCEPTION hereby agrees to indemnify CLAVO RICO and each of the officers,
agents and directors of CLAVO RICO as of the date of execution of this Agreement
against any loss, liability, claim, damage, or expense (including, but not
limited to, any and all expense whatsoever reasonably incurred in investigating,
preparing, or defending against any litigation, commenced or threatened, or any
claim whatsoever), to which it or they may become subject arising out of or
based on (i) any inaccuracy appearing in or misrepresentation made under Article
IV of this Agreement or (ii) an uncured subsequent default under Section 8.02 of
this Agreement. The indemnification provided for in this paragraph shall survive
the Closing and consummation of the transactions contemplated hereby and
termination of this Agreement.

 

Section 6.07 Covenants Regarding Certain CLAVO RICO Assets

 

(a) The Parties recognize and acknowledge that certain assets of CLAVO RICO are
related to mining operations in Honduras, but not to the Clavo Rico concession.
It is the intent that the ownership of the following described assets be
transferred from CLAVO RICO and recorded under Honduran law in the names of
assignees as soon as possible. Until such time as these transfers can be
effected and recorded the assets shall remain in the legal name of CLAVO RICO.

 

(b) The “Retained Assets” are: (i) Corpus 1,2,3, and 4 mining concessions; (ii)
the El Transito mining concession.

 

(c) The Parties shall execute and deliver, as a condition to the Closing, an
undertaking and indemnification agreement related to the Retained Assets
defining the Parties’ respective rights and responsibilities related thereto
until their transfer can be recorded under Honduran law without adversely
affecting the ownership thereof.

 

Section 6.08 Board Observation Rights and CERROS Legal Representative

 

(a) INCEPTION’S Board of Directors shall grant Board observation rights to up to
two designees of CLAVO RICO, who shall be entitled to participate as observers
of all meetings of the Board and shall be entitled to notice of such meetings,
actions to be taken without meeting, and all materials distributed to the Board
as if the designees were members of the Board. The Board observation rights
shall continue for a period of two years from the Closing Date.

 

(b) Gerardo Flores shall remain as one of CLAVO RICO’s Legal Representatives in
Honduras for at least 6 months from the Closing.

 

 

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ARTICLE VII

 

CONDITIONS

 

7.01 Conditions to Each Party’s Obligation to Effect the Exchange

 

The respective obligation of each party to effect the Exchange is subject to the
fulfillment, at or prior to the Closing, of each of the following conditions:

 

  (a) Shareholder Approval. The Agreement shall have been adopted by the
requisite vote of the Shareholders of CLAVO RICO under CLAVO RICO’s formation
documents and By-Laws and as required under Turks and Caicos Law.         (b)
State Securities Laws. INCEPTION shall have received all state securities or
“Blue Sky” permits and other authorizations necessary, if required, to issue the
INCEPTION common stock pursuant to the Agreement at the Closing.         (c) No
Injunctions or Restraints. No court of competent jurisdiction or other competent
governmental or regulatory authority shall have enacted, issued, promulgated,
enforced or entered any law or order (whether temporary, preliminary or
permanent) which is then in effect and has the effect of making illegal or
otherwise restricting, preventing or prohibiting consummation of the Exchange or
the other transactions contemplated by this Agreement.         (d) Consents and
Approvals. All consents, approvals and actions of, CLAVO RICO or INCEPTION to
consummate the Exchange and the other matters contemplated hereby, the failure
of which to be obtained or taken could reasonably expected to have a material
adverse effect on INCEPTION or CLAVO RICO, in each case taken as a whole, or on
the ability of the Parties to consummate the transactions contemplated hereby
shall have been obtained, all in form and substance reasonably satisfactory to
the Parties, and no such consent, approval or action shall contain any term or
condition which could be reasonably expected to result in a material diminution
of the benefits of the Exchange to the stockholders of INCEPTION or CLAVO RICO.
        (e) Lock-Up Agreement. The Parties shall have executed and delivered a
Lock-Up Agreement (“Lock-Up Agreement”) relating to a portion of the shares of
INCEPTION common stock acceptable to INCEPTION issued to the CLAVO RICO
shareholders in the Exchange.

 

7.02 Conditions to Obligation of INCEPTION to Effect the Exchange.

 

The obligation of INCEPTION to effect the Exchange is further subject to the
fulfillment, at or prior to the Closing, of each of the following additional
conditions (all or any of which may be waived in whole or in part by INCEPTION
in its sole discretion).

 

 

Page | 30

  

  (a) Representations and Warranties. The representations and warranties made by
CLAVO RICO and the Shareholders in this Agreement shall be true and correct in
all material respects as of the Closing Date as though made on and as of the
Closing Date or, in the case of representations and warranties made as of a
specified date earlier than the Closing Date, on and as of such earlier date,
and CLAVO RICO shall have delivered to INCEPTION a certificate, dated the
Closing Date and executed on behalf of CLAVO RICO by its Chairman of the Board
or its President to such effect.         (b) Performance of Obligations. CLAVO
RICO shall have performed and complied with, in all material respects, each
agreement, covenant, and obligation required by this Agreement to be so
performed or complied with by CLAVO RICO at or prior to the Closing, and CLAVO
RICO shall have delivered to INCEPTION a certificate, dated the Closing Date and
executed on behalf of CLAVO RICO by its Chairman of the Board or President to
such effect.         (c) Other Closing Documents. CLAVO RICO shall have
delivered to INCEPTION at or prior to the Effective Time such other documents as
INCEPTION may reasonably request in order to enable INCEPTION to determine
whether the conditions to its obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement, including but not
limited to such documents, certificates or representations from the Shareholders
to ensure that any shares issuable to such shareholder can be issued
appropriately in reliance upon an exemption from registration under the United
States Securities Act of 1933, as amended.         (d) Legal Action. There shall
not have been instituted or threatened any legal proceeding relating to, or
seeking to prohibit or otherwise challenge the consummation of, the transactions
contemplated by this Agreement, or to obtain substantial damages with respect
thereto.         (e) No Governmental Action. There shall not have been any
action taken, or any law, rule, regulation, order, judgment, or decree proposed,
promulgated, enacted, entered, enforced, or deemed applicable to the
transactions contemplated by this Agreement by any federal, state, local, or
other governmental authority or by any court or other tribunal, which, in the
reasonable judgment of INCEPTION, delays the Closing or effects the Exchange in
any material way.         (f) Material Adverse Change. There shall not have been
a Material Adverse Change in CLAVO RICO since December 31, 2013.

 

 

Page | 31

  

7.03 Conditions to Obligation of CLAVO RICO to Effect the Exchange.

 

The obligation of CLAVO RICO and the Shareholders to effect the Exchange is
further subject to the fulfillment, at or prior to the Closing, of each of the
following additional conditions (all or any of which may be waived in whole or
in part by CLAVO RICO or the Shareholders in their sole discretion):

 

  (a) Representations and Warranties. The representations and warranties made by
INCEPTION in this Agreement shall be true and correct in all material respects
as of the Closing Date as though made on and as of the Closing Date or, in the
case of representations and warranties made as of a specified date earlier than
the Closing Date, on and as of such earlier date, and INCEPTION shall have
delivered to CLAVO RICO a certificate, dated the Closing Date and executed on
behalf of INCEPTION by its President to such effect.         (b) Performance of
Obligations. INCEPTION shall have performed and complied with, in all material
respects, each agreement, covenant, and obligation required by this Agreement to
be so performed or complied with by INCEPTION at or prior to the Closing, and
INCEPTION shall have delivered to CLAVO RICO a certificate, dated the Closing
Date and executed on behalf of INCEPTION by its President to such effect.      
  (c) Percentage Ownership. The 66,391,160 shares issued by INCEPTION in
consideration of this Agreement was determined in light of the total fully
diluted shares of INCEPTION common stock at the Closing Date, including any
warrants, options, or other instruments convertible to common stock outstanding
on the Closing Date.         (d) Capital Funding. INCEPTION shall have completed
a debt or equity funding, the net proceeds from which shall be no less than
$11,000,000, or as mutually agreed to subsequent to the signing of this
agreement.         (e) Other Closing Documents. INCEPTION shall have delivered
to CLAVO RICO at or prior to the Effective Time such other documents as CLAVO
RICO may reasonably request in order to enable CLAVO RICO to determine whether
the conditions to its obligations under this Agreement have been met and
otherwise to carry out the provisions of this Agreement.         (f) Legal
Action. There shall not have been instituted or threatened any legal proceeding
relating to, or seeking to prohibit or otherwise challenge the consummation of,
the transactions contemplated by this Agreement, or to obtain substantial
damages with respect thereto.         (g) No Governmental Action. There shall
not have been any action taken, or any law, rule, regulation, order, judgment,
or decree proposed, promulgated, enacted, entered, enforced, or deemed
applicable to the transactions contemplated by this Agreement by any federal,
state, local, or other governmental authority or by any court or other tribunal,
which, in the reasonable judgment of CLAVO RICO, delays the Closing or effects
the Exchange in any material way.         (h) Material Adverse Change. There
shall not have been a Material Adverse Change in INCEPTION since July 31, 2014.

 

 

Page | 32

  

7.04 Covenants of INCEPTION subsequent to Closing

 

The following covenants shall be obligations of INCEPTION to the Shareholders,
which shall be satisfied after the Closing of the Exchange and shall survive the
closing of this Agreement. The remedy for breach of any of these covenants is
set forth under Article VIII herein.

 

  (a) Comply with the reporting requirements of the Exchange Act for a period of
eighteen (18) months following the Closing. If delinquent in any such reporting
requirement, any Shareholder may request INCEPTION to correct the delinquency
within thirty (30) days. Failure to file the delinquent reports within the
thirty (30) days notice shall constitute a breach of this subsection 7.04.      
  (b) Take all necessary action and use all reasonable efforts to remain
qualified for the common shares of INCEPTION to continue to trade on the
Bulletin Board listings or a comparable exchange for at least eighteen (18)
months from the Closing. Failure to meet this requirement shall constitute a
breach of this subsection 7.04.         (c) Elect a minimum of two new Directors
to the INCEPTION board of directors who have mining and financial experience
capable of running a small mining operation. Failure to elect such directors
within three months from Closing shall constitute a breach of this subsection
7.04.         (d) INCEPTION shall, through its management team or consultants,
prepare a detailed budget for its mine operations and development in Honduras
which includes its drilling program, its anticipated capital expenses as well as
its projected costs of production within four (4) months of Closing. INCEPTION
shall fund all operating costs, as well as investments and expenses per the
approved budget for a period of at least fifteen months from Closing. Failure to
fund such costs, investments and expenses shall constitute a breach of this
subsection 7.04.

 

7.05 Covenants of CLAVO RICO subsequent to Closing

 

The following covenants shall be obligations of CLAVO RICO to INCEPTION, which
shall be satisfied after the Closing of the Exchange and shall survive the
closing of this Agreement. The remedy for breach of any of these covenants is
set forth under Article VIII herein.

 

(a) The Shareholders who enter into a Lock-Up Agreement will comply with the
terms of the Lock-Up Agreement.

 

(b) Failure to comply in accordance with subsection (a) shall constitute a
breach of this subsection 7.05.

 

(c) CLAVO RICO shall notify all shareholders of the material terms of the Stock
Exchange Agreement within 30 days of Closing, which shall include instructions
for exchanging certificates.

 

 

Page | 33

  

(d) CLAVO RICO has advised that commencing on the date hereof through ninety
(90) days following the Closing, CLAVO RICO shall use its best efforts to have
the shareholders of CLAVO RICO in addition to the Shareholders (the “Additional
Shareholders”) execute this Agreement and have such Additional Shareholders
exchange their shares of CLAVO RICO for one share each of INCEPTION. The shares
of INCEPTION shall be offered to each of the Additional Shareholders under
Regulation S as promulgated under the Securities Act of 1933, as amended.

 

ARTICLE VIII

 

TERMINATION; DEFAULT

  

Section 8.01 Termination. This Agreement may be terminated at any time after
execution hereof and prior to the Closing as follows:

 

  (a) Mutual Agreement. This Agreement may be terminated at any time by mutual
agreement of the Parties.         (b) Failure of Conditions. Either Party may
terminate this Agreement, if any of the conditions obligating such Party to
close specified in Article VII, except the conditions in Section 7.04, hereof
are not satisfied or waived by such Party as of the Closing Date.         (c)
Effect of Termination. Each Party shall return to the other all non public
information in its possession relating to the other Party. Each Party shall bear
its own costs related to its due diligence, professional fees, etc.         (d)
Closing Date. In the event the contemplated transaction has not closed on or
before April 30, 2015 the Agreement may be terminated at any time by either of
CLAVO RICO or INCEPTION.

 

Section 8.02 Subsequent Default. In the event of a breach of any covenant set
forth in sections 4.02, 6.07, 7.04 or 7.05 herein, a Shareholder may notify
INCEPTION or CLAVO RICO, as appropriate, of the default and request that it be
remedied within ten (10) business days. Failure to remedy the breach within the
ten business days shall result a right of indemnification of the non-breaching
party under Section 6.06 of this Agreement

 

 

Page | 34

  

ARTICLE IX

 

MISCELLANEOUS

 

Section 9.01 Brokers. INCEPTION and CLAVO RICO agree that there were no finders
or brokers involved in bringing the parties together or who were instrumental in
the negotiation, execution, or consummation of this Agreement. INCEPTION and
CLAVO RICO each agree to indemnify the other against any claim by any third
person for any commission, brokerage, or finders’ fee arising from the
transactions contemplated hereby based on any alleged agreement or understanding
between the indemnifying party and such third person, whether express or implied
from the actions of the indemnifying party.

 

Section 9.02 Governing Law. This Agreement shall be governed by, enforced, and
construed under and in accordance with the laws of the United States of America
and, with respect to matters of state law, with the laws of Nevada.

 

Section 9.03 Notices. Any notices or other communications required or permitted
hereunder shall be sufficiently given if personally delivered to it or sent by
registered mail or certified mail, postage prepaid, or by prepaid telegram
addressed as follows:

 

  If to INCEPTION to:           5320 S 900 E Suite 260     Murray, Utah 84107  
  Attention: Michael Ahlin, President           With copies to:           If to
CLAVO RICO to:           4049 S. Highland Drive     Salt Lake City, Utah 84124  
  Attention: Reed L Benson, President           With copies to:

 

or such other addresses as shall be furnished in writing by any party in the
manner for giving notices hereunder, and any such notice or communication shall
be deemed to have been given as of the date so delivered, mailed, or
telegraphed.

 

Section 9.04 Attorney’s Fees. In the event that any party institutes any action
or suit to enforce this Agreement or to secure relief from any default hereunder
or breach hereof, the breaching party or parties shall reimburse the
non-breaching party or parties for all costs, including reasonable attorneys’
fees, incurred in connection therewith and in enforcing or collecting any
judgment rendered therein.

 

Section 9.05 Schedules; Knowledge. Each party is presumed to have full knowledge
of all information set forth in the other party’s schedules delivered pursuant
to this Agreement.

 

 

Page | 35

 

Section 9.06 Third Party Beneficiaries. This contract is solely between
INCEPTION, CLAVO RICO and the Shareholders, and, except as specifically
provided, no director, officer, stockholder, employee, agent, independent
contractor, or any other person or entity shall be deemed to be a third party
beneficiary of this Agreement.

 

Section 9.07 Entire Agreement. This Agreement represents the entire agreement
between the parties relating to the subject matter hereof, including This
Agreement alone fully and completely expresses the agreement of the parties
relating to the subject matter hereof. There are no other courses of dealing,
understandings, agreements, representations, or warranties, written or oral,
except as set forth herein.

 

Section 9.08 Survival; Termination. The representations, warranties, and
covenants of the respective parties shall survive the Closing Date and the
consummation of the transactions herein contemplated.

 

Section 9.09 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall be but a single instrument.

 

Section 9.10 Amendment or Waiver. Every right and remedy provided herein shall
be cumulative with every other right and remedy, whether conferred herein, at
law, or in equity, and may be enforced concurrently herewith, and no waiver by
any party of the performance of any obligation by the other shall be construed
as a waiver of the same or any other default then, theretofore, or thereafter
occurring or existing. At any time prior to the Closing Date, this Agreement may
be amended by a writing signed by all parties hereto, with respect to any of the
terms contained herein, and any term or condition of this Agreement may be
waived or the time for performance hereof may be extended by a writing signed by
the party or parties for whose benefit the provision is intended.

 

[SIGNATURE PAGE FOLLOWS]

 

 

Page | 36

  

IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to
be executed by their respective officers, hereunto duly authorized, as of the
date first above-written.

 

    INCEPTION MINING, INC. ATTEST:               /s/ Whit Cluff     By /s/
Michael Ahlin Secretary     President             CLAVO RICO, LTD.            
By /s/ Reed L. Benson       President

 

 

Page | 37

  

SHAREHOLDER SIGNATURE PAGE

 

The Undersigned shareholder(s) of Clavo Rico, Ltd, a Turks and Caicos Limited
Company, by the signature(s) set forth herein do hereby agree that the
Undersigned confirms and ratifies the Stock Exchange Agreement by and among
Clavo Rico, Ltd., Inception Mining, Inc. and the Shareholders of Clavo Rico,
delivered herewith. The Undersigned acknowledges that he(she) will receive one
share of Inception Mining, Inc. for each share of Clavo Rico, Ltd. held by the
Undersigned.

 

Shareholder   Number of Shares held                  

 

 

Page | 38